Gujarat High Court

Gambhirsinh Rathod vs State Of Gujarat on 4 May, 2021

Bench: R.M.Chhaya

      C/SCA/882/2021                                  JUDGMENT DATED: 04/05/2021




             IN THE HIGH COURT OF GUJARAT AT AHMEDABAD

                R/SPECIAL CIVIL APPLICATION NO. 882 of 2021

FOR APPROVAL AND SIGNATURE:

HONOURABLE THE CHIEF JUSTICE MR. JUSTICE VIKRAM NATH

and

HONOURABLE MR. JUSTICE R.M.CHHAYA

==========================================================

1     Whether Reporters of Local Papers may be allowed to                   Yes
      see the judgment ?

2     To be referred to the Reporter or not ?                               Yes

3     Whether their Lordships wish to see the fair copy of the               No
      judgment ?

4     Whether this case involves a substantial question of law               No
      as to the interpretation of the Constitution of India or any
      order made thereunder ?

==========================================================
                           GAMBHIRSINH RATHOD
                                  Versus
                            STATE OF GUJARAT
==========================================================
Appearance:
MR AS VAKIL(962) for the Petitioner(s) No. 1
for the Respondent(s) No. 2,3,4
MS SHRUTI PATHAK, AGP (99) for the Respondent(s) No. 1
==========================================================

    CORAM: HONOURABLE THE CHIEF JUSTICE MR. JUSTICE VIKRAM
           NATH
           and
           HONOURABLE MR. JUSTICE R.M.CHHAYA

                               Date : 04/05/2021

                               ORAL JUDGMENT

(PER : HONOURABLE THE CHIEF JUSTICE MR. JUSTICE VIKRAM NATH)

C/SCA/882/2021 JUDGMENT DATED: 04/05/2021

1 This petition under Article 226 of the

Constitution of India has been flied praying for the

following reliefs:

"[A] declare illegal and invalid Rule 15(1) of the Gujarat Mineral Concession Rules, 2017 as being ultra vires section 15(1)(1-A) of the Mines and Minerals (Development and Regulation) Act, 1957 and being violative of Article 14 of the Constitution of India;

[B] declare illegal and set aside the Government Resolution dated 18.10.2017;

[C] declare, in the alternative to prayer (a) and (B) above that the proviso to Rule 15(1) of the Gujarat Minerals Concession Rules, 2017 and the Government Resolution dated 18.10.2017 (Annexure-1) is not applicable to the petitioner for the purpose of mining blacktrap;

[D] to quash and set aside the two impugned demand letters dated 21.07.2020 and 07.11.2020 (Annexure 2 and 3 respectively;

[E] to stay, pending the hearing and final disposal of the present Special Civil Application, the operation, implementation and

C/SCA/882/2021 JUDGMENT DATED: 04/05/2021

execution of the two impugned demand letters dated 21.07.2020 and 07.11.2020 and thereby direct that the petitioner's ATR / e-royalty account of blacktrap be opened;

[F] to provide for the costs of the present Special Civil Application;

[G] to pass such other and further orders as this Hon'ble Court deemed fit and proper in the facts and circumstances of the present case;"

RELEVANT ACT & RULES

2 The Mines and Minerals (Development and

Regulation) Act, 1957 (hereinafter referred to as

MMDR Act) was enacted to provide for the development

and regulation of mines and minerals under the

control of the Union. Section 15 of the MMDR Act

confers power on the State Government to make rules

for regulating grant of quarry leases, mining leases

and other mineral concessions in respect of minor

minerals and for the other purposes connected

therewith.

2.1 The State of Gujarat for the first time

promulgated Gujarat Minor Minerals Rules, 1966 [for

C/SCA/882/2021 JUDGMENT DATED: 04/05/2021

short, 1966 Rules]. Under 1966 Rules there was a

provision in Rule 22(xvii) that the lessee shall

report the discovery of any material not specified in

the list in the leased area and that the lessee would

not win or dispose off such mineral without obtaining

lease.

2.2 In 2010, the Government of Gujarat framed

another set of Rules viz. Gujarat Mining Minerals

Concession Rules, 2010 [for short, 2010 Rules]. Under

Rule 74 of the 2010 Rules, the 1966 Rules were

repealed to the extent provided therein. Rule 41 of

the said 2010 Rules provided that lessee upon

discovery of any mineral not specified in the list

shall report to the competent authority and shall

apply for lease under the 2010 Rules for grant of

mining lease of the newly discovered mineral within a

period of 3 months from the discovery.

