Baijnath Kedia Vs. State of Bihar
& Ors  INSC 208 (28 August 1969)
28/08/1969 HIDAYATULLAH, M. (CJ)
HIDAYATULLAH, M. (CJ) SHELAT, J.M.
BHARGAVA, VISHISHTHA HEGDE, K.S.
CITATION: 1970 AIR 1436 1970 SCR (2) 100 1969
SCC (3) 838
CITATOR INFO :
D 1972 SC2301 (30) RF 1975 SC1389 (1,6,7,16)
D 1976 SC 714 (75) RF 1976 SC1654 (5,25,51) F 1980 SC 614 (29) RF 1980 SC1955
(41) RF 1981 SC 711 (1) D 1982 SC 697 (27) RF 1986 SC 85 (26) RF 1986 SC1323
(27) E 1991 SC1676 (45,46,47,49,55)
Constitution of India, 1950, Seventh Schedule
List I, Entry 54, List II Entry 23-Government of India Act, 1935, Seventh
Schedule, List I Entry 36, List II Entry 23-Power to legislate as to mines and
minerals-State's power is subject to Centre's power-Bihar Legislature had no
jurisdiction to enact 2nd proviso to s. 10(2) of Bihar Land Reforms Act,
1950-Field already covered by s. 15 of the Mines and Minerals (Regulation and
Development) Act 67 of 1957-Rule 20(2) of Bihar Minor Minerals Concession
Rules, 1964 invalid for lack of legislative support.
Entry 54 of the Union List I in the Seventh
Schedule to the Constitution confers power for the regulation of mines and
mineral development to the extent to which such regulation and development
under the control of the union is declared by Parliament by law to be expedient
in the public interest.
The corresponding entry in the Federal List I
under the Government of India Act, 1935 was entry 36 which besides mines and
mineral development dealt with oilfields also.
Entry 23 of List II of the Constitution gives
power for regulation of mines and mineral development to the States subject to
entry 54 of List I. The corresponding entry under the Government of India Act
was entry 23 of List Il.
The Central Assembly in exercise of its power
under entry 36. of List I in the Government off India Act enacted the Mines and
Minerals (Regulation and Development) Act 53 of 1948 which dealt with mines,
mineral development as well as oilfields. Rule 4 of the Mineral Concession
Rules, 1948 made under the Act which came into force on October 25, 1949 gave
power to the State Government to frame rules for the regulation and development
of 'minor minerals' as defined in the Rules. In 1957 Parliament passed the
Mines and Minerals (Regulation and Development) Act 67 of 1957.
The Act of 194-8 was adapted to deal with
oilfields and gas only. In Act 67 of 1957 the provisions relating to regulation
of mines in s.s. 4 to 13 were by s. 14 made inapplicable to 'minor minerals' as
defined in the Act.
Rules relating to minor minerals were under
s. 15 to be made by State Governments and till such rules were made any rules
enforce at the commencement of the Act were to continue.
The appellant purchased in 1963 a lease for
quarrying minor minerals as defined in Act 67 of 1957 from a vendor who had
taken the original lease from the then landlords in 1955. When under s. 10(1)
of the Bihar Land Reforms Act, 1950) the rights of the intermediary landlord
vested in the State of Bihar the said State became lessor of the appellant's
lease. The lease was confirmed on behalf of the State and rent under the terms
of the original lease was paid by the appellant up to September 1965. The Bihar
Government had not framed any rules relating to minor minerals under Act 53 of
1948 but it framed the Bihar Minor Mineral Contession Rules, 1964 under s. 15
of the Act 67 of 1957. Also, in 1964 the Bihar legislature amended s. 10(2) of
the Reforms Act. A second pro viso was added to sub-el.
(2) whereby the terms and conditions of and
pubsisting leases of minor minerals would be substituted by the terms and 101
conditions laid down in the Bihar Minor Mineral Concession Rules to the extent
that the former were inconsistent with the latter. Rule 20 of the said Bihar
Rules as originally framed provided for realisation of dead rent, royalty and
surface rent in 'respect of leases granted or renewed. In terms the rule was
prospective only. But in December 1964 it was amended by the addition of a
second sub-rule according to which the provisions as to dead rent etc. would
also apply to leases granted or renewed prior to the date of the commencement
of the Act and subsisting on such date. On the strength of the amended s. 10(2)
of the Reforms Act and the amended r. 20 the Bihar Government demanded from the
appellant, dead rent, royalty and surface rent contrary to the terms of his
lease. The appellant thereupon filed a writ petition in the High Court.
Dissatisfied with the judgment of that court
the appellant came to this Court. It was contended on behalf of the:
appellant: (i) that the subject of regulation
of mines and mineral development came within the exclusive jurisdiction of
Parliament as a result of the passing of Act 67 of 1957 with the result that
the State Legislature was left with no power to pass the second proviso to s.
10(2) and the said proviso was therefore ultra vires, (ii) that r. 20(2) being
without legislative support could not touch a lease granted, in 1955. On behalf
of the respondent State it was urged that (a) the 2nd proviso to s. 10(2) of
the Reforms Act fell not under entry 23 but under entry 18 of List II which
dealt with land and land tenures; (b) Act 67 of 1957 did not result in control
of the union as contemplated by entry 54 in List I and therefore the State's
jurisdiction under entry 23 List II was not ousted; (c) modification of leases
was not covered by s. 15 of the said Act and since Parliament was silent on
that subject the field remained open for legislation by the State.
