1. Vesting of estates and mines in State under U.P. Zamindari Abolition and Land Reforms Act — Dispute over lease terms, duration, and dead rent for mining operations. (Para 2 , 3 , 4 )
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1996 Supreme(SC) 1901
SUPREME COURT OF INDIA
K.Venkataswami : M.M.Punchhi
King Pal Singh
Versus
State Of U.P.
Case No. : .
Date of Decision : 11/8/96
Advocates Appeared: Agarwal B.D. : Chandra Satish : Mehta Raj Kumar : Mishra R.B. : Puri H.K. : Singh T.N. : Srivastava Ashok K. : Swarup Pramod
Important Points
Rights to mines and minerals vested in the State upon zamindari abolition. Lease terms for intermediaries can be determined retrospectively from the date of vesting. 'Regulation' of mining leases may include restrictive conditions, and dead rent is a fixed return based on the leased area, regardless of mineral quantity.
Subject
Land Law - Mining Rights
Act Referred
Headnote
Uttar Pradesh Zamindari Abolition and Land Reforms Act, 1950 – Section 6,4,7 and 107(2) - central Act, 1957 -Section 15 - Mines and Minerals (Regulation and Development) Act, 1957 – Section 7 - In all these appeals a common question of law arises for our consideration - Rights in mines and minerals -Royalty payable - A common argument was addressed by counsel concerned and that is why they are disposed of by this common judgment - U.P. Zamindari Abolition and Land Reforms Act, 1950(1 of 1951 came into force - On publication of a notification under Section 4 of Act all the estates stood transferred to and vested in State free from all encumbrances - Section 6 of the Act speaks of consequences of such vesting in the State - It says that on publication of notification under Section 4 all rights, title and interest of all intermediaries in every estate in such area including land and in all sub-soil in such estate including rights, if any, any mines and minerals whether being worked or not shall cease and be vested in State of Uttar Pradesh free from all encumbrance - In light of above provision, it appears the Collector, Agra issued notices to appellants staling that they should stop mining as they have lost all rights in mines and minerals - Collector, further took steps to auction the right to win minor minerals - At this stage, appellants challenged actions of Collector by moving the High court – Held, court is not an extreme case of prohibition but one of regulation, therefore, there is no force in arguments that terms and conditions of lease exceeds area of regulation contemplated under Section 15 of central Act - In this context in which these words find a place, it must be construed that the phase "for the time being in force" should be given a meaning that fulfils the object of provision, purpose being that at lime of settling terms Mines tribunal would take into account provisions of central Act - This was the view taken by High court and rightly too - Therefore, court do not find any substance in argument of the learned Senior Counsel on second point - Since dead rent and royalty are both a return to lessor in respect of area leased, looked at from one point of view dead rent can be described as minimum guaranteed amount of royalty payable to lessor but calculated on basis of the area leased and not on quantity of minerals extracted or removed - In fact, clause (ix) of Rule 3 of the Rajasthan Minor Mineral Concession Rules, 1977, defines dead rent as meaning minimum guaranteed amount of royalty per year payable as per rules or agreement under a mining lease - Stipulations providing for lessees liability to pay surface rent, dead rent and royalty to lessor are the usual covenants to be found in a mining lease - Regarding relaxation of rules, it is not for this court to give any direction in facts of these cases - In foregoing circumstances, court do not find any substance in all these cases - Appeals are dismissed.
Legal Category Hierarchy
Table of Contents
2. Intermediaries' mining rights persist despite land vesting — Lease terms should be prospective — Regulation under Central Act cannot amount to prohibition — Dead rent should be value-based. (Para 7 , 8 , 9 , 10 , 11 , 12 )
3. Sections 6 and 107 clearly vest mines in State — Regulation may include prohibition for conservation — Lease terms must cover the entire period from vesting. (Para 15 , 16 , 18 , 19 , 20 , 21 , 22 )
4. Statutory vesting of mines in State extinguishes intermediary rights — Regulatory powers under mining laws can include prohibitions — Dead rent is a fixed area-based return. (Para 15 , 17 , 18 , 22 )
5. Appeals dismissed. (Para 24 )
6. Does the vesting of estates under the U.P. Zamindari Abolition and Land Reforms Act extinguish the mining rights of intermediaries?
