{"file_name": "2024_10_1918_1930_EN.pdf", "text": "[2024] 10 S.C.R. 1918 : 2024 INSC 948\n\nState of U.P. & Anr.  \nv. \nNorthern Coal Fields \n\n(Civil Appeal No. 7614 of 2014)\n\n03 October 2024\n\n(Vikram Nath and Prasanna B. Varale, JJ.)\n\nIssue for Consideration\n\nIssue  arose  as  regards  the  legislative  competence  of  the  State \nGovernment to realise lease rent from the respondent-Government \nCompany  under  the  Coal  Bearing  Areas  (Acquisition  and \nDevelopment) Act, 1957. \n\nHeadnotes†\n\nCoal  Bearing  Areas  (Acquisition  and  Development)  Act, \n1957  –  ss.10  and  11  –  Vesting  of  land  or  rights  in  Central \nGovernment – Power of Central Government to direct vesting \nof land or rights in a Government company – Acquisition of \nland by the Central Government under the Act – Subsequently, \nthe said land vested in the respondent-government company – \nState Government issuing letters to the respondent to deposit \nlease rent – Aggreived thereagainst, the respondent filed writ \npetition – High Court allowed the same holding that the entire \narea had been acquired under the Act, under which the State \nhad  no  legislative  competence,  directing  the  State  not  to \nrealise further lease rent from the respondent – Correctness: \n\nHeld: When there is no pre-existing lease at the time of acquisition \nby the Central Government and the rights are subsequently vested \nin  a  Government  Company,  then  such  Government  Company \ndoes  not  become  a  deemed  lessee  of  the  State  –  Rights  in \nthe  Government  Company  were  vested  specifically  by  virtue  of   \nsub-section  (1)  of  s.  11  and  at  that  time,  there  did  not  exist  any \nmining lease as provided under sub-section (2) – Rights u/s.11(1) \nare vested in the Government Company in the exact nature as they \nexisted in the Central Government at the time – Thus, when the \nCentral Government’s right was free from all encumbrances and \ncompletely absolute, the Government Company also acquired an \nabsolute right over the land – No question of a qualified  right in \nthe capacity of a deemed lessee of the State Government arises \n\n\f[2024] 10 S.C.R.  \n\n1919\n\nin such a situation – This is by virtue of the fact that when Central \nGovernment  acquired  such  rights  and  also  when  it  was  further \nvested  in  the  Government  Company,  there  was  no  pre-existing \nmining  lease  in  favour  of  any  person  and,  thus,  s.10(2)  and   \ns.11(2)  become  inapplicable  in  the  given  case  –  Thus,  the  land \nvested in the Government Company free from all encumbrances, \nsubject  to  the  conditions  imposed  by  the  Central  Government  – \nState Government not entitled to claim itself as a deemed lessor \nof  the  Government  Company  and  the  demand  for  “lease  rent” \ncompletely unwarranted – State Government’s demand for “lease \nrent”  not  supported  by  any  statutory  provision,  such  a  demand \ncannot be sustained in law. [Paras 12-14, 18]\n\nCoal Bearing Areas (Acquisition and Development) Act, 1957 – \nss.10 and 11 – Interpretation – Distinction between the nature \nof  right  accrued  between  s.10  (1)  and  (2)  as  also  between   \ns.11 (1) and (2) – Discussed. [Paras 11, 12]\n\nCase Law Cited\n\nMahanadi Coalfields Ltd. v. State of Odisha [2023] 1 SCR 1055 : \n(2023) 4 SCC 343 – distinguished.\n\nManaging  Director,  National  Coal  Development  Corporation  and \netc. v. State of Bihar & Ors. AIR 1984 Pat 280 – approved.\n\nState of West Bengal v. Union of India [1964] SCR 1 371 : AIR \n1963 SC 1241 – referred to.\n\nList of Acts\n\nForest (Conservation) Act, 1980; Coal Bearing Areas (Acquisition \nand Development) Act, 1957; Mines and Minerals (Development \nand Regulation) Act, 1957.\n\nList of Keywords\n\nLease  rent;  Legislative  competence;  No  pre-existing  lease; \nDeemed lessee of the State; Mining lease; Acquisition by Central \nGovernment; Vested rights in Government Company. \n\nCase Arising From\n\nCIVIL APPELLATE JURISDICTION: Civil Appeal No. 7614 of 2014\n\nFrom the Judgment and Order dated 16.01.2013 of the High Court \nof Judicature at Allahabad in CMWP No. 50320 of 2010\n\nState of U.P. & Anr. v. Northern Coal Fields\f1920 \n\n[2024] 10 S.C.R.\n\nAppearances for Parties\n\nK  M  Natraj, A.S.G.,  Ms.  