M.P. Bricks Company vs State Of Madhya Pradesh

Headnote:(A) Mines and Minerals (Development and Regulation) Act, 1957 - Sections 9, 9A, 15(1) and 15(3) - State Minor Mineral Rules - Rule 29(3) and Rule 30 - Dead rent vs. Royalty - Dead rent is a fixed minimum annual payment based on the leased area, payable regardless of whether the mine is worked, whereas royalty is a variable charge based on the quantity of minerals extracted (Paras 19, 20, 25) - Section 9A of the Act is an independent provision and not merely an enabling provision of Section 9, creating a statutory liability for dead rent irrespective of extraction (Paras 21, 27).

(B) Liability for Dead Rent - Under state rules, if a lessee is unable to commence operations for reasons beyond their control, they must submit an application to the Sanctioning Authority to declare the lease as lapsed. In the absence of such an application, the lease continues, and the lessee remains liable for dead rent after the expiry of one year from the execution of the lease deed (Paras 23, 24, 28).

Facts of the case:
The petitioners challenged orders for the recovery of dead rent, contending that they were unable to operate the mining leases due to the lack of environmental clearances and the non-handover of physical possession. They argued that such impediments should exempt them from the liability of paying dead rent, relying on central government clarifications and various judicial precedents.

Findings of Court:
The court found that the petitioners failed to apply for a declaration of lapse of the leases under the relevant state rules despite the non-operation of the mines. Consequently, the leases continued for their stipulated periods. The court held that dead rent is a minimum guarantee for the lessor and is a fixed obligation based on the leased area, independent of production levels or the acquisition of statutory clearances.

Issues: Whether dead rent is payable after the grant of a quarry lease when the lease could not be operated due to non-handover of possession of the leased property or because the requisite permissions for operating the lease were not granted by the competent authority? (Para 4).

Ratio Decidendi: Dead rent is a fixed consideration for the lease of a mineral area and serves as a minimum guaranteed income for the state. Under Section 9A of the Act and the state rules, the obligation to pay dead rent persists during the currency of the lease unless the lease is formally declared as lapsed. The inability to obtain clearances or possession does not automatically discharge the lessee from this liability if the lease remains subsisting.

Result: The petitions are dismissed and interim relief is vacated.

Legal Category Hierarchy

1. Challenge to recovery of dead rent for period when quarry lease could not be operated due to lack of environmental clearance. (Para 1 , 2 )

2. Petitioner argued dead rent not payable when unable to operate lease; respondent argued dead rent payable regardless of operation under Section 9A. (Para 2 , 3 , 13 , 14 )

3. Petitions dismissed; dead rent held payable even if lease non-operational under Section 9A of MMDR Act and MP Minor Mineral Rules. (Para 29 )

4. Is dead rent payable under Section 9A of the MMDR Act when the mining lease could not be operated due to lack of environmental clearance?

Yes, dead rent is payable regardless of whether mining operations commenced, as it is a fixed minimum rent based on the leased area. (Para 4 , 14 , 21 , 24 , 25 , 27 , 28 )

5. Is Section 9A of the MMDR Act an independent provision or merely an enabling provision for Section 9?

Section 9A is an independent provision creating a separate liability to pay dead rent, not merely an enabling provision for Section 9 royalty. (Para 21 , 27 )

6. Can a lessee avoid dead rent by failing to operate the lease due to reasons beyond his control without seeking a declaration of lapse?

No, the lessee must apply under Rule 30(7) of MP Minor Mineral Rules for extension; otherwise, lease continues and dead rent is payable. (Para 23 , 24 )

7. Do the pre-2016 judgments of Rajasthan and Karnataka High Courts on dead rent remain applicable after the 2016 amendment inserting Section 9A?

No, those judgments are no longer applicable as Section 9A was inserted in 2016. (Para 8 )

ORDER :

Pradeep Mittal, J.

As all these writ petitions involve a common issue, they are heard and decided concomitantly by this common order. References to annexures and documents are taken from W.P. No. 3601 of 2021 for convenience.

1. The petitioner is challenging the order Annexure P/1 in which the Mining Officer, Hoshangabad has passed order of recovery of dead rent during the period between 2013-14 principle of which has been valued at Rs.4,60,903/-.

