Pal Singh. Vs. State of U.P. & Other  INSC 1429 (8 November 1996)
Punchhi, K. Venkataswami K. Venkataswami J.
Nos. 3226. 3227/83, 959. 732/81. 2903. 2904, 2906. 2907. 2908. 2910/809. 409/84
with CP 56/96 in C.A. No.2907/80)
these appeals a Common question of law arises for our consideration. A common
argument was addressed by counsel concerned and that is why they are disposed
of by this common Judgment.
U.P. Zamindari Abolition and Land Reforms Act, 1951 (hereinafter called
"the Act") came into force on and from July 1.1952. On the
publication of a Notification under Section 4 of the Act all the estates stood
transferred to and vested in the State free from all encumbrances. Section 6 of
the Act speaks of consequences of such vesting in the State. It says that on
the publication of Notification under Section 4 all rights. title and interest
of all the intermediaries in every estate in such area including land and in
all sub-soil in such estate including rights, if any, any mines and minerals
whether being worked or not shall cease and be vested in the State of Uttar
Pradesh free from all encumbrances. In the light of the above provision. it
appeals the Collector. Agra issued notices to the appellants stating
that they should stop mining as they have lost all rights in the mines and
minerals. The Collector, further took steps to auction the right to win the
minor minerals .
this stage. the appellants challenged the actions of the Collector by moving
the High Court.
High Court by an order dated March 18. 1955 held that the appellants were
entitled to take advantage of the provisions of Chapter VI of the Act and
consequently a direction was given to the State Government and the Collector, Agra, for considering the applications of the appellants
for grant of lease under Sections 106-108 of the Act.
to the said judgment of the High Court, the Collector, Agra, sent letters dated
8.1.1964 offering the terms and conditions of the proposed leases to the
appellants. Along with those letters drafts of mining lease containing the
details of terms and conditions were also enclosed. Inter alia, the lease was
offered for a period of 15 years and the terms and conditions proposed were in
the light of U.P. Minor Minerals (Concession) Rules. 1963 (hereinafter called
"the Rules") as well as the rules framed under the Mines and Minerals
(Regulation & Development) Act, 1957 (hereinafter called "the Central
Act"). The appellants raised objections regarding certain terms and
conditions contained in the porposed leases. Initially the aggrieved parties
moved the High Court by filing writ petitions and the High Court while
dismissing the same on 9.2.1965 directed the parties to come to settlement
regarding terms and conditions on which the leases have to be given to the
appellants and in case they could not settle the terms, the differences can be
referred to Mines Tribunal to be appointed under Section 110 of the. Act. As
the parties could not come to a settlement, the collector on 12.10.1966 filed
an application under Section 107(2) of the Act for settlement of the terms of
the leases. Before the Mines Tribunal, the following were placed as area of
controversy:- "(A) Period of lease Proposal of State Objection of Opposite
lease shall be for a The lease should be period of fifteen years perpetual and
permanent. with effect from 1.7.1952.
Payment of Royality or Dead Rent.
rate of Royality or dead The question of making rent shall be charged in
payment of Royality or accordance with the maximum dead rent for the past rate
prescribed under First years does not arise at Schedule (Rule 22) of the all.
The rate of dead U.P. Minor Mineral (Conce- rent indicated in the ssion) Rules
1963, with draft lease deed is effect from 1.7.1952 excessive and there is no
guiding principle to determine the same.
Commencement and Execution of the lease The lease shall be deemed to The terms
and proposed to have been executed with lease deed should be effect from July
l, 1952. prospective and not retrospective.
Mines Tribunal, which was presided over by a District Judge and an expert
Member along with him, after considering elaborately the arguments and the
materials placed before it negatived all the claims of the appellants holding
that the leases could not be perpetual and permanent, that the appellants are
bound to pay royalty/dead rent as the case may be and that the leaves will
necessarily be from the date of vesting of the estate in the State.
the Mines Tribunal fixed the period of leases from 1.7.52 to 23 11.87 being 10
years from the date of its order.
by the order of the Mines Tribunals, the appellants moved the High Court
reiterating the same arguments once over before the High Court. The High Court
after considering the arguments threadbare confirmed the views expressed by the
Mines Tribunal and consequently dismissed the writ petitions. Hence the present
appeals by special leave.
