Section 54 in The Petroleum Concession Rules, 1949
54. Conditions of mining lease .-Every mining lease shall, in addition to such other conditions as may in any particular case be found necessary, contain the following conditions:--
(i)The lessee shall pay royalty on all crude oil or natural gas won and saved from the leased area, at the rate specified in the Schedule to these rules.(ii)The lessee shall pay, for every year except the first year of the lease, a fixed yearly dead rent at the following rates:-Rs. 2 per acre for the first 10 square miles;Rs. 3 per acre for the next 40 square miles;Rs. 5 per acre for the next 40 square miles;Rs. 10 per acre for area exceeding the first 100 square miles:Provided that the lessee shall be liable to pay only the dead rent or the royalty, whichever be higher in amount but not both.(iii)The lessee shall also pay for the surface area actually used by him for the purposes of the operations conducted under the lease surface rent at such rate not exceeding the land revenue and cesses assessable on the land, as may be specified by the State Government in the lease.(iv)The lessee shall make reasonable satisfaction and pay such compensation, as may be assessed by lawful authority in accordance with the law in force on the subject applying to the lands over which the lease has been granted for any damage, injury of disturbance which may be done by him in exercise of the powers granted by the lease, and shall indemnify the Government against all claims which may be made by third parties in respect of any such damage, injury or disturbance.(v)Unless the Central Government for good cause permits otherwise the lessee shall commence operations within one year from the date of execution of the lease, and shall thereafter carry them on in a proper, skilful and workmanlike manner.Explanation .-For the purposes of this clause, operations shall include the erection of machinery, laying of a tramway or construction of a road in connection with the oilfield.(vi)The lessee shall, at his own expense, erect and all times maintain and keep in repair boundary marks and pillars necessary to indicate the demarcation shown in the plan annexed to his lease.(vii)The lease shall contain such restrictions and conditions with regard to the cutting and use of reserved timber as may be agreed upon between the Central Government and the lessee.(viii)The lessee shall not, without the previous permission of the proper authority, erect any building or carry on any surface operations upon any public pleasure ground, burning or burying ground or place held sacred by any class of persons, or any village site, or public road, nor shall he interfere with any right of way, well or tank.(ix)The lessee shall not carry on or allow to be carried on any boring operations at any point within a distance of 50 yards from any railway line, except with the written permission of the railway administration concerned, or from any reservoir, canal or other public works or buildings except with the previous permission of the Central Government. The railway administration or the Central Government may, in granting such permission, impose such conditions as it may deem fit.(x)The lessee shall not intentionally cause any boring to deviate from the vertical in such a way as to cross a vertical plane passing through a boundary of the land covered by the lease or employ any method of drilling which is causing or is likely to cause a boring to deviate to such extent and in such direction as to cross such a vertical plane.(xi)The lessee shall provide properly constructed and efficient tank meters and other suitable means for measuring the quantity and volume of petroleum or natural gas produced.(xii)The lessee shall keep correct accounts showing the quantity and other particulars of petroleum or natural gas obtained and dispatched from the oilfield, the number of persons employed therein, and complete plans of the oilfield, and shall allow any officer authorised by the Central Government in that behalf to examine at any time, nay accounts, plans and records maintained by him, and shall finish the Central Government, with such information and returns as it may prescribe.(xiii)The lessee shall keep accurate records of the drilling, deepening, plugging or abandonment of all bore-holes and wells and of any alterations to the casings thereof, and shall allow any officer authorised, by the Central Government to inspect the same. Such records shall contain the following particulars:(a)The strata and sub-soil through which the bore-hole or well was drilled.(b)The casing inserted in any bore-hole or well and any alteration to such casing.(c)Any petroleum or water-bearing strata, coal-seams, seam and veins of any other mineral substance encountered.(d)Such other matter as the Central Government may from time to time require.(xiv)The lessee shall strengthen and support to the satisfaction of the railway administration concerned, or the Central Government, as the case may be, any part of the mine which in its opinion requires such strengthening or support for the safety of any railway, reservoir, canal, road or any other public works or structures.(xv)The lessee shall allow any officer authorised by the Central Government to enter upon any building, excavation or land comprised in the lease for the purpose of inspecting the same.(xvi)The lessee shall allow reasonable facilities of access to existing or future holders of licences or leases over any land which is comprised in or adjoins or is reached by the land held by him.(xvii)The lessee shall, without delay, report to the State Government the discovery in the area comprised in this lease, of any mineral other than petroleum or natural gas.(xviii)The lessee shall not be controlled by any trust, syndicate, corporation, firm or person, except with the written consent of the State Government.(xix)(1) In case of a national emergency in respect of petroleum the Central Government shall, at all time, have the right of pre-emption of the refined petroleum or petroleum products produced from the oil crude extracted from the area held under lease, or of the crude oil where the lessee is permitted to sell, export or dispose of it without refining:Provided that the fair market price prevailing at the time of pre--emption shall be paid to the lessee, for the petroleum or petroleum products taken in pre-emption.(2)Notwithstanding anything contained in rule 64, the Central Government shall be the sole judge as to what constitutes a national emergency in respect of petroleum, and its decision in this respect shall be final.(xx)Should the royalty or rent payable by the lessee be not paid within two months next after the date fixed in the lease for the payment of the same, the Central Government may enter upon the premises comprised in the lease and distrain any moveable property therein, and may order the sale of the property so distrained or so much of it as will suffice for the satisfaction of the royalty or rent due and all costs and expenses occasioned by the non-payment thereof: and if any royalty or rent remains at any time unpaid for six calendar months next after the date on which it is due the Central Government may determine the lease and take possession of the premises demised therein:Provided that if any dispute regarding the royalty or rent shall have been submitted to arbitration the period of two months or of six months, as the case may be, shall run from the date of announcement of the award.(xxi)In cases of breach of any of the conditions of the lease by the lessee of his transferee or assignee, the Central Government may, where it is satisfied that the breach is such as cannot be remedied, on giving thirty day's notice to the lessee or his transferee or assignee, forfeit the whole or part of deposit made under rule 45 or determine the lease. In case the Central Government considers the breach to be of a remediable nature, it shall give notice to the lessee, or his transferee or assignee, as the case may be, requiring him to remedy the breach within sixty days from the date of receipt of the notice and informing him of the penalty proposed to be inflicted if such remedy is not made within such period:Provided that, if the lessee, or his transferee or assignee, claims that he has not committed any such breach or that, the penalty proposed therefor is unduly sever, or that the breach is of a remediable nature, be may submit the dispute to arbitration as provided in rule 64, within thirty days from the date of receipt of the notice and if he does so, the Central Government shall not take any action under this clause till the award of the arbitration is announced and, in case the arbitrators of the umpire find that a breach as been committed and that it is of a remediable nature, the sixty days' time for remedying the same shall run from the date of announcement of the award.(xxii)The lessee shall be at liberty to, determine the lease or surrender or relinquish any part of the leased area, giving not less than twelve calendar months' notice in writing to the Central Government.
