Supreme Court Upholds 10% DMF Contribution on Total Bid Amount for Minor Minerals.


23 May 2025 Civil Appeals >> Civil & Consumer Law  

The Supreme Court of India has affirmed that successful bidders for minor mineral mining concessions are liable to deposit 10% of their total bid amount with the District Mineral Foundation (DMF). This ruling, delivered in Civil Appeal No. 12314 of 2024 and connected appeals, upholds a demand notice issued by the District Magistrate/District Officer and sets aside a challenge to a High Court of Allahabad judgment.

The case, with Chandra Bhan Singh v. State of Uttar Pradesh & Others as the lead matter, involved a successful bidder for sand mining who was required to deposit Rs. 54,12,960/-, representing 10% of the total bid amount of Rs. 5,41,29,600/-, into the District Mineral Foundation Trust. This demand was in accordance with a policy decision dated April 22, 2017. The appellant had argued that this demand contravened Section 9B of the Mines and Minerals (Development and Regulation) Act, 1957 (1957 Act), which, according to him, limited the deposit to a percentage of the royalty fixed in the Second Schedule of the 1957 Act.

 
 

The Supreme Court, however, rejected the appellant's contention regarding the applicability of Section 9B of the 1957 Act. The Court highlighted Section 14 of the 1957 Act, which explicitly states that Sections 5 to 13 (including Section 9B) do not apply to minor minerals.

The Court clarified that the State Government's power to regulate payments to the DMF for minor minerals stems from Section 15(4)(c) read with Section 15A of the 1957 Act. Section 15A empowers the State Government to "prescribe the payment by all holders of concessions related to minor minerals of amounts to the District Mineral Foundation".

Furthermore, the Court referred to Rule 10(2) of the Uttar Pradesh District Mineral Foundation Trust Rules, 2017 (2017 Rules), which states that a permit holder shall "in addition to the royalty, pay to the Trust... an amount which is equivalent to 10% of royalty or as may be prescribed by the State Government from time to time". The Court interpreted this to mean that while 10% of royalty is payable in the absence of a specific prescribed amount, if the State Government prescribes a different amount or rate, that rate shall prevail. In this case, the State had fixed and prescribed 10% of the total bid amount.

The appellant's challenge to the policy decision dated April 22, 2017, for alleged non-compliance with Rule 68 of the Uttar Pradesh Minor Minerals (Concession) Rules, 1963 (1963 Rules), was also dismissed. The Court noted that the policy was not challenged before the High Court and that the appellant had participated in the e-tender process under this very policy. Upon reviewing the original records, the Court found that the State had validly exercised its powers under Rule 68 of the 1963 Rules, especially given the ban on mining activity and its impact on development works.

Finally, the Supreme Court also dismissed the appellant's reliance on Rules 21 and 54 of the 1963 Rules, stating that these rules are not applicable to cases where an e-tender process is followed, as per Rule 23(3) of the 1963 Rules.
In conclusion, the Supreme Court found no merit in the appeal, upholding both the High Court's judgment and the demand notice, thereby confirming the appellant's liability towards the DMF Trust.