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SUPREME COURT OF INDIA
S.M. SIKRI, C.J.I., J.M. SHELAT, P. JAGANMOHAN REDDY AND G.K. MITTER, JJ.
The State of M.P. and another etc., Appellants
Versus
Dadabhoy s New Chirimiri Ponri Hill Colliery Co. Pvt. Ltd. and another etc., Respondents.
Civil Appeals Nos 167 and 168 of 1968. D/- 29-11-1971.
Advocates appeared
Mr. I. N. Shroff, Advocate, for Appellants (In both the Appeals); Mr. S. V. Gupte, Sr, Advocate, (M/s. Suresh A. Shroff, R. K. Thakur, Miss Bhuvanesh Kumari, Mr. K. S. Cooper and Mrs. M. K. Cooper Advocates, and M/s. J. B. Dadachanji, O. C. Mathur and Revinder Narain, Advocates of M/s. J. B. Dadachanji and Co., with him.), for Respondent No. 1 (In C. A. No. 167 of 1968). Mr. B. P. Maheshwari, Advocate, for Respondent No. 1 (In C. A. No. 168 of 1968), and Mr. S. P. Nayar, Advocate, for Respondent No. 2 (In both the Appeals). (Para 26)
Section 30-A suspended the application of sections 9 (1) and 16 (1) in relation to pre-1949 leases and authoised. The Central Government to direct that all or any of the said provisions (including rules made under sections 13 and 18) shall apply to or in relation to such leases subject to such exceptions and modifications, if any, as may be specified in a notification. As a result of the suspension of section 9(1), lessees under pre-1949 leases were relegated to the original position under which they were liable to pay royalty at rates agreed to in those leases whether the rate was over or below 5% provided by section 9(1). As and when the Central Government issued the notification envisaged by the second part, such lessees would be obliged to pay royalty at the rate of 5% as prescribed for the time being in the Second Schedule, and even if the Government were, in the meantime, to enhance the rate as authorised by section 9 (3) upto the maximum rate of 20% at such rate but never more than 20%. The second part thus contemplated payment of royalty, on section 9 (1) being made applicable, at the most at the rate of 5% only, as no increase had till then been made under section 9 (3). [Para 21
The notification was issued, as it recites, in exercise of the powers conferred by section 30-A. That power was to apply, by issuing a notification thereunder, sections 9 (1) and 16 (1) and the rules made under sections 13 and 18. The notification in terms directed the application of section 9 (1) which meant that on and from December 29, 1961. The company would have to pay royalty as prescribed under that sub section read with the Second Schedule, that is, at 5%. The notification, however, applied section 9 (1) subject to one modification, namely, that lessees under the pre-1949 leases were to pay royalty at the rate provided in their leases or at 2-1/2% whichever was higher. The modification was to the rate applicable under section 9 (1) and the Second Schedule, that is, to the rate of 5%. Considering the object with which section 30-A was enacted, viz, to phase the rate of 5%, and not to impose it at one stroke, the modification could not mean recovery at a rate inconsistent with section 9(1) and the Second Schedule, that is, at the rate higher than 5% provided thereunder. [Para 24
Such a modification, if it were to be construed as meaning payment at a rate higher than 5% would be in excess of the power under section 30-A and also in contravention of the language of section 9 (1) and the Second Schedule. A modification, if any, would be for charging royalty at a rate lesser than the one provided under section 9 (1) and the Second Schedule, and not at a rate higher than such rate. A construction to the contrary would mean exercise of power in excess of that conferred by the section and would affect the validity of the notification. A literal meaning which the State canvassed for can, therefore, be accepted only at the cost of invalidating the notification. [Para 25
(2) Interpretation of Statutes - two interpretations possible - one leading to validity of provision should be followed.
The rule of construction that a Court construing a provision of law must presume that the intention of the authority making it was not to exceed its power and to enact it validly is well-settled. Where, therefore, two constructions are possible, the one which sustains its validity must be preferred. [Para 26
Judgment
SHELAT, J. :- By an Indenture of Lease, dated January 12, 1944 made between the then Ruler or Korea State of the one part referred to as the lessor therein, and Sir Maneckji B. Dadabhoy referred to as the lessee, of the other part, the lessor granted to the lessee for a term of 30 years, in consideration of payment of rents and royalties therein mentioned, a mining lease of an area measuring 5.25 sq. miles delineated on the plan annexed thereto, with liberties, powers and privileges and on terms and conditions therein set out. By Clause (2) of that Indenture, the lessee agreed to pay during the subsistence of the lease royalties at the rates and on dates set out therein. The rates of royalty varied from 5 to 25 according to the price of coal per ton extracted from the leased area, that is to say, from 4 ans. per ton if the price was Rupees 5/- per ton to 25 of the price per ton at the pit s head if that price was Rupees 20/- or more.
2. On the merger of the Korea State with Madhya Pradesh, into the events of which it is not necessary for the purposes of this appeal to go, the leased area became subject to the provisions of the Mines and Minerals (Regulation and Development) Act, 53 of 12948 and the Mineral Concession Rules made thereunder on October 25, 1949. In 1952, Sir Maneckji agreed to assign the said lease and the benefits, powers and privileges thereunder provided to the respondent-company. Since, under the lease, such assignment could not be made without the previous consent of the lessor and since, by that time, owing to the merger of the Korea State with Madhya Pradesh, the State of Madhya Pradesh had acquired the said area and the rights in respect of it under the said lease, an agreement was made between the State of Madhya Pradesh and the respondent-company on November 6, 1952 under which the State of Madhya Pradesh granted its consent to the said assignment for the unexpired period of the said lease in consideration of the respondent-company agreeing to comply with the terms and conditions of the said lease including payment of royalties to the State Government as provided therein. That meant that the respondent-company had to pay henceforth royalty to the State of Madhya Pradesh as the lessor at the rates provided in the original lease
3. An unexpected development in the meantime took place Under an Industrial award, called the Muzumdar Award, published on May 25, 1956, increased wages were awarded to colliery workers. To meet the consequent increased expenditure which the collieries had to incur, the Government of India proportionately increased the controlled coal price. A representation made by the respondent-company to the Government of India, dated October 5, 1956 shows that the increase in respect of the coal extracted by the respondent-company was from Rs. 14.6.0 and Rs. 15.6.0 to Rupees 17.6.0 and Rupees 18.6.0 per ton. That increase, however, resulted in the respondent-company having to pay royalty at an increased rate since the rate of royalty payable by the company was on graded slab varying according to the price of coal at the pit s head. The company s representation, therefore, was that the royalty payable by it should be modified so as to bring it in consonance with that payable under the 1948 Act read with the Mineral Concession Rules. 1949 and the First Schedule thereto, namely, at a fixed rate of 5 of the f. o. r. price subject to the minimum of 8 ans. per ton. (Rule 41 (1) (a)). The Government of India referred the respondent-company to the State Government and advised it to make a similar representation to that Government. Thereafter correspondence went on between the Government of Madhya Pradesh and the respondent-company for a considerable time. The State Government, however, was not agreeable to modify the terms of the said lease and to bring the royalty payable thereunder in consonance with Rule 41 of 1949 Rules and the First Schedule thereto.
4. On December 28, 1957. Parliament
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