State of Tamil Nadu Vs. Hind Stone
[1981] INSC 25 (5 February 1981)
REDDY, O. CHINNAPPA (J) REDDY, O. CHINNAPPA
(J) PATHAK, R.S.
CITATION: 1981 AIR 711 1981 SCR (2) 742 1981
SCC (2) 205 1981 SCALE (1)237
CITATOR INFO :
F 1985 SC 660 (24) RF 1986 SC1323 (49) D 1988
SC1301 (11) F 1990 SC 820 (31)
ACT:
Mines and Minerals (Regulation and
Development) Act, 1957-Section 15-Rule 8-C of Tamil Nadu Minor Mineral
Concession Rules 1959-Scope of-Rule if ultra vires the rule making power of the
State Government-Whether violative of Articles 301 and 303 of the Constitution.
Interpretation-"Regulation" whether
includes "prohibition".
HEADNOTE:
The Mines and Minerals (Regulation &
Development) Act, 1957 (Central Act) was enacted in the public interest to
enable the Union to take under its control the regulation of mines and the
development of minerals. Exercising its power under this Act, the Central
Government declared by a notification that black granite was a minor mineral.
Exercising power vested in it by section 15
of the Act, the State Government made the Tamil Nadu Minor Mineral Concession
Rules, 1959. Rule 8 of the Rules prescribes the procedure for lease of quarries
to private persons. By rule 8-C, introduced in 1977, leases for quarrying black
granite in favour of private persons were banned. Sub-rule (2) of this rule
enacts that the State Government themselves may engage in quarrying black
granite or grant leases for quarrying black granite in favour of any
corporation wholly owned by the State Government.
Several applications for the grant of fresh
leases as well as for the renewal of leases for quarrying black granite
belonging to the State Government were submitted to the State Government, some
prior to the introduction of rule 8C and some after the rule came into force.
The State Government considered all the applications and rejected all of them
in view of rule 8C.
The respondents filed writ petition
questioning the vires of Rule 8-C on various grounds. The High Court struck
down Rule 8-C on the ground that it exceeded the rule making power given to the
State Government and held that it was not open to the appellant Government to
keep the applications pending for a long time and then to dispose them of on
the basis of a rule which had come into force later. As a result all the
applications were disposed of without reference to rule 8-C.
The appellant contended that: (I) The
approach of the High Court was vitiated by its failure to notice the crucial
circumstance that the minerals belonged to the Government, (II) The respondents
had no vested or indefeasible right to obtain a lease or a renewal to quarry
the minerals, (III) There were good reasons for banning the grant of lease to
quarry black granite to private parties and (IV) The Government could not be
compelled to grant leases which would result in the destruction of the mineral
resources of the country.
On behalf of the respondent it was submitted
that (I) the question of ownership of the minerals was irrelevant, (II) It was
not open to the appellant 743 to exercise its subordinate legislative function
in a manner to benefit itself as owner of the minerals, nor was it open to the
appellant to create monopoly by such means, (III) There was violation of
articles 301 and 303 of the Constitution, (IV) Rule 8-C had no application to
renewals and (V) That in any event it would not have the effect of affecting
applications made more than 60 days before it came into force.
Accepting the appeals, it was
HELD: Rule 8-C was made in bonafide exercise
of the rule making power of the Appellant Government and not in its misuse to
advance its own self interest. Making a rule which is perfectly in order is not
to be considered a misuse of the rule making power, if it advances the interest
of State, which really means the people of the State. Rivers, forests, minerals
and as such other resources constitute a nation's natural wealth. These
resources are not to be frittered away and exhausted by any one generation.
Every generation owes a duty to all succeeding generations to develop &
conserve the natural resources of the nation in the best possible way. It is in
the interest of mankind. It is in the interest of the Nation. It is recognised
by Parliament. Parliament has 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. [751C-D, 753G-H]
2. The Public interest which induced
Parliament to make the declaration contained in S.2 of the Mines & Minerals
(Regulation and Development) Act, 1957 has naturally to be the paramount
consideration in all matters concerning the regulation of Mines & Minerals.
Parliament's Policy is clearly discernible from the provisions of the Act. It
is the conservation and the prudent and discriminating exploitation of
minerals, with a view to secure maximum benefit to the community. There are
clear sign posts to lead and guide the subordinate legislating authority in the
matter of the making of rules. [751G-H]
3. The other provisions of the Act, particularly
sections 4A, 17 and 18, indicate that the rule making authority under S.15 has
not exceeded its powers in banning leases for carrying black granite in favour
of private parties and in stipulating that the State Government themselves may
engage in quarrying black granite or grant leases for quarrying black granite
in favour of any corporation wholly owned by the State Government. To view such
a rule made by the Subordinate legislating body as a rule made to benefit
itself merely because the State Government happens to be the subordinate
legislating body is, but, to take too narrow a view of the functions of that
body. [751H, 752A-B] H. C. Narayanappa & Ors. v. State of Mysore & Ors.
