Case name: Director of Mines and Geology, Government of Karnataka vs M/s BMM ISPAT Ltd & Anr.
Court: Supreme Court of India, Civil Appeal No. ___ of 2026 (Special Leave Petition No.16259 of 2019).
Date of judgment: 4 June 2026.
Period of dispute: Royalty amendment effective 1 Sept 2014; e‑auction conducted 27‑28 June 2014; removal of ore and related payments made 2014‑2016.
Parties Involved
Appellant: Director of Mines and Geology, Department of Mines and Geology, Government of Karnataka.
Respondent: M/s BMM ISPAT Ltd (and associated parties).
Other entities mentioned: Monitoring Committee (Dept. of Mines & Geology), Central Government, MSTC Ltd, NMDC, Accountant General, Finance Manager Jaganath Poojary (Monitoring Committee).
Issues / Allegations / Violations
Whether the State may levy a royalty rate higher than the 10% stipulated in the tender agreement after the Central Government amended the Second Schedule of the Mines and Minerals (Development and Regulation) Act, 1957 to 15%.
Applicability of Section 9 of the MMDR Act 1957 to the contract between the Monitoring Committee and the respondent.
Determination of the point in time at which royalty becomes payable – at bid acceptance (10%) or at actual removal/dispatch of the mineral (potentially 15%).
Findings & Observations
The amendment dated 1 Sept 2014 raised royalty on iron ore from 10% to 15%; the amendment is a statutory function of the Central Government and cannot be overridden by contract.
Section 9(1) mandates royalty to be paid on the mineral removed or consumed from the leased area at the rate specified in the Second Schedule at the time of removal.
The Supreme Court observed that the respondent’s bid was accepted and payment made before the amendment, but the actual dispatch of the ore occurred after the amendment; therefore the higher rate applies.
The High Court’s order rejecting the deduction of the additional 5% royalty was held “unsustainable in law” and set aside.
Penalties / Settlements / Directions
The Monitoring Committee deducted Rs 2,09,26,077 (including VAT Rs 10,19,933) representing the 5% royalty shortfall from the respondent’s security deposit of Rs 2,91,92,750.
The remaining balance of Rs 82,66,673 was refunded to the respondent.
No further monetary penalty was imposed beyond the royalty adjustment.
Corrective Actions & Future Obligations
The Monitoring Committee must continue to apply the royalty rate prevailing at the time of mineral dispatch for all future removals.
Parties to e‑auctions must ensure that royalty payments reflect statutory rates at the moment of dispatch, not merely at bid acceptance.
Any security deposit retained may be used to recover statutory dues arising after the date of deposit.
Final Ruling & Enforcement
The Supreme Court allowed the appeal, quashed and set aside the High Court judgment dated 25 Jan 2017/31 Jan 2017.
The deduction of the additional 5% royalty from the security deposit was upheld as lawful.
All pending applications, if any, were disposed of.
The decision reinforces that statutory amendments to royalty rates supersede prior contractual stipulations where the mineral is removed after the amendment.
