M/S. Nandram Hunatram, Calcutta Vs.
Union of India & ANR [1966] INSC 90 (29 March 1966)
29/03/1966
ACT:
Mines and Minerals-Failure to fulfill
condition of lease and endangering colliery-Government if can determine leaseRevision
Procedure for passing order-Mineral Concession Rules, 1960.
HEADNOTE:
The appellant-firm held mining lease of a
colliery on the condition to continue the work, without voluntary intermission,
in a skillful and workman-like manner. The partners fell out amongst,
themselves, the work of the colliery stopped, wages of the labourers were not
paid, the essential services stopped working, and the colliery began to get
flooded. The State Government stepped in and made a promise to the essential
workmen that their wages would be paid and this saved the colliery. The State
Government gave a notice asking the firm to remedy the defect within sixty days
failing which it would take over the colliery. As the firm did nothing to
remove the defects and did not request for extension of time, the State
Government took over the colliery and terminated the lease. The firm filed a
revision before the Central Government. The Central Government asked for the
comments of the State Government and invited the firm to make its own comment
upon the reply of the State Government. Taking the entire matter into
consideration, the Central Government rejected the revision.
In appeal to this Court, the firm contended
that the action by the State Government was arbitrary and highhanded and that
the Central Government did not give a hearing to the firm and also did not give
any reasons in its order dismissing the revision.
HELD:The action of the State Government far
from being arbitrary or capricious was not only right but proper. This$ was
hardly a case in which any act-ion other than rejecting the application for
revision was called for and a detailed order was really not required because
after all the Central Government was merely approving the action taken in the
case by the State Government, which stood completely vindicated.
[108 B-C] The Mineral Concession Rules make
it incumbent on the Central Government to obtain the comments of the State
Government upon the application for revision and cast a duty on the Central
Government to afford an opportunity to the applicant to make representations in
respect of the comments of the State Government. This procedure was correctly
followed and the Central Government thus had a detailed discussion of the pros
and cons of the case before it. [107 G].
Harinagar Sugar Mills Ltd. v. Shyam Sundar
Jhunjhunwala, [ 1962] 2 S.C.R. 339, Madhya Pradesh Industries Ltd. v. Union of
India. [1966] J.S.C.R. 466 and Aluminium Corporation of India Ltd. v. Union of
India and Ors., C.A. No. 635/64, dated 22-1965] referred to.
105 The firm did not fulfil its obligations
under the lease and, whatever the reason, it was guilty of voluntary
intermission in the working of the colliery and of endangering it by neglect.
This entitled the State Government to step in and determine the lease under the
terms of the lease and the provisions of the Mineral Concession Rules. [107
C-D].
CIVIL APPELLATE JURISDICTION: Civil Appeal
No. 257 of 1964.
Appeal by special leave from the judgment and
order dated February 19, 1963 of the Government of India, Ministry of Mines and
Fuel, New Delhi on an application for review under rule 54 of the Mineral
Concession Rules 1960.
S. N. Andley, Rameshwar Nath, P. L. Vohra and
Mahinder Narain, for the appellant.
C. K. Daphtary, Attorney-General, R.
Ganapathy lyer and B. R. G. K. Achar, for respondent No. 1.
R. N. Sachthey, for respondent No. 2.
The Judgment of the Court was delivered by
Hidayatullah, J. The appellant Messrs. Nandram Hunatram of Calcutta, a firm
consisting of four partners including one Kishan Lal Aggarwal, held a mining
lease for coal in respect of Handidhua Colliery for a period of 30 years
commencing on April 6, 1959. Under Part VII of the lease, which contained the
covenants of the lessee, the firm had undertaken to commence mining operations
within one year from the date of the execution of the lease and then to
continue the work of searching and winning minerals without voluntary
intermission in a skillful and workman-like-manner. The firm had appointed one
M. L. Goel as the Manager and Kishan Lal Aggarwal as the occupier of the
colliery. It appears (and in fact it is not denied) that the partners fell out
among themselves and as none of them was willing to spend money on the
colliery, work deteriorated and came to a standstill in May 1962. Goel reported
to the State Government that the wages of the labourers had not been paid for
weeks, that work had stopped at the colliery and that even the essential
services were not being maintained owing to non-payment of wages. He wrote to
the firm and Government early in the first week of May, bringing to their
notice that the colliery was in danger of being flooded if the essential
services stopped working. On May 9, 1962 the essential services stopped working
as their wages had not been paid for several weeks. The colliery began to get
flooded when the pumps stopped and it was apprehended that within the next few
hours the pumps would be drowned and the colliery lost. Government, however,
stepped in and made a promise to the essential workmen that their wages would
be paid and this saved the colliery. On May 14, the Chief Inspector of Mines
was informed by Kishan Lal Aggarwal that he was restrained by the other 106
Partners of the firm from making payment for running expenses of the colliery
and that he was not in a position to perform his duties as an occupier. He
accordingly resigned his office. Goel also resigned and on May 16, 1962 the Sub
divisional Officer, Talchar informed Government that the situation had become
very alarming and that some action was absolutely necessary. Government
thereupon gave a notice on May 19, 1962 asking the firm to remedy the defect
within sixty days of the receipt of the notice failing which Government
threatened to take over the colliery from the firm. As the firm did nothing to
remove the defects and did not request for extension of time, Government took
over the colliery and terminated the lease.
