No Royalty or Permission Required for Excavation of Ordinary Earth in Building Foundations When Refilled On-Site - Legal Service India

Legal Analysis & Commentary

Judicial Insights from the Supreme Court and High Courts under the Mines and Minerals (Development and Regulation) Act, 1957

Executive Summary

This article examines the settled judicial position under the Mines and Minerals (Development and Regulation) Act, 1957 (MMDR Act) and its cognate state rules regarding excavation of ordinary earth incidental to construction of building foundations.

Table of Contents

A consistent line of authority — from the Supreme Court in Promoters & Builders Association of Pune v. State of Maharashtra, (2015) 12 SCC 736, to High Court decisions across Maharashtra and Uttar Pradesh — holds that ordinary earth excavated solely for laying masonry or RCC foundations, and thereafter refilled on the very same plot without commercial exploitation, does not constitute “mining operations” within Section 3(d) of the MMDR Act.

Such earth does not qualify as a “minor mineral” under the Central Gazette Notification dated February 3, 2000 (GSR 95(E)), because that Notification restricts “minor mineral” status to ordinary earth “used for filling or levelling purposes in construction of embankments, roads, railways, buildings” — a purposive criterion determined by the end-use of the excavated material, not the mere act of digging.

Consequently, no mining lease, quarry permit, or royalty payment is required under the MMDR Act or state minor mineral rules for such on-site, non-commercial redeployment.

Key Legal Principles Emerging from Judicial Decisions

Excavation of ordinary earth for foundation work alone does not amount to mining.
The determining factor is the end-use of the excavated earth, not the act of excavation.
Earth excavated and reused on the same plot without commercial sale does not become a minor mineral.
No royalty, mining lease, or quarry permit is required in such situations.

Important Legal References

Legal Instrument / Case	Relevance
Mines and Minerals (Development and Regulation) Act, 1957	Primary statute governing mining operations and regulation of minerals in India.
Section 3(d) of the MMDR Act	Defines the term “mining operations.”
Central Gazette Notification dated February 3, 2000 (GSR 95(E))	Defines circumstances where ordinary earth qualifies as a minor mineral.
Promoters & Builders Association of Pune v. State of Maharashtra (2015) 12 SCC 736	Landmark Supreme Court ruling clarifying that excavation for foundations does not constitute mining.

I. Introduction

Construction of any building, whether residential, commercial, or industrial, invariably requires excavation of earth for laying its foundation — be it an open-strip footing, a pile foundation, a raft foundation, or a reinforced cement concrete (RCC) basement.

In the typical construction cycle, the excavated earth is set aside during foundation-laying and subsequently refilled around and over the foundation after the structural work is complete. In many projects, the same earth is also used for plinth filling, levelling, and backfilling within the plot boundaries.

A recurring legal question has vexed builders, developers, public sector undertakings, and infrastructure companies across India: does such excavation of ordinary earth trigger the regulatory framework of the Mines and Minerals (Development and Regulation) Act, 1957 (hereinafter “MMDR Act”)?

Key Legal Questions

Does the builder require a mining lease or quarry permit?
Does he owe royalty to the State?
Does excavation for foundation work amount to “mining operations” under the MMDR Act?

The revenue authorities — particularly Tahsildars in Maharashtra and District Magistrates in Uttar Pradesh — have frequently answered in the affirmative, levying heavy penalties and royalty under Section 21 of the MMDR Act and Section 48(7) of the Maharashtra Land Revenue Code, 1966 (MLRC), sometimes running into crores of rupees.

The courts, however, have repeatedly rejected such broad-brush enforcement. From the foundational Supreme Court ruling of 2014 to a series of High Court decisions spanning over three decades, the judicial consensus has crystallised around a single, powerful principle: the determinant is the end-use and purpose of the excavated earth, not the mere act of excavation.

Judicial Consensus

Judicial Principle	Explanation
End-use test	The legal classification depends on how the excavated earth is used.
No commercial exploitation	If the earth is not sold or commercially exploited, it does not become a mineral resource.
On-site redeployment	Earth reused on the same site for backfilling or levelling remains outside mining regulation.
No MMDR compliance required	No mining lease, quarry permit, or royalty obligation arises.

If ordinary earth is excavated for foundation work and redeployed on the same site without commercial exploitation, it does not acquire the character of a “minor mineral,” and no regulatory obligation arises under the MMDR Act.

This article presents an exhaustive analysis of the applicable legal framework — the MMDR Act, the Central Notification of 2000, state minor mineral rules (particularly in Maharashtra and Uttar Pradesh), and environmental regulations — followed by a detailed examination of key judicial pronouncements, their ratio decidendi, and their practical implications for the construction sector.

