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PETITIONER: SUDARSHAN MINERAL CO.  LTD.

       Vs.

RESPONDENT: UNION OF INDIA & ANR.

DATE OF JUDGMENT13/02/1975

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

CITATION:  1975 AIR  949            1975 SCR  (3) 547  1975 SCC  (1) 527

ACT: Tile  Mines  &  Minerals  (Regulation  &  Development)   Act 1957--Mineral  Concession Rules 1960--Whether detailed  rule making    power   restricts   the   General   Rule    making Power--Maximum  dead rent specified whether void on  account of  uncertainty--Whether  renewal  of the lease  has  to  be granted on the same terms and conditions.

HEADNOTE: The  appellant was granted a Mining Lease by  the  erstwhile State  of Shahapura. for a period 20 years  commencing  from 12th  August,  1941.   The area of the lease  was  1500  sq. miles.  The said area later on formed part of the State.  of Rajasthan.   The mines & minerals (Regulation &  Development Act,  1957,  came  into force from 1st  June,  1958.   Under section  61  of the Act the area of  a mining lease  in  the case  of Mica could not be more than 10 sq. miles  and;  its maximum  period  could not exceed 20 years  as  provided  in section  8.  Section 16 confers powers to  modify  a  mining lease  accorded before 1949 to bring it in  conformity  with the  Act  and  the Rules.  In exercise  of  this  power  the Controller of Mica leases reduced the mining area to 10  sq. miles and the rent was reduced from Rs. 8 per acre as  fixed by. the original lease to Rs. 6/per acre.  The period of  20 years  of  original  lease  came to an  end  in  1961.   The appellant applied to the Government of Rajasthan for renewal of  its  lease  for another 20 years  under  rule  28.   The renewal was granted but the dead rent was increased from Rs. 6 to Rs. 8 per acre.  The appellant challenged the order  of Rajasthan Government by filing a Revision before the Central Government which was dismissed.  Thereafter the a decree  of injunction  restraining per acre and for a declaration  that they are per acre.  The suit was decreed by the trial  First Appellate  Court.   The dismissal was  appellant  filed  the present suit for respondents from charging dead rent @ Rs. 8 entitled  to charge only @ Rs. 6 court but was dismissed  by the  maintained  by  the High Court in  Second  Appeal.   On Appeal by Special Leave , the appellant contended :               (1)   Under the agreement dated 20-11-1959 the               lease  was to be governed by the Act  and  the               Rules except in regard to dead rent was  fixed

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             at Rs. 6/- per acre.               (2)   Under  Rule 28 of the Rules,  the  State               Government while renewing the lease had  power               to  reduce the area but no power  to  increase               the dead rent.               (3)   Ride  27 does not apply to renewal of  a               lease.               (4)   Clause (c) of Sub-Rule (1) of Rule 27 is               ultra vires as it transgresses the rule making               power under section 13(2) (g) of the Act.               (5)   Rule  27(1)(c)  if  made  applicable  to               renewal  of  a  mining  lease  introduces   an               element of uncertainty and is therefore  void. HELD:     Rule  making  power is to be found in  section  13 (1).   Section 13(2), merely illustrates the nature  of  the power, it does not restrict the general power tinder section 13(1).   The rule could have been framed even under  section 13 (2) (g). [549C] HELD FURTHER: There is no element of uncertainty in the rule either  to  the grant of fresh lease or in  respect  of  the renewal.  The maximum limit is contained in Chapter IV.   To Provide  for  payment of dead rent it has  specified  rates’ subject  to variation within. the limit-  specified.   These cannot be said to be void on account of uncertainty. [550C] 548 HELD  FURTHER: The contention that the renewed lease had  to be granted on the same terms and conditions and that no term and condition could be varied while granting the renewal  of the  lease except in regard to the reduction of the area  in accordance  with rule 28(5) was negatived was  not  correct. If in the original lease of 1941 there wars a renewal clause one  could  probably say that the renewal bad to be  on  the same terms and conditions but in the absence of such a right of  renewal to the lessee the argument was not  sound.   The demand  of Rs. 8 per acre was within the limit specified  by Schedule IV and was in accordance with law.  The appeal  was dismissed with ’Costs.  [551B5-D]

