State of Andhra Pradesh vs Duvvuru Balarami Reddy

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

Court: Supreme Court of India

Case Number: Civil Appeal Nos. 252 and 253 of 1958

Decision Date: 2 April 1962

Coram: K.N. Wanchoo, Bhuvneshwar P. Sinha, P.B. Gajendragadkar, N. Rajagopala Ayyangar

On 2 April 1962 the Supreme Court of India delivered a judgment in the matter of State of Andhra Pradesh versus Duvvuru Balarami Reddy. The decision was authored by Justice K N Wanchoo, with Justices Bhuvneshwar P Sinha, P B Gajendragadkar, and N Rajagopala Ayyangar forming the bench. The petition was presented by the State of Andhra Pradesh as the petitioner and Duvvuru Balarami Reddy as the respondent. The judgment was recorded under the citation 1963 AIR 264 and reported in 1963 SCR (1) 173, with subsequent citations appearing in later reports. The case concerned the interpretation of a sub‑soil rights clause in an inam grant, specifically whether the owners of a Shrotriem village possessed the right to grant leases for mining mica and whether such leases could be renewed after the village estate was resumed by the State.

The respondents had obtained one‑year leases for extracting mica from the owners of the Shrotriem village on the condition that the lessors would renew the leases for any period desired by the lessees. Shortly thereafter the village was vacated and the owners’ estate was resumed by the State. The respondents argued that the State was bound to renew the leases, while the State contended that the Shrotriem owners never possessed mineral rights, could not have granted any mining leases, and therefore no question of renewal arose. The Court held that the Shrotriem owners did not have any sub‑soil rights and that the leases they granted were legally ineffective. The Court explained that merely being the holder of an inam grant does not automatically confer sub‑soil rights in addition to surface rights; such rights must be expressly indicated in the language of the grant. Because the original grant was not produced and the inam fair register did not demonstrate inclusion of sub‑soil rights, no inference could be drawn that the grant included such rights, even though the grant also covered poramboke (uncultivable) land. The Court further observed that potential difficulties arising from mining operations, where mineral rights might vest in the State while surface rights remained with the Shrotriem owners, did not turn the owners into co‑sharers of sub‑soil rights, nor did it entitle them to grant mining leases. The Court applied the principle from Secretary of State for India in Council v Srinivasa Chariar (1920 L R 48 1 A 56) and distinguished the case of Secretary of State v Krishna Rao (1945 L R 72 1 A 211). The judgment arose from Civil Appeal Nos 252 and 253 of 1958, filed by special leave and certificate from an order of the former Andhra High Court dated 5 August 1955 in Writ Appeal No 13 of 1955. Counsel for the State of Andhra Pradesh was represented by the advocate general, and counsel for the respondents was also engaged, with appropriate legal representatives appearing on both sides.

Counsel for the appellant and counsel for Respondent No. 1 appeared in Civil Appeal No. 252 of 1958, while counsel for the appellant and counsel for Respondents No. 1 to 3 appeared in Civil Appeal No. 253 of 1958. Counsel for Respondent No. 2 was also present in Civil Appeal No. 253 of 1958. The judgment was delivered on 2 April 1962 by Justice Wanchoo. The Court observed that the two appeals were closely linked because they arose from the same decision of the Andhra Pradesh High Court. The principal appeal, numbered 252, was filed by the State of Andhra Pradesh and the second appeal, numbered 253, was filed by Duvvuru Balarami Reddy together with other respondents. For convenience, the Court referred to the State of Andhra Pradesh as “the appellant” and to Duvvuru Balarami Reddy and the other parties as “the respondents.” The essential facts necessary for the decision were as follows. The respondents had filed a writ petition seeking a mandamus or any other appropriate writ that would compel the appellant to grant them permission to conduct mica mining operations in Survey No. 49/1 situated in the village of Ananthamadugu, Rapur Taluk, Nellore district. The petition required the respondents to execute an agreement in accordance with the Mineral Concession Rules, 1949, and to comply with the conditions specified therein.

