The Lodna Colliery Co. Ltd vs Bhola Nath Roy

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

Court: Supreme Court of India

Case Number: Civil Appeal No. 405 of 1956

Decision Date: 19 January, 1962

Coram: Raghubar Dayal, Bhuvneshwar P. Sinha, P.B. Gajendragadkar

The case titled The Lodna Colliery Co. Ltd versus Bhola Nath Roy was decided on 19 January 1962 by the Supreme Court of India. The judgment was authored by Justice Raghubar Dayal, with Justices Bhuvneshwar P. Sinha and P. B. Gajendragadkar forming the bench. The petitioner in the proceeding was The Lodna Colliery Co. Ltd and the respondent was Bhola Nath Roy. The official citation for the decision is reported as 1964 AIR 918 and 1962 SCR Supl. (2) 636, with a related citation of RF 1973 SC 408 (4). The statutory provision under consideration related to the Lakhraj land scheme, specifically the question of whether a permanently settled holder of a resumed, invalid Lakhraj (revenue‑free) land possessed rights to the sub‑soil minerals of that land. The headnote of the judgment framed the issue as whether a person with whom such land had been permanently settled enjoyed sub‑soil mineral rights. The Court held that the property right of persons whose resumed invalid Lakhraj land had been settled was the same as that of the Zamindars, and therefore extended to the sub‑soil minerals of the land they held. The Court referred to earlier authorities such as Ranjit Singh v. Kali Dasi Debi (1917) L.R. 44 I.A. 117, Hari Narain Singh v. Sri Ram Chakrabarti (1910) L.R. 37 I.A. 136, Durga Prasad Singh v. Braja Nath Bose (1912) L.R. 39 I.A. 133, Sashi Bhusan Misra v. Jyoti Prasad Singh Deo (1916) L.R. 44 I.A. 46, and Raghunath Roy Marwari v. Raja of Jheria (1919) L.R. 46 I.A. 158, noting that those precedents were not applicable to the present matter. The judgment arose from Civil Appeal No. 405 of 1956, which was an appeal against a decree dated 11 September 1952 passed by the Calcutta High Court in appeal from original decree No. 162 of 1949. The appellant was represented by counsel including the Attorney General for India, while the respondents were represented by their own counsel. The judgment was delivered by Justice Raghubar Dayal. The appeal, issued on a certificate from the Calcutta High Court, sought to determine whether the holder of a permanently settled resumed invalid Lakhraj land had rights in the sub‑soil minerals. The factual background explained that the plaintiffs were proprietors of land identified in C. S. Khatian No. 611 and Sub‑Khatians Nos. 612 and 613 of the village of Sripur, located in Touzi No. 2597 of the Burdwan Collectorate. The Maharaja of Burdwan owned the lands in the same village belonging to Touzi No. 12 of the Burdwan Collectorate and had let those lands to the Pals and Goswamis of Sripur on a Putni tenancy. The Putnidars subsequently obtained a coal mining lease from the Maharaja and, together with the Maharaja, granted a coal mining lease of the same lands to P. K. Chatterji of Ikrah. P. K. Chatterji, in turn, sub‑leased the mining rights to Messrs. Lodna Colliery Co. Ltd., which was the predecessor in interest of the defendant company, the Lodna Colliery Co. (1920) Ltd. A portion of the lands in suit later subsided, and upon inquiry the plaintiffs discovered that the defendant company had extracted a substantial quantity of underground coal from the lands. This alleged unauthorized extraction formed the basis of the plaintiffs’ claim for damages and other relief, while the defendant denied any right to the sub‑soil, contending that the permanent settlement of the resumed invalid Lakhraj land conferred no greater rights than those held by their predecessors under Brahmottar and Debutter grants, which did not include sub‑soil ownership. The trial court had previously held that the invalid Lakhraj tenure in the land did not grant sub‑soil rights, a conclusion that was subsequently examined by this appeal.

