14 August 1964
Supreme Court


Case number: Writ Petition (Civil) 14 of 1964






DATE OF JUDGMENT: 14/08/1964


CITATION:  1965 AIR  821            1965 SCR  (1)  49

ACT: Mines  and Minerals (Regulation and Development)  Act,  1948 (Act 53 of 1948), s. 5-Acquisition-Notification-Mala fide-if delay  evidence  of-opening of mines-Rule 39  if  valid  and authorised  by s. 17’Grane in s. 5 if connotes  transfer  of property--constitutional  validity  of  r.  39-If  could  be challenged  by  person not having sufficient  interest  Coal Mines (Conservation and Safety), Act, 1952 (Act 12 of 1952), v.  17-Coal Mines (Conservation and Safety) Rules, 1954,  r. 39--Mineral Concession Rules, 1948, rr. 37, 48--Constitution of India, Arts. 14, 19.

HEADNOTE: By  notifications  under s. 4(1) of the Coal  Bearing  Areas (Acquisition and Development) Act (20 of 1957), the  Central Government gave notice of its intention to prospect for coal in  the colliery of the petitioner.  The petitioner did  not file any objection to the proposed acquisition under a. 8 of the  Act  (20 of 1957).  In reply to the intimation  by  the Government  that the area in question appears to  have  been notified,  the petitioner asserted that he was not bound  in law  by the aforesaid notifications.  According to  him,  he started working the colliery immediately after purchasing it in  1956.   This was denied by the respondents and  on  this issue the High Court found against the petitioner.  Under s. 4(4)  of  the  Act (20 of 1957)  the  Union  Government  was prohibited  from  acquiring "that portion of land  in  which coal  mining  operations are actually being  carried  on  in conformity  with the provisions of any enactment,  rule,  or order for the time being in force".  The respondents relying on  the provision, however, said further that even if it  be assumed  that the petitioner worked the mines, this was  not done  in accordance with law.  On this point also  the  High Court  held  against  the  petitioner.   Against  this   the petitioner argued that r. 39 of the Coal Mines (Conservation and Safety) Rules, 1954, under which the Coal Board  refused permission to open the colliery was ultra vires as the Union Government  could not make this rule under s. 17 of the  Act (12  of  1952) and it was this illegal refusal to  open  the



mines that resulted in the colliery not being worked at  the time of the notifications. the petitioner further  contended that  even  if r. 39 was valid permission was  refused  mala fide,  with the ulterior object of avoiding the  prohibition laid  down  in  s.  4(4)  of the  Act  (20  of  1957).   The respondents  objected that the petitioner had  acquired  the lease in contravention of the law and therefore had no right to  allege  that r. 39 of the Coal Mines  (Conservation  and Safety) Rules was violative of Art. 19 of the  Constitution. To  defeat  this objection the petitioner raised  the  point that  rr. 37 and 48 of the Mines & Minerals (Regulation  and Development)  Rules  were ultra vires the Mines  &  Minerals (Regulation and Development) Act, 1948. HELD : (i) The notifications were not vitiated on account of any  mala fides.  That there was delay in disposing  of  the petitioner’s  representations  is  evident  but  delay,   by itself,  is hardly evidence of mala fide, specially  as  the Coal  Board  had  long ago declined to  revise  its  earlier decision not to give permission to reopen the mines. [54C-E] (ii)Rule  39 was not invalid and it was authorised by s.  17 of the Act (12of 1952) [55C-D]. 50 Rule  39 is designed, inter alia, to secure conservation  of coal.  If a mine has to be opened or reopened the Coal Board has to consider whether it is necessary to do so and it must take into consideration the requirements of the country  for the particular grade at that time. [55B-C] (iii)The word ’grant’ in the context of s. 5 of the Act  (53 of  1948),  inter alia, connotes transfer  of  property  and mining leases are property.  The Parliament, while using the word  ’grant’  in  s.  13(1) of the Act 67  of  1957  in  s. 13(2)(1)  specially provided for rules being made  regarding the  manner in which and the conditions subject to  which  a prospecting licence or a mining lease might be  transferred. If  these  rules were intra vires, the result was  that  the petitioner  acquired the colliery in transgression of  these rules.   Consequently he had not sufficient interest in  the property to raise question about the constitutional validity of r. 39 of the Coal Mines (Conservation and Safety)  Rules, 1954. [56E-G] Mason,  Herring  and  Brooks v. Harris  [1921]  1  K.B.  653 distinguished. (iv)Under   the  circumstances,  there  has  not  been   any discrimination in violation of Art. 14 of the  Constitution. Demand for Grade IIIB Coal can easily be different after the lapse  of  five years, and the Coal Board  was  entitled  to decide the lease of the other colliery on the facts existing in 1959 and 1963. [57C-D]