JUDGMENT: CIVIL  APPELLATE  JURISDICTION : Civil Appeal  No.  2305  of 1969. Appeal by Special Leave from the Judgment & Order dated  the 8th August, 1969 of the Rajasthan High Court in S. B.  Civil Second Appeal No. 236 of 1966. P. C. Bhartari, for the Appellant. Girish Chandra, for Respondent No. 1. S. M. Jain, for Respondent No. 2. The, Judgment of the Court was delivered by UNTWALIA, J. This is a plaintiffs appeal by special leave of this  Court  from the Judgment and decree of  the  Rajasthan High  Court whereby the, plaintiffs Second appeal  from  the decision of the First Appellate Court was dismissed and  the dismissal of its suit was maintained. The  facts  of  the case lie in a  narrow  compass  and  may usefully be stated at the outset.  The plaintiff was granted a  mining  lease for mining mica by the erstwhile  State  of Shahpura  for a period of 20 years commencing from the  12th August,  1941.  The area of the lease purported to 1500  sq. miles.   In due course the mining area in question  came  to form  part  of  the  State  of  Rajasthan.   The  Mines  and ’Minerals (Regulation and Development) Act, 1957-hereinafter called the Act-came into force from 1st June,, 1958.  Under- section 6(1) of the Act as it stood at the relevant time the

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area of a mining lease in the case of mica could not be more than 10 sq. miles and its maximum period could not exceed 20 years as provided in section 8. Section 16 confers power  on the  appropriate authority to modify a mining lease  granted before 24th October, 1949 to bring it in conformity with the Act  and  the Rules made thereunder.  In  exercise  of  this power   and   in   accordance   with   the   Mining   leases (Modifications of Terms) Rules, 1956 the Controller of  Mica Leases,  Nagpur, reduced the mining area ,of  the  appellant lease to 10 sq.  Miles by his order dated November 20, 1959. As  per Rule 10(1) (a) of the said Rules a  compensation  of Rs. 10/- only was fixed by agreement between the parties for reduction of the area, and by the, same order the dead  rent at  the  rate  of Rs. 8/-per acre per  annum  fixed  by  the original lease was reduced to Rs. 6/- per acre c. The period of  20 years of the original lease came to an end on  August 11, 1961.  The appellant applied to the Government of Rajas- than  for renewal of its lease for another 20  years.   This was  done  in  accordance  with  Rule  28  of  the   Mineral Concession  Rules., 1960hereinafter called the  Rules.   The Government of  Rajasthan granted the renewal by order  dated December 13, 1961 for a period of 20 years 549 with  effect from August 12, 1961.  The dead rent fixed  for there renewed lease was Rs. 20/- per hectare which comes  to Rs. 8/- per acre.  The appellant challenged the order of the Government  of  Rajasthan by filing a  revision  before  the Central Government in accordance with Rule 54 of the  Rules. But  the revision was dismissed.  Thereupon it filed a  suit against the Union of India, respondent no.  1 and the  State of Rajasthan, respondent no. 2 for a decree of in unction to restrain  the defendant from charging dead rent at the  rate of  Rs.  8/- per acre per annum and for a  declaration  that they are entitled to charge only at the rate of Rs. 6/-  per acre.   The  suit  was decreed by the Trial  Court  but  was dismissed  by the First Appellate Court.  The dismissal  was maintained,by the High Court in second appeal. Mr.  Y.  S.  Chitlay, learned  counsel  for  the  appellant, pressed the following five points in support of this  appeal :               (1)   Under the agreement dated 20-11-1959 the               lease  was to be governed by the Act  and  the               Rules except in regard to dead rent which  was               fixed at Rs. 6/- per acre.               (2)   Under  Rule 28 of the Rules,  the  State               Government while renewing the lease had  power               to  reduce the area but no power  to  increase               the dead rent.               (3)   Rule  27 does not apply to renewal of  a               lease.               (4)   Clause (c) of Sub-Rule (1) of Rule 27 is               ultra vires as it transgresses the rule making               power under section 13:(2) (g) of the Act.               (5)   Rule  27(1)  (c) if made  applicable  to               renewal  of  a  mining  lease  introduces   an               element of uncertainty and is therefore void. Learned counsel for the respondents combated the  appellants argument  in  all  respects.  In our  opinion  none  of  the contentions put forward on behalf of the appellant is fit to be accepted and the appeal must fall. As  is well settled the power to make rules  for  regulating the  grant  of  prospecting licences and  mining  leases  in respect of minerals and for purposes connected therewith  is to be found in sub-section (1) of :section 13.   Sub-section (2) merely illustrates the nature of the power.  It does not

