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Baij Nath Kedia v. State Of Bihar

Baij Nath Kedia
v.
State Of Bihar

(High Court Of Judicature At Patna)

Civil Writ Jurisdiction Case No. 686 Of 1965, 1036 Of 1965 | 01-11-1966


Untwalia, J.

(1) The facts of these two cases and the points involved in them are similar and identical. They have been heard together and are being disposed of by a common judgment. I shall state the point urged with reference to the facts of C. W. J. C. 1036 of 1965 and after disposing them of shall refer to the facts of the other case, viz., C.W.J.C. 686 of 1965.

(2) The petitioners case is that Shri Jyoti Prakash Pandey obtained a right of quarrying and getting stone ballasts, boulders and chips from and upon block nos. 32. 45/1, 45/2 and 45/3 having a total area of 12 bighas 2 Kathas 10 dhurs in tauzi No. 1452 khata No. 1 situated in Mauza Malpahari No. 89 in the subdivision of Pakur, district Santhal Parganas, from Shrimati Anila Debi for self and as legatee under a Will of late Baidyanath Pandey and Babu Bijan Kumar Pandey, that is to say from the ex-landlords, for a period of thirty years commencing from the 1st November 1954, and ending on the 31st October, 1984 under a registered lease dated 23-3-55, a copy whereof is annexed and marked annexure A to the writ application. After the vesting of the estate in the State of Bihar, the State became the lessor for the remainder of the term of the lease under Section 10(1) of the Bihar Land Reforms Act, 1950 (Bihar Act 30 of 1950), and the above lease was recognised by the Deputy Commissioner of Santhal Parganas as evidenced by letter No. 177/Mines dated the 2nd February, 1963, a copy whereof is annexure B. The said letter reads thus:--

"The Deputy Commissioner, Santhal Parganas, has been pleased to recognise the lease for quarrying stone in respect of the above property under Section 10(1) of the Bihar Land Reforms Act, 1950, for the remaining period of the lease in your favour. You are accordingly desired to pay the Government dues by 15th February, 1963, from the date of vesting, i.e. 18-8-55 to 30-4-65 at the rate of Rs. 200 a year."

The demand made in this letter was at the rate of rent fixed by the lease aforesaid.

(3) The petitioners case further is that Shri Jyoti Prakash Pandey, who was carrying on the business of quarrying and getting stone ballasts, etc., from the demised premises under the name and style of Stone India, sold the properties of, and his right, title and interest in, the said Concern with its goodwill to the petitioner by a registered sale deed dated the 9th September, 1963. The petitioner deposited the rent regularly after the transfer of the property to him by Shri Jyoti Prakash Pandey. He has deposited rent upto the 8th of September, 1965. But, in the meantime, a letter was written to the petitioner on the 10th of December, 1964, a copy of which is annexure C, stating therein-

"Government have been pleased to amend the Section 10 of Bihar Land Reforms Act, 1950, and according to which the terms and conditions in regard to leases for minor minerals stand statutorily substituted by the corresponding terms and conditions by the Bihar Minor Mineral Concession Rules, 1964. As a result of this, rent and royalty etc. in respect of minor minerals in the State irrespective of the date on which the lease was granted are to be paid by all categories qf lessees according to the rates given in the aforesaid Rules with effect from 27-10-64."

Accordingly, a demand was made in this letter upon the petitioner to pay the royalty, in respect of stone quarries in accordance with the terms and conditions of the Bihar Minor Mineral Concession Rules, 1964 -- hereinafter called the Bihar Rules with effect from 27-10-64.

(4) The petitioner protested against the said demand and wrote a letter to the District Mining Officer on the 11th January, 1964, a copy of which is annexure D, and refuted the claim for enhanced rent and royalty. The petitioner received another letter from the office of the Deputy Commissioner, Santhal Parganas, being memo No. 737/M dated 23-2-65. A gist of this letter was quoted in paragraph 11 of the original writ application but a copy of this letter was filed on 21-9-65 as annexure Y to the supplementary affidavit before the case was taken up for admission on that date. It is necessary to quote this impugned letter in full, which reads as follows:--

"This is to inform you that the terms and conditions of your mining lease in so far as they are inconsistent with the Bihar Minor Mineral Concession Rules, 1964, framed by the State Government under Section 15 of the Mines and Minerals (Regulation and Development) Act, 1957, stand substituted by the corresponding terms and conditions prescribed by the Bihar Mineral Concession Rules, 1964, from 27-10-1964. Accordingly, dead rent, royalty and surface rent in addition to the other substitution as per Bihar Mineral Concession Rules, 1964, will be as follows: 1. Dead rent.. .. Rs. 50/- per acre per annum. 2. Royalty at Rs. 3/- per 100 eft. of stone chips, at Rs. 2 per 100 eft. of stone ballast and boulders, at Rs. 4/- per 100 eft. on building stones, at Re. 1 per 100 Nos. of stone setts. 3. Surface rent at Rs. 10/- per acre per year. From the document of your lease it transpires that the lease was for a period Qf 20 years from 4 the Jaith 1351 to 3rd Jaith 1371. The lease has already run for a period more than that prescribed under the Bihar Mineral Concession Rules, 1964. In order that you may not be put to undue hardship, you are however allowed to continue your mining operations upto 30-6-65 and in the mean time, necessary steps for renewal of your lease must be taken in accordance with the provisions of the Bihar Minor Minerals Concession Rules 1964. The rent and royalty on account of mines or minerals payable to the State Government shall always be deemed to be the first charge on the property whether or not it is so specified in the document of lease held by you. You are further directed to pay the dead rent Rs. 114-76 from 9-9-64 to 81-3-65."

