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IN THE HIGH COURT OF JUDICATURE OF BOMBAY
BENCH AT NAGPUR
...
WRIT PETITION NO: 1161/2007
WITH
WRIT PETITION NO: 975/2007
WITH
WRIT PETITION NO: 1106/2007
WITH
WRIT PETITION NO: 1110/2007
ig WITH
WRIT PETITION NO: 3430/2007
WITH
WRIT PETITION NO: 19/2008
WITH
WRIT PETITION NO: 2604/2008
1) W.P. 1161/2007
Western Coalfields Ltd.
Through the Chief General Manager
Wani Area, Tadali (Urjagram)
Dist. Chandrapur. .. PETITIONER
VERSUS
1. The State of Maharashtra
through the Secretary
Revenue and Forest Department
Mantralaya, Mumbai-32.
2. Tahsildar
Chandrapur. ..RESPONDENTS
2) W.P. 975/2007
Western Coalfields Ltd.
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Through the Chief General Manager
Chandrapur Area, Chandrapur. .. PETITIONER
VERSUS
1. State of Maharashtra
through the Secretary
Revenue and Forest Department
Mantralaya, Mumbai-32.
2. Tahsildar
Chandrapur. ig ..RESPONDENTS
3) W.P. 1106/2007
Western Coalfields Ltd.
Through the Chief General Manager
Ballarpur Area, Sasti
Tq.Rajura
Dist. Chandrapur. .. PETITIONER
VERSUS
1. State of Maharashtra
through the Secretary
Revenue and Forest Department
Mantralaya, Mumbai-32.
2. Tahsildar
Ballarpur Dist. Chandrapur. ..RESPONDENTS
4) W.P. 1110/2007
Western Coalfields Ltd.
Through the Chief General Manager
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Ballarpur Area, Sasti, Tq.
Rajura Dist. . Chandrapur. .. PETITIONER
VERSUS
1. The State of Maharashtra
through the Secretary
Revenue and Forest Department
Mantralaya, Mumbai-32.
2. Tahsildar
Rajura Dist. Chandrapur.
..RESPONDENTS
5) W.P.3430/2007
Western Coalfields Ltd.
Through the Chief General Manager
Wani North Area, Bhallar Township
Tq.Wani Dist. Chandrapur. .. PETITIONER
VERSUS
1. The State of Maharashtra
through the Secretary
Revenue and Forest Department
Mantralaya, Mumbai-32.
2. Tahsildar
Wani Dist. Yavatmal. ..RESPONDENTS
6) W.P. 19/2008
Western Coalfields Ltd.
Through the Chief General Manager
Wani Area, Tadali
Dist. Chandrapur. .. PETITIONER
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VERSUS
1. The State of Maharashtra
through the Secretary
Revenue and Forest Department
Mantralaya, Mumbai-32.
2. Tahsildar
Wani Dist. Yavatmal. ..RESPONDENTS
7) W.P. 2604/2008
Western Coalfields Ltd.
Through the Chief General Manager
Nagpur Area Nagpur. .. PETITIONER
VERSUS
1. State of Maharashtra
through the Secretary
Revenue and Forest Department
Mantralaya, Mumbai-32.
2. Sub-Divisional Officer
Ramtek Dist. Nagpur.
3. Tahsildar,
Parseoni, Dist. Nagpur. ..RESPONDENTS
--------------------------------------------------------------------------------------------------
------Additional Solicitor General Shri Sharan with Adv. S.C. Mehadia for
WCL.
Additional Government Pleader Bharati Dangre with Asst. Govt. Pleaders
T.R. Kankale, D.B. Patel & R.N. Kothari for State Of Maharashtra.
--------------------------------------------------------------------------------------------------
------
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CORAM : B.P. DHARMADHIKARI, J.
DATE OF RESERVING : 15/12/2008
DATE OF PRONOUNCEMENT: 05/1/2009
JUDGMENT:
1. Common question involved in all these Writ Petitions is,
“whether State Government can levy and demand any sum as amount of
nonagricultural assessment from Petitioners WCL.”
ig Petitioner-
Company is incorporated under the Companies Act, 1956 with its Head
Office at Nagpur and it is Central Government Undertaking in public sector
as also the Government Company within the meaning of Section 617 of
Companies Act. It is having coal mines in western part of the nation
including State of Maharashtra and Madhya Pradesh. Prayers in all Writ
Petitions filed by it are to declare that orders assessing non-agricultural
tax and demand notices issued consequentially are illegal. There is also
similar prayer in relation to Zilla Parishad cess and Gram Panchayats
cess with direction to Respondents to refund the amount already
recovered from it on that account.
2. In W. P. 1161/2007 challenge is to assessment orders dated
3/3/2005 and 4/3/2005 and consequential demand notices dated 5/3/2005
of Tahasildar, Chandrapur. W. P. 975/2007 raises challenge to
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assessment orders dated 4/3/2005, 5/3/2005, notice dated 7/3/2005 and
consequential demand notice dated 5/3/2005 again by Tahasildar,
Chandrapur. W. P. 1106/2007 challenges assessment orders dated
7/3/2005, demand notices dated 7/3/2005, 16/10/2006 by Tahasildar,
Ballarpur (District Chandrapur). W. P. 1110/2007 challenges assessment
orders dated 3/3/2005, demand notices dated 7/3/2005, 19/11/2004 &
13/10/2006 by Tahasildar, Rajura (District Chandrapur). W. P. 3430/2007
challenges demand notices dated 16/1/2001, 18/1/2001, 24/1/2001,
23/1/2001 & 13/2/2001 by Tahasildar, Wani (District Yavatmal). It also
challenges common order dated 29/10/2002 passed in Rev. Appeals 9,11
to 21/RRC-70/2001 (of Kolera) by S.D.O. Wani, order dated 29/8/2005 by
Addl. Collector in further Rev. Appeal 70/2/2004-05 and order dated
12/2/2007 in Revision No. 2/RRC-70/2005-06 by the Additional
Commissioner, Amravati Division. In W. P. 19/2008 challenge is to
demand notices dated 16/1/2001,18/1/2001,30/1/2001, 1/2/2001,
5/2/2001 & 1/3/2001 by Tahsildar, Wani (District Yavatmal). It also
challenges common order dated 25/10/2002 passed in Rev. Appeals 1 to
8 & 10 /RRC-70/2001 by S.D.O. Wani, dated 29/8/2005 by Addl.
Collector in further Rev. Appeal 70/2/2004-05 (of Ukani) and order dated
12/2/2007 in Revision no. 2/RRC-70/2005-06 (of Kolera) by the Additional
Commissioner, Amravati Division. In W. P. 2604/2008 challenge is to
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demand notices dated 21/12/2001, 15/2/2006, 17/2/2006, 16/3/2006 by
Tahasildar, Parseoni (District Nagpur). It also challenges order dated
3/12/2002 passed in Appeal by S.D.O. Ramtek, dated 30/11/2007 by
Addl. Collector, Nagpur in further Rev. Appeal 114/MRC–81/2006-07(of
Pipti, Kandri, Tekadi & Gondegaon) and order dated 2/4/2008 in Appeal
no. 1/MRC-81/2007-08 by the Additional Commissioner, Nagpur Division.
As the bone of contention between parties is competence of State
Government to recover non-agricultural tax from Petitioners, they have
not addressed this Court about the correctness or otherwise of the
Appellate or Revisional orders mention above.
3. By reasoned order dated 26/2/2008, this Court admitted all
Writ Petitions of the year 2007 and granted interim relief. Writ Petition
19/2008 came to be admitted and interim relief has been granted in it on
3/3/2008 in view of this earlier order. W. P. 2604/2008 is not admitted so
far and this Court has not issued even a formal notice therein. However
as all the matters are being considered together, Respondents have
already filed their submissions in the matter. Accordingly Rule also in Writ
Petition No. 2604/2008. It is also heard finally along with other Writ
Petitions mentioned above.
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4. I have heard Additional Solicitor General Shri Sharan with
Adv. S.C. Mehadia, for Petitioner- WCL and Additional Government
Pleader (Mrs) Bharati Dangre with Asst. Govt. Pleaders T.R. Kankale,
D.B. Patel & R.N. Kothari for State of Maharashtra in all the matters. Shri
Sharan has placed short written notes on record while opening the
arguments and also while rebutting the oral contentions of the
Respondents.
5. (A)
Learned ASG Sharan contends that WCL has come
into existence because of nationalization of coal mining activity in the
country due to Coal Mines (Nationalization) Act, 1973. W.C.L. receives
lands for its activities by three modes i.e. by acquisition under Coal
Bearing Areas (Acquisition and Development) Act, 1957 — hereinafter
referred to as Coal Bearing Act, by acquisition under Coal Mines
(Nationalisation) Act, 1973 — hereinafter referred to as “Nationalisation
Act”; by acquisition under Land Acquisition Act and by Purchase. The
impugned demand is in relation to lands which thus came to Petitioners.
As the Central Government is the owner of these lines, because of Article
285 of the Constitution of India, these lands cannot be taxed at all. By
virtue of Section 10 of Coal Bearing Act the lands vested absolutely in
Central Government and under its Section 11, the lands have been
transferred to WCL but then as absolute right to deal with or alienate
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these lands is not conferred upon W. C. L., it is not the owner and Central
Government continues to be the absolute owner. Right to alienate is “sine
qua non” for ownership or vesting and for this proposition support is being
drawn from 2004 (4) Bom.C .R. 386- – Hindustan A e ronautic s Ltd vs
State O f Maharashtra and 1986 (O ) BC I 143= 1985 Mah.L.J. 343
Inte rnational A irp ort A uthority of India vs State O f Maharashtra as
also of Hon Apex Court reported at A .I.R. 1957 SC 344 — “Fruit and
Vegetable Merchants Union v. Delhi Improvement Trust“.
(B) By placing reliance upon Section 5 of Nationalization Act
it is stated that mines acquired there-under also do not vest absolutely
and WCL is not complete owner thereof. Attention is invited to Section 2
(h) thereof to point out the wide field covered by meaning given to phrase
“mine”. It is contended that under Section 4 Central Government
becomes Lessee after vesting and by Section 3 & 6, said vesting is free
from all encumbrances. Deemed lease under Section 5 (2) and its
effect is being relied upon by pointing out how deeming provision needs to
be interpreted to urge that rights of Central Government become the rights
of WCL and liabilities of Central Government only become its liabilities. It
is also urged that under the statutory lease on account of Rule 72 and
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Form “K” of Mineral Concession Rules, 1960 framed under Section 13 of
Mines and Minerals (Regulation and Development) Act, 1957; Petitioners
are not obliged to pay any land revenue to State Government. Mineral
Concession Rules, 1960 are referred to as 1960 Rules while Mines and
Minerals (Regulation and Development) Act, 1957 is referred to as Act no.
67 of 1957 hereafter.
(C) It is submitted that lands subjected to non-agricultural
tax under the Maharashtra Land Revenue Code, 1966 are the lands
wherein mining activities or activities essential for such mining are
undertaken/performed and all lands are covered by mining lease.
Regulation and development of mine is subject enumerated under Entry
54 List I to 7th Schedule. Parliament has in exercise of its power under
this entry enacted Mines and Minerals (Regulation and Development) Act,
1957 & Mineral Concession Rules, 1960. As these 1960 Rules do not
stipulate payment of any land revenue to the State Government by
Lessee, imposition of non-agricultural tax is claimed to be directly in
conflict with Central Legislation and therefore void ab initio. Judgment of
Hon Apex Court reported at 1991 (supp l. 1) SC C 81– O rie nt Pape r &
Industrie s Ltd. vs. State of O rissa is relied upon in support. Similarly,
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by pointing out 1995 AIR SC W 2179 “State of T.N. v. A dhiyama n
Educational and Research Institute” = 1995 (4) SCC 104-para 41, it is
argued that even if Rule 72 or Form ‘K’ above may be a subordinate
legislation, still, State enactment (referable to Entry 25 in List II) in
conflict there with is null and void.
6. (A) Learned igAddl. G.P. Smt. Bharati Dangre with
respective other AGPs raise preliminary objection by pointing out that
these Writ Petitions lack necessary details and, therefore, deserve to be
dismissed. Attention is invited to judgment dated 21/12/2006 delivered in
W. P. 1407/2006 to point out how absence of material has been found to
be fatal deficiency by this Court. It is argued that the Petitioners get
necessary land for their activity through purchase, acquisition or
allotment by State Government, encroachment on Government Lands,
through Coal Bearing Act and through Nationalization Act. It is
contended that lands received by Petitioners by last three modes are
relevant for present litigation. Lands forming subject matter of W. P.
1161/2007 at Mouza Ghugus are said to be unauthorizedly converted for
non-agricultural purpose since 1973 — 74 and by inviting attention to order
of Tahasildar, Chandrapur dated 3/3/2005, it is pointed out that the non-
agricultural tax there is for such unauthorized user for residential and for
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industrial/official use. Judgment dated 5/6/2007 in W. P. 5523/2004 is
shown to urge that this Court on earlier occasion, had reminded the
matter back after noticing that the orders of non-agricultural assessment
did not show any application of mind to the nature and status of the land.
It is urged that impugned orders are passed with due application of mind.
