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Case Number

Writ Petn. No. 1851 of 1983

Advocates

For the Appellant: A. Panduranga Rao, Advocate.
For the Respondent: Govt. Pleader.

Judges

P.A Chowdhary, J.

Acts

R.9 (i), Andhra Pradesh Minor Mineral Concession Rules (hereinafter referred to as "the Rules")
Development) Act, 67 of 1957 (hereinafter referred to as `the Act).
provisions of Section 15 (1)
Rule 10 (1) of the Rules
Rule 10 of the Rules
Development) Act, 1957.

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Smart Summary

Structured Summary of the Opinion

Factual and Procedural Background

The petitioner is a labour contract society that was granted a quarry lease by the Assistant Director of Mines and Geology, Guntur, on 31-12-1980 for the period 2-1-1981 to 31-12-1981 in Reach No. 2 of the Krishna River, Survey No. 1/B1 of Tadepalli Village, for extraction of sand. Under the lease deed dated 2-1-1981 the petitioner agreed to pay a yearly dead rent of Rs. 500 per hectare and complied with the lease conditions while extracting sand during that lease year.

For the year 1982 the petitioner applied for renewal on 28-9-1981 but the authority did not dispose the renewal application by 31-12-1981, resulting in a deemed rejection. The petitioner filed W.P. No. 9859/81 (and W.M.P. No. 14112/81) and obtained interim directions on 31-12-1981 permitting continuation of quarry operations. Acting under those interim orders, the petitioner extracted sand during 1982 without executing a fresh lease. For 1983 the petitioner made a renewal application on 30-9-1982, and when that was not disposed, filed W.P. No. 9287/82; that writ was disposed on 25-1-1983 directing disposal within thirty days and allowing the interim arrangement to continue subject to payment of seigniorage fee, cess and other amounts payable under the Minor Mineral Concession Rules.

By letter dated 19-2-1983 the Assistant Director demanded Rs. 61,082.82 from the petitioner as payable towards dead rent and cess for the period 2-1-1982 to 1-1-1983. The petitioner challenged that demand by filing the present writ petition.

Legal Issues Presented

Whether dead rent is payable where the petitioner carried on quarrying under interim orders of the Court (and not under a fresh quarry lease or permit), i.e., whether the interim orders exempted the petitioner from the obligation to pay dead rent for the period 2-1-1982 to 1-1-1983.
Whether Rule 10(1) of the Andhra Pradesh Minor Mineral Concession Rules (the Rule imposing dead rent) is beyond the legislative or rule-making competence of the State Government under the Mines and Minerals (Regulation and Development) Act, 1957 (the Act), specifically in relation to minor minerals.

Arguments of the Parties

Petitioner-society's Arguments

The petitioner argued that dead rent is payable only when quarrying is carried on under R.9(i) of the Rules (i.e., under a quarry lease/permit), and because the petitioner quarried under interim orders rather than a lease, it was not liable to pay dead rent for the period in question.
The petitioner further contended that Rule 10(1), which stipulates dead rent on minor minerals removed from land at a specified rate, is beyond the rule-making power of the State Government under the MM (R&D) Act, 1957 — i.e., the State lacks competence to impose dead rent in relation to minor minerals because the Parliamentary Act governs the field.

The opinion does not contain a detailed account of any specific counter-arguments advanced on behalf of the respondents beyond the legal positions the Court adopts in its reasoning.

