Supreme Court refuses to dispense with 10 per cent royalty from minerals in Karnataka

The Supreme Court today rejected a plea of an industrial body to do away with the need for depositing 10 per cent of the sale proceeds of minerals in Karnataka with the District Mineral Foundation (DMF).

The Federation of Indian Mining Industry (FIMI) (Southern Region) in its plea claimed that the DMF had already accumulated funds to the tune of over Rs 15,000 crore.

DMFs were constituted in every district where mining operations are carried out after amendments were made to the Mines and Mineral Act 2015.

The top court directed the Karnataka Mining Environment Restoration Corporation (KMERC), a Special Purpose Vehicle (SPV) constituted by the state government, to furnish a report in six months.

It said the report should indicate the cost to be incurred in developing socio-economic conditions, and industrial, railway and health infrastructures in the Bellary, Chitradurga and Tumkur districts. It should also include details on total outlay and cost escalation.

A bench of Justices Ranjan Gogoi, A M Sapre and Navin Sinha said that after the report is submitted, and after an assessment,  it may consider the plea of FIMI to dispense with the need for depositing 10 per cent of the sale proceeds with the DMF.

It said that "this is not the stage" and it is not "prudent to discontinue the contribution" at this time.

On the apex court's direction, the Karnataka government prepared a Comprehensive Environment Plan for the Mining Impact Zone (CEPMIZ) in the Bellary, Chitradurga and Tumkur districts of Karnataka which would work under the KMERC for socio-economic development of the area and developing integrated mining and railway, industrial and medical infrastructures.

The bench said that the KMERC was to submit a concrete proposal for the CEPMIZ but it had not been done despite a lapse of over four months.

Senior advocate P Chidamabaram, appearing for FIMI, said that huge funds had accumulated, but they were not utilised for the construction of infrastructure projects as directed by the apex court.

He said that it will take years to exhaust the funds so collected and till the matter is reviewed further by the apex court, the 10 per cent royalty should be dispensed with.

The court perused a report filed by the Central Empowered Committee (CEC) earlier this week and the submission of senior advocate Shyam Divan appointed amicus curiae to assist in the matter.

Divan contended that the CEPMIZ is still a vision document and the quantum of money required for each project was still not clear at this stage.

The CEC in its report had said that huge amounts of money would be required for development of various projects envisioned.

Chidambaram argued that the KMERC do not have in-house experts and have to engage consultants for feasibility study of laying of conveyor belt system, railway sidings and sub-lines.

He said that the CEPMIZ is for 10 years and the feasibility report would take another year to be prepared and getting approved.

The bench intervened and told Chidambaram that "no purpose will be served by presenting a gloomy picture".

It directed the KMERC and the state government to include representatives of FIMI for future deliberations.