In this case the plaintiff proprietors asserted that the defendant company had removed a substantial volume of underground coal from the lands that were the subject of the suit. Because of this alleged wrongful extraction, the plaintiffs relied on their proprietary interest to claim damages for the coal that had been taken and for other related injuries. The defendant company opposed the suit and denied that the plaintiffs possessed any right to the sub‑soil minerals. Its defense rested, among other points, on the contention that the land in dispute had been permanently settled in the plaintiffs’ favour after being resumed as “invalid Lakhraj” land, and that such settlement did not confer any greater rights than those the plaintiffs already held under the original Brahmottar and Debutter grants. Those earlier grants, according to the defendant, did not contain any entitlement to the sub‑soil. The trial court examined these arguments and concluded that the invalid Lakhraj tenure over the disputed land, which had originally been held by the plaintiffs’ predecessors‑in‑interest, had been resumed by the Government under Regulation II of 1819. After such resumption, the Government permanently settled the land with the plaintiffs at a fixed revenue assessment. The court held that, by virtue of that permanent settlement, the plaintiffs acquired a right to the minerals located beneath the soil of the settled land. Accordingly, the trial court decreed the suit in part in favour of the plaintiffs, and the High Court affirmed that decree. On appeal, the appellant reiterated the contention that a person with whom an invalid Lakhraj land had been resumed and subsequently settled possessed no rights in the sub‑soil. The respondents, in support of their claim to the sub‑soil, relied upon the provisions of the Regulations framed by the Governor‑General in Council. The Governor‑General in Council had issued a series of Regulations on 1 May 1793, the first of which to be considered was Regulation XIX of 1793. This Regulation was enacted to reenact, with certain modifications, the Rules that had been issued by the Governor‑General in Council on 1 December 1790. Those Rules were intended to test the validity of titles held by persons claiming lands exempt from payment of revenue under various grants, and also to determine the amount of annual assessment that might be imposed on such lands should they become liable to public revenue. The preamble of Regulation XIX made it clear that the Regulation created an agency tasked with determining the title of proprietors who claimed exemption from revenue on the basis of particular grants. It further declared that the British Government had, from time to time, deemed all grants conferring exemption from revenue without proper sanction since the accession of the East India Company to the Diwani on 12 August 1765 to be illegal and void. Moreover, the Regulation stipulated that no such exempted land was to be subjected to revenue liability until the titles of the proprietors had been adjudged invalid by a final judicial decree.

The Court noted that the titles of the proprietors had been adjudged invalid by a final judicial decree. The Court also observed that the individuals who claimed to hold land exempt from the payment of revenue were described in the Regulation as “proprietors.” Section II, Clause First of the Regulation dealt with grants of alienated land that were made before 12 August 1765, the date on which the East India Company acquired the Diwani. That provision stated that such grants would be deemed valid only if the grantee actually and bona‑fide obtained possession of the land and if the land had not subsequently been made liable to the payment of revenue. Section III, Clause First declared invalid every grant for holding land exempt from the payment of revenue that had been made between 12 August 1765 and 1 December 1790 by any authority other than the Government, when such a grant had not been confirmed by the Government or by any officer empowered to confirm it. Section IV, which the Court regarded as significant for the present case, read in full: “This Regulation, as far as regards lands alienated previous to the 1st December 1790, respects only the question whether they are liable to the payment of revenue or otherwise. Every dispute or claim regarding the proprietary right in lands alienated previous to that date, and which, in conformity to this Regulation, may become subject to the payment of revenue, is to be considered as a matter of a private nature to be determined by the Courts of Diwani Adalat in the event of any dispute or claim arising respecting it between the grantee and the grantor or their respective heirs or successors. The grantees, or the present possessors, until dispossessed by a decree of the Diwani Adalat, are to be considered as the proprietors of the lands with, the same right of property therein as is declared to be vested in proprietors of estates or dependent taluks, (according as the land may exceed or be less than one hundred bighas, specified in sections 6, 7 and 21,) subject to the payment of revenue, and they are to execute engagements for the revenue, with which their lands may be declared chargeable, either to Government or to the proprietor or farmer of the estate in which the lands may be situated, or to the officer of Government, (according as the revenue of the estate in which the lands may be situated may be payable by the proprietor or a farmer, or collected khas) under the rules for the decennial settlement. If by the decision of the Diwani Adalat the proprietary right in the land shall be transferred, the person succeeding thereto is in like manner to be responsible for the payment of the revenue assessed or chargeable thereon.” From this section the Court concluded that the Regulation merely addressed whether certain lands were liable to the payment of revenue and provided that any dispute concerning the proprietary right between the grantees and the grantors would be a matter of a private

In the present case, the Court observed that any dispute concerning the nature of proprietary rights was to be resolved by the Courts of Diwani Adalat. The provision, however, clearly stated that the grantees or the present possessors of land, until they were dispossessed by a decree of the Diwani Adalat, were to be regarded as the proprietors of those lands. Such proprietors enjoyed the same right of property that was declared to be vested in the proprietors of estates or in dependent taluks, whether the land exceeded or was less than one hundred bighas, subject only to the obligation to pay revenue.