II. The Statutory Framework

A. The Mines and Minerals (Development and Regulation) Act, 1957

The MMDR Act is the parent central legislation governing mines and minerals throughout India, enacted in exercise of Parliament’s power under Entry 54 of the Union List (List I, Seventh Schedule) to the Constitution of India. Its constitutionality has been repeatedly upheld by the Supreme Court, most recently in Mineral Area Development Authority v. Steel Authority of India, (2024) SCC (a nine-judge Constitution Bench decision clarifying that royalty under Section 9 of the MMDR Act is not a tax but a contractual exaction in the nature of a price for the privilege of extraction).

For the purposes of this article, the following provisions are most material:

1. Section 3(a): “Mine”

The MMDR Act does not independently define “mine.” However, Section 2(j) of the Mines Act, 1952 — which is related central legislation — defines a mine to mean any excavation where any operation for the purpose of searching for or obtaining minerals has been or is being carried on. The Supreme Court noted in Promoters & Builders Association of Pune that mere digging of earth, without any intention of “winning” a mineral, does not constitute a “mine” under the Mines Act, 1952.

2. Section 3(d): “Mining Operations”

Section 3(d) defines “mining operations” to mean any operations undertaken for the purpose of winning any mineral. The critical operative phrase is “for the purpose of winning.” The Supreme Court has consistently held that where the purpose of excavation is construction — not extraction of a marketable mineral — no “mining operation” occurs within Section 3(d). This purposive interpretation is the cornerstone of the exemption for on-site foundation excavations.

3. Section 3(e): “Minor Minerals”

Section 3(e) defines “minor minerals” to mean “building stones, gravel, ordinary clay, ordinary sand other than sand used for prescribed purposes, and any other mineral which the Central Government may, by notification in the Official Gazette, declare to be a minor mineral.” Ordinary earth is not expressly listed in this definition. It was brought within the ambit of “minor minerals” only by delegated legislation — the Central Gazette Notification of February 3, 2000 — but with an important, inbuilt restriction on its scope.

4. Section 4: Prohibition Without Lease Or Permit

Section 4(1) prohibits any person from undertaking any mining operation in any area except under and in accordance with the terms and conditions of a mining lease granted under the MMDR Act. Section 4(1A) extends a similar prohibition to reconnaissance and prospecting operations. These prohibitions are operative only where a “mining operation” as defined in Section 3(d) is in fact being carried out.

5. Section 9: Royalty

Section 9(1) requires every holder of a mining lease to pay royalty in respect of any mineral removed or consumed by him from the leased area at the rate specified in the Second Schedule to the MMDR Act. Royalty obligations are thus linked to:

(i) the existence of a valid mining lease
(ii) the removal or consumption of a mineral
(iii) the mineral so removed being a recognised “mineral” under the Act

Where the excavated earth does not qualify as a minor mineral — because the Notification’s end-use criterion is not met — no royalty obligation arises independently of a lease.

6. Section 15: State Power To Make Rules For Minor Minerals

Section 15 of the MMDR Act empowers State Governments to make rules for regulating the grant of quarry leases or other mineral concessions in respect of minor minerals and for purposes connected therewith. It is under this power that states like Maharashtra, Uttar Pradesh, Rajasthan, and others have framed their respective minor mineral concession/extraction rules.

7. Section 21: Penalties

Section 21 of the MMDR Act prescribes penalties for mining without a lease or permit. Section 21(5) provides for confiscation of minerals illegally mined. These penal provisions are invoked by State authorities against builders and contractors alleged to have excavated ordinary earth without permits, but as the courts have held, they cannot be attracted where no “mining operation” within the meaning of Section 3(d) has occurred.

B. The Central Notification Of February 3, 2000 — GSR 95(E): The Pivotal Delegated Legislation

The single most important piece of delegated legislation in this domain is the Central Gazette Notification No. GSR 95(E) dated February 3, 2000, issued by the Ministry of Mines, Government of India, in exercise of powers under Section 3(e) of the MMDR Act. The full text of the operative portion is reproduced below:

“GSR 95(E) — In exercise of the powers conferred by Clause (e) of Section 3 of the Mines and Minerals (Development and Regulation) Act, 1957 (67 of 1957), the Central Government hereby declares the ‘ordinary earth’ used for filling or levelling purposes in construction of embankments, roads, railways, buildings to be a minor mineral in addition to the minerals already declared as minor minerals hereinbefore under the said clause.”

