- (1.) M/s. South Eastern Coalfields Ltd.. and M/s Western Coalfields Ltd. are Government Companies operating various coal mines in the State of Madhya Pradesh, holding mining leases granted to them by the State Government under the provisions of the Mines and Minerals (Regulation and Development) Act, 1957, hereinafter 'the Act', for short. Coal is a major mineral and the said companies, hereinafter collectively called as 'coalfields', have the exclusive right for extraction of coal under the lease deeds held by them.
(2.) Sub-section (3) of Section 9 of the Act empowers the Central Government to enhance or reduce the rate at which royalty shall be payable in respect of any mineral including coal w.e.f. such date as may be specified in the notification published in the official gazette in that behalf. In exercise of the power so conferred, the Union of India enhanced the royalty payable on coal to Rs.120/- per ton from Rs. 6.50 per ton, which was the rate prevailing till then. So far as the State Government is concerned, it is entitled to collect the royalty including the enhanced royalty from the lessees, i.e. the coalfields, and the coalfields can, in law, pass-on the burden of royalty to the purchasers/consumers of coal by including the amount equivalent to royalty in the price of the coal. Coal is a controlled commodity and governed by the provisions of the Essential Commodities Act, 1956 and the Coal Control Order issued thereunder. Inasmuch as the State Government took steps for recovering the royalty on coal at the enhanced rates from the lessees and the lessees in their turn proposed to enhance the rate at which the coal was supplied to the purchasers/consumers, about 60 writ petitions came to be filed in the High Court of Madhya Pradesh by different consumers who were to bear the burden of enhancement ultimately. In the writ petitions, the enhancement of royalty on coal was sought to be impugned on two grounds : firstly, that Section 9(3) of the Act itself was ultra vires the Constitution; and secondly, that the notification dated 1st August, 1991 issued by the Central Government under S. 9(3) of the Act was unconstitutional being arbitrary, unreasonable and lacking in bona fides. The High Court of Madhya Pradesh by its decision dated 17-12-1993 upheld the vires of S. 9(3) of the Act but quashed the notification dated 1-8-1991 enhancing the rate of royalty on the ground that it was arbitrary and lacking in bona fides.
(3.) It is pertinent to note that the coalfields did not lay any challenge to the enhancement. All the writ petitions in the High Court were filed by the consumers/purchasers. The coalfields were impleaded as respondents. When the State of Madhya Pradesh filed appeals by special leave in this Court impugning the judgment of the High Court, the coalfields joined as appellants with the State of Madhya Pradesh. A batch of appeals was decided by this Court on February 1, 1995 (decision reported as State of M. P. v. Mahalaxmi Fabric Mills Ltd. and Ors. 1995 Supp (1) SCC 642). This Court allowed the appeals, set aside the decision of the High Court of Madhya Pradesh and directed the writ petitions filed in the High Court to be dismissed.;