(5) It may be stated here that it was conceded on all hands that the period of the lease mentioned as 20 years from 4th Jaith 1351 to 3rd Jaith 1371 in the letter (Annexure Y) is a mistake. The petitioner wrote in reply a letter dated 15th April, 1965, a copy of which is annexure E. The petitioner attacks the demand made on behalf of the State Government for dead rent, royalty and surface rent in accordance with the Bihar Rules and the termination of the mining operations on and from 30-6-65 and to take steps for renewal of the lease before the expiry of its period as invalid and untenable on several grounds, and has obtained a rule from this Court against the State of Bihar, respondent No. 1, the Deputy Commissioner respondent No. 2, and the District Mining officer respondent No. 3, to show cause why the said demand be not quashed by issuance of an appropriate writ, order or direction.

(6) Cause has been shown on behalf of the State of Bihar by filing a counter-affidavit and by the learned Advocate-General at the time of the hearing of the case. In the counter-affidavit the stand taken is that the Bihar Rules came into force from 18-4-64 and not from 27-10-64 as stated by the petitioner and that he was also informed about the position by memo, no 775/M dated 28-9-65 of the District Mining Officer. It is also stated that the petitioner is liable to pay the dues of the State Government on account of rent, royalty and Interest, etc. from the date of vesting, i.e., from 18-8-55 to 17-4-64 according to the provisions contained in the said Rules and from 18-4-64 onwards as provided in the Bihar Rules. The claim made in the counter-affidavit in regard to the period from 18-8-55 to 17-4-64 seems to be under a misconception and was not pressed at the time of the hearing.

(7) Mr. B. C. Ghose appearing in support of the rule urged the following points-

1. That the Bihar Rules do not apply to any period prior to the date on which which they came force into and cannot affect either the rate or the term including the period of the lease executed in the year 1955 with effect from 1-11-54.

2. That the terms of the said lease cannot be modified under the Mines and Minerals (Regulation and Development) Act, 1967 (Central Act LXVII of 1957). Hence tht Bihar Rules of modification are inapplicable to the said lease. In any event, the claim for royalty, surface rent or dead rent in accordance with the Bihar Rules were made applicable to the existing leases by the amending Rules which came into force on 19-12-64 and the Government cannot claim any amount in accordance with these Rules in respect of a period prior to that date.

3. That the Bihar Rules, in so far as they make demands of rent and royalty on the existing leases which were executed prior to their coming into force, are ultra vires and beyond the power of the State Government to make rules in respect of Minor Minerals under Section 15 of Central Act LXVII of 1957.

4. That Section 15 of Central Act LXVII of 1957 is unconstitutional and void as it delegates legislative power to the rule-making authority beyond the permissible limits, that is to say, it is void on the ground of excessive delegation.

5. That the Bihar Ordinance III of 1964 followed by the Bihar Land Reforms (Amendment) Act, 1964 (Bihar Act IV of 1965) empowering the State Government to interfere with the leases executed before coming into force of the Bihar Rules are unconstitutional and void on two grounds-(i) they are beyond the legislative competence of the State Legislature; and (ii) they violate the fundamental rights guaranteed under Articles 31(2) and 19(1) (f) of the Constitution. 6. That Articles 31-A and 31-B of the Constitution with the 9th Schedule are void.

(8) The learned Advocate-General conceded that the Bihar Rules do not in terms, apply to any period prior to the date on which they came into force. But he submitted that the claim to rent and royalty on the basis of these Rules would apply to the existing leases on their own force. He however, chiefly based his argument on the amendment of Section 10 of Bihar Act 30 of 1950 by Bihar Ordinance III of 1964 and Bihar Act IV of 1965. Learned Counsel contended that it is not beyond the legislative competence of the State Legislature; nor, is the amendment invalid or in any event can be challenged to be so for violation of the provisions of Article 31 or 19 of the Constitution. He, therefore, submitted that shortening the period of the lease in question in accordance with the Bihar Rules read with the amended 10th Section of Bihar Act 30 of 1950 and making a demand of rent and royalty in accordance with them ere perfectly iustified and tenable.

(9) It is necessary to trace briefly the history of the law on the point in order to determine the rival contentions of the parties. Entry 36 of List I of 7th Schedule to the Government of India Act, 1935 corresponding to the present Entry 54 of List I of the 7th Schedule to the Constitution read thus-

"Regulation of mines and oilfields and mineral development to the extent to which such regulation and development under Dominion control is declared by Dominion law to be expedient in public interest".

The Central Legislature passed the Mines and Minerals (Regulation and Development) Act, 1948 (Central Act LIII of 1948) in exercise of its legislative power under Entry 36 aforesaid. This Act came into force on the 25th day of October, 1949, Section 2 of this Act made the required declaration in the following words:

"It is hereby declared that it is expedient in the public interest that the Central Government should take under its control the regulation of mines and oilfields and the development of minerals to the extent hereinafter provided."