HELD: (i) Entry 54 of the Union List speaks
both of regulation of mines and mineral development and entry 23 is subject to
entry 54. It is open to Parliament to declare that it is expedient in the
public interest that the control should vest in Central Government. Once: this declaration
is made and the extent laid down the subject of the legislation to the extent
laid down becomes an exclusive subject for legislation by Parliament. Any
legislation by the State after such declaration and touching upon the field
disclosed. in the field is extracted from the legislative competence of the
State. [113 B--D] The declaration contemplated by entry 54 is contained in s. 2
of Act 67 of 1957 and the Central Government is given control as to regulation
of mines and mineral development to the extent provided in the Act. Thus what
is left within the competence of State Government has to be worked out from the
terms of the Act itself. [113 F] The Act deals with minor minerals separately
from other minerals. In respect of minor minerals it provides in s. 14 that ss.
4 to 13 do not apply to prospecting licences and mining leases. It goes on to
state in s. 15( 1 ) that the State Government may by 'notification make 'rules
for regulating the grant of prospecting licences and mining leases in respect of
minor minerals and for purposes connected therewith, and in s. 15(2) that till
are framed any rules already in force would
continue. No 'rules existed in the State of Bihar which could be preserved
under s. 15(2). Therefore the whole subject of legislation was covered in
respect of minor minerals by s. 15(1). Whether rules under that section were
made or not the topic was covered by Parliamentary legislation and to that
extent the powers of the State Legislature were wanting. [114 G--115 B] It must
accordingly be held that by the declaration in s. 2 and by the enactment of s.
15 the whole of the field relating' to minor minerals came 102 within the
jurisdiction of Parliament and no scope was left 'for the enactment of the
second proviso to s. 10(2) of the Land Reforms Act. The second proviso was
therefore ultra vires.
Hingir Rampur Coal Co. Ltd. & Ors. v.
State of Orissa & Ors.  2 S.C.R. 537 and State of Orissa v. M.A.
(ii) Vested interests cannot be taken away
except by law made by a competent legislature. Mere rule-making power is not
sufficient. In view of Act 67 of 1957 the Bihar Legislature had lost
jurisdiction to legislate about minor minerals. The power of the Central
Government; to modify existing mining leases was confined under s. 16 of the
Act to leases granted before October 25, 1949. For modifying leases granted
after that date legislation by Parliament on the lines of s. 16 was necessary.
Rule 20(2) of the Bihar Minor Concession Rules, 1964 was ineffective 'for the
purpose. It could not derive sustenance from the 2nd proviso to s. 10(2) of the
Reforms Act as that proviso was not validly enacted. There was also no other
legislative support since s. 15 of the Act of 1957 did not contemplate
alteration of terms of leases already in existence before that Act was passed.
[116 B--E; 116 G; 117 D] (iii) The contentions raised on behalf of the State
must be rejected: (a) The abolition of the rights of intermediaries in the
mines and vesting of these rights as lessors in the State Government was a
topic connected with land and land tenures. But after the mining leases stood
between the State Government and the leases, any attempt to regulate those
mining leases will fall not in entry 18 but in entry 23. The pith and substance
of the amendment to s. 10 of the Reforms Act falls within entry 23 although it
incidentally touches land. [115 C---E] (b) Union consists of its three limbs
namely, Parliament, Union Government and Union Judiciary. Control by Parliament
is therefore control of the Union within the meaning of entry 54 and for the
purpose of ousting jurisdiction under entry 23. [115 F--G] (c) The entire
legislative field relating to minor minerals having been withdrawn from the
State legislature it could not be said that because s. 15 did not deal with
modification of leases the State was free to legislate in this field. [117
A--C] & CIVIL APPELLATE JURISDICTION: Civil Appeals Nos. 685 to 688 of
Appeals from the judgments and orders dated
November 1, 1966, December 21, 1966 and December 23, 1966 of the Patna High
Court in C.W.J.C. Nos..1036, 686, 1200 and 778 of 1965 respectively.
A.K. Sen and P.K. Chatterjee, for the
appellants (in all the appeals).
Lal Narain Singha, Lakshman Saran Sinha and
Goburdhun, for the respondents (in C.A. No..
685 o.f 1967).
B.P. Jha, for the respondents (in C.A. No.
686 of 1967).
U.P. Singh, for the respondents Nos. 1 to 3
Nos. 687 and 688 of 1967).
103 Krishna Sen, M.M. Kshatriya and G.S.
Chatterjee, for respondent No. 4 (in C.A. No. 687 of 1967) and respondents Nos.
5 to 8 (in C.A. No. 688 of 1967).
R.C. Prasad, for the intervener (in C.A. No.
685 of 1967).
The Judgment of the Court was delivered by
Hidayatullah, C.J. This judgment will also govern the. disposal of Civil
Appeals 686 (Kanti Prasad Pandey v. State of Bihar and others), 687 (Shri
Krishna Chandra Gangopadhya v. State of Bihar and others) and 688 (M/s.
Pakur Quarries Private Ltd. & Ant. v.
