Holding

Delegated legislation under the MMDR Act cannot operate retrospectively; contributions to DMFs are payable only from the dates of the respective notifications, and the August 31, 2016 notification is ultra vires.

Summary

The Federation of Indian Mineral Industries and other mining entities challenged the validity of notifications establishing District Mineral Foundations (DMFs) and the associated contribution rules under the Mines and Minerals (Development and Regulation) Act, 1957, arguing that the DMFs were retrospectively created and that contributions could not be levied from 12 January 2015. The Court examined whether the DMFs could be deemed to have been established retrospectively and whether the Central and State Governments possessed the power to impose contributions with retrospective effect. It held that delegated legislation is ordinarily prospective and that neither the State nor the Central Government could give retrospective effect to the contribution rules absent express statutory authority. Consequently, the contributions could only be demanded from the dates the respective notifications were issued—17 September 2015 for minerals other than coal, lignite and sand, and 20 October 2015 (or the date of DMF establishment, whichever is later) for coal, lignite and sand. The Court also struck down the August 31, 2016 notification as ultra vires. The petitions were allowed and the batch of cases disposed of.

Issues considered

The DMFs could be established with retrospective effect from 12 January 2015.
Whether contributions to the DMFs could be levied retrospectively from the date of the Ordinance.
Whether the Central and State Governments possessed the authority under the MMDR Act to prescribe contribution rates and dates retrospectively.

Legislation cited

Mines and Minerals (Development and Regulation) Act, 1957s. 13(2), s. 15, s. 20A, s. 98, s. 9B

Subjects

District Mineral FoundationMines and Minerals (Development and Regulation) Actretrospective legislationcontribution rulesmining leasetaxationdelegated legislationconstitutional law

Judgment

[2017] 12 S.C.R. 724

A FEDERATION OF INDIAN MINERAL INDUSTRIES & ORS.
v.
UNION OF INDIA & ANR.
(Transferred Case (Civil) No. 43 of2016)
B OCTOBER 13, 2017
[MADAN B. LOKUR, SANJAY KISHAN KAUL AND
DEEPAK GUPTA, JJ.]
Mines and Minerals (Development and Regulation) Act, 1957:
c s.98 and l 3(qqa) - Establishment of District Mineral
Foundation (DMF) provided by Ordinance dated 12.1.2015 - On
direction by Central Government the States established DMFs on
different dates - By Notification dated 17.09.2015, Ministry of Mines
promulgated Contribution Rules which were deemed to have come
D into force on 12.1.2015 - By Notification dated 20.10.2015 Ministry
of Coal promulgated Contribution Rules in respect of coal, lignite
and sand for stowing, which were deemed to have come into force
on the date of their publication - Both the Notifications provided
payment to DMF an amount at the rate of 10% of the royalty in
respect of mining leases granted on or after date of their enforcement
E and at the rate of 30% in respect of leases granted before the date
of their enforcement - Ministry of Coal by further Notification dated
31.8.2015 provided that paynu:nt under Notification dated
20.10.2015 shall be made to DMF ll~ef 12.1.2015 - Validity of the
Notifications challenged - Held: Mere(v because DMFs have been
F established or deemed to have been established from a date prior
to issuance of relevant notifications, does not make their operation
retrospective - The establishment of the D}v!Fs even if assumed to
be retrospective does not prejudicially affect anyones vested rights
- Delegated legislation is ordinarily prospective and a right or
liability created for the first time cannot be given retrospective effect
G - Provisions of the Act do not give power to the State Government
or the Central Government to make rules with retrospective effect -
It is not obligatory to declare any not(fication ultra vires' the rule
making power of the State, if its validity can be saved without doing
violence to the law - In the present case, it is not obligat0ty to
H declare the notifications ultra vires the rule making power of the
724
FEDERATION OF INDIAN MINERAL INDUSTRIES v. UNION 725
OF INDIA

Slate Government to the extent of their establishing the DMF with A
retrospective effect - The court can save their validity by reading
them as operational from the date of their publication - The
contributions to the DMF cannot be insisted upon w.e.f 12.1.2015
- Co11trib11tions to the DMF. in the case of minerals other than coal,
lignite and sand for stowing are required to be made w.e.f 17.9.2015
B
- Contributions to the DMF in the case of coal, lignite and sand for
stowing are required to be made w.e.f 20.10.2015 when the rates
were prescribed by the Central Government o!" w.e.f the date on
which the DMF was established by the State Government by a
notification, whichever is later - The notification dated 31.8.2016
being retroactive substitution is ultra vircs the rule making power of C
the Central Government under the MMDR Act and hence invalid -
Mines and A1inerals (Contribution to District Mineral Foundation)
Rules, 2015.
Disposing of the transferred cases/petitions, the Court
HELD: 1.1 The notifications establishing the District D
Mineral Foundation (DMF) in the States were issued pursuant
to the provisions of Section 9B of the Mines and Minerals
(Development and Regulation) Act, 1957. The intention of
Parliament appears to have been for the State Governments to
establish the DMF with effect from 12•h January, 2015 since its E
object is to work for the interest and benefit of persons and areas
affected by mining related operations. The object being the welfare
of those adversely affected by mining operations, the DMFs ought
to have been established on 12•h January, 2015. However, every
State Government took it easy compelling the Central
Government to issue a direction u/s. 20A of the MMDR Act on F
16 11 ' September, 2015 requiring the State Governments to issue
a notification that the DMF shall be deemed to have come into
existcn.ce with effect from the 12•h January, 2015. [Para 18)(742-
C-E]
A. Thangal K11nj11 Musaliar v. M Venkitachalam Patti G
[1955] 2 SCR 1196; Commissioner of Income Tax
(Central) - 1 v. Vatika Township Private Limited (2015)
I sec I : [2014] 12 SCR 1037 - followed.
1.2 Even assuming that since the DMFs were established
H
726 SUPREME COURT REPORTS [2017] 12 S.C.R.

,A from a date anterior to the date of the notification, and, therefore
they were established' with retrospective effect, their
, establishment did not adversely affect anybody's vested rights.
Therefore, there can be no real objection to the operation of the
notifications from 12'h January, 2015. The DMFs were not
B ,established from a date prior to 12•h January, 2015 and to that
extent cannot be said to have been established with retrospective
effect. [Para 191(742-F-G]
1.3 The Central Government or the State Government (or
any other authority) cannot make a subordinate legislation having
retrospective effect unless the parent statute, expressly or by
c necessary implication, authorizes it to do so. Delegated legislation
is ordinarily prospective in nature and a right or a liability created
for the first time cannot be given retrospective effect. As regards
a subordinate legislation concerning a fiscal statute, it would not
be pro,per to hold that in the absence of an express provision a
D delegated authority can impose a tax or a fee. There is no scope
or any room for intendment in respect of a compulsory exaction
from a citizen. [Para 211(743-C, D, El
Hukum Chand v. Union of India (1972) 2 SCC 601
: [1973] 1 SCR 896; Mahabir Vegetable Oils (P) Ltd. v.
E State of Haryana (2006) 3 SCC 620 : [2006] 2
SCR 1172; Panchi Devi v. State of Rajasthan (2009) 2
SCC 589 : [2008] 17 SCR 1325; Ahmedabad Urban
Development Authority v. Sharadkumar Jayantikumar
Pasawalla (1992) 3 SCC 285 : [1992) 3 SCR 328; State
of Rajashtan v. Basant Agrotech (India) Limited (2013)
F 15 sec 1 : [2013) 11 SCR 395 - relied on.
1.4 Section 15 of the MMDR Act empowers the State
Government to make rules for regulating the grant of quarry
leases, mining leases or other mim~ral concessibns in respect of
minor minerals and for purposes connected therewith. Under
G t~e provisions of the MMDR Act, no State Government has the
power to frame a rule with retrospective effect or to create a
deeming fiction, either specifically or by necessary intendment.
Similarly, Section 13 of the MMDR Act does not confer any
specific power on the Central Government to frame any rule with
H retrospective effect. Section 9B(5) and (6) read with clause (qqa)
FEDERATION OF INDIAN MINERAL INDUSTRIES v. UNION 727
OF INDIA

