STAT.E OF ANDHRA PRADESH versus DUVVURU BALARAMI REDDY

1 S.C.R. SUPRE~IE COURT REPORTS

of jurisdiction and the order of assessment passed in those proceedings cannot be held to be without jurisdiction and no suit will lie for impe<tehing them on the ground that s. lU { l) had not been followed. This must fortiori be so when the appeJJant hits itself submitted to jurisdiction and made return. We accordingly agree with the learned Judges that even if the registration of the appellant as dealer under s. 8 is bad that has no effect on the validity of the proceedings taken against it under the Act and the assessment of tax made thereunder.

We should add that s. ~l of the Act bare tho jurisdiction of Ci vii Courts to entertain suits ea.Hing in question any orders passed by tho authr)rities under the Act, and in the view which we have t<1ken it is unnecessary to gn into the question \Vhether in view of this section the preacnt :-;uit is maintainable.

There are no merits whatsoever in this appeal and it is dismissed with costs.

Appeal d-isniis.w?A.1.

Central l'1•Utrics Ltd. v.

Si.ate of M al:oro!hlra Afyar J.

STAT.E OF ANDHRA PRADESH

DUVVURU BALARAMI R~DDY

(B. P. SINHA, c. J;, P. B. GAJENDRAG.\DKAR, K. N.

W.ANCHOO, N. RA.JGOPALA AY\'ANGAR, and

T, L. V1mKATARAIHA ArY.-\R, JJ.)

Subsoil Right-Shrotriem inam-W hen includes sub-soil rights.

The respondents has obtained leases for mining mir::a from the owners of certain 8ltrolri'.em village for one year with stipulation that the lessors were bound to renew the !cases for such periods as may be desired by the lessees. Shortly, there-after, the village waseanoifie.d and the estate of the owners wns resumed by the pptllant. The respondent conten<led tha~

1962 April 2.

Slolt •f Andhra Praths1t v. uvvuru Balaf'ami Redh

the appellant was bound to renew the leases. The appellant contended that the shrotriemdars had no right in the minerals, that they con]d not have granted any leases for mining the n1inerals a11d that as such no question of renewing the leases arose.

JI cld, that sltrotriemdara had no rights in the minerals and the leases granted by them to the respondent had no legal effect. The mere fact that person was the holder of an inam grant was not by itself enough to establish that the inam grant included the grant of sub-soil rights in addition to surface rights. The grant of sub-soil r;ghts depended upon the language used in the grant ; if there were no words in the grant fr· m which grant of sub-soil rights could be properly inferred it would only convey ·surface rights to the grantee. 'fhe original grant in the present case was not available and the inam .'air register did not show that the grant included the grant of sub-soil rights. No inference could he drawn of the grant of sub-soil rights from the fact that the inam grant iucludcd poramboke l unculturable land) also. The difficulty that may arise in the woking of the mines on account of the mines vesting in the state and the surface rights vesting in the shrotriPmdars could not make the shrotriemdar8 co-sharers in the sub-soil rights so as to entitle them to grant leases of the sub-soil rights.

Secretary of State for India in Council v. Srinivasa Ohariar, ( 1920) L. R. 48 I. A. 56, applied.

Secretary of State v. Krishna Rao, (I 945) L. R. 72 I. A. 211, dis!inguished.

CIVIL APPELLATE JurusDICTION: Civil Appeal Nos. 252 and 253 of 1958.

Appeals by Certificate and speoial·leave from

the judgment and order dated August 5, 1955, of the former Andhra High Court in Writ Appeal No. 13 of 1955.

AND

VICE VERSA

D. Narsaraju, Advocate General for the State of AnilhraPradesh, D. Parsanna Kumari, T. V. R. Tata-chari and P. D. Menon, for the appellant (In C. A. No. 252 of 58) and Respondent No. 1 (Jn C. A. No, ~53 of 58). ·

1 s.c.R.

P. Ram Reildy, for the the appellants (In C. A.

No. 253 of 58) and Respondent No. 1 to 3 (In C. A. No. 252 of 58).

A. V. V ishwanatha Sastri and J(. R. Ohoudhri,

for the respondent No. 2 {In C. A. No. 253 of 58).