Table of Precedents Cited

Precedent	Rule or Principle Cited For	Application by the Court
Amar Singh v. State, AIR 1972 Punj & Har 356 (FB)	Referenced as an authority relied upon by the petitioner (implicitly for the proposition that interim orders might affect liabilities under leases).	The Court stated that it did not find assistance in this decision for the petitioner's argument that interim orders exempted payment of dead rent; the decision was not followed or held to support the petitioner.
M.V. Krishna Rao v. Dist. Collector, (1981) 2 Andh LT 351 : AIR 1982 Andh Pra 55	Decision of a Division Bench rejecting the contention (similar to the petitioner's) that Rule 10(1) was beyond state rule-making power.	The Court agreed with the Division Bench conclusion and treated that prior decision as supporting the validity of the State rule-making power to impose dead rent for minor minerals; the Court declined to depart from it.
M.V. Subbarao v. State of Andhra Pradesh, (1978) 2 Andh LT 328 : AIR 1978 Andh Pra 453	Single-Judge decision relied upon by petitioner to argue that the Union Act displaces State competence to levy dead rent.	The Court distinguished and disagreed with the reasoning in Subbarao, finding that Subbarao did not consider that Section 15(1) of the Act confers power to make rules connected with grant of quarry leases (which can include imposing dead rent).
State of Orissa v. M.A. Tulloch & Co., AIR 1964 SC 1284-85	Referred to by the petitioner (presumably as supporting arguments about displacement of State power).	The Court recorded that this case (and two other Supreme Court cases cited) did not have bearing on the precise question before it and did not apply them to invalidate Rule 10(1).
Baijanath v. State of Bihar, AIR 1970 SC 1436	Referred to by the petitioner.	The Court considered it not to have bearing on the present question and did not rely on it.
State of Assam v. O.P. Mehta, AIR 1973 SC 678	Referred to by the petitioner.	The Court found it not relevant to the issue of State power to make rules imposing dead rent for minor minerals.
Halsbury's Laws of England, 4th Ed., Vol.31, para 235 (legal treatise)	Definition and purpose of "dead rent" (fixed annual rent reserved in mining leases) and its character as a lessor's proprietary right.	The Court quoted Halsbury to support its view that dead rent is an incident of the lessor's proprietary right and remains payable as a fixed rent; this supported the conclusion that the State (as proprietor) can insist on collection of dead rent from its lessee.

Court's Reasoning and Analysis

The Court addressed the two principal contentions in sequence and applied textual, constitutional and statutory analysis:

On whether interim orders exempted the petitioner from dead rent:
- The Court observed that the petitioner extracted State-owned sand during the period in question pursuant to interim orders issued by this Court. However, the Court concluded that those interim orders must be read as having permitted quarrying subject to the same terms and conditions that the petitioner had voluntarily accepted under its earlier lease (dated 2-1-1981), including the obligation to pay dead rent at Rs. 500 per hectare.
- The Court reasoned that to hold otherwise would mean permitting the petitioner to enjoy State property without payment and would imply an intention by the Court to permit enjoyment free of charge — an interpretation the Court rejected.
- Consequently, the Court held that the interim direction implicitly imposed the same financial obligations as the executed lease for the earlier period, and therefore the petitioner remained liable to pay dead rent for 2-1-1982 to 1-1-1983.
- The Court expressly rejected reliance on Amar Singh as supportive of the petitioner's position.
On the competence of the State to make Rule 10(1) under the MM (R&D) Act, 1957:
- The Court began by addressing the constitutional allocation of legislative competence: minerals are state property under Item 23 of List II of the Seventh Schedule, subject to the extent Parliament has regulated mines and minerals under Item 54 of List I; Article 294 and Section 2 of the Act show Parliament's declared intent to regulate mines and minerals to an extent.
- The Court noted that displacement of state power occurs only to the extent Parliament has in fact legislated; therefore, whether State power to levy dead rent on minor minerals is ousted depends upon whether the Parliamentary Act provides for or takes away that power.
- The Court observed that the Act contains no general provision dealing with dead rent for minor minerals; Section 9-A (inserted in 1972) authorises collection of dead rent but applies to major minerals, not minor minerals relevant here.
- Accordingly, the Court held that the State's pre-existing proprietary right to collect dead rent as owner of the minerals remained intact unless the Act expressly removed it.
- The Court relied on a functional reading of Section 15(1) of the Act which confers upon the State Government power to make rules for regulating the grant of quarry leases and "for other purposes connected therewith." The Court concluded that the power to make rules regulating quarry leases necessarily carries the power to make rules imposing dead rent, since dead rent is intimately connected with the grant and terms of a lease.
- The Court quoted Halsbury to explain the nature and purpose of dead rent as a fixed rent and an incidence of the proprietary right of the lessor, reinforcing the conclusion that the State can insist upon such rent from its lessee.
- The Court rejected the argument that the omission of express mention of dead rent in Section 15 meant Parliament intended to withhold that power, and distinguished the earlier single-judge Subbarao decision on that basis.
- The Court therefore concluded that Rule 10(1) was within the State Government's rule-making competence under the Act and was not ultra vires.