inserted in Section 13(2) of the MMDR Act enable the Central A
Government to make rules to provide for the amount of payment
to be made to the DMF established by the State Government
under Section 9B(l) of the MMDR Act. None of these provisions
confer any power on the Central Government to require the holder
of a mining lease or a prospecting licence-cum-mining lc.asc to
B
contribute to the DMF with retrospective effect. Therefore, even
the scope and extent of the rule making power of the Central
Government is limited. Therefore, the notifications issued by the
State Governments must be understood to mean (assuming the
DMF could not be established with effect from 12'h January, 2015
by a notification issued on a later date) that the DMF was C
established on the date of publication of each notification. (Paras
23, 24 and 25][744-B-D, G]
1.5 It is not obligatory to declare any notification ultra vires
the rule making power of the State Government if its validity can
be saved without doing violence to the law. In the present cases, D
it is not obligatory to declare the notifications 11/tra vires the rule
making power of the State Governments to the extent of their
establishing the DMF from a retrospective date, since the Court
can save their validity by reading them as operational from the
date of their publication. In any event, no prayer was made before
the Court for striking down the establishment of the DMF as . E
such. (Para 25] [744-H; 745-A-B]
2. Specification of the rate of tax (or any compulsory levy
for that matter) is an essential component of the tax regime.
Specifying the maximum amount of compensation to be paid to
the DMF in terms of Section 9B of the MMDR Act, being an F
amount not exceeding one-third of the royalty, docs not specify
the requirements of law. What is required by the law is certainty
and not vagueness - not exceeding one-third could. mean onc-
fourth or one-fifth or some other fraction. It is this uncertainty
that is objectionable. Therefore, the petitioners are not liable to G
make any contribution to the DMF from l2 1hJanuary, 2015. (Paras
32, 33][747-D-F]
Commissioner of Income Tax (Central) - I v. Vatika
Township Private Limited (2015) 1 SCC 1 : (2014] 12
SCR 1037 - followed. H
728. SUPREME COURT REPORTS [2017] 12 S.C.R.

A Mis Govind Saran Ganga Saran v. Commissioner of
Sales Tax (1985) Suppl. SCC 205 : (1985] SCR 985 -
referred to.
Principles of Statutory Interpretation by Justice GP.
Singh 14 11' edition revised by Justice A.K. Patnaik,
B former Judge, Supreme Court of India - referred to.
3.1 The object of the DMF is "to work for the interest and
benefit of persons, and areas affected by mining related
operations". The purpose of Section 9B of the MMDR Act and
the object of the DMF are in furtherance of the cause of social
c justice for those affected by the mining related operations -
including tribals who may be dislocated or displaced from their
. habitat. To deny them a benefit that is rightfully theirs only because
the State Government has been lax in establishing the DMF would
be doing injustice to them. Additionally, Section 9B of the MMDR
Act creates a liability and only the quantum of the liability remained
D to be determined. That determination came on the issuance of
the notification of 17'h September, 2015. The fact that it would
take time (even more than a year as in the case of Tamil Nadu
and Uttar Pradesh) for the benefit to reach the affected persons
cannot detract from the liability of the petitioners to contribute
E nor does it absolve them of their liability to pay the contribution.
Therefore, the effective date of payment of contribution to the
DMF in the case of those petitioners who are (or were) holders
of a mining lease or a prospecting licence-cum-mining lease for
minerals other than coal, lignite and sand for stowing would be
17'" September, 2015. [Paras 37, 38 and 41][748-D-G; 749-D)
F
A. Prabhakara Reddy v. State of Madhya Pradesh
(2016) 1 sec 600 - relied on.
3.2 The position with regard to contribution to the DMF by
the holders of a mining lease or a prospecting licence-cum-mining
G lease for coal, lignite and sand for stowing is quite different from
the situation of the other holders of a mining lease or a prospecting
licence-cum-mining lease. The notification of 201h October, 2015
provides that the contribution, though payable, shall be paid only
from the date of the notification (20'" October, 2015) or from the
date of establishment of the DMF in the concerned State,
H
FEDERATION OF INDIAN MINERAL INDUSTRIES v. UNION 729
OF INDIA

whichever is later. Therefore, only Madhya Pradesh, Odisha and A
Telangana would be entitled to the contribution from holders of a
mining lease or a prospecting licence-cum-mining lease from 20'h
October, 2015 since their DMF was established much earlier. As
far as all other States are concerned, the holders of a mining lease
or a prospecting licence-cum-mining lease could claim to B
postpone payment to the DMF till it was established, as per the
notification issued by the State Government. [Para 421(749-E-GJ
3.3 It is true that many notifications establishing the DMF
provided the date of establishment as 12'h January, 2015. Since
the rule making power of the Central Government and the State
Government under the MMDR Act docs not permit retrospective C
operation of subordinate legislation, the Contribution Rules also
do not have retrospective operation by necessary implication .
.Furthermore, the rate at which the contribution was to be paid,
came to be notified only on 20'h October, 2015. Therefore, it
cannot be said that the contribution should be paid by the holders D
of a mining lease or a prospecting licence-cum-mining lease with
effect from l2 1h January, 2015. [Para 43)(750-A-CJ
3.4 The subsequent notification dated 31'' August, 2016
which substituted paragraph 3 in the notification of 20'h October,
2015 with the requirement that the contribution "shall be paid E
with effect from the 12'h January, 2015", being a retroactive
substitution, is ultra vires the rule making power of the Central
Government. The notification dated 31'' August, 2016 is clearly
beyond the rule making power of the Central Government.
Therefore, in respect of coal, lignite and sand for stowing, the
holder of a mining lease or a prospecting licence-cum-mining lease F
shall pay the contribution to the DMF from 201h October, 2015 or
the date of establishing the DMF, whichever is later. [Para 44] [750-
D-E)
4. Section 9B of the MMDR Act cannot be said to be a
conditional legislation. Section 9B of the MMDR Act delegates G
power to the State Governments to establish the DMF without
any pre-condition. Similarly, it delegates power to the Central
Government to prescribe the rate at which the contribution should
be made to the DMF. This again is without any pre-condition.
[Para 45][750-F]
H
730 SUPREME COURT REPORTS [2017] 12 S.C.R.

