Gujarat High Court
Oil & Natural Gas Corpn. Ltd vs State Of Gujarat on 21 January, 2020
Author: J. B. Pardiwala
Bench: J.B.Pardiwala, Bhargav D. Karia
C/SCA/17304/2006 JUDGMENT
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/SPECIAL CIVIL APPLICATION NO. 17304 of 2006
With
R/SPECIAL CIVIL APPLICATION NO. 17305 of 2006
FOR APPROVAL AND SIGNATURE:
HONOURABLE MR.JUSTICE J.B.PARDIWALA Sd/-
and
HONOURABLE MR. JUSTICE BHARGAV D. KARIA Sd/-
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1 Whether Reporters of Local Papers may be allowed to NO
see the judgment ?
2 To be referred to the Reporter or not ? NO
3 Whether their Lordships wish to see the fair copy of the NO
judgment ?
4 Whether this case involves a substantial question of law NO
as to the interpretation of the Constitution of India or any
order made thereunder ?
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OIL & NATURAL GAS CORPN. LTD & 1 other(s)
Versus
STATE OF GUJARAT & 9 other(s)
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Appearance:
M/S TRIVEDI & GUPTA for the Petitioner(s) No. 1,2
GOVERNMENT PLEADER for the Respondent(s) No. 1
RULE SERVED for the Respondent(s) No. 2,3,4,5,6,7,8,9
RULE SERVED(64) for the Respondent(s) No. 1
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CORAM: HONOURABLE MR.JUSTICE J.B.PARDIWALA
and
HONOURABLE MR. JUSTICE BHARGAV D. KARIA
Date : 21/01/2020
ORAL JUDGMENT
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C/SCA/17304/2006 JUDGMENT (PER : HONOURABLE MR.JUSTICE J.B.PARDIWALA)
1. Since the issues raised in both the captioned petitions are the same and the parties are also the same, those were heard analogously and are being disposed of by this common judgment and order. For the sake of convenience, the Special Civil Application No.17304 of 2006 is treated as lead matter.
2. By this writapplicant under Article 226 of the Constitution of India, the writapplicant company registered under the provisions of the Companies Act, 1956 has prayed for the following relief(s): "10(A) YOUR LORDSHIPS may be pleased to issue writ of mandamus or a writ in the nature of mandamus or any other appropriate writ, order or direction holding and declaring that the respondents are not entitled to raise demand for land revenue and local fund and/or other taxes, cess duties and/or N.A.assessment and/or Panchayat Cess etc. in connection with the mining lease granted to the petitioner Corporation in view of the judgment of the Hon'ble High Court in First Appeal No.5224/2001 AND First Appeal No.5225/2001.
(B) YOUR LORDSHIPS may be pleased to issue writ of mandamus or a writ in the nature of mandamus or any other appropriate writ, order or direction holding and declaring that the impugned demand notices are without jurisdiction, without authority law, in contravention of the statutory provisions as well as the conditions of lease and in contravention of the judgment dated 01.12.2005 delivered in First Appeals Nos.5224/2001 and 5225/2001 and the impugned demand notices are arbitrary, unreasonable and oppressive.
Page 2 of 13 Downloaded on : Sun Jun 14 22:56:33 IST 2020C/SCA/17304/2006 JUDGMENT (C) YOUR LORDSHIPS may be pleased to issue writ of mandamus or a writ in the nature of mandamus or any other appropriate writ, order or direction quashing and setting aside the impugned demand notices annexed to the captioned petition as AnnexureA colly.
(D) Pending admission and final disposal of present petition, YOUR LORDSHIP may be pleased to pass appropriate writ, order or direction, as and by way of interim relief, staying the operation, implementation and execution of the impugned demand notices and restraining the respondents from taking any coercive actions pursuant to the impugned demand notices.
(E) An exparte adinterim relief in terms of para 10(C) above may kindly be granted.
(F) YOUR LORDSHIPS may be pleased to grant any other and further relief/s, as may be deemed just and proper, may also be kindly granted in the interest of justice and fitness of things."
