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PETITIONER: GORELAL DUBEY

       Vs.

RESPONDENT: STATE OF MADHYA PRADESH AND OTHERS (And Vice-Versa)

DATE OF JUDGMENT04/12/1975

BENCH: UNTWALIA, N.L. BENCH: UNTWALIA, N.L. MATHEW, KUTTYIL KURIEN GOSWAMI, P.K.

CITATION:  1976 AIR 1125            1976 SCR  (2) 876  1976 SCC  (2) 911

ACT:      Mineral  Concession  Rules  (Central)  1960-The  Madhya Pradesh Mineral  Rules, 1961,  made under  section 15 of the Mines  and   Minerals  (Regulation   and  Development)  Act, (Central Act 67) 1957-Section 3(a) and 3(e)-Power to grant a quarry lease for limestone as a minor mineral under the 1961 Rules or  a mining  lease for  limestone as  a minor mineral under the  Central Rules  1961 with  the  State  Government- Notifications under  section 3(e)  of  the  Act  by  Central Government, one dated 1-6-1958 declaring "limestone used for lime burning  and  another"  dated  20-9-1961  amending  it, substituting  the   words  "limestone   used  in  kilns  for manufacture of  lime used  as building material"-Totality of facts given in the application for a quarry lease describing "limestone  for   burning  purposes"  and  "minor  minerals" decides whether  the application  is for  "major mineral" or "minor minerals"-Treating  such an  application  as  "for  a major mineral" is wrong when two applications are there, one for "quarry lease" and another for "mining lease" in respect of one  and the same area, the grant of lease depends on the quality of  limestone available  and after  considering such applications together.

HEADNOTE:      In respect  of an area of 8.36 acres of land containing limestone in  the village  Bistara, Jabalpur District, there were  two   applications   before   the   State   Government (Respondent in  C.A. 785/71  & Appellant  in  C.A.  1781/75) empowered to grant prospecting licence or a mining lease for a major mineral under the Mineral Concessions Rules, 1960 or a "quarry  lease" under  the Madhya  Pradesh Mineral  Rules, 1961, for  a minor mineral as defined in section 3(e) of the Mines and  Minerals (Regulation  and Development) Act, 1957- one by "GD", (the appellant in C.A. 785/71 and respondent in C.A.  1781/75)   dated  7-5-1965  for  a  quarry  lease  for "limestone for  burning purposes,  minor minerals  intended" and another by "RC" dated 2-6-1965 for a mining lease for "a major mineral". The "quarry lease" was granted to "GD" on 1- 11-1965 and the lease deed was executed on 10-11-1965 with a special clause 18A therein.      In revision  by "RC"  against the order granting quarry

