STATE OF PUNJAB & ORS.versusM/S OM PRAKASH BRICK KILN OWNER, ETC.

                  [2025] 1 S.C.R. 859 : 2025 INSC 88

                     State of Punjab & Ors.
                               v.
              M/s Om Prakash Brick Kiln Owner, Etc.
                (Civil Appeal No(s). 10687-10694 of 2013)
                               21 January 2025
               [Abhay S. Oka* and Ujjal Bhuyan, JJ.]


                           Issue for Consideration
       Whether the State is entitled to levy royalty on brick earth
       excavation, irrespective of the issue of ownership of the excavated
       land.

                                  Headnotes†
       Power of State Government to levy on royalty on excavation
       of brick earth – Punjab Minor Mineral Concession Rules, 1964:
       Held: Under Rules 54A, 54B and 54C of the Punjab Minor Mineral
       Concession Rules, 1964, the State Government is empowered to
       levy royalty on the production and disposal of minor minerals – In
       the present case, brick earth was declared as a minor mineral,
       and thus, the State Government was entitled to levy royalty on
       the same under the Punjab Minor Mineral Concession Rules,
       1964. [Paras 11 and 12]

       Issue of ownership of land becomes irrelevant, once the State
       is entitled to levy royalty:
       Held: Once it is shown that under the Mineral Rules, the State
       Government was entitled to levy royalty on the activity of mining
       of brick earth, the issue of ownership of the said lands becomes
       irrelevant – The reason is that the owners of the said lands in
       which the excavation is made are not in the exempted category
       specified in Rule 3 of the Mineral Rules. [Para 13]

       Ownership of land and brick earth according to Wajib-ul-arz
       of the Village – Section 42 of the Punjab Land Revenue Act,
       1887:


* Author
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       Held: In this case, the Respondents, who were operators of brick
       kilns filed a Suit against the State Government seeking to restrain
       the State Government from assessing, levying or recovering any
       royalty from the Respondents for excavation of earth – The Trial
       Court dismissed the Suit holding that u/s.42(1) of the Punjab
       Land Revenue Act, the quarry land would be vested in the State
       Government, since the Wajib-ul-arz did not specify that the quarries
       belonged to the Land owners – The Appellate Court also held that
       merely because the Wajib-ul-arz did not specifically mention about
       the ownership of the State over brick earth, it would not disentitle
       the State from levying tax on the mining of brick earth – The High
       Court, however, held that the State was not entitled to claim any
       royalty from the quarry operators – The Hon’ble Supreme Court
       held that the Courts below unnecessarily went into the issue
       of ownership of the lands and minerals therein, and that the
       only issue was about the right of the State Government to levy
       royalty. [Para 13]

                                  List of Acts
       The Punjab Land Revenue Act, 1887; The Mines and Mineral
       (Regulations and Development) Act, 1957; The Punjab Minor
       Mineral Concession Rules, 1964; Code of Civil Procedure, 1908.

                               List of Keywords
       Right of State Government to levy royalty on brick earth excavation.

                              Case Arising From
       CIVIL APPELLATE JURISDICTION: Civil Appeal No(s). 10687-
       10694 of 2013
       From the Judgment and Order dated 19.09.2007 of the High Court
       of Punjab & Haryana at Chandigarh in RSA No(s). 2376 to 2383
       of 1984

                           Appearances for Parties
       Shadan Farasat, A.A.G., Talha Abdul Rehman, D.A.G., Siddhant
       Sharma, Adv. for the Appellants.
       Ravindra Bana, Adv. for the Respondents.
[2025] 1 S.C.R.                                                        861

                          State of Punjab & Ors. v.
                    M/s Om Prakash Brick Kiln Owner, Etc.

                Judgment / Order of the Supreme Court

                                 Judgment

     Abhay S. Oka, J.

