Is the High Court Right in  Re-affirming that Sections 437(5) and 439(2) Cr.P.C. are not Provisions for Cancellation of Bail?

(By V. Ramkumar, Former  Judge,  High  Court  of  Kerala)

In my humble opinion, it is without properly appreciating the distinguishing mechanics behind the processes of “setting aside a bail order,” “forfeiture of bail bond resulting in cancellation of bail bond" and “cancellation of bail", that the High Court of Kerala once again fell into an error in Intelligence Officer, Narcotics Control Bureau v. Lijo K. Jose (2015 (4) KLT 981). (“NCB case" for short ). In paragraph 18 of the NCB case, this is what has been asserted:-

“18. This Court had an occasion to consider the aspect as to whether the provisions contained under S.439(2) Cr.P.C. are relating to cancellation of bail? Still, this Court is of the view that the said provision contained in the Code of Criminal Procedure is not for cancellation of bail in all matters.The powers granted to Magistrates under S.437(5) Cr.P.C. and the power granted to the Sessions Court as well as the High Court under S.439(2) Cr.P.C. are not for cancellation of bail in all circumstances. Of course, when those powers are lawfully exercised within the meaning and spirit of those provisions, it may result in a situation wherein such an order has the effect of an order of cancellation of bail. The impact of orders under the said provision may result in an order which is having an impact of the cancellation of bail. When the legislature does not specifically show that those powers are powers for cancellation of bail, this Court is of the firm view that the said provision may not be made use of in all circumstances, for cancellation of bail.”                                   (emphasis supplied)

The learned Judge is emphatically reiterating his own view which was already taken in James George @ Basaliyos Marthoma Yakob Pradaman v. State of Kerala (2015 (4) KLT 310) wherein it was observed that Sections 437(5) and 439(2) Cr.P.C. are not meant for cancellation of bail. But this time, there is a slight relaxation made to concede that the aforesaid provisions can be invoked for cancellation of bail in certain circumstances. Law, without any rider, cannot be so imprecise and ambiguous as to be applicable to certain situations only.

2. The Apex Court has unhesitatingly understood the above sections as the appropriate provisions for cancellation of bail, at least in 41 reported cases. Even the extracts from the Supreme Court relied on by the learned Judge in NCB case unmistakably state that the above provisions are meant for cancellation of bail. It is pertinent to note that the aforementioned view of the learned Judge in James George (supra) was refused to be followed by another learned Judge of the High Court in Mahesh K. alias Battampura Mahesh v. Station House Officer, Kasargode Police Station & Anr. (2016 (1) KLT 325) in the light of the decision of a Division Bench ruling of the High Court in Latheef @ Abdul Latheef v. State of Kerala(2011 (2) KLT 231) wherein it was pointedly held that Section 437(5) Cr.P.C. is the source of power for the Magistrate to cancel the bail granted by the Magistrate under Section 437(1) and (2) Cr.P.C.

3. In the NCB case, the High Court was mainly considering the question whether the Sessions Judge who had granted bail to certain accused persons for offences, inter alia, involving commercial quantity of narcotic drugs under the N.D.P.S. Act, 1985 allegedly without giving the Public Prosecutor an opportunity of being heard, could itself entertain petitions for cancellation of bail. In my view the learned Judge has rightly concluded that the High Court (superior court) alone could entertain a petition for setting aside the bail order and that approaching the very same court with applications for cancellation of bail, was misconceived. But what is objectionable is certain observations made which are capable of creating confusion in the minds of officers of the subordinate Judiciary.

4. Before proceeding further, it may be profitable to notice the distinction between the following:-

i)    an order granting bail or refusing (or rejecting) bail;

ii)   an application for setting aside an order grating bail.

iii)  forfeiture of bail bond and resultant cancellation of bond;

iv)  application for cancellation of bail.

Order granting or refusing (rejecting) bail

5.  Depending on the gravity of the offence, stringent provisions, if any, in the special law governing the case, the nature, potential and antecedents of the offender, the duration of custody, if any, and such other relevant factors the Court may or may not grant bail to an accused person either during the stage of investigation, inquiry or trial of the case. This order is not appealable under the Cr.P.C. (Vide State of Gujarat v. Salimbhai Abdulgaffar Shaikh and Others (AIR 2003 SC 3224)and Narendra K. Amin (Dr.) v. State of Gujarat(2008) 13 SCC 584 (3 Judges). But in cases where bail is granted by the High Court, appeals are seen filed before the Supreme Court by the State Governments concerned. (Vide para 20 of Narendra K.Amins’ case (supra) and State of Kerala v. Raneef (2011 (1) KLT 242 (SC) =AIR 2011 SC 340). A revision against the grant of bail may also lie. (See Prasad Jacob v. State of Kerala (2010 (2) KLT SN 70 (C.No.68) =2010 Crl. L.J. 4137 (Ker.).

Application  for  Setting  aside  an  Order  Granting  Bail

6. When bail has been granted by a Court in a case in which bail ought not to have been granted either due to a legal bar or due to non-compliance with a condition precedent such as mandatory hearing of the Public Prosecutor or by flouting a special provision in the penal statute concerned or due to the extreme gravity of the offence endangering public order or the security of the State, a superior Court, if moved, can set aside the order granting bail and it may virtually have the effect of cancelling the bail. But here, the superior Court is really setting aside and not cancelling the bail order due to reasons which already existed initially at the time of granting bail and not due to any post-bail event.

Forfeiture  and  the  resultant  cancellation  of  the  bail  bond

7. If the bond executed by an accused person is for appearance, then forfeiture of the bond takes place automatically in view of Forms 45 and 48 of the Second Schedule to Cr.P.C., when such person does not appear before Court on the specified day, unless of course, his absence for the day is excused by the Court under Section 317 Cr.P.C. The only legal consequence of such forfeiture, by virtue of Section 446 Cr.P.C., is the liability to pay penalty which such person (and his surety, if any) had undertaken to forfeit to the Government in the contract executed by them in Form No. 45 referred to above. In paragraphs 21 and 22 of the NCB case, the learned Judge has observed as follows:-

“21. As per the said provision, where a bond under the Code is for appearance of a person in a case, and it is forfeited for breach of a condition, the powers under S.446A(a) as well as (b) can be invoked. It may not be understood that the breach of that condition which results in forfeiture of the bond and bail bond is not confined to the breach of the condition for appearance only. The wordings of the provision “where a bond under this Code is for appearance of a person in a case and it is forfeited for breach of a condition” clearly indicates that the forfeiture will result even in violation of conditions other than the conditions for appearance also. At the same time, such a forfeiture of a bond under S.446A should be one executed for the appearance of a person in a case. Therefore, it is evident that in cases wherein an accused who is enlarged on bail, executes a bond for appearance in a case, commits breach of any of those conditions contained in the order granting bail, forfeiture of the bond as well as bail bond is possible. At the same time, in all such cases, it may not be just, in forfeiting the bonds of the sureties also.

22. Let us take a case wherein a condition has been incorporated in the order grating bail that he shall not involve in any offence while on bail. In such a case, even if such an accused who is enlarged on bail through the order happens to become an accused in another case, it will not be just in forfeiting the bond executed by the sureties and asking them to pay the penalty. There can be breach of other similar conditions also. Except the violation of the condition for the appearance of the accused in that case, the sureties cannot be called upon to pay the penalty after forfeiting their bonds. At the same time, on account of the violation of any of such conditions, the bail of the accused happens to be cancelled and in such case, the accused fails to appear before the court in the case, it paves the way for the forfeiture of the bonds of the sureties, and it will ultimately entail in an order for payment of penalty by the sureties also.”

