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Madhya Pradesh High Court · body

1975 DIGILAW 122 (MP)

Tata Iron and Steel Co. Calcutta v. Union of India

1975-09-30

M.L.Malik, S.M.N.Raina

body1975
ORDER Malik, J. 1. The two appeals one day the claimants M/s Tata Iron and Steel Company and the other by the Central Government, are directed against the award dated the 18th May, 1966, made by the Tribunal constituted under section 14 (2) of the Coal Bearing Areas (Acquisition and Development) Act, 1957, (hereinafter called the Act). This order shall dispose of both the appeals. 2. The facts may be briefly stated: A notification under section 4 (1) of the Land Acquisition Act was issued by the Government of India on 4th August, 1956, of their intention to prospect for coal in an area of 3.02 Square miles (equivalent to 1932.80 acres) in village Jhilimili, District Surguja, which area formed part of the land held by the claimants M/S Tata Iron and Steel Co. under a mining lease. This notification was deemed to be issued under section 4 of the Act by virtue of section 28 of the Act. No objections to acquisition were made by the claimants or any other person interested in the land. The Central Government being satisfied that the land should be acquired; issued a declaration of acquisition under section 9 of the Act by their Notification dated the 22nd December. 1959, which was published in the Gazette of India dated the 2nd January, 1960. In consequence, the mining lease of the claimants in respect of the notified area comes to an end and vested in the Central Government from the date of the publication of the said notification. 3. The acquired are of 3.02 square miles formed part of 10 square miles held by the claimants under their mining lease dated the 16th October, 1947, which they had obtained from the Maharaja of Surguja. The claimants had done the exploratory and prosecuting operations before taking the lease. The exploration covered an area of 235 square miles which they did sometime before 1945. In May 1945 they obtained prospecting licence for an area of 65 square miles. In October, 1956, they obtained another prospecting licence for an area of 114 square miles. Though the claimants had their operation of prospecting done on an area of 180 square miles they took a lease for 10 square miles only. Out of this area of 10 square miles, the Government has acquired 302 square miles. 4. In October, 1956, they obtained another prospecting licence for an area of 114 square miles. Though the claimants had their operation of prospecting done on an area of 180 square miles they took a lease for 10 square miles only. Out of this area of 10 square miles, the Government has acquired 302 square miles. 4. The claimants preferred a claim of Rs 2,96,554/- before the Competent Authority on the 22nd July, 1961. The Central Government made an offer of Rs. 61.699.42 Nps. by their letter dated the 6th April, 1962. By letter dated 11th July 1962 the claimants agreed to accept the amount under protest. The amount was received by them on 20-9-1962. On 22nd August, 1962, the claimants addressed a petition to the Tribunal constituted under section 14 (2) of the Act for determination of the amount of fair compensation. In fact, on 22nd August 1962, the Tribunal had not been constituted. The Tribunal came to be constituted by Notification No. S O. 3453 dated the 8th November. 1962, published in the Gazette of India dated the 17th November, 1962. In the petition that was addressed to the tribunal on the 22nd August 1962 the demand of the claimants was at the same figure of Rs. 2.96.554/-. On 20th July, 1963 the claimants filed before the Tribunal a 'statement, enhancing the claim to Rs. 4.85,996. The Central Government objected to the claimant's filing an enhanced claim on the ground of limitation. That is one of the points for consideration in these appeals. 5. We might give here the claims made under different heads section 13 (2) of the Act, the amount which the Central Government offered and the compensation that came to be determined by the Tribunal. Claim under As advanced As advanced Claim allowed Allowed by S. 13 (2) (i) Initially be fore on 20-7-63 by the competent the Tribunal of the Act. the competent before the authority authority on Tribunal 21-7-1961 and before the Tribunal on 14-9-1962. (1) (2) (3) (4) (5) For Salami Out of Rs. Total expenses Rs. 442-73 Nps. Rs. 8985/- paid for 25200/- shown enhanced to Rs. obtaining as total expenses 29752/-, the claim prospecting over 10 Square for 3.02 acres licences. miles, the claim proportionately