State of Bihar and others) of 1967. These four appeals have been brought
against a common judgment, November 1, 1966, of the High Court of Patna and
arise out of four petitions under Art.
226 of the Constitution filed to question the
validity of Proviso (2) to s. 10(2) added by Bihar Land Reforms (Amendment) Act
1964 (Bihar Act 4 of 1965), and the operation of the second sub-rule of r. 20
added on December 10, 1964 by a notification of the Governor in the Bihar Minor
Mineral Concession Rules, 1964. The facts of all the four cases are similar and
the same points arise ,for determination. It is, therefore, sufficient to state
the facts in Civil Appeals 685 and 686 as illustrative of the others as well.
One Jyoti Prakash Pandey obtained on March
23, 1955 from Babu Bijan Kumar Pandey and Smt. Anita Devi acting for herself'
and also as legatee under the will of one Baidyanath Pandey, registered leases
to quarry stone ballast, boulders and chips from and upon Blocks Nos. 32, 45/1
45/2 and 45/3 in tauzi No. 1452, khata No. 1 in Mouza Malpahari No. 89 in Pakur
SubDivision of Santhai Parganas. The leases were to commence from November 1,
1954 and to end on October 31, 1984, that is to say, they were for a total
period of 30 years. Jyoti Prakash Pandey was working under the name and style
of 'Stone India'. He sold his rights, title and interest by a registered sale-
deed on September 9, 1963 to the present appellant. It is admitted that rent
under the terms of the original lease was deposited upto September 1965.
On the passing of the Bihar Land Reforms Act,
1950 (Act 30 of 1950) the ex-landlords ceased to have any interest from the
date of vesting and in their place the State of Bihar became lessor under s.
10(1) of the Land Reforms Act.
The terms of s. 10 were as given below. After
the vesting of the estate of the inter- "10. Subsisting leases of mines
and minerals:- (1)Notwithstanding anything contained in this Act, where
immediately before the date of vesting of the estate or tenure there is a
subsisting lease of mines or minerals comprised in the estate or tenure or any
part thereof, the whole or that part of the estate or tenure comprised in such
lease shall, with effect from the date of vesting, be deemed to have been 104
mediaries, the State of Bihar as the new lessor recognised the lease for the
quarrying of stones for the remaining period and the Deputy Commissioner,
Santhal Parganas asked for the rent from the date of vesting to 30 April, 1965
at the rate of Rs. 200/per year as stated in the original lease. This was by a
letter issued from his office on February 2, 1963. On December 10, 1964 the
appellants received a letter which gives the gist of the facts on which the
present controversy starts and the relevant part may be quoted here:
"Government have been pleased to amend
the section 10 of Bihar Land Reforms Act, 1950, and according to which the
terms and conditions in regard to leases for minor minerals stand statutorily
substituted by the corresponding terms and conditions by the Bihar Minor
Mineral Concession Rules, 1964. As a result of this, rent and royalty etc. in
respect of minor minerals in the State irrespective of the date on which the
lease was granted are to be paid by all categories of leases according to the
rates given in the aforesaid Rules with effect from 27-10-64".
'The 'appellants denied their liability to
pay. The Government informed them by letter as follows:
"This is to inform you that the terms
and conditions of your mining lease in so far as they are inconsistent with the
Bihar Minor Mineral Concession Rules, 1964, framed by the State Government under
section 15 of the Mines & Minerals (Regulation & Development) Act,
1957, stand substituted by the corresponding terms and conditions prescribed by
the Bihar Mineral Concession Rules, 1964, from 27-1-1964. Accordingly, leased
by the State Government to the holder of the said subsisting lease for the
remainder of the term of that lease and such holder shall be entitIed to retain
possession of the lease-hold property.
(2) The terms and conditions of the said
lease by the State Government shall mutatis mutandis be the same as the terms
and conditions of the subsisting condition that, if in the opinion of the State
Government the holder of the lease had not, before the date of the commencement
of this Act, done any prospecting or development work, the State Government
shall be entitled at any time before the expiry of one year from the said date
to determine the lease by giving three months' notice in writing:
Provided that nothing in this sub- section
shall be deemed to prevent any modifications being made in the terms and
conditions of the said lease in accordance with the provisions of any Central
Act for the time being in force regulating the modification of existing mining
(3) The holder of any such lease of mines and
minerals as is referred to in subsection (1) shall not be entitled to claim any
damages from the outgoing proprietor or tenure- holder on the ground that the
terms of the lease executed by such proprietor or tenure-holder in respect of
the said mines and minerals have become incapable of fulfillment by the
operation of this Act.
105 dead rent, royalty and surface rent in
addition to the other substitution as per Bihar Mineral Concession Rules, 1964,
will be as follows :--
1. Dead rent .... Rs. 50/- per acre perannum.
2. Royalty .... Rs. 3/- per 100 cft. of stone
Rs. 2/- per 100 cft. of stone ballast and
Rs. 4/- per 100 cft. on building stones.
Re. 1/-per 100 Nos. of stones 'setts'.
3. Surface rent 3 .. Rs. 10 per acre per
year." It is this additional demand and the liability to pay, which is the
subject of controversy here. The Bihar Government contends that the terms of
the original lease have been validly altered by the operation of the second
proviso to s.