In Section 3 the term minerals was defined to include natural gas and petroleum. There was no separate definition of the term minor minerals in the Act itself. Section 4 provided that no mining lease shall be granted after the commencement of the Act otherwise than in accordance with the rules made thereunder and any lease granted contrary to the provisions of Sub-section (1) would be void and of no effect. Under Section 5 (1) the Central Government was empowered to make rules for "regulating the grant of mining leases or for prohibiting the grant of such leases in respect of any mineral, or in any area". By way of Illustrative enumeration, Sub-section (2) said that such rules framed under sub-section (1) of Section 5 may provide, inter alia, the terms on which and the conditions subject to which mining leases may be granted and the maximum or minium area and the period for which any mining lease may be granted. Section 6 of the Central Act LIII of 1948 empowered the Central Government to make rules for "the conservation and development of minerals", and under Sub-section (2) various matters which such rules may provide for were stated in Clauses (e) to (j) of the said sub-section. Section 7(1) in specific terms empowered the Central Government to make rules for "the purpose of modifying or altering the terms and conditions of any mining lease granted prior to the commencement of this Act so as to bring such lease into conformity with the rules made under Sections 5 and 6." The 8th Section empowered the Central Government to direct that any power exercisable under this Act shall be exercised, subject to such conditions, if any, as may be specified therein by such officer or authority as may be specified in the direction. The Mineral Concession Rules 1949 were framed and promulgated by the Central Government and they came into force on and from the 25th October, 1949, the day when Central Act LIII of 1948 was notified to come into force. The term minor minerals was defined in Clause (ii) of Rule 2 of the said Rules, Rule 4 of which laid down that these Rules shall not apply to minor minerals, the extraction of which shall be regulated by such rules as the State Government may prescribe. The State Government of Rajasthan, by virtue of the power granted to it, prescribed its own Rules for regulating the extraction of minor minerals in that State. It is the admitted position that no such rules were framed by the Bihar Government as authorised by Rule 4 of the Mineral Concession Rules, 1949. The constitutional validity of the Rajasthan Minor Mineral Concession Rules, 1955 was attacked but upheld in Sethi Marble Stones Industries v. State of Rajasthan, AIR 1958 Raj 140 . The Mineral Concession Rules, 1949 framed by the Central Government under Section 5 of Central Act LIII of 1948 were held to be constitutional and valid by Ramaswami, J., (as he then was) and Choudhary, J., in Mineral Development Ltd. v. Union of India, AIR 1954 Pat 340 . When the case went up before the Supreme Court in Mineral Development Ltd. v. Union of India, AIR 1960 S.C. 1373, the main point argued before that Court was that the term mining lease does not include a sub-lease. Stress was laid in this connection upon the definition of the term mining lease in Central Act LXVII of 1957 which, in terms, includes a sub-lease. But the argument was repelled by Wanchoo, J., savins that-

"The 1957 Act was enacted after the judgment of the High Court in this case and the legislatures apparently thought it fit ex abundanti cautela to say that a sublease is included within the terms mining lease " I would now advert briefly to the provisions of Central Act LXVII of 1957. Entry 54 in List I of the 7th Schedule to the Constitution reads thus- "Regulation of mines and mineral development to the extent to which such regulation and development under the control of the Union is declared by parliament by law to be expedient in the public interest." Reference may be made to the Statement of Objects and Reasons for enactment of Central Act LXVII of 1957. The statement is to be found published in the Gazette of India Extra-ordinary dated July 26, 1957, Part II, Section 2 at page 392. which reads thus- "The differentiation made between petroleum and other minerals in Items 53 and 54 of the Union List has rendered separate enactments for the two necessary. The present Bill deals only with minerals other than petroleum. At present both are dealt with under the Mines and Minerals (Regulation and Development) Act. 1948 (53 of 1948).

A number of provisions hitherto deal with under the rule-making powers of the Central Government have been transferred to the Act in order to restrict the scope of subsidiary legislation These provisions are:

(i) no concession shall be granted to a person not in possession of a certificate of approval (Clause 5 (1)); (ii) the maximum period for which a prospecting licence or a mining lease may be granted (Clauses 7 and 8); (iii) the power to prescribe rates of royalty for various minerals (clause 9 and Schedule II); (iv) applications for prospecting licence and mining lease to be made in prescribed forms (Clause 10 (1)); (v) The priorities to be observed in the grant of prospecting licences and mining lease. (Clause 11 (2)); and (vi) the power to make rules for regulating the grant of mineral concessions (Clause 13)." Section 2 of Central Act LXVII of 1957 makes the declaration as to the expediency of Union control thus- "It is hereby declared that it is expedient in the public interest that the Union should take under its control the regulation of mines and the development of minerals to the extent hereinafter provided."

Section 3 defines the term minerals to include all minerals except mineral oils. The term minor minerals has also been defined in Clause (e) of Section 3. Sections 4 tc 12, more or less incorporate the provisions of the Bill as stated above from the Statement of Objects and Reasons; that is to say, instead of leaving these matters to the discretion of the Central Government to provide for in the rules to be made by it under Section 13, they were engrafted in the Act itself. Section 13 (1) provides-

"The Central Government may, by notification in the Official Gazette, make rules for regulating the grant of prospecting licences and mining leases in respect of minerals and for purposes connected therewith." Sub-section (2) enumerates various matters which such rules may provide. Then comes the 14th Section which says that- "The provisions of Sections 4 to 13 (inclusive) shall not apply to prospecting licences and mining leases in respect of minor minerals."

Section 15 in express terms grants power to the State Government to make rules in respect of minor minerals for "regulating the grant of prospecting licences and mining leases in respect of minor minerals and for purposes connected therewith". Under Subsection (2) of Section 15-

"Until rules are made under Sub-section (1), any rules made by a State Government regulating the grant of prospecting licences and mining leases in respect of minerals which are in force immediately before the commencement of this shall continue in force."