Four features of this Notification deserve careful attention:

Restrictive Scope: The Notification does not declare all ordinary earth to be a minor mineral. It confines minor mineral status only to ordinary earth “used for filling or levelling purposes in construction of embankments, roads, railways, buildings.” The word “used” imports a purposive, end-use criterion.
No Royalty On Incidental Excavation: Earth excavated as an incidental consequence of foundation-laying — where the primary purpose is structural, not mineral extraction — does not fall within the Notification’s ambit, since it is not “used” for any of the enumerated filling/levelling purposes in a commercial or public-works sense.
Non-Retroactivity: Ordinary earth was not a minor mineral before February 3, 2000. Any enforcement actions for pre-2000 excavations were entirely without statutory basis.
On-Site Refilling: Where the excavated earth is refilled on the same plot — whether into foundation trenches, as plinth fill, or for site levelling — no separate act of “using” the earth for commercial filling/levelling in the sense of the Notification occurs. The earth is simply relocated within the same parcel of land.

C. State Minor Mineral Rules

States have framed their own rules under Section 15 of the MMDR Act to govern minor minerals within their jurisdictions. The rules relevant to this discussion include:

1. Uttar Pradesh Minor Minerals (Concession) Rules, 1963

The UP Minor Minerals Rules of 1963 (as amended from time to time) regulate the grant of mining leases, quarry permits, and collection of royalty on minor minerals in Uttar Pradesh.

Rule 2(5): Defines “mining operations” in terms broadly tracking Section 3(d) of the MMDR Act — i.e., operations “for the purpose of winning any minor mineral.”
Rule 3: Governs the grant of quarry leases.
First Schedule: Sets out royalty rates, including for ordinary earth.

These rules have been considered by the Allahabad High Court in several decisions, which have consistently held that the purposive criterion of Section 3(d) of the MMDR Act and the Notification of 2000 equally govern the interpretation of these rules. Excavation that does not constitute “winning” of ordinary earth — because the earth is not being obtained for commercial use or off-site deployment — does not attract the rules.

It is also notable that the UP rules (as amended in 2021 and 2022 to incorporate Uttar Pradesh Minerals (Prevention of Illegal Mining, Transport and Storage) Rules) have strengthened enforcement against illegal quarrying. However, these enforcement mechanisms presuppose the existence of an actual mining operation within the meaning of the MMDR Act, which — as demonstrated below — does not arise for on-site foundation work.

2. Maharashtra Minor Mineral Extraction (Development and Regulation) Rules, 2013 And The 2015 Amendment

Maharashtra has enacted the Maharashtra Minor Mineral Extraction (Development and Regulation) Rules, 2013 (MME Rules, 2013) under Section 15 of the MMDR Act.

Rule 46: Deals with royalty payable by lessees.

Following the Supreme Court’s 2014 ruling, the State of Maharashtra took the significant legislative step of prospectively codifying the judicial position:

By Notification No. Gaukhani-10/1012/G.R. 603/kh dated May 11, 2015, the Government of Maharashtra amended Rule 46 of the MME Rules, 2013 by inserting the following proviso in Rule 46(a)(i):

“Provided further that, no royalty shall be required to be paid on earth which is extracted while developing a plot of land and utilized on the very same plot for land levelling or any work in the process of development of such plot.”

This amendment effectively gave statutory teeth to the Supreme Court’s ruling and eliminated any residual ambiguity about whether royalty was payable on on-site redeployment of excavated earth in Maharashtra. The Bombay High Court has applied this amended provision in numerous post-2015 decisions.

3. Maharashtra Land Revenue Code, 1966 — Section 48(7)

Section 48(7) of the Maharashtra Land Revenue Code, 1966 (MLRC) empowers the State to levy penalty on any person who “without lawful authority extracts, removes, collects, replaces, picks up or disposes of any mineral.”

The revenue authorities in Maharashtra have frequently invoked this provision against builders. However, the courts have consistently held that this provision operates only where a “minor mineral” is being extracted — a threshold that is not met for on-site foundation earth.

III. The Decisive Test: Purpose And End-Use Of Excavated Earth

Before examining individual cases, it is useful to articulate the clear legal test that has emerged from the case law. The following matrix captures the framework:

Scenario	Purpose Of Excavation	End-Use Of Earth	Minor Mineral Status	Royalty / Permit Required?
Foundation Excavation, On-Site Refilling	Structural — laying masonry/RCC foundation	Refilled on same plot; plinth fill, levelling	NOT a minor mineral	NO
Basement Excavation, Earth Sold/Transported	Structural, but earth commercially exploited	Sold to third party or transported off-site	IS a minor mineral	YES
Quarrying for Commercial Supply	Extraction and sale of earth	Supplied to road/embankment contractors	IS a minor mineral	YES
Road/Embankment Filling — Earth Procured Externally	Filling of embankment, road, railway	Filling/levelling for road or embankment	IS a minor mineral	YES
Excess Earth from Large Projects	Structural, but surplus earth sold/removed	Off-site disposal or sale of surplus	IS a minor mineral (surplus portion)	YES — for surplus portion

The common thread running through all exempted scenarios is the absence of commercial exploitation. The earth must be:

(i) excavated as an incidental consequence of construction, not for the purpose of winning a mineral
(ii) redeployed on the same plot of land
(iii) not transported off-site or sold to any third party

IV. The Supreme Court’s Foundational Ruling

Promoters & Builders Association of Pune v. State of Maharashtra, (2015) 12 SCC 736

Case Details	Information
Court	Supreme Court of India
Date of Decision	December 3, 2014
Bench	Justice Anil R. Dave and Justice A.K. Sikri

Background and Facts

The Promoters & Builders Association of Pune, along with several individual builders and the Nuclear Power Corporation of India Limited (NPCIL), were hauled up by Maharashtra revenue authorities under Section 48(7) of the MLRC for excavating ordinary earth without a quarry permit or royalty payment.

The builders had dug earth for foundation-laying pursuant to sanctioned development plans under the Maharashtra Regional and Town Planning Act, 1966, and had redeployed the excavated earth within their respective construction sites.

In the NPCIL case, the earth was excavated during widening of a water intake channel at an atomic power station and was used on-site. In neither case was the earth commercially sold or transported outside the site.

Revenue authorities had imposed significant penalties, treating the excavated earth as a “minor mineral” by virtue of the Notification dated February 3, 2000. The Bombay High Court had upheld the levy. The appellants approached the Supreme Court.

Questions of Law

The Supreme Court framed the core question as:

Whether ordinary earth excavated in the process of laying foundations for buildings, and redeployed on the same site, constitutes a “minor mineral” within the Notification of 2000 and triggers the regulatory regime of the MMDR Act and Section 48(7) of the MLRC.

Ratio Decidendi and Holdings

Justice A.K. Sikri, writing for the Bench, laid down the following propositions:

Inbuilt Restriction In The 2000 Notification: The Notification of 2000 has an “inbuilt restriction”: it brings ordinary earth within the fold of minor minerals only if it is used for filling or levelling purposes in the construction of embankments, roads, railways, or buildings. The word “used” must be interpreted with reference to purpose and end-use.
Purpose Of Excavation As The Decisive Test: The purpose of excavation is the decisive test. The Court held: “As use can only follow extraction or excavation, it is the purpose of the excavation that has to be seen… An excavation undertaken to lay the foundation of a building would not, ordinarily, carry the intention to use the excavated earth for the purpose of filling up or levelling.”
Blanket Liability Is Impermissible: “a blanket determination of liability merely because ordinary earth was dug up” is legally unsustainable. The authority must examine how and for what purpose the excavated earth was used.
Commercial Exploitation As The Threshold: The absence of any commercial exploitation — no sale, no off-site transport — is a decisive factor against classifying the excavated earth as a minor mineral.
Approval Of Construction Activity: Where the earth is excavated pursuant to sanctioned building plans under town planning/development legislation, and redeployed as an integral part of that approved development, no separate mining permission is required.

Crucially, the Court also relied with approval on the earlier Bombay High Court judgment in Rashtriya Chemicals and Fertilizers Ltd. v. State of Maharashtra, AIR 1993 Bombay 144, where a learned single Judge had poetically observed that “to equate the earth removed in the process of digging a foundation, or otherwise, as a mineral product, in that context, would be a murder of an alien but lovely language.”

The Supreme Court allowed all the appeals, set aside the orders of the Bombay High Court, and quashed the penalty/royalty demands. It left open — as unnecessary to decide — the constitutional validity of Section 48(7) of the MLRC.

Significance and Impact

The Promoters & Builders judgment is the authoritative Supreme Court ruling on this question. It has been:

(i) cited and followed in over 50 reported and unreported decisions of High Courts across the country;
(ii) the basis for Maharashtra’s 2015 legislative amendment to Rule 46 of the MME Rules;
(iii) noted in financial reporting by real estate developers as providing significant regulatory relief; and
(iv) applied broadly to cover not just residential construction but industrial projects, public infrastructure, and government undertakings.

V. The Pre-Existing Precedent: Bombay High Court (1993)

Rashtriya Chemicals and Fertilizers Ltd. v. State of Maharashtra, AIR 1993 Bombay 144

Case Details	Information
Court	Bombay High Court
Year	1993
Bench	Single Judge Bench

Long before the Supreme Court’s 2014 ruling, the Bombay High Court had articulated the principle that ordinary earth excavated in the course of construction or development activity does not automatically become a regulated mineral product.

The petitioner, a public sector fertilizer company, had excavated earth in the course of construction activities on land granted to it by the State Government. The State sought to levy charges on the excavated earth as a mineral.

The learned single Judge held that the reading of the entire grant — the purpose for which the land was granted — would rule out treating every pebble or particle of soil in the granted land as partaking the character of a mineral product.

The Court found the Revenue’s interpretation to be leading to “patently absurd results,” and quashed the levy.

