PETITIONER: STATE OF HARYANA Vs. RESPONDENT: <NAME> & ORS. DATE OF JUDGMENT06/05/1988 BENCH: <NAME>, L.M. (J) BENCH: <NAME>, L.M. (J) PATHAK, R.S. (CJ) CITATION: 1988 AIR 1301 1988 SCR (3)1013 1988 SCC (3) 416 JT 1988 (2) 444 1988 SCALE (1)889 CITATOR INFO : F 1990 SC1417 (12) RF 1991 SC 564 (4) ACT: Mines & Minerals (Regulation & Development) Act , 1957- Whether a mining lease can be prematurely terminated in purported exercise of powers under Section 4A of-Without notice to the party affected and opportunity to that party to place its view point-Whether such termination is violative of principles of natural justice. HEADNOTE: These appeals were directed against the common judgment of <ORG> in Writ applications filed by different petitioners, challenging the termination of the mining leases granted to them. The State of Haryana which had executed the mining leases in favour of the writ petitioners for ten years under the provisions of the Mines & Minerals (Regulation & Development) Act (the Act), terminated the said leases prematurely in the purported exercise of powers under Section 4A of the Act without prior notice to the writ petitioners or any opportunity to them to defend their cases. The leases were so terminated on the ground that <ORG>-a public sector undertaking-had fully equipped itself to undertake the mining operations. <ORG> allowed the writ petitions. The State of Haryana and <ORG> appealed to this <ORG> by Special leave against the decision of <ORG>. According to the appellant, the necessary consultation between <ORG> and <ORG> was held, fulfilling the conditions under Section 4A of the Act and the decision impugned was taken. The appellant contended that the writ petitioners-lessees had no locus standi to place their view point and it was not necessary to give them notice, and that there was no violation of the principles of natural justice. Dismissing the appeals, the <ORG>, ^ HELD: The language of Section 4A indicates that the Section by itself does not permaturely terminate any mining lease. A decision in this regard has to be taken by <ORG>. The question of <ORG> granting a fresh mining lease in favour of a <ORG> or a <ORG> arises only after the existing mining lease is terminated, the section does not direct termination of all mining leases merely for the reason that a Government Company or a <ORG> has equipped itself for the purpose. It is not correct to say that an existing mining lease can be terminated for the reason that a Government Company or a <ORG> is ready to undertake the work. Viewed thus, the section must be interpreted to imply that a person who may be affected by such a decision should be afforded an opportunity to prove that the proposed step would not advance the interest of mines and mineral development. Not to do so will be violative of the principles of natural justice. Since there is no suggestion in the section to deny the right of the affected persons to be heard, the provisions have to be interpreted as implying to preserve such a right. A final decision to prematurely terminate a lease can be taken only after notice to the lessee.[1019C-H;1020E] The Writ Petitioners-respondents before the <ORG> were never given an opportunity to be heard. If such an opportunity had been afforded, they would have shown that their standard of mining operations was very high and favourably measured against the expected standard and was superior to that of the <ORG>. [1021G] There was no effective consultation between <ORG> and <ORG>, and <ORG> did not form any opinion as required under Section 4A of the Act. The respondents before the <ORG> were entitled to be heard before a decision to prematurely terminate their leases was taken but they were not given any opportunity to place their cases. The respondents must succeed. [1022A- <CITATION> ,  2 SCC 510; <CITATION> , AIR 1987 SC 1802; <CITATION> , AIR 1987 SC 1463 and <CITATION> , etc.,  2 SCR 742, referred to. JUDGMENT:

CIVIL APPELLATE JURISDICTION: Civil Appeals No.1472-77 of 1987.

From the Judgment and Order dated 4.12.1986 of <ORG> in Civil Writ Petition Nos. 2148 of 1986, 2417, 2173, 2174, 2175 and 2166 of 1986.

<NAME>

<NAME>, <NAME> and <NAME> for the Appellant.

<NAME>, <NAME>, <NAME>, <NAME>, <NAME>, <NAME>, <NAME>, <NAME>, <NAME> and <NAME> for the Respondents.

