Court affirms liability of successful limestone bidder to pay District Mineral Foundation contribution under MMRD Act
In a significant ruling, the Allahabad High Court has dismissed the writ petition filed by Shri. Manjeet Chawla challenging the demand for District Mineral Foundation (DMF) contribution. The Division Bench, comprising Justices Saral Srivastava and Amitabh Kumar Rai, delivered the judgment on December 19, 2025. The Court upheld the demand for DMF contribution as stipulated in the Letter of Intent (LOI) and terms of the E-Tender process for the clearance of limestone in the Sonbhadra district.
The petitioner, Shri. Manjeet Chawla, had contested the inclusion of DMF contributions, arguing that the operation was not a mining operation as defined under the Mines and Minerals (Development and Regulation) Act, 1957 (MMRD Act) and that no mining lease was granted. However, the Court concluded that the activities undertaken by the petitioner fell within the scope of "mining operations" as defined in the Act, which includes any operation undertaken for the purpose of winning minerals.
The Court further clarified that the LOI issued to the petitioner constituted a binding contract, obligating him to the terms, including the payment of DMF contributions. It was emphasized that the petitioner, having acted upon the LOI by paying royalties and obtaining necessary permissions, could not deny the liability under the unfavorable terms while benefiting from favorable ones.
The Bench highlighted that the DMF contribution aims to benefit areas and persons affected by mining operations and necessitates a liberal interpretation to achieve the statutory aim. As such, the petitioner's argument that the contribution should be based on the auction amount rather than royalty was rejected.
This judgment reiterates the legal obligations of successful bidders in mineral auctions to contribute to the DMF, aligning with the welfare objectives of the MMRD Act. The decision underscores the judiciary's role in ensuring compliance with statutory provisions intended for social and environmental welfare.
Bottom Line:
Mines and Minerals (Development and Regulation) Act, 1957 - District Mineral Foundation (DMF) contribution - Successful bidder under E-Tender process for clearance of limestone is liable to pay DMF contribution as stipulated in the Letter of Intent (LOI) and E-Tender terms and conditions.
Statutory provision(s): Mines and Minerals (Development and Regulation) Act, 1957 Sections 3(d), 4, 9B
Shri. Manjeet Chawla v. State of U P, (Allahabad)(DB) : Law Finder Doc Id # 2826074
