Katwa Udyog Limited v. State of Karnataka - Writ Petition

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M/S Katwa Udyog Limited vs The State Of Karnataka on 24 March, 2026

-1-
WP No. 18008 of 2007

                IN THE HIGH COURT OF KARNATAKA AT BENGALURU

                    DATED THIS THE 24TH DAY OF MARCH, 2026

                                   PRESENT
                 THE HON'BLE MR. VIBHU BAKHRU, CHIEF JUSTICE
                                      AND
                    THE HON'BLE MR. JUSTICE C.M. POONACHA
                   WRIT PETITION NO.18008 OF 2007 (GM-MM-S)
           BETWEEN:
           1.    M/S KATWA UDYOG LIMITED
                 A COMPANY REGISTERED UNDER
                 THE COMPANIES ACT
                 HAVING ITS REGISTERED OFFICE
                 JYOTI TOWER, 215/2, KARBHAR GALLI
                 6TH CROSS, NAZAR CAMP
                 M. VADGAON, BELGAUM - 590 005
                 REP. BY ITS VICE CHAIRMAN CUM DIRECTOR
                 SRI VENKATESH H. KATWA
                                                 ...PETITIONER
           (BY SRI GAUTAM S. BHARADWAJ, ADVOCATE)

           AND:

Digitally 1. THE STATE OF KARNATAKA
signed by REP. BY ITS PRINCIPAL SECRETARY
AMBIKA H B COMMERCE & INDUSTRIES DEPARTMENT
Location: 1ST FLOOR, VIKASA SOUDHA
High Court BANGALORE - 560 001
of Karnataka
2. COMMISSIONER AND DIRECTOR OF
THE DEPARTMENT OF MINES AND GEOLOGY
NO.49, RACE COURSE ROAD
KHANIJA BHAVAN, BANGALORE - 560 009

           3.    THE EXECUTIVE MEMBER &
                 CHIEF EXECUTIVE OFFICER
                 KARNATAKA INDUSTRIAL AREAS
                 DEVELOPMENT BOARD
                        -2-
                                 WP No. 18008 of 2007

 NRUPATHUNGA ROAD
 BANGALORE - 560 001

1. M/S. JAYKAYCEM LIMITED
   (SUBSIDIARY OF JK CEMENT LTD.)
   A COMPANY REGISTERED UNDER
   COMPANY ACT, HAVING THEIR OFFICE
   AT 529/1, SAI NAGAR
   MUDHOL DISTRICT
   BAGALKOT
   REPRESENTED BY
   ITS MANAGING DIRECTOR

2. M/S ASHIRWAD MINERALS
   LOKAPUR, MUDHOL TALUK
   BIJAPUR DISTRICT
   REPRESENTED BY ITS
   MANAGING PARTNER
   SRI H.G. SRIPADA
   AGED ABOUT 47 YEARS
   SRI H GURURAJA RAO

   (IMPLEADED VIDE COURT ORDER DATED 08.04.2011)
   ...RESPONDENTS (SMT. NILOUFER AKBAR, AGA FOR R-1 & 2
   SRI I. GOPALAKRISHNA, ADVOCATE FOR R-3,
   SRI D.L.N RAO, SENIOR ADVOCATE FOR
   SRI ANIRUDH ANAND, ADVOCATE FOR R-4 AND
   SRI GURURAJ JOSHI, ADVOCATE FOR R-5)

   THIS WRIT PETITION IS FILED UNDER ARTICLES 226 AND 227 OF THE CONSTITUTION OF INDIA PRAYING TO
   CALL FOR THE RELEVANT RECORDS WHICH ULTIMATELY
   RESULTED IN ISSUING THE IMPUGNED COMMUNICATIONS
   No.IADB/326 V/4682/07-08 DATED 03.07.2007 AND THE
   COMMUNICATION No. CI 26 SPI 2007 DATED
   03.10.2007/02.11.2007 VIDE ANNEXURES-A AND B & ETC.