1962. April 2. The Judgment of the Court was delivered by. ·

WANCHOO, J.-These are 'two connected appeals

arising out of the same judgment of the Andhra. Pradesh High Court. The main appeal No. 252 is by the State of Andhra Pradesh while the other ap-peal No. 253 is by Duvvuru Balarami Reddy and others. We shall dispose of them by this, common judgment and will hereinafter refer to the State of Andhra Pradesh a.s the appellant and Duvvuru Balarami Reddy and others at ~he respondents. · The brief facts necessary for present are these. The respondents had filed writ petition for the issue of ~vrit in the nature of ~endamus or any other ap-propriate writ directing the appellant to give per-mission to the respondents to carry on mica mining operations in survey No. 49/1 in the village of Ananthamadugu in Rapur Taluk of Nellore district subject to the respondents executing as agreement in the manner provided under the' Minera 1 Conces~ sion Rules, 1949 (hereinafter refe1-red . to as the Rules) and conforming to the conditions mention-ed therein. . The case of the respondents was that they had obtained leases for mica mining purposes from various CO·Owners in the shrotriem village Of Ananthamadugu on March 24, 1952. Thereafter on May 27, J 953, this village was notified under the Madras Estates. (Abolition and Conversion into Ryotwari) Act, No. XXVI of 1948, (hereinafter referred to as the Act) and the interest of the shrot-riem owners W')B taken over by the appellant. The leases granted to the respondents were for period of one year and one of the terms provided that the ~essors were bou11d to extend and renew the period

State of .Andhra Pradesli v.

Duvouru Balarami Reddy

State of Andhra Pradesh v. Duovuru Balo.rami /fed <[y ft'anchoo J,

of lease for such period as may be desired by the lessess ,subject to the Rules. After the estate was taken over, the question arose whether the leas<>s were enforceable against the Government under s.20 (l) of the Aot. In November 1953, the Manager of Estates, appointed on behalf of the Government, · held that the leases were. enforceable against the Government. This order was confirmed by the Collector of Nellore. Thereupon there was revi-sion petition by one of the co-owners of the shrot-riem who was not party to the leases before the Board of Revenue. The respondents also appli-ed to the Government for permission to work the mines. The Government however did not grant such permission. The respondents contended that the Government had no right to withheld permission to work the mines. Therefore, the writ petition was filed asking for the issue of writ in the nature of mandamus or any other appropriate writ directing the appellant to give permission to the respondents to carry on mica mining in accordance with the leases.

The petition was opposed on behalf of the

appellant and the main contention on its behalf was that the village in question being shrotriem inam village there was no presumption that the inam grant included the grant of sub·soil rights also to the shrotriemdars. Therefore, the respon-dents could not claim· any rights higher than these of their lessors. In effect, the appellant had contended that the lessors had no rights to the miner-als and therefore the leases even if not void within the meaning of s.20 of the Act would not confer any rights on the respondents to claim as matter of right the grant of permission to work the mines from the appellant and that it was entirely within the discretion of the State whether to grant mining lease or not in accordance with "the Rules. It was also stated in that the revision filed .before the Boarq of ~evenue had been sta~ed as the point~

raised before the Board were covered by the ques-tions involved in the writ petition.

On these pleadings the main question that

arose for decision was whether the shrotriemdars had any rights in the minerals at all and were enti· tied to grant leases thereof. If ~e shrotriemdars had no right in the minerals the grant of lease by them would be of no value :i.nd would not entitle the respondents to claim mining lease under the Rules from the appellant as matter of right.

The learned Single Judge who heard the writ

petition cams to the conclusion that there was nothing to show that the inam grant in the present case covered the right to minerals. In consequence, it was held that the respondents did not get any rights under the said leases to the minerals. The learned Judge then considered the other points raised in the petition with which we are however not concerned and eventUally dismissed it.

