Mahanadi Coalfields Ltd vs The State Of Odisha

Mahanadi Coalfields Ltd. ...Appellant(S)

Versus

State of Odisha & Ors. ...Respondent(S)

JUDGMENT

M. R. Shah, J.

1. Feeling aggrieved and dissatisfied with the impugned

judgment and order dated 02.04.2019, passed by the High

Court of Orissa at Cuttack in W.P. (C) No. 2477/2009, by

which, the High Court has dismissed the said writ petition

preferred by the appellant herein and has confirmed the

demand made by the District Magistrate & Collector,

Sambalpur, of Rs. 70 lakhs towards the premium of the

government land, the appellant – Mahanadi Coalfields Ltd. Signature Not Verified Digitally signed by Neetu Sachdeva Date: 2023.01.20 16:12:11 IST Reason: has preferred the present appeal.

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2. The facts leading to the present appeal in a nutshell are as

under: -

2.1 That the lands in question owned by the State Government

of Odisha came to be acquired by the Government of India

under Section 9 of the Coal Bearing Areas (Acquisition and

Development) Act, 1957 (hereinafter referred to as the Act,

1957). That thereafter, vide order dated 04.09.1981 and in

exercise of powers conferred by Sub-section (1) of Section

11 of the Act, 1957 with respect to some lands acquired,

the Central Government directed that the rights in or over

the lands vested absolutely in the Central Government,

shall, instead of continuing to vest in the Central

Government, under Sub-section (1) of Section 10, vest in

the Western Coalfields Limited. That vide order dated

15.12.1988, with respect to some other lands acquired by

the Central Government and in exercise of powers

conferred by the Sub-section (1) of Section 11 of the Act,

1957, the Central Government directed that the said lands

and rights so vested shall, with effect from 16.05.1987

instead of continuing to so vest in the Central

2 Government, shall vest in the Government Company,

subject to the terms and conditions mentioned in the said

order. That is how, the appellant acquired the lands and

rights over the lands in question. That respondent issued

the demand notice dated 15.03.1984 for a sum of Rs. 70

lakhs towards premium for Government land and Rs. 40

lakhs towards compensation. That various similar demand

notices were issued for area of Non-Forest Government

land and Revenue Forest land. The demands were

challenged by the appellant by way of writ petition before

the High Court. Before the High Court, Section 18(a) of the

Act, 1957 was pressed into service by the appellant herein

and it was submitted that in view of the notification as the

lands and rights on the lands absolutely vested in the

Central Government thereafter, the State Government is

not entitled to any compensation with respect to the lands

so acquired/vested except the royalty leviable under

Section 18(a) of the Act, 1957. By the impugned judgment

and order the High Court has interpreted Section 2(d) of

the Act, 1957 and has observed that the State Government

can be said to be person interested in land and therefore,

3 entitled to the compensation over and above in lieu of

losing the rights over the land. That thereafter, by the

impugned judgment and order the High Court has

dismissed the writ petition and has confirmed the

demand(s).

2.2 Feeling aggrieved and dissatisfied with the impugned

judgment and order passed by the High Court the

appellant – original writ petitioner – Mahanadi Coalfields

Limited has preferred the present appeal.

3. Shri K.M. Nataraj, learned ASG, appearing on behalf of the

appellant has taken us to the entire scheme of the Act,

1957 right from Section 4 to Section 11. It is submitted

that as per Section 4 of the Act, 1957, whenever it appears

to the Central Government that coal is likely to be obtained

from land in any locality, it may, by notification in the

Official Gazette give notice of its intention to prospect for

coal therein. It is submitted that thereafter after following

the due procedure as required the Central Government

being satisfied, after considering the report, if any, made

under Section 8 that any land or any right in or over such

4 land should be acquired, a declaration shall be made by it

to that effect. It is submitted that thereafter once the

declaration under Section 9 of the Act is issued on the

publication in Official Gazette of the declaration, the land

or the rights in or over the land, as the case may be, shall

vest absolutely in the Central Government free from all

encumbrances as per Section 10 of the Act. It is further

submitted that as per Section 11 of the Act,

notwithstanding anything contained in Section 10, the

Central 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. It is submitted that

therefore, once the land or the rights vested in the Central

Government and/or in a Government company (under

5 Section 11), the same is vested absolutely free from all

encumbrances and the State Government is not entitled to

recover any amount of premium of the land or the

compensation or any rental except the royalty leviable

under Section 18(a) of the Act, 1957. It is submitted that

therefore, the demands made by the State Government

upheld by the High Court towards premium/rental, etc., is

absolutely illegal.

4. Opposing the present appeal Shri Umakant Mishra,

learned counsel appearing on behalf of the State has

vehemently submitted that the appellant has been vested

with the rights in the land in question pursuant to the

order of the Central Government issued under Section 11

of the Act, 1957. It is submitted that it cannot be disputed

that the State Government was the owner of the lands in

question. It is submitted that therefore, the State

Government is entitled to the

premium/compensation/rentals with respect to the lands

in question of the land vested or rights so vested in the

Government company.