A Case Law Reference
[1955) 2 SCR 1196 followed ·Para 16
[1973) 1 SCR 896 relied on Para 21
[2006] 2 SCR 1172 relied on Para 21
B · [2008] 17 SCR 1325 relied on Para 21
[1992) 3 SCR 328 relied on Para 21
[2013) 17 SCR 395 relied on Para 21
[2014) 12 SCR 1037 followed Para 22
c [1985] SCR 985 referred to Para 27
(2016) 1 sec 600 relied on Para 39
CIVIL ORIGINAL JURISDICTION: Transferred Case (Civil)
,.. No.43 of2016.
D Under Article 139-A ofthe Constitution of India.
WITH
W.P. (C) No. 989 of2016, T.C. (C) No.1003 of2016, W.P. (C)
No.1014 of2016, W.P. (C) No.1028 of2016, T. P. (C) Nos. 74-76 of
E 2016, W.P. (C) No.67 of2017, W.P. (C)No.69 of2017, W.P. (C)No.205
. of2017, W.P. (C) No. 201 of2017, S.L.P. (C) No.12099 of2017, S.L.P.
(C) No.12184-12185 of2017, S.L.P. (C) No.14693 of2017, S.L.P. (C)
No.16885 of2017, W.P. (C) No.886 of2016, W.P. (C) No. 912 of2016,
W.P. (C) No. 27 of2017.and W.P. (C) No. 112 of2017.
F Maninder Singh, A.N.S. Nadkarnani, ASGs, M. L. Sharma,
Dr. AbhishekManu Singhvi, DhruvMchta, SubramoniumPrasad,Arvind
Datar, K. V. Vishwanthan, C. L. Pandey, A. K. Panda, Jagdeep
Dhankhar, Prashanto Chandra. Sen, Sr. Advs., Manish Kumar Saran,
Rekha Bankar, Sunil Dogra, Vivek Vishnoi, Abhishek Sharma, Pallav
Mongia, Gagan Sanghi, Rameshwar Prasad Goyal, Priya Puri, Sharad
G Puri, Vaibhav Srivastav, Ranjay Kr. Dubey, Swatantra Rai, Devashish
Bharuka, Ravi Bharuka, Justine George, Himanjali Gautam, Ms. Vanita
Bhargava (For E.C. Agrawala and For Mis Khaitan & Co.), Praveen
Kumar, Ms. Babita Pant, Asccm Chaturvedi, Sarangan Arvindkasan {For ·
Mis Khaitan & Co.), Aakash Bajaj, Gaurav Juneja, Sanjeev K. Kapoor
(For Mis Khaitan & Co.), Sushmit Pushkar, Akshay Sapre, Abhijcet
H
FEDERATION OF INDIAN MINERAL INDUSTRIES v. UNION 731
OF INDIA

Swaroop, Ms. Esha Sandhu, Sachin Mittal, Ms. Ananya Pandey, R. A
Balasubramanian, Prabhas Bajaj, S.A. Haseeb, Vibhu Shankar Mishra,
Gurmeet Singh Makker, Merusagar Samantaray, Ms. Viddusshi, Ms.
Lhinghveivah, M. K. Maroria, Kuldeep Chmihan,R K. Rathore, Akshay
Amritanshu, Ms. Aarti Sharma, Deepak Goel, Ms. Supriya, Vaibhav
Agnihotri, Gp. Capt. Karan Singh BHati, Hemendra Sharma, Kuna! A. B
Cheema, Nishant R. Katneshwarkar, Ms. Hemantika Wahi, Ms. Jesal
Wahi, Ms. Puja Singh, Shodhika Sharma, Atul Jha, Sandeep Jha,
Dharmendra Kumar Sinha, Ms. Prachi Mishra, C. D. Singh, Ms. Sakshi
Kakkar, Gaurav Shukla, Chaitanya, Ms. Pragya Garg, Suneet Padhi,
Mishra Saurabh, Ms. Vanshaja Shukla,Anupam Lal Das,Anirudh Singh,
Krishanu Barua, P. S. Sudheer, Rishi Maheshwari, Ms. Sanah Batta, c
Abhinav Goyal, Saurabh Jain, Gautam Singh, Kaushik Poddar, Anip
Sachthey, Anjali Chauhan, Ms. Ria Sachthey, U. A. Rana, Himanshu
Mehta, Avirat Kumar (Mis Gagrat& Co.), Anuj Tyagi, Ms. Sugandha
Khaitan, Ms. Mai try Kakade, Anshurnan Shri vastava, B. Ramana Murthy
(For Anantha Narayana), Advs. for the appearing parties.
D
The Judgment of the Court was delivered by
MADAN B. LOKUR, J. I. This batch of petitions (including
transfer cascstpetitions) relate to the establishment ofthc District Mineral
Foundation under the Miries and Minerals (Development and Regulation)
Act, 1957 and the.contribution required to be made to the District Mineral E
Foundation by the holder of a mining lease or a prospecting licence-
cum-mining _lease in addition to the payment of royalty.
Ordinance of l21h January, 2015
2. On l 21h January, 2015 the President promulgated an Ordinance
making several amendments to the Mines and Minerals (Development F
and Regulation) Act, 1957 (for short 'the MMDR Act'). We are
concerned with only a few of these amendments which are detailed
below:
(i) Section 9 of the Ordinance inserted Section 9B in the MMDR
Act. This section provides that the State Government shall establish G
a non-profit trust called the District Mineral Foundation (for short
'the DMF') in any district affected by mining operations. The
DMF shall have the object of working for the interest and benefit
of persons and areas affected by mining related operations.
H
732 SUPREME COURT REPORTS [2017] 12 S.C.R.

A What is of significance is that this provision requires the holder of
a mining lease or a prospecting licence-cum-mining lease, in addition to
payment of royalty, to pay to the DMF concerned an amount equivalent
to a percentage of royalty not exceeding one-third thereof, as may be
prescribed by the Central Government. Section 9B of the MMDRAct,
as inserted by the Ordinance, reads as follows:
B
"9B. District Mineral Foundation - (l) In any district
affected by mining related operations, the State Government
shall, by notification, establish a trust, as a non-profit body, to
be called the District Mineral Foundation.

c (2) The object of the District Mineral Foundation shall be to
work for the interest and benefit of persons, and areas affected
by mining related operations in such manner as may be
prescribed by the State Government.
(3) The composition and functions of the District Mineral
D Foundation shall be such as may be prescribed by the State
Government.
(4) The holder of a mining lease or a prospecting licence-
cum-mining lease shall, in addition to the royalty, pay to the
District Mineral Foundation of the district in which the mining
E operations are carried on, an amount which is equivalent to
such percentage of the royalty paid in terms of the Second
Schedule, not exceeding one-third of such royalty, as may be
prescribed by the Central Government."
(ii) Section 14 of the Ordinance inserted sub-clause (qqa) in Section
13(2) of the MMDR Act relating to the power of the Central
F
Government to make rules in respect of minerals. Clause (qqa)
as inserted in the MMDR Act reads as follows:
"(qqa) the amount of payment to be made to the District
Mineral Foundation under sub-section (4) of section 9B;"
G (iii) Section 15 of the Ordinance inserted sub-section (4) in Section
15 of the MMDR Act relating to the power of the State
Governments to make mies in respect of minor minerals. Sub-
section (4) as inserted in Section 15 of the MMDR Act reads as
follows:

H
FEDERATION OF INDIAN MINERAL INDUSTRIES v. UNION 733
OF INDIA [MADAN B. LOKUR, J.]

"15. Amendment of section 15. - In section 15 of the principal A
Act, after sub-section (3), the following sub-section shall be.
inserted, namely:-
"(4) Without prejudice to sub-sections (I), (2) and sub-section
(3), the State Government may, by notification, make rules for
regulating the provisions of this Act for the following, namely:- B
(a) the manner in which the District Mineral Foundation shall
work for the interest and benefit of persons and areas affected
by mining under sub-section (2) of section 9B;
(b) the composition and functions of the District Mineral
Foundation under sub-section (3) of section 9B; and c
(c) the amount of payment to be made to the District Mineral
Foundation by concession-holders of minor minerals under
section ! SA."
(iv) Section 18 of the Ordinance inserted Section 20A in the D
MMDRAct relating to the power of the Central Government to
issue directions. It is not necessary to reproduce the provisions
of Section 20A of the MMDR Act except to say that the section
enables the Central Government to issue appropriate directions to
the State Governments for the conservation of mineral resources,
or on any policy matter in the national interest, and for the scientific E
and sustainable development and exploitation of mineral resow·ces.
Amendments to the MMDR Act
3. On 27'11 March,2015 the Ordinance was replaced by the Mines
and Minerals (Development and Regulation) Amendment Act, 2015 with
effect from 12'" January, 2015. However, Section 9B and Section 13(2) F
clause (qqa) were further amended and they now read as follows: ·
"9B. District Mineral Foundation. - ( 1) In any district affected
by mining related operations, the State Government shall, by
notification, establish a trust, as a non-profit body, to be called the
District Mineral Foundation. G
(2) The object of the District Mineral Foundation shall be to work
for the interest and benefit of persons, and areas affected by
mining related operations in such manner as may be prescribed
by the State Government.
H
734 SUPREME COURT REPORTS [2017) 12 S.C.R.

