Andhra HC (Pre-Telangana)
N.Phani Kumar vs The Government Of Andhra Pradesh Rep. By ... on 18 March, 2014
Equivalent citations: AIR 2014 ANDHRA PRADESH 132, (2014) 3 ANDHLD 565
Author: Nooty Ramamohana Rao
Bench: Nooty Ramamohana Rao
THE HON'BLE SRI JUSTICE NOOTY RAMAMOHANA RAO WRIT PETITION Nos.4730 of 2014 18-03-2014 N.Phani Kumar....Petitioner The Government of Andhra Pradesh Rep. by its Principal Secretary to Industries and Commerce, Hyderabad... Respondents Counsel for the Petitioner: Sri Unnam Muralidhar Rao Counsel for Respondents: Government Pleader for Mines and Gelogy <Gist : >Head Note: ?Cases referred: THE HON'BLE SRI JUSTICE NOOTY RAMAMOHANA RAO WRIT PETITION No.4730 of 2014 ORDER:
The petitioner herein challenges the order passed by the Director of Mines and Geology through his memo dated 19.12.2013 requiring the Assistant Director of Mines and Geology, Nizamabad to submit proposals on the transfer of mining lease application after obtaining the consent from the legal heir and the present mining lease holder for taking further action in the matter. The petitioner also seeks a consequential direction to the 1st respondent State Government to pass appropriate orders by transferring the un-expired period of mining lease of Quartz over an extent of 3.920 hectares in Sy.No.629/2 of Nandipet village and Sy.Nos.62 and 63 of Chimarajpally village, Nandipet Mandal, Nizamabad District in favour of the petitioner pursuant to the recommendations made by the respondent Nos.2, 3 and 4.
The State Government, the 1st respondent herein passed orders through their G.O.Ms.No.352, Industries and Commerce (M.III) Department dated 17.12.2007 granting mining lease for Quartz over an extent of 3.920 Hectares situated in Sy.No.629/2 of Nandipet Village and Sy.Nos.62 and 63 of Chimarajpally Village of Nandipet Mandal, Nizamabad District for a period of 20 years in favour of M/s Sri Venkateswara Minerals subject to obtaining Consent For Establishment (CFE) from the A.P.Pollution Control Board and subject to satisfaction of Mineral Concession Rules, 1960 (henceforth called Rules) and the Provisions of Mines and Minerals (Development and Regulation) Act, 1957 (for brevity referred to as Act from now on). The State Government passed further orders through their Memo No.1090 dated 11.02.2009, after due consideration of the request of M/s Sri Venkateswara Minerals, granted extension of time for a further period of six months from the last expiry date for execution of lease deed. Accordingly, upon satisfactorily complying with all statutory requirements and other related formalities, a mining lease has been executed on 28.07.2009 for a period of 20 years i.e. up to 27.07.2029, according permission to commence mining operations over the leased extent of land. It appears on 28.10.2009, an application for transfer of the mining lease for the un-expired portion in favour of the writ petitioner has been filed. Sri Mohd.Abdul Hai, the sole proprietor of M/s Sri Venkateswara Minerals signed the transfer application and also filed an affidavit setting out that due to financial and age related problems he desired to transfer the mining lease in favour of the writ petitioner herein for the un- expired lease period up to 27.07.2029. That application has been processed by the Assistant Director of Mines and Geology, Nizamabad, who recommended the transfer to be accorded. The Zonal Joint Director of Mines and Geology, Hyderabad, has also considered the matter and agreed with the recommendations of the Assistant Director of Mines and Geology for transfer of the mining lease in favour of the writ petitioner herein for the un-expired portion. The Director of Mines and Geology, through his communication dated 02.06.2010 required Sri Mohd.Abdul Hai to submit the necessary declaration within 15 days by way of notarized affidavit with regard to the consideration amount received by the transferor from the transferee so as to consider the justification for the transfer proposals and also to make an assessment as to whether the transfer proposal is a speculative one or not. It is the case of the petitioner that Sri Mohd.Abdul Hai has accordingly submitted the notarized affidavit vouching for the fact that he has received an amount of Rs.50,000/- towards consideration for the transfer of the mining lease in favour of the petitioner herein as that was the amount incurred by him towards the preliminary expenditure. Thereafter the proposal for transfer has been processed once again to the Director of Mines and Geology for his consideration.
