STATE OF ORISSA Vs. UNION OF INDIA

JUDGEMENT

(1.) This appeal is directed against the judgment of the Division Bench of Orissa High Court and the question for consideration is whether the Railway Administration would be liable to pay the royalty in respect of the minor minerals used by it in laying down the railway line. The facts are not disputed namely for laying the railway line Government of Orissa acquired the land and handed over the same to the railway administration. When the Railway Administration utilised certain minor minerals like the rock cut spoils and earth from the very land, which had been acquired for laying the railway line, the Revenue Authorities of the State of Orissa initiated proceedings for realisation of royalty and cess under the provisions of Orissa Minor Mineral Concession Rules. The Railway Administration and the Union of India assailed the same by filing a writ petition in the Orissa High Court. According to the Railway Administration, royalty or cess could be levied against the lessee of any mineral and the railway administration not being the lessee of the land or the minor minerals therein no royalty is payable for utilisation of the aforesaid minor minerals for laying down the railway line. The State Government on the other hand took the stand that the handing over of the land for laying of the railway track to the railway administration does not amount to conferring ownership right over the minerals existing on the land and in accordance with the provisions of the Mines and Minerals (Regulation and Development) Act, 1957 (hereinafter referred to as 'the Act') as well as the Orissa Minor Mineral Concession Rules, 1990 (hereinafter referred to as the Rules), the railway administration would be liable to pay royalty for use of any minerals from the land in question and accordingly, the revenue authorities had rightly issued notice. The High Court, in the impugned judgment came to hold that the earth and rock cut spoils excavated by the railway administration are minerals. This finding of the High Court has not been assailed by the railway administration. But so far as the right to levy royalty on the use of minerals from the land in question, the High Court came to the conclusion that the State would not be justified in levying the royalty in respect of the minerals on the land which had been acquired and possession of which has been delivered to the railway administration. But so far as the land belonging to the State Government is concerned the High Court came to the conclusion, since no formal transfer deed has been executed, it would be open to the State Government to incorporate in the formal transfer, a term as to the payment of royalty in view of the admission of the railway administration in its letter dated 10-6-1987 that they would abide by the terms and conditions to be decided by the State Government while sanctioning transfer of Government land. It is this judgment of the High Court of Orissa, which is under challenge in this appeal.

(2.) Mr. P.N. Mishra, the learned senior counsel, appearing for the State of Orissa, contended that the State is the owner of the mines and minerals within its territory and right to levy royalty or cess in respect of any minerals is governed by the provisions of the Act and the Rules framed thereunder. According to the learned counsel, under the provisions of Orissa Minor Mineral Concessions Rules, which has been framed in exercise of power under Section 15(1) of the Act, no person can undertake any quarrying operation or collect and/or remove any minor mineral except under and in accordance with the terms and conditions of quarry lease, permit and/or auction sale provided under the rules. Under the proviso to Rule 3, when extraction and collection of minor minerals is made by a person from his own land for normal agricultural operations or other bona fide domestic consumptions, then that would not tantamount to quarrying operations and it is excluded from the purview of Rule 3. Necessarily, therefore if minor minerals are extracted or removed from one's own land not for any domestic consumption or agricultural operations, but are sold to the public, then the State would be justified in levying the royalty on such extraction and or collection.

(3.) Mr. P.P. Malhotra, the learned senior counsel, appearing for the Union of India, on the other hand, contended that unless and until the lease deed is executed in favour of the Union of India, the State Government would not be entitled to levy royalty or cess for extraction of minerals from the land which had been acquired for the purpose of laying down railway track and possession whereof has been given to the Union of India itself. According to the learned counsel, the High Court was justified in disposing of the matter against the State.