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TaxTMI 
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1973 (3) TMI 147
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....intiff by the Assistant Mining Engineer, Bikaner. by his letter, dated 4-7-1957 (Ex. 26). The Deputy Director (Administration) of Mines and Geology also communicated this fact to him by his letter, dated 5-7-1957 (Ex. 25). The plaintiff then deposited an amount of ₹ 1550/- by wav of security with the Assistant Mining Engineer, Bikaner. on 8th August. 1957. He also completed the other formalities regarding demarcation etc. of the area in question. By letter, dated 9-10-1957 (Ex. 5). the plaintiff was also informed to commence his work. Plaintiff Raghunath Singh further deposited ₹ 1550/- on 28th October, 1957, as another part of the security deposit amount. He also paid a sum of ₹ 1550/- on the same date as the first quarterly instalment of the dead-rent. He was then asked to execute the indenture on a duly stamped paper. The plaintiff in response to that got prepared an indenture relating to the mining lease and submitted the same duly signed by him and accompanied by necessary stamp duty. This was done in the month of January. 1958. The said indenture and its copies, duly signed by the plaintiff, are on the record. They are marked Exs. D1/1 D1/2 and D1/3. Accordi....
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....acts made with different parties for supply of lime and lime-stone i.e. the compensation the plaintiff had to pay on account of his inability to fulfil the said agreement with various parties Note:-The further details of it are as under: - a) Shri Ramiilal S/o Ramprasad of Delhi. Rs. 7500/- b) Ganpairam s/o Boduram of Alwar Rs. 500/- c) Birbal s/o Panna of Village Dhani Bha-tota Tehsil Narnaul Rs. 3531/- d) Minimum loss of profit which the plaintiff would have earned by working the said mines Rs. 25000/- Total :- Rs. 70,151/5/3 Since the plaintiff failed to obtain any relief from the State Government, he instituted the suit for the recovery of the amount on 16th April. 1962. 4. The defendant State resisted the suit by its written-statement, dated 17-10-1962. The main plea of the defendant was that the plaintiff was not granted a minor mineral lease of limestone inasmuch as no formal document granting the lease was executed between the plaintiff and the Director of Mines and Geology Rajasthan, in the name and on behalf of the Governor. The mere granting of the lease by the Director of Mines was not sufficient to constitute a valid contract of lease. It wa....
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....he parties inasmuch as there was no formal instrument evidencing the contract between the Parties in accordance with the provisions of Article 299 of the Constitution. It was submitted that though the Director of Mines and Geology had absolute power and was the competent authority to grant the mining lease in Question, vet he was acting on behalf of the State and the contract was to be made by him in the exercise of executive power of the State. It was therefore, necessary that the contract should have been expressed in terms of Article 299 of the Constitution. According to him the view taken by the trial Judge that the mining lease was granted by the Director of Mines and Geology under the statutory powers and as such, Article 299 of the Constitution was not applicable, is erroneous. On the other hand, Mr. Agarwal learned counsel appearing for the plaintiff-respondent, urged that the mining lease was granted under the Minor Mineral Concession Rules 1955 and, therefore, no other law would be looked into to determine the validity of the lease except the said Rules of 1955. He has also argued that the lease in Question was not granted in the exercise of the executive power of the Sta....
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....ection 3 of the Act of 1948 made 'The Mineral Concession Rules, 1949'. Rule 4 of the Rules of 1949 provided that these rules shall not apply to minor minerals, the extraction of which shall be regulated by such rules as the State Government may prescribe. There is no dispute between the parties that lime-stone is a minor mineral. The Mineral Concession Rules of 1949 will not therefore, govern the mining lease for lime-stone and it must be regulated by such rules which the State Government may make, in exercise of the powers under Rule 4 of the Mineral Concession Rules. Minor Mineral Concession Rules 1955, were framed by the Rajasthan State. These rules same into force on June 11. 1955. Learned counsel for the parties are at one that the mining lease in Question was governed by Chapter IV of these Rules. Chapter IV consists of rules 19 to 32. Rule 19 prescribes certain restrictions for the grant of mining lease. Rule 20 provides that an application for the grant of a mining lease shall be submitted to the Director of Mines and Geology. According to the Rule 21, an application for a mining lease shall be accompanied by a fee of ₹ 5/-. If the applicant is refused the gr....
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....t or the Director (as the case may be) for the relevant provisions of these rules." Reliance has been placed by Mr. Tewari on this rule in support of his contention that even when the Director of Mines and Geology had the absolute power under the Notification, issued under Rule 43 (1) be only acted on behalf of the Government and under Rule 44, he was deemed to be the Government itself. This argument is not without force. The State Government has full proprietary right on the mineral resources of the State and the State Government is the original authority which can grant a mining lease for the exploitation of a particular mining mineral. Even the delegation under rule 43 by the Government may be subject to such restrictions regarding area and the limits as the State Government may direct. We have noticed above that Rule 4 of the Mineral Concession Rules, 1949, empowered the State Government to regulate the minor minerals in the State. 7. The contention of Mr. Agarwal, to this extent, that mining lease can be granted under the Minor Mineral Concession Rules, 1955 is, no doubt, correct. But his submission that no other law can be looked into for determining the validity of a ....
