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2001 DIGILAW 186 (HP)

HIMACHAL SALES AND STONES, CHAMBA v. STATE OF H. P.

2001-08-07

M.R.VERMA

body2001
JUDGMENT M.R, Verma, J.—This suit has been instituted by the plaintiffs praying for a decree for declaration and permanent prohibitory injunction. 2. The case of the plaintiffs as made out in the plaint is that plaintiff No. 2 is the sole proprietor of plaintiff No. 1 a concern involved in the business of manufacturing of slates. On 30.7.1996 a lease deed was executed between the parties providing a right to the plaintiffs to quarry slates from Khasra No. 1218/524/1 measuring 1-14 bighas situate in Mauza Piyura, Tehsil and District Chamba for a period of ten years and the plaintiff firm was put in possession of the said land. As per the lease deed, the royalty payable by the plaintiffs was as per the rates specified in the first schedule of H.P. Minor Minerals (Concession) Revised Rules, 1971 (hereafter referred to as the Rules) as modified vide notification dated 13.5.1991 issued in the name of the Governor of Himachal Pradesh. As per the said notification, the rate of royalty applicable to slates was Rs. 75 per tonne. The plaintiffs after incurring huge expenses, in order to quarry the slates started their work and had been paying the royalty. The defendants vide letter dated 17.2.1997 informed and directed the plaintiffs to execute supplementary lease deed because of the change in the conditions of the lease regarding royalty and reduction of 10 years lease period to five years. The royalty was then required to be paid for the period 2.1.1997 to 18.10.2000 at the rate of Rs. 75,200/ per annum. This act of the defendants is unilateral, illegal, ultra vires and without jurisdiction. Hence, the present suit in which the following reliefs have been claimed:— (a) Declaration that the plaintiffs are entitled to work in the mine to extract slates as per lease deed executed on 30.7.1996; (b) Declaration that letter dated 17.2.1997 calling upon the plaintiffs to execute supplementary lease deed is illegal, void and arbitrary; (c) Injunction restraining the defendants from interfering with the possession of the plaintiffs over the slate quarry in suit, and from enforcing the revised rates of royalty as per letter dated 17.2.1997. 3. The defendants contested the suit and filed written statement. While admitting the status of the parties and the execution of the lease, it has been claimed that the lease was executed on 26.4.1996 and not on 30.7.1996 as claimed in the plaint. 3. The defendants contested the suit and filed written statement. While admitting the status of the parties and the execution of the lease, it has been claimed that the lease was executed on 26.4.1996 and not on 30.7.1996 as claimed in the plaint. The details of expenses incurred by the plaintiffs for carrying out the work of slates quarry has been denied for want of knowledge. It is further claimed that Section 15(1) of the Mines and Minerals (Regulation and Development) Act, 1957 confers wide powers on the State Government inter alia in fixing the royalty for extraction of the mines and minerals. It has been admitted that vide letter dated 17.2.1997 the plaintiffs have been asked to execute the supplementary lease deed and the royalty desired to be paid is Rs. 75,200/- per annum with effect from 2.1.1997 to 18.10.2000 which is akin to the dead rent and no injustice has thus been caused to the plaintiffs in any manner. It has been claimed that no enhancement in the rates of royalty has been made applicable but the minimum rate of Rs. 75,200/- has been calculated which is based on the pit mouth value of the minerals. It has also been claimed that Rule 56 ibid authorises the State Government to alter the terms and conditions of the working of the mines in the interest of mineral development. Therefore, the entitlement of the plaintiffs to the reliefs as claimed, has been denied and it has been prayed that the suit be dismissed. 4. The plaintiffs filed replication wherein the grounds of defence as taken in the written statement were denied and the claim as made in the plaint was re-affirmed. 5. On the pleadings of the parties, the following issues were framed:— 1. Whether the rates of royalty have been enhanced vide letter dated 17.2.1997 by the defendants in an illegal manner and without jurisdiction? If so, to what effect? OPP 2. Whether the plaintiffs have no cause of action, as alleged? OPD 3. To what relief, if any, the plaintiffs are entitled? OPP 4. Relief. 6. Parties led evidence. 7. Arguments were heard. 8. My findings on the aforesaid issues are as follows. 9. Issue No.1. It is not disputed that the lease deed Ext. PW-l/B has been executed between the parties as required under the provisions of Rule 19 of the Rules. To what relief, if any, the plaintiffs are entitled? OPP 4. Relief. 6. Parties led evidence. 7. Arguments were heard. 8. My findings on the aforesaid issues are as follows. 9. Issue No.1. It is not disputed that the lease deed Ext. PW-l/B has been executed between the parties as required under the provisions of Rule 19 of the Rules. As per the said deed, the plaintiffs are liable to pay royalty for-the mining of slates "at the rates specified in the first schedule" of the Rules ibid. It is also not in dispute that at the time of execution of deed Ext. PW-l/B, the rate of royalty so payable was Rs. 75/- per ton as per the said schedule. 