2.3 Again in the year 2017, The State of

Gujarat in exercise of powers under Section 15 of the

MMDR Act framed the Gujarat Minor Mineral Concession

Rules, 2017 [for short, 2017 Rules]. Rule 92 of the

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2017 Rules provides for repeal and saving of the 2010

Rules. Further, Rule 56(5) of the 2017 Rules provide

for payment of royalty for each such mineral in case

more than one minor mineral is permitted to be mined

in the same leasehold area. Rule 15(1) of the 2017

Rules provided for new discovery and levy of auction

premium of newly discovered mineral in respect of

quarry lease executed after 2017 Rule. However, the

proviso to Rule 15(1) provided that where the quarry

lease for a minor mineral was granted prior to

commencement of 2017 Rules, the Government shall

have power to specify the rate of payment of the new

mineral discovered. Pursuant to the proviso to Rule

15(1), the Government issued a resolution dated

18.10.2017 laying down the rate of payment for the

newly discovered mineral. According to the Government

Resolution the lessee would have to pay in addition

to the royalty and dead rent as per Schedule-I and

Schedule-II of the 2017 Rules, an additional amount

being 80% of the royalty.

FACTS RELATING TO LEASE FOR MINING SAND

2.4 The Collector, Geology and Mining

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Department, Surendranagar issued a mining order dated

30.09.2009 in favour for the petitioner sanctioning

lease for mining sand over a plot measuring 4.900

Hectares situate in Village Sandhiyala, Taluka Chuda,

District Surendranagar for a period of 3 years.

Pursuant to the aforesaid order mining lease deed was

executed in favour of the petitioner on 03.11.2010.

Before completion of 3 years, the petitioner applied

for renewal of mining lease vide application dated

10.02.2013. The mining lease was renewed for a period

of 3 years on 03.11.2013 which would be valid upto

02.11.2016. Again before completion of period of the

second term of 3 years, the petitioner applied on

03.08.2015 for further renewal of the mining lease.

During the pendency of this renewal application, the

petitioner discovered a new mineral BLACKTRAP and

accordingly made an application on 19.09.2015 for

including BLACKTRAP in the existing lease deed.

Filing of this application is admitted to the

respondents.

2.5 Another mining order dated 10.03.2016 came

to be issued renewing the mining lease dated

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03.11.2013 for a period of 3 years upto 02.11.2019.

However, this mining order made no reference to the

application of the petitioner dated 19.09.2015 to

include BLACKTRAP. The said application apparently

remained pending with the authority. On 14.07.2016

renewal lease deed was executed in favour of the

petitioner for a period of 3 years with respect to

mining of sand. Subsequently the lease has been

renewed upto 2022.

FACTS RELATING TO MINING OF BLACKTRAP

2.6 There is environmental clearance in favour

of the petitioner for mining BLACKTRAP dated

02.07.2018 issued by the District Level Environment

Impact Assessment Authority, Surendranagar. The

Commissioner, Geology & Mining passed an order dated

09.07.2018 on the pending application of the

petitioner dated 19.09.2015 (for inclusion of the new

discovery of BLACKTRAP) and granted permission to

include BLACKTRAP. Pursuant to the aforesaid order of

the Commissioner dated 09.07.2018, the quarry lease

deed was executed in favour of the petitioner for

mining BLACKTRAP on 02.08.2018. Consequential order

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was also passed by the Collector on 03.08.2018. From

August, 2018 the petitioner started mining BLACKTRAP

and paid the royalty @Rs.45 per MT which was duly

accepted by the respondents. According to the

petitioner from the period from August, 2018 upto

June, 2020 the petitioner mined 5,76,000 MT and paid

approximately an aggregate royalty amount of Rs.2.60

crores at the above rate.

2.7 The Geologist, Geology Assessment and

Mining Department, Surendranagar issued a demand

letter dated 21.07.2020 raising a demand of alleged

differential amount of R.2,07,11,613/- @Rs.36 per MT

being 80% of the rate of the royalty under the

proviso to Rule 15(1) of the 2017 Rules applying the

Government Resolution dated 18.10.2017. Subsequently,

a second demand notice was issued by respondent No.4

- Geologist on 07.11.2020. This differential demand

is on the newly discovered minor mineral viz.

BLACKTRAP which was being mined by the petitioner

pursuant to the quarry lease dated 02.08.2018 after

the Commissioner has accorded sanction vide order

dated 09.07.2018. Aggrieved by the aforesaid demand,

C/SCA/882/2021 JUDGMENT DATED: 04/05/2021

the present petition has been filed.

2.8 There is challenge to the validity of Rule

15(1) of the 2017 Rules being violative of Article 14

of the Constitution of India as also Section 15(1)

(1A) of the MMDR Act as being ultra vires. Further

prayer is to quash and set aside the Government

Resolution dated 18.10.2017. In the alternative it

has been prayed that the Government Resolution dated

18.10.2017 does not apply to the petitioner and as

such the two impugned demand notices dated 21.07.2020

and 07.11.2020 be quashed.

2.9 Counter affidavit was called for which has

been filed by the State duly sworn by the respondent

No.4 - Geologist. The facts leading to the grant of

mining lease both of sand and BLACKTRAP to the

petitioner right from 2009 are not disputed. Further

that the mining lease has been renewed from time to

time with respect to sand and later for BLACKTRAP is

also not disputed.

