Full Judgment Text
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PETITIONER:
MAHANTAPPA & ORS.
Vs.
RESPONDENT:
STATE OF KARNATAKA
DATE OF JUDGMENT: 01/12/1998
BENCH:
K.Venkataswami, M.Jagannadha Rao.
JUDGMENT:
M. Jagannadha Rao, J.
Leave granted.
The appellant’s writ petition No. 1046 of 1997 was
dismissed by a learned Single Judge of the Madras High Court
by Judgment dated 20.10.1997 and further appeal filed by the
appellant before the Division Bench in Writ Appeal No. 1686
of 1998 was also dismissed. Aggrieved by the said Judgments
this appeal has been preferred.
The following are the relevant facts.
The District Collector, Tuticorin (First respondent)
published a notification in the District Gazetta in January
1995 calling for tender applications for grant of lease of
sand quarry in 1.17 1/2 hectares for a period of two years
from 1.1.95 to 31.3.1997. The said advertisement was
amended and modified as a lease for three years i.e. upto
31.3.98, rather than for two years. On 23.2.1995 the
petitioner submitted his tender and offered a sum of Rs.
1.60 lakhs per annum. The offer of the petitioners was the
highest. The first respondent did not accept the offer but
rejected the same by orders dated 22.3.1995 in exercise of
his powers under Rule 8(6)(b)(ii) of the Tamilnadu Minor
mineral Concession Rules, 1959 (hereinafter called ’the
Rules’). The collector felt that the appellant’s offer,
even though it was highest, was less than the upset price as
estimated by the department. The appellant preferred an
appeal to the Director of Geology and Mines (second
respondent). The Director allowed the appeal of the
appellant by his order dated 1.4.1997 on the ground that by
the closing date of the tenders namely, 6.3.1995 the upset
price was not fixed by the Assistant Geologist, that such
upset price was fixed only on 10.3.1995 long after the
closing date namely, 6.3.1995. The Director also held that
compared to another tender where the offer of Rs. 1.75
lakhs of this very appellant was accepted for an extent of
3.24 hectares, the present offer of the appellant for 1.60
lakhs was not unreasonable particularly when the extent of
the quarry area in this case was only 1.17 1/2 hectares.
However, the Director applied the provisions contained in
the amendment to Rule 8-A introduced by G.o. Ms.235 on
19.12.1996 by which additional Seigniorage fee was payable
in addition to lease amount. By the date when the Director
allowed the appeal on 1.4.1997, part of the lease period
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from 1.4.1995 upto 1.4.1997 had already expired. Therefore,
the Director granted the lease only for the remaining period
from 1.4.1997 upto 31.3.1998.
Aggrieved by the said order to the extent that full
three year lease was not granted by the Director amended
Rules dated 19.12.96, the appellant filed the writ petition
in the High Court. He contended that when the Director
applied the amended rules dated 19.12.1996 which were issued
in GOMs No.235, so far as seigniorage was concerned, the
Director should have also given the benefit of the amendment
to Rule 8(8)(a) which stated that the lease should run for a
period of three years form the date of the execution of the
lease deed. The writ petition was contested by the
respondents before the learned Single Judge.
The learned Single Judge while dismissing the writ
petition observed that the auction notice specified a
particular period namely, 1.1.95 to 31.3.98 and, therefore,
the appellant could not claim that the three year period was
to run as per the amended Rule 8(8)(a), that the amendment
was prospective in nature and was not applicable to leases
which had already been processed and rejected the Collector
earlier, - in this case on 22.3.1995. Merely because the
appellate order was passed subsequent to the amendment of
the rules in GOMs No.235 dated 19.12.1996, the appellant
could not seek the benefit of the amendment. Before the
learned single Judge, the appellant relied upon the judgment
of this Court in State of Tamilnadu vs. Hind Stone [1981
(3) SCR 742] for the proposition that if rules were amended
during the pendency of an application for the grant of a
mining lease, the said rules should be applied to such
pending applications. The said decision was distinguished
by the learned Single Judge on the ground that the
appellant’s application was rejected by the Collector on
22.3.1995 long before the rules came into force on
19.12.1996 and that the pendency of the appeal by the rime
the emended rules came into force, was not a sufficient
reason for applying the amendment. So far as the appellate
order of the Director asking the appellant to pay
seigniorage as per the amended rule was concerned, the
learned Single Judge justified the said charge on the ground
that the said fee was leviable form 1.4.1997 to 31.3.1998.
