1. Mining lease termination — Breach of covenant to continue operations without voluntary intermission — Failure to pay wages leading to work stoppage — Termination under Mineral Concession Rules. (Para 1 , 2 , 3 )
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1966 Supreme(SC) 119
SUPREME COURT OF INDIA
M. HIDAYATULLAH, J.R. MUDHOLKAR, R.S. BACHAWAT AND J.M. SHELAT JJ.
M/s. Nandram Hunatram, Calcutta, Appellants
Versus
Union of India and another, Respondents.
Civil Appeal No. 257 of 1964. 1923
Advocates appeared
M/s. S. N. Andley, Rameshwar Nath, P. L. Vohra and Mahinder Narain, Advocates of M/s. Rajinder Narain and Co., for Appellants; Mr. C. K. Dapthary, Attorney-General for India, (M/s. R. Ganapathy Iyer and B. R. G. K. Achar, Advocates, with him), for Respondent No. 1; Mr. R. N. Sachthey), Advocate, for Respondent No. 2.
Advocates:
B.R.G.K.Achar, C.K.DAFTARY, MANINDER NARAIN, P.L.VOHRA, R.Ganapathy Iyer, R.N.SACH, RAMESHWAR NATH ROY, S.N.ANDLEY
B.R.G.K.Achar, C.K.DAFTARY, MANINDER NARAIN, P.L.VOHRA, R.Ganapathy Iyer, R.N.SACH, RAMESHWAR NATH ROY, S.N.ANDLEY
Termination of a mining lease is justified upon voluntary intermission of work and neglect endangering the mine. In quasi-judicial revisions, detailed reasons may not be required if the order affirms a clearly vindicated action and procedural fairness was observed.
Headnote:(A) Mineral Concession Rules, 1949 - Rule 41; Mineral Concession Rules, 1960 - Rules 27(1)(f), 27(5) and 54 - Mining lease - Termination of lease for breach of covenants - Voluntary intermission of work - Failure to conduct operations in a proper, skilful and workman-like manner - State Government's power to determine lease after notice to remedy breach - Action taken to prevent flooding and ruin of colliery held justified - Termination of lease not arbitrary or high-handed. (Para 4)
(B) Administrative Law - Quasi-judicial functions - Requirement of giving reasons in orders - Where the authority merely approves an action taken by a lower authority which is clearly vindicated by the facts and records, a detailed order stating reasons for rejection of revision may not be strictly required, provided the procedure of hearing and representations was followed. (Paras 5, 6)
Facts of the case:
A firm holding a coal mining lease failed to maintain operations due to internal disputes among partners, leading to non-payment of wages and stoppage of essential services. This resulted in the colliery being endangered by flooding. Despite a sixty-day notice to remedy the defects, the firm failed to act, leading the State Government to take over the colliery and terminate the lease. The firm filed an application for revision before the Central Government, which was subsequently rejected.
Findings of Court:
The court found that the firm committed a breach of the lease covenants and the Mineral Concession Rules by allowing voluntary intermission of work and neglecting the colliery. The State Government's intervention was necessary to save the asset from being ruined. The Central Government's rejection of the revision was sustainable as the procedure for representations was followed and the underlying action was justified.
Issues: Whether the termination of the lease by the State Government was arbitrary and whether the Central Government's order rejecting the revision was invalid for lack of detailed reasons.
Ratio Decidendi: Voluntary intermission of mining operations and failure to maintain essential services constitute a breach of lease covenants and statutory rules, justifying lease termination. In quasi-judicial revisions, if the procedure for hearing is followed and the decision merely affirms a clearly justified action, the absence of detailed reasons does not necessarily vitiate the order.
Result: Appeal dismissed.
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2. Whether the lease termination was arbitrary and whether the failure to provide detailed reasons in the revision order violated principles of quasi-judicial functions. (Para 4 , 5 )
3. Non-payment of wages causing work stoppage constitutes voluntary intermission; detailed reasons are not mandatory when affirming a clearly justified and vindicated administrative action. (Para 4 , 6 )
4. An order affirming a clearly vindicated administrative action does not require detailed reasons if the procedural requirements of the governing rules were followed. (Para 6 )
5. Appeal dismissed with costs. (Para 7 )
6. Does failure to pay wages resulting in work stoppage constitute a breach of a lease covenant to continue mining without voluntary intermission?
