Holding

The Bihar Land Reforms Act, 1950 does not provide for compensation for unexploited minerals, so the appellants are not entitled to such compensation.

Summary

The estate of the late Raja Nilkanth Narayan Singh was vested in the State of Bihar under the Bihar Land Reforms Act, 1950. While some mines were being worked under leases and royalties were paid, the successors-in-interest filed a writ petition seeking compensation for coal-bearing areas that had not been exploited at the time of vesting. The High Court dismissed the petition, holding that no compensation was payable for unexploited minerals. On appeal, the Supreme Court examined the statutory scheme, emphasizing that a statute must be read as a whole and that sections and rules must be harmoniously construed. It concluded that the Act expressly provides compensation only for existing sources of income (mines being worked or under lease) and contains no provision for unexploited mineral reserves; therefore, no compensation is due and the Act is not unconstitutional. The appeal was dismissed.

Issues considered

Whether the Bihar Land Reforms Act, 1950 obliges the State to pay compensation to an ex‑intermediary for mineral reserves that were not being exploited at the time of vesting.

Legislation cited

Bihar Land Reforms Act, 1950s. 10, s. 25, s. 3, s. 9
Bihar Land Reforms Rules, 1951s. Rule 25-E
Constitution of Indias. 9th Schedule, s. Article 133(1), s. Article 226

Subjects

statutory interpretationcompensationland reformsmineral rightsexpropriationBihar Land Reforms Actunexploited mineralsconstitutional law

Judgment

RAJA SATYENDRA NARAYAN SINGH & ANR.
A
v.
STATp OF BIHAR & ORS.

MAY 5, 1987

B [SABYASACHI MUKHARJI ANDS. NATARAJAN, JJ.]

Bihar Land Reforms Act, 1950: ss. 3, 9, 10 and 25-Minerals not
exploited by the ex-landlord on date of vesting of the estate-Right of ~
ex-intermediary to get compensation for such minerals.

Interpretation of Statutes-Rules of Construction-Statute to be
c read as a whole and in the context-Statutory rules to be harmoniously
read with Statute-statute providing for assumption and enforcement of
an existing liability not to be construed as extending that liability or
creating new one in absence of clear terms to that effect. '-f
D Sei:tion 3 of the Bihar Land Reforms Act, 1950 provides for vest-
ing of an estate or tenure in the State by notification. Under s. 9 from
the date of such vesting all mines comprised in the estate or tenure, as
were in operation at the commencement of the Act and were being
worked directly by the intermediary were deemed to have been leased to
the intermediary and he was entitled to retain possession thereof. Sei:-
1
E tion IO provides for vesting of snbsisting leases of mines and minerals.
Section 25 provides for computation of compensation payable to the
intermediary in respect of royalties on account of mines and minerals or
directly working mines comprised in the estate or tenure. Rule 25-E of
the Bihar Land Reforms Rules, 1951 deals with the procedure for -"(
determination of the amount of compensation or annuity.
F
The estate of the ex-landlord comprising vast areas of mineral
bearing lands was vested in the State by virtue of a notification under
s. 3 of the Act with effect from 4th November, 1951. Some part of the
said area was being worked by the lessees under the leases granted to
them, who paid royalty to him.
G
The ex-landlord died in 1969. His successors-in-interest, the
appellants herein, tlled writ petition before the High Court claiming
compensation in respect of the coal bearing area having coal reserves
vested in the State. The High Court came to the conclusion that the
ex-intermediary was not entitled to the compensation as claimed, and
H dismissed the petition.
124
RAJA S.N. SINGH v. STATE OF BIHAR 215

In this appeal by certificate, it was contended for the appellants A
that where there are minerals which were not tapped and not exploited
by the ex-intermediary, acquisition of the source of income for the
intermediary would be acquisition of property, that there was no provi-
sion for compensation for this purpose in the Act, and the statute was,
therefore, exproprietary in nature. For the respondents, it was con-
tended that there was no question of expropriation. The property being B
not in existence, it was acquisition of a right which might be a source of
income and property if tapped, but it was not an existing right.

