1. Dispute over demand for annual lease rent for forest land acquired under the Coal Bearing Areas (Acquisition and Development) Act, 1957 and vested in a government company. (Para 1 , 2 , 3 , 4 , 5 , 6 )
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2024 Supreme(SC) 1158
SUPREME COURT OF INDIA
VIKRAM NATH, PRASANNA B. VARALE, JJ.
State of U.P. & Anr. – Appellants
Versus
Northern Coal Fields – Respondent
Civil Appeal No. 7614 of 2014
Decided On : 03-10-2024
Important Points
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.
Subject
Administrative Law - Land Acquisition
Act Referred
Headnote
(A) Coal Bearing Areas (Acquisition and Development) Act, 1957 - Sections 7, 9, 10, and 11 - Demand for lease rent by State Government from Government Company for coal mining operations - High Court held that the State has no legislative competence to claim lease rent as the land vested in the Central Government free from encumbrances - The demand for lease rent was found to be unwarranted and unsupported by statutory provisions. (Paras 1, 7, 18)
(B) Legislative Competence - The court reaffirmed that the power to legislate for regulation and development of mines and minerals includes the power to acquire land, but does not extend to the State's claim for lease rent from a Government Company. (Paras 8, 18)
Facts of the case:
The Respondent, a Government Company, challenged the demand for lease rent from the Divisional Forest Officer, which was set aside by the High Court, leading to the present appeal. The Respondent's rights over the land were established under the CBA, 1957, and the demand was deemed unsupported by law.
Findings of Court:
The court found that the State Government's demand for lease rent was not backed by any statutory provision and thus could not be sustained in law.
Issues: The primary issue was whether the State Government had the authority to claim lease rent from the Respondent under the CBA, 1957.
Ratio Decidendi: The court ruled that the land vested in the Central Government free from encumbrances, and therefore, the State Government could not claim lease rent from the Respondent, as such a demand was not supported by any legal basis.
Result: Appeal dismissed.
(B) Legislative Competence - The court reaffirmed that the power to legislate for regulation and development of mines and minerals includes the power to acquire land, but does not extend to the State's claim for lease rent from a Government Company. (Paras 8, 18)
Facts of the case:
The Respondent, a Government Company, challenged the demand for lease rent from the Divisional Forest Officer, which was set aside by the High Court, leading to the present appeal. The Respondent's rights over the land were established under the CBA, 1957, and the demand was deemed unsupported by law.
Findings of Court:
The court found that the State Government's demand for lease rent was not backed by any statutory provision and thus could not be sustained in law.
Issues: The primary issue was whether the State Government had the authority to claim lease rent from the Respondent under the CBA, 1957.
Ratio Decidendi: The court ruled that the land vested in the Central Government free from encumbrances, and therefore, the State Government could not claim lease rent from the Respondent, as such a demand was not supported by any legal basis.
Result: Appeal dismissed.
Legal Category Hierarchy
Advocates appeared:
For the Appellant(s) : Mr. K M Natraj, Sr, A.S.G. Ms. Garima Prashad, Sr. A.A.G. Mr. Sudeep Kumar, AOR Ms. Indira Bhakar, Adv. Ms. Manisha, Adv. Ms. Rupali, Adv. Mr. Anuj Udupa, Adv.
For the Respondent(s): Mr. Ashok Kumar Sharma, Sr. Adv. Mr. Ashwani Kumar Dubey, AOR Mr. Kshitij Mudgal, Adv. Ms. Anshul Rajora, Adv.
For the Appellant(s) : Mr. K M Natraj, Sr, A.S.G. Ms. Garima Prashad, Sr. A.A.G. Mr. Sudeep Kumar, AOR Ms. Indira Bhakar, Adv. Ms. Manisha, Adv. Ms. Rupali, Adv. Mr. Anuj Udupa, Adv.
For the Respondent(s): Mr. Ashok Kumar Sharma, Sr. Adv. Mr. Ashwani Kumar Dubey, AOR Mr. Kshitij Mudgal, Adv. Ms. Anshul Rajora, Adv.
Table of Contents
2. State claims right to lease rent; Respondent contends absolute vesting of land under the Coal Bearing Areas Act precludes a lessor-lessee relationship with the State. (Para 2 , 6 , 7 , 17 )
3. The court distinguished between absolute vesting under Section 10(1) and 11(1) versus deemed leasehold rights under Section 10(2) and 11(2) of the Coal Bearing Areas Act. (Para 8 , 9 , 11 , 12 , 13 , 14 , 15 , 16 )
4. Where land vests absolutely under Section 10(1) and 11(1) of the CBA Act without a pre-existing mining lease, no lessor-lessee relationship exists between State and company. (Para 11 , 12 , 14 )
5. Appeal dismissed; demand for lease rent held unsustainable as no statutory provision supports the State's claim as a deemed lessor. (Para 18 )
6. Does the vesting of land under Section 10(1) of the CBA Act create a lessor-lessee relationship?
No. Under Section 10(1), land vests absolutely in the Central Government free from all encumbrances, meaning the Central Government becomes the absolute owner, divesting the State of its rights. (Para 11 , 13 , 15 )
7. When does a government company become a deemed lessee of the State under the CBA Act?
A government company becomes a deemed lessee under Section 11(2) only if rights under a mining lease granted by the State existed prior to the Central Government's acquisition of the land. (Para 11 , 12 , 14 )
8. What is the effect of vesting land in a government company under Section 11(1) of the CBA Act?
Land vested under Section 11(1) carries the same nature of rights as held by the Central Government. If the Central Government's right was absolute and free from encumbrances, the company acquires absolute rights. (Para 12 , 14 )
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