8. If we closely examine Section 446-A Cr.P.C. it will be clear that there is no warrant for the conclusion that forfeiture of a bond (for appearance) can result from the violation of a condition other than one for appearance. When as per the statutory scheme under the Cr.P.C., forfeiture of a bond (for appearance) takes place consequent on a breach of the condition for appearance, there is an automatic cancellation of the bond itself by virtue of Section 446-A Cr.P.C., disentitling the accused to be released only on his own bond unless the Police Officer or the Court decides to proceed under the proviso to Section 446-A Cr.P.C. by releasing him on fresh bail. But the wording in Section 446-A Cr.P.C. which reads :

“Where a bond under this Code is for appearance of a person in a case and it is forfeited for the breach of a condition”  cannot be understood to mean that forfeiture of the bond for appearance can take place even for the breach of any condition other than one for appearance. By virtue of Form Nos. 45 and 48 (unless suitably modified by the High Court under Article 227 of the Constitution of India and Section 477 Cr.P.C.) which are the Forms to be used for this purpose in view of Section 476 Cr.P.C., forfeiture of a bond (for appearance) is contemplated only in cases of non-appearance of the accused and in no other contingency. Form No. 3 prescribed by the High Court under Appendix I to the Criminal Rules of Practice, Kerala, 1982 is also on similar lines as Form No. 48 referred to above. Hence no other mode of forfeiture is contemplated by the Cr.P.C. If so, the question of any injustice in asking the sureties to pay the penalty consequent on the accused committing breach of a condition other than one for appearance, does not arise. The learned Judge is not quite right in observing that when a bond for appearance is forfeited for breach of a condition, the powers under Section 446-A (a) and (b) can be invoked. There is no question of the Court invoking either clause (a) or clause (b) of Section 446-A of Cr.P.C. Under clause (a) the cancellation of the bond consequent on the forfeiture, takes place automatically. Clause (b) is also not a provision for invocation by the Court. It is really an interdict not to release the person who had committed breach of the condition for appearance. It is the proviso thereto which the Court can invoke in an appropriate case.

9. There is a practice in some Courts to secure the presence of the accused through a warrant of arrest consequent on the forfeiture and resultant cancellation of the bail bond and thereafter enlarging the accused on fresh bond with sureties, without insisting on a fresh application and order for bail. Technically speaking , the said practice cannot be said to be illegal since the earlier order granting bail remains intact even after the bail bond stands cancelled. The situation will be analogous to one where the court orders release of the accused on bail, but he does not execute a bail bond, with the only difference that in such a case the accused is yet to be released.

Cancellation  of  Bail

10. Cancellation of bail has to be distinguished from cancellation of a bond for appearance although the consequence of cancellation may be the same so far as the accused is concerned. Just as bail of a person in custody can be granted under Section 437 Cr.P.C. only on the existence of sufficient grounds, as detailed in paragraph 5 above, cancellation of bail already granted, can only be on grounds mainly attributable to the conduct of the accused at the post-bail stage, such as his misusing the liberty granted to him by attempting to tamper with the evidence or influencing or intimidating the witnesses, or indulging in grave crimes while on bail or placing himself beyond the reach of his sureties by going abroad without the permission of the Investigating Officer or Court or violating any of the bail conditions etc. In other words, the grounds for cancellation of bail should be referable to the conduct of the accused after he has been enlarged on bail. (Vide Nityanand Rai v. State of Bihar (2005) 4 SCC 178 = AIR 2005 SC 2239). When any of the above grounds are present, the Court may resort to the power under section 437(5) Cr.P.C. if it is the Magistrate or under Section 439(2) Cr.P.C. if it is the Court of Session or the High Court. The Court which granted bail can itself invoke the appropriate provision for cancelling the bail if an application in that behalf is filed or on its own motion. Just as a Magistrate can have recourse to Section 437(5) Cr.P.C. and cancel the bail granted by the Magistrate himself, a Sessions Judge or the High Court can similarly exercise the power under Section 439 (2) Cr.P.C.

11.  Still another instance of cancellation of bail recognized by the Apex Court is where the facts of the case are such that no court would have granted bail, but the inferior Court has wrongly granted bail. If the order granting bail is perverse for the reason that irrelevant material of a substantial nature has been taken into account or relevant material has been omitted from consideration while grating bail, that will be a fit case in which a superior Court would be justified in cancelling the bail. (Vide Dinesh M.N. (SP) v. State of Gujarat (2008 (3) KLT Suppl.1397 (SC) =(2008) 5 SCC 66  (3 Judges); Narendra K. Amin (Dr.) v. State of Gujarat (2008) 13 SCC 584 – (3 Judges); Prasad Jacob v. State of Kerala (2010 (2) KLT SN 70 (C.No. 68) = 2010 Crl. LJ 4137 (Ker.). Eventhough the Apex Court has used the expression “cancellation of bail” in such contingencies, really the remedy is against the order grating bail and such order can be set aside (loosely called “cancelled”) only by a superior Court.

Revisiting Preamble

(By Kaleeswaram Raj, Advocate, Supreme Court of India and Kerala High Court)

It is an irony that much debate was required for the Government to say that the Constitution is our holy book. The treacherous remarks on secularism and socialism by the Home Minister created initial obfuscation that had to be erased by the Prime Minister’s assurance to stick on to the constitutional values. The Government ultimately acknowledged the distinction between conventional democracy and constitutional democracy, thereby hinting that the latter is not merely a device for majoritarian regime.

The fascination for the original Preamble does not seem to be a feeling expressed in the best interest of the nation. A textual revisit to the Constituent Assembly debates and an empirical evaluation of the country’s journey after independence would support this postulate.

 Chief Justice Marshall visualised the Constitution as a socio political document “framed for ages to come” and “designed to approach immortality as near as human institutions can approach”. In the Indian context, Justice R.C.Lahoti described the Preamble as the “quintessence of the Constitution”. The Constituent Assembly extensively debated on each and every word in the preface to the fundamental law. Dr.Ambedkar, apprehensive of future contradictions between constitutional dreams and social realities, however, advocated for institutional reforms. An optimist Nehru who pleaded for fundamental rights, Sardar Patel who was skeptic about them, Rajagopalachari, whose inclination was more towards a Gandhian Swaraj, and K.M.Munshi who was eloquent on individual liberty were all dynamic in the debates, which in all respects were ‘national’.

The Preamble was amended in 1976. The amendment came into force on 3.1.1977. The 42nd amendment was preceded by debates within and outside the Parliament.

The proponents of ‘original Preamble’ have however, put forward the following postulates:-

(1) Even without these words in the Preamble, we are a secular country.

(2) There is nothing wrong in using the ‘original Preamble’ for official purpose.

(3) The founding fathers of the Constitution did not include the words ‘socialist and secular’ and therefore the present day congress leaders could not have desired for something which even Pandit Nehru did not want.

The third postulate is vulnerable to historical scrutiny. While moving the motion for amendment, the then Minister of Law H.R.Gokhale, opened the discussion by referring to Pandit Nehru’s speech on 22.1.1947:–

“The first task of this assembly is to free India through a new Constitution, to feed the starving people, to clothe the naked masses and to give every Indian the fullest opportunity to develop himself according to his capacity” (Loksabha Debates Vol.65 P.75).

Gokhale then indicated that the Preamble “being the key to the whole Constitution” should more accurately and correctly reflect the ‘objectives’ of socialism and secularism. (Ibid).

