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High Court Of Madhya Pradesh
P. V. Dixit, C. J. and K. L. Pandey, J.
SHANKER PRASAD GOENKA - Appellant
Versus
STATE OF MADHYA PRADESH - Respondents
Misc. Petn. 308 Of 1964
Decided On : 09/10/1964
Rule 18 of the M.P. Minor Mineral Rules 1961 clearly contemplates assignment, transfer or sub-letting in law. Rule 18 and the condition in lease deed cannot be construed as prohibiting a transaction which is not in law an assignment, transfer or under-letting even if the practical effect of the transaction may be to enable a third person to extract the mineral on behalf of the lessee and to purchase it solely to the expulsion of there from the lessee. [Para 6
It would be altogether a wrong approach in principle to look beneath a transaction which is legal, competent, regular and in conformity with the rules and conditions of the lease and to regard it as prohibited by Rule 18 of the condition of the lease by speculations as to the motive or scheme for defeating the Rule and the condition. If the Rules or the conditions of the lease leave an easy loophole for evading the prohibition of assignment, transfer or sub-letting without the previous sanction of the lessor, then the proper course to adopt is to amend the Rules and the conditions so as to prevent the evasion. [Para 7
(2) Mines & Minerals (Regulation and Development) Act, 1957 - S. 3 - Notification No. G. S. R. 436 - limestone - is a minor mineral.
Limestone is a minor mineral as declared by Notification No. G. S. R. 436, issued by the Central Government under section 3 of the Mines & Minerals (Regulation and Development) Act, 1957. [Para 9
(3) Minor Mineral Rules, 1961 (M.P.) - R. 25, Cls. (VIII) & (XVI) - failure to keep proper accounts - notice to remedy the breach necessary - lease cannot be cancelled without such notice and opportunity to remedy the breach-condition contrary to rule - is invalid.
It is plain from the language of clause (XVI) of Rule 25 that a lease cannot be determined on the ground of the failure of the lessee to keep correct accounts as provided by clause (VIII) unless and until a notice is first given to the lessee to remedy the breach of clause (VIII) within 30 days from the date of the notice and if the lessee fails to remedy the breach within that period. This provision applies even where there is a total failure to maintain accounts. Any condition inserted in the lease-deed contrary to clauses (VIII) and (XVI) of Rule 25 for the cancellation of the lease on the ground of failure to maintain proper or correct accounts would be invalid. The cancellation of lease on this ground without giving the required notice and opportunity is illegal. [Para 9
(4) Constitution of India - Art. 226 - Minor Mineral Rules, 1961 (M.P.) - R. 25 - cancellation of lease for failure to keep accounts - Government discharges quasi - judicial functions - High Court can entertain writ petition - lease cancelled on two grounds - order not a speaking order - one ground illegal - order to be quashed.
The provisions of the Rules show that in cancelling a lease under clause (XVI) of Rule 25 on the ground of lessee's failure to maintain proper accounts the State Government discharges quasi - judicial function and not merely an administrative one. Even if it is assumed that it is an executive act, still in as much as the act can be done only after certain conditions are satisfied, the validity of the act can be assailed in proceedings under Art. 226 if the conditions are not satisfied. 1961 JLJ 771, relied on.
When the cancellation is based on two grounds and the order is not a speaking order and it is impossible to say from it how far one or the other of the two grounds in the Government and effectively operated to bring about the decision in regard to the cancellation of the lease. Therefore, if one of the two grounds was illegal, the whole of the order is vitiated and liable to be quashed. [Para 9
Where an authority fails to exercise any discretion at all and declines jurisdiction, it can be compelled by a writ to exercise jurisdiction vested in it. (1902) 2 K.B. 165, relied on. [Para 12
(5) Minor Mineral Rules, 1961 (M.P.) - R. 18 - sanction for assigning, sub-letting or transferring lease under a condition in lease - sanction cannot be refused for wholly extraneous reasons - matters to be considered in such a case.
