KING PAL SINGHversusSTATE OF U.P. AND ORS.

                          KING PAL SINGH                                    A
                                   v.
                      STATE OF U.P. AND ORS.

                         NOVEMBER 8, 1996

            [M.M. PUNCHHI AND K. VENKATASWAMI, JJ.]                         B

        Tenancy and land laws :

      U.P. Zamindari Abolition and land Reforms Act, 1950: Sections 4,
6, 7 and 107.
                                                                            c
      Intermediaries-Rights of-To work mines in their estates-Held:
extinguished and vested in the State Government.

      Section 107(2) proviso-Mining Lease-Terms and conditions a/-
Power to regulate-Conferred on State-Under S. 15 ofMMRD Act-Held:           D
extended to extinguish or prohibit rights of intermediaries- 'Regulation'
included 'Prohibition '-Mines and Minerals (Regulation and Development)
Act, 1957, S.15.

     Section 107(2)-Mining Lease-Terms and conditions of-Laid down
by Mines Tribunal for intermediaries-Held: effective from date of vesting E
and not from date on which parties agreed to execute lease.

     Mines and Minerals-Dead Rent-Levy of-No evidence produced
regarding quality or quantity of minerals removed during period in
question-Held: In the circumstances levy of dead rent at maximum rate       F
was proper-Dead rent not payable with regard to quantity of mineral won
over.

        Words and Phrases :

      "For the time being in force"-Meaning of-In the context of S.107
                                                                            G
(2) proviso of the U.P. Zamindari Abolition and Land Reforms Act,
1951.

     "Regulation"-Meaning of-Jn the context of S.15 of the Mines and
Minerals (Regulation and Development) Act, 1957.                     H
                                  619
      620                   SUPREME COURT REPORTS [1996] SUPP. 8 S.C.R.


A           The appellants land stood transferred to and vested in the State
      free from all encumbrances vide Sections 4 and 6 of the U.P. Zamindari
      Abolition and Land Reforms Act, 1950. in the light of the aforesaid
      provisions the Collector issued notices to the appellants stating that
      they sltould stop mining as they had lost all rights in the mines and
      minerals. The High Court, however, directed the respondents to
''B   consider the applications of the appellants for grant of lease under
      Sections 106-108 of the Act.

            Pursuant to the direction of the High Court, the respondents
      sent drafts of mining lease containing details of terms and conditions
      in accordance with U.P. Minor Minerals (Concession) Rules, 1967 and
 C    the Rules framed under the M·ines and Minerals (Regulation and
      Development) Act, 1957. The appellants raised objections regarding ·
      certain terms and conditions contained in the proposed leases. The
      differences were referred for adjudication to the Mines Tribunal
      appointed under Section l1 Oof the Act. The Tribunal negative all the
      claims of the appellants: The High Court dismissed the writ petition
 D    filed by the appellants. Being aggrieved the appellants preferred the
      present appeal.

         On behalf of the appellants it was contended that under Section
   7 of the Act the rights of the appellants to work the mines would
 E continue and such rights did not cease and vest in the State though
   the titles to the land had gone to the State; that the rights to work the
   mines were governed by Chapter VI of the Act only; that the phrase
   "for the time being in force" occurring in the proviso to Section 107(1)
   of the Act showed that inasmuch as there was no central enactment
   laying down any provision regulating the operation of mines in respect
 F of minor minerals on the date when the Act came into force, the
   subsequent enactments either Central or State could not restrict the
   rights of the appellants by fixing the period in the terms and conditions
   of the proposed leases; that the Rules were only prospective and could
   not bind the appellants; that the 'Regulation' contemplated under
 G Section 15 of the Central Act could not amount to 'prohibition' or
   extinguishment of the rights of the appellants; that the terms and
   conditions mentioned in the proposed mining lease could not be from
   the date of vesting and it must be from the date on which the parties
   agreed to execute the lease; and that the payment of dead rent must
    relate to the probable value of the minerals extracted and not with
 H reference to area.
                 KING PAL SINGH v. STATEOFU.P.                    621


      On behalfofthe respondents it was contended that in the absence    A
of records regarding the quality or quantity of the minerals extracted
the authorities had to levy the dead rent at the maximum rate with
reference to area.

