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State of Rajasthan Vs. Hari Shankar Rajendra Pal - Court Judgment

LegalCrystal Citation
SubjectCommercial
CourtSupreme Court of India
Decided On
Judge
Reported inAIR1966SC296; [1965]3SCR402
ActsRajasthan Minor Mineral Concession Rules, 1955 - Rules 30, 19 to 32 and 33 to 42; Constitution of India - Article 226; Mines and Minerals (Regulation and Development) Act, 1948 - Sections 5; Mineral Concession Rules, 1949 - Rules 3 and 4
AppellantState of Rajasthan
RespondentHari Shankar Rajendra Pal
Excerpt:
.....of original lease containing with it option of renewal - rules under chapter 4 applicable to mining lease granted under chapter 5 - appeal before supreme court - rule 30 dealing with period of lease applicable to said chapters - when period of lease already fixed then rules 38 and 39 applicable - at the desire of applicant period less than 5 years can be fixed - certain guarantees required to be fulfilled by lessee for extension of lease - high court right in view of expressed desire of extension by lessee - renewal of lease under rule 30 requires option of lessee to obtain another extension for an equivalent period - such option to be incorporated at time of first extension - supreme court held, high court competent to make decision in accordance with requirements of proviso of..........application in respect of thesame land. these rules cannot, by their nature, apply to the grant of miningleases by auction or tender or by any other method.9. rule 24 provides for the register of mining leases. most of theparticulars to be noted in this register relate to the grant of mining leaseson application but some of the particulars could be entered with respect to themining leases granted by following the other procedure and therefore itsprovisions can partially apply to the mining leases granted under chapter v.rule 25 will also usually apply to applications only, as in the case ofgranting a mining lease otherwise, the government would have ordinarily alreadydecided the area for which the lease is to be given. rule 26 lays down arestriction on the length and breadth of an area.....
Judgment:

Raghubar Dayal, J.

1. This appeal, on certificate granted by the Rajasthan High Court, raisesthe question of the applicability of the provisions of Chapter IV and therebyof r. 30 of the Rajasthan Minor Mineral Concession Rules, 1955, hereinaftercalled the rules, to the grants of mining leases under the provisions ofChapter V of the rules.

2. The facts leading to this appeal are briefly these. The respondentobtained the mining lease for extracting sand-stone from the mines in certainarea from the Government of Rajasthan in 1956. The lease was granted as aresult of auction. The period of the lease was from April 1, 1956 to July 31,1959. The respondent applied for extension of the period upto two years in viewof the mandatory nature of the main provision of r. 30 and simultaneously alsoapplied for the renewal of the lease for a further period in accordance withthe provisions of the proviso to r. 30. The first prayer was refused and theState Government extended the period of the lease at first by six months andlater by another two months. The respondent thereafter filed a writ petitionunder Art. 226 of the Constitution in the High Court and prayed for issue of awrit of mandamus directing the striking down of the order of the Governmentrenewing the lease for 8 months and directing the State of Rajasthan further toextend the lease in the first instance for two years from July 30, 1959 tobring it in conformity with the period of lease specified in r. 30 and torenew, after the expiry of such extended period, for a further period of 5years under r. 30 of the rules. The State of Rajasthan appellant, contested thepetition on the ground that the provisions of chapter IV of the rules did notapply to the grant of mining leases by auction or tender provided for byChapter V of the rules and that in any case the initial period short of 5 yearsmust be deemed to have been at the desire of the respondent and that anyfurther extensions of the period of the lease under the proviso was in thediscretion of the Government and consequently, the respondent could not claimto have the period of the lease extended for a period of 5 years.

3. The High Court held that the provisions of Chapter IV of the rules wereapplicable as far as possible to the grant of mining leases by auction underChapter V that though the State Government had to give a lease for 5 years inview of r. 30, yet the shorter period of the lease in favour of the respondentmust, in the circumstances, be deemed to have been at his request and that therespondent was entitled to an extensions of the lease by a further period of 5years in accordance with the provisions of the proviso. It therefore directedthe State Government to renew the lease for a period of 5 years from the expiryof the original lease with option of further renewal, if so desired, by anotherperiod of 5 years subject to the conditions mentioned in r. 30. It is againstthis order that this appeal has been field.

4. Two questions are raised for the appellant in this Court. The first isthat the provisions of Chapter IV of the rules do not govern the grant ofmining leases by auction under the provisions of Chapter V of the rules. Theother is that the proviso to r. 30 gives discretion to the State Government toextend the period of the lease for any period not exceeding 5 years that it isnot mandatory that the State Government must extend the lease by a period of 5years as held by the High Court. We are of opinion that the High Court has cometo a right conclusion on these two points.