On these grounds, the writ petition was dismissed.
When the appellant appealed before the Division
Bench the learned Judges too distinguished the decision of
the Supreme Court in Hind Stone [1981 (2) SCR 742]. The
Bench also held that the new rules did not apply. The Bench
was also of the view that the value of the sand by the time
the appellate order came to be passed on 1.4.97 would have
been more than what the appellant offered at the time of the
tender of 21.3.1995 and that, therefore, in case the appeal
were to be allowed, the interests of the State would suffer.
For all these reasons, the appeal was dismissed.
In this appeal before us, it was contended by the
learned senior counsel of the appellant Shri K.R. Choudhary
that the learned Single judge and the Division Bench as also
the Director (second respondent) were wrong in not applying
the amended rule in GOM No. 235 dated 10.12.1996.
According to him the judgment of this Court in State of
Tamilnadu vs. Hind Stone [1981 (2) SCR 742] was directly in
point when it said that the application for grant of a lease
of minerals under these rules had to be disposed of on the
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basis of such rules as may be in force at the time the
application was disposed of and not by the rules in force at
the time the application for grant of lease was made.
Learned senior counsel, therefore, contended that the
Director. Mines and Geology ought to have, while allowing
the appeal of the appellant, granted a lease for a period of
three years from the date of execution of the lease as
provided in the amended rules in rule 8(8)(a).
On the other hand, the learned counsel for the
respondents contended that the tender being for a specific
period from 1.4.1995 to 31.3.1998 it was not permissible for
the appellant to seek a lease for a period beyond 31.3.1998
on the basis of the amended rules. The fact that the appeal
before the Director was pending upto 1.4.1997 was not a
ground for applying the amended rules. The rules were
preceded by administrative instructions dated 12.3.1997
which stated that if any application had been processed
before the commencement of the new rules then such
applications should not be disposed of on the basis of the
amended rules. Even otherwise the amended rules were
prospective in nature. The judgment of this court relied
upon by the appellant in Hind Stone was not applicable
inasmuch as the application of the appellant was disposed of
by the Collector on 22.3.1995 whereas the rules came into
force long thereafter on 19.12.1995 whereas the rules came
into force long thereafter on 19.12.1996. If the appellant
were granted three years lease from the date of the
execution of the lease then the appellant would be making a
undue profit inasmuch as the value of sand has gone up
between 1995 and 1998 and to that extent the interests of
the Government would suffer.
The point for consideration is whether the appellant
is entitled to a quarrying lease for sand for three years
from the date of the execution of the lease dated as per
rule 8(8)(a) of the rules as amended by the GOM No.235 dated
19.12.1996 or only upto 31.3.1998 as per the advertisement?
It may be noticed that Rule 8(8)(a), before its
amendment by GOMs No. 235 dated 19.12.1996 read, in so far
as it is material for the case before us, as follows :
"Rule 8(8)(a): The period of any quarry
lease granted under this rule for
quarrying stones shall be five years and
the period of quarry lease for quarrying
sand and other minor minerals shall be
three years, subject to the following
conditions :-
(I) The date of commencement of the period
of a quarrying lease granted under this
rule shall be the first day of the first
financial year of the lease period:
provided that where the lease
deed could not be executed before the 1st
day of April in the first financial year
of the lease period due to administrative
reasons, the lessee is entitled for
proportionate reduction in the annual
lease amount in the first year of the
lease period;
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provided that. . . . . . . . . .
provided also that the lease
amounts for the second and subsequent
financial years of the lease period shall
be fixed by enhancing the lease amount of
the previous year by twenty per cent of as
prescribed by the State Government from
time to time.