A (3) The composition and functions of the District Mineral ·
Foundation shall be such as may be prescribed by the State
Government.
(4) The State Government while making rules under sub-sections
(2) and (3) shall be guided by the provisions contained in article
B 244 read with Fifth and Sixth Schedules to the Constitution relating
to administration of the Scheduled Areas and Tribal Areas and
the Provisions of the Panchayats (Extension to the Scheduled
Areas) Act, 1996 and the Scheduled Tribes and Other Traditional
Forest Dwellers (Recognition of Forest Rights) Act, 2006.
(5) The holder of a mining lease or a prospecting licence-cum-
mining lease granted on or after the date of commencement of
the Mines and Minerals (Development and Regulation)
Amendment Act, 2015, shall, in addition to the royalty, pay to the
District Mineral Foundation of the district in which the mining
operations arc carried on, an amount which is equivalent to such
D percentage of the royalty paid in terms of the Second Schedule,
not exceeding one-third of such royalty, as may be prescribed by
the Central Government.
(6) The holder of a mining lease granted before the date of
commencement of the Mines and Minerals (Development and
E Regulation) Amendment Act, 2015, shall, in addition to the royalty,
pay to the District Mineral Foundation of the district in which the
mining operations are carried on, an amount not exceeding the
royalty paid in terms of the Second Schedule in sucl,i manner and
subject to the categorisation of the mining leases and the amounts
F payable by the various categories of lease holders, as may be
prescribed by the Central Government."
"(qqa) the amount of payment to be made to the District Mineral
Foundation under sub-sections (5) and (6) of section 9B."
. 4. Very broadly, the MMDR Act required the State Government
G to establish a District Mineral Foundation and the Central Government
was required to prescribe the rate of contribution to the DMF, provided
the contribution did not.exceed one-third of the royalty payable by the
holder .of a mining lease or a prospecting licence-cum-mining lease.

H
FEDERATION OF INDIAN MINERAL INDUSTRIES v. UNION . 735
OF INDIA [MADAN B. LOKUR, J.]

Notifications issued A
5. On 16'h September, 2015 the Central Government, in exercise
of its power under Section 20A of the MMDR Act issued a direction to
all the State Governments that the notification establishing the DMF
· shall state that the DMF shall be deemed to have come into existence
with effect from 12'h January, 2015. The direction dated 16'h September, B
2015 reads as follows:
"No. 16/7/2015 -M.VI (Part)
Government oflndia
Ministry of Mines
c
New Delhi, Shastri Bhawan
Dated the 16'11 September, 2015
ORDER
WHEREAS in terms of the provisions of sub-section ( 1) of section
9B of the Mines and Minerals (Development and Regulation) D
(MMDR) Act, 1957 (67of1957), the State Governments shall,.
by notification, establish a District Mineral Foundation in every
district in the country.affected by mining related operations.
AND WHEREAS the said provision is deemed to have come
into force on the 12'h day of January, 2015. E
NOW THEREFORE, the Central. Government in exercise of the
powers conferred under section 20A of the MMDR Act, 1957, in
the national interest hereby directs the concerned State
Governments that the notification establishing the District Mineral
Foundations shall state that such District Mineral Foundations shall
F
be deemed to have come into existence with effect from the 12'h
day ofJanuary, 2015.
(R Sridharan)
Additi?nal Secretary to the Government oflndia"
6. It is not necessary for us to examine the validity of the direction G
except to note that pursuant thereto, several State Governments did
establish a DMF as per the table below:

H
736 SUPREME COURT REPORTS [2017] 12 S.C.R.

A
Date of Notification and Establishment ofDMF
&ate Date of Nitification DateofFstablishmcnt
I Andina Praresh 14.3.2016 14.3.2.016
2 Chhattisgarh 22.12.2.015 12.1.2015
B
3 Goa 15.1.2016 12.1.2.015
4 Harvana 17.11.2.016 121.2015
5 Jharkffind 22.3.2016 12.1.2015
6 Kamataka 11.1.2016 12.1.2015
7 Mtclhva Pradesh 15.5.2015 15.5.2015
8 Maharashtra l.9.2016 16.9.2015
c 9 Odisha 18.8.2015 18.8.2015
10 Rajasthan 31.5.2016 12.1.2015
11 Tamil Nachl 19.5.2017 19.5.2.017
12 Telaill!ana 21.8.2015 21.8.2015
13 Uttar Pradesh 25.4.2017 12.1.2015
D 14 W:stBawal 3.3.2016 3.3.2016

7. On J7 1h September, 2015 the Ministry of Mines issued a
notification promulgating the Mines and Minerals (Contribution to District
·Mineral Foundation) Rules, 2015. 1 In terms of the notification, the
E Contribution Rules were deemed to have come into force on 121h January,
2015. Paragraph 2 of the notification provides, inter alia, for payment
to the DMF an amount of 10% of the royalty payable by the holder of a
mining lease or prospecting licence-cum-mining lease granted on or after
12'h January, 2015 and 30% of the royalty payable in respect of mining
leases granted before I 2'h January, 2015.
F
8. Since the administration of MMDR Act with the Ministry of
Mines is limited to minerals other than coal, lignite and sand for stowing,
it is assumed that the notification did not relate to these three minerals.
9. The notification dated 17th September, 2015 reads as follows:
G "MINISTRY OF MINES
NOTIFICATION
New Delhi, the 17'h September, 2015

' The administration of the MMDR Act is with the Ministry of Mines for minerals
H other than coal, lignite and sand for stowing
FEDERATION OF INDIAN MINERAL INDUSTRIES v. UNION 737
OF INDIA [MADAN B. LOKUR, J.]