Therefore it is erroneous to delink Nehruvian concept of socialism and secularism from the ‘politics of amendment’. The conflict was rather between the Nehruvian approach on the one hand and the leftist perception on the other. During the discussions, the veteran communist leader Indrajit Gupta reacted by saying that mere inclusion of the words would not alter the socio-economic structure of the country. Gupta even referred to National Socialist Party in Germany led by Adolf Hitler to argue that there is nothing so significant in the description. He pleaded for strengthening the directive principles with a socialist edge, rather than making ‘cosmetic’ changes in the Preamble.

The other postulates also are equally fragile. Even the Constituent Assembly debates show a conceptually flawed move to assimilate socialist traits in the Preamble. Maulana Hasrat Mohani who pleaded for incorporating federalism in Preamble, also wanted to name the country as "Union of India Socialist Republics” (U.I.S.R.) resembling U.S.S.R. This was unacceptable to the majority, for the very political structure of U.S.S.R. was dissimilar to the Indian Constitutional policy. However, the fact remains that the proposals and deliberations as occurred in 1976 were absent during the making of the Constitution. Nor there was a historical context as it occurred in 1976 to call for an amendment. Therefore, such comparisons would be out of place.

 Socialist jurisprudence

The finest part of the 42nd amendment is that it motivated the Supreme Court not only to endorse the amendment but even to evolve a socialist jurisprudence. A ‘Krishna Iyer School’ in the Supreme Court found its ideological legitimacy in the amended Preamble. In Excel Wear (1978) the Supreme Court relied on the socialist component of the Preamble to endorse nationalisation process and State’s monopoly over resources. In Radhir Singh (1982) the doctrine of ‘equal pay for equal work’ was expounded on the same premises. In Nakara (1982) the Supreme Court could strike down the disparity in emoluments paid to the pensioners for it arbitrarily negated the socialist goal of the Constitution. Socialist approach, according to the court, should involve a strategy for decent standard of life. The Supreme Court even explained the concept of socialism as a “blend of Marxism and Gandhism” which could be proximate to Gandhian Socialism. The decision in Dharwad Employees (1990) asserted the right for pay parity for casual workers and that in Samatha (1997) with a striking title took a formidable posture against inequalities, in the context of tribal rights.

An aversion to the amendment expressed by a few elected leaders therefore clearly indicates their ideological plank which again should be subjected to public scrutiny. While projecting the original Preamble, they practically ignore the authoritative pronouncements of the Supreme Court on the socialist characteristics of the constitutional text.

Secularism

The President’s power under Article 356 of the Constitution for dismissing State Governments and dissolving State Legislatures was the matter in issue in Bommai (1994) The court held that secularism, like federalism, is a basic feature of the constitution. In States like Madhya Pradesh, Himachal Pradesh and Rajasthan, the reports by the respective Governors sufficiently indicated that State Governments and even the ministers were in hand in glove with the communal forces. The executive abetment of communal activities led to a real break down in governance in the States.

It was in Bommai that the Supreme Court inter alia examined the secularist Preamble along with the other parts of the Constitution including Articles 25 to 30, which deal with religious freedom. The Court held:-

Under the Constitution no party or organization can simultaneously be a political and religious party. It has to be either. Same would be the position, if a party organization acts and/or behaves by word of mouth, print or in any other manner to bring about the said effect, it would equally be guilty of an act of unconstitutionality. It would have no right to function as a political party. The fact that a party may be entitled to go to people seeking a mandate for a drastic amendment of the Constitution or its replacement by another Constitution is wholly irrelevant in the context. We do not know how the Constitution can be amended so as to remove secularism from the basic structure of the Constitution. Nor do we know how the present Constitution can be replaced by another; it is enough for us to know that the Constitution does not provide for such a course - that it does not provide for its own demise. (All India Reporter, 1994. Para 243).

This long passage from Bommai would also signify the importance of amendment. The plea that India would be secular even without that word in the Preamble is historically incorrect and even deceptive. The truth is that even with the word, the communal outfits could sabotage the constitutional scheme which ultimately led to interference by the court and protest from the electorate. Bommai contains a final declaration of law on the subject. It is no longer a legal text. On the other hand, it is the country’s experience. And as Justice Holmes put it, life of the law is not logic; it is experience. Though the 42nd amendment might have had a political agenda behind it, the present yearn for doing away with it is all the more perilous.

(The original text of the article is edited and abridged by the author). 

Is Capital Punishment, The Answer to Juvenile Crime?

(By Dr. Jayaprakash R., Additional Professor of Paediatrics, Child Psychiatrist, Behavioural Paediatrics Unit, SAT  Hospital, Government Medical College, Thiruvananthapuram)

Finally the Rajyasabha also amended the J.J. Act (2014) to trial the juveniles in the age group of 16-18 years like adults who committed major or heinous crimes. That means, they will be subjected to similar punishments also? This is in the wake of protest against the release of a juvenile offender who took part in the crime of raping a girl in December, 16, 2012 in Delhi. He was the one who tried to abuse the helpless girl most physically and sexually. Naturally the public opinion was that he committed severe crime as well as an adult crime, so he should be given more punishment than others in the gang. Public opinions of similar nature were raised in similar situations all over the world. But as a signatory to UNCRC (1989) India and majority of other countries kept away from this demand. Our JJ Act (Care and Protection, 2000) was in line with the concept that all those under 18 should be considered as children, those who commit crime should be called as ‘children in conflict with law’and be kept away from our routine legal and judicial process, but will be tried in Juvenile Courts and send to reformative institutions for a maximum period of 3 years. The concept or the principle behind this approach is, since they are children, they have not attained the appropriate developmental state to understand or recognize the heinous act, or its consequences. China (1997) and America
(2005) also moved forward in this direction and stopped the capital punishment for younger than 18 years. Recognition of the concept of juvenile delinquency and criminal responsibility among children and adolescents has got evolved over past three centuries.  But with current amendment we are moving backward from our previous scientific and developmentally appropriate stand.

The new amendment has to be withdrawn or our President should not give consent to ratify it. It should not be allowed to include in the law of land because of two reasons.

Firstly, the children and adolescents, up to age of 18, are still in the growing and developmental phase. The cognitive neuroscience and cognitive developmental psychology has developed and evolved over the last three decades and has come out with definite knowledge about adolescent brain development. Now it is confirmed that adolescent brain continues to develop and complete this process only by the end of 18 to 20 years. The main neurodevelopmental process is the continued myelinization and development of the areas specifically prefrontal lobe (concerned with executive function), temporal lobe  (concerned with intelligence) and amygdala (concerned with control of emotion and social cognition). The developmental maturation of pre frontal lobe is concerned with the control of one’s impulsive behaviour in anticipating the consequence of an act, i.e. thinking before the act considering the pros and cons of it …So with premature prefrontal lobe, among the adolescents irrespective of the gender, the desire for emotional intimacy (love affair etc.) and sex will be much higher than that of any adults. It is this same (impulsive) adolescent cognitive developmental psychology which works in both high school/higher secondary girls when they are being attracted by crooked love affair and offers by maiden ‘lovers’ who stand outside the school wall as well as the adolescent rapist. So one have to realize that the desire and resultant acts of an adolescent rapist will be more powerful and abusive than any adult experienced rapist. It is this (immature) developmental psychology which worked in Delhi or similar incidents.

Secondly, considering the developmental psychology of criminal behaviour, after 10 years of research on criminal behaviour among children and adolescents in Behavioural Paediatrics Unit, SAT Hospital, the risk factors for such child-adolescenthood criminal behaviours were families abandoned by father (single parent family), quarrelsome families, alcoholism, and domestic violence (2014). In many families these multiple risk factors were interacting with each other. So the poor ‘criminal children’ are the creation and scape goats of their bad family and psycho social environment. Now it is also known that these family and psycho social environments badly and reversely affect the brain development from early childhood itself. So one can easily recognize the developmental psychology of criminal behaviour among children and adolescents. Here we should not separate a juvenile crime per se from his or her family or psycho social environment, but have to see holistically. Taking the juvenile crime alone after ignoring the background is very unscientific. By this new amendment, we can start by giving more and more capital punishment to these poor impulsive adolescents. Will we hang these adolescents?Pathetic!