THIS WRIT PETITION HAVING BEEN HEARD AND
RESERVED FOR ORDERS, COMING ON FOR
PRONOUNCEMENT THIS DAY, ORDER WAS PRONOUNCED
AS UNDER:

-3- WP No. 18008 of 2007

CORAM: HON'BLE MR. VIBHU BAKHRU, CHIEF JUSTICE
and
HON'BLE MR. JUSTICE C.M. POONACHA

C.A.V. JUDGMENT

(PER: HON'BLE MR. VIBHU BAKHRU, CHIEF JUSTICE)

1. The petitioner [hereafter 'KUL'] has filed the present

petition, inter alia, impugning a communication dated 03.07.2007

addressed by the Chief Executive Officer of the Karnataka

Industrial Areas Development Board [KIADB] to the State

Government of Karnataka seeking orders for allotment of land

measuring 305 acres and 7 guntas at Naganapur and Hebbal

villages, Mudhol Taluk, Bagalkot district [the subject land] for

allotment of land in favour of respondent No.4 [hereafter 'JKL'],

which had offered an amount of `3,02,000/- per acre for the

subject land. KUL also seeks directions from the respondent

authorities to complete the process of allotment of the subject

land to it as the successor to the leasehold rights of M/S. Shree

Quality Cements Limited [hereafter SQCL].

1. KUL seeks to impugn the allotment of the subject land in

favour of JKL and claims that it is entitled to the said allotment as

a successor of SQCL. Thus, the principal controversy to be -4- WP No. 18008 of 2007 addressed in the present petition is whether KUL is entitled to

claim the allotment of the subject land and whether the allotment

of the same in favour of JKL is contrary to law.

1. The present petition was filed almost nineteen years ago,

and some of the issues raised by KUL in the present petition have

been concluded against KUL. Thus, the learned counsel

appearing for the petitioner confined his arguments for

challenging the allotment of the subject land in favour of JKL,

essentially, on the ground that the same was in violation of Rule

59 of the Mineral Concession Rules, 1960 [MC Rules] read with Section 11 (4) of the Mines and Minerals (Development and

Regulation) Act, 1957 [MMDR Act ], as was in force prior to its

amendment in the year 2015. KUL claims that it was

impermissible for an area, which was previously held under a

mining lease, to be made available for re-grant unless (i) the area

is available for grant made under Rule 40 (2) of the MC Rules;
and (ii) the availability of the area for grant is notified under the

official gazette.

1. KUL further claims that the provisions of the [Karnataka

Industrial Areas Development Act, 1966](https://indiankanoon.org/doc/89355826/) [KIAD Act ] are -5- WP No. 18008 of 2007 inapplicable in respect of the land which is held under a mining

lease.

THE CONTEXT

1. The aforesaid dispute arises in the context of the facts as

stated hereafter.

1. One Sri B. N. Shah had applied for a grant of a mining

lease in respect of the subject land, and the State Government of

Karnataka executed the mining lease [ML No.1858] for a period

of twenty years from 23.12.1982 and registered on 02.02.1983.

The State Government executed the said mining lease for the

extraction of limestone, clay, dolomite, sandstone, and gypsum. It

is the KUL's case that the said lease was held on behalf of SQCL.

1. KIADB published a Preliminary Notification on 07.06.1984

for the acquisition of the subject land. Thereafter, KIADB

published the Final Notification under Section 28(4) of the KIAD

Act on 24.10.1987 for acquiring the land to the total extent of

293.38 acres (167.32 acres in Hebbal village and 126.06 acres in

Naganapura village). KIADB also acquired the area of 35 acres

and 15 guntas [hereinafter also referred to as the Factory Land]

under the provisions of the KIAD Act. Apparently, KIADB -6- WP No. 18008 of 2007 proposed allotting the subject land to various persons for the

purpose of establishing an industry, which was opposed by

SQCL.

1. SQCL had filed a writ petition, being W.P. No. 4892/1999,

in this Court, seeking to challenge the proposal of allotment in

favour of the third parties and also seeking a direction for the

delivery of the subject land to SQCL. The said petition was

disposed of by an order dated 08.01.2002, directing KIADB to

consider SQCL's representation.

1. KIADB allotted the Factory Land measuring 35.15 acres to

SQCL. SQCL availed of financial assistance from IDBI Limited

[IDBI] and other banks and financial institutions, and mortgaged

the Factory Land to IDBI and other banks and financial

institutions. SQCL defaulted in servicing the loans availed from

IDBI and financial institutions.

