Gorelal Dubey v. State of Madhya Pradesh and Others

UNTWALIA, J.-These two appeals by special leave have been heard together as they originate from a common dispute between the parties. They are being disposed off by a common judgment and order.

To provide for the regulation of mines and the development of minerals under the control of the Union of India The Mines and Minerals (Regulation and Develqpment) Act, 1957, Central Act 67 of 1957-hereinafter referred to as the Act, was passed. In section 3 of the Act clause (a) says : "minerals" includes all minerals except mineral oils." Clause (e) provides: ·

"minor minerals" means building stones, gravel, ordi-· nary clay, ordinary sand other than sand used for prescrib-ed purposes, and any other mineral which the Central Gov-ernment may, by notification in the Official Gazette, declare to be a minor mineral,"

For the sake of convenience and to distinguish minor minerals from minerals, the minerals are generally called major minerals and will be described as such hereinafter in this judgment. Provisions of sections 4 to 13 are applicable to the grant of any prospecting licence or a mining lease for a major mineral. In exercise of the power under section 13, the Central Government made the Mineral Conces-sion Rules, 1960'-hereinafter called the Central Rules. The State Government was authorised by section 15 of the Act to make Rules for regulating the grant of prospecting licences (now quarry leases) and mini'ag leases in respect of minor minerals. The Government of Madhya Pradesh in exercise of the said power made the Madhya Pra-desh Minor Mineral Rules, 1961-hereinafter called the State Rules. In clause (iii) of Rule 2 'quarry lease' was stated to mean a mining lease for minor minerals.

GORELAL v. M. P. STATE (Untwalia J.} 879 Limestone is found in abundance in the State of Madhya Pradesh. The Central Government issued a notification dated the 1st June, 1958 in exercise of the powers conferred on them by clause (e) of section 3 of the Act declaring "limestone used for lime burning" as f_ a minor mineral. By a subsequent notification dated the 20th Sep-

tember, 1961 the description of the limestone as a minor mineral was changed and only "limestone used in kilns for manufacture of lime used as building material" was declared as a minor mineral. The t power to grant a quarry lease for limestone as a minor mineral or a

mining lease for lim.estone as a majm mineral rested in the State Government-the former under the State Rules and the latter under the Central Rules. Applicants had to apply to the State Government in the respective forms prescribed in the two Rules.

Gorelal Dubey-the appellant in Civil Appeal No. 785 of 1971 made an application on May 7, 1965 to the State Government for a quarry lease for "limestone for burning purpose" for a term of 10 years menti'oning in paragraph 3 of the application "minor minerals" against the 6th column "Minor minerals or minerals which the applicant intends to mine." The land in respect of which the application was made by the appellant measured 8.36 acres and is situated in viliage Bistara, District J abalpur. The firm, Ram Chander Badri Prasad Gaur, respondent no. 3 filed an application before the 'State Government on June 2, 1965 under the Central Rules in res-pect of the same area asking the Goverment to grant a mining lease to it for mining limestone as a major mineral. By their order dated November l, 1965 a quarry lease was granted by the State Govern-ment to the appellant and a Lease Deed was executed on November 10, 1965 including a special clause l 8A therein. Respondent no. 3 filed an application in revision before the Central Government. They allow_ed the revision by their order dated December 14, 1967 holding therem that in substance the application for a lease filed by the appel-lant was an application for major mineral and lease granted was also not for minJr mineral, hence the grant of the lease to the appellant was not competent. The Central Government therefore directed the State G?ve~n.ment to consi<:fer the application' of respondent no. 3 for grant of mmmg lease for !tmestone over a'n area of 8.36 acres in village Bistara.

The appellant filed a writ petition (M.P. No. 3/1968) in the Madhya Pradesh High Court to chailenge the order of the Central Govern-ment. The High Court dismissed the writ application by order dated c;. September 2, 1970 affirming the view of the Central Government that in substance and in: effect the application for and grant of lease to the appellant by the State Government was for a maior mineral and not a minor mineral. Since the other two points urged before the Hi~h Court were not pressed in argument before us, we need not make any reference to them. The appellant came to this Court against the order of the High Court. Special leave to appeal was granted but stay .wa~ refused: The result. was that the appellant's lease could remam m operat10n for a penod Of about 5 years and for the last 5 years, respondent nu. 3 who was granted a mining lease pursuant .IA to the order of the Central Government has been carrying on i:s

operation of mining limestone as a major' mineral.