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lease to GD the Central Government by its order dated 14-12- 1967, holding  that in substance the application of "GD" was an application  for "major  mineral" and,  there  fore.  the grant of  the  "quarry  lease"  to  the  appellant  was  not competent, directed  the respondent  State to  consider  the application of "RD" for the grant of mining lease.      As the writ petition No. 3/68 assailing the said order, filed by  "GD" in  the M.P. High Court was dismissed on 2-9- 1970, GD  obtained a special leave (CA 785/71), but the stay was refused,  resulting in  his lease  running in  operation only for  a period of about 5 years and "RD" carrying on its operation of mining limestone as a major mineral.      During the  pendency of the lease in favour of "GD" the rate of  royalty was  enhanced by  the State  Government and "GD" filed  another writ  petition (MP  No. 328/1968) in the High Court  on 23-7-1968. As the MP 3/68 Was dismissed on 2- 9-1970, "GD"  amended the  application suitable in MP 328/68 with the  words "in  view of the decision of the High Court, he was liable to pay royalty at a rate which were chargeable as a  major  mineral".  The  High  Court  allowed  the  writ petition, remanded the matter of qualification of the amount of royalty  due from  "GD".  After  the  remand,  the  State Government determined  the royalty at Rs. 16,722/-. The said demand was again 877 challenged by  "GD" for  the third  time by  way of  a  writ petition No.  MP  390/72  contending  that  if  royalty  was charged from  him on  the basis  of a major mineral, then he had paid  Rs. 36,000/- and odd more. The writ was allowed in 25-3-1974 during  the course  of the hearing of CA 785/71 in the Supreme  Court and  the  appeal  by  special  leave  (CA 1781/75) obtained  by the respondent State against the order dated 25-3-1974 was heard with CA 785/71.      Allowing CA 785/71 on merits, following the decision in Rukmani Bai Gupta v. The State Government of Madhya Pradesh, Bhopal and  others, [1975]  (3) S.C.R.  72 and  allowing  CA 1781/75 with  permission to  the appellant  to withdraw  the writ petitions No MP 328/68 and MP 390/72, the Court: ^      HELD: (1)  The facts  of the instant case, being almost identical as  Smt. Rukmani  Bai Gupta’s  case, with the only difference that  in column  6 of his application the present appellant had  merely stated  "minor minerals"  reading  the said expression  with the  expression "limestone for burning purposes" mentioned in paragraph 1, the same result follows. Therefore, the  application of the appellant was for a minor mineral and the lease granted to him was for the same. After the adverse  decision of  the High Court, he was ill-advised to take  the stand  that he was liable to pay royalty on the amount  of  limestone  quarried  by  him  out  as  "a  major mineral", that  the amount  of royalty  which is  chargeable upon it  as "a  major mineral"  is lower than one chargeable upon it as a "minor mineral". [881-CE]      Smt. Rukmani  Bai Gupta  v.  The  State  Government  of Madhya Pradesh,  Bhopal and  others. [1975]  (3) S.C.R.  72, followed.      HELD FURTHER:  (2) The  distinctive points  between the 1958 and 1961 notifications are as under:      (a) Limestone  for lime  burning was  a ’minor mineral" under the  1958 notification  irrespective of the process of burning or the quality of the lime it produced. [882-C]      (b) After  the 1961  notification  only  that  type  of limesone would  be a  "minor mineral"  which is  capable  or being used for burning in kilns for producing has quality of lime which  can  ordinarily  and  generally  be  used  as  a

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building material. [882-D]      (c)  The   lessees’  responsibility   ceases  when  the limestone  quarried   by  him  is  used  for  burning  kilns producing the building material quality of lime. It would be beyond his  control to  see that  the lime  so produced  was actually used as a building material.      (3) The  question of  grant of a lease for quarrying or mining the  limestone will  have to  be decided by the State Government on the basis of the quality of the limestone in a particular area. If a major portion in the area is such that can be  used as a "minor mineral" then a lease in accordance with the  State Rules  will have to be granted and a special clause like  clause 18 may be provided therein if per chance some quality  of limestone  quarried in  the demised area is found to be of high grade. Similarly if the major portion is found to be of high grade limestone, then a mining lease for mining limestone  as a  major mineral in accordance with the Central Rules  will have to be granted. A special clause may be incorporated  in such  a lease  also. In either event the lease will  be liable  to be cancelled if the lessee commits any breach of the terms of the lease including the one as to the purpose  of using  the limestone  as a  major or a minor mineral.[882-EH]      (4) In  situations like  the instant  case where  there were two  applicants-one wanting the lease of limestone as a minor mineral  and the  other  who  wanted  it  as  a  major mineral, it  was not  open to the State Government to merely ignore the  application for major mineral and grant lease to the appellant;  nor  was  it  appropriate  for  the  Central Government to  direct the  State Government to  consider the application for  major mineral.  The proper course in such a situation is to direct the State Government to consider both the applications,  determine the  question as to whether the quality of the limesone contained in the area in question is such that a lease to quarry it as a minor mineral should 878      be granted  and then  it should  proceed to  grant  the leave. In  the instant case the proper course which ought to have been  followed has  neither been  followed nor has been directed to be followed by the Central Government. [883-AD]

