Full Judgment Text
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PETITIONER:
STATE OF TAMIL NADU
Vs.
RESPONDENT:
M.P.P. KAVERY CHETTY
DATE OF JUDGMENT19/01/1995
BENCH:
BHARUCHA S.P. (J)
BENCH:
BHARUCHA S.P. (J)
VERMA, JAGDISH SARAN (J)
PARIPOORNAN, K.S.(J)
CITATION:
1995 AIR 858 1995 SCC (2) 402
JT 1995 (1) 537 1995 SCALE (1)297
ACT:
HEADNOTE:
JUDGMENT:
BHARUCEIA, J.:
1. Leave granted.
2. In these appeals the State of Tamil Nadu impugns
the judgment and order dated 23rd December, 1992 of a
Division Bench of the High Court at Madras whereby Rules 8D
and 19B of the Tamil Nadu Minor Mineral Concession Rules,
1959, ("the said Rules") made Under the provisions of the
Mines & Minerals (Regulation & Development) Act, 1957, ("the
said Act") were struck down as unconstitutional. The
Government Orders by which these provisions were introduced
into the said Rules were also quashed in part. A direction
was issued to the appellant State to permit the respondents
herein, being the petitioners upon whose writ petitions the
judgments and orders were passed, to carry on quarrying
operations and transport the material quarried without
reference the aforementioned Rules, subject to the payment
of royalty and seigniorage.
Rule 194
10. Prior to 10th June, 1992, Rule 19-A read thus:
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" 19-A Permission for quarrying black, Pink.
red, grey, green and other coloured granites
and any other rock required for use for
decorative and ornamental purpose in ryotwari
lands:-
(1) Notwithstanding anything to the contrary
contained in Section III to these rules the
authority competent to grant permission for
quarrying black, pink, red, grey, green and
other coloured granites and other rock
required for use for decorative and ornamental
purposes in ryotwari lands shall be the State
Government. The application shall be in the
form specified in Appendix III to these rules:
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Provided that the quarrying permission for the
minerals above in ryotwari lands shall be
granted only to an applicant who is having an
existing industry in Tamil Nadu or distinct
industrial programme to use the mineral in his
proposed industry in Tamil Nadu:
Provided further that the permission holder
for quarrying the above mineral shall remove
or transport the mineral shall remove
or transport the mineral from the specified
land after payment of area assessment
seigniorage, rates prescribed from time in
Appendix II to these rules and after obtaining
transport permit fawn the District Collector
or the Officer authorised by him in the
behalf;
Provided also that the transport permit shall
be issued only to the industry for which the
mineral is required to be supplied. The
lessee shall keep correct accounts showing the
quantity and other particulars of all minerals
obtained at the factory site and despatched
from the factory. The lessee shall also allow
any officer authorised by the State Government
in this behalf to inspect the industry and
verify its records and accounts and furnish
such information and returns as may be
required by him."
4.On 10th June, 1992, the State Government issued Government
Order NO. 214. It stated that under the said Rules as they
stood, orders had been issued that leases be granted to
industries which had already been established for cutting
and polishing granite and to those who gave a definite
industrial programme to set up such units within the
appellant State a period of two years from the date of
receipt of the letter of commitment. The Director of
Geology and Mining at Madras had reported to the State
Government that illicit mining and transportation was
rampant in a number of districts, that the amount obtained
as tender bids for granite leases was very meagre and that
there was an alarming tendency for monopolies to be created
in the granite trade. He had also reported that there was a
lot of wastage in the granite cutting and polishing process.
He had suggested that the State Government should take steps
for conservation and proper utilisation of the nonrenewable
granite potential available in the appellant State with a
view to safeguard the interest at large. Granite was a
valuable mineral which earned valuable foreign exchange. It
was, therefore, necessary that it should be conserved and
properly used without waste. Considering all these aspects,
the State Government had been examining the question of
streamlining the procedure for utilising the valuable
granite deposits available in the appellant State, and it
had decided that:
"(1) henceforth no lease for quarrying
granites on poramboke lands shall be granted
to private persons except those who are
holding letters of commitment. Fresh leases
will be given only to a State Government
Company or a Corporation owned or controlled
by the State Government;
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(2) ha respect of quarrying Paradiso
,Kashmir, White Kunnam, Paithur, Bavanur,
Black, Blue Granite, Raw Silk and Red Granite,
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the lease in ryotwari lands will be granted
preferably to a State Government company or a
corporation owned or controlled by the State
Government;
(3) the existing condition that the lessee
who has been granted permission to quarry
granite in ryotwari lands should have an
existing industry in Tamil Nadu or distinct
Industrial programme to use the mineral in his
proposed indusutry in Tamil Nadu, shall be
dispensed with;
(4) all trade relating to granite shall be
canalised through the Tamil Nadu Minerals
Ltd."