JUDGMENT: ORIGINAL JURISDICTION.-Writ Petition No. 14 of 1964. Petition under Art. 32 of the Constitution of India for  the enforcement of Fundamental Rights. WITH Civil Appeal No. 143 of 1964. Appeal  by special leave from the judgment and  order  dated May 23, 1963, of the Patna High Court in M.J.C. No. 1069  of 1962. C.   B. Agarwala and K. K. Sinha, for the petitioner (in  W. P. No. 14/1964) and appellant (in C.A. No. 143/1964). S.   V. Gupte, Additional Solicitor-General and B. R. G.  K. Achar,  for the respondents (in W.P. No. 14/1964 and  C.  A. No. 143/1964).



The Judgment of the Court was delivered by Sikri J. There are two matters before us for disposal.   One is  an appeal by special leave against the judgment  of  the Patna  High  Court,  dismissing  an  application  filed   by Biswanath  Prasad under Art. 226 of the  Constitution.   The other is a petition filed under Art. 32 of the Constitution. In the petition under Art. 32, some points have been  raised which  were  not  debated before the  High  Court  and  some documents which were not produced before the High Court have been  filed  in this Court.  In the circumstances  It  seems convenient to proceed to dispose of the petition first,  but we  will,  where  appropriate,  indicate  the  finding   and reasoning  of  the  High Court on a  particular  point.   To decide the points raised 51 by  Mr.  C.  B.  Agarwala,  the  learned  counsel  for   the petitioner,  it is necessary to state the facts somewhat  in detail,  for, inter alia, he submits that the action of  the Union  Government  in acquiring the petitioner’s  mines  was mala fide. The  petitioner,  by deed of sale dated November  29,  1956, purchased  a  colliery, called Dhobidih  Colliery,  for  Rs. 20,000  from the Bengal Coal Co. Ltd., Calcutta.  He held  a certificate of approval granted to him under r. 6 of Mineral Concession  Rules,  1949.   According  to  him,  he  started working  the  colliery immediately.  This is denied  by  the respondents.   This is one of the issues debated before  the High  Court,  which found it against the  petitioner.   This point  is of crucial importance for the Union Government  is prohibited  by sub-s. (4) of s. 4 of the Coal Bearing  Areas (Acquisition   and  Development)  Act  (20  of  1957)   from acquiring  "that  portion  of  land  in  which  coal  mining operations are actually being carried on in conformity  with the provisions of any enactment, rule, or order for the time being  in force." The respondents relying on this  provision however,  say  further that even if it be assumed  that  the petitioner worked the mines, this was not done in accordance with  law.  On this point also the High Court  held  against the petitioner. After  acquiring the colliery, the petitioner, according  to him,  started  working the mine in earnest.   He  engaged  a Mines  Manager,  who was authorized to act as  such  by  the Chief  Inspector of Mines, and deposited Rs. 2,000 with  the Assistant   Electrical  Engineer,  Giridih,  to  secure   an electric  connection.   He exploited the Hill Seam  and  had even two shifts in the Mine.  He duly submitted returns.  He even paid Sales Tax and excise on coal raised, which in  the annual  return  for the year ending December  31,  1958,  he claimed,   amounted   to  4200  tons,   including   colliery consumption  and  coal used for making  coke.   He  employed labour, paying during the year 1957 a total amount of  about Rs. 41,000 for 1,103 man day’s work.  In this connection  we were referred to an affidavit filed before the Calcutta High Court  on behalf of the Coal Board wherein it is stated  the petitioner had "commenced mining operations in contravention of  r.  39(1) of the Coal Mines  (Conservation  and  Safety) Rules,  1954,  and  further, coal was  being  dispatched  in contravention  of  r. 39(4) of the aforesaid  Rules  on  the basis  of an old grade given by the Coal Commissioner  prior to  the closure of the colliery in the year 1948.  The  said grade was, however, withdrawn in February 1958." From these facts it emerges that the petitioner did put up a show of raising coal but all these operations do not add  up to 52



