A mining lease expressly exempting land revenue bars its subsequent levy under the Land Revenue Code.

The State granted the petitioners a mining lease over 1,543-09-58 hectares in village Jadva, Kutch, under an agreement dated 19 March 1996.

Part VII, clause 1 of the lease required payment of specified rents, royalties and public demands, but expressly excluded demands for land revenue.

The Taluka Development Officer nevertheless issued a notice seeking land revenue under the Bombay Land Revenue Code and, by orders dated 12 July 2007 and 16/24 July 2007, demanded revenue, penalty and interest and attached the petitioner’s bank account.

The attachment was later lifted following an unconditional apology by the officer.

The petitioners challenged the levy and sought quashing of the orders and refund of amounts collected.

1. Whether the petitioners were liable to pay land revenue on the leased mining land despite the lease clause expressly excluding demands for land revenue.

2. Whether the demand and consequential orders, including penalty and interest, could stand when the lease clause and the petitioners’ reply had not been properly considered.

Section 45 of the Bombay Land Revenue Code makes land liable to land revenue unless it is wholly exempted under a special contract with the Government or by law; the provision therefore permits exemption through a contract with the State.

The State relied on Section 48 of the Code as authority for recovery, while the demand was issued by reference to Sections 148 and 152.

The Court applied the Division Bench decision in Oil and Natural Gas Corporation Ltd. v. Taluka Panchayat, Khambhat, (2006) 2 GCD 1748 (DB), which held that where a lease contract expressly excludes land revenue, the State cannot levy it contrary to that contract, having regard to Section 45.

The Court also referred to subsequent Division Bench decisions following that ruling.

The lease clause required payment of rents, water rates, royalties and other public demands but expressly excepted demands for land revenue.

Applying Section 45 and the ONGC Division Bench ruling, the Court held that the contractual exemption prevented the State from imposing land revenue on the leased land.

The TDO’s order did not give reasons for imposing the levy and failed to consider the relevant lease clause and the petitioners’ reply; the demand for revenue, penalty and interest was therefore unsustainable.

The Court concluded that the State was estopped from making the demand under the terms of the lease.

It allowed the petition, quashed the notice dated 30 April 2007 and the orders dated 12 July 2007 and 16/24 July 2007, and directed the respondents to refund amounts collected from the petitioners towards land revenue.

The Rule was made absolute.