Rajgaon Stores Company (P) Ltd. Vs. State of West Bengal and ors. - Court Judgment

A. Lala, J.

1. This writ petition has been made by a company by the pen of one Sri Amar Madhab Gupta, claimed to be the Secretary of such company. Basically the main writ petition has been made by making three grievances. One is not to give effect or further effect of the demand of payment or royalty for the period from 30th January, 1974 to 30th June, 1974 under annexure 'B' to the writ petition. The second is declaration that Rule 18 of the West Bengal Minor and Minerals Rules, 1973 is ultra vires of the Mines & Minerals (Regulation & Development) Act, 1957 particularly Sections 2 and 16 thereof. The last is declaration that the West Bengal Minor and Minerals Rules 1973 has no application to the subsisting Mining lease under West Bengal Estates Acquisition Act, 1953.

2. However, before going to such controversy let me narrate the factual position herein. The predecessors-in-interest of the petitioner company were holding mining lease for quarrying stone metal over an area of 9000 bighas in Mouza Barua and area of 150 bighas in Mouza Gopalpur in the District of Birbhum, West Bengal for a long time. The mining lease had been granted to them by the ex-intermediaries before the acquisition by the State under West Bengal Estate Acquisition Act, 1973. By a Deed of disclaimer dated 21st December, 1957 the holders of the mining lease relinquished their leasehold Interest in favour of the petitioner company. The lessees were required under the terms of the said mining lease to pay the rents and royalties at the following rates:

(i) One anna per 100 Cft. Of stone chips laterite, dust or other minerals.

(ii) 3 Pies per 100 Setts of all stone sets,

(iii) Minimum royalty of Rs. 1000/- per annum,

(iv) Fixed rent of Rs. 50/- per annum.

3. As a matter of fact, the petitioner company was formed by the predecessors-in-interest. As because the original predecessor-in-interest were not agreeable to grant mining lease to them a private limited company was formed by them with effect from 19th December, 1963. The appropriate authority under the West Bengal Estates Acquisition Act recognised the petitioner company as a subsisting lease-holder in respect of the above mentioned area by its letter reference No. 1792 EA of 27th April, 1962. After vesting all the rights of the intermediaries in the State the petitioner was paying the rents and royalties to the authority under the provisions of Section 29 of the Act. Therefore, it became statutory lessee under such section of the Act. However, the lease was subsisting.

4. By a letter No. 2021(50) LR dated 7/8th April, 1975 the Additional Collector, Birbhum, Suri demanded a sum of Rs. 26,821.42p. as royalty for the period from 30th January, 1974 to 30th Jun, 1974. Dispute arose from there. The petitioner company disputed the demand. In further a demand of justice was made on 7th August, 1975 saying that the claim on the basis of the Rule 18(2) of the West Bengal Mining Minor Rules, 1973 cannot be applicable herein. Such Rule cannot override Section 29 of the West Bengal Estates Acquisition Act. Therefore, the same is ultra vires to the existing Act. Such point has already been decided by the Supreme Court of India by delivering a judgment reported in : AIR2000SC2870 (Quarry Owners' Association v. State of Bihar and Ors.). There the fixation of rate of royalty for minor and minerals under Section 15 of the Mines and Minerals (Regulation and Development) Act, 1957 was the subject matter of discussion. The question of consideration is the ambit of delegation of Parliament to the State Government under Section 15 of the Act. Two notifications were issued by the State of Bihar in respect of enhancement of rate of royalty. The appellants before the Supreme Court submitted that the same is ultra vires because it is not within the scope and ambit of the earlier decision of he Supreme Court reported in 1986 supple. SCC 20 (D.K. Tribedi & Sons and Ors. v. State of Gujarat and Ors. with other matters). On the other hand, the respondent stressed that issuance of notifications cannot be confined to that case. The Supreme Court ultimately held that such notifications are valid. The State Government while acting as a delegatee under Sections 15(1) of the Act is not confined to fix the royalty/dead rent within the peripheral ambit of entry 54 Schedule II of the Act. Neither D.K. Tribedi had said so, nor can it be construed to be so. The State Government has acted within the ambit of the power delegated to it and such delegation is with sufficient guidelines and check in view of the preamble, objects, reasons and various provisions of the Act. Requirement of some placement of the Rules or the notifications before the State Legislature is also one of the forms of check of the State Government to exercise his power as a delegate. In that case, one of the notifications had not been placed as required by the Sub-section (3) of Section 20 of the Act. The State Government is directed to do so at the earliest. However, it was observed that non-placement of such notification would not invalidate the same as the requirement is only directory. The enhancement of the royalty on the facts and circumstances of the case cannot be arbitrary or otherwise illegal.