Chandra, learned Sr. Counsel addressed three main arguments and the other
learned counsel adopted the same on behalf of the appellants. It was his
contention that under Section 7 of the Act, the rights of intermediaries, like
the appellants who were zamindars to work the mines would continue and such
rights do not cease and vest in the State. In other words, they continue to
remain vested in the intermediaries as before, though, the title to the lands
has gone to the State. In support of this contention, he invited our attention
to the fact that no compensation was provided under the provisions of the Act
in respect of their right in the mines. The same was because, according to him.
right to work mines did not vest in the State and it always remained with the
to the learned Sr. Counsel, the right to operate or work mines and to extract
minerals remains unaffected by the extinguishment of the rights under Chapter
II and at the same time the same is to be governed by Chapter VI only. He placed
reliance on the proviso to Section 107(2) of the Act to contend differently.
Section 107 reads as follows :- "Section 107 (1) With effect from the date
of vesting, all mines comprised in the estate or estates acquired under this
Act as were in operation on the date immediately preceeding the said date and
were being worked directly by the intermediary shall, if so desired by him. be
deemed to have been leased by the State Government to the intermediary, and
such intermediary shall be entitled to retain possession of those mines as a
The term and conditions of the said lease by the State Government shall be such
as may be agreed upon between the State of Government and the intermediary or in dafault of agreement as may be settled by a Mines
Tribunal appointed under Section 110:
that all such terms and conditions shall be in accordance With the provisions
of any Central Act, for the time being in force regulating the grant of new
mining leases." Elaborating his submission on the basis of the proviso to
Section 107(2), it was submitted that the phrase 'for the time being in force'
occurring in the proviso is referable only for regulating the terms and
conditions of those leases under Section 107(1) which on the date of vesting are
deemed to have been leased by the State Government. Inasmuch as there was no
Central enactment laying down any provision, regulating the operation of the
mines in respect of minor minerals on 1.7.1952, the subsequent enactments
either Central or State, will not come to the aid of the respondents to
restrict the rights by fixing the period in the terms and conditions of the
proposed leases. The Minor Mineral Concession Rules, 1963 are only prospective
and the same cannot be applied to bind the appellants with the fixed period and
conditions in the proposed lease from 1.7.1952.
date of' vesting. Therefore, the terms and conditions proposed by the
Collector. Agra cannot be justified either under
the Act or under the Rules. Period of lease can be fixed only in a case where
the rights in the mines including the right to work the mines has been acquired
and have to be regulated by the terms and conditions of the lease such as the
cases where the mines had already been leased out. So far as the cases of the appellants
are concerned, according to the learned Sr. Counsel, the right to work the
mines remains vested in them as intermediaries and that right has not been
acquired under Chapter 11 of the Abolition Act and therefore no period can be
fixed so far as they are concerned.
it was argued that regulation contemplated under the Central Act, 1957 by
Section 15 can only mean in the present context to preserve the right to work
the mines without let or hindrance. The power to regulate, Contemplated under
Section 15 of the Central Act given lo the State Government cannot be extended
to extinguish the rights of intermediaries under the guise of Regulation. In
support of this argument that regulation cannot amount to prohibition or
extinguishment. he cited a number of authorities.
second major point argued was that assuming that the Collector was right in
offering the lease to the appellants subject to the terms and conditions
mentioned thereon, the same cannot be from the date of vesting and it must be
from the date on which the parties agree to execute the lease. Learned Sr.
