STATE OF MADHYA PRADESH & ANR. versus DADABHOY'S NEW CHIRIMIRI PONRI HILL COLLIERY CO. PVT. LTD.

Citation: [1972] 2 S.C.R. 609 · Decided: 29-11-1971 · Supreme Court of India · Bench: S.M. SIKRI · Disposal: Dismissed
Cited by 3 judgment(s) · see the full citation network in Lexace
Open in Lexace · Ask the AI about this case
Judgment (excerpt)

A 
B 
c 
D 
E 
F 
G 
H 
609 
STATE OF MADHYA PRADESH & ANR. 
v. 
DADABHOY'S NEW CHIRIMIRI fON~ HILL COLLIERY 
CO. PVT. LTD. 
November 29, 1971 
[S. M. SIKRI, C.J., J. M. SHELAT, P. ]AGANMOHAN REDDY AND 
G. K. MITTER, JJ.] 
The Mines & Minerals (Regulation and Development) Act 67 of 1957 
as amended by Act 15 of 1958, ss. 9(1) and JOA-Notification issued 
under Second Part of s. 30A whether can have effect of raising rate of 
royalty on coal in respect of pre 1949 mining leases above rate of 5% 
provided ins. 9(1) read with Second Schedule. 
I.n .1944 the .Ruler of the erstwhile Indian State of Korea granted to D 
a mmmg lease in respect of an area of 5.25 sq. 
miles in the State. 
Accordmg to the terms of the lease the rates of royalty varied from 5 % 
to 25 % accotding to the price of the coal per tons extracted from the 
leased area, that is to say, from 4 as. per ton if the price was Rs. 51. per 
ton to 25% of the price per ton at the pit's head if that price was Rs. 20/-
or more. 
On the merger of the Korea State with Madhya Pradesh the 
leased area became subject to the provisions of the Mines & Minerals 
(Regulation and Development) Act 53 of 1948 and the Mineral Conces-
sion Rules, 1949.. In 1952 D assigned the lease and its benefits to the 
respondent company. The State of Madhya Pradesh granted its consent 
to the assignment for the unexpired period of the lease in consideration 
of the respondent-company agreeing to comply with the terms and condi-
tions of the lease including payment of royalties. On December 21!, 1967 
Parliament passed the Mines & Minerals (Regulation and Development) 
Act 61 of 1957 under its power under Entry 54 of List I of the Seventh 
Schedule to the Constitution. The Act as amended by Act 15 of 1958 
was brought into force by a notification of the Central Government with 
effect from June 1. 1958. Under s. 9(1) of the Act a lessee under a min-
ing lease granted before the commencement of the Act was liable to pay 
royalty at the rate for the time being specified in the Second Schedule. 
Under item (I) of the Second Schedule royalty payable jn respect of coal 
was the same as under r. 41 of the Mineral Concession Rules, 1949, that 
is, 5% of the f.o.r. price, subject to a minimum of fifty naye paise per 
ton. Under s .. 30A which had been inserted bv Act 15 of 1958 with re-
trospective effect, the provisions of s. 9(1) and s. 16(1) were not appli-
cable to mining leases granted before 25th October 1949 in respect of coal. 
but the Central GoYernment had power if satisfied that it was expedient 
to. do so, to direct by notification in the Offi~al Gazette, that all or any 
of the said provisions (including rules made under ss. 13 and 18) shall 
apply to or in relation to such leases "subject to such exceptions and modi-
fications. if any, as mav be specified in that or in any sul?"equent not!fica-
tion". On December 29. 1961 the Central Government issued a nollfica· 
tion in exercise of its power under the second part of s. 30A bv which 
it directed application of s. 9( !} with immediate effect to or in relation 
to the pre-1949 coal mining leases "subiect to the modification that the 
lessee shall pay royaltv. at the rate specified in any agreement between the 
lessee and the lessor or at n% of f.o.r. price, whichever is higher. in lieu 
of the rate of 'royaltv specified in respect of coal in the Second Schedule 
to the said Act." The Collector served upon the 
r~sp.ondent company 
demand notices to pay the arrears of royalty for t~e penod December 29, 
1961 to December 31, 1965 at the rates specified m the lease. The com-
610 
SUPREME COURT REPORTS 
[1972] 2 S.C.R. 
pany in a wrh petition before the High Court urged that the exceptions 
and mod1ficatWfis under s. JOA had to be and were intended to cusaion or 
soften the burden which would otherwise fall on the lessees under s. 9(1) 
and the Second Schedule and therefore any modification or exception 
which would be specified in such notification was intended to reduce rather 
than increase the rate -of royalty payable under s. 9 (I). The State Gov-
ernment contended that the respondent-company was bound to pay royaltv 
at the rates provided in its lease, that being higher than the minimum of 
2f% provided in the notification. The High Court rejeeted the contention 
raised by the State as being inconsistent with the purpose for which s. 30A 
was introduced. 
The State appealed. 
HELD : 
The notification was issued in exercise of the
Excerpt shown. Read the full judgment & AI analysis in Lexace.