This decision was expressly noted with approval by the Supreme Court in Promoters & Builders (2014), thus elevating it to the status of a building-block of the jurisprudence.

VI. High Court Decisions: A Jurisdiction-by-Jurisdiction Analysis

A. Bombay High Court

1. BGR Energy System Ltd., Khaparkheda v. Tehsildar, Saoner and Others, (2018) 1 MhLJ 332

Bombay High Court (Nagpur Bench) | Reported at (2018) 1 Maharashtra Law Journal 332

BGR Energy Systems Limited was engaged in construction of a thermal power plant at Khaparkheda, Nagpur district. During the construction of the plant’s foundation pits, ordinary earth was excavated and subsequently used to refill the pits after the foundation was laid. The Tahsildar, Saoner, directed BGR Energy to pay royalty and penalty under Section 48(7) of the MLRC for allegedly unauthorised excavation.

The Bombay High Court quashed the Tahsildar’s order, applying the Supreme Court’s ruling in Promoters & Builders. The Court held that the excavated earth, having been used by the petitioner solely to fill up the pits after foundation-laying, did not fall within the Notification of February 3, 2000 — it was not used for filling or levelling in any of the enumerated categories of embankments, roads, railways, or buildings in a commercial sense. The Court held:

“If the excavated earth is not used for filling or levelling in construction of embankments, roads, railways, buildings, etc., the said earth would not be a ‘minor mineral.’ Use of the excavated earth to fill up the dug pits and any construction of the project did not fall within the ambit of the Notification dated 03.02.2000.”

This decision is significant because it extended the principle beyond residential and commercial building projects to large-scale industrial and energy infrastructure projects.

2. M/s. Royale Urbanspace and Ors. v. State of Maharashtra and Anr.

Bombay High Court | Justice S.J. Kathawalla and Justice Milind N. Jadhav | Decided in 2022

The petitioners — a real estate developer — were issued show-cause notices by the Tahsildar, Shahapur, demanding royalty and penalty of approximately Rs. 1.07 crore and Rs. 5.71 crore respectively under Section 48(7) of the MLRC for excavation of 1,030 brass of minor minerals during foundation-laying.

The petitioners had obtained all necessary permissions for development and had redeployed the excavated earth on the same property for filling the excavated portions after foundation completion. The Tahsildar had rejected their replies and directed them to deposit the sums within 7 days.

The Division Bench quashed the notices and orders, observing:

“Respondents have merely proceeded on the premise that the very excavation of ordinary earth by the Petitioners is subject to levy of royalty dehors the use for which it was put to. However, in view of the ratio of the judgment of the Supreme Court in the case of Promoters and Builders Association of Pune (supra), we are not inclined to accept the submissions made on behalf of the Respondent(s).”

The Court also noted the 2015 amendment to Rule 46 of the MME Rules, holding that the amended proviso confirmed that no royalty is payable on earth extracted during development of a plot and utilized on the very same plot.

3. Matrix Developers Pvt. Ltd. v. The State of Maharashtra and Ors.

Bombay High Court | Decided on December 9, 2021

The Tahsildar, Mulshi, had issued show-cause and demand notices alleging unauthorised removal of 7,632 brass of earth during construction of the petitioner’s building project. The Tahsildar made no factual finding that the earth had been removed from the site or commercially exploited.

The Bombay High Court, applying Promoters & Builders and the 2015 amendment to Rule 46, held:

“If the extracted minor minerals are used on the same plot while developing the said plot, then no royalty is payable by the Petitioner… The purpose of excavation of minor minerals is required to be looked into by the authority and if the excavation is merely for construction/formation of plinth, it cannot be termed as mining activity and the developer cannot be forced to pay royalty for the same.”

The notices and demand orders were quashed. The Court observed that the Authorities had proceeded on the legally unsustainable premise that every excavation of ordinary earth automatically attracted royalty liability irrespective of its purpose and end-use.

4. PSC Pacific v. State of Maharashtra

Bombay High Court | Division Bench | Cited in subsequent decisions

In this matter, the Bombay High Court followed the Supreme Court’s ruling in Promoters & Builders and quashed penalties imposed on a construction company for excavation of earth incidental to building construction, where the excavated material was used for construction purposes on the same site. This case has been cited in several subsequent Bombay High Court decisions as part of the consistent line of authority on this point.

5. Flagship Infrastructure Pvt. Ltd. v. The State of Maharashtra and Ors.

Bombay High Court | Writ Petition

The Tahsildar, Mulshi, issued a notice demanding royalty and penalty of approximately Rs. 24.15 crore for excavating earth during foundation-laying of a large building project. The Bombay High Court, citing the well-established judicial position, quashed the demand, reiterating that the liability under Section 48(7) depends entirely on the use for which the excavated earth is put — not on the quantum of earth dug or the size of the project.

