Ramlal & Sons Vs. State of
Rajasthan  INSC 255 (9 October 1975)
CITATION: 1976 AIR 54 1976 SCR (2) 222 1976
SCC (1) 112
Mines and Minerals (Regulation and
Development) Act (67 of 1957), s. 5 and the Mineral Concession Rules 1949, r. 41- State Government demanding premium without prior approval of Central
The appellant's tender for mining rights for
mica was accepted in 1951. The appellant deposited the premium demanded and
took possession of the land. The lease was for a period of twenty years but no
lease was executed. In 1967, the State Government directed that the appellant
should vacate the land within a month from the date of the receipt of their
order. The appellant challenged the order under Art. 226. but the High Court
dismissed the petition.
Allowing the appeal to this Court,
HELD: (1) In view of the facts, that the
period of the purported lease had already expired, and no proper lease had been
executed, there was no question of issuing a writ for granting the lease, or
the appellant exercising an option to renew the lease. [224H] (2) The
appellant, however, was entitled to a refund of the illegally realised premium
deducting the sum received on account of compensation for the unexpired period.
The State Government was under a legal obligation to act in accordance with the
statutory rules applicable, namely, the Mineral Concession Rules, 1949, made in
exercise of the power conferred under s. 5 of the Mines and Minerals
(Regulation and Development) Act, 1948 when granting a lease. It could not
impose terms and conditions according to its own whims ignoring or disregarding
statutory rules which are binding on it, and could not exercise a power unknown
to the rules.
There is no provision in the rules
authorising the realisation of premium. Rule 41, providing for conditions of
the lease, specifically mentions royalty, dead rent and surface rent but not
premium. Under r. 41(3) a mining lease may contain any other special conditions
subject to the prior approval of the Central Government; but no such prior
approval was given in the present case, for the realisation of the premium.
CIVIL APPELLATE JURISDICTION: Civil Appeal
No. 1562 of 1970.
Appeal by special leave from the Judgment and
Order dated the 29th July, 1970 of the Rajasthan High Court in D.B. Civil
Special Appeal No. 172 of 1970.
D. V. Patel, S. M. Jain, for the appellant.
Miss Maya Rao for the respondent.
The Judgment of the Court was delivered by
GOSWAMI, J. This appeal by special leave is against the judgment of the
Division Bench of the Rajasthan High Court by which an appeal against the
judgment of a single Bench was summarily rejected.
In answer to a notification of March 29,
1950, issued by the State of Rajasthan inviting tenders for mining rights for
mica on certain terms and conditions, the appellant submitted its tender which
was accepted on December 30, 1950 and a notification in that behalf was made by
the State Government on February 6, 1951, granting the mining lease for mica
for block No. 6 (except sidries mine) in Bhilwara District on payment of the
tendered amount of Rs. 1,55,000.
223 The lease was for a period of 20 years
with an option of renewal of the lease for another 20 years as per conditions
prescribed in the Mineral Concession Rules, 1949 (briefly the Rules). A premium
of Rs. 1,55,000 was deposited by the appellant and possession was also handed
over to it on March 15, 1951. The area originally was 6021 acres but later on a
dam, by the name of Meza Dam, was constructed over some parts of the original
area and the appellant was left to work on 2924 acres. It is stated that the
appellant spent Rs. 5,65,000 between 1951 and 1955. It is also common case that
no lease was executed within six months of the acceptance of the tender as
required. On June 19, 1955, the Director of Mines and Geology, Rajasthan, sent
a notice to the appellant intimating that the orders sanctioning the lease
stood revoked with effect from June 6, 1955. The appellant was asked by this
notice to show cause why further action to take immediate possession of the
area should not be taken. It may be noted that in this notice exception was
taken for the appellant not executing the lease within the requisite period of
six months which, it was mentioned, expired on August 27, 1953. The appellant
submitted a review application against the order of the State Government
cancelling the mine lease on February 23, 1957. It appears, meanwhile, the State
Government proposed to grant a lease to the appellant and the latter did not
press the review application. Thereafter some correspondence took place between
the appellant and the State Government regarding execution of the lease, its
terms and conditions and the like. A reference was also made by the appellant
to the Central Government on March 12, 1963, to direct the State Government to
sanction the lease. On May 15, 1965, the Mining Engineer, Rajasthan, sent a
notice to the appellant to deposit the dead rent amounting to Rs. 1,27,616.36
for the period 1-4-1960 to 14-9-1965 on pain of legal action.
The appellant preferred a revision
application to the Government of India against this order. The Government of
India by its order of March 19, 1966, set aside the order of May 15, 1965,
demanding Rs. 1,27,616.36 as dead rent for block No. 6. This order is
significant in more than one way.