The respondents asserted that they had obtained leases for mica mining from several co‑owners of the shrotriem village of Ananthamadugu on 24 March 1952. Subsequently, on 27 May 1953, the village was notified under the Madras Estates (Abolition and Conversion into Ryotwari) Act, No. XXVI of 1948, whereby the interests of the shrotriem owners were transferred to the appellant. The leases granted to the respondents were for a term of one year, with a provision that the lessors were required to extend and renew the lease for any period desired by the lessee, subject to the Rules. After the estate was taken over, the question arose whether the leases could be enforced against the Government under section 20 of the Act. In November 1953, the Manager of Estates, acting on behalf of the Government, held that the leases were enforceable against the Government, an order that was later affirmed by the Collector of Nellore. One of the co‑owners of the shrotriem, who was not a party to the leases, filed a revision petition before the Board of Revenue. The respondents also applied to the Government for permission to work the mines, but the Government declined to grant such permission. The respondents contended that the Government had no authority to withhold permission and therefore filed the writ petition seeking a mandamus or any other appropriate writ directing the appellant to allow them to carry out mica mining in accordance with the leases.

In this case, the petitioners sought a writ of mandamus, or any other appropriate writ, directing the respondent State to grant them permission to carry on mica mining in accordance with the leases that had been executed. The State opposed the petition, arguing that the village involved was a shrotriem inam village and that, as a matter of law, there was no presumption that an inam grant automatically included sub‑soil rights for the shrotriemdars. Consequently, the respondents could not claim any rights superior to those of their lessors. The State further contended that the lessors themselves did not possess mineral rights; therefore, even if the leases were not void under section 20 of the Act, they did not confer upon the respondents a statutory entitlement to obtain permission from the State to work the mines. The State maintained that the grant of a mining lease remained entirely within its discretion, to be exercised in accordance with the Rules. Additionally, the State pointed out that the revision petition filed before the Board of Revenue had been stayed, because the issues raised before the Board were encompassed by the questions presented in the writ petition. The central question for determination thus became whether the shrotriemdars possessed any rights in the minerals and whether they were competent to grant leases over such minerals. If the shrotriemdars lacked mineral rights, any lease they issued would be of no legal effect and would not give the respondents a vested right to a mining lease from the State under the Rules. The learned Single Judge who heard the writ petition held that there was no evidence that the inam grant in the present case covered mineral rights. Accordingly, the Judge concluded that the respondents did not acquire any rights under the leases with respect to the minerals. After addressing other matters raised in the petition, which are not material to the present discussion, the Judge dismissed the petition. The respondents appealed this decision to a Division Bench of the High Court. The appellate Court, after reviewing the standing orders of the Board of Revenue of the erstwhile Madras State, held that the State was entitled only to impose a royalty on minerals extracted by the shrotriem inamdar. The Court observed that this view accorded with common‑sense principles, noting that the grantor retains sub‑soil rights while the grantee holds surface rights; since each party requires the other's assistance to exploit the minerals, it is natural and just that the production be shared. This reasoning suggested that the sub‑soil right belonged to the State, while the surface right remained with the inamdar, leading to a shared entitlement from the mining operation.

The appellate court concluded that the sub‑soil rights belonged to the State and not to the inamdar. However, because the surface rights were vested in the inamdar while the sub‑soil rights were vested in the State, the court reasoned that the inamdar and the Government should share the output produced by the mining operation. Ultimately, the appellate court dismissed the appeal on the ground that the original one‑year leases had expired and that the period for renewal, which the respondents could have obtained under the applicable Rules, had also elapsed before the appellate court rendered its decision. In reaching this conclusion, the court relied on the Supreme Court’s decision in K. N. Guruswamy v. The State of Mysore and held that, since the respondents’ claim failed due to the lapse of time, they were awarded costs.

Subsequently, the State applied for a certificate, which was granted, and this procedural step gave rise to the present appeal before this Court. The respondents, seeking special leave to appeal, argue that the High Court’s decision was favorable to them on the merits and therefore the High Court should have ordered the State to grant them a lease even though both the original lease term and the renewal period prescribed by the Rules had expired. The central issue for determination in these appeals is whether the shrotriemdars can be said to possess rights in the minerals. This question has been examined repeatedly by the Madras High Court and was finally settled by the Judicial Committee in the case of Secretary of State for India in Council v. Srinivasa Chariar. The Judicial Committee case arose on appeal from the Madras High Court’s decision in Secretary of State for India in Council v. Sreenivasa Chariar. The dispute before the Madras High Court concerned a shrotriem inam granted by the Nawab of Carnatic in 1750 and later enfranchised by the British Government in 1862. The inamdar began quarrying stone on the granted land, and the Government asserted its right to levy a royalty or seigniorage fee on the quarried stone. The inamdar counter‑claimed that an enfranchised inam was equivalent to a zamindari estate under the permanent settlement, giving him full sub‑soil rights and precluding any Government royalty. The High Court held that, under the terms of the grant, the grantor had conveyed all interests it possessed in the soil, including sub‑soil rights, and therefore the Government was not entitled to levy any royalty or seigniorage fee on the stones quarried by the inamdar.