3 We have heard Mr. Apurva Vakil, learned

C/SCA/882/2021 JUDGMENT DATED: 04/05/2021

counsel for the petitioner and Ms. Shruti Pathak,

learned Assistant Government Pleader for the State

respondents. Mr. Vakil submits that he does not

propose to file any rejoinder affidavit in response

to the affidavit in reply filed by the State

respondents. Further learned counsels for the parties

have stated that they are ready to argue the matter

on merits and with their consent we have heard the

matter on merits finally.

4 At the outset, we may refer to the relevant

provisions of the 2017 Rules. Under Rule 2(1)(v), the

definition of Rules is given which means that in

these rules unless the context otherwise required

Rules would mean the Gujarat Minor Mineral Concession

Rules, 2017. The same is reproduced hereunder:

"Rule 2. Definitions

[a] to [u] xxx xxx

[v] `rules' means the Gujarat Minor Mineral

Concession Rules, 2017".

4.1 Further as the main issue relates to

C/SCA/882/2021 JUDGMENT DATED: 04/05/2021

interpretation and applicability of Rule 15(1) and

its proviso of 2017 Rules, the same is reproduced

hereunder:

"15. New Discovery-

[1] Where a quarry lease has been granted for a minor mineral under the rules made under section 15 and subsequent to registration of the quarry lease, a new minor mineral(s) is discovered, then the quarry lease holder may request the Government in writing to include the new mineral(s) in the quarry lease. In such case, the Government may grant a quarry lease subject to compliance by the quarry lease holder of the provisions of applicable laws with respect to mining for the new mineral, including submission of a mining plan and payment of the auction premium to the Government:

Provided that where the quarry lease for a minor mineral was granted prior to commencement of these rules, the Government shall have power to specify the rate of payment for the new minerals".

4.2 As per the admitted facts during the

currency of the lease deed granted on 03.11.2013, the

new discovery of the mineral BLACKTRAP was made

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sometimes in August / September, 2015. Accordingly,

the petitioner had moved an application on 19.09.2015

informing the authority about the recent discovery

and requesting to include BLACKTRAP in the lease deed

of the sand which was already existing. At the

relevant time i.e. 2015 when the new discovery was

made, the 2010 Rules were in existence. Rule 21 of

the 2010 Rules relates to the rate of royalty as the

same may be specified in column 2 of the Schedule-I

at the rates specified against each minor mineral in

column 3 thereof. Further under column 2 of the

Schedule-II, the holder of a quarry lease shall pay

yearly dead rent at the rates specified against each

minor mineral in column 3 thereof. In both the

schedules BLACKTRAP is included as a minor mineral.

There is no mention of charging of any premium or any

power to the State to decide the rate in respect of

newly discovered mineral.

4.3 Further, under Rule 41 of the 2010 Rules,

there is an obligation on the part of the lessee to

report discovery of any other mineral to the

competent authority. It provided that within 3 months

C/SCA/882/2021 JUDGMENT DATED: 04/05/2021

the lessee shall report discovery of any new mineral

not specified in the lease and would not win or

dispose off such mineral without obtaining a lease

and for which he was required to apply under the

Rules requesting for grant of mining of such mineral,

otherwise the Government would grant such lease to

any other person. Rules 21 and 41 of the 2010 Rules

read as under:

"Rule 21 Rate of Royalty - [1] The holder of a quarry lease or any other mineral concession granted under these rules shall, except quarry Parwana, pay royalty in respect of minor minerals, specified in column 2 of the SCHEDULE-I, removed or consumed by him or by his agent, manager, employee, contractor or sub lessee from the leased area at the rates respectively specified against them in column 3 of the said Schedule.

[2] The holder of a quarry lease granted under these rules shall pay yearly dead rent in respect of minor minerals specified in column 2 of SCHEDULE-II, at the rates respectively specified against each minor mineral in column 3 thereof.

[3] No dead rent shall be payable under sub-

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rule (2), where the royalty paid during a year under sub-rule (1) in respect of a minor mineral is greater than the dead rent payable.

[4] Where the royalty paid during a pear under sub-rule (1) in respect of a minor mineral is less than the dead rent payable under sub-rule (2), only the difference between the two amounts shall be payable as dead rent.

[5] The lease holders who have obtained lease in private land shall pay seventy five percent of the dead rent as specified in the SCHEDULE- II.

[6] If in the same lease hold area, more than one minor mineral is permitted to be mined, the lessee shall be liable to pay royalty or as the case may be, dead rent for every such minor mineral separately.

Rule 41 Lessee to report discovery of other mineral to Competent Authority - The lessee shall report the discovery of any mineral not specified in the lease in the leased area without delay to the Competent Authority and shall not win or dispose off such mineral without obtaining a lease. He shall apply for a lease under the rule regulating the grant of mining lease for that mineral within a period of three months from the

C/SCA/882/2021 JUDGMENT DATED: 04/05/2021

date of discovery, failing which it shall be open to the Government to grant a lease over such a mineral to any other person".