Reported judgments in Hindustan Aeronautics Ltd vs State Of
Maharashtra & International Airport Authority of India vs State Of
Maharashtra (supra) are commented upon to show that the views therein
are not relevant in present matters.
Purpose of Coal Bearing Act is pointed out and it is
(B)
stated that when lands vest in Central Government, then only vesting is
“free from all encumbrances”. Under section 11 (1) and (2), the Central
Government directs vesting with Government Company like present
Petitioner and when lands go to such Government Company, the
immunity available to Central Government by virtue of Article 285 of
Constitution of India does not pass over to Petitioners. By inviting
attention to provisions of Section 4 and 5 of Nationalization Act, again,
same arguments are advanced. To demonstrate constitutional
competence of State Government to legislate in the matter of non-
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agricultural tax , Entry 23,49 and 50 of List II are being pointed out as
against Entry No 54 in List I. Section 2 (16), (19) and (21) of MLR Code
read with Section 117 thereof are pressed into service for this purpose.
Attention is also invited to Section 64, 168 as charging sections.
(C) Judgments reported at 1999 (3) SC C 290=1999 A IR
SCW 4761– Western igCoalfields Ltd vs Municipal Council,
Birsing hp ur, A .I.R. 1999 SC 1734- – Ele c tronic s C orp n. of India, Ltd.,
M/s. v. Se c y., Re ve nue De ptt., G ovt. of A .P, 1999 (6) SC C 78– Board
of Truste e s for the Visakhapatnam Port Trust vs State O f A .P. and in
same volume at page 74– Food Corporation of India vs Muincipal
Committee,Jalalabad are pointed out to show that Hon. Apex Court
has noted difference between Union of India or Central Government and
the Government company. Ele c tronic s C orp oration of India Ltd vs
Se c re tary, Re ve nue De partme nt, G ove rnme nt of A . P. — re p orte d at
1994 (4) SC C 458, Food C orp oration of India vs Sub C olle c tor,
Narasap ur- re p orte d at 1999 (6) SC C 80, Inte rnational A irport
Authority vs Munic ip al C orp oration of De lhi – – re porte d at A .I.R. 1991
De lhi 302 are also pressed into service for same purpose. Munic ip al
C ommissione r of Dum Dum Munic ip ality vs Indian Tourism
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De ve lop me nt C orporation re p orte d at 1995 (5) SC C 251 — para 35,
36 and Judgment of Hon Division Bench of Jammu and Kashmir High
Court reported at A.I.R. 2001 J&K 36- – Hote l C orporation of India v.
State and othe rs, are also cited to demonstrate how position has not
been correctly appreciated by this Court in its earlier judgment mentioned
above. It is urged that there is nothing on record to show that Central
Government has not ceased to be the Owner. Pleadings in Writ Petitions
are also pointed out to show that Union of India is not the owner and lands
no longer vest in it. 1982 (1) SC C 125- A IR 1982 SC 697- We ste rn
C oalfie lds Ltd & Bharat A luminium C omp any Ltd. vs. Sp e c ial A re a
De volop me nt A uthority, is relied upon to show legislative competence
of State Legislature in the matter. It is argued that clauses 4 and 5 of the
order by which lands vest in WCL do not in any way derogate from
ownership of property or vesting thereof with WCL. Attention of this Court
is also invited to the fact that other grounds of challenge like time-barred
tax claim, retrospectively of the assessment or computation errors or claim
for exemption have not been argued by Petitioners.
7. (A) In his reply arguments, Learned ASG Sharan has
stated that his arguments about effect of deeming fiction are not even
rebutted and clause 4 and 5 of allotment letter show the eminent domain
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of Central Government. In order to explain the provisions in Article 285
and his arguments further, he cited 1950 (supl) SC R 92- The
C orp oration of C alc utta vs The G ove rnors of St Thomas Sc hool
C alc utta, 1991 (3) SC C 410- -Kalawatib ai vs. Soiryabai and A .I.R.
1984 Pat 280– Manag ing Dire c tor, National C oal De ve lop me nt
C orp oration vs Sta te of Bihar. It is further urged that necessary details
in relation to lands are already given in all petitions and attention has been
invited to pages 32 — 33 of W. P. 1106/2007. As “Rule” is already
issued in the matter after hearing both sides, point of maintainability
cannot be debated as it was already pressed into service at the stage of
admission. It is stated that rule of res-judicata also applies at different
stages of same litigation and, therefore, the question cannot be re-
agitated at this stage. 2005 (1) SC C 787- – Bhanu Kumar Jain vs.
Arc hana Kumar, and several other judgments are cited in support. It is
further urged that argument of not obtaining previous permission before
changing the user of land is misconceived because the lands given to
WCL are only for mining purposes and no other purpose. Acquisition of
land for the purpose of coal mining itself amounts to sanctioning the use of
land for non-agricultural purpose. It is urged that sanction for such user
or change of user is implicit in the allotment or acquisition. Various
judgments cited by Learned Addl. G.P. & other AGPs. are also attempted
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to be distinguished. Para 19 of 2002 (3) SC C 496, – – Haryana
Financ ial C orp oration vs. Jag damb a O il Mills, and some other
judgments are cited to urge that a precedent is an authority for what it
decides and not for what could logically follow from it. Ashwan Kumar
Sing h vs. U.P. Pub lic Se rvic e C ommission- – 2003 (11) SC C 584 (p ara
10 – 12) is relied upon to show that the Courts interpret law and not the
judgments. According to learned Counsel issue regarding effect of
deeming fiction under Section 5 (2) of Nationalization Act has not been
determined by any of the judgments and hence, the judgments are not
authority governing present controversy. Again Form “K ” Chapter 7
Clause 1 of 1960 Rules is pointed out and it is canvassed that State has
not argued that Leases granted to WCL were not as per said Form or then
the terms thereof are not binding on it. It is pointed out that the Hon
Judge of Apex Court party to its judgment upholding imposition of
municipal taxes on Airport Authority in Dum Dum Airport case (supra)
while deciding International Airport Authority of India vs State Of
Maharashtra (supra) as a Hon Judge of this High Court had taken
different view after noticing the concept of vesting and its different shades.
It is further clarified that WCL did not acquire a single lease under Coal
Bearing Areas (Regulation & Development) Act, 1957 and hence only the
provisions of Section 10 (1) and 11 (1) govern the issue. There is no
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question of looking into subsection (2) of either Section 10 or 11. It is
urged that separate machinery is provided for eviction and as no action for
eviction of WCL has been taken, it implies that there is no
encroachment. It is explained that other grounds of challenge like time-
barred tax claim, retrospectively of the assessment or computation errors
or claim for exemption have not been invoked as the same need to be
decided by Appellate/Revisional authorities if this Court does not find merit
in the Article 285 challenge.
(B) Learned Addl. G.P. Smt. Dangre with other AGPs. has
pointed out that Managing Director, National Coal Development
Corporation vs State of Bihar (supra) is the judgment in case of a virgin
land & attention is invited to pleadings in W. P. 1161/2007.
8. (A) It is placed on record that Petitioners have offered no
arguments about prayer in relation to Zilla Parishad cess and Gram
Panchayats cess. Similarly, about challenge to quantum of NA tax or its
retrospective recovery no contentions are advanced mentioning that the
same can be looked into by the competent authority after the questions
raised herein are sorted out.
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(B) Judgment dated 5/6/2007 in W. P. 5523/2004 shows
that this Court found that merely because WCL did not bother to place all
material on record before the Revenue Authorities or tender proper
evidence, the Authorities cannot avoid their statutory responsibility under
Maharashtra Land Revenue Code to apply law correctly after ascertaining
the actual facts. The matter was remitted back with observation that
issuance of the proper show cause notice or a supplementary notice to
the WCL was essential in the matter. This is sufficient to demonstrate the
inappropriateness in preliminary objection sought to be raised by the State
Government here. In case of Munic ip al C ommissione r of Dum Dum
Munic ip ality vs Indian Tourism De ve lopme nt C orp oration re porte d
at 1995 (5) SC C 251 in paragraph 37, Hon. Apex Court found that the
finding of High Court about all lands in possession of ITDC being within
limits of Dum Dum Municipality was not based on any definite material
and hence it was left open for decision by appropriate authority at
appropriate stage. Here also the effect of want of relevant details can be
considered at proper stage in this judgment.
9. The consideration of the controversy has to be after close
scrutiny of the two judgments of this Court on which Petitioner WCL have
placed heavy reliance.
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(A) Hindustan Aeronautics Ltd. Vs. State of Maharashtra &
others (supra) is the judgment of learned Single Judge of this Court
which considers the fresh decision of State Government after its earlier
order was set aside by this Court and matter was remanded back to it.
This earlier judgment is reported at 2003 (4) LJSO FT 122 =2003(2)
Bom.C .R. 652. Brief mention of this earlier decision here is necessary.
There the demand of amount towards non-agricultural assessment was
disputed by the petitioner on the ground that the title of the land vested
with Union of India. Secretary for State while returning finding that the
land does not belong to the Central Government adverted to the entries in
the record of rights never decisive regarding title of the land. The
question whether the subject land was the property of the Union or not
was held to be purely a question of fact . Though the petitioner was in
possession but if the property was still the property of the Union then the
question of recovery of non-agricultural land revenue was found not to
arise in view of Article 285(1) of the Constitution of India. Defence of
Petitioner was that there was no valid conveyance of title of the subject
land by Union of India to the petitioner and the Union of India continues to
be the absolute owner of the property in question in spite of a deed dated
24-6-1978 signed between the respondent No. 5 and the petitioner. The
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said deed was not registered and hence that title did not pass to the
petitioner for want of registration. State Government urged that
registration was not necessary. However, this Court found that it was not
the basis on which the Secretary had decided the matter nor that plea was
taken in affidavit filed before this Court on behalf of State Government.
On the other hand, the petitioner had contended that document had not
been acted upon. In these circumstances, after quashing the impugned
order the matter was remitted to the Principal Secretary of Revenue
Department for consideration afresh in accordance with law without being
influenced by any of the observations in the impugned order or in High
Court order. Judgment relied upon by the WCL before me in this matter is
in challenge to this subsequent decision of said Secretary.
(B) Paragraph 14 and 15 of Hindustan Aeronautics Ltd. Vs.
State of Maharashtra & others (supra) relied upon before this Court are
important. It was noticed that State Government found title in Petitioner
Hindustan Aeronautics because of indenture dated 22/6/1978. The said
document was unregistered and State treated that document as in the
nature of “sale”. It was found that second part of Section 54 of Transfer
of Property Act contemplated two ways of transfer of tangible immovable
property costing less than Rs.100/–. As the registered document was
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absent, first such way was absent and as State did not find that transfer
was by delivery of possession, the other way was not shown to have
been followed. The judgment then proceeds to consider the precedents
cited to note that those judgments contemplated ownership of the property
and it was also noticed that definition of “owner” as contained in Andhra
Pradesh Non-agricultural Assessment Act, 1963 was expanded even to
include the Lessee in respect of the land owned by State Government. It
was found that there was no parallel provision in Maharashtra Land
Revenue Code. In paragraph 17 the contentions of State Government
about the wide meaning of expression “transfer” or “divesting” are noted
with question whether in facts there had been a transfer by such action by
which it could be gathered that land ceased to be property of the Central
Government. Then in paragraph 19, this Court held that petitioner before
it was neither an owner not a grantee. It is obvious that the question
which is being raised before me by Petitioner-W. C. L. did not arise for
consideration in this reported judgment. As the document purporting to
effect transfer was found not to possess that effect and as facts on record
did not establish divesting of any interest by Union of India, this Court
found that Article 285 continued to apply and hence non-agricultural tax
was not leviable.
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10. (A) International Airport Authority of India vs State of
Maharashtra (supra) is the other judgment of this High Court (by Hon.
S.P. Bharucha,J.) & Petitioner is trying to read it with judgment of Hon
Apex Court in case of Municipal Commissioner of Dum Dum Municipality
vs Indian Tourism Development Corporation reported at 1995 (5) SC
251, to which Hon Judge is not a party. Effort is to stress that angle
considered in judgment of this High Court was not required to be looked
into by Hon Apex Court. Western Coalfields Ltd. v. Municipal Council,
Birsinghpur Pali (supra) is the later judgment of Hon Apex Court on same
issue and to it Hon. Judge is a party. In paragraph 8 of this later
judgment, it is observed: —
“8. We should now add that the issue that we are here
concerned with is substantially covered by the judgment ofthis Court in Municipal Commissioner of Dum-Dum
Municipality v. Indian Tourism Development Corporation,
(1995) 5 SCC 251 and, agreeing with that judgment, wesee no reason to accept Mr. Raval’s submission that it
needs to be reconsidered.”
In fact, Hon. Judge has delivered the Constitutional Bench judgment of
Hon Apex Court in case of Electronics Corpn. of India, Ltd., M/s. v. Secy.,
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Revenue Deptt., Govt. of A.P (supra).