Yes. Sections 6 and 107 of the Act clearly provide that all rights, title, and interest in mines and minerals vest in the State government, thereby extinguishing the proprietary rights of former Zamindars. (Para 15 , 16 , 17 )
7. Can the power to regulate the grant of mining leases under the Mines and Minerals (Development and Regulation) Act include the power to prohibit them?
Yes. Regulation does not have a rigid meaning and can include prohibition, particularly in a welfare state to ensure the conservation and prudent exploitation of scarce minerals. (Para 18 , 19 )
8. Can the terms and conditions of a mining lease be determined retrospectively from the date of vesting of the estate?
Yes. Since the right to a lease is conferred upon intermediaries operating mines on the date of vesting, the terms settled by the Mines Tribunal must cover both past and future periods. (Para 20 )
9. What is the legal distinction between dead rent and royalty in a mining lease?
Royalty is a variable return based on the quantity of minerals extracted, whereas dead rent is a fixed minimum guaranteed return calculated on the basis of the area leased, regardless of the quantity extracted. (Para 21 , 22 )
JUDGMENT
K. VENKATASWAMI, J.
(1) IN all these appeals a common question of law arises for our consideration. A common argument was addressed by the counsel concerned and that is why they are disposed of by this common judgment
(2) THE U.P. Zamindari Abolition and Land Reforms Act, 1950(1 of 1951 (hereinafter called "the Act") came into force on and from 1/7/1952. On the publication of a notification under Section 4 of the Act all the estates stood transferred to and vested in the State free from all encumbrances. Section 6 of the Act speaks of consequences of such vesting in the State. It says that on the publication of notification under Section 4 all rights, title and interest of all the intermediaries in every estate in such area including land and in all sub-soil in such estate including rights, if any, any mines and minerals whether being worked or not shall cease and be vested in the State of Uttar Pradesh free from all encumbrances. In the light of the above provision, it appears the Collector, , Agra issued notices to the appellants staling that they should stop mining as they have lost all rights in the mines and minerals. The Collector, further took steps to auction the right to win the minor minerals. At this stage, the appellants challenged the actions of the Collector by moving the High court
(3) THE High court by an order dated 18/3/1955 held that the appellants were entitled to take advantage of the provisions of Ch. VI of the Act and consequently a direction was given to the State government and the Collector, Agra, for considering the applications of the appellants for grant of lease under S. 106-108 of the Act
(4) PURSUANT to the said judgment of the High court, the Collector, Agra, sent letters dated 8/1/1964 offering the terms and conditions of the proposed leases to the appellants. Along with those letters drafts of mining lease containing the details of terms and conditions were also enclosed. Inter alia, the lease was offered for a period of 15 years and the terms and conditions proposed were in the light of U.P. Minor Minerals (Concession) Rules, 1963 (hereinafter called "the Rules") as well as the rules framed under the Mines and Minerals (Regulation and Development) Act, 1957 (hereinafter called "the central Act"). The appellants raised objections regarding certain terms and conditions contained in the proposed leases. Initially the aggrieved parties moved the High court by filing writ petitions and the High court while dismissing the same on 9/2/1965 directed the parties to come to a settlement regarding the terms and conditions on which the leases have to be given to the appellants and in case they could not settle the terms, the differences can be referred to the Mines tribunal to be appointed under Section 110 of the Act. As the parties could not come to a settlement, the Collector on 12/10/1966 filed an application under Section 107(2 of the Act for settlement of the terms of the leases. Before the Mines tribunal, the following were placed as areas of controversy:
"(A) PERIOD OF LEASE
Proposal of State Government
Objection of Opposite Party
The lease shall be for a period of
The lease should be perpetual and
fifteen years with effect from
permanent.
1-7-1952.
(B) PAYMENT OF ROYALTY OR DEAD
RENT
The rate of royalty or dead rent shall
The question of making payment
be charged in accordance with the
of royalty or dead rent for the past
maximum rate prescribed under
years does not arise at all. The rate
First Schedule (Rule 22) of the U.P.
of dead rent indicated in the draft
Minor Mineral (Concession) Rules,
lease deed is excessive and there is
1963, with effect from 1-7-1952.
no guiding principle to determine
the same.
(C) COMMENCEMENT AND
EXECUTION OF THE LEASE
The lease shall be deemed to have
The terms and proposed lease deed
been executed with effect from 1-7-
should be prospective and not
1952.
retrospective."
(5) THE Mines tribunal, which was presided ove