4.4 The application given by the petitioner on

19.09.2015 remained pending. According to the State

sample of the new mineral discovered by the

petitioner was sent for lab test, which took some

time, but later on it was confirmed that it was

BLACKTRAP. However, the authorities did not decide

the application of the petitioner for grant of lease

with respect to the discovered mineral i.e. BLACKTRAP

for almost 3 years.

5 According to the learned counsel for the

petitioner, his application ought to have been

considered and decided immediately upon completion of

the formalities regarding the lab report etc. under

2010 Rules. However, the matter was delayed at the

instance of the respondents which caused loss not

only to the petitioner, but also huge loss of revenue

to the State.

6 In the meantime, the Rules, 2017 came into

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force w.e.f. 24.05.2017. Rule 92 Chapter XVIII of the

2017 Rules deal with repeal and savings. Further rule

15(1) and its proviso deal with new discovery. Rule

15(1) is already reproduced in the order. Rule 92

reads as under:

"92. Repeal and saving-

[1] On the commencement of these rules, the Gujarat Minor Mineral Concession Rules, 2010 shall cease to be in force with respect to all minor minerals covered under the Gujarat Minor Mineral Concession Rules, 2017 except as regards things, done or omitted to be done before such commencement.

[2] On the commencement of these rules, with respect to the minerals to which these rules apply, any reference to the Gujarat Minor Mineral Concession Rules, 2010 in the rules made under the Act or any other document shall be construed as referenced to the Gujarat Minor Mineral Concession Rules, 2017, to the extent it is not repugnant to the context thereof."

7 The moot question to be considered in this

petition is whether Rule 15(1) and its proviso of

2017 Rules would be applicable for a new discovery

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made prior to the enforcement of the said 2017 Rules.

In the present case, the new discovery admittedly was

made some time in August / September, 2015 and

communicated to the competent authority with an

application for grant of lease on 19.09.2015, whereas

the 2017 Rules came into force on 24.05.2017 or

thereafter. Rule 15 of 2017 Rules relates to NEW

DISCOVERY. Sub-Rule (1) of Rule 15 refers to quarry

lease granted for mining minor mineral under the

Rules made under Section 15 of the MMRD Act and

subsequent to registering of quarry lease a new minor

mineral is discovered then the quarry lease holder

may request the Government to include the said new

mineral subject to other conditions being fulfilled.

The word Rules in sub-rule (1) would relate to 2017

Rules only as per the definition given in Rule 2(1)

(v) of the 2017 Rules. The proviso refers to quarry

lease for mining minor mineral having been granted

prior to commencement of these rules i.e. 2017 Rules

and in such a case the Government would have power to

specify the rate of payment for new mineral.

8 According to Ms. Shruti Pathak, learned

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Assistant Government Pleader in the present case

inasmuch as quarry lease was granted prior to the

commencement of 2017 Rules, and therefore,

notification issued on 18.10.2017 would apply to the

petitioner and as such in addition to the royalty he

would be liable to pay 80% of the royalty as premium

and as such the impugned demands dated 21.07.2020 and

07.11.2020 are just and valid. This submission is

made applying the proviso to Rule 15(1) of the 2017

Rules.

9 On the other hand, the submission of Mr.

Vakil, learned counsel for the petitioner is that a

new discovery under Rule 15 would only and only

relate to a new discovery made after the enforcement

of the said 2017 Rules. Rule 15(1) or its proviso of

2017 Rules cannot in any manner relate to the new

discovery made and admittedly communicated to the

competent authority prior to the commencement of the

2017 Rules. There is neither any reference nor any

intention to the contrary. It is for this reason that

Rule 92 clearly protects not only things done, but

also omitted to be done under 2010 Rules before such

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commencement of the 2017 Rules. Therefore, under 2010

Rules, upon discovery of the new mineral, the

petitioner would be liable to pay royalty and which

the petitioner has been regularly paying right from

2018, ever since the quarry lease for BLACKTRAP was

granted on 02.08.2018. Once Rule 15 of the 2017 Rules

has no application to the discovery, in the present

case, as it was made prior to 2017 Rules coming into

force, the demand of the differential amount of 80%

premium would be totally without authority of law,

illegal and unsustainable.

10 In order to test the submission of Ms.

Shruti Pathak, learned Assistant Government Pleader,

let us take an example where the lease was granted

prior to the enforcement of 2017 Rules with respect

to a new mineral discovered prior to 2017 and under

the then existing provisions, the lease for new

mineral was also granted. The lease for the new

mineral would invite royalty at the same rate at

which it was provided in the then existing provisions

at the relevant point of time. Renewal of such

existing lease for a new mineral discovered earlier,

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after the enforcement of 2017 Rules whether it can be

said that Rule 15(1) of the 2017 Rules would be

attracted. It could not be attracted, again for the

same reason that the discovery of the new mineral was

prior to the enforcement of 2017 Rules. Only because

of the omission to decide the application for grant

of lease of the new mineral made on 19.09.2015, which

remained pending for a period of almost 3 years, it

can't be justified or legally sustained that Rule

15(1) and its proviso of the 2017 Rules would be

applicable and invite additional amount of premium @

80% of the royalty.

