M/s. Burrakur Coal Co., Ltd vs The Union of India and Others

Rewritten Version Notice: This is a rewritten version of the original judgment.

Court: Supreme Court of India

Case Number: Petitions Nos. 241 and 242 of 1960

Decision Date: 10 February 1961

Coram: J.R. Mudholkar, Bhuvneshwar P. Sinha, S.K. Das, A.K. Sarkar, N. Rajagopala Ayyangar

In the matter of M/s Burrakur Coal Co. Ltd versus the Union of India and others, a petition was filed before the Supreme Court of India and the judgment was delivered on 10 February 1961. The Bench hearing the case comprised Justice J. R. Mudholkar, Justice Bhuvneshwar P. Sinha, Justice S. K. Das, Justice A. K. Sarkar and Justice N. Rajagopala Ayyangar. The case is reported in the 1961 AIR 954 and the 1962 S.C.R. (1) 44, with subsequent citations including R 1965 S.C. 632, (11) R F 1969 S.C. 125, (8) R F 1973 S.C. 1461 and (90). The statutory provision in dispute is the Coal Bearing Areas (Acquisition and Development) Act, 1957, specifically sections 4, 5, 6, 7, 8, 13 and 14, together with the constitutional provisions of Articles 31A(1)(e) and 31(2) of the Constitution of India.

The Act was enacted, as stated in its preamble, to enable the State to acquire unworked land that contains or is likely to contain coal deposits. Under section 4(1) the Central Government is authorised to issue a notification indicating its intention to prospect for coal in any designated locality. Section 5(b) provides that any mining lease granted to a person relating to land for which such a notification has been issued shall cease to have effect. Section 7 further empowers the Central Government to acquire the mining rights within two to three years from the date of the notification. On 29 July 1960 the Central Government exercised this power and published a notification under section 4(1) concerning an area that formed part of a colliery where the petitioners held mining rights.

The colliery in question had been idle from 1932 until May 1960 because operating it was not economically viable. Nevertheless, the petitioners applied to the Coal Board on 3 December 1959 seeking permission to reopen the colliery. Although no reply was received from the Board, the petitioners began drilling operations in May 1960. They were compelled to stop these operations on 12 August 1960 after the government’s notification came into effect. The petitioners challenged the validity of that notification, arguing that the preamble of the Act together with sections 4, 5, 6, 7 and 8 indicate that the legislation was intended only for “unworked mines,” which they interpreted to mean virgin lands that had never been mined. They contended that the Act should not apply to mines that had been worked previously or were being worked at the time of the notification, asserting that their coal field had previously been worked and its recent idleness was merely a result of an unremunerative market for coal. Additionally, the petitioners claimed that the Act violated Article 19(1)(g) and Article 31(2) of the Constitution on three grounds: (1) that the effect of a notification under the Act was to prevent an owner or lessee from working the mine for two to three years, a period they deemed unreasonable; (2) that the Act lacked any provision for compensation for the deprivation of the petitioners’ right to conduct their business during that period; and (3) that although section 13 dealt with compensation, it did not provide for compensation for the loss of mineral rights.

The petitioners argued that a notification issued under the Coal Bearing Areas (Acquisition and Development) Act, 1957, effectively barred the owner or lessee of a mine from carrying out mining operations for a period of two or three years. They contended that such a period was excessively long and therefore could not be considered reasonable. In addition, they claimed that the Act contained no specific provision for compensation for the loss of their right to conduct business during the two‑ or three‑year prohibition. Finally, they observed that although section 13 of the Act dealt with the payment of compensation, it failed to provide any compensation for the mineral rights themselves.

The Court held that the term “unworked land” found in the preamble of the Coal Bearing Areas (Acquisition and Development) Act, 1957, must be understood to refer to land that was not being worked at the moment the notification was issued, and that this definition also embraces dormant mines. The Court explained that when the purpose or meaning of a statute is unclear, the preamble may be used to interpret it, citing the precedent set in In re the Kerala Education Bill, 1957 [1959] S.C.R. 995. It further held that the Act applies not only to virgin lands but also to dormant collieries or unworked lands, including mines that had previously been worked but on which mining activities had ceased at the time of the notification. The expression “to undertake any operation in the land” in section 5(b) was interpreted to mean the commencement of an operation on land that had been previously abandoned or discontinued, rather than only a first‑time undertaking; consequently, the resumption of mining after a temporary or ordinary closure does not fall within the bar created by section 5(b). The Court concluded that the restrictions imposed by sections 4 and 5, which prevent an owner or lessee from working a mine for a specified period, are not unreasonable and do not violate Article 19(1)(g) of the Constitution. Moreover, such restrictions constitute a modification of rights within the meaning of Article 31A(1)(e); therefore, the validity of sections 4 and 5 cannot be attacked on the ground that they infringe Article 31(2), given the protection offered by Article 31A(1)(e). The Court relied on earlier decisions, including Thakur Raghbir Singh v. Court of Wards, Ajmer [1953] S.C.R. 1049, Sri Ram Ram Narain Medhi v. State of Bombay [1959] Supp. 1 S.C.R. 489, Atma Ram v. State of Punjab [1959] Supp. 1 S.C.R. 748, and In re Delhi Laws Act, 1912 [1951] S.C.R. 793. Finally, the Court held that the Act cannot be challenged on the basis that sections 5(a) and 13 do not provide compensation for mineral rights, because sections 13 and 14 lay down the principles for determining compensation, and under Article 31(2) a law cannot be questioned solely on the ground of inadequate compensation.