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.... of Rajasthan. One of the objections raised by learned counsel appearing for the State was that the transfer of land effected by the Tehsildar was not in accordance with the requirement of Article 299 of the Constitution. In the circumstances of that case it was held by this Court that the Tehsildar acted within the powers conferred upon him by the statute and the transaction of transfer of the land which fell within his jurisdiction could not be challenged on the ground that Article 299 of the Constitution was not complied with. The decision in that case cannot be applied to the facts of the present case. As indicated above, the Government was the sole authority to grant the mining lease under the Minor Mineral Concession Rules. It was only by virtue of rule 43 that the Government could delegate its Powers to the Officer of the Department of Mines and Geology. Affain, in the succeeding rule it has been made clear that the Officer while granting the mining lease shall be deemed to be the Government. In this view of the matter, no assistance can be claimed by the respondent from the decision referred to above. 9. Another contention that Mr. Agarwal has strenuously urged before us i....
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....er of each State shall, in so far as such trade or business or such purpose is not one with respect to which the State Legislature may make laws, be subject to legislation by Parliament." 11. Under this article, the executive power of the Union and the State extends to the carrying on of any trade or business and to the acquisition, holding or disposal of any property. The present case is not hit by the proviso attached to this article. This article has been substituted with the object to make it clear that the Union Government as well as the State Government are competent to carry on any commercial or industrial undertaking whether or not it is related to a matter within the legislative competence of the Union or as the case may be of the State. Similarly, the holding, acquisition and disposal of property and the making of contracts by the Union or State can be for any purpose without constitutional impropriety. At the same time the revised article provides that this extended executive power of the Union and of the State will be subject, in the former case, to the legislation by the State and in the latter to the legislation by Parliament. We have noticed above that the Stat....
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....have been taken away. They include, in addition to the execution of the laws, the maintenance of public order, the management of Crown property and nationalised industries and services, the direction of foreign policy, the conduct of military operations and the provision or supervision of such services as education, public health, transport, and state assistance and insurance. In the performance of these functions, public authorities are bound to issue orders which are not far removed from legislation, and to make decisions affecting the personal and proprietary rights of individuals which, while not strictly judicial, are Quasi judicial in character. Discretionary action of both these types must now be considered normal on the part of the executive." In view of what has been discussed above, the grant of mining lease under the Rajasthan Minor Mineral Concession Rules. 1955, cannot be said to be a legislative or a judicial act of the State and it will, therefore, fall in the residuary class of executive functions of the State. 13. In determining the liability of the Union and the State in respect of contracts, regard must be had to Article 299(1) of the Constitution, which ....
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....urt took the same view in the Union of India v. A. L. Rallia Ram: AIR 1963 SC 1685. 15. In a Bench decision of this Court in Tiwari Jhumarlal Swarooplal v. State of Rajasthan 1964 RLW 380 it was held with regard to a minor mineral lease that the lease agreement, if not executed in terms of Article 299 of the Constitution, will not be enforceable in law. 16. The same view was taken by a learned single Judge of this Court in Bharat Bhoosan v. State of Rajasthan S. B. Civil Writ petition No. 2268/70 decided on 17-1-1973 (Raj). In that case a lease agreement was signed by the Joint Director on behalf of the Governor. It was revealed that Joint Director was not authorised to execute and sign on behalf of the Governor. The agreement was declared to be unenforceable in law and the demand notice for the recovery of the money due under the said agreement was quashed. 17. Likewise Lodha J. in the State of Rajasthan v. Jairam Das AIR 1972 Raj 38 held that the effect of non-compliance of the provisions of Article 299 of the Constitution makes the contract void and it cannot be enforced. This was also a case of lease under the Minor Mineral Concession Rules. 1955. 18. As a result of the for....
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....tted that the Director of Mines and Geology was the person authorised to sign and to execute on behalf of the Governor. His signatures are not appended to this document. This document no doubt, bears the signatures of the Assistant Mining Engineer, but it is not the case of either party that he was authorised to sign on behalf of the Governor. Therefore, the requirement of executing the document on behalf of the Governor is not obviously fulfilled. Mr. Agarwal has also referred to the letters Ex, 25 and Ex. 26. On the basis of the two letters, he has argued that it contains the sanction of the lease by the Director of Mines, as these two documents coupled with the document Ex. Dl/1 may together constitute a valid contract. We have examined the document Ex. 25. Though this letter has been issued from the office of the Director. Mines and Geology, vet it purports to have been signed by the Deputy Director (Administration). Ex. 26 is another letter by which the sanction of the lease has been communicated, but this is signed by the Assistant Mining Engineer. There is thus no basis for the argument that the grant of the mining lease is anywhere executed and signed by the Director of Min....
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....ment which the Government had accepted. Their Lordships of the Supreme Court upheld the claim under Section 70 in that case. We therefore feel justified to order the refund of ₹ 4715/- by the State to the plaintiff along with pendente lite and future interest. We have taken notice of the fact that the plaintiff did not actually work the mine and could not derive any benefit out of the grant 22. Before parting with this case, we take it to be our duty to observe that the State has not given an account of fair play and justice in the present case. The Director of Mines and Geology had absolute power under Rule 43 of the Minor Mineral Concession Rules and he granted the mining lease to the plaintiff. The sanction was communicated to him and he was also ordered to commence his work of the mines on 9th October, 1957. He paid the required security deposit and also deposited the quarterly instalment. The demarcation of the area was also done at his expense. He was also made to submit the necessary indenture for the execution of the lease agreement, on a standard form. He did so in January, 1958. The necessary indenture was accompanied by the requisite stamp duty. The Deputy Ministe....