These two points were nowhere in discussion during the amendments either in the parliament,Rajyasabha or in the society. Experts of child and adolescent mental health were not consulted or opinion were not taken before this major and drastic amendments. Proper application of cognitive neuro-science and adolescent developmental psychology of criminal behaviour in legal proceeding and judicial process is the need of the hour.

Some  suggestions  are  good

The suggestions regarding the creations and functioning of child welfare committee and juvenile justice board are very good. Proper continuation of education, employment and rehabilitation back to life should be the basic principles when we consider the criminal behaviour of children and adolescents. Of course the ‘adolescent criminals’ like Delhi incidents will be dangerous, if we release them as such to the society. But it is the social and judicial responsibility to build up a proper education-rehabilitation system for the juvenile delinquents, but for that we have to go miles…It is cruel and improper for a developing society to move away from the responsibility of our system, but solving this major social issue by killing the juvenile culprits. 

Begging  A  Social  Issue  Cum  Social  Menace -- A  Study

(By Yadukrishnan B, Advocate, High Court of Kerala)

“Begging would have been the best option if God had given talents to only a selected few. Fortunately, He gave us all our compatible gifts respectively, so it is an offence to be a chronic beggar” -- Israelmore Ayivor, A Ghanaian Author

Begging is one of the most serious social issues in India. In spite of its rapid economic growth, India is a poverty-driven country, which is also leading to the growth of beggars in the country. Most of them come from Bangladesh and some of them are from various parts of India. There are a few beggars in the country who actually are the real ones, who beg because they are handicapped, because of their inability to work or because they are old or blind or because they really need money for basic needs. There are many others who live far below the poverty line and opt for begging to earn their livelihood. There are some cases in which the entire family is involved in begging. The family members keep on increasing with marriage and birth and each of them gets into begging on streets or temples and church premises. Children of such families do not go to school but only beg. They have to do begging because their family’s income is not enough to feed the entire family in a day. Here, poverty is one big reason for such a situation. But at the same time, begging is not the solution for such a situation.

Begging  in  India  as  a  Scam

Poverty is real in India but not begging. Begging in India has become a big racket in the country. For many, begging is just like any other profession. They go out to earn money, not by working, but by begging. In fact, there are begging gangs in cities like Delhi, Noida, Gurgaon, Mumbai, Kolkata, Chennai etc. These gangs have their own gang leaders. Each leader allots a particular territory for a group of beggars and the day’s earnings are shared among them. The gang leader keeps the larger share. These beggars are so involved in begging that they do not want to work elsewhere. It is strange but true that some of these beggars earn in thousands and lakhs, much more than a normal middle class worker.

It is very difficult to find out who is a real beggar and who is not, because looks are very deceptive. Even the children with their shabby faces with pleading looks are properly trained to beg and look real. Sometimes, our heart melts when we see a young woman holding her tiny baby, begging on the streets. In most cases, the baby is found sleeping. This is a scam. Many sting operations have revealed that babies are rented to give credibility to begging. Sometimes, babies are drugged for the entire day, so that, they look sick and they can be easily carried from one area to another by the young women beggars.

The beggars are trained to become very persistent while begging that you are bound to give them money. This is especially true for foreigners when they do not know how to react in such situations and ultimately give money to the beggars. Some of the young beggars also become anti-social elements of the country. They get into drugs. To buy drugs, they start with begging first, then slowly graduate to pick pocketing and then move on to bigger scams like robbing and killing.

Begging  in  Kerala

Regarding begging in Kerala, majority of the beggars are from neighbouring States, especially from Tamil Nadu. The poor from these States are attracted by the comparative richness of Kerala and undertake this as relatively easy way ofliving. It has been reported that many come in the morning train and get back to their villages by evening train like people in any other job. There have also been reports about the beggars living in rented lodges. The rising burglaries in the State have also been attributed to their increased number. The Kochi and Thiruvananthapuram Corporations have taken the right step by banning begging. Other local authorities should follow suit to end the menace. Regarding rehabilitation, the State needs to support only those who hail from Kerala. Beggars hailing from neighbouring States should be sent back to their native places. This will minimize the financial impact on the State’s exchequer. Recent news with respect to begging in Kerala is that it has been almost abolished in Thiruvananthapuram district from January onwards. In what is perhaps a unique achievement for any district in the country, the Kerala capital will now be devoid ofbeggars, following what the social welfare department officials claim to be the result of a year - long effort to root out beggary. The new project to eradicate begging had its roots in the Juvenile Justice Act and when the authorities in the Kerala capital set their minds to end begging by children, they found that there were only a few hundred children being used by the beggary mafia to seek alms. Begging as a social menace is a deep rooted problem.  In Ernakulam district it has become a serious social issue. In almost all the corners of shops. establishments, hospitals and hotels we find these beggars. The pity is that we are not getting sentimental to these people. Most of them are from outside Kerala and majority are women. We cannot find any problem with respect to their health and life situation. The problem is that they are considering begging as a job by depending uponothers. One thing the Government must do is to rehabilitate these persons from streets,otherwise send them to some shelter homes. Most of these beggars are strong and somewhat healthy. The accute problem faced by Kochi City is the growing concern of beggary. Poverty was the major cause of beggary sometimes before. But now it is not the major cause. The authorities have to conduct a thorough investigation about these street beggars and find their whereabouts.

Bombay  Prevention  of  Begging  Act,  1959

In India it is a crime to beg and the statute for this has been coded in the Bombay Prevention of Begging Act, 1959 which has been adopted by many States in our country. It has been extended to the Union Territory of Delhi (National Capital Territory of Delhi) on 2nd June, 1960. Unfortunately this has become archaic now and not just because it dates back to 1959 but because the punitive as well as rehabilitative measures are not coherent with the current scenario. Say for example, until our Parliament had passed and enacted the Criminal Law (Amendment) Act, 2013 which provides for an imprisonment of not less 20 years for rape convicts, the imprisonment for a convict of beggary (10 years) was more than what a rape convict would get (7 years). As a matter of fact, those dependant on the beggar is detained if the beggar is arrested. Even the definition of beggary is not appropriate in the law which causes trouble in identification and estimating the exact beggar’s population in our country.

Prominent  Features  of  the  Act:

•   Beggars may be arrested without warrant

•   They can be sentenced to jail without trial or may be sent to shelter homes/certified institutions

•   The punishment tenure for beggary rangesfrom 3-10 years in jail

•   Court may order detention of persons wholly dependent on beggar

•   Penalty for employing or causing persons to beg or using them for purposes of begging

•   Provision for the teaching of agricultural, industrial and other pursuits, and for general education and medical care of the inmates of the Receiving Centres/Certified Institutions

•   As per the Act, if any beggar detained in a Certified Institution is found to be of unsound mind or a leper, she/he can be ordered to be removed to a mental hospital or leper asylum as per provisions of the Indian Lunacy Act, 1912 and the Lepers
Act, 1898.

Growing Concern: The Ministry of Social Justice and Empowerment, concerned by the high number of beggars flocking the cities, has sought information from the States and Union Territories about schemes and welfare measures adopted by them to check beggary. Though, a number of States and UTs have enacted welfare measures through executive orders, but the data on their implementation status is unavailable. More surprising is the fact that even the National Crime Records Bureau has no data to throw light on the figures of beggar’s population in India.

