Full Judgment Text
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CASE NO.:
Appeal (civil) 9811-9812 of 1995
PETITIONER:
V.P. PITHUP1TCHAI AND ANR.
RESPONDENT:
SPECIAL SECRETARY TO THE GOVT. OF TAMIL NADU
DATE OF JUDGMENT: 30/04/2003
BENCH:
RUMA PAL & B.N. SRIKRISHNA
JUDGMENT:
JUDGMENT
2003 (3) SCR 1045
The Judgment of the Court was delivered by
RUMA PAL, J. The appellants gather and trade in seashells. The seashells
are collected from lands belonging to private individuals along the
seashore near Tuticorin in the state of Tamil Nadu.The question to be
decided is whether seashells can be termed to be ’mineral’ within the
meaning of the Mines and Minerals (Regulation and Development) Act, 1957
(referred to as the Act).
The Act was enacted by the Central Government in exercise of its power
under Entry 54 of List 1 of the Seventh Schedule read with Article 246 of
the Constitution. Under Section 2 of the Act it was 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 provided in the Act. The word ’minerals’ has been somewhat un-
helpfully, defined in Section 3(a) as including "all minerals except
mineral oils." Despite the generality of this definition, from the
provisions of the Act it is clear that there are two classes of minerals.
The first is that of "minor minerals" which has been defined in Section
3(e) of the Act as meaning "building stones, gravel, ordinary clay,
ordinary sand other than sand used for prescribed purposes, and any other
mineral which the Central Government may, by notification in the Official
Gazette, declare to be a "minor mineral". The second group of minerals
would be the "major minerals" or the minerals not included within the
definition of "minor minerals". The importance of this distinction between
the two types of minerals lies in the fact that as far as minor minerals
are concerned the State Governments have been empowered under Section 15 to
make rules in respect of minor minerals by notification in the Official
Gazette for regulating the grant of quarry leases, mining leases or other
mineral concessions in respect of minor minerals and for the purposes
connected therewith. The provisions of the Act, namely, Section 5 to 13
which relate to all other minerals do not apply to minor minerals.
The Act envisages three kinds of operations in respect of minerals-mining,
prospecting and reconnaissance. We are in this case concerned with mining
leases. Section 4 of the Act inter alia provides that no person shall
undertake mining operations in any area except under and in accordance with
the terms and conditions of a mining lease granted under the Act and the
Rules framed thereunder. Sub-section (1) of Section 6 places restrictions
on the acquisition of any mineral or prescribed group of associated
minerals in a State. The associated minerals have been specified in Rule 69
of the Mineral Concession Rules, I960. Section 9 provides for the payment
of royalty in respect of mining leases in respect of any mineral removed or
consumed by the holder or by his agent, manager, employee, contractor or
sub-lessee from the leased area at the rate for the time being specified in
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the Second Schedule in respect of that mineral. The Second Schedule
contains a list of 50 specified minerals. Entry 28 refers to "lime shell"
and item 51 deals with ’all other minerals not herein before specified’.
By a letter dated 24.9.73, the Collector, Tirunevelli, wrote to the State
Government, stating (in so far as it is relevant) that large quantities of
seashells were being quarried from "patta lands" near Tuticorin village and
transported to various places for sale. Since seasheslls did not find place
in the list of "associated minerals" under Rule 69 of the Mineral
Concession Rules, 1980, the Collector requested that the Central Government
should be moved to notify seashells as an associated mineral under the Act.
On 3rd April 1975, the State Government issued a memo which said that the
proposal of the Collector had been carefully examined in consultation with
the Director of Industries and Commerce and that it was "reported that
seashells are the same as ’lime shell’ which is classified as a major
mineral under the Second Schedule to the Mines and Minerals (Regulation and
Development) Act. 1957 and royalty rates similar to "limestone" have been
prescribed. Hence seashells have to be treated only as "major minerals".
Pursuant to this order, the Collector called upon the appellants to take
out leases and pay royalty in respect of seashells at the rate prescribed
for lime shell in the Second Schedule to the said Act.
Some of the appellants approached the Government with representations
against the levy and requirement of taking a licence. The Government by
G.O. dated 26.5.1977 rejected the representations. The reason given was
that in other districts "seashell" had been treated as a major mineral and
mining leases had been granted by the Government in respect of seashells.
The appellants then challenged the order dated 3.4.75 before the High Court
of Madras under Article 226 of the Constitution. Although the learned
Single Judge held, that as seashells are admittedly dug out from the earth,
they would fall within the definition of "minerals", the writ petitions
were allowed by holding that as seashells were not included in the Second
Schedule to the Act, royalty could not be levied in respect of seashells in
the absence of any notification by the Government of India under Section
13(2) of the Act.
The Appellate Court allowed the appeals preferred by the State Government.