Garima  Prashad,  Sr. A.A.G.,  Sudeep \nKumar, Ms. Indira Bhakar, Ms. Manisha, Ms. Rupali, Anuj Udupa, \nAdvs. for the Appellants.\n\nAshok  Kumar  Sharma,  Sr. Adv., Ashwani  Kumar  Dubey,  Kshitij \nMudgal, Ms. Anshul Rajora, Advs. for the Respondent.\n\nJudgment / Order of the Supreme Court\n\nJudgment\n\n1.  The present appeal arises from the judgment and order of the High \nCourt of Judicature at Allahabad dated 16.01.2013 in Writ (C) No. \n50320/2010  wherein  the  Respondent’s  Writ  Petition  was  allowed, \norders  dated  23.03.2010,  11.06.2010  and  31.07.2010  passed  by \nthe  Divisional  Forest  Officer,  Renukoot,  District  Sonebhadra,  UP1 \nwere set aside, the State was directed not  to  realise  further lease \nrent from the Respondent and to refund/adjust the amount paid by \nthe Respondent for the year 2010-2011.\n\n2.  The facts of the matter, succinctly put, are that the Respondent is \na Government Company which was incorporated with an object to \ncarry on mining operations for extraction of coal and supply thereof \nto core sector and non-core sector and is carrying on two coal mine \nprojects namely ‘Krishnashila Project’ and ‘Bina Project’ in the district \nof Sonebhadra. The DFO had issued letters dated 23.03.2010 and \n11.06.2010 to the Respondent seeking the deposit of annual lease \nrent  for  the  year  2010-2011  for  the  forest  land  which  has  been \ntransferred on lease to the Respondent for 30 years and 23 years \nrespectively.  The  Respondent  deposited  the  said  amount  under \nprotest which further led to the issuing of letter dated 31.07.2010 by \nthe  DFO  stating  that  since  the  amount  has  been  deposited  under \nprotest,  which  is  against  the  conditions  of  transfer,  the  matter  is \nbeing referred to the higher level of the Government for cancelling \nthe said transfer. Thereafter, the Respondent preferred a Writ Petition \nbefore the High Court challenging the above-mentioned letters and \nthe demand of annual lease rent by the DFO.\n\n1 \n\nHereinafter referred to as “DFO”\n\nDigital Supreme Court Reports\f[2024] 10 S.C.R.  \n\n1921\n\n3.  Before moving further, we find it relevant to delve into the genesis of \nvesting of such rights in the Respondent. On 23.12.1980, the Central \nGovernment issued a notification under Section 7 of the Coal Bearing \nAreas  (Acquisition  and  Development) Act,  19572  of  its  intention  to \nacquire the lands admeasuring 1657.16 hectares (approximately) as \nspecified in the Schedule, and consequently, issued a declaration on \n17.11.1981 acquiring the said land under Section 9 of CBA, 1957. \nThe  said  declaration  was  published  in  the  Gazette  of  India,  dated \n05.12.1981, vesting the land and rights described in the Schedule \nappended to the abovementioned notification absolutely in the Central \nGovernment free from all encumbrances under Section 10(1) of the \nCBA, 1957. Further, in exercise of powers under S. 11(1) of CBA, \n1957, the Union Government, by its order dated 02.11.1982, directed \nthat  the  lands  and  rights  so  vested  shall,  w.e.f.  from  05.12.1981, \ninstead of continuing to so vest in the Central Government, shall vest \nin the Government Company named Central Coalfields Ltd. (which \nwas  later  formed  into  Northern  Coal  Fields  Ltd.  w.e.f.  28.11.1985, \ni.e. the Respondent).\n\n4.  Thereafter, the Respondent submitted a proposal for its ‘Krishnashila \nproject’  of  235.99  hectares  of  land  for  obtaining  approval  of  the \nCentral  Government  for  use  of  the  land  for  mining  purpose  under \nthe  Forest  (Conservation) Act,  19803.  Similarly,  another  proposal \nunder  the  FCA,  1980  for  usage  of  258  hectares  of  forest  land  for \nmining purpose for ‘Bina Coal Project’ was submitted to the Central \nGovernment for obtaining its approval. \n\n5.  Accordingly, in pursuance of Section 2 of the FCA, 1980, the Central \nGovernment, vide its order dated 23.05.1996, granted approval for \ndiversion of 258 hectares of forest land under ‘Bina Project’, which \nwas  communicated  by  the  State  Government  to  the  Respondent \nvide letter dated 28.06.1998. Similarly, the Central Government, with \nregard to the ‘Krishnashila Project’, vide its letter dated 06.07.2006, \ngranted approval for diversion of 235.99 hectares of forest land in \naccordance with Section 2 of FCA, 1980, which was communicated \nto  the  Respondent  by  the  State  Government  vide  letter  dated \n27.07.2007.