It is clearly stated in the order that the
conditions under the Mineral Concession Rules 1949 under which mining or prospecting
operation is allowed to be undertaken do not provide for payment of premium by
the lessee except with the prior approval of the Central Government. It was
also pointed out in the order that no such approval was secured by the State
Government before accepting the premium of Rs.
1,55,000 from the appellant. It was,
therefore, pointed out that the acceptance of the premium was illegal. It was
further held that the State Government was entitled to charge only royalty in
the present case and it could charge dead rent or royalty, whichever was
higher, only after execution of a formal lease.
Then came the State Government's impugned
order of November 9, 1967, addressed to the appellant. There was reference in
the above order to the fact that the appellant- "approached the Central
Government in revision.
The Central Government have held that the
permissive permission 224 of this block to you is not even as a licensee under
the Mineral Concession Rules 1949. Government, therefore, do not want that the
possession of this area should remain with you any longer. Government is,
therefore, pleased to order that you should vacate the aforesaid block No. 6 within
a month from the date of the receipt of this note, failing which such action
shall be taken as may be deemed proper".
It may be mentioned that the Central
Government in the order referred to above in the extract also observed
"this licence was not within the meaning of Mineral Concession Rules 1949
but was governed by the General law, e.g. the Easement Act".
(See Central Government letter dated March
19, 1966.) The appellant after receipt of the order of November 9, 1967,
instituted an application under article 226 of the Constitution in the High
Court of Rajasthan (being Writ Petition No. 691 of 1967) praying for a writ of
certiorari to quash the aforesaid order, to restrain the State from revoking
the licence and dispossessing the appellant from the mining area absolutely or
in the alternative, till compensation along with refund of the premium of Rs. 1,55,000
and the dead rent realised in excess of royalty were paid by the State. As a
last alternative it prayed for a direction to the State to grant the lease of
the balance area of 3628 acres or such other area to which the appellant was
entitled in law.
The learned single Judge of the High Court
dismissed the writ application as infructuous in view of the offer made by the
State in its application of April 20, 1970, repeated through the learned
Advocate General. The learned Advocate General submitted before the High Court
that the State Government "was still prepared to pay them compensation in
order to revoke the licence granted in favour of the petitioner".
In the aforesaid application of April 20,
1970, the State Government was prepared to pay compensation to the appellant at
the rate of Rs. 7750 per annum for the unexpired period of 20 years ending on
March 14, 1971.
The learned single Judge while dismissing the
application observed that if the petitioner thought that the compensation was
inadequate he could agitate the matter in court.
The appellant's appeal thereafter to the
Division Bench was summarily dismissed and leave to appeal to this Court was
also rejected. Hence this appeal by special leave.
We have heard the learned counsel for both the
In view of the fact that the period of the
purported lease already expired on March 14, 1971, there is no question of a
writ for granting the lease. Since a proper lease had not been executed, for
whatever reasons, there was no question also of exercise of an option of
renewal 225 of lease. The only question that survives is whether the State
Government could realise premium in a lawful manner under the Mineral
We do not find any provision in the Rules
authorising realisation of premium as done in this case. Rule 41 of the Rules
of 1949 applicable at the relevant time provides for conditions of the lease.
These conditions specifically mention royalty, dead rent and surface rent, but
not premium. Again proviso to rule 41(1)(iii) states that the lessee shall be
liable to pay the dead-rent or royalty in respect of each mineral whichever be
higher in amount, but not both. Under subsection (3) of section 41, a mining
lease may contain any other special conditions, subject to the prior approval
of the Central Government. The Central Government, is, therefore, right in
holding that the realisation of the premium of Rs. 1,55,000 was illegal,
particularly because there was no prior approval under sub- section (3) of rule
41 of the Rules.
When in this case grant of the mining lease
was envisaged under definite statutory rules made in exercise of power,
conferred under section 5 of the Mines & Minerals (Regulation and
Development) Act, 1948, the State Government was under legal obligation to act
in accordance with these rules. It could not exercise a power in the matter of
grant of mining lease unknown to these Rules. The State Government could not
impose terms and conditions according to its own whims ignoring or disregarding
the statutory rules which are binding on it. The appellant is, therefore,
entitled to a refund of Rs. 1,21,930.71 which is due to the appellant out of
the illegally realised premium of Rs. 1,55,000 allowing the sum of Rs.
33,069.29 already received by the appellant from the Government on account of
The appellant's counsel made a statement in
court that since the appellant had already vacated the area it will not of its
own make any further claim for compensation or under any other heads but
reserves its right to raise all possible defences against any action that may
be instituted by the State against the appellant in the matter of the grant of
mining for mica in the area. Subject to the reservation of the above right, the
appeal is partly allowed to the extent that the State Government is directed to
1,21,930.71 as mentioned above.
The appellant is entitled to its costs in
V.P.S. Appeal allowed in part.