Madhya Pradesh High Court
Satna Stone And Lime Co. Ltd. And Ors. vs State Of Madhya Pradesh And Ors. on 7 May, 1988
Equivalent citations: AIR1988MP286, AIR 1988 MADHYA PRADESH 286, (1988) 22 REPORTS 375 (1988) MPLJ 489, (1988) MPLJ 489
JUDGMENT K.N. Agarwal, J.
1. This order shall also dispose of the following writ petitions : --
(1) M.P. No. 955/88, Tata Iron and Steel Co. Ltd. v. State and Anr.; (2) M.P. (No. 229/88, Birla Jute and Ind. Ltd. v. Union of India, and Ors.; (3) M.P. No. 504/88, Bharat Food India Ltd. v. Union of India; (4) M.P. No. 1166/88, Hindustan Aluminium Corpn. and Anr. v. State and Anr.; (5) M.P. No. 500/88, Raymond Cement Works v. Union of India and Ors.; (6) M.P. No. 943/88, Grasim Industries Ltd. v. State and Ors.; (7) M.P. No. 1260/88, Steel Authority of India v. State and Anr.; (8) M.P. No. 1267/88, Cement Corpn. of India v. State and Anr.; (9) M.P. No. 889/88, Hindustan Copper Ltd. v. State and Anr.; (10) M.P. No. 1109/88, D.P. Rai v. State and Anr.; (11) M.P. No. 1112/88, J.A. Trivedi Brothers v. State and Anr.; (12) M.P. No. 1167/88, Pacific Mineral Pvt. Ltd. v. State and Anr.; (13) M.P. No. 1173/88, Eastern Mineral Mine Owners v. State and Ors.; (14) M.P. No. 277/88, Century Textiles and Ind. Ltd. v. State and Ors.; (15) M.P. No. 282/88, Century Textiles and Ind. Ltd. v. State and Ors.; (16) M.P. No. 661/88, Navratan Mal Gugalia and Ors. v. State and Ors.; (17) M.P. No. 662/88, Perfect Pottery Co. Ltd. v. Stateand Ors.; (18) M.P. No. 663/88, Burn Standard Co. Ltd. v. State and Ors.; (19) M.P. No. 1178/88, Burn Standard Co. Ltd. v. State and Ors.; (20) M.P. No. 1201/88, Sheilesh Kumar v. State and Ors.; (21) M.P. No. 1282/88, Darjeeling Dooars Plantations Ltd. v. State and Ors.; (22) M.P. No. 40/88, Hiralal Rameshwar Pd. and Ors. v. State and Ors.; (23) M.P. No. 424/88, Associated Cement Co. v. State and Ors.; (24) M.P. No. 1255/88, Association Cement Co. Ltd. v. State and Ors.; (25) M.P. No. 916/88, Hiralal Remeshwar Pd. v. State and Ors.; (26) M.P. 885/88, Jaiprakash Ind. Ltd. v. State and Ors.; (27) M.P. No. 3056/87, M.P. Lime Manu Asso. v. State and Ors.; (28) M.P. No. 443/88, Mysore Cement Ltd. v. State and Anr.; (29) M.P. No. 509/88, Pannalal Bajaj v. State and Ors.; (30) M.P. No. 510/88, Satyawan Agarwal v. State and Ors.; (31) M.P. No. 536/88, Managanese Ore. (India) Ltd. v. State and Anr.; (32) M.P. No. 614/88, Sheoratanlal Gulabchand Agarwal and Ors. v. State and Ors.; (33) M.P. No. 740/88, Bharat Aluminium Co. Ltd. v. State and Ors.; (34) M.P. No. 859/88, Diamond Mining Project v. State and Anr.; (35) M.P. No. 862/88, National Mineral Development Corpn. v. State and Anr.; (36) M.P. No. 957/88, National Mineral Development Corpn. v. State and Anr.; (37) M.P. No. 1010/88, Shaligram Parita v. State and Anr.; (38) M.P. No. 1011/88, Preeti Enterprisers v. State and Ors.; (39) M.P. No. 1160/88, Narsinghdas Jankidas Mehta v. State and Ors.; (40) M.P. No. 1168/88, Shri Krishandas Tikaram and Anr. v. State of M. P.; (41) M.P. No. 1177/88, Krishindas Tikaram v. State and Ors.; (42) M.P. No. 1185/88, Shri Krishandas Tikaram and Ors. v. State and Ors.; (43) M.P. No. 1322/88, Chopra & Sons Co. and Ors. v. State and Ors.; (44) M.P. No, 1322/88, Dyers Stones lime Co. (P) Ltd. and Ors. v. State and Ors.; (45) M.P. No. 1324/80, O.K. Maitra v. State and Ors.; (46) M.P. No. 1394/88, Cement Corporation of India v. State and Anr.