B. Allahabad High Court (Uttar Pradesh)

1. General Position in Uttar Pradesh

Uttar Pradesh has been a jurisdiction of significant litigation on this question, given the large scale of construction and infrastructure development in the State and the active enforcement of mining regulations by revenue authorities (particularly District Magistrates and sub-divisional officers). The Allahabad High Court has broadly followed the Supreme Court’s Promoters & Builders ruling in UP-specific contexts, applying it through the lens of the UP Minor Minerals (Concession) Rules, 1963 and the Central Notification of 2000.

The Allahabad High Court has consistently held that the purposive test under Section 3(d) of the MMDR Act equally governs the interpretation of Rule 2(5) of the UP 1963 Rules. Excavation that is not for the purpose of “winning” ordinary earth — because the earth is incidental to foundation construction and is redeployed on-site — does not constitute “mining operations” under the state rules.

2. Reported Decisions of the Allahabad High Court on Ordinary Earth

The Allahabad High Court, in a series of writ petitions involving construction companies and builders in Uttar Pradesh, has held that:

The mere extraction of ordinary earth for a purpose other than those enumerated in the Notification of 2000 would not render it liable to be treated as a minor mineral under the MMDR Act or the UP 1963 Rules.
Where the petitioner establishes that earth was excavated for building construction purposes and reused on the same plot — for foundation trenches, plinth filling, or site levelling — no royalty or permit is required.
Revenue authorities must conduct a factual inquiry into the end-use of the earth before issuing royalty demands or penalty notices. A demand based solely on the fact of excavation, without reference to end-use, cannot be sustained.
In cases where end-use is disputed, the Court has remanded the matter to the District Magistrate or relevant authority for a fresh factual inquiry, placing the burden on the authority to establish commercial exploitation.
Where the Court finds that no such factual inquiry was conducted, it quashes the demand and directs fresh consideration with the benefit of the applicable legal framework from Promoters & Builders.

3. Cases Involving Construction Projects in UP

Multiple writ petitions filed before the Allahabad High Court by builders, developers, and infrastructure companies in UP challenging royalty and penalty demands under the UP 1963 Rules have been decided in favour of the petitioners where the excavated earth was redeployed on-site. The High Court has stressed:

The 2000 Notification’s purposive criterion applies uniformly across all states, given it is a Central Gazette Notification under a Union law.
No state rule can override the central framework; royalty under the UP 1963 Rules can only be levied on ordinary earth that qualifies as a “minor mineral” by satisfying the conditions of the 2000 Notification.
The District Magistrate or Collector acting under the UP 1963 Rules must first determine whether a “minor mineral” is involved — and cannot presume that all excavated earth automatically qualifies as such.

C. Other High Courts

1. Kerala High Court

In Construction Materials Movers Association v. State of Kerala, (2008) 4 KLT 909, the Kerala High Court considered the status of ordinary earth under the Kerala Minor Mineral Concession Rules, 1967. The Court held that ordinary earth transported for filling/levelling purposes in construction of embankments, roads, railways, and buildings is a minor mineral by virtue of the 2000 Notification. The Kerala High Court’s ruling thus supports the converse proposition equally: earth not used for such enumerated purposes is not a minor mineral.

2. Gauhati High Court

The Gauhati High Court has also considered the scope of ordinary earth as a minor mineral under the Assam Minor Mineral Concession Rules, 1994, observing that where earth is not included as a minor mineral under the relevant state rules and is also not covered by the Central Notification, it cannot be subjected to royalty or licensing requirements.

VII. Key Environmental and Regulatory Considerations

While the MMDR Act’s framework is clear — foundation excavation with on-site refilling does not require mining permits or royalty — builders must remain mindful of intersecting regulatory requirements:

A. Environmental Impact Assessment (EIA) — MoEF Notification, 2006

The Ministry of Environment, Forest and Climate Change (MoEF&CC) has issued the EIA Notification, 2006 under the Environment (Protection) Act, 1986. Schedule I to this Notification lists activities requiring environmental clearance (EC). Mining of minor minerals including ordinary earth is listed as a “B2” category project requiring EC from the State Environmental Impact Assessment Authority (SEIAA) when the lease area exceeds 5 hectares (and “B1” above 25 hectares). However, this EIA requirement applies to mining operations for minor minerals in the commercial sense — not to incidental construction excavation. The EIA Notification itself excludes “excavation of earth for laying of foundations of buildings” from the category of mining operations requiring EC, where the excavated earth is not commercially exploited.

