The State Government cannot claim lease rent from a Government Company under the Coal Bearing Areas Act, as the rights vested in the Company are absolute and free from encumbrances.

JUDGMENT :

1. The present appeal arises from the judgment and order of the High Court of Judicature at Allahabad dated 16.01.2013 in Writ (C) No. 50320/2010 wherein the Respondent’s Writ Petition was allowed, orders dated 23.03.2010, 11.06.2010 and 31.07.2010 passed by the Divisional Forest Officer, Renukoot, District Sonebhadra, UP¹[Hereinafter referred to as “DFO”] were set aside, the State was directed not to realise further lease rent from the Respondent and to refund/adjust the amount paid by the Respondent for the year 2010-2011.

2. The facts of the matter, succinctly put, are that the Respondent is a Government Company which was incorporated with an object to carry on mining operations for extraction of coal and supply thereof to core sector and non-core sector and is carrying on two coal mine projects namely ‘Krishnashila Project’ and ‘Bina Project’ in the district of Sonebhadra. The DFO had issued letters dated 23.03.2010 and 11.06.2010 to the Respondent seeking the deposit of annual lease rent for the year 2010-2011 for the forest land which has been transferred on lease to the Respondent for 30 years and 23 years respectively. The Respondent deposited the said amount under protest which further led to the issuing of letter dated 31.07.2010 by the DFO stating that since the amount has been deposited under protest, which is against the conditions of transfer, the matter is being referred to the higher level of the Government for cancelling the said transfer. Thereafter, the Respondent preferred a Writ Petition before the High Court challenging the above-mentioned letters and the demand of annual lease rent by the DFO.

3. Before moving further, we find it relevant to delve into the genesis of vesting of such rights in the Respondent. On 23.12.1980, the Central Government issued a notification under Section 7 of the Coal Bearing Areas (Acquisition and Development) Act, 1957²[Hereinafter referred to as “CBA, 1957”] of its intention to acquire the lands admeasuring 1657.16 hectares (approximately) as specified in the Schedule, and consequently, issued a declaration on 17.11.1981 acquiring the said land under Section 9 of CBA, 1957. The said declaration was published in the Gazette of India, dated 05.12.1981, vesting the land and rights described in the Schedule appended to the abovementioned notification absolutely in the Central Government free from all encumbrances under Section 10(1) of the CBA, 1957. Further, in exercise of powers under S. 11(1) of CBA, 1957, the Union Government, by its order dated 02.11.1982, directed that the lands and rights so vested shall, w.e.f. from 05.12.1981, instead of continuing to so vest in the Central Government, shall vest in the Government Company named Central Coalfields Ltd. (which was later formed into Northern Coal Fields Ltd. w.e.f. 28.11.1985, i.e. the Respondent).

4. Thereafter, the Respondent submitted a proposal for its ‘Krishnashila project’ of 235.99 hectares of land for obtaining approval of the Central Government for use of the land for mining purpose under the Forest (Conservation) Act, 1980³[Hereinafter referred to as “FCA, 1980”]. Similarly, another proposal under the FCA, 1980 for usage of 258 hectares of forest land for mining purpose for ‘Bina Coal Project’ was submitted to the Central Government for obtaining its approval.

5. Accordingly, in pursuance of Section 2 of the FCA, 1980, the Central Government, vide its order dated 23.05.1996, granted approval for diversion of 258 hectares of forest land under ‘Bina Project’, which was communicated by the State Government to the Respondent vide letter dated 28.06.1998. Similarly, the Central Government, with regard to the ‘Krishnashila Project’, vide its letter dated 06.07.2006, granted approval for diversion of 235.99 hectares of forest land in accordance with Section 2 of FCA, 1980, which was communicated to the Respondent by the State Government vide letter dated 27.07.2007.

6. The Respondent, by virtue of Section 18A of th