Dismissing the appeal, the Court,

HELD 1. A statute must be read as a whole, fairly and reason- C
ably. It must be so read, if possible, and warranted by the context to
"t-· give effect to the manifest intent of the iramer. So read, it cannot be
said that the Blhar Land Reforms Act, 1950 provides for any compensa-
tion for the minerals not exploited. That does not make the Act un-
constitutional. [232D]
D
2. The Rules and the sections must be harmoniously construed.
In the instant case, the legislature was acquiring the estate of an ex-
intermediary. For all the existing sources of his income and which were
being exploited, compensation has been provided for. But for a right
which might become a source of income which had not been exploited,
no compensation has been provided. Where a statute provides for the E

-- assumption and enforcement of an existing right or liability, it will not
be construed as extending that liability or creating a new one unless it
does so in clear terms. [231F]

" ·~ Halsbury's Laws of England, 4th Edition, Vol. 44, page 556,
paragraph 904, referred to. F

In the instant case there is no question of interpreting any law
which will expose the Act to constitutional infirmity. The right was not
existing at the time of vesting, no question therefore, arises of depri-
ving the ex-intermediary of any right without compensation. (231G]
G
3. The basic principle of construction of every statute is to find
out what is clearly stated and not to speculate upon latent imponder·
ables. The scheme of the Act does not support the appeUant that it is
~xproprielary in nature. Section 25(1)(a) and (b) deal with independent
items ands. 25(1)(c) is a combination of the two. The other sub-sections
make it quite clear. Compensation for the acquisition of a source which H
226 SUPREME COURT REPORTS [1987] 3 S.C.R.

A when exploited might become property or income is not necessary.
Ownership is a bundle of rights and for the existing bundle of rights
compensation has been provided for. [231H-232B]

4. It is not for the court to provide for compensation where legis-
lature has thought it fit not to do so. The fact that compensation
B for existing rights has been provided for would not expose the statute
to the vice of unconstitutionality as exproprietary. Had there been
such a possibility, other considerations might have been there. The
Act has been incorporated in Item I of the 9th Schedule of the
Constitution. [232C]

C CIVIL APPELLATE JURISDICTION: Civil Appeal No. 390
-
of 1981.

From the Judgment and Order dated 31.8.1979 of the Patna High
Court in C.W.J.C. No. 262 of 1979 (R).

D M.K. Ramamurthy, A.K. Nag and Mrs. Naresh Bakshi for the
Appellants. ---.J ~
Jaya Narayan and Pramod Swarup for the Respondents.

The Judgment of the Court was delivered by
E
SABY ASACHI MUKHARJI, J. This appeal is directed against
the judgment and order of the High Court of Patna, (Ranchi Bench) - "I
--
dated 31st August, 1979.
'r. /'
It involves the question of the right of ex-intermediaries to get
F compensation for the minerals which were not exploited by the ex-
landlords on the date of vesting the estate under Bihar Land Reforms
Act, 1950 (hereinafter referred to as the 'Act').

Raja Nilkanth Narayan Singh of Sawagarh estate was the ex-
landlord whose estate vested by virtue of the notification under the
G Act with effect from 4th November, 1951. The petitioners before the ~
High Court and the appellants herein are the successors-in-interest
being the grandson and the daughter-in-law of the late Nilkanth
Narayan Singh. The estate of the ex-landlord comprised, inter a/ia,
tauzi Nos. 14 and 15 of the District Collectorate of Dhanbad within the
aforesaid tauzis. These were vast areas of mineral-bearing lands
H owned by the ex-proprietor of the estate. Some part of the said area
-
RAJA S.N. SINGH v. STATE OF B!HAR [MUKHARJI. J.J 227

was being worked by the lessees under the leases granted to them who A
paid royalty to late Nilkanth ·Narayan Singh, aforesaid, who, it might
be stated, died in November, 1969 in a state of jointness with other
appellants.

