STATE OF MADHYA PRADESH Vs. DADABHOYS NEW CHIRIMIRI PONRI HILL COLLIERY GO PRIVATE LIMITED :REWA MINING COMPANY LIMITED

JUDGEMENT

(1.) By an Indenture of Lease, dated January 12, 1944 made between the then Ruler or Korea State of the one part referred to as the lessor therein, and Sir Maneckji B. Dadabhoy referred to as the lessee, of the other part, the lessor granted to the lessee for a term of 30 years, in consideration of payment of rents and royalties therein mentioned, a mining lease of an area measuring 5.25 sq. miles delineated on the plan annexed thereto, with liberties, powers and privileges and on terms and conditions therein set out. By Clause (2) of that Indenture, the lessee agreed to pay during the subsistence of the lease royalties at the rates and on dates set out therein. The rates of royalty varied from 5% to 25% according to the price of coal per ton extracted from the leased area, that is to say, from 4 ans. per ton if the price was Rupees 5/- per ton to 25% of the price per ton at the pit's head if that price was Rupees 20/- or more.

(2.) On the merger of the Korea State with Madhya Pradesh, into the events of which it is not necessary for the purposes of this appeal to go, the leased area became subject to the provisions of the Mines and Minerals (Regulation and Development) Act, 53 of 12948 and the Mineral Concession Rules made thereunder on October 25, 1949. In 1952, Sir Maneckji agreed to assign the said lease and the benefits, powers and privileges thereunder provided to the respondent-company. Since, under the lease, such assignment could not be made without the previous consent of the lessor and since, by that time, owing to the merger of the Korea State with Madhya Pradesh, the State of Madhya Pradesh had acquired the said area and the rights in respect of it under the said lease, an agreement was made between the State of Madhya Pradesh and the respondent-company on November 6, 1952 under which the State of Madhya Pradesh granted its consent to the said assignment for the unexpired period of the said lease in consideration of the respondent-company agreeing to comply with the terms and conditions of the said lease including payment of royalties to the State Government as provided therein. That meant that the respondent-company had to pay henceforth royalty to the State of Madhya Pradesh as the lessor at the rates provided in the original lease

(3.) An unexpected development in the meantime took place Under an Industrial award, called the Muzumdar Award, published on May 25, 1956, increased wages were awarded to colliery workers. To meet the consequent increased expenditure which the collieries had to incur, the Government of India proportionately increased the controlled coal price. A representation made by the respondent-company to the Government of India, dated October 5, 1956 shows that the increase in respect of the coal extracted by the respondent-company was from Rs. 14.6.0 and Rs. 15.6.0 to Rupees 17.6.0 and Rupees 18.6.0 per ton. That increase, however, resulted in the respondent-company having to pay royalty at an increased rate since the rate of royalty payable by the company was on graded slab varying according to the price of coal at the pit's head. The company's representation, therefore, was that the royalty payable by it should be modified so as to bring it in consonance with that payable under the 1948 Act read with the Mineral Concession Rules. 1949 and the First Schedule thereto, namely, at a fixed rate of 5% of the f. o. r. price subject to the minimum of 8 ans. per ton. (Rule 41 (1) (a)). The Government of India referred the respondent-company to the State Government and advised it to make a similar representation to that Government. Thereafter correspondence went on between the Government of Madhya Pradesh and the respondent-company for a considerable time. The State Government, however, was not agreeable to modify the terms of the said lease and to bring the royalty payable thereunder in consonance with Rule 41 of 1949 Rules and the First Schedule thereto.