JUDGMENT:      CIVIL APPELLATE JURISDICTION: Civil Appeals Nos. 785 of 1971 and 1781 of 1975.      Appeal by  Special Leave  from the  judgment and orders dated the  2nd September,  1970 and  25th March, 1974 of the Madhya Pradesh  High Court  in Misc.  Petition Nos. 3/68 and 390/72 respectively.      V. M.  Tarkunde and K. J. John of M/s. J. B. Dadachanji & Co. for the appellant (In CA 785/71)      Ram Panjwani,  Dy. Adv.  Gen. (M.P.) with H. S. Parihar for respondent  no. 1  (In CA  785/71  &  appellant  in  CA. 1781/75).      S. P. Nayar for respondent No. 2 (In CA. 785/71)      G. L. Sanghi, A. K. Sanghi, C. K. Ratnaparkhi and A. G. Ratnaparkhi for respondent No. 3 (in CA 785/71)      M/s. Balakrishnan  and Ghatate,  for respondents  in CA 1781/75.      The Judgment of the Court was delivered by      UNTWALIA, J.-These  two appeals  by special  leave have been heard  together as they originate from a common dispute between the parties. They are being disposed off by a common judgment and order.

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    To  provide   for  the  regulation  of  mines  and  the development of  minerals under  the control  of the Union of India The  Mines and  Minerals (Regulation  and Development) Act, 1957, Central Act 67 of 1957-hereinafter referred to as the Act,  was passed.  In section  3 of  the Act  clause (a) says: "minerals" includes all minerals except mineral oils." Clause (e) provides:           "minor minerals"  means 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, declared to be a minor mineral," For  the  sake  of  convenience  and  to  distinguish  minor minerals from  minerals, the  minerals are  generally called major minerals  and will be described as such hereinafter in this judgment. Provisions of sections 4 to 13 are applicable to the  grant of  any prospecting  licence or a mining lease for a  major mineral. In exercise of the power under section 13, the  Central  Government  made  the  Mineral  Concession Rules, 1960-hereinafter  called the Central Rules. The State Government was  authorised by  section 15 of the Act to make Rules for  regulating the grant of prospecting licences (now quarry  leases)  and  mining  leases  in  respect  of  minor minerals. The  Government of  Madhya Pradesh  in exercise of the said  power made the Madhya Pradesh Minor Mineral Rules, 1961-hereinafter called  the State Rules. In clause (iii) of Rule 2  ’quarry lease’ was stated to mean a mining lease for minor minerals. 879      Limestone is  found in abundance in the State of Madhya Pradesh. The  Central Government issued a notification dated the 1st  June, 1958  in exercise  of the powers conferred on them by  clause (e)  of  section  3  of  the  Act  declaring "limestone used  for lime  burning" as a minor mineral. By a subsequent notification  dated the  20th September, 1961 the description of  the limestone as a minor mineral was changed and only  "limestone used  in kilns  for manufacture of lime used as  building material" was declared as a minor mineral. The power  to grant  a quarry lease for limestone as a minor mineral or  a mining  lease for limestone as a major mineral rested in  the State  Government-the former  under the State Rules and the latter under the Central Rules. Applicants had to apply  to the  State Government  in the  respective forms prescribed in the two Rules.      Gorelal Dubey-the  appellant in  Civil Appeal No 785 of 1971 made  and application  on May  7,  1965  to  the  State Government for  a quarry  lease for  "limestone for  burning purpose" for a term of 10 years mentioning in paragraph 3 of the application  "minor minerals"  against  the  6th  column "Minor minerals  or minerals  which the applicant intends to mine." The land in respect of which the application was made by the  appellant measured  8.36 acres  and is  situated  in village Bistara,  District Jabalpur.  The firm,  Ram Chander Badri Prasad  Gaur, respondent  no. 3  filed an applications before the  State Government  on  June  2,  1965  under  the Central Rules  in  respect  of  the  same  area  asking  the Goverment to grant a mining lease to it for mining limestone as a  major mineral  By their order dated November 10 1965 a quarry lease  was granted  by the  State Government  to  the appellant and a Lease Deed was executed on November 10, 1965 including special clause 18A therein. Respondent no. 3 filed an application  in revision  before the  Central Government. They allowed  the revision by their order dated December 14, 1967 holding therein that in substance the application for a lease filed  by the  appellant was  an application for major