The same provision required these proprietors of land to execute an engagement for revenue, by which their lands could be declared chargeable either to the Government or to the proprietor or farmer of the estate in which the lands were situated. Consequently, the grantees of the so‑called invalid Lakhraj lands possessed the identical right of property in those lands, subject to the payment of revenue, as was recognized as vested in the proprietors of estates. The Court further noted that if the zamindars, who were the proprietors of estates, held rights not only over the surface of the land but also over the sub‑soil, then the persons whose grants had been held invalid and who were liable to pay land revenue likewise possessed rights in the sub‑soil of the settled land.

The Court then turned to Regulation VIII of 1793, which had been passed on 1 May 1793. This Regulation re‑enacted, with certain modifications and amendments, the Rules for the Decennial Settlement of the public revenue payable from the lands of the zemindars, independent talukdars and other actual proprietors of land in Bengal, Bihar and Orissa. Those Rules had originally been promulgated for the respective provinces on 18 September 1789, 25 November 1789 and 10 February 1790, together with later amendments. Section IV of Regulation VIII provided that the settlement, subject to the restrictions and exceptions specified in the Regulation, was to be concluded with the actual proprietors of the soil, irrespective of their denomination, whether they were zemindars, talukdars or chaudhris. From this, the Court inferred that the zemindars with whom settlement was made were recognised as the actual proprietors of the soil.

The Court explained that the revenue settlement thus effected was made permanent by Section IV of Regulation I of 1793. Regulation I of 1793 had incorporated into a Regulation certain Articles of a Proclamation dated 22 March 1793. Section I of this Regulation stated that the various Articles of the Proolamation were enacted into a Regulation and that those Articles related to the limitation of public demand upon the lands, as addressed by the Governor‑General in Council to the zemindars, independent talukdars and other actual proprietors of land who paid revenue to the Government in the Provinces of Bengal, Bihar and Orissa.

Finally, the Court pointed out that Section IV of Regulation I declared to the zemindars, independent talukdars and other actual proprietors of land – whether a settlement had been concluded on their behalf under the earlier Regulations – that upon the expiration of the term of settlement no alteration would be made in the assessment that they had respectively engaged to pay. Moreover, the provision assured that they, together with their heirs and lawful successors, would be allowed to hold their estates at the same assessment forever. The Court noted that the preamble to this provision further reinforced the permanence of the settlement.

Regulation II of 1793 abolished the Courts of Mal Adalat, which had previously exercised revenue jurisdiction, and transferred the trial of suits that were cognizable in those courts to the Courts of Diwani Adalat. In the same regulation, with reference to the proposed improvements in agriculture, it declared that two fundamental measures were essential for attaining those improvements. First, it stated that ownership of the soil had been declared to vest in the landholders, and second, it fixed the revenue payable to the Government from each estate forever. The regulation further observed that before this enactment the ownership of the soil had never been formally declared to belong to the landholders, nor had the landholders been permitted to transfer any rights they possessed or to raise money on the credit of their tenures without prior sanction of the Government.

From those declarations it became clear that the zemindars, who were the proprietors of the estates, were recognized by the British administration as the proprietors of the soil itself. This view was subsequently affirmed by the Privy Council in the case of Ranjit Singh v. Kali Dasi Debi. At page 122 of that judgment the Council observed: “Passing to the settlement of 1793, it appears to their Lordships to be beyond controversy that whatever doubts be entertained as to whether before the British occupation the zamindars had any proprietary interest in the lands comprised within their respective districts, the settlement itself recognizes and proceeds on the footing that they are the actual proprietors of the land for which they undertake to pay the Government revenue. The settlement is expressly made with the ‘zemindars, independent talukdars and other actual proprietors of the soil’: see Regulation I, s.3, and Regulation VIII, s.4. It is clear that since the settlement the zamindars have had at least a prima facie title to all lands for which they pay revenue, such lands being commonly referred to as malguzari lands.”

The right of the zemindars to the sub‑soil minerals beneath their land follows from their status as proprietors of the soil, and this principle has been recognised in a series of decisions involving disputes between zemindars and persons holding land under tenures granted by them. In those cases the courts have held that, where the right to sub‑soil minerals is not expressly conferred on the tenure holder by the terms of his tenure, the holder does not acquire any right to those minerals. The first such decision was Hari Narayan Singh v. Sriram Chakravarti (1). The same principle was reiterated in Durga Prasad Singh v. Braja Nath Bose (2). In Sashi Bhushan Misra v. Jyoti Prashad Singh Deo (3), Lord Buckmaster, at page 53, explained that these earlier judgments established the rule that when a zamindar grants a tenure at a fixed rent, even if that tenure is permanent, heritable and transferable, minerals are not deemed to be part of the grant unless there is express evidence to that effect. The fact that the tenure was rent‑free does not alter this principle, as confirmed in Raghunath Roy Marwari v. Raja of Jheria (4).