3. We take notice of the fact that the captioned writapplications along with one third identical petition being the Special Civil Application No.1607 of 2006 were taken up for hearing by the coordinate Bench of this Court and vide judgment and order dated 06.10.2016, disposed of all the petitions. We deem it appropriate to quote the entire judgment of the coordinate Bench: "1. These three petitions with slight variance in factual background, lead to the same challenge by the petitionerONGC. The ONGC is enjoying certain lands for its oilfields and other purposes. The lands involved in Special Civil Application No.16071 of 2006 have been given to the ONGC under lease deeds executed by the State Government. These lease deeds have a clause, under which, the ONGC is exempt Page 3 of 13 Downloaded on : Sun Jun 14 22:56:33 IST 2020 C/SCA/17304/2006 JUDGMENT from payment of land revenue. Despite this clause, the Panchayats, where such lands are situated, has been demanding the land revenue as also the education cess. ONGC opposes such demands. In other two petitions, some of the lands have been acquired for and on behalf of ONGC. By virtue of such acquisitions, the ONGC has become the owner thereof. Counsel for the petitioner submitted that even in these petitions, certain lands have been granted to ONGC under lease deed executed by the Government which contained similar clause for exemption of the land revenue. In background of such facts, the ONGC disputes levy and collection of land Revenue by the appropriate authorities as well as the education cess. Learned counsel for the petitioner drew our attention to a judgment of Division Bench of this Court in case of Oil & Natural Gas Corporation Ltd. v. Taluka Panchayat, Khambhat & Anr., reported in 2006 (2) GLR 987, in which, it was held and observed as under: "4.6 We have considered various submissions made by the learned counsel. In our view the order of the learned trial judge rejecting the claim of the plaintiff is wholly illegal and contrary to the provisions of the Bombay Land Revenue Code and the Panchayats Act. In our earlier part of this judgement we have considered the Bombay Land Revenue Code as well as other provisions of the Act. In our considered view the contract specifically entered into by the State Government exempts payment of land revenue. Therefore, the plaintiff will have no liability to pay land revenue under Section 45 of the Code.
4.7 In view of the above submission the defendants are not entitled to levy the tax as the plaintiff is not liable to pay any land revenue under the Bombay Land Revenue Code and in the light of Education Cess Act and the contract, the plaintiff is also not liable to pay panchayat cess in view of Section 191 read with Section 203 of the Act.
4.8 We have also considered Chapter XIII of Land Revenue Code which deals with restrictions on use of land. The lands Page 4 of 13 Downloaded on : Sun Jun 14 22:56:33 IST 2020 C/SCA/17304/2006 JUDGMENT occupied by the plaintiff are reserved for mining operations and are assigned for public purpose as the lands acquired by the plaintiff shall be deemed to be needed for a public purpose. Rule 75(1)(b) of the Land Revenue Rules contemplates that the lands assigned for public purpose are not assessed and hence defendant No. 1 is not authorised to assess and claim nonagricultural assessment from the plaintiff in respect of the lands used for public purposes.
4.9 In view of the above, the appeal is allowed. The judgement and decree of the trial Court dated 27.9.2001 passed by the Joint Civil Judge (S.D.), Nadiad in Special Civil Suit No. 20 of 1995 is quashed and set aside. The original suit of the plaintiff is decreed partly and this Court holds that notices dated 13.2.1997 and 15.3.1997 issued by the Taluka Development Officer to pay tax in form of land revenue,and V.P. Cess are illegal and inoperative, unconstitutional and arbitrary and liable to be quashed and set aside. This Court grants permanent injunction restraining the defendants or their subordiates from collecting any tax in the form of Land Revenue and V.P. Cess, from the plaintiff.
4.10 So far as Education cess is concerned, in view of the above discussions and the legal position, plaintiff's suit against recovery of education cess is dismissed. Parties to bear their own costs throughout. A decree be framed accordingly."
2. In the nutshell, the Division Bench in the said judgment, held that the ONGC on the leased lands is not required to pay land revenue but would be liable to pay education cess. This ratio would apply in case of Special Civil Application No.16071 of 2006, where admittedly, the land is granted to the ONGC by the Government under a lease carrying an exemption clause. It would also apply in case of other two petitions, where lands have been so granted to ONGC under similar lease deeds containing conditions. The position however would be different in cases where the land is acquired for and on behalf of the ONGC. In such a situation, the ONGC would become the owner thereof and since it is even Page 5 of 13 Downloaded on : Sun Jun 14 22:56:33 IST 2020 C/SCA/17304/2006 JUDGMENT otherwise not contended that such acquisition of land contained a clause for waiver of land revenue, the ONGC would have to pay the same.
3. In the result, all petitions are disposed of with a declaration that with respect to lands occupied by the ONGC under lease agreements executed by the State Government, there shall be no liability to pay land Revenue. In such cases the liability of ONGC would be confined to payment of education cess. In case of lands which have been acquired for and on behalf of ONGC, both land revenue as well as education cess would be payable by the ONGC.
4. We are informed, the ONGC has deposited disputed amounts before the Registry of the High Court. In Special Civil Application No.16071 of 2006, whatever amount the petitioner might have deposited, 75% thereof shall be returned to ONGC with accrued interest, if any. Remaining 25% shall be released with accrued interest, if any, in favour of the concerned Panchayat. The Panchayat shall recalculate the ONGC's liability for payment of education cess ignoring land revenue. The final figure would be adjusted towards the amounts that we have released under this order.