2. The petitioners in all these petitions under Article 226 of the Constitution, hold mining leases under written contracts in Form K referred to in Rule 31 of the Mineral Concession Rules, 1960, (for short, the "M.C. Rules") for mining various minerals in different parcels of land in various villages. By the Madhya Pradesh Land Revenue Code (Amendment) Act, 1987 (No. 25 of 1987), (for short, the "Amending Act"), certain amendments were made in Section 59 of the Madhya Pradesh Land Revenue Code. 1959, (for short, the "MPLR Code" or the Code"), and then the Madhya Pradesh Land under Mining Leases Quarry Leases Assessment Rules, 1987, (for short, the "New Assessment Rules"), were framed. The Amending Act was published on 28-5-1987, whereas the new Assessment Rules were published on 4-12-1987 in the Madhya Pradesh Gazettee (Extraordinary) of the even dates. After the amendment in Section 59 of the MPLR Code and on the basis of the rates given in new Assessment Rules, assessments of lands under various mining leases of the petitioners were made for the purpose specified in the newly inserted item (e) of Sub-section (1) of Section 59 of the Code. After such assessments, demand notices were issued against the petitioners, which are impugned in all the petitions on various grounds. As the grounds of attack are more or less, common in all the petitions, the State of Madhya Pradesh and its officers and authorities filed their return in Misc. Petition No. 40 of 1988. Hiralal Rameshwar Prasad and Ors. v. State and Ors., and adopted the same in all other petitions.
3. It was argued by the learned counsel for the petitioners in M.P. No. 980 of 1988 that the introduction of item (e) in Sub-section (1) of Section 59 of the Code by the Amending Act was beyond the legislative competence of the State Legislature. According to him, the regulation of mines and mineral development to the extent mentioned to Entry 54 of the Union List was within the domain of the Parliament and that in exercise of that power the Parliament enacted the Mines and Minerals (Regulation and Development) Act, 1957, (for short, the "MMRD Act"), and made its declaration under Section 2 that "it is expedient in public interest that the Union should take under its control the regulation of mines and the development of minerals to the extent" provided in the MMRD Act. Section 3(c) defines "mining lease" as a lease granted for the purpose of undertaking mining operations, and includes a sub-lease granted for such purpose. The expression "mine" has the meaning assigned to it in the Mines Act, 1952, as per Clause (i) of Section 3 the MMRD Act. It is, therefore, in the exclusive field of Parliament to regulate mines and minerals development, including taxation on mines and minerals, by enacting Laws in that regard by virtue of Entry 54 of the Union List. It was contended that the State Legislature transgressed its limits by inserting item (e) in Sub-section (1) of Section 59 of the Code, inasmuch as the State Government was thereby empowered to levy tax on mines and minerals in the garb of land revenue.
4. The learned Advocate-General appearing for the respondents justified the amendment in Section 59 of the Code by relying on Entry 45 of the State List.
5. Entry 45 in List II of Seventh Schedule to the Constitution empowers the State Legislature to make laws with respect to "Land Revenue, including the assessment and collection of revenue.....". Section 59 of the Code makes provision for variation of land revenue according to purpose for which land is used. Before the impugned amendment, Section 59(1) of the MPLR Code provided that 'The assessment of land revenue on any land shall be made, with reference to the use of land :
(a) for the purpose of agriculture;
(b) as sites for dwelling houses;
(c) for purposes other than those specified in items (a), (b) or (d);
(d) for industrial or commercial purpose.
By the impugned amendment, item (e) in Section 59(1) was inserted in following terms :
"(e). for the purpose of mining under a mining lease within the meaning of Mines and Minerals (Regulation and Development) Act, 1957 (No. 67 of 1957.)"
