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The Jaipur Udyog Ltd., Sawaimadhopur and ors. Vs. the Union of India (Uoi) and ors. - Court Judgment

LegalCrystal Citation
SubjectCommercial
CourtRajasthan High Court
Decided On
Case NumberCivil Writ Petn. Nos. 1854 and 1949 of 1970 and 11 of 1971
Judge
Reported inAIR1972Raj129; 1972()WLN43
ActsMines and Minerals (Regulation and Development) Act, 1957 - Sections 9(3); Constitution of India - Article 226 - Order 29, Rule 1
AppellantThe Jaipur Udyog Ltd., Sawaimadhopur and ors.
RespondentThe Union of India (Uoi) and ors.
Appellant Advocate K.K. Jain and; R.L. Maheshwari, Advs.,; A.L. Mehta,
Respondent Advocate Raj Narain, Addl. Adv. General and; S.K. Tewari, Dy. Govt. Adv.
DispositionPetitions allowed
Cases ReferredAssociated Cement Co. Ltd. v. Union of India
Excerpt:
.....on 29.1.70--whether provision of section 9(3)(b) are violated.;the notification issued by the central government in 1968 whereby two grades of limestone were declared and the royalty was enhanced in respect of the superior grade of limestone has the effect of enhancing the realty in respect of limestone under section 9(3) of the act and this notification issued by the central government would preclude it from enhancing royalty in respect of this very mineral for a period of four year. enhancement of royalty in respect of one grade of a mineral would mean the enhancement of royalty in respect or that mineral and therefore further enhancement of royalty even respect of other grade would be governed by proviso (b) to sub-section (3) us section 9 of the act. in these circumstances the..........in the second schedule in respect of that mineral. sub-section (3) of this section empowers the central government to amend the second schedule by issuing a notification so as to enhance or reduce the rate at which royalty shall be payable in respect of any mineral with effect from such date as may be specified in the notification, but a rider has been put by the statute on this power of the central government by adding a proviso thereto which lays down that the central government shall not (a) fix the rate of royalty in respect of any mineral so as to exceed twenty per cent of the sale price of the mineral at the pit's head, or (b) enhance the rate of royalty in respect of any mineral more than once during any period of four years.3. when the said act came into force from 1st of.....
Judgment:
ORDER

V.P. Tyagi, J.

1. All the three petitioner companies in these three separate writ petitions are quarrying lime-stone from the areas leased out to them and therefore all of them have challenged the validity of the notification dated 29th January, 1970, issued by the Union of India whereby item No. 8 in the Second Schedule of the Mines and Minerals (Regulation and Development) Act, 1957 (hereinafter called the Act) has been amended. Since common questions of law are raised in all these petitions, I propose to dispose them of by one judgment.

2. Petitioner companies have been holding areas in their respective fields of operation under the mining lease granted to them for quarrying limestone. The contention of the petitioners is that the limestone quarried by each one of them is of inferior grade with less than 45% calcium oxide. Section 9 of the Act lays down that the holder of a mining lease shall pay royalty on the mineral in accordance with the rates for the time being specified in the Second Schedule in respect of that mineral. Sub-section (3) of this section empowers the Central Government to amend the Second Schedule by issuing a notification so as to enhance or reduce the rate at which royalty shall be payable in respect of any mineral with effect from such date as may be specified in the notification, but a rider has been put by the statute on this power of the Central Government by adding a proviso thereto which lays down that the Central Government shall not (a) fix the rate of royalty in respect of any mineral so as to exceed twenty per cent of the sale price of the mineral at the pit's head, or (b) enhance the rate of royalty in respect of any mineral more than once during any period of four years.

3. When the said Act came into force from 1st of June, 1958, the rate of royalty specified for limestone in the Second Schedule was as follows:

5% of the sale price at the pit's mouth subject to a minimum of 37 paise per tonne.