10.1 Once it is admitted that there is no

new discovery of any mineral after enforcement of

2017 Rules any Government Resolution passed

determining the rate of payment under Rule 15(1) and

its proviso of the 2017 Rules, can never have any

application to such new mineral. The Government

Resolution dated 18.10.2017 can apply only and only

to a new mineral discovered after the enforcement of

the 2017 Rules. In the present case, it is not so,

and therefore, the Government Resolution dated

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18.10.2017 can have no application.

10.2 Rule 15(1) of the 2017 Rules clearly

mentions that where a quarry lease has been granted

for a minor mineral under the Rules made under

Section 15 and subsequent to registration of the

quarry lease a new mineral is discovered. Therefore,

twin conditions are to be fulfilled for application

of Rule 15(1), firstly the quarry lease should have

been granted under the Rules i.e. 2017 Rules and

secondly the new mineral is to be discovered

subsequent to the registration of the quarry lease

under the 2017 Rules. In the present case, both these

conditions are not existing as the quarry lease was

granted in November, 2013 and during the currency of

that quarry lease, the new mineral has been

discovered in August / September, 2015 and before

enforcement of 2017 Rules.

10.3 Now coming to the proviso to Rule 15(1)

of the 2017 Rules, which is supplement of the main

provision and requires that where the quarry lease

for a minor mineral was granted prior to commencement

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of the 2017 Rules, the Government will have power to

specify the rate for new mineral. That would be a

case where a quarry lease was granted prior to

enforcement of the 2017 Rules, and after the

enforcement of the 2017 Rules during the currency of

the quarry lease granted earlier, a new mineral had

been discovered. To cover up such situation, the

proviso was carved out and only in such cases, the

Government would have the power to specify the rate

of payment for the new mineral. Such fixation of rate

by the Government would only cover a new mineral

discovered after enforcement of the 2017 Rules in

respect of a quarry lease granted prior to the

commencement of the 2017 Rules. In the present case,

the proviso also will have no application as although

the quarry lease was granted prior to the enforcement

of the 2017 Rules but the discovery of the new

mineral had also been made prior to it and not

subsequent to the enforcement of the 2017 Rules.

10.4 The Government Resolution dated

18.10.2017 will have no application in the present

case and any reference made thereto would be an error

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on the part of the respondents. The lease deed dated

02.08.2018 stipulates that the lessee would be liable

to pay the royalty and other payments required to be

made under the Act and Rules. So if the Act and Rules

applicable to the petitioner have no application of

Rule 15(1) or its proviso of the 2017 Rules, the

Government Resolution dated 18.10.2017 cannot be

applied and accordingly the demand notices would be

bad in law.

11 Ms. Pathak, learned Assistant Government

Pleader further urged that the Rules in existence on

the date of execution of the lease or grant of the

lease would be applicable, and therefore, Rule 15(1)

and its proviso of the 2017 Rules would clearly apply

to the petitioner, and therefore, the demand raised

by the two demand notices are just and valid. In

support of her submission, she has relied upon the

judgment of the Supreme Court in the case of Sulekhan

Singh and Company vs. State of Uttar Pradesh and

Others reported in (2016)4 SCC 663.

12 We have perused the above judgment. It was

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a case relating to consideration of renewal

application of a mining lease. It was in the said

context that the Supreme Court had held as follows in

para 22 of the report:

"22. The plea of the appellants that they had acquired a vested right prior to the G.O. dated 31.05.2012 cannot be accepted. The order dated 31.05.2012 was issued by the State of U.P. to bring about transparency and to safeguard the government revenue and was consistent with the decisions of this Court on Article 14 of the Constitution. The validity thereof was upheld by the High Court in Nar Narain Mihra. The said judgment applied to the mineral in question as specifically laid down by the High Court. The High Court upheld the stand of the State that pendency of application did not create any right in favour of the appellants. All applications pending as on 31.05.2012 stood rejected including the application of the appellant. Admittedly, the appellants did not make an application after the changed policy dated 22.10.2014 and thus the said G.O. had no application to the present case. We are not called upon to decide validity of order dated 22.10.2014 in cancelling order dated 31.05.2012. This question can be gone into as and when raised."

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12.1 In the present case, the issue is with

regard to new discovery being made after the

commencement of 2017 Rules with respect to quarry

lease granted under 2017 Rules and even with regard

to quarry lease granted prior to commencement of 2017

Rules. The discovery has to be subsequent to the 2017

Rules i.e. after 24.05.2017, which is not so in the

present case. Thus, the judgment of the Supreme Court

in the case of Sulekhan Singh and Company (supra)

will have no application in the facts of the present

case.

12.2 Further from the definition clause, Rules

in the 2017 Rules and the use of the said words in

Rule 15(1) will restrict the application of Rule 15

and its proviso to a discovery made after 24.05.2017.