GS.R. 715(E).-In exercise of the powers conferred by sub- A
sections (5) and (6) of Section 9B of the Mines and Minerals
(Development and Regulation) Act, 1957 (67 of 1957), the Central
Government hereby makes the following rules specifying the
amount to be paid by holder of a mining lease or a prospecting
licence-cum-mining lease, in addition to the royalty, to the District B
Mineral Foundation of the district established by the concerned
State Government by notification, in which the mining operations
are carried on, namely:-
1. Short title and commencement.-(!) These rules may be
called as the Mines a.nd Minerals (Contribution to District
Mineral Foundation) Rules, 2015. C
(2) These rules shall be deemed to have come into force on the
12'h day of January, 2015. •
2. Amount of contribution to be made to District Mineral
Foundation.-Every holder of a mining lease or a prospecting
licence-cum-mining lease shall, in addition to the royalty, pay to D
the District Mineral Foundation of the district in which the mining
operations are carried on, an amount at the rate of - ·
(a) ten per cent of the royalty paid in terms of the Second Schedule
to the Mines and Minerals (Development and Regulation) Act,
1957 (67of1957) (herein referred to as the said Act) in respect E
of mining leases or, as the case may be, prospecting licence-
cum-mining lease granted on or after 12'11 January, 2015; and
(b) thirty per cent of the royalty paid in term of the Second
Schedule to the said Act in respect of mining leases granted
before 121h January, 2015." F
10. On 20th October, 2015 the Ministry of Coal issued a notification
promulgating the Mines and Minerals (Contribution to District Mineral
Foundation) Rules, 2015. 2 The Contribution Rules are deemed to have
come into force on the date of their publication in the Official Gazette.
These rules pertain to payment to the DMF at the same rate and on the
G
same terms as mentioned in the notification dated 17'11 September, 2015.
The subject notification, having been issued by the Ministry of Coal,
specifically mentioned that the rules were in respect of coal, lignite and
sand for stowing.
2
The administration of the MMDR Act is with the Ministry of Coal for coal, lignite
~~~b~~ H
738 SUPREME COURT REPORTS [2017] 12 S.C.R.

A 11. What is of significance in the notification dated 201hOctober,
2015 is paragraph 3 thereof. This provides that the amount payable to
the DMF shall be paid from the date of the notification issued under
Section 9B( 1) of the MMDR Act by the State Government establishing
the DMF or the date of coming into force of the Contribution Rules,
whichever is later. The notification dated 20'" October, 2015 reads as
B
follows:
"MINISTRY OF COAL
NOTIFICATION
New Delhi, the 20'h October, 2015
c
GS.R. 792(E).-ln exercise of the powers conferred by sub-
sections (5) and (6) of Section 9B of the Mines and Minerals
(Development and Regulation) Act, 1957 (67of1957), the Central
Government hereby makes the following rules in r/o of coal and
lignite and sand for stowing specifying the amount to be paid by
D holder of a mining lease or a prospecting licence-cum-mining lease,
in addition to the royalty, to the District Mineral Foundation of the
district established by the concerned State Government by
notification, in which the mining operation are carried on, namely:-
1. Short title and commencement.-{ 1) These rules may be
E called as the Mines and Minerals (Contribution to District
Mineral Foundation) Rules, 2015.
(2) These rules shall be deemed to have come into force on the
date of their publication in the Official Gazette.
2. Amount of contribution to be made to District Mineral
F
Foundation.-,-Every holder of a mining lease or a prospecting
licence-cum-mining lease in respect of coal and lignite and sand
for stowing shall, in addition to the royalty, pay to the District
Mineral Foundation of the district in which the mining operation
are carried on, an amount at the rate of:-
G. (a) ten per cent of the royalty paid in term of the second schedule
to the Mines and Minerals (Development and Regulation) Act,
1957 (67of1957) (herein referred to as the said Act) in respect
of mining lease or, as the case may be, prospecting licence-
cum-mining lease granted on or after 12'hJanuary, 2015; and
H
FEDERATION OF INDIAN MINERAL INDUSTRIES v. UNION 739
OF INDIA [MADAN B.LOKUR, J.]

(b) thirty per cent of the royalty paid in term of the Second A
Schedule to the said Act in respect of mining lease granted
before 12'h January, 2015.
3. Date from which contribution to be made.-The amount
calculated at the rate prescribed in rule 2 shall be paid from the
date of notification issued under Section 9B( 1) of the Act by the B
State Government establishing District Mineral Foundation or the
date of coming into force of these rules, whichever is later."
12. The Ministry of Coal issued another notification on 31 ''August,
2016 substituting paragraph 3 of the notification dated 20'h October, 2015.
The substituted paragraph provided that payment under the notification C
dated 2o•h October, 2015 shall be made to the DMF with effect from
12'h January, 2015. The notification dated 31 ''August, 2016 reads as
follows:
"MINISTRY OF COAL
D
NOTIFICATION
New Delhi, the 31" August, 2016
GS.R. 837(E).-In exercise of the powers conferred by sub-
sections (5) and (6) of section 9B of the Mines and Minerals
(Development and Regulation) Act, 1957, (67of1957), the Central E
Government hereby makes the following rules in respect of coal,
lignite and sand for stowing, to amend the Mines and Minerals
(Contribution to District Mineral Foundation) Rules, 2015, namely:-
!. These rules may be called as the Mines and Minerals
(Contribution to District Mineral Foundation) (Amendment) Rules, F
2016.
In the Mines and Minerals (Contribution to District Mineral
Foundation) Rules, 2015, for r11le 3, the following rule shall be
substituted, namely:-
. ' G
"3. Date from which contribution to be made. - The amount
calculated at the rate specified in rule 2 shall be paid with
effect from the 12'h January, 2015."
Questions raised by the petitioJlers
H
740 SUPREME COURT REPORTS [2017) 12 S.C.R.

A 13. On the basis of these notifications, the questions raised by
learned counsel for the petitioners are: Firstly, whether the DMFs could
be established with effect from 12'h January, 2015? Secondly, whether
contributions to the DMFs were required to be made by the petitioners
at the rate mentioned in both sets of Contribution Rules with effect from
12d• January, 2015? The validity of the notifications was challenged or
B
was under challenge to this extent depending on their interpretation and
their impact and effect.
(i) The first question
14. In terms of sub-section (1) of Section 9B the State Government
is required to establish a trust as a non-profit body and that trust would
c be called the District Mineral Foundation. For establishing the trust the
State Government is required to issue a notification. It is entirely for the
State Government to decide the date from which to set up the trust. The
Central Government has no role to play in this, although a direction was
issued by the Central Government to the State Governments to establish
D a trust with effec~ from 12th January, 2015. But be that as it may, the
State Governments did issue a notification establishing the DMF - some
with effect from 12'h January, 2015 and some with effect from the date
of the notification establishing the DMF.
15. The submission of learned counsel for the petitioners is that
E the DMF could not have been established from a retrospective date
prior to the date of the notification.
16. To answer this issue, it is necessary to first ofall decide whether
the DMF has in fact been established retrospectively. The learned
Additional Solicitor Genernl submitted that the DMFs were not established
F with retrospective effect. His contention was that under Section 98 of
the MMDR Act the DMF could be established with effect from 12'"
January, 2015 or any date thereafter. Some States chose to issue a
notification establishing the DMF from an anterior date (12'" January,
2015) while some others did not, notwithstanding the direction of the
Central Government. According to the learned Additional Solicitor
G General establishing the DMF from a date anterior to the date of the
notification did not mean that the DMF was established with retrospective,
effect. He relied on a decision of the Constitution Bench of this Court in
A.. Tltangal Kunju .Musaliar v. M. Venkitachalam Potti3 in support of
his contention.
3
(l955)2SCR 1196
H
FEDERATION OF INDIAN MINERAL INDUSTRIES v. UNION 741
OF INDIA [MADAN B. LOKUR, J.]

17. Musaliar advances the case of the Iearned Additional Solicitor A
General. The Constitution Bench acknowledged that the general law is
that a statute comes into force on the day it received the assent of the
competent authority. However that date could be postponed if so provided
in the statute. In Musaliar the statute provided that it was to come into
force on a date notified in the Government Gazette. Since the statute
B
was passed by the Legislature on 7'h March, l 949 it would have ordinarily
