# M/s Nishant Traders, Basti v. State of U.P. & Ors

- **Citation:** (2024) 1 ILRA 1338
- **Court:** High Court of Judicature at Allahabad
- **Decided:** 2023-12-14
- **Case number:** Writ-C No. 36361 of 2019
- **Bench:** Siddhartha Varma, Manoj Baja
- **Source:** https://unisonlegal.in/judgment/allahabad-high-court/m-s-nishant-traders-basti-v-state-of-u-p-ors-50896
- **Pages:** 11

## Headnote

A. Mining Law - Forfeiture of Deposits
Under U.P. Minor Minerals (Concession)
Rules, 1963 - Petitioner challenged the
cancellation of the Letter of Intent (LoI) dated
13.11.2017 and forfeiture of earnest money,
security money, and first installment vide order
dated 22.01.2020, arguing that only a penalty
under Rule 59 could be imposed - Held, under
the unamended Rule 59 (pre-13.08.2019),
failure to submit a mining plan within one
month of the LoI subjected the petitioner to a
penalty of Rs. 1,00,000, deductible from the
security money, and no provision allowed
forfeiture of the entire deposits, rendering the
forfeiture illegal. (Paras 6, 9, 10, 18, 19)

B. Retrospective Application of Amended
Rule 59 - Respondents argued that the
amended Rule 59 (post-13.08.2019) permitted
forfeiture of the first installment and security
money for failure to execute the lease postenvironmental clearance - Held, the amended
Rule 59, effective from 13.08.2019, does not
apply retrospectively to the petitioner's case, as
the LoI was issued on 13.11.2017 and the
petitioner's
application
dated
18.01.2018
predated the amendment, per Commissioner of
Income Tax Vs Bajpur Co-operative Sugar
Factory Ltd., N.T. Devin Katti Vs Karnataka
Public Service Commission, and P. Mahendran
Vs St. of Karnataka - The unamended Rule 59
governs, limiting the penalty to Rs. 1,00,000.
(Paras 10, 14, 18)

C. Application of Rule 59 and Rule 34 -
Petitioner contended that failure to submit a
mining plan under Rule 34 within one month
triggered only a penalty under Rule 59, not
forfeiture - Held, Rule 59 (unamended) clearly
stipulates a penalty of Rs. 1,00,000 for noncompliance with Rule 34's requirement to
submit a mining plan within one month, and the
District Magistrate was required to impose this
penalty and refund the remaining deposits, as
no forfeiture clause existed in the 1963 Rules or
the LoI. (Paras 6, 9, 10, 12, 18)

D. Procedural Fairness - Non-Disclosure of
Enquiry Report - Petitioner alleged that the
enquiry report dated 26.02.2019, relied upon by
the Revisional Court's order dated 16.09.2019,
was not shared, violating natural justice - Held,
while the non-disclosure of the report was not
directly addressed, the court's focus on the
inapplicability
of
forfeiture
under
the
unamended
Rule
59
rendered
the
issue
secondary, as the penalty was limited to Rs.
1,00,000, and the remaining deposits were to
be refunded. (Paras 2, 18, 20)

E.
St.'s
Admission
in
Affidavit
-
Respondents' affidavit calculated a penalty of
1 All. M/s Nishant Traders, Basti Vs. State of U.P. & Ors.
1339
Rs. 80,10,000 under the amended Rule 59,
implying partial forfeiture - Held, even the
respondents' affidavit did not support forfeiture
of the entire deposits (Rs. 3,31,33,731.50), and
the court rejected this calculation, affirming that
only Rs. 1,00,000 could be deducted under the
unamended Rule 59, with the remainder to be
refunded,
aligning
with
the
petitioner's
submissions. (Paras 15, 16, 18)

Writ Petitions Allowed.

List of Cases cited:

## Text

1338 INDIAN LAW REPORTS ALLAHABAD SERIES
of not entertaining the complaint on the
ground as taken by the learned counsel for
the petitioner.

34. In view of the discussions made
above, no grounds for interference is made
out,
the
writ
petition
is
dismissed
accordingly.

35. However, it is open to the
authorities to complete final enquiry within
a period of two months, in accordance with
law, by means of reasoned and speaking
order. The petitioner is directed to cooperate in the enquiry.
----------
(2024) 1 ILRA 1338
ORIGINAL JURISDICTION
CIVIL SIDE
DATED: ALLAHABAD 14.12.2023

BEFORE

THE HON'BLE SIDDHARTHA VARMA, J.
THE HON'BLE MANOJ BAJAJ, J.

Writ-C No. 36361 of 2019
With
Writ C 4812 of 2020

M/s Nishant Traders, Basti ...Petitioner
Versus
State of U.P. & Ors. ...Respondents

Counsel for the Petitioner:
Sri Devbrat Mukherjee

Counsel for the Respondents:
C.S.C.