\n\n2 \n\n3 \n\nHereinafter referred to as “CBA, 1957”\n\nHereinafter referred to as “FCA, 1980”\n\nState of U.P. & Anr. v. Northern Coal Fields\f1922 \n\n[2024] 10 S.C.R.\n\n6.  The  Respondent,  by  virtue  of  Section  18A  of  the  CBA,  1957,  has \nbeen paying money equal to royalty as determined under Section 9 \nof the Mines and Minerals (Development and Regulation) Act, 19574. \nHowever, the letter dated 23.03.2010 and subsequent letter dated \n11.06.2010 were issued to the Respondent demanding the deposit \nof  “lease  rent”  amounting  to  Rs.1,24,23,015/-  in  accordance  with \nCondition  No.  7  of  ‘Krishnashila  Project’  and  Rs.1,91,25,593/-  in \naccordance with Condition No. 12 of ‘Bina Project’.\n\n7.  Aggrieved  by  the  said  demand  for  “lease  rent”,  the  Respondent \npreferred the Writ Petition before the High Court, which was allowed \nwhile observing that the entire area has been acquired under CBA, \n1957 under which the State has no legislative competence as held \nin State of West Bengal v. Union of India.5 Therefore, where the \nState is denuded of any power to legislate in the matter or to exercise \nany  executive  power  under Article  162  of  the  Constitution  and  no \nsatisfactory basis has been disclosed by the State Government for \nclaiming  the  lease  rent  from  the  Respondent,  Condition  No.  7  in \nGovernment Order dated 27.07.2007 which is unsupported by any \nlegal basis, cannot be permitted to operate against the Respondent. \nThe State of UP, being aggrieved by the said judgment, is in appeal \nbefore us.\n\n8.  Since  the  reasoning  of  the  High  Court  is  majorly  based  on  the \njudgment in the case of State of West Bengal (supra), we find it \nimperative to deal with the said judgment first. In the said Constitution \nBench judgment, wherein the statutory scheme of CBA, 1957 was \ndiscussed in detail, the relevant question of law under consideration \nwas  whether  the  Parliament  has  legislative  competence  to  enact \na  law  for  compulsory  acquisition  by  the  Union  of  land  and  other \nproperties vested in or owned by the State. The said question was \nanswered in the affirmative by the majority. It was held that the power \nto  legislate  for  regulation  and  development  of  mines  and  minerals \nbeing under the control of the Union, would by necessary implication \ninclude the power to acquire mines and minerals, thereby upholding \nthe constitutional validity of CBA, 1957, and in particular Sections 4 \nand 7. It must be noted that the said judgment only delved into the \n\n4 \n\n5 \n\n“MMDR Act, 1957”, hereinafter\n\n[1964] 1 SCR 371 : AIR 1963 SC 1241\n\nDigital Supreme Court Reports\f[2024] 10 S.C.R.  \n\n1923\n\nlegislative  competence  of  the  Union  and  State  in  matters  relating \nto acquisition of land, especially in context of mines and minerals, \nand  did  not  deliberate  upon  the  right  of  the  State  Government  to \nclaim  lease  rent  by  a  Government  Company  under  CBA,  1957  or \nother  related  acts.  In  the  instant  case,  the  legislative  competence \nof neither the Union nor the State Government is under challenge. \nThe matter at hand only pertains to the claim of lease rent by the \nState Government and therefore, the rationale in judgment of State \nof West Bengal (supra) is of no avail to the Respondent.\n\n9.  Another case that has been dealt with in the impugned judgment is a \ndecision by the Division Bench of the Patna High Court in Managing \nDirector,  National  Coal  Development  Corporation  and  etc.  v. \nState of Bihar & Ors.6 wherein a question arose as to whether the \nPetitioner-Company is liable to pay to the State of Bihar dead rent \nby reason of the provisions of Section 18A of CBA, 1957 or not. In \nthe said case, the following was held –\n\n“7. In the State counter affidavit in C.W.J.C. 2462 of 1979, \nit has been stated that a relationship of lessor and lessee \nexists between the State Government and the petitioner-\ncompany.  