The firm thereupon filed an application for
revision before the Central Government under Rule 54 of the Mineral Concession
Rules 1960. The Central Government asked for the comments of the State
Government on the application and invited the firm to make its own comments
upon the reply of the State Government. Taking the entire matter into
consideration the Central Government by order, February 19, 1963, rejected the
application for revision. The present appeal is against the order of the
Central Government by special leave of this Court.
It was admitted in the application for
revision and it is not denied before us that the partners were quarrelling
among themselves and the work at the colliery had therefore stopped. It is
admitted that the wages of the labourers were not paid for about five weeks
before Government sent its notice on May 19, 1,962. It is further admitted that
the essential services had also stopped working and that but for the timely
action of the Government, the colliery would have been flooded in a matter of
hours and probably rendered unworkable till dewatered. With this background in
mind we have to consider the objections of the firm to the order of the Central
Government in the first instance and of the State Government in the final
analysis.
Clause (3) of Part VII of the lease is one of
the covenants by the lessee and under it the lessee undertook to continue work,
without voluntary intermission, in a skilful and workman-like-manner. Under
cls. (i) to (x) of Rule 41 of the Mineral Concession Rules, 1949 and under Rule
27(5) of the Mineral Concession Rules, 1960 power is conferred on the State
Government to require the lessee by notice to remove a breach within 60 days of
the receipt of notice and in default to determine the lease and forfeit the
whole or part of the security in deposit. Under Rule 27(1)(f) the lessee is
also required to conduct operations in a proper, skilful and
workmanlike-manner. It is abvious that there was a breach by the lessee of the
covenants and the Mineral Concession Rules when the firm stopped working the
colliery.
Even if the firm did not order the stoppage
of the work at the colliery it is clear from the complaints 107 of Goel and
Kishan Lal Aggarwal that no payment was being made to the labourers and they
stopped work. On record there are many telegrams and letters sent by the
Workers' Association to Government complaining of the failure of the firm to
pay their wages for weeks. It is thus clear that action was absolutely
necessary to save the colliery from being ruined. It is contended, however,
that the wages were paid in full on the 17th of July but that obviously cannot
do away with voluntary intermission which had already taken place for a few
weeks. The firm in its representation to the Central Government said that it
had plans to raise as much as 240,000 tons of coal per year but their
performance shows that in April, 1962 they had raised less than 2,000 tons and
nothing in May, June and July. In these circumstances, there is no merit
whatever in the submission of the firm that the action by the State Government
was arbitrary and high-handed. It is plain that the firm did not fulfill its
obligations under the lease and, whatever the reason, it was guilty of
voluntary intermission in the working of the colliery and of endangering it by
neglect.
This entitled the State Government to step in
and determine the lease under the terms of the lease and the provisions of the
Mineral Concession Rules.
It is, however, argued before us that the
Central Government did not give a hearing to the firm and also did not give any
reasons in its order dismissing the application for revision. Reliance is
placed upon two recent decisions of this Court which, following the earlier
decision reported in Harinagar Sugar Mills Ltd. v. Shyam Sundar Jhunjhunwala(1)
have laid down that Government should give reasons when it performs
quasi-judicial functions such as hearinappeals and revisions. The two cases are
Madhya Pradesh Industries Ltd. v. Union of India and Ors.(2) and Aluminium
Corporation of India Ltd. v. Union of India and Ors(3) In Harinagar Sugar
Mills(1) the order was reversed on the ground that reasons for the decision
should have appeared. In the Aluminium case there was dispute as to how much
scrap was remelted and Government gave its decision on a report received behind
the back of the aggrieved party again without stating why a part of the assessee's
case was rejected. In the Madhya Pradesh Industries case it was pointed out
that an order affirming an earlier decision need not fail because it does not
repeat the same reasons over again.
The Mineral Concession Rules make it
incumbent on the Central Government to obtain the comments of the State
Government upon the application for revision and cast a duty on the Central
Government to afford an opportunity to the applicant to make representations in
respect of the comments of the State Government. This procedure was correctly
followed and the Central Government thus had a detailed discussion of the pros
and cons of the case before it. The facts in the case were quite clear and
spoke (1) [1962] 2 S.C.R. 339, (2) [1966] 1 S.C.R, 466.
(3) C.A.-No.635 of 1964 decided on September
23,1965.
108 for themselves. The belated attempt to
pay the back wages of the workmen did not undo the voluntary intermission for a
significantly long period and did not wipe off the dereliction on the part of
the firm by which the existence of the colliery was gravely endangered. The
documents on the record quite clearly establish that the colliery was being
flooded as the essential services had stopped functioning and but for the
timely intervention of the State Government the colliery would have been lost.
In these circumstances, it is quite clear that the action of the State
Government was not only right but proper and this is hardly a case in which any
action other than rejecting the application for revision was called for and a
detailed order was really not required because after all the Central Government
was merely approving of the action taken in the case by the State Government,
which stood completely vindicated. The order of the Central Government is
clearly sustainable on the material and it is not said that anything has been
withheld from us. The action of the State Government far from being arbitrary
or capricious was perhaps the only one to take and all that the Central
Government has done is to approve of it.
The appeal fails and is dismissed with costs.
Appeal dismissed.
Back