5. Section 5 of the Mines and Minerals (Regulation and Development) Act,1948 (Act LIII of 1948) empowered the Central Government to make rules, bynotification in the official Gazette, for regulating the grant of mining leasesor for prohibiting the grant of such leases in respect of any mineral in anyarea. In the exercise of its power the Central Government framed the MineralConcession Rules, 1949, hereinafter referred to as the Central rules. Clause(ii) of r. 3 of the Central rules defined 'minor mineral' to mean 'buildingstone' etc., which admittedly included sand-stone. Rule 4 stated that the ruleswould not apply to minor minerals the extraction of which would be regulated bysuch rules as the State Government might prescribe. The State of Rajasthan madethe rules in 1955 in the exercise of the powers conferred by r. 4 of theCentral rules.

6. Chapter IV of the rules deals with grant of mining leases and consists ofRules 19 to 32. Chapter V deals with grant of mining leases and royaltycollection contracts by auction or by inviting tenders or by other methods andconsists of Rules 33 to 42. Apart from the heading of Chapter IV being in generalterms and so applicable to the grant of all mining leases by whatever process,a comparison of the provisions of rules in Chapter IV and those in Chapter Vshows that all the incidents of a grant of a mining lease contemplated andprovided for in Chapter IV are not provided for by Chapter V. This leads to theirresistible conclusion that matters not provided for by rules in Chapter Vwith regard to mining leases will be covered by provisions relating to thosematters in Chapter IV, as these provisions deal with the essential incidentsaffecting grant of mining lease.

7. We may therefore go through the provisions of Chapter IV to have acomprehensive view of what the rules provide and to see whether all of them aresuch that the Legislature could have intended their not applying to leasesgranted under Chapter V or whether they, by their nature, can apply to leasesgranted under Chapter IV only. Rule 19 deals with restrictions on grant ofmining leases. There is no corresponding rule in Chapter V. It is inconceivablethat the restrictions mentioned in r. 19 be not applicable to the grant ofmining leases by auction or tender or any other method. The matters ofsubstance are the contents of the lease, the persons to whom the minerals aboutwhich leases can be granted and not the procedure to be followed in grantingthe lease. Chapter IV deals with the grant of mining leases on applications forsuch a grant. Chapter V mainly deal with grant of mining leases by auction orby inviting tenders or by other methods. It is clear that the procedure to befollowed for the grant of leases if left to the discretion of the Governmentthough,, ordinarily, in the absence of general or special orders, the procedurelaid down in Chapter IV is to be followed. Sub-r. (3) of r. 33 provides thatleases by public auction or tender under sub-r. (1) shall be given only in sucha case as the Government may, by general or special order, direct and r. 42gives discretion to Government to adopt any other method for leasing out minormineral deposits in the interest of industry and development of the deposit.The restriction laid down by r. 19 are that no mining lease is to be granted inrespect of any minor mineral notified by Government in that behalf, that nomining lease for the notified mineral will be granted to a person unless he holdsa valid certificate of approval and that no mining lease shall be granted to anindividual person unless he be a citizen of India except with the priorapproval of Government. These restrictions are of a general nature and salutaryin effect and the Legislature, in our view, could not have made theminapplicable to the grant of mining leases under the rule in Chapter V.

8. Rules 20 to 23 applicable to applications for grant of mining leases.They mention the person to whom an application is to be made, the fee which isto accompany such application, what the application should contain and howpriority is to be given if there be more than one application in respect of thesame land. These rules cannot, by their nature, apply to the grant of miningleases by auction or tender or by any other method.

9. Rule 24 provides for the Register of Mining Leases. Most of theparticulars to be noted in this Register relate to the grant of mining leaseson application but some of the particulars could be entered with respect to themining leases granted by following the other procedure and therefore itsprovisions can partially apply to the mining leases granted under Chapter V.Rule 25 will also usually apply to applications only, as in the case ofgranting a mining lease otherwise, the Government would have ordinarily alreadydecided the area for which the lease is to be given. Rule 26 lays down arestriction on the length and breadth of an area to be leased, but givesdiscretion to the Government to relax the provisions of the rule. This rule isof general application, subject to the discretion in the Government to relaxits provisions and there is no reason why it would have been made in applicableto mining leases granted under Chapter V. Rule 27 provides that the boundariesof the area covered by a mining lease shall run vertically down below thesurface towards the center of the earth. Such a specification of the boundariesof the area is very essential in connection with mining leases and the ruleabout it must apply to all mining leases granted under Chapter V.

10. Rule 28 deals with deposit of security and applies to applicants formining leases and not to those who are to get leases under Chapter V. There isa specific provision for security under r. 37(iv), in Chapter V.