The Court noted that the matter arose from Petitions numbered 241 and 242 of 1960, each filed under article 32 of the Constitution of India for the enforcement of fundamental rights. The petitioners were represented by counsel P B Das, K Choudhoury, Balbhadra Prasad Singh and I N Shroff, while the respondents were represented by M C Setalvad, the Attorney‑General of India, together with B Sen and R H Dhebar. The judgment was delivered on 10 February 1961 by Justice Mudholkar. The petitioner in W P 241 of 1960, Messrs Burrakur Coal Co. Ltd., and the petitioner in W P 242 of 1960, Messrs East India Coal Co. Ltd., alleged that they had obtained mining rights in two separate blocks located in Mouza Sudamdih and Mouza Sutikdih, respectively, both of which lay in the Dhanbad district of Bihar State. On 28 July 1960 the Central Government issued notification number S‑0‑1927 under section 4 of the Coal Bearing Areas (Acquisition and Development) Act, 1957 (act 20 of 1957), declaring its intention to prospect for coal in an area of approximately five square miles that covered the Sudamdih collieries and the Sutikdih collieries. The petitioners asserted that, as a result of that notification, they were barred from carrying out any mining operations in the respective collieries and that the Government was empowered to acquire the mining rights in the notified area within two years of the notification, or within a further period not exceeding one year if the Government specified such an extension by another official Gazette notice. Invoking article 32, the petitioners contended that the notification was ultra vires and illegal because it infringed their fundamental right to own property and to conduct business. The Court observed that, assuming an incorporated company may be treated as a citizen, the East India Coal Co. Ltd. was incorporated in the United Kingdom while the Burrakur Coal Co. Ltd. was incorporated in India; consequently, only the latter could claim protection of the rights guaranteed under article 19, which are limited to Indian citizens. Nevertheless, both petitioners claimed that their right under article 31 (2) of the Constitution was also violated by the notification, and that this right was not confined to Indian citizens, unlike the rights under article 19. The arguments for both petitions were heard together, though the primary discussion focused on the Burrakur Coal case; the Court therefore indicated that it would address that case in full before briefly considering the East India Coal petition. The challenge to the notification was based on two grounds: first, that the notification exceeded the powers granted by the Act, and second, that the Act itself was ultra vires the Constitution.

In this matter the petitioner’s counsel argued that the legislation in question could be applied only to “unworked” coal mines, a term he interpreted to mean lands that had never been mined and not to mines that were presently being worked or that had been worked in the past. To support this interpretation he placed great reliance on the preamble of the Act, which he reproduced as follows: “An Act to establish in the economic interest of India greater public control over the coal mining industry and its development by providing for the acquisition by the State of unworked land containing or likely to contain, coal deposits or of rights in or over such land, for the extinguishment, or modification of such rights accruing by virtue of any agreement, lease, licence or otherwise, and for matters connected therewith.” His contention extended to the proposition that even abandoned mines were excluded from the operation of the statute.

The counsel then turned to the specific facts concerning the Sudamdih colliery, asserting that this mine could not be characterized as abandoned. He noted that the mine had not been actively worked between the year 1932 and May 1960, but that the petitioner had nevertheless purchased the mine for a substantial sum exceeding rupees one lakh forty‑six thousand. Following the purchase the petitioner had continued to pay the statutory minimum rent and royalty, amounting in total to more than rupees one lakh twenty‑three thousand, for the period from 1 May 1939 to 30 June 1960. The petitioner maintained that the mine had not been worked during that interval because, in his view, mining there was uneconomical.

Further, the petitioner filed an application on 3 December 1959 with the Coal Board, as required by the provisions of the Coal Mines (Conservation and Safety) Act, 1952 (XII of 1952), seeking permission to reopen the colliery. No response was received from the Coal Board. Undeterred, the petitioner commenced drilling operations at the beginning of May 1960 and continued them until 12 August 1960, at one point achieving a depth of 235 feet. These drilling activities were brought to an abrupt halt following the publication of the impugned notification in the Gazette on 6 August 1960. The counsel highlighted these facts to argue that, contrary to the petitioners’ own assertions, the mine had indeed been “actually worked” prior to the issuance of the notification.

Before addressing that subsidiary argument, the counsel emphasized his primary contention that the Act’s reach was limited to virgin land. He maintained that the preamble of a statute serves as a key to interpreting its provisions, and he referred the Court to an earlier advisory opinion of this Court concerning the Kerala Education Bill, 1957. In that opinion, Chief Justice Das observed that the long title and preamble of a Bill articulate the policy and purpose intended by the legislature and therefore should guide the construction of the Bill’s clauses, provided such construction does not conflict with clear, express provisions of the enactment.