A notification amending the said Rules was appended to the
said Government Order and, so fir as is material for our
purposes, it amended Rule 19A and introduced Rules 8B and
19-A, as amended, read thus:
" 19-A Quarrying lease for quarrying black,
pink, red, grey, green, white or other
coloured or multi-coloured granites or any
other rock required for use for decorative and
ornamental purposes in ryotwari lands,
Notwithstanding anything to the contrary
contained in section III to these rules the
authority competent to grant quarrying lease
for quarrying black, pink. red, grey, green,
white or other coloured or multi-coloured
granites or any other rock required for use
for decorative and ornamental purposes in
ryotwari lands shall be the State Government.
The application shall be in the form specified
in Appendix VII to these rules:
The said application shall be accompanied by a
mining dues clearance certificate issued by
the District Collector concerned in the Form
prescribed in Appendix VIII. Receipt of the
application made under this rule shall be
acknowledged by the District Collector or the
Officer authorised by the District Collector
in this behalf in the form prescribed in
Appendix IX to these rules:
Provided that on and from the 10th June 1992
the State Government in granting quarrying
lease for quarrying the following minor
minerals in ryotwari lands, shall give
preference to a State Government Company or a
Corporation or Company owned or controlled by
the State Government, namely:-
(a) Paradiso - (Gnessic Rock with
violet colour wavy
pattern)
(b) Kashmir White - (Leptynite White gran-
ite with gar net
spees)
(c) Kunnam Paithur,
Bavanur Black Black granite fine
and medium grade
with
brown back
ground
(d) Blue Granite- Chamockite with
blue background.
(e) Raw Silk- Leptynite with
background. yellow
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(f)Red Granite- Porphyritic granite
and granites with
red background.
Provided further that the quarrying holder for
quarrying the above mineral shall remove or
transport the mineral from the specified land
after payment of area assessment, seigniorage
fee or dead rent whichever is higher at the
rate; prescribed from time to time in Appendix
11 to these rules and after obtaining
transport permit from the District Collector
or the Officer authorised by him in this
behalf.
Provided also that the lessee shall keep
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correct accounts showing the quantity of the
minerals quarried and shall allow any office
authorised by the State Government in this
behalf to inspect the quarry and verify its
records and accounts and furnish such
information and returns as may be required by
him.
5. It was the first proviso in Rule 19A as amended which
was under challenge and was struck down by the High Court.
By reason thereof, the State Government was obliged to give
preference to State Government companies and Corporation in
granting quarrying leases for the varieties of granite set
out therein.
6. The High Court found that the firs proviso in Rule 19A
did not contain an guideline in the matter of giving prefer
ence to a State Governmment company of Corporation. The
grant of preference was left to the unfettered discretion of
the State Government. It was, therefore ultra vires the
Constitution
7. Learned counsel for the appellant State drew our
attention to the judgment of this Court in State of Tamil
Nadu v. Hind Stone etc.,(1981) 2 S.C.R. 742. The High Court
of Madras had struck do Rule 8C of the said Rules as it then
read. Rule 8C stated that on and from 2nd December, 1977,
no lease for quarrying black granite would be granted to
private persons and that the State Government itself could
engage in quarrying black granite or grant leases for
quarrying black granite in favour of any State Government
Corporation. This Court referred to the declaration made
under Section 2 of the said act, which states that "it is
expedient in the public interest that the Union should take
under its control the regulation of the mines and the
development of minerals" to the extent provided in the said
Act. The public interest, this court said, which induced
parliament to make this declaration had to be the paramount
consideration in all matters concerning the regulation of
mines and the development of minerals. Parliament’s policy
was clearly discernible from the provisions of the said Act.