This  stand  does  not  appear  to  be  correct. As \nhas  been  pointed  out,  the  present  cases  do  not  attract \nSection  10(2)  of  the Acquisition Act  inasmuch  as  there \nwere no mining leases. Admittedly, these cases relate to \nvirgin  mineral  which  continues  to  be  unworked  till  now. \nThe case is governed by Section 10(1) and its language \nin no uncertain terms states that the entire interest of the \nState vests absolutely in the Central Government free from \nall encumbrances. The State is completely divested of all \nits rights and a relationship of lessor and lessee does not \ncontinue between the State and the Central Government \n(or for that matter the petitioner-company).\n\n8. The  next  question  is  :  does  S.  18A  of  the Acquisition \nAct create a right in the State to realise Dead Rent? The \nlanguage  of  Section  18A  quoted  above,  while  referring \n‘royalty’ has omitted to include ‘Dead Rent’ in the Section. \n‘Royalty’  and  ‘Dead  Rent’  are  two  separate  and  distinct \n\n6 \n\nAIR 1984 Pat 280\n\nState of U.P. & Anr. v. Northern Coal Fields\f1924 \n\n[2024] 10 S.C.R.\n\nliabilities  payable  by  lessees  and  have  been  dealt  with \nseparately by two Sections of the Development Act, that \nis, Sections 9 and 9A. The rates are also detailed in the \nsecond  and  third  schedules  respectively.  The  rate  of \nroyalty  is  related  to  the  quantity  of  coal  to  be  extracted \nwhile Dead Rent is payable area-wise. Royalty is payable \non the extracted mineral while Dead Rent on area having \nunworked mineral. The two expressions cannot be treated \nto refer to a common claim by the State. The distinction \nbetween  the  two  has  been  appreciated  and  discussed \nin  the  decisions  in  Bhorulal  v.  State  of  Rajasthan  (AIR \n1956 Raj 161), Sethi Marble Stone Industries v. State of \nRajasthan (AIR 1958 Raj 140) and Surajdin Laxmanlal v. \nState of Madhya Pradesh (AIR 1960 MP 129). The view \nof the Certificate Officer that royalty includes Dead Rent \nis,  therefore,  clearly  illegal.  It  must,  therefore,  be  held \nthat Dead Rent is not payable by reason of Section 18A.”\n\n10. \n\nInsofar as the instant case at hand, we are only concerned with the \nobservations  pertaining  to  Section  10  of  CBA,  1957  in  the  above \njudgment  and  not  with  the  claim  of  dead  rent  under  Section  18A \nthereof. However, before going into the applicability/utility of the above \njudgment, we find it pertinent to produce the relevant provisions of \nCBA, 1957, which are as follows:\n\n“7.  Power  to  acquire  land  or  rights  in  or  over  land \nnotified under Section 4.—(1) If the Central Government \nis satisfied that coal is obtainable in the whole or any part \nof the land notified under sub-section (1) of section 4, it \nmay, within a period of two years from the date of the said \nnotification  or  within  such  further  period  not  exceeding \none  year  in  the  aggregate  as  the  Central  Government \nmay  specify  in  this  behalf,  by  notification  in  the  Official \nGazette, give notice of its intention to acquire the whole \nor  any  part  of  the  land  or  of  any  rights  in  or  over  such \nland, as the case may be.\n\n(2)  If  no  notice  to  acquire  the  land  or  any  rights  in  or \nover such land is given under sub-section (1) within the \nperiod  allowed  thereunder,  the  notification  issued  under \nsub-section (1) of section 4 shall cease to have effect on \nthe expiration of three years from the date thereof.”\n\nDigital Supreme Court Reports\f[2024] 10 S.C.R.  \n\n1925\n\n9.  Declaration  of  acquisition.—(1)  When  the  Central \nGovernment  is  satisfied,  after  considering  the  report,  if \nany, made under Section 8 that any land or any rights in or \nover such land should be acquired, a declaration shall be \nmade by it to that effect [, and different declarations may \nbe made from time to time in respect of different parcels \nof any land, or of rights in or over such land, covered by \nthe same notification under sub-section (1) of Section 7, \nirrespective of whether one report or different reports has \nor have been made (wherever required) under sub-section \n(2) of section 8]:\n\n[Provided that no declaration in respect of any particular \nland, or rights in or over such land, covered by a notification \nunder  sub-section  (1)  of  section  7,  issued  after  the \ncommencement  of  the  Coal  Bearing Areas  (Acquisition \nand Development) Amendment and Validation Act, 1971 \n(54 of 1971), shall be made after the expiry of three years \nfrom the date of the said notification:\n\nProvided further that, where a declaration] relates to any \nland or to any rights in or over land belonging to a State \nGovernment which has or have not been leased out, no \nsuch  declaration  shall  be  made  except  after  previous \nconsultation with the State Government.