In discussing the relevance of a statute’s preamble, the Court referred to an earlier advisory opinion concerning the Kerala Education Bill, 1957. In that opinion, the Court observed that the long title of the Bill declared its purpose to provide for the better organisation and development of educational institutions throughout the State, and that its preamble stated, “Whereas it is deemed necessary to provide for the better organisation and development of educational institutions in the State providing a varied and comprehensive educational service throughout the State.” The Court therefore indicated that the substantive provisions of the Bill should be examined in the light of the policy and purpose that could be deduced from the long title and the preamble, and that the clauses ought to be interpreted so as to advance that policy and purpose.

While acknowledging that it is permissible to consult the preamble for understanding the meaning of a Bill’s various clauses, the Court clarified that this does not mean that the express provisions of the Bill should be ignored even when they appear to extend beyond the terms of the preamble. The Court reiterated a fundamental rule of statutory construction: when the language of an Act is clear, the preamble must be set aside. Conversely, when the object or meaning of a provision is uncertain, the preamble may be employed to explain it. Moreover, when a statute uses very general language that is evidently intended to have a limited scope, the preamble may be used to indicate the particular situations to which the enactment is meant to apply. Accordingly, the Court stated that interpretation should not commence with the preamble, although it may be necessary to resort to the preamble if the parliamentary language is ambiguous or overly broad while Parliament intended a limited application.

Mr. Das argued that the various provisions of the Act demonstrated that Parliament intended the legislation to apply only to virgin land. To support this contention, he cited sections 4, 5, 6, 7 and 8 of the Act. He emphasized that, under sub‑paragraph a.(1) of section 4, the Central Government was empowered to give notice of its intention to prospect for coal in any locality where it appeared likely that coal could be obtained. Mr. Das further contended that if a mine had previously been worked, all necessary information would already be contained in the mine’s working plan. He illustrated this point by referring to the detailed information available in the working plan annexed as Annexure B1 of the Sudamdih colliery, and noted that this information was likewise in the possession of the Government, as demonstrated by Annexure B appended to the notification dated July 20, 1960.

Annexure B, according to the Court’s observation, listed the percentages of worked and unworked areas in various coal mines after describing the different seams that had been proved. Mr. Das maintained that prospecting would be required only where no information existed about an area, and therefore there would be no need to prospect a mine that had already been worked. Although sub‑section a.(1) of section 4 did not expressly limit its application to unworked land, Mr. Das argued that it must be construed as applying solely to unworked land because the Government would have no reason to undertake prospecting in an area where a colliery already existed. The Court could not accept this argument, noting that the bulk of a mine’s coal lies underground and that even when some seams have been proved in certain locations, the information obtained during earlier prospecting or during operation is rarely complete regarding the quality, quantity, and dimensions of the coal seams. The Court observed that seams are not necessarily horizontal and often exhibit complexities that cannot be fully resolved by prior working plans alone.

In this case, the Court examined the argument presented by counsel for the petitioner that prospecting was unnecessary where a mine had previously been worked, because all relevant information would already exist in the mine’s working plan. Counsel relied on subsection (1) of clause a of section 4, contending that the provision should be read to apply only to land that had never been mined, since the government would have no reason to prospect land on which a colliery was already operating. The Court rejected this contentions, observing that the majority of coal in any mine lies underground and that the information obtained during an earlier prospecting exercise or during past mining operations could not be considered complete with respect to the quality, quantity, orientation, or dimensions of the seams. The Court noted that coal seams are often not horizontal; they may be inclined, folded, or disrupted by faults, which can give the false impression that a seam has disappeared at a particular point, while deeper borings might reveal its re‑appearance further below. Consequently, when mining had been abandoned because the coal was thought to be exhausted or of insufficient quality to justify economic extraction, further prospecting could discover additional coal‑bearing strata or a better grade of coal than had been previously identified. The Court therefore held that the plain language of subsection (1) empowers the Central Government to issue a notice of its intention to prospect any land in a locality, and that the provision does not limit the power to “virgin” land as described by the petitioner’s counsel. Counsel also cited subsection (3) of clause a of section 4, arguing that because a detailed geological survey of the entire country had already identified all known coal fields in reports of the Geological Survey of India, it would be unnecessary for the legislature to confer upon the Government the authority to enter and survey any land where a colliery existed. The Court observed that the very grant of power to enter and survey land indicates that the legislature intended the authority to cover lands not previously recorded as coal‑bearing in those geological reports. Thus, the Court concluded that the statutory provision was designed to enable the Government to ascertain not only the presence of coal in a given area but also the quality, quantity, and economic viability of extracting coal from lands that might have been previously worked, partially worked, or previously unexamined.

The Court observed that the legislature had granted the power to enter upon and survey land only for those parcels that were not identified as coal‑bearing in any report of the Geological Survey of India. It noted that the purpose of such a survey was not merely to ascertain the presence of coal but also to determine the quality and quantity of the coal and to assess whether mining the coal would be economically feasible, including the evaluation of mines that already existed on the land but were not being worked at the time.

