Judgment

KRISHNA IYER, J. - This appeal, by special leave, raises only a few points of law, although the stakes, counsel states, are substantial.

2. The appellant had a mining lease stretching over a period of 20 years from the respondent State of Madhya Pradesh. The grant of such licences is governed by the Mines and Minerals (Regulation and Development) Act, 1957 (hereinafter referred to as the Act) and the rules framed thereunder. In particular we are concerned with Rs. 27 (5) framed by the Central Government in exercise of its powers under S. 13.

3. Right at the outset we may re-produce the relevant rule:

"Rule 27 (5) If the lessee makes default in payment of royalty as required by S. 9 or commits a breach of any of the conditions other than those referred to in sub-para (4). the State Government shall give notice to the lessee requiring him to pay the royalty or remedy the breach, as the case may be, within sixty days from the date of receipt of the notice and if the royalty is not paid or the breach is not remedied within such period, the State Government may, without prejudice to any proceeding that may be taken against him, determine the lease and forfeit the whole or part of the security deposit."

The admitted case of the parties is that certain breaches of the conditions which the appellant was bound to comply with had been committed. Consequently, a notice was issued to the appellant by the Collector of District Satna (under powers delegated to him by the State Government which is the appropriate authority to take action when breaches are committed). This notice dated October 15, 1973 itemised three branches. The said communication stated;

"You have committed following breaches of the rules of the Mineral Concession Rules. 1960 in relation to the aforesaid mining lease.

(i) Against royalty for the period half-year ending June 1973, Rupees 6062.75 paise not deposited.

(ii) Against surface rent for the period half-year ending June 73 Rs. 13.38 paise not deposited. So deposit the aforesaid amount together with interest at the rate of 9% from 16-9-73 and produce the challan.

(iii) Failure to install the weighting machine".

The rule earlier quoted gives the lessee a period of 60 days to remedy the breaches complained of and it is the admitted case that the lessee did not do so. But a few months later, by letter dated March 22, 1974 the appellant replied by pleading that he had deposited the royalty and the surface rent, although out of time. Virtually it was a plea of guilty because the reply stated It has been our endeavour to meet the commitments but we regret the breach having been occurred due to conditions stated ... Regarding weighment machine we feel the same is beyond our means in the present circumstances and finances we have. The prayer was that the breach be condoned as a special case. Although the Collector has the power to issue the notice contemplated by the rule, the State Government has to take the decision regarding cancellation or otherwise. The government however passed an order dated May 21, 1974 cancelling the contract and forfeiting the security deposit in exercise of its powers under R. 27 (5) of the Mineral Concession Rules (for short the rules) set out earlier. This, in one sense determined the lease but a little complication which has formed the foundation of an argument was created by the Collector concerned issuing a notice D/- 22-5-1974 (a day after the State Govt. had cancelled the lease) complaining of the commission of breaches of the rules by the appellant and directing him to rectify the aforesaid breaches within 60 days from the receipt of the notice on pain of the contract being cancelled and the security amount being forfeited in the event of default. In substance, the breaches were the non-payment of royalty for the period subsequent to that covered by the former notice and the non-installation of the weighing machine at the mine. The notice wound up with the statement; You should also appear