A. Mining Law - Forfeiture of Deposits
Under U.P. Minor Minerals (Concession)
Rules, 1963 - Petitioner challenged the
cancellation of the Letter of Intent (LoI) dated
13.11.2017 and forfeiture of earnest money,
security money, and first installment vide order
dated 22.01.2020, arguing that only a penalty
under Rule 59 could be imposed - Held, under
the unamended Rule 59 (pre-13.08.2019),
failure to submit a mining plan within one
month of the LoI subjected the petitioner to a
penalty of Rs. 1,00,000, deductible from the
security money, and no provision allowed
forfeiture of the entire deposits, rendering the
forfeiture illegal. (Paras 6, 9, 10, 18, 19)

B. Retrospective Application of Amended
Rule 59 - Respondents argued that the
amended Rule 59 (post-13.08.2019) permitted
forfeiture of the first installment and security
money for failure to execute the lease postenvironmental clearance - Held, the amended
Rule 59, effective from 13.08.2019, does not
apply retrospectively to the petitioner's case, as
the LoI was issued on 13.11.2017 and the
petitioner's
application
dated
18.01.2018
predated the amendment, per Commissioner of
Income Tax Vs Bajpur Co-operative Sugar
Factory Ltd., N.T. Devin Katti Vs Karnataka
Public Service Commission, and P. Mahendran
Vs St. of Karnataka - The unamended Rule 59
governs, limiting the penalty to Rs. 1,00,000.
(Paras 10, 14, 18)

C. Application of Rule 59 and Rule 34 -
Petitioner contended that failure to submit a
mining plan under Rule 34 within one month
triggered only a penalty under Rule 59, not
forfeiture - Held, Rule 59 (unamended) clearly
stipulates a penalty of Rs. 1,00,000 for noncompliance with Rule 34's requirement to
submit a mining plan within one month, and the
District Magistrate was required to impose this
penalty and refund the remaining deposits, as
no forfeiture clause existed in the 1963 Rules or
the LoI. (Paras 6, 9, 10, 12, 18)

D. Procedural Fairness - Non-Disclosure of
Enquiry Report - Petitioner alleged that the
enquiry report dated 26.02.2019, relied upon by
the Revisional Court's order dated 16.09.2019,
was not shared, violating natural justice - Held,
while the non-disclosure of the report was not
directly addressed, the court's focus on the
inapplicability
of
forfeiture
under
the
unamended
Rule
59
rendered
the
issue
secondary, as the penalty was limited to Rs.
1,00,000, and the remaining deposits were to
be refunded. (Paras 2, 18, 20)

E.
St.'s
Admission
in
Affidavit
-
Respondents' affidavit calculated a penalty of
1 All. M/s Nishant Traders, Basti Vs. State of U.P. & Ors.
1339
Rs. 80,10,000 under the amended Rule 59,
implying partial forfeiture - Held, even the
respondents' affidavit did not support forfeiture
of the entire deposits (Rs. 3,31,33,731.50), and
the court rejected this calculation, affirming that
only Rs. 1,00,000 could be deducted under the
unamended Rule 59, with the remainder to be
refunded,
aligning
with
the
petitioner's
submissions. (Paras 15, 16, 18)

Writ Petitions Allowed.

List of Cases cited:

1. Commissioner of Income Tax, U.P.-II,
Lucknow Vs Bajpur Co-operative Sugar Factory
Ltd., (1988) 3 SCC 553

2. N.T. Devin Katti Vs Karnataka Public Service
Commission, (1990) 3 SCC 157

3. P. Mahendran Vs St. of Kar., (1990) 1 SCC
411

(Delivered by Hon'ble Siddhartha Varma, J.
&
Hon'ble Manoj Bajaj, J )

1. As on 14.8.2017 the State of Uttar
Pradesh had taken a decision to grant all
leases for minor minerals by way of etendering-cum-e-auction,
tenders
were
invited from bidders at large with regard to
mining leases of various mining areas of
the district of Basti. The petitioner was
interested to get the mining lease of the
plots situate in village Mahua Kalan,
Khand-II having plot nos.757, 770, 771,
772, 773, 774, 775, 776, 777, 778, 779,
780, 781, 782, 783, 810, 811 and 812 the
area of which was 4.249 hectares. Though a
certain minimum reserve price was given
for price to be offered by the participants in
the e-auction, the petitioner made an offer
of Rs.557/- per cubic meter for the mineral
which was available. The petitioner being
the highest bidder was offered a Letter of
Intent on 13.11.2017 stating therein that he
was required to deposit immediately within
two days the 25% of the royalty of the first
year as security money and 25% of the
royalty of the first year as the first
installment.

