Kirloskar Ferrous Industries Limited & Anr. vs Union of India & Ors.

Held: No – Merely because the methodology or formula for computation of royalty has been altered from what it was under the erstwhile MCR, 1960 will not make the new mechanism or methodology unreasonable or arbitrary and liable to be struck down – It is possible that at the relevant time in respect of some of the minerals, royalty was being computed without inclusion of the royalty, DMF and NMET contributions previously paid, however, that does not mean that the Central Government’s power is restricted and it cannot alter the mode of computation of royalty – Matters such as computation of royalty or the levy of such royalty on different minerals is entirely a matter of policy making beyond the expertise and domain of the Courts – Whether a particular policy is wise or a better public policy can be evolved is purely the domain of the executive – Judicial review of policy decisions is limited to assessing the legality of the decision making process rather than the substantive merits of the policy itself – Court should confine itself to the question of legality as to whether the policy making authority exceeded its powers, or committed an error of law or breached the rules of natural justice or reached a decision which no reasonable authority would have reached or whether it abused its powers – Though the mechanism for computation of royalty in terms of r.38, MCR, 2016 and r.45, MCDR, 2017 might have onerous implications in monetary terms on the mining leaseholders as there is a compounding effect on the rate of royalty for every subsequent month however, in absence of anything to show that the policy was in excess of the powers or domain of the respondents or in breach of any statutory provision, it cannot be struck down – Mineral (Development and Regulation) Amendment Act, 2015. [Paras 50, 51, 61]

Economic policies/laws relating to economic activities – Mineral (Development and Regulation) Amendment Act, 2015 – Mineral (Other than Atomic and Hydrocarbons Energy Minerals) Concession Rules, 2016 – Explanation to r.38 – Mineral Conservation and Development Rules, 2017 – Explanation to r.45 – Different mechanism for computation of royalty for coal and other minerals – Whether the exclusion of royalty, and contributions towards DMF and NMET paid previously for coal but not for other minerals is unreasonable and manifestly arbitrary:

Held: No – The exclusion of royalty, and contributions towards DMF and NMET paid previously for coal but not for other minerals cannot be termed as arbitrary or unreasonable, merely because the computation for one differs from the other in certain aspects – Deference needs to be shown to the legislature in deciding how royalty must be computed in respect of different mineral grades/concentrates – Although, the computation of royalty for different minerals is purely a matter of policy yet, it cannot be ignored that prima facie there is anomaly both in the very computation mechanism of average sale price for minerals and the perplexing stance of exclusion of only coal from such mechanism despite the general nature and application of the aforesaid rules – Also, the legislature itself has acknowledged the anomaly in compounding of royalty etc. for the purpose of computation of average sale price – Respondents granted 2 months to conclude the public consultation process undertaken by themselves for amending the MMDR Act and take a final decisive call as regards the cascading impact of royalty on royalty in the calculation of the ‘average sale price’ by virtue of the Explanations to r.38 of the MCR, 2016 and r.45 of the MCDR, 2017. [Paras 71, 76, 84]

Principle of separation of powers – Doctrine of judicial restraint: Held: Each branch of government has a unique, defined role and operates within its designated boundaries – Separation of powers ensures that one branch does not encroach upon the functions of the others, with checks and balances crucial to democratic governance – Courts should respect the decisions made by the legislative and executive branches, provided the decisions are legally sound and constitutionally valid – Doctrine of judicial restraint emphasizes that courts should exercise caution and avoid involvement in policy decisions, as these are complex judgments requiring a balancing of diverse and often competing interests – Courts should not replace policymakers' judgments with their own unless absolutely necessary. [Paras 52-54]

Policy decisions – Power of judicial review:

Held: Not absolute – Policy decisions often require the expertise of professionals and specialists in fields such as economics, public health, national security, and environmental science etc. – These domains involve specialized knowledge that judges, as generalists in legal matters, may lack – Judicial review does not mean a comprehensive re-evaluation of the policy’s wisdom – It is limited to assessing the legality of the decision-making process rather than the substantive merits of the policy itself. [Para 56] Interpretation of Statutes – Explanation(s) to r.38 of Mineral (Other than Atomic and Hydrocarbons Energy Minerals) Concession Rules, 2016 and r.45 of Mineral Conservation and Development Rules, 2017 – Interpretation of Explanation – Aforesaid Explanations, if exceeded the ambit of the main provisions: Held: No – Explanation added to a statutory provision is not a substantive provision – It is merely meant to explain or clarify certain ambiguities which may have crept in the statutory provision and thus, must be read so as to harmonise with and clear up the ambiguity in the main section – An explanation does not either restrict or extend the enacting part; it does not enlarge or narrow down the scope of the original section that it is supposed to explain – The construction of the explanation must depend upon its terms, and no theory of its purpose can be entertained unless it is to be inferred from the language used – An 'explanation' must be interpreted according to its own tenor; that it is meant to explain and not vice versa – Merely because the Explanations to r.38 of the MCR, 2016 and r.45 of the MCDR, 2017 provides that there shall be no deduction of royalty, payments to the DMF and NMET from the gross amount for the purpose of computing sale value does not make the aforesaid Explanation in derogation of the main provision – The Explanations are merely clarificatory in nature inasmuch as they explain the ambiguities in the main provisions of r.38 of the MCR, 2016 and r.45 of the MCDR, 2017, and thus, do not exceed the ambit of the main provisions or in contravention of the statutory scheme. [Paras 65, 66]