A careful reading of Section 59(1) of the Code, with or without the impugned amendment, would show that it does not levy or impose any land revenue on any land or the landowner. It only prescribes the mode or manner of assessment of land revenue on any land according to its use. Section 59(1), before its amendment already prescribed different methods of assessment of lands on the basis of their use for the purpose, of agriculture, or as house sites, or for industrial or commercial purpose, or for purposes other than agriculture, house site, industry and commerce. By the impugned amendment, the method of assessment of land revenue on lands used for the purpose of mining under a mining lease has been specified. There is no provision in the MPLR Code or in any other enactment to say that assessment of land revenue on lands on the basis of their user cannot be made, or to say that the lands used for mining purposes or brought under mining operations cannot be subjected to or would be immune from payment of land revenue. We, therefore, see no legislative incompetence with the State legislature in making the impugned amendment in Section 59(1) of the Code in the light of Entry 45 of the State List. Accordingly we find no merit in the 'first contention of the learned counsel for the petitioners and it deserves to be rejected.
6. It was next submitted by the learned counsel for the petitioners that Section 59 of the Code was not a charging Section. The liability of land to payment of land revenue arises under Section 58 of the Code and under Section 138 thereof, the responsibility for payment of land revenue is fixed on the persons therein mentioned. Section 58(1) of the Code makes all lands liable to the payment of revenue to the State Government, except such land as has been wholly exempted from such liability by special grant of or contract with the State Government, or under the provisions of any law or rule for the time being in force. The learned counsel referred to Clause 1 of Part VII of the Mining Lease (Annexure D) and contended that the petitioners were given exemption from payment of land revenue under the contract. It was argued that under Section 138(1) of the Code, the primary liability for payment of the land revenue was on the Bhumiswami in respect of a Bhumiswami holding and on the Government lessee in respect of a holding leased out by the State Government. The petitioners were neither Bhumiswamis, nor Government lessees and were, therefore; not liable for payment of any land revenue in respect of the land given to them for mining purposes under the Mining Lease. In the alternative his submission was that as per the amended item (e) of Section 59(1) of the Code, only the land used for the purpose of mining under a Mining Lease could be assessed to land revenue, but in the instant case, the entire area of land mentioned in Part I of the Mining Lease (Annexure D) has been assessed to land revenue, irrespective of the fact that the entire area is not under mining operation.
7. The learned Advocate General did not dispute that the charging Section was 58(1) of the Code, but he differently interpreted Clause 1 of Part VII of the Mining Lease (Annexure D) and submitted that there was no exemption to the petitioners from payment of land revenue. Similarly he justified the impugned demands from the petitioners by referring to Section 139 of the Code. So far as the assessment of land not under mining operation was concerned, he submitted that it was a disputed question of fact, which could be looked into and decided by the competent authority on an objection being raised in that regard by the petitioners.
8. Section 58(1) of the Code does make all lands, to whatever purpose applied and wherever situate, liable to payment of land revenue, "except such land as has been wholly exempted from such liability by special grant of or contract with the State Government, or under the provisions of any law or rule for the time being in force." It cannot, therefore, be disputed that the liability of a land to payment of land revenue does not cease to operate by reason of its being brought under mining operation, unless such land has been granted any such exemption as is provided in Section 58(1) of the Code. Once the liability of a land under mining operation for payment of land revenue is accepted, the question crops up, if such land is exempt from such payment under any grant of or contract with the State Government, or under the provisions of any law or rule for the time being in force. We have not been shown any such exemption to exist in regard to any land under the Mining Lease or Leases. The exemption referred to in Clause 1 of Part VII of the Mining Lease (Annexure D) is, in fact, immunity from payment of land revenue recognised in favour of or granted to the lease-holder rather than to the land.