B. District Mineral Foundation (DMF) — Section 9-B, MMDR Act

The MMDR (Amendment) Act, 2015 introduced Section 9-B, requiring mining lease holders to contribute to the District Mineral Foundation for the welfare of persons affected by mining activities. The Allahabad High Court in a 2025 decision held that the DMF obligation is triggered by the grant of a mining lease — where no mining lease exists (as in the case of incidental foundation excavation), no DMF contribution is required.

Construction projects above specified thresholds require Consent to Establish and Consent to Operate from the State Pollution Control Board under the Water (Prevention and Control of Pollution) Act, 1974 and the Air (Prevention and Control of Pollution) Act, 1981. These consents govern emissions, effluents, and construction dust — but do not address royalty on excavated earth.

D. Planning Authority and Development Permissions

Under town planning and development control regulations — such as the Maharashtra Regional and Town Planning Act, 1966 (MRTPs), the UP Urban Planning and Development Act, 1973, and municipal building byelaws — builders require sanctioned building plans and development permissions before commencing construction. These permissions sanction the construction activity as a whole, including the incidental foundation excavation. Courts have relied on the existence of valid development permissions as a factor supporting the characterisation of excavation as construction activity, not mining.

VIII. Practical Guidelines For Builders, Developers, And Contractors

Based on the judicial framework set out above, the following practical guidelines emerge for parties involved in construction activities:

A. Documentation And Record-Keeping

Maintain complete records of the sanctioned building plan, development permission, commencement certificate, and any other planning authority approval — these demonstrate the legitimacy of the construction activity.
Keep records (with photographs, site supervisor logs, and project engineer certifications) of the quantity of earth excavated and the precise manner in which it was redeployed — whether as foundation backfill, plinth fill, or site levelling.
If any portion of excavated earth is being disposed of off-site (e.g., because the project produces more earth than can be used on-site), document separately the quantum disposed of and the manner of disposal. Revenue authorities may legitimately levy royalty on the off-site portion.
Prepare and retain an affidavit or declaration by the project engineer/site supervisor confirming that all excavated earth was used on-site and none was commercially sold or transported.

B. Response To Revenue Authority Notices

Upon receipt of a show-cause notice or royalty demand under the MMDR Act, state rules, or MLRC, respond promptly with a detailed reply citing:
- the Notification of February 3, 2000;
- the Supreme Court’s ruling in Promoters & Builders Association of Pune, (2015) 12 SCC 736; and
- the relevant High Court decisions applicable in your jurisdiction.
In Maharashtra, additionally cite the proviso to Rule 46(a)(i) of the Maharashtra Minor Mineral Extraction (Development and Regulation) (Amendment) Rules, 2015 — the legislative codification of the judicial exemption.
Specifically deny any commercial sale or off-site transport of excavated earth, and attach supporting documentation.
If the authority insists on proceedings, promptly approach the High Court by way of a writ petition under Article 226 of the Constitution, seeking interim stay. Courts have been consistently sympathetic to such petitions where the facts disclose on-site redeployment.

C. Points Of Caution

The exemption applies only to ordinary earth. If the excavation unearths sand, gravel, building stone, or other materials that independently qualify as minor minerals under Section 3(e) of the MMDR Act or the state’s minor mineral list, those materials attract the full regulatory framework regardless of redeployment.
Where a basement or large-scale excavation produces earth substantially in excess of what can be absorbed on-site, the surplus — if sold or transported — will attract royalty on the surplus quantity. Careful project planning can minimize this exposure.
For projects exceeding certain thresholds (large infrastructure, government contracts), consultation with the State Mining Department in advance is advisable to obtain a No-Objection or a written confirmation of exemption. This provides pre-emptive protection against subsequent enforcement action.
Environmental clearance requirements under the EIA Notification, 2006 must be independently verified for large projects, even where MMDR Act obligations do not arise.

IX. Summary Table Of Key Cases And Holdings

Case Name & Citation	Court / Year	Key Holding
Rashtriya Chemicals & Fertilizers Ltd. v. State of Maharashtra, AIR 1993 Bombay 144	Bombay HC / 1993	Earth excavated during construction/development on granted land is not a “mineral product”; blanket levy impermissible. (Approved by SC in 2014)
Promoters & Builders Association of Pune v. State of Maharashtra, (2015) 12 SCC 736 (decided 3 Dec 2014)	Supreme Court of India	LANDMARK: Purpose of excavation is decisive; earth excavated for foundation laying and redeployed on same site without commercial exploitation is NOT a minor mineral under the 2000 Notification. Royalty and penalty demands quashed.
BGR Energy System Ltd., Khaparkheda v. Tehsildar, Saoner & Ors., (2018) 1 MhLJ 332	Bombay HC (Nagpur) / 2018	Principle extended to industrial/energy infrastructure: earth from thermal power plant foundation pits, refilled on-site, not a minor mineral. Order levying royalty quashed.
Matrix Developers Pvt. Ltd. v. State of Maharashtra & Ors.	Bombay HC / Dec 2021	Demand for royalty on 7,632 brass of earth from construction site quashed; authority must factually inquire into end-use before levying royalty.
M/s. Royale Urbanspace & Ors. v. State of Maharashtra & Anr.	Bombay HC / 2022	Rs. 6+ crore demand quashed; excavated earth redeployed in development of the same plot attracts no royalty under amended Rule 46 of MME Rules, 2015.
Flagship Infrastructure Pvt. Ltd. v. State of Maharashtra & Ors.	Bombay HC	Rs. 24.15 crore demand quashed; same principle applied to large residential project.
Allahabad HC decisions on UP Minor Minerals Rules, 1963	Allahabad HC / 2015–2023	Consistent application of Promoters & Builders; UP authorities directed to conduct factual inquiry into end-use before levying royalty; demands quashed where no commercial exploitation established.

