PETITIONER: STATE OF RAJASTHAN Vs. RESPONDENT: HARI SHANKAR RAJENDRA PAL DATE OF JUDGMENT: 19/03/1965 BENCH: DAYAL, RAGHUBAR BENCH: DAYAL, RAGHUBAR GAJENDRAGADKAR, P.B. (CJ) RAMASWAMI, V. CITATION: 1966 AIR 296 1965 SCR (3) 402 CITATOR INFO : R 1987 SC1073 (12,16) D 1988 SC2187 (35) ACT: Rajasthan Mines Mineral Concession Rules, 1958. Chapters IV and V, r. 30-Matters not provided for in Chapter IV-Chapter V, if applicable-Rule 30 if applicable to Chapter IV-Period of first extension-Whose option. HEADNOTE: The respondent who had as a result of auction obtained a mining lease from the appellant--State, applied for extension of the lease period in view of the mandatory nature of the main provision of rule 30 and simultaneously also applied for renewal of the lease in accordance with the provisions of the proviso to rule 30. The appellant refused the first prayer but extended the period by a few months. The respondent thereafter, filed a writ petition in the High Court for striking down the order of the Government renewing the lease by a few months and for directing the appellant to extend the lease in the first instance for two years to bring it in conformity with the period of lease specified in rule 30 and to renew after the expiry of such extended period, for a further period of 5 years under rule 30. The appellant contended that the provisions of Chapter IV of the rules did not apply to the grant of mining leases by auction or tender provided for by Chapter V of the rules and that in any case the initial period short of 5 years must be deemed to have been at the desire of the respondent and that any further extension of the period of lease under the proviso was in the discretion of the appellant and consequently, the respondent could not claim to have the period of the lease extended for a period of 5 years. The High Court disagreed with the appellant's contentions and allowed the petition. In appeal by certificate; HELD: Matters not provided for by rules in Chapter V with regard to mining leases will be covered by provisions relating to those matters in Chapter IV, as these provisions deal with the essential Incidents affecting grant of mining leases. [404 H] Rule 30 applies to leases granted under Chapter V both because the rules under Chapter IV apply to such leases and because there is no corresponding rule in Chapter V. [407 G- H] The word "may" in the proviso in rule 30 in regard to the extension of the period by, Government should also be construed as 'shall', so as to mike it incumbent on Government to extend the period of the lease if the lessee desires extension. Of course no question for the extension of the lease can arise if the lessee himself does not wish to have the lease for a further period. It is on account of this option existing in the lessees that the word 'may' has been used in this context. But the option given to the lessee to have the lease extended by period of another five years is to be respected only if the lessee gives the guarantee referred to in the proviso. [408 H] The first extension must be five years and not less. The period of lease can be shorter than five years only when the applicant desires and not when the Government desires. [409 B] 403 JUDGMENT:
CIVIL APPFELLATE JURISDICTION: Civil Appeal No. 21 of 1963.
Appeal from the judgment and order dated August 1, 1961 of
the Rajasthan High Court in Civil Writ No. 86 of 1960.
C. C. Kasliwal Advocate General for the State of Rajasthan
and M. M. Tiwari, for the appellants.
Rameshwar Nath S. N. Andley, and P. L. Vohra, for the
respondent.
The Judgment of the Court was delivered by
Raghubar Dayal, J. This appeal, on certificate granted by
the Rajasthan High Court, raises the question of the
applicability of the provisions of Chapter IV and thereby of
r. 30 of the Rajasthan Minor Mineral Concession Rules, 1955,
hereinafter called the rules, to the grants of mining leases
under the provisions of Chapter V of the rules.
