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PETITIONER: M/S.  NANDRAM HUNATRAM, CALCUTTA

       Vs.

RESPONDENT: UNION OF INDIA & ANR.

DATE OF JUDGMENT: 29/03/1966

BENCH:

ACT: Mines and Minerals-Failure to fulfil condition of lease  and endangering  colliery-Government  if  can  determine  lease- Revision  Procedure  for  passing  order-Mineral  Concession Rules, 1960.

HEADNOTE: The  appellant-firm held mining lease of a colliery  on  the condition   to   continue  the   work,   without   voluntary intermission,  in a skillful and workman-like  manner.   The partners  fell  out  amongst, themselves, the  work  of  the colliery stopped, wages of the labourers were not paid,  the essential  services stopped working, and the colliery  began to get flooded.  The State Government stepped in and made  a promise  to the essential workmen that their wages would  be paid and this saved the colliery.  The State Government gave a  notice asking the firm to remedy the defect within  sixty days failing which it would take over the colliery.  As  the firm  did nothing to remove the defects and did not  request for  extension of time, the State Government took  over  the colliery  and  terminated  the  lease.   The  firm  filed  a revision before the Central Government.  The Central Govern- ment  asked  for the comments of the  State  Government  and invited  the firm to make its own comment upon the reply  of the  State  Government.   Taking  the  entire  matter   into consideration, the Central Government rejected the revision. In appeal to this Court, the firm contended that the  action by  the  State Government was arbitrary and  highhanded  and that  the Central Government did not give a hearing  to  the firm  and  also  did  not give  any  reasons  in  its  order dismissing the revision. HELD:The action of the State Government far from being arbi- trary  or capricious was not only right but  proper.   This$ was hardly a case in which any act-ion other than  rejecting the  application for revision was called for and a  detailed order was really not required because after all the  Central Government was merely approving the action taken in the case by the State Government, which stood completely  vindicated. [108 B-C] The  Mineral  Concession  Rules make  it  incumbent  on  the Central  Government  to  obtain the comments  of  the  State Government upon the application for revision and cast a duty on  the Central Government to afford an opportunity  to  the applicant to make representations in respect of the comments of  the  State  Government.  This  procedure  was  correctly followed  and  the Central Government thus  had  a  detailed discussion of the pros and cons of the case before it.  [107 G]. Harinagar  Sugar Mills Ltd. v. Shyam Sundar Jhunjhunwala,  [

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1962] 2 S.C.R. 339, Madhya Pradesh Industries Ltd. v.  Union of  India. [1966] J.S.C.R. 466 and Aluminium Corporation  of India  Ltd.  v. Union of India and Ors.,  C.A.  No.  635/64, dated 22-1965] referred to.                             105 The firm did not fulfil its obligations under the lease and, whatever the reason, it was guilty of voluntary intermission in  the  working of the colliery and of  endangering  it  by neglect.  This entitled the State Government to step in  and determine  the  lease under the terms of the lease  and  the provisions of the Mineral Concession Rules. [107 C-D].