9. Section 138 of the Code fixes the primary responsibility for payment of land revenue on the Bhumiswami in respect of a Bhumiswami holding and on the Government lessee in respect of a holding consisting of land leased out by the State Government. Section 139 fixes the secondary responsibility on the person in possession of the land in the case of default by any person primarily liable under Section 138, The petitioners are neither the Bhumiswamis, nor the Government lessees in respect of the land given to them under the Mining Lease. There is no dispute that they are not the Bhumiswamis of the land. They are not the Government lessees, because they do not hold land from the State Government under Section 181 of the Code, as per definition of the term in Section 2(1)(h) thereof. They hold the land under a Mining lease granted to them under the MMRD Act and the rules thereunder framed. Even under the Mining Lease, what is given to them is a Lease of the right to extract a particular mineral and not a lease of the land. In this connection, a reference may be made to the recitals of the Mining Lease (Annexure D). Under the lease, the Government has demised to the lessee all those mine beds/veins seems of a particular mineral situated, lying and being in or under the lands which are referred to in Part I of the document. The lessee has been empowered to enter upon the land for a particular purpose and on particular conditions specified in the Deed. Under Part IV of the Indenture, the Government has reserved its right to lease any other mineral to any other person on the very land, which is incompatible with lease of a land. The petitioners are, thus, neither Bhumiswamis, nor Government lessees and, therefore, not liable for payment of land revenue under Section 138 of the Code. So far as; Section 139 of the Code is concerned, the secondary liability of a person under it cannot be fixed without ascertainment of the person primarily liable under Section 138; and of the nature and extent of possession of the person, who is to be charged with the secondary liability under Section 139 of the Code, because a person in cultivating possession of the land as servant agent Gomasta of the Bhumiswami or of a Government lessee may not be liable under Section 139. In the present case, it is not easy to fix the person with whom the primary liability under Section 138 rests, the reason being the complex provisions in regard to mineral rights, their assignment and compensation to persons adversely affected; and the mode of assessment of land used for mining operation. The right to all minerals, mines and quarries vests in the State Government and all powers necessary for the proper enjoyment of such right are reserved with it under Section 247(1) of the Code. Section 247(2) clarified the right reserved under Sub-section (1) by providing that "The right to all mines and quarries includes the right of access to land for the purpose of mining and quarrying and the right to occupy such other land as may be necessary for purposes subsidiary thereto, including the erection of offices, workmen's dwellings and machinery, the stacking of minerals and deposit of refuse, the construction of roads, railways or tram lines, and any other purposes which the State Government may declare to be subsidiary to mining and quarrying." Sub-section (3) of Section 247 empowers the Government to delegate its powers under Section 247(1) and (2) to the assignee of its right over any minerals mines or quarries, to the extent and for the purpose mentioned in the sub-section. These provisions in Section 247 of the Code make it clear that its right over any minerals, mines or quarries may be assigned by the Government, but its powers under Section 247(1) and (2) of the Code may be delegated. These powers include "the right of access to land for the purpose of mining and quarrying and the right to occupy such other land as may be necessary for purposes subsidiary thereto, including the erection of offices, workmen's dwellings and machinery, the stacking of minerals and deposit of refuse, the construction of roads, railways or tram lines, and any other purposes which the State Government may declare subsidiary to mining and quarrying." One who makes the delegation, cannot get out of his responsibilities and hold the delegate responsible for the same, particularly in the absence of a contract to the contrary, or a statutory provision in that regard This is how the provisions with regard to compensation may be explained. Section 247(4) provides for compensation payable by the Government by its assignee to persons whose rights are infrigned by the occupation or disturbance of the surface of land on which the mineral rights are exercised. As the obligation to pay compensation appears to be primarily on the Government, safeguards are provided in Section 247(5) by restraining the Government assignee from entering on or occupying the surface of any land, "unless the compeasation has been determined and tendered to the persons whose rights are infringed"; and by empowering the Collector under Section 247(6) to "recover such compensation from him on behalf of the persons entitled to it, as if it were an arrear of land revenue." No such safeguard is provided in respect of land revenue payable on such land, though the occupation of the land by the lease-holder is for and on behalf of the Government by virtue of the delegation of powers made by it in his favour in accordance with Section 247(3) of the Code for such occupation. This leads to an irresistible conclusion that the Government assignee under Section 247(3) of the Code or the holder of a mining lease under the MMRD Act is not liable to pay any land revenue in respect of the land held by him for mining purposes even by calling into aid the provisions of Section 139 of the Code and this may be the reason why it is provided in CL 1 of Part VII of the Mining Lease (Annexure D) that the lessee shall not be liable to satisfy the demands for land revenue inrespect of the landdemised.