10 (2) of the Bihar Land Reforms Act added
first by Ordinance III of 1964 and later incorporated again by the Bihar Land
Reforms (Amendment) Act, 1964 (Act 4 of 1965) and the addition of s. 10A to the
Act by the same enactments.
The material part of the second section of
Act 4 of 1965 is quoted below. Section 10A provided for the vesting of the
interest of leases of mines or minerals which were subject to such leases and
need not be read here. The State Government also relied upon the Bihar Mineral
Concession (First Amendment) Rules, 1964 by which a second sub-rule was added
to Rule 20. The twentieth rule, purporting to be framed under s. 15 of the
Mines and Minerals (Regulation 'and Development) Act, 1957 (67 of 1957) was
amended on December 19, 1964 and now reads:
Rule 20. ( 1 ) Dead rent, royalty and surface
rent.-- When a lease is granted or renewed.
(a) dead rent shall be charged at the rates
specified in Schedule 1, (b) royalty shall be charged at the rates specified in
Schedule II, and (c) surface rent shall be charged at the rates specified by
the Govt. in the Revenue Department from time to time.
2. Amendment of section 10 of Bihar Act XXX
of 1950.-- In Section 10 of the Bihar Land Reforms Act, 1950 (Bihar Act XXX of
1950) (hereinafter referred to as the said Act).-- (a) in sub-section (2), the
following second proviso shall be added, namely :- "Provided further that
the terms and conditions of the said lease in regard to minor minerals as
defined in the Mines and Minerals (Regulation and Development) Act, 1957 (Act
LXVII of 1957), shall, in so far as they are inconsistent with the rules made
by the State Government under section 15 of that Act, stand substituted by the
corresponding terms and conditions prescribed by those rules and if further
ascertainment and settlement of the terms will become necessary then necessary
proceedings for that purpose shall be undertaken by the Collector"; and
(b) after sub-s. LI Sup. Cl/70--8 106 (2) On and from the date of commencement
of these rules, the provisions of sub-rule (1) shall also apply to leases
granted or renewed prior to the date of such commencement and subsisting on
such date." The contention is that the amendment of s. 10 of the Bihar
Land Reforms Act is ultra vires the Constitution and that rule 20(2) does not
legally entitle the recovery of the dead-rent, royalty etc. as in the Schedules
to the Bihar Minor Mineral Concession Rules, 1964.
To understand fully the argument on behalf of
the appellants a resume of the legislation on the subject of mines and minerals
is necessary. Under the Government of India Act, 1935, the subject of Mines and
Minerals was covered by Entry 36 of the Federal Legislative List I and entry
No. 23 of the 'Provincial Legislative List II of the 7th Schedule. These
entries read as follows:
"Entry 36. Regulation of mines and oil
fields and mineral developments to which such regulation and development under
a Federal control is declared by Federal law to be expedient in the public
interest." "Entry 23. Regulation of mines and oil fields and mineral
development subject to the provisions of List I with respect to regulation and
development under Federal control." When the Indian Independence Act, 1947
was passed the word federal' where it occurs for the first time in entry 36 and
in entry 23 was changed to 'dominion'. The entries are practically repeated in
the present Constitution and may be read immediately here:
"Entry 54, of List H--Union List--reads:
"Regulation of mines and mineral
development to the extent to which such regulation and development under the
control of the Union is declared by Parliament by law to be expedient in the
public interest." Entry 23 of List II--State List--reads:
"Regulation of mines and mineral
development subject to the provisions of List I with respect to regulation and
development under the control of the Union." The difference between the
entries of the Government of India Act, 1935 and the present Constitution lies
in the removal of oilfields from the entries and the declaration now must be by
Parliament. Entry 53 in List I deals with oilfields and mineral resources.
107 In 1948 the Legislative Assembly enacted
the Mines and Minerals (Regulation and Development) Act, 1948 (Act 53 of 1948).
It received the assent of the Governor-General on September 8, 1948. It was an
Act to provide for the regulation of mines and oilfields and for the
development of minerals. In s. 2 of that Act is to be found the declaration
contemplated by entries 36 and 23, 7th Schedule of the Government of India Act,
1935. That declaration reads as follows:
"2. It is hereby declared that it is
expedient in the public interest that the Central Government should take under
its control the regulation of mines and oil fields and the development of
minerals to the extent hereinafter provided." Section 3 of the Act of 1948
contained definitions. There were definitions of 'mine' and 'minerals'. The
former meant an excavation for the purpose of searching for or obtaining
minerals and included an oil-well and the latter included natural gas and
petroleum. Section 4 provided that no mining lease would be granted after the
commencement of that Act otherwise than in accordance with the rules made under
that Act and that a mining lease granted contrary to the provisions would be
void and of no effect. Section 5 empowered the Central Government, by
notification to make rules for regulating the grant of mining leases or for
prohibiting the grant of such leases in respect of any mineral or in any area.
In particular the rules could provide for the manner in which, the minerals or
areas in respect of which and the persons by whom, 'applications for mining
leases could be made and the fees payable, the terms on which and the
conditions subject to which, mining leases might be granted, the areas and the
period for which any mining lease might be granted and the maximum and minimum
rent payable by a lessee, whether the mine was worked or not. Under s. 6 the
Central Government had power to make rules as respect mineral development.