The facts leading to this appeal are briefly these. The
respondent obtained the mining lease for extracting sand-
stone from the mines in certain area from the Government of
Rajasthan in 1956. The lease was granted as a result of
auction. The period of the lease was from April 1, 1956 to
July 31, 1959. The respondent applied for extension of the
period upto two years in view of the mandatory nature of the
main provision of r. 30 and Simultaneously also applied for
the renewal of the lease for a further period in accordance
with the provisions of the proviso to r. 30. The first
prayer was refused and the State Government extended the
period of the lease at first by six months and later by
another two months. The respondent thereafter filed a writ
petition under Art. 226 of the Constitution in the High
Court and prayed for issue of a writ of mandamus directing
the striking down of the order of the Government
renewing the lease for 8 months and directing the State
of Rajasthan further to extend the lease in the first
instance for two years from July 30. 1959 to bring, it
unconformity with the period of lease specified in r. 30
and to renew. after the expiry of such extended period, for
a further period of 5 years under r. 30 of the rules. The
State of Rajasthan, appellant, contested the petition on the
ground that the provisions of Chapter IV of the rules did
not apply to the grant of mining leases by auction or tender
provided for by Chapter V of the rules and that in any case
the initial period short of 5 years must be deemed to have
been at the desire of the respondent and that any further
extension of the period of the lease under the proviso was
in the discretion of the Government and consequently, the
respondent could not claim to have the period of the lease
extended for a period of 5 years.
The High Court held that the provisions of Chapter IV of the
rules were applicable as far as possible to the grant of
mining
M/B(N) 3SCI-13
404
leases by auction under Chapter V. that though the State
Government had to give a lease for 5 years in view of r. 30,
yet the shorter period of the lease in favour of the
respondent must, in the circumstances, be deemed to have
been at his request and that the respondent was entitled to
an extension of the lease by a further period of 5 years in
accordance with the provisions of the proviso. It therefore
directed the State Government to renew the lease for a
period of 5 years from the expiry of the original lease with
option of further renewal, if so desired, by another period
of 5 years subject to the conditions mentioned in r. 30.
It is against this order that this appeal has been filed.
Two questions are raised for the appellant in this Court.
The first is that the provisions of Chapter IV of the rules
do not govern the grant of mining leases by auction under
the provisions of Chapter V of the rules. The other is that
the proviso to r. 30 gives discretion to the State
Government to extend the period of the lease for any period
not exceeding 5 years that it is not mandatory that the
State Government must extend the lease by a period of 5
years as held by the High Court. We are of opinion that the
High Court has come to a right conclusion on these two
points.
Section 5 of the Mines and Minerals (Regulation and Develop-
ment) Act, 1948 (Act LIII of 1948) empowered the Central
Government to make rules, by notification in the official
Gazette, for regulating the grant of mining leases or for
prohibiting the grant of such leases in respect of any
mineral in any area. In the exercise of its power the
Central Government framed the Mineral Concession Rules,
1949, hereinafter referred to as the Central rules. Clause
(ii) of r. 3 of the Central rules defined ‘minor mineral’ to
mean ‘building stone’ etc., which admittedly included sand-
stone Rule 4 stated that the rules would not apply to minor
minerals the extraction of which would be regulated by such
rules as the State Government might prescribe. The State of
Rajasthan made the rules in 1955 in the exercise of the
powers conferred by r. 4 of the Central rules.
Chapter IV of the rules deals with grant of mining leases
and consists of rr. 19 to 32. Chapter V deals with grant of
mining leases and royalty collection contracts by auction or
by inviting tenders or by other methods and consists of rr.
33 to 42. Apart from the heading of Chapter IV being in
general terms and so applicable to the grant of all mining
leases by whatever process, a comparison of the provisions
of rules in Chapter IV and those in Chapter V shows that all
the incidents of a grant of a mining refuse contemplated and
provided for in Chapter IV ire not provided for by Chapter
V. This leads to the irresistible conclusion that matters
not provided for by rules in Chapter V with regard to mining
leases will be covered by provisions relating to those
matters in chapter IV, as these provisions deal with the
essential incidents affecting grant of mining lease.