      Dismissing the appeal, this Court
                                                                         B
      HELD: I.I. In view of the consequences of vesting of the estate
pursuant to the Notification under Section 4 of the U.P. Zamindari
Abolition and Land reforms Act, 1957 and the clear and unambiguous
provisions of Sections 6 and 107 of the Act, there is no doubt about
the vesting of the mines and minerals with the State Government.
Therefore, the rights of intermediaries to work the mines in their       C
estates were extinguished and vested in the State. (627-8,F)

      Bagwan Das v. State of UP. and Ors., AIR (1976) SC 1393, relied
on.

      1.2. The contention that 'Regulation' cannot mean 'Prohibition'    D
is not acceptable. The present case is not an extreme case of
'Prohibition' but one of 'Regulation' and, therefore, the terms and
conditions of the mining lease do not exceed the area of'Regulation'
contemplated under Section 15 of the Mines and Minerals (Regulation
and Development) Act, 1957. The power to regulate conferred on the       E
State under Section 15 of the Central Act extended to extinguish or
prohibit the rights of intermediaries. (627-F, 629-A, 626-C-D)

      State of Tamil Nadu v. Hind Stone, (1981) 2 SCC 205, relied on.

      2.1. The terms and conditions which were required to be F
determined could not be only for the future. Necessarily they had to
be for the whole period for which the lease was to be granted. As the
legislature has conferred a right on the intermediaries, who .'Were
operating the mines on date of vesting it had further created the
Mines Tribunal for settling the terms. Therefore, it is logical to hold G
that the terms to be laid down by the Tribunal would be in respect of
the past as well as the future. Nobody could imagine that the Tribunal
would be created the day on which the rights were abolished and that
it would determine the right without loss of any time. The phrase
'for the time being in force' should be given a meaning that fulfils
the object of the provision, the purpose being that at the time of H
    622                     SUPREME COURT REPORTS [1996] SUPP. 8 S.C.R.


A settling the terms the Mines Tribunal would take into account the
    provisions of the Central Act. (629-BDJ

          2.2. The appellants have not produced the records regarding
    quality or quantity of the minerals removed by them during the period
    in question. Necessarily, therefore, the authorities have to levy the
B   dead rent at the maximum rate. Dead rent is not payable with regard
    to the quantity of minerals won over. (629-E,HJ

          D.K. Trivedi and Sons v. State of Gujarat, [1986) Supp. SCC 20,
    relied on.

C         CIVIL APPELLATE JURISDICTION : Civil Appeal No. 3224 of
    I 983 Etc.

         From the Judgment and Order dated 10.8.79 of the Allahabad High
    Court in C.M.W. No. 2261 of 1978.

D        Salish Chandra, B.D. Aggarwala, Pramod Swarup, H.K. Puri, Raj
    Kr. Mehta, T.N. Singh, R.B. Mishra and Ashok K. Srivastava for the
    appearing parties.

          The Judgment of the Court was delivered by
E
          K. VEN KATASWAMI, J. In all these appeals a common question
    of law arises for our consideration. A common argument was addressed
    by counsel concerned and that is why they are disposed of by this common
    judgment.

F        The U.P. Zamindari Abolition and Land Reforms Act, I951
  (hereinafter called 'the Act') came into force on and from July 1, 1952.
  On the publication of a Notification under Section 4 of the Act all the
  estates stood transferred to and vested in the State free from all
  encumbrances. Section 6 of the Act speaks of consequences of such vesting
G in the State. It says that on the publication of Notification under Section 4
  all rights, title and interest of all the intermediaries in every estate in such
  area including land and in all sub-soil in such estate including rights, if
  any, any mines and minerals whether being worked or not shall cease and
  be vested in the State of Uttar Pradesh free from all encumbrances. In the
  light of the above provision, it appears the Collector, Agra issued notices
H to the appellants stating that they should stop mining as they have lost all
     KING PAL SINGH v. STATEOFU.P. [K. VENKATASWAMl,J.] 623


rights in the mines and minerals. The Collector, further took steps to auction   A
the right to win the minor minerals. At this stage, the appellants challenged
the actions of the Collector by moving the High Couti.

