COMMISSIONER OF INCOME TAX Vs. GOGTE MINERALS

JUDGEMENT

(1.) THIS is a reference arising under s. 256(1) of the IT Act. Three questions are referred for our opinion and they are as follows :

(2.) THE learned counsel for the assessee submitted that when this Court decided ITRC Nos. 149 and 150/1979. Rule 34 of the Mineral Conservation & Development Rules, 1988 was not available. He, however, submitted that Part VII of the indenture of mining lease provides for the covenants between the lessee and the lessor and cl. 12 thereof provides that the lessee shall be bound by such rules as may be issued from time to time by the Government of India under s. 18 of the Mines & Minerals (Regulation & Development) Act, 1957 and shall not carry on mining or other operations under the said lease in any way other than as prescribed under the said rules. Rule 34 of the rules provides for reclamation and rehabilitation of lands. Every holder of prospecting licence or mining lease shall undertake the phased restoration, reclamation and rehabilitation of lands affected by prospecting or mining operations and shall complete this work before the conclusion of such operation and the abandonment of prospect of mine. Relying upon the decision of the Supreme Court in the case of Dr. Indramani Pyarelal Gupta vs. W. R. Nathu & Ors. the learned counsel submitted that when a provision of rule or enactment gets engrafted into an existing contract and operates so as to produce a result which is something quite different from original intention of the contracting parties, such a statute has in effect a retrospective operation. It is, therefore, submitted that an obligation does arise even in respect of the activities that might have been carried on earlier and, therefore, submitted that the liability of the assessee is clear and complete.

(3.) IN Gardner & Co. Ltd. vs. Cone & Ors. (1928) All ER 458, the expression "retrospective" has been very clearly explained. An Act may be called retrospective because it affects contracts existing at the date when it comes into operation. An Act may be more properly described as retrospective because it applies to transactions completed, or to rights and remedies accrued, before it came into force. It may apply, again, to such matters as procedure and evidence. IN this case what is sought to be shown, it does effect the rights that had arisen which creates a fresh obligation on the assessee concerned to fulfil the terms of r. 34 and that arises only at the end of the contract and not earlier. The contention advanced on behalf of the Department that r. 34 is prospective in nature and, therefore, has no application to the circumstances arising in this case is clearly misconceived. We may usefully refer in this context to what was said by Craies in his Treatise on Statue Law, 5th Edn. page 366 while referring to Cockburn, C.J. in Duke of Devonzhire vs. Barrow, Haematite Steel Co. Ltd. (referred to earlier), "When the terms of the contract engrafts an enactment upon existing contracts and thus operates so as to produce a result which is something quite different from the original intention of the contracting parties, such a statue has, in effect, a retrospective operation.". We cannot improve upon the language used by Craies. That clearly sets out the law on the matter.