10. Sub-rule (2) of Rule 20 of the Rules which empowers the State Government to vary the rates of royalty payable in respect of a lease regarding mining of minor minerals, reads as under:— "20 (1) (2) The Government may, by notification in the official Gazette, amend the First and Third Schedule so as to enhance or reduce the rate at which the royalty shall be payable in respect of any minor mineral with effect from such date as may be specified in the notification, either in respect of the whole State or any specified area: Provided that the rate of royalty in respect of any minor mineral shall not be revised more than once during any period of four years." 11. It is clear from a bare reading of the above sub-rule that it is open to the State Government to revise the rate of royalty at any time once during a period of four years from the coming into force of the Rules and after each period of four years at any time during each succeeding period of four years. However, the revision of the rates of royalty, be it reduction or enhancement of such rates, shall have to be carried out by amending the First and Third Schedule and such amendment shall be carried out by a Notification in the official Gazette. Therefore, to be valid and enforceable, the revision of the rate of royalty shall have to be made in the manner as provided under the sub-rule supra. 12. In this case the rate of royalty has admittedly been revised as per the contents of the letter Ext. Therefore, to be valid and enforceable, the revision of the rate of royalty shall have to be made in the manner as provided under the sub-rule supra. 12. In this case the rate of royalty has admittedly been revised as per the contents of the letter Ext. PW-l/E and the plaintiffs have been asked to pay "minimum royalty" at the rate of Rs. 75,200/-" per annum. It is admitted by DW-1 S.K. Agnihotri that "no notification was ever issued by the State Government for enhancement of royalty" and "no notification fixing the minimum rate of royalty was issued". Thus, the revised rate of minimum royalty of Rs. 75,200/- cannot be said to have been fixed in exercise of the powers of the State Government under sub-rule (2) of Rule 20 of the Rules. 13. It was contended for the defendants that the rate of minimum royalty payable by the plaintiffs has been fixed in exercise of the powers of the State Government under Rule 56 of the Rules. 14. Rule 56 of the Rules ibid reads as follows:— "56. State Government may, if it is of opinion that in the interest of mineral development it is necessary to do so, by order in writing and for reasons to be recorded, authorise in any case the grant of any mining lease or the working of any mine for the purpose of mining any mineral on terms and conditions different from those laid down in these rules." 15. It is evident from the bare reading of the rule ibid that it empowers the State Government to authorise grant of a mining lease or working of a mine for the purpose of mining any material on terms and conditions other than those laid down in the Rules, if the State Government is of opinion that in the interest of mineral development it is necessary to do so. Once the requisite opinion is formed, the State Government will do the needful by an order in writing and the reasons for doing so shall be recorded. 16. In this case there is no evidence to prove that the Government was of the opinion that fixing of minimum royalty shall be in the interest of mineral development nor the recorded reason and order in writing have been proved to justify the action of the State Government in issuing the letter Ext. 16. In this case there is no evidence to prove that the Government was of the opinion that fixing of minimum royalty shall be in the interest of mineral development nor the recorded reason and order in writing have been proved to justify the action of the State Government in issuing the letter Ext. PW-l/E calling upon the plaintiffs to pay the fixed minimum royalty per annum instead of the rate of royalty as fixed in the Schedule and payable under Rule 20 and as per terms of the lease deed Ext. PW-l/B. 17. In view of the above discussion, the rates of royalty as fixed vide letter dated 17.2.1997 Ext. PW-l/E cannot be said to have been enhanced/ fixed legally and validly and the same cannot be enforced against the plaintiffs. This issue is accordingly held in favour of the plaintiffs. 18. Issue No. 2. It is not in dispute that the letter Ext. PW-l/E introduces substantial change in the terms and conditions contained in the lease deed Ext. PW-1/B between the parties, therefore, the plaintiffs have a cause of action. This issue is, therefore, decided against the defendants. 19. Issue No. 3. The plaintiffs have claimed the relief of (i) declaration that letter dated 17.2.1997 (Ext. PW-l/E) is illegal and the plaintiffs are entitled to extract slates as per the lease deed dated 30.7.1996 (Ext. PW-l/B) and (ii) that the defendants be restrained from interfering with the possession of the plaintiffs over the slate quarry in suit and from enforcing the revised rates of royalty as per Ext. PW-l/E. 20. In so far as fixing of "the minimum rate of royalty" as per Ext. PW-l/F is concerned, it has already been held not to be valid and legal vide findings on issue No. 1 above, therefore, the defendants cannot be allowed to enforce and recover the said rate of royalty. Instead the defendants can recover the royalty from the plaintiffs only as per the rates as specified in the Schedule as amended or as may be amended from time to time as per the provisions of Rule 20(2) of the Rules. 