K.S. Radhakrishnan, Ag. C.J.
1. The question that is posed for consideration in this batch of cases is whether State Government has got power to demand dead rent as per Rule 29(1)(d) of the Kerala Minor Mineral Concession Rules, 1967 for the period during which minor lease was kept idle. Learned single Judge found no infirmity in the demand and dismissed the Original Petitions. Aggrieved by the same these appeals have been preferred.
2. For disposal of these cases we will refer to the facts in O.P. No. 630 of 1999 against which W.A. No 148 of 2003 was filed. Petitioner is a partnership concern carrying on business of quarrying and exporting granite. By proceedings dated 14.05.1996 first respondent granted quarrying lease for extraction of granite dimension stone of M/s. Indus Granites over an extent of 6.7608 hectares in survey numbers 122/1 and 122/2 of Vandanmedu village in Udumbanchola taluk in Idukki district for a period of three years. Lease deed was executed in favour of M/s. Indus Granites on 29.05.1996. Indus Granites could not carry on quarrying operation in the above mentioned land due to financial constraints. Consequently they had sold the above mentioned property for valuable consideration to the petitioner and requested the third respondent to transfer the quarrying lease in favour of the petitioner. The Director of Mining and Geology by proceedings dated 9.5.1997 transferred the lease granted to M/s. Indus Granites over the above extent of land in favour of the petitioner as per Rule 34 of the aforesaid Rules.
3. Petitioner however could not carry on the quarrying operation in the above mentioned land during the period from 29.05.1997 to 28.05.1998. Consequently demand notice dated 25.6.1998 was issued by the third respondent directing the petitioner to remit an amount of Rs. 45,648/- towards 'dead rent' for the above mentioned period. Demand was made under Rule 29(1)(d) of the Rules. Petitioner is aggrieved by the said demand and has preferred the Original Petition seeking a declaration that Rule 29(1)(d) of the Kerala Minor Mineral Concession Rules, 1967 is ultra vires the Mines and Minerals (Development and Regulation) Act, 1957 and is violative of Article 14 of the Constitution of India in so far as it is made applicable to patta land. Petitioner has also sought a declaration that Clause 22 of the lease deed dated 29.05.1996 is illegal and without the authority of law and also for a writ of certiorari to quash the demand notice dated 25.6.1998.
4. Counsel appearing for the petitioner Sri Joseph Kodiianthara submitted that the concept of dead rent has no application to patta land since dead rent only represents the minimum royalty payable to the owner of the land in respect of lands which are the subject matter of the grant of mining permission. Counsel submitted so far as patta lands are concerned, payment of dead rent could not arise since the quarry operator is also the owner of the land. Counsel also submitted that Section 9A of the Act indicates that the word 'dead rent' only relates to the minimum fixed rate in the case of mining leases granted by the Government and as rules originally stood, lessees are being called upon to pay apart from area assessment, seigniorage fee quantified on the basis of the mineral quarried or the dead rent quantified on the basis of the area of land leased whichever is higher so as to ensure a minimum royalty in relation to the land leased by the Government. Counsel also submitted that pattadar cannot be required to pay any amount other than the royalty or seigniorage fee payable in respect of the minerals exploited or won from the land and levy and collection of any other amount other than normal assessment in relation to patta land would be ultra vires the Act. Counsel placed considerable reliance on the decision of the Division Bench of the Madras High Court in Kumaresan v. State of Tamil Nadu I.L.R 1994 (3) Madras 41.
5. Senior Government Pleader Sri T.R. Ravi on the other hand contended that Section 9 of the Kerala Mines and Minerals (Regulation and Development) Act, 1957 read with Rule 15(3) of the Rules framed thereunder makes the petitioner liable to pay either royalty or dead rent. Counsel submitted that dead rent is envisaged to derive a minimum guaranteed return from the lessee for the lease granted to the minerals belonging to the State. Counsel submitted that the objective of the fixed rent is to ensure that the lessee will work at all times. Counsel submitted that petitioner is only a pattadar and is having only the surface right and the minerals underneath the surface belongs to the Government. Government Pleader submitted that the lands in question are also situated within the territorial limits of the erstwhile Travancore and therefore the petitioner is liable to pay the royalty or dead rent, not both, as the case may be. Further Government Pleader also submitted that the claim for dead rent for minor minerals is not made directly under Section 9-A of the Mines and Minerals (R & D) Act, 1957. State Government is empowered to fix and collect dead rent vide Sections 15(3) and 25(2) of the Act and Rule 29(1)(d) of the Kerala Minor Minerals Concession Rules, 1967 provides for the liability to pay the dead rent. Counsel submitted that the reliance placed on the decision of the Division Bench of the Madras High Court in Kumaresan's case, supra is misplaced. Counsel submitted that the Madras High Court has only held that the provisions in the Madras Rules demanding dead rent can be enforced only from the date of coming into force of the government order dated 9.12.1988 since there was no provision fixing the rate of dead rent until it was specifically provided for by the above Government order dated 9.12.1988. Counsel submitted that the Madras High Court has held that the demand for dead rent can be enforced only prospectively with effect from 9.12.1988.