      The High Court by an order dated March 18, 1955 held that the
appellants were entitled to take advantage of the provisions of Chapter VI
of the Act and consequently a direction was given to the State Government        B
and the Collector, Agra, for considering the applications of the appellants
for grant of lease under Sections I 06- l 08 of the Act.

       Pursuant to the said judgment of the High Court, the Collector, Agra,
sent letters dated 8.1.1964 offering the terms and conditions of the proposed
leases to the appellants. Along with those letters drafts of mining lease        C
containing the details of terms and conditions were also enclosed. Inter
a/ia, the lease was offered for a period of 15 years and the terms and
conditions proposed were in the light ofU.P. Minor Minerals (Concession)
Rules, 1963 (hereinafter called "the Rules") as well as the rules framed
under the Mines and Minerals (Regulation and Development) Act, 1957
(hereinafter called "the Central Act". The appellants raised objections          D
regarding certain terms and conditions contained in the proposed leases.
Initially the aggrieved parties moved the High Court by filing writ petitions
and the High Court while dismissing the same on 9.2.1965 directed the
parties to come to settlement regarding terms and conditions on which the
leases have to be given to the appellants and in case they could not settle      E
the terms, the differences can be referred to Mines Tribunal to be appointed
under Section l l 0 of the Act. As the parties could not come to a settlement,
the Collector on 12.10.1966 filed on application under Section 107(2) of
the Act for settlement of the terms of the leases. Before the Mines Tribunal,
the following were placed as area of controversy:-
                                                                                 F
      "(A)    Period of lease

      Proposal of State                    Objection of Opposite Party.
      Govern1nent

      The lease shall be for               The lease should be perpetual and
                                                                                 G
      a period of fifteen years            permanent.
      with effect from I. 7 .1952.

      (B)     Payment of Roya lily or
              Dead Rent.                                                         H
     624                      SUPREME COURT REPORTS [1996] SUPP. 8 S.C.R.


.A         The rate of royality or dead        The question of making
           rent shall be charged in            payment of royality or dead
           accordance with the maximum         rent for the past years does
           rate prescribed under First         not arise at all. The rate of
           Schedule (Rule 22) of the           dead rent indicated in the
           U.P. Minor Mineral (Conce-          draft lease deed is excessive
B          ssion) Rules 1963, with             and there is no guiding prin-
           effect from 1.7.1952.               ciple to determine the same.

           (C)     Commencement and
                   Execution of the lease

           The lease shall be deemed to        The terms and proposed lease
c          have been executed with effect      deed should be prospective
           from July l, 1952.                  and not retrospective.

           The Mines Tribunal, which was presided over by a District Judge
     and an expert Member along with him, after considering elaborately the
D    arguments and the materials placed before it negatived all the claims of
     the appellants holding that the leases could not be perpetual and permanent,     <

     that the appellants are bound to pay royalty/dead rent as the case may be
     and that the leases will necessarily be from the date of vesting of the estate
     in the State. However, the Mines Tribunal fixed the period of leases from
     1.7.52 to 23.11.87 being 10 years from the date of its order.
E
           Aggrieved by the order of the Mines Tribunal, the appellants moved
     the High Court reiterating the same arguments once over before the High
     Court. The High Court after considering the arguments threadbare
     confirmed the views expressed by the Mines Tribunal and consequently
     dismissed the writ petitions. Hence the present appeals by special leave.
F
           Mr. Salish Chandra, learned Sr. Counsel addressed three main
     arguments and the other learned counsel adopted the same on behalf of the
     appellants. It was his contention that under Section 7 of the Act, the rights
     of intermediaries, like the appellants who were zamindars to work the
 G   mines would continue and such rights do not cease and vest in the State. In
     other words, they continue to remain vested in the intermediaries as before,
     though, the title to the lands has gone to the State. In support of this
     contention, he invited our attention to the fact that no compensation was
     provided under the provisions of the Act in respect of their right in the
     mines. The same was because, according to him, their right to work mines
 H   did not vest in the State and it always remained with the appellants
     KING PAL SINGHv. STATEOFU.P. [K. VENKATASWAMl,J.] 625


(intermediaries). According to the learned Sr. Counsel, the right to operate       A
or work mines and to extract minerals remains unaffected by the
extinguishment of the rights under Chapter II and at the same time the
same is to be governed by Chapter VI only. He placed reliance on the
proviso to Section I 07(2) of the Act to contend differently. Section l 07
reads as follows:-
                                                                                   B
      "Section l 07 :-

      (I)     With effect from the date of vesting, all mines comprised in
              the estate or estates acquired under this Act as were in operation
              on the date immediately preceding the said date and were
              being worked directly by the intermediary shall, if so desired       C
              by him, be deemed to have been leased by the State
              Government to the intermediary, and such intermediary shall
              be entitled to retain possession of those mines as a lessee
              thereof.