for 302 Square increased to Rs. miles was 8985/- shown as Rs. 76.0/-. Prospection Total expenses Total expenses shown Rs. 1236239 Rs. Total expenses Rs. 442-73 Nps. Rs. 8985/- paid for 25200/- shown enhanced to Rs. obtaining as total expenses 29752/-, the claim prospecting over 10 Square for 3.02 acres licences. miles, the claim proportionately for 302 Square increased to Rs. miles was 8985/- shown as Rs. 76.0/-. Prospection Total expenses Total expenses shown Rs. 1236239 Rs. 80355/- expenses at shown for 10 for 10 Square miles the site. Square miles Rs. Rs. 2,66.078/- 266078/- propor- proportionate tionate expenses expenses over 302 Square over 3.02 Sq. miles claimed miles claimed at Rs. Rs. 85114/-. 80355/-. (1) (2) (3) (4) (5) General pro- Total expenses Total expenses Not allowed. Not allowed. pecting ex- shown over enhanced to Rs. penses incu- 10 Sq. miles Rs. 3,70,541/- rred over 2.66.08/-. proportionate maintaining proportionate claim for 302 the Central claim for 302 Sq. Sq. miles Rs. Establishment miles Rs. 1,11,903/- for supervises- 85,114/-. ion, control, direction etc. Claim under section 13 (2) (ii) Expenditure in For 10 Sq. miles For 10 Sq. miles Rs. 16362.96 Rs. 16362.96 Nps obtaining lease. Rs. 55,182/-. Rs. 55,182/-. For 302 Sq. For 302 Sq. miles Rs. miles Rs. 16,665/- 16,665/- (item not disputed in appeal before us). Claim under For 10 Square For 10 Sq. miles Rs. Rs. 12,233/- Rs, 12,233/- section (2) (iii) miles. Rs. 42,107/- For 3.02 Minimum 42.107/- For Sq miles Royalty or 302 Sq. miles. Rs. 12,233/- dead-rent Rs. 13.472/-. paid by the lessees (Item not in dispute in appeal before us). Claim under Rs. 1,04742/- Rs. 1,15,070/- Rs. 20,298.23 Rs. 5856.67 section 13 (2) (iv) interest: Claim under Not claimed Rs. 1,40,785/- No claim made. Disallowed. section 13 (4): Solatium: Nothing allowed. The Tribunal found the claimants entitled to an excess award of Rs. 1.14802.36 Nps than what was paid by the Central Government. The Tribunal, however disallowed interest and costs that could, in the discretion of the Tribunal, be awarded under sections 15 and 16 of the Act. The appeal of the claimants before us is with respect to the items of General Prospecting Expenses incurred in maintaining Central Establishment disallowed by the Tribunal, solatium claimable under section 13 (4) of the Act, interest that ought to have been allowed under section 16 and proportionate increase in the figure of interest payable under section 13 (2) (iv) of the Act. The Central Government on the other hand, contend in their appeal that nothing more could be awarded than what they had determined as the fair compensation. 6. The first and the most vital point for consideration is whether the claimants could claim the expenses over prospecting in the ratio of 3:10 as allowed by the Tribunal, or in the ration 3:181 as argued by the learned counsel for the Central Government. It cannot be disputed that the amount of salami paid, or the prospecting expenses incurred relate to operations over an area of 180 square miles covered by the two prospecting licences, though ultimately the claimants preferred to take a lease of 10 square miles only. The point is whether the expenses incurred over exploration of 235 square miles and prospecting over 180 square miles should be taken as expenses towards obtaining a lease of 10 square miles and, therefore, the Central Government should be made liable in the ratio of 5:10. 7. In our interpretation of the section 13 (2) (i) what seems payable is the reasonable and bonafide expenditure actually incurred in respect of the land that is, the land sought to be acquired by the Government. If the prospecting expenses were incurred over an area of 180 Sq. miles and the Government proposed to acquire only 3 Sq. miles, the expenses actually incurred would be in proportion of 3:180 for the land acquired. If the prospecting expenses were incurred over an area of 180 Sq. miles and the Government proposed to acquire only 3 Sq. miles, the expenses actually incurred would be in proportion of 3:180 for the land acquired. We may usefully reproduce here the relevant provisions of sections 13 (1) and 13 (2) (i) of the Act:- Sec. I3 (l): "Where a prospecting licence ceases to have effect under section 5, there shall be paid to the person interested compensation, the amount of which shall be a sum made up of all items of reasonable and bonafide expenditure actually incurred in respect of the land that is to say,- (i) the expenditure incurred in obtaining the licence; (ii) the expenditure if any incurred in respect of the preparation