4f^ i/^J^ HIGH COURT OF CHHATTISGARH : BILASPUR SINGLE BENCH: HON'BLESHRl IV1ANINDRA IVIOHAN SHRIVASTAVA.J. WRIT PETITION (C ) No.4804/2006 K l •1! PETITIONER RESPONDENTS Babulal Agrawal Versus State of Chhattisgarh and others ;l»».s s) FOR PRONOUNCEMENT OF ORDER ON 2/ APRIL, 2011 (T^ JUDGE /04/2011 J^' ^•^ ,^ Y(I^ HIGH COURT OF CHHATTISGARH : B1LASPUR Single B^nch: Hon'ble Shri Manindra Mohan Shrivastava, J. WRIT PETITION (Cl N0.4804/2006 PET1TIONER Babulal Agrawal Versus RESPONDENTS State of Chhattisgarh and others Present: - Shri Shailendra Shukla, counsel for the petitioner. Shri Ajay Dwivedi, Deputy Government Advocate for the State/respondehts. ORDER (Passed on ..?./.....April, 2011) By this petition, the petitioner has assailed legality and validity of demand notice dated 10/10/05 (Annexure P/1) by which, an amount of Rs.2,57,250/- has been demanded from petitioner, being arrears of dead rent payable by the petitioner. 2. The facts necessary for adjudication of controversy involved in the petition are that on petitioner's application for grant of query lease of Granite mineral, th'e State Government vide its letter dated 29/09/93 (Annexure P/3), communicated to the Collector, its approval for grant of lease to the petitioner. Thereafter, a lease deed was executed in favour of the petitioner by the lessor, being respondent No.2, on 24/12/93, granting query lease to the petitioner for a period of 10 years commencing from 24/12/93 to 23/12/03, in respect of an area of 2.85 hectares situated in Khasra No.419 and Khasra No.427 of village Badwar, vide Annexure P/4. The petitioner worked out mining operation pursuant to grant of lease in his favour for some time, until an application was made on 5/9/98 (Annexure P/5) for surrender of an area of 1.91 hectares, out of the total demised ...- ::^~'u'"^ .^:i^ . ^ i' '^gs^y^ s. "•'^^ws^^' ^ area of 2.85 hectares. Some time thereafter, the petitioner submitted another application on 6/6/99 (Annexure P/7), for surrender of the remaining area of the lease stating that due to cyclonic effect, the cutting and polishing factory has been destroyed and therefore, the petitioner does not intend to continue with the mining activity. According to the petitioner, he did not receive any response to any of the two applications dated 5/9/98 and 6/6/99. However, vide order dated 18/9/02 (Annexure P/8), the State Government cancelled the tease granted in favour of the petitioner on the ground of violation of terms and conditions of lease executed in favour of the petitioner. Thereafter, the impugned demand notice has been issuedagainst which, the petitioner approached this Court. 3. Learned counsel for the petitioner contended that the action of the respondents in seeking to recover an amount of Rs.2,57,250/- from the petitioner, as amount payabte by the petitioner towards dead rent, is illegal and in excess of the authority conferred under the law, in as much as the petitioner, having surrendered a part of lease, vide his application dated 5/9/98, and the remaining leased area vide application dated 6/6/99, is not liable to pay dead rent upto the date of canceltation of lease and the amount which has been computed by the mining inspector, as contained in Annexure P/2, is illegal. Learned counsel submitted that in respect of 2.85 hectares of the demised area, the petitioner was liabte to pay dead rent only till determination of lease vide application for surrender, submitted on 5/9/98 and after determination of lease, upon surrender vide application dated 6/6/99, the petitioner is not liable for payment of dead rent. The next submission of tearned counsel for the petitioner is that the cancellation of lease vide order dated18/9/02 does not entitle the respondents to recover dead rent upto that date because under the law, a part of M'v-i the lease was surrendered under application dated 5/9/98 and remaining was surrendered on the basis of application dated 6/6/99 and therefore, the action is illegal. It has further been submitted that there were no arrears standing against the petitioner and all the dead rent as well as royalty on account of the lease was paid by the petitioner from time to time, as reflected from the entries and statements of payments (Annexure P/9) and that the petitioner has, infact, paid an excess amount of Rs.24,000/-. Learned counsel for the petitioner further contended that though, under the lease, Rs.6,000/- per annum was fixed as the dead rent but the respondent/authorities have raised demand for payment of dead rent at a much higher rate of Rs.15,000/-, which is illegal and the petitioner was liable to pay only Rs.6,000/- per annum, up to the date of determination of lease under application for surrender of lease. 