405
We may therefore go through the provisions of Chapter IV to
have a comprehensive view of what the rules provide and to
see whether all of them are such that the Legislature could
have intended their not applying to leases granted under
Chapter V or whether they, by their nature, can apply to
leases granted under Chapter IV only. Rule 19 deals with
restrictions on grant of mining leases. There is no
corresponding rule in Chapter V. It is inconceivable that
the restrictions mentioned in r. 19 be not applicable to the
grant of mining leases by auction or tender or any other
method. The matters of substance are the contents of the
lease, the persons to whom the minerals about which leases
can be granted and not the procedure to be followed in
granting the lease. Chapter IV deals with the grant of
mining leases on applications for such a grant. Chapter V
mainly deals with grant of mining leases by auction or by
inviting tenders or by other methods. It is clear that the
procedure to be followed for the grant of leases is left to
the discretion of the Government though, ordinarily, in the
absence if general or special orders, the procedure laid
down in Chapter IV is to be followed. Sub-r. (3) of r. 33
provides that leases by public auction or tender under sub-
r. (1) shall be given only in such a case as the Government
may, by general or special order, direct and r. 42 gives
discretion to Government to adopt any other method for
leasing out minor mineral deposits in the interest of
industry and development of the deposit. The restrictions
laid down by r. 19 are that no mining lease is to be granted
in respect of any minor mineral notified by Government in
that behalf, that no mining lease for the notified mineral
will be granted to a person unless he holds a valid
certificate of approval and that no mining lease shall be
granted to an individual person unless he be a citizen of
India except with the prior approval of Government. These
restrictions are of a general nature and salutary in effect
and the Legislature, in our view, could not have made them
inapplicable to the grant of mining leases under the rules
in Chapter V.
Rules 20 to 23 are applicable to applications for grant of
mining leases. They mention the person to whom an
application is to be made, the fee which is to accompany
such application, what the application should contain and
how priority is to be given if there be more than one
application in respect of the same land. These rules
cannot, by their nature, apply to the grant of mining leases
by auction or tender or by any other method.
Rule 24 provides for the Register of Mining Leases. Most of
the particulars to be noted in this Register relate to the
grant of mining leases on application but some of the
particulars could be entered with respect to the mining
leases granted by following the other procedure and
therefore its provisions can partially apply to the mining
leases granted under Chapter V. Rule 25 will also usually
apply to applications only, as in the case of granting a
mining- lease otherwise, the Government would have
ordinarily already decided
406
the area for which the lease is to be given. Rule 26 lays
down a restriction on the length and breadth of an area to
be leased, but gives discretion to the Government to relax
the provisions of the rule. This rule is of general
application, subject to the discretion in the Government to
relax its provisions and there is no reason why it would
have been made inapplicable to mining leases granted under
Chapter V. Rule 27 provides that the boundaries of the area
covered by a mining lease shall run vertically down below
the surface towards the centre of the earth. Such a
specification of the boundaries of the area is very
essential in connection with mining leases and the rule
about it must apply to all mining leases granted under
Chapter V.
Rule 28 deals with deposit of security and applies to
applicants for mining leases and not to those who are to get
leases under Chapter V. There is a specific provision for
security under r. 37 (iv), in Chapter V.
Rule 29 deals with transfer of mining leases and provides
that a lessee with the previous sanction of the Government
and subject to certain conditions could transfer his lease
or any right or interest therein. There is no corresponding
rule in Chapter V. This indicates that r. 29 will apply to
the transfer of mining leases granted under Chapter V. There
is no good reason why such a lessee be deprived of his right
to transfer or be free from any restriction laid down in r
29. Rule 30 deals with the period of lease and is the rule
which is to be considered by us.
Rule 31 lays down the conditions subject to which the mining
lease is granted. This rule has 24 clauses dealing with
various matters. It is clear from r. 41 in Chapter V
dealing with the execution of lease that the terms and
conditions mentioned in r. 31 would be included in the lease
executed by the lessee to whom a mining lease is -ranted
under Chapter V. of course, r. 41 provides that Such terms
and conditions would be so modified as might be necessary by
reason of the provisions of rr. 33 and 34.
Sub.r, (2) of r. 23 provides that in cases of grant of
mining leases by auction or by inviting tenders the annual
dead-rent of the lease would be determined in the auction or
by tend as the case may be and may exceed the rate give in
the Second Schedule to the rules. Rule 34 deals with
payment of royalty through the contractor for royalty
collection. These provisions of rr. 33(2) and 34 would re-
quire modification in conditions (3) and (4) of r. 31.