Conclusion

The judicial architecture on the question of royalty and permits for ordinary earth excavated during building foundation work is remarkably coherent and consistent. From the Supreme Court’s landmark ruling in Promoters & Builders Association of Pune (2015) 12 SCC 736 — itself building on the earlier Bombay High Court wisdom in Rashtriya Chemicals (AIR 1993 Bombay 144) — to a steady stream of High Court decisions in Maharashtra and Uttar Pradesh, the law is settled as follows:

Settled Legal Position

Ordinary earth is a “minor mineral” only when it satisfies the purposive criterion of the Central Gazette Notification dated February 3, 2000 (GSR 95(E)) — i.e., when it is used for filling or levelling in construction of embankments, roads, railways, or buildings in a commercial or public-works sense.
Excavation of ordinary earth incidental to foundation-laying (masonry or RCC) — where the earth is redeployed on the same plot without commercial exploitation — does not constitute “mining operations” within Section 3(d) of the MMDR Act and does not produce a “minor mineral” within the Notification of 2000.
Accordingly, no mining lease, quarry permit, or royalty payment is required or payable in respect of such on-site foundation excavations.
Maharashtra has legislatively confirmed this position through the 2015 amendment to Rule 46 of its Minor Mineral Extraction Rules, while Uttar Pradesh courts have applied the same principle under the UP Minor Minerals (Concession) Rules, 1963.

Determinative Test Applied by Courts

The determinative enquiry in every case is the end-use of the excavated earth: if it is redeployed on-site without commercial sale or transport, no regulatory obligation arises; if it is commercially exploited or transported off-site, the full MMDR Act framework applies.

Practical Guidance for Builders and Developers

Builders, developers, contractors, and infrastructure companies should familiarise themselves with this settled legal position, document their construction activities carefully to demonstrate on-site redeployment, and firmly resist unjustified royalty and penalty demands by revenue authorities. Where such demands are nonetheless issued, prompt legal action — backed by the consistent line of Supreme Court and High Court authority — offers strong prospects of relief.

XI. Table Of Statutes, Notifications, And Rules

Instrument	Key Provision(s) Discussed
Mines and Minerals (Development and Regulation) Act, 1957	Sections 3(d) [mining operations], 3(e) [minor minerals], 4 [prohibition without lease], 9 [royalty], 9-B [DMF], 15 [State powers for minor minerals], 21 [penalties]
Central Gazette Notification No. GSR 95(E), dated February 3, 2000 (Ministry of Mines)	Declares ordinary earth used for filling/levelling in embankments, roads, railways, buildings to be a minor mineral — with the inbuilt end-use restriction
Mines Act, 1952	Section 2(j) [definition of “mine”] — read with MMDR Act to define scope of “mining”
Maharashtra Land Revenue Code, 1966	Section 48(7) — penalty for unauthorised extraction of minerals
Maharashtra Minor Mineral Extraction (Development and Regulation) Rules, 2013	Rule 46 — royalty payable by lessees on minor minerals
Maharashtra Minor Mineral Extraction (D&R) (Amendment) Rules, 2015 (Notification dated May 11, 2015)	Proviso to Rule 46(a)(i) — no royalty on earth extracted during development of plot and utilized on same plot
Maharashtra Minor Mineral Extraction (D&R) (Amendment) Rules, 2017	Procedure for excavation during plot development — advance information to Collector, royalty deposit
Uttar Pradesh Minor Minerals (Concession) Rules, 1963 (as amended)	Rule 2(5) [mining operations], First Schedule [royalty rates for ordinary earth]
Maharashtra Regional and Town Planning Act, 1966	Sections 31 [development plans], 2(7) [definition of “development” including engineering/mining operations]
Environment (Protection) Act, 1986 and EIA Notification, 2006	Environmental clearance requirements for mining of minor minerals — not applicable to incidental construction excavation with on-site redeployment

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