6 4.1 It is submitted that as such Section 18(a) of the Act, 1957

which has been inserted in the year 1971 is distinct from

and over and above the right of the State Government to

recover the compensation/rental, etc. It is submitted that

the royalty is for the extraction of the minerals/coal from

the lands in question. He has taken us to the Statements

of Objects and Reasons for inserting Section 18(a) in the

Act, 1957.

4.2 Making the above submissions, it is prayed to dismiss the

present appeal by submitting that the High Court has

rightly interpreted Section 2(d) of the Act, 1957 and has

rightly observed that the State being person interested in

the land shall be entitled to the compensation/rental over

and above the amount of royalty leviable/payable under

Section 18(a) of the Act, 1957.

5. We have heard learned ASG on behalf of the appellant and

learned counsel appearing on behalf of the State. It cannot

be disputed that as per Sections 4 to 10, on the

declaration being issued under Section 9 of the

7 acquisition, the land/rights in or over the land, as the case

may be, shall be vested absolutely in the Central

Government free from all encumbrances. However, as per

Section 11 of the Act, notwithstanding anything contained

in Section 10, the Central 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. As per Sub-section (2) of

Section 11, 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 lessee of the State Government as if a mining lease

under the Mineral Concession Rules had been granted by

the State Government to the Government company, the

8 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. Section 13 provides for

compensation for prospecting licences ceasing to have

effect, rights under mining leases being acquired. Thus, as

per Section 11, the Government company in whose favour

the order has been issued by the Central Government shall

be deemed to be the lessee and shall be liable to pay the

compensation/rental, etc., to the State Government being

‘person interested’. ‘Person interested’ is defined under

Section 2(d) of the Act. The State Government being the

original owner can be said to be deemed lessor and ‘person

interested.’ As per Sub-section (2) of Section 11 of the Act,

the Government company in whose favour the order is

issued under Section 11 can be said to be the deemed

lessee of the State Government. Therefore, the State

Government can be said to be the ‘person interested’ in

9 getting the compensation. Therefore, the High Court is

absolutely right in observing and taking the view that

being ‘person interested’ the State Government is entitled

to the compensation/rental, etc.

5.1 Now so far as the submission made on behalf of the

appellant that the Government company in whose favour

the order is passed under Section 11 after which the land

is vested absolutely with the Central Government except

the amount of royalty as per Section 18(a) of the Act, the

Government company is not liable to pay any amount is

concerned, the aforesaid has no substance. The

compensation/rental payable with respect to the lands by

the lessee/deemed lessee is altogether different than the

royalty. Royalty is for extraction of minerals in the lands in

question. The aforesaid would be clear from the

Statements of Objects and Reasons of the Act 54 of 1971

by which Section 18(a) of the Act was introduced. The

same reads as under: -

“Act 54 of 1971- The Coal Bearing Areas (Acquisition and Development) Act, 1957 (20 of 1957) hereinafter referred to as the Coal Bearing Areas Act) provides inter alia for the acquisition by the Central Government of virgin lands, including underground minerals, or rights in or over such

10 lands. Under the Explanation to clause (a) of sub-section (5) of section 13, which provides that the value of any minerals lying in the land will not be taken into consideration in determining the market value of any land no compensation is payable to the State Governments in respect of the underground minerals which also vest in the Central Government when the land is acquired by the Central Government. The State Government have been representing from time to time that this results in their being deprived of large sums by way of revenue. The Central Government has considered the representations of the State Government and has decided that the State Governments should be paid purely on an ex gratia basis such sums as they would have been entitled to receive by way of royalty, had mining leases been granted in respect of the areas acquired. It is now proposed to amend the Coal Bearing Areas Act to make such payments obligatory.

6. In that view of the matter over and above the amount of

royalty the coal company/Government company shall be

liable to pay the compensation and surface land rent, etc.,

Therefore, the High Court is absolutely justified in

confirming the respective demand(s). The amount of

royalty cannot be mixed with the compensation/loss

caused to the State Government due to loss of land and

surface land rent as the State Government is entitled for

the adequate compensation. If the submission made on

behalf of the appellant is accepted in that case nothing

would be paid towards the lands except the amount of

royalty under Section 18(a) of the Act, which is for

extraction of minerals.

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7. In view of the above and for the reasons stated above, the

impugned judgment and order passed by the High Court is

not required to be interfered with. However, if the

appellant is disputing the quantum and/or calculation of

demand(s), it would be open for them to approach the

appropriate authority, however, the demand(s) as such

is/are upheld. With this, present appeal stands dismissed.

No costs.

…………………………………J. (M. R. SHAH)

…………………………………J. (C.T. RAVIKUMAR) NEW DELHI, JANUARY 20, 2023.

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