The respondents went in appeal to Division

Bench of the High Court., and the appeal court seems to have held on review of the various standing orders of the Board of Revenue of the composite State of Madras that the State was only entitled to impose royalty on minerals taken out by the shro· triem inamdar. .It was pointed out that this seemed to be in accordance with commonsense as the ''grantee is entitled to the surface rights and the grantor to the sub-soil rights and as the latter rights can only be exercised by enterin~ upon the surface, it is only natural and just that they should share what is produced by working the mine, since one cannot enter upon the land, as he has no right to do so and the other cannot work the- mine, as he has no right to the land". This would seem to suggest that the appeal court held that the i-:ub-soil rights belonged to the State and not to the inamdars; but because.of the difficulty that _arose on . account of

s .. ,. •f An'hr• hal11/t v. Duvvuru Raltw4'11 i B1t14y Wa1"AooJ,

State of Andhra Pradesh v. Vuvvuru Balarami R'tBd.J w ... ,,,.,, J.

the surface rights being in the inamdar and sub-soil rights being in the State, it apparently held that the inamdar and the Government should share what is produced by working the mine. Finally, however, the appeal court dismissed the appeal on the ground that the period of one year for which tho leases had been granted had ~xpired and. the period of renewal which the respondents could get under the Hules also had expired before the decision of the appeal court. It relied in this connection on the decision of this Court in K. N. Guruswamy v. The St,ate of Mysore (1) : but as the respondents had failed on account of the expiry of time t4ey were allowed their costs.

This was followed by an application by the State for certificate which was granted, and that is how the State's appeal•has come up before us. As for the appeal by special leave by the respon-dents, they contend that the decision being in their favour on the merits, the High Court should have ordered the State to grant them lease even though the period fixed in the original leases and the period of renewal permissible under the Rules had expired.

The main question therefore that fails for decision in these appeals is whether shrotriemdars ea.n be said to have rights in the minerals. This matter has been the subject of consideration by the Madras High Court on number of occasions and eventually the controversy was set at rest by the decision of the Judicial Committee in Sooretary of St,ate for India in Council v. S rinivasa Ghaiiar ([2]) That case came on appeal to the Judicial Committee from the decision of the Madras High Court in the Secretary of State for India in Council v. Sreenivasa Ckariar ('). The controversy before the Madras High Court was with respect to . shrotriem inam which was grapted by the Nawab ·of Carnatio (I) [!955) I S.C.R. so.; (2) (1920) L.R. 48 I.A. 56. (3) (1917) 1.L.R. 40 Mad. 268. ·

I S.C.R. SUPREME COURT REPORTS

in 1750 a.nd ha.d been enfranchised by the British Government in 1862. The inamdar started quarr-ying stones in the land granted to him and the Go'vernment claimed that it had right to levy royalty or seigniorage fee on stones quarried by tbe inamdar. The ina.mdar contended on the other hand that an enfranchised inam was exactly in the same position as za.mindari estate under the permanent settlement and that he was entitled to the entire sub-soil rights and the Government was not entitled to levy royalty or seigniorage fee on stones quarried by him. The High Court held that under the terms of the grant, the gra.ntor conveyed all that the gran-tor had in the soil i~cluding sub-soil rights and therefore it was not open to the Government to levy any royalty or ~eigniorage fee on stones quar-ried by the inamdar. In effect, the decision of the High Court negatived the ofaim of the Governm~nt to sub-soil rights, for the· Government could only levy royalty or seigniorage fee if it had sub-soil rights and the inamdar had no such rights.

This decision was taken in appeal to the Judi-cial Committee as already indicated above, and. the controversy between the parties was that the inam-dar claimed decree establishing his ,full rights to the said village to the rocks and hills within its boundaries. The State on the other hand while · admitting that there had been an inam grant of the village to the inamdar contended that there was no conveyance of the rights to minerals in the village. The Judicial Committee held that the grant of village in inam might be no more than aii. · aasignment of revenue, and even where there was included grant of land, what interest in the land passed must depend on the language of the instru-ment and the circumstances of each case. The Judicial Committee alC!o considered the standing orders of the Board of Revenue of 1890 and 1907 which have been referred to by the appeal court in

State of . Andhra Pradesli v.

