1. Modification of mining lease terms under Mining Leases (Modification of Terms) Rules, 1956 — Dispute over lease commencement date and constitutional validity of modification. (Para 1 , 3 , 4 )
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1966 Supreme(SC) 243
SUPREME COURT OF INDIA
K. SUBBA RAO, C.J.I., M. HIDAYATULLAH, S.M. SIKRI, R.S. BACHAWAT AND RAGHUBAR DAYAL, JJ.
M/s. Gujarat Pottery Works Private Ltd., Appellants
Versus
B. P. Sood and others, Respondents.
Civil Appeal No. 428 of 1964, D/- 3-10-1966.
Advocates appeared
Mr. C. L. Sanghi, Advocate, and M/s. J. B. Dadachanji, O. C. Mathur and Ravinder Narain, Advocates of M/s. J. B. Dadachanji and Co., for Appellant, Mr. Niren De, Additional Solicitor-General of India, (M/s. R. Ganapathy Iyer and R. H. Dhebar, Advocates, with him), for Respondents Nos. 1 and 2; Mr. R. H. Dhebar, Advocate, for Respondent No. 3; M/s. E. C. Agarwala and M. S. Gupta, Advocates, for Respondents Nos. 4 to 20, 22 to 25 and 28 to 31.
Advocates:
C.L.SANGHVI, E.C.AGARWAL, J.B.DADACHAN, M.S.Gupta, NIREN DEY, O.C.MATHUR, R.Ganapathy Iyer, R.H.Dhebar, Ravindra Narayan
C.L.SANGHVI, E.C.AGARWAL, J.B.DADACHAN, M.S.Gupta, NIREN DEY, O.C.MATHUR, R.Ganapathy Iyer, R.H.Dhebar, Ravindra Narayan
The court held that an agreement to lease acted upon constitutes the grant of the lease. It interpreted "winning" in Article 31A(1)(e) of the Constitution broadly as extracting minerals and ruled that modified lease periods under the 1957 Act should run from the Act's commencement date.
Headnote:(A) Mining Leases (Modification of Terms) Rules, 1956 - Rule 2(c), 6, 7, 9, 10 - Mines and Minerals (Regulation and Development) Act, 1957 - Sections 8, 9, 13, 18, 29 - Constitution of India - Articles 14, 19, 31, 31A(1)(e) - Grant of mining lease - Distinction between the grant of a lease and its formal execution - The granting of a lease is distinct from the formal execution of the lease deed; the sanctioning of the lease or an agreement to lease that is acted upon and contains all essential terms amounts to the grant of the lease, while the formal execution is merely compliance with legal requirements to make the grant enforceable. (Paras 7, 9, 11)
(B) Constitution of India - Article 31A(1)(e) - Interpretation of the term "winning" - The expression "winning" in a Constitutional provision must be construed broadly to mean getting or extracting minerals from mines and other incidental purposes, as the object is to make laws providing for the extinguishment or modification of mineral leases in the public interest immune from challenges under Articles 14, 19, and 31. (Paras 17, 18)
(C) Mines and Minerals (Regulation and Development) Act, 1957 - Section 29 - Validity and continuity of rules - Rules made under a previous Act are deemed to have been made under the subsequent Act if they relate to matters provided for in the new Act and are not inconsistent with it, effectively antedating the new Act to validate such rules. (Paras 29, 30)
Facts of the case:
The appellant held a perpetual lease for excavating white clay. An agreement for the lease was executed in 1939 and possession was delivered, but the formal lease deed was executed only in 1951 following a court decree for specific performance. The Controller of Mining Leases modified the lease terms under the 1956 Rules, reducing the period to 25 years from 1939 and introducing dead rent and royalty payments. The appellant challenged these modifications on the grounds that the lease was not an "existing mining lease" and that the rules were unconstitutional.
Findings of Court:
The lease was granted in 1939 and thus qualifies as an "existing mining lease" under the 1956 Rules. The modification of the lease is protected under Article 31A(1)(e) of the Constitution. The 1956 Rules are valid and continue under the 1957 Act. However, the Controller erred in limiting the lease period from the original grant date; the period should instead be calculated from the date the 1957 Act came into force.
Issues: Whether the lease was granted in 1939 or 1951 for the purpose of being an "existing mining lease"; whether the term "winning" in Article 31A(1)(e) covers the extraction and removal of minerals; whether the 1956 Rules were valid and continued under the 1957 Act; and whether the modified lease period should run from the original grant date or the commencement of the 1957 Act.
Ratio Decidendi: The court held that an agreement acted upon constitutes the grant of the lease, regardless of the date of formal execution. The term "winning" in the Constitution is interpreted widely to include extraction to facilitate public interest regulation of minerals. Under the 1957 Act, the maximum period for a mining lease (20 years for non-coal/iron ore/bauxite minerals) should be counted from the date the Act came into force to ensure prospective regulation.
Result: Appeal allowed; order modified to set the lease period at 20 years from June 1, 1958.