[1960] 3 SCR 742 @ 745, 752-753 referred to.
5. Whenever there is a switch over from
'private sector' to 'public sector' it does not necessarily follow that a
change of policy requiring express legislative sanction is involved. It depends
on the subject and the statute. But if a decision is taken to ban private mining
of a single minor mineral for the purpose of conserving it, such a ban, if it
is otherwise within the bounds of the authority given to the Government by the
Statute, cannot be said to involve any change of policy. The policy of the Act
remains the same and it is, the conservation and the prudent and discriminating
exploitation of 744 minerals, with a view to secure maximum benefit to the
community. Exploitation of minerals by the private and/or the public sector is
contemplated. If in the pursuit of the avowed policy of the Act, it is thought
exploitation by the public sector is best and wisest in the case of a
particular mineral and, in consequence, the authority competent to make the
subordinate legislation makes a rule banning private exploitation of such
mineral, which was hitherto permitted.
There is no change of policy merely because
that was previously permitted is no longer permitted. [756A-D] Municipal
Corporation of the City of Toronto v. Virgo [1896] A.C. 88, Attorney General
for Ontario v.
Attorney General for the Dominion and the
Distillers and Brewers Association,[1896] A.C. 348, State of Uttar Pradesh and
Others v. Hindustan Aluminium Corporation Ltd. and Ors., [1979] 3 SCR 709, G.
K. Krishnan etc. v.
The State of Tamil Nadu and Anr. etc. [1975]
2 SCR 715 @ 721, Commonwealth of Australia v. Bank of New South Wales [1950]
A.C. 235 referred to.
6. The restrictions, freedom from which is
guaranteed by Art. 301 would be such restrictions as directly and immediately
restrict or impede the free flow or movement of trade. The Act and the rules
properly made thereunder are, therefore, outside the purview of Art. 301. Even
otherwise Art. 302 which enables Parliament, by law, to impose such
restrictions on the freedom of trade, commerce or intercourse between one State
and another or within any part of the territory of India as may be required in
the public interest also furnishes an answer to the claim based on the alleged
contravention of Art. 301. [757F-H, 758A-B]
7. The Mines and Minerals (Regulation and
Development) Act is a law enacted by Parliament and declared by Parliament to
be expedient in the public interest. Rule 8-C has been made by the appellant
Govt. by notification in the official Gazette, pursuant to the power conferred
upon it by sec. 15 of the Act. A statutory rule, while ever subordinate to the
parent statute, is, otherwise, to be treated as part of the statute and as
effective. "Rules made under the Statute must be treated for all purposes
of construction or obligation exactly as if they were in the Act and are to be
of the same effect as if contained in the act and are to be judicially noticed
for all purposes of construction or obligation. [758B-G] Atiabari Tea Co. Ltd.
v. State of Assam & Ors. [1961] 1 SCR 809 The Automobile Transport
Rajasthan Ltd., v. State of Rajasthan & Ors. [1963] 1 SCR 491 and State of
U.P. & Ors. v. Babu Ram Upadhya [1961] 2 SCR 679, referred to.
8. Rule 9 makes it clear that a renewal is
not to be obtained automatically, for the mere asking. The applicant for the
renewal has, particularly, to satisfy the Government that the renewal is in the
interests of mineral development and that the lease amount is reasonable in the
circumstances of the case. These conditions have to be fulfilled in addition to
whatever criteria is applicable at the time of the grant of lease in the first
instance, suitably adapted, of course, to grant of renewal. Not to apply the
criteria applicable in the first instance may lead to absurd results.
Therefore rule 8-C is attracted in considering
applications for renewal of leases also. [759A-D]
9. While the applications should be dealt
with within a reasonable time, it cannot on that account be said that the right
to have an application disposed 745 of in a reasonable time clothes an applicant
for a lease with a right to have the application disposed of on the basis of
the rules in force at the time of the making of the application. No one has a
vested right to the grant or renewal of a lease and none can claim a vested
right to have an application for the grant or renewal of a lease dealt with in
a particular way, by applying particular provisions.
In the absence of any vested rights in any
one, an application for a lease has necessarily to be dealt with according to
the rules in force on the date of the disposal of the application despite the
fact that there is a long delay since the making of the application. [759G-H,
760A]
10. The language of Rule 8-C is clear that it
cannot have any application to lands in which the right to minerals belongs to
the applicants themselves. In the case of lands in which the right to minerals
belongs to private owners and those owners seek permission to quarry black
granite the applications will have to be dealt with under the relevant rules in
Sec. III of the Tamil Nadu Minor Mineral concession Rules. Rule 8-C does not
impose a general ban on quarrying black granite but only imposes a bar on the
grant of leases for quarrying black granite. [760D-F]
CIVIL APPELLATE JURISDICTION: Civil Appeal
Nos. 2602- 2604 of 1980.