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mineral and  lease granted  was also  not for minor mineral, hence the  grant of  the lease  to  the  appellant  was  not competent. The  Central Government,  therefore, directed the State Government  to consider  the application of respondent no. 3  for grant  of mining lease for limestone over an area of 8.36 acres in village Bistara.      The appellant  filed a  writ petition (M.P. No. 3/1968) in the  Madhya Pradesh  High Court to challenge the order of the Central  Government. The  High Court  dismissed the writ application by  order dated  September 2, 1970 affirming the view of  the Central  Government that  in substance  and  in effect the  application  for  and  grant  of  lease  to  the appellant by  the State  Government was  for a major mineral and not  a minor  mineral. Since  the other two points urged before the  High Court  were not  pressed in argument before us, we  need not  make any  reference to them. The appellant came to  this Court  against the  order of  the High  Court. Special leave  to appeal  was granted  but stay was refused. The result  was that  the appellant’s  lease could remain in operation for  a period  of about 5 years and for the last 5 years, respondent  no. 3  who was  granted  a  mining  lease pursuant 880 to the  order of the Central Government has been carrying on its operation of mining limestone as a major mineral.      During the  pendency of  the lease  in  favour  of  the appellant,  rate  of  royalty  was  enhanced  by  the  State Government in exercise of their power under the State Rules. Demands of  more royalty were made from the appellant by the State Government. He filed a writ petition (MP No. 328/1968) in the  High Court  on July 23, 1968 to challenge the demand of the  enhanced royalty. After the decision dated September 2, 1970  of the  High Court  in M.P. 3 of 1968 the appellant amended his  M.P. 328/1968  by introducing paras 20A and 20B and a  prayer (b)(i)  in the writ application to say that he was liable  to pay,  in view  of the  decision of  the  High Court, royalty  on the  limestone quarried  by him at a rate which were  chargeable on  limestone as  a major mineral. On certain grounds,  which are  not necessary  to  be  detailed here, the  High Court  allowed M.P. 328/1968 by its judgment and order dated December 14, 1970 and remanded the matter of quantification of  the amount  royalty due from appellant to the authorities  concerned.  After  remand  the  authorities determined the  amount of  royalty due from the appellant at Rs. 16,722/-  and demanded  the same from him. The appellant filed a  writ petition  (MP 390)  72) in  the High  Court to attack the  demand of  Rs. 16,722/-  from him  and contended that if  royalty was  charged  from  him  on  the  basis  of limestone as a major mineral then he had paid Rs. 36,000 and odd more.  The High  Court by  its judgment  and order dated March 25,  1974 allowed M.P. 390/1972 and quashed the demand of  Rs.  16,722  made  by  the  State  Government  from  the appellant. The  State of Madhya Pradesh filed an application for special  leave to  appeal from  the said decision of the High Court.  During the course of hearing of Gorelal Dubey’s appeal, special  leave was  granted by  us and thereupon the appeal was registered and numbered as CA 1781/75.      Mr. Tarkunde  appearing for  the appellant in CA 785/71 submitted that in view of the decision of this Court in Smt. Rukmani Bai Gupta v. The State Government of Madhya Pradesh, Bhopal and  others the decision of the Central Government as also of  the High  Court to  the effect  that the  appellant application for and grant of lease to him was in substance a lease for  a major  mineral is  erroneous. He submitted that the order  should be quashed and the State Government should

