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Informist, Thursday, Jun. 4, 2026

 

NEW DELHI – The Supreme Court Thursday held that state governments can charge higher royalty from mining companies than mentioned in the tender agreement following subsequent changes in the law. The payment of royalty is to be made on the date of movement of the minerals, the court said. If the date of movement is after the enhancement in royalty on account of a change in law, a contract entered into before the statutory change cannot limit its impact, the court said.

 

A bench of Justice Sanjay Karol and Justice N.K. Singh said the Karnataka government was correct in deducting additional 5% royalty from the security deposit of BMM Ispat Ltd. It was open to BMM Ispat to remove the entire iron ore from the site at one go or at any date prior to the amendment, but the company chose not to do so, the court said. It was BMM Ispat which had either adopted a piecemeal approach to moving the mineral or moved the entire quantity after the amendment date, it said. As such, the company cannot escape payment of enhanced royalty, it ruled.

 

The case has its genesis from a Supreme Court-appointed committee conducting an auction for the stock of iron ore. BMM Ispat furnished to the authorities the amount requested for sale price, royalty, and related charges to get the committee's acceptance. In 2015, the Centre revised the royalty rate for iron ore to 15%. The applicable rate on the date of the tender agreement of BMM Ispat with the committee was 10%. Upon completion of the work, the company sought reimbursement of the security deposit. At that time it was informed that additional royalty of 5%, in view of the Centre's revision of the rate, had been deducted and the remainder of the deposit was returned.  End

 

Reported by Surya Tripathi

Edited by Rajeev Pai

 

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