It was the conservation and the prudent and discriminating
exploitation of minerals with a view to secure maximum
benefit to the community. There were clear sign posts to
lead and guide the subordinate legislating authority in the
matter of making rules. It could not be said, having regard
to the provisions of the said Act, that the rule making
authority had exceeded its power in banning leases for
quarrying black granite in favour of private parties and in
stipulating that the State Government itself could engage in
quarrying black granite or grant leases for quarrying black
granite in favour of any State Government Corporation. To
view such a rule as a rule to benefit the State Government,
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the subordinate legislating body, was to take too narrow a
view of its functions. If in the pursuit of the avowed
policy of the Act it was thought that exploitation by the
public sector was best and wisest in the case of a
particular mineral, the authority competent to make the
subordinate legislation could make a rule banning private
exploitation of such mineral, which had hitherto been
permitted. In the case of scare mineral the most effective
method of conservation and prudent exploitation was to
permit exploitation by the State or its agencies and to
prohibit exploitation by private agencies. "If’, the Court
said "you want to conserve in the future you must prohibit
in the present. We have no doubt that the prohibiting of
leases in certain cases is part of the regulation
contemplated by section 15 of the Act."
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8. That valid differentia exists between State Government
companies and Corporations on the one hand and private min-
ers on the other and that it bears close nexus to the object
of the said Act is not in serious dispute. With the object
of conserving a rare and precious mineral and ensuring its
exploitation in the best possible manner,it is open to the
State Government, the rule making authority in respect of
minor minerals under section 15 of the said Act, to keep
mining operations in granite of the kind specified in the
amended Rule 19-A, so far as is possible, in its own hands,
and to do this by giving preference in the grant of
quarrying leases for such granite to State Government com-
panies or Corporations.
9. The principal challenge to the first proviso in Rule
19-A was that it was arbitrary in that it conferred no
guidelines in the matter of giving preference to State
Government companies or Corporations. In this connection
attention was invited by learned counsel for the appellant
State to Appendix X to the said Rules. Appendix X sets out
the form of the application for a quarrying permit to be
mad-. in accordance with the provisions of Rule 3. The
applicant is required to state, inter alia whether he or it
is an individual or a firm or a company. The applicants
nationality or place of registration or incorporation is to
be set out, as also his or its profession or nature of
business. The form requires the applicant to state whether
it has filed on affidavit, as required by Rule 3, that no
mining dues arc outstanding in its name. It is also
required to state whether it has previously worked the
mineral in the area in which it seeks the permit, the
quantity that it seeks to remove and the period during which
it will be quarried and transported. It is required to
state the purpose for which the mineral is to be used. Such
guidelines as are required, it was submitted, are furnished
by the form read with rule 3. Quite clearly, preference to a
State Government company or Corporation must be given, all
things being equal having regard to the various factors in
respect of which information is sought by the aforesaid
form. These are the guideline in this behalf
10.It was submitted by learned counsel for the respondents
that the Government company or Corporation was free to apply
for one piece of land but not another and that the said rule
should have provided guidelines for the State Government
company or Corporation in this behalf. It is difficult to
see how a Government company or Corporation can be bound
down by guidelines provided by the said Rules. As
commercial undertakings, they would be guided by commercial
considerations, and it must be assumed that they would act
bona fide.
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11.It was submitted that Rule 19A as amended had no nexus to
the objects stated in G.O. No. 214 quoted above. This
submission is not well founded. The State Government would
be better able to control the mining of the granite
mentioned in the amended Rule if it was in the hands of a
State Government company or Corporation It was so held in
the Hind Stone Case cited above.
12.It was submitted that under Rule 19-A as it stood before
10th June 1992, applicants who qualified to be granted
quarrying leases were those who had an existing polishing
unit or distinct industrial programme to set up one. Many
pri-
544
vate persons had set up polishing units on the basis of this
policy and had applied for quarrying leases. In the
meantime, Rule 19A was amended, and these persons had
suffered great hardship. The amendment of Rule 19-A to give
preference to State Government companies or Corporations was
detrimental to such persons. It was arbitrary and, applying
also the principle of promissory estoppel, ought to be
struck down. Rule 19-A as it read prior to its amendment on
10th June, 1992, has already been quoted. There is no
promise or representation therein; the principle of prom-
issory estoppel is, therefore, not attracted: nor can it be
said that there is any arbitrariness in the State
Government’s decision to alter its policy in regard to the
mining of granite having regard to its perception, from time
to time, of the need to conserve it.