In support of this view, the Court examined sub‑section (4) of section 4, which demonstrated that the Act was not confined to unworked lands alone. The provision read: “In issuing a notification under this section the Central Government shall exclude therefrom that portion of any land in which coal mining operations are actually being carried on in conformity with the provisions of any enactment, rule or order for the time being in force or any premises on which any process ancillary to the getting, dressing or preparation for sale of coal obtained as a result of such operations is being carried on.” The Court explained that this language required the Central Government to leave out any portion of land where coal mining activities were currently taking place in accordance with existing law. Consequently, the Court inferred that the language of sub‑section (1) of section 4 must also be understood to apply to land where mining operations were actually being carried on; otherwise sub‑section (4) would become redundant.

Mr Das contended that sub‑section (4) merely created a precautionary “rule of exclusion.” The Court rejected this argument, stating that if sub‑section (1) could be read to include land with ongoing mining operations, then there was an even stronger reason to apply the same provision to land where mining had previously taken place but had ceased. The Court questioned why Parliament, having been careful enough to exclude land with current mining activity, would stop short of extending the same caution to lands where mining had formerly occurred. It pointed out that, according to the plain meaning of the term “unworked,” such lands would more readily fall within the scope of sub‑section (1) than lands that were actively being worked, i.e., “worked lands.”

The provision authorises the lessee, or any person claiming through him, to undertake any operation in the land, and it ceases to have effect while the notification under that sub‑section remains in force. Counsel argued that the provision forbids only the undertaking of a new operation in the land and does not prohibit the continuation of an operation already in progress. According to counsel, ‘undertaking’ relates to the initial working of a mine or to the resumption of work after a stoppage, but not to the ongoing work that has never been halted. He further maintained that, once a notification under sub‑section (1) or section 4 is issued, the lessee is barred only from undertaking any operation on land where no operation was being carried on at that moment. Nevertheless, he contended that the lessee may continue any operation that he was already performing on the date the notification took effect. The Court cannot accept the view that the resumption of mining operations on the land falls outside the prohibition created by this provision. The words “to undertake any operations in the land” are defined by the Concise Oxford Dictionary as “to enter upon work, enterprise or responsibility”. Consequently, the prohibition applies to actions that the lessee was not performing on the date the notification was issued, even though his lease authorised such actions. Thus, if a colliery was not functioning when the notification came into force, section 5(b) prevents the lessee from commencing work there thereafter. The provision must, however, be interpreted reasonably and does not forbid work simply because a holiday caused the mine to be idle on the day before the notification became effective. A brief interruption in mining, such as a casual closure or a normal shutdown in the ordinary course of operations, does not fall within the bar created by section 5(b). Regulation 7 of the Coal Mines Regulations 1957 provides that when a mine is to be reopened after abandonment for a period exceeding sixty days, at least thirty days’ notice must be given before resumption of mining operations. These regulations were framed under section 57 of the Mines Act 1952, whose subsection 16 requires notice to be given before the commencement of mining operations. Consequently, the interpretation of section 5(b) must be consistent with those statutory requirements, meaning that the prohibition covers both the initial undertaking of work on previously idle land and the resumption of work after an abandonment.

Mr. Das argued that a mining area is necessarily large and that it is impossible to work every portion of it at the same time; consequently, he maintained that if any part of a colliery is being worked, the entire colliery must be regarded as being in operation, meaning that coal‑mining activities should be deemed to be carried on over the whole area on which the colliery is situated. To support this contention, he relied upon the decision of the Privy Council in Nageswar Bux Roy v. Bengal Coal Co., Ltd. (1) and upon a passage in Halsbury’s Laws of England (2). Both the Privy Council decision and the Halsbury passage address the question of possession and state that a person may be considered to be in possession of minerals within a well‑defined mining area even though his actual physical possession is limited to a small portion, namely the mine that is actually being worked. The Court, however, found that the decision of the Privy Council and the passage in Halsbury are not applicable to the present issue. Moreover, the Court observed that it is difficult to see how an exemption under section 4(4) of the Act could be justified in the case of the Sudamdih colliery or the Sutkidih colliery unless it could be shown that those collieries were actually being worked on the date of the notification and that such work complied with “any enactment, rule or order for the time being in force.” It is an admitted fact that, although a notice under section 16 of the Mines Act, 1952 was given by the Sutkidih Colliery – the petitioners in W.P. 242 of 1960 – the colliery did not actually commence working because of the impugned notification. By contrast, the Court noted that Burrakur Coal Co., Ltd. began working the Sudamdih Colliery in May 1960 without having obtained permission from the appropriate authorities. Accordingly, the Court examined Mr. Das’s argument that every colliery must be held to be exempted under sub‑section 4 of section 4. The Court recalled the earlier reference to the Privy Council case (1) (1930) L.R. 58 I‑A 29 and to Halsbury’s Laws (2) 3rd Edn., Vol. 26, p. 630, as well as to section 16 of the Mines Act, 1952 and regulation 7 of the Mining Regulations, 1957. In addition, regulation 3 of 1957 requires that the notice contemplated by section 16 be submitted in Form I. The Court acknowledged that the petitioner had indeed given notice as required by these provisions and that the authorities were required to take appropriate action on such notice. However, the Court held that the inaction of the authorities could not be used by the petitioner to claim an exemption. The Court therefore gave effect to the plain language of sub‑section 4 of section 4, which in clear terms provides an exclusion or exemption only with respect to that portion of land in which coal‑mining operations are actually being carried on in conformity with the provisions of any enactment, rule or order.