4. In the year 1962 this item in the Second Schedule was amended by the Central Government by issuing a notification on 31st of October, 1962, whereby the rate of royalty for limestone was fixed thus:

Re. 0.75 per tonne, but subject to a rebate of Re. 0.38 per tonne to be given on limestone beneficiated by froth floatation method.

5. The system of granting rebate on the royalty of limestone as was provided in 1962 was, however, abolished in the year 1968 and the Central Government by issuing another notification dated 29th June, 1968, amended item No. 8 of the Second Schedule as follows:

'8. Limestone - (a) Superior grade with 45 % or more CaO.one rupee twenty five paise per tonne.'(b) Inferior grade with less than 45% CaO.Seventy-five paise per tonne.'

6. By issuing the impugned notification dated 29th January, 1970, the Central Government abolished the two grades of limestone as specified in the Second Schedule and laid down that henceforward item No. 8 in the Second Schedule shall be read as follows:

'8. Limestone--One rupee and twenty-five paise per tonne.'

7. The grievance of the petitioner companies is that by issuing the impugned notification the two grades of limestone have been abolished by the Central Government and the result of it is that the rate of royalty on the inferior grade of limestone having content of less than 45% CaO is enhanced from Re. 0.75 per tonne to Rs. 1.25 per tonne. According to the petitioners, this power of enhancing therate of royalty could not be used by the Central Government before the expiry of four years from 29th June, 1968, when the last notification was issued by the Central Government in the exercise of its power under proviso (b) to Sub-section (3) of Section 9 of the Act. In these circumstances, this last notification is challenged on the ground that the Central Government had no authority to enhance the rate of royalty on limestone of inferior grade before the expiry of four years from the date of the last notification issued in June, 1968. A challenge has also been thrown to this notification on the ground that it is ultra vires Article 14 of the Constitution. It is, therefore, prayed that by issuing an appropriate writ, order or direction the notification issued by the Central Government on 29th of January, 1970, be declared illegal and the notices issued by the Government in pursuance of the said notification demanding royalty from the petitioners at the enhanced rate be quashed; and the respondents be directed not to realise royalty from the petitioners at the rate of Rs. 1.25 per tonne.

8. The Union of India has not filed any reply to these writ petitions.

9. The State Government along with its officers have, however, joined issue with the petitioners and in their reply it has been averred that the petitioners have been paying royalty at the rate of Re. 0.75 per tonne since 10th of November, 1962, as the limestone was not beneficiated by froth floatation method and hence they were not entitled to any rebate of 38 paise per tonne according to the rates prescribed in the Second Schedule. Therefore, it cannot be said that the effect of the impugned notification is to enhance the rate of royalty on inferior grade limestone within a period of four years. According to the reply of the respondents, the petitioners have been made to pay the enhanced rate of royalty after eight years as they have been regularly paying the royalty on limestone extracted by each one of them at the rate of 75 paise per tonne since 1962. By the notification dated 29th of June, 1968, the rate of royalty was enhanced according to the respondents only on limestone having content of 45% or more than 45% CaO and that rate of royalty is maintained by the impugned notification and, therefore, it cannot be said that the Central Government acted in contravention of the proviso (b) to Sub-section (3) of Section 9 of the Act. According to the respondents, the rate of royalty in respect of inferior grade of limestone containing less than 45% CaO was enhanced by the Central Government after 1962 for the first time in the year 1970 when the impugned notification was issued after a lapse of a period of eight years.

10. In the first two petitions, a preliminary objection has been raised by the respondents that the petitions have been filed by unauthorised persons as they have not been signed by the Secretary or the Director of the company concerned and, therefore, the petitions are not maintain-able. Besides this objection, it is contended that under proviso (b) to Section 9(3) the Central Government is empowered to enhance the rate of royalty once within a period of four years and even if the 1968 notification is considered to be a notification in the enhancement in the rate of royalty in respect of inferior grade of limestone, the Union of India can enhance that rate of royalty once within four years, and, therefore, it cannot be said that the impugned notification was issued in violation of the provisions of Clause (b) of the proviso to Section 9(3) of the Act.