The Judgment of the Court was delivered by SHARMA, J. The present appeals by the State of Haryana and <ORG> are directed against the common judgment of <ORG> disposing of 6 writ applications filed by different petitioners impleaded as respondent No. 1 herein.

2. Separate mining leases were executed on behalf of the State of Haryana with respect to Silica sand and ordinary sand in favour of the writ petitioners for a period of 10 years, in accordance with the provisions of the Mines & Minerals (Regulation & Development) Act , 1957, hereinafter referred to as the Act. The State of Haryana, in purported exercise of powers under Section 4A of the Act prematurely terminated the leases by its order dated 1st October, 1986 which is quoted in the judgment of <ORG>, stating that it was proper to do so as <ORG>, respondent No. 4 (appellant No. 2 herein) a public sector undertaking had informed that it had fully equipped itself to undertake the mining operation and that necessary permission in terms of the Section had been obtained from <ORG> to prematurely terminate the leases. Admittedly no prior notice to the writ petitioners or any opportunity to them to place their case was given.

3. The lessees contended before <ORG> that essential conditions for exercises of the powers under Section 4A are not satisfied in the present cases and further, the impugned decision is violative of the principles of natural justice. It was also urged that so far as the lease in respect of ordinary sand which is a minor mineral under the Act, is concerned, Section 4A being excluded by the provisions of Section 14 is not applicable. It was also averred that forcible possession of the mining areas was taken even before communicating the impugned order. <ORG> agreed with these contentions and allowed the writ petitions. The State of Haryana and <ORG>, respondents No. 2 and 4, respectively, in the writ cases were allowed special leave to appeal under Article 136. Hence these appeals.

<NAME>

4. Section 4A as it stood at the relevant time read as follows:

"4A.(1) Where <ORG>, after consultation with <ORG>, is of opinion that it is expedient in the interest of regulation of mines and mineral development so to do, it may request <ORG> to make a premature termination of a mining lease in respect of any mineral, other than minor mineral, and, on receipt of such request, <ORG> shall make an order making a premature termination of such mining lease and granting a fresh mining lease in favour of such <ORG> company or corporation owned or controlled by <ORG> as it may think fit.

(2) Where <ORG>, after consultation with <ORG>, is of opinion that it is expedient in the interest of regulation of mines and mineral development so to do, it may, by an order, make premature termination of a mining lease in respect of any minor mineral and grant a fresh lease in respect of such mineral in favour of such <ORG> company or corporation owned or controlled by <ORG> as it may think fit."

5. Silica sand being a major mineral is governed by Sub-section (1) of Section 4A and ordinary sand by Sub- section (2). According to the appellant, full and necessary consultation between the two Governments i.e. <ORG> and <ORG> was held and it was considered expedient in the interest of regulation of mines and mineral development to take the impugned decision. Reference in this regard was made by the learned counsel to the report of <ORG> referred to in the letters of the Director, <ORG>, <ORG> to the Chief Secretary, <ORG>, dated 20th April, 1985, 8th July, 1985 and 10th July, 1985 and the <ORG>'s letters dated 14th July, 1986, 17th September, 1986 and 29th September, 1986. It has been contended that since a decision was jointly taken by the two Governments to grant mining lease of the entire area to <ORG>, this by itself fulfilled the necessary conditions under Section 4A and as the writ petitioners-lessees had no locus standi to place their point of view with respect to this aspect, it was not necessary to give them a notice. The argument is that in the circumstances there is no question of violation of principles of natural justice. It was also claimed that the <ORG> was the final authority to take a decision under Section 4A with respect to both major and minor minerals.

6. Mr. <NAME>, Additional Solicitor General, stated on behalf of <ORG>, respondent No. 2 that the respondent is ready to reconsider the matter after hearing the parties concerned. He refuted the claim of the appellant that the <ORG> is the ultimate authority to take a decision under Section 4A with respect to major minerals and he appears to be right. Sub-section (1) which deals with major minerals empowers <ORG> to consider the matter and, after having consultation with the <ORG> Government, to take a decision in this regard and once it does so and makes a request to the <ORG> Government for prematurely terminating a lease, the <ORG> Government shall be under an obligation to act. The use of "shall" in this context indicates the binding nature of the request.