In the present case the Court observed that sub‑section (4) of section 4 exempts only those collieries that are being operated in conformity with the provisions of any enactment, rule or order. Consequently, Parliament intended to exclude solely the mines that were being worked according to the law. Counsel for the petitioner, Mr Das, argued that the Act prescribes penalties for violations of its provisions and the accompanying regulations, and therefore the petitioner might be liable to a penalty while his right to continue mining would remain unaffected. The Court clarified that it was not concerned with whether non‑compliance with the Coal Mines Act or the 1957 Regulations would, in themselves, prevent the petitioner from carrying out mining operations. The sole issue before the Court was whether, as a matter of fact, the petitioner was conducting mining activities in accordance with the law. The Court noted that Mr Das did not deny that the petitioner was not operating in compliance, and therefore the petitioner could not claim the benefit of sub‑section (4) of section 4. Although this argument could have been addressed in a separate portion of the judgment, the Court chose to consider it here to avoid repetition.

The Court then turned to section 6(1) of the Act, which provides for compensation for any necessary damage arising under section 4. Counsel for the petitioner contended that Parliament plainly intended the Act to apply only to virgin land, and that if the provision were meant to cover already‑worked mines, it would have included a requirement to compensate the owner or lessee for loss of the right to work the mine following a notification. The Court pointed out that section 4 does not contemplate entering upon land that is currently being worked, and therefore there is no actual deprivation of the owner’s or lessee’s right to continue mining. The Act applies solely to “unworked lands,” a term that covers both virgin lands and lands where mining had been carried out in the past but has since been discontinued or abandoned. The Court acknowledged that Government action might affect the potential right of an owner or lessee to resume mining, thereby interfering with his property rights and business. The Court indicated that this issue would be examined when addressing the remaining part of Mr Das’s argument. Finally, the Court noted that section 7, which confers on the Central Government the power to acquire land or rights in land notified under section 4, further demonstrates the limited operation of the Act; sub‑section (1) of section 7 states: “If the Central Government is …”.

In this part of the decision, the Court examined the provision of section 7(1), which read that if the Central Government was satisfied that coal could be obtained in the whole or any part of the land notified under subsection (1) of section 4, the Government might, within two years of the notification—or within a further period not exceeding one year in the aggregate as it might specify—publish a notice in the official Gazette of its intention to acquire the whole or any part of the land or any rights in or over such land. The petitioners argued that for mines that had already been worked at some time in the past, all relevant information was already available to the Government even before any notification under subsection (1) of section 4 was issued. Consequently, they contended, the Government need not prospect the land to be satisfied that coal was obtainable, and therefore the provision could not have been intended to apply to anything other than virgin land. The Court observed that this argument was essentially a repetition of the contention previously raised in relation to subsection (1) of section 4, and that the reasoning applied to that subsection was equally applicable here.

The Court noted that subsection (1) of section 7 allowed a period of two years within which the Government could give a notice of acquisition. The petitioners maintained that this two‑year period was excessive for keeping out an owner or lessee of land on which mines had been previously worked, and that Parliament could not have intended such an effect. From this, they inferred that the word “land” wherever it appeared in the Act should be read as meaning only virgin land. The Court, however, explained that prospecting operations are necessarily prolonged because the nature of the subsurface cannot be readily determined without conducting drilling or other appropriate investigations at several locations. Such investigations inevitably require time. The Court further observed that Parliament appeared to think it reasonable to allow a two‑year window for the Government to complete the necessary prospecting work and to reach a decision. Accordingly, the mere length of the period granted to the Government could not be taken as an indication that Parliament intended the term “land” to be limited to virgin land.

Turning to the petitioners’ reliance on the explanation to subsection (1) of section 8, the Court reproduced the relevant text: any person interested in any land for which a notification under section 7 had been issued could, within thirty days of the issue of the notification, object to the acquisition of the whole or any part of the land or of any rights in or over such land. The explanation clarified that it would not be an objection within the meaning of the section for any person merely to state that he himself desired to undertake mining operations in the land for the production of coal and that such operations should not be undertaken by the Central Government or any other person. The petitioners argued that the use of the words “to undertake mining operations” rather than “to carry on mining operations” demonstrated that the Act could not have been intended to apply to mines that had already been worked. The Court considered this argument to be analogous to the earlier arguments based on clause (b) of section 5, and reiterated that the reasoning applied to those earlier points was also applicable in this context.

