Ownership of land won't entitle quarrying or mining, rules Supreme Court

A bench of Justices said a person to whom the certificate is issued is required to file returns showing the production and disposal of mines or minerals and the royalty is determined for it.

New Delhi: The Supreme Court has said that ownership of land would not entitle one to undertake quarrying or mining operations, unless he holds a certificate of approval in terms of mineral rules.

A bench of Justices Abhay S Oka and Ujjal Bhuyan said a person to whom the certificate is issued is required to file returns showing the production and disposal of mines or minerals and the royalty is determined for it.

The court allowed an appeal filed by the Punjab government, and set aside 2007 order by the High Court.

M/s Om Prakash Brick Kiln and others, operating brick kilns, claimed they took different lands from private owners on lease. They used to excavate earth from the said lands to manufacture bricks in their brick kilns. 

They contended under the Mines and Mineral (Regulations and Development) Act, 1957 or under the Punjab Minor Mineral Concession Rules, 1964, there was no provision entitling the state Government to levy royalty on the use of brick earth. The respondents contended that the appellants' action of assessing royalty and sending notices for recovery was illegal.

The state government, on other other hand, submitted every mineral, including brick earth, vests with it, in accordance with Section 42 (2) of the Land Revenue Act. It also contended that under Section 15 of the 1957 Act, the state government was empowered to make Rules for making a provision for charging royalty. Accordingly, under the Mineral Rules framed by the state government, the appellants were entitled to levy royalty.

"Once it is accepted that brick earth was a minor mineral under the Mineral Rules, the state government gets the right to levy royalty on the production and disposal of minor minerals. An appeal is provided under Rule 54F of the Mineral Rules against an order of the assessment of royalty. This remedy is an efficacious remedy available to challenge the levy of royalty," the bench said in its judgment on January 21, 2025.

The bench also pointed out on June 1, 1958, the Government of India published a notification in the exercise of powers conferred under clause (e) of Section 3 of the 1957 Act by which brick earth was declared a minor mineral within the meaning of the 1957 Act. 

The court felt the High Court here missed the real issue. As far as the ownership of the said lands is concerned, admittedly, respondents were not the owners, it said.

The bench also pointed out the Mineral Rules, Rule 3 provides for exemptions from payment of royalty and it does not provide for an exemption in respect of the excavation of brick earth for manufacturing bricks.

Relying upon the rules, the bench said, "Therefore, even if a person owns the land, he cannot undertake quarrying or mining operations therein unless he holds a certificate of approval in Form “B”. A person to whom the certificate is issued is required to file returns showing the production and disposal of mines or minerals. The royalty is determined as provided in sub-Rule (1) of Rule 54C."

In the case, the court said that the three courts have unnecessarily gone into the issue of ownership of the said lands or minerals therein. 

"Once it is shown that under the Mineral Rules, the first appellant –state government was entitled to levy royalty on the activity of mining of brick earth, the issue of ownership of the said lands becomes irrelevant. The reason is that the owners of the said lands in which the excavation is made are not in the exempted category specified in Rule 3 of the Mineral Rules," the bench said.