Holding and Implications

Final Holding: The writ petition is dismissed. The demand of the Assistant Director of Mines and Geology dated 19-2-1983 for dead rent and cess for the period 2-1-1982 to 1-1-1983 is upheld by the Court.

Immediate Consequences for the Parties:

The petitioner remains liable to pay the dead rent (at the rate agreed earlier, Rs. 500 per hectare) and cess for the period specified; the demand stands.
The writ petition was dismissed with costs, and the Court awarded an advocate's fee of Rs. 150.

Broader Implications: The Court concluded that the State retains the power to prescribe dead rent for minor minerals through rule-making under Section 15(1) of the MM (R&D) Act, insofar as the Act does not expressly displace that state power for minor minerals. The opinion follows and expressly agrees with an earlier Division Bench decision on the point (M.V. Krishna Rao). The opinion does not state that it is creating a new precedent beyond addressing the present petition and does not pronounce any broader policy beyond its statutory and constitutional interpretation in this dispute.

This summary is confined strictly to the content and reasoning contained in the provided opinion and does not add or infer facts or legal conclusions beyond the text.

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Yanamadala Co-Operative Labour Contract Society Ltd. v. Assistant Director Of Mines & Geology, Guntur .

Judgement

The petitioner-society is a labour contract society. By an order dated 31-12-1980 it was granted by the Assistant Director of Mines and Geology, Guntur, a quarry lease over an extent of 101.172 hectares in Reach No. 2 of Krishna River in Survey No. 1/B1 of Tadepalli Village, Mangalagiri Taluk, Guntur District for a period of one year from 2-1-1981 to 31-12-1981. The purpose of the lease was to permit the society to extract sand in the above-mentioned area. The petitioner executed a lease deed dated 2-1-1981 agreeing to be bound by certain terms and conditions. One of the conditions of that lease deed was that the petitioner-society should pay an yearly dead rent of Rs. 500/- per hectare in respect of the demised piece of land. During the lease period, the petitioner had carried on the activity of extracting the sand and complied with all the conditions of the grant.

2. This writ petition relates to the next year of 1982 when the petitioner extracted sand without grant of lease.

3. On 28-9-1981 long before the expiry of the first lease, the petitioner-society applied for renewal of the lease for the year 1982. This application made by the petitioner well in time was not disposed of before 31-12-1981 as it should have been and was therefore deemed to have been rejected by the Assistant Director of Mines and Geology. There are departmental remedies available to the petitioner to meet such situations of deemed rejection. But the petitioner-society had filed W. P No. 9859/81 seeking the issuance of a writ of mandamus directing the Assistant Director, Mines and Geology to renew the lease for the period 1-1-1981 to 31-12-1982. Along with that writ petition, the petitioner-society also filed W. M. P. No. 14112/81. The writ petition was admitted on 31-12-1981 and this Court granted interim directions directing the Assistant Director of Mines and Geology to permit the petitioner to carry on the quarry operations including transporting of sand although thereby the petitioner got all that he wanted in the miscellaneous application itself.