\n\n(2)  [Every  declaration]  shall  be  published  in  the  Official \nGazette, and—\n\n(a) in any case where land is to be acquired, shall state \nthe district or other territorial division in which the land is \nsituate and its approximate area; and, where a plan shall \nhave been made of the land, the place where such plan \nmay be inspected;\n\n(b) in any case where rights in or over such land are to \nbe acquired, shall state the nature and extent of the rights \nin addition to the matters relating to the land specified in \nclause (a); and\n\na copy of every such declaration shall be sent to the State \nGovernment concerned.\n\nState of U.P. & Anr. v. Northern Coal Fields\f1926 \n\n[2024] 10 S.C.R.\n\n10. Vesting of land or rights in Central Government.—\n\n(1)  On  the  publication  in  the  Official  Gazette  of  the \ndeclaration  under  section  9,  the  land  or  the  rights  in  or \nover the land, as the case may be, shall vest absolutely \nin the Central Government [free from all encumbrances].\n\n(2)  Where  the  rights  under  any  mining  lease  granted  or \ndeemed to have been granted by a State Government to any \nperson are acquired under this Act, the Central Government \nshall, on and from the date of such vesting, be deemed \nto have become the lessee of the State Government as if \na mining lease under the Mineral Concession Rules had \nbeen  granted  by  the  State  Government  to  the  Central \nGovernment,  the  period  thereof  being  the  entire  period \nfor  which  such  a  lease  could  have  been  granted  by  the \nState Government under those rules.\n\n11. Power of Central Government to direct vesting of \nland or rights in a Government company.—\n\n(1) Notwithstanding anything contained in section 10, the \nCentral Government may, if it is satisfied that a Government \ncompany is willing to comply, or has complied, with such \nterms and conditions as the Central Government may think \nfit to impose, direct, by order in writing, that the land or the \nrights in or over the land, as the case may be, shall, instead \nof vesting in the Central Government under section 10 or \ncontinuing  to  so  vest,  vest  in  the  Government  company \neither on the date of publication of the declaration or on \nsuch other date as may be specified in the direction.\n\n(2)  Where  the  rights  under  any  mining  lease  acquired \nunder this Act vest in a Government company under sub-\nsection (1), the Government company shall, on and from \nthe  date  of  such  vesting,  be  deemed  to  have  become \nthe lessee of the State Government as if a mining lease \nunder the Mineral Concession Rules had been granted by \nthe  State  Government  to  the  Government  company,  the \nperiod  thereof  being  the  entire  period  for  which  such  a \nlease could have been granted by the State Government \nunder those rules; and all the rights and liabilities of the \n\nDigital Supreme Court Reports\f[2024] 10 S.C.R.  \n\n1927\n\nCentral  Government  in  relation  to  the  lease  or  the  land \ncovered by it shall, on and from the date of such vesting, \nbe deemed to have become the rights and liabilities of the \nGovernment company.”\n\n11.  A  bare  perusal  of  Section  10  and  11  clearly  brings  forth  a  plain \ndistinction  in  the  nature  of  right  conferred  and  liabilities  accrued \nbetween  sub-section(1)  and  (2)  of  Section  10,  as  also  between \nsub-section (1) and (2) of Section 11. Further, Section 10(1) clearly \nprovides that when the said provision is applied, the land or rights \nin or over the land shall vest absolutely in the Central Government \nfree from all encumbrances. The words “free from all encumbrances” \nbecome of vital importance as it clarifies that from such point onwards, \nthe Central Government becomes the absolute owner and has sole \nrights and claim over the land. However, when the State Government \nhas  already  granted  rights  to  any  person  under  any  mining  lease \nand the Central Government subsequently