In regard to a provision or covenant in a lease for obtaining previous sanction for any assignment, sub-letting or transfer of any right or title in the lease, the law is well settled that the lessor is not entitled to refuse sanction or consent for wholly extraneous reasons and grounds for refusal should have a rational connection with the property actually leased or the character of the proposed transferor or the assignee or the sub-lessee. The lessor cannot withhold the sanction for obtaining some collaterial advantage or for imposing on the intended assignor of transferor any greater burden than that had been imposed by the lease and the sanction cannot be withheld arbitrarily or vexatiously. (1896) 2 QB 241 & (1925) 1 Ch. 575, referred to. [Para 11
( 1 ) THIS order will also govern the disposal of Miscellaneous Petition No. 309 of 1964.
( 2 ) BY these two applications under Article 226 of the Constitution of India the petitioners seek writs of certiorari for quashing two orders passed by the State government, one on 20th February 1964 rejecting the petitioner Shankar Prasad goenka's application for the transfer of a lease for extraction of limestone to the other petitioner in Miscellaneous Petition No. 308 of 1964, namely, Messrs T. C. Bajan and Co. , Private Ltd. of Katnf (hereinafter called the company) and another order passed on 7th April 1964 cancelling the lease for attraction of limestons granted to Shanker Prasad Goenka, forfeiting the security deposit under the lease and requiring him to quit and deliver possession of the lands covered by the lease.
( 3 ) THE material facts are. that on 1st November 1961 Shankar Prasad Goenka was granted by ths State a quarry lease for the extraction of limestone in certain specified lands admeasuring 24. 75 acres, situated in Mauia Amehta, Tahsil muvwara, District Jabalpur, for a period of five wears commencing from 1st november 1961 and ending on 31st October 1966. On 4th March 1962 the leasee geonka entered into an agreement with one Dorab Cawasji Bajan for the raising of limestone from the leased out area. Under that agreement Bajan was to engage all labour for the extraction of limestone at marked out places, use his own tools, machinery and materials, was to stack extracted limestone at the place or places selected by Goenka and was to receive payments at the rate of Rs. 20/.-per 100 cft. of limestone raised. Bajan was made responsible for payment of wages, compensation amount and other emoluments "payable under the law" to his labour and personnel. This agreement was to last for an initial period of two years. On 18th March 1962 Goenka entered into another agreement with the company in which Dorab Cawasji Bajan was a partner, for the sale of limestone at the rate of rs. 30/- per 100 Cft. This contract contained clauses about drawing of bills, payment and delivery of limestone. Its duration was stated to be initially for a period of five years. The petitioner did not file copies of these agreements along with his two petitions. The State also did not file them along with their returns. But these agreements are to be found in the record of the matter which was placed before us. On 23rd July 1962 Goenka made a request in writing to the government for being allowed to transfer his lease to the Company. He reiterated this request by another application to the Government on 9th March 1963. It has been stated in the return filed on behalf of the State that on receipt of these applications an enquiry was held by the Sub-divisional Officer, Katni, and it was found by him that the lessee had not maintained any accounts and had virtually transferred the lease to the Company by the two agreements he had concluded with the Company and Dorab Cawasji Bajan. The report of the Sub-Divisional officer was forwarded to the Government through the Commissioner, Jabalpur division, with his recommendation that the transfer application should be rejected and the lease should be cancelled as the lessee had not maintained account books, had virtually transferred the lease without obtaining the previous sanction of the lessor, and had thus committed a breach of conditions Nos. 5 and 12 of the lease. In the return it has been averred that the lessee was given full opportunity by the sub-Divisional Officer, Katni, the Additional Collector, Jabalpur, and the commissioner, Jabalpur Division, for producing his account books and explaining the agreements he had entered into with Dorab Cawasji Bajan and the Company. The petitioner however complains that no such opportunity was given. After the receipt of the report of the Commissioner, a notice was issued to the lessee goenka on 20th February 1964 (Annexure A to the petition in Misc. Petition
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