2. For making the bid the petitioner
had deposited Rs.19,33,295/- as earnest
money as was the requirement of the
advertisement in pursuance of which the
petitioner had applied for participating in
the auction. 118972 cubic meters of sand
was supposedly available for mining.
However, when knowledge dawned on the
petitioner that in fact the quantity of
mineral
as
was
given
out
in
the
advertisement was not present at the site
and that the mineral was in agricultural
land of various private persons and also
that there was a river which would be an
impediment
in
the
excavation,
the
petitioner on 18.1.2018 applied to the
Director of Geology and Mining that in
view of the problems which the petitioner
was facing, appropriate action be taken by
him. When despite repeated requests
nothing was done from the side of the
State, the petitioner filed a Revision before
the State Government under Rule 78 of the
U.P. Minor Mineral (Concession) Rules,
1963 (hereinafter referred to as the "1963
Rules") and before the Revisional Court a
specific
prayer
was
made
that
the
representation of the petitioner for taking
action on the application of the petitioner
dated 18.1.2018 be decided. In effect the
Revision was filed with virtually the same
prayers as were there in the application
dated 18.1.2018. During the pendency of
the Revision, a direction was issued to the
District Magistrate to conduct an inquiry
for ascertaining the quantity of mineral
over the plot in question and in pursuance
of that direction the Revenue Officials
submitted a report on 26.2.2019. The
1340 INDIAN LAW REPORTS ALLAHABAD SERIES
petitioner, learned counsel has submitted,
was never shown the report which was
submitted by the Revenue Authorities on
26.2.2019 but the Revision itself was
disposed of on 16.9.2019 basing its order
on the report dated 26.2.2019. From the
order dated 16.9.2019, the crux of the
report dated 26.2.2019 can be found which
had stated that the petitioner's allegation
that there was no mineral/sand available
was wrong. Ultimately the petitioner's
application dated 18.1.2018 stood rejected.
Thereafter on 30.9.019 the petitioner once
again
represented
to
the
District
Magistrate/Collector, Basti that mining was
not possible and that the amount of
Rs.3,12,00,407/- which the petitioner had
deposited in advance be refunded to him.
However, no order was passed on the
application but on 23.10.2019, the District
Magistrate, Basti gave a notice to the
petitioner that in view of the order dated
16.9.2019 of the Revisional Court, the
petitioner may provide the environmental
clearance and get the lease executed
otherwise the Letter of Intent dated
13.11.2017 would be cancelled; the mine in
question would be re-auctioned and all the
amounts which the petitioner had deposited
would stand forfeited.

3. Disturbed by this notice, the
petitioner filed a writ petition being Writ-C
No.36361 of 2019 (M/s. Nishant Traders
vs. State of U.P. & Ors.) with a prayer that
the amount which the petitioner had
deposited after the issuing of the Letter of
Intent be refunded to the petitioner and also
that the amount which the petitioner had
deposited be not forfeited.

4. While this writ petition was
pending, an order was passed by the
District Magistrate on 22.1.2020 by which
the Letter of Intent dated 13.11.2017 was
cancelled and also the earnest money along
with the first installment which the
petitioner had deposited amounting to
Rs.3,31,33,731.50 p were to be forfeited.
Aggrieved by the order dated 22.1.2020,
the petitioner filed another writ petition
being Writ-C No.4812 of 2020.

5. Since both the matters in Writ-C
No.36361 of 2019 and in Writ-C No.4812
of 2020 were with regard to the same
subject-matter, they were heard together
and are, therefore, being decided together.

6. Learned counsel for the petitioner
relying upon Rule 59 of the 1963 Rules had
submitted that the respondents could have
penalized the petitioner for not having
approached
the
respondents
for
the
execution of the lease after submission of
the lease plan and the environmental
clearance within a period of one month by
imposing a penalty of Rs.1,00,000/- and he
submits that if this amount of Rs.1,00,000/-
was not deposited then that amount could
be deducted from the security money which
the petitioner had deposited. He, therefore,
submits that in the absence of any forfeiture
clause either in the Mines and Minerals
(Regulation and Development) Act, 1957
or in the 1963 Rules or in the Letter of
Intent, no forfeiture of the earnest money;
the security money and the first installment
could have been done. Since learned
counsel for the petitioner has very heavily
relied upon Rule 59 of the 1963 Rules, the
same is being reproduced here as under :-

"59.
Consequences
of
contravention of certain conditions--(1)
The proponent who has received Letter
of Intent however has not produced
mining plan within the stipulated period,
of one month as per the provisions
mentioned in Rule 34 be liable for
1 All. M/s Nishant Traders, Basti Vs. State of U.P. & Ors.
1341
penalty of Rs. one lakh on failure to
deposit the amount of penalty the same
shall be deducted by the District
Magistrate from the security money
deposited against the concerned lease.