carrying  on  coal mining operations within the  meaning  of sub-s.  (4) of S. 4 of the Coal Bearing  Areas  (Acquisition and  Development)  Act,  1957.   At  any  rate,  argues  the respondents  counsel, the coal was raised contrary  to  law, and at the time of the acquisition by the Government no coal mining  operations  were  being carried  on.   To  this  the petitioner’s  counsel replies that r. 39 of the  Coal  Mines (Conservation  and Safety Rules) 1954, under which the  Coal Board  refused  permission to open the  colliery  was  ultra vires as the Union Government could not make this rule under s. 17 of the Coal Mines (Conservation and Safety) Act,  1952 (12 of 1952), and it was this illegal refusal to reopen  the mines that resulted in the colliery not being worked at  the time  of  the  Notification.  The learned  counsel  for  the petitioner  further  says  that  even if  r.  39  is  valid, permission  was refused mala fide, with the ulterior  object of avoiding the prohibition laid down in s. 4(4) of the Coal Bearing Areas (Acquisition and Development Act) 1957.   Now. what  are the facts which are relevant to this part  of  the case ? The Bengal Coal Company, from whom the petitioner had acquired the colliery, stopped working the colliery in 1949. ’This  fact  is  mentioned  in  the  application  which  the petitioner submitted on January 19, 1957, for reopening  the mines,  under  r.  39 of the Coal  Mines  (Conservation  and Safety) Rules 1954.  It is further stated in the application that the reasons for closure by previous owner are not known but  it  appears that due to non-availability of  power  and transport the risings were very poor and eventually  closed. It follows from the statements in the application that  when the petitioner acquired the colliery it had been closed  for more  than eight years.  The explanation subsequently  given by  the  petitioner that this application was  made  through clerical  mistake cannot be believed.  On October 10,  1957, after some correspondence, the petitioner was informed  that the  Coal  Board had not granted permission  to  reopen  the colliery  "  as  production  of more  coal  of  the  quality expected from the Seams Proposed to be worked by you is  not now required for the Giridih area" In spite of this refusal, the  petitioner carried on correspondence with the  Regional Inspector of Mines, Dhanbad Inspection Region, regarding the working  plan of the colliery.  This  correspondence  cannot advance  the petitioner’s case in any manner.   On  February 24,  1958, the Coal Board withdrew the Grade IIIB fixed  for the  colliery  with immediate effect.   The  petitioner  was further requested not to despatch any coal from the colliery henceforth.   From the above recital it is quite clear  that if  it is assumed that the petitioner worked the  mines,  he did it contrary to r. 39 and, therefore, the rule if  valid, the prohibition 53 in.  s.  4(4)  of the Coal Bearing  Areas  (Acquisition  and Development) Act does not come into operation. After this, the petitioner started representing to the  Coal Board: for cancelling its orders.  By its letter dated March 24,  1958,  the Coal Board firmly reiterated its  stand  and warned the petitioner that he had raised and dispatched coal in  contravention  of  Coal Mines  Conservation  and  Safety Rules,  1954.  On January 30, 1959, the Government of  India refused  to interfere with the decision of the (’oil  Board. On July 20, 1959, the Board declined to revise its decision. But  the  petitioner  was  not  disheartened.   He   started representing again and for some reason, not apparent on  the record, the Coal Board started showing a receptive mind.  In October  1959, it asked for the production of a  licence  or registration  certificate under the Industries  (Development