11. The petitioners have limited their challenge to the impugned notification only to one point that it is violative of the provisions of Section 9 of the Act. The other grounds have not been pressed before this Court. Therefore, the short question to be decided by this Court is whether by issuing the impugned notification in the year 1970 the respondent No. I has violated the provisions of Clause (b) of proviso to Section 9(3) of the Act. It will be relevant to reproduce Section 9 of the Act:

'S. 9. Royalties in respect of mining leases-- (1) The holder of a mining lease granted before the commencement of this Act shall, notwithstanding anything contained in the instrument of lease or in any law in force at such commencement, pay royalty in respect of any mineral removed by him from the leased area after such commencement, at the rate for the time being specified in the Second Schedule in respect of that mineral.

(2) The holder of a mining lease grant ed on or after the commencement of this Act shall pay royalty in respect of any mineral removed by him from the leased area at the rate for the time being specified in the Second Schedule in respect of that mineral.

(3) The Central Government may, by notification in the Official Gazette, amend the Second Schedule so as to enhance or reduce the rate at which royalty shall be payable in respect of any mineral with effect from such date as may be specified in the notification:

Provided that the Central Government shall not-

(a) fix the rate of royalty in respect of any mineral so as to exceed twenty per cent of the sale price of the mineral at the pit's head, or

(b) enhance the rate of royalty in respect of any mineral more than once during any period of four years.'

12. Sub-section (3) of this section empowers the Central Government to amend the Second Schedule so as to enhance or reduce the rate of royalty in respect of any mineral by issuing a notification but, according to Clause (b) of the proviso the Central Government cannot enhance such royalty more than once during any period of four years.

13. Mr. Jain appearing on behalf of the Jaipur Udyog Limited has argued that the main object to put this rider on the power of the Central Government to amend the Schedule is to see that persons who are engaged in the business of working the mines or quarries and extracting mineral from them may have certain degree of confidence that the Government shall not put an extra burden on their resources by enhancing the royalty at least for a period of four years. He further argued that in carrying out the working of a mine or a quarry the lessee has to invest considerable amount and therefore the nature of business requires certain guarantee that his terms of contract shall not vary which may put an extra burden on him towards the payment of the royalty at least for a period of four years. According to him, the mandate of the law is that the Central Government having once fixed the royalty by making amendment in the Second Schedule shall not enhance that royalty more than once during any period of four years, and this period is to be reckoned from the date when the Schedule has been amended last time by the Central Government by exercising the power under Section 9 of the Act. The argument of learned counsel for the petitioners on this basis is that in the year 1968 the lime stone was divided into two categories and that the royalties were fixed by the Central Government for each category separately. If these categories are now permitted to be abolished within a period of four years, then, according to learned counsel, it would tantamount to enhancing the rate of royalty in respect of the inferior category of limestone on which the lessees had to pay royalty at the rate of Re. 0.75 per tonne only. It is, therefore, urged by learned counsel for the petitioners that the rate of royalty on inferior category of limestone cannot be enhanced by adopting the device of abolishing that category within a period of four years.

14. Mr. Raj Narain, on the other land, has urged that the petitioner companies have been paying royalty on the inferior grade of limestone since 1962 when the Schedule was amended by the Central Government on 29th of June, 1962, at the rate of 75 paise per tonne and the categories when made for the first time in the year 1968 did not increase the rate of royalty on the limestone extracted by the petitioner companies though the effect of that amendment was that limestone of superior category having content of 45% or more than 45% CaO had to pay royalty at the enhanced rate of Rs. 1.25 per tonne.Under these circumstances, the contention of the learned counsel for the respondents is that the rate of royalty by abolishing the categories of inferior grade of limestone is increased after the lapse of a period of eight years and, therefore, it cannot be said that the impugned notification in any manner violates the provisions of Clause (b) of the proviso to Sub-section (3) of Section 9 of the Act.