The case of the appellants is that compensation in respect of the
coal bearing area having coal reserves i.e. minerals, has not yet been B
paid by the State of Bihar although the estate had vested in it as early

-
as in November, 1951. So far as the mines that were being worked out
or the minerals which were the subject-matter of leases granted by the
ex-landlord are concerned, there was no dispute. The appellants are
entitled to and have not been denied compensation in respect thereof
under the Act, and the Rules. c
The controversy is only on the question whether the ex-landlord
or his successor-in-interest is entitled to compensation for the minerals
which were not the subject-matter of any lease granted in favour of any
lessee. However, it appears, there is no dispute on the question that
had such minerals been the subject-matter of a lease, the ex-inter- D
mediary would have been entitled to compensation in respect thereof
in the manner provided under the Act to be computed as prescribed by
the R•iles.

The High Court after an exhaustive discussion of the different
provisio~' of the Act came to the conclusion that ex-intermediary is E
not entitled to the compensation as claimed for and as such dismissed
'f the application under Article 226 of the Constitution. Being aggrieved
by the said decision. the appellants after obtaining a certificate under
Article 133( 1) of the Constitulinn have come up to this Court.

The expression 'mines' used in the Act or in the Rules had a F
distinct connotation namely those minerals that were unworked and
unexcavated reserves while excavated mines had been worked. The
question, therefore, involves, as the High Court rightly pointed out
not only the mines but with minerals located beneath the earth, and
neither being worked by ex-intermediary on the date of vesting nor
being the subject matter of lease in favour of any third party. G
'r
The rights of the parties have to be worked out under the provi-
sions of the Act. The Act in question was an Act which was passed to
provide for the transference to the State of the interests of proprietors,
and tenure-holders in land and of the mortgages and lessees of such
interests including interests in trees, forests, fisheries, 'jalkars' ferries, H
228 SUPREME COURT REPORTS [1987] 3 S.C.R.

A 'hats', 'bazars' mines and minerals, and to provide for the constitution
of a Land Commission for the State of Bihar with powers to advise the
State Government on the agrarian policy to be pursued by the State
Government consequent upon such transference and for other matters
connected therewith. On an analysis of the scheme of the Act, it ap-
pears that section 3 of the Act provides for the notification vesting an
B estate or tenure in the State. It provides, inter alia, that the State
Government may, from time to time, by notification declare that the
estates or tenures of a proprietor or tenure-holder, specified in the
notification, have passed to and become vested in the State. There was
appropriate notification passed in this case. On issuance of the notifi-
cation, the estates become vested in the State. Section 4 deals with the
of vesting. It provides that notwithstanding anything
c consequences
contained in any other law for the time being in force or in any con-
tract, on the publication of the notification notwithstanding anything
to the contrary, certain consequence& as mentioned in section 4 wC'uld
follow. Such consequences are mentioned in clauses (a), (b), (c), (d)
and (e) and other sub-clauses of section 4 of the Act. Section 9 deals
D with the mines worked by intermediary and it provides that with effect
from the date of vesting all such mines comprised in the estate or
tenure as were in operation at the commencement of the Act and were
being worked directly by the intermediary shall, notwithstanding any-
thing contained in the Act, be deemed to have been leased by the
appropriate Government to the intermediary and he shall be entitled
E to retain possession of those mines as a lessee thereof. The terms and
conditions of the said lease would be such as would be agreed upon
between the State Government and the intermediary provided that all '-.;
such terms and conditions shall be in accordance with the provisions of
any Central Act for the time being in force. Section 10 deals with the
consequences of subsisting leases of mines and minerals and provides
F for vesting of the same. Section 23 deals with computation of net
income for the purpose of preparing compensation assessment-roll of
the net income of the intermediary. Section 24 deals with the rates of
compensation, and provides that after the net income had been com-
puted under section 23, the Compensation Officer should for the
purpose of preparing compensation assessment-roll proceed to
G determine the amount of compensation to be payable in respect of the
transference to the State of the interests of each intermediary. The
table is set out in the section. Section 25 is important and deals with
the computation of compensation payable for mines and minerals. The
relevant portion of it provides, inter alia, as follows:

H "25. Computation of compensation payable for mines and
minerals.
- -- __,,

RAJA S.N. SINGH v. STATE OF BIHAR (MUKHARJI, J.] 229

(1) The Compensation Officer shall prepare in the pres- A
cribed form and in the prescribed manner compensation
assessment-roll containing in respect of every inter-
mediary in receipt of royalties on account of mines and
minerals or directly working mines comprised in the estate
or tenure-
B
(a) his gross income and net income from such royalties;
(b) his gross "income from mines worked directly by him
and the amount deemed to be his net income from
royalties in respect of such mines;
(c) the amount of compensation payable to him under the C
provisions of this Act for mines and minerals; and
(d) such other particulars as may be prescribed."

Then sub-section (2) of section 25 deals with the preparation of com-
pensation roll for clause (a) of sub-section (1) and sub-section (3) deals 0
with the preparation of compensation roll for clause (b) of sub-section ( 1).
Sub-section (4) deals with the question whether after net income from
royalties have been computed under sub-sections (2) and (3), the
Compensation Officer should proceed to determine the amount of
compensation to be payable to the intermediary in the manner and in
accordance with the principles laid down therein. E

-- While we are on the provisions of the Act and the Rules, refer-
r ence may be made to Bihar Land Reforms Rules, 1951 (hereinafter
called the 'Rules'), and Rule 25-E deals with the procedure for
determining the approximate amount of compensation or annuity. It
provides as follows:
F
"25-E. Procedure for determining the approximate
amount of compensation or annuity. (1) The approximate
amount of compensation in respect of the intermediary in-
terests, other than that payable for mines and minerals,
shall be the approximate net income arrived at in the man-
ner laid down in rule 25-C multiplied by the appropriate G
multiple referred to in Sec. 24(1); and the approximate
amount of annuity shall be equal to the approximate net
income.

(2) The approximate amount of compensation or annuity H
payable for mines and minerals comprised in the estate or
230 SUPREME COURT REPORTS [1987] 3 S.C.R.
•
A tenures of an intermediary shall be worked out after con-
sidering the report to be obtained from the Mining Officer
of the existing reserves in the mines or minerals and the
probable income therefrom in the future.

(3) The approximate amount of the total compensation or
B annuity payable to the intermediary shall be arrived at
by adding the approximate amount of compensation or ~
annuity payable for mines and minerals to the approximate
amount of compensation or annuity in respect of his other '-y
interests:

c Provided that, if no such information regarding the
existing reserves in the mines or minerals and the probable
income therefrom in the future is available, the approxi-
mate amount of compensation or annuity shall be calcula-
ted only on the basis of the net income from the
intermediary interests, other than mines or minerals, in
D accordance with sub-rule (1):

Provided further that the deduction allowed under
clause (c) and (cc) of Sec. 4 shall be recovered by deduction
from the approximate amount of compensation payable to
the intermediary under this rule."
E
It is clear from the facts brought out by the High Court that all
the mines comprised in the estate or tenure of ex-intermediary which . -.;
were worked out directly by him although vested as a result of the
provisions of section 4A were .deemed by legal fiction to be subse-
quently settled by the State Government in favour of the ex-inter-
F mediary and that ex-intermediary should be deemed in law to be
statutory lessee under the State Government in respect of the mines
which have been worked out by him. It is clear from several provisions
of the Act including section 9 that there is no section dealing with the
minerals at all. In this connection sections 9 and 10 may be borne in
mind.
G
Section 25 of the Act envisages compensation to be payable for
mines and minerals and provides that ex-intermediary shall be paid for
the payment to the ex-intermediary who is in receipt of royalties on
account of mines and minerals or directly working mines in the estate
or tenure consisting of his gross income-namely, income of ex-
H intermediary, gross and net income from royalty and his gross income
RAJA S.N. SINGH v. STATE OF B!HAR [MUKHARH, J.J 231

