Jharkhand High Court
Central Coalfields Limited vs The State Of Jharkhand on 16 September, 2025
Author: Sujit Narayan Prasad
Bench: Sujit Narayan Prasad
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IN THE HIGH COURT OF JHARKHAND AT RANCHI
W.P.(C) No.4478 of 2019
-----
Central Coalfields Limited, a Company incorporated under
the Companies Act, having its registered Office at Darbhanga
House, P.O. - GPO, P.S. - Kotwali, District - Ranchi
(Jharkhand), through its General Manager Bimlendu
Kumar, aged about 54 years, son of Sri Jagdish Pandey
presently residing at Darbhanga House, P.O.-G.P.O., P.S. -
Kotwali, Ranchi, Distt. - Ranchi. Jharkhand.
... ... Petitioner
Versus
1. The State of Jharkhand.
2. Secretary, Department of Mines & Geology, Government
of Jharkhand, Nepal House, P.O. & P.S.-Doranda,
District- Ranchi, Jharkhand.
3. District Mines Officer, Ramgarh, P.O.+P.S. & Distt. -
Ramgarh, Jharkhand.
4. Union of India through Ministry of Coal, New Delhi.
... ... Respondents
With
W.P.(C) No.269 of 2019
-----
Central Coalfields Limited, a Company incorporated under
the Companies Act, having its registered Office at Darbhanga
House, PO - GPO, PS - Kotwali, District - Ranchi
(Jharkhand), through its Chief General Manager, B&K Area,
P.O. & P.S.-Kargali, District-Bokaro and also through its
General Manager, B&K Area, P.O. & P.S.-Kargali, District-
Bokaro Sri Mahendra Kumar Punjabi, aged about 54 years,
residing at Officers' Colony, B&K Area, P.O. & P.S.-Kargali,
District-Bokaro (Jharkhand).
... ... Petitioner
Versus
1. The State of Jharkhand.
2. Secretary, Department of Mines & Geology, Government
of Jharkhand, Nepal House, P.O. & P.S.-Doranda,
District- Ranchi (Jharkhand).
3. Deputy Commissioner, Bokaro, P.O. + P.S. & District -
Bokaro (Jharkhand).
1
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4. Certificate Officer (Mines Circle), Dhanbad, P.O. + P.S. &
District - Dhanbad (Jharkhand).
5. Union of India through Ministry of Coal, New Delhi.
... ... Respondents
With
W.P.(C) No.4491 of 2019
-----
Central Coalfields Limited, a Company incorporated under
the Companies Act, having its registered Office at Darbhanga
House, P.O. - GPO, P.S. - Kotwali, District - Ranchi
(Jharkhand), through its General Manager Bimlendu
Kumar, aged about 54 years, son of Sri Jagdish Pandey
presently residing at Darbhanga House, P.O.-G.P.O., P.S. -
Kotwali, Ranchi, Distt. - Ranchi. Jharkhand.
... ... Petitioner
Versus
1. The State of Jharkhand.
2. Secretary, Department of Mines & Geology, Government
of Jharkhand, Nepal House, P.O. & P.S.-Doranda,
District- Ranchi, Jharkhand.
3. District Mines Officer, Ramgarh, P.O.+P.S. & Distt. -
Ramgarh, Jharkhand.
4. Union of India through Ministry of Coal, New Delhi.
... ... Respondents
With
W.P.(C) No.1847 of 2022
-----
Central Coalfields Limited, a Company incorporated under
the Companies Act, having its registered Office at Darbhanga
House, P.O. - Ranchi University, P.S.-Kotwali, District-
Ranchi (Jharkhand), through its General Manager (Legal) Sri
Partha Bhattacharjee, aged about 59 years, son of Late P.C.
Bhattacharjee, residing at 34, Pragati Enclave, Dibdih, PO-
Doranda, PS-Doranda, District-Ranchi-834002 (Jharkhand)
who is also representing other petitioners herein.
... ... Petitioner
Versus
1. The State of Jharkhand.
2. Secretary, Department of Mines & Geology, Government
of Jharkhand, Nepal House, P.O. & P.S.-Doranda,
District- Ranchi (Jharkhand).
3. District Mines Officer, Hazaribagh having its office at
Hazaribagh, PO & PS Hazaribagh, District Hazaribagh.
4. Certificate Officer (Mines), North Chotanagpur Circle,
Hazaribagh having its office at Hazaribagh PO and PS
Hazaribagh District Hazaribagh.
5. Union of India through Ministry of Coal, New Delhi.
2
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... ... Respondents
-------
CORAM: HON'BLE MR. JUSTICE SUJIT NARAYAN PRASAD
HON'BLE MR. JUSTICE ARUN KUMAR RAI
-------
For the Petitioner : Mr. Amit Kumar Das, Advocate
For the State : Mr. Rajiv Ranjan, Advocate General
: Mr. Ratnesh Kumar, SC (L&C)-I
: Mr. J.F. Toppo, G.A.-V
: Mr. Rakesh Kr. Shahi, A.C. to A.G.
: Mr. Shray Mishra, A.C. to A.G.
: Mr. Amrit Raj Kisku, AC to G.A.-V
: Ms. Moushmi Chatterjee, AC to GA-V
For the UOI : Mr. Anil Kumar, A.S.G.I.
: Mr. Prashant Vidyarthi, Advocate
------
C.A.V. on 18.08.2025 Pronounced on 16/09/2025
Per Sujit Narayan Prasad, J.
1. Al the writ petitions since are having the common
issues and, as such, were directed to the heard together and
accordingly listed together which have been heard together
with the consent of the learned counsel for the parties.
2. These writ petitions are under Article 226 of the
Constitution of India for issuance of following reliefs :-
Prayer made in W.P.(C) No.4478 of 2019
"a) For issuance appropriate writ(s)/order(s), direction(s)
in the nature of certiorari for quashing and setting aside
the order issued vide letter no. 409 dated 14/03/2019
(Annexure- 5), whereby and whereunder the respondent
no.-3 (District Mining Officer, Ramgarh) has directed the
petitioner-company to pay the fixed rent with interest for
Laiyo Colliery Area, which is closed colliery from the year
before 2014 itself as per the respondents themselves.
AND / OR
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b) Pass such other writ/ writs, order/orders,
direction/directions as Your Lordships may deem fit and
proper.
AND / OR
c) During the pendency of this writ petition, order issued
vide letter no.- 409 dated 14/03/2019 (Annexure-5),
passed by respondent no.-3 (District Mining Officer,
Ramgarh) directing the petitioner Company to deposit the
fixed rent, may be stayed/kept in abeyance and
respondents be restrained to proceed further in the
matter or to take any coercive steps against the
petitioner-Company."
Prayer made in W.P.(C) No.269 of 2019
"a) For issuance of appropriate writ(s)/ order(s)/,
direction(s) setting aside the order dated 07.07.2000
(Annexure 2) passed by respondent No.5 in Certificate
Case No.109/90-91, whereby and whereunder after
rejecting the objection filed under Section 9 of the Bihar
& Orissa Public Demand Recovery Act, 1914, directed the
petitioner to pay the entire demanded amount without
making any determination.
b) For issuance of further appropriate writ(s)/order(s)/,
direction(s) setting aside the order dated 05.09.2018
(Annexure 3) passed by respondent No.3 in Certificate
Appeal No.64/2005, whereby and whereunder he has
been pleased to dismiss the appeal."