(B) Judgment delivered by Hon Judge as Judge of this
High Court [International Airport Authority of India vs State of Maharashtra
(supra)] shows that there the question whether land belonging to Union
Government earlier devolved upon International Airport Authority by virtue
of Section 12 (1) (a) of International Airports Authority Act, 1971 (“1971
Act” hereafter) arose for consideration. If the land was held as belonging
to Central Government, Article 285 of Constitution applied to it and not
otherwise. Paragraph 2 this judgment is important and it shows that in
terms of Section 12 (3) of said 1971 Act dispute of such nature was to be
resolved by Central Government in consultation with Airport Authority &
accordingly it was decided by Central Government holding that the land
on which non-agricultural tax was demanded by State of Maharashtra
continued to belong to Central Government and its ownership was not
transferred to said Authority. In paragraph 11 of this judgment different
shades of the meaning of word “vest” are noticed and in paragraph 12
thereafter scheme of 1971 Act has been considered. It is noticed that
Airport Authority has to pay balance of its annual net profits to Central
Government and it has also to prepare the programme of its next financial
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year with financial estimate thereof and obtain approval from Central
Government. The Central Government has retained the power to take
away the management of Airports from the Authority and entrust it to any
other person. In paragraphs 13 and 14 judgment of Hon Calcutta High
Court and Hon Gujarat High Court holding that the transfer was for limited
purpose of administration and management are appreciated. Thereafter
in paragraph 15, it has been concluded that since the word “vest” is
capable of variable meanings, provisions of Section 12 (1) (a) thereof
were of no assistance and other provisions of the 1971 Act needed to be
looked into. In paragraph 16 it is noticed that no contract for sale of
immovable property can be made by Airport Authority unless previously
approved by Central Government and it had no power to lease if it was for
period of more than 30 years without such previous approval. It has been
therefore observed that vesting with Airport Authority was only for the
management of Airports and Union Government remained the owner.
Immunity conferred by Article 285 was, therefore, held to be available and
State Government could not impose any tax upon said land. It is obvious
that view taken is due to appreciation of scheme of 1971 Act as also of
decision of Union of India in terms of its section 12 (3). I find that the
judgment of Hon Apex Court in case of Municipal Commissioner of Dum
Dum Municipality vs Indian Tourism Development Corporation (supra)
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being considered little later does not support this appreciation of statutory
scheme.
11. Judgment of Hon. Apex Court delivered by Hon. Judge in
case of Electronics Corpn. of India, Ltd., M/s. v. Secy., Revenue Deptt.,
Govt. of A.P (supra) now needs to be perused. Levy of non-agricultural
assessment by A.P. Non-Agricultural Land Assessment Act (14 of 1963)
(as amended by Act 28 of 1974) on land owned by Central Govt. but
leased out to appellant company for industrial and commercial purpose
was held legal & it was held that it can be recovered from Company.
Plea of estoppel on ground that State Government in its reply letter stated
that no separate notification is necessary for exempting land given to
Union of India from payment of said levy was held not tenable. There
with effect from 1st July, 1974, Sec. 12 of the Act was amended so that it
applied to land which was owned by the Central or a State Government
and was leased out for any commercial, industrial or other non-agricultural
purpose. Sec. 2(j) defining an “owner” was also amended from that
date to include a lessee of land owned by the Central or a State
Government if the land was leased out by such Government for a
commercial, industrial or other non-agricultural purpose. By virtue of
Sec. 3, the obligation to pay non-agricultural assessment on the leased
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land lay upon the owner lessee. In the case before it, Hon Apex Court
found the appellant company to be the lessee of the Department of Atomic
Energy of the Union of India in respect of the said land. The said land,
therefore though of the ownership of the Central Government, being
leased out to the appellant company for an industrial and commercial
purpose, was land to which the said A.P. Act applied. By virtue of the
amended definition of “owner” under S. 2(j) of that Act, the appellant
company was held to be owner of the said land and, by virtue of Sec. 3,
was found liable to pay non-agricultural assessment thereon. Apex Court
declared that a clear distinction must be drawn between a company and
its share-holder, even though that shareholder may be only one and may
be the Central or a State Government. In the eye of the law, a company
registered under the Companies Act is a distinct legal entity other than the
legal entity or entities that hold its shares. Its earlier judgment in case of
Western Coalfields Ltd vs Special Area Development Authority (supra)
has been relied upon in support. The question about vesting decided by
Hon. Judge as Judge of this High Court did not require consideration by
Hon Apex Court in this Constitutional Bench judgment.
12. Judgment of Hon Apex Court in case of Municipal
Commissioner of Dum Dum Municipality vs Indian Tourism Development
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Corporation (supra) considers properties vesting in Airport Authority by
virtue of Section 12 of International Airport’s Authority Act, 1971 i.e. 1971
Act. Provisions of Section 12 along with its subsection (3) are
reproduced in paragraphs 11/12 of this report and then in later paragraphs
13 to 16 the scheme of the 1971 Act is briefly stated. The argument
advanced in paragraph 18 about different shades of expression “vest” is
considered in paragraph 22 which also shows consideration of argument
that the vesting of properties in Airport Authority was only for the purpose
of managing those properties and ownership thereof never vested in the
Authority. It has been concluded that the scheme of the 1971 Act and
absence of words of restriction in Section 12 revealed the intention of
legislature that properties ceased to be the properties of Union of India
and vesting in Airport Authority was neither restricted nor temporary. In
para 23, Section 33 of 1971 Act is held to be a temporary and regulatory
measure which usually finds place in enactments dealing with Co-
operative societies and Panchayat Raj institutions. In paragraph 24,
Section 34 dealing with supersession of Airport Authority are also
considered to find that for limited period only properties vested in Union.
In paragraph 26, requirement of giving notice before taking action under
Section 33 and 34 is held to indicate that Airport Authority was meant to
be a separate entity with distinct identity. In paragraph 28 and 29 of the
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reported judgment letters written by Government of India purported to the
under Section 12 (3) of 1971 Act are reproduced and in paragraph 30,
Hon Apex Court has given reasons for holding it not to be a binding
decision in terms of Section 12 (3). In paragraph 34 of this judgment, its
earlier judgment in case of Western Coalfields Ltd vs Special Area
Development Authority (supra) has been cited with approval by the Hon.
Apex Court. Thus, this judgment clearly overrules the view of this High
Court in International Airport Authority of India vs State of Maharashtra
(supra). It is to be noted that Hon. Apex Court has set aside the view of
Calcutta High Court and found that similar view reached by Learned
Single Judge of this High Court was subject-matter of L.P.A. before its
Division Bench. The Apex Court has also dismissed appeal of Airport
Authority against the interlocutory order in L.P.A. directing it to pay the
part of demand of property tax to Bombay Municipal Corporation issued
by said D.B. by its judgment.
13. Though State Government has cited several judgments to
show how Government Companies have been treated as distinct entities
liable to pay property tax or non-agricultural tax as levied by State
Governments, in view of the discussion above and direct judgment
available on the point, I do not find it necessary to delve more in this
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controversy. Following observations in Western Coalfields Ltd. v. Special
Area Development Authority, Korba (supra) clinch the issue :–
“20. The third contention of the Attorney General
flows from the provisions of Art. 285 (1) of theConstitution which says that the property of the Union
shall, save in so far as Parliament may by lawotherwise provide be exempt from all taxes imposed by
a State or by any authority within a State. Sec. 127A(2) of the M. P. Municipalities Act and S. 136 of the M.
P. Municipal Corporation Act also provide that the
property tax shall not be leviable, inter alia, on
“buildings and lands owned by or vesting in the Union
Government”. Relying on these provisions, it is
contended by the Attorney General that since the
appellant companies are wholly owned by the
Government of India. the lands and buildings owned by
the companies cannot be subjected to property tax. The
short answer to this contention is that even though the
entire share capital of the appellant companies has
been subscribed by the Government of India it cannot
be predicated that the companies themselves are owned
by the Government of India. The companies, which are
incorporated under the Companies Act, have a
corporate personality of their own, distinct from that of
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the Government of India. The lands and buildings are
vested in and owned by the companies the Government
of India only owns the share capital. In Rustom
Cavasjee Cooper v. Union of India (The Banks
Nationalisation case) it was held :
“A company registered under the Companies Act is a
legal person, separate and distinct from its individual
members. Property of the Company is not the property
of the shareholders. A shareholder has merely an
interest in the Company arising under its Articles of
Association, measured by a sum of money for the
purpose of liability, and by a share in the profit.”
21. In Heavy Engineering Mazdoor Union v. The State
of Bihar, the fact that all its shares were held by the
President and certain officers of the Central
Government did not make any difference to that
position.
21A. The decision of this Court in the Andhra Pradesh
State Road Transport Corporation v. Income-tax
Officer, but it is not a Government department nor do
its powers fall within the province of Government”.
In Pennington’s Company Law, 4th Edition, pages 50-
51, it is stated that there are only two decided cases —
no scope for applying the doctrine of lifting the veil in
order to have regard to the realities of the situation.
The appellant companies were incorporated under the
Companies Act for a lawful purpose. Their property is
their own and it vests in them. Under S. 5 (1) of the
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Coal Mines (Nationalisation) Act, 26 of 1973, which
applies in the instant case, the right, title and interest
of a nationalised coal mine vest, by direction of the
Central Government, in the Government company. If
the lands and building on which respondent 1 has
imposed the property tax cannot be regarded as the
property of the Central Government for several other
purposes like attachment and sale, there is no reason
why, for taxing purposes the property can be treated as
belonging to that Government as distinct from the
company which has a juristic personality..”
14. In Electronics Corpn. of India, Ltd., M/s. v. Secy., Revenue
Deptt., Govt. of A.P (supra ) also, it is observed that a clear distinction
must be drawn between a company and its share-holder, even though that
shareholder may be only one and that the Central or a State Government.
In the eye of the law, a company registered under the Companies Act is a
distinct legal entity other than the legal entity or entities that hold its
shares. In 1999 A IR SC W 4761–We ste rn C oalfie lds Ltd. v. Munic ipa l
C ounc il, Birsing hp ur Pali; Hon. Apex Court has held that due to effect
of order under S.5 of Coal Mines (Nationalisation) Act (26 of 1973) , rights,
title and interests of erstwhile owner of colliery which vested in Central
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Government on nationalization get vested in the Govt. company. Such
Government company holds the colliery as its own & not on behalf of
Central Government. Colliery is, therefore, not entitled to exemption from
property tax. Discussion undertaken below by me in this judgment
considers the argument that property does not vest in WCL and rejects it.
Thus, in view the direct judgments of the point, it is apparent that the
contentions raised on the strength of two judgments of learned Single
Judges of this Court stands concluded against the Petitioners WCL.
15. Now the contentions about effect of clauses in document
handing over the mine to WCL & language of relevant Sections of Coal
Bearing Act & Nationalization Act deserves attention.
(A) Learned ASG Sharan has also argued that there is
deeming fiction in Coal Bearing Act as also in Nationalization Act which
has not been considered by any of the judgments so far. It is difficult to
accept this proposition as while delivering the judgments relevant
provisions of law are noticed though the same may not be expressly
mentioned. However in order to appreciate this controversy, relevant
provisions need to be reproduced.
Sections 3, 5 and 11 of the Coal Mines (Nationalization) Act,
1973, so far as they are relevant here are thus :
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“3. Acquisition of rights of owners in respect of coal
mines.- (1) On the appointed day, the right, title and
interest of the owners in relation to the Coal Mines
specified in the Schedule shall stand transferred to, and
shall vest absolutely in, the Central Government free
from all encumbrances.
(2), (3), (4) and (5) —
5. Power of Central Government to direct vesting of
rights in a Government company- (1) Notwithstanding
anything contained in Sections 3 and 4, the Central
Government may, if it is satisfied that the Government
company is willing to comply, or has complied with
such terms and conditions as that Government may
think fit to impose, direct, by an order in writing, that
the right, title and interest of an owner in relation to a
coal mine referred to in Section 3, shall, instead of
continuing to vest in the Central Government, vest in
the Government Company either the date of
publication of the direction or on such earlier or later
date (not being a date earlier than the appointed day),
as may be specified in the direction.
(2) Where the right, title and interest of an owner in
relation to a coal mine vest in a Government company
under sub-section (1) the Government Company shall,
on and from the date of such vesting, be deemed to
have become the lessee in relation to such coal mine as
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if a mining lease in relation to the coal mine has been
granted to the Government company and the period of
such lease could have been granted under the Mineral
Concession Rules; and all the rights and liabilities, of
the Central Government in relation to such coal mine
shall on and from the date of such vesting, be deemed
to have become the rights and liabilities, respectively, of
the Government company.
(3) The provisions of sub-section (2) of Section 4 shall
apply to a lease which vests in a Government company
as they apply to a lease vested in the Central
Government and references therein to the “Central
Government” shall be construed as references to the
Government Company.
11. Management, etc. of coal mines.- (1) The general
superintendence, direction, control and management of
the affairs and business of a coal mine, the right, title
and interest of an owner in relation to which have
vested in the Central Government under Section 3,
shall-
(a) in the case of a coal mine in relation to which a
direction has been made by the Central Government
under sub-section (1) of Section 5, vest in the
Government company specified in such direction or”
(b) in the case of a coal mine in relation to which no
such direction has been made by the Central
Government, vest in one or more custodians appointed
by the Central Government under sub Section (2),
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(2) The Central Government may appoint an
individual or a Government Company as the Custodian
of a coal mine in relation to which no direction has
been made by it under sub Section (1) of Section 5.”
