Page 1 [REPORTABLE]

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO. OF 2017

(ARISING OUT OF SLP (CIVIL) NO.3652 OF 2010)

STATE OF BIHAR & ORS. .…APPELLANTS

VERSUS

RAMESH PRASAD VERMA (DEAD) THR. LRS. ...RESPONDENTS

AND

CIVIL APPEAL NO. OF 2017

(ARISING OUT OF SLP (CIVIL) NO.3653 OF 2010)

J U D G M E N T

AMITAVA ROY, J.

Leave Granted.

2.Vexed by the determination thereby limiting the

application of the Notification SS-2/MM-11/2001-2361.../M

dated 26.12.2001 to the date of issuance thereof, for the

purpose of realizing royalty in respect of the minerals

mentioned therein @ Rs.100/- per cubic meter, otherwise

prescribed by the Notification dated 24.03.2001 notifying the

Bihar Minor Mineral Concession (Amendment) Rules, 2001, the

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Page 2 State of Bihar and its concerned functionaries are in appeal

seeking redress. The impugned judgment and order dated

21.08.2009 is common in both the appeals and consequently,

marginal variation in the contextual facts notwithstanding, the

legal issues raised are the same, permitting analogous disposal

of the proceedings in hand.

3.We have heard Mr. Gopal Singh learned counsel for the

appellants and Mr. Sunil Kumar, learned counsel and Mr.

Nagendra Rai, learned senior counsel for the respondents in

appeals corresponding to S.L.P. (C) Nos. 3652 of 2010 and

3653 of 2010 respectively.

4.The facts, as construed to be germane for the adjudication,

fall in a short compass and for the sake of brevity and

convenience would be lifted from the appeal corresponding to

SLP(C) No.3652 of 2010. To reiterate, nothing turns on the facts

with fringe differences in the two appeals and in course of the

arguments as well, no marked distinguishable features have

been highlighted warranting individual analysis thereof.

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Page 3 5.The respondent had been granted a lease for 10 years from

the year 1992 under the Bihar Minor Mineral Concession

Rules, 1972 (hereinafter referred to as “the Rules”) and on the

expiry of the term thereof, the same had not been renewed. The

lease had been accorded to win pebbles (gutika) from the basin

of Pandai river. The rate of royalty, as was fixed by the

Notification dated 17.08.1991 initially at the commencement of

the lease, stood revised thereafter on 29.08.1994. Eventually,

by the aforementioned Notification dated 24.03.2001 ushering

in the amendment to the Rules, amongst others the rate of

royalty for “boulder, gravel, shingles, which is used for making

chips”, was prescribed to be Rs.100/- per cubic meter. The

relevant excerpt from Schedule II to the Rules qua the above

Minerals is extracted herein below for ready reference :

Royalty

Sl. No. Name of the Minerals Rate per cubic metre (in

rupees)

1 2 3

1. Boulder, Gravel, Shingle 50.00

2. Boulder, Gravel, Shingle which used for

making chips

100.00

3

Page 4

At the foot of the Notification, the following note was attached :

“Note: In respect of Minerals mentioned in Sl.

Nos.1 and 2 the identified areas of the two

categories of the said Minerals, shall be notified

separately, as per rules.

3. This order will come into force from

1.4.2001.”

It would be appropriate as well to quote at this juncture, Rule

26 of the Rules pertaining to rent/royalty an assessment as

herein below:

“26.Rent/royalty and assessment – (1) When

a lease is granted or renewed:-

(a)Dead rent shall be charged at the rates

specified in Schedule I;

(b)Royalty shall be charged at the rates

specified in Schedule II; and

(c)Surface rent shall be charged at the rate

specified by the Collector from time to time for the

area occupied or used by the lessee.

(2)On and from the date of commencement of

these rules, the provisions of sub-rule (1) shall

also apply to the leases granted or renewed prior

to the date of such commencement and subsisting

on such date.

(3)If the lease permits the working of more

than one Mineral in the same area, the Collector

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Page 5 may charge separate dead rent in respect of each

Mineral:

Provided that the lessee shall be liable to pay the

dead rent or royalty in respect of each Mineral,

whichever be higher in amount.

(4)Notwithstanding any thing contained in

any instrument of lease the lessee shall pay

rent/royalty in respect of any minor mineral own,

extracted and removed at the rate specified from

time to time in Schedules I and II.