10. In the light of our aforesaid conclusions, it does not appear necessary to record our finding on the alternative argument of the learned counsel for the petitioners that as per the amended item (e) of Section 59(1) of the Code, only land used for the purpose of mining could be assessed to land revenue, but as the learned Advocate General could say nothing beyond submitting that it was a disputed question of fact, which could be looked into and decided by the competent authority on an objection being raised in that regard by the petitioners, we may observe that the assessment of land revenue on the entire Land mentioned in Part I of the Mining Lease (Annexure D) is per se illegal vis-a-vis the provisions of Section 59(1)(e) of the Code, which empower assessment of land revenue or any land with reference to the use of land for the purpose of mining. In other words, assessment of land revenue under Section 59(1)(a) can be justified only in respect of land actually brought under mining operation and that such assessment cannot be made in respect of the entire land mentioned in Part I of the lease-deed. What is the area of land actually used in mining operation is a disputed question of fact, which can be decided by the competent authority on an appropriate objection being raised by the lease-holder.
11. It was also contended that the new Assessment Rules offended Article 14 of the Constitution, because different rates were prescribed according to the different areas of land given to lease-holders for the purpose of mining operation. It was submitted that the said rules were further invalid because imposition of land revenue was made by the rules and not by the Code and because Rule 3 of the New Assessment Rules enlarged the scope of Section 59(1)(e) of the Code by providing assessment of the entire land under a Mining Lease and by not restricting it to the land actually used for or brought under mining operation.
12. The learned Advocate General was not in position to give any cogent reply to the said objections of the learned counsel for the petitioners. The different slabs of income-tax for persons falling in different income groups under the Income-tax Act were, however, relied on while supporting the slabs of assessment rates on the basis of different areas of land under various mining leases.
13. The procedure and principles for fixation of assessment rates are mentioned in Sections 76 to 81 of the Code. Without adhering to them, assessment rates for lands under mining leases have been arbitrarily fixed under the new Assessment Rules, Section 59(1)(e) of the Code enables assessment of land revenue with reference to the use of land for the purpose of mining, but Rule 3 of the new Assessment Rules provides for assessment of such land "according to the total area leased out for any particular mine or quarry." Similarly there appears no basis for classification of lands according to the different areas leased out for any particular mine or quarry and for fixing different rates of assessment on the basis of such classification. For precious' minerals like copper, small area of land for a mining lease may be required; but for minor minerals like lime, large areas of land may be required There may also be cases where per hectare return of a holder of mining lease for 4 hectares and a holder of such lease for 30 hectares of a particular mineral may be equal, but their liability for payment of land revenue would be largely unequal according to the assessment rates under Rule 3. The impugned classification has no reference to the nature of minerals or soil, nor has it reference to the financial status of a lease-holder. The new Assessment Rules, therefore, deserve to be struck down as unreasonable, invalid and violative of Article 14 of the Constitution.
14. The learned counsel for the petitioners also pointed out that the new Assessment Rules came into force from 4-12-1987, but were sought to be given retrospective effect by demanding land revenue from 28-5-1987, i.e., the date of enforcement of the Amending Act, as would be evident from the impugned demand notices. This was not permissible. We find substance in the contention. Rules cannot be given retrospective effect and no liability under them from a date earlier to the date of their enforcement can be imposed on a person.
15. The last submission of the learned counsel for the petitioners about violation of the rules of natural justice while making the impugned assessment of land revenue by the authorities also deserves to be upheld. It is shown that the petitioners objected to the assessment after obtaining intimation thereof in Form A of the new Assessment Rules and wanted hearing. The opportunity of hearing was refused by letter dated 1-2-1988 (Annexure H) of the Mining Officer on the ground that it was not necessary. It was contrary to the provisions of R. 6 of the new Assessment Rules, as also against the rules of natural justice. The learned Advocate General fairly conceded that an opportunity of hearing, ought to have been given to the petitioners.
16. The upshot of the aforesaid discussion is that the Amending Act cannot be declared to be beyond the legislative competence of the State Legislature, but the new Assessment Rules are liable to be struck down as invalid, unreasonable and violative of Article 14 of the Constitution. The impugned assessment of land revenue and the demand notices are liable to be quashed.