2) The lessee who does mining
works
contravening
the
terms
and
conditions mentioned in the approved
mining
plan
and
clean
environment
certificate issued as per the provisions
provided under Rule 34, then he will be
liable for penalty at the rate of Rs. 50,000/-
per occasion of default that shall be
recovered by the District Magistrate.

(3) If the lease holder disobeys
the provisions of Rule 35 then penalty at
the rate of rupees twenty five thousand per
day for each and every default shall be
levied by the concerned District Magistrate.
In case of default on deposit of such levied
penalty the concerned District Magistrate
will deduct the said amount from the
amount of security deposited against the
said mining lease.

(4) According to the provisions
provided under Rule 41-H mining work
through suction machine/lifter into the
water stream will be prohibited. If any
lessee is found contravening the provisions
of the said rule then he will be liable for
penalty at the rate of of Rs. five lakh per
occasion of contravening act, which will be
recovered
on
the
order
of
District
Magistrate or Director, Geology and
Mining. On failure to deposit of the above
mentioned amount of penalty the same
shall be deducted by the District Magistrate
from the security money deposited against
the concerned lease.

(5) Any lessee holding a mining
lease who commits a breach of any of the
conditions provided in Rule 44 shall be
liable for levy/penalty of Rs. fifty thousand.
On failure to deposit the said amount of
penalty the same shall be deducted by the
District Magistrate from the security money
deposited against the concerned lease."

(emphasis supplied)

7. Learned counsel for the petitioner
further stated that even if Rule 59 as it
stood amended on 13.8.2019 by the 47th
Amendment is taken into account then also
if the petitioner i.e. the proponent who had
received the Letter of Intent was not
producing the mining plan or was not
applying for the grant of environmental
clearance within the period of one month as
per the provisions mentioned in Rule 59
then the proponent would be liable for a
penalty of Rs.10,000/- per day for a period
of one month. Learned counsel for the
petitioner has argued that the amended
Rule had two parts; one was with regard to
non production of the mining plan within
one month and for non-application of the
grant of environmental clearance within
one month as stipulated in Rule 34 of the
1963 Rules and the other was that if the
proponent i.e. the person who had got the
Letter of Intent failed to execute the lease
within one month of obtaining
the
environmental clearance certificate.

8. In the first case, if the proponent
did not deposit the amount of penalty for
one month then the same could be
deducted
from
the
security
money
deposited by the proponent and in the
second case i.e. if after obtaining of the
environmental clearance, the lease was not
got executed then the District Magistrate
could cancel the Letter of Intent and also
could forfeit the first installment and the
security money.
1342 INDIAN LAW REPORTS ALLAHABAD SERIES

9. In the case at hand, learned counsel
for the petitioner submitted that the lease
was yet not executed. The petitioner by a
letter dated 18.1.2018 had informed the
District Magistrate and the other State
Officials that they may take action as the
petitioner was not able to provide the
mining
plan
and
the
environmental
clearance. He, therefore, submits that the
forfeiture could not have been done.

10. Furthermore, learned counsel for
the petitioner submitted that the amended
Rule 59 would not apply to the case of the
petitioner. The petitioner's Letter of Intent
was dated 13.11.2017 and the petitioner
had written on 18.1.2018 that he would
not be able to do mining work. He
submits that within one month of
13.11.2017, the petitioner had to provide
the mining plan and if he did not do that
then as per the un-amended provisions he
was liable for a penalty of Rs.1,00,000/-
and a reading of the un-amended Rule 59
clearly shows that the production of the
mining plan had to be done within one
month. Therefore, learned counsel for the
petitioner
states
that
the
District
Magistrate had not to wait for more than
one
month
and
had
to
deduct
Rs.1,00,000/- from the deposit of security
amount and had to return the remaining
security amount. He, therefore, submits
that his case had to be confined to the
earlier unamended provisions of Rule 59
of the 1963 Rules and that at the most the
District Magistrate could have penalize
the petitioner for Rs.1,00,000/-.

11. Rule 59 as it existed before the
coming of the amendment has been
reproduced
in
the
judgment
above.
Relevant portion of Rule 59, which came
after
13.8.2019
i.e.
after
the
47th
Amendment, reads as under :-

"59.
Consequences
of
contravention of certain conditions--(1)
The proponent who has received letter of
intent however has not produced mining
plan or has not applied for grant of
Environment
Clearance
within
the
stipulated period of one month as per the
provisions mentioned in Rule-34 shall be
liable for penalty of Rs. Ten thousand
per day. On failure to deposit the
amount of penalty, the same shall be
deducted by the District Magistrate from
the security money deposited against the
concerned lease. In case the proponent
fails to execute the lease deed within one
month
of
obtaining
environment
clearance
certificate,
the
District
Magistrate
shall,
subsequent
to
cancelling the letter of intent, forfeit the
first installment and security money
deposited by the proponent in favour of
the State Government.