Identification Issue: Identification of beggars is a challenge as the definition of beggars in the Bombay Prevention of Begging Act, 1959 provides no watertight classification of beggars. Hence, the homeless people and landless labourers who migrate to metros and bigger cities to look for means of subsistence, destitute people and other categories of people are tagged as beggars. Out of the inmates of 207 shelter homes in Delhi, only 10% are actually beggars. Old and ill people live there too and this also sometimes result in people becoming drug addicts and alcoholics. Moreover, rehabilitation mechanisms are absent for those detained and Right to Food cannot be extended to them, while infact they are as vulnerable (perhaps more) as all those who are being brought under the ambit of the noval and noble Right to Food Act.

The Racket of Beggary: Beggars are not atomic units on streets but a tiny unit of the vast beggary rackets being run by the mafia. So, the crime is not just the begging, but the act of pushing people into this down-hole and making money out of it.

Violation of Fundamental Rights: The proponents of Anti-Begging Act call it a rehabilitative process, but the fact is that most of the times, it is coercive, taking away one’s freedom of choice. But, it is perhaps a matter of perspective- a debatable issue as in today’s polity, phrases like “arrested without warrant” and “sentenced without trial” are an anomaly to today’s advanced judicial system and at the same time attract the eyes of the proponents of human rights. In the Indian Penal Code, punishment is equally stringent to persecution of convicts of beggary than set for much heinous crimes like attempt to murder, rape, culpable homicide not amounting to murder, acid attacks on women, etc. A comparable term of punishment for beggary is unjustified. On the other side, it is not only the beggar’s fundamental rights which are being violated, but also of the people who are coaxed into giving alms to them. Beggars touch the people, catch them by hands and chase them endlessly embarrassing them on streets. They blabber curses on those shooing them away. People helplessly end up digging their pockets.

Back in 2010, when Delhi hosted the Commonwealth Games and hosted thousands of international guests, there was a deporting drive undertaken in which beggars were deported from the capital to their original States. Shameless as it sounds this act undertaken by the Government by-passed the institutional mechanisms, the democracy of the people and the right to life and personal liberty of a proportionately large section of Indian population. All this need a redressal in a constitutionally viable, legal, and result oriented way. Skill development, rehabilitation, education, vocational training and other such aspects should be focused upon while designing a mechanism to deal with this deep rooted problem.

 What should we do?

Begging has grown at a significant rate in India. It is estimated that half a million people in India are beggars. The Government, varied organizations, activists claim that many measures have been taken to abolish begging and it has been successful to a certain extent. But the trend of begging still continues. We are also to be blamed. We as Indians are very orthodox, God-fearing and have a religious frame of mind. This compel us to do charity. And one easy way is to visit a nearby temple and give alms to the beggars there.

But as the citizens of this country, it is our moral responsibility to stop this menace and the best way is to stop giving alms. It might seem that we are very heartless in not giving money to a little child begging on the street, but this is one step that we can take to prevent begging. If more and more people come out and take a pledge that they are not going to give a single penny to any beggar, irrespective of their need. I am sure, beggary will then be completely uprooted from our country. Meanwhile, let the Government continue with its poverty alleviation schemes and make India a better place to live in.

As begging is a federal subject, respective States where begging is a social menace can enact suitable comprehensive legislation to ban begging. Kerala does not have such a comprehensive legislation and the State can think about it by banning begging on streets as well as making out efficacious measures to rehabilitate the begging citizen by improving their skill and craft to indulge in other works and avocation which they are capable of doing.

'Royalty' A Proprietary Right or Prerogative Right

(By M.K.S.Menon, Advocate, Supreme Court of India)

This Article is attempting to analyse the hardship that is faced by the litigants in a case that was referred to a 9 Judges bench because the delay caused in getting the matter heard, invariably results in grave injustice.

“Mineral Area Development Authority etc. v.  M/s. Steel Authority of India & Ors” reported in (2011 (2) KLT Suppl. 2 (SC) = (2011) 4 SCC 450), referred India Cement’s case reported in ((1990) 1 SCC 12) to 9 Judges Bench ;

ORDER

Having heard the matter(s) for considerable length of time, we are of the view that the matter needs to be considered by the Bench of Nine Judges. The questions of law to be decided by the Larger Bench are as follows:

1. Whether ‘royalty’ determined under Sections 9/15(3) of the Mines and Minerals (Regulation & Development) Act, 1957 (Act 67 of 1957, as amended) is in the nature of tax?

2. Can the State Legislature while levying a tax on land under Entry 49 List II of the Seventh Schedule of the Constitution adopt a measure of tax based on the value of the produce of land? If yes, then would the Constitutional position be any different in so far as the tax on land is imposed on mining land on account of Entry 50 List II and its interrelation with Entry 54 List- I?

3. What is the meaning of the expression “Taxes on mineral rights subject to any limitations imposed by Parliament by law relating to mineral development” within the meaning of Entry 50 of List II of the Seventh Schedule of the Constitution of India? Does the Mines and Minerals (Regulation & Development) Act, 1957 contain any provision which operates as a limitation on the field of legislation prescribed in
Entry 50 of List II of the Seventh Schedule of the Constitution of India? In particular, whether Section 9 of the aforementioned Act denudes or limits the scope of Entry 50 of List II?

4.  What is the true nature of royalty/dead rent payable on minerals produced/mined/extracted from mines?

5. Whether the majority decision in State of West Bengal v. Kesoram Industries Ltd. and Ors, ((2004) 10 SCC 201), could be read as departing from the law laid down in the seven Judges Bench decision in India Cement's Ltd. and Ors. v. State of Tamil Nadu and Ors.,((1990) 1 SCC 12)?

6. Whether “taxes on lands and buildings” in Entry 49, List II of the Seventh Schedule to the Constitution contemplate a tax levied directly on the land as a unit having definite relationship with the land?

7. What is the scope of the expression “taxes on mineral rights” in Entry 50, List II of the Seventh Schedule to the Constitution?

8. Whether the expression “subject to any limitation imposed by Parliament by law relating to mineral   development” in Entry 50, List II refers to the subject matter in Entry 54, List I of the Seventh Schedule to the Constitution?

9. Whether Entry 50, List II read with Entry 54, List I of the Seventh Schedule to the Constitution constitute an exception to the general scheme of Entries relating totaxation being distinct from other Entries in all the three Lists of the Seventh Schedule to the Constitution as enunciated in M.P.V. Sundararamier & Co. v. State of Andhra Pradesh & Anr. ((1958) 1 SCR 1422) at 1481 (bottom)?

  10. Whether in view of the declaration under Section 2 of the Mines and Minerals (Development & Regulation) Act, 1957 made in terms of Entry 54 of List I of the Seventh Schedule to the Constitution and the provisions of the said Act, the State Legislature is denuded of its power under Entry 23 of List II and/or Entry 50 of List II?

  11. What is the effect of the expression “...subject to any limitation imposed by Parliament by law relating to mineral development” on the taxing power of the State Legislature in Entry 50 of List II, particularly in view of its uniqueness in the sense that it is the only entry in all the entries in three Lists (Lists I, II and III) where the taxing power of the State Legislature has been subjected to “any limitation imposed by Parliament by law relating to mineral development”.