Otherwise, if the Government wanted even new

discovery made prior to the enforcement of 2017 Rules

to be considered and covered by Rule 15(1) of the

2017 Rules, then another proviso ought to have been

added similar to the proviso already existing

regarding quarry lease granted prior to the

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commencement of the Rules. Provision could have been

made with respect to new discovery made prior to the

2017 Rules where the lease is being granted after the

coming of the 2017 Rules. But there is no such

proviso and as such we cannot read anything which is

not mentioned in the Rules. Statutory provisions are

to be strictly adhered to under the settled

principles of interpretation of statutes. We are

therefore not impressed by the argument raised by Ms.

Pathak. On the other hand we find that as the

discovery has been made prior to the commencement of

the 2017 Rules, Rule 15(1) and its proviso will have

no application.

13 The proper function of the proviso is to

qualify something enacted in the substantive clause,

which but for the proviso would be within that

clause unless the context, setting and purpose of the

provision warrants a different construction.

13.1 It is a cardinal rule of interpretation,

that a proviso to a particular provision of a

statute only embraces the field that is covered by

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the main provision to which it has been enacted as a

proviso and to no other.

13.2 The normal function of a proviso is to

except something out of the enactment or to qualify

something enacted therein which but for the proviso

would be within or outside the purview of the

enactment. (See Kedarnath Jute Manufacturing v.

Commercial Tax Officer, AIR 1966 SC 12).

13.3 Justice G.P.Singh in "Principles of

Statutory Interpretation" explains the use and

purpose of 'proviso' as "....... The insertion of a

proviso by the draftsman is not always strictly

adhered to its legitimate use and at times a section

worded as a proviso may wholly or partly be in

substance a fresh enactment adding to and not merely

excepting something out of or qualifying what goes

before. ......." (See "Principles of Statutory

Interpretation," Seventh Edition by Justice G. P.

Singh, Chapter 3, Sub-paragraph (f) at pages 166-

167).

C/SCA/882/2021 JUDGMENT DATED: 04/05/2021

13.4 Maxwell on "The Interpretation of

Statutes," Twelfth Edition, at pages 190-191 states

as under :-

"...... If, however, the language of the proviso makes it plain that it was intended to have an operation more extensive than that of the provision which it immediately follows, it must be given such wider effect.

If a proviso cannot reasonably be construed otherwise than as contradicting the main enactment, then the proviso will prevail on the principle that "it speaks the last intention of the makers. ......."

13.5 Rule 15 of 2017 Rules carries a heading of

new discovery. Rule 15(1) of 2017 Rules confines its

application to quarry leases registered under the

said Rules as also new discovery made during the

currency of quarry lease granted and registered under

the said Rules.

13.6 Taking assistance of the settled canons of

construction and particularly in view of the language

employed in the proviso and in the context in which

C/SCA/882/2021 JUDGMENT DATED: 04/05/2021

it appears in the said Rule 15(1) of the 2017 Rules,

we are of the opinion that the said proviso adds and

enhances the scope of the main provision by only

including the quarry leases executed prior to the

enforcement of 2017 Rules. In no case does it carve

out an exception of adding new discovery made prior

to the enforcement of the said Rules i.e. 2017 Rules.

14 Ms. Pathak, learned Assistant Government

Pleader further made a submission that in the order

of Commissioner granting sanction for mining

BLACKTRAP vide order dated 09.07.2018, the petitioner

was informed about the payment of the premium as

fixed by the Government Resolution dated 18.10.2017

which order of the Commissioner, the petitioner never

challenged, and therefore, it does not lie in the

mouth of the petitioner to challenge the demand

notices. According to her, if the Department had

committed an error in not raising demand for

premium / rate fixed by the Government under the

proviso to Rule 15(1) of the 2017 Rules vide

Government Resolution dated 18.10.2017, the

petitioner cannot derive any advantage thereof.

C/SCA/882/2021 JUDGMENT DATED: 04/05/2021

15 In reply to the above submission, Mr.

Vakil, learned counsel for the petitioner submitted

that the petitioner had no occasion to file the

present petition earlier inasmuch as the demand which

was being raised for mining the new mineral i.e.

BLACKTRAP as per the order of the Commissioner dated

09.07.2018, the lease deed dated 02.08.2018 and the

order of the Collector dated 03.08.2018 was only the

royalty which the petitioner was duly paying without

failure or default. It was only when the impugned

demand was raised in July, 2020 and November, 2020

that the petitioner was compelled to approach this

Court, as such it is incorrect to say that the

petitioner has filed this petition with great delay.

15.1 It is also submitted by Mr. Vakil that the

respondents were rightly charging the royalty on the

mining of BLACKTRAP till July, 2020 when for the

first time they raised the demand of the premium

amount of additional 80% royalty as per the

Government Resolution dated 18.10.2017. It is also

submitted by Mr. Vakil that the Government Resolution

C/SCA/882/2021 JUDGMENT DATED: 04/05/2021

dated 18.10.2017 would be applicable to a new mineral

discovered after the commencement of the 2017 Rules.

In the present case, admittedly there being no new

discovery of any mineral after the commencement of

2017 Rules, Rule 15(1) and its proviso of the 2017

Rules will have no application and consequently the

Government Resolution dated 18.10.2017 will also not

have any application.

