Case Note & Summary
The Supreme Court of India considered a civil appeal by special leave against an order of the Central Government rejecting a revision against the Controller of Mining Leases' modification of a mining lease. The appellant, Gujarat Pottery Works, had acquired rights from the original lessee, Jairam Jagmal, who held a perpetual lease for excavating white clay from land in Gujarat. The lessors had entered into an agreement to execute a perpetual lease on December 2, 1939, and delivered possession, but the formal lease deed was executed only on November 3, 1951, in execution of a decree for specific performance. In 1954, the original lessee transferred his rights to the appellant. On September 29, 1960, the Controller of Mining Leases modified the terms under the Mining Leases (Modification of Terms) Rules, 1956, which were continued by Section 29 of the Mines and Minerals (Regulation and Development) Act, 1957. The modifications reduced the lease period to 25 years from 1939, made renewal subject to law and rules, imposed dead rent at Rs. 10 per acre per annum, made the lease subject to rules under Sections 13 and 18 of the 1957 Act, and required royalty under Section 9. The appellant's revision was dismissed by the Central Government on January 30, 1962. The main legal issues were whether the 1951 lease was an 'existing mining lease' under Rule 2(c) of the 1956 Rules, whether the rules infringed Article 31 and whether Article 31A(1)(e) protected them, whether the rules were void as made before the Seventh Amendment due to lack of legislative competence, whether ultra vires rules could continue under Section 29 of the 1957 Act, and whether the Controller was justified in limiting the period to 25 years from 1939. The appellant argued that the lease was granted in 1951, that the lease was not merely for 'winning' minerals, that the rules were void pre-Seventh Amendment, that invalid rules could not continue, and that the period reduction was unjustified. The respondents defended the modifications. The court, by a majority of Subba Rao C.J., Sikri and Raghubar Dayal JJ., held that the grant of lease occurred in 1939 because the agreement with possession was acted upon and the formal execution in 1951 was only compliance. The court construed 'winning' in Article 31A(1)(e) to mean getting or extracting minerals and held the rules were protected and not void under Articles 14, 19, 31. The rules were within regulation of mines and mineral development, not acquisition of property, and the Central Legislature was competent. Section 29 of the 1957 Act continued the rules even if they were ultra vires the 1948 Act. The Controller was competent to modify the terms, but the majority held the period should be 20 years from June 1, 1958, when the 1957 Act came into force, instead of 25 years from 1939. The dissenting judges, Hidayatullah and Bachawat JJ., would have dismissed the appeal entirely, holding the lease could be cut down to 20 years from 1939, and the Controller's reduction to 25 years was not prejudicial. The final decision partly allowed the appeal, modifying the lease period to 20 years from 1958 and upheld the other modifications.
Headnote
A) Mining Law - Existing Mining Lease - Grant of Lease - Mines and Minerals (Regulation and Development) Act, 1957; Mining Leases (Modification of Terms) Rules, 1956, Rule 2(c) - The agreement to lease with delivery of possession in 1939 constituted grant of lease; formal execution in 1951 was mere compliance with legal requirements to make grant enforceable. The court relied on Rule 28A of Mineral Concession Rules, 1949, and the terms of the agreement to hold that the lease was granted in 1939. Held that the lease fell within the definition of existing mining lease and was liable to modification (Paras 698 C-D). B) Constitutional Law - Article 31A(1)(e) - Meaning of 'Winning' - Constitution of India, Article 31A(1)(e) - 'Winning' means getting or extracting minerals from mines and other incidental purposes; definitions in Acts or Rules for limited purposes cannot guide constitutional interpretation. The 1956 Rules modifying rights under the lease were protected under Article 31A(1)(e) and not void for taking away rights under Articles 14, 19 or 31. Held that the rules were constitutionally valid (Paras 701 D, 702 C-E). C) Constitutional Law - Legislative Competence - Seventh Amendment - Constitution of India, Seventh Amendment Act, 1956; Mines and Minerals (Regulation and Development) Act, 1948, Section 7 - The 1956 Rules were made in connection with regulation of mines and mineral development, not acquisition or requisitioning of property; the Central Legislature was competent under the 1948 Act. The rules did not fall within the field of acquisition and requisitioning of property. Held that the rules were not void for lack of competence at the time they were made (Para 702 H). D) Statutory Interpretation - Continuance of Rules - Section 29 of 1957 Act - Mines and Minerals (Regulation and Development) Act, 1957, Section 29; Mines and Minerals (Regulation and Development) Act, 1948 - Section 29 provided that rules made or purported to have been made under the 1948 Act for matters for which rules could be made under the 1957 Act would be deemed made under the 1957 Act and continue in force. Even if the rules were ultra vires the 1948 Act, they were validly continued after the 1957 Act came into force. Held that the rules continued in force (Paras 703 E, G). E) Mining Law - Modification of Lease Terms - Period of Lease - Mines and Minerals (Regulation and Development) Act, 1957, Sections 13, 9; Mining Leases (Modification of Terms) Rules, 1956, Rules 6, 7 - The Controller was competent to modify the lease terms to bring them into conformity with the 1957 Act and rules under Section 13. The majority held that the period should be 20 years from June 1, 1958, when the 1957 Act came into force, not 25 years from 1939; renewal was to be regulated in accordance with law and rules in force. Held that the appeal was partly allowed and other modifications upheld (Paras 704 F, 705 E).
Issue of Consideration
Whether the mining lease dated 1951 was an existing mining lease under Rule 2(c) of the 1956 Rules; whether the 1956 Rules violated Articles 14, 19, 31 of the Constitution and whether Article 31A(1)(e) protected the modifications; whether the rules were void for legislative incompetence before the Seventh Amendment; whether ultra vires rules could continue under Section 29 of the 1957 Act; and whether the Controller was justified in limiting the lease period to 25 years from 1939.
Final Decision
Majority judgment delivered by Raghubar Dayal J. for Subba Rao C.J., Sikri and Dayal JJ. allowed the appeal to the extent that the period of lease shall be 20 years from June 1, 1958, when the 1957 Act came into force, and its renewal would be regulated in accordance with law and rules in force. The appeal in respect of other modifications was dismissed. Dissenting opinion by Bachawat J. for Hidayatullah and Bachawat JJ. would have dismissed the appeal entirely, holding lease could be cut down to 20 years from 1939, and Controller's reduction to 25 years was not prejudicial.
Law Points
- Grant of lease occurs at sanctioning or agreement with possession
- not formal execution of lease deed
- 'Winning' in Article 31A(1)(e) means getting or extracting minerals from mines and incidental purposes
- 1956 Rules are within regulation of mines and mineral development
- not acquisition of property
- Section 29 of 1957 Act continues rules made under 1948 Act even if inconsistent
- Controller competent to modify lease terms to conform to 1957 Act and rules under Section 13
- Existing mining lease includes agreement to lease acted upon with possession before 25-10-1949