(5)The State Government may, by notification

in the official Gazette, amend the first and second

Schedules so as to enhance or reduce the rate at

which rents/royalties shall be payable in respect

of any minor Mineral with effect from the date of

publication of the notification in the official

Gazette.

(6)The (Competent Officer), after such enquiry

and verification as he may deem necessary of the

monthly returns furnished by the lessee in Form

“H” shall assess the amount of rent/royalty

payable by the lessee at the end of the prescribed

period.”

6.As would be evident from the Notification dated

24.03.2001, thereby the rate of royalty for boulder, gravel,

shingle, which are used for making chips, though had been

stipulated to be Rs.100/- per cubic meter, the footnote thereof

clarified that the identified areas thereof would be notified

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Page 6 separately as per the Rules. Otherwise, the rates were made

effective on and from 01.04.2001. As the respondent was

dealing in boulder, gravel, shingle which are used for making

chips, the adjudicate understandably would be limited to these

minerals.

7.Be that as it may, as the recorded facts demonstrate,

demand notices dated 06.09.2001 and 29.11.2001 for the terms

01.04.2001 to July, 2001 and 01.07.2001 to October, 2001 for

Rs. 28,80,079/- and Rs.16,75,353/-, followed in response

whereto, the appellant deposited Rs.11 lakhs and Rs.8.5 lakhs

correspondingly. At that stage, the Notification dated

26.12.2001 adverted to hereinabove, was issued by the

Government of Bihar, Mines and Geological Department, to the

effect that boulder, gravel, shingle found in the Districts of

Rohtas and Bettiah are capable of being made into stone chips,

for which the royalty would be payable @ Rs.100/- per cubic

meter, as fixed by the Notification dated 24.03.2001 issued

under Rule 26 of the Rules. The said Notification mentioned

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Page 7 that the districts mentioned therein had been identified on the

basis of a report of a team of experts constituted for the

purpose. Pleaded facts are available to the effect that the State

Government on 05.05.2001 had indeed constituted an Expert

Committee to notify the areas in the basin of the Pandai river,

wherefrom the above minerals, if extracted, would attract the

royalty @ of Rs.100/- per cubic meter, as ordained by the

Notification dated 24.03.2001.

8.As with the issuance of the Notification dated 26.12.2001,

the royalty @ Rs.100/- per cubic meter for the minerals

concerned was sought to be realized by the State Government

w.e.f 24.03.2001, the respondents separately assailed the

demand notices unsuccessfully before the Departmental

Appellate Authority, whereafter they laid the impeachment

thereto before the High Court under Article 226 of the

Constitution of India.

9.The learned Single Judge dismissed the impugnment

observing that once the areas were identified by the Notification

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Page 8 dated 26.12.2001, the demand would relate back to

01.04.2001.

10.The respondents, as a consequence, carried the challenge

in appeal to the Division Bench, which upheld the same.

11.As the impugned verdict would reveal, the Division Bench

noticed that the respondents had not challenged the validity of

the notification dated 24.03.2001 and had confined their

demurral only to the retrospective application thereof, pursuant

to the Notification dated 26.12.2001. The Division Bench held

the view that once the rate of royalty had been enhanced, as

effected by the Notification dated 24.03.2001, it was incumbent

on the part of the concerned authorities also to notify the

relevant areas therewith, so as to enable the lessees to pass on

the liability to the purchasers in the transactions to follow. As,

in absence of the identification of the areas by the Notification

dated 23.04.2001, there was a possibility that the higher rates

of royalty would not be applicable to them, the respondents

might not have passed on such liability in their contemporary

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Page 9 transactions. It was thus concluded that the realization of

royalty at the higher rates, as fixed by the Notification dated

24.03.2001, was not realizable from the date prior to

26.12.2001.

12.Consequently, both the respondents, as held, were

required to pay royalty at the rate fixed by the Notification dated

24.03.2001 w.e.f. 26.12.2001, following necessary adjustments

of the amounts already deposited by them.

13.Whereas, the learned counsel for the appellant has

emphatically urged that the Notification dated 26.12.2001 is

apparently clarificatory in nature and only identifies the areas

wherefrom the minerals involved, if extracted would attract the

rate of royalty otherwise fixed by the Notification dated

24.03.2001, and that the High Court has ex facie erred in its

interpretation thereof, the impugned decision has been

endorsed on behalf of the respondents by pleading that the

Rules by themselves being a delegated legislation, in absence of

any provision in the parent statute authorizing realization of

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Page 10 royalty with retrospective effect, the Notification dated

26.12.2001 cannot be given a retrospective effect on and from

24.3.2001 and thus, no interference by this Court is called for.