Section 2 (e) states that “Custodian” means the
Custodian appointed under sub Section (2) of Section
11, to take over, or carry on, the management of a coal
mine.”
Thus, it is obvious that when Central Government makes a
direction under Section 11(1) (a) the general superintendence direction
control and management of the affairs and business of a coal mine as
also the right, title and interest of Central Government in relation there to
stands transferred to and vests in Government Company. Central
Government under Section 3 succeeds to right, title and interest of the
owner of coal -mine which it then passes on to Government Company
under Section 5 (1) of Nationalization Act. At least statute does not show
that these rights get diluted in any way in the process. If no such
direction is made, the same vests in Custodian appointed under sub
Section (2) above. Question is what is the purport of deeming fiction
about the rights and liabilities of Central Government which or subject to
which the property vests in Government Company.
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B. Scheme of Coal Bearing Act is not much different.
Section 9 is final declaration of acquisition and relevant Sections 10 & 11
read as under: —
“Section 10. Vesting of land or rights in
Central Government: — (1) On the publication in theOfficials Gazette of the declaration under Section 9, the
land or the rights in or over the land, as the case maybe, shall vest absolutely in the Central Government free
from all encumbrances.
(2) Where the
rights under any mining lease granted or deemed tohave been granted by a State Government to any person
are acquired under this Act the Central Governmentshall, on and from the date of such vesting, be deemed
to have become the lessee of the State Government as ifa mining lease under the Mineral Concession Rules had
been granted by the State Government to the Central
Government, the period thereof being the entire period
for which such a lease could have been granted by StateGovernment under those rules.
Section 11. Power of Central
Government to direct vesting of land or rights in a
Government Company: — (1) Notwithstanding
anything contained in Section 10, the Central
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Government may, if it is satisfied that a Government
Company is willing to comply or has complied with
such terms and conditions as the Central Government
may think fit to impose, direct by order in writing, that
the land or the rights in or over the land, as the case
may be, shall instead of vesting in the Central
Government under section 10 or continuing to so vest,
vest in the Government Company either on the date of
publication of the declaration or on such other date as
may be specified in the direction.
(2) Where the
rights under any mining lease acquired under this Act
vest in a Government Company under sub Section (1),
the Government Company shall on and from the date of
such vesting, be deemed to have become the lessee of the
State Government as if a mining lease under the
Mineral Concession Rules has been granted by the State
Government to the Government Company, the period
thereof being the entire period for which such a lease
could have been granted by the State Government
under those rules, and all the rights and liabilities of
the Central Government in relation to the lease or the
land covered by it shall, on and from the date of such
vesting be deemed to have become the rights and
liabilities of the Government Company.”
It is obvious that after declaration under Section 9, the
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lands, whether private or otherwise forming subject-matter thereof or all
the rights in relation there to either as lessee of State Government or
otherwise vest in Central Government. Learned ASG Sharan has
contended that in present case no mining lease has been acquired by
Central Government under Coal Bearing Act and therefore neither Section
10 (2) nor Section 11 (2) have any application and Petitioners WCL
cannot be treated as Lessee of State Government in relation to lands
received by it under this Enactment. It is apparent that all types of rights
can be acquired under Coal Bearing Act and vesting thereof is
contemplated only under Section 10 (1). Section 10 (1) also covers
vesting after acquisition of leasehold rights. Section 10 (2) only provides
for substitution of Central Government as lessee of State Government
when rights under mining lease are acquired. The rights of original owner
of those leasehold rights vest in Central Government under first part of
Section 10 and Section 10 (2) only regulates the relationship between
Central Government and State Government concerning such mining lease
by superimposing Central Government as lessee and by prescribing
maximum possible duration therefor. Therefore, only Section 11 (1)
does not use or specify both parts of Section 10 separately. Otherwise,
there is no mechanism in Section 11 enabling Central Government to
transfer acquired mining lease to any Government Company. Section 11
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(1) is, therefore, the only provision which empowers Central Government
to transfer rights vesting in it either as owner or then as lessee of State
Government to such Government Company. This separation of rights as
lessee of State Government or otherwise qua the acquired rights/land is
not prescribed by legislature only for Central Government and the
Government Company also substitutes itself in place of Central
Government as lessee of State Government by virtue of Section 11 (2). It
is,
therefore, apparent that whatever interests or rights Central
Government procurers under the scheme of Coal Bearing Act only, all
those rights devolve upon Government Company under Section 11.
16. (A) It is here important to note that to demonstrate that
Petitioner WCL does not have right to alienate any lands none of the
provisions either of Coal Bearing Act or then of Nationalization Act have
been pointed out. The document by which Central Government directed
vesting of the property in WCL has only been shown. This document is
under Coal Bearing Act and no copy of order of vesting under
Nationalization Act is filed. Copy of order dated 23rd December 1986
issued by Under Secretary to Government of India has been annexed as
specimen along with all Petitions except WP 2604/2008. No order of
vesting is annexed with WP 2604/2008. First paragraph of this specimen
after disclosing 21st December, 1985 as the date of publication of
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notification under Section 9 (1) of Coal Bearing Act mentions that lands
and rights described in schedule appended to it vested absolutely free
from all encumbrances in Central Government as per Section 10 (1). Said
schedule appended either to notification under Section 9 (1) or to this
specimen copy is not filed on record. Second paragraph is about
satisfaction of Central Government that WCL, Nagpur i.e. present
Petitioner was willing to comply with the terms and conditions Central
Government thought it fit to impose. Third paragraph thereafter declares
that said lands and rights so vested with effect from 21st December 1985
instead of continuing to so vest in Central Government shall vest in the
Government Company subject to 5 terms and conditions stated below: —
” 1. The Government Company shall reimburse the
Central Government all payments made in respect
of compensation, interests, damages and the like,as determined under the provisions of the said Act.
2. A Tribunal shall be constituted for the purpose of
determining the amounts payable to the Central
Government by the Government Company undercondition (1) and all expenditure incurred in
connection with any such Tribunal and persons
appointed to assist the Tribunal shall be borne by
the Government Company and, similarly all
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also be borne by the Government Company.
3. The Government Company shall indemnify the
Central Government or its officials against any other
expenditure that may be necessary in connectionwith any proceedings by or against the Central
Government or its officials regarding the rights in or
over the said lands so vesting.
4. The Government Company shall have no
power to transfer the said lands to any other person
without the previous approval of the CentralGovernment.
5. The Government Company shall abide by such
directions and conditions as may be given orimposed by the Central Government for particular
area as and when necessary.”
(B). This document ,therefore , clearly shows that rights
in land as vested with Central Government have been passed over to
Government Company (WCL) and power to transfer available to it has
been permitted to be exercised only after previous approval of Central
Government. The document itself shows that power to transfer has not
been denied to Petitioner-Company. Petitioner-Company has to payback
entire expenditure incurred by Central Government towards acquisition of
land including compensation to the original owner and has also to
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indemnify Central Government for future expenditure in connection with
said proceedings. Thus as per this document Central Government does
not pay anything from its treasury for the lands/leases and recovers
everything from Petitioner WCL. Thus having paid for market value of
acquired rights, it cannot be accepted that such acquired rights or property
does not vest in WCL. Neither memorandum of association nor articles of
association of WCL are placed on record to show that though a
Government Company under Companies Act, it has not been authorized
to acquire and hold property. Petitioner itself has stated some instances of
direct purchases as source of acquisition of lands for its activities.
Judgment of Hon Apex Court in case of Municipal Commissioner of Dum
Dum Municipality vs Indian Tourism Development Corporation (supra)
considered above, deals the nature of vesting of properties in
International Airport Authority by virtue of Section 12 of International
Airport’s Authority Act, 1971 i.e. 1971 Act. Provisions of Section 12 along
with its subsection (3) are reproduced in paragraph 11 & 12 of this report
and then in paragraph 13 provisions of Chapter IV which sets out
functions of the Authority are discussed. In report paragraph 14 Chapter
V dealing with finance, accounts and audit are mentioned. It is also
noticed that balance of its annual net profits remaining after meeting of its
expenditure and after providing for reserves etc. is to be made over to
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Central Government by Airport Authority. Sections 21 to 24 which contain
certain regulatory measures concerning the finances of Airport Authority
are also noticed. Chapter VI with title “Miscellaneous” which require
Authority to prepare and submit to Central Government annual report
giving accounts of its activities during the financial year, activities
proposed to be undertaken during next financial year, provision for placing
such report before both houses of Parliament, provision in Section 31
stipulating that the Authority shall be deemed to be a company within the
meaning of Income Tax Act, 1961 are all considered in paragraph 15 of
this judgment by Hon Apex Court. Sections 33 and 34 which confer
power upon Central Government to issue direction to Airport Authority to
entrust management of Airport to any person after reasonable opportunity
of being heard, operation of such arrangement for period of six months
unless recalled earlier with power to extend it for further period not
exceeding 18 months, power given by Section 34 to supersede Airport
Authority in certain contingencies find consideration in paragraph 15 as
also paragraph 16 of the report. In paragraph 21, Hon Apex Court has
noted that after realising that business is to be carried on as a business
and not in the manner of Governmental activity, Central and State
Government’s started creating corporations for carrying on these
activities. Instances of several such corporations are given and it is noted
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that International Airport Authority is one such Corporation created by the
Act. Is noticed that vesting under Section 12 is neither restricted nor
temporary and property ceases to be property of Union of India. It is also
noticed that vesting was no doubt for ensuring better management of
airports but the said purpose underlying the creation of the Authority could
not be read as a restriction or as the ground for curtailing the meaning of
vesting. The argument in paragraph 18 about different shades of
expression “vest” is considered in paragraph 22 which also shows
consideration of argument that the vesting of properties in Airport
Authority was only for the purpose of managing those properties and
ownership thereof never vested in the Authority. In para 23, Section 33 of
1971 Act is held to be a temporary and regulatory measure which usually
finds place in enactment dealing with Co-operative Societies and
Panchayat Raj institutions. In present Writ Petitions neither WCL nor State
Government has pointed out any similar Sections or Scheme relevant for
determination of nature of “vesting”. Petitioner WCL has chosen to rely
only upon above specimen copy of order. It only shows that when Union
of India accepted an artificial person in the shape of WCL to substitute
itself, certain regulatory measures have been made in the orders issued
under Section 11 (1) of Coal Bearing Act. The regulations do not deny
right to transfer to Petitioner and in no way states that if transfer is
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permitted, Central Government will receive the consideration therefor. I,
therefore, find that the specimen copy which accepts absolute vesting of
property in Central Government substitutes WCL in place of Central
Government as its absolute holder free from all encumbrances but subject
to certain regulatory measures inherent in such type of arrangements. It
shows that said right instead of continuing to so vest in Central
Government has been made over to Petitioners and thus Central
Government has ceased to be its holder. Observations of Hon Apex Court
cited on behalf of Petitioners & in Kalawatibai vs. Soiryabai reported at
the 1991 (3) SC C 410 in paragraph 12 made in the background of Section
14 (1) of Hindu Succession Act, 1956 explaining meaning of limited
ownership are not applicable here.
17. (A) Effect of alleged “deeming fiction” needs to be
considered in this background. Petitioners have urged that precedents
are not Euclid’s theorem and as effect of deeming fiction as contained in
Section 5 (2) of Nationalization Act has not been determined by any of the
judgments cited on behalf of State Government, those judgments are not
relevant authorities. The word “deemed” is used in different senses and it
does not mean that a deeming provision is every time made for creating a
fiction. A deeming provision may be with a view to include what is already
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obvious or what is uncertain or to signify an artificial meaning or
construction of a word or phrase that would not have been normally
possible. Thus in each situation a question as to with what object the
legislature has made such a deeming provision falls for consideration.
Here “deeming fiction” in Section 5 of Nationalization Act or in Section 11
of Coal Bearing Act is sought to be extended to transfer immunity from
taxation provided to Union i.e.Central Government by Article 285 of
Constitution of India to WCL. Said Article reads:–
“285. Exemption of property of the Union from State
taxation.- (1) The property of the Union shall, save inso far as Parliament may by law otherwise provides, be
exempt from all taxes imposed by a State or by any
authority within a State.”
Settled principles governing the interpretation of a deeming
clause can be gathered from the case of East End Dwe lling s C o. Ltd. v.
Finsbury Boroug h C ounc il , reported in 1951 (2) A ll ER 587. This
quotation in judgment of the House of Lords has been approved by the
Supreme Court in a number of decisions. Commenting on the construction
of a deeming clause, which creates a legal fiction, Lord Asquith explained
the effect of such a fiction in the following words :-
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“If one is bidden to treat an imaginary state of affairs
as real, one must surely, unless prohibited from doing
so, also imagine as real the consequences and incidentswhich, if the putative state of affairs had in fact
existed, must inevitably have flowed from or
accompanied it.”
“The statute says that one must imagine a certain state
of affairs. It does not say that, having done so, onemust cause or permit one’s imagination to boggle when
it comes to the inevitable corollaries of that state ofaffairs.”
The Court has to first ascertain the purpose behind incorporation of such
deeming provision i.e. the need necessitating such a legal fiction in the
scheme of law.