13. Learned counsel for the respondents submitted that
granite was a major as also a minor mineral, depending upon
its end use; if it was used for industrial or engineering
purposes it was not a building stone and could not be
treated as a minor mineral. Under the provisions of Section
15 of the said Act the State Government has power to make
rules for regulating the grant of quarry and mining leases
only "in respect of minor minerals." The said Rules are,
therefore, only in relation to minor minerals. The
applicants that we are here concerned with are those who
desire to quarry minor minerals. The submission, therefore,
has no relevance to the validity of Rule 19A.
14. Learned counsel for the respondents submitted that
under the first proviso of Rule 19A the consent of the owner
of the land was not made a condition and it was bad in law
on that account The submission does not take note of section
24A of the said Act. Thereunder the holder of a mining
lease under the said Act or- rules made under it is
empowered to enter the land on which the lease has been
granted and carry out mining operations-. He is obliged to
compensate the land owner for any loss or damage that his
operations may cause. Consent of the occupier is required
only when the holder of the lease desires entry into any
building or enclosed court or garden.
15. The provisions of section 17A(2) of the said Act were
adverted to and it was submitted that they were being cir-
cumvented by the first proviso of Rule 19A. Section 17A(2)
reads thus:
"The State Government may, with the approval
of the Central Government, reserve any area
not already held under any prospecting licence
or mining lease, for undertaking prospecting
or mining operations through a Government,
company or corporation owned or controlled by
it or by the Central Government and where it
purposes to do so, it shall, by notification
in the official Gazette, specify the bound-
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arises of such area and the mineral or min-
erals in respect of which areas will be
reserved."
Section 17A(2) applies when an area is sought to be reserved
by the State Government for undertaking mining operations
exclusively through a Government company or corporation.
When such area is notified the mineral or minerals in
respect of which it is notified must also be stated. Such
reservation cannot be made without the approval of the
Central Government. The first proviso of Rule 19A does not
wholly exclude private parties from
545
obtaining quarrying leases for the minerals specified
therein. It states that for such leases preferences shall
be given to State Government companies and corporations.
Where, therefore, there are, for the same mining lease for
the specified minerals, rival applications, all things being
equal having regard to the requirements of Rule 3 and the
form at Appendix X, a State GoveRNment company or
corporation is to be preferred. The first proviso to Rule
19A cannot, therefore, be said to circumvent the provisions
of section 17(2).
16. The provisions of the amended Rule 19-A have not been
attacked on grounds other than those set out above. We find
no substance in the attack. We are of the view that the
High Court was in error in holding that the first proviso in
Rule 19-A was ultra vires the Constitution.
Rules 8D and 19B:
17. Rules 8D and 19B were introduced in to the said Rules
by Government Order No. 214. dated 10th June, 1992. The two
rules are identical, except that Rule 8D is in Section 11
which relates to Government lands which the minerals belong
to the Government and Rule 19B is in Section III which
relates to ryotwari land in which the minerals belong to.
This being so, it is enough to quote Rule 19B. It reads
thus:
" 19-B Constitution of black, red, pink, grey,
green, white or other coloured or multi-
coloured granites or any rock suitable for use
as ornamental and decorative stones quarried
by the permit holder, etc.-
(1) Notwithstanding anything contained in
these rules, on and from the 10th June,1992
the sale of the quarried black, red, pink,
grey, green, white or other Coloured or multi-
coloured granites or any rock suitable for use
as ornamental and decorative stone by every
permit holder who has been granted permission
by the State Government and every person who
has been permitted by a competent court having
jurisdiction, for quarrying black, red, pink,
grey, green, white or other coloured or multi-
coloured granites or any rock suitable for use
as ornamental and decorative stone, shall be
regulated by the State or by an Officer of
the State Government or by a State Government
company or by a corporation owned or
controlled by the State Government as the
State Government may direct in this behalf
(2) Where the above sale is regulated by-
(i) The State Government or by an Officer of
the State Government, the minimum price shall
be as fixed by the State Government;
(ii) The State Government-Company or a
corporation owned or controlled by the State
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Government, the minimum price shall be as
fixed by the said company or corporation, as
the case may be:
Provided that in fixing the minimum price
under this sub-rule the fair market price
prevailing at the time of the sale shall be
taken into account."