1. In the circumstances, IDBI filed a suit before the Bombay

High Court, Mumbai (O.A. No. 3251/1993). In the said

proceedings, the Bombay High Court appointed a court receiver.

Subsequently, the said proceedings were transferred to the Debts

Recovery Tribunal, Pune [DRT] with the enactment of the -7- WP No. 18008 of 2007 Recovery of Debts due to Banks and Financial Institutions, 1993.

The said action was numbered as O.A No.182/2002. The learned

DRT also appointed another receiver in respect of the assets of

SQCL.

1. In the proceedings before the DRT, the assets of SQCL

were put up for sale by a public auction on an 'as is where is'

basis. The petitioner also participated in the bidding process of

the assets of SQCL and was declared the highest bidder in the

public auction held on 07.05.2007, and the Certificate of Sale of

the property purchased by SQCL was issued. The said certificate

described the property purchased by KUL as under:

"SPECIFICATION OF PROPERTY
Property admeasuring 35.15 acres Survey
Nos. 15/4, 88/1A, 88/1B, 88/2, 88/3, 88/4, 5 & 6
situated at Village Nagnapur, Post Lokapur, Taluka
Mudhol, District Bagalkot in the State of Kamataka,
as per the MOU dated 27th July 1987 of which
lease-hold rights have been renewed by the
Karnataka Industrial Area Development Board for a
period of two years from 25th May 2005 to 24th May
2007 as per their letter dated 1st December 2006,
the properties comprising of lease-hold rights,
along with structures standing thereon including
plant & machinery etc. on "as is where is" basis,
and more appropriately described in Schedule 'A,
'B' and 'C' of General Terms & Conditions of
Auction"
-8- WP No. 18008 of 2007 12. KIADB executed a lease-cum-sale agreement for the

Factory Land. Although the KUL had acquired the Factory Land

only at a public auction held on 07.05.2007, it also claimed that it

was entitled to a lease in respect of the subject land (305 acres 7

guntas). KUL sent several letters claiming that SQCL held the

leasehold rights in respect of the subject land, representing that it

was entitled to ML 1858 as a successor in interest to SQCL.

1. Following the said communications, the Department of

Mines and Geology issued an order dated 05.09.2007, restoring

ML No. 1858, the mining lease in respect of the subject land, in

favour of KUL.

1. The said order was challenged by Sri Atul B. Shah, the son

of Sri B.N. Shah (the lessee in ML1858), before the Revisional

Authority (Central Government) by filing a revision application

(Revision Application No. 13/07-2008/RC). KUL was also

impleaded and contested the proceedings. It claimed that Sri Atul

B. Shah had no locus standi to file the revision petition or

challenge the order dated 05.09.2007. It was KUL's case that the

application for the grant of the mining lease was made by SQCL -9- WP No. 18008 of 2007 and the lease was granted to it. It claimed that Sri B. N. Shah was

a Director of the SQCL and had executed the lease on its behalf.

1. The Revisional Authority faulted the order dated

05.09.2007, which restored the mining lease ML 1858 in favour of

KUL on several grounds. First, that the area in question was a

held area, and Rule 59 of the MC Rules applied. It was noted that

the State Government had not accepted KUL as a legal

successor in respect of ML 1858. Therefore, the same could not

be restored in favour of KUL. Second, it noted that the State

Government had accepted Atul Babulal Shah as legal heir under

Rule 25A of the MC Rules, in respect of renewal of ML 1858.

Third, the Central Government found that the certificate of sale of

immovable property dated 30.05.2007 issued by the Registrar,

DRT, Pune did not make any reference to ML 1858 or the subject

land. Thus, KUL had not purchased the subject property. In the

given facts, the State Government did not have the jurisdiction to

accept the application for renewal of ML 1858 from KUL. The

Revisional Authority held that the action of the State Government

in issuing the order dated 05.09.2007 recommending renewal of

the mining lease in favour of KUL was violative of Section 19 of

the MMDR Act. In view of the above, the Revisional Authority

• 10 -

WP No. 18008 of 2007 (Central Government) allowed the revision petition by an order

dated 30.11.2010 and set aside the State Government's order

recommending the restoration of ML 1858 in favour of KUL.

1. Aggrieved by the order dated 30.11.2010 passed by the

Revisional Authority (Central Government), KUL filed a writ

petition in this Court, being WP No. 9581/2011 (GM-MM-S).

