1. Mining lease — Interstate boundary dispute — Claim for refund of royalty deposits based on alleged failure to deliver possession of the mining area. (Para 2 , 3 , 4 , 5 , 6 , 9 , 11 )
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2023 Supreme(SC) 795
SUPREME COURT OF INDIA
Dhananjaya Y. Chandrachud, CJI., J.B. Pardiwala, Manoj Misra, JJ.
State of U.P & Others – Appellants
Versus
Vinay Kumar Singh – Respondent
Civil Appeal Nos.5171-5172 OF 2023 (Arising out of Special Leave Petition (Civil) Nos.17891-17892 of 2023)
Decided On : 23-08-2023
Important Points
IMPORTANT POINT
Royalty – Bidder is advised to inspect and satisfy itself regarding mining area before participating in bidding process.
Royalty – Bidder is advised to inspect and satisfy itself regarding mining area before participating in bidding process.
Subject
Civil Law - Mining Law
Act Referred
Headnote
Mining Laws – Royalty – Sand mining lease – Objection as to territorial limits of demised mining area – By impugned order High Court allowed Writ Petition on ground that since State had failed to deliver possession of demised mining area, amount of money paid for gaining mining rights was liable to be refunded – There is no statement that State of U.P. and its officers had failed to handover possession of mining area – State of U.P. was justified in taking stand in review petition that High Court had wrongly observed that State of U.P. had failed to handover possession of area allotted to petitioner for carrying out mining operations – However, while deciding review petition, this aspect of matter has not been dealt with by High Court – Bidder was advised to inspect and satisfy itself regarding mining area before participating in bidding process – That apart, there is no determination of area which falls in disputed territory i.e., within State of M.P. – There is also no discussion on plea of appellants that amount of which refund was sought was far in excess of amount paid by original petitioner – Impugned orders set aside and Writ Petition restored to file for fresh adjudication. (Paras 10, 18, 20 and 22)
Facts of the case:
State of Uttar Pradesh is in appeal against orders of High Court of Judicature at Allahabad dated 30.09.2022 and 12.05.2023 passed in Writ C No.37749 of 2019 and Civil Misc. Review Application No.525 of 2022 respectively.
Findings of Court:
High Court has not properly addressed all issues raised before it. It is appropriate to remand the matter to High Court by restoring the writ petition to its original number so that it is decided afresh in accordance with law.
Result : Appeals allowed.
Legal Category Hierarchy
Advocates appeared:
For the Appellant(s) :Mrs. Rachna Gupta, Advocate
For the Respondent(s):Mr. Sanjeev Malhotra, Advocate
For the Appellant(s) :Mrs. Rachna Gupta, Advocate
For the Respondent(s):Mr. Sanjeev Malhotra, Advocate
Table of Contents
2. Refund based on contract frustration due to unresolved boundary dispute — versus — denial of refund as the bidder inspected the area and possession was not refused. (Para 15 , 16 )
3. High Court erred by assuming failure to deliver possession without evidence and ignoring the bidder's obligation to inspect the area and the actual amount deposited. (Para 18 , 19 , 20 )
4. Relief cannot be granted based on factual assumptions not pleaded in the petition or by ignoring material contractual obligations such as the bidder's duty to inspect. (Para 20 )
5. Appeals allowed — Impugned orders set aside — Matter remanded to the High Court for fresh adjudication. (Para 21 , 22 )
6. Can a court order a refund based on a factual assumption not specifically pleaded in the writ petition?
No. The court found that the High Court's order was based on an assumption that the state failed to deliver possession, whereas the petition actually alleged a boundary dispute and hindrance by another state. (Para 18 , 20 )
7. What is the legal significance of a contractual clause requiring a bidder to inspect a mining area before bidding?
Such a clause, combined with the bidder's submission of a mining plan and environmental clearance, is a material factor in determining whether the state failed to provide a mineable area or if the contract was frustrated. (Para 11 , 20 )
8. Does an unresolved interstate boundary dispute automatically entitle a lessee to a refund of deposits for contract frustration?