(2) The lessee who does mining
works
contravening
the
terms
and
conditions mentioned in the approved
mining
plan
and
clean
environment
certificate issued as per the provisions
provided under Rule 34, then he will be
liable for penalty at the rate of Rs. 50,000/-
per occasion of default that shall be
recovered by the District Magistrate.

(3) If the lease holder disobeys the
provisions of Rule-35 then penalty at the rate
of rupees twenty five thousand per day for
each and every default shall be levied by the
concerned District Magistrate. In case of
default on deposit of such levied penalty the
concerned District Magistrate will deduct the
said amount from the amount of security
deposited against the said mining lease.

(4) According to the provisions
provided under Rule 41-H mining work
1 All. M/s Nishant Traders, Basti Vs. State of U.P. & Ors.
1343
through suction machine/lifter into the
water stream will be prohibited. If any
lessee is found contravening the provisions
of the said rule then he will be liable for
penalty at the rate of Rs. five lakh per
occasion of contravening act, which will be
recovered
on
the
order
of
District
Magistrate or Director, Geology and
Mining. On failure to deposit of the above
mentioned amount of penalty the same
shall be deducted by the District Magistrate
from the security money deposited against
the concerned lease.

5) Any lessee holding a mining
lease who commits a breach of any of the (
conditions provided in Rule 44 shall be
liable for levy/penalty of Rs. fifty thousand.
On failure to deposit the said amount of
penalty the same shall be deducted by the
District Magistrate from the security money
deposited against the concerned lease.

(6) Where the lease holder fails to
conform to the prescribed loading norms,
penalty of Rs. 25,000.00 per occasion of
default shall be imposed by the District
Magistrate. Upon failure to deposit the said
penalty, the same shall be deducted by the
District Magistrate from the security money
deposited against the concerned lease.

(7) Where the proponent fails to
complete
all
desired
formalities
for
obtaining
Environment
Clearance
as
required by the competent authority within
the
stipulated
time
frame,
District
Magistrate may cancel the letter of intent
issued in his favour."

(emphasis supplied)

12. For a better understanding, it would
also be necessary to reproduce Rule 34 of the
1963 Rules, which reads as under :

"34.
Mining
Operations
to
commence
within
six
months-The
'Selected Applicant' before the execution of
mining lease deed under the provision of
Chapters II, IV and IX or issuing a mining
permit under Chapter VI of these rules,
shall get prepared a mining plan by the
person, recognized and registered by the
Director, having the qualification and
experience namely

(i)
a
degree
in
Mining
Engineering or post-graduate degree in
Geology granted by university established
or incorporated by or under Central Act or
a Provincial Act or a State Act, including
any institution recognized by the University
Grants
Commission
establihed
under
Section 4 of the University Grants
Commission Act, 1956; and

ii) Professional experience of 05
years of working in a supervisory capacity
in the field of mining after obtaining the
degree.

(2) The selected applicant/etender/bidder of e-auction shall submit the
mining plan for approval to the officer
authorized by notification in this behalf by
the State Government who may within 30
days from the date of receipt of mining
plan approve, modify or reject it positively.

(3)
The
mining
plan
once
approved shall be valid for entire duration
of the mining lease/permit or for five years
whichever is earlier. If the lease period is
more than five years then in that case the
lease holder will resubmit mining plan
before the officer authorized by notification
in this behalf by the State Government.

(4) Mining operations shall in
respect of all minor mineral be undertaken
1344 INDIAN LAW REPORTS ALLAHABAD SERIES
in accordance with the mining plan,
detailing yearly development schemes,
aspect of reclamation and rehabilitation of
mined out areas including progressive mine
closure scheme duly approved by the
officer authorized by notification in this
behalf by the State Government.

Provided that the lessee shall start
the mining operation after obtaining
environmental clearance if required under
the provisions of Environment Impact
Assessment Notification, dated September
14, 2006 issued by the Ministry of
Environment, Forest and Climate change
Government of India as amended from time
to time:

Provided
further
that
an
application seeking prior environmental
clearance in all cases shall be made by the
project proponent or end user agency as the
case may be, in as provided in Paragraph 6
of the Environment Impact Assessment
Notification, dated September 14, 2006 as
amended from time to time.

