Sudarshan Mineral Co. Ltd. v. Union of India & Anr
UNTWALIA, J. This is a plaintiff's appeal by special leave of this
·Court from the Judgment and decree of the Rajasthan High Court
whereby the plaintiff's second appeal from the decision of the First
Appellate Court was dismissed and the dismissal of its suit was main
tained.
The fact!\ of the case lie in a narrow comp:iss und may usefully be
· stated at the outset. The plaintiff was granted a mining lease for
mining mica by the erstwhile State of Shahpura for a period of 20 years
commencing from the 12th August, 1941. The area of the leru;e pur
ported to be 1500 sq. miles. In due course the mining area in ques·
tion came to form part of the State of Rajasthan. The Mine.~ and
Minerals (Regulation and Development) Act, 1957-hereinafter called
the Act-came into force from 1st June, 1958. Under-section 6(1)
of the Act as it stood at the relevant time the area of a mining kase in
·tile case of mica could not be more than 10 sq. miles and its maximum
period could not exceed 20 years as provided in section 8. Section
16 confers power on the approi:riate authority to modify a mining lease
granted before 24th October, 1949 to bring it in conformity with the
Act and the Rules made thereunder. In exercise of this power and in
accordance with the Mining Leases {Modifications of Terms) Rules,
1956 the Controller of Mica Leases, Nagpur, reduced the mining area
of the appellant lease to 10 sq. miles by his order dated November 20,
1959. As per Rule lO(l)(a) of the said Rules a compensation of
Rs. 10/- only was fixed by agreement between the parties for reduction
of the area, and by the same order the dead rent at the rate of Rs. 8/
·per acre per annum fixed by the original lease was rcducedJo Rs. 6/· per
acre. The period of 20 years of the original lease came to an end on
August H, 1961. The appellant applied to the Government of Rajas
than for renewal of its lease for another 20 years. This was do11e in
accordance with Rule 28 of the Mineral Concession Rules, 1960-
hcrciuafter called the Rules. The Government of Rajasthan granted
·the renewal by order dated December 13, 1961 for a period of 20 years
•\
II
SUDARSHA'i \1!NERAL co. v. UNION (Untwalw, J.) 549-
with effect from August 12, 1961. The dead rent fixed for the renewetl
lease was Rs. 20/- per hectare which comes to Rs. 8/- per acre. The
appellant challangcd the order of the Government of Rajasthan by
tiling a revision before the Central Government in accordance with
Rule 54 of the Rules. But the revision was dismissed. Thereupon it
filed a suit against the Union of India, respondent no. l and the State
of Raja.~than, respondent no. 2 for a decree of injunction to restrain the
defendants from charging de8.d rent at the rate of Rs. 8/- per acre per
annum and for a dedaration that they arc entitled to charge only at the
rate of Rs. 6/- pC'r acre. The suit was decreed by t11c Trial Court but
was dismissc:d by the First Appellate Court. The dismissal was main
tained by the High Court in second.appeal.
Mr. Y. S. Chitlay, learned counsel for the appellant, pressed the
following five points in support of this appeal :
ll) Under the agreement dated 20-11-1959 the lease
was to be governed by the Act and the Rules except
in regard to dead rent whicli was fixed at Rs. 6/- per
acre.
(2) Under Ruic 28 of the Ruh:s, the State Government
while renewing the lease had power to reduce the
area but no power to increase the dead rent.
(3) Rule 27 docs not apply to renewal of a Jcas1:.
(4) Clause (c) of Sub-Ruic (1) of Rule 27 is ultra vires
as it tran~gresscs the rule making power under section
13(2) (g) of the Act.
(5) Rule 27(1) (c) if made applkablc to rcne\Yal of a
mining lease introduces an clement of uncertainty and
is therefore void.
Learned counsel for the respondents combated the appellants argu
ment in all respects. In our opinion none of the contentions put for
ward on behalf of the appellant is fit to be accepted and the appeal must
fail.
As is well settled the power to make rules for regulating the grant
of prospecting licences and mining leases in respect of minerals and for
purposes connected therewith is to be found in sub-section ( l) of sec
tion 13. Sub-section (2) merely illustrates the nature of the power. It
Llocs not restrict the general power under sub-section (1). Even under
clause (g) of sub-section (2) in particular the Rules may provide the
tcnn~ on which and the conditions subject to which any mining foasc
may be granted or renewed. Sub-Ruic ( 1) of Ruic 27 requires every
mining lease to be subjected to the conditions enumerated in clause (:i)
to (n) and such conditions have got to be incorporated in every mining
lease. The conditions enumerated in clause (a) to (o) of Sub-Rule
(2) arc optional and n mining lease may contain such other conditions
;i_s the State Government may deem necessary in regard to them.
