CASE TITLE:
Mahanadi Coalfields Ltd. V. State of Odisha & Ors.
DATE OF ORDER:
20 January 2023
JUDGE(S):
Justice MR Shah
Justice CT Ravikumar
SUBJECT
The Apex Court, in the present case, held that in cases where the rights over a land is transferred to a Government company by the Central Government, the State Government being the lessor u/s 11 of the Coal Bearing Areas (Acquisition and Development) Act, 1957 is entitled to compensation/rental in respect thereof. Such compensation/rental shall be over and above the royalty amount payable u/s 18(a).
IMPORTANT LEGAL PROVISIONS
- Section 11(1)- 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
- Section 11(2)- 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.
BRIEF FACTS OF THE CASE
- The lands, which are the subject matter of the present case, belonged to the State Government.
- The Central Government vide the Coal Bearing Areas( Acquisition and Development) Act, 1957 acquired it.
- The Central Government later on by exercising its power u/s 11(1) of the Act transferred all the rights in the said land to the appellant, a government company.
- The respondent i.e the State Government issued a demand notice asking the appellant to pay a sum of Rs. 70 Lakhs towards premium and a sum of Rs. 40 Lakhs towards compensation.
- The appellant challenged the demand notice before the High Court, which ruled in the favour of the State Government.
- It is against this order of the High Court that the appellant has preferred the present appeal.
ARGUMENTS ADVANCED BY THE APPELLANT
- It is argued by the learned ASG for the appellant that once the land and rights thereon are vested in the Central Government , it is vested absolutely free from all encumbrances.
- As such, as per them, the State Government is not entitled to any premium or compensation except the royalty leviable u/s 18 (a) of the Act.
ARGUMENTS ADVANCED BY THE RESPONDENT
- The learned counsel for the respondent submitted that there is no any dispute regarding the fact that the State Government was the owner of the lands in question which makes it entitled to the premium or compensation demanded.
- It was also submitted that the royalty recoverable u/s 18(a) of the Act is over and above the right of the State Government to recover rental/compensation.
LEGAL ISSUE
- Whether the State Government is entitled to compensation/rental beyond the sum of royalty payable u/s 18(a)?
ANALYSIS BY THE COURT
- While adjudicating upon the matter, the Court observed that as per section 11(2) of the Act, the government company in which the rights are transferred by the Central Government u/s 11(1) shall be deemed to be the lessee of the State Government.
- Further, the Court observed that section 13 provides for compensation for prospecting licenses ceasing to have effect, rights under mining leases being acquired.
- The Court held that as per section 11, the State Government becomes the lessor and thus should be entitled to rental/compensation demanded. The State Government shall be deemed to be ‘person interested’.
- 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. Thus, the argument of the appellant that the respondent is not entitled to anything except royalty fees can not be accepted.
CONCLUSION
The learned Court thus while upholding the order made by the High Court held that the company shall be liable to pay the compensation and surface land rent, etc.
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