5. In case of other two petitions, the entire amount with accrued interest, if any, shall be released in favour of the respective panchayats before whom, it would be open for the ONGC to appear and point out that with respect to some of the lands, there being lease agreement, the ONGC's tax liability will be confined to education cess and therefore be reduced. The Panchayat shall consider such representation if so received and modify the tax bills suitably and grant refund if the representations are found valid.
6. All petitions are disposed of accordingly."
4. Thus, all the three petitions vide judgment and Page 6 of 13 Downloaded on : Sun Jun 14 22:56:33 IST 2020 C/SCA/17304/2006 JUDGMENT order dated 06.10.2016 were disposed of with a declaration that with respect to lands occupied by the ONGC under lease agreements executed by the State Government, there shall be no liability to pay the land revenue. The liability of the ONGC would be confined to payment of education cess. The Court further observed that in case of the lands which had been acquired for and on behalf of the ONGC, both land revenue as well as education cess would be payable by the ONGC.
5. Later the Misc.Civil Application No.1 of 2017 came to be filed by the ONGC in both the captioned petitions seeking necessary clarification. The said application came to be disposed of vide order dated 12.10.2018 following the terms: "1. This application is filed by the original petitionerONGC and its authorities. Prayer is to recall a common judgement dated 06.10.2016 disposing of the petitions. The issue involved in the main petition was of the right of the respective panchayats where the ONGC was carrying out oil drilling operations to collect land revenue from ONGC. Case of the ONGC was that the panchayats had no authority to collect such land revenue. By the judgement disposing of the petitions, it was held that in cases where the lands were given to the ONGC on lease by the Government in view of waiver clauses, no land revenue can be collected. However, wherever there are leases so executed, revenue could still be demanded.
2. Counsel for the petitioner submitted that in this case, the lands have been acquired by the State Government for and on behalf of ONGC. Thereafter mining leases have been executed in terms of Rule 4 of the Petroleum and Natural Gas Rules, 1959. In view of such leases also the land Page 7 of 13 Downloaded on : Sun Jun 14 22:56:33 IST 2020 C/SCA/17304/2006 JUDGMENT revenue waiver should apply.
3. This aspect was not in our minds when we were disposing of the petitions. This is therefore not a case for clarification as was primarily urged by the counsel for the petitioner. Instead, we would give a full and fresh chance to both sides to argue all issues. For such purpose, common judgement in connection with this petition is recalled.
4. Petition is revived and would be placed for hearing before the appropriate Bench. Misc. Civil Application is disposed of."
6. Thus, the coordinate Bench was of the view that the Misc.Civil Application filed by the ONGC was just classificatory in nature. The coordinate Bench thought it fit to give an opportunity of hearing to both the sides to argue on the issue whether the land revenue can be collected in cases where the land is actually acquired by the State Government for and on behalf of the ONGC, and thereafter, a leasedeed is executed in that regard.
7. It was argued on behalf of the ONGC before the coordinate Bench that as the mining leases had been executed in terms of Rule 4 of the Petroleum and Natural Gas Rules, 1959, the land revenue waiver would apply to such leases.
8. The issue in question can be divided into two parts, first, the cases in which the State Government would allot the land in favour of the ONGC for the purpose of mining by executing a leasedeed and secondly, the State Government would acquire the land under the provisions of the Land Acquisition Act for Page 8 of 13 Downloaded on : Sun Jun 14 22:56:33 IST 2020 C/SCA/17304/2006 JUDGMENT and on behalf of the ONGC for the purpose of mining, and thereafter, enter into an appropriate leasedeed.
9. So far as the first part is concerned, the issue stands concluded. The only question that now falls for our consideration is whether in cases where the land is actually acquired by the State Government for and on behalf of the ONGC for the purpose of mining and the leasedeed is executed then whether the ONGC is liable to pay any tax by way of land revenue.
10. Our attention has been drawn to the Petroleum and Natural Gas Rules, 1959 more particularly, Rule 4 which reads thus: "No prospecting or mining except under a license or a lease - No person shall prospect for petroleum except in pursuance of a petroleum exploration license (herein after referred to as a license) granted under these rules, and no person shall mine petroleum except in purusance of a petroleum mining lease (herein after referred as a lease) granted under these rules. Every holder of a license and every holder or a lease shall in these rules be referred to as the licensee and the lesseee, respectively."
11. Our attention is further drawn by the learned counsel appearing on behalf of the ONGC on PartVII of the leasedeed executed between the parties. Clause (1) of PartVII reads thus: "1. The lessee shall pay the rents and royalties reserved by this lease at the time and in the manner provided in Part V and Part VI of the Schedule and shall also pay and discharge all taxes, rates, assessments and impositions whatsoever being in the nature of public demands which shall from time to time be charged, Page 9 of 13 Downloaded on : Sun Jun 14 22:56:33 IST 2020 C/SCA/17304/2006 JUDGMENT assessed, or imposed by the authority of the Central or State Government upon or in respect of the premises and works of the Lessee in common with other premises and works of a like nature except demands for land revenue."