come into force on that date but by virtue of Section 1(3) of the statute,
a notification was issued on 26'" July, 1949 bringing the statute into force
on 22•<1 July, 1949 a date obviously later than 7•h March, 1949. The
Constitution Bench held that the notification did not prejudicially affect
any vested rights and (by implication) its retrospective operation could C
not be looked upon with disfavour. Moreover, the operation of the statute
was not from a date prior to its passing and so it could not be said to
have retrospective operation. Fixing a date anterior to the date of the
notification bringing the statute into force did not attract the principle of
disfavouring retrospective operation. The Constitution Bench however D
did not consider the further submission of the learned Attorney General
that the notification was good to bring the statute into operation from the
date of issue of the notification. The law laid down by the Constitution
Bench is quite explicit when it was held:
"The reason for which the Court disfavours retroactive operation
E
of laws is that it may prejudicially affect vested rights. No such
reason is involved in this case. Section l (3) authorises the
Government to bring the Act into force on such date as it may, by
notification, appoint. In exercise of the power conferred by this
section the Govcmmerit surely had the power to issue the
notification bringing the Act into force on any date subsequent to F
the passing of the Act. There can therefore, be no objection to the
notification fixing the commencement of the Act on the 22nd July,
1949 which was a date subsequent to the passing of the Act. So
the Act has not been given retrospective operation, that is to say,
it has not been made to commence from a date prior to the date
of its passing. It is true that the date of commencement as G
fixed by the notification is anterior to the date of the
notification but that circumstance docs not attract the
principle disfavouring the retroactive operation of a statute.

H
742 SUPREME COURT REPORTS [2017]. 12 S.C.R.
~

A Here there is no. question of affecting vested rights. The
operation of the notification itselfis not retrospective. It only brings
the Act into operation on and from.an earlier date. In any case it
was in terms authorised to issue the notification bringing the Act
into force on any date subsequent to the passing ofthe Act and
that is all that the Government did. In'this view of the matter, the
B·
further argument advanced by the learned Attorney- ·
General and which found favour with the Court below,
namely, that the notification was at any rate good to bring
the Act into operation as on and from. the date of its issue
need not be considered." (Emphasis supplied by us)
c 18. The notifications establishing the DMF in the States mentioned
· in the table above were issued pursuant to the provisions of Section 9B
of the MMDR Act. The intention of Parliament appears to have been
for the State Governments to establish the DMF with effect from 12'h
January, 2015 since its object is to work for the interest and benefit of
·n persons and areas affected by mining related operations. The object
being the welfare of those adverseiy affected by mining operations, the
DMFs ought to have been established on 12•h January, 2015. However,
not surprisingly, every State Government took it easy (including to a
lesser extent the State Governments of Madhya Pradesh, Odisha and
Telangana) compelling the Central Government to issue a direction under
E Section 20A of the MMDR Act on l 6'h September, 2015 requiring the
State Governments to issue a notification that the DMF shall be deemed
to have come into existence with effect from the 12'h January, 2015.
19. In any event, even assuming that since the DMFs were
established from a tlate anterior to the date of the notification and therefore
F they were established with retrospective effect, their establishment did
not adversely affect anybody's vested rights (as will be seen later). This
is crucial. Therefore there can be no real objection to the operation of
the notifications from 12'h January, 2015 in view of the decision in
Musaliar. The DMFs were not established from a date prior to 12'h
G January, 2015 and to that extent cannot .be said to.have been established
with rctrospecti vc effect.
20. Assuming the DMFs were established· with retrospective
effect - is that permissible in law? This question really does ~t arise in
the view that we have taken following Musaliar but since it was
vehemently argued by learned counsel by citing severµ! decisions, we
. H
briefly give our views.
. FEDERATION OF INDIAN MINERAL INDUSTRIES v. UNION 743
OF INDIA [MADAN B. LOKUR, J.]

21. The power to give retrospective effect to subordinate legislation A
whether in the form of rules or regillations or notifications has been the
subject matter of discussion in several decisions rendered by this Court
and it is not necessary to deal with all of them - indeed it may not even
be possibl~ to do so. It would suffice ifthe principles laid down by some
of these decisions cited before us and relevant to our discussion are
B
culled out. These are obviously relatable to the present set of cases and
are not intended to lay down the law for all cases of retrospective
operation of statutes or subordinate legislation. The relevant principles
are:.
(i) The Central Government or the State Government (or any
other authority) cannot make a subordinate legislation having
c
retrospective effect unless the pai·ent statute, expressly or by
necessary implication, authorizes it to do so. (Hukum Chand v.
Union of lndia4 and Mahabir Vegetable Oils (P) ·Ltd. v. State
of Haryana 5).
D
(ii) Delegated legislation is ordinarily prospective in nature and a
right or a liability created for the first time cannot be given
retrospective ·effect. (Pane/ii Devi v. State of Raja.stlian6 ).
(iii) As regards a subordinate legislation concerning a fiscal statute,
it would not be proper to hold that in the absence of an express E-
provision a delegated authority can impose a tax or a fee. There
is no scope or any room for intendment in respect of a compulsory
exaction from a citizen. (Ahmedabad Urban Development
Authority v. Sllaradkumar Jayuntikumar Pasawalla 7 and
State of Rajaslitan v• .Basant Agrotecll (India) Limited. 8).
F
22. A much more erudite, general and broad-based discussion on
the subject is to be found in the Constitution Bench decision in
Commissioner of Income Tax (Central) - I v. Vatika Township
Private Limited9 and we are obviously bound by the conclusions arrived
at therein: It is not at all necessary for ·us to repeat the discussion and
G
'0972) 2 sec 601
' c2006) 3 sec 620
'(2009) 2 sec 589
1
(1992) 3 sec 285
• c2013J 1s sec 1
'c2015) 1sec 1
H
744 SlJPREME COURT REPORTS (2017] 12 S.C.R.

A the conclusions arrived at by the Constitution Bench in the view that we
have taken except to say that our conclusions do not depart from the
conclusions arrived at by the Constitution Bench.
23. On the facts before us, it is clear that Section 15 of the MMDR
Act empowers the State Government to make rules for regulating the
B grant of quarry leases, mining leases or other mineral concessions in
respect of minor minerals and for purposes connected therewith. This
section does not specifically or by necessary implication empower the
State Government to frame any rule with retrospective effect. Also, the
MMDR Act does not confer any specific power on the State Government
to fictionally create the DMF deeming it to be in existence from a date
c earlier than the date of the notification establishing the DMF. Therefore,
it must follow that under the provisions of the MMDR Act that we are
concerned with, no State Government has the power to frame a rule
with retrospective effect or to create a deeming fiction, either specifically
or by necessary intendment.
D 24. Similarly, Section 13 of the MMDRAct does not confer any
specific power on the Central Government to frame any rule with
retrospective effect. Section 9B(5) and (6) read with clause (qqa) inserted
in Section 13(2) of the MMDR Act enable the Central Government to
make rules to provide for the amount of payment to be made to the
E DMF established by the State Government under Section 9B( I) of the
MMDR Act. None of these provisions confer any power on the Central
Government to require the holder of a mining lease or a prospecting
licence-cum-mining lease to contribute to the DMF with retrospective
effect. Therefore, even the scope and extent of the rule making power
of the Central Government is limited.
F
25. In view of the position in law as explained above and the
factual position before us, the notifications issued by the State
Governments must be understood to mean (assuming the DMF could
not be established with effect from 12'11 January, 2015 by a notification
issued on a later date) that the DMF was established on the date of
G publication of each notification. This is reflective ofthe further submission
of the learned Attorney General in Musaliar that was not considered by
the Constitution Bench. In our opinion this submission can be extrapolated
