Deepchand Kishanlal vs State of Karnataka

Jawad Rahim, J.—Petitioner has called in question the demand of dead rent by the respondents through the demand notice dated 17.03.2004/23.03.2004 in No. GA.BU.HI:BECB;GA.GU 2333: 2003-04/19915, vide Annexure ''L'' issued by the second respondent.

Heard the learned Senior Counsel Sri. D.L.N. Rao, for petitioner and Government Advocate for respondents.

The contextual facts are that, the Petitioner had obtained mining lease in respect of iron ore, over an area of 650 acres in Yerakatte and other villages in Chikkanayakanahalli Taluk, Tumkur District, on 2 9.05.1956 for a period 20 years vide M.L. No. 299, which is at Annexure- ''A''. The said lease expired on 23.05. 1976.

Before expiry of the lease referred to above, the petitioner applied for renewal of the mining lease, 12 months prior to its expiry, vide its application dated 23.05.1975. The said application was not disposed of within the time stipulated under the provisions of Mining Consumption Rules 1960 (herein after referred to as M.C. Rules). As per the provision of M.C. Rules then existing, the application suffered deemed rejection. Consequently, the petitioner filed a revision application to the Central Government against deemed rejection and Central Government by its Order dated 30.03.1977, allowed the said revision application and set aside the deemed rejection and directed the State Government to pass Orders on the renewal application within hundred days. That Order was not complied by the State Government. Thus, the petitioner filed a Writ Petition before this Court in W.P. No. 12228/1978. It was allowed by Order dated 12.12.1986 directing the State Government to dispose of the renewal application within a period of four months.

The Order passed in the W.P. No. 12228/1978 was also not complied with by the State Government. Hence, the Central Government ultimately passed an Order on 11.12.1992 to grant renewal of raining lease in favour of the petitioner. In the circumstances, as the mining lease M.L. No. 299 had expired on 28.05.197 6, the petitioner was not permitted to carry on mining operation during pendency of the renewal application.

Ultimately, the State Government sanctioned renewal of mining lease in favour of petitioner by notification dated 17.12.1992, sanctioning the renewal of the mining lease for a period of twenty years with effect from 29.05.1976(the date of expiry of the origina1 lease M. L. No. 299). The renewa1 of lease was sanctioned with retrospective effect from 29.05.1976, by notification dated 17.12.1992, which is at Annexure-''B''.

Pursuant to notification, Annexure- B, mining lease deed No. M.L. 2194 was executed in favour of the petitioner by the State Government on 10.04.1995, granting lease for twenty years with retrospective effect, which is at Annexure-C.

Referring to the above facts, the petitioner contends that even though the mining lease was executed for a period of twenty years, in effect the petitioner had the benefit of lease only for a period of one year as the lease was renewed with retrospective effect for 19 years. During the said period of 19 years, the petitioner could not carry out the mining operation and had, therefore, no benefit of the lease.

However, during the available period of lease, the petitioner approached the Senior Geologist, (now designated as Director) for issuance of mineral dispatch permit for transporting the iron ore. Without granting the said permit, he issued a demand notice dated 21.06.1995, calling upon the petitioner to pay Rs. 10,00,589/- towards the dead rent charges for the period from 01.01.197 6 upto 31.03.1995, vide Annexure -D.

The petitioner aggrieved by the said demand, approached the second respondent to waive the said dead rent charges. In the meanwhile, as the period of renewal of lease also expired, the petitioner applied for second renewal of mining lease, which is still pending with the Government.

During this period, the second respondent issued a Memo on 18.11.1998 to the Senior Geologist informing that as against the demand of Rs. 10,00,589/- raised by the Senior Geologist, he had written a letter dated 04.07.1998 to the State Government recommending waiver of the said dead rent. That letter is at Annexure-E. Relying on Annexure-E, it is urged that the second respondent had accepted petitioner''s contention that the demand for dead rent in a sum of Rs. 10,00,589/- levied, was improper, but the respondents had failed to waive the dead rent.

It is also averred that the second respondent by his letter dated 16.7.2003 (Annexure-F) informed the State Government that by judgment dated 20.7.1990, in W.P. No. 384 62/1982, this Court had declared that demand of such dead rent in case of mining lease renewed with retrospective effect was improper. By the said letter at Annexure-F, the second respondent had sought permission of the State Government to waive the dead rent.

In view of the said development, the petitioner submitted fresh representation to the second respondent on 23.09.2003 for waiver of dead rent relying on the Judgment of this Court in the case of Jyothi Brothers v. Director of Mines and Geology and Ors. in W.P. No. 38462/1982, and the Government Order No. CI MMM 81 dated 1982 in the matter of M.L. No. 1265, and Government Order No. CI 307 MM80, in M.L. No. 1266, wherein identical question had arisen and the Government had waived the dead rent. Copy of representation is at Annexure-G.

The petitioner has also relied on the No Due Certificate issued by the second respondent on 14.12.2000 to the effect that, in respect of M.L. No. 2194 petitioner has paid all amounts due to the Government and there was no balance.