Yes. The court held that when non-payment of wages leads to the stoppage of work and endangers the colliery, it constitutes a breach of the covenant to continue operations without voluntary intermission and a violation of the Mineral Concession Rules. (Para 4 )
7. Is the government required to provide detailed reasons when performing a quasi-judicial function of affirming a previous administrative decision?
Not necessarily. While reasons are generally required for quasi-judicial functions, a detailed order may not be required if the government is merely approving an action that is clearly sustainable on the material and has been completely vindicated. (Para 5 , 6 )
8. What is the effect of subsequent payment of arrears on a prior breach of lease covenants regarding voluntary intermission?
Belated payment of back wages does not undo or wipe off a prior voluntary intermission that occurred for a significant period or the dereliction of duty that endangered the property. (Para 4 , 6 )
Judgement
HIDAYATULLAH, J.: The appellant Messrs. Nandram Hunatram of Calcutta, a firm consisting of four partners including one Kishan Lal Aggarwal, held a mining lease for coal in respect of Handidhua Colliery for a period of 30 years commencing on April 6, 1959. Under Part VII of the lease, which contained the Convenants of the lessee, the firm had undertaken to commence mining operations within one year from the date of the execution of the lease and then to continue the work of searching and winning minerals without voluntary intermission in a skilful and workmanlike-manner. The firm had appointed one M. L. Goel as the Manager and Kishan Lal Aggarwal as the occupier of the colliery. It appears (and in fact it is not denied) that the partners fell out among themselves and as none of them was willing to spend money on the colliery, work deteriorated and came to a standstill in May 1962. Goel reported to the State Government that the wages of the labourers had not been paid for weeks, that work had stopped at the colliery and that even the essential services were not being maintained owning to non-payment of wages. He wrote to the firm and Government early in the first week of May, bringing to their notice that the colliery was in danger of being flooded if the essential services stopped working. On May 9, 1962 the essential services stopped working as their wages had not been paid for several weeks. The colliery began to get flooded when the pumps stopped and it as apprehended that within the next few hours the pumps would be drowned and the colliery lost. Government, however, stepped in and made a promise to the essential workmen that their wages would be paid and this saved the colliery. On May 14, the Chief Inspector of Mines was informed by Kishan Lal Aggarwal that he was restrained by the other partners of the firm making payment for running expenses of the colliery and that he was not in a position to perform his duties an occupier. He accordingly resigned his office. Goel also resigned and on 16-5-1962 the Sub-divisional Officer, Talchar informed Government that the situation had become very alarming and that some action was absolutely necessary. Government thereupon gave a notice on May 19, 1962 asking the firm to remedy the defect within sixty days of the receipt of the notice failing which Government threatened to take over the colliery from the firm. As the firm did nothing to remove the defects and did not request for extension of time, Government took over the colliery and terminated the lease.
2. The firms thereupon filed an application for revision before the Central Government under Rule 54 of the Mineral Concession Rules 1960. The Central Government asked for the comments of the State Government on the application and invited the firm to make its own comments upon the reply of the State Government. Taking the entire matter into consideration the Central Government by order, February 19, 1963, rejected the application for revision. The present appeal is against the order of the Central Government by special leave of this Court.
3. It was admitted in the application for revision and it is not denied before us that the partners were quarrelling among themselves and the work at the colliery had therefore stopped. It is admitted that the wages of the labourers were not paid for about five weeks before Government sent its notice on May 19, 1962. It is further admitted that the essential services had also stopped working and that but for the timely action of the Government, the colliery would have been flooded in a matter of hours and probably rendered unworkable till dewatered. With this background in mind we have to consider the objections of the firm to the order of the Central Government in the first instance and of the State Government in the final analysis.
4. Clause (3) of Part VII of the lease is one of the covenants by the lessee and under it the lessee under-took to continue work, without voluntary intermiss