5. When I go to D.K. Tribedi's case (supra) I find that the Supreme Court held thereunder that by virtue of Section 15 of the Mines and Minerals (Regulation and Development) Act, 1957 enhancement of rate of dead rent in the public interest, during the subsistence of the contract, would not amount to arbitrary exercise of power. Adverse on private on some leases would not vitiate such enhancement. The grant of quarry or mining lease or other mineral concession is not governed by the ordinary contractual law. Therefore I do not find any reason to say that the concept of enhancement of royalty or dead rent in respect of two Judgments of the Supreme Court are conflicting with each other. According to me, this is the consistent view.

6. The argument of Mr. Swadesh Ranjan Bhunia, learned senior counsel appearing on behalf of the respondent authority, is that when the relevant point has been considered by the Supreme Court as intra vires, there is no scope open for the petitioner to re-agitate the same. According to me, such submission is absolutely correct.

7. Presently his submission is that by efflux of time the continuance of the lease had come to an end in 1972 but the petitioner company has wrongfully carrying out the mining business in such leasehold plot even after the expiry of such period. Therefore, the petitioner company has no other alternative but to surrender his leasehold right to the authority concerned and apply for the renewal of the same for consideration by such authority. In addition to the same, the authority is entitled to enhance the rate of royalty and/or dead rent in view of the late Supreme Court judgment as above reported in : AIR2000SC2870 (supra). He argued that the West Bengal Minor Mineral Rules, 1973 is arising out of Mines and Minerals (Regulation and Development) Act, 1957. Since such Rule, by the interpretation of the Supreme Court as above, declared as intra vires the petitioner company has no other alternative but to pay at the enhanced rate of royalty and rent for the period it is carrying out the business. So far as the right of the writ petitioner company under Section 29 of the West Bengal Estates Acquisition Act is concerned, it applies only up to 11th January, 1972 i.e. last date of existing lease for a period of 30 years from 12th January, 1942 executed by the predecessor/predecessors-in-interest. The West Bengal Minor Mineral Rules, 1973 came into force superseding the earlier Rule i.e. West Bengal Mines and Minerals Rules, 1959. The present Rule is framed under entry 23 of the List II read with entry 54 of the List I of the Constitution of India. This Rule was framed under-section 15 of the Act i.e. Mines and Minerals (Regulation and Development) Act, 1957. The petitioner company even after the expiry of the period excavated the stones since 1975 under an order of injunction of the Court by furnishing a bank guarantee to the tune of Rs. 20,000/- only. From the record it will be available that the dues of the petitioner company is about Rs. 8 crores. The petitioner company had invoked the writ jurisdiction with uncleaned hands to regularise its own wrong. Therefore, the respondent is entitled to recover their dues under Par IX of the Payments of Recovery Act. Additionally this Court would be pleased to direct the petitioner company to hand over the possession of the query in question to the State respondent since the lease has expired on 1972.

8. From the plain reading of Section 29 of the Estate Acquisition Act, 1953 it appears that leases of mines and minerals in a notified area granted by an intermediary and subsisting intermediary before the date of vesting shall, with effect from such date, be deemed to have been granted by the State Government to the holder of the said subsisting lease on the same terms and conditions as of the subsisting lease with the conditions imposed thereunder. It appears to the Court that Chapter IV of such Act under which Section 29 has been provided is made for mines and minerals. Mr. Bhunia argued that when the Rules of Minor Minerals Rules, 1973 have been promulgated under the Mines and Minerals (Regulation and Development) Act, 1957 and said it is declared as intra vires there will be no effect of the West Bengal Estate Acquisition Act, 1953 even in respect of the leasehold interest of the petitioner company. I find that Rule 38 of the aforesaid Rules repealing the West Bengal Minor Mineral Rules, 1957 excepting the power of application or proceeding which was there before, will be treated to be continued under new Rules.