It appears in the meantime Sri Mohd.Abdul Hai expired on 26.09.2010. Hence his wife, the 5th respondent herein filed an application before the Assistant Director of Mines and Geology, who passed orders on 03.05.2012 declaring her as the successor to the lease. The petitioner herein has challenged the validity of the said order dated 03.05.2012 by instituting Writ Petition No.22279 of 2012 in this Court urging that as by 03.05.2012 the transfer application of the lease in his favour is pending consideration and hence the 5th respondent herein could not have been declared as successor. That writ petition was disposed of by this Court holding that the legal representative of the deceased Mohd.Abdul Hai is certainly entitled to succeed to the mining lease and no exception can be taken thereto by the petitioner herein.
The grievance of the petitioner is that instead of independently determining the transfer application, the Director of Mines and Geology passed the impugned order requiring the Assistant Director of Mines and Geology, Nizamabad to submit proposals on the transfer of mining lease application after obtaining the consent from the Legal heir and the present mining lease holder Smt.Bilqui Sultana for taking further course of action in the matter. Hence, this writ petition is instituted.
Heard Sri Unnam Muralidhar Rao, learned counsel for the petitioner and Assistant Government Pleader for Mines and Geology.
Sri Unnam Muralidhar Rao, learned counsel for the petitioner, would contend that the sub-soil mineral Quartz does not belong to any individual. The Mineral wealth is that of the State. What has been granted by the State is only a lease to win the mineral. The mining lease holder had agreed to transfer the mining lease for the un-expired portion in favour of the petitioner and completed all the requisite formalities including execution of an affidavit vouching for the fact that he has received a just consideration, which has no element of speculation for the transfer of the mining lease. It is contended by Sri Unnam Muralidhar Rao, learned counsel for the petitioner, all that is required to be done for causing the transfer of the mining lease has already been done and hence the formal order of transfer has got to be passed by the State Government in accordance with Rule 37 of the Mineral Concession Rules. Sri Unnam Muralidhar Rao, learned counsel for the petitioner, would submit that there was no necessity to obtain the consent of the legal heir of the deceased Mohd.Abdul Hai. Sri Unnam Muralidhar Rao, learned counsel for the petitioner, would submit that the expression "lessee" used in the lease deed includes heirs, executors, administrators, representatives and permitted assigns and hence the transfer application filed by Sri Mohd.Abdul Hai binds his legal heirs and hence no separate consent is required to be obtained from the legal heirs. Further, the analogy of Rule 25A can be applied to the transfer applications as well. Sri Unnam Muralidhar Rao, learned counsel for the petitioner, would contend that as per the meaning of the term "transfer" employed under Section 5 of the Transfer of Property Act, the transfer of the property in question shall be deemed to have been effected and neither the intervention of the State nor the consent of the legal heir is warranted. Learned counsel for the petitioner would submit that once a deed of transfer is executed by the transferor, no further interest of the transferor in the property would remain with the transferor to enable subsequently his legal heirs to claim succession thereto. Learned counsel for the petitioner would also submit that a transfer in property takes effect from the date of execution of the deed of transfer, but not necessarily from the date of its registration. Therefore, Sri Mohd.Abdul Hai having already executed a deed of transfer in favour of the petitioner herein, the question of obtaining the consent of the successors of Sri Mohd.Abdul Hai would not simply arise now. Sri Unnam Muralidhar Rao, learned counsel for the petitioner, while dealing with the expression "transfer in relation to capital asset" found in the Income Tax Act, would submit that the Supreme Court held that relinquishment of an asset or extinguishment of right therein amounts to transfer of a capital asset. Applying the said principle, Sri Mohd.Abdul Hai, the transferor had extinguished his right in favour of the writ petitioner by receiving consideration and hence the transfer of the lease deed is liable to be deemed to have been completed in the present case. In that view of the matter, the necessity to seek the consent of the legal representatives of the transferor would not simply arise. Therefore, the Director of Mines and Geology has gravely erred in directing the Assistant Director of Mines and Geology, Nizamabad to process the application only after obtaining the consent of the legal representatives of Sri Mohd.Abdul Hai.