Prayer made in W.P.(C) No.4491 of 2019
"a) For issuance of appropriate writ(s)/order(s),
direction(s) in the nature of certiorari for quashing and
setting aside the order issued vide letter no. 407 dated
14/03/2019 (Annexure- 5), whereby and whereunder the
respondent no.-3 (District Mining Officer, Ramgarh) has
directed the petitioner-company to pay the fixed rent with
interest for Ara Colliery Area, which is closed colliery from
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the year before 2014 itself themselves as per the
respondents.
AND / OR
b) Pass such other writ/ writs, order/orders,
direction/directions as Your Lordships may deem fit and
proper.
AND / OR
c) During the pendency of this writ petition, order
issued vide letter no.- 407 dated 14/03/2019 (Annexure-
5), passed by respondent no.-3 (District Mining Officer,
Ramgarh) directing the petitioner Company to deposit the
fixed rent, may be stayed/kept in and respondents be
abeyance restrained to proceed further in the matter or
to take any coercive steps against the petitioner-
Company."
Prayer made in W.P.(C) No.1847 of 2022
"a) For issuance of appropriate
writ(s)/order(s)/direction(s) quashing Letter No.
1109/Mining, Hazaribagh dated 27.11.2019 (Annexure
2) issued by the District Mining Officer, Hazaribagh
whereby and whereunder he has demanded an amount
of Rs.9,76,560/- towards dead-rent.
b) For issuance of further appropriate
writ(s)/order(s)/direction(s) quashing Letter
No.332/Mining, Hazaribagh dated 29.04.2020 (Annexure
3) whereby and whereunder the District Mining Officer,
Hazaribagh has raised a demand of Rs.15,89,460/-
towards dead-rent for the period 2016-18.
c) For issuance of further appropriate
writ(s)/order(s)/direction(s) quashing the demand of
Rs.29,56,396.00/- vide demand notice as contained
under Notice No. 986 dated 21.10.2021 (Annexure 4)
addressed to Project Officer, Tapin South Project of M/s.
CCL Charhi Area, Hazaribagh; issued by the Certificate
Officer (Mining), Hazaribagh under the Bihar & Orissa
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Public Demands Recovery Act, 1914 in Certificate Case
No 06/2021-2022.
d) For issuance of further appropriate
writ(s)/order(s)/direction(s) quashing of entire
proceeding of Certificate Case No. 06/2021-2022
initiated under Bihar & Orissa Public Demands Recovery
Act, 1914 as the land has been acquired under the Coal
Bearing Areas (Acquisition and Development) Act, 1957."
Factual Matrix
3. Since facts of all the aforesaid writ petitions are
almost similar, therefore, the facts of lead case, i.e., W.P.(C)
No.4478 of 2019 are being referred herein: -
It is the case of the petitioner that the petitioner -
Company is mainly engaged in the mining of coal and for the
purpose of said business, the petitioner -Company has
acquired mines under the Coal Mines (Nationalisation) Act,
1973 as well as has developed various mines after acquiring
land under the Coal Bearing Areas (Acquisition and
Development) Act, 1957.
4. The petitioner Company, for the purpose of
establishing mines within West Bokaro area of the petitioner-
Company, had acquired certain lands under the Coal
Bearing Areas (Acquisition and Development) Act, 1957 vide
Notification bearing S.O. No. 2082 dated 30/06/1981 issued
by the Central Government.
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5. The petitioner Company had also acquired land for
the purpose of establishing mines within Laiyo area of the
petitioner-Company, under the Coal Bearing Areas
(Acquisition and Development) Act, 1957 vide Notification
bearing S.O. No.-288 dated 04/09/1965 and vide
Notification bearing S.O. No.-1754 dated 15/05/1996 issued
by the Central Government.
6. The Government of Bihar has already declared by
way of declaration that the particular land has been acquired
by the Government of India vide letter no. 490 dated
14.11.1981 and one notification has been also issued vide
Notification No. 2246 dated 19.10.1989 by the State of Bihar.
7. It is the further case of the petitioner that from bare
perusal of Section 10 and Section 11 of the Coal Bearing
Areas (Acquisition and Development) Act, 1957, it shall
become apparent that on publication of the notification in
the Official Gazette of the Declaration under Section 9 of the
Act, the land or the right in or over the land, as the case may
be, vests absolutely with the Central Government/
Government Company free from all encumbrances. Only in
cases where rights under a mining lease granted or deemed
to have been granted by the State Government has been
acquired, the Central Government or the Government
Company, as the case may be, is deemed to be the lessee for
the remaining period of the lease. It has been stated that the
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land which has been acquired vide S.O. No. 3154, dated
10.08.1976, did not include subsisting mining lease. These
lands at the relevant time were virgin lands.
8. It is also the case of the petitioner that Section 18-A
of the Coal Bearing Areas (Acquisition and Development) Act,
1957 provides that notwithstanding anything contained in
this Act, where any land or any rights in or over land
belonging to State Government (other than the rights under
a mining lease granted or deemed to have been granted by
the State government to any person) vest in the Central
Government under section 10 or in a Government Company
under section 11, the Central Government or the company,
as the case may be, may pay to the State Government to such
sum of money as would have been payable as royalty by
lessee, had such land or rights been under mining lease
granted by the State Government.
9. Though the State Government is neither a lessor nor
the Central Government or the Government Company who
develops some mines after acquiring a piece of land under
the Coal Bearing Areas (Acquisition and Development) Act,
1957 is a lessee, however, still, the Central Government or
the Government Company, as the case may be, with respect
to the land belonging to the State Government which has
been acquired is liable to pay such sum of amount, as would
have been payable as royalty by lessee, had such land or
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right been under the mining lease granted by the State
Government. Thus, apparently, if the land acquired does not
belong to the State Government and is a raiyati land, then
such amount is not required to be paid.
10. It is the case of the petitioner that the Respondent
No.-3, without considering aforesaid aspects of the matter,
has passed an order dated 14.03.2109 holding the petitioner
company to be liable to pay an amount of Rs.1,73,80,624.64
(in W.P.(C) No.4478 of 2019).
11. It is evident from the aforesaid factual aspect that the
petitioner Company had acquired certain lands under the
Coal Bearing Areas (Acquisition and Development) Act, 1957
for the purpose of establishing mine/mining of coal.
12. The contention of the petitioner is that Section 10
and Section 11 of the Coal Bearing Areas (Acquisition and
Development) Act, 1957 provide that on publication of the
notification in the Official Gazette of the Declaration under
Section 9 of the Act, the land or the right in or over the land,
vests absolutely with the Central Government/Government
Company free from all encumbrances. Only in cases where
rights under a mining lease granted or deemed to have been
granted by the State Government to any person are acquired
under this Act has been acquired the Central Government or
the Government Company, as the case may be, is deemed to
be the lessee for the remaining period of the lease and the
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land which has been acquired vide S.O. No. 3154, dated
10.08.1976, did not include subsisting mining lease.
