Authority: Supreme Court of India, Civil Appellate Jurisdiction

Order Date: 13 July 2026

Case Overview

  • Appeals: Civil Appeal No. of 2026 (arising out of SLP (Civil) Diary No. 15252 of 2017) and Civil Appeal No. of 2026 (arising out of SLP (Civil) Diary No. 30225 of 2017).
  • Parties: Appellants – State of Haryana & others; Respondents – M/s Faridabad Gurgaon Minerals (FGM) and M/s Ganpati Enterprises Slate Mines (GESM) (also referred to as M/s. GESM).
  • Background: Auction notice dated 12 Oct 2001 issued by Haryana Mines & Geology Department for road‑metal and masonry‑stone leases in Faridabad (86.8 ha in Sirohi and 131.05 ha in Khori Jamalpur). FGM offered highest bid, received two letters of acceptance on 6 Nov 2001, and executed a mining lease deed on 17 Sep 2002. GESM obtained a similar lease for 232.55 ha in Majra Manethi, Rewari on the same date.
  • Lease terms: Auction Notice and Letter of Acceptance incorporated clauses that the lease would be governed by Rules 10 and 21 of the Punjab Minor Mineral Concession Rules, 1964 (adopted by Haryana). The lease deed itself omitted any express provision for future revision of royalty or dead rent.
  • Statutory framework: MMDR Act 1957, Section 15 empowers State Governments to make rules for minor minerals and mandates payment of royalty or dead rent “at the rate prescribed … in the rules”. Rule 10 allows dead‑rent enhancement up to 50% after three years; Rule 21 obliges payment of royalty at rates in the First Schedule and permits revision “from time to time”.
  • State action: Notification No. S.0.40/C.S. 67/1957/S.15/2005 dated 3 June 2005 amended the 1964 Rules, increasing royalty from Rs 24 to Rs 36 per tonne and dead rent from Rs 1,000 to Rs 2,000 per hectare (a 50% increase).
  • Litigation: Respondents filed writ petitions in the High Court of Punjab & Haryana (CWP No.17958 of 2005 and CWP No.14306 of 2005) challenging the notification as arbitrary, beyond statutory authority, and violative of the Rules of Business (1977). The High Court, on 2 June 2016, allowed the writs, holding the lease deeds did not bind the State to the enhanced rates and that the notification was arbitrary and breached the Rules of Business.
  • State appealed; review petitions dismissed on 3 Mar 2017 and 26 May 2017.

Final Outcome

  • The Supreme Court allowed both appeals, set aside the High Court’s impugned judgment of 2 June 2016, and upheld the State’s power to enhance royalty and dead rent under the applicable rules.
  • The Court held that Rules 10 and 21 of the 1964 Rules form an implied condition of the mining lease, even though the lease deed omitted explicit reference, and therefore the State may revise rates “for the time being” as prescribed.
  • The notification of 3 June 2005 was not arbitrary; the State considered comparative rates from neighbouring states and acted within the statutory interval (more than five years after the previous revision).
  • The alleged violation of the Rules of Business was rejected: the Chief Minister (also Minister‑in‑charge of Mining) approved the notification, satisfying the requirement of Council approval; deemed consent of the Finance Minister was inferred, and the Rules were held to be directory where no adverse financial impact is shown.
  • Limited relief: any interest on arrears of dead rent or royalty, if imposed, shall be limited to 12% per annum (instead of the higher rates previously claimed). Unpaid dead rent or royalty may be realised by the State, but parties bear their own costs.

Topics: Mining Lease Regulation, Royalty Enhancement, Business Rules Compliance