(5) The mining lease deed will be
executed only after approval of mining plan
by the officer authorized by notification in
this behalf by the State Government after
which the lessee shall commence mining
operation within six months from the date
of execution of the lease deed and shall
thereafter conduct such operations without
deliberate intermission in a proper, skillful
in work man like manner.

(6) Financial assurance has to be
furnished by every lease holder. The
amount of financial assurance shall be
Rupees twenty five thousand for insitu-rock
deposit and Rupees fifteen thousand for
sand or morrum or bajari or boulder or any
of these in mixed state exclusively found in
the river bed mines per acres of the mining
lease area put to use for mining and allied
activities However, the mini um amount of
financial assurance to be furnished in any
of the forms referred to in sub-rule (7) shall
be Rupees two lakhs for each category of
mines be respective of area:

Provided that a lease holder shall
be required to enhance the amount of
financial assurance with the increase in the
area of mining and allied activities:

Provided further that where a
leaseholder undertakes reclamation and
rehabilitation measures as part of the
progressive closure of mine, the amount so
spent shall be reckoned as sum of the
financial assurance already spent by the
leaseholder and the total amount of
financial assurance, to be furnished by the
lessee, shall be reduced to that extent.

(7) The Financial assurance shall
be submitted by the lessee before the
execution of lease deed in one of the
following forms to the District officer or
the
officer
authorised
by
the
State
Government in this behalf, as the case may
be, or any amendment to it:

(a) Letter of Credit from any
Scheduled Bank;

(b) Performance or surety bond;

(c) any other form of security or
any other guarantees acceptable to the
competent authority.

(8) Release of financial assurance
shall be effective upon the notice given by
the lessee for the satisfactory compliance of
the provisions contained in the mine
closure scheme and certified by the District
1 All. M/s Nishant Traders, Basti Vs. State of U.P. & Ors.
1345
Officer or the Officer authorised by the
State Government in this behalf, as the case
may be.

(9) If the District Officer or the
Officer authorised by the State Government
in this behalf, has reasonable grounds for
believing that the protective, reclamation
and rehabilitation measures as envisaged in
the approved 'mine closure scheme' as
given in mining plan in respect of which
financial assurance was given has not been
or will not be carried out in accordance
with the 'mine closure scheme' either fully
or partially, the District Officer or the
Officer authorised by the State Government
in this behalf shall give the lessee a written
notice of his intention to issue the orders
for forfeiting the sum assured at least thirty
days prior to the date of the order to be
issued.

(10) Within the thirty days of the
receipt of notice referred in sub-rule (9), if
no satisfactory reply has been received in
writing from the lessee, the District Officer
or the Officer authorised by the State
Government in this behalf, as the case may
be, shall pass an order for forfeiting the
surety amount and a copy of such order
shall be endorsed to the State Government.

(11) Upon the issuance or order
District Officer or the officer authorised by
the State Government in this behalf, the
State Government may realise any letter of
credit or bond or any other surety,
guarantee provided or obtained as financial
assurance for the purpose of performance
of protective reclamation, rehabilitation
measures and shall carry out those
measures, or appoint an agent to do so.

Explanation-- For the purpose of
this rule mining operations shall include the
erection of machinery, use of machine
laying of a tramway or construction of road
in connection with the working of the
mines. "

13. Learned counsel for the petitioner,
therefore, submitted that nothing more than
Rs.1,00,000/- could have been deducted
from the security money of the petitioner.

14. Learned counsel for the petitioner
relying upon the judgment of the Supreme
Court in Commissioner of Income Tax,
U.P.-II,
Lucknow
vs.
Bajpur
Cooperative Sugar Factory Ltd., Bajpur,
District Nainital reported in (1988) 3 SCC
553 submitted that when the amended
provisions
had
not
stated
that
the
provisions would be retrospective then
definitely the provisions would not be
retrospective
and,
therefore,
in
the
petitioner's case, the un-amended Rule
would
apply.
For
strengthening
his
arguments further, learned counsel for the
petitioner also relied upon the decisions of
the Supreme Court in N.T. Devin Katti &
Ors. vs. Karnataka Public Service
Commission & Ors. reported in (1990) 3
SCC 157 and in P. Mahendran & Ors. vs.
State of Karnataka & Ors. reported in
(1990) 1 SCC 411.

