Ownership of minerals should be vested with the owner of the land and not with the government, the Supreme Court has said.
A three-judge bench headed by justice RM Lodha said that there is no law in the country which declares that state is the owner of sub-soil or mineral wealth.
“We are of the opinion that there is nothing in the law which declares that all mineral wealth sub-soil rights vest in the state. On the other hand, the ownership of sub-soil/ mineral wealth should normally follow the ownership of the land, unless the owner of the land is deprived of the same by some valid process,” the bench said.
Referring to various acts regulating extraction of underground natural resources, the bench said that the laws do not anywhere declare the proprietary right of the state.
It rejected the argument that individual owners cannot claim any proprietary right on the sub-soil resources as Section 425 of the Mines and Minerals (Development and Regulation) Act, 1957, prohibits carrying out of any mining activity in this country except in accordance with a permit, licence or mining lease.
“The said Act does not in any way purport to declare the proprietary rights of the state in the mineral wealth nor does it contain any provision divesting any owner of a mine of his proprietary rights,” the bench said.
It said that the assertion of government to collect duty or tax is in the realm of the sovereign authority, but not a proprietary right.
“The power to tax is a necessary incident of sovereign authority (imperium) but not an incident of proprietary rights (dominium). Proprietary right is a compendium of rightsconsisting of various constituent, rights. If a person has only a share in the produce of some property, it can never be said that such property vests in such a person,” the bench said.
It, however, refused to go into the issue of liability of land owners to pay royalty to the state as it would be decided by a larger bench.
“We make it clear that we are not making any declaration regarding their liability to pay royalty to the State as that issue stands referred to a larger bench,” it said.
The bench passed the order on a petition filed by a few land owners of Kerala challenging the verdict of the high court which had passed the order in favour of the state government.