17. Before parting, a few words may be said about additional arguments raised in some petitions and about special features appearing in certain other petitions, though in the light of the view we are taking, it is not necessary to look into them. In M.P. No. 943/88, Grasim Industries Ltd v. State and Ors.; it was argued that under Section 258(4) of the Code, all rules framed under the Code were required to be placed before the Legislative Assembly, which was not done in the case of the new Assessment Rules. The argument was given up after being informed that they were going to be placed before the Legislative Assembly. In M.P. No. 1166/88, Hindustan Aluminium Corporation and Anr. v. State and Anr.; it was contended that the contract had frustrated, because the petitioners were out of possession of the lease-hold. This is a disputed question of fact, which needs no consideration. The petitioners shall have liberty to raise the point by pursuing any other alternative remedy opentothem. In M.P. No. 229/88, Birla Jute & Ind. Ltd v. Union of India and Ors.; it was submitted that the Laterite Mining Lease had expired on 27-6-1987 and that in the other existing lease for an area of 1000 hectares, the mining operation was carried out in 55.684 hectares of land but demands have been made in respect of an area under the expired lease and in respect of 2469.07 hectares of land pertaining to lease for 1000 hectares and the actual operating area being of 55.684 hectares. These factual objections can be decided by the competent authority and, therefore, need no consideration in the petition under Article 226 of the Constitution. In M.P. No. 504/88, Bharat Food India Ltd v. Union of India and Ors.; the argument was that the lease area consisted of Reserve Forest land and, therefore, not liable to land revenue. The argument requires no consideration in the light of the view we have taken on the main arguments common to all the petitions. Now certain special features of some cases, though not of much consequence, may be noted. Some petitioners have filed two petitions challenging the demand notices by separately challenging the vires of the Amending Act and the validity of the new Assessment Rules. In some cases, petitions have been filed in anticipation of demand notices. There are petitions, where demand notices have not been properly annexed to the petitions, or not filed or not properly marked. For such technical defects, we do not think it proper either to dismiss such petitioner or to prolong them by affording the petitioners time to amend the petitions.
18. In the result, all the petitions succeed and they are hereby allowed. Although the Madhya Pradesh Land Revenue Code (Amendment) Act, 1987 (No. 25 of 1987) is declared to be within the legislative competence of the State Legislature, the Madhya Pradesh Land under Mining Leases Quarry Leases Assessment Rules, 1987 are struck down as unreasonable, invalid and violative of Article 14 of the Constitution. Accordingly the various assessment orders made and demand notices issued against the petitioners in the various petitions, including those in the present petition, for payment of land revenue in respect of lands given to them under their respective Mining Leases for mining purposes, are quashed. In the circumstances of the case, we made no order as to costs of these petitions and leave the parties to bear their costs as incurred. The outstanding amount of security shall be refunded to the petitioners.
Sohanl, Ag. C.J.
19. I fully agree with my learned brother Agrawal J. that the petitions deserve to be allowed as indicated in his order. However, in view of the importance of the questions raised in these petitions. I would like to state briefly my reasons for coming to that conclusion.
20. The first contention advanced on behalf of the petitioners was that the demand for land revenue from the petitioners, made in pursuance of the provisions of Section 59 of the M.P-. Land Revenue Code, 1959 (hereinafter referred to as "the Code"), as amended by Act No. 25 of 1987 was not justified because the provisions of Act No. 25 of 1987 were ultra vires. The challenge to the validity of the provisions of Act No. 25 of 1987 is, however, untenable. By that Act, no liability to pay land revenue is created. That Act merely introduces one more mode of use of land with reference to which land revenue can be assessed. If a person is liable to pay land revenue under the provisions of the Code, then the provisions of Section 59 of the Code as amended by Act No. 25 of 1987, merely provide for making assessment of land revenue with reference to the use of land Such a provision cannot be held to be ultra vires inasmuch as the State Legislature is competent to make laws with respect to any matter enumerated in List II in the Seventh Schedule to the Constitution and one of the matters specified in Entry 45 of List II in the Seventh Schedule to the Constitution is 'land revenue' including the assessment and calculation of the land revenue. The provisions of Act No. 25 of 1987 deal with the matter of assessment of land revenue, which falls within the purview of the aforesaid entry 45. The challenge to the views of Act No. 25 of 1987 cannot, therefore, be sustained
21. The real grievance of the petitioners is that they are being made liable to pay land revenue in respect of the total area leased out to the petitioners for carrying out mining operations even though, according to the petitioners, no such liability arises under the provisions of the Code. The question for consideration, therefore, is whether there is any provision in the Code, which renders the petitioners liable to pay land revenue in respect of the total area leased out to the petitioners for carrying out mining operations. To answer this question, we have to turn to the relevant provisions of the Code.