Duvvuru B•larami Reddy

Wanchoo J.

i..9tale of .Andhr11 Prr.<llsh v. Du11vuru Balarami Redqy Wanchoo J,

the judgment under appeal. This decision thus estab-lishes that the mere fact that person is the holder of an inam grant would not by itself be enough to establish that the inam grant included the grant of sub-soil rights in addition to the surface rights and that the grant of sub-soil rights would depend upon the language used in the grant. If there are no words in the grant from which the grant of sub-soil rights can be properly inferred the inam grant would only convey the surface rights to the grantee, and the inam grant could not by itself he equated to complete transfer for value of all that was in the grantor. In particular, the Judicial Committee stressed the use of the words "the produce of the seasons each year" used in the grant to show that only the surface rights were granted in that case.

It is not disputed that eversince the decision of the Judicial Committee in Srinimsa Chariar's case(') that has been t.he law wfoh respect to sub-soil rights of inamdars us distinct from zamindars under the permanent settlement. The B,Jards standing orders of lS!JO and l!l07 to which the appeal court has referred in it; judgment were also considered by the Judicial Committee and it is now too late in the day to use them to find out the rights of the ina.m· dars and the Government in the minerals under the soil. As the decision of the Judicial Committee shows, the standing orders of the Board of Reve-nue themselves show how the views of the Govern-ment changed from time to time on this question. The older view seems to have been that the sub-soil rights were in the inamclars but from 1907 at any rate the Government has taken the view that sub-soil rights are in the Government unless there is anything in the grant to the contrary. It is this later view which was upheld by the Judicial Com-mittee in Srinivasa Chariar's case(') and this view has ever since prevailed as to the rights of the Govern-ment in the minerals under the soil in the cast> of

(I) (1920) L.R.48 I.A. 56.

1 S.C.R.

inams. We are unable to see how this decision as to the rhzhts of the Government to the minerals under the soil can bb distinguished on the ground that the decision dealt only with the question of royalty. It is obvious that the Government could charge royalty only if it had the right to the minerals under the soil and not the inamdars. What therefore we have to see is .whether on the terms of the grant in this case the shrotriemdars can be said to have been granted the sub-soil rights also.

So far as this matter is concerned, . there does not seem to have been serious controversy in the High Court and it does not appear that the respon-dents contended that under the terms of the grant to the shrotriemdars the latter were entitled to sub-soil rights. We have already referred to that part oft.he judgment of the appeal court which suggests that ev.en the appeal court was of the view that the sub-soil rights were in the Government in this case and the surface rights were in the shrotriemdars. The original grant is not available and all that we have is the irt4m fair register of 1861 and all that is stated in that register is that the grant is for the personal advantage of the holder. There is nothing therefore in the inam fair .register to show that the grant in-cluded the grant of sub-soil rights.

It is however urged on behalf of the respon-

dents that the grant included Poramboke, and from the fact that Poramboke was also included it should be inferred that mere surface rights were not the subject-matter of the grant. Reliance in this con-nection has been placed on the decision of the Judi-cial Committee in Secretary of State v. Krishna Rao. n). The dispute in that case related to levy of water cess under the Madras Irrigation Cesa Act, (No. 7 of 1865). The Judicial Committee pointed ant that the inam grant in that case included not only dry, wet and garden land but also porambok~

ll) (1945) L.R. 72 I.A. 211,

1969 St'lteof Andhra Pradesh Duvvuru Balarami Reddy Wanchoo J,

196Z Sta!1 of .Andhr• f'r14Juh •• DuutJuru Balarami a,dd.:1 War1chooJ.

i.e. unculturable land. ·This was held to indioate that full proprietary rights were granted and there-fore the Government could not char~ any water cess, It is urged for the respondents that this case shows that where poramboke is also granted, the grantee gets all the rights including the sub-soil rights in full proprietorship. It should however be remembered that the dispute in that case was whether the inamdar was entitled to free irrigation from water sources lying in the shrotiem village by virtue of the grant or whether the grantor oould levy cess under the Madras Irrigation Cess Aet. There was no dispute as to the sub.soil rights in that case, the dispute being confined to surface rights relating to water. The Government oonten-ded in that case that the grant to the inamdar was only of the melvaram or the right of the revenue from the lands. while the respondent's contention was that the grant carried not only the melmram but also the proprietary interest in the land itself and therefore the Government had no right to levy the irrigation cess. It was in that oonneotion that the Judioial Committee held that the grant of poramhoke i. e. unoulturable land, was one of the factors that indi-. cated that it was not mere grant of melvaram but full proprietary right. It is remarkable howeviir that though the Judicial Committee came to the conolusion in that case that full proprietary right had been granted, it referred to the earlier decision in Srinivasa Ohariar's case during the cours!J of. the judgment. This later deoision therefore in our opi-nion cannot be read in such way as to lay down that wherever poramboke is included in the inam grant, presumption must be drawn that the inam grant included sub-soil rights also; all that may be possible to infer by the inclusion of poramboke on the basis of this decision is that all the surface rights ·were granted and not merely the melvaram as

