Case: Ramlal &amp; Sons Vs. State Of Rajasthan

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 w as 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 St ate Governments 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 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 p roper".4. 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.)5. 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 1 967) 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.6. 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, 1971.7. 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.8. The appellants 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.9. 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 of lease. The only question that survives is whether the State Government could realise premium in a lawful manner under the Mineral Concession Rules.10. 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.11. The appellants 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

Decision (1 = appeal accepted, 0 = rejected): 1

Explanation:
1[ds]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 ofdo 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.