).. from .mines worked directly by ex-intermediary and the amount A
deemed to be the net income from royalties of his mines; under clause
(c) of sub-section(!) of section 25, the amount of compensation pay-
able to him under the provisions of the Act for milles and minerals. On
behalf of the State Government it was contended that this item under
clause (c) of section 25(1) was nothing additional or extra than clause
(a) plus clause (b) of sub-section (1) of section 25 and he supported B
,;,_ this submission by reference to sub-sections (2), (3) and (4) of section
25.

According to the State, Rule 25-E of the Rules does not carry the
matter any further. On the other hand counsel for the appellants, Mr.
Ramamurthy, submitted that where there are minerals which were not C
tapped and not exploited by the ex-intermediary, acquisition of source
of income for the intermediary would be acquisition of property and
no statute should be so read as would amount to, specially in the back-
ground of the constitutional provisions prevailing in 1950 when this
Act was passed, as taking away right of property' without payment of
compensation. It was urged that there was no provision for compensa- D
tion for this purpose. If it is so read as contended for by the respondent
for this valuable property of the appellants, such construction which
would amount to exproprietary legislation should be avoided. On the
other hand, it was submitted that there was no question of expropria-
tion. The property was not in existence. It was acquisition of a right
which might be a source of income and property if tapped but it was E

-- not an existing right.

The Rules and the sections must be harmoniously construed.
Here the legislature was acquiring the estate of ex-intermediary. For
all the existing sources of his income and which were being exploited,
compensation has been provided for. But for right which might be- F
come a source of income which had not been exploited, no compensa-
tion has been provided. Where a statute provides for the assumption
and enforcement of an existing right liability, it will not be construed
as extending that liability or creating a new one unless it does so in
clear terms. See in this connection Halsbury's Laws of England, 4th
Edition, Vol. 44, page 556, paragraph 904. But here there is no ques- G
'r lion of interpreting any law which will expose the Act to constitutional
infirmity. The right was not existing at the time of vesting-no ques-
tion therefore arises of depriving ex-intermediary of any right without
compensation.

The basic principle of construction of every statute is to find out H
232 SUPREME COURT REPORTS [ 1987] 3 S.C.R.

A what is clearly stated and not to speculate upon latent imponderables.
1be scheme of the Act does not support the appellant. Moreover
section 25(1)(a) & (b) deal with independent items and sec. 25(1)(c) is
a rombination of two. The other sub-sections make it quite clear.
Compensation for the acquisition of a source which when exploited
might become property or income is not necessary. Ownership is a
8 bo.mdle of rights-for all the elements of existing ingredients of bur.die
of rights and for the existing bundle of rights compensation has been
provided for. The statute is not bad on that ground.

It is not for the court to provide for compensation where legisla- ·-
ture has thought it fit not to do so. The view which we are taking in
C view of the fact that compensation for existing rights has been pro-
vided for would not expose this statute to the vice of the unconstitu-
-
tionality as exprop•ietary. Had there been such a possibility, other
considerations might have been there. The Act has been incorporated
in Item I of the 9th Schedule of the Constitution. How the respondent
authorities treated this question in the initial stage is irrelevant. It is
0 well settled that a statute must be read as a whole, fairly and reason-
ably. It must be so read, if possible, and warranted by the context to
give effect to the manifest intent of the framer. So read we find that
the statute does not provide for any compensation for the minerals not
exploited. That does not make the Act unconstitutional. So be it.
E In that view of the matter, we are of the opinion that the High
Court was right and the appeal must therefore fail and is accordingly
dismissed. In the facts and circumstances of the case, however, we . 'I.
make no order as to costs.
\
P.S.S. Appeal dismissed. y-r