4. On the other hand, learned State counsel argued that though, the petitioner had submitted two applications i.e. one on 5/9/98 and the other on 6/6/99, the lease of the petitioner continued because the petitioner had not paid all the dues and therefore, the lease would not determine, on account of submjssion of application for surrender in view of the specific provisions contained in clause 13 and 14 of the lease dead. Learned counsel for the State further argued that the petitioner was not regularly paying the dead rent and for that, notices were given to the petitioner. When the dead rent were not paid by the petitioner, the matter was referred to the State Government by the Collector vide his memo dated 5/7/01 (Annexure R/1) and 14/6/02 (Annexure R/2) whereupon the State Government cancelled the lease ofthe petitioner vide order dated 18/9/02. Therefore, the lease came to an end only upon cancellation and there was no determination of tease by virtue of surrender applications. He ^^ submitted that in the absence of any challenge to the correctness and validity of order of cancellation of lease passed on 18/9/02 it has to be presumed that the petitioner had violated the terms and conditions of lease and therefore, the action towards recovery of arrears of dead rent upto 18/9/02 and consequent demand notice (Annexure P/1), is in accordance with law. Learned counsel for the respondent further submitted that in view of the provisions contained in condition No.1, lease could be surrendered by the petitioner only before commencement of query and that too after two months prior notice to the Collector and as the applications were submitted by the petitioner on 5/9/98, after commencement of query, the application is not maintainable. He further submitted that in view of the provisions contained in Rute 29 ofthe M.P./C.G. Minor Mineral Rules, 1996, the petitioner is liable to pay dead rent as per the rates specified in the schedule appended to the rules and therefore, notwithstanding the terms of tease, the petitioner is obliged under the law to pay dead rent in accordance with the provisions of law. 5. The petitioner was granted lease of a total area of 2.85 hectares of the description given in the lease deed and there is no dispute with regard to this factual aspect. The first application for surrender of lease was made by the • petitioner on 5/9/98 (Annexure P/5). A perusal of the application dated 5/9/98 shows that the petitioner intended to surrender 1.85 hectares of the demise which was forwarded by the Collector along with recommendations to the State Government. No orders were passed on petitioner's application regarding J surrender of lease in respect of the part of the area of tease. Thereafter, another 1 . ) application was moved by the petitioner on 6/6/99 (Annexure P/7) for surrender ) of the entire lease on the statement that due to cyclone, cutting and poiishing plant, structure and factory has been completely destroyed and therefore, it is no longer possible to the petitioner to carry on work of Granite cutting and polishing. On this application also, no orders were passed. nl. 6. Rule 34 read with Clause 13 and 14 ofthe deed of lease make provisions with regard to surrender and determination of lease. Rule 34 provides that the lessee may determine lease at any time, by giving not less than six months notice in writing to the sanctioning authority, after paying all outstanding dues to the State Government. Clause 13 of the lease deed recites that the lease may be surrendered by the lessee at any time after six months previous notice, in writing, to the lessor, provided that the lessee has paid all sums due on account of the lease. It further provides that if the lessee elects to determine the lease before the expiry of the sixth year of the lease, he shall pay, in addition to other dues- a. A sum representing the difference between the prescribed annual dead rent and the royalty paid in respect of the first year of the lease if the said dead rent exceeded in amount, the said royalty, or b. If no royalty was paid a sum equal to the annual dead rent. Clause 14 further provides that on the expiration of the terms of the lease or on its earlier determination under Clause 13 or 14, the lessee shall pay to the Collector for all land which has been rendered useless for agriculture through the exereise of the powers demised by the lease, such sum as the Collector may fix, ; as equivalent to the capitalised value of the land revenue of such land, rendered [ useless. Importantly, clause 14 provides that the lease shall continue if the sums 1 . are not cleared before the date of determination of notice. 'Q 7. The petitioner in his petition has stated that no arrears were standing against him and that the petitioner deposited all dead rent on account of the lease from time to time as reflected from the entries made in Annexure P/9. A perusal of Annexure P/9 shows that the petitioner had made payments towards royalty and dead rent under different challan, in respect of the period from 24/12/93 upto 31/12/99. In the column of determination against entry No.8, 9 and 10, which covers period from 1/1/97 to 30/06/98, no amount has been shown to be paid towards dead rent. Similarly, under entry No.11, 12, and 13, in respect of the period from 1/7/98 to 31/12/99, the total amount which is stated to have been paid is Rs.2,000/-. According to the statements prepared by the Mining Inspector, placed on record as Annexure P/2, the petitioner was held liable for payment of dead rent to the tune of Rs.1,80,000/-, in respect of the period from November, 1998 to March, 2000 and thereafter, upto the date of cancellation of lease i.e. 18/9/02, a further amount of Rs.77,250/-. However, on what basis, such cancellation has been made, has not been indicated. 