      (2)      The term and conditions of the said lease by the State              D
               Government shall be such as may be agreed upon between
               the State Government and the intermediary or in default of
               agreement, as may be settled by a Mines Tribunal appointed
               under section 110:
                                                                                   E
               Provided that all such terms and conditions shall be in
            accordance with the provisions of any Central Act, for the time
            being in force regulating the grant of new mining leases."

        Elaborating his submission on the basis of the proviso to Section
107(2), it was submitted that the phrase 'for the time being in force' F
occurring in the proviso is refer?ble only for regulaJing the terms and
conditions of those leases under Section l 07( l) which on the date of vesting
are deemed to have been leased by the State Government. ln as much as
there was no Central enactment laying down any provision, regulating the
operation of the mines in respect of minor minerals on 1.7 .1952, the G
subsequent enactments either Central or State, will not come to the aid of
the respondents to restrict the rights by fixing the period in the terms and
conditions of the proposed leases. The Minor Mineral Concession Rules,
1963 are only prospective and the same cannot be applied to bind the
appellants with the fixed period and conditions in the proposed lease from
 I. 7.1952, the date of vesting. Therefore, the terms and conditions proposed H
    626                     SUPREME COURT REPORTS (1996] SUPP. 8 S.C.R.


A   by the Collector, Agra cannot be justified either under the Act or under the
    Rules. Period of lease can be fixed only in a case where the rights in the
    mines including the right to work the mines has been acquired and have to
    be regulated by the terms and conditions of the lease such as the cases
    where the mines had already been leased out. So far as the cases of the
    appellants are concerned, according to the learned Sr. Counsel, the right
B   to work the mines remains vested in them as intermediaries and that right
    has not been acquired under Chapter II of the Abolition Act and therefore
    no period can be fixed so far as they are concerned.

          Alternatively, it was argued that regulations contemplated under the
    Central Act, 1957 by Section 15 can only mean in the present context to
C   preserve the right to work the mines without let or hindrance. The power
    to regulate, Contemplated under Se~tion 15 of the Central Act given to the
    State Government cannot be extended to extinguish the rights of
    intermediaries under the guise of regulation. In support of this argument
    that regulation cannot amount to prohibition or extinguishment, he cited a
    number of authorities.
D
           The second major point argued was that assuming that the Collector
    was right in offering the lease to the appellants subject to the terms and
    conditions mentioned thereon, the same cannot be from the date of vesting
    and it must be from the date on which the parties agree to execute the
E   lease. Learned Sr. Counsel submitted that the order of the Mines Tribunal
    that the mining lease was from 1.7.1952 and for a period of 10 years from
    he dare of its order was misconceived and invalid in law.

          The last point argued was with reference to the payment of dead
    rent. According to the learned Sr. Counsel, the payment of dead rent must
F   relate to the probablye value of the minerals extracted per acre and the
    amount fixed with reference to area namely, Rs. 1,000/- per acre per annum
    was, therefore, not sustainable.

           Some of the counsel who adopted the argument of Mr. Satish Chandra
G   submitted that the power is vested under the Rules with the Government
    to relax wherever necessary and the Government must be directed to relax
    the conditions in favour of the appellants.

         Learned counsel appearing for the respondent-State reiterated the
    conclusions reached by the Mines Tribunal and confirmed by the High
H   Court in support of his argument.
     KING PALSINGHv. STATEOFlJ.P. [K. VENKATASWAMI,J.] c27


      We have considered the rival submissions and we are of the view            A
that the High Court was right and appellants have no case in all these
appeals.

