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Revision Side No. 139 of 1956‑57, decided on 1st June 1957: District Sargodha.

S. 28‑Demand of royalty by Government, if unilateral action on part of Government, is not enforceable under Act--- Royalty Payable under Act amounts to penalty for purposes of recovery as arrears of land revenue under S. 28.

M. Anwar, Assistant Advocate‑General for Petitioner.

Kh. Abdur Rahim and Ahmad Din Bhatti for Respondent.

The dispute in the present case relates to substantial royalty which the Provincial Government has demanded from the respondent company for converting a large area of land, which was meant for agricultural purposes, into a Textile Mill. This amount of royalty has not been collected so far. The Collector proceeded under section 28 of the Colonization of Government Lands (Punjab) Act, 1912. But the respondent company appealed to the Commissioner and he gave a decision to the effect that the provisions of section 28 of the said Act could not be used for recovering this amount of royalty. The Commissioner proceeded to say as far as I can judge that in fact no royalty could be claimed by Govern ment in respect of such conversion.

As regards the main decision of the Commissioner, I find that there is little scope for altering it. The demand of royalty at present is a unilateral action on the part of Government. It cannot, therefore, be said that the royalty has been proved to be due under the said Act.

The Commissioner's second decision is of doubtful validity. The proprietorship obtained by the predecessor‑in‑interest of the respondent company was conferred on him by means of a sale deed which included a number of clauses. One of those clauses required that the land should be used for agricultural purposes only. Another condition of the grant was that if a dispute arose in respect of any matter relating to the grant, the dispute shall be referred to the Commissioner as an arbi trator. The respondent company pleads that the normal condition restricting the use of the land to agricultural purposes only is not valid under section 30 of the said Act of 1912. It can, however, be argued on behalf of Government that the condition is valid and effective under the provisions of the Crown Grants Act, 1895, and that arbitration in respect of the alleged conversion is, therefore, required to be carried out in accordance with clause 5 contained in Schedule II of the Act of 1912, which would thereby make the result of arbitration effective under the Act vide section 30. This matter is one on which I need not pronounce finally to‑day. But it is clear that the' arbitrator appointed for purposes of settling the dispute between the parties can also look into this question. It is, however, clear to me that if the arbitrator decides that a royalty is payable in the circumstances under the Colonization of Government Lands (Punjab) Act, 1912, the royalty would amount to a penalty for purposes of recovery as arrears of land revenue under section 28 of the Act.

With the above observations, I would say that this petition for revision should be treated as rejected.

K. M. A. Petition rejected.

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