Pointing out that the calculation of the royalty fee for minerals is a policy decision completely within the authority of the executive, the Supreme Court rejected the objection regarding the government’s change in the concession calculation method. The court stated that such decisions cannot be challenged unless the policymaker exceeds the limits of authority, as these decisions require expertise that judges do not have.

“It is clear that whether a particular policy is wise or whether a better public policy can be developed is entirely within the prerogative of the state administration. Issues such as calculating the royalty fee or collecting this royalty fee on different mines are a matter of policy making that is completely outside the expertise and scope of the courts. “It is no longer res-integra when a question regarding the validity of a particular policy relates to reviewing the policy-making process itself and not the merits of such decision or policy.”led bench CJI DY Chandrachud and includes Judges JB Pardiwala and Manoj Misra afflicted.

“The duty of the courts is to confine itself to the question of legality, and its concern is whether a policy-making authority has exceeded its powers, committed an error of law, violated the rules of natural justice, or reached reasonable authority, or whether it has abused its powers.”the court added.

In this case, the petitioner has invoked the Mineral (Other than Atomic and Hydrocarbon Energy Minerals) Concession Rules, 2016 (MCR, 2016) and the Mineral Conservation and Development Rules, 2017 (MCDR, 2017).

The petitioner argued that the change in royalty calculation methodology resulted in a “compounding” effect on the current royalty calculation method, where royalty paid in one month is included in subsequent months, increasing the financial burden and creating a cascading effect. They claimed that this was arbitrary and contrary to Article 14 of the Constitution.

The decision rejecting the plaintiff’s claim, Justice Pardiwala He emphasized that the judiciary should not intervene in economic policies unless it is clearly arbitrary or unconstitutional. The Court reaffirms the legislature’s discretion to design copyright policies without judicial intervention, especially in areas where complex economic considerations are involved.

“The doctrine of judicial restraint at the heart of this debate emphasizes that courts must exercise caution and avoid meddling in policy decisions; because these are complex decisions that require balancing diverse and often conflicting interests. Policies are created based on comprehensive analysis of social, economic and political factors and matters beyond the jurisdiction of the court. The court is tasked with ensuring that policies do not violate constitutional provisions or legal limits; “But they should not replace policymakers’ decisions with their own decisions unless absolutely necessary.”the court observed.

“In policy-related cases, the court’s duty is primarily to determine whether the policy falls within the scope of authority given to the relevant institution. If the policy decision is within the executive’s legal authority and was made following proper procedures, courts should seek the expertise and discretion of policymakers, even if the policy appears unwise or imprudent. This restriction ensures that the courts do not impose their own perspective on policy issues that are the responsibility of other bodies.”, the court added.

The Court observed: “In respect of some minerals at the relevant time, royalty was being calculated without including the previously paid royalty, DMF and NEMT contributions; but this does not mean that the power of the Central Government is curtailed and the Central Government cannot change the way royalty is calculated.”

“Merely because the methodology or formula for calculating the royalty has been changed from the previous MCR, 1960 will not render the new mechanism or methodology unreasonable or arbitrary and shall not be repealed.”The court gave reasons.

The Court observed that the Explanation added to Article 38 of the MCR did not violate the main provision and described it as merely explanatory, meant to explain or clarify some ambiguities that may have previously crept into the statutory provision.

“Only the Explanation(s) to MCR, 2016 Rule 38 and MCDR, 2017 Rule 45 stipulate that no deductions shall be made from payments made to the District Mineral Trust, royalty deductions and payments to the National Mineral Research Foundation. amount does not in any way render the said Disclosure contrary to the main provision. The Explanation(s) referred to above are merely explanatory in nature as they explain ambiguities in the main provisions of Rule 38 of MCR, 2016 and Rule 45 of MCDR, 2017 and, therefore, cannot be said to go beyond their scope. It is contrary to the main provisions or contrary to the legal order.”the court observed.

Acknowledging that the legislature had recognized the anomaly in the provisions regarding incorporation of royalty in calculating the average selling price, the Court granted two months to the Union of India as a final opportunity to review the calculation mechanism for determining all other selling prices. minerals covered by the challenged provisions.

“The Registry will inform this matter before an appropriate Board within a period of two months from the date of announcement of this decision to ensure that our instructions have been complied with.”the court ordered.

Appearance:

Dr. AM Singhvi, senior counsel for the petitioner

Mr. Shailesh Madiyal, Additional Solicitor General for the Respondents

Case Title: KIRLOSKAR FERROUS INDUSTRIES LIMITED & ANR VERSUS UNION OF INDIA & ORS., WRITTEN PETITION (C) NO. 715 OF 2024

Quote: 2024 LiveLaw (SC) 880

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