13. Further, Section 18-A of the Coal Bearing Areas
(Acquisition and Development) Act, 1957 provides that
notwithstanding anything contained in this Act, where any
land or any rights in or over to State belonging land
Government (other than the rights under a mining lease
granted or deemed to have been granted by the State
government to any person) vest in the Central Government
under section 10 or in a Government Company under section
11, the Central Government or the company, as the case may
be, may pay to the State Government to such sum of money
as would have been payable as royalty by a lessee, had such
land or rights been under mining lease granted by the State
Government.
14. But, the Respondent No.-3, without considering
aforesaid aspects of the matter, has passed an order dated
14.03.2019 holding the petitioner company to be liable to
pay an amount of Rs. 1,73,80,624.64 (in W.P.(C) No.4478 of
2019) against which the present writ petition has been filed.
15. Almost same is the situation so far as other three writ
petitions are concerned as in the W.P.(C) 4491 of 2019, the
letter No.407 dated 14.03.2019 issued by District Mining
Officer, Ramgarh demanding surface rent along with interest
in Ara Colliery Area has been challenged. Further in W.P.(C)
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1847 of 2022 letter no.1109/ Mining, Hazaribagh dated
27.11.2019 demanding dead rent with respect to Tapin
South project, Charhi, has been challenged.
16. Herein the reference of the notification through
which the land in question have been acquired is being
depicted in tabular Form which are as under:
W.P(C) 4478 of 2019
S.N. NOTIFICATION/S.O.No. Dated Area (H)
(i) S.O.No. 2082 30.06.1981 1242.36
(ii) S.O.No. 1754 15.05.1996 339.93
(iii) Notification No. 28 04.09.1965 220.73
W.P(C) 4491 of 2019
S.N. NOTIFICATION/S.O.No. Dated Area
(i) S.O.No. 1104E 15.04.2014 481.93
(Total)
(ii) S.O.No. 3665 26.08.1989 ----
W.P(C) 1847 of 2022
S.N. NOTIFICATION/S.O.No. Dated Area
(i) S.O.No. 1687 13.09.1983 4433.29
(Total)
17. Further, WP(C)No. 269 of 2019 has been filed by the
Petitioner-CCL seeking quashing of the order dated
07.07.2000 passed by the Respondent-State in Certificate
Case No. 109/90-91, which had been initiated for realization
of Surface Rent with respect to the lands which has vested
with the Govt. Company under the Coal Bearing Areas
(Acquisition and Development) Act, 1957. By the said order,
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the objection filed by the Petitioner under Section 9 of the
Bihar & Orissa Public Demand Recovery Act, 1914 was
rejected, and the Petitioner-CCL was directed to pay the
entire demanded amount without any determination. The
petition further seeks setting aside of the appellate order
dated 05.09.2018 passed in Certificate Appeal No. 64/2005,
whereby and whereunder the appeal preferred by the
Petitioner-CCL was dismissed.
Submission made by the learned counsel for the
petitioner
18. Learned counsel appearing for the petitioner-CCL
has submitted that the lands since have been acquired
under the provisions of the Coal Bearing Areas (Acquisition
and Development) Act, 1957 (hereinafter to be referred to as
the Act, 1957) and, as such, the same has been vested upon
the Central Government and once it has been vested upon
the Central Government then no subsisting right is available
for the State Government to make any demand considering
the Central Government or the Government Company like
that of the writ petitioner, to be the deemed lessee.
19. It has been contended that after the declaration of
the acquisition and the gazette notification issued under
Section 10(1) of the Act, 1957 in favour of the Central
Government, the land has been vested free from any
encumbrances and subsequent thereto, in view of the
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notification issued under Section 11(1) of the Act, 1957, the
land has been vested upon the Government Company, the
writ petitioner herein.
20. The contention has been raised that at the time when
the land was vested upon the Central Government/
Government Company, no subsisting right of lease was
existing, as such, it is not a case where the Government
Company will be said to be deemed lessee of the State
Government in the light of the provision as provided under
Section 11(2) of the Act, 1957.
21. It has been contended that bare perusal of Section
18-A would show that the Central Government or the
Government Company "may pay" to the State Government
such sum of money as would have been payable as royalty
by lessees had such lands or rights been under mining lease
granted to the State Government. The use of word "may"
make it clear that amount which is paid under Section 18-A
is firstly discretionary and, secondly, as will be apparent
from bare perusal of the object of the Amending Act, is on
ex-gratia basis. However, the State Government all of a
sudden started insisting for payment of surface rent and
dead-rent which has given rise to the instant litigations.
22. Learned counsel has submitted that the judgment
rendered by Hon'ble Apex Court in the case of Mahanadi
Coalfields Ltd. v. State of Odisha & Ors. reported in
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(2023) 4 SCC 343, therefore, will not be applicable on the
premise of the factual aspect involved in the present case,
since, in the case of Mahanadi Coalfields Ltd. v. State of
Odisha & Ors. (Supra), the factual aspect was with respect
to the issue of premium and compensation and has been
dealt with the implication in a case of subsisting right at the
time of vesting of the land in favour of the Central
Government or the Government Company, therefore, the
judgment rendered in the case of Mahanadi Coalfields Ltd.
v. State of Odisha & Ors. (Supra) will not be applicable
herein.
23. It has been contended that the judgment rendered in
the case of State of U.P. and Another v. Northern Coal
Fields reported in 2024 SCC OnLine SC 4092, rather will
be applicable wherein the judgment rendered by Hon'ble
Apex Court in the case of Mahanadi Coalfields Ltd. v.
State of Odisha & Ors. (Supra) has been distinguished on
the facts of the case.
24. Learned counsel for the writ petitioner, on the basis
of the aforesaid premise, has submitted that the demand so
raised on behalf of the State, therefore, requires interference
since it has been issued without any jurisdiction conferred
upon the State after vesting of the land in the Government
Company under Section 10(1) read with Section 11(1) of the
Act, 1957.
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Submission made by learned counsel for the respondent-
State
25. Per contra, learned Advocate General appearing for
the State, has submitted by referring to the provision as
contained under Section 10 of the Act, 1957 that the vesting
as notified by virtue of the provision as contained under
Section 10 of the Act, 1957 will be of the land or the rights
in or over the land, meaning thereby, the land which has
been acquired or the rights in or over the land, all will come
under the fold of Section 10 of the Act, 1957.
26. The contention has been raised that the aforesaid
aspect of the matter has been taken into consideration by
the Hon'ble Apex Court in the case of Mahanadi Coalfields
Ltd. v. State of Odisha & Ors. (Supra) wherein by taking
the aid of insertion of the provision by way of amendment of
Section 18-A of the Act, 1957, which speaks with respect to
payment to State Government in lieu of royalty and by taking
into consideration the implication of Section 18-A of the Act,
1957, the Hon'ble Apex Court while dealing with the
aforesaid provision in the case of Mahanadi Coalfields Ltd.
v. State of Odisha & Ors. (Supra), has held the Government
Company, Mahanadi Coalfields Limited in the said case, to
be the deemed lessee and thereby upheld the demand raised
by the State upholding the view taken by the High Court of
Orissa.