The Court observed that the explanation to sub‑section (1) of section 8 states that a person interested in land may object to acquisition, but it clarifies that “it shall not be an objection … to undertake mining operations in the land for the production of coal and that such operations should not be undertaken by the Central Government or by any other person.” It was submitted that the wording uses the phrase “to undertake mining operations” rather than “to carry on mining operations,” and therefore the statute could not be intended to cover mines that have already been worked. The Court noted that this argument mirrors the contention raised earlier based on clause (b) of section 5, and the reasoning previously applied to that clause would apply here as well.

Turning to section 13, which addresses compensation when prospecting licences cease to have effect and when rights under mining leases are acquired, counsel argued that because the provision contains no specific compensation for the minerals lying underground, Parliament could not have intended the Act to be used for acquiring mines that have previously been worked. According to counsel, when a person acquires land either as an owner or as a lessee together with the right to extract minerals and subsequently opens mines and works them for a period, a severance occurs between the surface right and the mineral right. As a result, the person would thereafter hold the minerals as a separate tenement, distinct from the demised land, and such a separate tenement could not be acquired under the present Act, or, if it could be, it would require a specific compensation provision. Counsel cited various provisions of the Act, particularly section 13, to support the view that the Act’s scope is limited.

The Court found it difficult to accept the contention that the mere act of opening mines on a parcel of land creates a severance between surface and underground mineral rights. It acknowledged that a trespasser who acquires rights to underground minerals by adverse possession for the statutory period might cause a separation of surface and mineral rights, resulting in the minerals forming a separate tenement. However, the Court held that an owner or lessee who possesses the right to win minerals cannot effect such a severance merely by opening and operating mines, because while carrying out mining operations the owner or lessee continues to enjoy the surface rights. Consequently, the Court could not accept the argument that a severance of mineral and surface rights had occurred in either of the two cases under consideration.

Finally, the Court agreed that section 13 does not contain a specific provision for compensation for the value of underground minerals. Nevertheless, the Court pointed out that the explanation to clause (a) of sub‑section (5) provides that the value of the minerals lying in the land shall not be taken into account when assessing compensation, indicating that the absence of a separate compensation provision does not render the Act inapplicable to lands with existing mineral extraction.

The Court observed that the Act expressly states that the value of minerals lying in the land shall not be taken into account when assessing compensation. The Court then examined whether the absence of a specific compensation provision for minerals renders the Act ultra‑vires where it contemplates acquisition of land. It noted that the Act contains no provision for compensation for minerals even in the case of virgin land, and that the argument presented by counsel for the petitioner would apply equally to such virgin land. Consequently, the Court held that the lack of a compensation provision for minerals cannot be used to argue that the Act was intended to apply only to virgin lands. For this reason, the notification issuing the acquisition was not ultra‑vires. The Court further explained that the Act applies not only to virgin lands but also to dormant collieries or unworked lands. In arriving at this conclusion, the Court stated that the pre‑amble of the Act need not be invoked to interpret its provisions, particularly the meaning of the word “land”. Even if the pre‑amble were considered, the expression “unworked land” should be given its ordinary meaning – that is, land that was not being worked at the time the notification was issued – which includes dormant mines. Moreover, the provisions of the Act, especially sub‑section (4) of section 4 and section 5(b), clearly contradict the contention that the Act was intended to cover only virgin lands to the exclusion of lands with dormant mines. Finally, the Court held that the absence of a compensation clause in section 13 for mineral rights does not, by itself, justify the inference that the Act was meant to apply solely to virgin land.

The Court then turned to the second limb of the petitioner’s argument, which alleged that sections 4, 5 and 6 infringed the petitioner’s fundamental right under Article 19(1)(g) of the Constitution. The petitioner argued that, under section 5, a mining lease ceases to have effect for a period of two years and possibly three years, and that such a duration was unreasonably long. While acknowledging that the State may impose reasonable restrictions on the rights guaranteed by Article 19(1)(g) in the public interest, the Court noted that prospecting operations inherently require a lengthy period to complete. It observed that Parliament, presumably after considering this practical reality and expert advice, fixed the two‑ to three‑year period. The Court also pointed out that no pleadings were filed on record to support this legislative intent. However, the Court declined to allow the petitioner to rely on the absence of such pleadings, noting that the petitioner’s own petition did not specify what would constitute a reasonable time for prospecting operations. Accordingly, the Court could not agree with the petitioner's contention that the statutory period was unreasonable.

