Allahabad High Court: MMRD Act Is Beneficial Piece Of Legislation, Should Be Given Liberal Interpretation

The Allahabad High Court has emphasised that the Mines and Minerals (Regulation & Development) Act, 1957 (MMRD) Act is a beneficial piece of legislation and should be given liberal interpretation which may achieve the object of the legislation.

The Court emphasised thus in a Writ Petition seeking to quash the letter of intent (LOI) to the extent that a demand for contribution towards District Mineral Foundation (DMF) was raised.

A Division Bench comprising Justice Saral Srivastava and Justice Amitabh Kumar Rai observed, “As held above that incorporation of Section 9-B in the MMRD Act is for the benefit of persons affected by the mining operation, therefore, being a beneficial piece of legislation it should be given liberal interpretation which may achieve the object of the legislation. In such view of the fact, the aforesaid contention of learned counsel for the petitioner is misconceived and is rejected.”

The Bench said that Section 9-B (5) of the MMRD Act is specific and provides that the leaseholder is liable to pay an amount which is equivalent to such percentage of royalty paid in terms of Second Schedule of MMRD Act not exceeding one third of such royalty.

Advocate Ashish Malhotra represented the Petitioner, while Chief Standing Counsel (CSC) Rajeshwar Tripathi represented the Respondents.

Brief Facts

During the pendency of the Writ Petition, the Respondent-District Magistrate passed an Order by which he directed the Petitioner to deposit 10% of the royalty in DMF, which was assailed by the Petitioner by filing Amendment Application, which was allowed by the High Court. Accordingly, the Petitioner amended the Writ Petition. The Directorate of Geology & Mining, Lucknow and its subordinate offices issued an E-Tender inviting offers for the auction of limestone, a major mineral, which was obtained during the blasting/digging and levelling operation for the purpose of expansion of Obra ‘C’ (2 x 660 MW) Power Project situated in District Sonbhadra which was divided in three blocks, for which the Respondent-State fixed minimum amount as ‘reserve price’.

The value of the mineral was mentioned as ‘royalty’ in the auction notice which was meant as ‘sale price’ of the mineral and not the ‘royalty’ as understood under the provisions of MMRD Act. The Petitioner being interested, submitted its bid for all the three locations and 344/Mines/2018 were issued to the Petitioner declaring him as the highest bidder for the limestone described as Part-II and Part-III respectively in the public notice. The Petitioner being aggrieved by the demand of contribution towards DMF, approached the High Court.

Court’s Observations

The High Court in view of the above facts, noted, “From the reading of the aforesaid judgement, it can safely be concluded that the ‘mining operations’ as defined in Section 3(d) of the MMRD Act is comprehensive, so as to embrace every activity by which mineral is quarried or obtained from the earth irrespective of whether such activity is carried out on the surface or deep inside the earth.”

The Court said that the clearance of the limestone from the site would fall within the ‘mining operation’ in the light of the Judgements of the Apex Court defining that the mining operations includes every activity carried out for the purpose of extracting or obtaining mineral either on the surface of the earth or beneath the earth.

“From the proposition laid down by the Apex Court in the above cases, the law is no more res-integra that a party cannot approbate and reprobate at the same time as once it becomes beneficiaries of certain documents/instruments then such a party cannot choose to honor the commitment of certain parts of the said document/instrument which are beneficial to it and wriggle out of those conditions which puts liability upon it”, it added.

The Court remarked that the Petitioner cannot deny its liability to pay DMF contribution.

“It is relevant to point out here that neither MMRD Act nor the Rules, 2017 recognises anything as continuous mining operation which means full fledged mining operation. It only speaks about mining operation which means any operation undertaken for winning any mineral. The ‘affected area’ as defined in Rule 2(1) (b) of Rules, 2017 only speaks about the mining operation. It further states that any area in which mining operation is being done or undertaken under the MMRD Act or Rules, 2017 is an ‘affected area’. As per Rule 2(1)(c), a person who sustain injury or sustain damage of his property by mining related activity would be an affected person”, it observed.

The Court remarked that the interpretation of beneficial legislation involves liberal and purposive construction to achieve the statute’s underlying aim to ensure the welfare of the intended beneficiaries.

“Therefore, narrow interpretation to Section 9-B would render otiose the very object of the insertion of Section 9-B of MMDR Act which is for the benefit of people at large who are affected by mining operation and suffer injury and damage because of mining operation”, it further noted.

Conclusion

The Court was of the view that the Petitioner is bound by terms and conditions stipulated in paragraph-3 of the LOI, hence, he cannot deny his liability to pay the said amount towards DMF contribution disputing the fact that the DMF contribution should have been based upon percentage of royalty as computed in terms of Second Schedule of MMRD Act and not based on auction amount.

“… in the instant case, the petitioner failed to demonstrate that respondent-State has not acted fairly and has acted with malice, therefore, said judgement is not applicable in the facts of the present case”, it concluded.

Accordingly, the High Court dismissed the Writ Petition.

Cause Title- Manjeet Chawla v. State of UP and 2 Others (Neutral Citation: 2025:AHC:229198-DB)

Appearance:

Petitioner: Advocates Ashish Malhotra, Jitendra Shankar Pandey, and Tarun Varma.

Respondents: CSC Rajeshwar Tripathi and Advocate Archana Singh.

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