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27. Learned Advocate General, in view of the aforesaid
submission, has submitted that the demand, therefore,
needs no interference.
Analysis
28. We have heard learned counsel for the parties and
gone through the pleading made in the writ petition as also
in the counter affidavit and the provision as contained under
the Coal Bearing Areas (Acquisition and Development) Act,
1957 and the judgment rendered by Hon'ble Apex Court in
the case of Mahanadi Coalfields Ltd. v. State of Odisha
& Ors. (Supra) and State of U.P. and Another v. Northern
Coal Fields (Supra).
29. This Court, on the basis of the submission made on
behalf of the parties, needs to consider following issues :-
(i) Whether the State can be said to be empowered to issue
demand if the land has been vested free from all
incumbrances without any subsisting right of lease in
favour of any party at the time of vesting under the
notification of Section 9 of the Act, 1957?
(ii) Whether in the facts and circumstances of the present
case, the judgment rendered in the case of Mahanadi
Coalfields Ltd. v. State of Odisha & Ors. (Supra) will
be applicable or the judgment rendered in the case of
State of U.P. and Another v. Northern Coal Fields
(Supra) will be applicable?
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30. Both the issues since are interlinked and, as such,
are being taken up together for their consideration.
31. But before considering the said issues, the provisions
of Coal Bearing Areas (Acquisition and Development) Act,
1957 (in short Act 1957) implemented with effect from 8th
June, 1957 by virtue of Act No.20 of 1957 needs to be
referred herein which has been enacted to establish in the
economic interest of India, greater public control over the
coal mining industry and its development by providing for
the acquisition by the State of unworked land containing or
likely to contain coal deposits or of rights in or over such
land, for the extinguishment or modification of such rights
accruing by virtue of any agreement, lease, licence or
otherwise, and for matters connected therewith.
32. Section 4, 5, 6, 7, 8, 9, 10, 11 and 18-A of Act 1957
are having bearing upon the issues and, as such the same
are being referred herein :-
4. Preliminary notification respecting intention to
prospect for coal in any area and powers of competent
authorities thereupon.--(1) Whenever it appears to the
Central Government that coal is likely to be obtained from
land in any locality, it may, by notification in the Official
Gazette, give notice of its intention to prospect for coal therein.
(2) Every notification under sub-section (1) shall give a
brief description of the land and state its approximate area.
(3) On the issue of a notification under sub-section (1),
it shall be lawful for the competent authority and for his
servants and workmen--
(a) to enter upon and survey any land in such locality;
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(b) to dig or bore into the sub-soil;
(c) to do all other acts necessary to prospect for coal
in the land;
(d) to set out the boundaries of the land in which
prospecting is proposed to be done and the intended
line of the work, if any, proposed to be made thereon;
(e) to mark such boundaries and line by placing
marks; and
(f) where otherwise the survey cannot be completed
and the boundaries and line marked, to cut down
and clear away any part of any standing crop, fence
or jungle:
Provided that no person shall enter into any building or
upon any enclosed court or garden attached to a dwelling
house (unless with the consent of the occupier thereof)
without previously giving such occupier at least seven days'
notice in writing of his intention to do so.
(4) In issuing a notification under this section the
Central Government shall exclude therefrom that portion of
any land in which coal mining operations are actually being
carried on in conformity with the provisions of any enactment,
rule or order for the time being in force or any premises on
which any process ancillary to the getting, dressing or
preparation for sale of coal obtained as a result of such
operations is being carried on are situate.
5. Effect of notification on prospecting licences and
mining leases.--On the issue of a notification under sub-
section (1) of section 4 in respect of any land--
(a) any prospecting licence 1 which authorises any
person to prospect for coal or any other mineral in the
land shall cease to have effect; and
(b) any mining lease 2 *** shall, in so far as it authorises
the lessee or any person claiming through him to
undertake any operation in the land, cease to have
effect for so long as the notification under that sub-
section is in force.
6. Compensation for any necessary damage done
under section 4.--(1) Whenever any action of the nature
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described in sub-section (3) of section 4 is to be taken, the
competent authority shall, before or at the time such action is
taken, pay or tender payment for all necessary damage which
is likely to be caused, and in case of dispute as to the
sufficiency of the amount so paid or tendered or as to the
person to whom it should be paid or tendered, he shall at once
refer the dispute to the decision of the Central Government,
and the decision of the Central Government shall be final.
(2) The fact that there exists any such dispute as is
referred to in this section shall not be a bar to action under
sub-section (3) of section 4.
7. Power to acquire land or rights in or over land
notified under section 4.--(1) If the Central Government is
satisfied that coal is obtainable in the whole or any part of the
land notified under sub-section (1) of section 4, it may, within
a period of two years from the date of the said notification or
within such further period not exceeding one year in the
aggregate as the Central Government may specify in this
behalf, by notification in the Official Gazette, give notice of its
intention to acquire the whole or any part of the land or of any
rights in or over such land, as the case may be.
(2) If no notice to acquire the land or any rights in or
over such land is given under sub-section (1) within the period
allowed thereunder, the notification issued under sub-section
(1) of section 4 shall cease to have effect on the expiration of
three years from the date thereof.
8. Objections to acquisition.--(1) Any person
interested in any land in respect of which a notification under
section 7 has been issued may, within thirty days of the issue
of the notification, object to the acquisition of the whole or any
part of the land or of any rights in or over such land.
Explanation.--It shall not be an objection within the meaning
of this section for any person to say that he himself desires to
undertake mining operations in the land for the production of
coal and that such operations should not be undertaken by
the Central Government or by any other person.
(2) Every objection under sub-section (1) shall be made
to the competent authority in writing, and the competent
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authority shall give the objector an opportunity of being heard
either in person or by a legal practitioner and shall, after
hearing all such objections and after making such further
inquiry, if any, as he thinks necessary, either make a report
in respect of the land which has been notified under sub-
section (1) of section 7 or of rights in or over such land, or
make different reports in respect of different parcels of such
land or of rights in or over such land, to the Central
Government, containing his recommendations on the
objections, together with the record of the proceedings held by
him, for the decision of that Government.
(3) For the purposes of this section, a person shall be
deemed to be interested in land who would be entitled to claim
an interest in compensation if the land or any rights in or over
such land were acquired under this Act
9. Declaration of acquisition.--(1) When the Central
Government is satisfied, after considering the report, if any,
made under section 8 that any land or any rights in or over
such land should be acquired, a declaration shall be made by
it to that effect, and different declarations may be made from
time to time in respect of different parcels of any land, or of
rights in or over such land, covered by the same notification
under sub-section (1) of section 7, irrespective of whether one
report or different reports has or have been made (wherever
required) under sub-section (2) of section 8:
Provided that no declaration in respect of any particular
land, or rights in or over such land, covered by a notification
under sub-section (1) of section 7, issued after the
commencement of the Coal Bearing Areas (Acquisition and
Development) Amendment and Validation Act, 1971 (54 of
1971), shall be made after the expiry of three years from the
date of the said notification:
Provided further that, where a declaration relates to any
land or to any rights in or over land belonging to a State
Government which has or have not been leased out, no such
declaration shall be made except after previous consultation
with the State Government.