The following facts are not in dispute:
Pursuant to the orders passed by the State Government contained in their G.O.Ms.No.352, Industries and Commerce (M.III) Department, dated 17.12.2007, granting mining lease for Quartz over an extent of 3.920 Hectares in favour of M/s Sri Venkateswara Minerals, a mining lease was executed on 28.07.2009 to subsist till 27.07.2029. In three months time thereafter i.e. on 28.10.2009 the petitioner herein filed an application for transfer of the mining lease for the balance period of time. The transfer application was signed by Sri Mohd.Abdul Hai. Sri Mohd.Abdul Hai pursuant to the communication dated 02.06.2010 of the Director of Mines and Geology submitted a declaration in the form of a notarized affidavit vouching for receipt of Rs.50,000/- towards consideration amount for the proposed transfer from the petitioner herein. The proposal has been recommended by the Assistant Director of Mines and Geology and the Zonal Joint Director of Mines and Geology, which was also considered by the Director of Mines and Geology. But however on 26.09.2010 Sri Mohd.Abdul Hai expired. On an application submitted by his wife, the Assistant Director of Mines and Geology, Nizamabad passed orders on 03.05.2012 recognising her as the successor lessee of the mining lease. That action has been unsuccessfully challenged by the petitioner herein by instituting Writ Petition NO.22279 of 2012 and this Court held that as long as the lease stood in the name of the lessee, till the date of his death, the legal representative would certainly be entitled to get the succession and hence no exception need be drawn in recognising the wife of the deceased lessee as the successor of the lease. Taking the same into account and consideration, the Director of Mines and Geology, through the impugned order directed the Assistant Director of Mines and Geology to process the transfer application of the mining lease after obtaining the consent of the successor lease holder.
It is important to notice that the Act has been made for development and regulation of mines and minerals under the control of union. The necessary declaration to that effect was also pronounced in Section 2 of the Act.
Sub-section (1) of Section 4 of the Act restricts any person from undertaking any mining operations in any area, except under and in accordance with the terms and conditions of the mining lease granted under the Act or the rules made thereunder.
Section 5 of the Act imposed restrictions upon the State Governments for grant of mining leases unless it is satisfied that the person to whom the mining lease is to be granted is an Indian national, or a company as defined in sub- section (1) of Section 3 of the Companies Act and all such other conditions are also satisfied for such grant.
Similarly Section 6 specified that no person shall acquire in respect of any mineral one or more mining leases covering a total area of more than ten thousand square kilometres.
Section 13 of the Act conferred power on the Central Government to make rules in respect of minerals. Accordingly, the Mineral Concession Rules, 1960 have been framed by the Central Government.
Rule 22 dealt with the applications for grant of mining leases, while Rule 24 dealt with the disposal of such applications.
Rule 25-A dealt with the status of the grant on the death of applicant for mining lease. It was spelt out that where an applicant for grant or renewal of mining lease dies before the order granting him a mining lease or its renewal is passed the application for the grant or renewal of a mining lease shall be deemed to have been made by his legal representative. Similarly in case the applicant to whom an order of grant was made dies before the mining lease deed referred to in sub-rule (1) of Rule 31 is executed, the grant shall be deemed to have been passed in the name of the legal representative of the deceased applicant.