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be directed  to grant  a fresh  lease to  the appellant  for another period of 10 years or the balance of the said period as the  case may be. Mr. Sanghi appearing for respondent no. 3 endeavoured  to point  out that the decision of this Court in Rukmani  Bai’s case  (supra) was  distinguishable and the decision of  the Central  Government and  the High  Court is correct. He  further pointed  out  that  the  appellant  had himself taken  categorical  stand  in  MP  328/1968  and  MP 390/1972 that  he had quarried limestone as a major mineral, disposed it of as such and was liable to pay royalty only on that basis.  Counsel further  submitted that  there  was  no renewal clause in the appellant’s lease and the period of 10 years having expired now 881 the appellant  was entitled  to no relief in this Court. Mr. Ram Panjwani,  appearing for  the State  of  Madhya  Pradesh supported the appellant on the question of the nature of his lease as  being one  for a  minor mineral  and  pressed  the Govermnent’s demand of Rs. 16,722 in C. A. 1781/75.      It appears  even after the issuance of the notification dated September  20, 1961 by the Central Government making a change in  the description  of  the  limestone  as  a  miner mineral  confusion  persisted  amongst  the  applicants  for quarry  lease   of  limestone   as  also   the  governmental authorities. They did not clearly appreciate the distinction between the  new description of limestone as a minor mineral given in  1961 notification  and  the  one  which  had  been mentioned in  the 1958  notification. In  Rukmani Bai’s case the appellant  had stated  in column  6 of  the  application "limestone for  burning as  a minor  mineral" and  the lease which was  granted described it as "Iimestolle for burning". Taking into  consideration the  totality of the facts it was held by this Court that the application and the grant of the lease was  for limestone   as  a minor mineral. The facts of the instant  case are  almost identical, the only difference being that  in column  6  of  the  application  the  present appellant had  merely stated  ’minor minerals’.  But reading the said  expression  with  the  expression  "limestone  for burning  purpose"  mentioned  in  para  1  the  same  result follows. A contrary view expressed by the Central Government and the  High Court  does not hold good. We, therefore, hold that the  application of  the  appellant  was  for  a  minor rnineral and  the lease  granted to  him was  for the  same. After the  adverse decision  of the  High Court, he was ill- advised to  take the stand that he was liable to pay royalty on the   amount of limestone quarried by him only as a major mineral. We  were a bit surprised to know that the amount of royalty which  is chargeable on limestone as a major mineral is lower than the one chargeable upon it as a minor mineral. Without further light it seems to us curious.      In paragraph  8 at  page 996  it  was  pointed  out  in Rukmani Bai’s  case by  this Court with reference to the two notifications issued  by the Central Government in the years 1958 and 1961:           "The field  of minor  mineral, in  so  far  as  it      concerned  limestone,   was  narrowed   down.  Formerly      limestone used  for burning  for manufacture  of  lime,      whatever may be the uses to which such lime may be put,      whether as building material or for other purposes, was      within the definition of ’minor mineral’, but after the      amendment, it  was only  lime stone used for burning in      kilns for manufacture of lime used as building material      that was  covered by  the definition  of minor mineral.      When limestone is used for burning for manufactories of      lime for industrial or sophisticated purposes otherwise

