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Chandra Bhan Singh v. State of Uttar Pradesh and Others

Civil Appeal · 2025 INSC 763Decided 23 May 2025
Civil Appeal No. 12314 of 2024 (with connected Civil Appeal Nos. 12315 and 12316 of 2024)
Justice Abhay S. Oka · Justice Augustine George Masih

Background

The appellant successfully bid for a sand-mining tender in Uttar Pradesh and was allotted a mining permit. The District Magistrate then issued a Demand Notice requiring him to deposit an amount equal to 10% of the entire bid amount (over ₹54 lakh) to the District Mineral Foundation (DMF) Trust, under a State policy dated 22.04.2017 issued in relaxation of the normal mining rules. The appellant challenged this before the Allahabad High Court, arguing that under the Mines and Minerals (Development and Regulation) Act, 1957, contributions to the DMF should be capped at 10% of the royalty payable (a much smaller figure), not 10% of the total bid amount. The High Court rejected this challenge, and the appellant approached the Supreme Court.

Decision Breakdown

The Supreme Court examined the original government records behind the 2017 policy (produced on the Court's earlier direction) and found the State had validly exercised its power under Rule 68 of the U.P. Minor Minerals (Concession) Rules, 1963, to relax the normal rules: necessitated by a court-ordered mining ban that was disrupting construction activity. On the substantive dispute, the Court held that Section 9B of the 1957 Act (which links DMF contributions to a percentage of royalty) does not apply to "minor minerals" like sand, because Section 14 of the Act expressly excludes Sections 5 to 13 from applying to minor minerals. Instead, the applicable provision was Section 15A, which separately empowers the State Government to independently prescribe the amount payable to the DMF Trust for minor minerals, and the State had validly fixed this at 10% of the total bid/title amount under Rule 10(2) of the District Mineral Foundation Trust Rules, 2017. The appellant's reliance on general mining Rules 21 and 54 also failed because those rules do not apply once an area is opened up for tender/auction under Rule 23(3). The appeals were dismissed and the demand notice upheld.

Lesson Learnt

For "minor minerals" (like sand, used in ordinary construction), the special protections and royalty-linked formulas that apply to major minerals under the central Mines and Minerals Act do not automatically apply: State Governments have independent, broader power to fix contribution amounts payable to District Mineral Foundations for minor mineral concessions, so bidders should carefully check the specific state rules and tender terms rather than assuming the major-mineral formula applies.

Official source (sci.gov.in)View Judgment (PDF)

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