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 DB Civil Special Appeal No 172 of 1970
D V Patel section 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 155000
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 155000 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 565000 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 12761636 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 12761636 as dead rent for block No 6
This order is significant in more than one way
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 155000 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 eg 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 155000 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
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 411iii 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 155000 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 12193071 which is due to the appellant out of the illegally realised premium of Rs 155000 allowing the sum of Rs 3306929 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 12193071 as mentioned above
The appellant is entitled to its costs in this Court
VPS Appeal allowed in part


Summary:
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 article 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 section 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 413 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
225A F