During the pendency of the lease in favour -of the appellant, rate of royalty was enhanced by the State Government in exercise of their p·0wer tinder the State Rules. Demands of more royalty were made from the appellant by the State Govem;nent. He filed a writ petition (MP No. 32811968) in the High Court m July 23, 1968 to chaTienge the demand of the enhanced royalty. After the decision dated Sep-i tember 2, 1970 of the High Court in M.P. 3 of 1968 the appellant amended his M.P. 328/1968 by introducing paras 20A and 20B and a prayer (b )(i) in the writ application to say that he was liable to pay, in view of the decision of the High Court, royalty on the limestone quarried by him at a rate which were chargeable on limestone as a major mineral. On certain grounds, which are not necessary to be detailed here, the High Court allowed M.P. 328/1968 by its judgment and order dated December 14, 1970 and remanded the matter of quantification of the amount of royalty due from appellant to the authorities concerned. After remand the authorities determined the amount of royalty due from the appellant at Rs. 16,722/- and demand-ed the same from him. The appellant filed a writ petition (MP 390) · ;D 72) in the High Court to attack the demand of Rs. 16,722/- from him

and conte11ded that if royalty was charged from him on the basis of limestone as a major mineral then he had paid Rs. 36,00tl and odd more. The High Court by its judgment and order dated March 25, 1974 allowed M.P. 390/1972 and qu•ashed the demand of Rs. 16,722 made by the State Government from the appellant. The State of Madhya Pradesh filed an application for special leave to appeal from the said decision of the High. Court. During the course of hearing of Gorelal Dubey's appeal, special leave was granted by us and there-upon the appeal was registered and numbered as CA 1781/75.

Mr. Tarkunde appearing for the appellant in CA 785 /71 sub-mitted that in view of the decision of this Court in Smt. Rukmam) :F Bai Gupta v. The State Government of Madhya Pradesh, Bhopal and

others(') the decision of the Central Government as also of the High Court to the effect that the appellant application for and grant of lease to him was in substance a lease for a major mineral is erroneous. He submitted that the order should be quashed and the State Gov-ernment should be· directed to grant a fresh lease to the appellant for another period of 10 years or the balance of the said period as the ·G case may be. Mr. Sanghi appearing for respondent no. 3 endeavoured

to point out that the decision of this Court in Rukmani Bai's case (supra) was distinguishable and the decision of the Central Govern-ment and the High Court is correct. He further pointed out that the appellant had himself taken categorical stand in MP 328/1968 and MP 390/1972 that he had quarried limesto'ne as a major mineral, disposed it of as such and was liable to pay royalty only on tliat basis. Counsel further submitted that there was no renewal cl>ause in the appellant's lease and the period of 10 years having expired now

GORELAL V. M. P. STATE (Unlwalia l.) 881 the appellant was entitled to no relief in this Court. Mr. Ram Panj-wani, appearing for the State of Madhya Pradesh supported the ap-pellant on the question of the nature of his lease as being one for a minor mineral and pressed the Government's demand of Rs. 16,722 in C.A. 1781/75.

It appears even after the issuance of the notification dated Se~ tember 20, 1961 by the Central Government making a change in the B· description of the limesto11e as a minor mineral confusion persisted amongst the applicants for quarry lease of limestone as also the gov-ernmental authorities. They did not clearly appreciate the distinc-tion between the new description of limestone as a minor mineral given in 1961 notification iwd the one which had been mentioned in the J 958 notification. In Rukmani Bai's case the appellant had c: stated in column 6 of the application "limestone for burning as a minor mineral" arid the lease which was granted described it as "lime-stm1e for burning". Taking into consideration the totality of the facts it was held by this Court that the application and the grant of the lease was for limestone as a minor mineral. The facts of the instant case are almost identical, the only difference being that in column 6 of the application the present appellamt had merely stated D· 'minor minerals'. But reading the said expression with the expression "limestone·for burning purpose" mentioned in para 1 the same result follows. A contrary view expressed by the Central Go¥ernment and the High Court does not hold good. We, therefore, hold that the application of the appellant was for a minor mineral and the lease granted to him was for the same. After the adverse decision of the High Court, he was ill-advised to take the stand that he was liable to pav royalty on the amount of limestone quarried by him only as a major mineral. We were a bit surprised to know that the amount of royalty which is chargeable on limestone as a major mineral is lower than the o~e chargeable upon it as a minor mineral. Without fur the;· light it seems to us curious.

In paragraph 8 at page 996 jt was pointed out in Rukmani Bai's case by this Court with reference to the two notifications issued by the Central Government in the years 1958 and 1961 :

"The field of minor mineral, in so far as it concerned limestone, was 'narrowed down. Formerly limestone used for burning for manufacture of lime, whatever may be the I uses to which such lime may be put, whether as building

material or for other purposes, was within the definition of · 'minor mineral', but after the amendment, it was only lime-stone used for burnin:;r in kilm for manufocture 0f lim.:: used as buildi'ng material that was covered by the definition of minor mineral. When limestone is used for burning for manufacture of lime for industrial or sophisticated purposes otherwise than as building material, it would have to be of superior quality and hence after the amendment, it was classified as major mineral, leaving only limestone used for burnrng in kilns for manufacture of lime used as building

material to be regarded as minor mineral. But in both cases, whether under the origiml notification or the amend-ed notification, limestone was contemplated to be used for burning for manufacture of lime. The only difference was that in the former, buraing could be by any means or pro-cess and lime manufactured could be for any purpose in-cluding building material, while in the latter, burning could be only in the kilns and for manufacture of lime used only as building material and for 110 other purpose."