11. Rule 29 deals with transfer of mining leases and provides that a lesseewith the previous sanction of the Government and subject to certain conditionscould transfer his lease or any right or interest therein. There is nocorresponding rule in Chapter V. This indicates that r. 29 will apply to thetransfer of mining leases granted under Chapter V. Three is no good reason whysuch a lessee be deprived of his right to transfer or be free from anyrestriction laid down in r. 29. Rule 30 deals with the period of lease and isthe rule which is to be considered by us.

12. Rule 31 lays down the conditions subject to which the mining lease isgranted. This rule has 24 clauses dealing with various matters. It is clearfrom r. 41 in Chapter V dealing with the execution of lease that the terms andconditions mentioned in r. 31 would be included in the lease executed by thelessee to whom a mining lease is granted under Chapter V. Of course, r. 41provides that such terms and conditions would be so modified as might benecessary by reason of the provisions of Rules 33 and 34.

13. Sub-r. (2) of r. 33 provides that in cases of grant of mining leases byauction or by inviting tenders, the annual dead-rent of the lease would bedetermined in the auction or by tender as the case may be and may exceeds therate given in the Second Schedule to the rules. Rule 34 deals with payment ofroyalty through the contractor for royalty collection. These provisions of Rules33(2) and 34 would require modification in conditions (3) and (4) of r. 31.

14. It has been urged that the specific mention of r. 31 in r. 41 indicatesthat the other rules in Chapter IV are not applicable to the grant of miningleases under Chapter V. We do not agree and are of opinion that the specificmention of r. 31 is made in r. 41 in view of the fact that it was to apply withsuitable modifications. Rules in Chapter IV which apply as they stand dorequire no specific mention for their applicability to the grant of miningleases under Chapter V.

15. Rule 32 deals with the currency of the lease and provides that thecurrency of the lease shall be from the date of communication to the partyunless otherwise stated, that the lessee shall have no right to continue workor to accumulate stock on or after the date of termination of the lease howeverunless otherwise sanctioned by Government and that all accumulated stock andimmovable property left in the leased out area after the date of expiry of thelease shall be deemed to be Government property. The provisions of this ruleare essential to define the currency of the mining lease granted under ChapterV and to the rights of the lessee and the State in regard to continuing thework after the date of termination of the lease or to the matter lying in theleased out area after the expiry of the lease. There is no corresponding rulein Chapter V. Rule 32 must be deemed to apply to the leases granted underChapter V.

16. It would thus appear that the provisions of Rules 19, 26, 27, 29 and 32,by their nature, must apply to the leases granted under Chapter V as they areexpressed in general terms and can apply to all mining leases. If they were notintended to apply to mining leases granted under Chapter v. the legislaturewould have made an express provision about it and would have also made somesuitable corresponding provisions for the leases granted under Chapter V.

17. We are therefore of opinion that the contention that the rules underChapter IV do not apply to mining leases granted under Chapter V is not soundand that the High Court rightly held that they do apply so far as applicable tomining leases granted under Chapter V.

18. Rule 30 deals with the period of lease. This rule will apply to leasesgranted under Chapter V both because the rules under Chapter IV apply to suchleases and because there is no corresponding rule in Chapter V. Reference hasbeen made to Rules 38 and 39 in Chapter V which deal with certain payments if theperiod of lease is not more than 1 year or is more than one year respectively.The fixing of the period of the lease is an essential term of the lease. Rule32 in Chapter IV provides when the lease is to commence. The lease should alsoprovide the time when it should terminate. That can be done either by settingdown the actual date or by expressing the period of the lease. Rules 38 and 39provide for different matters. They apply when the period of the lease isalready fixed under the terms of the lease and in accordance with the rules.

19. The next matter to be considered is the construction of r. 30 whichreads :

'Period of lease - A mininglease may be granted for a period of 5 years unless the applicant himselfdesires a shorter period;

Provided that the period may beextended by the Government for another period not exceeding 5 years with optionto the lessee of renewal for another equivalent period, in case the lesseeguarantees investments in machinery, equipments and the like, at least to thetune of 20 times the value of annual dead-rent within 3 years from the grant ofsuch extension. The value of the machinery, equipment and the like shall bedetermined by the Government. Where the lease is so renewed, the dead rent andthe surface rent shall be fixed by the Government within the limits given inthe Second Schedule to these rules, and shall in no case exceed twice theoriginal dead rent and surface rent respectively, and the royalty shall becharged at the rates in force at the time of renewal'.

20. It is urged for the appellant that the State Government has discretionto fix the initial period of the lease as well as to fix the period of theextension of the lease after the expiry of the initial period. The High Courtdid not agree with this submission of the State and, we think, rightly.