This fiction is created for purposes of construing the continuity of consideration of the application or the follow up action in the event of the death of the original applicant.
The rule making authority has provided for only certain circumstances as are contemplated by Rule 25-A. What has not been contemplated by the rule making authority cannot be introduced by the Court thereinto. It is apt to remember that the Courts are not vested with the legislative functions, either primary or secondary. Where there is any ambiguity or necessity for clarifications to be provided, then the Court can step in for interpreting a particular provision and find out as to whether a circumstance which has not been specifically adverted to by the provision was also conceived and thereby can also be covered by its sweep.
In the instant case rule 25-A has not talked of pending transfer applications and hence the same are not liable to be dealt with on the analogy provided for under rule 25-A. Rule 25-A has specifically dealt with the contingency arising out of the death of the applicant either when the mining lease application is pending or its renewal is pending or execution of the mining lease deed is pending. It has not dealt with the pending transfer application of the mining leases. Therefore, the contention canvassed by the learned counsel for the petitioner that the analogy behind Rule 25-A should also be applied to pending transfer applications cannot be accepted.
Rule 27 has made it clear that every mining lease shall be subject to the various conditions specified therein. Importantly condition (b) stipulates that any mineral not specified in the lease, if discovered in the leased area, the lessee shall not win and dispose of such mineral unless such mineral is included in the lease or a separate lease is obtained therefor. Thus, it is exceedingly made clear that the mining operation liable to be undertaken pursuant to a mining lease is a completely regulated exercise by the State. This apart rule 30 conferred certain rights on the lessee with respect to the land leased to him. Therefore, before any one can exercise any of the rights, a mining lease is necessary to be executed in his favour.
The relevant portion of Rule 37 of the Mineral Concession Rules, reads as under:
"37. Transfer of lease. - (1) The lessee shall not, without the previous consent in writing of the State Government and in the case of mining lease in respect of any mineral specified in [Part 'A' and Part 'B' of] the First Schedule to the Act, without the previous approval of the Central Government :-
(a) assign, sublet, mortgage, or in any other manner, transfer the mining lease, or any right, title or interest therein, or
(b) enter into or make any [bonafide] arrangement, contract, or understanding whereby the lessee will or may be directly or indirectly financed to a substantial extent by, or under which the lessee's operations or undertakings will or may be substantially controlled by, any person or body of persons other than the lessee:
Provided further that where the mortgagee is an institution or a Bank or a Corporation specified in Schedule V, it shall not be necessary for the lessee to obtain any such consent of the State Government .
(1-A) The State Government shall not give its consent to transfer of mining lease unless the transferee has accepted all the conditions and liabilities which the transferor was having in respect of such mining lease. (2) ............................
(3) The State Government may, by order in writing determine any lease at any time if the lessee has, in the opinion of the State Government committed, a breach of any of the provisions of sub-rule (1) (or sub-rule (1A) or has transferred any lease or any right, title or interest therein otherwise than in accordance with sub-rule (2) ;
Provided that no such order shall be made without giving the lessee a reasonable opportunity of stating his case."
The Rule makes it clear without the previous consent of the State Government, the lessee shall not assign or sublet or in any manner transfer the mining lease held by him. Nor can he transfer any interest in a mining lease in favour of a third party without any such consent of the State Government. In fact, the State Government can determine any lease, if the original lessee has breached the provisions of Sub-Rule (1) of Rule 37. Hence, the transfer of a mining lease is a regulated exercise by the State Government.
It is further evident that an order recognising the transfer has to be passed by the State Government, duly accepting the proposal. That is not a mere formal act. The consent can be accorded only upon satisfaction of all relevant factors. Till such time an order of transfer is passed, the lease holder retains his status as such and continues to be a lessee. Only after a transfer order is passed, he ceases to be a lessee and a new individual or entity steps into his shoes to function as lessee for the balance un-expired lease period. Till such time an order of transfer is passed, his status as lessee does not get diminished and no third party can step into his shoes as such.
