- (1.) These appeals raise questions as to the validity of a prospecting license granted on 26-3-1915 in favour of Messrs Bird and Co., by the Court of Wards as representing the Ramgarh-Estate and of two deeds dated 23-11-1917 and 1-6-1937 executed by the Court of Wards modifying the terms of the license dated 26-3-1915.
(2.) The Ramgarh Raj is an ancient principality situate in Bihar. It has three coal fields, Bokaro Jharia Ramgarh and Karanpura. Of these, the Karanpura Coal-fields are the largest being of the extent of 550 sq. miles, of which about 415 sq. miles belonged to the estate. On 26-11-1907 Raja Ramnarain Singh, the proprietor of the estate, granted in favour of Messrs. Anderson Wright and Co., a prospecting license in respect of the Bokaro Ramgarh coal-fields, referred to in these proceedings as the Bokaro license. He was also negotiating for similar license in respect of the Karanpura coal-fields (vide Ex. 155-b dated 1-12-1912), but before anything was concluded, he died on 26-1-1913 leaving him surviving his widow, Rikinath Kaur, and a minor son, Lakshminarain Singh. At the time of his death, the debts owing by the estate amounted to about Rs. 9 Lakhs.
(3.) On 20-5-1913 the Court of Wards took over the management of the estate, and its first concern was to relieve it from the pressure of creditors, and for that purpose, to arrange for a loan on easy terms. It was at this juncture that Messrs Bird and Co., made an application for a prospecting license for the Karanpura coal-fields, and in reply thereto the manger of the Court of wards informed them on 4-9-1913 that "the estate being involved and anxious to pay off the debts, one of the conditions of the lease would be an advance of about Rs. 8 to Rs. 11 lakhs including salami. etc., to the estate on the same terms as advanced by the Bokaro and Ramgarh Company". Then, there were negotiations, extending over several months, a good deal of correspondence and personal discussions, and eventually on 29-7-1914 the terms were finally agreed upon, and on 26-3-1915 the deed of prospecting license was actually executed. Its main terms were as follows : It was to be in force for a period of six years. A sum of Rs. 1,00,000 was paid as salami. The licensees were to pay a minimum ground rent of Rs. 8,000 per annum commencing from the second year of the license, and if the leases were actually taken by the licensees, this amount was to be adjusted towards royalties payable thereunder. The terms of the leases which were to be granted in pursuance of the license were firstly, the lessees were to pay a salami at Rs. 40 per biha, the payment to commence either when railway facilities were available for transport of coal from the mouth of the pit or after a lapse of six years after the period of the license, that is to say, after 26-3-1927, whichever was earlier; secondly, royalty was to be paid on coal, dust and coke at rates specified therein, subject to a minimum of Rs. 5 per bigha payable after the first year of the lease; and thirdly the lessees were to pay the ceases payable under the law by the occupier or tenant of the land. As consideration for the grant of the license, Messrs Bird and Co., were to advance Rs. 9 lakhs as loan to the estate. This amount was not to carry interest and was to be discharged by adjusting the royalties which would become payable under the leases. If no leases were taken and the license was abandoned, then the amount of the loan was to carry interest at 4 1/2 per cent per annum from that date and it had to be repaid in half-yearly instalments such that the entire debt would be discharged within a period of six years. A mortgage bond was executed on the same date as the prospecting license embodying these terms.;