15. When Sri Sandeep Kumar Singh,
learned Additional Chief Standing Counsel
had on 2.8.2023 stated that the penalty
could be imposed as per the amended Rule
59 of the 1963 Rules as was amended on
13.8.2019, the Court had asked the learned
Additional Chief Standing Counsel to
calculate the amount as was recoverable. In
pursuance thereof, learned Additional Chief
Standing Counsel filed an affidavit on
behalf of respondent nos.2 and 3 and in
paragraph 17 of the affidavit, calculated the
amount which was payable to the State
1346 INDIAN LAW REPORTS ALLAHABAD SERIES
Government by the petitioner and stated
that
the
petitioner
had
to
pay
Rs.80,10,000/-. The relevant paragraphs of
the affidavit i.e. paragraph nos.17 and 18
are being reproduced here as under :-

"17. That the letter of intent was
issued on 13.11.2017 and the same was
cancelled on 22.1.2020. On the date of
cancellation,
the
47th
Amendment
incorporated in the Uttar Pradesh Minor
Minerals (Concession) Rules, 1963 was in
force and therefore, the petitioner is liable to
pay a penalty of Rs.10000/- per day from the
date of the issuance of letter of intent to the
cancellation of letter of intent. The chart is
being reproduced below :-

Sn.
Particulars
Date
1.
Date of issuance of letter of intent.
13.11.2017
2.
Date of production of approved
mining plan before the competent
authority
13.12.2017
3.
Date of cancellation of letter of
intent
22.01.2020

Number of days, through which the
letter of intent was effective from the date of
production of approved mining plan till the
cancellation of letter of intent.

Sn.
Year
Number of Days
1.
2017
49
2.
2018
365
3.
2019
365
4.
2020
22

Total number of days
801

Rate of penalty per day -
Rs.10000/-

Total
penalty
Rs.10000x801=
8010000/-

18. That as per the above
calculation, the petitioner is liable to pay
Rs.8010000/-
as
per
the
provisions
contained in Rule 59(1) inserted through
47th Amendment w.e.f. 13.8.2019 under
the
Utter
Pradesh
Minor
Minerals
(Concession) Rules, 1963."

16. Learned counsel for the petitioner
has stated that first of all the amended
provision would not apply and also he
submitted that the amended provisions even
if applied then the petitioner could be
charged for Rs.10,000/- for a period of one
month only i.e. he could have been
penalized for Rs.3,00,000/- and if that
amount was not paid then that amount
could be deducted from the security money
and the remaining security money should
be returned to the petitioner. Learned
counsel for the petitioner relied upon the
affidavit filed by respondent nos.2 and 3
and submitted that whatever be the case,
the deponent of the affidavit i.e. Sri
Prashant Raj Karan Yadav who is the
Mines Officer at Basti had admitted that
only a certain amount had to be deducted
and the entire security money which
comprises the earnest money and the
security money and the first installment
could not be forfeited by the Government.

17.

Learned
Additional
Chief
Standing Counsel has, however, in reply
submitted that if Rule 59 of the 1963 Rules
which stood prior to 13.8.2019 is perused
and if the subsequent Rule 59 as it stood
amended by the 47th Amendment dated
13.8.2019 is perused, it becomes clear that
the penalty for non-compliance of the
provisions of Rule 34 were definite and
they were to the effect that the petitioner
had to be penalized by paying certain
amount which would discourage nonserious
applicants
from
making
1 All. M/s Nishant Traders, Basti Vs. State of U.P. & Ors.
1347
applications for mining purposes. He
further submitted that the initiation of the
auction proceedings entailed a lot of
expenditure and if non-serious individuals
were not discouraged then a lot of financial
pressure would be exerted on the State
exchequer and the State's time would also
be wasted. Learned Additional Chief
Standing Counsel once again took the
Court through the provisions of the
unamended Rule 59 of the 1963 Rules
and the amended Rule 59 of the 1963
Rules and tried to convince the Court that
as per the amended Rule 59 definitely the
security amount along with the first
installment and the earnest money could
be forfeited.

18. Having heard learned counsel
for the petitioner Sri Devbrat Mukherjee
and learned Additional Chief Standing
Counsel Sri Sandeep Kumar Singh, we
are of the view that when the petitioner
i.e. the proponent who had got the Letter
of Intent on 13.11.2017 had not been able
to provide the mining plan as is provided
under Rule 34 of the 1963 Rules within
one month then definitely Rule 59 of the
1963 Rules came into play and after the
completion of 30 days, the District
Magistrate ought to have cancelled the
Letter of Intent and ought to have
imposed the penalty of Rs.1,00,000/-.
Definitely we are of the view that since the
Letter of Intent was granted on 13.11.2017
and the application of the petitioner dated
18.1.2018 stating that he was not able to
continue with the mining was given much
before the amended Rule 59 came into
existence on 13.8.2019, the law as
prevailed on the date when one month
expired after the Letter of Intent dated
13.11.2017, would prevail and, therefore,
we are of the view that the petitioner could
have been penalized at the most by
imposition of penalty of Rs.1,00,000/- and
the remaining amount comprising the
earnest money, security money and the first
installment should have been returned to
the petitioner. Further from the affidavit
which the State has filed on 13.10.2023, we
find that even the State is of the view that
the earnest money, the security money to
the first installment and the first installment
of the first year which the petitioner had
deposited could not be forfeited and the
deponent of the affidavit has only stated
that, from the petitioner as per the amended
provision of Rule 59 of the 1963 Rules
Rs.80,10,000/- had to be taken. Thus, even
as per the own saying of the State
Authorities, the petitioner had only to pay a
certain penalty. As held earlier, we
definitely hold that the petitioner, for the
non-compliance of the provisions of Rule
34 of the 1963 Rules within one month of
the issuance of the Letter of Intent, could
be penalized only by the imposition of a
penalty of Rs.1,00,000/-.