21. Instead the defendants can recover the royalty from the plaintiffs only as per the rates as specified in the Schedule as amended or as may be amended from time to time as per the provisions of Rule 20(2) of the Rules. 21. The question which still remains to be decided is whether the plaintiffs possession of the slate quarry in question for mining purposes can be protected for a period of ten years and the defendants can be restrained from enforcing the conditions regarding reduction of the period of lease from ten years to five years as per the terms of letter Ext. PW-l/E? 22. The lease deed Ext. PW-l/B provides that it shall be operative for a period of ten years with effect from 30-7.1996, whereas vide letter Ext. PW-l/E, the said period has been reduced to five years. Rule 18 of the Rules which provides for "period of lease" reads as follows:— "18 (1) The period for which a mining lease may be granted shall be five years in the first instance. The mining lease may be renewed for one or two periods to exceeding the period for which the mining lease was originally granted. (2) The application for renewal of the mining lease shall be made in Form O before six months of the expiry of the lease and upon payment of a fee of Rs.10. This renewal will be subject to the Government being satisfied that the mines have been developed by the lessee and that the substantial investments in machinery, equipments have been made by him and that the mines have been worked and developed in a scientific manner and that the lessee has been paying the Government dues regularly under the rules. (3) When a renewal is granted, dead rent, royalty and surface rent shall be charged at the rates in force at the time of renewal” 23. Thus, as per the provisions of the above rule, the period of lease at the first instance shall be five years and the lease can be renewed for one or two terms of the period not exceeding the period for which the mining lease was originally granted which period evidently cannot be more than five years. Thus, as per the provisions of the above rule, the period of lease at the first instance shall be five years and the lease can be renewed for one or two terms of the period not exceeding the period for which the mining lease was originally granted which period evidently cannot be more than five years. Thus, the lease could have been granted in favour of the plaintiffs for a maximum period of five years at the first instance or by way of renewal, whereas it has been granted for ten years, hence contrary to the provisions of Rule 18 of the Rules. 24. It appears from the contents of Ext. PW-l/E that before issue of this letter, the plaintiffs were served with a show cause notice which was replied to by them and on consideration of such reply, the minimum amount of royalty was fixed and the period of lease was reduced from ten years to five years. Evidently, the action of the State Government in reducing the period of lease to five years appears to bring the period of lease in conformity with the provisions of Rule 18 supra, and such action have been taken after issue of show cause notice and consideration of reply of the plaintiffs to such notice. The action, thus, does not suffer from the vice of being unilateral as claimed for the plaintiffs. There are no allegations of mala fide. Therefore, the act of the State Government in reducing the period of lease does not appear to be illegal but appears to have been done to rectify an illegality, i.e violation of Rule 18 supra. In any case the conditions of the lease Ext. PW-l/B fixing the period of lease as ten years being contrary to Rule 18 supra is illegal. 25. The reliefs of declaration and injunction are purely discretionary reliefs and in my considered view, cannot be granted to protect a transaction arrived at in violation of law as it is the duty of the Court not to render its aid to the enforcement of illegal transaction. Therefore, the plaintiffs are not entitled to the relief of declaration and injunction qua the reduction in the period of lease. 26. Therefore, the plaintiffs are not entitled to the relief of declaration and injunction qua the reduction in the period of lease. 26. In view of the above, I hold that the plaintiffs are entitled to the relief claimed qua the illegal fixing of "minimum rate of royalty" as claimed but they are not entitled to the relief qua the reduction in the period of the mining lease deed as claimed. This issue is accordingly decided partly in favour of the plaintiffs and partly against them. 27. Issue No. 4 Relief In view of the findings given above, the suit of the plaintiffs is partly decreed and the letter dated 17.2.1997 (Ext. PW-l/E) is declared illegal and void to the extent it fixes the minimum rate or royalty payable by the plaintiffs and the plaintiffs were entitled to remain in possession of the slate quarry in suit and to quarry the slates there from till the expiry of reduced period of lease deed, i.e. five years from the date of execution of the lease deed Ext. PW-l/B on payment of royalty as per the First Schedule of the Rules as amended from time to time in accordance with the provisions of Rule 20(2) of the Rules and subject to the terms and conditions of the said lease deed, save and except, the condition about the period of lease being ten years and the defendants are restrained from enforcing the recovery of royalty from the plaintiffs as per the rate fixed vide letter Ext. PW-l/E. The claim over and above the relief herein-above granted is dismissed. No orders as to costs. Suit partly allowed. -