The Court observed that the petitioner’s next contention was more serious. It was argued that the Act contained no provision for compensation for the loss of the petitioner’s right to conduct its business for the two‑to‑three‑year period prescribed by the statute, and that this lacuna amounted to an infringement of a fundamental right. The Court noted that while section 13(4) of the Act deals with the question of compensation, it indeed contains no clause for paying compensation for the deprivation of a mine owner’s or lessee’s right to carry on his business for that period. Nevertheless, the Court held that the petitioner could not successfully complain on that ground. The Court then turned to Article 31A(1), sub‑paragraph (e) of the Constitution, inserted by the First Amendment Act of 1951, which states: “notwithstanding anything contained in Article 13, no law providing for … the extinguishment or modification of any rights accruing by virtue of any agreement, lease or licence for the purpose of searching for, or winning, any mineral or mineral oil, or the premature termination or cancellation of any such agreement, lease or licence, shall be deemed to be void on the ground that it is inconsistent with, or takes away or abridges any of the rights conferred by Article 14, Article 19 or Article 31.” The Court indicated that it was not concerned with the proviso that follows this provision. The Court explained that the effect of a notification issued under section 4(1) read with section 5(b) of the Act is to prevent the owner or lessee of a mine from operating the mine for a specified period, thereby modifying the owner’s rights by the notification. The petitioner’s counsel, however, contended that the notification merely suspended the rights of a mine‑owner or lessee for a certain time and that such suspension did not amount to a modification of rights. To support this position, counsel relied on the observations of Mahajan J, then a judge of the High Court, in Thakur Raghbir Singh v. Court of Wards, Ajmer, where it was held that the word “modification” in the constitutional provision did not include a suspension of a right. The Court noted that those observations had subsequently been considered by this Court in Sri Ram Narain Medhi v. State of Bombay and in Atma Ram v. State of Punjab and others. In the latter case, this Court explained that the observations of Mahajan J were strictly limited to the facts of that particular case and could not be extended to statutes that were wholly dissimilar to the Ajmer Tenancy and Land Records Act, 1950, which was the subject of the earlier challenge. The Court further observed that, on a construction of the provision of the Act in question, the earlier decision held that the provision only suspended the right of management and did not amount to any extinguishment or

In discussing the question of whether a statutory provision effects a modification of any proprietary rights, the Court referred to earlier authorities reporting at (1) [1953] S.C.R. 1049, 1053, (2) [1959] Supp. S.C.R. 489, 519 and (3) [1959] Supp. S.C.R. 748, 767. The Court observed that the provisions of the Act then under its consideration bore absolutely no resemblance to the provisions of the Act presently before it, and consequently it was impossible to apply a similar construction to the present provisions. The Court then mentioned a recent, not‑yet‑reported decision in which it had been asked to apply the observations previously articulated by this Court to the Bombay Act. In that case it was pointed out that the observations of Mahajan, J., as he then was, must be confined to a statute that merely suspends the right of management of an estate and cannot be extended to a statute that either extinguishes or modifies certain rights of a proprietor in an estate or any portion thereof. The Court further clarified that it had not intended, in Thakur Raghbir Singh v. Court of Wards, Ajmer (1), to lay down the proposition that Article 31A(i)(e) would be inapplicable where a person’s property rights are kept in abeyance for a specified period.

The meaning of the word “modify” was then examined in the context of re The Delhi Laws Act, 1912. The Court reproduced the observation of Kania, C. J., who explained that, according to the Oxford Dictionary, “modify” means to limit, restrain, assuage, make less severe, rigorous or decisive, or to tone down. It also signified “to make partial changes in; to alter without radical transformation.” The Court further cited Rowland Burrows’ “Words and Phrases,” in which “modify” was defined as “vary, extend or enlarge, limit or restrict.” According to the learned Chief Justice, it has been held that modification implies an alteration and may either narrow or enlarge the provisions of a former Act. Keeping in mind the principle that a constitutional enactment must be construed liberally, the Court held that the dictionary meaning should be given to the word “modification” occurring in the provision under consideration. Mr. Das, however, argued that for a thing to amount to a modification of a right it must be of a permanent character and not merely temporary. The Court found no basis for that contention, observing that a right may be modified for an indefinite period or for a limited duration, and in either case the right must be regarded as having been modified. Accordingly, the Court concluded that the provisions of Article 31A, clause (1)(e), barred the petitioners from challenging the validity of sections 4 and 5 of the Act on the ground that they infringed the provisions of Article 31(2) of the Constitution. The Court then noted that the remaining issue to be examined was whether the provisions permitting acquisition of land were ultra vires the Constitution because they offended Article 31(2).

The Attorney‑General argued that the petitioners had no present grievance because the contested notification merely authorised the State to prospect for coal on the petitioners’ land and did not empower the State to acquire the land. The Court could not accept that argument. It observed that the purpose of Parliament in enacting the legislation was to give the State authority to acquire lands that contained coal. Prospecting for coal, the Court explained, is only a preliminary step that precedes the actual acquisition of the land. Consequently, if the provisions of the Act that relate to acquisition were found to be unconstitutional, the entire Act would be rendered unconstitutional. The Court then set out the text of Article 31(2) of the Constitution, as amended by the Fourth Amendment Act of 1955, which provides that no property shall be compulsorily acquired or requisitioned except for a public purpose and only by authority of a law that provides compensation, fixes the amount of compensation or specifies the principles and manner for determining and giving compensation, and that such a law shall not be questioned in any court on the ground that the compensation is inadequate. Counsel for the petitioner, Mr Das, pointed out that Section 13 of the Act, although dealing with compensation, contains no provision for compensation for mineral rights. He further noted that the explanation to clause (a) of Section 5 expressly states that, when calculating compensation for land, the value of the minerals shall not be taken into account. Accordingly, Mr Das argued that the acquisition of mineral rights would be impermissible under Article 31(2) because no compensation would be payable for those rights. The Attorney‑General responded that Section 13 comprehensively deals with the payment of compensation to the owner or lessee of a mine for the entire interest in the land, including mineral rights, and that even though the section expressly excludes the value of minerals from the compensation formula, the concluding words of Article 31(2) prevent the petitioners from challenging the law on that basis. Mr Das further contended that the only ground on which the Central Government, in its affidavit, had attempted to uphold the validity of the acquisition provisions of the Act was the bar on challenges provided by Article 31A(1)(e), and that the Government could not now rely on any other ground to sustain the law. The Court rejected that submission. It held that when the validity of a statute enacted by a competent legislature is questioned before a court, the court must presume the statute’s validity. Moreover, in examining the statute’s validity, the court is not confined to the pleadings of the State; it may freely consider whether, under any constitutional provision, the law can be sustained.

