Karnataka HC quashes Rs 482-crore penalty on ACC, directs govt to execute mining lease

Bengaluru: The Karnataka High Court has quashed a Rs 482.70 crore penalty slapped by the state government over limestone mining operations in Kalaburagi district on the cement major ACC Limited, in a major relief to the Adani Group company.

A division bench comprising Chief Justice Vibhu Bakhru and Justice KS Hemaleka also directed the Department of Mines and Geology to restore the cement maker's full access to the Integrated Lease Management System (ILMS) portal. In its 89-page judgment, delivered on September 8 and up on the court website now, the bench ordered the state to execute a supplementary lease deed extending ACC’s mining rights without insisting on a "no-dues certificate", and to refund the amount deposited by the company under earlier interim court orders.

ACC holds a captive mining lease in the state for limestone and shale, which was renewed periodically until February 18, 2023. The company and the department had been locked in a dispute over royalty calculations and estimated output. While the government applied a fixed 1:1.42 limestone-to-clinker formula to calculate extraction, ACC argued that royalties must be assessed on actual weighment data. The court held that the state failed to build a tenable case to justify replacing actual records with a notional ratio.


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The standoff escalated in 2025 when the department issued a revised royalty demand of Rs 367.51 crore (after adjusting Rs 125 crore already deposited by the firm), followed by a separate penalty notice of Rs 482.70 crore under the Mines and Minerals (Development and Regulation) Act.

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The authorities claimed ACC illegally extracted over 7.83 million metric tonnes of limestone during 2023–24 because a supplementary lease deed had not been formally signed after February 2023. Challenging the levy, ACC argued that its lease enjoyed a deemed statutory extension until March 31, 2030, under Section 8A(5) of the MMDR Act, making post-expiry operations lawful despite delays in administrative paperwork—a position upheld by the court.