19. We, thus, hold that the order dated
22.1.2020 which has been challenged in
Writ-C No.4812 of 2020 cannot be
sustained in the eyes of law. As per the
provisions of law which were in existence
on the date when one month expired after
the Letter of Intent was given on
13.11.2017, the petitioner could have been
penalized by imposing a penalty of
Rs.1,00,000/-
only.
The
order
dated
22.1.2020 impugned in Writ-C No.4812 of
2020 is thus quashed and is set aside.

20. Under such circumstances, we
direct the respondent-District Magistrate to
refund the entire amount which was
deposited by the petitioner at the time of
making his application for participating in
the auction i.e. the security money and the
first installment of the first year which he
1348 INDIAN LAW REPORTS ALLAHABAD SERIES
had given after the Letter of Intent was
issued.

21. For what has been stated above,
the writ petitions succeed and are allowed
to the extent indicated above.
----------
(2024) 1 ILRA 1348
ORIGINAL JURISDICTION
CIVIL SIDE
DATED: LUCKNOW 11.01.2024

BEFORE

THE HON'BLE ALOK MATHUR, J.

Writ-C No. 1000301 of 1991

Surendra Pratap Singh ...Petitioner
Versus
State of U.P. & Ors. ...Respondents

Counsel for the Petitioner:
S. Irfan Ahmad, Ankit Pande, Dr. Ramsurat
Pande, R.P. Yadav

Counsel for the Respondents:
C.S.C., Umesh Chandra

A. Ceiling law - UP Imposition of Ceiling
on Land Holdings Act, 1960 - Sections 9,
10(2) & 19(3) - Ceiling proceeding -
Nature - Recorded tenure holder died
after publication of notice u/s 9 -
Abatement of proceeding claimed -
Permissibility - Proceeding treating the
legal heir as tenure holder, how far
liable to be continued - Nature of case,
how far being affected on the death of
tenure holder - Held, nature of the case
for determination of land in excess of
ceiling area does not change and it is
centric only to the recorded tenure
holder
and
not
to
his
legal
representatives - Even if the recorded
tenure
holder
had
died
after
the
publication of notice u/s 9 of Act, 1960,
the
proceedings
could
have
been
continued after effecting notice on his
legal heirs. (Para 10 and 11)
Writ petition dismissed. (E-1)

List of cases cited:

1. Horam Singh & ors. Vs District Judge,
Moradabad & ors.; 1978 (4) ALR 918

(Delivered by Hon'ble Alok Mathur, J.)

1. Heard Shri R.S. Pandey, learned
Senior Advocate assisted by Shri Virendra
Bhatt, learned counsel for petitioners, Shri
S.K. Khare, learned Standing Counsel for
the State and perused the material available
on record.

2. The present writ petition has been
filed by the petitioners assailing the orders
passed under the provisions of the U.P.
Imposition of Ceiling on Land Holdings
Act,
1960,
wherein
the
Prescribed
Authority by means of order dated
26.06.1985 has rejected the objections
preferred by the petitioners and the
Additional
Commissioner,
Faizabad
Division, Faizabad has rejected the appeal
by means of order dated 10.12.1990
affirming
the
findings
of
the
said
Prescribed Authority.

3. Though facts in brief necessary for
the adjudication of the present case are that
once Brij Mohan Singh was a recorded
tenure holder with regard to land situated at
Village Mau-Atwara, Pargana Jagdishpur,
Tehsil Musafirkhana, District Sultanpur. A
notice under Section 10 (2) of the U.P.
Imposition of Ceiling on Land Holdings
Act, 1960, was issued to Brij Mohan Singh,
the recorded tenure holder on 30.07.1974,
who had died prior to the issuance of notice
on 24.04.1974. The said notice was duly
received by his sons i.e., Rameshwar
Singh, Jagat Pal Singh and Ram Singh,
who filed their objections against the notice
issued under Section 10 (2) of the U.P.