Learned Senior Counsel Sri.D.L.N. Rao for the petitioner referring to the contextual facts contends that, under the provisions of the Mines and Minerals (Development and Regulation) Act, 1957, and the Mineral Concession Rules 1960, a lessee of mining lease is liable to pay either the dead rent or royalty whichever is higher to the State Government. The dead rent is charged at a particular rate per acre per annum, which ensures a minimum guarantee to the State Government in respect of the area granted by way of mining lease. The royalty is charged at a particular rate calculated per ton depending upon the mineral transported. By this, the royalty amount collected by the Government depends upon the mineral transported by the lessee. At the end of every year audit is conducted to verify the quantity of the mineral transported to fix the royalty to be collected from the lessee in respect of the mining lease and then the dead rent which is leviable in respect of the are of the mining lease is determined. If the royalty payable by lessee exceeds the amount payable as the dead rent, then, the dead rent cannot be collected from the lessee. The dead rent is payable only in respect of an area held under the mining lease and not otherwise. Therefore, he submits that unless the lessee had the advantage of mining lease, neither the dead rent nor the royalty is payable. Therefore, he seeks to quash the amount demanded as "dead rent" claimed by the respondents under Annexure-L.

Learned Government Pleader appearing for the respondents supports the amount demanded as "dead rent", vide Annexure-L.

I have heard both sides and examined the records. It is not in dispute that petitioner had obtained lease bearing M.L. No. 299 on 29.05.1956 which by afflux of time had to expire on 28.05.1976. As required under the provisions of MMRD act and MC Rules, 1960, petitioner had applied for renewal of mining lease one year prior to its expiry, within the time stipulated under the MC Rules, 1960. But the State Government had failed to consider such revision application compelling the petitioner to file renewal application before the Central Government against the deemed rejection. Despite the revision application was allowed on 30.03.1997, directing the State Government to consider the renewal application within a fixed period of hundred days, the State Government unjustifiably failed to comply with the said Order. Per force, the petitioner approached this Court in W.P. 12228/1978 seeking direction against the State Government. Even though this Court allowed the said Petition on 12.12.1986 directing the State Government to consider the said application within four months, but the State Government, for the reasons best known to it, took no action. It is not in dispute that the petitioner had once again approached the Central Government with a revision application and the Central Government in exercise of its revisional power passed an order on 11.1.2.1992, granting renewal of lease to the petitioner.

This shows that from the date on which the earlier lease expired on 28.05.1976 till mining lease was renewed on 11.12.1992, pursuant to the order passed by the Central Government, the petitioner had no leasehold right in respect of the area of land in question. The said mining area was free from lease and in possession and control of the State Government. It is only on 17.12.1992, that the State Government has sanctioned the renewal of lease for a period of 20 years with retrospective effect, i.e., from 28.05.1976. Even after the issuance of sanction of renewal of license, the lease deed has been executed only on 10.04.1995 vide Annexure-C. Due to the inaction on the part of the State Government, the petitioner was undoubtedly deprived of ruining operation for the entire period of twenty years renewed under Annexure-B and C. It is only from 10.04.1995, the date on which the lease deed was executed, in favour of the petitioner, the petitioner could embark upon mining operation for the available period of lease, which expired on 09.04.1996. Thus, he could mine only for one year and not the entire period of 20 years. I am, therefore, satisfied that for the period from 2 9.05.1976 till 10.04.1995, for over 19 years, the petitioner was neither allowed nor was he entitled to carry out any mining operation in respect of the mining area covered under the renewed license.

The question that arises for consideration is: whether the petitioner could be saddled with the liability of paying dead rent for a period of 19 years, during which there was no subsistence of lease nor the petitioner was in physical possession of the ruining area covered under the lease. Though MMRD Act, 1957 and M.C. Rules, 1960 make the lessee liable to pay dead rent or royalty, levying of such dead rent or royalty is dependent upon the actual lease granted to the lessee. It is noticed that the renewal of lease granted to the petitioner vide notification dated 17.12.1992 and the deed of lease executed on 10.04.1995 renewing the lease for twenty years is with retrospective effect, i.e., from the date of expiry of original lease. Such renewal of lease retrospectively is under the then existing provisions so as to keep continuity of the lease. It is just a legal fiction. But that does not justify levying of either dead rent or royalty. It is not in dispute that the royalty is charged only on the basis of quantity of the mineral removed and transported. That means, the amount of royalty payable is to be determined by the Government on the basis of quantity of the mineral mined from the site by the lessee, annually. That is to say, the lessee becomes liable to pay royalty in respect of the financial benefit the lessee derives from the quantity of mineral mined by him during the year. But dead rent is leviable only on the basis of the leased mining area and in physical possession of the lessee, available for mining operation during the relevant period. Thus, for levying dead rent, the* lessee should be shown to be in possession of the mining area under the mining lease and its availability for mining. It therefore, depends upon the valid grant of mining lease. Only then the lessee will be liable to pay dead rent.

This Court in the case of Jyothi Brothers v. Director of Mines and Geology and Ors. W.P. No. 38462/1982, had considered this question and held on similar facts and circumstances of this case, that though renewal of license retrospectively is granted from the dated on which the earlier lease expired, it is only preservations of continuity in the lease and to that extent the respondents may be right in stating that the lessee is liable to pay the rent but, it is only a technical application of the rule. This Court held that, when the lessee could not legally carry on the mining operation and that too when the Government was not prevented from alienating the land or earning any rent from this area, the Government cannot levy dead rent for renewing the license retrospectively.

I am satisfied that the decision of this Court cited supra applies to the facts of this case, and for the reasons discussed above, the impugned demand raised by the respondents directing the petitioner to pay dead rent quantifying under Annexure-L is not sustainable. It is liable to the quashed.

In the result, the demand notice dated 17.03.2004/23.03.2004 bearing No. GaBhuEi/DCB/GaGu/2333-04/19915, issued by the second respondent under Annexure-L, is quashed. Writ Petition is allowed.

Rule is made absolute.