15.2 Mr. Vakil has further drawn our attention

to the order of the Commissioner dated 09.07.2018 and

submitted that royalty or the payment for mining of

BLACKTRAP would be as per the law. Merely because the

reference is made to the Government Resolution dated

18.10.2017 in the Commissioner's order dated

09.07.2018, it cannot include payment of 80% of

royalty as premium in addition to the royalty. He

further submitted that the lease deed clearly

mentions of payment of royalty and making other

payments required to be made under the Rules as per

the clause 2.3 of the lease deed. So, if under the

Act and Rules, the Government Resolution dated

18.10.2017 issued under the proviso to Rule 15(1) of

C/SCA/882/2021 JUDGMENT DATED: 04/05/2021

the 2017 Rules is not applicable any demand raised

under the said resolution would not be covered by the

lease deed. Clause 2.3 of the lease deed is

reproduced below:

"2.3 Subject to the Lessee complying the provisions of the Act and the Rules, paying the royalties and making other payments required to be made under the Act and Rules and hereunder and observing and performing all the covenants and agreements herein contained and on the part of the Lessee to be observed and performed, the Lessee shall and may quietly hold and enjoy the rights and premises of the Lease Area for and during the term hereby granted without any unlawful interruption from or by the Government or any person rightfully claiming under it."

15.3 He further submitted that the order of the

Commissioner dated 09.07.2018 although refers to the

Government Resolution dated 18.10.2017, the

Commissioner could not have imposed a condition,

which would not be applicable otherwise under law and

to that extent the same deserves to be quashed.

15.4 Mr. Vakil has also drawn our attention to

C/SCA/882/2021 JUDGMENT DATED: 04/05/2021

Rule 92 of the 2017 Rules and has submitted that the

application dated 19.09.2015 was saved and had to be

dealt with under the provisions of 2010 Rules.

According to Mr. Vakil, from August, 2018 till July,

2020 the petitioner was rightly being charged the

royalty under the 2010 Rules which was the correct

position in law.

15.5 Mr. Vakil also drew our attention to Rule

56(5) of the 2017 Rules to submit that the Department

was rightly charging separate royalty on both the

minor minerals being excavated by the petitioner

under the lease deed. According to him, the same was

permitted very clearly under the aforesaid Rule.

16 We have perused the order of the

Commissioner as also the lease deed. The lease deed

is the contract signed between the parties and would

be binding inter se parties. The lease deed clearly

mentions that royalty and other payments payable

would be as per provisions of the Act and Rules. We

have already held that Rule 15(1) and its proviso of

2017 Rules has no application to the present case. As

C/SCA/882/2021 JUDGMENT DATED: 04/05/2021

such the demand raised cannot be justified under law.

16.1 Having held that the lease deed dated

02.08.2018 could not have been under Rule 15(1) or

its proviso under the 2017 Rules, the question would

be then under which provision the lease has been

granted for mining BLACKTRAP. Under the 2017 Rules,

other grants of lease for minor minerals has to be by

way of public auction. The lease for new discovery

was permitted under Rule 15(1) and its proviso of the

2017 Rules. Now that under 2017 Rules, insofar as the

petitioner is concerned, BLACKTRAP is not a new

discovery as it was discovered prior to the

enforcement of 2017 Rules when the November, 2013

lease deed was in existence. According to the

petitioner's counsel, the quarry lease for mining

BLACKTRAP granted in favour of the petitioner would

be under 2010 Rules and only royalty would be payable

as per the provisions contained in 2010 Rules.

Otherwise, if BLACKTRAP is not treated to be a new

discovery in the case of the petitioner, then its

lease has to be by way of public auction. The fact

remains that the Government Resolution dated

C/SCA/882/2021 JUDGMENT DATED: 04/05/2021

18.10.2017 issued for determining the rate of payment

under the proviso to Rule 15(1) of the 2017 Rules

would have no application. As such, the demand

notices dated 21.07.2020 and the subsequent notice

dated 07.11.2020 cannot be sustained.

16.2 Rule 92 pertains to the Repeal and Saving

of the previous Rules of 2010. As per Rule 92, on the

commencement of these rules, the old Rules of 2010

shall cease to be in force with respect to all minor

minerals covered under the Rules, 2017 except as

regards things, done or omitted to be done before

such commencement.

16.3 The moot question which begs to be answered

is whether the act of the State in not deciding the

application filed by the petitioner pursuant to the

discovery of the new mineral, falls within an act

omitted to be done before the commencement of the

2017 and thus, shall be covered by Rule 92. The

literature on the subject has been expounded in great

detail by the Hon'ble Apex Court. And it has time and

C/SCA/882/2021 JUDGMENT DATED: 04/05/2021

again been held that the previous statute would

continue to remain in operation for acts committed or

omitted to be committed. The observations of the

Hon'ble Supreme Court in Rayala Corporation (P) Ltd

v. Director of Enforcement, New Dethi {(1969) 2 SCC

412} may be noted in this regard:

"...the saving provision laid down that the operation of that Act itself was not to be affected by the expiry as respects things previously done or omitted to be done. The Act could, therefore, be held to be in operation in respect of acts already committed, so that the conviction could be validly made even after the expiry of the Act in respect of an offence committed before the expiry."

