State of
Jharkhand & Ors. Vs. M/S Misrilall Jain & Sons and ANR. Etc. [2010] INSC
272 (13 April 2010)
Judgment
CIVIL
APPELLATE JURISDICTION CIVIL APPEAL NOS. 3226-3271 OF 2010 (Arising out of
SLP(C) Nos. 24489-24534 of 2007) State of Jharkhand & Ors. ...Appellants
Versus M/s. Misrilall Jain & Sons & Anr. etc.etc. ...Respondents WITH CIVIL
APPEAL No. 3272 OF 2010 (Arising out of SLP(C) No. 7199 of 2008) CIVIL APPEAL
Nos. 3274-3275 OF 2010 (Arising out of SLP(C) Nos. 7200-7201 of 2008) CIVIL
APPEAL No. 3273 of 2010 (Arising out of SLP(C) No. 7202 of 2008) CIVIL APPEAL
Nos. 3276-3277 of 2010 (Arising out of SLP(C) Nos. 7203-7204 of 2008) JUDGEMENT
R.M. Lodha, J.
Leave
granted.
2. In
this group of 52 appeals by special leave, 46 are directed against the common
judgment dated May 7, 2007 passed by the High of Jharkhand disposing of 46 writ
petitions.
The
remaining 6 arise from separate judgments but following the judgment dated May
7, 2007. These appeals involve common issues and, accordingly, were heard
together and are being disposed of by this common order.
3. The
appellants in these appeals are State of Jharkhand and their officers (for
short, `State Government').
The
respondents are major mineral lease holders and minor mineral lease holders (for
short, `lessees').
4. On
June 17, 2005, the State Government through Department of Mines and Geology
issued a Resolution regarding collection of surface rent on the area of mining
leases at par with the land under commercial use whereby and where under the
following decisions were taken:
"(a)
The area held for minor and major mineral mining lease shall be treated as held
for commercial purposes in accordance therewith the surface rent shall be
collected on it.
(b) The
annual land rent for the entire area held under minor and major mineral shall
be equal to the 5% of the latest market price determined for that particular
area by the Dy.
Commissioner-cum-District
Registration (should be Registrar) and it shall be collected by the
District/Asst. Mining Officer from the lease holders.
2 (c)
This rate shall be variable from time to time in proportion of the market price
determined by the Dy. Commissioner-cum-District Registrar.
(d) The
arrear of the surface rent can be realized by initiating case for auction as a
public under the Bihar & Orissa Public Demand Recovery Act, 1914."
5. In
pursuance of the aforesaid Resolution, demand notices were issued to the
lessees in respect of the leases held by them for payment of enhanced surface
rent, i.e., surface rent equal to 5% of the latest market price of the land
treating the entire leased area as having been held for commercial use. The
lessees approached Jharkhand High Court by filing writ petitions challenging
the competence and authority of the State Government in issuing the said
Resolution treating entire land for the purposes of determination of surface
rent as the lease for commercial purposes and revising surface rent at 5% of
the latest market price of the land. The lessees prayed for quashing the Resolution
dated June 17, 2005 and demand notices.
6. The
State Government defended their action as valid, legal and justified. According
to State Government, the Resolution dated June 17, 2005 has been issued in
terms of the power conferred upon them, insofar as major minerals are 3
concerned, under the Mines and Minerals (Development and Regulation) Act, 1957
(for short, `1957 Act') and Mineral Concession Rules, 1960 (for short, `1960
Rules') and as regards minor minerals under Jharkhand Minor Mineral Concession
Rules, 2004 (for short, `2004 Rules').
7. The
High Court by a common judgment dated May 7, 2007, allowed 46 writ petitions
and quashed the Resolution dated June 17, 2005 and the demand notices. The
other 6 writ petitions were allowed subsequently by following the judgment
dated May 7, 2007.
8. Mr.
M.S. Ganesh, learned senior counsel for the State Government invited our
attention to Entry 54 of Union List and Entry 18, Entry 23 and Entry 45 of the
State List in Seventh Schedule to the Constitution. He referred to the
provisions of 1957 Act, particularly, definition of `mining lease' and `mining
operations' in Section 3(c) and Section 3(d) respectively, Section 13 that
empowers Central Government to make rules in respect of minerals, Section 15
that empowers State Government to make rules in respect of minor minerals and
Section 17 that specially empowers the Central Government to undertake
prospecting or mining operations in certain lands. He 4 also invited our
attention to 1960 Rules, particularly, Rule 27 (1)(d) and Rule 31. In backdrop
of the aforesaid legal provisions, Mr. M.S. Ganesh assailed the impugned
judgment of the High Court dated May 7, 2007 and submitted that none of the
writ petitioners laid any challenge to or prayed for any relief against the
legislative competence of Parliament to enact, or to the constitutional
validity/vires of Section 13(2)(i) of 1957 Act or to the competence of the
Central Government to make, or to the vires of, Rule 27(1)(d) of the 1960 Rules
or to the constitutional validity/vires of Section 15(1A)(g) of 1957 Act or to
the competence of the State Government to make, or to the vires of Rule
29(1)(d) of the 2004 Rules. In the circumstances, learned senior counsel
submitted that it was not open to the High Court to pronounce that the
imposition of surface rent (whether for major or minor minerals) is beyond the
legislative competence of the State and the subordinate/delegated legislative
competence and executive authority of the State Government.
9.
