Decide amendments to MMDR Act in 2 months: Supreme Court to Centre
The bench refused to hold the law to be wrong, respecting the government’s discretion to take economic policy decisions.
The Supreme Court on Thursday said the government’s discretion over policy domain does not allow it to keep decisions in limbo as it directed the Centre to take a final call in two months on a proposed amendment to the Mines and Minerals (Development and Regulation) Act, 1957 (MMDR Act) for calculating royalty on extracted minerals.
A bench headed by Chief Justice of India (CJI) Dhananjaya Y Chandrachud was considering a petition filed by Kirloskar Ferrous Industries challenging an anomaly in the MMDR Act and the accompanying rules which permits a higher rate of royalty for extraction of iron ore and other minerals and a lesser royalty for coal.
The bench, also comprising of justices JB Pardiwala and Manoj Misra, refused to hold the law to be wrong, respecting the government’s discretion to take economic policy decisions. It said, “Although, the computation of royalty for different minerals is purely a matter of policy yet we should not just shut our eyes to the prima-facie anomaly that exists both in the very computation mechanism of average sale price for minerals in terms of the aforesaid provisions and the perplexing stance of exclusion of only coal from such mechanism despite the general nature and application of the aforesaid rules.”
Since the Centre has realised the anomaly and the Ministry of Mines issued notice in May 2022 to all stakeholders for consultations, justice Pardiwala, authoring the decision for the bench, said, “We grant the Centre and Indian Bureau of Mines a period of two months from the date of this judgment to conclude the public consultation process undertaken for amending the MMDR Act.”
The registry of the court was directed to list the case after 2 months for monitoring compliance. The bench categorically held, “Merely because it (Centre) has the discretion to take such policy decision does not mean that it can endlessly keep on prolonging the decision-making process whereby the very discretion is rendered ad-lib and the issue in itself a forgone conclusion.” On the pretext of ongoing public consultation process, the Centre “cannot continue to keep the aforesaid issue in limbo,” the court said.
The petitioners, represented by senior advocate Abhishek Manu Singhvi, were permitted to challenge the final policy decision as and when it is taken by Centre. He submitted that due to the definition of sale value of minerals provided under Rule 38 of Mineral Concession Rules, 2016 (MCR) and Rule 45 of Mineral Conservation and Development Rules, 2017, the previously paid royalty by way of payments to the District Mineral Foundation (DMF) and payments to the National Mineral Exploration Trust (NMET) was not being factored in computation of royalty. This amounted to “compounding” of royalty that was manifestly arbitrary.
The company showed that such contributions towards DMF and NMET paid previously were being exempted for coal while computing royalty. The bench refused to strike down the law and said, “Matters such as computation of royalty or the levy of such royalty on different minerals is entirely a matter of policy making which is beyond the expertise and domain of the courts.” These domains require expertise of professionals with specialised knowledge which judges generally lack.
When it involves economic and social policies, judicial interference in areas such as redistribution of resources, prioritisation of interests, and balancing of public needs, may result in risks creating disruptions in the economic balance that policymakers are trying to achieve that is linked with economic growth.
Such complex issues of economic and fiscal nature cannot be construed by any strait-jacket formula or unidirectional approach and courts generally adopt a “judicial hands-off approach” qua economic legislation.
“The legislature is to be allowed wide latitude in experimenting with economic legislation, by virtue of it being an extension of the government’s economic policy,” the court said.
In the present case, it held, “There is no doubt that the mechanism for computation of royalty in terms of Rule 38 of the MCR, 2016 and Rule 45 of the MCDR, 2017 devised by the respondents might have onerous implications in monetary terms on the mining leaseholders...this Court in the absence of anything to show that such policy is in excess of the powers or domain of the respondents herein or in breach of any statutory provision, cannot strike down the same.”
Since the MMDR Act and the rules thereunder pertain to the extraction, disposal and sale of natural resources which is an economic policy that entails intricate economic choices and have a direct effect on the macroeconomics, we are of the considered opinion that when it comes to computation of royalty the legislature must have greater play in the joints, the court concluded.