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TMI Blog1995 (9) TMI 20X X X X Extracts X X X X X X X X Extracts X X X X ..... claimed in the assessment, on the basis of rule 34 of the Mineral Conservation and Development Rules, 1988 ?" We are concerned in these cases with assessments pertaining to the assessment years 1982-83, 1983-84, 1986-87 and 1987-88. The assessee is a partnership-firm engaged in extracting iron ore. It obtained mining lease from the State of Maharashtra for the purpose of extracting iron ore in terms of Mineral Conservation and Development Rules. The terms of the agreement is at annexure "E". The assessee entered into separate agreements with the occupants who were in possession of the lands in question to carry on mining operations. For the relevant years in question, the assessee claimed deduction in respect of "pit filling expenses". By reason of the mining operations carried on, the surface of the land had been disturbed and the assessee claimed that it was required to restore the land to its original position by filling up the pits. The assessee claimed the deduction under the provisions made in that regard on the basis of actual liability. The assessing authority, the first appellate authority and the second appellate authority rejected the claim and the authorities held th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as in effect a retrospective operation. It is, therefore, submitted that an obligation does arise even in respect of the activities that might have been carried on earlier and, therefore, submitted that the liability of the assessee is clear and complete. Hence, the Tribunal ought to have allowed the claim made by the assessee. The approach of the Tribunal in stating that the rule is not retrospective because the provisions of law does not enable the authorities to make retrospective rules and that pre-existing rights arise under a contract cannot be modified with reference to rules are all decisive. He, therefore, contended that in these cases, taking into consideration the effect of rule 34 upon the contract it must be held that the directions had to be granted. Learned senior standing counsel contended that unless a statute provides for making retrospective rules, rules cannot be framed retrospectively by any subordinate authorities. In these cases, the lease gives rise to certain obligations and those obligations which are arising at the inception of the lease get crystallised and they cannot be impaired by reason of subsequent amendment made to the rules. It is the endeavour ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der rule 34 is to be performed is before the conclusion of mining operation or the abandonment of prospect of mine. If the lease is in force and operations are being carried on in terms of the said lease, before the conclusion of those operations, the obligation arising under rule 34 will have to be fulfilled. Thus what we have to look at in this matter is the operative nature of rule 34 and its effect upon the contract rather than whether the rule by itself is prospective or retrospective. The Tribunal in this context has missed the essence of the matter and has gone at a tangent in analysing the provisions and setting forth the law whether the rule is prospective or retrospective. This discussion is enough to answer the questions referred for our opinion. However, we may advert to the law in the matter. In a somewhat identical situation in the case of Dr. Indramani Pyarelal Gupta v. W. R. Natu, AIR 1963 SC 274, the law on the matter is stated thus by the Supreme Court while referring to a decision of the Queen's Bench Division wherein Cockburn C. J., said in Duke of Devonshire v. Barrow Haematite Steel Co. Ltd. [1877] 2 QBD 286 at page 289, that where two persons enter into a con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Haematite Steel Co. Ltd. [1877] 2 QBD 286 (referred to earlier). "When the terms of the contract engrafts an enactment upon existing contracts and thus operates so as to produce a result which is something quite different from the original intention of the contracting parties, such a statute has, in effect a retrospective operation." We cannot improve upon the language used by Craies. That clearly sets out the law on the matter. The upshot of the discussion is that the lessees are bound by such rules as may be framed under section 18 of the Mines and Minerals (Regulation and Development) Act, 1957, and they cannot carry on the mining or other operations except in terms of the rules and those rules become part of the contract and if those conditions required filling up of the pits at the end of the contract, it cannot be said obligation does not arise then. The obligation would certainly arise. Hence, we have to reject the contention advanced on behalf of the Department and uphold that of the assessee. The next question that arises for consideration is whether the Tribunal ought to interpret on the language of rule 34 so as to mean that it does not create an obligation. It is s ..... X X X X Extracts X X X X X X X X Extracts X X X X
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