7. The language of Section 4A clearly indicates that the Section by itself does not prematurely terminate any mining lease. A decision in this regard has to be taken by <ORG> after considering the circumstances of each case separately. For exercise of power it is necessary that the essential condition mentioned therein is fulfilled, namely, that the proposed action would be in the interest of regulation of mines and mineral development. The question of <ORG> granting a fresh mining lease in favour of a Government Company or a <ORG> arises only after a decision to terminate the existing mining lease is arrived at and given effect to. The Section does not direct termination of all mining leases, merely for the reason that a Government Company or <ORG> has equipped itself for the purpose. The Section was enacted with a view to improve the efficiency in this regard and with this view directs consulation between <ORG> and <ORG> to be held. The two Governments have to consider whether premature termination of a particulare mining lease shall advance the object or not, and must, therefore, take into account all considerations relevant to the issue, with reference to the lease in question. It is not correct to say that an existing mining lease can be terminated merely for the reason that a Government Company or <ORG> is ready to undertake the work.

8. Considered in this light, the Section must be interpreted to imply that the person who may be affected by such a decision should be afforded an opportunity to prove that the proposed step would not advance the interest of mines and mineral development. Not to do so will be violative of the principles of natural justice. Since there is no suggestion in the Section to deny the right of the affected persons to be heard, the provisions have to be interpreted as implying to preserve such a right. Reference may be made to the observations of this Court in <CITATION> ,  2 SCC 510, that where exercise of a power results in civil consequences to citizens, unless the statute specifically out the application of natural justice, such rules would apply. The cases, <CITATION> , AIR 1987 SC 1802; <CITATION> , AIR 1987 1463 and <CITATION> etc.,  2 SCR 742, relied upon by Mr. <NAME> do not help the appellant. The learned counsel placed reliance on the observations in paragraphs 5 to 7 of the judgment in <CITATION> . which were made in connection with legislative activity which is not subject to the rule of audi alteram partem. The principles of natural justice have no application to legislative activities, but that is not the position here. It has already been pointed out earlier that the existing mining leases were not brought to their and directly by Section 4A itself. They had to be terminated by the exercise of the executive authority of the State Government. Somewhat similar was the situation with regard to Section 4A of Haryana Board of School Education Act, 1969 which was under Consideration in <CITATION> , AIR 1987 SC 1463. A matter of policy was adopted and included by the legislature in the impugned section. Besides, the validity of the Section was not under challenge there, as was expressly stated in paragraph 6 of the judgment. So far as the case, <CITATION> is concerned, the learned counsel for the appellant cited it only with a view to emphasise the importance of the mineral wealth of the nation which nobody denies. We, therefore, held that a final decision to prematurely terminate a lease can be taken only after notice to the leassee.