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(2) Every declaration shall be published in the Official
Gazette, and--
(a) in any case where land is to be acquired, shall
state the district or other territorial division in which
the land is situate and its approximate area; and, where
a plan shall have been made of the land, the place where
such plan may be inspected;
(b) in any case where rights in or over such land
are to be acquired, shall state the nature and extent of
the rights in addition to the matters relating to the land
specified in clause (a); and a copy of every such
declaration shall be sent to the State Government
concerned.
10. Vesting of land or rights in Central
Government.--(1) On the publication in the Official Gazette
of the declaration under section 9, the land or the rights in or
over the land, as the case may be, shall vest absolutely in the
Central Government free from all encumbrances.
(2) Where the rights under any mining lease granted or
deemed to have been granted by a State Government to any
person are acquired under this Act, the Central Government
shall, on and from the date of such vesting, be deemed to have
become the lessee of the State Government as if a mining lease
under the Mineral Concession Rules had been granted by the
State Government to the Central Government, the period
thereof being the entire period for which such a lease could
have been granted by the State Government under those
rules.
11. Power of Central Government to direct vesting
of land or rights in a Government company.--(1)
Notwithstanding anything contained in section 10, the
Central Government may, if it is satisfied that a Government
company is willing to comply, or has complied, with such
terms and conditions as the Central Government may think
fit to impose, direct, by order in writing, that the land or the
rights in or over the land, as the case may be, shall, instead
of vesting in the Central Government under section 10 or
continuing to so vest, vest in the Government company either
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on the date of publication of the declaration or on such other
date as may be specified in the direction.
(2) Where the rights under any mining lease acquired
under this Act vest in a Government company under sub-
section (1), the Government company shall, on and from the
date of such vesting, be deemed to have become the lessee of
the State Government as if a mining lease under the Mineral
Concession Rules had been granted by the State Government
to the Government company, the period thereof being the
entire period for which such a lease could have been granted
by the State Government under those rules; and all the rights
and liabilities of the Central Government in relation to the
lease or the land covered by it shall, on and from the date of
such vesting, be deemed to have become the rights and
liabilities of the Government company.
18A. Payment to State Governments in lieu of
royalty.--Notwithstanding anything contained in this Act,
where any land or any rights in or over land belonging to a
State Government (other than the rights under a mining lease
granted or deemed to have been granted by the State
Government to any person) vest in the Central Government
under section 10 or in a Government Company under section
11, the Central Government or the Company, as the case may
be, may pay to the State Government such sum of money as
would have been payable as royalty by a lessee had such land
or rights been under a mining lease granted by the State
Government."
33. It is, thus, evident from the provision as contained
under the Act, 1957 that the declaration of acquisition is to
be issued under Section 9.
34. Section 10 comprises of two provisions, Sub-section
(1) thereof provides that on the publication in the Official
Gazette of the declaration under section 9, the land or the
rights in or over the land, as the case may be, shall vest
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absolutely in the Central Government free from all
encumbrances.
Sub-section (2) thereof provides that where the rights
under any mining lease granted or deemed to have been
granted by a State Government to any person are acquired
under this Act, the Central Government shall, on and from
the date of such vesting, be deemed to have become the
lessee of the State Government as if a mining lease under the
Mineral Concession Rules had been granted by the State
Government to the Central Government, the period thereof
being the entire period for which such a lease could have
been granted by the State Government under those rules.
35. The provision of Section 10 therefore, very
specifically clarifies that the land or the rights in or over the
land, as the case may be, meaning thereby, eventualities
have been referred therein, i.e., the land or the rights in or
over the land, as the case may be, shall vest absolutely in
the Central Government free from all encumbrances while
Sub-section (2) provides that where the rights under any
mining lease granted or deemed to have been granted by a
State Government to any person, meaning thereby, at the
time of vesting, if the lease has been granted by the State to
any person then the Central Government shall, on and from
the date of such vesting, be deemed to have become the
lessee of the State Government as if a mining lease under the
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Mineral Concession Rules had been granted by the State
Government to the Central Government, the period thereof
being the entire period for which such a lease could have
been granted by the State Government under those rules.
36. Section 11 confers power upon the Central
Government to direct vesting of land or the rights in a
Government Company if the Central Government is satisfied
that a Government company is willing to comply, or has
complied, with such terms and conditions as the Central
Government may think fit to impose, direct, by order in
writing, that the land or the rights in or over the land, as the
case may be, shall, instead of vesting in the Central
Government under section 10 or continuing to so vest, vest
in the Government company either on the date of publication
of the declaration or on such other date as may be specified
in the direction.
37. Sub-section (2) of the Section 11 provides that where
the rights under any mining lease acquired under this Act
vest in a Government company under sub-section (1), the
Government company shall, on and from the date of such
vesting, be deemed to have become the lessee of the State
Government as if a mining lease under the Mineral
Concession Rules had been granted by the State
Government to the Government company, the period thereof
being the entire period for which such a lease could have
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been granted by the State Government under those rules;
and all the rights and liabilities of the Central Government
in relation to the lease or the land covered by it shall, on and
from the date of such vesting, be deemed to have become the
rights and liabilities of the Government company.
38. Section 10 thus, provides that what would be the
situation of the land if the land has been vested upon the
Central Government while Section 11 stipulates that if the
Central Government is satisfied that the Government
Company is willing to comply or has complied then the
vesting will be in favour of the Government Company. The
pari materia provision is there under Sub-Section (2) of
Section 11 as that of Sub-section (2) of Section 10 thereof.
39. Section 18A has been inserted in the Act on the
premise of the objective and dealing with the representation
of the State Government as per the object of the Act, 1957,
for ready reference the same is being referred herein:-
"Act 54 of 1971- The Coal Bearing Areas (Acquisition and
Development) Act, 1957 (20 of 1957) hereinafter referred to as
the Coal Bearing Areas Act) provides inter alia for the
acquisition by the Central Government of virgin lands,
including underground minerals, or rights in or over such
lands. Under the Explanation to clause (a) of sub-section (5)
of section 13, which provides that the value of any minerals
lying in the land will not be taken into consideration in
determining the market value of any land no compensation is
payable to the State Governments in respect of the
underground minerals which also vest in the Central
Government when the land is acquired by the Central
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Government. The State Government have been representing
from time to time that this results in their being deprived of
large sums by way of revenue. The Central Government has
considered the representations of the State Government and
has decided that the State Governments should be paid purely
on an ex gratia basis such sums as they would have been
entitled to receive by way of royalty. had mining leases been
granted in respect of the areas acquired. It is now proposed to
amend the Coal Bearing Areas Act to make such payments
obligatory."