Rule 27(1)(c) reads as follows: ·
"The Jca.~e ~hall pay, for c\'cry y<.!ar, except the first year
nf the leas.:, such yearly dead rent within the limits specified
sso SUPREMB COURT ltEPORTS / J 975] JS.CR.
ln-Schedule IV as may be fixed from time to time· by the
· State Government and if the lease permits the working ·of
more than one mineral in the same area, the State Govem··
-ment may charge separate dead rem in respect · of · each
111ineral :
Provided that the Jessee shall be liable to pay the dead
rent or royalty in respect of each mineral whichever be higher
in amount but not both."
There is no element of uncertainty in the Ruie either in regard to the
grant 'Jf fresh lease or in respect of the renewal. The yearly dead rent
to be fixed from time to time by the State Government cannot e~xceed
t'le limit specified in Chapter IV. The maximum limit is therefore
certain. To provide for payment of dead rent at a specified rate s11bject
to variation within the limit specified in Schedule IV, is a term which
cannot be said to be void on account of uncertainty, nor is it beyond the
Rule making power c,0nferred on the Central Government under sec
tion 13 of the Act. The 4th and 5th points urged on behalf ol' the
appellant therefore fail.
Rule 27(1) makes it incumbent to subject every mining lease to the
conditions enumerated in that sub~rule. The renewal of lease cannot
be outside Rule 27 (I). A lease granted under the Rules and the
renewal made thereunder will nci. occasion any difficulty at all in. the
application of the conditions enumerated in sub-mle (1) to both. But
the scope for .argument in this case arose because .the original lease wa.~
granted in 1941 by the erstwhile State. The modifications were made
in the year 1959 in accordance with the Act of 1957 and the Mining
Leases (Modification of Term~) Rules, 1956. The Rules of 1960 were
then not in existence. The question which deserves careful considera
tion, therefore, is-whether there is any substaoce in dtber of the· first
or second points urged on behalf of the appellant.
The Controller of Mica leases prepared a note and passed a final
order on· the 20th November, 59 recording the modifications of the
terms of the mining lease dated 12-8-1941 specifically stating therein
that the said foase was for 20 years "without a renewal clause". After
providing that ·~dead rent. shall be payable at the rate of Rs. 6/- per acre
per annum", it was mentioned "The following clause shall be decflled
to be inserted in the Jease deed and shall form part thereof :
)
"Except for· the modifications made by this order, the
.tease shall be subject to the Rules made or deemed to have
been made under sections 13 and 18 of the Mines and
Minerals (Regulation and Development) Act, 1957 (No. 67
of l-9~7).''
. It.was submitted on behalf of the appellr.nt that when renewal: of
the lease was granted under Rule 28 of the Rules then the State Govern
ment was bound to act upon and incorpc>rate the new clause inserted
in the original lease by order dated 20-11-1959; ,In other words, it
was contended that the renewed lease had to be granted on the same
terms and conditions. No term and condition coUld be varied while
I;
' ~
SUDARSHAN MINERAL co. v. UNION (Untwalia, J.) 55 l
granting the renewal of the lease except in regard to the reduction of
the area in accordance with sub-Rule (5) of Rule 28. That being so,
the agreement stressed was that in view of the new clause operation of
Rule 2 7 (1) ( c) was excluded in regard to the dead rent, it was not pay
able at any rate different from Rs. 6/- per acre. In our judgment the
argument though attractive is not fruitful. If in the original lease there
would have been a renewal clause giving a right to tlie lessee to have
the renewal of the lease for another period of 20 years at its option one
could probabily say that the renewal had to be on the same terms and
conditions. In that event the new clause inserted in the original lease
by order dated 20-11-1959 could possibly be said to overri9e the man
datory requirement of Rule 27(1) (c). But in absence of such a right
of renewal to the -lessee the said clause was operative-and effective only
during the period of the original lease· i.e. upto 11th August, 1961. The
lease renewed thereafter was a renewal of the origipal ·1ease ia one
sense and a fresh lease in another. While granting a fresh lease the
Governmental authority has no power to relax the mandatory require
ment of sub-Rule (1) of Rule 27 of the Rules. By agreement it can
not take the conditions of the lease out of the said provision. It is,
therefore, clear on the facts and in the circumstances of this case that
while granting the renewal of the lease, the authority was neither bound
nor empowered to incorporate a condition in the lease against clause
(c) of Rule 27(1). The demand of dead rent at Rs. 20/- per hectare
i.e. Rs. 81- per acre was within the limits specified in Schedule IV of
the Rules and there was no mfirmity in it.
For the reasons stated above we !ind no merit in this appeal. It is
accordingly dismissed with costs.
P..H.P. . Appeal dismissed;
4-470SCl/75