of maps, charts and other documents relating to the land, the collection from the land of cores and mineral samples and the due analysis thereof and the preparation of any other relevant records or material; (iii) the expenditure if any, incurred in respect of the construction of roads or other essential works on the land, if such roads or works are in existence and in a usable condition; (iv) the expenditure, if any, incurred in respect of any other operation necessary for prospecting carried out in the land. Sec. 13 (2) (i): Where the rights under a mining lease are acquired under this Act, there shall be paid to the person interested compensation the amount of which shall be a sum made up of the following items, namely:- (i) if the lease was granted after prospecting operation had been carried out in respect of land under a prospecting licence, the sum of all items of reasonable and bonafide expenditure actually incurred with respect to the matters specified in clauses (i), (ii), (iii) and (iv) of sub-section (I) before the date of the lease; Provided that where two or more leases had been granted in relation to any land covered previously by one prospecting licence, only so much of the expenditure aforesaid as bears to the total area covered by the mining leases shall be payable under this clause." The reading of the provision of section 13 (1) and 13 (2) (i) would make it clear that where a claimant has not acquired a mining lease but holds only a prospecting licence, which ceases to have effect upon issuance of a notification under section 4 of the Act, he is entitled to claim from the Government that part of the reasonable and bona fide expenditure actually incurred by him over obtaining the licence and prospecting done as the notified area would bear to the total area covered by the prospecting operations. The same amount would be payable to the claimant under section 13 (2) (i) where the clamant obtains a mining lease after the prospecting operation and that lease comes to an end by acquisition. It would be difficult to reconcile that where prospecting licence ceases to have effect because of the notification the claimant should be entitled to 3/180th of the total expenditure under section 13 (1), but where he obtains a mining lease of a much lesser area (as in the present case, 10 Square miles), he should be permitted to throw the entire burden of the prospecting expenditure on the area of lease, to be shared by the Government if they proposed to acquire a part of the lease hold. Throwing the burden of the entire expense of prospecting of 180 Square miles over the lease hold area of 10 Square miles, would neither be reasonable and bona fide expenditure actually incurred within the meaning of section 13 (I) or section 13 (2) (i), nor would it be expenditure in respect of the land which signifies the land under acquisition. 8. It follows, therefore, that whatever the claimant could claim under section 13 (1), would be admissible to him under section 13 (2) (i) and nothing more. We find the Tribunal in error in calculating compensation in the ratio of 3:10. Compensation payable under section 13 (2) (i) ought to have been calculated in the ratio of 3:180 Calculating thus, the amounts payable under S.13 (2) (i) comes to 25200 + 266078 + 266078 x 3/180 = 557 356/60 = Rs 9284/-. Instead, the Government has paid Rs.- 442 + Rs 12362.39 Nps. = Rs. 12804,39 Nps , more than what the claimants were entitled to. Even calculating on the basis of the claim advanced on 207-1963, the amount payable works out to Rs. 29752 + 66078 + 370541 = Rs. 11105/-. The Government has been paid ______________________ 60 instead, more than Rs. 12800/. 9. We might consider here the question of limitation: whether the claimants could be permitted to enhance their claim by their petition dated the 20th July, 1963, and whether the Tribunal could make an award on the basis of the enhanced claim Rule 7 (5) of the Coal Bearing Areas (Acquisition and Development) Rules, 1957 governs the case. It reads as under:- Rule 7 (5): "Any person who has been admitted to be interested and who has accepted the payment of compensation under protect may within six weeks of the date of such acceptance prefer an application to the Tribunal for determining and sufficiency of the amount of compensation: Provided the Tribunal may entertain an application preferred within thirty days after the expiry of the specified period if it is satisfied that the applicant had sufficient cause for not preferring the application within the specified period." The application was required