High Court · 2007

IN THE HIGH COURT OF JUDICATURE AT MADRASDATE: 04.01.2007CORAM:THE HONOURABLE MR.JUSTICE K.RAVIRAJA PANDIANWRIT PETITION Nos.21633 to 21638, 23469, 24831 of 2001 and 640 of 2002 Munavar Basha.. Petitioner in W.P.Nos.21633 to 21635 and 21638/2001Evershine Monumentsrep by its Managing PartnerMR. Munavar basha.. Petitioner in W.P.21636/01Gazhanfar Basha... Petitioner in W.P.21637/01G.B. Enterprises,rep by its PartnerGhazanfar Basha... Petitioner in W.P.23469/01Karthik Granites Pvt. Ltd.,Rep by its Director Mrs. T. Jayanthi... Petitioner in W.P.24831/01Premium Granites Ltd., Rep by its General Manager,L.V. Ramanathan... Petitioner in W.P.640/02-Vs-The District CollectorThiruvannamalai DistrictThiruvannamalai...Respondents in W.P.Nos.21633 to 21638/01The Assistant Director of Geology & MiningO/o. The District Collector of SalemSalem.... Respondent in W.P.Nos.23469/01, 24831/2001The District Collector,Vellore District, Vellore.... Respondent in W.P.Nos.640/02Writ petitions filed under Article 226 of the Constitution ofIndia praying for the issuance of a writ of certiorari as stated https://hcservices.ecourts.gov.in/hcservices/ therein.For Petitioners:Mr.K.Ramakrishna ReddyFor Respondents :Mr.R.Thirugnanam,SGPC O M M O N O R D E RW.P.No.21633 of 2001 is filed for the issuance of a writ ofcertiorari to call for the records of the respondent's proceedingsbearing S.R.No.24/Kanimam/97 dated 10.09.2000 pertaining to granitequarry lands measuring 2-04-0 Hectares, comprised in S.No.10/2,Mekkalur Village, Tiruvannamalai Taluk, Tiruvannamalai District andquash the same.2. W.P.No.21634 of 2001 is filed the issuance of a writ ofcertiorari to call for the records of the respondent's proceedingsbearing S.R.No.22/Kanimam/97 dated 10.09.2000 pertaining to granitequarry lands measuring 0.97.3 Hectares, comprised in S.No.37,situated in Mekkalur Village, Tiruvannamalai Taluk, TiruvannamalaiDistrict and quash the same.3. W.P.No.21635 of 2001 is filed for the issuance of a writ ofcertiorari to call for the records of the respondent's proceedingsbearing S.R.No.23/Kanimam/97 dated 10.09.2000 pertaining to granitequarry lands measuring 4-00-0 Hectares, comprised in S.No.16,situated in Mekkalur Village, Tiruvannamalai Taluk, TiruvannamalaiDistrict and quash the same.4. W.P.No.21636 of 2001 is filed for the issuance of a writ ofcertiorari to call for the records of the respondent's proceedingsbearing S.R.No.33/Kanimam/97 dated 10.09.2000 pertaining to granitequarry lands measuring 2.04.5 Hectares, comprised in S.No.59,situated in Mekkalur Village, Tiruvannamalai Taluk, TiruvannamalaiDistrict and quash the same.5. W.P.No.21637 of 2001 is filed for the issuance of a writ ofcertiorari to call for the records of the respondent's proceedingsbearing S.R.No.21/Kanimam/97 dated 10.09.2000 pertaining to granitequarry lands measuring 5.70 acres, comprised in S.No.176, situatedin Kothandavadi Village, Tiruvannamalai Taluk, TiruvannamalaiDistrict and quash the same.6. W.P.No.21638 of 2001 is filed for the issuance of a writ ofcertiorari to call for the records of the respondent's proceedingsbearing S.R.No.32/Kanimam/97 dated 10.09.2000 pertaining to granitequarry lands measuring 1-74-5 Hectares, comprised in S.No.7/1,situated in Mekkalur Village, Tiruvannamalai Taluk, TiruvannamalaiDistrict and quash the same.7. W.P.No.23469 of 2001 is filed for the issuance of a writ ofcertiorari to call for the records of the respondent's demandsbearing Roc.1347/2001/Mines-B dated 22.10.2001 andRoc.1442/2000/Mines-B, dated 20.11.2001 pertaining to granite quarry https://hcservices.ecourts.gov.in/hcservices/ lands measuring 1-87-0 Hectares, comprised in S.No.203/3, situatedin Navapatty Village, Mettur Taluk, Salem District and quash thesame.8. W.P.No.24831 of 2001 is filed for the issuance of a writ ofcertiorari to call for the records of the respondent's demandbearing Roc.526/97/Mines-B dated 03.12.2001 pertaining to granitequarry lands situatd in Thalaisolai Village, Salem District andquash the same.9. W.P.No.640 of 2002 is filed for the issuance of a writ ofcertiorari to call for the records of the respondent's proceedingsbearing