      In view of the consequences of vesting of the estate pursuant to the
Notification under section 4 of the Act, we are not able to appreciate the
arguments of the learned Sr. Counsel for the appellants. The clear and           R
unambiguous provisions of 6 and 107 of the Act leave no doubt about the
vesting of mines and minerals with the State Government. We have already
given the substance of Section 6 aod the text of Section I 07.

     In this connection, we need only to refer to the judgment of this
Court rendered under the very same provisions with which we are                  C
concerned. In Bagwan Das v. State of U.P. and others, AIR (!976) SC
!393, this court observed as follows:-

              "The right of the former Zamindars to mines and minerals
              was extinguished by the Act of 195 I and became vested in          D
              the State Government. So long as 'the proprietory right to
              the laod was vested in the Zamindar, he was entitled to mines
              and minerals. With the abolition of Zamidari by the I 95 I
              Act that right has passed on not to the appellant but to the
              State Government. The appellant's writ petition filed to
              restrain the State Government from auctioning the right to         E
              undertake mining operations must, therefore, fail."

      We have, therefore, no hesitation to reject the contention ofthe learned
counsel for the appellants that notwithstanding the Act, the rights of
intermediaries in the mines remain vested with them.
                                                                                 F
     The contention that regulati.on cannot mean prohibition as a general
proposition is no longer open for argument in view of the decision of this
Court in State of Tamil Nadu v. Hind Stone, [1981] 2 SCC 205. This
Court while considering the scope of Rule 8C ofTamil Nadu Minor Mineral
(Concessions) Rule 1959 observed as follows:-                                    G

              "One of the arguments pressed before us was that Section 15
              of the Mines and Minerals [Regulation and Development]
              Act authorised the making of rules for regulating the grant
              of mining leases and not for prohibiting them as rule 8-C
              sought to do, aod, therefore, Rule 8-C was ultra vires Seciion     H
    628             SUPREME COURT REPORTS [1996] SUPP. 8 S.C.R.


A         15. We know cases on the subject right from Municipal
          Corporation of the City of Toronto v. Virgo and Attorney-
          General for Ontario v. Attorney General for the Dominions
          up to State of UP. v. Hindustan Aluminum Corporation Ltd.,
          were brought to our attention. We do not think that
          ·regulation' has that rigidity of meaning as never to take in
B         'prohibition' Much depends on the context in which the
          expression is used in the statute and the object sought to be
          achieved by the ~ontemplated regulation. It was observed by
          Mathew, J. in G.K. Krishnan v. State of Tamil Nadu: The
          word 'regulation' has no fixed connotation. Its meaning
          differs according to the nature of the thing to which it is
c         applied." In modern statutes concerned as they are with
          economic and social activities, 'regulation' must, of necessity,
          receive so wide an interpretation that in certain situations, it
          must exclude competition to the public sector from the private
          sector. More so in welfare State. It was pointed out by the
          Privy Council in Common Wealth of Australia v. Bank af.
D         New South Wales-and we agree with what was stated therein-
          that the problem whether an enactment was regulatory or
          something more or whether a restriction was direct or only
          remote or only incid~ntal involved, not so much legal as
                                                                              -
          political, social or economic consideration and that it could
          not be laid down that in no circumstances could the exclusion
E         of competition so as to create a monopoly, either in a State
          or Commonwealth agency, be justified. Each case, it was
          said, must be judged on its own facts and in its own setting
          of time and circumstances and it might be that in regard to
          some economic activities and at some stage of social
          development, prohibition with a view to State monopoly was
F         the only practical and reasonable manner of regulation. The
          statute with which we are concerned, the Mines.and Minerals
          (Development and Regulation) Act, is aimed, as we have
          already said more than once, at the conservation and the
           prudent and discriminating exploitation of minerals. Surely,
           in the case of a scarce mineral, to permit exploitation by the
G
           State or its agency and to prohibit exploitation by private
           agencies is the most effective method of conservation and
           prudent exploitation. If you want to conserve for
           the future, you must prohibit in the present. We have
           no doubt that the prohibiting of leases in certain cases is part
H          of the regulation contemplated by Section 15 of the Act."
     1'1NGPALSINGHv. STATEOFU.P. [K. VENKATASWAMI,J.] 629


      Ours is not a extreme case of prohibition but one of regulation,            A
therefore, there is no force in the arguments that the terms and conditions
of the lease exceeds the area of regulation contemplated under Section 15
of the Central Act.