to be made before the Tribunal within six weeks of the date on which payment of compensation had been accepted under protest. The Tribunal could entertain the application within 30 days thereafter if the applicant satisfied the Tribunal that there was sufficient cause for not preferring the application within the specified period. We might count the period from the date the Tribunal came to be constituted. It was constituted on 19-11-1962. The application ought to have been made within six weeks thereafter, that is, by December end, the Tribunal could extend the period by 30 days. The application made on 20th July, 1963, was clearly beyond time. The Tribunal could, therefore, deal with the claim as was addressed to it on 22nd August, 1962. The enhanced claim could not be considered. 10. The learned counsel for the claimants however, contended that the claim for interest under section 13 (2) (iv) and under section 16 of the Act and payment of solatium under S. 13 (4) had to be allowed irrespective of pleadings, once the data relating to items covered by section 13 (2) (i), (ii) and (iii) had been furnished. The enhanced claim, the counsel said covered a major item of solarium which was statutorily allowable item under section 13 (4). Even if no claim were advanced, the Tribunal could award solatium. 11. The argument of the learned counsel is without much meaning, since if data relating to items (i), (ii) and (iii) of sub-section (2) of section 13 had been given interest would be a matter of calculation under section 13 (2) (iv). But no change in the data relating to items (i), (ii) and (iii) could be permitted beyond the period of limitation. The claimants here sought to change the data of item (i) of section 13 (2) by increasing the amount of salami and Central Establishment expenses. If that is not permitted, there cannot be corresponding increase in the amount of interest. 12. Similarly, the claim of solatium under section 13 (4) of the Act is permissible only to such claimant where no acquisition is made under section 9 and notification under section 4 ceases to have effect in accordance with the provisions of section 7 (2) of the Act. A claimant whose mining lease is acquired, is entitled to compensation only as calculated by section 13 (2) of the Act. He cannot claim over and above that compensation, solatium under section 13 (4) of the Act. A claimant whose mining lease is acquired, is entitled to compensation only as calculated by section 13 (2) of the Act. He cannot claim over and above that compensation, solatium under section 13 (4) of the Act. The matter has been lucidly dealt with by Untwalia, C.J. in East India Coal Co. Ltd. v; The Union of India AIR 1974 Patna 48 and we are in respectful agreement with the reasoning’s given by their Lordships. This is what their Lordships said: "If land in respect of which notification under S. 4 has been issued is not acquired within the maximum period of three years, then under S. 7(2) of the Act the notification issued under sub-section (1) of S. 4 ceases to have effect on the expiration of three years from the date thereof. If however within the mid period a declaration of acquisition is made under S.9, then there is no question of the effect of notification ceasing or the effect under S. 5(b) coming to an end in that event the land vests in the Central Government and becomes its property. When land is acquired then under S. 13(2) (iii) the expenditure if any, incurred by way of dead rent or minimum royalty during any year or years. when there was no production of coal is fully paid irrespective of question whether the non-production of coal was because of the mining operations not going on or because of the effect brought about under section 5 (b) of the Act. If, however, land is not acquired the notification under S.4 (1) as also the effect brought about under section 5 (b) comes to an end. If, however, land is not acquired the notification under S.4 (1) as also the effect brought about under section 5 (b) comes to an end. In that event to the owner of the land a compensation of 5 per centum has been provided under sub-section (4) of S.13 which says- "Where a mining lease ceases to have effect for any period under clause (b) of section 5, there shall be paid by way of compensation for the period during which the lease so ceased to have effect a sum equivalent to 5 per centum of any such expenditure as is referred to in clauses (i) and (iii) of sub-section (2) for each year during which the lease remains suspended." It is to be noticed that under sub-section (4) a sum