Rc.B.49/2000 (Mines) dated 16.07.2001 and all furtherproceedings therein pertaining to two granite quarrying landsmeasuring 1-54-5 Hec. Comprised in S.No.355/1A, situated in GudalurVillage and the quarry lands measuring 4-40-5 Hectares comprised inS.No.381/2, situated in Ayyapedu Village Arkonam Taluk, VelloreDistrict (formerly North Arcot Ambedkar District) and quash thesame.10. As the facts in all the cases are identical and the prayerin all the writ petitions as well as the challenge and the groundsof challenge are one and the same, all the writ petitions are takenup together for disposal. The facts in W.P.No.21633 of 2001 istaken as a typical case.11. The petitioner obtained a quarry lease in respect ofGovernment land measuring 2.04.0 hectares comprised in S.No.10/2situated in Mekkalur Village, Tiruvannamalai Taluk, TiruvannamalaiDistrict for a period of 5 years from 03.05.1988 to 02.05.1993 andexecuted lease deed containing various terms and conditions bindingthe parties for quarrying of granite and payment thereof during therelevant period of time. It is the case of the petitioner thatthough the lease was granted and lease deed was executed, the quarrycould not be operated as the granite deposit available in the quarrywas not of marketable quality. The quarry was abandoned. It isthe further case of the petitioner that the respondent byproceedings dated 10.09.2000 has levied and demanded interest at therate of 24% on the belated payment of local cess and local cesssurcharge and also area assessment and dead rent totalling a sum ofRs.73,900/-. The said demand issued in the year 2000 is put inissue by the petitioner in this writ petition. 12. So far as the demand of interest on local cess and localcess surcharge, according to the petitioner, the issue is settled bythe Judgment of the Supreme Court in the case of DISTRICT MININGOFFICER VS. TATA IRON AND STEEL COMPANY reported in 2001 (7) SCC 358in favour of the petitioner. 13. In respect of the other demand, the area assessment in asum of Rs.586/- and Dead Rent in a sum of Rs.30,538/-, it is thecase of the petitioner that though the lease has been granted andlease deed has been executed for a period of 5 yeas from 03.05.1988 https://hcservices.ecourts.gov.in/hcservices/ to 02.05.1993, no quarrying operation has been carried out by thepetitioner and quarry was lying barren. As per Sec.4-A(4) of theMines and Minerals (Regulation and Development) Act, 1957, if thelessee has not operated the quarry for a period of one year, thelease granted in favour of the petitioner would automatically belapsed. After the quarry lease is lapsed, there is no question ofdemand of dead rent and area assessment in respect of the saidquarry. Hence the impugned order in respect of demand of areaassessment in a sum of Rs.486/-, dead rent in a sum of Rs.30,538/-is not legally sustainable and liable to be set aside.14. Mr.Ramakrishna Reddy, learned counsel appearing for thepetitioners, in elaboration of the contention, submitted that as perSection 4A(4) of the Mines and Minerals (Regulation and Development)Act, 1957, if the quarry is not operated for a period of one yearfrom the date of execution of the lease deed, the lease granted infavour of the petitioner is lapsed automatically and thereupon thereexist no lessor and lessee relationship. In the absence of any suchrelationship, the respondents cannot legally demand area assessmentand dead rent. He further contended that the stand taken by therespondent in their counter that the petitioners did not informabout the non operation of the quarry or surrendered the quarry backto the Government cannot be legally sustainable when the statuteitself provides for automatic lapse if the quarry is not operatedfor a period of one year from the date of lease deed, andparticularly in the absence of any obligation cast upon by way ofstatutory provision to inform the respondent about the non-quarryingoperation by the petitioners. 