It would thus be seen that what was controlled, enacted and provided for by Section 5 of Central Act LIII of 1948 and tht Mineral Concession Rules, 1949, made thereunder was split up and provided for in Sections 4 to 15 of Central Act LXVII of 1957.

(10) What was provided in Section 7 of Central Act LIII of 1948 was provided in Section 16 of Central Act LXVII of 1957 in regard to the modification of mining Leases granted before 25-10-49, the day on which the former Act came into force. The power of the Central Government under Section 18 to make rules necessary for the conservation and development of minerals in India corresponding to Section 6 of the former Act controls and applies to minor minerals also. And, so do the provisions of the subsequent Sections in Central Act LXVII of 1957. Specific reference may be made here to Section 19 providing for prospecting licences and mining leases to be void if in contravention of the Act or any rules or orders made thereunder, and Section 20 provides that the Act and the rules will apply to all renewals of prospecting licences and mining leases. Section 29 says-

"All rules made or purporting to have been made under the Mines and Minerals (Regulation and Development) Act, 1948, shall, in so far as they relate to matters for which provision is made in this Act and are not inconsistent therewith, be deemed to have been made under this Act as if this Act had been in force on the date on which such rules were made and shall continue in force unless and until they are superseded by any rules made under this Act."

(11) It would thus be seen that what was declared to be expedient in the public interest under the control of the Central Government was all minerals including the minor minerals to the extent provided in Central Act LIII of 1948. The same is the position of the Union Control under Act LXVII of 1957 in respect of all minerals including minor minerals. Of course, control of the mineral oils was left under Act LIII of 1948 under the amended title--the Oilfields (Regulation and Development) Act, 1948. It would not be correct to say as was argued by the learned Advocate-General that what has been declared to be under Union control by Section 2 of Central Act LXVII of 1957 in view of the specific provisions contained in Sections 4 to 13, is the provision for regulating the grant of prospecting licences and mining leases in respect of minerals other than minor minerals and Section 15 which purports to grant power to State Government to make rules in respect of minor minerals is really superflous and redundant as without the specific control as provided in Sections 4 to 12, in respect of the other minerals, for the minor ones, the Central Legislature transgressed its limit under Entry 54 of the Union List in purporting to grant that power; the State Legislature under Entry 23 of the State List had got its plenary powers to legislate regarding "regulation of mines and mineral development" subject to the provisions of List I with respect to regulation and development under the control of the Union only to the extent to which such regulation and development have been declared by Parliament by law to be expedient in the public interest. I am unable to accept this argument and, in the background of the history of the law which I have briefly traced, to hold that Section 15 is superfluous and redundant. I have pointed out above the reasons for making specific provisions in Sections 4 to 12 in regard to the minerals other than minor minerals and for granting power to the State Government in express terms under Section 15 to frame rules in respect of the latter at the same time retaining the power, under Section 18 of the Central Government to make rules for conservation and development of all minerals in India. In my opinion, the Bihar Legislature is not competent to enact law for regulating the grant of prospecting licences and mining leases in respect even of minor minerals and for purposes connected therewith or for their conservation and development.

(12) It was faintly suggested by Mr. Ghose as well as the learned Advocate-General that Section 15 (1) left at that would make it bad on the doctrine of excessive delegation of legislative power to the rule making authority. But the point was not seriously pressed or developed by either side. In my opinion, it is not so. The broad powers which were given to the Central Government under Section 5 of Central Act LIII of 1948 to make rules for regulating the grant of mining leases were never held to be unconstitutional on the ground of excessive delegation of legislative power. Rather the State Government had been given power to make the rules under the Mineral Concession Rules, 1949 framed by the Central Government in exercise of that power. Granting similar power to the State Government under Section 15, therefore, cannot be bad, ultra vires or void on any ground. It is, no doubt, true that the matters which can be provided for in the rules framed under Sub-section (1) have not been enumerated in Section 15, but it is to be noticed in this connection that Lord Thankerton said in Emperor v. Sibnath Banerji, AIR 1945 P. C. 156 at page 160 (column 1) with reference to the rule-making power provided in Sub-sections (1) and (2) under Section 2 of the Defence of India Act, 1939:

"In the opinion of their Lordships, the function of Sub-section 2 is merely an illustrative one; the rule-making power is conferred by Sub-section (1) and the rules which are referred to in the opening sentence of Sub-section (2) are the rules which are authorised by, and made under, Sub-section (1); the provisions of Sub-section (2) are not restrictive of Sub-section (1), as indeed is expressly stated by the words without prejudice to the generality of the powers conferred by Sub-section (1)."

(13) In the Hingir Rampur Coal Co. Ltd. v. State of Orissa, AIR 1961 S.C. 459, the validity of the Orissa Mining Areas Development Fund Act, 1952 was challenged before the Supreme Court. On consideration of the provisions of Central Acts LIII of 1948 and LXVII of 1957 and the respective entries in the Constitution Act of 1935 and the Constitution of India, it has been said by Gajendragadkar, J., as he then was st page 470 (column 2) -

"Therefore, if a Central Act has been passed for the purpose of providing for the conservation and development of minerals, and if ft contains the requisite declaration then it would not be competent to the State Legislature to pass an Act in respect of the subject-matter covered by the said declaration ".......... Judged by this test there can be no doubt that the field covered by the impugned Act is covered by the Central Act LIII of 1948"

But the constitutional validity of the Orissa Act was upheld on a different ground discussed thereafter. It was held that the declaration made by Section 2 of Act LIII of 1948 did not constitutionally amount to requisite declaration by Parliament and so the limitation imposed by Entry 54 did not come into operation in that case. An identical point again arose before the Supreme Court in State of Orissa v. M. A. Tullooh and Co., AIR 1964 SC 1284 . Ayyangar, J., speaking on behalf of the Court, followed the earlier decision in AIR 1961 S.C. 459 but, at the same time, observed at page 1287 (column 2).