21. The word 'may' in the main provision of the rule must mean 'shall' andmake the provision mandatory. This is obvious from the last portion of theprovision. If the State Government had discretion to fix any period of thelease, the last portion of the provision would be redundant. The Governmentcould fix the period of the leases at any period shorter than five years. Butthe provision requires the fixing of a period shorter than 5 years only whenthe applicant desires a shorter period. The period of the lease therefore canbe shorter than five years only when the applicant desires and not when theGovernment desires. Government must fix the period of the lease at 5 years inthe absence of any expression of desire by the applicant for taking the leasefor a shorter period.

22. The word 'may' in the proviso in regard to the extension of the periodby Government should also be construed as 'shall', so as to make it incumbenton Government to extend the period of the lease if the lessee desires extension.Of course no question for the extension of the lease can arise if the lesseehimself does not wish to have the lease for a further period. It is on accountof this option existing in the lessee that the word 'may' has been used in thiscontext. The lessee has been given a further option to have the lease extendedby another five years but such an option is to be respected only if he givesthe guarantee referred to in the proviso. If he is not prepared to give such aguarantee, he cannot exercise the option for the extension of the lease and thelease must automatically expire at the end of the first extended period.

23. The first extension has to be for five years. Government has no optionin that regard as well. This appears from what is provided in connection withthe option of the lessee for a second extension. The second extension, at hisopinion, is to be for a period equivalent to the period of the first extension.The guarantee to be given is to the effect that the lessee would invest inmachinery etc., at least to the tune of 20 times the value of the annualdead-rent within 3 years from the grant of such extension. There is no point intaking a guarantee to make certain investments within three years if the secondextended period of the lease is of a shorter duration as it can be ifGovernment has a discretion in granting extension for a period shorter than 5years. If the first extension be for less than three years the second extensioncannot be for a longer period. If the expression 'such extension' refers to theextension on the exercise of the option of the lessee at the end of the firstextension, it would be a preferable construction of the proviso to hold thatthe Government is bound to extend the period of the lease for five years at theexpiry of the initial period of the lease and that the lease will have theoption for renewal of the lease for another five years in case he guaranteesthe requisite investment as mentioned in the proviso. Another way of looking atthe provision - and a better way - is that the expression 'such extension'refers to the first extension which the Government grants at the expiry of theinitial term of the lease. This means that at the time of granting the firstextension the lessee has to choose whether he should also ask for the optionfor a second extension. The option would then be an integral part the agreementabout the first extension. This is also indicated for the language of theproviso linking the period of extension with the option for renewal of thelease for an equivalent period. If no option as such is given at the time andis not a term of the lease, the lessee may not be able to ask for a secondextension at the end of the first extended period of the lease. When he securesthe exercise of such an option as a term of the lease, he has to guarantee thatwithin the first three years of the extended period of the lease he will makethe heavy investment mentioned in the proviso with the resultant confidencethat he will have undisturbed lessee rights for a period of 10 years for theexpiry of the initial term of the lease. Whichever construction be put, withrespect to the time when the term about option is to be settled between theparties, it must follow that the period of the first extension must be fiveyears and not less.

24. We are further of opinion that the High Court is right in holding thatthe respondent's taking the lease for a period upto July 31, 1959 must amountto his expressing a desire for having a lease for that period. If he did not sodesire, he need not have bid and taken the lease for the period for which itwas to be given by auction.

25. It has been argued for the State that the High Court granted relief tothe respondent in excess of what he had prayed, inasmuch as the High Court haddirected the Government to renew the respondent's first lease for a period of 5years with option to further renewal if so desired for another period of 5years subject to the condition mentioned in r. 30 when the respondent had notprayed for any direction with respect to the option for a second extension ofthe lease. The contention is not sound. The relief claimed after the expiry ofthe period of the first lease, which according to the respondent, was also tobe extended by two years, reads :

'and then, after the expiry of the period of fiveyears the lease be renewed for a period of five years under Rule 30 ofRajasthan Minor Mineral Concession Rules, 195'.

26. The renewal was to be under r. 30. Rule 30 itself requires extension ofthe lease with option in the lessee for obtaining another extension for anequivalent period. This option must be a term of the lease and therefore mustbe incorporated in the lease at the time when the first extension is granted.The prayer therefore should be deemed to include a prayer for an extension of 5years with necessary option. Even if the prayer was not so made, the High Courtwas competent to make the direction in accordance with the requirements of theproviso to r. 30. The direction for renewal is, in our view, in full accordancewith what the proviso requires.

27. The result is that the appeal fails and is dismissed with costs.

28. Appeal dismissed.


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