Legal Analysis: The Director of Mines and Geology v. BMM Ispat Ltd and Another

Citation: 2026 INSC 627

Court: Supreme Court of India

Bench: A Division Bench comprising Justice Sanjay Karol & Justice Nongmeikapam Kotiswar Singh

Date of Decision: June 4, 2026

Nature of Judgment: Civil Appeal arising out of SLP (Civil) No. 16259 of 2019 against the judgment of the High Court of Karnataka at Bengaluru dated 18th March 2019 in Writ Petition No. 6979 of 2017.

Synopsis of the Judgment

The appellant (Director of Mines and Geology, Karnataka) challenged the High Court’s order which allowed the respondent’s writ petition against the deduction of additional 5% royalty from its security deposit. The respondent had participated in an e-auction for sale of iron ore stockpile pursuant to this Court’s orders in WP (C) No. 562 of 2009. The acceptance letter was issued on 28.06.2014, and the bid was accepted at 10% royalty. The Central Government, by notification dated 01.09.2014, increased the royalty rate for iron ore from 10% to 15% with effect from that date. The respondent had paid the entire consideration including royalty at 10% but removed the iron ore in batches, some of which was after 01.09.2014. The appellant deducted the differential royalty (5%) from the security deposit. The High Court held that the royalty crystallised on the date of acceptance of the bid and that the enhancement could not be imposed. The Supreme Court allowed the appeal, holding that: (i) royalty under Section 9 of the MMDR Act, 1957 is payable on the removal or consumption of minerals from the leased area; (ii) the contractual provision (including the contingency amount of Rs.50/100 per tonne) cannot override a statutory amendment; (iii) the date of movement/dispatch of minerals is the relevant date for determining the applicable royalty rate; (iv) since the respondent removed the iron ore after the amendment came into force, it was liable to pay royalty at the enhanced rate of 15%.

1. Basic Information of the Judgment

Case Title: The Director of Mines and Geology v. BMM Ispat Ltd and Another

Citation: 2026 INSC 627

Civil Appeal No.: Arising out of SLP (Civil) No. 16259 of 2019

Bench: Justice Sanjay Karol & Justice Nongmeikapam Kotiswar Singh

Date of Decision: June 4, 2026

Court: Supreme Court of India (Civil Appellate Jurisdiction)

Impugned Order: Judgment and order dated 18th March 2019 of the High Court of Karnataka at Bengaluru in Writ Petition No. 6979 of 2017.

2. Legal Framework

Major Laws and Provisions Involved

• Mines and Minerals (Development and Regulation) Act, 1957 (MMDR Act) – Section 9 (royalties in respect of mining leases – payable on removal or consumption of minerals from leased area at rates specified in Second Schedule; Central Government may amend Schedule to enhance or reduce rates, but not more than once every three years).

• Transfer of Property Act, 1882 – Section 105 (definition of lease – transfer of ri

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