In this matter, the Court held that the Constitution could not uphold the whole Act merely by relying on Article 31A(1)(e) or Article 31(2A), because those provisions do not address the question of acquisition, and the Attorney‑General himself conceded that the Act could not be sustained on that basis alone. The Court then examined the language of sub‑section (2) of section 13, which states that where rights under a mining lease are acquired under the Act, the person interested shall be paid compensation composed of a sum of specified items. The provision proceeds to list those items, which the Court identified as expenditures and the interest on such expenditures. Sub‑section (3) was noted to prescribe the procedure to be followed when the rights acquired under section 9 relate only to a part of the land covered by the mining lease. Sub‑section (4) was described as dealing with compensation where a mining lease ceases to have effect for any period under clause (b) of section 5. Sub‑section (5) was recognised as providing for payment of compensation for any land acquired under section 9 and for laying down the principles to be applied in computing that compensation. Sub‑section (6) was said to provide for compensation for damage done to the surface of any land or any works thereon where no other provision for compensation exists in the Act. Sub‑section (7) addressed compensation for maps, charts and other documents. Section 14 was identified as the clause that sets out the method for determining compensation. From these provisions, the Court concluded that the Act clearly specifies the principles and the manner in which compensation must be determined and paid, which satisfies the requirement of Article 31(2) of the Constitution for a law relating to the acquisition of property. The Court further observed that where a law contains such provisions, Article 31(2) bars any court from questioning the law on the ground that the compensation it provides is inadequate. The compensation under the Act is expressly provided for the land to be acquired, and the land includes everything beneath the surface, which Mr Das described as “locked up” in the land. Parliament, in sub‑paragraph B(5) of section 13, has prescribed how the value of this land is to be calculated. The argument that Parliament’s formula does not take into account the value of the minerals therefore amounts to a challenge to the adequacy of the compensation, which is precluded by the concluding words of Article 31(2). Although Mr Das contended that minerals constitute a separate tenement and should attract separate compensation, the Court noted that it had already addressed that contention and need not repeat its earlier reasoning.

The Court noted that it was unnecessary to restate the reasoning already set out in earlier portions of the judgment. In its view the minerals located beneath the surface could not be treated as a distinct tenement, except perhaps in a situation involving a trespass. Consequently, there was no legal basis for providing separate compensation for such minerals. Moreover, even if the minerals were to be considered a separate tenement, the legislation presently under consideration would not be applicable to that tenement at all. The Court reiterated that the coal present in the two collieries that were the subject of the petition was not owned by the respective petitioners as a tenement apart from the surface land. On these grounds, the Court held that the challenge to the validity of the Act on the basis that it violated Article 31(4) of the Constitution could not succeed. Accordingly, the petition was dismissed and the petitioners were ordered to pay the costs of the proceedings.

The Court then turned to the matters raised in writ petition 242 of 1960. The petition concerned a tract of land measuring 737 bighas, of which the petitioner reported that 321 bighas had been worked. The mining operations on that tract had been halted in 1928 because the mine had become flooded. The petitioner filed an application dated 5 June 1957 seeking permission to reopen the mine. Subsequent reminders were sent by the authorities, but none of these reminders elicited any response. It was clarified that the petitioner’s application sought the reopening of the existing mine and did not request the opening of new mines. In the absence of the requisite permission, the petitioner did not commence any mining activity. The Court was informed that, historically, the petitioner had extracted more than one million tonnes of coal from the colliery. Nevertheless, the Court observed that no special considerations applied to the petitioner’s case that were different from those that applied to the Burrakar Coal Company case. The petitioner’s colliery had also remained dormant for an extended period and therefore qualified as an “unworked mine.” The impugned Act and the notification issued under it were held to apply to the petitioner’s colliery in the same manner as they applied to the Sudamdih colliery of Burrakar Coal Company. Consequently, the writ petition failed and was dismissed with costs. The Court ordered that the cost of the hearing be borne equally by the two petitioners, with a single hearing fee to be divided equally between them. The petitions were dismissed.