Legal Category Hierarchy
Table of Contents
2. Whether lease was granted in 1939 or 1951 — Validity of modification under Article 31A(1)(e) — Competence of Central Government to frame modification rules. (Para 6 , 12 , 26 , 28 , 29 , 32 )
3. Distinction between granting a lease and formal execution — Interpretation of winning minerals under Article 31A(1)(e) — Effect of saving clauses in subsequent legislation. (Para 7 , 17 , 18 , 29 , 30 )
4. Statutory lease period limits under the 1957 Act run from the date of the Act's commencement for existing leases. (Para 33 )
5. Appeal partially allowed — Lease period modified to twenty years from the commencement of the 1957 Act. (Para 34 )
6. Does the formal execution of a lease deed determine the date the lease was granted?
No. The granting of a lease is distinct from its formal execution. If an agreement to lease is acted upon and contains all terms, it constitutes the grant; formal execution is merely compliance to make the grant legally enforceable. (Para 7 , 9 , 11 )
7. What is the meaning of the expression winning in Article 31A(1)(e) of the Constitution?
In the context of Constitutional provisions, winning is construed broadly to mean getting or extracting minerals from mines and other incidental purposes, ensuring laws modifying such leases are immune from certain fundamental rights. (Para 17 , 18 )
8. How does a saving clause in a new Act affect rules made under a repealed Act?
A saving clause can antedate the new Act, deeming rules made under the previous Act as if they were made under the new Act, provided they are not inconsistent with it. (Para 29 , 30 )
9. When does the statutory maximum period for a modified existing mining lease begin?
For existing leases modified to conform with the 1957 Act, the statutory maximum period runs from the date the Act came into force, not from the original lease date. (Para 33 )
Judgment
RAGHUBAR DAYAL, J. (For himself, K. Subba Rao, CJI. and S. M. Sikri, J.) : This appeal, by special leave, is against the order, dated January 30, 1962, of the Central Government, under R. 7 of the Mining Leases (Modification of Terms) Rules, 1956, hereinafter called the 1956 rules, on revision against the order, dated September 29, 1960 of the Controller of Mining Leases, under R. 6 of the said rules.
2. It may be mentioned here that respondents Nos. 28 and 27, who were formal parties, died during the pendency of the appeal and an application to bring their legal representatives on record has been rejected.
3. The facts leading to this appeal are as follows. Jairam Jagmal originally held a perpetual lease from Chimanlal Chandulal Jani and others, inamdars and owners of the mineral rights for excavating white clay from the area leased and for taking it away. The lessors entered into an agreement for executing the perpetual lease, on December 2, 1939. They did not however, execute the lease, though possession over the leasehold land had been delivered to the said Jairam Jagmal after the execution of the agreement. Ultimately, the lease was executed on November 3, 1951, in execution of a decree of a civil Court for the specific performance of the agreement to lease.
4. The original lessee, Jairam Jagmal, transferred his right, title and interest in the lease to the appellant in 1954. On September 29, 1960, the Controller of Mines modified the terms of the lease after following the procedure laid down for modifying the lease under the 1956 rules which continued to be in force in view of S. 29 of the Mines and Minerals (Regulation and Development) Act, 1957, hereinafter called the 1957 Act. The modifications were that the period of the lease was reduced to 25 years from December 2, 1939 and further renewal was to be regulated in accordance with the law and rules in force. Dead rent was payable at the rate of Rs. 10 per acre per annum. The lease was made further subject to the rules made or deemed to have been made under Ss. 13 and 18 of the 1957 Act and royalty was to be payable in accordance with S. 9 of that Act.
5. The appellant preferred a revision before the Central Government under R. 7. That was rejected.
6. The correctness of the orders challenged in appeal is questioned on various grounds. The first is that the mining lease in favorer of the appellant is, dated November 3, 1951 and, therefore, is not an existing mining lease as defined in R. 2 (c) of the 1956 rules. The lease was executed on November 3, 1951 in execution of the decree for specific performance. An agreement to lease was, however, executed on December 2, 1939. The question is whether the lease can be said to be granted in 1939 or in 1951. If it was granted in 1951, the contention for the appellant is sound, but if it is held to be granted in 1939, the contention fails and the lease would be liable to modification under the 1956 rules as R. 2 (c) defines an existing mining lease to be a lease which has been granted before October 25, 1949.
7. The granting of lease is different from the formal execution of the lease deed. The Mineral Concession Rules, 1949, made under S. 5 of the 1948 Act and hereinafter referred to as the 1949 rules, deal with the procedure for the grant of mining leases in respect of land in which the minerals belong to Government, under Chap. IV. Rule 27 deals with applications for mining leases. Rule 28A provides that when a mining lease is granted the formal lease shall be executed within six months of the order sanctioning the lease and if no such lease is executed within the aforesaid period, the order sanctioning the lease shall be deemed to have been revoked. It is really the sanctioning of the lease which amounts to the granting of the lease. Execution of the formal lease is only compliance with the legal reguirements to make the grant legally enforceable.
8. Further, the agreement of lease, dates December 2, 1939 was acted upo