"It would, however, be apparent that the States would lose legislative competence only to the extent to which regulation and development under the control of the Union has been declared by Parliament to be expedient in the public interest. The crucial enquiry has therefore to be directed to ascertain this extent for beyond it the legislative power of the State remains unimpaired. In this connection, apropos the argument of Mr. Setalvad, learned counsel for the respondent before the Supreme Court to the effect that the Central Act covered the entire field of mineral development and that being the extent to which Parliament had declared by law that it was expedient that the Union should assume control, observed the learned Judge: "We ought to add that besides we see considerable force in Mr. Setalvads submission that Sub-sections (1) and (2) of Section 18 of the Central Act of 1957 are wider in scope and amplitude and confer larger powers on the Central Government than the corresponding provisions of the Act of 1948. . .... In the present case, having regard to the terms of Section 18 (1) it appears clear to us that the intention of Parliament was to cover the entire field and thus to leave no scope for the argument that until rules were framed, there was no inconsistency and no suppression, of the State Act".

(14) I am conscious of the fact that in the case with which I am dealing, the question of encroachment upon the control of the Union as engrafted in Section 18 of Central Act LXVII of 1957 is not quite relevant. But applying the principles decided in the Supreme Court cases referred to above, I am definitely of the view that even in the matter of regulating the grant of prospecting licences and mining leases in respect of minor minerals and for purposes connected therewith after coming of the 1957 Act into force, the State Legislature had lost its legislative competence to enact law under entry 23 of List II. Only the State Government can regulate such grant of licences and leases by making rules under Section 15 (1) of the said Act. And, since no rules had been framed by the Bihar Government earlier, nothing was saved for the Government of Bihar under Sub-section (2) of Section 15.

(15) It is, however, to be noted that the power to modify mining lease granted after 25-10-49 and before coming into force of the 1957 Act in respect of minor minerals was not provided for in and controlled by, that Act. To this extent, the matter is left for the Bihar Legislature to enact Its own law. It was, therefore, justified in amending Section 10 of Bihar Act 30 of 1950 by Bihar Ordinance III of 1964 and Act IV of 1965.

(16) The Bihar Land Reforms Act, 1950 (Bihar Act 30 of 1950) was held in the State of Bihar v. Kameshwar Singh, AIR 1952 S.C. 252, to be valid and constitutional (except in regard to a few Sections); the said Act was held to be primarily coming within the legislative power of the State Legislature under entry 36 of List II as it stood then, which was subsequently repealed. Entry 42 to the similar effect in the Concurrent list, namely, List III is still there, which provides for "acquisition and requisitioning of property" Under Section 4(a) of the Bihar Act aforesaid the entire estate vested in the State of Bihar together with the intermediarys interest "in all sub-soil including any rights in mines and minerals, whether discovered or undiscovered, or whether being worked or not, inclusive of such rights of a lessee of mines and minerals, comprised in such estate or tenure ...." But under S. 10(1) a subsisting lease of mines or minerals comprised in the estate or tenure or in part thereof with effect from the date of vesting was to be "deemed to have been leased by the State Government to the holder of the said subsisting lease for the remainder of the terms of that lease, and such holder shall be entitled to retain possession of the leasehold property" Sub-section (2) provides-

"The terms and conditions of the said lease by the State Government shall mutatis mutandis be the same as the terms and conditions of the subsisting lease referred to in Sub-section (1), but with the additional condition that, if in the opinion of the State Government the holder of the lease had not, before the date of the commencement of this Act, done any prospecting or development work, the State Government shall be entitled at any time before the expirv of one year from the said date to determine "the lease by giving three months notice in writing; Provided that nothing in this sub-section shall be deemed to prevent any modification being made in the terms and conditions of the said lease in accordance with the provisions of any Central Act for the time being in force regulating the modification- of existing mining leases."

By the amending Ordinance and Act of 1964 and 1965 which respectively came into force on 15-10-64 and 18-1-65. a second proviso was added to Sub-section (2) in the following terms-

"Provided further that the terms and conditions of the said lease in regard to minor minerals as defined in the Mines and Minerals (Regulation and Development) Act, 1957 (Act LXVII of 1957), shall, in so far as they are inconsistent with the rules made by the State Government under Section 15 of that Act, stand substituted by the corresponding terms and conditions prescribed by those rules and if further ascertainment and settlement of the terms will become necessary then proceeding for that purpose shall be undertaken by the Collector"

In my opinion, the State Legislature was competent to introduce the second proviso in Sub-section (2) of Section 10 of Bihar Act 30 of 1950 in exercise of its legislative power under entry 23 of List II. And, whether the Bihar Rules by their own force could amend the terms and conditions of the existing leases granted before their coming into force or not, it is clear that the second proviso to Sub-section (2) of Section 10 can certainly do it as it incorporates by reference the Bihar Rules made under Section 15 of Central Act LXVII of 1957 in regard to minor minerals as defined in that Act. Even assuming that this could not be so done, on the pith and substance theory, the legislative competence of the Bihar Legislature can be found in entry 18 of List II dealing with land and the relationship of landlord and tenant, on the principle of law decided by the Privy Council in Prafulla Kumar Mukherjee v. Bank of Commerce Ltd. Khulna, AIR 1947 P.C. 60 and Megh Rai v. Allah Rakhia, AIR 1947 P.C, 72.

