SUDARSHAN MINERAL CO. LTD.

UNION OF INDIA & ANR February 13, 1975

54 7

LK. K. MATHEW, P. K. GOSWAMI AND N. L. UNTWAUA, JI.]

Tlze Mines & Minerals (Regulation & Developmelll) Act 1951-, Mi11erai' Concession Rules 196Q-.:.Whet/ier detailed rule making power restricts the General Rule making power-Maximum drild m1t spei:ified whether void on account of uncertainty-Whether renewal of tl/c lease .has to oc granted 011 the same term.•. and c; onditions. ·

The appellarrt was granted a Mining Lease by the erstwhile State of Shahapurn for a period 20 years commencing from 12th August, 1941. The area of the lease was 1500 sq. miles. The said area later on, formed part . of the State of Rajasthan. The Mines & Minerals (Regulation .& Development) Act, 1957, came into force from 1st June, 1958. Under section 61 of the Act the area of a mining lease in the case of Mica could not be more than 10 sq. miles and. its maximum priod could not exceed 20 years as provided in section 8. Section 16 confers powers to modify a mining lease accorded before 1949 to bring it in conformity with the Act and the Rules.

In exercise of this power. the.

Controller of Mica leass reduCed the mining area to 10 sq. miles and the. rent . was duced from Rs. 8 per acre as fixed by the original lease to Rs. 6 /- per acre. The period of 20 years of original lease .; a e to an end iu 196h The appellant applied to the Crllvemment of Rajasthan f r renewal of its lease

for another 20 years under rule 28.

The renewal was ranted but the. dead: rent was increased from Rs. 6 to Rs. 8 per ocre. The a Hant challenged t11e order of Rajasthan Government by filing a Revision befor the Central Oovrn

ment which was dismissed. Thereafter. the appellant fil the present suit for a decree of injooction restraining respondents from chargin dead rent @.Rs. 8 per acre and for a declaration that they are entitled to c . arge only @ Ril •. 6 per acre. The suit was decreed by the trial court but .was dismissed by the First App!llate Court. The dismissal was maintained b~ the. Higb Court iro. 'ict, ind Apir.al. On appeal by Speial Leave, the appellant contended : ·

(I) Under thoagreement. dated. 20-11-1959 the lase was to be governed by the A, ct and the Rules except in/" regard to dea.d. re'nt was fixed at Rs. 6/- per ar.:re. · ··· . '

( 2) Under Rule 28 of the Rules, the State Governnlent while reney.--

ing .the lease had power to reduce the "rea ut no power k ' increase the dead rent. . . . .. : . / . ·

 i3) Ruk 'J.7 does not apply to renewal of a le.as~.

(4) ciause (c) of si1Ji:Rule (ly t Ruic 27 i~ ultra Vires us .it transgresses the rnle making power under ction 13(2}{g) of. the

A~I. ., . . .. . .

(5) Rule 270}(c) if.made appllcabldo renewal of a minin11 Ieac

introduces 001 element of uncertainty il\id is therefore void.

HELD: Rukmaklng power is to be found in section 13 (!). Section f3(2J merely illustrates the nature of the power, it does not restrict the general power under section 13 (I) .. The rule could ha e beeri framed even under section

13(2){g). [549C]

HELD FURTIIBR : There is no element of uncertainty in the rule either le> the grant of fresh leas~ or in respect of the renewal. The maximum limi1 is contained in Chapter IV .. To provide for payment of dead rent it ha~ specified rates slibfct to variation within the limit specified. These cttnnot hi: said to be void on account of uncertainty.

[550C]

.548

SUPREME COURT REPORTS [1975) 3, S.C.lt.

HELD FURTHER : The contention that the renewed lea5e had to be

ranted on the same twns and conditions and that no term and c:onditioo could be varied while granting the renewal of the lease except in regard to the reduction of the area in accordance with rule 28(5) was negatived was not corm:!. If in the original lease of 1941 there was a renewal clause one could probably say th:kt the renewal had to be on the same terms and conditions . but in the absenee of such a right of rcn:wat to the kscc the argument was not sound. '.rhe deman,1 of Rs. 8 per acre was within the limit spedfied by Schc<lule JV and w:t5 in accordance with law.

The appeal was dismis!1ed with :o\tS.

[55 JB .. D)

CIVlL APPELL\JE JURISDICTION : Civil Appeal No. 2305 of 1969.

Appeal by Special Leave from the Judgment & Order <lated the 8th August, 1969 of the Rajathan High Court in S. B. Civil Second . Appeal No. 236 of 1966.