18.On the same day that Rule 8D and 19B were introduced,
that is, 10th, June, 1992, Government Order No. 216 was also
issued. It directed, under the provisions of the two Rules,
that the Tamil Nadu Minerals Limited, a State Company, would
regulate the sale of quarried black, red, pink, grey, green,
white or other
546
coloured or multi-coloured granite or any rock suitable for
use as ornamental and decorative stones.
19. The High Court quashed Rules 8D and 19B principally on
the ground that Section 15 of the said Act gave no power to
the State Government to frame rules to regulate internal or
foreign trade in granite after it had been quarried.
Section 15 also did not empower the State Government to
frame rules to enable a State Government company or
corporation to fix a minimum price for granite.
20. Learned counsel for the appellant State submitted that
Rules 8D and 19B were valid having regard to the Preamble of
the said Act and Section 18 thereof He submitted that the
rule making power of the State under Section 15 (o) was wide
enough to encompass Rules 8D and 19B.
21. The said Act is enacted to provide for the regulation
of mines and the development of minerals under the control
of the Union. Section 2 of the said Act declares that it is
expedient in the public interest that the Union should take
under its control the regulation of mines and development of
minerals to the extent provided in the said Act. Section 13
empowers the Central Government to make rules for regulating
the grant of prospecting licences and mineral leases in
respect of minerals and for purposes connected therewith.
Sub-section (1) of section 15 empowers the State Government
to make rules for regulating the grant of quarry leases,
mining leases and other mineral concessions in respect of
minor minerals and for purposes connected therewith. Sub-
section (1A) of section 15 states that such rules may
provide for the matters set out herein, namely, the person
by whom and the manner in which an application for a quarry
lease, mining lease and the like may be made; the fees to be
paid therefore; the time and the form in which an
application is to be made; the matters which are to be
considered where application in respect of the same land are
received on the same day; the terms and conditions on which
leases may be granted or regulated; the procedure in this
behalf, the facilities to be afforded to lease-holders; the
fixation and collection of rent and other charges and the
time within which they are payable; the protection of the
rights of third parties; the protection of flora; the manner
in which leases may be transferred; the construction,
maintenance and use of roads, power transmission lines, etc.
on the land; the form of registers to be maintained; reports
and statements to be submitted and to whom ; and the
revision of any order passed by any authority under the said
Rules. Clause (o) of sub-section (IA) reads, "any other
matter which is to be or may be prescribed." Section 18 of
the said Act states that it shall be the duty of the Central
Government to take all such steps as may be necessary for
the conservation and systematic development of the
environment by preventing or controlling any pollution which
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may be caused by prospecting or mining operations.
22.Rules 8D and 19B empowers the State Government company or
corporation as the State Government may direct to control
the sale by every permit-holder of quarried granite or other
or rock suitable for ornamental or decorative purposes.
They also empower the State Government or its officers or a
State Government company or corporation, as the case may be,
to fix the minimum price for the sale thereof. The object,
as is shown by the terms of
547
Government Order No. 214 dated 10th June, 1992, quoted
above, is to conserve and protect granite resources.
23. It is difficult to see how granite resource scan be
protected by controlling the sale ofgranite after its
excavation and fixing the minimum price thereof
24. There is no power conferred upon the State
Government under the said Act to exercise control over minor
minerals after they have been excavated. The power of the
State Government, as the subordinate rule making authority,
is restricted in the manner set out in Section 15. The
power to control the sale and the sale price of minor
mineral is not covered by the terms of clause (o) of sub-
section (IA) of Section 15. This clause can relate only to
the regulation of the grant of quarry and mining leases and
other mineral concessions and it does not confer the power
to regulate the sale of already mined minerals.
25. In our view, therefore, the High Court was clearly
right in striking down Rules 8D and 19B as being beyond the
purview of the rule making power of the State Government.
These Rules having been struck down, the High Court was also
right in striking down Government Order No.214 to the extent
that it prescribed these Rules and Government Order No.216
made in pursuance of these Rules.
26. In the result, these appeals succeed in part. The
judgment and order of the High Court is set aside in so far
as it holds that Rule 19A as amended by Government Order
No.214 dated 10th June, 1992, is bad in law. The judgment
and order of the High Court is affirmed in so far as it
holds that Rules 8D and 19B are bad in law. It is affirmed
also in so far as it holds that Government Order No. 214
dated 10th June, 1992, in so far as it prescribes Rules 8D
and 19, and Government Order No.216 dated 10th June, 1992,
are bad in law,
27. There shall be no order as to costs.
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