8. In view ofthe provisions contained in Rule 34 read with conditions 13 and 14 of the lease, the petitioner isrequired to clear all dues on account of lease which would necessarily include the dead rent payable by the petitioner in s:; respect of the period of subsistence of lease. The aforesaid provision provide that the lease may be determined by giving six months notice to the sanctioning authority after paying all dues to the Government. Moreover, in view of the fact that both the applications for surrender of lease were made by the petitioner before expiry of the sixth year of lease, the petitioner was also required to pay the amount in accordance with clause (a) and (b) ofclause 13 ofthe lease deed. Further, the petitioner is also required to pay to the Collector, a sum equivalent to Y ^-.-^ Pll "il 3 "%> ~itaa ,^ the capitalised value of the land revenue of such land which is rendered useless. This amount is to be fixed by the Collector. However, there is nothing on record to show that after the petitioner submitted his application dated 5/9//98 and 6/6/99, any such exercise towards fixation as required under clause 14 of the lease deed was undertaken by the Collector. In view of the statutory provisions contained in Rule 34 of the Rules of 1996 read with clause 13 and 14 of the lease deed, the lease could be determined by way of surrender only when the dues stipulated therein have been cleared. However, full and specific details with regard to the various dues have neither been made by the petitioner in this petition nor the respondents have given any details of the exact payments made by the petitioner, on account of tease from time to time, but a bald submission has been made by the respondents in their return that the petitioner has not cleared all the dues. 9. True it is that at the time of execution of lease deed (Annexure P/4), yearly dead rent was fixed as Rs.6,000/- in advance, stipulating that the first payment of rent is to be made on 24/12/94 for the ensuing year commencing from 24/12/94 and thereafter, to be paid every year on the 20th day of the first month of the year. However, thereafter, the State Government framed M.P. Minor Mineral Rules, 1961 in exercise of powers conferred under Section 15 of the Mines and Minerals (Regulations and Developments) Act, 1957. Rule 29 makes provisions with regard to rates of dead rent. The relevant provisions of the said rule are extracted herein below- "29 ...(1). When a quarry lease is granted or renewed- a. dead rent shall be charged at the rates specified in schedule IV; % "—' ./ f. '"k. '^%0;' /f ^ .^' ""•:s:S&g^SS:"" " ll b. royalty except for limestone shall be charged at the rates specified in Schedule III; c. rate of royalty on limestone shall be the same as fixed by the Government of India from time to time for limestone in Schedule II oftheAct; d. surface rent shall be charged at the rates specified by the Collector of the district from time to time for the area occupied or used by the lessee. 2. On and from the date of commencement of these rules, the provisions of sub-rule (1) shall also apply to the leases granted or renewed prior to the date of such commencement and subsisting on such date; 3. If the lease permits the working of more than one mineral in the same area separate dead rent in respect of each mineral may be charged. Provided that the lessee shall be liable to pay the dead rent or royalty in respect of each mineral, whichever is higher in amount; 4. Notwithstanding anything contained in any instrument of the lease, the lessee shall pay rent/royalty in respect of any mineral removed and / or consumed at the rate specified from time to time in Schedule III and IV; 5. The State Government may, by notification in the Official Gazette amend the Schedules III and IV so as to enhance or reduce the rate at which rents/royalties shall be payable in respect of any mineral with effect from the date of publication of the notification in the Official Gazette; Provided that the rate of royalty/ dead rent in respect of any mineral shall not be revised more than once during any period ofthree years; 6. No granite block either processed or in the raw form or any other mineral shall be dispatched from any of leased areas without a valid transit pass issued by Mining Officer. The transit pass shall be issued on an application in Form VIII after depositing royalty for the quantity intended to be "'S;i.' ?^"" n-0 7. transported out of the minerals extracted. Contravention of this rule may result in forfeiture of the security deposit by the Collector without prejudice to any other action that might lie against the lessee; The Transit Pass shall be in Form IX." 10. A perusal of the aforesaid provisions woutd at once show that when a query lease is granted, the dead rent shall be charged at the rate specified in Schedule IV. The provisions contained in Sub-Rule 2, also leave no manner of doubt that on and from the date of commencement of rules, the provisions of Sub-Rule 1 shall also applied to the leases granted or renewed, priorto the date ofsuch commencement and subsisting on such date. The consequences flowing from such provision is that with effect from the date, the rules of 1996 came into force, the dead rent is payable at the rate specified in Schedule IV and that will cover tease, which has been granted prior to the date of such commencement and subsisting. Therefore, the petitioner is statutorily liabte to make payment of dead rent in accordance with the rates prescribed in Schedule IV appended to the rules of 1996, with effect from the date of commencement of the rules of 1996. The provisions contained in rule 1 (ii) of the rules of 1996 clearly provide that the rute