It has been urged that the specific mention of r. 31 in r.
41 indicates that the other rules in Chapter IV are not
applicable to the grant of mining leases under Chapter V. We
do not agree and
407
are of opinion that the specific mention of r. 31 is made in
r. 41 In view of the fact that it was to apply with suitable
modifications. Rules in Chapter IV which apply as they
stand do require no specific mention for their applicability
to the -rant of mining leases under Chapter V.
Rule 32 deals with the currency of the lease and provides
that the currency of the lease shall be from the date of
communication to the party unless otherwise stated, that the
lessee shall have no right to continue work or to accumulate
stock on or after the date of termination of the lease
however unless otherwise sanctioned by Government and that
all accumulated stock and immovable property left in the
leased out area after the date of expiry of the lease shall
be deemed to be Government property. The provisions of this
rule are essential to define the currency of the mining
lease granted under Chapter V and to the rights of the
lessee and the State in regard to continuing the work after
the date of termination of the lease or to the matter lying
in the leased out area after the expiry of the lease. There
is no corresponding rule in Chapter V. Rule 32 must be
deemed to apply to the leases granted under Chapter V.
It would thus appear that the provisions of rr. 19, 26, 27
29 and 32, by their nature, must apply to the leases granted
under Chapter V as they are expressed in general terms and
can apply to all mining leases. If they were not intended
to apply to mining leases granted under Chapter V, the
legislature would have made an express provision about it
and would have also made some suitable corresponding
provisions for the leases granted under Chapter V.
We are therefore of opinion that the contention that the
rules under Chapter IV do not apply to mining leases granted
under Chapter V is not sound and that the High Court rightly
held that they do apply so far as applicable to mining
leases granted tinder Chapter V.
Rule 30 deals with the period of lease. This rule will
apply to leases granted under Chapter V both because the
rules under Chapter IV apply to such leases and because
there is no corresponding rule in Chapter V. Reference has
been made to rr. 38 and 39 in Chapter V which deal with
certain payments if the period of lease is not more than 1
year or is more than one year respectively. The fixing of
the period of the lease is an essential term of the lease,
Rule 32 in Chapter IV provides when the lease is to
commence. The lease should also provide the time when it
should terminate. That can be done either by setting down
the actual date or by expressing the period of the lease.
Rules 38 and 39 provide for different matters. They apply
when the period of the lease is already fixed tinder the
terms of the lease and in accordance with the rules.
408
The next matter to be considered is the construction of r.30
which reads:
Period of lease-A mining lease may be granted
for a period of 5 years unless the applicant
himself desires it shorter period;
Provided that the period may be extended by
the Government for another period not
exceeding 5 years with option to the lessee
for renewal for another equivalent period in
case the lessee guarantees investments in
machinery equipments and the like, it least to
the tune of 20 times the value of annual dead-
rent within 3 years from the of such
extension. The value of the machinery,
equivalent and the like shall be determined by
the Government. Were the lease is so renewed,
the dead rent and the surface rent shall be
fixed by the Government within the limits
given in the Second Schedule to these rules,
and shall in no case exceed twice the original
dead rent and surface rent respectively, and
the royalty shall be charged at the rates in
force at the time of renewal”.
It is urged for the appellant that the State Government has
discretion to fix the initial period of the lease as well as
to fix the of the extension of the lease after the expiry of
the initial period. The High Court did not agree with this
submission of the and, we think, rightly.
The word ‘may’ in the main provision of the rule must mean
shall’ and make the provision mandatory. This is obvious
from the last portion of the provision. If the State
Government had discretion to fix any period of the lease,
the last portion of the provision would be redundant. The
Government could fix the period of the lease at any period
shorter than live yea-AS. But the provision requires the
fixing of the period shorter than 5 years only when the
applicant desires a shorter period. The period of the lease
therefore can be shorter than five years only when the
applicant desires and not when the Government desires.
Government must fix the period of the lease at 5 years in
the absence of any expression of desire by the applicant for
taking the lease for a shorter period.