15. On the other hand, the learned Special Government Pleaderappearing for the respondents submitted that under Clause 4 andClause 5(1) of the lease deed executed by the petitioner, thepetitioner agreed to pay seigniorage fee or dead rent whichever ishigher apart from area assessment. Having entered into a statutoryagreement, the petitioner cannot wriggle out and contend that he isnot liable to pay dead rent and area assessment on the premise thatquarrying activity has not been carried out. Admittedly notermination order was passed by the respondents. Hence the quarrylease granted in favour of the petitioners cannot be treated asterminated. The provision contained in Sec.4A(4) of the Mines andMinerals (Regulation and Development) Act, 1957, could not beregarded as termination of lease as contended by the petitioner,because the provisos thereto provide for revival of the quarry atthe instance of the lessee. However, in respect of local cess andlocal cess surcharge, learned Special Government Pleader concededthat the issue has been settled by the Supreme Court. 16. I heard the argument of the learned counsel for the partiesand perused the material and also the statutory provision.17. The dispute of levy of local cess and local cess surchargeon minerals has been now well settled by the Supreme Court in thecase of DISTRICT MINING OFFICER VS. TATA IRON AND STEEL COMPANYreported in 2001(7) SCC 358. In the impugned order, a sum of https://hcservices.ecourts.gov.in/hcservices/ Rs.42,776/- is demanded towards local cess and local cess surchargewhich included interest at the rate of 24% from 22.6.1994. As perthe judgment of the Supreme Court reported in 2001(7) SCC 358, therespondent cannot levy local cess and local cess surchargesubsequent to the date of 4.4.1991 upto which date the levy had beenvalidated by Validation Act. Thus, the interest demanded from22.6.1994 cannot be legally sustainable and to that extent thedemand is quashed.18. Now, let me consider the other contention that the demandof dead rent and area assessment is bad inasmuch as under Section 4A(4), the lease granted is automatically lapsed, if the quarry is notoperated for a period of one year from the date of execution oflease deed. 19. Section 4A(4) of the Mines and Minerals (Regulation andDevelopment) Act, 1957 provides as follows:-"(4)...Where the holder of a mining leasefails to undertake mining operations for a periodof one year (now amended as two years)after thedate of execution of the lease or havingcommenced mining operations, has discontinued thesame for a period of one year (now amended as twoyears), the lease shall lapse on the expiry ofthe period of one year (now amended as two years)from the date of execution of the lease or, asthe case may be, discontinuance of the miningoperations:Provided that the State Government may, onan application made by the holder of such leasebefore its expiry under this sub-section and onbeing satisfied that it will not be possible forthe holder of the lease to undertake miningoperations or to continue such operations forreasons beyond his control, make an order,subject to such conditions as may be prescribed,to the effect that such lease shall not lapse:Provided further that the State Governmentmay, on an application by the holder of a leasesubmitted within a period of six months from thedate of its lapse and on being satisfied thatsuch non-commencement or discontinuance was dueto reasons beyond the control of the holder ofthe lease, revive the lease from such prospectiveor retrospective date as it thinks fit but notearlier than the date of lapse of the lease:Provided also that no lease shall be revivedunder the second proviso for more than twiceduring the entire period of the lease."20. From the reading of the above provision, the conspectus ofthe same could be deduced as follows: (1) Where the holder of a mining lease failed to undertake https://hcservices.ecourts.gov.in/hcservices/ mining operation for a period of one year (prior to amendment by Act25 of 1994), the lease shall be lapsed on the expiry of period ofone year from the date of execution of the lease;(2) Where the holder of the mining lease having commenced themining operation had discontinued the same for a period of one year,the lease shall be lapsed on the expiry of the period of one yearfrom the date of discontinuance;(3) After