CIVIL WRIT JURISDICTION CASE No.5544 of 1984 In the matter of an application under Articles 226 and 227 of the Constitution of India ******* THE STATE OF BIHAR, through the Assistant Mining Officer, Dumka now Sahibganj ……….Petitioner Versus 1. UNION OF INDIA, through General Manager, Eastern Railway, Calcutta 2. Member, Board of Revenue, Bihar, Patna ...... Respondents ******** For the Petitioner : Mr. V M K Sinha Special P P, Mines For the Respondents: N o n e. ******** P R E S E N T THE HON'BLE MR. JUSTICE SUDHIR KUMAR KATRIAR THE HON'BLE MR. JUSTICE SAMARENDRA PRATAP SINGH ******** S P Singh, J. In the instant writ application the petitioner- State of Bihar has prayed for quashing the order dated 27.12.83, passed by the learned Member, Board of Revenue, Bihar, in Revision Case No.95 of 1978, whereby he has set aside the order dated 28.1.76 (Annexure-2), passed by the Certificate Officer in Certificate Case No.24/75-76 subsequently numbered as Dumka Case No.31/69-70, as well as the order dated 27.11.76 in Certificate Appeal No.23/75-76 (Annexure-3) passed by Dy. Commissioner, Santhal Pargana, and also order dt. 16.1.78 (Annexure-4) of the learned Commissioner, Bhagalpur in S.P. Revision Case No.9 of 1976-77, whereby the respondent Union of India was directed to pay the certificate dues. 2. The State of Bihar has assailed the impugned order of the Member, Board of Revenue on the ground of same being violative of statutory provisions of Bihar Land Reforms Act, 1950, the Land Acquisition Act and Bihar Minor Mineral Concession Rules, 1964 and 1972. 2 3. Before we take up the issues involved and points pressed by writ petitioner, it would be necessary to notice the facts of the case in some detail. The Union Government vide various declarations made under section 6 of the Land Acquisition Act, 1894 acquired land at Taljhari and Bakudih in the district of Santhal Pargana for constructing lower Ganga bridge. The land at Bakudih were acquired vide declarations dated 24.7.1903 and 1.12.1909 and those at Taljhari were acquired in the year 1916 for `ballasts’ and works of `sidings’. After acquisitions, the Union Government handed the land to the Railways for constructing lower Ganga bridge. On 22.4.1969, a certificate case was filed by the State Government at Dumka being Certificate Case No.31 of 1969 against the Eastern Railway for payment of royalty to the tune of Rs.4,84,130.23 against removal of stone ballasts and boulders from Baludih, Taljhari and Barharwa railway quarries for the period 3.12.1952 to 25.3.1968. Later on, the demand was revised to Rs.55,447.27 for Taljhari Railway quarry and Rs.1,78,269.30 for Bakudih Railway quarry, totalling Rs.2,28,716.66. The case got subsequently transferred to the court of Certificate Officer, Bhagalpur giving rise to new Certificate Case No.24/75-76- Dumka Case No.31/69-70. In the beginning, some negotiations took place between the State Government and the railways, but ultimately the Railways contested the claim of the State Government to demand royalty for the period in question e.g. 3.12.1952 to 25.3.1968. The Certificate Officer vide its order dated 28.1.1976 rejected the objections of the Railways that the latter is not liable to pay royalty for removal of stones and boulders from Baludih, Taljhari and Barharwa Railway quarries. The certificate officer observed that `boulders’ and `ballasts’ have been declared as `minor minerals’ under section 3(e) of the Mines and Mineral (Regulation and Development) Act 1957 (hereinafter referred to as the ‘M.M.Act, 1957’) as such the State 3 of Bihar is entitled to charge royalty under the Bihar Minor Mineral Concession Rules, 1964 and Bihar Minor Mineral Concession Rules, 1972, which replaced the 1964 Rules (hereinafter referred as Mines and Mineral Rules 1964 and 1972’). He further observed that in view of sections- 3 and 3A of the Bihar Land Reforms Act, 1950, all lands along with its minerals vested in the State of Bihar and as per section 9 thereof, the land would be deemed to have been leased to the Railways. 4. The Union of India challenged the order of the Certificate Officer (Mines)-cum- Deputy Director of Mines, Bhagalpur in appeal before the Deputy Commissioner, Santhal Pargana, Dumka being Certificate Appeal No.23/75-76, which too failed. The appellate court was of the view that the transfer and possession of acquired lands in favour of Railways gave only the surface right to them and not the right over underground reserves. The appellate court observed that no mining operation can be done in the State of Bihar without payment of royalty and the compensation, in view of Mines and Minerals Rules, 1964 and 1972. 5. Being aggrieved by the order of the appellate court, the Union of India filed revision before the Commissioner, Bhagalpur being S.P. Rev. Revision No.9/76-77. The revisional Court too affirmed the order of the Certificate Officer as well as the appellate authority. The dismissal of the revision by Commissioner, Bhagalpur led to filing of revision application by the Union of India before the Board of Revenue which was numbered as Case No.95 of 1978. The Board of Revenue reversed the orders of all the three courts. The learned Member, Board of Revenue observed that the expression ‘land’ as defined u/s 3(a) of the Bihar Land Acquisition Act, 1894 would also include benefits to arise out of land, and things attached to the earth or permanently fastened to anything attached to the earth. He observed that no notification issued under section 3A of Bihar Land Reforms Act, 1950 was brought to the notice of the Court. He also observed that as the Union Government acquired the land for the Railways, the