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State of Haryana & Ors. v. M/S Faridabad Gurgaon Minerals & Anr.

Civil Appeal · 2026 INSC 690Decided 13 Jul 2026
C.A. No.-008830-008833 - 2026 (arising out of SLP (Civil) Diary No. 15252 of 2017, with a connected appeal arising out of SLP (Civil) Diary No. 30225 of 2017 involving M/s Ganpati Enterprises Slate Mines)
Justice Dipankar Datta · Justice Satish Chandra Sharma · Justice Sheel Nagu

Background

The State of Haryana auctioned mining leases for road metal and masonry stone to M/s Faridabad Gurgaon Minerals and a connected lessee in the early 2000s, under the Punjab Minor Mineral Concession Rules, 1964. The executed lease deeds themselves did not expressly mention fluctuating or revisable royalty and dead rent rates, though the auction notices referenced the 1964 Rules. In 2005, the State issued a notification enhancing royalty and dead rent rates by 50%, which the lessees challenged, and the High Court ruled in the lessees' favour, holding the increase invalid.

Decision Breakdown

The Supreme Court held that the statutory framework (Section 15(3) of the Mines and Minerals (Development and Regulation) Act, 1957 read with Rules 10 and 21 of the 1964 Rules) entitles the State to revise royalty and dead rent rates from time to time (subject to a cap of once every three years), and this statutory power is incorporated into the lease even where the deed itself is silent, because the auction notice and letter of acceptance expressly referenced the 1964 Rules. The Court also rejected the lessees' argument that the enhancement was procedurally invalid for want of Cabinet/Finance Department concurrence, holding there was "deemed consent" of the Finance Minister given the Chief Minister's approval and the collective responsibility of the Council of Ministers. The appeals were allowed and the High Court's judgment set aside, though the Court granted limited relief by capping interest on arrears at 12% per annum given the notification had remained stayed for years and the leases had since expired.

Lesson Learnt

Where a mining lease is granted under a statutory rules regime that permits periodic revision of royalty and dead rent, the lessee is bound by lawfully notified rate increases even if the lease deed itself does not spell out the escalation clause, provided the governing rules were validly incorporated by reference.

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

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