(II) . . . . . . . . . . . . . . . . . "
By the amendment made w.e.f. 19.12.1996 in
GOMs No. 235 (Industries) it is stated as
follows :
"Amendments.
In the said rules, in rule 6 --
(1) In sub-rule (80, in clause (a) --
(a) for sub-clause (i) including the
provisos, the following sub-clause shall
be substituted, namely :-
(i) the date of commencement of the
period for which the quarrying lease is
granted under this rule shall be the date
on which the lease deed is executed.
(b) for sub-clause (ii), the following
sub-clause shall be substituted, namely :-
(ii) the lease shall expire on the date
specified in the lease deed and in no case
extension of the period of lease shall be
made.
(2) in sub-clause (iv), for clause (b),
the following clause shall be substituted,
namely :-
(b) All leases, besides the one time
payment of the bid amount/tender amount,
which is the lease amount, shall also pay
seigniorage fee or deed rent . . .
Besides the lease amount and the
seigniorage fee or deed rent, the lessee
shall also pay such other levies, as may
be prescribed by the State Government,
......."
In is clear, therefore, that after the amendment,
the three year period for quarrying of sand is to be counted
from the date of execution of the lease. Apart from the
lease amount, seigniorage fee or dead rent or other charges
have to be paid.
In the present case, the above amendment by GOMs
No.2355 dated 19.12.1996 came into force after the order of
rejection was passed by the Collector on 22.3.1995,
obviously, the Collector could not have applied the
amendment. But the appeal was preferred to the Director on
20.4.1995 and it was during the pendency of the appeal that
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the amendment dated 19.12.1996 came into being.
As to the effect of the amendments to the Rules, the
judgment of the Supreme Court in State of Tamil Nadu vs.
Hind Stone [1981 (20 SCR 742] is relevant. In that case,
when certain renewal applications were pending under these
very Rules, before the Government, Rule 8(c) was introduced
by GOMs No.1312 (Industries) on 2.12.1977. By that rule,
"leases" for quarrying black granits in favour of private
parties were banned. Question arose whether the amendment
applied only to fresh leases or whether the pending renewal
applications were to be disposed of under the Rules as they
stood when the original lease was granted. Question also
arose whether, the concerned authority could apply a Rule
which came into force during the pendency of an application
or whether the Rules in force on the date of the application
alone applied. It was argued for the application alone
applied. It was argued for the applicant that there was
undue delay in the disposal of the renewal applications and
hence the new amendments could not be applied. This Court
initially observed (p.759) that an application for renewal
is in substance an application for a lease. It held :
"It must be remembered that an application
for the renewal of a lease is, in essence
an application for the giant of the lease
for a fresh period. We are, therefore, of
the view that Rule 8(c) is attracted in
considering applications for renewal of
leases also."
This Court also held that if rules are
amended during the pendency of an
application for a mining lease, the
amended rule is to be applied while
disposing of the application. The argument
if there was long delay in disposal of
applications, subsequent amendments should
not be applied, was rejected. At
(pp.759-760) it was held:
"while it is true that such applications
should be dealt with within a reasonable
time, it cannot on that account be said
that the right to have an application
disposed of in a reasonable time clothes
an applicant for a lease with a right to
have the application disposed of on the
basis of the rules in force at the time of
the making of the application. No one has
a vested right to the grant or renewal of
a lease and none can claim a vested rights
in anyone, an application for a lease has
necessarily to be dealt with according to
the rules in force on the date of the
disposal of the application despite the
fact that there is a long delay since the
making of the application."
question for consideration is whether in cases where the
application for lease is rejected by the Collector and an
appeal is filed by the applicant before the Director, and
the rules are amended during the pendency of the appeal, the
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above principle in Hind Stone can be applied?
In our view, what applies to applications applies
equally to appeals because, an appeal is nothing by the
continuation of the proceeding which stated with an
application. In our view it makes no difference whether the
delay has occurred on account of keeping the applications
pending or on account of an appeal being filed. In either
case, Hind Stone becomes applicable.