15. From the above facts it is clear that the Central Government for the first time divided limestone into two categories in 1968 and different rates of royalty were prescribed for these two categories. Prior to this the system of charging royalty on limestone was different. Though there were no distinct categories yet rebate was allowed on that limestone which was beneficiated by froth floatation method. The question of getting any advantage of this rebate system, however, does not arise in the case of the petitioners as they have been paying the royalty at the rate of Re. 0.75 per tonne on the limestone extracted by them since 1962. In 1968 the Central Government, however, changed the system of realising royalty by amending Item 8 in Schedule II to the Act. The effect of this amendment was that the limestone was divided into two categories, viz., superior grade and having contents of CaO to the extent of 45% or more and the inferior grade of less than 45% CaO contents. It is a matter of chance that the limestone extracted by the petitioners fell within the inferior category and, therefore, the rate of royalty under the 1968 notification practically remained the same, i.e., they continued to pay the royalty at the rate of Re. 0.75 per tonne. It cannot, however, be denied that the effect of this notification of 1968 is that the rate of royalty in respect of the superior grade of limestone was enhanced from Re. 0.75 to Rs. 1.25 per tonne.

16. The question which arises for the determination is whether by issuing a notification in the year 1968, the Central Government had exercised the power of enhancing the rate of royalty in respect of the mineral known as limestone or not and if it did so, whether it can further enhance the rate of royalty on the limestone within a period of four years from the date when the notification was issued by the Central Government on 29th of June, 1968, charging royalty on the superior grade of limestone at the rate of Rs. 1.25 per tnnne and inferior grade at the rate of Re. 0.75 per tonne.

17. It will be relevant to mention here that in the case of the Jaipur Udvog Limited, the respondents, on the inspection of the record of the company, have discovered that from certain quarries owned by the company the limestone extracted by the company falls within the category of superior grade on which the company should pay royalty at the enhance rate of Rs. 1.25 per tonne; but the Jaipur Udyog Limited and the other petitioners are paying the royalty on the limestone extracted by them at the rate of Re. 0.75 per tonne treating entire limestone as falling within the inferior category. In the case of Jaipur Udyog Limited the Department can legitimately demand the payment of royalty on that limestone which falls within superior grade at the rate of Rs. 1.25 per tonne and in that case it cannot be argued that the rate of royalty was not increased on limestone because of the 1968 notification. In such circumstances, this argument is not available to Mr. Raj Narain that the Central Government did not enhance the royalty at all on limestone by issuing a notification on 29th June, 1968.

18. The proviso to Sub-section (3) of Section 9 of the Act puts a rider on the power of the Central Government to enhance the rate of royalty in respect of any mineral in two ways, (1) that the Central Government cannot fix the rate of royalty in respect of a mineral so as to exceed twenty per cent of the sale price at the pit's head, and (2) that it cannot enhance the rate of royalty in respect of any mineral more than once during any period of four years. The words used by the Legislature while putting this rider on the power of the Central Government are 'in respect of any mineral'. As observed above, the effect of the notification issued by the Central Government on 29th of June, 1968, is to enhance the rate of royalty in respect of superior grade of limestone which undoubtedly falls within the term 'mineral' as used n the Act. The power vested in the Central Government by virtue of Sub-section (3) of Section 9 of the Act if used by it in respect of one of the categories of a particular mineral, then it cannot be said that :he Central Government has not exercised that power in respect of that particular mineral. The notification issued by the Central Government in 1968 whereby two grades of limestone were declared and the royalty was enhanced in respect of the superior grade of limestone has the effect of enhancing the royalty in respect of limestone under Section 9(3) of the Act and this notification issued by the Central Government would preclude it from enhancing royalty in respect of this very mineral for a period of four years. Enhancement of royalty in respect of one grade of a mineral would mean the enhancement of royalty in respect of that mineral and, therefore, further enhancement of royalty even in respect of the other grade would be governed by proviso (b) to Sub-section (3) of Section 9 of the Act. The result of the impugned notification issued by the Central Government in 1970 is that the royalty on limestone was again enhanced within a period of two years by abolishing the two grades of limestone in Item 8 of Schedule II of the Act. According to the change in the Schedule, the rate of royalty on inferior grade of limestone is increased from Re. 0.75 per tonne to Rs. 1.25 per tonne. This increase in the royalty on limestone could not come into effect before the expiry of four years from the date when the last notification was issued by the Central Government in the exercise of its power under Sub-section (3) of Section 9 of the Act in the year 1968. In these circumstances, the impugned notification, in my opinion, violates the mandate contained in Clause (b) to the proviso of Sub-section (3) of Section 9 of the Act.