expiry of the period aforesaid, the holder of themining lease could not operate the quarry;(4) The holder of the mining lease, who failed to undertake themining operation, within the aforesaid period of one year, couldmake an application to the State Government giving reasons for hisfailure to commence the quarry operation for passing orders to theeffect that the lease shall not be lapsed;(5) The holder of the mining lease, who having commenced miningoperation, discontinued the same, within the period of one year fromthe discontinuance could make an application giving reasons thereforto the Government for passing orders to the effect that lessee shallnot be lapsed;(6) The State Government on being satisfied that it would notbe possible for the holder of the lease to undertake the miningoperation or to continue such operation for the reasons beyond hiscontrol could make an order subject to such condition to the effectthat the lease shall not be lapsed;(7) The holder of the lease, within a period of six months fromthe date of its lapse, on either count i.e., failure to undertakethe mining operation or having commenced the mining operationdiscontinued the same for a period of one year could make anapplication by giving reasons therefor to the State Government topass an order to revive the same; (8) The State Government on being satisfied that such non-commencement or discontinuance was due to the reasons beyond thecontrol of the holder of the lease, revive the lease from suchprospective or retrospective date, but not earlier than the date oflapse of the lease; and (9) No lease could be revived under the second proviso for morethan twice during the entire period of the lease. 21.The term "lapse of lease" has not been defined either in Minesand Minerals (Development and Regulation) Act,1957 or in theTamilnadu Minor Mineral Concession Rules, 1959. In Wharton's Law Lexicon, 14th Edition, the word "Lapse" hasbeen defined as "error; failing in duty". In Shroud's Judicial Dictionary of Words and Phrases, VolumeII, 3rd Edition, the word "lapse" has been defined as "an aptexpression for the loss of any interest in land by reason of anomission to renew, or the non-performance of a condition such as thepayment of money (O.Keefe v. Malone, (1903) A.C. 365, citedFORFEITURE)". In Black's Law Dictionary, Eighth Edition, the word "lapse" hasbeen defined as "lapse, n. The termination of a right or privilegebecause of a failure to exercise it within some time limit orbecause a contingency has occurred or not occurred." In Corpus Juris Secundum Volume LII, the word "Lapse" has been https://hcservices.ecourts.gov.in/hcservices/ defined as "used as a noun it means a failure; the termination orfailure of a right or privilege through neglect to exercise itwithin some limit of time, or through some failure or contingency."It further states that "as used in a statute with reference to theoperation of crown lands under a license, an apt expression for theloss of any interest in land by reason of an omission to renew, orthe non-performance of a condition, such as the payment of money;It has been held synonymous with "fail" and failure."22. From the above definition, it is obvious that on thefailure of the holder of the mining lease, in not commencing thequarry operation, or having commenced, has discontinued thequarrying operation, the holder of mining lease loses his interestin the land for carrying out the mining operation alone. The holderof the mining lease loses only his right and interest in the landfor carrying on the quarrying activity without getting an order farnon-lapsing or revival of the right to quarry. It is evident fromthe two provisos to Section 4A(4) which provide for and save theinterest of the leaseholder to get an order for revival of thelease. 