Counsel submitted that the order of the Mines Tribunal that the mining lease
was from 1.7.1952 and for a period to 10 years from the date of its order was
misconceived and invalid in law.
last point argued was with reference to the payment of dead rent. According to
the learned Sr. Counsel. the payment or dead rent must relate to the probable
value of the minerals extracted per acre and the amount fixed with reference to
area namely. Rs.1.000/- per acre per annum was, therefore. not sustainable.
of the counsel who adopted the argument of Mr. Satish Chandra submitted that
the power is vested under the Rules with the Government to relax wherever
necessary and the Government must be directed to relax the conditions in favour
of the appellants.
counsel appearing for the respondent-State reiterated the conclusions reached
by the Mines Tribunal and confirmed by the High Court in support of his
have considered the rival submissions and we are of the view that the High
Court was right and appellants have no case in all these appeals.
view of the consequences of vesting of the estate pursuant to the Notification
under Section 4 of the Act, we are not able to appreciate the arguments of the
for the appellants. The clear and unambiguous provisions of 6 and 107 of the
Act leave no doubt about the vesting of mines and minerals with the State
Government. We have already given the substance ox Section 6 and the text of
this connection, we need only to refer to the judgment of this Court rendered
under the very same provisions with which we are concerned. In Bagwan Das vs.
State of U.P. & Others (AIR 1976 SC 1393). this
court observed as follows :- "The right of the former Zamindars to mines
and minerals was extinguished by the Act of 1951 and became vested in the State
Government. So long as the proprietory right to the land was vested in the Zamindar.
he was entitled to mines and minerals.
the abolition of Zamidari by the 1951 Act that right has passed on not to the
appellant but to the State Government. The appellants' writ petition filed to
restrain the State Government from auctioning the right to undertake mining operations
must, therefore, fail".
have therefore, no hesitation to reject the contention of the learned counsel
for the appellants that notwithstanding the Act, the rights of intermediaries
in the mines remain vested with them.
contention that regulation cannot mean prohibition as a general proposition is
no longer open for argument in view of the decision of this Court in state of
Tamil Nadu vs. Hind Stone ( 1981 (2) SCC 205). This Court while considering the
scope of Rule 8C of Tamil Nadu Minor Mineral (Concessions) Rule 1959 observed
as follows :- "One of the arguments pressed before us was that Section 15
of the Mines and Minerals (Regulation and Development) Act authorised the
making of rules for regulating the grant of mining leases and not for
prohibiting them as rule 8-t sought to do. and, therefore, Rule 8-C was ultra vires
Section 15. We know cases on the subject right from Municipal Corporation of
the City of Toronto vs. Virgo and Attorney- General for
Ontario vs. Attorney General for the
Dominions up to State U.P. VS. Hindustan
Aluminum Corporatin Ltd, were brought to our attention. We do not think that
'regulation' has that rigidity of meaning as never to take in 'prohibition'.
Much depends on the context in which the expression is used in the statute and
the object sought to Be achieved by the contemplated regulation. It was
observed by Mathew, J. in G.K. Krishnan vs. State of Tamil Nadu :
word 'regulation' has no fixed connotation: Its meaning differs according to
the nature of the thing to which it is applied". In modern statutes
concerned as they are with economic and social activities, 'regulation' must,
of necessity, receive so wide an interpretation that in certain situations, it
must exclude competition to the public sector from the private sector. More so
in a welfare State. It was pointed out by the Privy Council in Common Wealth of
Australia vs. Bank of New South Wales - and we agree with what was stated
therein - that the problem whether an enactment was regulatory or something
more or whether a restriction was direct or only remote or only incidental
involved, not so much legal as political, social or economic consideration and
that it could not be laid down that in no circumstances could the exclusion of
competition so as to create a monopoly, either in a State or Commonwealth
agency be justified.
case, it was said, must be judged on its own facts and in its own setting of
time and circumstances and it might be that in regard to some economic
activities and at some stage of social development, prohibition with a view to
State monopoly was the only practical and reasonable manner of regulation. The
statute with which we are concerned, the Mines and Minerals (Development and
Regulation) Act, is aimed, as we have already said more than once, at the
conservation and the prudent and discribinating exploitation of minerals.