The Court observed that there is no distinction from the principle set out in Raghunath Roy Marwari v. Raja of Jheria (4). Accordingly, it held that the property right of the person with whom the resumed invalid Lakhraj land had been settled, being the same as that of the zamindars, also extended to the sub‑soil minerals of the land held by that person. The Court further noted that the plaintiffs relied upon the documents identified as Exhibits 10, 2 and 6(a) to support their claim. Before examining those exhibits, the Court referred to two regulations that had not yet been discussed. Regulation II of 1819 altered the earlier regulations governing the resumption of revenue from lands that were held free of assessment because they were occupied under illegal or invalid tenures. Section III of that regulation declared that the lands specified therein would be liable to assessment in the same way as other unsettled mahals and that the revenue assessed on all such lands would belong to the Government. It also prescribed the procedure by which the Government could make an inquiry, claim assessment of such land, and levy revenue. Regulation III of 1828 introduced certain procedural changes, but the Court found that those changes did not contain any provision that would affect the determination of the issue presently before it. Exhibit 10 was identified as the Robakari of the Deputy Collector of Burdwan dated 15 April 1841, relating to Touzi No. 2597. The Court explained that, pursuant to the order recorded in that Robakari, a permanent settlement was effected with Madhusudan Roy and Sitaram Roy, who were the predecessors‑in‑interest of the plaintiffs, concerning the land that formed the subject of the suit. From the contents of the Robakari, it emerged that in the proceedings wherein the Government was the plaintiff and Manik Chandra Roy, Madhusudan Roy, Sitaram Roy and other parties were defendants, the Government, relying on the provisions of Regulation II of 1819 and Regulation III of 1828, claimed the invalid revenue‑free land consisting of Brahmottar land measuring 156 bighas 10 cattahs together with Debutter land measuring 18 bighas 20 cattahs, a total of 175 bighas, situated in the village of Pariharpur and other villages within Pergana Shergarh. That claim was decreed in April 1837, resulting in the resumption of the land and its assessment to land revenue. Madhusudan Roy, Sitaram Roy and the other defendants asserted a right to obtain settlement on the ground that the land constituted Lakhraj property acquired by their ancestors. However, the settlement was entered into with Manik Chandra Roy on 19 April 1838 because the other defendants failed to appear. Subsequently, Madhusudan Roy applied for settlement jointly with Manik Chandra Roy and the other parties. Following the enquiry, a permanent settlement was made separately: one settlement with Manik Chandra Roy and the other parties covering a portion of the area, and another settlement with Madhusudan Roy and Sitaram Roy covering the remaining portion. On 15 April 1841, the Deputy Collector of Burdwan issued an Amalnama identified as Exhibit 2, addressed to the Mukhyas and others, directing them to pay their respective rents to the persons with whom the settlements had been made. Exhibit 6(a) was identified as a certified copy of settlement khatian No. 611 relating to the village of Sripur, also concerning Touzi No. 2597, R.S. No. 2416, and it described the interest in the suit land as

The Court observed that the settlement document identified the land in question as Bajeapti, meaning resumed, Lakheraj land situated at Pariharpur and adjoining areas. The document listed five individuals as the proprietors in actual possession of that interest, namely the son of Madhusudan Roy and the sons of Sitanath Roy. In addition, the record expressly showed that the King Emperor of India held the entire superior interest in the land. From these entries the Court concluded that the persons who possessed the resumed Lakheraj land were holding it as proprietors under the authority of the King Emperor of India. Accordingly, the Court reasoned that these proprietors were entitled to enjoy the same bundle of rights that other proprietors, such as zamindars, traditionally possessed. The appellants, however, contended that prior to the resumption proceedings the lands in dispute were classified as Brahmottar and Debutter holdings belonging to the ancestors of the plaintiffs. Relying on the legal principle articulated by the Privy Council in Hari Narayan Singh’s Case and subsequent authorities, the appellants argued that, in the absence of clear proof that sub‑soil rights were transferred under those earlier grants, the plaintiffs could not be said to own mineral rights beneath the surface. The Court rejected this contention. It held that the ancestors of the plaintiffs held the land directly from the Government, not on a subordinate tenure from any zamindar. Consequently, the rule laid down in Hari Narayan Singh’s Case, which applies to situations where a subordinate tenant seeks sub‑soil rights, was inapplicable to the present circumstances. Having examined the facts and the applicable law, the Court was of the view that the plaintiffs were correctly recognized as owners and possessors of the mineral rights under the land in dispute. Accordingly, the decree in favour of the plaintiffs was affirmed as proper. The appeal was therefore dismissed, and the appellant was ordered to bear the costs of the proceedings.