equivalent to 5 per centum of the expenditure provided in clause (iii) of sub section (2) of section 13 is not to be paid if there were no mining operations carried on by the owner of the land but the amount is to be paid only if he was prevented from carrying on the operations because of the effect brought about under section 5 (b) of the Act. That being so, it is difficult to accept the argument that the appellant is entitled over and above the full amount awarded under section 13 (2) (iii), to 5 per centum more under section 13 (4). Similarly, nothing more can be allowed under section 13(4) over and above the amount allowed under Section 13(2)(i). The first point, therefore, fails and is rejected." 13. Similarly, nothing more can be allowed under section 13(4) over and above the amount allowed under Section 13(2)(i). The first point, therefore, fails and is rejected." 13. While construing section 13 (4) of the Act, we might as well refer to Rule 5-A of the Coal Bearing Areas (Acquisition and Development) Rules 1957, wherein filing of claim under section 13(4) has been provided for in Clause (b) of Rule 5-A as under : "Where the claim is in respect of any matter referred to in sub-section (4) of section 13 within ninety days from the date of rescission of the notice issued under sub-section (i) of section 4 or after the expiry of the period of three years specified in sub-section (2) of section 7." The reading of the Rule makes it clear that section 13 (4) of the Act envisages compensation to a person whose lease is suspended by notifications under section 4 till such time the notice is rescinded, or the maximum period of three years when the notice ceases to have effect automatically under section 7 (2) of the Act But where declaration under section 9 is made, neither is the notice rescinded nor will it cease to have effect in order to attract section 13(4). 14 In this view of the matter, the claimants could claim nothing under section 13 (4) of the Act. 15. The only point that remains to be considered is whether the Tribunal was right in disallowing the Central Establishment charges. It cannot be disputed that expenses incurred over supervision and control and sifting of data would be intimately connected with the prospecting operations and therefore, a permissible item under section 13 (I) (iv). But the claimants in their initial application dated the 22nd August, 1962 or in their claim petition to the competent authority gave no details of the expenses incurred and how those expenses were related to the prospecting operations. Only a vague and general statement was made that they incurred expenses of Rs. 66078/- over general prospecting. The particulars and details came to be given in the second claim preferred before the Tribunal on 20th July, 1963. The figure was enhanced to Rs. 370541/-. As said above, the second claim was barred by limitation and could not be looked into. The original claim as advanced could be rejected forthwith if no details were forthcoming. The particulars and details came to be given in the second claim preferred before the Tribunal on 20th July, 1963. The figure was enhanced to Rs. 370541/-. As said above, the second claim was barred by limitation and could not be looked into. The original claim as advanced could be rejected forthwith if no details were forthcoming. The evidence given in respect of Central Establishment Expenses was equally vague and uncertain. Those expenses ought to be intimately connected with the prospecting operations and the evidence must show what was actually done at the Central Office in the aid of prospecting operations. Say for example, tests in the Laboratory technical advice obtained, maps and drawing drawn etc., would be items connected with the prospecting. The Tribunal was not satisfied with the evidence given before it, and in our opinion, the Tribunal rightly rejected the claim for General Prospecting. 16. As shown above, even if the expenses over Central Establishment were taken into account, the claimants would be entitled to Rs. 1105/- only, under section 13 (2) (i) the ratio being 3:180. The Government has allowed more than Rs. 12800/-. 17. In the result, therefore, the appeal filed by the claimants must be dismissed with costs and that filed by the Central Government must be allowed. The Government had made a fair offer of Rs. 61699.42 Nps. Nothing more could be paid. The Tribunal's award is accordingly set aside. The Central Government shall receive from the claimants costs incurred before the Tribunal as also before this Court. Counsel's fee as per schedule.