2. That facts leading to the filing of the present petition are that, the petitioner had applied for renewal of quarry lease on 25.06.2012 before the respondent no.3 and the same was granted in favour of the petitioner on 26.09.2013 for a period of 10 years, thereafter the petitioner applied for environment clearance before the State Environment Impact Assessment Authority and the same was granted in favour of petitioner on 25.11.2014. The petitioner was not granted Bhu Pravesh as per provision of M.P. Land Revenue Code after due compliance of all mandatory condition mentioned in the Letter of intent. After due approvals granted in favour of the petitioner, the petitioner with the intention of operating the QUARRLY LEASE entered the land but in the meanwhile the National Green Tribunal has stayed the operation of mining lease in which environment clearance is not granted. The respondent no.3 has enumerated the condition that the petitioner is restricted to start the work without environment clearance. However, even though he was unable to operate the mining work in the leased area he has paid the dead rent for the period 2012 to 2013. The respondent no.3 has issued the demand notice of dead rent for the period of 13.07.2013 to 13.07.2014 vide order dated 12.03.2015. The possession could have been handed over to the petitioner and prior to starting the mining work the respondent no.3 has demanded the dead rent which is against the order passed by the Central Government whereby the Government of India vide Annexure P/ 6 issued the direction to all States directing that premature determination of dead rent when lessee was not legally allowed to carry out mining activities, the State Government could not demand arrears of dead rent for intervening period. The petitioner against the order passed by the Collector approached the Appellate Authority U/s 57 of Rules 1996 wherein the said order of the Collector was affirmed by the respondent nos.1 and 2. The respondent No.3 has overlooked the clarification issued by the Central Government in the year 2001 whereby the Central Government has clarified that the State Government could not demand the dead rent if the leasee has not operated the mines. The respondent no.3 has completely overlooked the notification and dismissed the claim of the petitioner without applying the mind. The order of recovery of dead rent is arbitrary and unlawful and has been issued without application of mind. The petitioner has questioned the same before the Appellate Authority u/s 57 of Rules of 1996 and after facing rejection the petitioner has moved before the State Government and the State Government vide order dated 06.04.2018 has rejected the contentions raised by the petitioner qua exemption from the dead rent. The petitioner was unable to operate the mining work due to stay order passed by National Green Tribunal. The petitioner is suffering by the inaction on the part of respondents and petitioner is not at any fault as the condition for delaying is beyond the control of the petitioner. The impugned order dated 12.03.2015 and 24.04.2018 in which a demand has been raised for recovery of dead rent between the period 2013 to 2014 is bad in law as provision of recovery of dead rent persists only after the starting the work. The impugned order dated 06.01.2018 is issued in total disregard in overlooking the clarification issued by Government of India.

3. The submission of the respondent is that, in the present petition, the petitioner has heavily relied upon the

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2026 Supreme(MP) 608

Dead rent is a fixed minimum annual payment independent of mineral extraction. A lessee remains liable for it during the lease's currency unless they apply for the lease to be declared lapsed under the governing rules, regardless of the lack of statutory clearances or physical possession.

Legal Category Hierarchy

Table of Contents

4. Is dead rent payable under Section 9A of the MMDR Act when the mining lease could not be operated due to lack of environmental clearance?

5. Is Section 9A of the MMDR Act an independent provision or merely an enabling provision for Section 9?

6. Can a lessee avoid dead rent by failing to operate the lease due to reasons beyond his control without seeking a declaration of lapse?

7. Do the pre-2016 judgments of Rajasthan and Karnataka High Courts on dead rent remain applicable after the 2016 amendment inserting Section 9A?

Judicial Analysis

2026 Supreme(MP) 608

Dead rent is a fixed minimum annual payment independent of mineral extraction. A lessee remains liable for it during the lease's currency unless they apply for the lease to be declared lapsed under the governing rules, regardless of the lack of statutory clearances or physical possession.

Legal Category Hierarchy

Table of Contents

4. Is dead rent payable under Section 9A of the MMDR Act when the mining lease could not be operated due to lack of environmental clearance?

5. Is Section 9A of the MMDR Act an independent provision or merely an enabling provision for Section 9?

6. Can a lessee avoid dead rent by failing to operate the lease due to reasons beyond his control without seeking a declaration of lapse?

7. Do the pre-2016 judgments of Rajasthan and Karnataka High Courts on dead rent remain applicable after the 2016 amendment inserting Section 9A?

Cases Referred (3)

Judicial Analysis