Before concluding, we may clarify that normally the Bench of five learned Judges in case of doubt has to invite the attention of the Chief Justice and request for the matter being placed for hearing before a Bench of larger coram than the Bench whose decision has come up for consideration (See: Central Board of Dawoodi Bohra Community and Anr. v. State of Maharashtra and Anr.(2005 (1) KLT 486 (SC).  However, in the present case, since prima facie there appears to be some conflict between the decision of this Court in State of West Bengal v. Kesoram Industries Ltd.& Ors.(supra)which decision has been delivered by a Bench of five Judges of this Court and the decision delivered by seven Judges Bench of this Court in India Cement's Ltd.and Ors. v. State of Tamil Nadu & Ors. (supra) reference to the Bench of nine Judges is requested. Office is directed to place the matter on the administrative side before the Chief Justice for appropriate orders.

Part  I

1. Legislative competence of the State Governments to impose tax on minerals and mineral rights had always bothered Hon’ble Supreme Court from the very inception of our Constitution. Even after 7 Judges bench judgment in India Cement’s case reported in ((1990) 1 SCC 12), the question as to whether the State’s prerogative to impose tax under our federal system can be restricted by the Central Government through a declaration under Section 2 of Mines and Minerals Development and Regulation Act 1957 is still bothering Hon’ble Supreme Court.   The question is as to whether the power of “regulation and control”  being a general power can encroach upon the State Government’s power of taxation, reason being the power of taxation is regarded as distinct matter and is separately set out and more so when power to tax  cannot be deduced from a general legislative entry as an ancillary power. Entry 50 of List II enables the State to impose tax on mineral rights subject to any restriction imposed by Parliament relating to mineral development. Then the moot question is as to whether a general declaration under Section 2 is sufficient to denude the power of the State to impose Tax on mineral rights. There is nothing in the MMRD Act 1957 imposing a specific embargo against such imposition of tax and the wording in Section 2 of MMRD Act 1957 reads as follows:

“ 2.  It is hereby declared that it is expedient in the public interest that the Union should take under its control the regulation of mines and the development of minerals to the extent hereinafter  provided.”

Then the question is as to what extent power to impose “tax on minerals and mineral rights” are provided in the MMRD Act 1957. When imposition of tax is not covered by any of the provisions in the MMRD Act 1957, then can it be said that it restricts the power under Entry 50 of List II. This is the larger issue to be decided by the 9 Judges Bench. However incidentally as an offshoot, another issue also cropped up. i.e., whether “royalty” is tax or not. “Royalty” is always considered as the proprietary right vested in the owner and the MMRD Act 1957 is not an exception. Sections 17 and 17-A of the Act throw enough light on this aspect. 

2. Regarding the proprietorship of mines and minerals, a recent 3 Judges bench decision cleared the air misted up by a wrong presumption that all minerals are vested with the Government. In a case argued by the author and Judgment written by Justice Chelameshwar in Tressiamma Jacob v. Geologists reported in  (2013 (3) KLT 725 (SC)) laid down the concrete proposition of law on ownership on mines and minerals by reckoning the first principles from Halsbury’s Law of England and Broom's Legal Dictionary, holding that the owner of the surface of the land is also the owner of the minerals beneath unless it is vested in the Government through a known process of law.

3. Definition of “Estate” in Article 31-A of the Constitution created havoc at one of point time while interpreting “Proprietary Right” and “Prerogative Right”. Classic example is the case of Karambil Kunhikoman v. State of Kerala reported in (1962 KLT 42 (SC)) a judgment which resulted in the 17th Constitutional Amendment, amending Article 31-A so as to include ‘ryotwari settlements’  in the definition of “Estate”.  This has happened because courts below blindly adapted the propositions laid down in some judgments as legislations. Hon’ble Supreme Court always cautioned us on two aspects. (i) that a judgment cannot be read as a legislation and normal rules of interpretation or statutes is  not applicable while interpreting judgments. (ii) that a definition appearing in the Constitution is intended to interpret the Constitution alone and it cannot be applied while interpreting a Statute. (Madhav Rao Scindia  v. Union of India reported in (AIR 1971 SC 530). Any how the first post Independence agrarian reform enactment of Kerala namely Kerala Agrarian Relations Act 1960 was declared as unconstitutional due to a wrong interpretation of the word “Estate” appearing in Article 31-A of the Constitution by the Full Bench of the Kerala High Court in the case of Shukapuram Sabhayogam v. State of Kerala reported in ((1962 KLT 924 (F.B.)). Ryotwari Settlements were declared as government lands given in lease to the proprietors of the soil because it was declared that the Ryotwari owners are not proprietors of the land even though they are enjoying almost all the rights of a proprietor. This decision discussed the concept of “absolute proprietorship” while interpreting the word “ESTATE” in Article 31-A of the Constitution on the basis of local equivalent. There the Full Bench of the Kerala High Court went wrong in following Karambil Kunhikoman’s case reported in  (1962 KLT 42 (SC)) without appreciating the fact that (1962 KLT 42 (SC))  relied on the local equivalent from the Madras Estate Act 1908 and  that was not applicable to Malabar forming part of Madras State prior to State re-organisation. Most importantly the Full Bench was not informed of the fact that in Malabar, relationship between Ryotwari pattadar and its tenants were governed by Malabar Tenancy Act 1929, as appearing in the Madras Administrative Reports.  High Court proceeded to decide the issue by following  (1962 KLT 42 (SC)) a judgment based on Madras Estate Act 1908 where as the case ought to have been decided on the basis of Malabar Tenancy Act 1929. However the proposition laid down by the Kerala Full Bench in that case was wrong and happened to be contrary to what has been declared by the Hon’ble Supreme Court in a later judgment in the case of India Cement's v. State of Tamil Nadu reported in ((1990) 2 SCC 12) in which 7Judges of the Hon’ble Supreme Court declared that “Rajabhogam” namely “share in the produce”, claimed by the State during British Regime was only a “Prerogative Right” and not a “Proprietary Right”. “Share in the produce” was quite often misunderstood as “rent” pertaining to “proprietary right” and in fact it was clarified by the 7 Judges Bench as “revenue”  reckoning “prerogative right” of the State. Despite this clarification given by the larger bench in India Cement’s case at para 20, still the confusion continued due to one observation in paragraph 34 of the judgment to the effect that “Royalty is a Tax”. 

Part II

4. For reconsideration of a “ratio” in the judgment, Judicial discipline mandates that the smaller bench shall place the matter before the Hon’ble Chief Justice, for constituting a larger bench. This is the practice that is followed by the Higher Judiciary in India as a matter of convention/rule. At the same time one has to appreciate that there is always an exception for every rule. Eg. in a case when factually the earlier bench is not laying down a “ratio” on the facts in issue but logically it appears as though a “ratio” appeared to have been laid down, Supreme Court is not prevented from explaining what is the ratio in an earlier judgment. As per the well settled law as laid down by Hon’ble Supreme Court, the “ratio” is what it actually decides and not what “logically follows from the judgment”. (Ambica Quarry Workers etc. v. State of Gujarat reported in ((1987) 1 SCC 213). In some judgments a particular ratio appeared to have been declared but when analysed subtly, it could be seen that ratio has been declared in vacuum because the legal point decided may not be actually arising for consideration on the facts available in that case. Eg. Minerva Mills case reported in (1980 KLT 573 (SC)  touching upon Article 31-C of the Constitution of India.

5. There is one more important facet to be reckoned at this juncture. Constituting Larger Benches of more than 5 Judges in the Hon’ble Supreme Court is a very cumbersome process. Because of the dearth of Judicial time and personnel to be spared, it is very difficut to constitute larger benches. Larger the bench, lengthier will be the waiting period. Constituting Constitution Benches of 5 Judges itself very often derails the regular work of the Hon’ble Supreme Court which has to find time for various human and social problems.  Very often it is a herculean task for the Hon’ble Chief Justice to take a decision on priorities satisfying various public demands. May be it is time to consider as to whether the current scenario in the Hon’ble Supreme Court as a court of Special Leave where every issue is being agitated be changed, so that it gets enough time to deal with issues of larger public interest and constitutional matters alone. Once it is known to the litigant that the Hon’ble High Court is the last court of appeal, his expectations come to an end there.

