KHAS KARANPURA COLLIERIES LTD Vs. STATE OF BIHAR

JUDGEMENT

(1.) Except In C. W. J. C. No. 1146 of 1968, in all the rest of these applications under Article 226 of the Constitution of India, common questions of law arise for determination. Broadly speaking, the questions relate to the vires, true scope and construction of Section 30A of the Mines and Minerals (Regulation and Development) Act 1957, (hereinafter referred to as the "1957 Act"). In all these cases the petitioners are holders of mining leases, either under a head-lease or under a sub-lease in respect of coal and have obtained a rule nisi calling upon the respondents to show cause why the demand through relevant letters and notices or certificate cases in respect thereof for royalty at the rate of five per cent. F. O. R, price of coal, less such amount as might have been paid already, in respect of coal removed by them as lessees or sub-lessees, either during the period 3rd November 1951 to the 31st December, 1965, or during the period the 29th December, 1961 to the 31st December, 1965, be not quashed as wholly illegal and appropriate writs or orders be not issued in that connection. In two cases only, namely, C. W. J. C. Nos. 1101 and 1194 of 1968, the period involved is the 27th October, 1964 to the 31st December 1965. In C, W. J. C. No. 1146 of 1968, however, different - considerations arise and that case will be, therefore, considered separately.

(2.) Circumstances which have led to the filing of these applications may now be briefly set out. Proprietors of Estates, like Raja of Ramgarh and Raja of Jharia. had granted mining leases in respect of coal of large areas of land situate in the district of Hazaribagh, Dhanbad or Singhbhum to different parties. In the permanently settled areas of Bengal and Bihar from which States come about 80% or more of the total coal production of the country, the Zamindars enjoyed an unfettered discretion in regard to granting mining leases for working and extracting different minerals including coal, and, thus no uniformity of policy or practice as to terms of the leases was possible. Yet, generally speaking, the mining leases were for a duration of 999 years, with stipulations as to payment of premiums and a certain fixed annual rental, but in regard to royalty either there was no stipulation for any such payment or it was at very low rates. With very few exceptions, the lessees of such mining leases did not work the mines themselves, they invariably granted sub-leases on more or less similar terms. It is in consequence of that trend that save in C. W. J. C. Nos. 1097, 1098, 1101 of 1968 and partly in C. W. J. C. Nos. 1244 of 1968 and 1722 of 1969, the rest are all cases of sub-leases. The one common feature in regard to all these mining leases or sub-leases was that they were all of dates earlier to the 25th October 1949, on which date, for the first time, as a result of the corning into operation of the Mines and Minerals (Regulation and Development) Act 1948 (hereinafter referred to as the '1948 Act') and the Mineral Concession Rules, 1949 made under Section 5 of the said Act, the granting of mining leases and development of minerals were made subject to statutory regulations and restrictions. The Mineral Concession Rules, 1949, as per provisions of Section 5 of the 1948 Act were made for regulating the grant of mining leases or prohibiting the grant of such leases in respect of any mineral or in any area, and naturally did not apply to leases granted before the 25th October 1949 -- the date on which the 1948 Act as also those Rules had come into operation. The restrictions or provisions in those Rules regarding, for instance, areas, duration or rate of royalty payable did not apply to the leases or sub-leases of the petitioners. Even the Rules made in September 1956 under Section 7 of the 1949 Act known as "The Mining Leases (Modification of Terms) Rules 1956" providing for the modification or alteration of the terms and conditions of mining leases granted prior to the commencement of the said Act so as to bring them in conformity with the terms and conditions of mining leases granted after the commencement of the Act in accordance with the Mineral Concession Rules 1949, were expressly made inapplicable to mining leases in respect of coal and certain other minerals specified in Rule 2 (c) thereof though similar mining leases in respect of other minerals were covered. The result was that the mining leases or sub-leases of the petitioners remained unaffected by the regulatory or the restrictive provisions of the 1948 Act or of the rules made thereunder. No attempt was made to modify any of the terms or conditions of the leases or subleases. This was the position when the 1957 Act came into operation on the 1st of June 1958. Section 9 (i) of that Act made it obligatory on holders of mining leases in respect of all minerals except mineral oils, granted before the commencement of the Act, notwithstanding anything contained in the instrument of lease or in any law in force at such commencement, to pay royalty at 5% F.O.R. price of coal subject to the minimum of 50 paise per Ton. which was the rate for the time being specified in the second schedule to the said Act. Thus Section 9 (i) served to effect a statutory modification in the rates of royalty payable in respect of mining leases which might have been granted before the 1st June 1958, and thus the mining leases or subleases of the petitioners were automatically and adversely affected. So far as the question of modifying other terms and conditions in respect of mining leases granted before the 25th of October 1949 were concerned, so as to bring them in conformity with the terms and conditions of new leases to be granted under the Act in accordance with the rules made under Sections 13 and 18 thereof, Section 16 (1) of 1957 Act imposed a statutory duty of effecting the necessary modifications as soon as amy be after the commencement of the Act. The provisions of Sections 9 (1) and 16 (1) of the 1957 Act thus amounted to a sudden departure from the policy which was being followed by the Government in regard to mining leases in respect of coal. The case of the petitioners is that on account of the proposed sudden increase in the rate of royalty over the rates hitherto payable or being paid, a steep rise in the cost of production of coal was apprehended. Likewise the almost immediate certainty of other terms and conditions being modified, thus bringing in all the restrictive and regulatory provisions in regard to duration and area, was also likely to have an unsettling effect on the working of the coal industry as a whole. In such circumstances, according to the petitioners, representations were made to the Government of India to reconsider the whole matter and take some steps for preventing the aforesaid adverse effect on the production of coal, a vital and basic material for the industrial development of the country. The representations, according to the petitioners, had their effect and Section 30A of the 1957 Act was brought in by Section 2 of the Mines and Minerals Regulation and Development (Amendment) Act 1958, with retrospective effect. Section 2 of the Amendment Act which inserted Section 30A expressly stated that Section 30A shall be deemed always to have been inserted. In the result by virtue of Section 30A, the provisions of Sub-section (1) of Section 9 and of Sub-section (1) of Section 16 were to remain inapplicable to or in relation to mining leases in respect of coal granted before the 25th day of October 1949 until the Central Government was satisfied that it was expedient to make them applicable to those leases with such exceptions and modifications, by notification in the official Gazette, The provisions of Sections 9 (i) and 16 (i) having been thus suspended so far as mining leases in respect of coal were concerned, the petitioners went on paying royalty, if any, at the contractual rates. Finally, however, the Central Government in exercise of the powers conferred by Section 30A issued a notification dated the 29th December 1961, directing that the provisions of Section 9 (1) shall apply with immediate effect to or in relation to mining leases in respect of coal granted before the 25th October 1949, subject to this modification that the lessees concerned shall pay royalty at the rates specified in any agreement between the lessee and the lessor or at 21/2% F.O.R. price of coal whichever was higher in lieu of the 5% F.O.R. price of coal which was the rate specified in respect of coal in the second schedule to the 1957 Act. The petitioners thereupon began to pay royalty at the rate of 21/2% F.O.E. price of coal from the 29th December 1961 onwards in place of rate of royalty mentioned in the instrument of lease or sublease. In case of sub-lessees though there was no privity of contract or privity of Estate with respondent No. 1. the State of Bihar and as such they had no liability to pay any royalty to the State direct, yet in many cases, either on account of arrangement between the lessee and the sub-lessee or on account of duress or coercion, payments at 21/2% F.O.R. price of coal was made directly to the State. In any case, after the introduction of Section 10A by Section 3 of the Bihar Act 4 of 1965 into the Bihar Land Reforms Act 1950, all sub-lessees whose leases were not subject to further subleases came to hold their leases directly under the State Government and the payment of royalty at the rate specified in the notification of the Central Government dated the 29th December 1961, referred to above, continued until by another notification dated the 1st of January 1966, the previous notification dated the 29th December 1961 was superseded and the provisions of Section 9 (1) of the 1957 Act without any modification became applicable with immediate effect to and in relation to mining leases in respect of coal granted before the 25th October 1949. It is the common case of the parties that from the 1st January 1966 onwards, the petitioners have been paying royalty at the rate of 5% F.O.R. price of coal as specified in the second schedule to the 1957 Act. Respondent No. 2, District Mining Officer, has, notwithstanding the fact that royalty at the uniform rate of 21/2% F.O.R. price of coal in respect of coal removed from the leased area during the period 29th December 1961 to 31st December 1965, has already been paid by the petitioners, as per notification dated the 29th December 1961, issued by the Central Government in exercise of their powers under Section 30A of the 1957 Act, demanded further pay-ment of different sums of money from different petitioners by way of royalty calculated at the rate of 5% F.O.R. price of coal, in respect of the period from the 3rd November 1951 till the 31st December 1965 in some cases, and from the 29th December 1961 to the 31st December 1965 In other cases. This demand according to the petitioners, was wholly illegal and when their protests and representations to the respondents against the illegal demand have proved futile, and, indeed, the respondents had in the case of some of the petitioners initiated certificate proceedings for realisation of the aforesaid illegal demand and have been holding out threats of adopting coercive measures in other cases for realisation of the sums of money demanded by way of royalty, the present applications were filed for the reliefs already specified above.