Appeals by special leave from the Judgment
and Order dated 20-6-1980 of the Madras High Court in Writ Petition Nos. 4467
of 1977, 2933 and 4793 of 1978.
Lal Narain Sinha Att. Genl. of India for the
Appellant in CA 2602/80.
Soli J. Sorabjee for the Appellant in CA
2603/80.
R. Krishnamurthy Adv. Genl. for the appellant
in CA 2604/80.
A. V. Rangam and K. Venkatawani for the
Appellant in all the matters.
Y. S. Chitale (Dr.), Mrs. S. Ramachandran and
Mukul Mudgal for Respondent Nos. 11 and 42.
P. Chidambaram and A. S. Nambiyar for the
Respondents.
F. S. Nariman, A. V. Rangam and R. N.
Sachthey for the interveners.
V. Srinivasan, A. Venkatarayana and P. N.
Ramalingam for Respondent No. 45.
The Judgment of the Court was delivered by
CHINNAPPA REDDY, J.-Entry 23 of List II of the Seventh Schedule to the
Constitution is, "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". Entry 54 746 of List of the Seventh Schedule is
"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". Thus while
'regulation of mines and mineral development' is ordinarily a subject for State
legislation.
Parliament may, by law, declare the extent to
which control of such regulation and development by the Union is expedient in
the public interest, and, to that extent, it becomes a subject for
Parliamentary legislation. Parliament has accordingly enacted the Mines and
Minerals (Regulation and Development) Act, 1957. By S. 2 of the Act it is
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 thereafter provided. It is now common ground between the parties
that as a result of the declaration made by Parliament, by S. 2 of the Act, the
State legislatures are denuded of the whole of their legislative power with
respect to regulation of mines and mineral development and that the entire
legislative field has been taken over by Parliament. That this is the true
position in law is clear from the pronouncements of this Court in The Hingir
Rampur Coal Co. Ltd. & Ors. v. The State of Orissa & Ors. State of
Orissa v. M.A., Tulloch & Co. and Baijnath Kedia v. State of Bihar &
Ors. S. 3 of the Mines and Minerals (Regulation and Development) Act, 1957,
defines various expressions occurring in the Act. S. 3 (a) defines 'minor
minerals' and it includes any mineral declared to be a minor mineral by the
Central Government by a notification in the Official Gazette. 'Black granite'
has been so notified by the Central Government as a minor mineral. Section 4 to
9A are grouped under the heading 'General Restrictions on undertaking
prospecting and mining operations'. These provisions as well as Sections 10 to
13 are made inapplicable to 'minor minerals' by S. 14. S. 4 prohibits all
prospecting or mining operations except under a licence or a lease granted
under the Act and the rules made thereunder. S.4A(1) enables the State
Government on a request made by the Central Government in the interest of regulation
of mines and mineral development to terminate a mining lease pre-maturely and
grant a fresh mining lease in favour of a Government Company or Corporation
owned or controlled by Government. Perhaps because s.4A(1) is inapplicable to
minor minerals because of the provisions of S.14, S.4A(2) has been expressly
enacted making somewhat similar provision, as in S.4A(1), in respect of 'minor
minerals' also. S.4A(2) 747 enables the State Government, after consultation
with the Central Government, if it is of opinion that it is expedient in the
interest of regulation of mines and mineral development so to do, to
prematurely terminate a mining lease in respect of any minor mineral and grant
a fresh lease in respect of such mineral in favour of a Government Company or
Corporation owned or controlled by Government.
S.5 imposes certain restrictions on the grant
of prospecting licences and mining leases. S.6 prescribes the maximum area for
which a prospecting licence or mining lease may be granted. S.7 prescribes the
period for which prospecting licences may be granted or renewed. S.8 prescribes
the period for which mining leases may be granted or renewed.
S.9 provides for the payment of royalty and
S.9A for the payment of dead rent. Sections 10, 11 and 12 constitute a group of
sections under the title 'Procedure for obtaining prospecting licences or
mining leases in respect of land in which the minerals vest in the Government'.
S.10 provides for making applications for prospecting licences or mining leases
in respect of any land in which the minerals vest in the Government. S.11
provides for certain preferential rights in favour of certain persons in the
matter of grant of mining leases. S. 12 prescribe the Register of prospecting
licences and mining leases to be maintained by the State Government. S.13
empowers the Central Government to make rules for regulating the grant of
prospecting licences and mining leases. In particular we may mention that
S.13(2) (a) empowers the Central Government to make rules providing for 'the
persons by whom, and the manner in which, applications for prospecting licences
or mining leases in respect of land in which the minerals vest in the
Government may be made and the fees to be paid there for".
S.13(2) (f), we may add, empowers the Central
Government to make rules providing for 'the procedure for obtaining a
prospecting licence or a mining lease in respect of any land in which the
minerals vest in a person other than the Government and the terms on which, and
the conditions subject to which, such a licence or lease may be granted or
renewed'. S.14 makes the provisions of Sections 4 to 13 inapplicable to minor
minerals. S.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 purposes connected therewith.