The petitioner-society, without executing a fresh lease, had under the authority of the interim orders, extracted the sand and carried on the mining operations for the whole year of 1982. For the third year 1983, this performance was repeated. Once again, the petitioner-society made a similar application on 30-9-1982 for renewal of its lease for the year 1983. As the authority did not pass any orders on this application, petitioner-society hed filed another Writ Petition No. 9287/82. This writ petition was disposed of on 25-1-1983 by this Court directing the respondents to dispose of the renewal application of the petitioner-society dated 30-9-1982 in accordance with law. The learned Judge also directed the application made by the petitioner-society should be disposed of within thirty days from the date of receipt of the order of the Court. The learned Judge also observed:-

"It is represented that the petitioner was quarrying the sand by virtue of the interim directions of this Court. The same arrangement shall continue till the renewal application is disposed of subject to the condition that he pays the seigniorage fee, cess and all other amounts payable under the Minor Mineral Concession Rules."

4. The Assistant Director of Mines and Geology by his letter dated 19-2-1983 had demanded from the petitioner-society an amount of Rs. 61,082-82 as payable towards dead rent and cess for the period from 2-1-1982 to 1-1-1983. The present writ petition has been filed by the petitioner-society challenging the validity of the above demand made by the Assistant Director of Mines and Geology through his letter dated 19-2-1983.

5. The validity of the above demand is challenged in this writ petition on two grounds. Firstly it is argued that dead rent is payable if at all only when quarrying is carried on under R.9 (i), Andhra Pradesh Minor Mineral Concession Rules (hereinafter referred to as "the Rules") and as the petitioner-society has been extracting the sand under the interim orders of this Court and not under any quarry lease or permit granted to the petitioner, no dead rent is payable. Secondly, it is argued that R.10 (1) which stipulates that dead rent shall be charged on all the minor minerals removed from the land at the rate specified is beyond the rule-making power of the State Government under the Mines and Minerals (Regulation and Development) Act, 67 of 1957 (hereinafter referred to as `the Act).

6. The first point may first be disposed of, but not without first noting that it was the interim order may by this Court that emboldened the petitioner-society that extracted and used the sand belonging to the State to deny its liability to pay the dead rent. However, the argument of the petitioner that the demand made for the payment of dead rent for the period of January, 1982 to 1-1-1983 is invalid and without authority of law, because it did not carry on mining operations during that period under any quarrying lease granted by the Assistant Director of Mines and Geology cannot, in my opinion, be upheld.

During that period, the petitioner-society had extracted the sand belonging to the State. Immediately prior to that period, the petitioner-society had executed a quarry lease agreeing to pay Rs. 500/- per hectare as dead rent. The petitioner-society had filed W. P. No. 9859/81 on 3-12-1981 and obtained directions from this Court to permit the petitioner to carry on the quarrying operations. It was by reason of the orders passed by this Court, the petitioner-society was able to carry on the mining operations without executing any quarrying lease in favour of the State Government or without obtaining any grant from the State Government. In my opinion, the order passed by this Court permitting the petitioner-society to carry on the mining operations impliedly imposed the terms and conditions of the first lease which obliged the petitioner-society to pay all the amounts due and payable to the Government and as specified in the lease executed for the earlier period; other wise it would amount to saying that the petitioner-society can freely enjoy the State property and that this Court helped the petitioner in that process. Nobody could reasonably suggest that this Court could have intended to permit the petitioner-society to extract sand belonging to the Government without paying dead rent. The orders passed by this Court on 31-12-1981 must therefore be understood as permitting the petitioner-society to extract sand for the period beginning with January 1982 and ending with first of January 1983 subject to the same terms and conditions as were voluntarily agreed to by the petitioner-society for the earlier period. As the payment of dead rent at the rate of Rs. 500/- per hectare is expressly agreed to by the petitioner-society under its lease deed dated 2-1-1981, it must be held that obligation to pay dead rent at the same rate continued under the orders of this Court dated 31-12-1981 for the succeeding period also.