The High Court held that the Government could not levy any royalty or seigniorage fee on stones quarried by the inamdar. In effect, that judgment denied the Government any sub‑soil rights, because the Government could impose a royalty only if it possessed sub‑soil rights, and the inamdar did not have such rights. The High Court’s decision was subsequently taken to the Judicial Committee on appeal, as already mentioned. The controversy before the Judicial Committee centered on the inamdar’s claim that a decree established his full rights over the village, including the rocks and hills within its boundaries. The State, while acknowledging that an inam grant of the village had been made to the inamdar, argued that the grant did not convey any rights to the minerals beneath the village.

The Judicial Committee observed that a grant of a village in inam might amount only to an assignment of revenue. Even where the grant included land, the interest actually transferred depended on the precise language of the instrument and the particular circumstances of the case. The Committee also examined the Board of Revenue’s standing orders of 1890 and 1907, which had been referred to by the appeal court in its judgment. From this examination, the Committee concluded that merely holding an inam grant does not automatically imply that the grant includes sub‑soil rights in addition to surface rights. The existence of sub‑soil rights must be inferred from the specific words used in the grant.

If the grant contains no language from which sub‑soil rights can be properly inferred, the inam grant conveys only surface rights to the grantee and cannot be equated with a complete transfer of all rights held by the grantor. The Committee particularly highlighted the phrase “the produce of the seasons each year” that appeared in the grant, indicating that only surface rights were intended to be conveyed in that case. It is not contested that, since the Judicial Committee’s decision in the Srinivasa Chariar case, the law has treated sub‑soil rights of inamdars differently from those of zamindars under the permanent settlement.

The Committee also considered the Board of Revenue’s standing orders of 1890 and 1907, which the appeal court had cited, and held that it was now too late to rely on those orders to determine the rights of inamdars and the Government concerning minerals beneath the soil. The Committee’s decision showed that the Government’s views on this question had evolved over time. An earlier view seemed to place sub‑soil rights with the inamdars, but a later view, affirmed in the Srinivasa Chariar decision, placed those rights with the Government unless the grant expressly stated otherwise.

In the year 1907 the Government adopted the position that sub‑soil rights vested in the Government unless the grant expressly provided otherwise, and this later view was affirmed by the Judicial Committee in the case of Srinivasa Chariar (1920) L.R. 48 I.A. 56. That decision has since been the controlling authority on the Government’s entitlement to minerals beneath the soil in inam grants. The Court finds no basis for distinguishing that decision on the ground that it dealt only with the question of royalty, because it is evident that the Government could demand royalty only if it possessed the underlying mineral rights, not the inamdars. Consequently, the matter before us is whether the terms of the grant in the present case confer sub‑soil rights upon the shrotriemdars. The High Court did not identify any serious controversy on this point, and the respondents did not argue that the grant to the shrotriemdars included sub‑soil rights. The Court has already noted that the appellate judgment itself suggested that, in this case, sub‑soil rights remained with the Government while surface rights were vested in the shrotriemdars. The original grant document is unavailable; the only evidence is the inam fair register of 1861, which records that the grant was made for the personal advantage of the holder. The register contains no expression indicating that sub‑soil rights were part of the grant. The respondents, however, contend that the grant also comprised Poramboke land, and that the inclusion of Poramboke implies that the grant was not limited to mere surface rights. They rely on the Judicial Committee’s decision in Secretary of State v. Krishna Rao (1945) L.R. 721 A. 211, where the dispute concerned the levy of water cess under the Madras Irrigation Cess Act No. 7 of 1865. In that case the Committee observed that the inam grant covered dry, wet and garden land as well as Poramboke, i.e., uncultivable land, and held that such inclusion demonstrated the grant of full proprietary rights, thereby precluding the Government from imposing a water cess. The respondents argue that this precedent shows that when Poramboke is granted, the grantee acquires complete proprietary rights, including sub‑soil rights. It must be remembered, however, that the dispute in Krishna Rao centered on whether the inamdar was entitled to free irrigation from water sources situated in the village by virtue of the grant, or whether the Government could levy a cess under the irrigation legislation. The issue of sub‑soil rights was not contested in that proceeding; the contention was confined to surface rights relating to water. The Government’s stance was that the grant conveyed only melvaram, i.e., the right to revenue from the lands, whereas the respondent claimed that the grant included not only melvaram but also the full proprietary interest in the land itself, thereby barring any governmental imposition of the irrigation cess. The Judicial Committee, in reaching its conclusion, regarded the inclusion of Poramboke as an indication that the grant was not a mere melvaram grant but conferred full proprietary ownership.

