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PETITIONER: RAMLAL & SONS

       Vs.

RESPONDENT: STATE OF RAJASTHAN

DATE OF JUDGMENT09/10/1975

BENCH: GOSWAMI, P.K. BENCH: GOSWAMI, P.K. ALAGIRISWAMI, A. UNTWALIA, N.L.

CITATION:  1976 AIR   54            1976 SCR  (2) 222  1976 SCC  (1) 112

ACT:      Mines and Minerals (Regulation and Development) Act (67 of 1957), s. 5 and the Mineral Concession Rules 1949, r. 41- State Government demanding premium without prior approval of Central Government-Validity.

HEADNOTE:      The appellant’s  tender for  mining rights for mica was accepted  in  1951.  The  appellant  deposited  the  premium demanded and  took possession of the land. The lease was for a period of twenty years but no lease was executed. In 1967, the State  Government directed  that  the  appellant  should vacate the  land within a month from the date of the receipt of their  order. The  appellant challenged  the order  under Art. 226. but the High Court dismissed the petition.      Allowing the appeal to this Court, ^      HELD: (1)  In view of the facts, that the period of the purported lease had already expired, and no proper lease had been executed,  there was  no question of issuing a writ for granting the lease, or the appellant exercising an option to renew the lease. [224H]      (2) The appellant, however, was entitled to a refund of the illegally realised premium deducting the sum received on account of  compensation for the unexpired period. The State Government was under a legal obligation to act in accordance with the  statutory rules  applicable, namely,  the  Mineral Concession Rules,  1949,  made  in  exercise  of  the  power conferred under  s. 5  of the Mines and Minerals (Regulation and Development)  Act, 1948  when granting a lease. It could not impose  terms and  conditions according to its own whims ignoring or  disregarding statutory  rules which are binding on it,  and could not exercise a power unknown to the rules. There  is   no  provision   in  the  rules  authorising  the realisation of premium. Rule 41, providing for conditions of the lease,  specifically mentions  royalty,  dead  rent  and surface rent  but not premium. Under r. 41(3) a mining lease may contain  any other  special conditions  subject  to  the prior approval  of the Central Government; but no such prior approval was  given in the present case, for the realisation of the premium.

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                                                   [225A-F]

JUDGMENT:      CIVIL APPELLATE  JURISDICTION: Civil Appeal No. 1562 of 1970.      Appeal by  special leave  from the  Judgment and  Order dated the  29th July,  1970 of  the Rajasthan  High Court in D.B. Civil Special Appeal No. 172 of 1970.      D. V. Patel, S. M. Jain, for the appellant.      Miss Maya Rao for the respondent.      The Judgment of the Court was delivered by      GOSWAMI, J. This appeal by special leave is against the judgment of  the Division  Bench of the Rajasthan High Court by which  an appeal  against the  judgment of a single Bench was summarily rejected.      In answer  to a  notification of March 29, 1950, issued by the State of Rajasthan inviting tenders for mining rights for mica  on certain  terms and  conditions,  the  appellant submitted its tender which was accepted on December 30, 1950 and a  notification in  that behalf  was made  by the  State Government on  February 6,  1951, granting  the mining lease for mica  for block  No. 6 (except sidries mine) in Bhilwara District on payment of the tendered amount of Rs. 1,55,000. 223 The lease  was for  a period  of 20  years with an option of renewal of  the lease for another 20 years as per conditions prescribed in  the Mineral  Concession Rules,  1949 (briefly the Rules).  A premium  of Rs. 1,55,000 was deposited by the appellant and possession was also handed over to it on March 15, 1951.  The area originally was 6021 acres but later on a dam, by  the name  of Meza  Dam, was  constructed over  some parts of  the original  area and  the appellant  was left to work on  2924 acres.  It is  stated that the appellant spent Rs. 5,65,000  between 1951  and 1955. It is also common case that  no  lease  was  executed  within  six  months  of  the acceptance of  the tender as required. On June 19, 1955, the Director of  Mines and  Geology, Rajasthan, sent a notice to the appellant  intimating that  the orders  sanctioning  the lease stood  revoked with  effect from  June  6,  1955.  The appellant was asked by this notice to show cause why further action to  take immediate  possession of the area should not be taken.  It may be noted that in this notice exception was taken for  the appellant  not executing the lease within the requisite period  of six  months which,  it  was  mentioned, expired on August 27, 1953. The appellant submitted a review application  against  the  order  of  the  State  Government cancelling the  mine lease on February 23, 1957. It appears, meanwhile, the State Government proposed to grant a lease to the appellant  and the  latter  did  not  press  the  review application.  Thereafter   some  correspondence  took  place between the  appellant and  the State  Government  regarding execution of  the lease,  its terms  and conditions  and the like. A  reference was  also made  by the  appellant to  the Central Government  on March  12, 1963,  to direct the State Government to  sanction the  lease. On  May  15,  1965,  the Mining Engineer,  Rajasthan, sent  a notice to the appellant to deposit  the dead  rent amounting  to Rs. 1,27,616.36 for the period  1-4-1960 to  14-9-1965 on  pain of legal action. The  appellant  preferred  a  revision  application  to  the Government of  India against  this order.  The Government of India by its order of March 19, 1966, set aside the order of May 15,  1965, demanding  Rs. 1,27,616.36  as dead  rent for block No. 6. This order is significant in more than one way.