Learned senior counsel for the State Government would submit that the High
Court while considering the controversy relating to the Resolution dated June
17, 2005 5 applied principles evolved in relation to taxing statutes and the
decisions rendered relating to such statutes overlooking the conceptual
distinction between the State's sovereign capacity to levy taxes and duties and
the State's capacity as a lessor to collect rent. He vehemently contended that
the findings recorded by the High Court, namely, (a) that mining leases do not
partake of the same character as other leases that are characterised as
commercial leases and (b) that no provision has been made in 1957 Act for the
enhancement of surface rent were fundamentally erroneous. He urged that High
Court seriously erred in overlooking the fact that lessees have failed to plead
jurisdictional facts, let alone discharge their burden of, showing that the
surface rent as enhanced pursuant to Resolution dated June 17, 2005 is at a
rate that exceeds the land revenue in terms of 1960 Rules. He would also submit
that power to review and enhance the surface rent of a mining lease, even
during its subsistence as regards major minerals, is embodied and inherent in
Section 13(2)(i) of 1957 Act read with Rule 27(1)(d) and Part-V, clauses (2)
and (4) in the statutory lease of 1960 Rules and in respect of minor minerals,
in Section 15(1A)(g) read with Rule 29 (1)(d) of 2004 Rules. He 6 also
submitted that lessees have all along been paying surface rent without demur
and their challenge to the enhancement of surface rent had no merit yet High
Court allowed writ petitions.
10. Mr.
A.K. Ganguli, learned senior counsel led the arguments on behalf of the
lessees. He supported the judgment dated May 7, 2007 and submitted that the
entire field of legislation--`Regulation of Mines and Minerals Development' is
fully under the control of the Central Government and consequently the State
Legislature are denuded of their power to make any law with reference to the
subject matter covered by Entry 23 of List II of Seventh Schedule to the
Constitution.
He would
submit that the validity of the Resolution dated June 17, 2005 has to be tested
with reference to the powers of the State Government within the four corners of
1957 Act and the Rules made there under and the State Government would not be
competent to issue such Resolution as an executive order in exercise of its
power under Article 162 of the Constitution. He invited our attention to
Sections 2,4, 5 and 13 of 1957 Act, Rule 27(1)(d) and Rule 31 of 1960 Rules and
submitted that a conjoint reading of these provisions would show that the
surface rent is payable only for surface area occupied or used 7 by the lessee
and that too during the period when the lessee continues to occupy or use such
area even though the mining lease for the leasehold area continues beyond the
period when the surface area ceased to be occupied by the lessee.
Mr.
Ganguli submitted that the surface rent as determined by the State Government
is required to be specified in the lease deed itself and although royalty/dead
rent is variable but surface rent is not. He vehemently contended that surface
rent could not be levied for the entire leasehold area held under the mining
lease. According to him, the approved mining plan demarcates only limited
surface area which could be put for mining operation in a given year or for
block of years and, therefore, the Resolution dated June 17, 2005, in any case,
is bad to the extent it authorizes the levy of surface rent on the entire area
held. He would, thus, submit that the judgment dated May 7, 2007 and subsequent
judgments relying upon the said judgment do not call for any interference.
Learned senior counsel and counsel for lessees in some appeals adopted the
arguments of Mr. A.K. Ganguli.
11. It
was fairly clear during the course of arguments before us that there was no
challenge by writ petitioners to the 8 legislative competence of the Parliament
to enact 1957 Act or to the competence of the Central Government to make 1960
Rules or to the competence of the State Government to make 2004 Rules. It is
also apparent from the Resolution dated June 17, 2005 that it has been issued
by the State Government as an executive order. However, perusal of the judgment
of the High Court dated May 7, 2007 shows that High Court was not at all clear
about the Resolution dated June 17, 2005. In paragraph 29, High Court says :
"29.
Taking into consideration the Act and the Rules, we have no doubt in our mind
in holding that the State Legislature has no legislative competence to issue
executive orders for revision of surface rent in respect of the mining lease of
major minerals as it's jurisdiction is fully occupied by the Central Act and
the Rules."
(emphasis
supplied) Then, in paragraph 37, High Court observes :
"37.
On the face of the resolution, we are of the definite opinion that said
resolution is not only beyond the competence of the State Legislature but also
illegal, arbitrary and without application of mind."
(emphasis
supplied) In paragraph 48, High Court has concluded :
"48.
Be that as it may, when the imposition of surface rent is beyond the
legislative power of the State Government then by the Executive 9 Orders of the
State demand of Surface rent treating mining leasehold used for commercial
purposes is uncalled for. In our considered opinion, therefore, demand of
surface rent both for major and minor minerals by issuing executive orders is
illegal, arbitrary and wholly without jurisdiction."
(emphasis
supplied)
12. The
observations, `that the State Legislature has no legislative competence to
issue executive orders for revision of surface rent' and `that said Resolution
is not only beyond the competence of the State Legislature' in the impugned
judgment dated May 7, 2007 show that the Division Bench carried the impression
as if the Resolution dated June 17, 2005 has been issued by the State
Legislature. The legality and validity of the said Resolution was examined by
the High Court partly on that assumption. The reasoning in the judgment dated
May 7, 2007 is full of confusion. The aspects which were germane for
consideration of the controversy have been overlooked by the High Court and
certain irrelevant aspects have been taken into consideration. By reason of such
patent errors, it is difficult to sustain the impugned judgments. Ought we know
what would have been the ultimate decision of the High Court had such errors
not occurred. In the circumstances, we do not deem it 10 necessary to go into
the merits of the diverse contentions and leave the parties to agitate their
contentions before High Court as in our opinion the controversy relating to
Resolution dated June 17, 2005 and demand notices needs to be considered afresh
by the High Court.
13.
Consequently, these appeals are allowed and impugned judgments are set aside.
Writ petitions are restored to the file of the High Court for fresh
consideration and disposal as expeditiously as may be possible. No orders as to
costs.
...........................J (P. Sathasivam)
.............................J (R. M. Lodha)
New Delhi
April 13, 2010.
Back