In the earlier dispute concerning the lands situated in Shrotiem village, the question before the Judicial Committee was whether the grant of the lands included the right to levy a cess under the Madras Irrigation Cess Act. The parties did not dispute the existence of sub‑soil rights in that matter; the controversy was confined to the nature of the surface rights relating to water. The Government argued that the grant to the inamdar consisted solely of melvaram, that is, the right to collect revenue from the land, and therefore did not extinguish the government's power to impose an irrigation cess. The opposite side contended that the grant encompassed not only melvaram but also a full proprietary interest in the land itself, which would preclude any levy of the cess. The Judicial Committee observed that the inclusion of poramboke—land that is uncultivable—suggested that the grant was not a mere conveyance of melvaram but conveyed full proprietary rights. Nevertheless, the Committee also referred to an earlier decision in the case of Srinivasa Chariar, and consequently the present Court cannot interpret the earlier ruling as establishing a blanket presumption that every grant containing poramboke automatically includes sub‑soil rights. The only inference that can be drawn from the presence of poramboke is that all surface rights were granted, not that the sub‑soil was also conveyed. Therefore, the fact that the inam fair register in the present case lists poramboke does not, by itself, demonstrate that sub‑soil rights were part of the grant. Sub‑soil rights may pass to a grantee only if the grant expressly confers them or if they can be clearly inferred from the terms of the grant. Since the original grant document is unavailable and the record consists solely of the inam fair register, there can be no doubt that the learned Single Judge was correct in concluding that the grant of sub‑soil rights to the Shrotiem darshins was not established. The appellate court appears to concur with that view. Once it is held that sub‑soil rights were not transferred to the Shrotiem darshins, it follows logically that the darshins had no authority to lease any minerals situated beneath the soil to any other party. Consequently, the leases that the darshins executed in favour of the respondents in this case are of no legal effect in conveying any right to the respondents over the minerals in the sub‑soil. In the present circumstances, the respondents cannot rely on those leases to assert a claim for mining leases.

The Court examined the question of whether the practical difficulty that may arise because sub‑soil rights are vested in the Government while surface rights are vested in the shrotriemdars could convert the shrotriemdars into owners of the sub‑soil and consequently make them entitled to grant leases of those sub‑soil rights. With respect, the Court expressed that it could not understand how the mere existence of such a practical problem in the operation of mines could give the shrotriemdars any share in the sub‑soil and thereby confer upon them the authority to issue a mining lease. The Court further observed that whatever practice may have existed in the past, and however the Government may have overcome the practical difficulty in earlier times, such historical practice does not create any right in the minerals for the shrotriemdar. The fact that the Government has previously dealt with the difficulty does not bestow upon the shrotriemdar a mineral right that would enable him to grant a mining lease to any person. Consequently, the Court concluded that the mining leases granted in the present case were executed by persons who possessed no right to the minerals, and therefore those leases could not confer any rights on the respondents to claim, as a matter of right, that the Government should grant them a mining lease under the Rules. In view of the foregoing reasoning, the Court held that appeal No 252 must be allowed, whereas appeal No 253 must fail. Accordingly, appeal No 252 was allowed, the order of the appellate court was set aside, the writ petition was dismissed and costs were awarded to the State throughout. Appeal No 253 was dismissed, and each party was directed to bear its own costs. Civil Appeal No 252 of 1958 was therefore allowed, and Civil Appeal No 253 of 1958 was dismissed.