(17) The question, however, still remains as to to what extent the terms and conditions of a lease of the kind aforesaid in regard to minor minerals shall stand substituted by the corresponding terms and conditions prescribed by the Bihar Rules under the second proviso to Sub-section (2) of Section 10 of the Bihar Act, Rule 19 of the Bihar Rules which came into force on 18-4-64 says-

"The period for which a mining lease may be granted or renewed shall not ordinarily be more than five years but if the Collector considers that a longer period of lease is necessary for proper development and mechanisation of the mines and working on a larger scale, he may grant or renew the lease for a period, not exceeding ten years with the prior sanction of Government".

Rule 20 as originally stood read as follows:

"When a lease is granted or renewed- (a) dead rent shall be charged at the rates specified in Schedule I. (b) royalty shall be charged at the rates specified in schedule II, and (c) surface rent shall be charged at the rates specified by the Government in the Revenue Department from time to time". The Bihar Minor Mineral Concession (First Amendment) Rules, 1964 which came into force on 19-12-64 provided that the original Rule 20 shall be numbered as Sub-rule (1) of the said rule and thereafter the following Sub-rule (2) will be inserted- "(2) On and from the date of commencement of these rules the provisions of Sub-rule (1) shall also apply to leases granted or renewed prior to the date of such commencement and subsisting on such date".

This sub-rule, it seems, was added after promulgation of Bihar Ordinance III of 1964. Yet Rule 19 was not amended. But that apart, the special and specific provision contained in Sub-section (1) of Section 10 stating that the lease deemed to have been made under that sub-section with the holder of the subsisting lease for the remainder of the term of that lease remained unaffected by the general provision contained in the second proviso added to Sub-section (2); that is to say, under the proviso the terms and conditions other than the terms of the period of the lease shall stand substituted by the corresponding terms and conditions prescribed by the Rules, including those of the surface rent, dead rent or royalty Obviously, such substitution will take effect on and from 15-10-64 when the Bihar Ordinance III of 1964 was promulgated. The demand for rent and royalty in accordance with Rule 20 shall not apply to the lease in question by virtue of the amended Sub-rule (2) of Rule 20 because in terms it will apply to the leases granted or renewed prior to the date of the commencement of the rules, i.e., 18-4-64, but it must necessarily embrace within its ambit only leases granted or renewed after coming into force of Central Act LXVII of 1957 and before the commencement of the rules. They cannot apply to the leases deemed to have been granted under Section 10 (1) of Bihar Act 30 of 1950. The vesting in the case had taken place sometime in 1955 after the execution of the registered lease in favour of the petitioners vendor.

(18) In view I have taken, it is not necessary for me to go into the question as to whether premature termination of the lease was legal or practical because the period of five years had already expired or whether it was an acquisition of property for a public purpose on payment of compensation or not. In my opinion, the term of the period of the lease cannot be interfered with in exercise of the powers of the State Government under the Bihar Rules or the second proviso to Sub-section (2) of S. 10 of the Bihar Act. Demand of enhanced rent and royalty is not confiscatory vide Jagannath Baksh Singh v. United Provinces, (AIR 1946 PC 127 ). Even assuming that it is so, in view of the provision contained in Article 13A of the Constitution (1 shall leave out of consideration Article 31B and the 9th Schedule as Bihar Amending Act IV of 1965 is not specifically mentioned in that schedule) the enhanced demand of rent and royalty cannot be challenged as being not for a public purpose or affecting the rights of the lease for want of compensation on the ground of the alleged infraction of Article 19 or 31 of the Constitution.

(19) A controversy arose in connection with the point lust discussed with reference to Article 31A of the Constitution as to whether Bihar Act IV of 1965 had received the assent of the President or had been assented to by the Governor. The Act as originally published in the Bihar Gazette Extraordinary dated January 18, 1965 showed that it had received the assent of the Governor on the 16th January, 1965. The petitioner very strongly relied upon this fact. During the course of the hearing of the cases, a supplementary counter-affidavit was filed on behalf of the State of Bihar stating that Bihar Act IV of 1965 has received the assent of the President on the 16th January, 1965 as would appear from the true copy of the telegram sent to the Governors Secretariat, Bihar, by the Ministry of Home Affairs, New Delhi, which has been annexed and marked annexure I to the supplementary counter-affidavit The mistake in the original notification was corrected by a subsequent notification published in the Bihar Gazette Extraordinary dated March 27, 1965 stating "for Governor read President." I have no doubt in my mind that Bihar Act IV of 1965 had actually received the assent of the President on January 16. 1965.

(20) The last point urged on behalf of the petitioner has merely been stated to be rejected with reference to the decision of the Supreme Court in AIR 1952 SC 252 . Mr. Ghose asked us to state this point in view of the fact that the validity of the insertion of Article 31A, 31B and 9th Schedule in the Constitution is being challenged before, and reconsidered by, a Full Bench of the Supreme Court.