19. This view of mine finds support from the judgment of the Mysore High Court in Bagalkot Udyog Ltd., Bombay v. Union of India, AIR 1971 Mys 363 whereby the impugned notification has been declared by that Court as ultra vires the proviso to Sub-section (3) of Section 9 of the Act. The Delhi High Court in the Associated Cement Co. Ltd. v. Union of India, Civil Writ Petn. No. 1343 of 1970, D/- 6-9-1971 (Delhi) has also held the same view, though on different reasoning which have no relevance to the circumstances of the present case. Learned Additional Advocate-General, however, tried to distinguish the Delhi judgment on facts and I agree with the distinction pointed out by Mr. Raj Narain but with all that distinguishing feature, the learned Judges have arrived at the conclusion that the impugned notification is violative of the proviso to Section 9(3) of the Act.

20. Mr. Raj Narain's next contention is that the Central Government can within the four corners of the proviso enhance the rate of royalty at least once within a period of four years from 1968 in respect of any mineral and if the Central Government has issued the impugned notification after two years of its previous notification of 1968, it cannot be said to be violative of Clause (b) of the proviso to Section 9(3) of the Act. This very argument was raised before the Delhi High Court also but that contention was repelled by the learned Judges by observing as follows:

'We regret, we cannot accept this argument because on a plain constructionof the proviso to Section 9(3) the enhancement in the rate of royalty can only bemade once during any period of four years and since the rate of royalty has been enhanced by the notification dated 29th June, 1968 the Government could not furtherenhance the rate before the expiry of the 'period of four years'. The use of the expression 'period of four years' suggests a particular point of time and during thatperiod there can be no enhancement. It is only after the expiry of the 'period offour years' that any further enhancement can be made.'

21. I am in respectful agreement with the observations of the learned Judges of the Delhi High Court. I, therefore, reject the argument of Mr. Raj Narain.

22. Regarding the preliminary objection of the respondents that the first two petitions are not maintainable as they have not been filed by the authorised persons, I may mention that Rule 1 of Order 29 of the Code of Civil Procedure would be applicable for the presentation of the petitions y or on behalf of the corporations. Rule 1 lays down that in suits by or against a corporation, any pleading may be signed and verified on behalf of the corporation by the Secretary or by any director or other principal officer of the corporation who is able to depose to the facts of the case. The requirement of this rule is not that the principal officer must be empowered by a specific resolution to present the suit in a court of law. The only requirement of this rule is that the principal officer must be in a position to depose to the facts of the case. In the case of Jaipur Udyog Ltd., the petition has been signed by one Shri G.P. Gogla who has in his affidavit deposed that he is the Senior Executive Officer (Quarry) of the Jaipur Udyog Limited and that he was fully conversant with the facts of the case and was competent to swear the affidavit. In Petition No. 11 of 1971 of Hindusthan Sugar Mills Ltd., Bombay, the affidavit has been sworn by one Shri Rangnath Kabra who has described himself as the Administrative Manager of the petitioner company and has stated that he was fully conversant with the facts of the case. These averments of the aforementioned two officers clearly show that the petitions were signed and verified on behalf of the companies by their principal officers who were able to depose to the facts of the cases and as such they were entitled to sign the petitions and present them in the court. The preliminary objection has, therefore, no force and it is rejected.

23. For the reasons mentioned above, all these three writ petitions are allowed. The impugned notification dated 29th of January, 1970, is hereby quashed. No order as to costs.


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