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    than as  building material,  it would  have  to  be  of      superior quality  and hence  after the  amendment,  was      classified as  major mineral,  leaving  only  limestone      used for  burning in kilns for manufacture of lime used      as building 882      material to  be regarded  as minor mineral. But in both      cases, whether  under the  original notification or the      amended notification,  limestone was contemplated to be      used for  burning for  manufacture of  lime.  The  only      difference was  that in the former, burning could be by      any means or process and lime manufactured could be for      any purpose  in cluding building material, while in the      latter, burning  could be  only in  the kilns  and  for      manufacture of  lime used only as building material and      for no other purpose."      It  was   admitted  at  the  Bar  that  ordinarily  and generally only  limestone  of  inferior  grade  is  used  as burning in  kilns for  manufacture of  lime used as building material and  limestone of  superior grade is used either as such for industrial purposes or a high quality lime produced from it  is used  for purposes  other than building material including industrial  or  sophisticated  purposes.  For  the purpose of  some clarification  we may  add a  few words  to point out  the distinction  between the  two  notifications. Limestone used  for lime  burning was  a minor mineral under 1958 notification  irrespective of the process of burning or the  quality  of  the  lime  it  produced.  After  the  1961 notification only  that type  of limestone  would be a minor mineral which is capable of being used for burning materials for producing  that quality of lime which can ordinarily and generally be  used as  a  building  material.  The  leasee’s responsibility ceases  when the limestone quarried by him is used for  burning in  kilns producing  the building material quality of  lime. It would be beyond his control to see that the lime  so  produced  was  actually  used  as  a  building material. But  then by  and large the question of grant of a lease for  quarrying or mining the limestone will have to be decided by  the State Government on the basis of the quality of  the   limestone  in   a  particular  area.  Mr.  Sanghji endeavioured to  place materials  before us  to show that in the area in question was to be found limestone of high grade and  quality.   He,  therefore,  submitted  that  the  State Government should  not be  permitted to  waste the  national wealth of high grade limestone by granting a quarry lease as a minor  mineral merely  for the  purpose  of  getting  more royalty on  it. We  see force in this argument but it is not possible for  us to  decide the  contentious question  as to whether the  limestone found in the area was such that could be used  as a minor mineral or was fit to be used as a major mineral. If  a major portion in the area is such that can be used as a minor mineral. then a lease in accordance with the State Rules  will have  to be  granted and  a special clause like clause  18A may  be provided therein if per chance some quality of  limestone quarried  in the demised area is found to be of high grade. Similarly if the major portion is found to be  of high  grade limestone,  then a  mining  lease  for mining lime  stone as a major mineral in accordance with the Central Rules  will have to be granted. A special clause may be incorporated  in such  a lease  also. In either event the lease will  be liable  to be cancelled if the lessee commits any breach of the terms of the lease including the one as to the purpose  of using  the limestone  as a  major or a minor mineral. 883

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    Following Rukmini  Bai’s case  we have  held  that  the application filed  by the appellant and the lease granted to him was for quarrying limestone as a minor mineral. But that does not entitle him to get the relief as he wants from this Court. A  peculiar feature of this case, and which may occur in respect  of some  other area  is  that  there,  were  two applicants-one  the   appellant  was  wanted  the  lease  of limestone as  a minor mineral and the other respondent no. 3 who wanted it as a major mineral. In such a situation it was not open  to the  State  Government  to  merely  ignore  the application of  respondent no.  3 and  grant  lease  to  the appellant. Nor was it appropriate for the Central Government on the  view which  has been  found to be erroneous by us to direct the  State Government  to consider the application of respondent  no.  3  alone.  The  proper  course  in  such  a situation is to direct the State Government to consider both the applications,  determine the  question as to whether the quality of  the limestone  contained in the area in question is such  that a lease to quarry it as a minor mineral should be granted  or is such that a lease for mining it as a major mineral should  be granted  and then  it should  proceed  to grant the  lease. The proper course which ought to have been followed has  neither been followed nor has been directed to be followed.      For the  reasons stated  above, we  allow C.A.  785/71, quash the  order of  the High  Court as  also of the Central Government. The  leaser granted to respondent no. 3 pursuant to the  said order  shall cease  to have  effect. The  State Government is directed to consider both the applications for grant of lease and dispose of the matter afresh in the light of this judgment. It will be open to the State Government to grant a  lease for such period as it deems fit and proper to determine or  for the  balance of the period of the lease of the party to whom it may be granted. For the past period the appellant will  be liable  to pay  royalty on  the amount of limestone quarried  by him  during the  subsistence  of  his lease on the basis of the royalty payable on a minor mineral and respondent  no. 3,  similarly, will  be  liable  to  pay royalty on  the amount  of limestone  extracted by it during the period of its lease on the basis of the rates chargeable on a major mineral.      Learned counsel  for Gorelal Dubey during the course of argument had  offered to  withdraw his  writ petitions  M.P. 328/68 and  M.P. 390/1972  and to pay the sum of Rs. 16,722, if it be found that the lease granted to him was a lease for a minor  mineral. In  view of our finding recorded above, we allow CA  1781/75, set  aside the  orders of  the High Court made in  the  two  writ  petitions  and  allow  them  to  be withdrawn.      We shall  make no  order as  to costs  in  any  of  the matters. S.R.                                        Appeals allowed. 884