     FACTUAL ASPECT
1.   The appellants are the original defendants, and the respondents
     are the original plaintiffs. The respondents filed suits against the
     appellants for a permanent injunction restraining them from assessing,
     levying or recovering any amount as royalty from the respondents
     on account of the use of earth by the respondents for making bricks.
     According to the respondents who were operating brick kilns, they
     took different lands (for short, ‘the said lands’) from private owners
     on lease. The respondents used to excavate earth from the said
     lands to manufacture bricks in their brick kilns. The respondents’
     case was that no part of the land was vested in the Government
     and according to the Wajib-ul-arz, brick earth does not belong to the
     State Government. Reliance was placed on Section 42 of the Punjab
     Land Revenue Act, 1887 (for short, ‘the Land Revenue Act’) and,
     in particular, sub-section (2) thereof. It was further contended that
     under the Mines and Mineral (Regulations and Development) Act,
     1957 (for short, ‘the 1957 Act’) or under the Punjab Minor Mineral
     Concession Rules, 1964 (for short, ‘the Mineral Rules’), there was
     no provision entitling the first appellant – State Government to levy
     royalty on the use of brick earth. The respondents contended that
     the appellants’ action of assessing royalty and sending notices for
     recovery was illegal.
2.   The appellants resisted the suit by filing their written statements. It
     was contended that the Civil Court had no jurisdiction to entertain
     the suit in view of Rule 54F of the Mineral Rules, which provides
     a remedy of appeal against orders of assessment of royalty. The
     appellants also raised objections to the maintainability of suit on the
     ground of non-joinder of necessary parties. It was contended that
     the respondents had failed to implead the owners of the said lands.
     The appellants further challenged the maintainability of the suit for
     want of a notice under Section 80 of the Civil Procedural Code,
     1908. On merits, it was contended that according to Wajib-ul-arz of
     the village Jallalabad, every mineral, including brick earth, vests in
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       the first appellant – State Government in accordance with Section
       42 (2) of the Land Revenue Act. The appellants also contended
       that under Section 15 of the 1957 Act, the State Government was
       empowered to make Rules for making a provision for charging
       royalty. Accordingly, under the Mineral Rules framed by the State
       Government, the appellants were entitled to levy royalty.
3.     The Trial Court dismissed the suit vide judgement dated 22nd August
       1983. The Trial Court rejected the appellants’ preliminary objections
       regarding the bar of suit and non-maintainability of the suit. The
       Trial Court held that on the plain reading of Section 42 of the Land
       Revenue Act, in a case where the record of rights was completed
       before November 18, 1871, and there is no express provision made
       therein that any forest or quarry belongs to the landowners, the same
       shall be presumed to belong to the State. The Trial Court held that
       the record of rights regarding the land in question was made before
       18th November 1871, and since the Wajib-ul-arz did not specify
       that the quarries belonged to the land owners, it was held that the
       subject quarry is vested in the State Government in terms of Section
       42 (1) of the Land Revenue Act. The Trial Court further held that by
       a notification issued under Section 3(e) of the 1957 Act, brick earth
       was declared a minor mineral. The Trial Court held that even though
       the settlement in the years 1911-12 and 1962-63 did not show the
       subject land as a quarry, that was not significant as, at that time,
       brick earth was not declared as a minor mineral.
4.     The decree passed by the Trial Court was confirmed in the appeal
       preferred by the respondents by the learned Additional District Judge
       vide judgement dated 18th April 1984. The First Appellate Court
       observed that both the appellants and respondents had produced
       Wajib-ul-arz of the village of 1911-12 and 1962-63. Both these Wajib-
       ul-arz mentioned that the right to recover minor minerals in the said
       lands vested in the State. The case of the respondents was that
       as brick earth was not specifically mentioned in either of the Wajib-
       ul-arz, the appellants were not entitled to charge royalty. The First
       Appellate Court, however, rejected this argument and held that there
       was a presumption of ownership in favour of the first appellant under
       sub-Section (1) of Section 42 of the Land Revenue Act and the mere
       fact that the Wajib-ul-arz did not specifically mention ownership of
       the State over brick earth, would not disentitle the appellants from
[2025] 1 S.C.R.                                                           863