9. Coming to the facts of the present case it will be observed that the question of terminating the mining leases in question before us was introduced for the first time under the letter dated 14.7.1986 (page 80) of the State of Haryana. The earlier letter dated 20.4.1985 and 8.7.1985, of <ORG>, Union of India sent to <ORG> discussed the general question about the desired improvement in the mining field and referred to the report of <ORG> on silica sand mining in Haryana. The report had highlighted various aspects of silica sand mining in the State and made several positive suggestions. It was stated in the letter dated 20th April, 1985 that if the lessees did not comply with the requirements mentioned therein, their leases "deserve to be terminated in accordance with the procedure established under law." In the letter dated 8th July, 1985, further emphasis was laid on ensuring scientific mining of optimum utilisation of natural resources, ensuring safety in operation and ensuring payment of fair wages to the mine workers. In this letter the desirability of entrusting mining operations to the public sector was mentioned but it was also stated that the representatives of <ORG> had in the earlier meetings expressed their inability to entrust <ORG> (appellant No. 2 before us) with the mining operations in the entire State immediately. Additional terms and conditions were also suggested to be imposed in the future mining leases to be granted in favour of private parties. Later on, it appears that <ORG> became ready to take over the mining operations and intimated its preparedness by letter dated 10.7.1986 and thereupon the State of Haryana wrote on 14.7.1986 to <ORG> that it was appropriate to prematurely terminate the 6 leases mentioned in the letter of the date. It will be significant to note that <ORG> did not take a decision to terminate all the mining leases; on the countrary, fresh mining leases in favour of private individuals were in contemplation of the State authorities, as indicated by the aforementioned letters and by Annexure P-5 (page 273) to the Writ Petition of <NAME> in <ORG>. The State's letter dated the 14th July, 1986 was followed by another letter dated 5.9.1986 and in reply to it, <ORG> asked for a report on several specific points mentioned in their letter which is at page 85 of the paper-book. In place of sending the required information, <ORG>, in its letter dated 17.9.1986, took the erroneous stand that the information sought for was not relevant. Instead of pointing out that the information demanded was very pertinent in the context of the proposed termination of the mining lease, <ORG> by its letter dated 26th November, 1986 agreed to the proposal, but took care to advice that while taking any action for premature termination of the leases the authority should "ensure that the provisions of Section 4A of the Act are complied with". As has been mentioned earlier, <ORG> does not deny the right of hearing to the affected lessees and is ready, even now, to give an opportunity to them. Admittedly, the writ petitioners who are respondents before us were never given any such opportunity and according to their assertion if such an opportunity had been afforded, they would have shown that the standard of their mining operation was very high and favourably measured against the expected standard suggested in the report of <ORG> and mentioned in the letter of the Mines Department of <ORG> and that it was definitely superior to that of <ORG>.

10. On a consideration of the facts and circumstances of the present case, we are of the opinion that there was no effective consultation between <ORG> and <ORG>, and <ORG> did not form any opinion as required under Section 4A of the Act. We are further of the view that the lessees, the respondents before us, were entitled to be heard before a decision to prematurely terminate their leases was taken but they were not given any opportunity to place their case.

11. Mr. <NAME>, the learned counsel for the respondents, very fairly stated that he could not support the plea that leases in respect of minor minerals are saved from the application of Section 4A altogether by reason of Section

14. This Court in <CITATION> ,  2 SCR 742 (at pages 746H and 747A) pointed out that perhaps since Section 4A(1) is inapplicable to minor minerals because of the provisions of Section 14 , Section 4A(2) has been specially enacted making somewhat similar provision. It must, therefore, be held that leases in respect of minor minerals also can be prematurely terminated in appropriate cases. However, in view of our earlier finding the respondents must succeed. We accordingly dismiss these appeals with costs.

S.L. Appeals dismissed.


PETITIONER: STATE OF MADHYA PRADESH(NOW MAHARASHTRA) Vs. RESPONDENT: HAJI HASAN DADA DATE OF JUDGMENT: 02/12/1965 BENCH: <NAME>, <NAME>: <NAME>, J.C. <NAME>, K. SIKRI, S.M. CITATION: 1966 AIR 905 1966 SCR (2) 854 CITATOR INFO : RF 1986 SC1556 (24) ACT: C.P. and Berar Sales-tax Act (21 of 1947), s. claim for refund--When can be ordered. HEADNOTE: The respondent was assessed to tax by the Assistant Commissioner of Sales-tax under the C.P. and Berar Sales-tax Act, 1947 on the turnover ,of his business and he paid the tax. After the order of assessment <ORG> gave a ruling that dyeing charges were not taxable under the Act. The respondent applied to the Assistant Commissioner, under s. 13 before its amendment in 1953 for refund, on the plea that the amount ,claimed represented dyeing charges included in his turnover. The Assistant Commissioner rejected the application, but <ORG> ordered the case to be returned to the Commissioner for examination of the claim for refund on merits. At the instance of the State, the Board referred to <ORG>, the question whether there was any bar to the examination on merits of claims for refund under s. 13 as originally ,enacted. <ORG> held that there was no bar.In appeal to this Court, HELD:The application for refund of tax was not 'maintainable under the section as originally framed. The Assistant Commissioner is, within the limits of his jurisdiction and authority, competent to decide all questions which arise before him; his orders are liable to be set aside in appeal or modified in revision. But under the Act, the Assistant Commissioner-who exercises the powers of the Commissioner-has no power to review his decision, and so long as his order is not set aside or modified,, a dealer cannot call upon him to ignore the previous order and grant refund contrary to the plain direction of his order. [857 C, H] Commissioner of Income-tax v. Tribune Trust L.R. 74 I.A. 306 applied. JUDGMENT:

CIVIL APPELLATE JURISDICTION : Civil Appeal No. 1007 of 1964.

