More Stories

Informist, Monday, Jul. 13, 2026

 

NEW DELHI – The Supreme Court Monday held that state governments can enhance royalty rates even if there is no mention of the same in the lease deed between the parties. If the lease deed is interpreted to mean that a state government is disabled from enhancing royalty or dead rent during the subsistence of the lease merely because such power is not expressly recited therein, the result would be that mineral resources may continue to be exploited at rates which are no longer appropriate, fair or commensurate with their value, said the court.

 

Minerals are not ordinary commodities; they are held by the government in trust for the people, said the court. The state governments are under a constitutional obligation to ensure that their exploitation subserves the public interest, including securing appropriate revenue for the public exchequer, said the top court.   

 

If the state governments are not allowed to enhance royalty rates, it would not only undermine the government's obligation to secure a fair return for the exploitation of public resources, but would also run contrary to the object, spirit and statutory philosophy underlying The Mines and Minerals (Development and Regulation) Act, 1957 and the Punjab Minor Mineral Concession Rules, 1964, said the apex court. The lease deed must, therefore, be read in a manner that preserves the state's statutory authority to revise such rates in accordance with law, rather than in a manner that renders that authority nugatory, it said.

 

"According to us, the combined effect of Section 15 of the MMDR Act and Rules 10 and 21 of the 1964 Rules makes it evident that the liability of a lessee to pay royalty and dead rent is not frozen on the date of execution of the mining lease, but remains subject to revision in accordance with the statutory rules framed by the State Government," said the bench of Justice Dipankar Datta and Justice Satish Chandra Sharma. Therefore, a conjoint reading of these sections leads to the inescapable conclusion that enhancement of royalty and dead rent is traceable to statutory power and forms an implied condition of every mining lease, said the bench. Consequently, even in the absence of an express clause in the lease deed providing for enhancement, the lessee remains bound by revisions validly made under the statute and the rules framed thereunder, it said.

 

The apex court upheld the Haryana government's move to enhance the royalty rates during the subsistence of the lease with Ganpati Enterprises Slate Mines. The company had argued that the lease deeds executed contain no express provision permitting such increase. 

 

Reported by Surya Tripathi

Edited by Deepshikha Bhardwaj

 

For users of real-time market data terminals, Informist news is available exclusively on the NSE Cogencis WorkStation.

 

Cogencis news is now Informist news. This follows the acquisition of Cogencis Information Services Ltd. by NSE Data & Analytics Ltd., a 100% subsidiary of the National Stock Exchange of India Ltd. As a part of the transaction, the news department of Cogencis has been sold to Informist Media Pvt. Ltd.

 

Informist Media Tel +91 (11) 4220-1000

Send comments to feedback@informistmedia.com

 

© Informist Media Pvt. Ltd. 2026. All rights reserved.