However, the said petition was dismissed by an order dated

31.03.2016. This Court found: (i) that ML 1858 was never the

subject matter of sale before the DRT and the sale certificate was

confined to confirmation of sale of Factory Land to the extent of

35 acres and 15 guntas; (ii) that KUL acquired no rights in the

subject land; (iii) that KUL in the guise of sale certificate which did

not pertain to ML 1858 or the subject land had addressed

communications to various authorities to represent that it had

purchased rights in respect of ML 1858. KUL's contention that

ML1858 was granted to it was without basis and is, accordingly,

rejected; and (iv) that the mining lease, ML 1858, executed by the

government was indicative that it was in the name of Babulal

Nathuram Shah. In view of the aforesaid findings, this Court

dismissed KUL's petition (WP No.9581/2011).

• 11 -

WP No. 18008 of 2007

1. KUL challenged this court's order dated 31.03.2016,

passed in WP No.9581/2011 before the Supreme court, by filing a

special leave petition (SLP(C) No.16021/2016). The Supreme

Court dismissed the said SLP by an order dated 26.08.2025.

1. In the meantime, KIADB, in a meeting held on 30.05.2007,

noted that SQCL had failed to deposit the cost of the subject land

(land to the extent of 305 acres and 7 guntas) acquired under the KIAD Act.

1. In the meantime, five parties, including KUL and JKL had

requested for allotment of the subject land for establishment of a

cement plant. The request of the said parties was considered by

KIADB at an earlier meeting held on 30.01.2006, and it was

resolved to allot the subject land for the project approved under

the State High Level Clearance Committee (SHLCC). KIADB

noted that the project proposals of the five parties who had

requested allotment of the subject land had been cleared by

SHLCC. Accordingly, KIADB asked the said companies to submit

their final offer for allotment of the subject land.

• 12 -

WP No. 18008 of 2007

1. The said parties had submitted their offers within the

period stipulated. KUL had offered `2,43,300/- per acre, which

was the lowest, and JKL had offered `3,02,000/- per acre, which

was found to be the highest amongst all offers. Since the JKL's

bid was the highest, KIADB accepted it, and the subject land was

allotted in favour of JKL by a letter dated 03.07.2007, which is

impugned in the present petition. KIADB sought approval of the

Government for the allotment of the said land. The State

Government approved the allotment of the subject land to JKL for

mining purposes.

REASONS AND CONCLUSIONS

1. As noted at the outset, the learned counsel appearing for

KUL confined the challenge to the impugned communications on

the ground that the same violated Rule 59 of the MC Rules, as

were in force at the material time. It was also argued by the

learned counsel for the petitioner that the MMDR Act and the MC

rules are a complete code and override the KIAD Act. He argued

that the subject land could be leased only under the MMDR Act,

and it was impermissible for KIADB to allot the land to JKL. He

also noted that 12 acres of land were removed from ML 1858. In

respect of this parcel of land, a Notification dated 28.03.2002 was

• 13 -

WP No. 18008 of 2007 issued under Rule 59 of the MC Rules, notifying their availability

for regrant, which, according to the petitioner, was the correct

procedure to be followed. He contended that selectively not

following the said procedure in respect of the subject lands would

constitute malice in law. The learned counsel also referred to

certain decisions in support of his contentions, which would be

noted hereafter.

1. The learned counsel appearing for KIADB and JKL

countered the aforesaid submissions. They contended that the

contentions advanced are not supported by any pleadings, and

thus it was impermissible for the petitioner to pursue the same.

1. The learned counsel appearing for KIADB also submitted

that there is no cavil that before granting any mining lease, the MMDR Act and the rules made thereunder are required to be

followed. He submitted that the KIADB had not granted any

mining rights but had merely transferred the surface rights, which

it was entitled to do. It was also contended that the petitioner is

estopped from challenging the allotment of the subject land, as it

had participated in the allotment process without reservation.

• 14 -

WP No. 18008 of 2007 Having failed to offer the highest price, it commenced a series of

litigation to interdict the use of the subject land.