23. The said position will be more clear if clauses (1) to (3)of Section 4-A are read in conjunction with clause (4), which isthe fundamental rule of interpretation. Clause (1) of Section 4-A ofMines and Minerals (Development and Regulation) Act, 1957 speaksabout the power of the Central Government for making prematuretermination of prospecting licence or mining lease in respect of anymineral other than minor mineral. Clause (2) provides for prematuretermination of mining lease by the State Government in respect ofminor minerals. Clause (3) provides for giving a reasonableopportunity to the holder of mining lease before making an order ofpremature termination. Clause (4) provides for lapse. There is amarked distinction in the language employed in clause (2) and Clause(4). Clause (2) speaks about termination of lease, whereas clause(4) speaks about lapsing of lease in certain circumstances. If itis the intention of the Legislature on the happening of the eventstated in sub-clause (4) of section 4A the relationship of thelessor and lessee is snapped, they would have specifically statedthat the lease is terminated. 24. Rule 36-E of the Rules provides for refund of lease amountin case where the State Government have made premature terminationof a quarrying lease or permit under the provisions of sub-section(2) of Section 4-A of the Act. Sub-clause 11 of Clause 6 in thelease deed provides for termination of lease in respect of whole orany part of the premises by six months notice in writing on eitherside. It further provided that on such termination, the lessee shallhave no right of compensation of any kind. 25. From the above statutory provisions, it could be safelyconcluded that under Section 4-A(4), if the quarry is not operatedfor a period of one year from the date of lease deed, the right ofthe petitioner to quarry the mineral is only lapsed and the leasegranted in favour of the petitioner is not terminated. Thus, the https://hcservices.ecourts.gov.in/hcservices/ contention contra raised by the petitioner is rejected.26. Now, let me consider the meaning and significance of theexpression "dead rent". Whartons Law Lexicon, 14th Edn., at page 300defines dead rent as "a rent payable on a mining lease in additionto a royalty, so called because it is payable whether the mine isbeing worked or not." The definition of dead rent given in Blacks Law Dictionary, 5thEdition at page 359, is "In English law, a rent payable on a mininglease in addition to a royalty, so called because it is payablealthough the mine may not be worked". Jowitts Dictionary of English Law, 2nd Edition, at page 555,defined dead rent as "a term sometimes used in mining leases incontradistinction to a royalty, to denote a fixed rent to be paidwhether the mine is productive or not." The same dictionary statesunder the heading Rent, at page 1544 as follows:"When a mine, quarry, brickworks, or similar propertyis leased, the lessor usually reserves not only a fixedyearly rent but also a royalty or galeage rent, consistingof royalties (q.v.) varying with the quantity of minerals,bricks, etc., produced during each year. In this case thefixed rent is called a dead rent." The topics of dead rent and royalties are dealt with inHalsburys Laws of England Fourth Edition in volume 31 under the sub-heading Consideration, the main heading being Property demised;Consideration. Para 335 at page 241 deals with "dead rent" and para336 with royalties. The relevant passages are as follows:"335. Dead rent. It is usual in mining leases toreserve both a fixed annual rent (otherwise known as adead rent, minimum rent or certain rent) and royaltiesvarying with the amount of minerals worked. The object ofthe fixed rent is to ensure that the lessee will work themine; but it is sometimes ineffective for that purpose.Another function of the fixed rent is to ensure adefinite minimum income to the lessor in respect of thedemise.If a fixed rent is reserved, it is payable until theexpiration of the term even though the mine is notworked, or is exhausted during the currency of the term,or is not worth working, or is difficult or unprofitableto work owing to faults or accidents, or even if thedemised seam proves to be non-existent.Where a fixed rent is reserved to commence from thetime when a certain quantity of minerals has been got andthe lessee covenants to get that quantity without delay,the commencement of the payment will not be delayedshould the lessee fraudulently fail to complete thegetting of the quantity."27. In