The learned single judge and the Division Bench, in
our view, erred in not applying the judgment of this Court
in Hind Stone to the appeal that was pending before the
appellate authority. We are of the view that the amended
Rule 8(8)(a) which came into force on 19.12.1996 applied to
the appeal which came to be disposed of on 1.4.1997. If that
be so, the period of 3 years for a sand quarry lease must
necessarily run from the date of execution of the lease
deed.
Learned counsel for the State, however, relled on
the fact that the advertisement for lease was for a specific
period i.e. 1.4.1995 to 31.3.1998. According to him, the
appellant was entitled to a lease, by orders of the Director
dated 1.4.1997, only upto 31.3.1998 and if that period too
had expired by now, no relief could be granted. In our
opinion, the advertisement having been issued in order to
implement these very Rules, the terms of the advertisement
cannot be viewed in isolation. They have necessarily to be
read in conjuction with the rules.
Yet another argument of the learned counsel for the
State is that the amendment to the Rules dated 19.12.1996
was preceded by administrative instructions dated 12.3.1997
which stated that if by the date of amendment, the lease
application had been processed, the amendment would not
apply. The relevant part of the instruction reads as
follows:
"The District Collectors are also informed
that in these cases where order confirming
the auction/tender have been issued
already, the leases may be granted as per
certain rule and instructions issued. In
cases where auction/tender process was
already over, the same may be confirmed
under the earlier rules.
It is true that the latter part of this rule states
that if the processing of the application is completed
before the new rules come into force, than the new rules
cannot be applied. In our opinion, this goes against the
judgment of this Court in Hind Stone case which stated that
if the application for lease was not disposed of by the date
of the amendment, then the amendment would apply. The
administrative order cannot, therefore, be relied upon by
the respondents.
Further, the argument that the amendment is
prospective and is applicable only to fresh application
filed after the amendment cannot hold good again in view of
what is decided in the Hind Stone case. It is the rule in
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force on the date of disposal of the application or appeal
that is applicable. In case the amendment comes during the
pendency of an appeal against a refusal to grant the lease,
as in the case before us, the appeal by the applicant has to
be disposed of by applying the amendment which has come into
being during the pendency of the appeal.
Lastly, we come to the submission by the
respondent’s counsel that the price of sand had increased
between 1995 and 1998 and if fresh tenders are called today,
the state would get a higher amount.
In this context, we may point out that the rule
8(8)(a)(i) as it stood before the amendment had a proviso
that the lease amounts for the second and subsequent
financial years shall be fixed by way of an annual increase
of 20%. We find, however, that the said proviso was dropped
w.e.f. 19.12.1996. This is clear from the fact that the
amendment states.
"for sub-clause (i) including the provisos, the ne amendment
is substituted."
In the present case, the appellant’s tender was
rejected on 22.3.1995 and the provision for periodic
increases was there till 19.12.1996 only. in the
circumstances of the case, we have put it to the appellant’s
senior counsel that in the event the appeal is to be
allowed, we will apply the old rule upto a least 19.12.1996
so far as the rate is concerned. Learned senior counsel
agreed for such enhancement. The enhancement would be
roughly for 2 years. In the peculiar circumstances of the
case, we direct that the lease amount will stand increased,
to start, by 40% of the offer i.e. instead of Rs.1.60
lakhs, it will be Rs.2.24 lakhs per annum, the period of
lease will run for a period of 3 years from the date of
execution of the lease as stated in the amended rule, at the
rate of Rs.2.24 lakhs per annum. The appellant shall have
to pay the seigniorage also as per the amended rules in
addition to the lease amount. Time for payment of the
enhancement in the lease amount or any balance of the lease
amount or seigniorage, will be one month from today.
The judgment of the learned single judge and
division bench are set aside. The order of the Director of
Geology & Mining dated 1.4.1997 is modified accordingly. The
appeal is allowed as stated above. In the circumstances,
there will be no order as to costs.