shall come into force on first day of April, 1996. Therefore, the petitioner was liable to pay dead rent, at the rate specified in Schedule IV of the rules of 1996 with effect from 1 April, 1996, notwithstanding stipulation contained in clause 2 of the lease deed (Annexure P/4) because from the date of commencement of the rules of 1996, clause 2 of the lease deed, to the extent it fixes yearly dead rent as Rs.6,000/- is void being inconsistent with the provisions of law and incapable of being given effect to nor it could be enforced by any of parties to the lease. The statutory obligation caste on the petitioner is to pay 10 ) 'L-) annual dead rent at the rate specified in schedule IV of the rules of 1996. Moreover, in view of the provisions contained in Sub-Rule 5 of Rule 29, reproduced hereinabove, the State Government is entitled to enhance or reduce the rate at which, it is payable in respect of any mineral with effect from the date of publication of the notification in the official gazette, subject to the rider that the rate of dead rent shall not be revised more than once during any period of three years. Therefore, in view of aforesaid statutory provisions contained in Rule 29, with effect from 1 April, 1996, the petitioner is liable to make payment of dead rent, at the rates specified in schedule IV appended to the rules of 1996. 11. The submission of learned State counsel that in view of the provisions contained in clausel, 13 and 14 ofthe lease deed, the petitioner can exercise his right of surrender of lease only before commencement of quarry and not thereafter, is wholly misconceived and deserves rejection at the threshold. Neither clause 1 nor clause 13 and 14, anywhere stipulates any such condition. The first proviso to clause 1 of the lease deed only provides that before commencing the quarry on any part of the demised land, the lessee shall give to the Collector, two calendar month's notice in writing and thereafter, such part of the*said land shall not be used, if the Collector shall within two calendar months after the receipt by him of such notice, objects to such user, unless the objections so stated shall on reference to the Lessor, be annulled orwaived by the Lessor. Therefore, the said clause deals with the conditions subject to which the lessee could use the land for mining activity. It does not at all deal with the conditions governing surrender of lease. 12. From the discussions as above, l come to the conclusion that the respondents have failed to satisfy this Court that the demand of dead rent from -^ y.S&. '*!. Y 1 y Jl y s' 'ttSS' ^ ,y 11 )^ t/ the petitioner is in accordance with law. However, as the petitioner has not given complete d^tails nor the respondents have given specific details of various payments made by the petitioner from time to time and the dues liable to be paid by the petitioner from time to time, the material on record is not sufficient to come to a definite conclusion as to whether on the date of submission of application dated 5/9/98 and subsequently on 6/6/99, all the dues payable by the petitioner on account of lease were p.aid. Therefore, the contention of the petitioner that lease was determined on account of surrender of lease by submission of two applications dated 5/9/98 and 6/6/99, cannot be accepted. The determination of this aspect requires enquiry into dues payable bythe petitioner on account ofthe lease in view of the provisions contained in Rule 34 of the rules of 1 996, clause 13 and 14 ofthe lease deed and also computation, taking into consideration the rates of dead rent prescribed under schedule IV of the Rules of 1996. In case, the petitioner has cleared all the dues on account of lease, in so far as application dated 5/9/98 is concerned, the tease in respect of 1.85 hectares of land stands determined, upon expiry of six months from the date of submission of application dated 5/9/98; Similarly, if all the dues have been paid by the petitioner, in so far as surrender of lease vjde his application dated 6/6/99 is conserned, the lease would stand determined upon expiry of six months. However as stated hereinabove, this requires proper enquiry to be made, to ascertain the amount due and payable by the petitioner on account of lease in terms of provisions contained in Rule 29 and 34 of the Rules of 1996 and clause 13 and 14 ofthe lease deed. 13. In the circumstances, the demand notice (Annexure P/1) is quashed and the matter is remanded to the Coltector for proper determination regarding f'( .^ssSJte, i ^^1^s'%% -:i 'Sgy'l^ 'W.f 12 )-3 surrender of lease vide application dated 5/9/98 and 6/6/99 in the light of observations and findings recorded by this Court hereinabove. The Gollector shall give the petitioner, an opportunity of hearing and thereupon, decide whether the amount due on account of lease was cleared by the petitioner with reference to surrender application dated 5/9/98 and thereafter, with reference to surrender application dated 6/6/99. The amount of dead rent payable by the petitioner shall accordingly be determined by the Collector which shall be payable by the petitioner. The exercise, as stated above shall be completed and orders shalt be passed within an outer timit of five months from the date of receipt of copy of this order. The petition is accordingly allowed to the extent and in the manner stated as above. No orders as to costs. Sd/- M.M. Sb-ivastava Judge Deepti