a mining lease the consideration usually moving from thelessee to the lessor is the rent for the area leased (often called https://hcservices.ecourts.gov.in/hcservices/ surface rent), dead rent and royalty/seigniorage fee. Since themining lease confers upon the lessee the right not merely to enjoythe property as under an ordinary lease but also to extract mineralsfrom the land and to appropriate them for his own use or benefit, inaddition to the usual rent for the area demised, the lessee isrequired to pay a certain amount in respect of the mineralsextracted proportionate to the quantity so extracted. Such paymentis called royalty or seigniorage fee. It may, however, be that themine is not worked properly so as not to yield enough return to thelessor in the shape of seigniorage fee. In order to ensure for thelessor a regular income, whether the mine is worked or not, a fixedamount is provided to be paid to him by the lessee. This is calleddead rent. Dead rent is calculated on the basis of the area leasedwhile seigniorage fee is calculated on the quantity of mineralsextracted or removed. Thus, while dead rent is a fixed return to thelessor, the seigniorage fee is a return which varies with thequantity of minerals extracted or removed. Since dead rent andseigniorage fee are both a return to the lessor in respect of thearea leased, looked at from one point of view dead rent can bedescribed as the minimum guaranteed amount of royalty payable to thelessor but calculated on the basis of the area leased and not on thequantity of minerals extracted or removed. 28. Clause 6 of Rule 8-A of Tamil Nadu Minor Mineral ConcessionRules, 1959, which is relevant for this case provides for paymentrents which reads as follows:"(6) The lessee besides the lease amount shall payseigniorage fee or dead rent, which is more in respect ofthe actual quantity of the mineral removed or consumed atthe rate prescribed from time to time in Appendix II tothe Rules. Besides seigniorage fee or dead rent whichever is more, the lessee shall pay such other levies asmay be prescribed by the Government from time to time."29. Clause 5 of the statutory lease deed (Appendix I) providesfor payment of various amounts such as land assessment, the cessand seigniorage on the minerals mined or dead rent, which ever ismore and such other levies, which may be imposed by the Governmentfrom time to time. The other sub-clauses under clause 5 provide forpayment of local cess, local cess surcharge and seigniorage fee percubic metre. Under Clause 6, the lessee covenants to pay theassessment, seigniorage fee or dead rent on the days and in themanner provided in clause 5. Under Clause 7, the lessee agreed topay the land assessment, seigniorage fee or dead rent, as reservedby the Government. 30. Agreeing all the aforesaid conditions, the lease deed hasbeen executed by the petitioner. So, as per the conditions abovereferred to, the petitioner has to pay the seigniorage fee, and areaassessment. In all these cases, as the petitioner has not removedany minerals by way of quarrying, there is no question of payment of https://hcservices.ecourts.gov.in/hcservices/ seigniorage fee. Then, necessary corollary is that the petitionerhas to pay the fixed rent i.e., dead rent till the expiry of thelease period or till the lease is duly terminated in accordance withthe statutory provisions.28. In view of the fore-going reasons, the writ petitions arepartly allowed to the extent of demand of local cess and local cesssurcharge and interest over it for period subsequent to 4.4.1991. Inrespect of payment of area assessment and dead rent, the writpetitions are dismissed. However, there is no order as to costs. Sd/-Asst. Registrar./true copy/Sub Asst. Registrar.rg/uskTo1. The District CollectorThiruvannamalai DistrictThiruvannamalai.2. The Assistant Director of Geology & MiningO/o. The District Collector of SalemSalem.3. The District Collector,Vellore District, Vellore.9 ccs to the government Pleader, Sr. 1135 to 1137, 850, 851, 854,858 to 8609 ccs to Mr.K. Ramakrishna Reddy, Sr. 539, 541 to 543W.P.Nos.21633 to 21638, 23469,24831 of 2001 and 640 of 2002RA (CO)kk 19/1