Section 7 then provided as follows:
"7. (1) The Central Government may, by
notification in the official Gazette, make rules for the purpose of modifying
or altering the terms and conditions of any mining lease granted prior to the
commencement of this Act so as to bring such lease into conformity with the
rules made under sections 5 and 6:
Provided that any rules so made which provide
for the matters mentioned in clause (c) of sub-section (2) shall not come into
force until they have been approved, either with or without modification's, by
'the Central Legislature.
108 (2) The rules made under sub-section (1)
shall provide-- (a) for giving previous notice of the modification or
alteration proposed to be made there under to the lessee, and when the lessor
is not the Central Government, also to the lessor and for affording them an
opportunity of showing cause against the proposal.
(b) for the payment of compensation by the
party who would be benefited by the proposed modification or alteration to the
party whose rights under the existing lease would thereby be adversely
affected; and (c)for the principles or which, the manner in which and the
authority by which the said compensation shall be determined." Section 8
provided that the Central Government might by notification direct that 'any
power exercisable under that Act might be exercised, subject to such conditions
if any, as might be specified by such officer or authority or might be
specified in the direction. In furtherance of the powers conferred the Central
Government framed the Mineral Concession Rules 1949 and they came into force on
the twenty-fifth day of October 1949. These rules for the first time defined
minor minerals and after amendments from time to time the term meant:
"3 (ii) 'minor mineral' means building
stone, boulder, shingle, gravel, Chalcedony pebbles (used ,for ball mill
purposes only), limeshell, kankar and limestone used for lime burning, murrum,
brick-earth (Fuller's earth), Bentonite, ordinary clay, ordinary sand (used for
non- industrial purposes), road metal, reh-matti, slate and shale when used for
building material." Rule 4 however provided:
"4. Exemption.--These rules shall not
apply to minor minerals, the extraction of which shall be regulated by such
rules as the Provincial Government may prescribe." The word
"provincial" was later changed to 'State'. Although some of the
Provinces (now States) made Minor Mineral Concession Rules, it is admitted that
Bihar Government did not frame any such rules.
The leases of the appellants' predecessors
were granted in 1955 during the subsistence of the Act of 1948 and the Rules of
1949. It is also to be noticed that a fresh declaration was made by Parliament
as required by entry 54 List I--Union List of the 7th 109 Schedule of the
Constitution. The existing laws, however, continued. Without a declaration by Parliament
the field of legislation might have been open to the State Legislatures under
entry 23 of List II--State List of the Constitution but no law was made except
what was enacted by the Bihar Legislature in the Land Reforms Act about vesting
of mines in the State and the emergence of the State as a lessor in place of
all original lessors.
Further rules were made by the Central
Government in 1955 and 1956. In 1955 Minerals Conservation and Development
Rules were made which were later replaced in 1958. On September 4, 1956, the
Central Government in exercise of the powers conferred by s. 7 of the Act of
1948 made the Mining Leases (Modification of Terms) Rules 1956.
Under these rules existing Conservation 'and
Development Rules. The expression 'existing mining leases were to be brought
into conformity with the Minerals Conservation and Development Rules. The
expression 'existing mining leases' was defined as a mining lease granted
before 25th day of October 1949 and subsisting at the commencement of those rules
'but did not include any lease in respect of any minor mineral within the
meaning of clause (c) of s. 3 of the Act of 1948.
We now come to the year 1957. In that year
Parliament enacted the Mines and Minerals (Regulation and Development Act, 1957
(Act 67 of 1957). It came into force from December 28, 1957. Act 67 of 1957
made amendments in the Act of 1948 so as to make the latter relate to oilfields
only. All references to minerals other than oil were removed, with the result
that it became legislation exclusively relating to oil and gas. Since the Act
of 1948 was thus altered, Parliament enacted new provisions for minerals in Act
67 of 1957. We are primarily concerned with this Act in these appeals. A glance
at some of the provisions of Act 67 of 1957 is necessary.
The Act 67 of 1957 came into force on 1st
June, 1958 and extended to the whole of India. It contained the following
declaration in s. 2:
"It is hereby declared that it is
expedient in the public interest that the Union should take under the control
the regulation of mines and the development of minerals to the extent
hereinafter provided." By definition minerals excluded mineral oils
because the Act of 1948 exclusively dealt with oil. 'Minor minerals' were
defined to mean 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. Act 67 of 1957 contained 33 sections which were separated by general
headings 110 showing the topics dealt with. The first group of sections 4--9
contained general restrictions on undertaking prospecting and mining
operations. of this group we may quote here s. 4 which will be considered
"4. Prospecting or mining operations to
be under license or lease-- (1 ) No person shall undertake any prospecting or
mining operations in ,any area, except under and in accordance with the terms
and conditions of a prospecting licence or, as the case may be, a mining lease,
granted under this Act and the rules made thereunder:
Provided that nothing in this sub-section
shall affect any prospecting or mining operations undertaken in any area in
accordance with the terms and conditions of a prospecting licence or mining
lease granted before the commencement of this Act which is in force at such
(2) No prospecting licence or mining lease
shall be granted otherwise than in accordance with the provisions of this Act
and the rules made there under." Section 5 lays down restrictions on the
grant of prospecting licences or mining leases. Section 6 prescribes. the
maximum area for which a prospecting license or mining lease may be granted and
section 7 the periods for which prospecting licences may be granted or renewed
and section 8 the periods for which mining leases may be granted or renewed.