P. C. Bhartari, for the Apoellant.

Girish Chandra, foe Respondent No. J.

S. M. la.in, for Respondent No. 2.

The Judgment of the Court was delivered by

UNTWALIA, J. This is a plaintiff's appeal by special leave of this Court from the Judgment and decree of the Rajasthan High Court whereby the plaintiff's second appeal from the decision of the First Appellate Court was dismissed and the dismissal of its suit was maintained.

The fact!\ of the case lie in a narrow comp:iss und may usefully be stated at the outset. The plaintiff was granted a mining lease for mining mica by the erstwhile State of Shahpura for a period of 20 years commencing from the 12th August, 1941. The area of the leru; e purported to be 1500 sq. miles. In due course the mining area in ques tion came to form part of the State of Rajasthan. The Mine.~ and Minerals (Regulation and Development) Act, 1957-hereinafter called the Act-came into force from 1st June, 1958. Under-section 6(1) of the Act as it stood at the relevant time the area of a mining kase in tile case of mica could not be more than 10 sq. miles and its maximum period could not exceed 20 years as provided in section 8. Section 16 confers power on the approi:riate authority to modify a mining lease granted before 24th October, 1949 to bring it in conformity with the Act and the Rules made thereunder. In exercise of this power and in accordance with the Mining Leases {Modifications of Terms) Rules, 1956 the Controller of Mica Leases, Nagpur, reduced the mining area of the appellant lease to 10 sq. miles by his order dated November 20,

1959. As per Rule lO(l)(a) of the said Rules a compensation of Rs. 10/- only was fixed by agreement between the parties for reduction of the area, and by the same order the dead rent at the rate of Rs. 8/- per acre per annum fixed by the original lease was rcducedJo Rs. 6/· per acre. The period of 20 years of the original lease came to an end on August H, 1961. The appellant applied to the Government of Rajasthan for renewal of its lease for another 20 years. This was do11e in accordance with Rule 28 of the Mineral Concession Rules, 1960hcrciuafter called the Rules. The Government of Rajasthan granted the renewal by order dated December 13, 1961 for a period of 20 years

SUDARSHA'i \1!NERAL co. v. UNION (Untwalw, J.) 549with effect from August 12, 1961. The dead rent fixed for the renewetl lease was Rs. 20/- per hectare which comes to Rs. 8/- per acre. The appellant challangcd the order of the Government of Rajasthan by tiling a revision before the Central Government in accordance with Rule 54 of the Rules.

But the revision was dismissed.

Thereupon it filed a suit against the Union of India, respondent no. l and the State of Raja.than, respondent no. 2 for a decree of injunction to restrain the defendants from charging de8.d rent at the rate of Rs. 8/- per acre per annum and for a dedaration that they arc entitled to charge only at the rate of Rs. 6/- pC'r acre.

The suit was decreed by t11c Trial Court but was dismissc:d by the First Appellate Court. The dismissal was maintained by the High Court in second.appeal.

Mr. Y. S. Chitlay, learned counsel for the appellant, pressed the following five points in support of this appeal :

ll) Under the agreement dated 20-11-1959 the lease was to be governed by the Act and the Rules except in regard to dead rent whicli was fixed at Rs. 6/- per acre.

(2) Under Ruic 28 of the Ruh:s, the State Government while renewing the lease had power to reduce the area but no power to increase the dead rent.

(3) Rule 27 docs not apply to renewal of a Jcas1:.

(4) Clause (c) of Sub-Ruic (1) of Rule 27 is ultra vires

as it trangresscs the rule making power under section 13(2) (g) of the Act.

(5) Rule 27(1) (c) if made applkablc to rcne\Yal of a mining lease introduces an clement of uncertainty and is therefore void.

Learned counsel for the respondents combated the appellants argument in all respects.

In our opinion none of the contentions put forward on behalf of the appellant is fit to be accepted and the appeal must fail.

As is well settled the power to make rules for regulating the grant of prospecting licences and mining leases in respect of minerals and for purposes connected therewith is to be found in sub-section ( l) of section 13. Sub-section (2) merely illustrates the nature of the power. It Llocs not restrict the general power under sub-section (1). Even under clause (g) of sub-section (2) in particular the Rules may provide the

tcnn~ on which and the conditions subject to which any mining foasc may be granted or renewed.

Sub-Ruic ( 1) of Ruic 27 requires every mining lease to be subjected to the conditions enumerated in clause (:i) to (n) and such conditions have got to be incorporated in every mining lease.

The conditions enumerated in clause (a) to (o) of Sub-Rule

(2) arc optional and n mining lease may contain such other conditions ; i_s the State Government may deem necessary in regard to them.