6. At the present fluid state of affair, at least certain areas could be streamlined by adopting a more pragmatic approach, that can save valuable judicial time. Not referring “obiter” to larger benches of 5 Judges or more is one among them. Unless it is so unavoidable, it is always better not to refer the matters to larger benches. The author is writing this article after facing such a bizarre situation, where he will have to wait for another couple of decades to get a matter heard in a case in which his client started his journey about 25 years back when he filed a suit at Calicut/Kerala challenging the authority of the State to collect royalty on minerals vested in the private person. Central Enactment namely Mines and Minerals (Development and Regulation) Act 1957 as well as Kerala Minor Minerals Concession Rules 1967 provide that, the owner of the mineral is entitled to collect the “Royalty”. However State disputed the ownership of the private “Jenmies” and also their right to claim “Royalty”. Case when reached at the High Court of Kerala, one of the celebrated Full Bench judgments of 1960s (Shukapuram Sabhayogam reported in (1962 KLT 924 (F.B.)) was referred to larger Bench but the claim of the Jenmies were dismissed by the Bench by following the judgment reported in (1962 KLT 42 (SC)) which declared that in the Ryotwari lands minerals are vested in the Government. In fact neither (1962 KLT 42 (SC)) nor  ((1962 KLT 924 (F.B.) happened to be an authority to the point that all minerals vest in the government. Matter when reached before the Hon’ble Supreme Court, Hon’ble Court admitted the matter but stay was denied. This resulted in the total relapse of the enthusiasm of litigants because they lost their hope of winning the case even after spending lakhs of Rupees. Ultimately the mantle was taken forward by the author and it gave him the best opportunity to find meaning for his lengthiest research of 15 years and finally to get the matter decided by 3 Judges Bench in the Hon’ble Supreme Court. 

7. Matter was taken up by the Hon’ble Bench consisting of 3 learned Judges and finally declared that the “owner of the surface is also the owner of the minerals underneath”. Halsbury’s Law of England as well as Broom's Legal Dictionary came in support of the appellant and finally a judgment was delivered clearing the general misunderstanding that all minerals belong to the Government.  Whenever the case has been taken up, the first obstacle was to rebut the celebrated but the wrong presumption that all minerals are vested in the government. Author had occasion to argue this matter at least before a dozen benches including a Full Bench of Kerala High Court and also before different benches of the Hon’ble Supreme Court. Every bench expressed the same anxiety in upsetting this presumption i.e. “all minerals are vested in the Government".  However every time Section 17 and 17-A (3) of the MMRD Act 1957 came in as a panacea. These Sections were very often overlooked and general presumption was adopted which foreclosed further deliberation.

8. Even after the 3 Judges bench decision, author could not take his case to a logical conclusion because even after the 3 Judges bench judgment of the Hon’ble Supreme Court, the fate of the case remained the same. No final result. Even though the judgment namely Tressiamma Jacob v.  Geologists reported in (2013 (3) KLT 725 (SC)) declared that the owner of the surface of the earth is also the owner of the minerals lying within, the issue of “Royalty” was left open to be decided till the decision in Mineral Area Development Authority etc. v.  M/s Steel Authority of India & Ors. reported in (2011 (2) KLT  Suppl.2 (SC) that was referred to ‘Nine Judges Bench’. There is nothing wrong in waiting in ordinary circumstances but in this case Mineral Area Development Authority etc. v.  M/s Steel Authority of India & Ors. reported in  (2011 (2) KLT  Suppl.2 (SC) has been referred to a Bench of 9 Judges. Possibility of constituting 9 Judges Bench in Supreme Court in the near future is any one’s guess. That means another 25 or 30 years of waiting. This prompted the author to do further research and to move an application to get  the issue agitated separately so that the matter need not wait until the 9 Judges bench has been constituted.

Part III

PREROGATIVE  RIGHT  v.  PROPRIETARY  RIGHT

9. The line between “Prerogative right” and “Proprietary right” often gets obliterated in issues like “royalty on mineral working”. In India Cements' Ltd & Ors. v.  State of Tamilnadu reported in (1990) 1 SCC 12), Seven Judges of the Hon’ble Supreme Court in paragraph 20 clarified that the concept of “share in the produce”, very commonly applied in Madras Presidency is nothing but “revenue” and not “rent”. “Share in the produce” or “Rajabhogam” (Rajabhagam) was the governments share in the produce of the land which they were entitled to claim as revenue. This has been declared as nothing but the prerogative right. This has been misinterpreted quite often earlier and the word “share in the produce” was mistaken as “rent” (Proprietary right).

10. That very doubt still leads to the new controversy and referring of 7 Judges bench judgment in India Cement's Ltd & Ors v. State of Tamilnadu reported ((1990) 1 SCC 12) to a larger bench of 9 Judges. The reason for referring the matter to larger bench is that, in State of West Bengal v. Kesoram Industries Ltd. and Ors., ((2004) 10 SCC 201) another Constitution Bench 5 Judges of the Hon’ble Supreme Court clarified that “Royalty is not Tax”.  Constitution Bench in Kesoram (supra) clarified, that in 7 Judges bench decision in India Cement's (supra) Supreme Court never intended to hold that “Royalty” is “Tax”. However Hon’ble Mr. Justice Sinha was in dissent holding that a smaller bench cannot read down a larger bench decision. However Hon’ble Judges in majority headed by Justice Lahoti had given a wonderful reasoning on the point that India Cement’s case never wanted to hold that “Royalty” is “Tax”. This was done without quoting section 17 and 17-A of MMRD Act and held that Royalty can be claimed by a private person as well and therefore one has to realise that a private person is not vested with prerogative right and therefore cannot impose a tax. In fact in India Cement’s (supra) case,  Hon’ble Supreme Court was not invited to decide and hold that “Royalty is Tax” because that was not an issue in dispute on the facts of the case. The question involved therein was as to whether the State is entitled to impose Cess on Royalty and what is the consequence of such an imposition on the moratorium imposed by Section 2 declaration under the Mines and Minerals Development and Regulation Act 1957. By analysing the facts in that case it could be seen that, in India Cement’s case, State of Tamilnadu imposed a “Cess” on Royalty paid for the excavation of minerals. Hon’ble Supreme Court posed a question to itself that as to whether the said “Cess on Royalty” is justifiable as a demand of “land revenue” or “additional royalty” (Paragraph 11). Hon’ble Supreme Court in the said case set aside levy of cess by holding that levy of cess on royalty results in swelling of Royalty. Since the power to fix the Royalty was vested in the Union alone, the 7 Judges bench held that State cannot interfere with that vested right of the Union under Section 9 (3) of the MMRD Act. In this context Hon’ble Court equated the “Cess” to “enhanced royalty/additional royalty”. It was also declared that cess being a prerogative right but not permissible to be levied due to the Section 2 declaration. Describing the “cess” as “enhanced royalty” created the confusion. The Hon’ble Court held that by imposing tax/cess on royalty, in effect the State is increasing the royalty which they are not entitled to as per the mandate of Section 9. Following observation of Hon’ble Mr. Justice Sabyasachi Mukharji in paragraph 19 of the judgment throw amble light on the journey undertaken by the Hon’ble Supreme Court in India Cement's case (Supra) which reads as follows:

“ 19. Here, we are concerned with cess on royalty. One can have an idea as to what cess is, from the observations of Hidayathulla J., as the learned Chief Justice then was, in Guruswamy & Co. v. State of Mysore where at page 571, the learned judge observed:

“The word ‘cess’ is used in Ireland and still in use in India although the word rate has placed it in England. It means a tax and is generally used when the levy is for some special administrative expense which the name (health cess, education cess, road cess etc.) indicates. When levied as an increment to an existing tax, the name matters not  for the validity of the cess must be judged of in the same way as the validity of tax to which it is an increment.”    (underlining is by the author)

 In paragraph 30 it is observed as follows:

“30. It seems, therefore, that the attention was not invited to the provisions of Mines and Minerals (Development and Regulation)Act 1957 and Section 9 thereof. Section 9(3) of the Act in terms states that Royalty is payable under the Second Schedule of the Act shall not be enhanced more than once during a period of four years. It is, therefore for, a clear bar on the State legislature taxing royalty so as to effect amend Second Schedule of the Central Act.   In the premises , it cannot be right to say that tax on royalty can be a tax on land , and even if it is a tax, if it falls within Entry 50 will be ultra vires the State legislative power in view of Section 9(3) of the Central Act. In Hingir Rampur Coal Co. Ltd .v State of Orissa, Wanchoo, J. in his dissenting judgment has stated that a tax on mineral rights being different from a duty of excise, pertains only to a tax that is leviable for the grant of the right to extract minerals, and is  not a tax on minerals as well. On that basis, a tax on royalty would not be a tax on mineral rights and would therefore in any event be outside the competence of the State Legislature.”         (underlining is by the author) 

Finally in paragraph 34 it is observed as follows:

“34.   In the aforesaid view of the matter, we are of the opinion that Royalty is a tax, and as such a cess on royalty being a tax on royalty, is beyond the competence of the State Legislature because Section 9 of the Central Act covers the field and the State Legislature is denuded of its competence under Entry 23 of Listed II. In any event, we are of the opinion that cess on royalty cannot be sustained under Entry 49 of List II as being a tax on land. Royalty on mineral rights is not a tax on land but a payment for the user of land.”    (uderlining is by the author).

11. What is prohibited is enhancement of royalty by the State, in view of the bar contained under Section 9(3) of the Act, because in principle it enhances the “Royalty” (refer the quoted portion in para 19 of the judgment). Even though what is levied is a cess, it results in enhancement of the royalty. Neither Entry 23 nor Entry 49 of the List II of Seventh Schedule of the Constitution supports this action on the part of the State Government.  In that context, Hon’ble Court said that as an outcome of the levy, the cess is in the nature of additional royalty since it is enhancing the royalty for the purpose of Section 9 of the Act.  It does not mean, levy of Royalty is an exercise of prerogative right. It only says that, by the exercise of prerogative right in imposing tax/cess, as an end result, it resulted in enhancement of royalty and that the swelling of royalty has gone against Section 9(3) of the Act.  Reading the sentence “Royalty is tax”, out of context, resulted in the current mystification.

12. At this juncture it is necessary to apply all the principles of interpretations that is available to understand and apply a precedent/judgment. While referring the judgment in India Cement's case (supra) to 9 Judges bench to settle the difference of opinion expressed by the 5 Judges bench in Kesoram (supra), Hon’ble Chief Justice was not informed that  the observation “Royalty is tax” is a not a precedent based on the factual question in hand and that it is only an obiter which never binds the subsequent benches of the Hon’ble Supreme Court. Reference order treated the judgment in India Cement’s case (supra) as a precedent to the proposition that “Royalty is tax”. What logically follows is not a precedent. In India Cement's case, 7 Judges never laid down a law to the effect that what was levied by State of Tamilnadu as “Cess on Royalty” in effect is “Additional Royalty”. However by interpretation one will be able to describe it in such a fashion. No doubt, the reasoning for arriving at the conclusion that the levy was unconstitutional appears to be little tricky. That is what logically follows and what logically follows is not a precedent. In that context judgment in India Cement's may need a second look but not for a reason never thought of by the Hon’ble Judges while rendering the judgment in the said case. It is pertinent to mention thatIndia Cement's case (supra) and Kesoram’s case (supra) are dealing with two different situations. In India Cement's case, levy of cess is on Royalty where as in Kesoram the levy is on mineral bearing areas which may be justified for the reasons stated there in the judgment. In effect prima facie there is no conflict on this aspect.  All that Kesoram clarified is that what logically follows as explained above is not the precedent for a proposition that “Royalty is Tax”. They had also referred to the difference between “prerogative right” and “proprietary right” reflected in Section 17 and 17-A of the MMRD Act 1957 but failed to quote the Section.  In nutshell if we presume that reference order in Mineral Area Development Authority etc. v.  M/s Steel Authority of India & Ors. reported in (2011 (2) KLT Suppl. 2 (SC))  lays down that India Cement’s case (supra) is a precedent for the proposition that “Royalty is a prerogative right (Tax)”, then the reference order to that extent is per incurrium  because it failed to consider Section 17 and 17-A of MMRD Act  1957. No doubt that reference order is not a precedent and that the principles of sub silentio will not strictly apply in the context but the fact remains that the said reference order failed to consider legislative provisions finally binding the issue in hand and the reference itself is nothing but a futile exercise on this issue. Hundreds of cases are getting tagged along and justice is denied for no fault of the litigant. Supreme Court long ago declared that ‘Justice delayed’ is ‘justice denied’.

Conclusion:

13. Therefore the reference of India Cement’s case reported in ((1990) 1 SCC 12) to larger bench for reconsideration on the point that “Royalty is tax” could have been avoided because the reference order failed to take into account Section 17-A(3) of Mines and Minerals (Development and Regulation) Act 1957 in which it is provided that private person is entitled to collect royalty when the mineral is vested in him. When a private individual is vested with this right based on title, it is a proprietary right and not a prerogative right. Since imposition of tax is a prerogative right it cannot be vested in a private person. What is Royalty is well settled long back in D.K. Trivedi & Sons v. State of Gujarat reported in (AIR 1986 SC 1323) in which all the dictionaries were referred and it was held that it is the proprietary right of the owner of the minerals, claiming his share of the profit from the removal of the mineral from the mine owned by him.  Secondly, Hon’ble Court cannot give a verdict against Section 17-A(3) of MMRD Act 1957 in the referred matter because the said Section 17-A(3) is not under challenge in any of these cases. The Legislative mandate reflected in Section 17-A(3) will have to be respected and the question has to be put to rest  as early as possible avoiding undue hardship to the litigants.

14. By way of abundant caution it is necessary to mention that this Article intends to deal with only one issue i.e. “Whether Royalty is tax or not” in the reference order in Mineral Area Development Authority etc. v. M/s Steel Authority of India & Ors. reported in (2011 (2) KLT Suppl. 2 (SC)) and the question framed as follows:

 “1. Whether 'royalty’ determined under Sections 9/15(3) of the Mines and Minerals (Regulation & Development) Act, 1957 (Act 67 of 1957, as amended) is in the nature of tax"

Other issues such as:

 “10. Whether in view of the declaration under Section 2 of the Mines and Minerals (Development & Regulation)Act, 1957 made in terms of Entry 54 of List I of the Seventh Schedule to the Constitution and the provisions of the said Act, the State Legislature is denuded of its power under Entry 23 of List II and/or Entry 50 of List II?"

are larger issues and distinct/different, and therefore are not intended to be dealt with in the present Article.

All those cases  which are waiting for a decision in 9 Judges bench on the question as to whether ‘royalty is tax’ can be delinked and heard in the light of Section 17 and 17-A of the MMRD Act 1957.