Karnataka High Court Declares Clause in Mining Rules Unconstitutional – "Rights Cannot Be Built on Unconstitutional Acts"

In a landmark judgment, the Karnataka High Court today ruled against a contentious clause in the Karnataka (Prevention of Illegal Mining and Storage of Minerals) Rules, 2011, emphasizing that "rights cannot be built on unconstitutional acts." The Hon'ble Mr. Prasanna B. Varale, Chief Justice, and The Hon'ble Mr. Justice Krishna S. Dixit presided over the case.

The petitioner, M/S Rai Bahadur Seth Shreeram Narasingdas Private Limited, challenged the constitutional validity of Clause (b) of Sub-Rule (10) of Rule 4, which pertained to the levy of royalty charges at the processing plant rather than the mine head. The company, represented by Advocate Sri. Lakamapurmath Chidanandayya, argued that this clause contradicted Section 23-C of the Mines & Minerals (Development & Regulation) Act, 1957.

In a notable observation, the Court cited the words of Thomas M. Cooley, a renowned jurist, stating, "Where a Statute is adjudged to be unconstitutional, it is as if it had never been. Rights cannot be built up under it..." This powerful statement underlined the judgment's impact, indicating the Court's firm stance on the unconstitutionality of legislative actions that contradict established laws.

The case also referenced a similar decision in W.P.No.19773/2018 (M/S. MSPL LTD vs STATE OF KARNATAKA), where the High Court previously struck down the same rule. The petitioner sought a similar judgment based on the principle of parity. The Court agreed, extending the same relief to the petitioner that was granted in the MSPL LTD case.

The judgment is significant as it emphasizes the Court's role in ensuring that the legislation aligns with constitutional mandates. The ruling, described as a judgment in rem, is not limited to the parties involved but extends its implications to the wider public. This decision is expected to have far-reaching consequences in the mining industry, particularly in terms of how royalty charges are levied and collected.

Date of Decision: 14th December 2023

M/S RAI BAHADUR SETH SHREERAM NARASINGDAS PRIVATE LIMITED VS STATE OF KARNATAKA