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It is  clearly stated in the order that the conditions under the Mineral  Concession Rules  1949 under  which  mining  or prospecting operation  is allowed  to be  undertaken do  not provide for payment of premium by the lessee except with the prior approval  of  the  Central  Government.  It  was  also pointed out  in the  order that no such approval was secured by the  State Government before accepting the premium of Rs. 1,55,000 from  the appellant. It was, therefore, pointed out that the  acceptance of  the premium  was  illegal.  It  was further held  that the  State  Government  was  entitled  to charge only  royalty in the present case and it could charge dead rent  or royalty,  whichever  was  higher,  only  after execution of a formal lease.      Then came  the State  Government’s  impugned  order  of November 9,  1967, addressed  to the  appellant.  There  was reference in the above order to the fact that the appellant-           "approached the  Central Government  in  revision.      The Central  Government have  held that  the permissive      permission 224      of this  block to  you is  not even as a licensee under      the  Mineral   Concession   Rules   1949.   Government,      therefore, do not want that the possession of this area      should remain  with  you  any  longer.  Government  is,      therefore, pleased  to order that you should vacate the      aforesaid block  No. 6 with in a month from the date of      the receipt  of this  note, failing  which such  action      shall be taken as may be deemed proper". It may be mentioned that the Central Government in the order referred to above in the extract also observed "this licence was not  within the meaning of Mineral Concession Rules 1949 but was governed by the General law, e.g. the Easement Act". (See Central Government letter dated March 19, 1966.)      The appellant after receipt of the order of November 9, 1967, instituted  an application  under article  226 of  the Constitution in  the High  Court of  Rajasthan  (being  Writ Petition No.  691 of  1967) praying for a writ of certiorari to quash  the aforesaid  order, to  restrain the  State from revoking the  licence and  dispossessing the  appellant from the mining  area absolutely  or  in  the  alternative,  till compensation  along  with  refund  of  the  premium  of  Rs. 1,55,000 and  the dead  rent realised  in excess  of royalty were paid  by the State. As a last alternative it prayed for a direction  to the  State to grant the lease of the balance area of 3628 acres or such other area to which the appellant was entitled in law.      The learned  single Judge  of the  High Court dismissed the writ  application as  infructuous in  view of  the offer made by  the State  in its  application of  April 20,  1970, repeated through  the learned  Advocate General. The learned Advocate General  submitted before  the High  Court that the State  Government   "was  still   prepared   to   pay   them compensation in  order to  revoke  the  licence  granted  in favour of the petitioner".      In the  aforesaid application  of April  20, 1970,  the State Government  was prepared  to pay  compensation to  the appellant at  the  rate  of  Rs.  7750  per  annum  for  the unexpired period of 20 years ending on March 14, 1971.      The  learned   single  Judge   while   dismissing   the application observed that if the petitioner thought that the compensation was  inadequate he  could agitate the matter in court.      The appellant’s appeal thereafter to the Division Bench was summarily  dismissed and  leave to  appeal to this Court was also rejected. Hence this appeal by special leave.

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    We have heard the learned counsel for both the parties.      In view  of the  fact that  the period of the purported lease already  expired  on  March  14,  1971,  there  is  no question of  a writ  for granting  the lease. Since a proper lease had not been executed, for whatever reasons, there was no question also of exercise of an option of renewal 225 of lease.  The only  question that  survives is  whether the State Government  could realise  premium in  a lawful manner under the Mineral Concession Rules.      We do  not find  any provision in the Rules authorising realisation of  premium as done in this case. Rule 41 of the Rules of  1949 applicable  at the relevant time provides for conditions  of  the  lease.  These  conditions  specifically mention  royalty,  dead  rent  and  surface  rent,  but  not premium. Again  proviso to  rule 41(1)(iii)  states that the lessee shall  be liable  to pay  the dead-rent or royalty in respect of  each mineral  whichever be higher in amount, but not both. Under subsection (3) of section 41, a mining lease may contain  any other  special conditions,  subject to  the prior  approval  of  the  Central  Government.  The  Central Government,  is,   therefore,  right  in  holding  that  the realisation of  the premium  of Rs.  1,55,000  was  illegal, particularly because  there was no prior approval under sub- section (3) of rule 41 of the Rules.      When in  this  case  grant  of  the  mining  lease  was envisaged under definite statutory rules made in exercise of power, conferred  under section  5 of  the Mines  & Minerals (Regulation and Development) Act, 1948, the State Government was under  legal obligation  to act in accordance with these rules. It  could not exercise a power in the matter of grant of mining lease unknown to these Rules. The State Government could not  impose terms  and conditions according to its own whims ignoring or disregarding the statutory rules which are binding on  it. The  appellant is,  therefore, entitled to a refund of  Rs. 1,21,930.71 which is due to the appellant out of the  illegally realised  premium of Rs. 1,55,000 allowing the sum  of Rs.  33,069.29 already received by the appellant from the Government on account of compensation.      The appellant’s  counsel made a statement in court that since the appellant had already vacated the area it will not of its  own make any further claim for compensation or under any other heads but reserves its right to raise all possible defences against  any action  that may  be instituted by the State against  the appellant  in the  matter of the grant of mining for  mica in  the area. Subject to the reservation of the above  right, the appeal is partly allowed to the extent that  the   State  Government  is  directed  to  refund  Rs. 1,21,930.71 as mentioned above.      The appellant is entitled to its costs in this Court. V.P.S.                               Appeal allowed in part. 226