Surely, in the case of a scarce mineral, to permit exploitation by the State or
its agency and to prohibit exploitation by private agencies is the most effective
method of conservation and prudent exploitation. If you want to conserve for
the future, you must prohibit in the present. We have no doubt that the
prohibiting of leases in certain cases is part of the regulation contemplated
by Section 15 of the Act.":
is not an extreme case of prohibition but one of regulation therefore, there is
no force in the arguments that the terms and conditions of the lease exceeds
the area of regulation contemplated under Section 15 of the Central Act.
as the second contention is concerned, it was equally without substance. The
terms and conditions which were required to be determined could not be only for
the future. Necessarily they had to be for the whole period for which the lease
was to be granted. As the legislature has conferred a right on the
intermediaries, who were operating the mines on the date of vesting it had
further created the Mines Tribunal for settling the terms. Therefore, it is
logical to hold that the terms to be laid down by the Tribunal would be in
respect of the past as well as the future. Nobody could imagine that the
Tribunal would be created the day on which the rights were abolished and that
it would determine the right without loss of any time. In this context in which
these words find a place, it must he construed that the phrase 'for the time
being in force' should he given a meaning that at fulfils the object of the
provision, the purpose being that at the time of settling the terms the Mines
Tribunal would take into account the provisions of the Central Act. This was
the view taken by the High Court and rightly too. Therefore we do not find any
substance in the argument of the learned Sr. Counsel on the second point.
third point concerning the dead rent, it is seen that inspite of opportunities
given, the appellants have not taken steps to produce the records regarding the
quality or quantity of the minerals removed by them during the period in
question. Necessarily, therefore the authorities have to levy the dead rent at the
maximum rate. This is what the Tribunal observed :- "Regarding royalty or
dead rent, since there is no record of the amount of mineral taken out by the
lessee, and the opposite parties have not given the required information
through the interrogatories it would not be possible to calculate the royalty
of the mineral extracted, therefore the Government intends to charge dead rent,
because the dead rent, as per schedule 2 of rule 22 is chargeable at prescribed
rates on per acre basis irrespective of the quality or quantity of the mineral
removed by the lessee." It is not correct to contend that dead rent is
payable with regard to the quantity of mineral won over. Dead rent has a
different connotation. In D.K. Trivedi & Sons vs. State of Gujarat ( 1986
Supp. SCC 20) it was observed as follows :
a mining lease the consideration usually moving from the lessee to the lessor
is the rent for the area leased (often called surfact rent), dead rent and
royalty. Since the mining lease confers upon the lessee the right not merely to
enjoy the property as under an ordinary lease but also to extract minerals from
the land and to appropriate them for his own use or benefit, in addition to the
usual rent for the area demised, the lessee is required to pay a certain amount
in respect of the minerals extracted proportionate to the quantity so
extracted. Such payment is called "royalty". It may, however, be that
the mine is not worked Properly so as not to yield enough return to the lessor
in the shape of royalty. In order to ensure for the lessor a regular income,
whether the mine is worked or not, a fixed amount is provided to be paid to him
on the lessee.
is called "dead rent". "Dead rent" is calculated on the
basis of the area leased while royalty is calculated on the quantity of
minerals extracted or removed.
while dead rent is a fixed return to the lessor, royalty is a return which
varies with the quantity of minerals extracted or removed. Since dead rent and
royalty are both a return to the lessor in respect of the area leased, looked
at from the point of view dead rent can be described as the minimum guaranteed
amount of royalty payable to lessor but calculated on the basis of the area
leased and not on the quanity of minerals extracted or removed. In fact. clause
(ix) of Rule 3 of the Rajasthan Minor Mineral Concession Rules, 1977, defines
"dead rent" as meaning "the minimum guaranteed amount of royalty
per year payable as per rules or agreement under a mining lease, Stipulations
providing for the lessee's liability to pay surface rent, dead rent and royalty
to the lessor are the usual covenants to be found in a mining lease." Regarding
the relaxation of rules. it is not for this Court to give any direction in the
facts of these cases.
foregoing circumstances, we do not find any substance in all these cases. The
appeals are dismissed.
there will be no order as to costs.
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