(B) Deeming fiction is being pressed into service by WCL
to support its claim to the rights & liabilities of the Central Government.
The purpose of Coal Bearing Act is to establish in the economic interest of
India greater public control over the coal mining industry and its
development by providing for acquisition by the State of unworked land
containing or likely to contain coal deposits or of rights in or over such
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land, for the extinguishment or modification of such rights accruing by
virtue of any agreement, lease, licence or otherwise and contains
provisions for matters connected there with. Under Section 10 (1) of Coal
Bearing Act the land or the rights in all over the land vest absolutely in
Central Government free from all encumbrances. It is obvious that these
rights are acquired by following the procedure under said Act Section 10
(2) substitutes Central Government as Lessee of State Government if
property acquired is lease rights under any mining lease. It is therefore
obvious that the rights and liabilities of Central Government qua the
acquired property under Coal Bearing Act & its earlier owner/holder are
only envisaged in scheme of Section 10 (1) and (2). Consequentially it
follows that very same rights are also dealt with by Section 11. Same
logic also holds good in relation to Section 5 of Nationalization Act.
Section 5 (1) actually mentions the right, title and interest of an owner in
relation to the coal mine as the subject on which Central Government
issues order in writing and directs its vesting in Government Company like
WCL. It is an Act to provide for acquisition and transfer of the right, title
and interest of the owners in respect to the coal mines specified in the
schedule with a view to reorganizing and reconstructing such coal mines
so as to ensure rational, coordinated and scientific development and
utilization of coal resources consistent with the growing requirements of
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the country, in order that ownership and control of such resources are
vested in the State and thereby so distributed as best to subserve the
common good and to make provision for matters connected there with or
incidentally thereto. It is therefore obvious that the object of both these
Enactment/Acts is to divest private holding or ownership of coal mines and
to make it over to in Central Government. Thus after completion of
process of acquisition, the property or rights forming subject matter of
such acquisition vest absolutely in Central Government free from all
encumbrances. The original holder or owners are entitled only to
compensation as per the scheme of Acts but all their rights, title or interest
in such property is lost. It is these lost rights which are being transferred
to a Government Company through further Sections in respective Acts.
The words “all the rights and liabilities, of the Central Government in
relation to such coal mine” & “deemed to have become the rights and
liabilities, respectively of the Government Company” used in Section 5 (2)
Nationalization Act, therefore, envisage only these rights of private
owner/holder derived by Central Government. This is equally applicable
even to words “and all the rights and liabilities of the Central Government
in relation to the lease or the land covered by it shall, on and from the date
of such vesting be deemed to have become the rights and liabilities of the
Government Company.” appearing at the end of Section 11 (2) of Coal
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Bearing Act.
(C) Both these Acts do not deal with constitutional immunity
available to Central Government because of Article 285 (1) of Constitution
of India and also constitutional rights and liabilities of Central Government
and State Government qua each other. Not only this, there is no effort
and intention to transfer constitutional immunity of Central Government to
Government Company in said provisions. It is also clear that immunity
provided for by Article 285(1) is conferred by Constitution on Central
Government and it is a constitutional privilege which cannot be transferred
or made over to any other functionaries unless and until Constitution of
India is itself amended. Because of this position, neither Coal Bearing Act
or Nationalization Act can be construed as even dealing with such
immunity and therefore, nor Section 5 or Section 11 thereof, as the case
may be, can be viewed as engulfing this aspect of immunity while using
the words “all the rights and liabilities of Central Government”. The words
“free from all encumbrances” in respective S.10(1) & 3(1) of respective
Acts do not cover constitutional rights & liabilities. Moreover, even if
“deeming scheme” in respective above Sections is presumed to cover
within its sweep such immunity of Central Government, the same cannot
be passed over to WCL by either Coal Bearing Act or Nationalisation Act.
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It is more than apparent that argument of “deeming fiction” in an attempt
to reach such immunity is misconceived in present circumstances.
18. There is also challenge to competence of State Government
to continue to levy or to demand non-agricultural tax after the lands are
made over to WCL for its exploitation as coal mine.
(A)
Discussion already undertaken above clearly shows
that the immunity provided in Article 285 of Constitution of India sought to
be invoked either directly by claiming that lands still vested in Central
Government or then indirectly by stretching the so-called “deeming words”
is not available to Petitioners. In “Electronics Corpn. of India, Ltd., M/s. v.
Secy., Revenue Deptt., Govt. of A.P” (supra) in para 22, Hon. Apex Court
observed that the provisions under Ss. 2(j) and 12 of A.P. Non-Agricultural
Land Assessment Act (14 of 1963) (as amended by Act 28 of 1974), are
not ultra vires because Art. 285 does not apply when the property to be
taxed is not of the Union of India but of a distinct and separate legal entity.
Each of the appellants before it being companies registered under
Companies Act, were found to be entities other than the Union of India.
Hon. Apex Court concluded that the question of reading down of
provisions of S. 2(j) and S. 12 did not, therefore, arise. Hence challenge
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by pointing out provisions of Article 285 deserves to be rejected. The other
aspect of legislative competence on part of State Government to demand
tax or non-agricultural assessment on lands with WCL is squarely
covered by the two judgments of Hon. Apex Court i.e. first reported at AIR
1982 S.C. 697 Western Coalfields Ltd. v. Special Area Development
Authority, Korba & later at AIR 2005 S.C. 1646 “State of West Bengal v.
Kesoram Industries Ltd. The later judgment is delivered by
Constitutional Bench and majority therein approves the first judgment.
(B) In so far as Western Coalfields Ltd. v. Special Area
Development Authority, Korba (supra) is concerned, I find reproduction of
relevant paragraph from the judgment itself more appropriate.
23. Finally, the learned Attorney General raised a
contention of fundamental importance which was not
raised in the High Court. The lands and buildings on
which respondent 1 has imposed the property tax are
used for the purposes of and are covered by coal-mines.
Basing himself on that consideration the Attorney
General argues:
(1) By virtue of the declaration contained in Sec. 2
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of the Mines and Minerals (Development and
Regulation) Act 1957. the legislative field covered by
Entry 23, List II passed on to the Parliament by virtue
of Entry 54, List I.
(2) The Parliament enacted the Coal Mines
Nationalisation Act, 1973 for acquisition of coal mines
with a view to reorganising and reconstructing such
coal mines so as to ensure the rational, co-ordinated
and scientific development and utilisation of coal
resources as best to subserve the common good.
(3) Under Sec. 5 of the Nationalisation Act. the
acquired properties were vested in a Government
Company in order to carry out more conveniently the
object of that Act. and for that purpose the properties
were freed from all encumbrances by Section 6 of the
Act.
(4) The taxing power of the State legislature must be
construed as limited in its scope so as not to come in
conflict with the power and function of the Union to
regulate and develop the mines as envisaged by the
Nationalisation Act.
(5) The impugned tax is manifestly an impediment
in the discharge of the afore said function since it
substantially increases the cost of the developmental
activities. The tax is not in the nature of a fee.
24. Apart from the fact that there is no data
before us showing that the property tax constitutes an
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impediment in the achievement of the goals of the Coal
‘Mines Nationalisation Act, the provisions of the M. P.
Act of 1973, under which Special Areas and Special
Area Development Authorities are constituted afford an
effective answer to the Attorney General’s contention.
Entry 23 of List II relates to “Regulation of Mines and
mineral development subject to the provisions of List I
with respect to regulation and development under the
control of the Union,” Entry 54 of List I relates to
“Regulation of mines and mineral 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 true that
on account of the declaration contained in S. 2 of the
Mines and Minerals (Development and Regulation) Act
1957 the legislative field covered by Entry 23 of List II
will pass on to Parliament by virtue to Entry 54 List I.
But in order to judge whether on that account, the
State legislature loses its competence to pass the Act of
1973, it is necessary to have regard to the object and
purpose of that Act and to the relevant provisions
thereof, under which Special Area Development
Authorities are given the power to tax lands and
buildings within their jurisdiction. We have set out the
objects of the Act at the commencement of this
judgment, one of which is to provide for the
development and administration of Special Areas
through Special Area Development Authorities. Section
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64 of the Act of 1973, which provides for the
constitution of special areas lays down by sub-section
(4) that : Notwithstanding anything contained in the
M. P. Municipal Corporation Act. 1956, the M. P.
Municipalities Act, 1961, or the M. P. Panchayats Act,
1962, the Municipal Corporation. Municipal Council.
Notified Area Committee or a Panchayat. as the case
may be, shall in relation to the Special area and as
from the date the Special Area Development Authority
undertakes the functions under clause (v) or clause (vi)
of Sec. 68 cease to exercise the powers and perform the
functions and duties which the Special Area
Development Authority is competent to exercise and
perform under the Act of 1973 Section 68 defines the
functions of the Special Area Development Authority
one of which as prescribed by clause (v), is to provide
the Municipal services as specified in Sections 123 and
124 of the M. P. Municipalities Act, 1961. Section 69
which defines the powers of the Authority. shows that
those powers are conferred inter alia, for the purpose of
municipal administration. Surely. the functions, powers
and duties of Municipalities do not become an occupied
field by reason of the declaration contained in Section 2
of the Mines and Minerals (Development and
Regulation) Act. 1957. Though, therefore, on account
of that declaration, the legislative field covered by,
Entry 23, List II may pass on to the Parliament by
virtue of Entry 54. List 1, the competence of the State
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Government to enact laws for municipal administration
will remain unaffected by that declaration.
25. Entry 5 of List II relates to “Local Government.
that Is to say. the constitution and powers of municipal
corporations and other local authorities for the purpose
of local self-Government”. It is in pursuance of this
Power that the State Legislature enacted the Act of
1973. The power to impose tax on lands and buildings
is derived by the State Legislature from Entry 49 of List
II : “Taxes on lands and buildings”. The power of the
Municipalties to levy tax on lands and buildings has
been conferred by the State Legislature on the Special
Area Development Authorities. Those Authorities. have
the power to levy that tax in order effectively to
discharge the municipal functions which are passed on
to them. Entry 54 of List I does not contemplate the
taking over of municipal functions.
26. Shri Dharmadhikari who appears on behalf of
the respondents has drawn our attention to the
judgment of a Constitution Bench of this Court in H. R.
S. Murthy v. Collector of Chittoor (1964) 6 SCR 666:
(AIR 1965 SC 177), which provides a complete answer
to the Attorney General’s contention. In that case under
the terms of a mining lease, the lessee worked the mines
and bound himself to pay a dead rent if he used the
leased land for the extraction of iron ore and to pay
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surface rent in respect of the surface area occupied or
used by him. Demands were made upon the lessee for
successive years for the payment of land cess under
Secs. 78 and 79 of the Madras District Boards Act,
1920. Those demands were challenged by the lessee on
the ground, inter alia, that the provision imposing the
land cess quoad royalty under the mining leases must
be held to have been repealed by the Central Act viz. the
Mines and Minerals (Regulation and Development) Act,
1948, and the Mines and Minerals (Regulation and
Development) Act, 1957. This contention was repelled
by this Court by holding that Sections 78 and 79 of the
Madras District Boards Act had nothing to do with the
development of mines and minerals or their regulation.
The proceeds of the land cess were required to be
credited to the District fund which had to be used for
everything necessary for or conducive to the safety,
health, convenience or education of the inhabitants or
the amenities of the local area concerned It was further
held by the Court that the land cess was not a tax on
mineral rights but was in truth and substance a “tax on
lands” within the meaning Of Entry 49 of the State list.
The reasoning adopted in this decision shows that it is
not correct to say that the proparty tax provided for in
the Act of 1973 is beyond the legislative competence of
the State Legislature; that tax has nothing to do with
the development of mines. The power conferred by the
State Legislature on Special Area Development
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Authorities to impose the property tax on lands and
buildings is therefore not in conflict with the power
conferred by the Coal Mines Nationalisation Act on the
Union Government to regulate and develop the Coal
mines so as to ensure rational and scientific utilisation
of coal resources. The paramount purpose behind the
declaration contained in Section 2 of the Mines and
Minerals (Regulation and Development) Act, 1957 is
not in any manner defeated by the legitimate exercise of
taxing power under Section 69 (d) of the Act of 1973.
27. The decision of this Court in Baijnath Kedia v.
State of Bihar (1970) 2 SCR 100: (AIR 1970 SC
1436), on which the learned Attorney General relies, is
distinguishable.
The second sub-rule added to Rule 20 was held to
be without jurisdiction for the same reason.
28. That the declaration in Section 2 of the Mines
and Minerals (Regulation and Development) Act, 1957
does not result in invalidation of every State legislation
relating to mines and minerals is demonstrated
effectively by the decision in State of Haryana v.
Chanan Mal (1976) 3 SCR 688: (AIR 1976 SC 1654).
The Haryana State Legislature passed the Haryana
Minerals (Vesting of Rights) Act, 1973, under which
two notifications were issued for acquisition of right to
saltpetre, a minor mineral, and for auctioning certain
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saltpetre bearing areas. It was held by this Court that
the Haryana Act was not in any way repugnant to the
provisions of the Act of 1957 made by Parliament and
that the ownership rights could be validly acquired by
the State Government under the State Act.
29. The decision of a Constitution Bench of this Court
in Ishwari Khetan Sugar Mills (P.) Ltd. v. State of U. P.