acquires such landunder \nSection 10(2), then the rights acquired by the Central Government are \nlimited to the capacity of a deemed lessee of the State Government. \nTherefore, the rights conferred under sub-section (2) of Section 10 \nare  limited  in  nature  as  compared  to  sub-section  (1)  and  such  a \ndistinction  must  be  appreciated  when  determining  the  nature  of \nacquisition by the Central Government. It must be noted that such \na  contrast  in  rights  under  Section  10(1)  and  (2)  is  rooted  solely \nin  the  fact  if  the  rights  under  any  mining  lease  are  granted  to  any \nperson at the time of acquisition by the Central Government or not. \nThe  Central  Government  shall  acquire  the  character  of  a  deemed \nlessee  of  the  State  Government  only  if  a  mining  lease  granted  by \nthe State Government in favour of any person existed already before \nthe Central Government acquired the land and rights over it.\n\n12.  Similarly,  Section  11  which  talks  about  the  power  of  Central \nGovernment  to  direct  vesting  of  land  or  rights  in  a  Government \nCompany  draws  an  identical  distinction  between  its  two  sub-\nsections.  Section  11(1)  specifically  provides  that,  notwithstanding \nanything contained in Section 10, upon the satisfaction of the Central \nGovernment, the land or the rights in or over the land shall, instead \nof vesting in the Central Government under Section 10, vest in the \nGovernment Company from the specified date onwards. This means \nthat sub-section (1) of Section 11 blanketly vests the land or rights \nin or over the land in the Government Company, as it vested in the \n\nState of U.P. & Anr. v. Northern Coal Fields\f1928 \n\n[2024] 10 S.C.R.\n\nCentral Government, without any further stipulations. The nature of \nright  that  passes  onto  the  Government  Company  shall  be  exactly \nidentical to the right that existed with the Central Government itself. \nHowever, the language of sub-section (2) of Section 11 is direct and \nabsolutely  unclouded  when  it  specifically  talks  about  the  situation \n“where  any  rights  under  any  mining  lease  acquired  under  this Act \nvest in a Government company” and on the fulfilment of such pre-\nrequisite alone, the Government Company shall become a deemed \nlessee  of  the  State  Government  as  if  the  State  Government  had \ngranted a mining lease in the favour of that Government Company \nunder the Mineral Concession Rules. This provision pre-supposes \nthe  existence  of  a  mining  lease  granted  by  the  State  Government \nprior to the Central Government acquiring it under the CBA, 1957. \nNo  relationship  of  a  lessor  and  lessee  shall  come  into  existence \nbetween  the  State  Government  and  the  Government  Company  if \nthere did not exist any mining lease under the Mineral Concession \nRules, at the relevant point of time, when such right is being vested in \nthe Government Company. Simply put, when there is no pre-existing \nlease at the time of acquisition by the Central Government and the \nrights  are  subsequently  vested  in  a  Government  Company,  then \nsuch Government Company does not become a deemed lessee of \nthe State Government. \n\n13.  Having  clarified  the  legal  position  and  interpretation  of  the  two \nprovisions,  we  now  move  to  the  factual  analysis  of  our  case.  It  is \nundisputed  that  by  virtue  of  the  notification  in  the  Official  Gazette \ndated 05.12.1981, the land and rights vested absolutely in the Central \nGovernment free from all encumbrances under Section 10(1) of the \nCBA,1957.  This  means  that  the  Central  Government  became  the \nabsolute owner of the land and rights over the land from 05.12.1981 \nonwards.\n\n14.  Further, the Government Order dated 02.11.1982 published by the \nGovernment of India, which was produced as Annexure P-1 before \nus,  clearly  provided  that  in  exercise  of  the  powers  conferred  by \nSection 11(1) of the CBA, 1957, the Central Government had directed \nthe  vesting  of  such  land  and  rights  in  the  Government  Company, \nwith  effect  from  05.12.1981.  It  is  to  be  noted  that  the  rights  in  the \nGovernment  Company  were  vested  specifically  by  virtue  of  sub-\nsection  (1)  of  Section  11  and  at  that  time,  there  did  not  exist  any \nmining lease as provided under sub-section (2). As explained above, \n\nDigital Supreme Court Reports\f[2024] 10 S.C.R.  \n\n1929\n\nthe rights under Section 11(1) are vested in the Government Company \nin  the  exact  nature  as  they  existed  in  the  Central  Government  at \nthe time. Therefore, when the Central Government’s right was free \nfrom  all  encumbrances  and  completely  absolute,  the  Government \nCompany also acquired an absolute right over the land. No question \nof a qualified right in the capacity of a deemed lessee of the State \nGovernment arises in such a situation. This is by virtue of the fact \nthat when Central Government acquired such rights and also when \nit  was  further  vested  in  the  Government  Company,  there  was  no \npre-existing  mining  lease  in  favour  of  any  person  and,  therefore, \nSection  10(2)  and  Section  11(2)  become  inapplicable  in  the  given \ncase. Thus, the land vested in the Government Company free from \nall encumbrances, subject to the conditions imposed by the Central \nGovernment.  Therefore,  the  State  Government  is  not  entitled  to \nclaim itself as a deemed lessor of the Government Company in the \ngiven situation and the demand for “lease rent” becomes completely \nunwarranted.\n\n15.  The findings of the Patna High Court in Paragraph 7 of the judgment \nin  the  case  of  Managing  Director,  National  Coal  Development \nCorporation  (supra)  is  in  lines  with  our  analysis  as  even  in  that \ncase, it was held that Section 10(2) is not attracted because there \nexisted no mining lease prior to acquisition. The situation therein was \nalso governed by Section 10(1) and hence, it was rightly held that \nthe State Government is divested of all its rights and a relationship \nof lessor and lessee does not continue between the State and the \nCentral Government (or for that matter the petitioner-company).\n\n16.  There  is  another  judgment  of  this  Court  in  Mahanadi  Coalfields \nLtd. v. State of Odisha7 that was placed before us during the course \nof  arguments.  However,  since  in  the  said  judgment,  the  dispute \nwas with regards to the payment of premium and compensation, as \nopposed to the demand for “lease rent” in our case, the judgment, \nbeing distinguishable on facts, is not applicable to the case at hand. \nMoreover,  in  the  said  case,  the  right  of  the  State  Government  to \nclaim compensation/premium under section 18A of the CBA, 1957, \nwas  recognized  by  virtue  of  State  Government  being  a  “person \ninterested”  under  Section  2(d)  of  the Act.  Herein,  there  arises  no \n\n7 \n\n[2023] 1 SCR 1055 : (2023) 4 SCC 343\n\nState of U.P. & Anr. v. Northern Coal Fields\f1930 \n\n[2024] 10 S.C.R.\n\nquestion of an “interested person”. The said judgment did not delve \ninto  the  question  at  hand  currently,  that  is  the  distinction  between \nthe nature of right acquired under Section 11(1) and (2), and there \nwas  no  discussion  whether  there  was  a  pre-existing  mining  lease \nat the time of acquisition or vesting of rights or not. Hence, the said \njudgment, is clearly distinguishable on facts.\n\n17.  Lastly, we also observe that the State Government has raised multiple \ncontentions that no prior consultation of the State Government was \nmade for the transfer or acquisition of the reserved forest block in \nquestion under CBA, 1957. The said contention is unfounded in view \nof notification dated 23.12.1980 under Section 7, declaration dated \n17.11.1981 under Section 9, Gazette publication dated 05.12.1981 \nunder  Section  10  and  Government  Order  dated  02.11.1982  under \nSection  11  of  the  CBA,  1957  which  were  never  challenged  by  the \nState Government for any infirmity. Therefore, this contention is of \nno avail to the Appellant-State now.\n\n18.  Having  held  that  the  State  Government’s  demand  for  “lease  rent” \nwas not supported by any statutory provision, such a demand cannot \nbe sustained in law. The appeal is accordingly dismissed, albeit for \nreasons  different  than  the  one  provided  by  the  High  Court  in  the \nimpugned judgment.\n\n19.  There shall be no order as to costs.\n\nResult of the case: Appeal dismissed.\n\n†Headnotes prepared by: Nidhi Jain\n\nDigital Supreme Court Reports\f"}