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[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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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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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

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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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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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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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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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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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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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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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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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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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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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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

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Statutory Interpretation”, 11th 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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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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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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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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