IMPORTANT POINT
Where State Government acquired land and handed over same to Railway Administration for laying railway lines and Railway utilised mines miners from the land for laying railway lines, railway could not escape from its liability from paying royalty chargeable by the State on the minerals.

Headnote:Mines and Minerals (Regulation and Development) Act, 1957-Section 15-Orissa Minor Mineral Concession Rules, 1990-Rules 3, 2(1), 2(0) 10 and 13-Miner Minerals-Central Government s (Railway Administration) liability to pay royalty-Orissa Government acquiring land and handing over same to Railway Administration for laying railway lines-Railway administration utilising mineror minerals like rock cut spoils and earth from land for laying railway lines-Central Government is a person in terms of Rule 2(1)-Not entitled to undertake any quarrying operation unless permit granted to it-Absence of lease in favour of Railway cannot absolve its liability to pay royalty in view of proviso to Rule 3-Railway bound to pay royalty chargeable under Orissa Minor Mineral Concession Rules in view of embargo contained in Rule 3 prohibiting person from extracting or collecting minor minerals from his own land except for agricultural or other bona fide domestic consumption.
       Under the proviso to Rule 3, when extraction and collection of minor minerals is made by a person from his own land for normal agricultural operations or other bona fide domestic consumptions, then that would not tantamount to quarrying operations and it is excluded from the purview of Rule 3. Necessarily, therefore if minor minerals are extracted or removed from one s own land not for any domestic consumption or agricultural operations, but are sold to the public, then the State would be justified in levying the royalty on such extraction and or collection. (Para 2)
       The State is the owner of all the mines and minerals within its territory and the minerals vest with the State. In view of definition of "person" in Rule 2(1) and in view of the embargo contained in Rule 3, even the Central Government will not be entitled to undertake any quarrying operations, unless such permit is granted and it must be in accordance with the terms and conditions of the permit. The contention of the Railway Administration, that there being no lease in favour of the Railway Administration, it is not bound to pay any royalty, will not hold good, in view of the proviso to Rule 3, which on the face of it prohibits a person from extracting or collecting minor minerals from his own land, except for agricultural operations or other bona fide domestic consumption. But for the exclusion, contained in proviso to Rule 3 in relation to minor minerals extracted from owner s own land for normal agricultural operation or bona fide domestic consumption, it would be a case of quarrying operation within the definition of the expression in Rule 2(o). This being the position and the use of minor minerals on the railway track, after being extracted from the land, not coming within the expression "bona fide" domestic consumption", the said operation would be a quarrying operation under Rule 2(o), and consequently, the embargo contained in Rule 3 would apply. A combined reading of Rules 2(1), 2(o) and Rule 3 makes it crystal clear that the Railway Administration, cannot undertake the quarrying operation unless a permit is granted in its favour and, consequently, if the Railway Administration utilises the minor minerals from the land, for the railway track, it would be bound to pay the royalty chargeable under the Orissa Minor Mineral Concession Rules. The liability for payment of royalty accrues under Rule 13 and no doubt, speaks of a lease deed. If the Railway Administration, though not a lessee and at the same time is not authorised under Rule 3 to undertake any quarrying operation for the purpose of extraction of minor minerals, then for such unauthorised action, the Railway Administration would be liable for penalties, as contained in Rule 24. This being the position and in view of the prohibition contained in sub-Rule 2 of Rule 10 and taking into account the fact that such minor minerals would be absolutely necessary for laying down the railway track and maintenance of the same, we would hold that the Railway Administration would be bound to pay royalty for the minerals extracted and used by it, in laying down the railway track. (Paras 4 and 5)

JUDGMENT

Pattanaik, J.-This appeal is directed against the judgment of the Division Bench of Orissa High Court and the question for consideration is whether the Railway Administration would be liable to pay the royalty in respect of the minor minerals used by it in laying down the railway line. The facts are not disputed namely for laying the railway line, Government of Orissa acquired the land and handed over the same to the railway administration. When the Railway Administration utilised certain minor minerals like the rock cut spoils and earth from the very land, which had been acquired for laying the railway line, the Revenue Authorities of the State of Orissa initiated proceeding for realisation of royalty and cess under the provisions of Orissa Minor Mineral Concession Rules. The Railway Administration and the Union of India assailed the same by filing a writ petition in the Orissa High Court. According to the Railway Administration, royalty or cess could be levied against the lessee of any mineral and the railway administration not being the lessee of the land or the minor minerals therein, no royalty is payable for utilisation of the aforesaid minor minerals for laying down the railway line. The State Government on the other hand took the stand that the handing over of the land for laying of the railway track to the railway administration does not amount to conferring ownership right over the minerals existing on the land and in accordance with the provisions of the Mines and Minerals (Regulation and Development) Act, 1957 [hereinafter referred to as the Act] as well as the Orissa Minor Mineral Concession Rules, 1990 [hereinafter referred to as the Rules ], the railway administration would be liable to pay royalty for use of any minerals from the land in question and accordingly, the revenue authorities had rightly issued notice. The High Court, in the impugned judgment came to hold that the earth and rock out spoils excavated by the railway administration are minerals. This finding of the High Court has not been assailed by the railway administration. Butso far as the right to levy royalty on the use of minerals from the land in question, the High Court came to the conclusion that the State would not be justified in levying the royalty in respect of the minerals on the land which had been acquired and possession of which has been delivered to the railway administration. But so far as the land belonging to the State Government is concerned, the High Court came to the conclusion, since no formal transfer deed has been executed, it would be open to the State Government to incorporate in the formal transfer, a term as to the payment of royalty in view of the admission of the railway administration in its letter dated 10.6.1987 that they would abide by the terms and conditions to be decided by the State Government while sanctioning transfer of Government land. It is this judgment of the High Court of Orissa, which is under challenge in this appeal.

2. Mr. P.N. Mishra, the learned senior counsel, appearing for the State of Orissa, contended that the State is the owner of the mines and minerals within its territory and right to levy royalty or cess in respect of any minerals is governed by the provisions of the Act and the Rules framed thereunder. According to the learned counsel, under the provisions of Orissa Minor Mineral Concession Rules, which has been framed in exercise of power under Section 15(1) of the Act, no person can undertake any quarrying operation or collect and/or remove any minor mineral except under and in accordance with the terms and conditions of quarry lease, permit and/or auction sale provided under the rules. Under the proviso to Rule 3, when extraction and collection of minor minerals is made by a person from his own land for normal agricultural operations or other bona fide domestic consumptions, then that would not tantamount to quarrying operations and it is excluded from the purview of Rule 3.

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2000 Supreme(SC) 1887

Cases Referred (1)