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1957 Supreme(MP) 107
High Court Of Madhya Pradesh
Sen and Shrivastava, JJ.
STATE OF MADHYA PRADESH - Appellant
Versus
M.HASSONJEE - Respondents
First Appeal 181 Of 1952
Decided On : 04/20/1957
H.L.KHASKALAM, R.S.DABIR
Mining leases granted prior to the framing of rules under the Mines and Minerals (Regulation and Development) Act, 1948, are not void if they are in accordance with the Mining Rules.
Headnote:
MINING LEASE - MINING RULES - VALIDITY - MINES AND MINERALS (REGULATION AND DEVELOPMENT) ACT, 1948 - SECTION 4 - MINERAL CONCESSION RULES, 1949 - EFFECT - AGREEMENT FOR ENHANCED ROYALTY - VALIDITY - MISREPRESENTATION.
Fact of the Case:
The respondent, a mining lessee, entered into an agreement with the appellant, the State Government, to pay an enhanced rate of royalty on coal extracted from the leased area. The agreement was made in consideration of the State Government's promise to grant a consolidated mining lease for the entire area at the enhanced rate. The respondent paid the enhanced royalty for a period of time, but later filed a suit for refund, claiming that the agreement was void as it contravened the Mining Rules and the Mines and Minerals (Regulation and Development) Act, 1948. The trial court decreed the suit, holding that the agreement was void.
Finding of the Court:
The High Court held that the Mining Rules were not framed under the authority of any statute and were merely executive instructions issued by the Government to its officials for the sake of uniformity in the management of lands. The court further held that the Mines and Minerals (Regulation and Development) Act, 1948, did not prohibit the grant of mining leases prior to the framing of rules under the Act, and that the agreement between the parties was not affected by the Mineral Concession Rules, 1949, which came into force after the agreement was entered into. The court also held that the agreement was not vitiated by any misrepresentation on the part of the State Government.
Issues: 1. Whether the Mining Rules were valid and binding on the parties. 2. Whether the agreement between the parties was void as it contravened the Mines and Minerals (Regulation and Development) Act, 1948. 3. Whether the agreement was vitiated by any misrepresentation on the part of the State Government.
Ratio Decidendi: 1. The Mining Rules were not framed under the authority of any statute and were merely executive instructions issued by the Government to its officials for the sake of uniformity in the management of lands. 2. The Mines and Minerals (Regulation and Development) Act, 1948, did not prohibit the grant of mining leases prior to the framing of rules under the Act, and the agreement between the parties was not affected by the Mineral Concession Rules, 1949, which came into force after the agreement was entered into. 3. The agreement was not vitiated by any misrepresentation on the part of the State Government.
Final Decision: The High Court set aside the decree passed by the trial court and dismissed the suit. The respondent was ordered to pay the costs of the appellant and bear his own costs throughout.
( 2 ) ONE Haji Zehiruddin, of Bhopal, held a mining lease D/- 20-5-23 of 189. 76 acres of land in Chhindwara for extracting coal. This lease was transferred on 4th september 1940 to the respondent. The respondent was anxious to acquire some land from two adjacent collieries. After protracted negotiations, the State government agreed in 1947 to grant their consent to the transfer of the adjacent lands to respondent subject to the condition that the respondents took a consolidated lease for the whole area at an enhanced rate of royalty. The respondent agreed and executed an agreement dated llth January 1949 (Ex. P-3) by which the royalty rate was raised from Rs. 5/-per ton to Rs. 10/- per ton. The respondent started working the mines, though no formal mining lease was executed as contemplated. The State Government claimed Rs. 40,805/- being the difference between the old and new rates of royalty on the coal removed. The respondent paid the sum on different dates in February and March, 1950. He brought this suit for refund of the extra amount so paid with interest.
( 3 ) THE case of the plaintiff is that he was liable to pay royalty at the rate of Rs. 57per ton only as the agreement to pay enhanced rate of royalty was void inasmuch as it contravened Rule 50 of the mining rules then in force, and also because it was contrary to the provisions in Section 4 and rules made under Section 5 of the mines and Minerals (Regulation and Development) Act, 1948. It was also contended that the agreement was executed on a representation from the State Government that the Mining Rules were being amended to raise the rates of royalty. Ultimately, the draft amending rules which had been published for this purpose was not brought in force. The agreement was hence pleaded to be void as having been obtained by a misrepresentation. These contentions have been accepted by the trial court and the suit has been decreed. Henee this appal.
( 4 ) WE will first consider the position with reference to the Mining Rules which were framed in 1913. Prior to the coming into force of the Government of India Act, 1935, the Provinces did not have any separate entity. All the lands, buildings and other property belonging to the Government of India vested in His Majesty and the secretary of State for India acted for His Majesty. The constitutional position changed in 1935 and the Provinces were for the first time given an independent status in certain matters and the Government properties became vested in them. It was provided in Section 172 of the government of India Act that all lands and buildings which were till then vested in "his Majesty for the purposes of the Government of India" were to vest either in "his Majesty for the purpose of the Government of Province" or in "his Majesty for the purposes of the Government of the Federation", according as the purposes for which the property was held were under that Act the purposes of the Government of the Province or of the Federation. The general effect of the section is that lands in the Provinces vested in His Majesty for the purposes of the Province, except in few cases.
( 5 ) THE Mining Rules of 1913 have the following preamble:
"in supersession of the rules published with Resolution No. 18-17-2 dated the 20th May, 1899, the Governor General in Council is pleased to prescribe the following rules for regulating the grant by the Local government of licenses to prospect for minerals and the grant of mining leases in British India. . . "
It is clear from these Rules, that they have not been made under the authority of any statute; but are only in the nature of executive instructions. The Governor general on behalf of the Secretary or State framed these Rules for the management of lands by L