                          State of Punjab & Ors. v.
                    M/s Om Prakash Brick Kiln Owner, Etc.

     levying tax on the mining of brick earth by virtue of it being declared
     a minor mineral.
5.   By the impugned judgment, second appeals preferred by the
     respondents have been allowed, and the suits filed by the respondents
     have been decreed. The High Court concluded that by way of mere
     declaration of brick earth as a minor mineral, no rights can vest
     in the State Government to levy royalty. It was held that since the
     appellants failed to prove that they are owners of brick earth, they
     are not entitled to claim any royalty from the respondents.

     SUBMISSIONS
6.   Learned Additional Advocate General appearing for the State of
     Punjab submitted that Section 15 of the 1957 Act empowers the
     State Government to make Rules enabling it to charge a royalty on
     the extraction of minor minerals. He pointed out that, admittedly, a
     notification was issued under Section 3 of the 1957 Act by which
     brick earth was declared as a minor mineral. He submitted that
     the first regular settlement of the village in question was made
     before the year 1871. Nothing was on record to show that in the
     Wajib-ul-arz, forests and quarries, etc, were shown as belonging to
     the land owners. Therefore, there was a presumption of ownership
     in favour of the first appellant – the State Government. Reliance was
     placed on Rule 54A of the Mineral Rules, which provided that no
     person shall undertake quarry or mining operations unless and until
     he holds a certificate of approval in Form “B”. He submitted that the
     royalty is payable irrespective of the ownership.
7.   The learned counsel appearing for the respondents supported the
     impugned judgment by contending that the State has not discharged
     the burden to prove that the brick earth is vesting in it. It was submitted
     that merely because brick earth was declared as a minor mineral, the
     first appellant - State Government does not get a right to levy royalty.

     CONSIDERATION OF SUBMISSIONS
8.   On 1st June 1958, the Government of India published a notification
     in the exercise of powers conferred under clause (e) of Section 3 of
     the 1957 Act by which brick earth was declared a minor mineral within
     the meaning of the 1957 Act. As can be seen from the judgment of
     the Trial Court, the respondents did not claim to be the owners of the
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                          Supreme Court Reports


       said lands from which they were excavating brick earth. According to
       the respondents, the said lands were owned by someone else and
       were taken on lease by the respondents. In short, the respondents’
       stand was that the said lands were vested in private persons. If that
       be so, the persons claiming to be the land owners ought to have
       been made a party to the suit to enable the Court to decide the
       issue of title. Section 41 of the Land Revenue Act provides that all
       mines of metal and coal and all earth oil and gold shall be deemed
       to be the property of the State. Section 42 of the Land Revenue Act
       is material, which reads thus:
            “42. Presumption as to ownership of forests, quarries
            and waste lands.— (1) When in any record-of-rights
            completed before the eighteenth day of November,
            1871, it is no expressly provided that any forest
            quarry, unclaimed unoccupied, deserted or waste-land,
            spontaneous produce or other accessary interest in
            land belongs to the land-owners, it shall be presumed
            to belong to the Government.
            (2) When in any record-of-rights completed after that
            date it is not expressly provided that any forest or quarry
            or any such land or interest belongs to the Government,
            it shall be presumed to belong to the land-owners.
            (3) The presumption created by sub-section (1) may be
            rebutted by showing—
                 (a) from the records or report made by the assessing
                 officer at the time of assessment; or
                 (b) if the record or report, is silent, then from a
                 comparison between the assessment of villages in
                 which there existed, and the assessment of villages
                 of similar character in which there did not exist, any
                 forest or quarry, or any such land or interest,
            that the forest, quarry, land or interest was taken into
            account in the assessment of the land-revenue.
            (4) Until the presumption is so rebutted, the forest, quarry,
            land or interest shall be held to belong to the Government.”
                                                     (emphasis added)
[2025] 1 S.C.R.                                                        865

                          State of Punjab & Ors. v.
                    M/s Om Prakash Brick Kiln Owner, Etc.