JUDGMENT: CIVIL APPELLATE JURISDICTION: Civil Appeal No. 257 of 1964. Appeal  by special leave from the judgment and  order  dated February  19, 1963 of the Government of India,  Ministry  of Mines and Fuel, New Delhi on an application for review under rule 54 of the Mineral Concession Rules 1960. S.   N.  Andley,  Rameshwar Nath, P. L. Vohra  and  Mahinder Narain, for the appellant. C.   K. Daphtary, Attorney-General, R. Ganapathy lyer and B.   R. G. K. Achar, for respondent No. 1. R. N. Sachthey, for respondent No. 2. The Judgment of the Court was delivered by Hidayatullah, J. The appellant Messrs.  Nandram Hunatram  of Calcutta,  a firm consisting of four partners including  one Kishan Lal Aggarwal, held a mining lease for coal in respect of Handidhua Colliery for a period of 30 years commencing on April 6, 1959.  Under Part VII of the lease, which contained the  covenants  of the lessee, the firm  had  undertaken  to commence mining operations within one year from the date  of the execution of the lease and then to continue the work  of searching    and   winning   minerals   without    voluntary intermission  in  a skillful and  workman-like-manner.   The firm had appointed one M. L. Goel as the Manager and  Kishan Lal  Aggarwal as the occupier of the colliery.   It  appears (and  in fact it is not denied) that the partners  fell  out among  themselves and as none of them was willing  to  spend money  on  the  colliery, work deteriorated and  came  to  a standstill  in  May  1962.   Goel  reported  to  the   State Government that the wages of the labourers had not been paid for  weeks, that work had stopped at the colliery  and  that even the essential services were not being maintained  owing to  non-payment  of  wages.   He  wrote  to  the  firm   and Government early in the first week of May, bringing to their notice  that the colliery was in danger of being flooded  if the essential services stopped working.  On May 9, 1962  the essential  services stopped working as their wages  had  not been  paid  for several weeks.  The colliery  began  to  get flooded  when the pumps stopped and it was apprehended  that within the next few hours the pumps would be drowned and the colliery  lost.  Government, however, stepped in and made  a promise  to the essential workmen that their wages would  be paid  and  this saved the colliery.  On May  14,  the  Chief Inspector of Mines was informed by Kishan Lal Aggarwal  that he was restrained by the other 106 Partners  of  the  firm  from  making  payment  for  running expenses  of the colliery and that he was not in a  position to  perform  his  duties as  an  occupier.   He  accordingly resigned his office.  Goel also resigned and on May 16, 1962 the Sub divisional Officer, Talchar informed Government that the situation had become very alarming and that some  action

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was  absolutely  necessary.   Government  thereupon  gave  a notice on May 19, 1962 asking the firm to remedy the  defect within sixty days of the receipt of the notice failing which Government  threatened  to take over the colliery  from  the firm.  As the firm did nothing to remove the defects and did not request for extension of time, Government took over  the colliery and terminated the lease. The firm thereupon filed an application for revision  before the  Central  Government  under  Rule  54  of  the   Mineral Concession Rules 1960.  The Central Government asked for the comments  of  the State Government on  the  application  and invited the firm to make its own comments upon the reply  of the  State  Government.   Taking  the  entire  matter   into consideration the Central Government by order, February  19, 1963,  rejected the application for revision.   The  present appeal  is  against the order of the Central  Government  by special leave of this Court. It  was admitted in the application for revision and  it  is not  denied  before us that the  partners  were  quarrelling among themselves and the work at the colliery had  therefore stopped.   It  is admitted that the wages of  the  labourers were  not paid for about five weeks before  Government  sent its  notice on May 19, 1,962.  It is further  admitted  that the essential services had also stopped working and that but for the timely action of the Government, the colliery  would have been flooded in a matter of hours and probably rendered unworkable till dewatered.  With this background in mind  we have to consider the objections of the firm to the order  of the  Central  Government in the first instance  and  of  the State Government in the final analysis. Clause (3) of Part VII of the lease is one of the  covenants by the lessee and under it the lessee undertook to  continue work,  without  voluntary  intermission, in  a  skilful  and workman-like-manner.   Under cls. (i) to (x) of Rule  41  of the  Mineral Concession Rules, 1949 and under Rule 27(5)  of the Mineral Concession Rules, 1960 power is conferred on the State Government to require the lessee by notice to remove a breach  within  60  days of the receipt  of  notice  and  in default to determine the lease and forfeit the whole or part of the security in deposit.  Under Rule 27(1)(f) the  lessee is also required to conduct operations in a proper,  skilful and  workmanlike-manner.   It is abvious that  there  was  a breach  by  the  lessee of the  covenants  and  the  Mineral Concession Rules when the firm stopped working the colliery. Even  if the firm did not order the stoppage of the work  at the colliery it is clear from the complaints 107 of  Goel and Kishan Lal Aggarwal that no payment  was  being made  to  the labourers and they stopped  work.   On  record there  are many telegrams and letters sent by  the  Workers’ Association to Government complaining of the failure of  the firm  to pay their wages for weeks.  It is thus  clear  that action  was absolutely necessary to save the  colliery  from being ruined.  It is contended, however, that the wages were paid  in full on the 17th of July but that obviously  cannot do away with voluntary intermission which had already  taken place  for a few weeks.  The firm in its  representation  to the  Central Government said that it had plans to  raise  as much as 240,000 tons of coal per year but their  performance shows  that in April, 1962 they had raised less  than  2,000 tons   and  nothing  in  May,  June  and  July.   In   these circumstances, there is no merit whatever in the  submission of  the  firm that the action by the  State  Government  was arbitrary  and high-handed.  It is plain that the  firm  did not fulfil its obligations under the lease and, whatever the