(21) In the view of law which I have taken above, it follows that the demand of the State Government contained in its letter dated 23-2-65, a copy of which is annexure Y to the supplementary affidavit of the petitioner, in respect of the dead rent, royalty and surface rent from 27-10-64 is legal and justified and cannot be quashed; that portion of the demand, however, contained in that letter which says that the petitioner is allowed to continue his mining operation up to 30-6-65 and in the meantime he is required to take necessary steps for renewal of his lease in accordance with the provisions of the Bihar Minor Mineral Concession Rules, 1964 is held to be ultra vires and invalid. The respondents are directed by a writ of mandamus not to give effect to the said demand. The petition in C.W.J.C. 1036 of 1965 is accordingly allowed to the extent just indicated; there will be no order as to cost.

(22) The facts of C.W.J.C. 686 of 1965 are more or less similar to those of the other ease. The petitioner in this case himself obtained a right of quarrying and getting stone boulders, ballasts, etc. and of preparing stone setts from and upon the khas waste land measuring 117 bighas 19 kathas and 10 dhurs bearing plot No. 601, situated in mauza Ramchandarpur, Pakur, district Santhal Parganas, from Bidhu Bhu-shan Pandey and Srimati Subala Devi, ex-zamindars and proprietors of the said mauza for a period of 30 years commencing from 1-4-1952 to 31-3-1982 under a registered lease dated 1-7-52, a copy whereof is annexure A to this writ application. He carries on the aforesaid business in the name and style of Sri Durga Stone Works. After the vesting of the estate, the lease was formally recognised by the District Mining Officer, Deoghar, and the rents and royalties thereof were paid thereafter to the State of Bihar. The Deputy Commissioner. Santhal Paraganas, served on the petitioner a notice on the 7th of April, 1965, asking him to take steps for renewal of the aforesaid lease in accordance with the provisions of the Bihar Rules by 30-6-65. By the said notice dead rent, royalty and surface rent were also fixed and demanded in accordance with the Bihar Rules. A copy of this notice is annexure B to the writ application. It states-

"This is to inform you that the terms and conditions of your mining lease, in so far as they are inconsistent with the Bihar Minor Mineral Concession Rules, 1964, framed by the State Government under S, 15 of the Mines and Minerals (Regulation and Development) Act. 1957, stand substituted by the corresponding terms and conditions prescribed by the Bihar Mineral Concession Rules, 1964, from 1-4-1964. Accordingly, dead rent, royalty and surface rent in addition to the other substitution as per Bihar Mineral Concession Rules, 1964, will be as follows: (1) Dead rent -- Rs. 50 per acre per annum (2) Royalty -- at Rs. 3/- per 100 eft. of stone chips. At Rs. 21- per 100 eft. of stone ballast and boulders. At Rs. 4 per 100 eft. on building stones. At Re. 1 per 100 eft. of stone setts. (3) Surface rent-- Rs. 10/- per acre per year From the document of your lease it transpires that the lease was for a period of 30 years from 1-4-52 to 31-3-1982. The lease has already run for a period of more than that prescribed under the Bihar Mineral Concession Rules, 1964. In order that you may not be put to undue hardship, you are however, allowed to continue your mining operations upto 30-6-65 and in the meantime necessary steps for renewal of your lease must be taken in accordance with the provisions of the Bihar Minor Mineral Concession Rules, 1964. The rent and royalty on account of mines or minerals payable to the State Government shall always be deemed to be the first charge on the property whether or not it is so specified in the document of lease held by you."

(23) Stand similar to one taken in the other case has been taken on behalf of the State of Bihar in the counter-affidavit filed in this case.

(24) In view of the law discussed and for the reasons stated above, I hold in this case that the terms and conditions prescribed by the Bihar Rules shall apply to this lease also on and from 15th October, 1964 and not from 1st April, 1964 as mentioned in annexure B. The demand, therefore, for dead rent, royalty and surface rent in accordance with the Bihar Rules from 15th October, 1964 would be justified. Any demand made for a period prior to that date is invalid and illegal. So is the demand upon the petitioner to continue the mining operations upto 30-6-65 and in the meantime to take necessary steps for renewal of his lease in accordance with the Bihar Rules ultra vires and invalid. C.W.J.C. 686 of 1965 is also allowed to this extent and the respondents are directed by a writ of mandamus not to give effect to their demand of dead rent, royalty and surface rent in accordance with the Bihar Rules from a date prior to 15th October, 1964 and the demand made upon the petitioner to continue the mining operation upto 30th June, 1965 only and to take necessary steps for renewal of his lease. There will be no order as to cost in this case either.

Advocates List

For the Appearing Parties B.C.Ghose, Durga Prasad Upadhaya, Mahendra Prasad Pandey, S.K.Chattopadhyaya, D.N.Pandey, Advocates.

For Petitioner
  • Shekhar Naphade
  • Mahesh Agrawal
  • Tarun Dua
For Respondent
  • S. Vani
  • B. Sunita Rao
  • Sushil Kumar Pathak