and  Regulation) Act, 1951 (65 of 1951).  Some letters  were exchanged on this topic.  Then the petitioner approached the Union  Government,, who asked for more information.  In  the reply,  the  petitioner stated that ’on receipt  of  several letters  from  the concerned department the working  of  the colliery  was  stopped from August 1,  1958’.   Later,  more information  was  asked  for  and  supplied  to  the   Union Government.  Ultimately, the petitioner was informed that it was not necessary for him to have a licence under Act 65  of 195 1. From now on the petitioner was time and again told by the  Coal  Board that the matter  was  under  consideration, while  the  petitioner  continued to  press  his  case.   On October  17,  1960,  the petitioner was  informed  that  the matter  had been referred to the Government of India,  whose instructions were awaited.  From now on the scene shifts  to the  Ministry  of  Steel,  Mines and  Fuel,  which  kept  on acknowledging letters ad-dressed by the petitioner.   Enqui- ries  were  made  in April 1961  whether  the  colliery  was unworked.  On July 1, 1961, the Central Government issued  a Notification, No. S.O. 15 8 1, under sub-s. ( 1 ) of s. 4 of the  Coal Bearing Areas (Acquisition and  Development)  Act, 1957, giving notice of its intention to prospect for coal in the  colliery of the petitioner.  Another  Notification  No. S.O.  484, under s. 4(1) of the Act of 1957, was  issued  on February 6, 1962, in respect of another area of 25.15 acres. The petitioner did not file any objections to the  proposed. acquisition under s. 8 of the Act.  It was only on  November 23, 1961, that the petitioner was informed by the Government that  the  area in question appears to  have  been  notified under sub-s. (1) of s. 4 of the Act 20 of 1957.  In reply to this  intimation ’ the petitioner asserted that he  was  not bound in law by the aforesaid notification. 54 In  para  32 of the petition, the  petitioner  alleged  mala fides  thus:"that,  thus it is absolutely clear,  the  whole intent  and  purpose of the orders of the respondent  No.  2 (i.e.  the  Coal  Board)  and  the  notification  issued  by respondent  No.  1  (i.e.  the  Union  Government)  and  the subsequent  lingering of the matter on one plea  or  another were  quite  mala fide." In para 21 it is  stated  that  the respondents  and  their authorities colluded  and  conspired against  the petitioner with ulterior motive and  collateral reasons    and   paid   no   heed   to   the    petitioner’s representations." These allegations are quite vague and are not sufficient  to allege  a case of conspiracy between the Coal Board and  the Union ,Government to deprive the petitioner of his colliery. Apart  from  this, the above recital of the facts  does  not lend any support to any conspiracy existing between the Coal Board  and  the Union Government.  That there was  delay  in disposing of the petitioner’s representations is evident but delay, by itself, is hardly evidence of mala fide, specially as  the Coal Board had as long ago as July 1959 declined  to revise its earlier decision not to give permission to reopen the  mines.  There was a proceeding under s. 147,  ,Criminal Procedure  Code,  between  the  petitioner  and  the  Super- intendent of Giridih Collieries, worked by Respondent No. 3, the  National Coal Development Corporation (Pvt.) Ltd.,  and this  litigation  is  also called in aid  for  showing  mala fides.  We are unable to see how the fact, assuming it to be true,  that  the said Superintendent was on  inimical  terms with  the  petitioner, shows mala fide on the  part  of  the Union   Government.    Consequently,  we   hold   that   the Notifications Nos.  S.O. 1581 and S.O. 484 are not  vitiated on account of any mala fides.



This  takes  us to the question whether r. 39  of  the  Coal Mines ,Conservation and Safety Rules, 1954, is ultra  vires. The said rule 39 and S. 17 of -the Coal Mine-, (Conservation and Safety) ,Act, 1952, are in the following terms :-               "Rule 39--opening and reopening of Coal Mines.               (1)   No coal mine or seam shall be opened and               no  coal mine or seam the working whereof  has               been tinued for a period exceeding six  months               shall  be reopened and no operation  shall  be               commenced  without  the  prior  permission  in               writing of the Board and except in  accordance               with such directions as the Board may give."               "S.  17(1)-The  Central  Government  may,   by               notification  in  the  Official  Gazette   and               subject to the condition               55               of  previous publication, make rules to  carry               out the purposes of this Act." Section 17(2) gives various specific matters on which  rules can be made but none of these covers r. 39.  But in spite of this we are of the opinion that the impugned rule is  valid. The object of the Act is to provide for the conservation  of coal  and make further provision for safety in  coal  mines. Section  7 empowers the Central Government to exercise  such powers and take or cause to be taken all such measures as it may  deem necessary or proper or as may be  prescribed.   We consider  that  r.  39 is designed, inter  alia,  to  secure conservation  of  coal.  If a mine has to be opened  or  re- opened  the  Coal  Board  has  to  consider  whether  it  is necessary  to  do so.  It must take into  consideration  the requirements of the country for the particular grade at that time.   If  a particular grade of coal is not  required,  it would conserve it for future use, if it is not allowed to be raised.   In the result, we hold that r. 39 is  not  invalid and it is authorized by s. 17 of the Act (12 of 1952). The  next point that arises out of the pleadings is  whether rr.  37  and 48 of the Mineral Concession Rules,  1949,  are ultra   vires  the  Mines  and  Minerals   (Regulation   and Development)  Act,  1948.   This  point  is  raised  by  the petitioner in his counter-affidavit to defeat the  objection of  the  respondents that the petitioner  had  acquired  the lease  of  the  colliery in contravention of  the  law  and, therefore,  has  not any right to allege that r. 39  of  the Coal Mine,, Conservation and Safety Rules, 1954 is violative of  Art.  19 of the Constitution.   The  Mineral  Concession Rules,  1949, were made in exercise of the powers  conferred by   s.  5  of  the  Mines  and  Minerals  (Regulation   and Development) Act, 1948.  Section 5(1), before it was amended by Act 67 of 1957, reads thus               "5.   Power to make rules as  respects  mining               leases:               (1)   ’Me    Central   Government   may,    by               notification  in  the  official  gazette  make               rules  for  regulating  the  grant  of  mining               leases  or for prohibiting the grant  of  such               leases  in  respect of any mineral or  in  any               area."               Rules 37 and 48 are in the following terms               "37.   Transfer of leave-The lessee may,  with               the previous sanction of the State  Government               and subject to the conditions specified in the               first  proviso  to  rule 35 and  in  rule  38,               transfer  his  lease or any  right,  title  or               interest  therein,  to  a  person  holding   a               certificate of approval on payment of a fee of