The learned counsel for the respondents have contended further

that the Notification dated 26.12.2001 is even otherwise non

est, as it seeks to alter as well the description of the minerals

set out in Schedule II of the Notification dated 24.03.2001.

Reliance on their behalf has been placed on the decisions of this

Court in The Income Tax Officer, Alleppy vs. M.C. Ponnoose

and others etc. (1969) 2 SCC 351, Hukam Chand Etc. vs.

Union of India and others (1972) 2 SCC 601, Commissioner

of Income Tax vs. Bazpur Co-operative Sugar Factory Ltd.

(1988)3 SCC 553, Bejgam Veeranna Venkata Narasimloo

and others vs. State of A.P. and others (1998) 1 SCC 563.

14.The materials available on record and the competing

assertions have received our due consideration. Admittedly, the

Notification dated 24.03.2001 occasioning enhancement of the

rate of royalty for boulder, gravel, shingle which are used for

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Page 11 making chips and extracted by the respondents’ firm from the

basin of the Pandai river, is not under assailment by them.

They have not questioned as well the enforcement of this

notification w.e.f. 01.04.2001. As claimed by them, in response

to the demand notices thereafter, they have made part

payments of the royalty claimed. They have unequivocally

averred that they deal in boulder, gravel, shingle, which are

used for making chips.

15.The footnote to the Notification dated 24.03.2001, in clear

terms, proclaims that the areas of the two categories of the

minerals, corresponding to Sl. Nos.1 and 2 (boulder, gravel,

shingle, which are used for making chips) once identified, would

be notified separately as per the Rules. Eventually, such areas

being located in the Districts of Rohtas and Bettiah, having

been identified by the Expert Committee constituted for the

purpose, the Notification dated 26.12.2001 followed. A plain

reading of this Notification would demonstrate, in unambiguous

terms, that it is in continuation of the one dated 24.03.2001

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Page 12 fixing the rate of royalty at Rs.100 per cubic meter for boulder,

gravel, shingle, from which chips is prepared. Though it

mentioned that the boulder, gravel and shingle found in the

Districts of Rohtas and Bettiah were fit and suitable for making

stone chips, in our comprehension, though imputed by the

respondents, there is in reality no alteration in the description

of the minerals so as to exclude those extracted by them from

the purview of this Notification or the one dated 24.03.2001.

The words “is” and “fit and suitable” for making, in the

attendant facts and circumstances, unmistakably refer to

boulder, gravel and shingle from which either are used for

making chips or are capable of making the same. The assertion

of the respondents to the contrary does not commend for

acceptance and is rejected.

16.In Re Rule 26, it is apparent therefrom that when a lease is

granted or renewed, amongst others royalty would be charged

at the rate specified in Schedule II and that the State

Government may, by notification in the official gazette, amend

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Page 13 the First and Second Schedules so as to enhance or reduce

the rate at which rents/ royalty would be payable in respect of

any minor Mineral w.e.f. the date of the publication of the

notification in the official gazette. Though it has been

contended on behalf of the respondents that the mandate

contained in sub-rule 5 of Rule 26 authorizing the State

Government to enhance or reduce the rate of rents/royalties,

has to be construed to make such enhancement or reduction

effective essentially on and from the date of the publication of

the notification in the Official Gazette to that effect, we are

unable to subscribe to this plea vis-a-vis the Notification dated

26.12.2001 in its operation. In our estimate, having regard to

the relevant provisions of the Rules and, in particular the two

Notifications in hand and most importantly the footnote to the

one dated 24.03.2001, the Notification dated 26.12.2001 is only

clarificatory in nature, inasmuch as it declares only the areas

from which, if the minerals concerned are extracted would draw

the rate of royalty already fixed by the Notification dated

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Page 14 24.03.2001, payable on and from 01.04.2001.

17.No other interpretation would accord with the legislative

intendment contained in Rule 26 as well as the objectives of the

two Notifications.