9. From the affidavit-in-opposition of the State Government a new fact arose. A copy of indenture dated 5th January, 1926 annexed therein whereunder the erstwhile zaminder/predecessor of the Predecessor-in-interest being lessor granted leasehold right with a permanent, heritable and permissible demise in perpetuity against an oral fixed rent. The petitioner company called upon the respondents to produce other documents in connection with such indenture of lease but they failed to do so. However, the respondents never opposed the existence of such document annexed to the affidavit-in-opposition. Therefore, according to Mr. Ajit Kumar Panja, learned senior counsel, appearing for the petitioner company, a deed of disclaimer giving a period up to 1972 cannot override the perpetual right of the petitioner. Having such knowledge the Additional Director, Birbhum by a letter dated 27th April, 1962 informed the petitioner that he accepted the subsisting lease of the petitioner company. Moreover, by a Memorandum No. 2021(5)) LR dated 7/8th April, 1975 he called upon the petitioner to pay a sum of Rs. 26,821,42p. as royalty for the period of 30th January, 1974 to 30th June, 1974. Had there been expiry of leasehold period by 1972 no occasion could have arisen to ask payment of royalty between the period starts from 30th January, 1974 to 30th June, 1974.

10. According to me, as per the ratio of the judgment reported in : AIR2000SC2870 (supra) payment of royalty or rent on the enhanced rate cannot be dependable upon the period of existence or non-existence of the lease. Therefore, as because a Governmental Authority issued a notice for the purpose of royalty, the writ Court cannot construe that the necessary implication of such acceptance is extension of the period of leasehold interest of the petitioner company. Whether the petitioner company obtained a perpetual leasehold interest or not from the lessors that can only be decided by a Civil Court. As because writ petition was previously entertained due to challenge of vires before the decision of the Supreme Court, the leasehold right of the petitioner company, if any, cannot get its life of perpetuity at the final hearing without the proper test. Moreover, when by operation of law, the State has become lessor whether such conditions of private lease exists or not is also a big question.

11. Section 16 of the Mines and Minerals (Regulation and Development) Act, 1957 speaks as follows:

Power to modify mining leases granted before 25th October, 1949-(1)(a) All mining leases granted before the commencement of the Mines and Minerals (Regulation and Development) Amendment Act, 1972 (if in force at the date of commencement of the Mines and Minerals (Regulation and Development) Amendment Act, 1994 shall be brought in conformity with the provisions of this Act and the rules made thereunder within (two years from the date of the commencement of the Mines and Minerals (Regulation and Development) Amendment Act, 1994), or such further time as the Central Government may, by general or special order, specify in this behalf.

(b) Where the rights under any mining lease, granted by the proprietor of an estate or tenure before the commencement of the Mines and Minerals (Regulation and development) Amendment Act, 1972, have vested, on or after the 25th day of October, 1949, in the State Government in pursuance of the provisions of any Act of any Provincial or State Legislature which provides for the acquisition of estates or tenures or provides for agrarian reform, such mining lease shall be brought into conformity with the provisions of this Act and the rules made thereunder within (two years from the commencement of the Mines and Minerals (Regulation and Development) Amendment Act, 1994), or within such further time as the Central Government may, by general or special order, specify in this behalf.

((1A) Where any action is taken under Clause (a) or Clause (b) of Sub-section (1) to bring the period of any lease in conformity with the provisions of this Act and the rules made thereunder, then notwithstanding anything contained in Section 8, the period of such lease shall continue to operate for a period of two years from the date of bringing such lease in conformity with the provisions of this Act). (2) The Central Government may, by notification in the Official Gazette, make rules for the purpose of giving effect to the provisions of Sub-section (1) and in particular such rules shall provide-

(a) for giving previous notice of the modification or alteration proposed to be made in any existing mining lease to the lessee and where the lessor is not the Central Government, also to the lessor and for affording him an opportunity of showing cause against the proposal;

(b) for the payment of compensation to the lessee in respect of the reduction of any area converted by the existing mining lease; and

(c) for the principles on which the manner in which, and the authority by which, the said compensation shall be determined.

12. According to me, the scheme of Section 16 as aforesaid is to make a uniform action in respect of mines and minerals.

Section 15 of the Act is also as follows:

Power of State Government to make rules in respect of minor minerals-(1) The State Government may, by notification in the Official Gazette, make rules for regulating the grant of quarry leases, mining leases or other mineral concessions in respect of minor minerals and for purpose connected therewith, (1A) In particular and without prejudice to the generality of the foregoing power, such rules may provide for all or any of the following matters, namely:-

(a) the person by whom and the manner in which, applications for quarry leases mining leases or other mineral concessions may be made and the fees to be paid therefore;

(b) the time within which, and the form in which, acknowledgment of the receipt of any such applications may be sent;

(c) the matters which may be considered where applications in respect of the same land are received within the same day;