22. Section 57 of the Code declares that all lands belong to the State Government and that all such lands, including standing and flowing water, mines, quarries, minerals and forests, reserved or not, and all rights in the subsoil of any land are the property of the State Governments. 58 of the Code provides that all land, unless exempted, is liable to the payment of revenue to the State Government and that such revenue is called "land revenue." The assessment of land revenue on any land is made with reference to the use of that land, as provided by Section 59 of the code. Section 138 of the Code lays down that the persons primarily liable for the payment of land revenue are those who hold land from the State Government either as a Bhumiswami or as a lessee when land is leased by the State Government. In case of default by any person who is primarily liable to pay land revenue. Section 139 of the Code provides that the land revenue shall be recoverable from any person in possession of the land. Recovery of the land revenue from the petitioners is admittedly not being made under Section 139 of the Code. According to the State the petitioners are liable to pay land revenue by virtue of the provisions of Section 138 of the Code. It is, therefore, necessary to ascertain whether the petitioners fall in the categories specified in Section 132 of the Code.
23. Now it is common ground that the petitioners are not being assessed to land revenue as Bhumiswamis. Therefore, unless it is shown that the petitioners are holding land leased by the State Government to them, they cannot be made liable to pay the land revenue It is not disputed that apart from the mining lease, there is no other contract of lease between the State Government and t he petitioners. The question for consideration, therefore, is whether the petitioners to whom the mining leases have been granted under the provisions of Mining Minerals (Regulation and Development) Act, 1957, (hereinafter referred to as "as Act"), can be said to be the persons to whom land has been leased by the State Government by virtue of these mining leases.
24. Before we proceed to refer to the relevant provisions of the mining lease to ascertain whether by that lease any land has been leased by the State Government to the petitioners, it is necessary to bear in mind that the term land, as defined by Section 2(k) of the Code, means a portion of the earth's surface and shall be deemed to include all things attached to or permanently fastened to anything attached to such land. Section 247 of the Code, however, provides that unless it is otherwise expressly provided by the terms of a grant made by the Government, the right to all minerals, mines and quarries shall vest in the State Government, which shall have all powers necessary for the proper enjoyment of such right. From this provision it follows that when there is a grant of lease of land by the Government, the right to mines and minerals below that land cannot be held to have been assigned by the grant of lease in the absence of express provision to the contrary. Lease of land by the State Government under the provisions of the Code would, therefore, normally mean lease of a portion of the earth's surface alone. As observed in Halsbury's Laws of England Vol. 25. Para 899, a lease may be granted of land or any part thereof and since minerals are a part of the land it follows that a lease can be granted of the surface of the land and the minerals below, or of the surface alone or of the minerals alone. Lease of land under the provisions of the Code would normally be a lease of the surface of the land and would not normally include lease of the minerals below that land. Liability of a lessee to payment of land revenue under the Code thus arises when there is a lease of the surface of the land. Such a lease may include lease of minerals below the surface of the land if there is an express provision to that effect in the grant but unless there is a lease of the surface of the land. Liability for payment of land revenue would not arise. We have, therefore, to turn to the provisions of the mining lease to ascertain whether by that lease a lease of the minerals alone is brought into existence or whether a lease of the surface of the land and the minerals below that land is brought into existence.