     Therefore, if the record of rights was completed after 18th November
     1871 and if it was not expressly recorded that any forest or quarry
     or any such land or interest belongs to the Government, the same
     shall be presumed to belong to the land owners. As regards the
     lands of which record of right was completed before 18th November
     1871, unless it was recorded that any forest quarry, unclaimed,
     unoccupied, deserted or wasteland belongs to the land owners, it
     shall be presumed to be of the ownership of the State Government.
     The High Court, in the impugned judgment, held that the presumption
     under sub-Section (2) of Section 42 of the Land Revenue Act would
     not apply. The reason is that at the relevant time, brick earth was
     not declared as a minor mineral.
9.   In our view, the High Court has missed the real issue. As far as the
     ownership of the said lands is concerned, admittedly, respondents
     were not the owners. The respondents claimed that they had taken
     the said lands on lease from the real owners. The persons claiming
     to be the real owners were not parties to the suit. Most importantly,
     the Trial Court did not frame any issue on the ownership of the land in
     question. The District Court did not frame the point for determination
     on this aspect.
10. There is no dispute that brick earth was declared as a minor mineral
    by a notification under Section 3(e) of the 1957 Act. We have carefully
    perused the Mineral Rules. Rule 3 provides for exemptions from
    payment of royalty. Rule 3 does not provide for an exemption in
    respect of the excavation of brick earth for manufacturing bricks.
    Apart from the fact that the land ownership issue was not decided
    by the Trial Court and the First Appellate Court, even if we assume
    that the lands on which the respondents carried out excavation were
    private lands, the question is whether the State Government was
    powerless to levy royalty. The answer to the question is in Rules
    54A, 54B, and 54C, which read thus:
           “54A. Prohibition of under taking quarrying or mining
           operation - No person shall undertake quarrying or
           mining operation unless and until he holds a certificate
           of approval in Form “B” :
           Provided that no such certificate shall be necessary
           for undertaking quarrying or mining operation by a
           person exempted under rule 3.
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       54B. Returns.
       - Every assessee shall for each month furnish a return
       in Form ‘N’ about the production and disposal of minor
       minerals, during that month by the 10th day of the month
       following that to which the return relates.
       54C. Assessment of royalty.
       (1) If the Assessing Authority is satisfied without requiring
       the presence of the assessee or the production by him of
       any evidence that the returns furnished in form ‘N’ in respect
       of any period are correct and complete, he shall assess
       the amount of royalty due from the assessee on the basis
       of such returns and record assessment order in Form ‘O’.
       (2) If the Assessing Authority is not satisfied without
       requiring the presence of the assessee who furnished
       the returns in Form ‘N’ or production of evidence that the
       returns furnished in Form ‘N’ in respect of any period are
       correct and complete, he shall serve on such assessee
       a notice in Form ‘P’, requiring him on a date and a place
       specified therein, to attend in person or to cause to be
       produced any evidence (on which such assessee may
       rely) in support of such returns.
       (3) In case the assessee having furnished the returns in
       respect of a period in Form ‘N’ fails to comply with the
       terms of the notice in Form ‘P’ issued under sub-rule (1),
       the Assessing Authority shall within three years after the
       expiry of such period proceed to assess to the best of his
       judgment, the amount of the royalty due from the assessee
       and record the assessment order in Form ‘O’.
       (4) If an assessee does not furnish the returns in respect
       of any period by the due date, the Assessing Authority
       shall serve a notice upon the assessee in Form ‘Q’ and
       after giving the assessee a reasonable opportunity of
       being heard shall, within a period of three years after the
       expiry of the said period, proceed to assess to the best
       of his judgment the amount of royalty if any due from the
       assessee and record the assessment order in form ‘O’.
       (5) If upon information which has come into his possession
       the Assessing Authority is satisfied that any person has
[2025] 1 S.C.R.                                                           867