to the facts of the cases before us and if we do so, we find it well taken.
To the extent possible, the validity of a: rule, regulation or notification
H should be upheld. It is not obligatory to declare any notification ultra
FEDERATION OF INDIAN MINERAL INDUSTRIES v. UNION 745
OF INDIA [MADAN B. LOKUR, J.]

vires the rule making power of the State Government if its validity can A
be saved without doing violence to the law. In these cases, we arc of
opinion that it is not obligatory to declare the notifications ultra vires the
rule making power of the State Governments to the extent of their
establishing the DMF from a retrospective date, since we can save their
validity by reading them as operational from the date of their publication.
B
In any event, no prayer was made before us for striking down the
establishment of the DMF as such.
26. Therefore our answer to the first question is that the DMFs
were not established retrospectively even though the notifications
established them from a date anterior to the date of the notifications -
but not before the date of the Ordinance. Assuming the DMFs were c
established with retrospective effect from 12'" January, 2015 it is of no
consequence since the retrospective establishment does not prejudicially
affect the interests of anybody (as will be seen later). In this view of the
matter, the notifications do not violate the law laid down in Musaliar
and Vatika Towns/tip. Even othenvise, their validity can be saved by D
reading them as operational from the date of publication.
(ii) The second question
27. Learned counsel for the petitioners submitted that assuming
the issue of retrospective operation of the notifications and the
establishment of the DMFs is decided against them, even then the E
petitioners cannot be compelled to make the contribution for a period
prior to the date of the relevant notifications, that is, 17'" September,
2015 and 20'" October, 2015 (as the case may be). For this purpose,
reliance was placed on Mis Govind Saran Ganga Saran v.
Co111111issio11er of Sales Tax 10 and Vatika Towns/tip. F
28. In Govind Saran this Court was concerned with the taxation
of goods under Sections 14 and 15 of the Central Sales Tax Act, 1956
(the CST Act) and the assessment made under the Bengal Finance (Sales
Tax) Act, 1941 as applied to the Union Territory of Delhi. Section 15 of
the CST Act reads: G
"15. Every sales tax law of a State shall, insofar as it imposes or
authorizes the imposition of a tax on the sale or purchase of
declared goods, be subject to the following restrictions and
conditions, namely:
'° t 985 (Supp) sec 205 H
746 'SUPREME COURT REPORTS [2017) 12 S.C.R.

A (a) the tax payable under that law in respect of any sale or
purchase of such goods inside the State shall not exceed
three percent of the sale or purchase price thereof, and
such tax shall not be levied at more than one stage."
This Court noted that Section 15 of the CST Act prescribed the
B maximum rate of tax that could be imposed and that such tax shall not
b.e levied at more than one point. Expanding on these requirements, this
Court observed in paragraph 6 of the Report as follows:
"The components which enter into the concept of a tax are well
· known. The first is the character of the imposition known by its
c nature which prescribes the taxable event attracting the levy, the
. second is a clear indication of the person on whom the levy is
imposed and who is obliged to pay the tax, the third is the rate at
which the tax is imposed, and the fourth is the measure or value
to which the rate will be applied for computing the tax liability. If
those components arc not clearly and definitely ascertainable, it is
D difficult to say that the levy exists in point oflaw. Any uncertainty
or vagueness in the legislative scheme defining any of those
components of the levy will be fatal to its validity." (Emphasis
supplied by us)
29. After the above observations, this Court primarily dealt with
E the absence of specifying the single point at which the tax might be
levied and held that the prerequisite of Section 15 of the CST Act that
the tax shall not be levied at more than one stage had not been satisfied.
Therefore, it quashed the assessment complained of and allowed the
appeal of the assessee.
F 30. In Vatika Township the Constitution Bench was concerned
with the impact of the proviso appended to Section 113 of the Income
Tax Act, 1961 inserted by the Finance Act. 11 The rate of surcharge was
not specified in the proviso nor the date for the levy. The consequence
of this was that some assessing officers were not levying any surcharge
11 113. Tax in the case of block assessment of search cases ..-The total undisclosed
G
income of the block period, determined under Section l 58BC, shall be chargeable to tax
·at the rate of sixty per cent:·
Provided that the tax chargeable under this section shall be increased by a surcharge, if
any, levied by any Central Act and applicable in the assessment year relevant to the
previous year in which the search is initiated under section 132 or the 'equisition is
H made under section l 32A.
FEDERATION OF INDIAN MINERALJNDUSTRIES v. UNION 747
OF INDIA [MADAN B. LOKUR, J.]

and those who were levying surcharge adopted different dates for the A
levy. In this context it was.held that the rate at which a tax or for that
matter a surcharge is to be levied is an essential component of the tax
.regime. The decision in Govind Saran was referred to by the Constitution -
Bench, particularly the passage extracted above .. It was further held:
"It is clear from the above that the rate at which the tax is to be imposed
B
is an essential component. of tax and where the rate is not stipulated or it
cannot be applied with precision, it would be difficult to tax a person."
31. We may also note a similar view expressed in Principles of
Statutory Interpretation by Justice GP. Singh 12 that: "There are three
components of a taxing statute, viz. subject of the tax, person liable to
pay the tax and the rate at which the tax is levied. If there be any real
c
ambiguity in respect ofany of these components which is not removable
by reasonable construction, there would be no tax in law till the defect is
removed by the legislature."
32. In view of the decision of the Constitution Bench of this Court
D
that the spec;ification of the rate of tax (or a.I\Y compulsory levy for that
matter) is an essential component of the tax regime, it is difficult to
agree with the learned Additional Solicitor General that specifying the
maximum amount of compensation to be paid to the DMF in terms of
Section 9B of the MMDRAct, being an amount not exceeding one-third
of the royalty, satisfies the requirements oflaw. What is required by the E
law is certainty and not vagueness - not exceeding one-third could mean
one-fourth or one-fifth or some other fraction. It is this uncertainty that
is objectionable.
33. Therefore, our answer to the second question is that the
petitioners are no-t liable to make any contribution to the DMF from 12'" F
January, 2015.
Crucial date for making the contribution to the DMF
34. What then is the crucial date for making the contribution?
There are two categories of holders of a mining lease or a prospecting G
licence-cum-mining lease. We will consider the effect of the notifications
on each such category.

12
14.. edition revised by Justice A.K. Patnaik, former Judge, Supreme Court oflndia,
page 876
H
748 SUPREME COURT REPORTS [2017] 12 S.C.R.

A Lease holders for minerals other than coal, lignite and sand
for stowing
35. On 17'h September, 2015 the Ministry ofMines in the Central
Government issued a notification regarding the contribution to the DMF
in respect of minerals other than coal, lignite and sand for stowing. The
B rate at which the contribution was required to be made by the holder of
a mining lease or a prospecting licence-cum-mining lease is specified in
the notification. Although the notification provides that the contribution
is payable from l 2'h January, 2015 in view of our conclusion that the
contribution to the DMF cannot be with retrospective effect, it would be
payable only from the date of the notification, that is, l 7'h September,
C 2015 even though the DMF was established or deemed to be established
with effect from 12'h January, 2015.
36. The further question raised by learned counsel for the
petitioners in this regard was: How can the contribution be made to an
entity like the DMF that was established only on a date subsequent to
D l 7'h September, 2015 (except for the States of Madhya Pradesh, Odisha
and Telangana)? Can the contribution be paid to a non-existent trust?
37. We are afraid this line of questioning does not appeal to us.
The object of the DMF is "to work for the interest and benefit ofpersons,
and areas affected by mining related operations". The purpose of Section
E 9B of the MMDR Act and the object of the DMF are in furtherance of
the cause of social justice for those affected by the mining related
operations - including tribals who may be dislocated or displaced from