(1980) 3 SCR 331: (AIR 1980 SC 1955), is even more
to the point. In that case, 12 sugar undertakings stood
transferred to and were vested in a Government
undertaking under the U. P. Sugar Undertakings
(Acquisition) Ordinance, 1971, which later became an
Act. It was contended on behalf of the sugar
undertakings that since sugar is a declared industry
under the Industries (Development and Regulation)
Act, 1951, parliament alone was competent to pass a
law on the subject and the State Legislature had no
competence to pass the impugned Act by reason of
Entry 52. List I read with Entry 24, List II. The
majority, speaking, through one of us Desai J., held
that the legislative Power of the State under Entry 24,
List II, was eroded only to the extent to which control,
was assumed by the Union Government pursuant to the
declaration made by the Parliament in respect of a
declared industry and that the field occupied by such
enactment was the measure of the erosion of the
legislative competence of the State legislature. Since the
Central Act was primarily concerned with the
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development and regulation of declared industries and
not with ownership of industrial undertakings, it was
held that the State legislature had the competence to
enact the impugned law. Justice Pathak and Justice
Koshal, who gave a separate judgment concurring with
the conclusion of the majority, preferred to rest their
decision on the circumstance that the impugned
legislation fell within Entry 42, List III – ‘Acquisition
and requisition of property’ – and was therefore within
the competence of the State legislature.”
(C) In State of West Bengal v. Kesoram Industries Ltd.
(supra) facts show that the constitutionality of the Cess Act, 1880, West
Bengal Primary Education Act, 1973, West Bengal Rural Development
and Production Act, 1976 as amended by the West Bengal Taxation Laws
(Amendment) Act, 1992 whereby and where-under cess was levied on
“coal”, “tea”, “brick-earth” and “minor minerals” was in question before it in
batch of appeals and writ petitions. The Calcutta High Court had by its
Judgment impugned before Apex Court in coal matters declared the cess
imposed on coal to be unconstitutional relying on the decisions of
Supreme Court in India Cement Ltd. v. State of Tamil Nadu and Orissa
Cement Ltd. etc. v. State of Orissa and others. The core issue with which
Hon. Apex Court was concerned was as to whether the legislative
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competence of the State to impose cess is traceable to Entries 49 and 50
of List II vis-a-vis Entries 52, 54 read with Entry 97 of List I of the Seventh
Schedule of the Constitution of India.
(D) Perusal of minority view of Hon. Apex Court is helpful.
There it was held that though Entry 49 of List II confers legislative
competence upon the State to impose tax on ‘land’ and ‘building’, coal
bearing land or mineral bearing land for the purpose of Entry 49, however,
may not be equated with the land as ordinarily understood. Land in its
ordinary meaning may be an agricultural land or a non-agricultural land. It
may also be a mineral bearing land. Mineral bearing lands, however, are
governed by the provisions of the 1957 Act and the Rules framed
thereunder, so far as the same is covered by the declaration contained in
the statute. In terms of the provisions of the said Act, cess, dead rent, as
well as surface rent are payable. Therefore, as per minority view said
Entry 49 of List II should be read in such a manner so that the surface
land must have a direct nexus with the sub-soil right which is held an
inchoate right. Indisputably, sub-soil right would include mineral right.
Mining lease for mining of coal may be granted for huge area but
depending on the nature of mining activities to be carried on, necessarily
the mining lessee would not require the entire surface thereof except
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where mineral is being extracted by adopting quarrying method. As per
said view, if a wide definition of coal bearing land is given so as to hold
that the State is entitled to levy tax on extracted mineral which is severed
from land, the same would lead to an incongruous result as thereby value
of part of the land itself would be a subject-matter of measure of tax
although they do not remain ‘land’ as such. In any event, coal severed
from land cannot be said to be yield on coal bearing land so as to hold
that the value thereof can be determined only for the purpose of measure
of tax vis-a-vis the nature and character thereof. While purporting to
impose tax on land and buildings a State has the legislative competence
in terms of Entry 49 of List II of the Constitution but it can not entrench
upon Entry 52 or Entry 54 of List I thereof. The impugned levies under the
State Acts however, having regard to nature of impost were declared to
be not a tax on land as : (a) the impost was not directly on land. (b) the
levy did not concern itself with any aspects of land i.e. extent of land,
nature, character, quality or location thereof. In the case of mineral, as it is
already embedded in the earth minority view of Apex Court states that
there was no question of any yield because there could be no annual yield
or annual income. The Hon. Apex Court in its minority view finds Western
Coalfields Ltd. v. Special Area Development Authority, Korba (supra) not
to be a good law.
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(E) In this background the, perusal of majority view
particularly paras 39.40,130,135 & 150 is useful. Hon. Constitution Bench
by majority declares that the word ‘land’ cannot be assigned a narrow
meaning so as to confine it to the surface of the earth. It includes all strata
above or below. In other words, the word ‘land’ includes not only the
surface of the earth but everything under or over it, and has in its legal
significance an indefinite extent upward and downward. Ample authority is
available for the concept that under Entry 49 in List II the land remains a
land without regard to the use to which it is being subjected. It is open for
the Legislature to ignore the nature of the user and tax the land. At the
same time it is also permissible to identify, for the purpose of
classification, the land by reference to its user. While taxing the land it is
open for the Legislature to consider the land which produces a particular
growth or is useful for a particular utility and to classify it separately and
tax the same. Different pieces of land identically situated otherwise, but
being subjected to different uses, or having different potential, are capable
of being classified separately without incurring the wrath of Art. 14 of the
Constitution. The tax would remain a tax on land and would not become a
tax on the nature of its user. To be a tax on land, the levy must have some
direct and definite relationship with the land. So long as the tax is a tax on
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land by bearing such relationship with the land, it is open for the
legislature for the purpose of levying tax to adopt any one of the well
known modes of determining the value of the land such as annual or
capital value of the land or its productivity. The methodology adopted,
having an indirect relationship with the land, would not alter the nature of
the tax as being one on land. The judgment also lays down that the
measure employed for assessing a tax must not be confused with the
nature of the tax. A tax has two elements : First, the person, thing or
activity on which the tax is imposed, and secondly, the amount of tax.
While the subject of tax is clear and well defined, the amount of tax is
capable of being measured in many ways for the purpose of
quantification. Defining the subject of tax is a simple task; devising the
measure of taxation is a far more complex exercise and, therefore, the
legislature has to be given much more flexibility in the later field. The
mechanism and method chosen by Legislature for quantification of tax is
not decisive of the measure of tax though it may constitute one relevant
factor out of many for throwing light on determining the general character
of the tax.
(F) Majority view in paragraph 135 elaborates the cardinal
principles in a nutshell as under :—
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“135. The relevant principles culled out from the
preceding discussion are summarized as under:-
(1) In the scheme of the Lists in the Seventh
Schedule, there exists a clear distinction between the
general subjects of legislation and heads of taxation.
They are separately enumerated.
(2) Power of ‘regulation and control’ is separate &
distinct from the power of taxation and so are the two
fields for purposes of legislation. Taxation may be
capable of being comprised in the main subject of
general legislative head by placing an extended
construction, but that is not the rule for deciding the
appropriate legislative field for taxation between List I
and List II. As the fields of taxation are to be found
clearly enumerated in Lists I and II, there can be no
overlapping. There may be overlapping in fact but there
would be no overlapping in law. The subject matter of
two taxes by reference to the two Lists is different.
Simply because the methodology or mechanism adopted
for assessment and quantification is similar, the two
taxes cannot be said to be overlapping. This is the
distinction between the subject of a tax and the measure
of a tax.
(3) The nature of tax levied is different from the
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measure of tax. While the subject of tax is clear and
well defined, the amount of tax is capable of being
measured in many ways for the purpose of
quantification. Defining the subject of tax is a simple
task; devising the measure of taxation is a far more
complex exercise and therefore the legislature has to be
given much more flexibility in the latter field. The
mechanism and method chosen by Legislature for
quantification of tax is not decisive of the nature of tax
though it may constitute one relevant factor out of
many for throwing light on determining the general
character of the tax.
(4) Entries 52, 53 and 54 in List I are not heads of
taxation. They are general entries. Fields of taxation
covered by Entries 49 and 50 in List II continue to
remain with State Legislatures in spite of Union having
enacted laws by reference to Entries 52, 53, 54 in List I.
It is for the Union to legislate and impose limitations on
State’s otherwise plenary power to levy taxes on mineral
rights or taxes on lands (including mineral bearing
lands) by reference to Entry 50 and 49 in List II and lay
down the limitations on State’s power, if it chooses to
do so, and also to define the extent and sweep of such
limitations.
(5) The Entries in List I and List II must be so
construed as to avoid any conflict. If there is no conflict,
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an occasion for deriving assistance from non-obstante
clause “subject to” does not arise. If there is conflict, the
correct approach is to find an answer to three questions
step by step as under:
One – Is still possible to effect reconciliation between
two Entries so as to avoid conflict and overlapping?
Two – In which Entry the impugned legislation falls by
finding out the pith and substance of the legislation?
and
Three – Having determined the field of legislation
wherein the impugned legislation falls by applying
doctrine of pith and substance, can an incidental
trenching upon another field of legislation be ignored?
(6) ‘Land’, the term as occurring in Entry 49 of List II,
has a wide connotation. Land remains land though it
may be subjected to different user. The nature of user of
the land would not enable a piece of land being taken
out of the meaning of land itself. Different uses to which
the land is subjected or is capable of being subjected
provide basis for classifying land into different
identifiable groups for the purpose of taxation. The
nature of user of one piece of land would enable that
piece of land being classified separately from another
piece of land which is being subjected to another kind of
user, though the two pieces of land are identically
situated except for the difference in nature of user. The
tax would remain a tax on land and would not become
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a tax on the nature of its user.
(7) To be a tax on land, the levy must have some
direct and definite relationship with the land. So long
as the tax is a tax on land by bearing such relationship
with the land, it is open for the legislature for the
purpose of levying tax to adopt any one of the well
known modes of determining the value of the land such
as annual or capital value of the land or its
productivity. The methodology adopted, having an
indirect relationship with the land, would not alter the
nature of the tax as being one on land.
(8) The primary object and the essential purpose of
legislation must be distinguished from its ultimate or
incidental results or consequences, for determining the
character of the levy. A levy essentially in the nature of
a tax and within the power of State Legislature cannot
be annulled as unconstitutional merely because it may
have an effect on the price of the commodity. A State
legislation, which makes provisions for levying a cess,
whether by way of tax to augment the revenue
resources of the State or by way of fee to render services
as quid pro quo but without any intention of regulating
and controlling the subject of the levy, cannot be said to
have encroached upon the field of ‘regulation and
control’ belonging to the Central Government by reason
of the incidence of levy being permissible to be passed
on to the buyer or consumer, and thereby affecting the
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price of the commodity or goods. Entry 23 in List II
speaks of regulation of mines and mineral development
subject to the provisions of List I with respect to
regulation and development under the control of the
Union. Entries 52 and 54 of List I are both qualified by
the expression “declared by Parliament by law to be
expedient in the public interest”. A reading in
juxtaposition shows that the declaration by Parliament
must be for the ‘control of industries’ in Entry 52 and
‘for regulation of mines or for mineral development’ in
Entry 54. Such control, regulation or development must
be ‘expedient in the public interest’. Legislation by the
Union in the field covered by Entries 52 and 54 would
not like a magic touch or a taboo denude the entire
field forming subject matter of declaration to the State
Legislatures. Denial to the State would extend only to
the extent of the declaration so made by Parliament. In
spite of declaration made by reference to Entry 52 or
54, the State would be free to act in the field left out
from the declaration. The legislative power to tax by
reference to Entries in List II is plenary unless the entry
itself makes the field ‘subject to’ any other entry or
abstracts the field by any limitations imposable and
permissible. A tax or fee levied by State with the object
of augmenting its finances and in reasonable limits does
not ipso facto trench upon regulation, development or
control of the subject. It is different if the tax or fee
sought to be levied by State can itself be called
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regulatory, the primary purpose whereof is to regulate
or control and augmentation of revenue or rendering
service is only secondary or incidental.
(9) The heads of taxation are clearly enumerated in
Entries 83 to 92B in List I and Entries 45 to 63 in List
II. List III, the Concurrent List, does not provide for any
head of taxation. Entry 96 in List I, Entry 66 in List II
and Entry 47 in List III deal with fees. The residuary
power of legislation in the field of taxation spelled out
by Article 248 (2) and Entry 97 in List I can be applied
only to such subjects as are not included in Entries 45
to 63 of List II. It follows that taxes on lands and
buildings in Entry 49 of List II cannot be levied by the
Union. Taxes on mineral rights, a subject in Entry 50 of
List II can also not be levied by the union though as
stated in Entry 50 itself the union may impose
limitations on the power of the State and such
limitations, if any, imposed by the Parliament by law
relating to mineral development and to that extent shall
circumscribe the States’ power to legislate. Power to tax
mineral rights is with the States; the power to lay down
limitations on exercise of such power, in the interest of
regulation, development or control, as the case may be,
is with the Union. This is the result achieved by
homogeneous reading of Entry 50 in List II and Entries
52 and 54 in List I. So long as a tax or fee on mineral
rights remains in pith and substance a tax for
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augmenting the revenue resources of the State or a fee
for rendering services by the State and it does not
impinge upon regulation of mines and mineral
development or upon control of industry by the Central
Government, it is not unconstitutional.