25. Now it is common ground that mining leases have been granted to the petitioners in Form 'K' prescribed by Rule 31 of the Mineral Concession Rules, 1960 framed under the provisions of the Mines and Minerals (Regulation and Development) Act, 1957. A perusal of the recitals of the mining lease shows that what is demised by the tease is all those mines, beds/veins seems of a mineral specified in the mining lease, situated lying and being in or under the lands referred to in part I of the indenture of lease specifying the area of the lease. By Clause 1 of Part-II of the Indenture of the lease, the lessee is empowered to enter upon the lands falling in the area of lease for winning and carrying away the minerals specified in the lease. Clause 6 of Part III lays down that the lessee shall allow existing and future holders of Government licencees or lessees over the land, which is comprised in the area of lease, reasonable facilities of access. By virtue of Clause I of Part-IV, liberty and power is conferred on the State Government and on any other lessee to enter upon the land falling in the area of lease for carrying out mining operations for carrying away minerals other than those which the lessee under that mining lease is empowered to carry away. It has come on record that the area of mining tease includes, land held by some Bhumiswamis, whose rights as Bhumiswamis continue to subsist, land used as public roads, and land in possession of the State or the Central Government. Clause-II of Part-VIII of the indenture of lease provides that if in accordance with the conditions of lease, the lessee shall offer to pay to an occupier of the surface of the land for any damage or injury, which may arise from the mining operations compensation to be calculated in accordance with the provisions of the Land Acquisition Act, the State Government shall allow the lessee to enter the land and to carry out such operations as may be necessary for the purpose of mining lease. Clause 4 of Part-V stipulates that in the event of occupation by the lessee of any land comprised in the area of lease, the lessee shall pay surface rent for the area so occupied, during the period of occupation. It is significant to note that this surface rent which a lessee under a mining tease is required to pay is stated to be in lieu of land revenue vide letter Annexure-F dated 21-10-67 from the State Government produced in M.P. No. 980/88. It is stated in that letter that if the lessee had obtained permission to enter upon the land, he is liable to pay surface rent irrespective of the fact whether he worked the area or not but if possession was not taken, then he would not be liable to pay surface rent.
26. On a conspectus of the terms and conditions of the mining lease, it is clear that the surface of the entire land comprised in the area of lease is not demised to the lessee. The lease-deed brings into existence a lease of minerals alone assigning the rights of the State to the minerals reserved by Section 247 of the Code. That is why a mining lease is defined by Section 2(c) of the Act to mean a lease granted for the purpose of undertaking mining operations. By virtue of the mining lease, a lease of the surface of the land comprised in the area of the lease does not come into existence. Therefore, if the petitioners, who are lessees under mining leases cannot be held to be lessees to whom land has been leased by the State Government, they cannot be held liable for the payment of land revenue as provided by Section 138 of the Code. Moreover, even assuming that land has been leased by the State Government to the petitioners by virtue of the mining leases, CL I of Part-VIII of t he lease-deed provides that the liability of the lessee to pay rent, taxes, royalties etc. shall not include demand for land revenue. Section 58(1) of the Code provides that land which has been exempted from the liability to pay land revenue by contract with the State Government shall not be liable to the payment of land revenue. Looked at from any point of view, the petitioners cannot be held liable to pay land revenue in respect of the area leased out to them for carrying out mining operations.
27. It was brought to our notice that in some cases though the petitioners objected to the payment of the land revenue and preferred objections, the authorities concerned held that it was not necessary to hear the petitioners and decide the objections. Even the rules on the basis of which the petitioners were being held liable for payment of land revenue, specifically provide for giving a hearing to the lessees. The procedure adopted by the authorities was in utter violation of the relevant rules and betrayed an anxiety on the part of the concerned authorities to rush to collect land revenue, without caring to follow the provisions of law. Such a course of action does not inspire confidence in a citizen that he is being governed by rule of law. The learned Advocate General appearing for the State very fairly conceded that the authorities should have given a hearing to the petitioners before proceeding to pass an order of assessment. We would have quashed the proceedings for recovery of land revenue from the petitioners on this ground alone and would have directed the concerned authorities to hear the objections raised by the petitioners to the proposed assessment had we not come to the conclusion that the petitioners could not be held liable to pay land revenue on the basis of the total area leased out to the petitioners under mining leases. I, therefore, agree with the order proposed by my learned brother, Agarwal, J.
ORDER OF THE COURT
28. All these petitions succeed and are hereby allowed Although the Madhya Pradesh Land Revenue Code (Amendment) Act, 1987 (No. 25 of 1987) is declared to be within the legislative competence of the State Legislature, the Madhya Pradesh Land under Mining Leases Quarry Leases Assessment Rules, 1987, are struck down as unreasonable, invalid and violative of Article 14 of the Constitution. Accordingly, the various assessment orders made and demand notices issued against the petitioners in the various petitions, including those in the present petition, for payment of land revenue in respect of lands given to them under their respective Mining Leases for mining purposes, are quashed. In the circumstances of the case, we make no order as to costs of these petitions and leave the parties to bear their costs as incurred. The outstanding amount of security shall be refunded to the petitioners.