12. In our opinion, it would not make any difference so far as the liability to pay the land revenue is concerned even if the land is acquired by the State Government for the purpose of mining and the lease in that regard is executed. In the covenant itself it has been provided that the lessee i.e. O.N.G.C. shall pay the rent and royalty reserved by the lease and shall also pay and discharge all the taxes, rates, assessments and impositions except the demand for land revenue. The last part of the covenant in Part VII clinches the issue. Thus, even in cases like, the one on hand, if the State Government has acquired the land under the provisions of the Land Acquisition Act for and on behalf of the ONGC for the purpose of mining and has entered into leasedeed, the ONGC is not liable to pay any land revenue. We are not concerned with the other covenants. We are deciding a very limited issue as regards the liability of the ONGC to pay the land revenue.
13. It appears that on 23.08.2006, the coordinate Bench of this Court passed the following order: "The endorsement on the board indicates that notices issued to the respondent Nos.2 to 10 are not received back, either served or unserved. Having regard to the facts of the case, the matter is allowed to stand over to September 14, 2006. Adinterim relief granted earlier is directed to continue till then.
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14. Later, while issuing Rule, the coordinate Bench passed the following order on 03.10.2007.
"On the question of interim relief having heard the learned counsel for the petitioners and learned Government Pleader, we refuse to grant interim relief.
The amounts deposited by the petitioners shall be permitted to be withdrawn by the State Government, without prejudice to the petitioners' rights and contentions. Ultimately, if the petitioners succeed, the Court will consider directing the State Government to refund the amounts with interest at such rate as the Court may consider fit.
As regards the request being made by Mr. Naik for the petitioners, it will be open to the petitioners to move this Court in January 2008 for fixing an early date of final hearing."
15. We take notice of the fact that in the petitions before us the challenge is to the demand notices. The details are found in Paragraph No.3 of the memo of the writapplication. It is brought to our notice that, as this Court had declined to grant any interim relief at the relevant point of time, the entire amount towards the demand was deposited with the Registry of this Court and later the State Government was permitted to withdraw the said amount. As the writapplicant is succeeding in both the petitions, the amount which has been withdrawn by the State Government will have to be paid back to the ONGC at the rate of 6% simple interest.
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16. We also take notice of the affidavitinreply filed on behalf of the respondent no.3 duly affirmed on 11th January, 2007, more particularly, the averments made in Paragraph No.7 therein: "7. I state that for the above referred purposes petitioner acquires land thorough different mode like acquisition under Land Acquisition Act, through private contracts, by way of lease etc. It is stated that the present lands were acquired by the petitioner through acquisition mode. In the said awards, it is specifically stated that the petitioner is liable to pay the land revenue and the same is agreed by the petitioner. I crave leave to refer and rely the award passed with respect to land situated in other villages also, in necessary. It is clear from the above awards that these lands were acquired by the petitioner through acquisition mode and not by way of executing lease deed. There is no lease agreement executed between the petitioner and the respondent no.1."
17. The stance as aforesaid of the respondent no.3 is that as there is a reference in the award itself about payment of land revenue, the ONGC would be liable to pay the revenue.
18. Such a stance on behalf of the respondent no.3 does not appear to be tenable in law, as the same is directly in conflict with the covenant as provided in ChapterVII of the leasedeed which we have referred to above. Once again, at the cost of repetition, we state that, the position of law would remain the same in both the cases i.e. in cases where the land is actually alloted by the State Government and also in cases where the land is acquired by the State Page 12 of 13 Downloaded on : Sun Jun 14 22:56:33 IST 2020 C/SCA/17304/2006 JUDGMENT Government. The issue in question came to be decided by this Court way back in the year 2005 in the case titled as ONGC vs. Taluka Panchayat, Khambhat [2006 (2) GLR 987].
19. It is declared that the respondents are not entitled in law to raise demand for land revenue, local fund and panchayat cess except the education cess in connection with the mining lease granted in favour of the petitioner.
20. The amount deposited by the ONGC and later withdrawn by the State Government shall now be refunded to the ONGC at the rate of 6% interest within a period of three months from the date of receipt of writ of this order.
21. In the result, both the petitions succeed and are hereby allowed. Rule made absolute to the aforesaid extent.
(J. B. PARDIWALA, J) (BHARGAV D. KARIA, J) GIRISH Page 13 of 13 Downloaded on : Sun Jun 14 22:56:33 IST 2020