their habitat. To deny them a benefit that is rightfully theirs only because
the State Government has been lax in establishing the DMF would be
doing injustice to them.
F
38. Additionally, Section 9B of the MMDRAct creates a liability
and only the quantum of the liability remained to be determined. That
determination came on the issuance of the notification of l 7'h September,
2015. The fact that it would take time (even more than a year as in the
case of Tamil Nadu and Uttar Pradesh) for the benefit to reach the
G affected persons cannot detract from the liability of the petitioners to
contribute nor does it absolve them of their liability to pay the contribution.
The only criticism could be of the tardiness and lack of concern by State
Governments in setting up the DMF in spite of the direction of the Central
Government.
H
FEDERATION OF INDIAN MINERAL INDUSTRIES v. UNION 749
OF INDIA [MADAN B. LOKUR, J.]

39. In A. Prabhakara Reddy v. State of Madhya Pradesh 13 A
one of the questions raised was that since the Madhya Pradesh Building
and Other Construction Workers Welfare Board came to be constituted
only on 9t1i April, 2003 the recovery of cess under the Building and Other
Construction Workers Welfare Cess Act, 1996 with effect from 1st April,
2003 did not arise. On this basis, the requirement to pay cess was
B
challenged.
40. This Court rejected the contention and held that after the Cess
Act and the rules framed thereunder came into effect and the Workers
Welfare Board was constituted and the rate of cess was notified, the
State was under an obligation to collect the cess in respect of on-going
projects. The fact that passing on the benefit to the workers might take C
some time had no impact on the liability to pay the cess. It was further
held that: "Any other inte1pretation would defeat the rights of the workers
whose protection is the principal aim or primary concern and objective
of the BOCW Act as well as the Cess Act."
41. We hold, therefore, that the effective date of payment of D
contribution to the DMF in the case of those petitioners who arc (or
were) holders of a mining lease or a prospecting licence-cum-mining
lease for minerals other than coal; lignite and sand for stowing would be
17th September, 2015.
Lease holders for coal, lignite and sand for stowing
E
42. The position with regard to contribution to the DMF by the
holders of a mining lease or a prospecting licence-cum-mining lease for
coal, lignite and sand for stowing is quite different from the situation of
the other holders of a mining lease or a prospecting licence-cum-mining
lease. The reason for this is to be found in the text of paragraph 3 of the
notification of 20th October, 2015 which is very explicit. It provides that F
the contribution, though payable, shall be paid only from the date of the
notification (20'h October, 2015) or from the date of establishment of the
DMF in the concerned State, whichever is later. Therefore, only
Madhya Pradesh, Odisha and Telangana would be entitled to the
contribution from holders of a mining lease or a prospecting licence-
cum-mining lease from 20'h October, 2015 since their DMF was
0
established much earlier. As far as all other States are concerned, the
holders of a mining lease or a prospecting licence-cum-mining lease
could claim to postpone payment to the DMF till it was established, as
per the notification issued by the State Government.
"(2016) 1sec600 H
750 SUPREME COURT REPORTS [2017) 12 S.C.R.

A 43. It is true that many notifications establishing the DMFprovided
the date of establishment as 12th January, 2015 but as mentioned earlier
the rule making power of the Central Government and the State
, Government under the MMDR Act does not permit retrospective
operation of subordinate legislation. It cannot also be said that the
Contribution Rules have retrospective operation by necessary implication.
B
Even this occasion does not arise. Furthermore, as held above, the rate
at which the contribution was to be paid came to be notified only on 20th
October, 2015. Therefore in view of the law discussed above, it cannot
be said that the contribution should be paid by the holders of a mining
lease or a prospecting licence-cum-mining lease with effect from 12'h
c January, 2015.
44. The learned Additional Solicitor General sought to rely on the
subsequent notification dated 31" August, 2016 which substituted
paragraph 3 in the notification of20°1 October, 2015 with the requirement
that the contribution "shall be paid with effect from the 12'h January,
D 2015." For the same reasons already given by us, such a retroactive
substitution is ultra vires the rule making power of the Central
Government. The notification dated 31 ''August, 2016 is clearly beyond
the rule making power of the Central Government and must be struck
down and we do so. All that this means is that the notification of 20'h
October, 2015 remains untouched and must be read and understood on
E its plain language. The result is that in respect of coal, lignite and sand
for stowing the holder of a mining lease or a prospecting licence-cum-
mining lease shall pay the contribution to the DMF from 20•1t October,
2015 or the date of establishing the DMF, whichever is later.
45. Finally, it was submitted by one of the learned counsel that
F Section 9B of the MMDR Act was a conditional legislation and that it
could become operative only on the fulfilment ofccrtain conditions. We
cannot agree. Section 9B of the MMDR Act delegates power to the
State Governments to establish ,the DMF without any pre-condition.
Similarly, it delegates power to the Central Government to prescribe the
G rate at which the contribution should be made to the DMF. This again is
without any pre-condition. In view of this, we arc unable to describe
Section 9B of the MMDR Act as a conditional legislation.
Conclusion
46. Having considered the issues raised by the petitioners and by
H
FEDERATION OF INDIAN MINERAL INDUSTRIES v. UNION 751
OF ·INDIA [MADAN B. LOKUR, J.]

the learned Additional Solicitor General in different perspectives, we A
hold: (i) Merely because the DMFs hav.e been established or are deemed
to have been established from a date prior to the issuance of the relevant
notifications does not make their operation retrospective. (ii) In any eyent,
the establishment of the DMFs (assuming the establishment is
retrospective) from 12'" January, 2015 does not prejudicially affect any
B
holder of a mining lease or a prospecting licence-cum-mining lease:(iii)
In view of the failure of the Central Government to prescribe the rate On
l 2'h January, 2015 at which contributions are required to be made to the
DMF, the contributions to the DMF cannot be insisted upon with effect
from l 21h January, 20 I 5. Fixing the maximum rate of contribution to the
DMF is insufficient compliance with the law laid down by the Constitution C
Bench in Vatika. (iv) Contributions to the DMF are required to be made
by the holder of a mining lease or a prospecting licence-cum-mining
lease in the case of minerals other than coal, lignite and sand for stowing
with effect from l 71h September, 2015 when the rates were prescribed
by the Central Government. (v) Contributions to the DMF are required · D
to be made by the holder of a mining lease or a prospecting licence-
cum-mining lease in the case of coal, lignite and sand for stowing with
effect from 2o•h October, 2015 when the rates were prescribed by the
Central Government or with effect from the date on which the DMF
was established by the State Government by a notification, whichever is
later. (vi) The notification dated 31" August, 2016. issued by the Central E
Government is invalid and is struck down being ultra vires the rule making
power of the Central Government linder the MMD~ Act.
47. We fervently hope the State Governments recognize their
responsibilities and utilize the contributions to the District Mineral Funds
quickly and for the object for which they have been established, F
particularly since the amounts involved are huge.
48. We grant time till 31'' December, 2017 to those holders ofa
mining lease or a prospecting licence-cum-mining lease who have not
made the full contribution to the District Mineral Funds to pay the
contribution, failing which they will be liable to make the contribution G
with interest at 15% per annum from the due date. We also make it
clear that in the event any holder of a mining lease or a prospecting
licence-cum-mining lease has mistakenly made contributions to the District
Mineral Fund from ii date prior to the date that we have determined,
such a holder of a mining lease or a prospecting licence-cum-mining
H
752 SUPREME COURT REPORTS [2017) 12 S.C.R.

A lease shall not be entitled to any refWld but may adjust the contribution
against .future contributions, without the benefit of any interest.
49. With the above conclusions, Transfer Petition Nos. 74-76/2017
are. allowed, Transferred Cases (arising out of Transfer Petition (C)
Nos.74-76/2017), Transferred Cases (C) Nos.43 and 51 of2016 and the
B batch of petitions· are disposed of. All other pending applications arc
also disposed of.

Kalpana K. Tripathy Matters disposed of.