Isabella Mariam

Supreme Court Upholds State’s Right to Levy Royalty on Brick Earth as a Minor Mineral

In a landmark ruling, the Supreme Court of India has upheld the State Government's authority to impose royalty on the production and disposal of brick earth, classifying it as a minor mineral under the relevant Mineral Rules. This judgment came after the appellants, representing the State Government, challenged a lower court’s decision that had granted a permanent injunction in favor of the respondents, prohibiting the recovery of royalty.

Background of the Case

The case originated when the respondents, who operated brick kilns, filed a suit seeking to prevent the appellants from levying royalty on the earth extracted from leased lands. These lands were not owned by the State Government; rather, the respondents had leased them from private landowners for the purpose of excavating brick earth. The respondents argued that since the lands were privately owned and not vested with the government, the state had no legal right to levy royalty on the extracted brick earth.

The respondents also relied on various legal provisions, including Section 42 of the Punjab Land Revenue Act, 1887, and the Mines and Minerals (Regulation and Development) Act, 1957, along with the Punjab Minor Mineral Concession Rules, 1964. They claimed that merely declaring brick earth as a minor mineral did not entitle the State Government to impose royalty on its extraction.

Initially, the Trial Court ruled in favor of the respondents, dismissing the claim for royalty. This decision was upheld by the First Appellate Court. However, the High Court, in a subsequent judgment, sided with the respondents, asserting that a mere declaration of brick earth as a minor mineral did not automatically confer the right on the State to levy royalty. In response, the appellants challenged the High Court's decision before the Supreme Court.

Supreme Court's Analysis

The Supreme Court, comprising Justice Abhay S. Oka and Justice Ujjal Bhuyan, examined the legal and factual aspects of the case. The Court emphasized that the central issue was not the ownership of the land or the brick earth, but rather whether the State Government had the authority to impose royalty on the extraction of brick earth, which had been classified as a minor mineral.

The Court pointed out that the Government of India, through a notification in 1958, declared brick earth as a minor mineral under the Mines and Minerals (Regulation and Development) Act, 1957. This classification automatically conferred the right on the State to levy royalty on the production and disposal of brick earth, regardless of land ownership. The Court stressed that the lower courts had erroneously focused on ownership disputes, which were irrelevant to the main issue—the State’s legal right to collect royalties for the extraction of minor minerals.

The Bench also noted that the Trial Court had not framed any issue regarding land ownership, and the District Court did not raise this point for determination either. This further highlighted that the ownership of the land was not central to the matter of royalty collection.

Legal Framework for Mining and Royalty

The Supreme Court referred to the provisions under the Mineral Rules, particularly Rules 54A, 54B, and 54C, which regulate the extraction of minor minerals. The Court clarified that even if a person owns the land, they cannot undertake mining or quarrying operations unless they obtain a certificate of approval from the State Government. Such certificate holders are also required to file returns detailing the production and disposal of minerals, and the royalty is calculated based on these returns.

The Court further explained that once brick earth was declared a minor mineral, the State Government automatically gained the right to levy royalty on its extraction and disposal. This right was not contingent on the ownership of the land where the excavation took place. The Court also noted that the respondents could challenge the quantum of the royalty assessed through an appeal under Rule 54F of the Mineral Rules.

Conclusion of the Case

In conclusion, the Supreme Court ruled that the State Government had the legal right to levy royalty on the excavation of brick earth as a minor mineral, even if the land from which the earth was extracted was privately owned. The issue of land ownership became irrelevant once brick earth was classified as a minor mineral under the Mineral Rules.

The Court restored the Trial Court's decision, stating that the respondents had failed to make a case for a permanent injunction against the recovery of royalty. However, the Court also clarified that the respondents could still appeal the amount of royalty assessed if they felt it was excessive, providing an effective remedy to challenge the royalty calculation.

Case No/ Neutral Citation: Civil Appeal No.10687-10694 of 2013; 2025 INSC 88

Cause Title: State of Punjab & Ors Vs M/s OM Prakash Brick Klin Owner, Etc

Coram: Justice Abhay S Okha and Justice Ujjal Bhuyan