LHC nullifies mining dues markup sub-rules

Lahore High Court (LHC) Justice Shahid Karim has struck down two sub-rules of the Punjab Mining Concession Rules related to imposition of markup on non-payment of royalty and annual rent.

The court declared the sub rules ultra vires and illegal.

The petitioners had challenged notices for payment, including markup calculated under Sub-Rule (2) of Rule 68 of the Punjab Mining Concession Rules, 2002 as well as a markup on outstanding rental and renewal dues under Sub-Rule (3) of Rule 73.

The judge observed that the determination of rates did not mean that the provincial government was also vested with the powers to impose markup if a person had failed in its opinion to pay the amount of royalty or rent as required by Rule 68 or 73.

"Certainly, the imposition of markup is strictly not covered by the power to determine rates by the provincial government and is in excess of that power," Justice Karim observed.

The petitioners had challenged orders of the Punjab secretary for mines and minerals upholding orders issued by the director general on various dates.

The legality of the rules was challenged before the lower forums but the secretary was of the opinion that they did not offend the primary enactment, the Regulation of Mines and Oil-fields and Minerals Development (Government Control) Act, 1948.

The petitioners' viewpoint was that the act did not confer the power on the rule-making authority to impose markup in terms of rules 63(2) and 73(3).

The dispute revolved around the payment of markup.

The petitioners' counsel argued that Sub-Rule (2) of Rule 68 and Sub-Rule (3) of rule 73 were similarly worded and imposed a markup of one per cent per day on the amount or part thereof remaining unpaid from the due date until all outstanding amount was paid. The rules also compounded the payment of markup until all outstanding amount was paid.

The essence of challenge of the petitioners related to the power to levy markup on any amount of royalty or rent unpaid by them.

The respondents argued that the payment of markup would be covered by any matter ancillary or incidental to the matters set out in the other clauses of Section 2.

Justice Karim observed that the phrase any matter ancillary or incidental to the matters set out in the clauses would not cover the imposition of markup in case of failure to pay the principal amount. These matters would perhaps have connection with the powers of the government to recover the amount of royalty or rent and for this purpose provisions have been made in rules 70 and 71, giving the power to the provincial government to recover the amount of royalty in case of failure by any person to make the payment.

Clause (8) of Section 2 cannot be extended or interpreted to mean that by rule-making power an additional levy of markup can be imposed on a person whereas the primary enactment does not authorise such a payment to be made, he observed.

Striking down Sub-rule (2) of Rule 68 and Sub-rule (3) of Rule 73 of The Punjab Mining Concession Rules, 2002, the court declared unlawful the impugned order and demands issued under the rules.

The court also quashed the notices issued to the petitioners.