40. It is evident from the aforesaid object that the same
has been considered by the legislature based upon the
representation made by the State Government from time to
time that this result in their being deprived of large sums by
way of revenue. The Central Government has considered the
representations of the State Government and has decided
that the State Governments should be paid purely on an ex-
gratia basis such sums as they would have been entitled to
receive by way of royalty, had mining leases been granted in
respect of the areas acquired.
41. The Central Government, in view of the aforesaid
consideration, has inserted Section 18A which stipulates
that notwithstanding anything contained in this Act, where
any land or any rights in or over land belonging to a State
Government (other than the rights under a mining lease
granted or deemed to have been granted by the State
Government to any person) vest in the Central Government
under section 10 or in a Government Company under section
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11, the Central Government or the Company, as the case
may be, may pay to the State Government such sum of
money as would have been payable as royalty by a lessee had
such land or rights been under a mining lease granted by the
State Government.
42. The emphasis of argument advanced on behalf of the
State is the provision as contained under Section 18A of the
Act, 1957.
43. Learned Advocate General, in support of his
argument, has relied upon the judgment rendered by Hon'ble
Apex Court in the case of Mahanadi Coalfields Ltd. v.
State of Odisha & Ors. (Supra).
44. We have gone through the judgment passed by the
Hon'ble Apex Court in the case of Mahanadi Coalfields Ltd.
v. State of Odisha & Ors. (Supra) along with the factual
aspect narrated in para 2 to 5, for ready reference the factual
aspect is being referred herein which is having bearing in the
consideration of the issue pertaining to the applicability of
the judgments as per the Issue No.(ii) framed hereinabove:-
"2. The facts leading to the present appeal in a nutshell are
as under : That the lands in question owned by the State
Government of Odisha came to be acquired by the
Government of India under Section 9 of the Coal Bearing
Areas (Acquisition and Development) Act, 1957 (hereinafter
referred to as "the 1957 Act"). That thereafter, vide order dated
4-9-1981 and in exercise of powers conferred by sub-section
(1) of Section 11 of the 1957 Act with respect to some lands
acquired, the Central Government directed that the rights in
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or over the lands vested absolutely in the Central Government,
shall, instead of continuing to vest in the Central Government,
under sub-section (1) of Section 10, vest in Western Coalfields
Limited.
3. That vide order dated 15-12-1988, with respect to some
other lands acquired by the Central Government and in
exercise of powers conferred by sub-section (1) of Section 11
of the 1957 Act, the Central Government directed that the said
lands and rights so vested shall, with effect from 16-5-1987
instead of continuing to so vest in the Central Government,
shall vest in the government company, subject to the terms
and conditions mentioned in the said order. That is how, the
appellant acquired the lands and rights over the lands in
question. That the respondent issued the demand notice
dated 15-3-1984 for a sum of Rs 70 lakhs towards premium
for government land and Rs 40 lakhs towards compensation.
4. That various similar demand notices were issued for area
of non-forest government land and revenue forest land. The
demands were challenged by the appellant by way of writ
petition before the High Court.
5. Before the High Court, Section 18-A of the 1957 Act was
pressed into service by the appellant herein and it was
submitted that in view of the notification as the lands and
rights on the lands absolutely vested in the Central
Government thereafter, the State Government is not entitled
to any compensation with respect to the lands so
acquired/vested except the royalty leviable under Section 18-
A of the 1957 Act. By the impugned judgment and order
[Mahanadi Coalfields v. State, 2019 SCC OnLine Ori 512] the
High Court has interpreted Section 2(d) of the 1957 Act and
has observed that the State Government can be said to be
person interested in land and therefore, entitled to the
compensation over and above in lieu of losing the rights over
the land. That thereafter, by the impugned judgment and
order [Mahanadi Coalfields v. State, 2019 SCC OnLine Ori
512] the High Court has dismissed the writ petition and has
confirmed the demand(s)."
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45. It is evident from the factual aspect of the said case
that the land in question owned by the State Government of
Orissa had been acquired by the Government of India under
Section 9 of the Act, 1957 and the Government thereafter
vide order dated 04.09.1981 and in exercise of power
conferred by Sub-section (1) of Section 11 of the Act, 1957
with respect to some land acquired, the Central Government
directed that the rights in or over the lands vested absolutely
in the Central Government, shall, instead of continuing to
vest in the Central Government, under Sub-section (1)
of Section 10, vest in the Western Coalfields Limited. Vide
order dated 15.12.1988, with respect to some other lands
acquired by the Central Government and in exercise of
powers conferred by the Sub-section (1) of Section 11 of the
Act, 1957, the Central Government directed that the said
lands and rights so vested shall, with effect from 16.05.1987
instead of continuing to so vest in the Central Government,
shall vest in the Government Company, subject to the terms
and conditions mentioned in the said order. The appellant
thereby has acquired the lands and rights over the lands in
question. The respondent issued the demand notice dated
15.03.1984 for a sum of Rs. 70 lakhs towards premium for
Government land and Rs. 40 lakhs towards
compensation. Various similar demand notices were issued
for area of Non-Forest Government land and Revenue Forest
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land. The said demands had been challenged before the High
Court. The High Court has passed order upholding the said
demands. The same has been upheld by the Hon'ble Apex
Court on the premise of applicability of the provision of
Section 18A, for ready reference, the relevant part of the
aforesaid judgment as referred in paragraph 16 and 18 is
being referred herein :-
"16. Now so far as the submission made on behalf of the
appellant that the Government company in whose favour the
order is passed under Section 11 after which the land is
vested absolutely with the Central Government except the
amount of royalty as per Section 18-A of the Act, the
Government company is not liable to pay any amount is
concerned, the aforesaid has no substance. The
compensation/rental payable with respect to the lands by the
lessee/deemed lessee is altogether different than the royalty.
Royalty is for extraction of minerals in the lands in question.
18. In that view of the matter over and above the amount of
royalty the coal company/Government company shall be
liable to pay the compensation and surface land rent, etc.,
Therefore, the High Court is absolutely justified in confirming
the respective demand(s). The amount of royalty cannot be
mixed with the compensation/loss caused to the State
Government due to loss of land and surface land rent as the
State Government is entitled for the adequate compensation.
If the submission made on behalf of the appellant is accepted
in that case nothing would be paid towards the lands except
the amount of royalty under Section 18(a) of the Act, which is
for extraction of minerals."
46. The Hon'ble Apex Court, in the light of the fact that
the Central Government is liable to make payment of
compensation and surface land rent, etc. has been pleased
to uphold the view taken by the High Court.
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47. At this juncture it needs to refer herein that the
validity of the Act, 1957 has been raised before the Hon'ble
Apex Court in the case of State of W.B. v. Union of India,
1962 SCC OnLine SC 27 wherein a suit by the State of West
Bengal against the Union of India has been preferred for a
declaration that the Parliament is not competent to make a
law authorising the Union Government to acquire land and
rights in or over land, which are vested in a State, and that
the Coal Bearing Areas (Acquisition and Development) Act
(20 of 1957) which hereinafter will be referred to as the Act-
enacted by the Parliament, and particularly Sections 4 and
7 thereof, were ultra vires; the legislative competence of
Parliament, as also for an injunction restraining the
defendant from proceeding under the provisions of those
sections of the Act in respect of the coal-bearing lands vested
in the plaintiff.