S.15(3) provides for the payment of royalty
in respect of minor minerals at the rate prescribed by the rules framed by the
State Government. S.16 provides for the modification of mining leases granted
before October 25, 1949. S.17 enables the Central Government, after
consultation with the State Government to undertake prospecting or mining
operations in any area not already held under any prospecting licence or mining
lease, in which event the Central 748 Government shall publish a notification
in the official Gazette giving the prescribed particulars. The Central
Government may also declare that no prospecting licence or mining lease shall
be granted in respect of any land specified in the notification. S.18 casts a
special duty on the Central Government to take all necessary steps for the
conservation and development of minerals in India. Sections 19 to 33 are
various miscellaneous provisions with which we are not now concerned.
Pursuant to the power vested in it under S.15
of the Mines and Minerals (Regulation and Development) Act, 1957, the
Government of Tamil Nadu has made the Tamil Nadu Minor Mineral Concession
Rules, 1959. Section II of the rules consisting of rules 3 to 16 is entitled
"Government lands in which the minerals belong to the Government".
Rule 8 prescribes the procedure for the lease of quarries to private persons.
The ordinary procedure is to publish a notice in the District Gazette inviting
applications, thereafter to hold an auction and finally to grant a lease to the
highest bidder. Rule 8A which was introduced by way of an amendment in 1972,
provides for a special procedure for the sanctioning of leases in favour of
applicants who require the minerals for their existing industries or who have
an industrial programme for the utilisation of the mineral in their own
industry. Rule 8B was introduced in 1975 making special provision for the grant
of leases for quarrying black granite. The rule is as follows:
"8-B. Lease of quarries in respect of
black granite to private persons (1) Notwithstanding anything to the contrary
contained in rules 8 and 8A, the authority competent to grant leases in respect
of quarrying black granite shall be the State Government.
(2) An application for the grant of a
quarrying lease in respect of any land shall be made to the Collector of the
District concerned in the prescribed form in triplicate and shall be accompanied
by a fee of Rs. 100/-. The Collector shall after scrutiny, forward the
application along with his remarks to the Director of Industries & Commerce
who shall technically scrutinise the industrial programme given by the
applicant and forward the application with his remarks to the Government."
"(G. O. Ms. No. 993 Industries dt. 25-8-1975". Rule 8-C was
introduced by G. O. Ms. No. 1312 Industries dated December 2, 1977. By this
rule leases for quarrying black granite 749 in favour of private persons are
banned. Leases can only be granted in favour of a Corporation wholly owned by
the State Government. It is the vires of this rule which was under challenge
before the High Court and is also under challenge now. It will be useful to
extract the same. It is as follows:
"8-C Lease of quarries in respect of
black granite to Government Corporation, etc.
(1) Notwithstanding anything to the contrary
contained in these rules, on and from 7th December, 1977 no lease for quarrying
black granite shall be granted to private persons.
(2) The State Government themselves may
engage in quarrying black granite or grant leases for quarrying black granite
in favour of any corporation wholly owned by the State Government.
Provided that in respect of any land
belonging to any private person, the consent of such person shall be obtained
for such quarrying or lease".
Rule 9 provides for renewal of leases and it
is in the following terms:
"9. Renewal of lease.-(1) The Collector
may on application renew for a further period not exceeding the period for
which the lease was originally granted in each case if he is satisfied that-
(i) such renewal is in the interests of mineral development, and (ii) the lease
amount is reasonable in the circumstances of the case.
(2) Every application for renewal shall be
made to Collector, sixty days prior to the date of expiry of the lease:
Provided that a lease, the period of which
exceeds ten years shall not be renewed except with the sanction of the Director
of Industries and Commerce".
A proviso was added to rule 9(2) in 1975 and
it said:
"provided also that the renewal for
quarrying black granite shall be made by the Government".
Several persons who held leases for quarrying
black granite belonging to the State Government and whose leases were about to
expire, applied to the Government of Tamil Nadu for renewal of their leases. In
some of the cases applications were made long prior 750 to the date of G. O.
Ms. No. 1312 by which Rule 8 C was introduced. Some applications were made after
Rule 8 C came into force. There were also some applications for the grant of
fresh leases for quarrying black granite. All the applications were dealt with
after Rule 8 C came into force and all of them were rejected in view of Rule
8C. Several Writ Petitions were filed in the High Court questioning the vires
of Rule 8C on various grounds. Apart from canvassing the vires of Rule 8C, it
was contended that Rule 8C did not apply to grant of renewals of lease at all.