1. Before proceeding to address the rival submissions, it is

necessary to note that the arguments advanced before the court

are not supported by any averments made in the petition. Some

of the contentions advanced on behalf of the petitioner run

contrary to the averments made in the present petition. The

averments made in the petition indicate that petitioner had

challenged the impugned allotment on several grounds, including

that the allotment was made without following regulations made

under the KIAD Act. It is implicit that, according to the petitioner,

the KIAD Act and the regulations made thereunder were

applicable. It is expressly averred in the petition that KIADB is a

statutory body and "is required to grant land in terms of the

Regulations of Allotment framed by them". The petitioner has also

averred that "it is legally not permissible either under the

provisions of the KIAD Act or the Rules framed thereunder, to

give the land acquired for this project to any other person

overlooking the subsisting leasehold rights in favour of the

Petitioner". However, contrary to the said contentions, it is now

• 15 -

WP No. 18008 of 2007 contended that the KIAD Act and the rules made thereunder are

not applicable, and that the subject land can be leased only in

accordance with the procedure under the MMDR Act. According

to the petitioner, the MMDR Act overrides KIAD Act and,

therefore, the KIAD Act is not applicable.

1. We may note that the present petition is founded on the

presumption that the petitioner had acquired the leasehold rights

in respect of the subject land by virtue of an auction of assets of

SQCL conducted by the learned DRT. The petitioner had

participated in the auction and quoted a sum of `11.3 crores for

the assets of SQCL, on the premise that it would be conveyed the

right, title and interest in respect of the Factory Land. KUL also

claims that, in addition, SQCL acquired the subject land (305

acres and 7 guntas) so as to have a seamless supply of raw

materials and, "therefore, as a consequence, the said lands are

required to be allotted in favour of the petitioner".

1. Concededly, none of the grounds on which the present

petition is founded was urged or pressed by the learned counsel

of KUL.

• 16 -

WP No. 18008 of 2007

1. KUL's principal claim that it is entitled to the rights in the

subject land pursuant to being the successful purchaser of the

Factory Land was pursued by KUL before this court as well as

before the Supreme Court. But it did not prevail. This foundational

issue is concluded against KUL.

1. As noted above, the contention that the KIAD Act and the

regulations framed thereunder, including Regulation 17, were

violated has now been abandoned. It is now contended on behalf

of the petitioner that the MMDR Act and the regulations are not

complied with, and that the allotment under the KIAD Act is

impermissible. We may note that this contention is founded on the

premise that there can be no severance between the grant of

mining rights and surface rights. It was earnestly contended on

behalf of the petitioner that there can be no severance with

surface rights and mining rights, and therefore, no lease granting

surface rights could be made in favour of JKL without conferring

mining rights, and the said rights could not be conferred other

than in accordance with the MMDR Act and the MC Rules. We

may note that this contention is also inconsistent with the

averments made by KUL in the present petition. The petitioner

had expressly averred that "the 3rd respondent if he has any right

• 17 -

WP No. 18008 of 2007 can only claim the compensation for surface rights as determined

by the Government in terms of the Mineral Concession Rules.

Other than fixing compensation, the 3rd respondent has no other

rights".

1. It is clear that the contentions advanced before us were not

only not supported by the pleadings but run contrary to the

averments made in the present petition. It is apparent that KUL,

having failed to establish its case right up to the Supreme Court,

now, almost nineteen years later, seeks to set up a case contrary

to that pleaded in the present petition.

1. The learned counsel appearing on behalf of KUL submits

that there is no estoppel against law and therefore, KUL is entitled

to raise questions of law at this stage. However, it is also well

settled that the exercise of the power under Article 226 of the

Constitution of India is discretionary. We do not think it would be

apposite to exercise the discretion in favour of KUL in the given

facts, where, having failed to establish its entitlement to rights in

the subject land for the past 19 years, it now seeks to change its

tack and argue contrary to it, as claimed for the past 19 years.

• 18 -

WP No. 18008 of 2007

1. In view of the above, it is not necessary to address the

other questions that are raised by the learned counsel for KUL.

However, since we had heard contentions in regard to the

applicability of Rule 59 of the MC Rules, for the sake of

completeness, we consider it apposite to address the same.