(3.) The case of the petitioners is that the respondents are not entitled to demand or realise royalty at 5% F.O.R. price of coal for any period prior to the 1st January 1966 because for the period between the 3rd November 1951 -- the date on which the estates of the head-lessors are alleged to have vested in the State of Bihar under the Bihar Land Reforms Act 1950, and the 1st of June 1958 -- the date on which the 1957 Act was brought into operation, Rule 41 of the Mineral Concession Rules 1949 requiring royalty to be paid at the rate specified in the first schedule to those rules applied to leases granted under those Rules after the commencement of the 1948 Act and the Mineral Concession Rules themselves, and, as such had no application to the petitioners' leases or sub-leases, and so far as the claim or demand for the period between the 1st June 1958 and the 28th December 1961 was concerned, royalty at the contractual rates alone was payable, because, firstly, the provisions of Section 9 (1) of the 1957 Act did not cover and had no application to statutory leases deemed to have come into existence under Section 10 (1) of the Bihar Land Reforms Act 1950, and alternatively because by virtue of Section 30A of the 1957 Act which must be deemed to have come into operation on the 1st of June 1958 itself, the provisions of Section 9 (1) was not applicable to or in relation to the mining leases in respect of coal granted before the 21st day of October 1949 until the Central Government by notification had decided otherwise. So far as the claim in respect of the period 29th December 1961 to the 31st December 1965 was concerned, the case of the petitioners is that royalty at 21/2% F.O.R. price of coal for the said period has already been paid by the petitioners as per notification of the Central Government issued in exercise of their powers under Section 30A of the 1957 Act, and the State having itself invited and accepted those payments in full discharge of the petitioners' liability on the score of royalty payable during the said period, was not entitled to unilaterally revoke the aforesaid discharge or satisfaction and claim further royalty at 21/2% F.O.R. price of coal over and above what has already been paid and accepted.