The order of this Court made on 31-12-1981 was intended only to permit the petitioner-society to extract sand but subject to the same terms and conditions. In that view, I do not find any assistance in the decision reported in Amar Singh v. State, AIR 1972 Punj and Har 356 (FB). I am, therefore, of the opinion that the first argument of the petitioner-society that it is not liable to pay the dead rent as there was no quarrying lease is unsound. It is accordingly rejected.

7. The second contention raised by the petitioner-society is that Rule 10 (1) of the Rules is beyond the competence of the rule making authority of the State Government. This argument which is advanced by the petitioner-society at great length was once before rejected by this Court in a case reported is M.V.Krishna Rao v. Dist. Collector, (1981) 2 Andh LT 351 : AIR 1982 Andh Pra 55. I am in agreement with the conclusion reached by the Division Bench in the above mentioned decision. But as the learned counsel for the petitioner-society strenuously argued that that judgment of the Division Bench requires reconsideration, I feel it proper to deal with the arguments of the learned counsel in detail. The argument of the learned counsel is that the power to make the rules levying dead rent can only be traced to the provisions of the above mentioned Act. The learned counsel argued that under the above said Act, the State Government has not been given any power to levy dead rent although it has bean given power to levy royalty.

Relying upon the judgment of a learned single Judge of this Court reported in M.V.Subbarao. v. State of Andhra Pradesh, (1978) 2 Andh LT 328 : (AIR 1978 Andh Pra 453) and almost adopting the entirety of the reasoning of that judgment, the learned counsel argued that the above Act is a complete code on the subject and that it has internal evidence to show that the Parliament never desired that the State Government should have the power to levy the dead rent on minor minerals. On a careful consideration of these submissions of the learned counsel. I find wholly unable to agree with his argument or with his conclusions. A perusal of the provisions of the Constitution and more particularly Item 23 of List II of the Seventh Schedule read with Article 294 of the Constitution would show that the minerals situated in the State belong to the State Government. It is for that reason that a lease is executed in the name of the Governor in favour of those to whom these minerals are granted for being quarried:

Now under Item 23, the State Legislature has been given power to make laws to regulate mines and minerals development. But this legislative power contained in Item 23 of List II of the Seventh Schedule is made subject to Item 54 of List I of the Seventh Schedule which gives to the Parliament the right to make law regulating mines and minerals development to the extent to which such regulation and development under the control of the Union is declared by Parliament by law to be expedient in the public interest. It is in exercise of this power to make the laws regulating mines and mineral development, the Parliament has enacted the above mentioned Mines and Minerals (Regulation and Development) Act, 1957. The point to be noted is that under the Constitution the State power to make laws or otherwise deal the mines and minerals, particularly its right to charge dead rent can only be taken away by law made by the Parliament on that topic. In other words it the principle of displacement of legislative power that applies.

The question, therefore, to what extent the State power to levy dead rent is displaced by the Parliamentary law. The answer is to be found in Section 2 of the Act. Section 2 of that Act says :

"It is hereby declared that it is expedient in the public interest that, the Union should take under its control the regulation of mines and the development of minerals to the extent hereinafter provided.

It follows from the above that unless the levying of dead rent is authorised or provided for by any of the provisions of the Act, the power of the State Legislature and correspondingly the power of the State Executive to levy dead rent cannot in any way be affected by the above-mentioned Act. It, therefore, becomes necessary to consider whether the Parliament has in any way through its Act provided for or otherwise dealt with the question of levying dead rent, It is admitted that there is no provision in the entire Act dealing with the levy of dead rent except Section 9-A. Section 9-A which has been inserted by the Parliament by its act 56 of 1972 no doubt authorises the State Government to collect dead rent. But Section 9-A has no application to our present case, because Section 9-A deals with the collection of dead rent with respect to major minerals and not with respect to minor minerals with which we are concerned. It should, therefore, normally follow that the State Governments right to levy dead rent on minor minerals is not in any way affected by the provisions of the above Act.