The word ‘may’ in the proviso in regard to the extension of
the period by Government should also be construed as ‘shall
so as to make it incumbent on Government to extend the
period of the lease if the lessee desires extension. Of
course no question for the extension of the lease can arise
if the lessee himself does not wish to have the lease for a
further period. It is on account of this option existing in
the lessee that the word ‘may’ has been used in this
context. The lessee has been given a further option to have
the lease extended by another five years but such an option
is to be respected only if he gives the guarantee referred
to in the proviso. If he is not prepared to give such a
guarantee, he cannot exercise the option for
409
the extension of the lease and the lease must automatically
expire at the end of the first extended period.
The first extension has to be for five years. Government
has no option in that regard as well. This appears from
what is provided in connection with the option of the lessee
for a second extension. The second extension, at his option,
is to be for a period equivalent to the period of the first
extension. The guarantee to be given is to the effect that
the lessee would invest in machinery etc., at least to the
tune of 20 times the value of the annual dead-rent within 3
years from the grant of such extension. There is no point
in, taking a gurantee to make certain investments within
three years if the second extended period of the lease is of
a shorter duration as it can be if Government has a
discretion in granting extension for a period shorter than 5
years. If the first extension be for less than three years
the second extension cannot be for a longer period. If that
expression ‘such extension’ refers to the extension on the
exercise of the option of the lessee at the end of the first
extension, it would be a preferable construction of the
proviso to hold that the Government is bound to extend the
period of the lease for five years at the expiry of the
initial period of the lease and that the lessee will have
the option for renewal of the lease for another five years
in case be guarantees the requisite investment as mentioned
in the proviso. Another way of looking at the provision-and
a better way–is that the expression ‘such extension’ refers
to the first extension which the Government grants at the
expiry of the initial term of the lease. This means that at
the time of granting the first extension the lessee has to
choose whether he should also ask for the option for a
second extension. The option would then be an integral part
of the agreement about the first extension. This is also
indicated from the language of the proviso linking the
period of extension with the option for renewal of the lease
for an equivalent period If no option as such is given at
the time and is not a term of the lease, the lessee may not
be able to ask for a second extension at the end of the
first extended period of the lease. When he secures the
exercise of such an option as a term of the lease, he has to
guarantee that within the first three years of the extended
period of the lease he will make the heavy investment
mentioned in the proviso with the resultant confidence that
he will have undisturbed lessee rights for a period of 10
years from the expiry of the initial term of the lease:
Whichever construction be put, with respect to the time when
the term about option is to be settled between the parties,
it must follow that the period of the first extension must
be five years and not less.
We are further of opinion that the High Court is right in
holding that the respondent’s taking the lease for a period
upto July 31, 1959 must amount to his expressing a desire
for having a lease for that period. If he did not so
desire, he need not have bid and taken the lease for the
period for which it was to be given by auction.
410
it has been argued for the State that the High Court granted
relief to the respondent in excess of what he had prayed,
inasmuch as the High Court had directed the Government to
renew the respondent’s first lease for a period of 5 years
with option to further renewal if so desired for another
period of 5 years subject to the condition mentioned in r.
30 when the respondent had not prayed for any direction with
respect to the option for a second extension of the lease.
The contention is not sound. The relief claimed after the
expiry of the period of the first lease, which, according to
the respondent, was also to be extended by two years, reads:
” and then, after the expiry of the period of five years the
lease be renewed for a period of five years under Rule 30
,of Rajasthan Minor Mineral Concession Rules, 1955″.
The renewal was to be under r. 30. Rule 30 itself requires
extension of the lease with option in the lessee for
obtaining another extension for an equivalent period. This
option must be a term of the lease and therefore must be
incorporated in the lease at the time when the first
extension is granted. The prayer therefore should be deemed
to include a prayer for an extension of 5 years with the
necessary option. Even if the prayer was not so made, the
High Court was competent to make the direction in accordance
with the requirements of the proviso to r. 30. The
direction for renewal is, in our view. in full accordance
with what the proviso requires.
The result is that the appeal fails and is dismissed with
costs.
Appeal dismissed.
411