It was also argued that in any event, in those cases in which the applications
for renewal had been made prior to the coming into force of Rule 8C, their
applications should have been dealt with without reference to Rule 8C. The
Madras High Court while not accepting some of the contentions raised on behalf
of the applicants, struck down Rule 8C on the ground that it exceeded the rule
making power given to the State Government under S.15 which, it was said, was
only to regulate and not to prohibit the grant of mining leases. As a
consequence all the applications were directed to be disposed of without
reference to Rule 8C. It was also observed that even if Rule 8C was valid it
applied only to the grant of fresh leases and not to renewals. It was also held
that it was not open to the Government to keep the applications pending for a
long time and then to dispose them of on the basis of a rule which had come
into force later. The State Government has come in appeal against the judgment
of the Madras High Court while the respondent- applicants have tried to sustain
the judgment of the Madras High Court on grounds which were decided against
them by the Madras High Court.
The learned Attorney General who appeared for
the Government of Tamil Nadu submitted that the approach of the High Court was
vitiated by its failure to notice the crucial circumstance that the minerals
belonged to the Government and the applicants had no vested or indefeasible
right to obtain a lease or a renewal to quarry the minerals. There were good
reasons for banning the grant of leases to quarry black granite to private
parties and in the light of those reasons the Government could not be compelled
to grant leases which would result in the destruction of the mineral resources
of the country. Shri K. K. Venugopal, learned counsel who led the argument for
the respondents submitted that the question of ownership of the minerals was
irrelevant. In making the rules the State Government was acting as a delegate
and not as the owner of the minerals.
He submitted that it was not open to the State
Government to exercise its subordinate legislative function in a manner to
benefit itself as owner of the minerals, nor was it open to the State
Government to create a monopoly by such means 751 According to Shri Venugopal
creation of a monopoly in the State was essentially a legislative function and
was incapable of delegation. It was claimed that there was violation of
Articles 301 and 303 of the Constitution. It was further claimed that S. 15 of
the Mines and Minerals (Regulation and Development) Act 1957, enabled the State
Government to make rules to regulate the grant of leases and not to prohibit
them. In any case it was said that Rule 8G had no application to renewals and
that in any event it would not have the effect of affecting applications made
more than 60 days before it came into force.
Rivers, Forests, Minerals and such other
resources constitute a nation's natural wealth. These resources are not to be
frittered away and exhausted by any one generation. Every generation owes a
duty to all succeeding generations to develop and conserve the natural
resources of the nation in the best possible way. It is in the interest of
mankind. It is in the interest of the Nation. It is recognised by Parliament.
Parliament has 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. It has enacted the Mines and Minerals (Regulation and Development)
Act, 1957. We have already referred to its salient provisions. S. 18, we have
noticed, casts a special duty on the Central Government to take necessary steps
for the conservation and development of minerals in India. S. 17 authorises the
Central Government itself to undertake prospecting or mining operations in any
area not already held under any prospecting licence or mining lease. S.4A
empowers the State Government on the request of the Central Government, in the
case of minerals other than minor minerals, to prematurely terminate existing
mining leases and grant fresh leases in favour of a Government Company or
Corporation owned or controlled by Government, if it is expedient in the
interest of regulation of mines and mineral development to do so. In the case
of minor minerals, the State Government is similarly empowered, after
consultation with the Central Government. The public interest which induced
Parliament to make the declaration contained in S. 2 of the Mines &
Minerals (Regulation and Development) Act, 1957. has naturally to be the
paramount consideration in all matters concerning the regulation of mines and
the development of minerals. Parliament's policy is clearly discernible from
the provisions of the Act. It is the conservation and the prudent and
discriminating exploitation of minerals, with a view to secure maximum benefit
to the community. There are clear sign posts to lead and guide the subordinate
legislating authority in the matter of the making of rules. Viewed in the light
shed by the other provisions of the Act, particularly sections 4A, 17 and 18
752 it cannot be said that the rule making authority under S. 15 has exceeded
its powers in banning leases for quarrying black granite in favour of private
parties and in stipulating that the State Government themselves may engage in
quarrying black granite or grant leases for quarrying black granite in favour
of any corporation wholly owned by the State Government. To view such a rule
made by the Subordinate legislating body as a rule made to benefit itself
merely because the State Government happens to be the subordinate legislating
body, is, but, to take too narrow a view of the functions of that body. The
reasons that prompted the State Government to make Rule 8-C were explained at
great length in the common counter affidavit filed on behalf of the State
Government before the High Court. We find no good reason for not accepting the
statements made in the counter affidavit. It was said there:
"I submit that the leases for black
granite are governed by the Tamil Nadu Minor Mineral Concession Rules 1959
under which originally there was scope for auctioning of quarries of minor
minerals. In amendment issued in the G.O. dated 6-12-1972. under Rule 8-A it
was indicated that the Collector may sanction leases in favour of applicants
who are having an industrial programme to utilise the minerals in their own
industry. This provision is applicable to all minerals including black
granites. However, it was found that there were several cases where lessees who
obtained the black granite areas on lease by auction were not quarrying in a
systematic and planned manner taking into consideration the welfare and safety
measures of the workers as well as the conservation of minerals.