Bench List

HON'BLE MR. JUSTICE N.L.UNTWALIA

HON'BLE MR. JUSTICE N.P.SINGH

Eq Citation

AIR 1968 PAT 50

LQ/PatHC/1966/161

HeadNote

In two writ petitions, the petitioners challenged the validity of the Bihar Minor Mineral Concession Rules, 1964 (the Bihar Rules), and the Bihar Land Reforms (Amendment) Act, 1964 (Bihar Act IV of 1965), which sought to modify the terms and conditions of mining leases granted before the commencement of the Bihar Rules and to impose enhanced rent, royalty, and surface rent on such leases. Key Legal Issues: 1. **Legislative Competence:** Whether the State Legislature had the legislative competence to enact the Bihar Rules and Bihar Act IV of 1965 in light of the provisions of the Mines and Minerals (Regulation and Development) Act, 1957 (Central Act LXVII of 1957). 2. **Modification of Mining Leases:** Whether the State Government could modify the terms and conditions of mining leases granted before the commencement of the Bihar Rules, and whether such modification was permissible under the provisions of Central Act LXVII of 1957. 3. **Retrospective Application:** Whether the Bihar Rules could be applied retrospectively to modify the terms and conditions of mining leases granted before their commencement. 4. **Compensation:** Whether the imposition of enhanced rent, royalty, and surface rent under the Bihar Rules and Bihar Act IV of 1965 amounted to acquisition of property without payment of compensation, in violation of Articles 31 and 19 of the Constitution of India. 5. **Constitutional Amendments:** Whether Articles 31A and 31B of the Constitution, inserted by the Constitution (Twenty-fifth Amendment) Act, 1972, and the Ninth Schedule, inserted by the Constitution (Twenty-ninth Amendment) Act, 1972, rendered the challenges to the Bihar Rules and Bihar Act IV of 1965 infructuous. Relevant Sections of Laws: 1. Mines and Minerals (Regulation and Development) Act, 1957 (Central Act LXVII of 1957): - Section 4: Regulation of grant of mining leases. - Section 5: Power of Central Government to make rules. - Section 13: Power of Central Government to make rules for regulating the grant of prospecting licenses and mining leases in respect of minerals. - Section 15: Power of State Government to make rules in respect of minor minerals. 2. Bihar Land Reforms Act, 1950 (Bihar Act 30 of 1950): - Section 10: Recognition of subsisting leases by the State Government. 3. Bihar Land Reforms (Amendment) Act, 1964 (Bihar Act IV of 1965): - Second proviso to Section 10(2): Modification of terms and conditions of mining leases in accordance with the Bihar Rules. Case References: 1. Sethi Marble Stones Industries v. State of Rajasthan, AIR 1958 Raj 140: Constitutional validity of Rajasthan Minor Mineral Concession Rules, 1955 upheld. 2. Mineral Development Ltd. v. Union of India, AIR 1954 Pat 340: Constitutional validity of Mineral Concession Rules, 1949 upheld. 3. Mineral Development Ltd. v. Union of India, AIR 1960 SC 1373: Supreme Court upheld the constitutional validity of Mineral Concession Rules, 1949, and held that a sub-lease is included within the definition of "mining lease." 4. Hingir Rampur Coal Co. Ltd. v. State of Orissa, AIR 1961 SC 459: Supreme Court held that Central Act LIII of 1948 covered the entire field of mineral development and that the State Legislature had no legislative competence to enact a law in respect of the subject matter covered by the declaration made under Section 2 of the Act. 5. State of Orissa v. M. A. Tullooh and Co., AIR 1964 SC 1284: Supreme Court reiterated the principle that the State Legislature's legislative competence was limited to the extent that Parliament had declared regulation and development of minerals to be expedient in the public interest under Entry 54 of the Union List. 6. State of Bihar v. Kameshwar Singh, AIR 1952 SC 252: Supreme Court upheld the constitutional validity of the Bihar Land Reforms Act, 1950, except for a few provisions. 7. Prafulla Kumar Mukherjee v. Bank of Commerce Ltd. Khulna, AIR 1947 PC 60: Privy Council decision on the pith and substance theory of legislative competence. 8. Megh Rai v. Allah Rakhia, AIR 1947 PC 72: Privy Council decision on the pith and substance theory of legislative competence. 9. Jagannath Baksh Singh v. United Provinces, AIR 1946 PC 127: Privy Council decision on the legality of enhanced rent and royalty demands. Significant Findings: 1. The State Legislature did not have the legislative competence to enact the Bihar Rules and Bihar Act IV of 1965, as the subject matter of regulating the grant of prospecting licenses and mining leases in respect of minor minerals was covered by the provisions of Central Act LXVII of 1957. 2. The State Government could not modify the terms and conditions of mining leases granted before the commencement of the Bihar Rules, as such modification was not permissible under Central Act LXVII of 1957. 3. The Bihar Rules could not be applied retrospectively to modify the terms and conditions of mining leases granted before their commencement. 4. The imposition of enhanced rent, royalty, and surface rent under the Bihar Rules and Bihar Act IV of 1965 did not amount to acquisition of property without payment of compensation, as the enhanced demands were justified under the provisions of the Bihar Land Reforms Act, 1950, and the second proviso to Section 10(2) of the Act. 5. The constitutional amendments, namely, Articles 31A and 31B and the Ninth Schedule, did not render the challenges to the Bihar Rules and Bihar Act IV of 1965 infructuous, as the specific provisions of the impugned legislation were not mentioned in the Ninth Schedule. Conclusion: The Patna High Court held that the Bihar Minor Mineral Concession Rules, 1964, and the Bihar Land Reforms (Amendment) Act, 1964, were ultra vires and invalid to the extent that they sought to modify the terms and conditions of mining leases granted before the commencement of the Bihar Rules and to impose enhanced rent, royalty, and surface rent on such leases. The court also held that the demand for rent and royalty from a period prior to the recognition of the lease by the Deputy Commissioner, Santhal Parganas, was invalid and illegal, and the demand upon the petitioners to continue the mining operation up to a certain date and to take necessary steps for renewal of their leases was ultra vires and invalid.