G.P. Singh, J.
1. This petition is by a company which held a coal mining lease of certain lands in tahsil and district Chhindwara. The company made defaults in payment of royalty and dead rent and the Director of Geology and Mining issued notices calling upon the company to pay the dues within sixty days from the receipt of the notices and intimating that if the dues were not paid within that period the lease would be terminated. In all six such notices were issued. As regards the first five notices, last of which was issued on 19th October 1964, the company in each case paid the dues beyond sixty days from the receipt of the notice. As regards the sixth notice, which was issued on 21st May 1965, the company fully complied with its terms and deposited all the dues on 16th July 1965 within sixty days. In the meantime by an order passed on 29th June 1965, the Government acting under Rule 27 (5) of the Mineral Concession Rules 1960 cancelled the petitioner's lease and forfeited the security deposit on the ground that the earlier notices were not complied with in time. Against this order the petitioner went up in revision to the Central Government which was dismissed on 8th June 1966. The petitioner then filed this petition under Articles 226 and 227 of the Constitution calling in question the order of the State Government cancelling the lease and the order of the Central Government dismissing the revision.
2. The only point urged before us by the learned counsel for the petitioner is that after the sixth notice was issued on 21st May 1965 calling upon the petitioner to pay up the dues of royalty and dead rent in terms of the lease within a period of sixty days and intimating that the lease will be cancelled in case the payment is not made within that time, the previous defaults under first five notices must be taken to have been waived and it was not open to the Government to cancel the lease on the basis of the earlier defaults.
3. Under the Law of landlord and tenant it is well settled that if the lessorwants to take advantage of any breach of any term or condition so as to enforce his right to forfeit the lease he must not do anything after the breach which amounts to an acknowledgment of the continuance of the lease. Any act on the part of the lessor showing an intention to treat the lease as subsisting, as Section 112 of the Transfer of Property Act puts it, amounts to waiver of forfeiture or more appropriately waiver of the breach which, had the lessor so elected, would have enabled him to forfeit the lease. The general law of waiver of forfeiture has been applied to mining leases (Rex v. Paulson, 1921-1 AC 271). The question then is whether Rule 27 (5) of the Mineral Concession Rules 1960, under which the petitioner's lease was cancelled, contains this principle of waiver or is inconsistent with it. Rule 27 (5) reads as follows:
'27 (5) If the lessee makes any default in payment of royalty as required by Section 9 or commits a breach of any of the conditions other than those referred to in Sub-rule (4), the State Government shall give notice to the lessee requiring him to pay the royalty or remedy the breach, as the case may be, within 60 days from the date of the receipt of the notice and if the royalty is not paid or the breach is not remedied within such period, the State Government may, without prejudice to any proceeding that may be taken against him, determine the lease and forfeit the whole or part of the security deposit.'
It is pertinent to note that the first limb of the sub-rule which enjoins the Government to give notice requiring the lessee to pay the royalty or remedy the breach uses the language--'shall give notice', whereas the second limb of the sub-rule which empowers the Government to determine the lease in case the notice is not complied with uses the language--'may.....determine the lease'. The use of the word 'may' in the context of the determination of the lease and use of the word 'shall' in the earlier portion of the rule in the context of notice is clearly indicative that the Government is not bound to determine the lease even if the notice be not complied with in time. It is thus open to the Government either to elect to determine the lease or to elect not to determine it. The choice of action emerging from the enabling 'may' clearly brings in the principle of waiver. In our opinion if the Government, after a notice requiring the lessee to make payment or remedy the breach is not complied with does any act which shows an intention to continue the lease it would amount to an implied waiver of the right to forfeit or determine the lease on the ground of non-compliance of the notice. It is also clear that demand of rent accruing dueafter the lapse, which would have given rise to forfeiture, if the demand be unqualified, amounts to waiver. [Woodfall, 26th Edition Vol. 1 P. 944, Kristo Nath v. T.F. Brown, (1887) ILR 14 Cal 176 at p. 184.]
4. We may now revert to the facts of the instant case. The last notice in respect of which default was committed was issued, as stated earlier, on 19th October 1964. According to the statement of account exhibited as Annexure RI by the respondent State, this notice related to the dead rent and royalty falling due on 15th July 1964. The default was committed after expiry of sixty days from this notice i. e. hearabout 19th December 1964. This was the last default as other defaults were in respect of notices issued earlier to this notice. Instead of exercising the right of forfeiting the lease on footing of the default committed on or about 19th December 1964, another notice was issued on 2lst May 1965 demanding dead rent and royalty which became payable on 15th March 1965. This demand can only be explained on the footing that the lease continued till 15th March 1965 and the default committed on 19th December 1964 or other earlier default were not given effect to by exercising the right of forfeiture and the Government elected to forgo the defaults and to continue the lease. It was then not open to the Government to cancel the lease on 29th June 1965 on the basis of these earlier defaults which were waived by issue of demand notice of 21st May 1965. This last notice was complied with and there was no question of default or forfeiture thereafter. In our opinion by demanding rent and royalty for a period subsequent to the earlier defaults which could have resulted in forfeiture, the Government waived the defaults which could not thereafter be made basis of cancellation of the lease. The order issued on 29th June 1965 cancelling the lease was therefore in excess of the power conferred by Rule 27 (5).
5. The petition succeeds and is allowed. The order of the State Government cancelling the lease and the order of the Central Government dismissing the revision are quashed. The petitioner will be entitled to recover the costs of this petition from the State Government. Counsel's fee Rs. 150/- if certified. The security amount will be refunded to the petitioner.