Even after the introduction of the amendment
under Rule 8-A in most cases, the industry set up was of a flimsy nature more
to circumvent the rule than to really introduce industry including mechanised
cutting and polishing. The lessees were also interested only in obtaining the
maximum profit in the shortest period of time without taking into consideration
the proper mining and development of the mineral. There was also considerable
wastage of new materials due to wasteful mining. Therefore, Government issued a
further amendment as Rule 8-B wherein the competent authority to grant leases
in respect of the quarrying black granite was transferred from the Collector to
the State Government level. They also prescribed a standard form and an
application fee to be paid with the application.
The amendment states that the Director of
Industries and Commerce shall technically 753 scrutinise the industrial
programme given by the applicant while forwarding the same to Government. At
the same time, in the G.O. issued along with amendment, it was stated that if
any of the State Government Organisations like Tamil Nadu Small Industries
Corporation Limited, Tamil Nadu small Industries Development Corporation
Limited, Tamil Nadu Industrial Development Corporation Limited is interested to
obtain a lease for black granite in a particular area, preference will be given
to Government undertaking over other private entrepreneurs for granting the
leases applied for by them. However, in spite of these amendments to regulate
the grant of mining lease, there were a large number of lessees (exceeding
140), who were engaged in mining without proper technical guidance or safety
measures etc. for the workers. These lessees made a strong representation to
the then Government in 1976 expressing that though they had given assurance to
set up industries to use the granites they were not able to do so far various
reasons. They also represented that they should be allowed to export the raw
blocks of black granites.
Therefore, Government had issued a Government
Order dated 15-2-1977 relating to relaxation of the ban of export of raw blocks
and provision for setting up a polishing or finishing unit was not made a pre-
requisite. They have also stated that the terms and conditions for the existing
losses would remain in force. However, on an examination of the performance of
the lessees over the past several years, it has been found that excepting in a
very few cases, none of the lessees had set up proper industries or developed
systematic mining of the quarries. The exports continue to be mainly on the raw
black granite materials and not out and polished slabs. A large number of the
leases were not operating either due to speculation or lack of finance from the
lessees. Therefore, Government decided that there should be no further grant of
lease to private entrepreneurs for black granite. This was mentioned in G.O.Ms.
No. 1312 Industries dated 2-12- 1977.
We are satisfied that Rule 8C was made in
bonafide exercise of the rule making power of the State Government and not in
its misuse to advance its own self-interest. We however guard ourselves against
being understood that we have accepted the position that making a rule which is
perfectly in order to be considered a misuse of the rule making power, if it
advances the interest of a State, which really means the people of the State.
754 One of the submissions on behalf of the
respondents was that monopoly was a distinct legislative subject under entry 21
of List III of the Seventh Schedule to the Constitution and therefore monopoly,
even in favour of a State Government can only be created by plenary and not
subordinate legislation. Parliament not having chosen to exercise its plenary
power it was not open to the subordinate legislating body to create a monopoly
by making a rule. Our attention was invited to H. C. Narayanappa & Ors. v.
State of Mysore & Ors.(1) where it was held that the expression 'Commercial
and industrial monopolies' in entry 21 of List III of the Seventh Schedule to
the Constitution was not confined to legislation to control of monopolies but
was wide enough to include grant or creation of commercial or industrial
monopolies in favour of the State Government, also We are unable to agree with
Shri Venugopal's submission. The very decision cited by him furnishes the
answer. The validity of a scheme for nationalisation of certain routes made
pursuant to the powers conferred by Chapter IVA of the Motor Vehicles Act was
under attack in that case. One of the grounds of attack was that "by
Chapter IVA of the Motor Vehicles Act, 1939, "Parliament had merely
attempted to regulate the procedure for entry by the States into the business
of motor transport in the State, and in the absence of legislation expressly
undertaken by the State of Mysore in that behalf, that State was incompetent to
enter into the arena of motor transport business to the exclusion of private
operators;" Sustenance for the submission was sought to be drawn from the
language of Art. 19(6) (ii) which provides that nothing in Art. 19(1) (g) shall
'prevent the State from making any law relating to' 'the carrying on by the
State, or by a Corporation owned or controlled by the State, of any trade, business,
industry or service, whether to the exclusion, complete or partial, of citizens
or otherwise'. The argument was that the State or a Corporation owned or
controlled by the State could carry on a trade, business, industry or service
to the exclusion, complete or partial, of citizens, only if the State made a
law relating to it. The argument was repelled by the Court in these words:
"The plea sought to be founded on the
phraseology used in Art. 19(6) that the State intending to carry on trade or
business must itself enact the law authorising it to carry on trade or business
is equally devoid of force. The expression 'the State' as defined in Art. 12 is
inclusive of the Government and Parliament of India and the Government and the
Legisla- 755 ture of each of the States. Under entry No. 21 of the Concurrent
List, the Parliament being competent to legislate for creating commercial or
trading monopolies, there is nothing in the Constitution which deprives it of
the power to create a commercial or trading monopoly in the constituent States.