6. We heard counsel on either side at length and also examined the decisions cited at the bar. Meaning of the words 'royalty' and 'dead rent' occurring in the Mines and Minerals (Regulation and Development) Act, 1957 has been elaborately considered by the apex court in State of H.P. v. Gujarat Ambuja Cement Ltd. and Anr. (2005) 6 SCC 499 and hence requires no further elucidation. Apex court in paragraphs 49 to 58 of the above decision has succinctly defined the meaning of the expression 'dead rent'. The court quoted the definition of 'dead rent' given in Wharton's Law Lexicon as follows:
Dead rent - A rent payable on a mining lease in addition to a royalty, so called because it is payable whether the mine is being worked or not.
'Royalty' is a payment reserved by the grantor of a patent, lease of a mine or similar right, and payable proportionately to the use made of the right by the grantee. Referring to the earlier decision of the Apex Court in D.K. Trivedi and Sons v. State of Gujarat (1986) Supp. SCC 20, the court pointed out that while dead rent is a fixed return to the lessor, royalty is a return which varies with the quantity of minerals extracted or removed.
7. Land in question lies in the erstwhile State of Travancore. State Government in the counter affidavit filed in O.P. No. 630 of 1999 has stated that the Maharajah of Travancore by his proclamation dated 14.6.1881 irrespective of the tenure of land had vested all the minerals in its territory with the sovereign. Validity of the above proclamation was considered by a Division Bench of this Court in Shibu v. Tahsildar 1993 (2) KLT 870 and has conclusively held that all the minerals are vested with the Government of the State. Liability in respect of lands situated in the erstwhile Malabar area also came up for consideration before a Full Bench of this Court in Thressiamma Jacob v. District Office of the Department of Mining and Geology 2000 (2) KLT 162 and the court held that lands in question in the erstwhile Malabar area are in respect of Ryotwari Pattadars and the Ryotwari Pattadars were not considered as proprietors of the land. The court held that in so far as the lands in the erstwhile Malabar area are concerned the minerals belong to the Government and Royalty has to be paid to the Government for quarrying leases.
8. The above mentioned decisions rendered by this Court would enable the Government to demand dead rent on minerals irrespective of its ownership. Ownership of the land or surface rights does not in any way suggest ownership of minerals lying underneath or sub surface rights. Owner of the land is bound to pay the dead rent. Land owner is never called upon to remit any amount simply because the land in his possession contained mineral deposit. Demand is made only when a person holds a quarrying lease as per the rules to extract the minor mineral which is vested in the State.
9. Section 9A of the Mines and Minerals (Regulation and Development) Act, 1957 deals with dead rent to be paid by the lessee. Section 15 empowers the Government to make rules in respect of minor minerals. Section 15(3) is extracted below.
(3) The holder of a mining lease or any other mineral concession granted under any rule made under Sub-section (1) shall pay royalty or dead rent, whichever is more in respect of minor minerals removed or consumed by him or by his agent, manager, employee, contractor or sublessee at the rate prescribed for the time being in the rules framed by the State Government in respect of minor minerals.
Rule 29(1)(d) fixes the liability for payment of dead rent on a lease holder which is extracted below for easy reference.
(d) The lessee shall pay the State Government for every year except the first year of lease such yearly dead rent within the limits specified in Schedule II, as may be fixed from time to time by the State Government. Where the lease permits the working of any mineral, the lessee shall be liable to pay dead rent or royalty in respect of that mineral, whichever be higher in amount but not both:
Provided that where the lease permits the working of more than one mineral in the same area, the lessee shall be liable to pay dead rent or royalty in respect of each mineral subject to the restriction mentioned above in respect of any mineral.
Provided further that where the quarrying of one mineral involves the quarrying of any other mineral or minerals and lease permits the working of such other mineral or minerals also the lessee shall be liable to pay dead rent for only one mineral the highest dead rent being payable for this purpose in lieu of the combined royalty, if the latter is less than the former.
Petitioner, as we have already indicated, was served with demand notice under Rule 29(1)(d) of the Rules, since the petitioner has obtained a competent quarrying lease in respect of the land in survey numbers 122/1 and 122/2 of Vandanmedu village, Udumbanchola taluk and the owner of the surface of the land as per the revenue register is Sri Thirumalai Varadarajan and M/s. Indus Granites had transferred the lease to the petitioner. Land owner was never called upon to the pay the amount simply because the land in his possession contained mineral deposit. Demand was made only when the petitioner had held the quarrying lease as per rules to extract the minor mineral which is vested in the State. We have already found that grounds raised by the petitioner against the demand for dead rent are not sustainable. We hold that the Government have got the power to demand 'dead rent' as per Rule 29(1)(d) of the Rules for the period during which the mining lease is kept idle. In such circumstances, we are inclined to dismiss all the appeals and Writ Petitions. We find no reason to grant the reliefs prayed for in the appeals and Writ Petitions.