1. The relevant extract of Rule 59 of the MC Rules, as

applicable at the material time, is set out below:

"59. Availability of area for regrant to be notified :-

(1) No area -

(a) which was previously held or which is being held
under a reconnaissance permit or a prospecting
licence or a mining lease ; or

(b) which has been reserved by the Government or
any local authority for any purpose other than mining ;
or
xxx xxx xxx
shall be available for grant unless -

(i) an entry to the effect that the area is available for
grant is made in the register referred to in sub-rule (2)
of rule 7D or sub-rule (2) of rule 21 or sub-rule (2) of
rule 40 as the case may be; and

(ii) the availability of the area for grant is notified in the
Official Gazette and specifying a date (being a date not
earlier than thirty days from the date of the publication
of such notification in the Official Gazette) from which
such area shall be available for grant:

xxx xxx xxx"

1. There is no dispute that the subject land was included in

ML 1858. However, it is contended on behalf of KIADB that the

respondents refer to notifying the availability of land for re-grant

• 19 - WP No. 18008 of 2007 and not for grant. According to KIADB, this is not a re-grant but a

grant made for the first time after the lands were acquired. KIADB

also contends that it has not granted mining rights but merely

leased surface rights of the subject. Therefore, there is no

violation of Rule 59 of the MC Rules. KIADB also states that

before granting any mining rights, the applicable rules framed

under the MMDR Act would require to be followed. Illustratively,

KIADB refers to the allotment of land to the extent of 12 acres in

favour of respondent No.5. After the said allotment, respondent

No. 5 had filed an application under Rule 22 (1) of the MC Rules,

as were then applicable, to the State Government. The State

Government had thereafter proceeded to issue a Notification

dated 23.03.2002 as required under Rule 59 of the MC Rules.

The mining rights were granted to respondent No.5 in respect of

12 acres after the issuance of NOC from the Karnataka State

Pollution Control Board. KIADB states that similarly, JKL would

also be required to comply with all necessary rules for securing

the mining license under the provisions of the MMDR Act and

Rules made thereunder.

1. We are inclined to agree with the contention that the

challenge on the ground of violation of Rule 59 is premature, as

• 20 -

WP No. 18008 of 2007 no mining lease or rights in respect of minerals have been

granted to JKL. The State Government had acquired the subject

land under Section 28 of the KIAD Act. Thereafter, the lands were

placed at the disposal of KIADB. In terms of Section 28(8) of the

KIAD Act, the subject land was transferred to KIADB for the

purpose for which it was acquired. In the given facts, KIADB had

decided to invite offers for allotment without issuing a public

notice. Although it is averred in the present petition that the same

is not permissible and contrary to the KIAD Act, as noted above,

the said contention was not pressed. Karnataka Industrial Areas

Development Board Regulations, 1969, permit the disposal of

lands in special cases without issuing public notices. KUL

participated in the said exercise and submitted its offer; however,

this is not mentioned in the present petition. KIADB had allotted

the subject land to JKL at the price it offered. JKL acquired the

surface rights to the subject land, previously held by KIADB. As

noted herein, the petitioner had expressly averred in the present

petition that KIADB held surface rights of the subject land; thus, it

would be entitled to compensation for the same if the mining

lease was granted. However, inconsistent with this pleading, it is

contended that there can be no severance of surface rights and

• 21 -

WP No. 18008 of 2007 mining rights. The learned counsel for the petitioner had strongly

relied on the decision of M/s. [Burrakur Coal Company Limited

vs Union of India1](https://indiankanoon.org/doc/516439/), in support of the said contention. The reliance

placed on the said decision is misplaced. This is apparent from

the following extract of the said decision:

"17. Adverting to Section 13 of the Act which deals
with compensation for prospecting licences ceasing to
have effect and rights under mining leases being
acquired, it was contended that as there is no
provision for compensation in respect of the minerals
lying underground, Parliament could not be deemed to
have enacted this law for the purpose of acquiring
mines which have been worked in the past. According
to Mr Das if we have understood him right, when a
person has acquired land either as an owner or as a
lessee carrying with it the rights to win minerals and
has opened in that land mines which he worked for
sometime, there takes place a severance between the
right to the surface and right to the minerals and that
consequently such person will thereafter be holding
the minerals as a separate tenement, that is,
something apart from the land demised and this
separate tenement cannot be acquired under the
terms of the present Act or, if it can be so acquired, it
has to be specifically compensated for. Reference to
the several provisions of the Act and in particular to
those of Section 13 indicates, according to learned
counsel, the limited scope of the Act. It is difficult to
appreciate the contention that merely because the
owner or the lessee of a land had opened mines on
that land, a severance is effected between the surface
and the underground minerals. It may be that a
trespasser by adverse possession for the statutory
period can acquire rights to underground minerals. It
may also be that if that happens the surface rights
would become severed from the mineral rights as a
result of which the minerals underground would form a 1 1961 SCC Online SC 23