Appeal by special leave from the judgment and order dated September 13, 1961, of <ORG> (Nagpur Bench) in Civil Reference No. 1 of 1961.

<NAME> and <NAME>, for the appellant. The respondent did not appear.

The Judgment of the Court was delivered by <NAME>, J. By order dated April 17, 1952, the respondent <NAME> was assessed by the Assistant Commissioner of Sales Tax, Nagpur Region, to pay tax under the Central Pro-

<NAME>

vinces & Berar Sales Tax Act 21 of 1947 on the turnover from his business in yam for the period November 13, 1947 to November 1, 1948. The respondent paid the amount of tax assessed on July 8, 1952. Thereafter relying upon s. 13 of the C.P. & Berar Sales Tax Act, 1947 he applied on November 20, 1952 to the Assistant Commissioner of Sales Tax for an order refunding Rs. 873/10/- on the plea that in the turnover of his business were included dyeing charges which were not taxable under the Act, and which since the order of assessment were held by <ORG> to be not taxable. The Assistant Commissioner rejected the application, and the order was confirmed by the Commissioner of Sales Tax in appeal. <ORG>, Madhya Pradesh, however, set aside the order and ordered that the case be returned to the Commissioner "for disposal afresh in the light of the legal principles explained in Sheikh <NAME> of Balaghat v. The <ORG>(1)". During the pendency of the proceedings before the taxing authorities, s. 13 of the Act was amended with retrospective effect. It is claimed by the <ORG> that under the amended section the right to obtain refund in cases similar to those under examination was. taken away retrospectively. The <ORG> of Madhya Pradesh moved <ORG>r for a reference under s. 23 of the Act to <ORG>, and <ORG> referred the following three questions :

"1. Is ruling 57 (in Sheikh <NAME>'s case-3 S.T.C. 331) good law ? In other words, was the <ORG> right in holding that <ORG> decision in <CITATION> . Trust (A.I.R. 1948 P.C. 102) constituted no bar to the examination on merits of claims for refund made under the original section 13 of the Sales Tax Act XXI of 1947 within the time-limit mentioned in it ?

2. Has section 24 of Act XX of 1953 been validly enacted, in so far as it seeks to give retrospective effect to the amended section 13 of Act XXI of 1947-as from the very commencement of the latter on 1-6-47 ? and

3.If the answer to question No. 2 is in the affirmative, does sub-section (3) of the new section 13 constitute a bar to the examination on merits of the claim for refund made by the assessee in the present case ?"

(1) 3 S.T.C. 331.

L8Sup.CI/66-8 <ORG> held that by s. 13 of the Act as originally enacted, the respondent had "a valuable right to ask for refund of the amount of the tax paid by him in excess of the amount lawfully due" and that "the right to obtain a refund being a substantive right given to the respondent by the statute and not being a matter of mere procedure", this right could not be taken away except by clear and unambiguous words, and S. 13 as amended was not legislation which satisfied that test. <ORG> accordingly answered the questions as follows :

"1. Ruling No. 57 is good law, and, in our opinion, the <ORG> was right.

2. Section 24 of Act XX of 1953 has been validly enacted.

3. The new section 13 sub-section (3), does not bar an examination on merits of the claim for refund made on 20-11-1952 by the assessee."

With special leave, the State of Maharashtra, upon whom the rights of the State of Madhya Pradesh have devolved by virtue of the States Reorganisation Act , 1956, has appealed to this ,.Court.