Article 19(6) is a mere saving provision: its function is not to create a Power
but to immunise from attack the exercise of legislative power falling within
its ambit.
The right of the State to carry on trade or
business to the exclusion of others does not arise by virtue of Art. 19(6). The
right of the State to carry on trade or business is recognised by Art. 298;
authority to exclude competitors in the field of such trade or business is
conferred on the State by entrusting power to enact laws under entry 21 of List
III of the Seventh Schedule, and the exercise of that power in the context of
fundamental rights is secured from attack by Art.
19(6).
In any event; the expression 'law' as defined
in Art. 13(3) (a) includes any ordinance, order, bye-law, rule, regulation,
notification, custom, etc., and the scheme framed under s.68C may properly be
regarded as 'law' within the meaning of Art. 19(6) made by the State excluding
private operators from notified routes or notified areas, and immune from the
attack that it infringes the fundamental right guaranteed by Art.
19(1) (g)".
Earlier in Rai Sahib Ram Jawaya Kapur &
Ors. v. The State of Punjab, before the Seventh Amendment of the Constitution
by which the present Article 298 was substituted for the old Article, the
question arose whether it was beyond the competence of the executive Government
to carry on a business without specific legislature sanction.
The answer was that it was not. What was said
by the Court in that case was incorporated in the Seventh Amendment of the
Constitution. In that case the facts were that the State of Punjab, by a series
of executive orders had established for itself a monopoly in the business of
printing and selling textbooks for use in schools. The argument that
legislative sanction was necessary to enable the State Government to carry on
the business of printing and publishing text books was repelled and it was held
that no fundamental right of the petitioners who had invoked the jurisdiction
of the Court had been infringed.
Another of the submissions of the learned
counsel was that G.O.Ms No. 1312 dated December 2, 1977 involved a major change
of policy, which was a legislative function and therefore beyond the competence
756 of a subordinate legislating body. We do not agree with the submission.
Whenever there is a switch over from private sector' to 'public sector' it does
not necessarily follow that a change of policy requiring express legislative
sanction is involved. It depends on the subject and the statute. For example,
if a decision is taken to impose a general and complete ban on private mining
of all minor minerals, such a ban may involve the reversal of a major policy
and so it may require Legislative sanction. But if a decision is taken to ban
private mining of a single minor mineral for the purpose of conserving it, such
a ban, if it is otherwise within the bounds of the authority given to the
Government by the Statute, cannot be said to involve any change of policy. The
policy of the Act remains the same and it is, as we said, the conservation and
the prudent and discriminating exploitation of minerals, with a view to secure
maximum benefit to the community. Exploitation of minerals by the private
and/or the public sector is contemplated. If in the pursuit of the avowed
policy of the Act, it is thought exploitation by the public sector is best and
wisest in the case of a particular mineral and, in consequence, the authority
competent to make the subordinate legislation makes a rule banning private
exploitation of such mineral, which was hitherto permitted we are unable to see
any change of policy merely because what was previously permitted is no longer
permitted.
One of the arguments pressed before us was
that Sec. 15 of the Mines and Minerals (Regulation and Development) Act
authorised the making of rules for regulating the grant of mining leases and
not for prohibiting them as Rule 8-C sought to do, and, therefore, Rule 8-C was
ultra vires Act, S. 15. Well known cases on the subject right from Municipal
Corporation of the City of Toronto v. Virgo and Attorney General for the
Dominion General for the Dominion and the Distillers and Brewers Association of
Ontario upto State of Uttar Pradesh & Ors. v. Hindustan Aluminium
Corporation Ltd.
& Ors., were brought to our attention. We
do not think that 'Regulation' has the rigidity of meaning as never to take in
Prohibition'. Much depends on the context in which the expression is used in
the Statute and the object sought to be achieved by the contemplated
regulation. It was observed by Mathew J. in G. K. Krishnan etc. etc. v. The
State of Tamil Nadu & Anr. etc., "the word 'regulation has no fixed
connotation. Its meaning differs according to the nature of the thing to which
it is applied". In modern statutes concerned as they are with economic and
social activities, 'regulation' 757 must, of necessity, receive so wide an
interpretation that in certain situations, it must exclude competition to the
public sector from the private sector. More so in a welfare State. It was
pointed out by the Privy Council in Commonwealth of Australia v. Bank of New
South Wales(1)-and we agree with what was stated therein-that the problem whether
an enactment was regulatory or something more or whether a restriction was
direct or only remote or only incidental involved, not so much legal as
political, social or economic consideration and that it could not be laid down
in no circumstances could the exclusion of competition so as to create a
monopoly, either in a State or Commonwealth agency, to be justified. Each case,
it was said, must be judged on its own facts and in its own setting of time and
circumstances and it might be that in regard to some economic activities and at
some stage of social development, prohibition with a view to State monopoly was
the only practical and reasonable manner of regulation. The statute with which
we are concerned, the Mines and Minerals (Development and Regulation) Act, is
aimed, as we have already said more than once, at the conservation and the
prudent and discriminating exploitation of minerals. Surely, in the case of a
scarce mineral, to permit exploitation by the State or its agency and to
prohibit exploitation by private agencies is the most effective method of
conservation and prudent exploitation. If you want to conserve for 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 Sec. 15 of
the Act.