l S.C.R. SUPREME COURT REPORTS

was contended in that case. The fact therefore that in the inam fair register in this case the grant inclu-des poramboke would not by itself establish that sub-soil rights were also included in the grant. So far as sub-soil rights a.re concerned, they ca.n only pass to the grantee if they a.re conferred as such by the grant or if it can be inferred from the grant that sub-soil rights were also included therein. We have already remarked that the original grant in this case is not available and we have only the inam fair register to go by. There can be no doubt therefore on the facts of this case that the learned Single Judge was right in holding that the grant of sub-soil rights to shrotriemdars is not established. The appeal court also does not appear to differ from this view of the learned Single Judge.Once the conclusion is reached that sub~soil rig'h.ts were not granted to the shrotriemdars · it seems to us that the inference is plain that it was not open to the shrotriemdars to grant any l~ase of minerals lying under the soil to any one. Therefore, the leases granted by the shrotriemdars to the respondents in this case would be of no legal effect in c~nveying any right to them in the minerals under the soil. In the circumstances the respondents cannot put forward the leases in their favour to claim mining leases under the Rules. With respect, we have not been able to understand how the difficulty which may arise in practice, on account of the sub-soil rights being in the Government and the surface rights being in the shrotriemdars, in the working of the mines would make the shrotriemdars shares in the sub-soil rights and therefore entitled to grant lease of the sub-soil rights. Whatever may have been the practice in the past and howsoever the Government may ·have been getting over the practical difficulty in the past would not 'confer any right to the minerals upon the shrotriemda.r so as to enable

Sta.le of Anph1a Pmuslt Y• Du°"""u Balaraml Redd' WanchooJ.

1181 Stai. A.tu/''" PraJ1•h •• BuvVti'u 8aloromi lied'' -U'ane"'1o J.

SUPREME COURT RE.PORTS [1963]

him to grant mining lease to any one. It follows therefor" that the mining leases granted in this case were granted by persons who he.d no right to the minerals and therefore confer no rights on the respondents to claim as of right from the Government that they should be granted mining lease under the l:tulea.

In view of the above decision appeal No. l!52

must be allowed and appeal No. 25a must fail.

We th11refore allow appeal No. 252 and setting

aside the order of the appeal court dismiss the writ petition with costs to the State throughout. Appeal No. 253 is hereby dismissed but in the circumsta-nces parties will bear their own costs.

0. A. No. 252 of 1958 alkJwed.

0. A. No. 253 of 1958 dismissed.

STATE OF ANDHRA PRADESH

KOLLA SREERAMA MURTHY (B. P. SINHA, c. J., P. B. GAJENDR,AGADKAR, K. N. WANCnoo, N. RAJA.GOP.ALA AYYANGAR and T. L. VENKATARAMA AIYA.R, JJ.)

Sales Tax-Delivery order-Endoraement--Properly in

good& paaaea on taking delivery by tho laat endoraet-E//ect-Original holder of delivery order, if liable to pay salea taz-Madras General Sales taz Act, 1939 (Mad. IX of 1939). s. J.

The respondent was dealer.in gunny hags. He pur-chased gunnies from the ¥ills on terms of wri1ten contract which was on printed form. The Mills after receiving part of purchase price, issued "delivery orders" directing the delivery of goods as per the contract. Instead of taking deli-. very himself the respondent endorsed the delivery orders and these passed through several hands before the ultimate hol· der of the delivery order presented it to the Mills and obtaiJ'.!e<! delivery of the gunnies from them. •