The Court considered the definition of minerals and came to the conclusion
that a seashell was a mineral since it was not an organic substance. The
submission of the appellants that a mineral must form part of the earth’s
crust, was also rejected. The Court found no definition of the word
"limeshell" in any English Dictionary and held that the word "limeshell"
was a compound word consisting of "lime" and "shell" and that "shell" which
contains "lime" is classified as "limeshell". Although it was acknowledged
by the Court as not being an authority, reference was made to a paper
submitted in a seminar on Carbonate Rocks of Tamil Nadu organised by the
Geologists Association of Tamil Nadu in 1974 where, apparently, the
material commonly known as seashells was referred to as "limeshell" and the
word limeshell and seashells were taken as synonymous and "indiscriminately
(sic) used" for giving the same meaning in different places. The Appellate
Court therefore came to the conclusion that the word "lime" shown in item
14 of the Second Schedule includes what is known as seashells "in this part
of the country" and therefore was subject to levy of royalty as a major
mineral.
We are unable to uphold the decision of the Appellate Court. The word
’mineral’ although not defined in the Act has been judicially interpreted.
According to this Court’s view in State of M.P. v. Mahalaxrni Fabric Mills
Ltd., [1995] Supp 1 SCC 642.
"Mineral in ordinary and common meaning is a comprehensive term including
every description of stone and rock deposit whether containing metallic or
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non-metallic substance. The word mineral in popular sense means those
inorganic constituents of the earth’s crust which are commonly obtained by
mining or other process for bringing them to the surface for profit."
(p.665)
However in Bhagwan Dass v. State of U.P. [1976] 3 SCC 784, 789, it was
said.
"it is wrong to assume that mines and minerals must always be sub-soil and
that there can be no minerals on the surface of the earth. Such an
assumption is contrary to informed experience. In any case the definition
of mining operations and minor minerals in Section 3 (d) and (e) of the Act
of 1957 and Rule 2(5) and (7) of the Rules of 1963 shows that minerals need
not be subterranean and that mining operations cover every operation
undertaken for the purpose of "winning" any minor mineral. "Winning" does
not imply a hazardous or perilous activity. The word simply means
"extracting a mineral" and is used generally to indicate any activity by
which a mineral is secured."
See also : M/s. Banarasi Dass Chadha & Brothers v. Lt. Governor, Delhi
Administration and Ors., [1978] 4 SCC 11 at p. 13.
The learned Single Judges’s observation that as seashells are admittedly
dug out from the earth, therefore, they fall within the definition of
’mineral’ appears to be an incorrect approach. Minerals need not
necessarily be dug out from the earth and what is dug out from the earth
need not necessarily be a mineral. Therefore, a mineral as judicially
defined would mean an inorganic substance found either on or in the earth
which may be garnered and exploited for profits.
This is in keeping with the meaning given in the several dictionaries
referred to by the High Court to determine the meaning of the word
’mineral’ which are reproduced:
(i) Websters Third New International Dictionary, 1968 defines ’mineral’ as:
"a solid homogenous crystalline chemical element or compound - as diamond
or quartz) that results from the inorganic processes of nature and that has
a characteristic crystal structure and chemical composition or range of
compositions...............................................................
........something that is neither animal nor vegetable as in the old
general classification of things into three kingdoms; animal, vegetable and
mineral".
(ii) Funk and Wagnalls’ Standard Dictionary, International Edition, Volume
II:
"a naturally occurring, homogenous substance or material formed by
inorganic processes and having a characteristic set of physical properties,
a definite range of chemical composition, and a molecular structure usually
expressed in crystalline forms.....Any inorganic substance, as ore, a rock,
or a fossil." (iii) Oxford Illustrated Dictionary: "Substance (e.g. metal,
coal, salt) got by mining.....
....(chem) element or compound occurring naturally as a product of
inorganic processes........ substance which is neither animal nor
vegetable." (iv) Groliar International Dictionary Volume II,
"any naturally occurring, homogenous inorganic substance having a definite
chemical composition and characteristic crystalline structure, colour and
hardness.......
Any of various natural substances.
a. An element, such as gold or silver.
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b. A mixture of inorganic compounds, such as hornblende or granite.
c. An organic derivative such as coal or petroleum.....any substance
that is neither animal nor vegetable, inorganic matter."
It is not really necessary for us to consider whether seashells fall within
the residuary entry in the Second Schedule as that was nobody’s case at any
stage of the proceedings. We are strictly called upon to determine the
correctness of the High Court’s opinion that a seashell is limeshell within
the meaning of Item 28 of the Second Schedule to the Act because the term
’lime’ denotes the chemical composition of the shell and the term ’sea’
denotes the place of its occurrence.
A distinction must be drawn between (i) a substance identified as a
mineral, (ii) a substance containing minerals (for example bones which
contain large percentages of calcium and phosphate and to some extend
carbonate) and (iii) a substance which may be the original source of a
mineral (for example plants which after being subjected to millions of
years of geological processes ultimately become coal). In the first case,
the classification of a substance as a mineral is simple. But the bones in
the second class and trees in the third class can hardly be termed to be
minerals although they may contain or ultimately result in a mineral.