Section 9 fixes the royalties in respect of mining leases.
Then follows another group of sections 10--12
which lays down the procedure for obtaining prospecting licences or mining
leases in respect of land in which the minerals vest in the Government. The
next group of sections 13--16 is headed Rules for regulating the grant of
prospecting licences and mining leases. Section 13 gives power to the Central
Government to make rules in respect of minerals.
Section 14 however excludes the application
of sections 4--13 to minor minerals. It reads:
"The provisions of sections 4 to 13
(inclusive) shall not apply to prospecting licences and mining leases in
respect of minor minerals." Section 15 gives power to the State
Governments to make rules in respect of minor minerals. It reads:
111 "15 (1 ). The State Government may,
by notification in the official Gazette, make rules. for regulating the grant
of prospecting licences and mining leases in respect of minor minerals and for
purposes connected therewith.
(2) Until rules are made under sub- section
(1 ), any rules made by a State Government regulating the grant of prospecting
licences and mining leases m respect of minor minerals which are in force
immediately before the commencement of this Act shall continue in force."
Section 16 gives power to modify mining leases granted before 25th October,
1949. It reads:
"16(1 ). All mining leases granted
before the 25th day of October, 1949, shall, as soon as may be after the
commencement of this Act, be brought into conformity with the provisions of
this Act and the rules made under sections 13 and 18:
Provided that if the Central Government is of
opinion that in the interests of minerals development it is expedient so to do,
it may, for reasons to be recorded, permit any person to hold one or more such
mining leases covering in any one State a total area in excess of that
specified in clause (b) of section 6 or for a period exceeding that specified
in sub-section (1 ) of section 8.
(2) The Central Government may, by
notification in the official Gazette, make rules for the purpose of giving
effect to the provisions of sub-section (1) and in particular such rules shall
provide- (a) for giving previous notice of the modification or alteration
proposed to be made in any existing mining lease to the lessee and where the
lessor is not the Central Government also to the lessor and for affording him
an opportunity of showing cause against the proposal.
(b) for the payment of compensation to the
lessee in respect of the reduction of any area covered by the existing mining.
lease; and (c) for the principles on which, the manner in which and the
authority by which, the said compensation shall be determined." Section 17
stands by itself as a group and contains special powers of Central Government
to undertake prospecting or minning operations in certain cases. Section 18
deals with mineral development 'and gives additional rule making power to the
Central 112 Government. Next follow some miscellaneous provisions;
of these, only two interest us. Section 19
lays down that prospecting licences or mining leases granted, renewed or
acquired in contravention of the provisions of the Act shall be void and of no
effect and section 20 that the provisions apply to prospecting licences or
mining leases whether granted before or after the Act. The rest of this Act
does not concern this dispute.
It may be pointed out here that the rules
made under s.
13 do not apply to minor minerals in view of
the provisions of s. 14. The State of Bihar had not made any rules till the
Bihar Minor Mineral Concession Rules, 1964 were made. The modification of the
terms of existing mining leases was provided for in s. 16 but that provision
applied to mining leases granted before 25th October, 1949. The provisions of
Mining Leases (Modification of Terms) Rules, 1955 did not apply to minor
minerals because the definition of 'existing mining lease' excluded a lease in
respect of any minerals.
The power to modify the existing leases in
the case had to be found elsewhere.
The argument of the appellant is that apart
from the provisions of the 2nd proviso to s. 10 added to the Land Reforms Act,
1950 in 1964 by Act IV of 1965 and second sub- rule added to rule 20 of the
Bihar Minor Mineral Concession Rules, 1964, there is no power to modify the
terms. These provisions of law are said to be outside the competence of the
State Legislature and the Bihar Government. With regard to the State
Legislature it is contended that the scheme of the relevant entries in the
Union and State List is that to the extent to which regulation of mines and
mineral development is declared by Parliament by law to be expedient in the
public interest, the subject of legislation is withdrawn from the jurisdiction
of the State Legislature and therefore Act 67 of 1957 leaves no legislative
field to the Bihar Legislature to enact Act 4' of 1965 amending the Land
Reforms Act. As regards Rule 20(2) it is contended that the rule making power
of its own force cannot reach mining leases granted in 1955 and that this could
only be done by a competent legislature. These are the two matters which need
The main arguments are supplemented by the
following contentions. That the Bihar Rules in so far as they make demands of
rent and royalty on the existing leases which were executed prior to their
coming into force are beyond the power to make rules in respect of minor
minerals under s. 15 of Act 67 of 1957, that s. 15 itself is unconstitutional
and void because it delegates legislative power to the rule-making authority
and it is excessive delegation and that the amendment of Bihar Land Reforms.
Act is void because it affects the fundamental rights of the appellants guaranteed
under Articles 31 'and 19 of the Constitution.
113 Although these supplementary arguments
were raised it is obvious that they can arise according as the two main
arguments are allowed or disallowed. Therefore it is necessary to address
ourselves to the first argument that the legislative competence to enact the
amendment to s. 10 of the Reform Act was wanting. As the amendment was made
after Act 67 of 1957 we have to consider the position in relation to it. Entry
54 of the Union List speaks both of regulation of mines and minerals
development and entry 23 is subject to entry 54. It is open to parliament to
declare that it is expedient in the public interest that the control should
rest in Central Government. To what extent such a declaration can go is for
Parliament to determine and this must be commensurate with public interest.