             Rs. 100 to the State Government.               56               Provided  that no mining lease or  any  right,               title  or interest therein in respect  of  any               mineral  specified in Schedule IV shall be  so               transferred except with the previous  approval               of the Central Government."               "48.   Transfer of  assignment-No  prospecting               licence   or   mining  lease  to   which   the               provisions of this Chapter shall apply or  any               right,  title or interest in such  license  or               lease shall be transferred except to a  person               holding  a  certificate of approval  from  the               State Government having jurisdiction over  the               land  in respect of which such  concession  is               granted.               Provided that no prospecting license or mining               lease or any right, title or interest in  such               license  or  lease in respect of  any  mineral               specified in Schedule IV shall be  transferred               except  with  the  previous  approval  of  the               Central Government." These rules prohibit the transfer of a lease of a coal  mine except With the previous approval of the Central Government. It is argued on behalf of the petitioner that these rules do not  regulate  the  grant of a mining  lease  for  the  word ’grant’ does not include transfer or assignment of a  lease. It  is true that in a particular context, as existed in  the case  of  Mason, Herring and Brooks v. Harris(1),  the  word ’grant’  may  not  include an assignment.  But  we  are  not satisfied  that the word ’grant’ in the context of S. 5  has this narrow meaning.  The word ’grant’, inter alia, connotes transfer  of  property  and  mining  leases  are   property. Further,  mining leases are usually of long duration and  it could   not  have  been  the  intention  not   to   regulate assignments  of  such  leases.  We  are  fortified  in  this Conclusion by the fact that Parliament, while using the word ’grant’  in  s. 13 (1) of Act 67 of 1957, in s. 13  (2)  (1) specifically  provides  for rules being made  regarding  the manner  in  Which  and the conditions  subject  to  which  a prospecting  licence or a mining lease may  be  transferred. If  these  rules  are intra vires, the result  is  that  the petitioner  acquired the colliery in transgression of  these rules.  Consequently, he has not sufficient interest in  the property   to  raise  questions  about  the   constitutional validity of r. 39 of the Coal Mines Conservation and  Safety Rules, 1954. One point urged on behalf of the petitioner now remains, and that is the plea of discrimination.  The plea is put in  the following terms, in para 31 of his petition: (1)  [1921] 1 K.B. 653. 57 .lm15 "That  although the respondent No. 2 refused  permission  to the  petitioner to open the colliery and withdrew the  grade on  the plea that no more of the quality was  required  from the Giridih area, it granted permission on June 6, 1959, for reopening  of  Kabari  Bad  Colliery in  the  same  area  of Karhabaree  for  raising  Grade IIIB coal  which  was  lying unworked  for the last about 10 years although the  colliery lies  in the midst of collieries being worked by  respondent No.  3 due to which the latter had to allow them to use  its (N.C.D.C.’s) own road in the area." The respondent’s case is that while permission to reopen the mines was refused to the petitioner in October, 1957, it was



on  June  6. 1959, that the Kabari Bad  Colliery  was  given permission.   And more important is the allegation that  the grade was fixed for this colliery as IIIB on March 30, 1963, i.e.  five  years after this grade was  withdrawn  from  the petitioner.   Demand  for  Grade IIIB  coal  can  easily  be different after the lapse of five years, and the Coal  Board was  entitled to decide the case of Kabari Bad  Colliery  on the   facts   existing  in  1959  and   1963.    Under   the circumstances, we are not satisfied that there has been  any discrimination in violation of Art. 14 of the Constitution. In view of our findings above, we dismiss the petition,  but in the circumstances of the case, we order that the  parties will bear their own costs. No  other  point  arises in the appeal and  we  dismiss  the appeal with no order as to costs. Appeal dismissed. 58