We are of the view that the first question alone need be answered in this appeal, and on the answer we propose to record the claim made by the respondent must stand rejected. Section 13 of the Act, as originally enacted, and which applied during the ,year of assessment, read as follows :

"The Commissioner shall, in the prescribed manner and either 'by cash payment or, at the option of the dealer, by deduction of such excess from the amount of tax due in respect of any other period, refund to a registered dealer applying in this behalf any amount of tax or penalty paid by such dealer in excess of the amount due from him under this Act. Provided that no claim for refund shall be allowed unless it is made within twelve months from the date on which the order of assessment with or without penalty was passed or within six months from the date on which the final order is passed on appeal, revision, review or reference in respect of the order of assessment with or without penalty."

The amendment to S. 13 by Act XX of 1953 need not, for reasons already set out, be considered.

Section 13 , in terms authorised the Commissioner to grant refund to a registered dealer applying in that behalf, of any amount of tax or penalty paid by such dealer in excess of the amount due from him under the Act. The section implies that refund may be granted only of the amount which is not lawfully due, and whether a certain amount is lawfully due or not, must be determined by the Assistant Commissioner in making the order of assessment or re- assessment. The order of the Assistant Commissioner is undoubtedly not final : it is liable to be set aside in appeal or modified in a revision application under the provisions of the Act. But so long as the order passed by the Assistant Commissioner is not so set aside or modified, a dealer cannot call upon him to ignore the previous order, and grant refund contrary to the plain direction of the order.

There is abundant authority for the view that until it is set aside by appropriate proceedings under the Act which authorises the levy of tax, full effect must be given to an order of assessment, even if it be later found that the order was erroneous in law : e.g. Commissioner of Income Tax, Punjab, North-West Frontier and Delhi Provinces, Lahore v. <ORG>, Lahore(1). In that case the <ORG> which had been in previous years assessed to, and had paid, income-tax, claimed in respect of its assessment for the year 1932-33 that it was exempt from taxation. In appeal which was carried to <ORG>, the contention was upheld. Before the judgment of <ORG> was pronounced, assessments to income-tax were made on the <ORG> for the years 1933-34 to 1938-39. After the <ORG>'s decision, the <ORG> applied to the Commissioner of Income- tax for an order for refund of income-tax. <ORG> held in a reference under s. 66(3) of the Indian Income-tax Act that the assessments made for the years 1933- 34 to 1938-39 "were a nullity", and that the <ORG> could not be denied the relief. <ORG> reversed the order of <ORG> and held that the assessments which were duly made by the Income-tax Officer in the proper exercise of his duty were validly made and were effective until they were set aside.

The Assistant Commissioner appointed under the Act is within the limits of his jurisdiction and authority competent to decide all the questions which arise before him : his orders, it is true, are liable to be set aside in appeal or modified in revision as provided by the Act. But under the Act the Assistant Commissioner who exercises the powers of the Commissioner-has no power to (1) L.R. 74 I.A. 306.

review his decision, nor is he authorised to ignore his previous order, and to pass an order for refund inconsistent with his previous order which has not been set aside by appropriate proceedings.

It is somewhat unfortunate that a later decision of <ORG> in <CITATION> (1)-a case arising under S. 13 of the Bombay Sales Tax Act, 1946-which decided the identical question which arose in this appeal, was not brought to the notice of <ORG>. In that case it was held by <ORG> that an application for refund of sales tax paid under an order of assessment cannot be entertained by the Sales Tax Officer on the plea that the order was made on an erroneous view of the law, unless the order was set aside in appropriate proceedings by way of appeal or revision. The <ORG> in that case in a reference made under the Bombay Sales Tax Act disapproved of the view of <ORG> which had in arriving at its decision followed the precedent in Sheikh <NAME> case (2). Application for refund of tax was, therefore, not maintainable under s. 13 of the C.P. & Berar Sales Tax Act, 1947 as originally framed.

The appeal must therefore be allowed. The parties to bear their own costs in this <ORG> and in the High <ORG>. Appeal allowed.

(1) 8 S.T.C. 379. (2) 3 S.T.C. 331.