(G). In relation to “Coal Matters” before it, the Hon. Apex
Court observes:—-
“136. The amendments incorporated by the West
Bengal Taxation Laws (Amendment) Act 1992 w.e.f. 1-
4-1992 into the provisions of the West Bengal PrimaryEducation Act 1973 and the West Bengal Rural
Employment and Production Act 1976 classify the land
into three categories: (i) coal-bearing land, (ii) mineral
bearing land (other than coal bearing land) or quarryand (iii) land other than the preceding two categories.
These three are well-defined classifications by reference
to the user or quality and the nature of product which it
is capable of yielding. The cess is levied on the land. The
method of quantifying the tax is by reference to the
annual value thereof. It is well-known that one of the
major factors contributing to the value of the land is
what it produces or is capable of producing. Merely
because the quantum of coal produced and dispatched
or the quantum of mineral produced and dispatched
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from the land is the factor taken into consideration for
determining the value of the land, it does not become a
tax on coal or minerals. Being a tax on land it is fully
covered by Entry 49 in List II. Assuming it to be a tax on
mineral rights it would be covered by Entry 50 in List II.
Taxes on mineral rights lie within the legislative
competence of the State Legislature “subject to” any
limitation imposed by Parliament by law relating to
mineral development. The Central legislation has not
placed any limitation on the power of the States to
legislate in the field of taxation on mineral rights. The
challenge to constitutional validity of State legislation is
founded on non-availability of legislative field to State;
it has not been the case of any of the writ petitioners
that there are limitations enacted by Central legislation
and the State of West Bengal has breached or crossed
those limits. Simply because incidence of tax is capable
of being passed on to buyers or consumers by the mine
owners with an escalating effect on the price of the coal,
it cannot be inferred that the tax has an adverse effect
on mineral development. Entry 23 in List II speaks of
regulation of mines and mineral developments, subject
to the provisions of List I with respect to regulation and
development under the control of the Union. The
Central Legislation has taken over regulation and
development of mines and mineral development in
public interest. By reference to Entry 50 of List II and
Entry 54 in List I, the Central legislation has not cast
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any limitations on the State Legislature’s power to tax
mineral rights, or land for the matter of that. The
impugned cess is a tax on coal-bearing and mineral-
bearing land. It can at the most be construed to be a tax
on mineral rights. In either case, the impugned cess is
covered by Entries 49 and 50 of List II. The West Bengal
Taxation Laws (Amendment) Act 1992 must be and is
held to be intra vires the Constitution.”
(H) It is therefore obvious that in spite of land being
coal bearing & used for coal extraction, the State Government does not
loose its power of taxation under Entry 49 of State List as declared in para
135(4) above by the Constitutional Bench. The “land” does not cease to
be the land for the purposes of entry 49 in State List as per the majority
view. Judgement of Hon. Patna High Court in Managing Director, National
Coal Development Corporation vs State of Bihar (supra) is on issue of
liability to pay dead rent when there is no lessor-lessee relationship and
lands acquired were virgin one. It is not relevant here. Again I find it
appropriate to rely on similar evaluation by the 5 Hon. Judges of A.P.
High-Court. A.P. Full Bench in AIR 1997 AP 85 –M/s.
Mahabaleswarappa and Sons, Bellary and etc., v. Commissioner of Land
Revenue, Govt. of A.P., Hyderabad and others, etc., rejected the
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challenge to S.3 of A.P. Non-Agricultural Land Assessment Act (14 of
1963 alleging absence of legislative competence after scrutinizing Sch.7,
List 2, Entry 49, List 1, Entry 86 and Art.246 of Constitution of India. Hon.
High Court held that Section 3 empowers the State to determine
assessment on non-agricultural lands and for the purpose of quantifying
the assessment, user of the land i.e., industrial, commercial or non-
agricultural, is to be taken into consideration. From the plain language
employed in Section 3, it is vivid that the assessment is on the land itself,
subject of course to the classification into different categories of the region
on the basis of population and the purpose for which it is put to use.
According to Entry 49 of List II of VII Schedule read with Art. 246 (3) of the
Constitution, the State Legislature is competent to make laws with respect
to levying taxes on lands and buildings. The assessment under the NALA
Act is on the land and not on the purpose for which it is used. The aim
and object of the Act can also be seen from the preamble itself. The
unambiguous language employed in the preamble would reveal that the
assessment is on the lands and not on the use to which they are put and
that the intention of the Legislature is to assess non-agricultural lands.
Further, a reading of Entries 18, 45, and 49 of the List II would reveal that
the State Legislature is competent to legislate in respect of land, the
rights in or over the land, its tenure, with regard to revenue including
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assessment, collection of revenue and also with regard to levy of tax on
lands and buildings. Thus power is exclusively vested in the State
Legislature to levy tax on the land, whether agricultural or non-
agricultural. The Hon. Judges held that the ‘assessment’ levied under the
NALA Act cannot be said to be an assessment alone, but it is more of a
tax. The contention that there is no power to the State to legislate the
enactment imposing assessment as it relates to Entry 86 of List I was
held to be not tenable.
(I) There is no challenge to constitutional validity of
Maharahtra Land Revenue Code before me. Contention is it can not apply
to coal bearing lands or mines with WCL due to central legislation under
Entry 54 of List I. Observations in para 135(4) of the Constitutional Bench
judgment of Hon. Apex Court are complete answer to these arguments &
sufficient to reject it. Rule 72 of Mineral Concession Rules relied upon by
Adv. Sharan does not deal with land revenue or NA assessment but it
requires officer appointed by the State Government to determine the
surface rent as compensation & WCL has to pay it to person who owns
the surface land on which mining is undertaken. It is thus a compensation
and sub-rule 2 & 3 directly link its quantum with annual agricultural yield or
average letting value of similar land for previous three years. It is not a
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substitute for tax under Entry 49 in List II. It can not be said that the Union
has legislated and imposed limitations on State’s otherwise plenary power
to levy taxes on lands by reference to 49 in List II and laid down any
limitations on State’s power.
19. The argument about unauthorised change of user by WCL
calls for consideration now.
(A) Purpose and object behind enacting Coal Bearing
Act and Nationalisation Act is already mentioned in brief above. It is not in
dispute that steps for acquisition or steps after Nationalisation are for the
purposes of extraction of coal. It is also not in dispute that Section 2 (h) of
Nationalisation Act has got a very wide sweep and includes even the
lands and buildings used for residence of officers and staff of the mine. In
fact by its sub-clause (XII) all other fixed assets, movable and immovable,
belonging to owner of mine, wherever situated and current assets
belonging to mine whether within its premises or outside are also included
in said definition. Both these Acts emanate from Entry 54 of List I of
Schedule 7 of Constitution of India. From very defence of State
Government, it is apparent that vesting of these lands or rights in or over
these lands in WCL is an accepted position. Provisions under
Maharashtra Land Revenue Code & of Mines and Minerals (Development
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and Regulation) Act, 1957 (hereinafter referred to as Act No. 67 of 1957)
with 1960 Rules framed thereunder need to be scrutinized. Whether there
is any overlapping & if yes, its effect and consequential erosion of power
in State are the parameters flowing from exercise already completed
above.
(B) The provisions of Maharashtra Land Revenue Code
from Section 41 onwards till Section 48 deal with question of user of
lands. Section 41 permits holder of any land assessed or held for the
purpose of agriculture to be used for the purpose of agriculture. The
erection of form house for carrying out any work for renewal of or
alteration of such form building requires the permission of the Collector.
The Collector has been also authorised not to grant such permission if the
area of land is less than 0.4 Hectare. There are certain other conditions
but in present matter, those conditions are not very relevant. Section
42(1) does not permit agricultural land to be used for agricultural area then
to use any particular agricultural purposes to any other agricultural
purposes or for same purpose but for relaxation of any of the conditions.
Section 43 permits Government or the Collector or Survey Officer
authorized by it, to regulate or prohibit the use of land liable for payment of
land revenue. By Section 42(2) permission for conversion of use is
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declared to be not necessary for person bonafide residential purpose in
non-urban area. Section 42 makes it obligatory for a person to seek
permission from the Collector for converting use of land to any non-
agricultural purpose. Procedure to be followed for seeking such
permission is prescribed under Section 44. An application is required to be
submitted in the prescribed format, along with all necessary documents
and giving necessary information. Collector can grant or refuse the
permission on the grounds like public health, safety, convenience etc.
Permission can also be refused if proposed use of land is contrary to any
Scheme relating to planned development. Section 44, sub-section (1) of
the Code specifies the person who can move such application. Section
44(2) makes it obligatory for the Collector to acknowledge the application
within seven days. The Collector can return the application, if it is not
made by the occupant or the superior holder or if it does not comply with
all the requirements prescribed in this behalf. If the requirements are
complied with, the Collector has to conduct an inquiry and either grant or
refuse permission. Section 44-A states that no permission is required to
convert any land held for agricultural purpose or for a particular non-
agricultural purpose if it is situated within industrial zone of a draft or final
regional plan prepared under Maharashtra Regional and Town Planning
Act, 1966, or within agricultural zone of any plan and the Development
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Control (Regulations) Act or Rules framed thereunder permit industrial use
of that land. Section 45 prescribe penalty for using land for other purpose
unauthorisedly i.e. without permission. Section 47 permits State
Government to exempt any land or class of land from operation of
provisions of Sections 41, 42, 44 and 45. Section 47A imposes
responsibility upon holder to pay additional land revenue called as
conversion tax on account of change of user of land. Section 41A
declares title of government to miner minerals. The State Government
has framed Maharashtra Land Revenue (Reconstruction of Land) Rules,
1968 and Rule 4 thereof prohibits excavation of agricultural land. Under
Rule 5, excavation of building site is also not permitted without
permission. Rule 6 requires previous permission for excavation of un-
alienated gaothan sites.
(C) The provisions of Mines and Minerals (Development
and Regulation) Act, 1957 (hereinafter referred to as Act No. 67 of 1957)
need to be looked into in the background of above provisions under
Maharashtra Land Revenue Code. Section 18 of this Act casts duty upon
the Central Government to take all such steps as may be necessary for
conservation and systematic development of minerals in India and for
protection of environment by preventing or controlling any pollution and to
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make rules for that purpose. Sub-section (2) gives heads under which the
Rules can be framed. Some of the heads are opening of new mines and
regulation of mining operations, regulation of excavation or collection of
minerals from any mine, the measures to be taken by owners of mines for
the purpose of beneficiation of ores, including the provision of suitable
contrivances for such purpose, the regulation of prospecting operations,
disposal or discharge of waste slime or tailings. Section 2 of this Act
declares that the Parliament has found it expedient in public interest that
Union of India should take under its control the regulation of mines and
the development of minerals to the extent provided in the Act No. 67 of
1957. The first schedule to the Act in its Part A dealing with
Hydrocarbons/Energy minerals specifies Coal. In view of Section sub-
section (3), State Government after prior consultation with Central
Government and as per Rules made under Section 18, can undertake
reconnaissance, prospecting or mining operation with respect of coal.
Section 5(1) prohibits State Government from granting licence for this
purpose to any person without previous approval of Central Government.
Section 7(2) again does not permit State Government to renew such
license except with previous approval of Central Government. The
Mineral Concession Rules 1960 (hereinafter referred to 1960 Rules), are
framed under Act No. 67 of 1957 and its Chapter IV deals with grant of
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mining leases. Rule 22 prescribes the form of application for grant of
mining lease and its sub-rule (3) clause (h) requires the applicant to
declare whether the land is not owned by him, whether he has obtained
surface rights over the area or has obtained the consent of owner for
starting mining operations. Sub-rule (4) requires State Government to
take decision to grant precise area for the said purpose and thereafter the
applicant has to furnish a mining plan to the Central Government for its
approval. After mining plan is approved, the applicant has to submit it to
State Government for grant of mining lease over said area. Rule 22(4A)
permits State Government to approve mining plans in relation to certain
minerals but then it does not include coal. Sub-rule (5) lays down
ingredients which must be incorporated in mining plan and those
ingredients require the plan of the lease hold area showing the nature and
extent of mineral body, spot or spots where the mining operations are
proposed, details of geology and lithology of the area, extent of manual
mining or mining by use of machinery, natural water resources, limits of
reserves and other forest areas, density of tress, assessment of impact of
mining activity on forest, land surface and environment including air and
water pollution, details of scheme of restoration of area by afforestation,
land reclamation, use of pollution control devices, a tentative scheme of
mining and annual programme and plan for excavation from year to year
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for five years, a progressive mine closure plan. This plan once approved
is followed for entire duration of the lease. The Hon’ble Apex Court in the
case of “M. C. Mehta v. Union of India” reported at A IR 2004 SC 4016, in
para 52 has held that mining operations cannot be commenced forthwith
merely on approval of mining plan and scheme by Central Government. A
mining lease holder is required to comply with other statutory provisions
such as Environment (Protection) Act, 1986, Air (Prevention and Control
of Pollution) Act, 1981, Water (Prevention and Control of Pollution) Act,
1974, Forest (Conservation) Act, 1980. It is also observed that measures
to be taken by lessee for protection of environment are required to be
strictly complied with. Rule 22A requires that mining operations must be
undertaken in accordance with duly approved mining plan. Rule 22B
requires mining plan to be prepared by recognised qualified persons and
rule 22C confers power on Central Government to approve persons
possessing qualifications and expertise as mentioned in sub rule (2) of
Rule 22B, as recognised persons for preparation of said plans. Rule 22D
states that minimum size for grant of mining lease shall not be less than 1
Hectare for small deposits, 2 Hectare in respect of beach sand & placers
and 4 Hectares in respect of other mineral deposits.
