MAHANADI COALFIELDS LTD.versusSTATE OF ODISHA & ORS

                          [2023] 1 S.C.R. 1055                             1055


                  MAHANADI COALFIELDS LTD.                                 A
                                   v.
                     STATE OF ODISHA & ORS.
                     (Civil Appeal No. 220 of 2023)
                          JANUARY 20, 2023
                                                                           B
           [M. R. SHAH AND C.T. RAVIKUMAR, JJ.]
       Coal Bearing Areas (Acquisition and Development) Act, 1957–
ss.11(2),2(d)– ‘Person interested’ –Lands in question owned by
respondent-State was acquired by the Central Govt. –In exercise of
powers u/s.11(1), the Central Govt. directed that the lands and rights
so vested shall instead of continuing to vest in the Central Govt.,        C
vest in the appellant-Govt. Company subject to the terms and
conditions as mentioned– Demand notice issued by State for premium
and compensation – Challenged by appellant– Demand confirmed
by High Court– On appeal, held: As per s.11(2), where the rights
under any mining lease acquired under this Act vest in a Govt.
company, the Govt. company shall, on and from the date of such             D
vesting, be deemed to have become lessee of the State Govt. as if a
mining lease under the Mineral Concession Rules had been granted
by the State Govt. to the Govt. company–It shall be liable to pay
compensation/rental, etc., to the State Govt. being ‘person
interested’– Person interested’ is defined u/s.2(d) – State Govt. being
the original owner can be said to be deemed lessor and ‘person             E
interested’ in getting the compensation – Therefore, the High Court
is right in observing that being ‘person interested’, the State Govt.
is entitled to the compensation/rental, etc.– Demand(s) upheld –
Impugned judgment not interfered with.
       Coal Bearing Areas (Acquisition and Development) Act, 1957          F
– ss.11, 18(a) – Plea of the appellant that the Govt. company in
whose favour the order is passed u/s.11,except the amount of royalty
u/s.18(a) it is not liable to pay any amount – Held : The argument
has no substance –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   G
– Over and above the amount of royalty, the coal company/
Government company shall be liable to pay the compensation and
surface land rent, etc. –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
                                                                           H
                                 1055
1056            SUPREME COURT REPORTS                          [2023] 1 S.C.R.


 A     the adequate compensation – High Court justified in confirming
       the respective demand(s).
              CIVIL APPELLATE JURISDICTION : Civil Appeal No.220 of
       2023.
              From the Judgment and Order dated 02.04.2019 of the High Court
       of Orissa at Cuttack in WP (C) No.2477 of 2009.
 B
              K. M. Nataraj, ASG, Soumyajit Pani, Aishwary Bajpai, Siddharth
       Jain, Advs. for the Appellant.
              Umakant Mishra, Niranjan Sahu, Apoorva Sharma, Debabrata
       Dash, Sibo Sankar Mishra, Advs. for the Respondents.
              The Judgment of the Court was delivered by
 C
              M. R. SHAH, J.
              1. Feeling aggrieved and dissatisfied withthe impugned judgment
       and order dated 02.04.2019, passed by theHigh Court of Orissa at
       Cuttackin W.P. (C) No. 2477/2009, by which, the High Court has
       dismissed the said writ petition preferred by the appellant herein and
 D     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. has preferred the present
       appeal.
              2. The facts leading to the present appeal in a nutshell are as
       under: -
 E
              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
 F     (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
 G     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 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
 H     over the lands in question. That respondent issued the demand notice
MAHANADI COALFIELDS LTD. v. STATE OF ODISHA & ORS. 1057
                 [M. R. SHAH, J.]

dated 15.03.1984 for a sum of Rs. 70 lakhs towards premium for                   A
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        B
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 andhas observed that the State Government can be said to be            C
person interested in land and therefore, 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         D
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          E
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 land should be acquired, a declaration shall be made by it to that          F
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      G
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
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1058             SUPREME COURT REPORTS                            [2023] 1 S.C.R.


 A     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 Section 11), the same is vested absolutely free from all
       encumbrances and the State Government is not entitled to recover any
 B     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 hasvehemently submitted that
 C
       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/
 D     compensation/rentals with respect to the lands in question of the land
       vested or rights so vested in the Government company.
               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
 E     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/
 F     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
 G     9 of the 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
 H     to impose, direct, by order in writing, that the land or the rights in or over
MAHANADI COALFIELDS LTD. v. STATE OF ODISHA & ORS. 1059
                 [M. R. SHAH, J.]

the land, as the case may be, shall, instead of vesting in the Central        A
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            B
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 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     C
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       D
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
                                                                              E
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 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.                                                                  F
       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            G
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: -
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1060              SUPREME COURT REPORTS                         [2023] 1 S.C.R.


 A                “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 lands. Under
                  the Explanation to clause (a) of sub-section (5) of section 13,
 B                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
 C                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
 D                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
 E     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
 F     be paid towards the lands except the amount of royalty under Section
       18(a) of the Act, which is for extraction of minerals.
              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
 G     the appropriate authority, however, the demand(s) as such is/are upheld.
       With this, present appeal stands dismissed. No costs.

       Divya Pandey                                                Appeal dismissed.
       (Assisted by : Abhishek Pratap Singh and Rakhi, LCRAs)

 H