                          State of Punjab & Ors. v.
                    M/s Om Prakash Brick Kiln Owner, Etc.

           raised, without any lawful authority, any minor mineral from
           any land and has not paid the royalty due thereon to the
           Government, the assessing Authority shall within three years
           after the expiry of the period during which the land was
           occupied by such person serve on such person in Form ‘R’
           and after giving such person a reasonable opportunity of
           being heard, proceed to assess to the best of his judgment
           the amount of royalty due from him. The Assessing Authority
           may also pass an order for recovery from such person of
           the minor mineral so raised or where such minor mineral
           has already been disposed of the price thereof.
           (6) The amount of royalty due and the price of minor mineral,
           if any, shall be paid by the assessee into the government
           Treasury by such date as may be specified in the notice in
           Form ‘S’ issued by the Assessing Authority for this purpose
           and the date so specified shall not be less then thirty days
           from the date of service of such notice: Provided that
           the Assessing Authority may in respect of any particular
           assessee and for reasons to be recorded in writing extend
           the date of such payment or allow the payment of royalty
           and price, if any, by instalments not exceeding four.
           (7) If in consequence of definite information which has
           come into his possession the Assessing Authority discovers
           that an assessee has been under- assessed or escaped
           assessment of royalty in any year, the Assessing Authority
           may, at any time within three years after the expiry of that
           year re-assess the royalty in Form ‘O’ after giving the
           assessee a reasonable opportunity of being heard.
           (8) The Assessing Authority may, at any time, within one
           year from the date of any order passed by him of his own
           motion, rectify any clerical or arithmetical mistake apparent
           from the record and within a like time period rectify any
           such mistake which has been brought to his notice by any
           person, affected by such order.”
                                                    (emphasis added)

11. Therefore, even if a person owns the land, he cannot undertake
    quarrying or mining operations therein unless he holds a certificate
    of approval in Form “B”. A person to whom the certificate is issued
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       is required to file returns showing the production and disposal
       of mines or minerals. The royalty is determined as provided in
       sub-Rule (1) of Rule 54C.
12. Therefore, once it is accepted that brick earth was a minor mineral
    under the Mineral Rules, the first appellant – the State Government,
    gets the right to levy royalty on the production and disposal of minor
    minerals. An appeal is provided under Rule 54F of the Mineral Rules
    against an order of the assessment of royalty. This remedy is an
    efficacious remedy available to challenge the levy of royalty.
13. The three Courts have unnecessarily gone into the issue of ownership
    of the said lands or minerals therein. The issue was about the right
    of the first appellant – the State Government to levy royalty. Once
    it is shown that under the Mineral Rules, the first appellant – State
    Government was entitled to levy royalty on the activity of mining
    of brick earth, the issue of ownership of the said lands becomes
    irrelevant. The reason is that the owners of the said lands in which
    the excavation is made are not in the exempted category specified
    in Rule 3 of the Mineral Rules. Though, for different reasons, the
    Trial Court and the First Appellate Court were right in dismissing
    the suits. In view of the discussions made above, the respondents
    did not make out a case for the grant of a decree of permanent
    injunction restraining the appellants from recovering royalty from the
    respondents. However, on the quantum of royalty, an appeal under
    Rule 54F is always available.
14. Therefore, the impugned judgment dated 19th September 2007 of the
    High Court is hereby quashed and set aside, and the decrees of the
    dismissal of suits passed by the Trial Court are restored. We make it
    clear that we have made no adjudication on the right of ownership of
    the said lands, which the respondents used to excavate brick earth.
15. Appeals are, accordingly, allowed on the above terms with no orders
    as to cost.

       Result of the case: Appeals allowed.




       †
           Headnotes prepared by: Vidhi Thaker, Hony. Associate Editor
                                   (Verified by: Shadan Farasat, Sr. Adv.)