Seashells may, like bones, contain calcium carbonate, and may also like
trees, through a geological process result in a mineral such as limestones.
But ’it cannot be said that a seashell in its original form is a mineral.
The Appellate Court was in any event not justified in arriving at the
meaning of the word "limeshell" by treating it as a compound word, as if it
were a term evolved for the purposes of the Act by the Central Government,
it must be assumed that the Parliament has used the word ’limeshell’ with a
purposes. Besides even if lime may be a product of seashells, unprocessed
seashells cannot be equated with lime. Had limeshells’ meant seashells and
nothing more, Parliament would have referred to it as such without
resorting to convoluted description of a familiar object. The respondents
sought to contend that seashell was nothing but a synonym for ’limeshell’
and have relied upon the chemical composition of limestone to justify this
assertion. The submission is unacceptable. There are three separate entries
in the Second Schedule in which the word ’lime’ finds place. The first is
Entry 26 which specifies ’limestone’, the second ’Lime Kankar’ under Entry
27 and the third is Entry 28 which refers to ’Limeshell’. Further while
seashells may evolve geologically into a form of limestone, it is not
limestone. If a person wanted to have a tonne of limestone, it is doubtful
whether he would be satisfied with a tonne of seashells instead.
The key paper referred to by the High Court has not been produced before
us. We do not know who submitted the paper nor what the qualifications of
the person were. Nor can we ascertain what was in fact said. The High Court
was right in saying that the paper cannot be cited as an authority for the
definition of limeshell. The word ’limeshells’ has been defined in the
Oxford English Dictionary (1933 edn. Vol. VI at page 296) as "Burnt lime
before it is slaked". According to this definition therefore, "lime shell"
is the product of lime. It is not either the lime itself nor the substance
from which lime may be derived.
All this discussion clearly shows that the issue whether seashell is
mineral for the purposes of the Act, was not one which could be determined
without extensive research by technically competent persons. According to
the respondent the State Government was guided by the report of the
Additional State Geologist in issuing the order dated 3.4.1975. The order
does not refer to any report nor has the report been brought on record nor
its contents disclosed. The letter dated 3rd April 1975 does not show that
the State Government had acted on the finding of any acknowledged expert.
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The determination that seashells is lime-shell and a major mineral within
the meaning of the Act does not appear to have been based upon any
’material whatsoever. The reason given in GO dated 26.5.1977 for rejection
of the representation of some of the appellants, namely, that mining leases
had already been issued in other districts of the State in respect of
seashells, is no reason at all. The counter affidavit which has been filed
before this Court on behalf of the respondent has been affirmed by the
Deputy Secretary, Industrial Department. His competence as a geological
expert is not known. In his counter-affidavit he has sought to define
limeshell as "desposition from marine animals with lime skeletons as
unconsolidated deposits of loose shells admixed with fine silt and sand",
meaning thereby that limeshell are deposits from marine animal skeletons,
upon their being admixed with silt and sand. It is also said that limeshell
are found as "stratified deposits varying in thickness........" and
further, as "lagoonal deposits.......river bed deposits.......
and marine/sea deposits". It is therefore apparent that even the
definitions put forward by the deponent, do not indicate the seashells by
themselves are limeshell. Limeshell according to the definition advanced by
the respondent is in the nature of a deposit of lime, which might be
derived from marine animal shells upon further processing and after
admixture with other inorganic elements. For all these reasons the decision
of the State Government be as expressed in the G.O dated 3.4.1975 cannot be
sustained.
There is another aspect of the matter. Having regard to the fact that the
Act is a Central Government’s legislation which occupies the field, it is a
moot point whether the State Government was competent to have decided the
issue as to whether a particular substance was a mineral or not for the
purposes of the Act.
We, therefore, allow these appeals and set aside the impugned decision of
the High Court. At the time of entertaining the special leave petitions,
out of which these appeals arise, on 26th February 1988, this Court had
directed.
"Pending notice there will be interim stay subject to the condition that
the petitioner will deposit 50% of the royalty payable to the Collector and
furnish Bank Guarantee in respect of the rest of the royalty to the
satisfaction of the Collector concerned within six weeks."
This interim order is still operative."
In view of our decision in the appeals, the requirement of taking out a
mining lease under the 1957 Act and of payment or royalty thereunder in
respect of seashells cannot, of course, be suatained. However since the
matter is pending before this Court for a long time and realisations have
been made by the State Government on the basis of the impugned decision of
the High Court, it would not be appropriate to direct refund of the amounts
already collected by the respondent from the appellants under the Act in
respect of seashells. However, if there are any pending demands, they shall
not be proceeded with and no recovery would be made. As far as the bank
guarantees are concerned, they shall stand discharged. It is made clear
that the respondent shall not be entitled to any amount from the appellants
except such amount as may have already been deposited with the State
Government by the respondent. No demand whether already raised or pendings
will lie against the appellant under the Act.