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Synopsis

The Supreme Court has said that even if a person owns a land, he cannot undertake quarrying or mining operations therein unless he holds a certificate of approval in terms of mineral rules.

"A person to whom the certificate is issued is required to file returns showing the production and disposal of mines or minerals. The royalty is determined as provided in sub-Rule (1) of Rule 54C," a bench of Justices Abhay S Oka and Ujjal Bhuyan said.

Dealing with an appeal filed by the Punjab government, the court set aside the Punjab and Haryana High Court's order of September 19, 2007.

The bench said, "Once it is accepted that brick earth was a minor mineral under the Mineral Rules, the State Government gets the right to levy royalty on the production and disposal of minor minerals. An appeal is provided under Rule 54F of the Mineral Rules against an order of the assessment of royalty. This remedy is an efficacious remedy available to challenge the levy of royalty."

The respondents, M/s Om Prakash Brick Kiln Owner, etc, who were operating brick kilns, claimed they took different lands from private owners on lease. They used to excavate earth from the said lands to manufacture bricks in their brick kilns.

Their case was that no part of the land was vested in the Government and according to the Wajib-ul-arz, brick earth did not belong to the State Government. They also placed reliance on Section 42 of the Punjab Land Revenue Act, 1887 and, in particular, sub-section (2) thereof.

They further contended that under the Mines and Mineral (Regulations and Development) Act, 1957 or under the Punjab Minor Mineral Concession Rules, 1964, there was no provision entitling the first appellant – State Government to levy royalty on the use of brick earth. The respondents contended that the appellants' action of assessing royalty and sending notices for recovery was illegal.

The respondents filed suits against the appellants for a permanent injunction restraining them from assessing, levying or recovering any amount as royalty from them on account of the use of earth by the respondents for making brick.

The state government contended every mineral, including brick earth, vests in the first appellant – State Government in accordance with Section 42 (2) of the Land Revenue Act. The appellants also contended that under Section 15 of the 1957 Act, the State Government was empowered to make Rules for making a provision for charging royalty. Accordingly, under the Mineral Rules framed by the State Government, the appellants were entitled to levy royalty.

The trial court dismissed the suit, holding that the subject quarry was vested in the State Government in terms of Section 42 (1) of the Land Revenue Act. It further held that by a notification issued under Section 3(e) of the 1957 Act, brick earth was declared a minor mineral. The appellate court confirmed the decree in appeal.

The High Court, however, allowed the appeal by the respondents, holding by way of mere declaration of brick earth as a minor mineral, no rights could vest in the State Government to levy royalty. It also held that since the appellants failed to prove that they were owners of brick earth, they were not entitled to claim any royalty from the respondents.

Considering the submission, the bench noted on June 1, 1958, the Government of India published a notification in the exercise of powers conferred under clause (e) of Section 3 of the 1957 Act by which brick earth was declared a minor mineral within the meaning of the 1957 Act.

The respondents took the stand that the said lands were vested in private persons.

"If that be so, the persons claiming to be the land owners ought to have been made a party to the suit to enable the Court to decide the issue of title. Section 41 of the Land Revenue Act provides that all mines of metal and coal and all earth oil and gold shall be deemed to be the property of the State," the bench said.

The High Court, in the impugned judgment, held that the presumption under sub-Section (2) of Section 42 of the Land Revenue Act would not apply, as at the relevant time, brick earth was not declared as a minor mineral.

"In our view, the High Court has missed the real issue. As far as the ownership of the said lands is concerned, admittedly, respondents were not the owners," the bench said.

In the case, the bench said, there was no dispute that brick earth was declared as a minor mineral by a notification under Section 3(e) of the 1957 Act.

Having gone through the Mineral Rules, the court pointed out, Rule 3 provided for exemptions from payment of royalty and it did not provide for an exemption in respect of the excavation of brick earth for manufacturing bricks.

After noting the fact that the land ownership issue was not decided by the Trial Court and the First Appellate Court, the court posed a question whether the State Government was powerless to levy royalty even if it was assumed that the lands were private lands.

Referring to Rules 54A, 54B, and 54C, the bench said, "Therefore, even if a person owns the land, he cannot undertake quarrying or mining operations therein unless he holds a certificate of approval in Form 'B'. A person to whom the certificate is issued is required to file returns showing the production and disposal of mines or minerals. The royalty is determined as provided in sub-Rule (1) of Rule 54C."

The bench said that the three courts had unnecessarily gone into the issue of ownership of the said lands or minerals therein. The issue was about the right of the first appellant – the State Government to levy royalty.

"Once it is shown that under the Mineral Rules, the first appellant –State Government was entitled to levy royalty on the activity of mining of brick earth, the issue of ownership of the said lands becomes irrelevant. The reason is that the owners of the said lands in which the excavation is made are not in the exempted category specified in Rule 3 of the Mineral Rules," the bench said.

The court pointed out though, for different reasons, the Trial Court and the First Appellate Court were right in dismissing the suits.

The court held that the respondents did not make out a case for the grant of a decree of permanent injunction restraining the appellants from recovering royalty from the respondents. However, on the quantum of royalty, an appeal under Rule 54F was always available, it pointed out.

The bench set aside the High Court's 2007 judgment and restored the dismissal of decree by the Trial Court. The court, however, clarified that it had made no adjudication on the right of ownership of the said lands, which the respondents used to excavate brick earth.

Case Title: STATE OF PUNJAB & ORS. versus M/S OM PRAKASH BRICK KILN OWNER, ETC