16.4 Under Rule 92 of the 2017 Rules, which

deals with repeal and savings, what is protected and

saved is the things done or omitted to be done before

such commencement. The application dated 19.09.2015

was pending since much before the commencement of the

2017 Rules. The application was saved under Rule 92

of the 2017 Rules and to that extent 2010 Rules would

be applicable. The application dated 19.09.2015 thus

C/SCA/882/2021 JUDGMENT DATED: 04/05/2021

ought to have been decided under the 2010 Rules.

Apparently for the above reason, after the lease deed

dated 02.08.2018 was executed for mining BLACKTRAP

the royalty was being charged under the 2010 Rules

only till 09.07.2020 when the impugned demand notice

was raised. Merely because Rule 15(1) and its proviso

of 2017 Rules was mentioned in the order of the

Commissioner would not make the Rule applicable.

Wrong mention of a provision cannot make the

provision applicable. We therefore hold that the

lease dated 02.08.2018 would be one under the 2010

Rules in particular Rule 41 thereof.

16.5 It is settled that no mining lease is

to be given without holding public auction so that

the maximum revenue is earned by the State. That is

the provision under the Rules also for granting a

general lease of minor mineral. It was only in the

case of new discovery by the lessee during the

subsistence of lease for a minor mineral that

provision was made under Rule 41 of the 2010 Rules to

grant lease to the same lessee for mining the newly

discovered minor mineral as otherwise it would be

C/SCA/882/2021 JUDGMENT DATED: 04/05/2021

practically impossible to grant lease to two

different persons for mining two different minor

minerals from over the same land covered by the two

lessees. It would not only create regular dispute,

but also everyday law and order problem between the

two lessees operating over the same area of land

permitted mining of two different minor minerals.

This is the primary reason for granting lease to the

existing lessee without holding public auction at the

rate prescribed under the Schedule for the newly

discovered minor mineral.

16.6 There is one more reason why the lease deed

should be saved. In case no lease deed had been

executed in favour of the petitioner, then not only

the revenue but also the petitioner would have

suffered financial loss as the royalty of more than

two and half crores already paid by the petitioner

for two years from August 2018 to June 2020 would

have been a loss to the revenue. Further, the profit

earned by the petitioner on such mining activity of

BLACKTRAP would have been a loss to the petitioner.

In case the State had decided not to save the lease

C/SCA/882/2021 JUDGMENT DATED: 04/05/2021

deed, then the only option left would have been to

hold public auction for the minor mineral BLACKTRAP

which again would have been a completely impractical

and almost an impossible task for the State to manage

and run two lease deeds in favour of two different

parties over the same plot of land. For the above

reason also, the lease deed dated 02.08.2018 deserves

to be saved under the 2010 Rules.

16.7 Ms. Shruti Pathak, learned Assistant

Government Pleader submitted that the order of the

Commissioner dated 09.07.2018 pursuant to which the

lease dated 02.08.2018 was executed clearly contained

a stipulation that 80% of the royalty would be

payable in addition to the royalty as per Government

Resolution dated 18.10.2017, the petitioner having

accepted the same and the lease deed having been

executed pursuant to the order of the Commissioner,

cannot now turn around and object that Government

Resolution dated 18.10.2017 does not apply. This

argument of Ms. Pathak does not merit consideration

in view of the discussion made above holding that

Government Resolution dated 18.10.2017 does not apply

C/SCA/882/2021 JUDGMENT DATED: 04/05/2021

in the facts of the present case.

16.8 We may also refer to Rule 56(5) of the

2017 Rules which deals with rate of royalty and

surface rent. Rule 56(5) of the 2017 Rules is

reproduced below:

"56. Rate of Royalty, dead rent and surface rent:-

[1] to [4] xxx xxx

[5] If in the same lease hold area, more than one minor mineral is permitted to be mined, the lessee shall be liable to pay royalty for each such mineral or as the case may be, the Government shall not charge separate dead rent for every such minor mineral:

Provided that the lessee shall be liable to pay: [a] the aggregate of royalty in respect of all minerals; or [b] the highest dead rent applicable with respect to the minerals included in the relevant quarry lease, whichever is higher."

16.9 It provides that if in the same lease hold

area, more than one minor mineral is permitted to be

C/SCA/882/2021 JUDGMENT DATED: 04/05/2021

mined, the lessee shall be liable to pay royalty for

each such mineral or as the case may be, the

Government shall not charge separate dead rent for

every such minor mineral. It further provides that

the lessee would be liable to pay aggregate of

royalty in respect of all minerals and the highest

dead rent applicable to the minerals included in the

quarry lease. In the present case there is no

question with regard to payment of dead rent. The