48. The Hon'ble Apex Court taking into consideration
that the suit raises questions of great public importance,
bearing on the interpretation of quite a large number of the
Articles of the Constitution and in view of the importance of
the questions raised in this litigation, issued notices to all
the Advocate Generals of the States of India. In pursuance of
that notice, the States of Assam, Bihar, Gujarat, Madras,
Orissa, Punjab, Rajasthan and Uttar Pradesh have
appeared.
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49. The Hon'ble Apex Court, taking into consideration
the legislative competence, has upheld the validity of the Act
1957 in particular Sections 4 and 7 and has observed that
the power to legislate for regulation and development of
mines and minerals being under the control of the Union,
would by necessary implication include the power to acquire
mines and minerals, thereby upholding the constitutional
validity of CBA, 1957.
50. We have also considered the judgment passed by
Hon'ble Apex Court in the case of State of U.P. and Another
v. Northern Coal Fields (Supra) and after going through the
factual aspect, as would be evident from the reference made
therein at paragraph 3, that on 23.12.1980, the Central
Government issued a notification under Section 7 of
the Coal Bearing Areas (Acquisition and Development) Act,
1957 of its intention to acquire the lands admeasuring
1657.16 hectares (approximately) as specified in the
Schedule, and consequently, issued a declaration on
17.11.1981 acquiring the said land under Section 9 of CBA,
1957. The said declaration was published in the Gazette of
India, dated 05.12.1981, vesting the land and rights
described in the Schedule appended to the abovementioned
notification absolutely in the Central Government free from
all encumbrances under Section 10(1) of the CBA, 1957.
Further, in exercise of powers under Section 11(1) of CBA,
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1957, the Union Government, by its order dated 02.11.1982,
directed that the lands and rights so vested shall, w.e.f. from
05.12.1981, instead of continuing to so vest in the Central
Government, shall vest in the Government Company named
Central Coalfields Ltd. (which was later formed into Northern
Coal Fields Ltd. w.e.f. 28.11.1985, i.e. the Respondent).
Thereafter, the Respondent submitted a proposal for
its 'Krishnashila project' of 235.99 hectares of land for
obtaining approval of the Central Government for use of the
land for mining purpose under the Forest (Conservation) Act,
1980. Similarly, another proposal under the FCA, 1980 for
usage of 258 hectares of forest land for mining purpose for
'Bina Coal Project' was submitted to the Central Government
for obtaining its approval.
Accordingly, in pursuance of Section 2 of the FCA,
1980, the Central Government, vide its order dated
23.05.1996, granted approval for diversion of 258 hectares
of forest land under 'Bina Project', which was communicated
by the State Government to the Respondent vide letter dated
28.06.1998. Similarly, the Central Government, with regard
to the 'Krishnashila Project', vide its letter dated 06.07.2006,
granted approval for diversion of 235.99 hectares of forest
land in accordance with Section 2 of FCA, 1980, which was
communicated to the Respondent by the State
Government vide letter dated 27.07.2007.
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The Respondent, by virtue of Section 18A of the CBA,
1957, has been paying money equal to royalty as determined
under Section 9 of the Mines and Minerals (Development
and Regulation) Act, 1957. However, the letter dated
23.03.2010 and subsequent letter dated 11.06.2010 were
issued to the Respondent demanding the deposit of "lease
rent" amounting to Rs. 1,24,23,015/- in accordance with
Condition No. 7 of 'Krishnashila Project' and Rs.
1,91,25,593/- in accordance with Condition No. 12 of 'Bina
Project'.
51. It is evident from the said judgment that the Hon'ble
Apex Court, after taking into consideration the implication of
Section 11(2) of the Act, 1957, has come to the conclusive
finding that when the Central Government's right was free
from all encumbrances and completely absolute, the
Government Company also acquired an absolute right over
the land. No question of a qualified right in the capacity of a
deemed lessee of the State Government arises in such a
situation. This is by virtue of the fact that when Central
Government acquired such rights and also when it was
further vested in the Government Company, there was no
pre-existing mining lease in favour of any person and,
therefore, Section 10(2) and Section 11(2) become
inapplicable in the given case.
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52. The said aspect of the matter has been taken into
consideration at paragraph 14 which is being quoted
hereunder as :-
"14. Further, the Government Order dated 02.11.1982
published by the Government of India, which was produced
as Annexure P-1 before us, clearly provided that in exercise of
the powers conferred by Section 11(1) of the CBA, 1957, the
Central Government had directed the vesting of such land and
rights in the Government Company, with effect from
05.12.1981. It is to be noted that the rights in the Government
Company were vested specifically by virtue of sub-section (1)
of Section 11 and at that time, there did not exist any mining
lease as provided under sub-section (2). As explained above,
the rights under Section 11(1) are vested in the Government
Company in the exact nature as they existed in the Central
Government at the time. Therefore, when the Central
Government's right was free from all encumbrances and
completely absolute, the Government Company also acquired
an absolute right over the land. No question of a qualified right
in the capacity of a deemed lessee of the State Government
arises in such a situation. This is by virtue of the fact that
when Central Government acquired such rights and also
when it was further vested in the Government Company, there
was no pre-existing mining lease in favour of any person and,
therefore, Section 10(2) and Section 11(2) become inapplicable
in the given case. Thus, the land vested in the Government
Company free from all encumbrances, subject to the
conditions imposed by the Central Government. Therefore, the
State Government is not entitled to claim itself as a deemed
lessor of the Government Company in the given situation and
the demand for "lease rent" becomes completely
unwarranted."
53. It is further evident that the judgment rendered in
the case of Mahanadi Coalfields Ltd. v. State of Odisha
& Ors. (Supra) has also been taken into consideration and
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on fact, the said judgment has been distinguished on the
basis of the factual aspect involved in the case of State of
U.P. and Another v. Northern Coal Fields (Supra) on the
premise that the factual aspect leading to the Mahanadi
Coalfields Ltd. v. State of Odisha & Ors. (Supra) was with
respect to the payment of premium and compensation as
opposed to the demand of "lease rent" in the case of State of
U.P. and Another v. Northern Coal Fields (Supra), for
ready reference, paragraph-16 of the said judgment is being
referred herein:-
"16. There is another judgment of this Court in Mahanadi
Coalfields Ltd. v. State of Odisha7 that was placed before us
during the course of arguments. However, since in the said
judgment, the dispute was with regards to the payment of
premium and compensation, as opposed to the demand for
"lease rent" in our case, the judgment, being distinguishable
on facts, is not applicable to the case at hand. Moreover, in
the said case, the right of the State Government to claim
compensation/premium under section 18A of the CBA, 1957,
was recognized by virtue of State Government being a "person
interested" under Section 2(d) of the Act. Herein, there arises
no question of an "interested person". The said judgment did
not delve into the question at hand currently, that is the
distinction between the nature of right acquired under Section
11(1) and (2), and there was no discussion whether there was
a pre-existing mining lease at the time of acquisition or vesting
of rights or not. Hence, the said judgment, is clearly
distinguishable on facts."