(d) the terms on which and the conditions subject to; which and the authority by which quarry leases, mining leases or other mineral concessions may be granted or renewed;

(e) the procedure for obtaining quarry leases, mining leases or other mineral concessions;

(f) the facilities to; be afforded by holders of quarry leases, mining leases or other mineral concessions to persons deputed by the Government for the purpose of undertaking research or training in matters relating to mining operations;

(g) the fixing and collection of rent, royalty, fees, dead rent, fines or other charges and the time within which and the manner in which these shall be payable;

(h) the manner in which rights of third parties may be protected (whether by way of payment of compensation or otherwise) in cases where any such party is prejudicially affected by reason of any prospecting or mining operations; (i) the manner in which rehabilitation of flora and other vegetation, such as trees, shrubs and the like destroyed by reason of any quarrying or mining operations shall be made in the same area or in any other area selected by the State Government (whether by way of reimbursement of the cost of rehabilitation or otherwise) by the person holding the quarrying or mining lease;

(j) the manner in which and the conditions subject to which, a quarry lease, mining lease or other mineral concessions may be transferred;

(k) the construction, maintenance and use of roads power transmission lines, tramways, railways, aerial ropeways, pipelines and the mining of passage for water for mining purposes on any land comprised in a quarry or mining lease or other mineral concession;

(l) the form of registers to be maintained under this Act;

(m) the reports and statements to be submitted by holders of quarry or mining leases or other minerals concessions and the authority to which such reports and statements shall be submitted;

(n) the period within which and the manner in which and the authority to which applications for revision of any order passed by any authority under these rules may be made, the fees to be paid therefore, and the powers of the revisional authority; and

(o) any other matter which is to be, or may be prescribed;

(2) Until rules made under Sub-section (1), any rules made by a State Government regulating the grant of quarry leases, mining leases or other mineral concessions in respect of minor minerals which are in force immediately before the commencement of this Act shall continue in force;

(3) The holder of a mining lease or any other mineral concession grantedunder any rule made under Sub-section (1) shall pay royalty or dead rent,whichever is more in respect of minor minerals removed or consumed byhim or by his agent, manager, employee, contractor or sub-assessee at therate prescribed for the time being in the rules framed by the StateGovernment in respect of minor minerals:

Provided that the State Government shall not enhance the rate of royalty or dead rent in respect of any minor for more than once during any period of three years.

13. Therefore, such sections clearly give a power of superseding effect in respect of the earlier Act and Rules to provide a scheme of operation. The petitioners cannot bypass the same. Therefore, it is correct to accept the argument of Mr. Bhunia that to avoid all complications it is appropriate for the petitioner company to make an application for renewal of the leasehold right upon payment of enhanced rate of royalty and rent. Whether the claim of royalty or rent is absurd or not that will be reflected from the appropriate accounts for which the petitioner has to approach the authority. If there is any proof of absurd claim and harassment the petitioner company is obviously entitled to prosecute the appropriate person. But that is a separate cause of action altogether which cannot be mixed up with the available cause of action in the pending writ petition. Presently, the scope and ambit of the writ petition is very limited. Whether the Minor Minerals Rules, 1973 is ultra vires or not the same has been decided by the Supreme Court. Therefore, this Court cannot enter upon such arena. The other dispute is a claim of royalty amount of Rs. 26,821.42p. for the period of 30th January, 1974 to 30th June, 1974 after the expiry purported period of leasehold right of the petitioner. The petitioner had not only given the bank guarantee but paid a substantial amount by an order of the Court. The original grievance of the petitioner, is if the petitioner's present claim stands on such notice after expiry of the leasehold period, then such notice has to be declared as bad in law. But the present argument of the petitioner is that since such notice has been given after the expiry of the purported leasehold period it is necessarily implies that the petitioner's leasehold interest exists. According to me, both the arguments are militating with each other. If the second argument is accepted the best course would be to institute a suit and/or proceeding for declaration. Writ Court cannot decide such issue. Presently the writ petition appears to be misconceived in nature.

14. Hence, the writ petition stands dismissed. However, no order is passed as to costs. Interim order, if any, stands vacated subject to the clarification that if any payment is made pursuant to the order/s of the Court that will be adjustable as against the claim of the respective parties. However, this order will not prevent the petitioner from making any application for extension of leasehold period in accordance with law, if so advised.

Let an urgent xeroxed certified copy of this judgment, if applied for, be given to the learned advocates for the parties within two weeks from the date of putting the requisites.