Upholding the Constitutional Validity of the Minerals Vesting Act, 2021, the Kerala High Court (Ernakulam Bench) clarified that while the ‘right to property’ is protected under Article 300A, the obligation to pay compensation for deprivation of property is not absolute and depends on the legislative policy and the purpose of the statute. The Court held that the 2021 Act was enacted in furtherance of the Public Trust Doctrine, which posits that natural resources like minerals are held by the State in trust for the public good.
The Court pointed out that the legislation was aimed at achieving the objectives laid out in the Directive Principles of State Policy, specifically ensuring that material resources of the community are distributed to subserve the common good. In this context, the absence of a compensation clause was held not to be violative of Article 300A. The Court also affirmed the State’s legislative competence to enact the law and found that it was not repugnant to the central Mines and Minerals Development and Regulation Act, 1957 (MMDR Act) or the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013 (RFCTLARR Act), as they operate in distinct fields.
On the requirement for Mining Permits and Licenses, a Single Judge Bench of Justice Kauser Edappagath observed that the MMDR Act, 1957, imposes a clear and absolute prohibition on undertaking any mining operations without a valid permit or lease. The Single Judge held that even when a person is the owner of the land and the subsoil minerals, they are statutorily obligated to obtain all necessary permissions, including mining plans, environmental clearances, and other licenses, before commencing any extraction activities.
The Bench found that the petitioners had admittedly not obtained these statutory clearances. Consequently, their quarrying activities were classified as illegal mining. This empowered the State, under Section 21(5) of the MMDR Act and Rule 108 of the Kerala Minor Mineral Concession Rules, 2015 (KMMC Rules), to recover the value of the minerals so raised and impose a fine.
On the State’s right to claim royalty, the Bench pointed out that this was a pivotal issue, particularly for the period before the Minerals Vesting Act, 2021, came into force. The Bench relied on the authoritative declaration by a nine-judge bench of the Supreme Court in Mineral Area Development Authority v. Steel Authority of India, which held that royalty is a consideration payable to the owner of the minerals. Applying this principle, the Bench concluded that for any extraction that occurred prior to December 30, 2019 (the effective date of the Act), the landowners in the Malabar area were the legal owners of the minerals.
The Bench accordingly held that the State has no authority to claim royalty from these private owners for minerals extracted during that pre-vesting period. However, for any extraction post this date, the State, being the new owner of the minerals, is entitled to claim royalty.
On the Validity of Rule 89 of the KMMC Rules, 2015, the Bench noted that the rule had already been deleted from the statute book with effect from April 1, 2023, before the writ petition was filed. Furthermore, it was found that the petitioner was not a quarrying leaseholder and had not opted for the consolidated royalty scheme under the said rule. The amounts paid by the petitioner were identified as the annual dealer’s license fee, not royalty. Therefore, the petitioner was not entitled to any relief on this ground.
Briefly, the matters relate to the State’s authority to demand royalty and the cost of minerals extracted from private lands located in the former Malabar province. The legal dispute arose from the unique status of mineral rights in this region. Following a Supreme Court judgment in Thressiamma Jacob v. Department of Mining and Geology, it was established that, unlike in the Travancore and Cochin regions, the ownership of subsoil mineral wealth in the Malabar province rested with the respective landowners and not with the State. In response to this judgment, the Kerala legislature enacted the Kerala Minerals (Vesting of Rights) Act, 2021, which vested all rights in minerals within the soil and subsoil of all lands in the Government, with retrospective effect from December 30, 2019.
The petitioners, who were landowners, quarry operators, and crusher unit owners, were aggrieved by demand notices issued by the Department of Mining and Geology for payment of royalty, mineral costs, and fines for allegedly unlawful extraction of minor minerals from their properties. Several petitioners contested the constitutional validity of the Minerals Vesting Act, 2021, primarily because it violated Articles 300A and 14 of the Constitution of India by not providing any compensation for the vesting of their mineral rights in the State. Other petitions specifically challenged royalty demands made for periods before the enactment of the 2021 Act, arguing that since they were the owners of the minerals during that time, the State had no right to claim royalty.
The State defended its actions by asserting that the Minerals Vesting Act, 2021, was a valid piece of legislation enacted to ensure that the material resources of the community subserve the common good and to bring uniformity across Kerala. The State contended that regardless of mineral ownership, any person undertaking mining operations must obtain the necessary statutory permits and licenses under the MMDR Act and KMMC Rules. Since the petitioners had failed to do so, their activities constituted illegal mining, empowering the State to recover the price of the minerals, fines, and royalty.
Appearances:
Advocates Shashank Devan, MKS Menon, Adarsh Kumar, and K.M. Aneesh, for the Petitioners
Senior Government Pleader S. Kannan, for the Respondent