But it is argued by the learned counsel for the petitioner that under Section 15 (3) of the Act the Parliament has empowered the State Government to collect royalty in respect of minor minerals removed or consumed but withheld the power from the State Government in levying dead rent. This argument of the learned counsel appears to me to be fallacious. In my opinion, the right to collect dead rent is anterior to the Union Act of 1957 and belongs to the State Government in its position as the owner and proprietor of the mineral and the sub-soil. Dead rent is a fixed annual rent charged by the lessor from his lessee with respect to the demised land. In Halsburys Laws of England, Fourth Edition, Vol. 31, para 235 it is stated:- "It is usual in mining leases to reserve both a fixed annual rent (otherwise known as a "dead rent" "minimum rent" or "certain rent") and royalties varying with the amount of minerals worked. The object of the fixed rent is to ensure that the lessee will work the mine, but it is sometimes ineffective for that purpose. Another function of the fixed rent is to ensure a definition minimum income to the lessor in respect of the demise.

If a fixed rent is reserved it is payable until the expiration of the term even though the mine is not worked, or is exhausted during the currency of the term, or is not worth working, or is difficult or unprofitable to work owing to faults or accidents or even if the demised seam proves to be nonexistent."

This would clearly show that landlord has, as an incidence of his proprietary right, the right to collect dead rent or the fixed rent from his lessee in respect of the demise. For the enjoyment and exercise of this right, no ones prior approval is required although, even such a right could not be enjoyed when once the Parliament prohibits. As the State Government, in my opinion, is the owner of these minerals, it enjoys this right to collect the dead rent from the petitioner-society which is its lessee. As that right to collect dead rent is not in any way taken away by the provisions of the above Union Act, the demand made by the Assistant Director of Mines and Geology on the writ petitioner to pay the dead rent cannot be found fault with. Even otherwise, I find sufficient authority for the State Government order Section 15 (1) of the Act to demand and collect the dead rent, because under the above provisions of Section 15 (1) the State Government has been given power to make rules for regulating the grant of quarry leases, mining leases and for other purposes connected therewith. The power to make rules regulating grant of quarry leases carries with it the power to make rules imposing dead rent. In any case such a rule can justifiably called a rule on a purpose connected with the grant quarry lease.

The argument of the learned counsel for the petitioner which found acceptance of a learned single Judge in the above-mentioned case namely, M.V. Subbarao v. State of A. P. (AIR 1978 Andh Pra 453) (supra) is that the failure of Section 15 to speak of collection of dead rent would show that the Parliament did not intend to confer that power on the State Government. But this argument does not appeal to me. In Subbaraos case (supra) the fact that the levy and collection of dead rent is certainly connected with the granting of quarrying lease or a mining lease within the meaning of Section 15 (1) of the Act and that, therefore, the State Government has the power to make rules regarding the imposition of dead rent was not considered. The fact that under Section 13 the fixation and collection of dead rent, etc., or other charges in respect of the mining leases of major minerals are expressly mentioned would not, in my opinion, detract from the meaning which we should attribute to the words to be found in Section 15 (1) of the Act. This is particularly so when we remember that the Government is the proprietor of these minerals and the dead rent is a certain or a fixed rent in respect of the demise. Section 13 of the Act which deals with the major minerals has no application to the charging of dead rent with respect to the minor minerals. I am, therefore, of the opinion that the petitioners argument that the making of Rule 10 of the Rules is going beyond the rule-making authority of the State Government is not correct. The petitioner referred to the cases reported in State of Orissa v. M.A. Tulloch and Co., AIR 1964 SC 1284-5; Baijanath v. State of Bihar, AIR 1970 SC 1436 and State of Assam v. O.P.Mehta, AIR 1973 SC 678, but I do not think they have any bearing on the question which falls to be considered in the case. For the aforesaid reasons, I find that there is no merit in this writ petition.

8. The writ petition is, accordingly, dismissed with costs. Advocates fee Rs. 150/-.

Petition dismissed.

Yanamadala Co-Operat... v. Assistant Director O...