Liability for royalty under the Mines and Minerals (Regulation and Development) Act, 1957 arises when coal is extracted and reaches the pit's mouth, and not only when it is dispatched outside the mining area.

R. N. MISRA, J.

( 1 ) THE National Coal Development Corporation Limited, incorporated under the companies Act, 1 of 1956, is wholly owned by the Government of India and carries on extensive mining operation in coal throughout the country. It has five collieries within the Talcher Sub-division of the district of Dhenkanal of this state, namely-

(i) Talcher Colliery, (ii) Deulbera Colliery, (iii) South Balanda Colliery, (iv) Jagannath Colliery, (v) Nandira Colliery.

Petitioner alleges that for the carrying out of mining operations a Large number of workmen have been engaged and it is customary in the mining industry that such workers within the mining area draw coal for their own domestic consumption. This traditional advantage has been recognised in several industrial adjudications and settlements between mine owners and their workmen. Coal mines are located in various States of the country and though they are properties of the various States where located, their regulation and development is controlled by a Central Act entitled the Mines and Minerals (Regulation and Development) Act (Central Act 67 of 1957) (hereinafter referred to as the 'act' ). Under its provisions, royalty has always been demanded, paid and accepted by all the States on the basis of the quantity of coal produced and despatched from the Collieries and coal consumed by the workmen for their domestic purposes had never been taken into account for the purpose of raising the demand of royalty, until sometime around 1970, when the Mining Officer of talcher Circle started initiating proceedings under the Orissa Public Demands recovery Act for realisation of arrears of royalty on coal consumed by the workmen in the Talcher and Deulbera Collieries of the petitioner company. Petitioner disputed the maintainability of the certificate proceeding on the footing that the alleged demand was not due under the statute and that contention, having been negatived both by the Certificate Officer as also the appellate authority, petitioner carried a revision to the Revenue Divisional commissioner and during the pendency of the revision approached this Court and later withdrew the revision application.

( 2 ) A counter-affidavit has been filed on behalf of opposite parties 1 to 3 to justify the demand.

( 3 ) ON behalf of the petitioner, it is contended that the liability of paying royalty arises in view of the provision in Section 9 of the Act, which runs thus :--

" (1) The holder of a mining lease granted before the commencement of this Act shall, notwithstanding anything contained in the instrument of lease or in any law in force at such commencement pay royalty in respect of any mineral removed by him from the leased area after such commencement, at the rate for the time being specified in the second Schedule in respect of that mineral (2) The holder of a mining lease granted on or after the commencement of this Act shall pay royalty in_ respect of any mineral removed by him from the leased area at the rate for the time being specified in the Second Schedule in respect of that mineral. (3) The Central Government may, by notification in the official gazette, amend the Second Schedule so as to enhance or reduce the rate at which royalty shall be payable in respect of any mineral with effect from such date as may be specified in the notification : provided that the Central Government shall not-- (a) fix the rate of royalty in respect of any mineral so as to exceed twenty per cent of the sale price of the mineral at the pit's head, or (b) enhance the rate of royalty in respect of any mineral more than once during any period of four years. "

The procedure for recovery of royalty has been provided under the Mineral concession Rules and the lease agreement. On the basis of these provisions, it is stated that unless coal is removed from the leased area, i. e. extracted from the colliery and despatched outside, liability for payment of royalty does not accrue. Reliance is placed on a