Once this declaration is made and the extent laid down, the subject of
legislation to the extent laid down becomes an exclusive subject for
legislation by Parliament. Any legislation by the State after such declaration
and trenching upon the field disclosed in the declaration must necessarily be
unconstitutional because that field is abstracted from the legislative
competence of the State Legislature. This proposition is also self evident that
no attempt was rightly made to contradict it. There are also two decisions of
this Court reported in the Hingir-Rampur Coal Co. Ltd. & Ors. v. State of
Orissa and Ors.(1) and State Orissa v. M. A. Tulloch & Co. (2) in which the
matter is discussed. The only dispute, therefore, can be to what extent the
declaration by Parliament leaves any scope for legislation by the State
Legislature. If the impugned legislation falls within the ambit of such scope
it will be valid; if outside it, then it must be declared invalid.
The declaration is contained in s. 2 of Act
67 of 1957 and speaks of the taking and the control of the Central Government
the regulation of mines and development of minerals to the extent provided in
the Act itself. We have thus not to look outside Act 67 of 1957 to determine
what is left within the competence of the State Legislature but have to work it
out from the terms of that Act. In this connection we may notice what was
decided in the two cases of this Court. In the Hingir-Rampur(1) case a question
had arisen whether the Act of 1948 so completely covered the fields of
conservation and development of minerals as to leave no room for State
legislation. It was held that the declaration was effective even if the rules
contemplated under the Act of 1948 had not been made. However, considering
further whether a declaration made by a Dominion law could be regarded as a
declaration by Parliament for the purpose of entry 54, it was held that it
could not and there was thus a lacuna which the Adaptation of  2 S.C.R.
537. (2)  4 S.C.R.
114 Laws Order, 1950 could not remove.
Therefore, it was held that there was room for legislation by the State
In the M. A.Tulloch case(1) the firm was
working a mining lease granted under the Act of 1948. The State Legislature of
Orissa then passed the Orissa Mining Areas Development Fund Act, 1952, and
levied a fee for the development of mining areas within the State. After the
provisions came into force a demand was made for payment of fees due from July
1957 to March 1958 and the demand was challenged. The High Court held that
after the coming into force of Act 67 of 1957 the Orissa Act must be held to be
non-existent. It was held on appeal that since Act 67 of 1957 contained the
requisite declaration by Parliament under entry 54 and that Act covered, the
same field as the Act of 1948 in regard to mines and mineral development, the
ruling in Hingir Rampur(2) case applied and as ss. 18(1) and (2) of the Act 67
of 1957 were very wide ruled out legislation by the State Legislature. Where a
superior legislature evinced an intention to cover the whole field, the
enactments of the other legislature whether passed before or after must be held
to be overborne. It was laid down that inconsistency could be proved not by a
detailed comparison of the provisions of the conflicting Acts but by the mere
existence of two pieces of legislation. As s. 19( 1 ) covered the entire field,
there was no scope for the argument that till rules were framed under that
section, room was available.
These two cases bind us and apply here. Since
the Bihar State Legislature amended the Land Reforms Act after the coming into
force of Act 67 of 1957, the declaration in the latter Act would carve out a
field to the extent provided in that Act and to that extent entry 23 would
stand cut down. To sustain the amendment the State must show that the matter is
not covered by the Central Act. The other side must, of course, show that the
matter is already covered and there is no room for legislation.
We have already analysed Act 67 of 1957. The
Act takes over the control of regulation of mines and development of minerals
to the Union; of course, to the extent provided.
It deals with minor minerals separately from
the other minerals. In respect of minor minerals it provides in s. 14 that ss.
4--13 of the Act do not apply to prospecting licences and mining leases. It
goes on to state in s. 15 that the State Government may, by notification in the
official Gazette, make rules for regulating the grant of prospecting licences
and mining leases in respect of minor minerals and for purposes connected
therewith, and that until rules 'are made, any rules made by the State
Government regulating the grant of prospecting licences and mining lease in
respect of minor minerals which were in force immediately before the
commencement of (1)  4S.C.R.461. (2)  2 S.C.R.
115 the Act would continue in force. It is
admitted that no such rules were made by the State Government. It follows that
the subject of legislation is covered in respect of minor minerals by the
express words of s. 15(1). Parliament has undertaken legislation and laid down
that regulation of the grant of prospecting licences and mining leases in respect
of minor minerals and for purposes connected therewith must be by rules made by
the State Government.
Whether the rules are made or not the topic
is covered by Parliamentary legislation and to that extent the powers of State
Legislature are wanting. Therefore, there is no room for State legislation.
Mr. L.N. Sinha argued that the topic of
legislation concerns land and therefore falls under entry 18 of the State List
and he drew our attention to other provisions on the subject of mines in the
Land Reforms Act as originally passed. The abolition of the rights of
intermediaries in the mines and vesting these rights as lessors in the State
Government was a topic connected with land and land tenures.
