Case: State Of Orissa  Vs. Union Of India &amp;Anr

The facts are not disputed namely for laying the railway line, Government of Orissa acquired the land and handed over the same to the railway administration. When the Railway Administration utilised certain minor minerals like the rock cut spoils and earth from the very land, which had been acquired for laying the railway line, the Revenue Authorities of the State of Orissa initiated proceedings or realisation of royalty and cess under the provisions of Orissa Minor Mineral Concession Rules. The Railway Administration and the Union of India assailed the same by filing a writ petition in the Orissa High Court. According to the Railway Administration, royalty or cess could be levied against the lessee of any mineral and the Railway Administration not being the lessee of the and or the minor minerals therein no royalty is payable for utilisation of the aforesaid minor minerals for laying down the railway line. The State Government on the other hand took the stand that the handing over of the land for laying of the railway track to the Railway Administration does not amount to conferring ownership right over the minerals existing on the land and in accordance with the provisions of the Mines and Minerals (Regulation and Development) Act, 1957 (hereinafter referred to as `the Act) as well as the Orissa Mineral Concession Rules, 1990 (hereinafter referred to as `the Rules) the Railway Administration would be liable to pay royalty for use of any minerals from the land in question and accordingly, the revenue authorities had rightly issued notice. The High Court, in the impugned judgment came to hold that the earth and rock cut spoils excavated by the railway administration are minerals. This finding of the High Court has not been assailed by the railway administration. But so far as the right to levy royalty on the use of minerals from the land in question, the High Court came to the conclusion that the State would not be justified in levying the royalty in respect of the minerals on the land which had been acquired and possession of which has been delivered to the railway administration. But so far as the land belonging to the State Government is concerned, the High Court came to the conclusion, since no formal transfer deed has been executed, it would be open to the State Government to incorporate in the formal transfer, a term as to the payment of royalty in view of the admission of the railway administration in its letter dated 10.6.1987 that they would abide by the terms and conditions to be decided by the State Government while sanctioning transfer of Government land. It is this judgment of the High Court of Orissa, which is under challenge in this appeal.

Court's reasoning:
In view of the aforesaid definition of "person" in Rule 2(1) and in view of the embargo contained in Rule 3, even the Central Government will not be entitled to undertake any quarrying operations, unless such permit is granted and it must be in accordance with the terms and conditions of the permit. The contention of the Railway Administration, that there being no lease in favour of the Railway Administration, it is not bound to pay any royalty, will not hold good, in view of the proviso to Rule 3, which on the face of its prohibits a person from extracting or collecting minor minerals from his own land, except for agricultural operations or other bona fide domestic consumption. But for the exclusion, contained in proviso to Rule 3 in relation to minor minerals extracted from owners own land for normal agricultural operation or bona fide domestic consumption, it would be a case of quarrying operation within the definition of the expression in Rule 2(o), which is quoted below in extenso2(o) : "quarrying operations" means any operation undertaken for the purpose of winning any minor mineral and shall include erection of machinery, laying of tramways, construction of roads and other preliminary operations for the purpose of quarrying.This being the position and the use of minor minerals on the railway track, after being extracted from the land, not coming within the expression "bona fide domestic consumption", the said operation would be a quarrying operation under Rule 2(o), and consequently, the embargo contained in rule 3 would apply. A combined reading of Rules 2(l), 2(o) and Rule 3 makes it crystal clear that the Railway Administration, cannot undertake the quarrying operation unless a permit is granted in its favour and, consequently, if the Railway Administration utilises the minor minerals from the land, for the railway track, it would be bound to pay the royalty chargeable under the Orissa Minor Mineral Concession Rules. The liability for payment of royalty accrues under Rule 13 and no doubt, speaks of a lease deed. If the Railway Administration, though not a lessee and at the same time is not authorised under Rule 3 to undertake any quarrying operation for the purpose of extraction of minor minerals, then for such unauthorised action, the Railway Administration would be liable for penalties, as contained in Rule 24.