Court holds royalty can be imposed only if excavated soil is removed and used for notified purposes, emphasizing excavation as a natural part of construction
In a significant judgment dated September 28, 2026, the Bombay High Court, presided over by Justice Arun R. Pedneker, delivered a ruling in the writ petition filed by Viren Buildcon LLP challenging the imposition of royalty and penalty by the Maharashtra Revenue Authorities for alleged excess excavation of soil during construction.
The petitioner had obtained construction permission for Survey Nos. 44/1/2 and 44/1/3, Plot No. 28, and had duly paid royalty on 897 brass of excavated murum (earth). However, the Revenue Authorities found an additional excavation of 3216.4 brass of soil/earth/murum and consequently imposed a penalty of Rs. 1,21,05,180/-. The petitioner contended that excavation is an inherent part of construction activities and a substantial portion of the excavated earth is refilled on the same site, with only limited soil being used for RCC components. Therefore, the royalty on the alleged excess excavation was unjustified.
The Court referred extensively to the Supreme Court's precedent in Promoters and Builders Association of Pune v. State of Maharashtra (2015), emphasizing that excavated earth or loose soil does not qualify as a "minor mineral" under Section 3(e) of the Mines and Minerals (Development and Regulation) Act, 1957, unless it is removed and used for specific notified purposes such as road laying, embankments, railways, or buildings. The judgment clarified that mere excavation, even if in excess, does not transform the soil into a minor mineral liable for royalty unless its end use is established for these purposes.
The learned Advocate General for the State argued that the petitioner's failure to keep the excavated material onsite and its non-availability nearby demonstrated that the soil was removed and thus liable for royalty. However, the Court held that without positive evidence or clear inference regarding the end use of the excavated material, royalty cannot be imposed merely on the basis of excess excavation.
The ruling reiterated that excavation is a natural and necessary part of construction, and part of the excavated material is to be refilled at the site. The Court found no justification for the penalty imposed on the petitioner and quashed and set aside the impugned order.
The writ petition was allowed, providing relief to Viren Buildcon LLP and setting an important precedent clarifying the scope of royalty on excavated earth in construction projects.
Bottom Line:
Mines and Minerals - Excavated earth/soil during construction does not become minor mineral merely because excavation is in excess - Royalty can be imposed only if it is positively shown that such excavated material was removed and used for purposes specified in the notification under Section 3(e) of the Mines and Minerals (Development and Regulation) Act, 1957.
Statutory provision(s):
Mines and Minerals (Development and Regulation) Act, 1957 Section 3(e), Maharashtra Land Revenue Code, 1966 Section 48(7)
Viren Buildcon LLP v. State of Maharashtra, (Bombay) : Law Finder Doc Id # 2991995