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restrict  the  general power under  sub-section  (1).   Even under clause (g) of sub-section (2) in ptrticular the  Rules may provide the terms on which and the conditions subject to which any mining lease may be granted or renewed.   Sub-Rule (1) of Rule 27 requires every ruining lease to be  subjected to  the conditions enumerated in clause (a) to (n) and  such conditions  have  got  to be incorporated  in  every  mining lease.   The conditions enumerated in clause (a) to  (o)  of Sub-Rule (2) are optional anda mining lease may contain such other   conditions  as  the.   State  Government  may   deem necessary  in  regard  to them.  Rule  27(1)  (c)  reads  as follows :               "The  lease shall pay, for every year,  cxcept               the first year of the lease, such yearly  dead               rent within the limits specified                550               in  Schedule IV as may be fixed from  time  to               time by the State Government and if the  lease               permits  the working of more than one  mineral               in  the  same area, the State  Government  may               charge separate dead rent. in respect of  each               mineral               Provided  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." There  is  no element of uncertainty in the Rule  either  in regard  to  the grant of fresh lease or in  respect  of  the renewal.  The yearly dead rent to be fixed from time to time by the State Government cannot exceed the limit specified in Chapter  IV.   The maximum limit is therefore  certain.   To provide for payment of dead rent at a specified rate subject to variation within the limit specified in Schedule IV, is a term  which  cannot  be  said  to  be  void  on   account-of uncertainty,  nor  is  it  beyond  the  Rule  making   power conferred on the Central Government under section 13 of  the Act.   The  4th  and  5th points  urged  on  behalf  of  the appellant therefore fail. Rule 27(1) makes it incumbent to subject every mining  lease to the conditions enumerated in that sub-rule.  The  renewal of  lease  cannot be outside Rule 27(1).   A  lease  granted under  the  Rules and the renewal made thereunder  will  not occasion  any  difficulty at all in the application  of  the conditions  enumerated  in sub-rule (1) to  both.   But  the scope  for argument in this case arose because the  original lease  was  granted  in 1941 by the  erstwhile  State.   The modifications were made in the year 1959 in accordance  with the  Act  of  1957 and the Mining  Leases  (Modification  of Terms)  Rules,  1956.  The Rules of 1960 were  then  not  in existence.   The question which deserves careful  considera- tion, therefore, is-whether there is any substance in either of  the  first  or  second points urged  on  behalf  of  the appellant. The  Controller of Mica leases prepared a note and passed  a final   order  an  the  20th  November,  59  recording   the modifications  of the terms of the mining lease dated  12-8- 1941  specifically stating therein that the said  lease  was for  20 years "without a renewal clause".   After  providing that "dead rent shall be payable at the rate of Rs. 6/-  per acre  per  annum", it was mentioned  "The  following  clause shall  be deemed to be inserted in the lease deed and  shall form part thereof :               "Except  for  the modifications made  by  this               order the lease shall be subject to the  Rules               made  or  deemed  to  have  been  made   under

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             sections  13 and 18 of the Mines and  Minerals               (Regulation and Development) Act, 1957 (No. 67               of 1.957)". It  was  submitted  on behalf of  the  appellant  that  when renewal of the lease was granted under Rule 28 of the  Rules then  the  State  Government  was  bound  to  act  upon  and incorporate the new clause inserted in the original lease by order  dated 20-11-1959.  In other words, it  was  contended that  the renewed lease had to be granted on the same  terms and conditions.  No term and condition could be varied while 551 granting  the renewal of the lease except in regard  to  the reduction  of  the area in accordance with sub-Rule  (5)  of Rule 28.  That being so, the agreement stressed was that  in view  of  the new clause operation of Rule 27  (1)  (c)  was excluded  in regard to the dead rent, it was not payable  at any  rate different from Rs. 6/- per acre.  In our  judgment the  argument though attractive is not fruitful.  If in  the original lease there would have been a renewal clause giving a  right to the lessee to have the renewal of the lease  for another period of 20 years at its option one could  probably say  that  the  renewal  had to be on  the  same  terms  and conditions.   In that event the new clause inserted  in  the original  lease by order dated 20-11-1959 could possibly  be said  to  override the mandatory requirement of  Rule  27(1) (c).   But  in  absence of such a right of  renewal  to  the lessee  the  said clause was operative  and  effective  only during  the  period  of the original lease  i.e.  upto  11th August, 196 1. The lease renewed thereafter was a renewal of the  original  lease  in  one sense and  a  fresh  lease  in another.   While  granting a fresh  lease  the  Governmental authority has no power to relax the mandatory requirement of sub-Rule (1) of Rule 27 of the Rules.  By agreement it  can- not  take  the  conditions  of the lease  out  of  the  said provision.  It is, therefore, clear on the facts and in  the circumstances  of this case that while granting the  renewal of the lease, the authority was neither bound nor  empowered to  incorporate a condition in the lease against clause  (c) of  Rule  27(1).  The demand of dead rent at  Rs.  20/-  per hectare  i.e.  Rs.  8/-  per  acre  was  within  the  limits specified  in  Schedule  IV of the Rules and  there  was  no infirmity in it. For  the  reasons  stated above we find  no  merit  in  this appeal.  It is accordingly dismissed with costs. P.H.P.                     Appeal dismissed. 4-470SCI/75 552