same became its 4 property and latter acquired all underground rights and mineral rights. He opined that property belonging to the Union of India can be taxed, only if the Parliament by law so provides as per Article 285 of the Constitution. Furthermore, the Parliament exercising such power has enacted M.M. Act, 1957. Section 15 of the M.M. Act, 1957 confers power on the State Government to make Rules in respect of minor minerals. In terms of section 15 of the M.M.Act, 1957 the Bihar Legislature framed Bihar Minor and Mineral Concession Rules, 1964 which was replaced by 1972 Rules. The Rules prescribed procedure for grant of permit for quarrying and mining lease under Chapter IV of the Mines and Mineral Rules, 1972. He was of the view that though the State of Bihar is competent to levy royalty for extraction of minerals, the same can be levied only as per procedure prescribed under the Bihar MMC Rules 1972. He observed that mining department has imposed royalty for removal of boulders and stone ballasts etc. by Railways, without following due procedure of law. 6. The State of Bihar being aggrieved with the order dated 27.12.1983 of the learned Member, Board of Revenue, passed in Case No.95 of 1978 has moved this Court in writ jurisdiction and has assailed the impugned order on the following grounds: (i) That in view of section 3A of the Bihar Land Reforms Act, 1950, all lands acquired by the Union Government for the Railways vested in the State of Bihar from the date of issuance of such notification. (ii) Under section 9 of the Bihar Land Reforms Act, 1950 the Railways will be deemed to be the lessee of the State of Bihar. (iii) Thirdly, both rule 20 of the M.M.C. Rules 1964 and sub-rule(2) of rule 26 of M.M.C. Rules 1972 provide that from commencement of these rules, the provisions of sub-rule (1) thereof in respect of minor minerals will also apply to the leases granted or renewed prior to the date of such commencement and subsisting on such date. 5 7. We have perused the orders of all the courts and heard the submissions of learned counsel appearing for the State of Bihar. The first point raised by the State is that in view of section 3 of the Bihar Land Reforms Act, 1950, all lands within the State of Bihar vested in it. Consequently, neither the Railway nor the Union Government remained the owner of the land and would have no right on minor minerals and mines. We are afraid, the submissions made by learned counsel for the State of Bihar is too wide in its perspective to be acceptable. Section 3 and 3A of the Land Reforms Act, 1950 deal with vesting. Section 3 confers power on the State Government to declare by notification that certain estate or tenure of a proprietor or tenure-holder vests in it. Section 3A, likewise confers power on the State to declare that the intermediary interests of all intermediaries in the whole of the State of Bihar have passed to and become vested in it. From the conjoint reading of sections 3 and 3A of the Bihar Land Reforms Act, 1950 it is apparent that only the estate or tenure of a proprietor or tenure holders or the intermediaries interest can vest in the State and not the raiyati right of tenant or a land- holder. The Union Government had acquired the land under the Land Acquisition Act in early 1900, much prior to the enactment of the Bihar Land Reforms Act, 1950 and handed over the same to the Railways. The Railways consequently became tenant of the land and thereby acquired all the raiyati interests thereof. The declarations and acquisitions of land nowhere specified that the acquisitions are subject to exclusions of mines and minerals. As per section 3 and 3A, it is only the estates and tenure of a proprietor, tenure holder and intermediary interests of all intermediaries in whole State of Bihar which may vest in State of Bihar upon notification, and not the raiyati interest of a tenant. We accordingly hold that the raiyati interest of the land which was acquired by Union of India or the railways did not vest in the State of Bihar. 6 8. The next point urged by the petitioner was that under section 9 of the Bihar Land Reforms Act 1950, the Railways will be deemed to be the lessee of the State of Bihar. Section 9 of the Bihar Land Reforms Act 1950 is being quoted hereinbelow for ready reference :- “9. Mines worked by intermediary.- (1) With effect from the date of vesting all such mines comprised in the estate or tenure as were in operation at the commencement of this Act and were being worked directly by the intermediary shall, notwithstanding anything contained in this Act, be deemed to have been leased by the State Government to the intermediary and he shall be entitled to retain possession of those mines as lessee thereof. (2) The terms and conditions of the said lease by the State Government shall be such as may be agreed upon between the State Government and the intermediary or in the absence of agreement as may be settled by a Mines Tribunal appointed under Section 12; Provided that all such terms and conditions shall be in accordance with the provisions of any Central Act for the time being in force regulating the grant of new mining leases.” Section 9 states that with effect from the date of vesting all such mines comprising in the estate or tenure and being worked directly by the intermediary would be deemed to have been leased by the State Government. Section 9 (2) of L.R. Act, 1950 speaks about terms and conditions of lease. The converse of section 9(1) would be that all such mines which comprised in the estate or tenure, but were not directly worked by the intermediaries would not be deemed to have been leased by the State Government. It is not in dispute that at the time of commencement of the Act, the mines in question were not directly being worked by the intermediaries. In fact, the land comprising mines were being worked by Railways, which had become the raiyat after acquisition. Thus section 9 of the L.R. Act, would have no application in the facts and circumstances of the case, as the acquired land or mines were not being directly worked by intermediaries but were being worked by Railways which were its tenant/raiyat. Thus we do not find mention the contention of the petitioner that the mines would be deemed to have been leased by the State Government, and the plea stands rejected. 