      So far as the second contention is concerned, it was equally without
substance. The terms and conditions which were required to be determined          B
could not be only for the future. Necessarily they had to be for the whole
period for which the lease was to be granted. As the legislature has conferred
a right on the intermediaries, who were operating the mines on the date of
vesting it had further created the Mines Tribunal for settling the terms.
Therefore, it is logical to hold that the terms to be laid down by the
Tribunal would be in respect of the past as well as the future. Nobody,           C
could imagine that the_ Tribunal would be created the day on which the
rights were abolished and that it would determine the right without loss of
any time. In this context in which these words find a place, it must be
construed that the phrase 'for the time being in force' should be given a
meaning that fulfils the object of the provision, the purpose being that at
the time of settling the terms the Mines Tribunal would take into account         D
the provisions of the Central Act. This was the view taken by the High
Court and rightly too. Therefore, we do not find any substance in the
argument of the learned Sr. Counsel on the second point.

      On the third point concerning the dead rent, it is seen that inspite of     E
opportunities given, the appellants have not taken steps to produce the
records regarding the quality or quantity of the minerals removed by them
during the period in question. Necessarily, therefore, the authorities have
to levy the dead rent at the maximum rate. This is what the Tribunal
observed:-
                                                                                  F
              "Regarding royalty or dead rent, since there is no record of
              the amount ofmineral taken out by the lessee, and the opposite
              parties have not given the required information through the
              interrogatories it would not be possible to calculate the royalty
              of the mineral extracted, therefore the Government intends          G
              to charge dead rent, because the dead rent, as per schedule 2
              of rule 22 is chargeable at prescribed rates on per acre basis
              irrespective of the quality or quantity of the mineral removed
              by the lessee."

      It is not correct to contend that dead rent is payable with regard to       H
    630                     SUPREMECOURTREPORTS [1996] SUPP. 8 S.C.R.


A the quantity of mineral won over. Dead rent has a different connotation.
    In D.K. Trivedi and Sons v. State of Gujarat, [1986] Supp. SCC 20 it was
    observed as follows:

                 "In a mining lease the consideration usually moving from
                 the lessee to the lessor is the rent for the area leased (often
B                called surfact rent), dead rent and royalty. Since the mining
                 lease confers upon the lessee the right not merely to enjoy
                 the property as under an ordinary lease but also to extract
                 minerals from the land and to appropriate them for his own
                 use or benefit, in addition to the usual rent for the area
                 demised, the lessee is required to pay a certain amount in
c                respect of the minerals extracted proportionate to the quantity
                 so extracted. Such payment is called "royalty". It may,
                 however, be that the mine is not worked properly so as not to
                 yield enough return to the lessor in the shape of royalty. In
                 order to ensure for the lessor a regular income, whether the
                 mine is worked or not, a fixed amount is provided to be paid
D                to him by the lessee. This is called "dead rent". "Dead rent"
                 is calculated on the basis of the area leased while royalty is
                 calculated on the quantity of minerals extracted or removed.
                 Thus; while dead rent is a fixed return to the lessor, royalty
                 is a return which varies with the quantity of minerals extracted
                 or removed. Since dead rent and royalty are both a return to
E
                 the lessor in respect of the area leased, looked at from the
                 point of view dead rent can be described as the minimum
                 guaranteed amount of royalty payable to the lessor but
                 calculated on the basis of the area leased and not on the
                 quantity of minerals extracted or removed. lnfact, clause (ix)
F                of Rule 3 of the Rajasthan Minor Mineral Concession Rules,
                  1977, defines "dead rent" as meaning "the minimum
                 guaranteed amount of royalty per year payable as per rules
                  or agreement under a mining lease." Stipulations providing
                  for the lessee's liability to pay surface rent, dead rent and
                  royalty to the lessor are the usual covenants to be found in a
G                 mining lease."

          Regarding the relaxation of rules, it is not for this Court to give any
    direction in the facts of these cases.

H         In the foregoing circumstances, we do not find any substance in all
     KING PALSINGHv. STATEOFU.P. [K. VEN~TASWAMl,J.] 631


these cases. The appeals are dismissed. However, there will be no order as   A
to costs.

v.s.s.                                                Appeals dismissed.