Punjab's Brick Earth Royalty: A Supreme Court Ruling


Court: Supreme Court of India.

Case Name: THE STATE OF PUNJAB vs. M/S. OM PRAKASH BRICK KILN OWNER.

Citation: 2025 INSC 88 (Reportable)

Background of the Case

The case revolves around a dispute between the State of Punjab and brick kiln owners, M/S Om Prakash Brick Kiln Owner, etc.. The brick kiln owners were excavating earth from privately leased lands to manufacture bricks. The State of Punjab sought to levy royalty on this extracted earth, which the brick kiln owners contested. The brick kiln owners argued they should not be required to pay royalty to the state since the land was not owned by the government. They cited the Wajib-ul-arz (village records) stating brick earth did not belong to the State. The State argued that brick earth was declared a minor mineral under the Mines and Minerals (Regulation and Development) Act, 1957, and thus, the State was entitled to levy royalty under this Act and associated rules.

Key Issues and Contentions

Primary Issue

The central issue in the case was whether the State of Punjab had the right to levy royalty on brick earth extracted from leased private land by brick kiln owners. This dispute challenged the State's power to charge royalty for a mineral extracted from private land. The case also touched upon the difference between land ownership and the state's power to regulate mining activities and charge royalty.

Interpretation of Section 42 of the Land Revenue Act

The court examined Section 42 of the Punjab Land Revenue Act, 1887, which addresses the presumption of ownership of forests and quarries. Sub-sections (1) and (2) of the Act, which deal with records completed before or after 18th November 1871, were examined in detail. If the record of rights was made before 1871 and it did not expressly state that a quarry belonged to the landowner, it was presumed to belong to the government.

Application of Mineral Rules

The applicability and validity of the Punjab Minor Mineral Concession Rules, 1964 (Mineral Rules) and the State’s right to levy royalty under these rules were central to the decision. The legal impact of declaring brick earth as a “minor mineral” under the 1957 Act was also considered.

Requirement for Certificate of Approval

The case also examined whether a certificate of approval is mandatory before starting mining operations.

Key Arguments

Respondents (Brick Kiln Owners)

The brick kiln owners argued that the state had failed to prove its ownership of the brick earth. They contended that declaring brick earth as a minor mineral did not automatically grant the State the right to levy royalty. They relied on the Wajib-ul-arz, which they said did not state that the State owned brick earth. The brick kiln owners sought a permanent injunction to stop the State of Punjab from levying royalty on the earth they used for making bricks.

Appellants (State of Punjab)

The State of Punjab argued that Section 42(1) of the Land Revenue Act created a presumption of state ownership for lands documented before 1871. The State relied on the 1957 Act that empowered them to make rules to charge royalty on minor minerals. They also argued that the Mineral Rules required a certificate of approval to undertake quarrying and allow the levy of royalty regardless of ownership.

Judgement and Reasoning

High Court's Error

The Supreme Court held that the High Court erred by focusing on ownership and ignoring the state’s right to levy royalty once brick earth was declared a minor mineral. The High Court had incorrectly focused on the lack of state ownership of the land. The High Court also ruled that the presumption under sub-section (2) of section 42 of the Land Revenue Act did not apply.

No Ownership Dispute Necessary

The Supreme Court clarified that the issue of land ownership was not relevant to the question of the state's right to levy royalty. The respondents did not claim to be the owners themselves, and if there was an issue of ownership, the owners would be necessary parties to the suit.

Presumption Under Section 42

The Court pointed out that under Section 42 of the Land Revenue Act, since the land records were made before 1871 and did not specify that quarries belonged to landowners, ownership was presumed to belong to the Government.

Mineral Rules and Royalty

The court emphasized that the Mineral Rules prohibit mining operations without a certificate of approval. The rules authorize the State to levy royalty on minor minerals. The court noted Rules 54A, 54B, and 54C of the Mineral Rules, which provide the framework for the levy of royalty.

State's Power to Levy Royalty

The court determined that once brick earth was declared a minor mineral, the state had the power to levy royalty, regardless of the land's ownership, as long as the person involved in mining was not exempted under Rule 3 of the Mineral Rules.

Efficacious Remedy

The court pointed out that Rule 54F of the Mineral Rules provides an appeals process against the assessment of royalty.

Reversal of High Court Decision

The Supreme Court set aside the High Court's judgment and reinstated the Trial Court’s decision.

No Adjudication on Land Ownership

The Court clarified that the decision did not determine the ownership of the land. The court stated, "We make it clear that we have made no adjudication on the right of ownership of the said lands, which the respondents used to excavate brick earth."

Focus on State's Right to Levy Royalty

The court made it clear that the core issue was the state's right to levy royalty, not the ownership of the land. The court noted that the question of ownership of the said lands was not the primary issue to be decided in this case.

Rationale

The Supreme Court's rationale was based on the interpretation of the Punjab Land Revenue Act, 1887, and the Mines and Minerals (Regulation and Development) Act, 1957, along with the Punjab Minor Mineral Concession Rules, 1964. The Court held that:

  • The High Court erred in focusing on the issue of ownership rather than the state's power to levy royalty, once brick earth was declared a minor mineral.
  • Under Section 42 of the Land Revenue Act, if the Wajib-ul-arz was completed before 1871 and did not explicitly state quarries belonged to landowners, then ownership was presumed to be with the State.
  • The State Government had the authority to regulate the extraction of minor minerals, and the Mineral Rules framed under the 1957 Act allowed the State to levy royalties.
  • The Court also noted that the Mineral Rules clearly prohibit mining operations without a certificate of approval.
  • The State has the power to levy royalty, regardless of the land’s ownership.
  • The Court emphasized that the Mineral Rules provide a clear procedure for assessment of royalty payments as per Rules 54A, 54B, and 54C, and provide a remedy to appeal the assessment under Rule 54F.

Excerpt

  • "We make it clear that we have made no adjudication on the right of ownership of the said lands, which the respondents used to excavate brick earth."
  • "No person shall undertake quarrying or mining operation unless and until he holds a certificate of approval in Form "B"".
  • "The royalty is determined as provided in sub-Rule (1) of Rule 54C."
  • "Therefore, even if a person owns the land, he cannot undertake quarrying or mining operations therein unless he holds a certificate of approval in Form “B”."

Points to Remember

  • The State has the power to regulate mining activities and levy royalty on minor minerals, even on private land, once they are declared as such by the government.
  • The Mineral Rules provide the framework for determining royalty and regulating quarrying.
  • There is a distinction between land ownership and the State's regulatory power over minerals.
  • A certificate of approval is needed to conduct mining operations.
  • The State can levy royalty as long as the person involved in mining is not exempted under Rule 3 of the Mineral Rules.
  • The parties have recourse to the appeal mechanism that is provided under the rules.
  • The Supreme Court did not rule on the issue of land ownership.
  • The core issue was the State's right to levy royalty and not necessarily the ownership of the land.
  • The case underscores the importance of complying with the specific provisions outlined in the Mineral Rules, including obtaining required permits, submitting returns, and paying assessed royalties.

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