Hence, the contention of the learned counsel for the petitioner that a transfer of lease or interest therein has taken place between the writ petitioner and Sri Mohd. Abdul Hai is without any substance. Since, no consent of the State Government is accorded for any such transfer, the petitioner cannot assume of any such transfer to have already been accomplished.
Rule 37-A specifies that where on an application for transfer of mining lease under Rule 37, the State Government have given consent for transfer of such lease, a transfer lease deed in Form-O or a form as nearer thereto, as possible, shall be executed within three months of the date of the consent, or within such further period as the State Government may allow in this behalf.
Form-O appended to the Mineral Concession Rules contained the model form for transfer of mining lease completely setting out the terms and conditions, subject to which such transfer of mining lease has got to be given effect to or operated upon.
In view of this legal regime, it is absolutely futile for the petitioner to contend that the State's intervention is totally uncalled for nor can the writ petitioner contend that when once a transfer application has been filed by a lessee of mining lessee proposing to transfer the lease in favour of a third party, the orders of the State Government thereon are a mere formality. Consideration required to be bestowed thereon by the State Government is clearly reflected in the Rule 37. Obviously, the State is required to bestow the same consideration as is required by it towards any applicant for grant of a mining lease. Therefore, the consent for transfer of a mining lease is neither a mechanical process nor an automatic one. It is a regulated exercise covered by the statutory regime. Hence, the contentions canvassed to the contra are without any substance or merit.
In the instant case, upon death of Sri Mohd.Abdul Hai, his wife filed an application to become his successor lessee and that was ordered on 03.05.2012. Therefore, there is a change of status with regard to the mining lease also on and from 03.05.2012. The 5th respondent herein, the wife of the deceased original lessee Sri Mohd.Abdul Hai, became the lessee of the mining lessee. If the transfer had occasioned with the consent of the State Government prior thereto, the 5th respondent could not have possibly succeeded to the mining lease. That is the reason why this Court while dealing with W.P.No.22279 of 2012 on the previous occasion has upheld the order declaring the 5th respondent herein as the successor lessee of the mining lease. With this change of the lessee of the mining lease, if any transfer application is to be considered or accorded, that can be done only with the consent of the existing lessee. The previous lessee, with his death, naturally lost all his rights with regard to the mining lease granted by the State Government. On or after 03.05.2012, the 5th respondent became the lessee for the balance period of mining lease. Hence, it is her consent for transfer, which is vitally needed. The agreement, or arrangement if any, between Sri Mohad.Abdul Hai and the writ petitioner herein entered prior to 03.05.2012 having not fructified into a transfer in favour of the petitioner, the said application cannot be taken up for independent consideration without the consent of the 5th respondent herein, who is the existing lessee of the mining lease.
Further, Section 4(1) read with Rule 37, requires specific order of grant to be made by the State Government. That is the reason why upon granting a consent for transfer of a mining lease, the Rules specify execution of a separate transfer deed in Form-O, so as to ensure that the transferee is bound by all the conditions of the grant. There was no transfer deed executed in the instant case in favour of the petitioner. Hence, the contention that the consent of the State is bound to be accorded even without the consent of the present lessee the fifth respondent and that the legal heirs of the deceased original lease are bound by the transfer application, cannot be accepted. The terms legal heirs or assigns or agents mentioned in the original mining lease, are intend to bind them jointly and severally with the original lessee, by the terms and conditions stipulated in the mining lease. It is not meant to cover any possible future transfer applications.
Therefore, I do not find any merit in this writ petition and it is accordingly dismissed, at the admission stage, but however without costs.
The miscellaneous petitions, if any pending in this writ petition, shall stand closed.
_____________________________ JUSTICE NOOTY RAMAMOHANA RAO 18th March, 2014