• 22 - WP No. 18008 of 2007 separate tenement. It is, however, difficult to see how the owner or the lessee of land who has right to win minerals can effect such a severance between the mineral rights and surface rights by opening and operating the mines of that land. For, even while he is carrying on mining operations he continues to enjoy the surface rights also. We cannot, therefore, accept the contention that there was any severance of the mineral rights and surface rights in either of these two cases."
• The Supreme Court rejected the contention that the owner

who has the right to mine minerals from the land can sever the

mineral rights from the surface rights by opening and operating

mines on that land. We may note that the Supreme Court had

made this observation in the context of a challenge to a

notification issued under Section 4 of the Coal Bearing Areas

(Acquisition and Development) Act, 1957, expressing its intention

to prospect for coal in an area approximately 5 sq. miles, which

included two collieries owned by the petitioner. The petitioner's

case was that in consequence of such notification, they were

precluded from carrying on mining operations and the State

Government was entitled to acquire mining rights.

1. It is well settled that an owner of the land does not acquire

the rights in the minerals under the said land. However, the grant

of mining rights may deprive the landowner of the right to use the

• 23 -

WP No. 18008 of 2007 surface. We may also refer to Section 24A of the MMDR Act, as

was applicable at the material time. The said Section is set out

below:

"24A. Rights and liabilities of a holder of
prospecting licence or mining lease. - (1) On the
issue of a reconnaissance permit, prospecting licence
or mining lease under this Act and the rules made
thereunder, it shall be lawful for the holder of such
permit, licence or lease, his agents or his servants or
workmen to enter the lands over which such permit,
lease or licence had been granted at all times during
its currency and carry out all such reconnaissance,
prospecting or mining operations as may be
prescribed:

Provided that no person shall enter into any
building or upon an enclosed court or garden attached
to a dwelling-house (except with the consent of the
occupier thereof) without previously giving such
occupier at least seven days notice in writing of his
intention to do so.

(2) The holder of a reconnaissance permit,
prospecting licence or mining lease referred to in sub-
section (1) shall be liable to pay compensation in such
manner as may be prescribed to the occupier of the
surface of the land granted under such permit, licence
or lease for any loss or damage which is likely to arise
or has arisen from or in consequence of the
reconnaissance, mining or prospecting operations.

(3) The amount of compensation payable under
sub-section (2) shall be determined by the State
Government in the manner prescribed."

1. In terms of Sub-section (2) of Section 24A of the MMDR

Act, the holder of a mining licence was required to pay

compensation to the occupier of the surface rights. Thus, there is

a clear distinction between surface rights and rights to minerals

• 24 -

WP No. 18008 of 2007 on or under the said land. Thus, a person owning surface rights is

required to be compensated if mining rights in respect of the said

land are granted to another person. The averments made in the

present petition also suggest the same.

1. As noted before, KUL had expressly pleaded that the rights

of KIADB were confined to the surface rights of the subject land.

The allotment of the subject land to JKL is for mining purposes

and, therefore, the subject land cannot be used for other

purposes, unless permitted. However, that does not mean that the

allotment of land grants mining rights to JKL.

1. In view of the above, we find no merit in the contention that

the allotment of land in favour of JKL violated Rule 59 of the MC

Rules.

1. There is also no dispute that the MMDR Act and the rules

made thereunder are a complete code for grant in respect of

mining rights. However, that does not mean that KIADB is

precluded from allotting any lands owned by it. Both enactments

• the MMDR Act and the KIAD Act - operate in different fields.

• 25 -

WP No. 18008 of 2007

1. In view of the above, the present petition is unmerited and

is accordingly dismissed.

1. The pending interlocutory applications also stand disposed

of.

Sd/-

(VIBHU BAKHRU)
CHIEF JUSTICE

                                    Sd/-

(C.M. POONACHA)
JUDGE

AHB/KMV