Rule 27(1)(c) reads as follows: "The Jca.e hall pay, for c\'cry y<.!ar, except the first year nf the leas.:, such yearly dead rent within the limits specified

sso SUPREMB COURT ltEPORTS

/ J 975] JS.CR.

ln-Schedule IV as may be fixed from time to time by the State Government and if the lease permits the working of more than one mineral in the same area, the State Govem· -ment may charge separate dead rem in respect of each

111ineral :

Provided that the Jessee shall be liable to pay the dead rent or royalty in respect of each mineral whichever be higher in amount but not both."

There is no element of uncertainty in the Ruie either in regard to the grant 'Jf fresh lease or in respect of the renewal.

The yearly dead rent to be fixed from time to time by the State Government cannot exceed t'le limit specified in Chapter IV.

The maximum limit is therefore certain. To provide for payment of dead rent at a specified rate s11bject

to variation within the limit specified in Schedule IV, is a term which cannot be said to be void on account of uncertainty, nor is it beyond the Rule making power c,0nferred on the Central Government under section 13 of the Act.

The 4th and 5th points urged on behalf ol' the appellant therefore fail.

Rule 27(1) makes it incumbent to subject every mining lease to the conditions enumerated in that subrule. The renewal of lease cannot be outside Rule 27 (I). A lease granted under the Rules and the renewal made thereunder will nci. occasion any difficulty at all in. the application of the conditions enumerated in sub-mle (1) to both. But the scope for .argument in this case arose because .the original lease wa.~ granted in 1941 by the erstwhile State.

The modifications were made in the year 1959 in accordance with the Act of 1957 and the Mining Leases (Modification of Term~) Rules, 1956. The Rules of 1960 were then not in existence. The question which deserves careful consideration, therefore, is-whether there is any substaoce in dtber of the first or second points urged on behalf of the appellant.

The Controller of Mica leases prepared a note and passed a final order on the 20th November, 59 recording the modifications of the terms of the mining lease dated 12-8-1941 specifically stating therein that the said foase was for 20 years "without a renewal clause". After providing that ·dead rent. shall be payable at the rate of Rs. 6/- per acre per annum", it was mentioned "The following clause shall be decflled to be inserted in the Jease deed and shall form part thereof : ) "Except for the modifications made by this order, the .tease shall be subject to the Rules made or deemed to have

been made under sections 13 and 18 of the Mines and Minerals (Regulation and Development) Act, 1957 (No. 67 of l-9~7).''

. It.was submitted on behalf of the appellr.nt that when renewal: of the lease was granted under Rule 28 of the Rules then the State Government was bound to act upon and incorpc>rate the new clause inserted in the original lease by order dated 20-11-1959; , In other words, it was contended that the renewed lease had to be granted on the same terms and conditions.

No term and condition coUld be varied while

' ~

SUDARSHAN MINERAL co. v. UNION (Untwalia, J.) 55 l

granting the renewal of the lease except in regard to the reduction of the area in accordance with sub-Rule (5) of Rule 28. That being so, the agreement stressed was that in view of the new clause operation of Rule 2 7 (1) ( c) was excluded in regard to the dead rent, it was not payable at any rate different from Rs. 6/- per acre.

In our judgment the argument though attractive is not fruitful.

If in the original lease there would have been a renewal clause giving a right to tlie lessee to have the renewal of the lease for another period of 20 years at its option one could probabily say that the renewal had to be on the same terms and conditions.

In that event the new clause inserted in the original lease by order dated 20-11-1959 could possibly be said to overri9e the mandatory requirement of Rule 27(1) (c). But in absence of such a right of renewal to the -lessee the said clause was operativeand effective only during the period of the original lease i.e. upto 11th August, 1961. The lease renewed thereafter was a renewal of the origipal 1ease ia one sense and a fresh lease in another.

While granting a fresh lease the Governmental authority has no power to relax the mandatory requirement of sub-Rule (1) of Rule 27 of the Rules.

By agreement it cannot take the conditions of the lease out of the said provision. It is, therefore, clear on the facts and in the circumstances of this case that while granting the renewal of the lease, the authority was neither bound nor empowered to incorporate a condition in the lease against clause

(c) of Rule 27(1). The demand of dead rent at Rs. 20/- per hectare i.e. Rs. 81per acre was within the limits specified in Schedule IV of the Rules and there was no mfirmity in it.

For the reasons stated above we !ind no merit in this appeal.

It is accordingly dismissed with costs.

P..H.P. . Appeal dismissed;

4-470SCl/75