It was admitted at the Bar that ordinarily and generally only :._ limestone of inferior graqe is used as burning in kilns for manufac-ture of lime used as building material and limestone of superior grade is used either as such for industrial purposes or a high quality lime produced from it is used for purposes other than buildr,1g material including industria~ or 1sophisticated purposes. For the purpose of some clarification we may add a few words to point out the distinction between the two notifications. Limestone used for lime burning was a minor mineral under 1958 notification irrespec-tive of the process of buming or the quality of the lime it produced. After the 1961 notification only that type of limestone would be a, minor mineral which is capable of being used for burning in kilns for producing that qll'a!ity of lime which can ordinarily and generally be used as a building material. The leasee's responsibility ceases when the limestO\le quarried by him is used for burning in kilns producing the building material quality of lime. It would be beyond his control to see that the lime so produced was actually used as a building material. But then by and large the question of grant of a lease for quarring or mining the limestone will have to. be de-cided by the State Government on the basis of the quality of th,c limestone in a particular area. Mr. Sa·aghi endeavoured to place materials before us to show that in the area in question was to be found limestone of high grade and quality. He, therefore, submitted that the State Government should not be permitted to waste the national wealth of high grade limestone by granting a quarry lease as a minor mineral merely for the purpose of getting more royalty on it. We see force in this argument but it is not possible for us to decide the contentious question as to whether the J. limestone found in the area was such that could be used as a minor mineral or was fit to be used as a major mineral. If a major por-tion in the area is such that can be used as a mraor mineral. then a lease in accorda•nce with the State Rules will have to be granted and a special clause like clause l 8A may be provided therein if per chance some quality of limestone quarried in the demised area is found to be of high grade. Similarly if the major portion is found to be of high grade limestone, then a mining lease for mining lime-stone as a major mineral in accordance with the Central Rules will have to be gra•ated. A special clause mav be incorporated in such a lease also. In either event the lease will be liable to be canceUed if the lessee commits any breach of the terms of the lease incbding the one as to the purpose of using the limestone as a major or a minor mineral:

GORELAL y. M. P. STATE (Untwalia, !.) 883 Following Rukmini Bai's case we have held that the application .A filed by the appellant and the lease granted to him was for quarrying limestone as a minor mineral. But that does not entitle him to get the relief as he wants from this Court. A peculiar feature of this case, and which may occur in respect of some other area is that there were two applicants--one the a'1peil:'·:1 w.1.1 wanted the lease of limestone as a minor mineral and the other respondent no. 3 who wanted it as a major mineral. In such a situation it was not open to the State Government to· merely ignore the application of res-pondent no. 3 and grant lease to the appellant. Nor was it appro-priate for the Central Government on the view which has been found to be erroneous by us to direct the State Government to consi-der the application of respondent no. 3 alone. The proper course in such a situation is_to direct the State Government to consider both the applications, determine the question as to whether the quality of the limestone contained in the area in question is such that a lease to quarry it as a minor mineral should be granted or is such that a lease for mining it as a major mineral should be granted and then it should proceed to grant the lease. The proper course which ought .to have been followed has neither been followed nor has been directed to be followed.

For the reasons stated above, we allow C.A. 785 /71, quash the order of the High Court as also of the Central Government. The lease granted to respondent no. 3 pursuant to the said order shall cease to have effect. The State Government is directed to consider both the applications for grant of lease and dispose of the matter afresh in the light of this judgment. It will be open to the State Government to grant a lease for such period as it deems fit and proper to determine or for the balance of the period of the lease of the party to whom it may be granted. For the past period the appellant will be liable to pay royalty on the amount of limestone quarried by him during the subsistence of his lease on the basis of the royalty payable on a minor mineral and respondent no. 3, simi-larly, will be liable to pay royalty on the amount of limestone ex-tracted by it during the period of its lease on the basis of the rates chargeable on a major mineral.

Learned counsel for Gorelal Dubey during the course of argu-ment had offered to withdraw his writ petitions M.P. 328/68 and M.P. 390/1972 and to pay the sum of Rs. 16,722, if it be found that the lease granted to him was a lease for a minor mineral. In view of our finding recorded above, we allow CA 1781/75, set aside the orders of the High .Court made in the two writ petitions and illlow them to be withdrawn.

We shall make no order as to costs in any of the matters.