54. Further, the reference of the Constitution Bench
Judgment rendered in the case of Mineral Area
Development Authority v. SAIL, (2024) 10 SCC 1 also
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needs to be made herein. We, after going through the said
judgment, have found the basic/fundamental difference
between royalty and tax, has been adjudicated by the
Hon'ble Apex Court.
55. The Hon'ble Apex Court while holding the royalty to
be not a tax, rather, different from tax under Section 9 of the
M.M.D.R. Act. It has been held therein that it is paid to the
land owner out of a contractual obligation between the land
owner and the lessee. The land owner may be the State
Government or a private person.
56. The aforesaid judgment also explains the
fundamental differences between royalty and tax and it has
been observed that Royalty charged by a proprietor is a
consideration and arises from a lease deed while on the other
hand, Tax is an imposition of a sovereign and it is levied in a
taxable event determined by law and it is imposed by an
authority of law.
57. For ready reference the relevant paragraphs of the
aforesaid judgment are being quoted as under:
70. Section 9(2) provides that the holder of a mining lease
granted after the commencement of the MMDR Act is also liable
to pay royalty in respect of any mineral removed or consumed
by him or by his agent, manager, employee, contractor or sub-
lessee from the leased area at the rate specified in the Second
Schedule. Section 9(3) empowers the Central Government to
amend the Second Schedule to enhance or reduce the rate at
which royalty shall be payable in respect of minerals
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enumerated in the Second Schedule. However, it also provides
that the enhancement in the rate of royalty in respect of any
mineral shall not be done more than once during any period of
three years. ---
130. On first principles, royalty is a consideration paid by a
mining lessee to the lessor for enjoyment of mineral rights and
to compensate for the loss of value of minerals suffered by the
owner of the minerals. The marginal note to Section 9 states
that royalties are "in respect of mining leases." The liability to
pay royalty arises out of the contractual conditions of the
mining lease. [See Mineral Concession Rules, 1960, Rules 27
and 45.] A failure of the lessee to pay royalty is considered to
be a breach of the terms of the contract, allowing the lessor to
determine the lease and initiate proceedings for recovery
against the lessee.
133. There are major conceptual differences between royalty
and a tax:
(i) the proprietor charges royalty as a consideration for parting
with the right to win minerals, while a tax is an imposition of
a sovereign;
(ii) royalty is paid in consideration of doing a particular action,
that is, extracting minerals from the soil, while tax is generally
levied with respect to a taxable event determined by law;
[Goodyear (India) Ltd. v. State of Haryana, (1990) 2 SCC 71,
para 27] and
(iii) royalty generally flows from the lease deed as compared
to tax which is imposed by authority of law.
58. It is thus evident that power to collect tax as has been
held in the aforesaid Judgment lies with the State
Government if the State Government is having proprietary
right or the subsisting lease on the basis of the proprietary
right over the land in question.
2025:JHHC:28577-DB
59. Adverting to the factual aspect of the present case, it
is admitted case of the State that the demand is not by way
of premium and compensation, rather, it is on the basis of
the lease rent which is also evident from the impugned order.
60. This Court, therefore, is of the view that since the
case of the writ petitioner is of acquisition of land having no
subsisting lease right in favour of any party and, as such,
the Government Company, the writ petitioner herein, will not
be construed to be the deemed lessee of the State
Government and in that view of the matter, the Government
Company, due to vesting of the land, will not be liable to
make payment of lease rent.
61. Again, adverting to the judgment rendered by Hon'ble
Apex Court in the case of State of U.P. and Another v.
Northern Coal Fields (Supra) and in absence of any
subsisting lease, as referred in Sub-section (2) of Section 11,
the State will have no jurisdiction to demand royalty once
the land has been vested in view of the notification issued
under Section 9 of the Coal Bearing Act, 1957. The Central
Government is having the propriety right over the land.
62. This Court, based upon the aforesaid discussion, is
of the view that the judgment rendered in the case of
Mahanadi Coalfields Ltd. v. State of Odisha & Ors.
(Supra), in the facts and circumstances of the present case,
will not be applicable, since, the case of the State is not of
2025:JHHC:28577-DB
demand of premium and compensation, rather, it is a case
of lease rent. Therefore, the judgment rendered in the case
of State of U.P. and Another v. Northern Coal Fields
(Supra) will be applicable since the same is the case of lease
rent wherein on fact the judgment rendered in the case of
Mahanadi Coalfields Ltd. v. State of Odisha & Ors.
(Supra) has been distinguished.
63. It further needs to refer herein that in the case of
State of U.P. and Another v. Northern Coal Fields
(Supra), the judgment passed by the Patna High Court in the
case of Managing Director, National Coal Development
Corporation Ltd. and etc. v. State of Bihar and Others
reported in AIR 1984 Pat 280 has also been taken care of,
as would be evident from paragraph-15 wherein, after giving
consideration of the availability of the subsisting right in
favour of the party and in such situation the land, if would
have been vested upon the Central Government or the
Government Company, as the case may be, then the
question of lease rent would be there but it has been held by
the Patna High Court that Section 10(2) of the Act, 1957 is
not attracted because there existed no mining lease prior to
acquisition. The situation therein was also governed by
Section 10(1) and hence, it was rightly held that the State
Government is divested of all its rights and the relationship
of lessor and lessee does not continue between the State and
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the Central Government, for ready reference, paragraph 15
of the aforesaid judgment is being referred herein :-
"15. The findings of the Patna High Court in Paragraph 7 of
the judgment in the case of Managing Director, National Coal
Development Corporation (supra) is in lines with our analysis
as even in that case, it was held that Section 10(2) is not
attracted because there existed no mining lease prior to
acquisition. The situation therein was also governed by
Section 10(1) and hence, it was rightly held that the State
Government is divested of all its rights and a relationship of
lessor and lessee does not continue between the State and the
Central Government (or for that matter the petitioner-
company)."
64. This Court, based upon the aforesaid reasons, is
answering the aforesaid issues.
65. Accordingly, the issues are answered.
66. In the result, in consequence of the issues having
been answered hereinabove and on the admitted facts of the
case that at the time of vesting of the land in favour of the
Central Government in exercise of power conferred under
Section 10(1) and subsequent thereto vesting to the
Government companies in view of the provision of Section
11(1) and as stipulated in sub-section 2 of Section 11 there
was no subsisting lease construing Government companies
to be deemed sub-lessee of the State Government as such
the State Government will have no right to demand by way
of lease rent.
67. However, it needs to refer herein that if the subsisting
lease would be there, then the judgment rendered in the case
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of Mahanadi Coalfields Ltd. v. State of Odisha & Ors
(supra) will be applicable.
68. Accordingly, the impugned orders need interference
and, as such, the same are quashed and set aside.
69. These writ petitions stand allowed.
70. Pending interlocutory application, if any, also stands
disposed of.
I agree (Sujit Narayan Prasad, J.)
(Arun Kumar Rai, J.) (Arun Kumar Rai, J.)
16th September, 2025
A.F.R.
Birendra/
