CHANDRA BHAN SINGH V. STATE OF UTTAR PRADESH & OTHERS 2025 INSC 763:

DATE: 23/05/2025

COURT: Suprme Court of India

BENCH: Justice Abhay S. Oka and Justice Augustine George Masih

FACTS:

Chandra Bhan Singh, the appellant in the present case, was the successful bidder for the mining of minor minerals, specifically sand, pursuant to a government-issued tender. Following the award of the tender, and in accordance with the stipulations outlined in the relevant policy framework, the appellant was directed to deposit a sum of Rs.54,12,960. This amount represented 10% of the total bid amount of Rs.5,41,29,600 and was to be paid to the District Mineral Foundation Trust, Kanpur (DMF Trust). In addition, the appellant was also asked to pay a 2% stamp duty on the same amount, as specified in a Demand Notice issued by the competent authority. In line with the terms of the tender and the conditions of the mining permit, the appellant had already deposited the required amount for the sanctioned quantity of sand to be mined. This was calculated at a rate of Rs.630 per cubic meter, in accordance with his winning bid, bringing the total to Rs.5,41,29,600.

However, the appellant challenged the legality of the additional demand made through the said Demand Notice by filing a writ petition before the High Court. He contended that the demand for the additional deposit was in direct contravention of the provisions of Section 9B of the Mines and Minerals (Development and Regulation) Act, 1957. According to the appellant, Section 9B only mandates a contribution based on the royalty rates prescribed in the Second Schedule of the Act, and not on the total bid amount or any other basis. Despite these arguments, the High Court dismissed the writ petition, upholding the validity of the Demand Notice through its impugned judgment. Aggrieved by this decision, the appellant has now approached the Supreme Court by way of the present appeal, seeking a reconsideration of the legality and constitutional validity of the additional financial imposition.

ISSUES:

The primary issue presented in this case was whether the appellant, Chandra Bhan Singh, was liable to deposit an additional 10% of the bid amount in favor of the District Mineral Foundation (DMF) Trust, as demanded through a notice issued by the authorities. The appellant contended that such a demand was contrary to Section 9B of the Mines and Minerals (Development and Regulation) Act, 1957, which, according to him, limited contributions to those calculated based on the royalty rates specified in the Second Schedule of the Act. The case also involved examining the validity of the impugned High Court judgment and whether the Demand Notice dated 25.10.2017 could be sustained under the statutory framework.

JUDGEMENT WITH REASONING:

The Supreme Court dismissed the appeals filed by Chandra Bhan Singh, upholding the judgment of the Allahabad High Court dated 15.11.2017, and validated the Demand Notice dated 25.10.2017 requiring the appellant to deposit 10% of the total bid amount with the District Mineral Foundation (DMF) Trust. The Court concluded that the demand was lawful and in accordance with the statutory framework governing minor mineral mining, specifically under the 2017 Rules and the empowerment conferred upon the State Government under the Mines and Minerals (Development and Regulation) Act, 1957.

The Court held that the appellant’s reliance on Section 9B(5) of the MMDR Act, 1957 was misplaced, as the mineral in question—sand—fell under the category of minor minerals. Referring to Section 14 of the Act, the Bench clarified that Sections 5 to 13 of the Act do not apply to minor minerals. The Court further observed that Sections 9B(2) and (3), as referenced by the appellant, had limited application as described in sub-Section (4) of Section 15, which did not address the determination of amounts payable to the DMF Trust. Instead, Section 15A expressly empowers State Governments to determine and fix the amounts to be paid towards the DMF, thereby validating the State’s authority in issuing the Demand Notice.

The Court emphasized that Rule 10(2) of the Uttar Pradesh Minor Minerals (Concession) (Second Amendment) Rules, 2017 clearly stipulates that in the absence of a prescribed rate by the State Government, 10% of the royalty is payable to the DMF Trust. However, when a specific amount is prescribed, that amount becomes applicable. In this case, the Demand Notice requiring 10% of the total bid amount (title amount) was consistent with the prescribed provisions and therefore enforceable. The Court also rejected the appellant’s reliance on Rules 21 and 54 of the 1963 Rules, clarifying that these rules are rendered inapplicable under Rule 23(3) in cases where the area is governed by e-tender processes. Since both Rule 21 and Rule 54 fall within Chapters III and VI respectively, they are not applicable under the e-tender scheme, rendering the appellant’s argument unsustainable.

ANALYSIS:

This case serves as a significant judicial interpretation of the interplay between the statutory provisions of the Mines and Minerals (Development and Regulation) Act, 1957 (MMDR Act), and the rules and powers delegated to State Governments, particularly in relation to the extraction and regulation of minor minerals. The appellant, Chandra Bhan Singh, argued that the additional demand to pay 10% of the total bid amount to the District Mineral Foundation (DMF) Trust was ultra vires to Section 9B of the MMDR Act, which he claimed limits contributions only to those calculated on royalty rates prescribed in the Second Schedule. However, the Supreme Court clarified that the mineral in question, sand is a "minor mineral" and, therefore, the central provisions under Sections 5 to 13 and the Second Schedule do not apply as per Section 14 of the Act. Importantly, the Court emphasized that Section 15A provides State Governments the statutory authority to determine the quantum of financial obligations related to minor mineral mining, thus validating the demand imposed on the appellant. The demand was further backed by Rule 10(2) of the 2017 Uttar Pradesh Minor Mineral Rules, which permits the State to prescribe a specific amount here, 10% of the title amount—which becomes enforceable when formally issued.

Moreover, the Court addressed and dismissed the appellant’s reliance on Rules 21 and 54 of the Uttar Pradesh Minor Mineral (Concession) Rules, 1963, noting that Rule 23(3) excludes the applicability of Chapters II, III, and VI (which include Rules 21 and 54) in areas declared for e-tender processes. Since the appellant's mining permit was granted through an e-tender, those rules could not be used to challenge the demand. The Court’s reasoning underlines the clear statutory demarcation between central regulation of major minerals and state-controlled governance of minor minerals. The judgment is crucial as it reinforces the States’ discretion in tailoring financial and regulatory frameworks to suit local mineral governance, provided such discretion is exercised within the bounds of the MMDR Act. It also offers a definitive stance on the scope of Section 9B, asserting that it does not preclude State Governments from imposing financial obligations that go beyond royalty calculations, especially when explicitly allowed under separate provisions such as Sections 15 and 15A.