7 9. The petitioner next contended that in view of rule 20 of the MMC Rules 1964 and sub-rule (2) of rule 26 of the MMC Rules 1972, anyone including raiyat of land removing boulders or minor minerals from within the State of Bihar, would be liable to pay royalty to the State. He submits that after coming into force the Mines and Mineral Rules 1964, the State got exclusive right on mines and minor minerals both underground or those attached to land. Even the raiyats ceased to have right on it, and only with prior permission of State Government can remove minor minerals or can conduct mining on due payment of royalty and tax etc. 10. The submissions made by petitioner is well founded in view of Article 285 and sub-rule (2) of rule 26 of Bihar MMC Rules 1972 which is almost reproduction of rule 20 of 1964 Rules. Both Article 285 and Rule 26(2) are being reproduced below :- Article 285. “Exemption of property of the Union from state taxation.- (1) The property of the Union shall, save in so far as Parliament may by law otherwise provide, be exempt from all taxes imposed by a State or by any authority within a State. (2) Nothing in clause (1) shall, until Parliament by law otherwise provides, prevent any authority within a State from levying any tax on any property of the Union to which such property was immediately before the commencement of this Constitution liable or treated as liable, so long as that tax continues to be levied in that State.” Section 26. “Rent/royalty and assessment.- .......... ........................... .............. (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. (Emphasis added) Article 285 provides for exemption of property of the Union from state taxation. The Article is in two parts. The first part states that the property of the Union cannot be taxed by State or any authority within a State, unless the Parliament by law, otherwise provides. The second part states that until the Parliament by law otherwise provides, nothing would prevent the State Government from levying tax on the property of the Union within its territory. In other words, the State Govt. can tax even 8 Union property situated in State unless the Parliament by law restricts and restrains the same. The Parliament in the year 1957 enacted Mines and Mineral Regulation and Development Act 1957. Section 15 of the said Act conferred power on the State Government to make Rules in respect of minor minerals. The State Government framed Bihar Minor Mineral Concession Rules 1964. Rule 20 of 1964 Rules provided for charge of rent or royalty on minor minerals and exclusive right over them. The Minor Mineral Rules 1964 was replaced by Minor Mineral Rules 1972. Rule 26(2) of 1972 Rules had substantially similar provisions as Rule 20 of 1964 Rules. The boulder and stone are `minor minerals’ under section 3(e) of Minor Mineral Act 1957. Rule 26(2) provides for charging of rent and royalty on extraction or removal of minor minerals. The State gets power to tax even property of Union by virtue of Article 285 and provisions of MM Rules, 1964 and 1972. As stated above, by virtue of provisions of Mines and Minerals Rules, the State of Bihar got exclusive right over mines and minerals. However, such royalty or rent can be charged only in accordance with rules and the provisions enshrined thereof as also observed by learned Member, Board of Revenue. The State of Bihar got the right to charge royalty on minor minerals existing on land of raiyats or tenants only from 1964 with framing of Bihar Minor Mineral Rules, 1964. Before enactment of 1964 Rules, the State did not have requisite legal sanction to collect royalty on removal of minor minerals attached and fastened to land of raiyats/ tenants. After enactment of Bihar M M Rules, the mines and minerals are now repository of State of Bihar. It is open to State to lease or allow quarrying and collect royalty thereof in accordance with law, and raiyats would not have any independent or legal right to deal with it though the same may be attached with raiyati lands. The State can allow removal of minor minerals or allow mining operation on due payment of Royalty or licence fee. 11. The certificate case was filed for non-payment of royalty against removal of boulders by Railways from the year 1952 to 1968. As prior to 9 1964, there was no rules conferring power on the State Government to charge royalty from the tenant for extraction or removal of minor minerals, the certificate claims for the period 1952 to 1964 is not tenable in law and stands rejected. The State Government however would be entitled to collect royalty on extraction or removal of stones/boulders or other minor minerals of quarrying of mines for the period commencing from 1964 onwards in accordance with law. 12. With the aforesaid observations this appeal is allowed in part and is accordingly disposed of. ( Samarendra Pratap Singh, J.) S K Katriar, J. I agree. ( S K Katriar, J. ) Patna High Court, Patna The 18th of January 2011 NAFR/mrl./SKPathak