Not necessarily. The court observed that the High Court wrongly assumed a failure to deliver possession when the actual issue was a boundary dispute and hindrance by another state, failing to consider the bidder's duty to inspect. (Para 18 , 20 )
JUDGMENT
MANOJ MISRA, J.
1. The State of Uttar Pradesh (in short “the State of U.P.) is in appeal against the orders of the High Court of Judicature at Allahabad (in short, “the High Court”) dated 30.09.2022 and 12.05.2023 passed in Writ C No.37749 of 2019 and Civil Misc. Review Application No.525 of 2022 respectively.
FACTS
2. The respondent (original petitioner) was granted a mining lease to excavate five lakhs cubic meter of sand. The lease was for a period of five years viz., from 13.02.2019 to 12.02.2024. The royalty payable for the first year was Rs.26,35,00,000 and for each succeeding year it was to be higher by 10%.
3. The mining area was 25 hectares falling in plot nos.5 and 9 in village Bilharka, Tehsil Naraini, District Banda (State of U.P.).
4. Pursuant to the grant, the original petitioner obtained environmental clearance for mining in the area and in terms thereof the mining lease was executed appending therewith a map of the mining area.
5. According to the original petitioner, when he commenced mining operations, the district administration of Chhatarpur, State of Madhya Pradesh (in short, the State of M.P.) raised an objection to the mining operations conducted by the original petitioner on the ground that 300 meters of the demised mining area fell within the territorial limits of the State of M.P.
6. It is the case of the original petitioner that objection of the district administration of Chhatarpur was duly reported to the officers of the State of U.P. but they failed to resolve the boundary dispute. Rather, the State of U.P raised a demand of Rs.6,58,25,000/- as next instalment payable towards royalty. Aggrieved therewith, the original petitioner invoked the jurisdiction of the High Court under Article 226 of the Constitution of India by filing Writ C No.18794 of 2019 seeking a direction upon the State of U.P. as well as the State of M.P. – (a) to resolve the boundary dispute in the demised area and (b) to permit the original petitioner to continue mining operations in the demised area. In the alternative it was prayed that if the boundary dispute is not resolved, and the original petitioner is not permitted to carry out mining operations, further realization of royalty be suspended.
7. In Writ C No.18794 of 2019, the High Court called for instructions from the counsel representing the State of U.P. In response thereto, the Additional Chief Standing Counsel representing the State of U.P. produced a letter, dated 15.07.2019, written by the Chief Secretary, Government of U.P. to the Director, Geology and Mines, Government of U.P. wherein, with reference to the concerned mining area, a request was made to ban mining/mineral extraction till the mining area is properly demarcated.
8. By taking notice of the aforesaid letter dated 15.07.2019, the High Court disposed of Writ C No. 18794 of 2019 with a direction to the State of U.P. to resolve the dispute expeditiously in terms of the letter dated 15.07.2019. It was also directed that till the dispute is resolved, no coercive action be taken against the original petitioner to recover the royalty.
9. After disposal of Writ C No.18794 of 2019, a second writ petition i.e., Writ C No.37749 of 2019 was filed by the original petitioner before the High Court, claiming, inter alia, that since the State of U.P. could not resolve the boundary dispute, the State of U.P. and its officers be directed to refund the amount already deposited by the appellant including expenses amounting to Rs.26,65,66,666/- with 9% interest.
10. By the impugned order dated 30.09.2022, the High Court allowed Writ C No.37749 of 2019 on the ground that since the State had failed to deliver possession of the demised mining area, the amount of money paid for gaining mining rights was liable to be refunded. While allowing the writ petition, the submission made on behalf of the State of U.P. was noticed in paragraph 6 of the judgment, which is extracted below:
“6. On the other hand, learned counsel for the responde