(D) Rule 27 deals with conditions of mining lease. Rule
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27(1)(d) requires lessee to pay for the surface area used by him as
surface rent and water rate at such rate not exceeding the land revenue,
water and cesses assessable on the land as prescribed by the State
Government. Clause (h) requires him not to carry mining operation within
50 meters from any railway line except in accordance with written
permission of Railway department. He can not carry any mining under or
beneath any rope way except in accordance with written permission of
authority owning the rope way. He also can not carry mining operation
within 50 meters from any reservoir, canal, or other public work or
buildings, except in accordance with prior permission of State
Government. Clause (s) requires him to take immediate measures for
planting and to look after these trees planted till they are handed over to
State Forest Department and to restore to the extent possible other flora
destroyed by mining operations. Rule 27(2) speaks of other conditions
which State Government may deem necessary to impose and those are in
relation to payment of rents and royalties, payment of compensation for
damage to land covered by lease, felling of trees, securing of pits and
shafts etc. Sub-rule (3) permits State Government to impose such further
conditions as may be found necessary in the interest of mineral
development either with the previous approval of Central Government or
at the instance of Central Government. Rule 28 deals with the
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circumstances in which lease lapses. Rule 29 deals with restrictions on
determination of lease, Rule 29A prohibits lessee from determining lease
or part thereof unless final mine closure plan approved by the Regional
Controller or the officer authorized by the State Government is
implemented. Rule 30 deals with right of lessee which included the right
to work the mines, to sink pits and shafts and construct buildings and
roads, to erect plant and machinery, to quarry and obtain building and
road materials and make bricks, to use water and take timber, to use land
for stocking purposes. Rule 31 states that after an order has been made
for grant of lease, lease deed in form “K” or in a form as near thereto as
circumstances permit, shall be executed within six months from the said
order. The date of commencement of the period of mining lease is the
date on which duly executed deed under sub-rule (1) of rule 31 is
registered.
(E) From these provisions in the Act No. 67 of 1957
& 1960 Rules framed, it is clear that the Parliament has through it made
all provisions necessary for securing the proper regulation and
development of mining activity on the land which is sought to be leased
out as contemplated therein. The lands come to WCL through various
modes already stipulated above. More elaborate, comprehensive &
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technically complete scheme for regulation & development of mine
therefore covers the field of “change of user of land” sought to be
occupied by the relevant provisions of Maharashtra Land Revenue Code.
It is more effective to guard public interest & subserve public good as
compared with Maharashtra Land Revenue Code to regulate the aspect of
change of user. State Government can not be permitted to stall the
exploitation of coal bearing land for mine through the Maharashtra Land
Revenue Code on that account. Thus, in cases where the leases are
specifically for the purposes of coal mine and are subject to provisions of
Act No. 67 of 1957, it is more than apparent that said provisions have to
prevail over the provisions of Maharashtra Land Revenue Code. State
Government therefore can not complain of alleged unauthorised change
of user and claim any penalty or fine in that respect.
(F) At the time of nationalisation of coal mines, there was
already change of user from agriculture to nonagricultural/commercial or
Industrial one. When steps for acquisition of land or interest therein or
then to acquire lease hold rights are initiated, it is obvious that the purpose
is well known to all including State Government which is party to said
initiation & action. After the lands vest in Central Government as per the
scheme of respective Acts, State Government cannot take any step which
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will have the effect of preventing or delaying appropriate user of such
property as mine by it or then by Government Company. Any procedure
or provision in any enactment of State which tends to control, defeat or
delay actual putting of land to the use for which it is taken up by the
Central Government i.e. of having or running a coal-mine definitely
militates with Entry 54 and to that extent is unworkable and void. The
decision of a Constitution Bench of this Court in Ishwari Khetan Sugar
Mills (P.) Ltd. v. State of U. P.(supra) holds that the legislative power of
the State under List II, was eroded only to the extent to which control, was
assumed by the Union Government pursuant to the declaration made by
the Parliament in respect of a declared industry and that the field occupied
by such enactment was the measure of the erosion of the legislative
competence of the State legislature. This position is reiterated by the Hon.
Apex Court in para 24 in Western Coalfields Ltd. v. Special Area
Development Authority, Korba (supra) & in para 135 in “State of West
Bengal v. Kesoram Industries Ltd. (supra). It is settled that the
inconsistency does not lie in the mere co-existence of two laws which are
susceptible of simultaneous obedience. It depends upon the intention of
the paramount Legislature to express by its enactment, completely
exhaustively, or exclusively what shall be the law governing the particular
conduct or matter to which its attention is directed. When a Central statute
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discloses such an intention, it is inconsistent with it for the law of a State
to govern the same conduct or matter. Central Statute here is more
scientific and a special legislation of all pervasive nature. It therefore
follows that in relation to such lands coming to WCL from Central
Government or State Government for use or development as a mine the
procedure prescribed in Maharashtra Land Revenue Code for conversion
or change of user is not applicable and hence no penalty/fine can be
recovered by State Government for alleged unauthorised change of user
by WCL. This however does not mean that land revenue at rate
prescribed for such type of nonagricultural user cannot be demanded from
it by State Government.
20. WCL has relied upon form “K” to urge that State can not
demand land revenue as per stipulation in its part VII.
(A) While considering this issue, the agreement between
WCL & State Government under Nationalisation Act is important & it
needs to be perused. As already stated in the beginning of this judgment,
no direction or order granting lands to WCL under Section 5 of
Nationalisation Act are produced before me. However, Respondent No 2
Tahasildar has filed affidavit in W. P. 1161/2007 on 31st August 2007 and
in it, in paragraph No 9 has given relevant details, insofar as their claim of
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non-agricultural tax against W. C. L. in Chandrapur district is concerned
as under : —
Source of land for W. C. L. Extent in Hectors
I -- land acquired under Coal Bearing Act. 816.82
II -- land acquired under Nationalisation Act. 289.41
III -- land acquired under Land Acquisition Act. 926.73
IV--land granted under Maharashtra Land Revenue 167.23
Code.
V-- land purchased by direct negotiations. 156.12
VII -- land encroached by WCL.
VI -- land given by Forest Department. 3.69
136.52
The total land with the WCL at Chandrapur is stated to be
2464.32 Hectors. This affidavit discloses that the Revenue Authorities
have imposed fine & demanded amount of Rs. 15 crores on account of
occupancy charges as well as fine in respect of the encroached land.
W.C.L. has paid Rs.95,36,602/– on 9/1/2007 and Rs.48,79,000/– on
30/3/2007 practically accepting the encroachment. This position declared
on affidavit has not been specifically disputed before me during
arguments. There are no contentions raised about the said amount of Rs
15 Crores or payment made on two dates mentioned above by W. C. L.
during oral arguments.
In W. P. 1106/2007, WCL has mentioned in paragraph 15
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that all lands in respect of which impugned assessment orders were
served upon it have been acquired or received on Nationalization of Coal
mines by it from different sources under different enactments. Attention is
invited to chart annexed as Annexture D with that petition. In W. P.
1161/2007,In W. P. 1110/2007 & W. P. 975/2007 same statement has
been repeated. Annexture D shows that land has come to WCL through
the first 5 sources i.e. lands acquired under Coal Bearing Act, lands
acquired under Nationalisation Act, lands acquired under Land Acquisition
Act, lands granted under Maharashtra Land Revenue Code and lands
purchased by direct negotiations. All these four petitions and W. P.
19/2008 are in relation to lands with WCL at Chandrapur. Grievance in
relation to lands at Yavatmal is made in W. P. 3430/2007 and in it in
paragraph 12 same statement has been made about the source of land.
W. P. 2604/2008 is about lands in Nagpur in paragraph 12 again general
statement on same lines has been made. Annexture I with this writ
petition shows that lands have come to WCL under the first 5 sources
mentioned above even in Nagpur district. Respondents have not filed any
specific reply in relation to sources of lands with WCL in Nagpur district
and Yavatmal district.
(B) However, specimen copy of lease agreement if any
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executed between State Government and WCL has not been filed on
record. Form “K” on which Petitioner WCL has placed reliance is model
form of mining lease prescribed by rule 31 of the Mineral Concession
Rules 1960. These rules are framed under the Act no.67 of 1957 and by
virtue of Section 13 thereof. Said Section 13 enables Central Government
to make rules for regulating the grant of mining leases by notification in
Official Gazette. Petitioner WCL has specifically argued that it has not
received any lands under Section 10 (2) or Section 11 (2) of Coal Bearing
Act as no rights under mining leases were acquired under that Act by
Central Government. It is therefore apparent that form “K” has no
relevance insofar as lands coming to W. C. L. under Coal Bearing Act are
concerned. First clause/paragraph of part VII which deals with the
covenants of lessee in form “K” obliges Lessee to pay rent, water rate
royalties, taxes, rates, assessments and impositions whatsoever being in
the nature of public demand, except the land revenue. It is not in dispute
before me that non-agricultural tax is land revenue and because of this
paragraph “1” WCL states that it is exempt from paying non-agricultural
tax to State Government. However, in none of the petitions there is
specific assertion that WCL is lessee in relation to a particular land for
which non-agricultural tax demand has been made from it. In spite of
previous to orders of this Court, these details or then copy of lease
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agreement, if any, in relation to lands forming subject matter of recovery
are not produced before this Court. Grounds in Writ Petitions show only a
contention that lease agreements existed between earlier owners of Coal
mines and State Government before nationalization. During arguments,
form “K” was sought to be relied upon with Section 5 (2) of Nationalisation
Act to point out that WCL is lessee of State Government. It is clear that
demand of amount of non-agricultural tax in relation to/of lands acquired
under Land Acquisition Act, privately by direct purchase i.e. through
negotiations has not been even attempted to be connected with said form
“K”. In relation to remaining lands received by it under Coal Bearing Act
the only argument was that Central Government continues to be its owner
and said lands do not vest in W. C. L. Hence, the fact that remaining
lands with WCL i.e. purchased directly, acquired by it by paying
compensation via Land Acquisition Act, Coal Bearing Act given to it
directly by State Government under Maharashtra Land Revenue Code
etc. are not covered under said exemption in form “K” is clear on record.
(C) "State of T.N.V. Adhiyaman Educational and
Research Institute" (supra) considers S.10 of All India Council for
Technical Education Act (52 of 1987) with S.3,T.N. Private Colleges
(Regulation) Act (19 of 1976),. Art.254, Sch.7(1)- Entry 66, Entry 25 in
Concurrent List of Constitution of India & S.19(ii) of Madras University Act
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(7 of 1923), & holds that the power to grant or withdraw Permission to
Start Technical Institution is given to body created under said Act.
Therefore a Body created under State Act cannot exercise such power
and that provisions in University Act, contrary to Central Act are
unenforceable. The institutions cannot be derecognised or disaffiliated on
the ground that they do not fulfil the higher requirements under the State
Act although they fulfil the requirements under the Central Act. So also,
when the power to recognise or derecognise an institution is given to a
body created under the Central Act. it alone can exercise the power and
on terms and conditions laid down in the Central Act, It will not be open for
the body created under the State Act to exercise such power much less
on terms and conditions which are inconsistent with or repugnant to those
which are laid down under the Central Act. State of West Bengal v.
Kesoram Industries Ltd. (supra) points out that Entries 52, 53 and 54 in
List I are not heads of taxation but are general entries. Fields of taxation
covered by Entries 49 and 50 in List II continue to remain with State
Legislatures even after Union makes laws under general entries. It is for
the Union to legislate and impose limitations on State’s this otherwise
plenary power to levy taxes and lay down the limitations on State’s power,
if it chooses to do so, and also to define the extent and sweep of such
limitations. Rule 31 of the Mineral Concession Rules prescribes Form “K”
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as the form applicable to leases as far as possible. Stipulation in Form “K”
has thus statutory sanction behind it & hence, it overrides right of State
Government to demand land revenue to that extent.
(D) Hence, if there are any lands/leases with WCL to which
paragraph 1 of part VII of form “K” is applicable, State Government can
not demand any land revenue in relation there to.
21. In the result, all Writ Petitions are partly allowed & demands or
action for recovery therein on lands in relation to which there is lease
agreement between parties in form “K” of 1960 Rules are only quashed &
set aside. Similarly the demand of fine & penalty by the State
Government on account alleged unauthorised change of user by
Petitioner WCL of lands for mine in its possession legally is also quashed
& set aside. Rest of the claims in all Writ Petitions are hereby rejected.
Rule thus made absolute in part in all Petitions accordingly without any
order as to costs.
JUDGE
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