18.All the decisions cited at the Bar are to the effect that a

delegated legislation cannot traverse beyond the contours of

the authority endowed by the parent statute and unless

authorized by it, is not empowered to make any law or provision

with retrospective effect, impairing the already vested rights of

those likely to be adversely affected thereby. In our mind, these

pronouncements, in the singular facts of the case are of no avail

to the respondents having regard in particular to the

clarificatory nature of the Notification dated 26.12.2001.

19.In Commissioner of Income Tax-I, Ahmedabad vs. Gold

Coin Health Food Pvt. Ltd. (2008) 9 SCC 622, a three-Judge

Bench of this Court, while dwelling on the sweep of a

clarificatory or declaratory legal provision, relied on the

following extract from the celebrated treatise “Principles of

14

Page 15 Statutory Interpretation”, 11

th

Edition 2008 by Justice G.P.

Singh:

“ The presumption against retrospective operation

is not applicable to declaratory statutes. As stated

in Craies and approved by the Supreme Court:

For modern purposes a declaratory Act may be

defined as an Act to remove doubts existing as to

the common law, or the meaning or effect of any

Statute. Such acts are usually held to be

retrospective.”........

….........“An explanatory Act is generally passed to

supply an obvious omission or to clear up doubts

as to the meaning of the previous Act. It is well

settled that if a statute is curative or merely

declaratory of the previous law, retrospective

operation is generally intended. The language

`shall be deemed always to have meant' or `shall

be deemed never to have included' is declaratory,

and is in plain terms retrospective. In the

absence of clear words indicating that the

amending Act is declaratory, it would not be so

construed when the amended provision was clear

and unambiguous. An amending Act may be

purely clarificatory to clear a meaning of a

provision of the principal Act which was already

implicit. A clarificatory amendment of this nature

will have retrospective effect and, therefore, if the

principal Act was existing law when the

constitution came into force, the amending Act

also will be part of the existing law.”

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Page 16 20.The following quote contained in Zile Singh vs. State of

Haryana & Ors. AIR 2004 SC 5100, was also noted with

approval:

“14.The presumption against retrospective

operation is not applicable to declaratory

statutes.... In determining, therefore, the nature

of the Act, regard must be had to the substance

rather than to the form. If a new Act is “to

explain” an earlier Act, it would be without object

unless construed retrospectively. An explanatory

Act is generally passed to supply an obvious

omission or to clear up doubts as to the meaning

of the previous Act. It is well settled that if a

statute is curative or merely declaratory of the

previous law, retrospective operation is generally

intended.... An amending Act may be purely

declaratory to clear a meaning of a provision of

the principal Act which was already implicit. A

clarificatory amendment of this nature will have

retrospective effect.”

21.The proposition has been so well laid that we do not wish

to burden the present rendition by referring to other rulings in

the same vein. Suffice it to state that any legislation or

instrument having the force of law, if clarificatory, declaratory

or explanatory in nature and purport, in order to supply an

obvious omission or to clear up doubts qua any prior law,

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Page 17 retrospective operation thereof is generally intended. Applying

this test, in absence of any indication to the contrary, either in

the parent Act or the Rules or the Notifications involved, we are

thus of the unhesitant opinion that on a conjoint reading of

Rule 26 and the two Notifications, the enhanced rate of royalty

at Rs.100/- per cubic meter for boulder, gravel and shingle,

which are used or are capable of being used for making chips

would be realizable w.e.f. 01.04.2001 and axiomatically thus,

the respondents are liable to discharge the demand, therefor, as

raised in terms thereof. The respondents were fully aware of

the amended rate of Rs. 100/- per cubic metre for the

minerals extracted by them and thus the reasoning of the High

Court that they might not have passed on the burden to their

purchasers is without any factual basis and being clearly

speculative is untenable. The High Court, in our view, had

clearly erred in interpreting the relevant legal provisions and

the Notification dated 26.12.2001 in particular in holding that

the enhanced rates, as fixed by the Notification dated

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Page 18 24.03.2001, would be payable for the minerals involved, as

extracted from the two areas, mentioned in the Notification

dated 26.12.2001 on and from that date. The determination

made by the High Court is thus indefensible and consequently,

the impugned decision is hereby set aside.

22.The appeals are thus allowed. No costs.

............................................J.

(ARUN MISHRA)

….........................................J.

(AMITAVA ROY)

NEW DELHI;

JANUARY 31, 2017.

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