But after the mining leases stood between the
State Government and the lessees, any attempt to regulate those mining leases
will fall not in entry 18 but in entry 23 even though the regulation
incidentally touches land. The pith and substance of the amendment to s. 10 of
the Reforms Act falls within entry 23 although it incidentally touches land and
not vice versa. Therefore this amendment was subject to the overriding power of
Parliament as declared in Act 67 of 1957 in s. 15. Entry 18 of the State List,
therefore, is no help.
Mr. Lal Narain Sinha next contended that the
provisions of ss. 4--14 do not envisage control of the Union which is a
condition precedent to the ousting of the jurisdiction under Entry 23.
Obviously Mr. Lal Narain Sinha reads Union as equivalent to Union Government.
This is erroneous. Union consists of its three limbs, namely, Parliament, Union
Government and the Union Judiciary. Here the control is being exercised by
Parliament, the legislative organ of the Union and that is also control by the
Union. By giving the power to the State Government to make rules, the control
of Union is not negatived. In fact, it establishes that the Union is exercising
the control. In view of the two rulings of this Court referred to earlier we
must hold that by enacting s. 15 of Act 67 of 1957 the Union has taken all the
power to itself and authorised the State Government to make rules for the
regulation of leases. By the declaration and the enactment of s. 15 the whole
of the field relating to minor minerals came within the jurisdiction of
Parliament and no scope was left for the enactment of the second proviso to s.
10 in the Land Reforms Act. The enactment 'of the proviso was, therefore,
116 This leaves for consideration the second
sub-rule added to Rule 20 in December, 1964 by the State Government. It will be
noticed that the rule as it stood previously applied prospectively to all
1eases which came to be executed after the promulgation of the rules. The
second sub-rule made ,applicable those provisions to all leases subsisting on
the date of the promulgation of the rules. The short question is whether the
rules could operate on leases in existence prior to their enactment without the
authority of a competent legislature. Vested rights cannot be taken away except
under authority of law ,and mere rule-making power without the support of a
legislative enactment is not capable of achieving such an end. There being two
legislatures to consider, namely, Parliament and the State Legislature we have
first to decide which legislature would be competent to grant such power.
We have already held that the whole of the
legislative field was covered 'by the Parliamentary declaration read with
provisions of Act 67 of 1957, particularly s. 15. We have also held that entry
23 of List II was to that extent cut down by entry 54 of List I The whole of
the topic of minor minerals became a Union subject. The Union Parliament
allowed rules to be made but that did not recreate a scope for legislation at
the State level. Therefore, if the old 1eases were to be modified a legislative
enactment by Parliament on the lines of s. 16 of Act 67 of 1957 was necessary.
The place of such a law could not be taken by legislation by the State
Legislature as it purported to do by enacting the second Proviso to s. 10 of
the Land Reforms Act. It will further be seen that Parliament in s. 4 of Act 67
of 1957 created an express bar although s. 4 was not applicable to minor
minerals. Whether s. 4 was intended to apply to minor minerals as well or any
part of it applies to minor minerals are questions we cannot consider in view
of the clear declaration in s. 14 of Act 67 of 1957 that the provisions of ss.
4--13 (inclusive) do not apply. Therefore, there does not exist any prohibition
such as is to be found in s. 4(1) Proviso in respect of minor minerals.
Although s. 16 applies to minor minerals it only permits modification of mining
leases granted before October 25, 1949. In regard to leases of minor minerals
executed between this date and December 1964 when Rule 20(1) was enacted, there
is no provision of law which enables the terms of existing leases to be
altered. A mere rule is not sufficient.
Faced with this difficulty Mr. Lal Narain
Sinha attempted to claim power for the second Proviso to s. 10 of the Land
Reforms Act .from entry 18 of List II, a contention we have rejected. He also
attempted to find a field for enactment by the State Legislature for the said
This argument was extremely ingenious and
needs separate notice.
117 The contention was that modification of
existing leases was a separate topic altogether and was not covered by s. 15 of
Act 67 of 1957. Therefore if Parliament had not said anything on the subject
the field was open to the State Legislature. The other side pointed to the
words 'and for purposes connected therewith' in s. 15 and contended that those
words were sufficiently wide to take in modification of leases. Mr. Lal Narain
Sinha's argument is unfortunately not tenable in view of the two rulings of
this Court. On the basis of those rulings we have held that the entire
legislative field in relation to minor minerals had been withdrawn from the
State Legislature. We have also held that vested rights could only be taken
away by law made by a competent legislature. Mere rule-making power of the
State Government was not able to reach them. The authority to do so must,
therefore, have emanated from Parliament. The existing provision related to
regulation of leases and matters connected therewith to be granted in future
and not for alteration of the terms of leases which were in existence before
Act 67 of 1957. For that special legislative provision was necessary. As no
such parliamentary law had been passed the second sub-rule to Rule 20 was
ineffective. It could not derive sustenance from the second Proviso to s. 10(2)
of the Land Reforms Act since that proviso was not validly enacted.
In the result, therefore, these appeals must
They are allowed with costs. A mandamus shall
issue restraining the State Government from enforcing the provisions of the
second Proviso to s. 10(2) added by Bihar L, and Reforms (Amendment) Act, 1964
(Bihar Act 4 of 1965) and the second sub-rule of Rule 20 added by a
notification on December 10, 1964 to the Bihar Mineral Concession Rules, 1964.
G.C. Appeals allowed.