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reason,  it  was  guilty of voluntary  intermission  in  the working  of the colliery and of endangering it  by  neglect. This entitled the State Government to step in and  determine the lease under the terms of the lease and the provisions of the Mineral Concession Rules. It is, however, argued before us that the Central Government did not give a hearing to the firm and also did not give any reasons   in  its  order  dismissing  the  application   for revision.   Reliance is placed upon two recent decisions  of this Court which, following the earlier decision reported in Harinagar  Sugar Mills Ltd. v. Shyam Sundar  Jhunjhunwala(1) have  laid down that Government should give reasons when  it performs  quasi-judicial functions such as  hearin-  appeals and revisions.  The two cases are Madhya Pradesh  Industries Ltd. v. Union of India and Ors.(2) and Aluminium Corporation of  India  Ltd. v. Union of India and  Ors(3)  In  Harinagar Sugar  Mills(1)  the order was reversed on the  ground  that reasons  for  the  decision should have  appeared.   In  the Aluminium  case there was dispute as to how much  scrap  was remelted  and  Government  gave its  decision  on  a  report received  behind  the  back of  the  aggrieved  party  again without  stating  why  a part of  the  assessee’s  case  was rejected.   In  the Madhya Pradesh Industries  case  it  was pointed out that an order affirming an earlier decision need not  fail because it does not repeat the same  reasons  over again. The  Mineral  Concession  Rules make  it  incumbent  on  the Central  Government  to  obtain the comments  of  the  State Government upon the application for revision and cast a duty on  the Central Government to afford an opportunity  to  the applicant to make representations in respect of the comments of  the  State  Government.  This  procedure  was  correctly followed  and  the Central Government thus  had  a  detailed discussion of the pros and cons of the case before it.   The facts in the case were quite clear and spoke (1) [1962] 2 S.C.R. 339,         (2) [1966] 1 S.C.R, 466. (3)  C.A.-No.635 of 1964 decided on September 23,1965. 108 for  themselves.  The belated attempt to pay the back  wages of the workmen did not undo the voluntary intermission for a significantly   long  period  and  did  not  wipe  off   the dereliction  on the part of the firm by which the  existence of the colliery was gravely endangered. The documents on the record  quite clearly establish that the colliery was  being flooded  as the essential services had  stopped  functioning and but for the timely intervention of the State  Government the colliery would have been lost.  In these  circumstances, it  is quite clear that the action of the  State  Government was  not only right but proper and this is hardly a case  in which  any action other than rejecting the  application  for revision was called for and a detailed order was really  not required because after all the Central Government was merely approving  of  the  action taken in the case  by  the  State Government, which stood completely vindicated.  The order of the  Central  Government is clearly sustainable on  the  ma- terial  and it is not said that anything has  been  withheld from us.  The action of the State Government far from  being arbitrary or capricious was perhaps the only one to take and all  that the Central Government has done is to  approve  of it. The appeal fails and is dismissed with costs. Appeal dismissed. 109

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