The submission of the learned counsel that
the impugned rule contravened Articles 301 and 303 of the Constitution is
equally without force. Now, 'the restrictions freedom from which is guaranteed
by Art. 301 would be such restrictions as directly and immediately restrict or
impede the free flow or movement of trade" (Atiabari Tea Co. Ltd. v. State
of Asssam & Ors.).(2) And, "regulatory measures or measures imposing
compensatory taxes for the use of trading facilities do not come within the
purview of restrictions contemplated by Art. 301". "They are excluded
from the purview of the provisions of Part XIII of the Constitution for the
simple reason that they do not hamper, trade, commerce or inter-course but
rather facilitate them" The Automobile Transport Rajasthan Ltd. v. State
of Rajasthan & Ors.(3). The Mines and Minerals (Regulation and Development)
Act is, without doubt a regulatory measure, Parliament having enacted it for
the express purpose of "the regulation of mines and the development of
minerals". The Act and the rules 758 properly made thereunder are,
therefore, outside the purview of Art. 301. Even otherwise Art. 302 which
enables Parliament, by law, to impose such restrictions on the freedom of
trade, commerce or intercourse between one State and another or within any part
of the territory of India as may be required in the public interest also
furnishes an answer to the claim based on the alleged contravention of Art.
301. The Mines and Minerals (Regulation and Development) Act is a low enacted
by Parliament and declared by Parliament to be expedient in the public
interest. Rule 8C has been made by the State Government by notification in the
official Gazette, pursuant to the power conferred upon it by Sec. 15 of the
Act. A statutory rule, while ever subordinate to the parent statute, is,
otherwise, to be treated as part of the statute and as effective. "Rules
made under the Statute must be treated for all purposes of construction or
obligation exactly as if they were in the Act and are to be of the same effect
as if contained in the Act and are to be judicially noticed for all purposes of
construction or obligation.. (State of U.P. & Ors. v. Babu Ram Upadhya)(1);
(See also Maxwell; Interpretation of Statutes, 11th Edn. pp. 49-50). So,
Statutory rules made pursuant to the power entrusted by Parliament are law made
by Parliament within the meaning of Art. 302 of the Constitution. To hold
otherwise would be to ignore the complex demands made upon modern legislation
which necessitate the plenary legislating body to discharge its legislative
function by laying down broad guidelines and standards, to lead and guide as it
were, leaving it to the subordinate legislating body to fill up the details by
making necessary rules and to amended the rules from time to time to meet
unforeseen and unpredictable situations, an within the framework of the power
entrusted to it by the plenary legislating body. State of Mysore v. H. Sanjeeviah(2)
was cited to us to show that rules did not become part of the statute. This was
case where by reference to Sec. 77 of the Mysore Forest Act which declared the
effect of the rules, it was held that the rules when made did not become part
of the Act. That was apparently because of the specific provisions of Sec. 77
which while declaring that the rules would have the force of law stopped short
of declaring that they would become part of the Act. In the absence of any
express provision, as now, the ordinary rule as enunciated in Maxwell and State
of Uttar Pradesh & Ors. v. Babu Ram Upadhya (supra) would perforce apply.
The next question for consideration is
whether Rule 8C is attracted when applications for renewal of leases are dealt
with. The argument was that Rule 9 itself laid down the criteria for grant of
renewal of leases and therefore rule 8C should be confined, in its application,
to 759 grant of leases in the first instance. We are unable to see the force of
the submission. Rule 9 makes it clear that a renewal is not to be obtained
automatically, for the mere asking. The applicant for the renewal has,
particularly, to satisfy the Government that the renewal is in the interests of
mineral development and that the lease amount is reasonable in the circumstances
of the case. These conditions have to be fulfilled in addition to whatever
criteria is applicable at the time of the grant of lease in the first instance,
suitably adapted, of course, to grant of renewal. Not to apply the criteria
applicable in the first instance may lead to absurd results. If as a result of
experience gained after watching the performance of private entrepreneurs in
the mining of minor minerals it is decided to stop grant of leases in the
private sector in the interest of conservation of the particular mineral
resource, attainment of the object sought will be frustrated if renewal is to
be granted to private entrepreneurs without regard to the changed outlook. In
fact, some of the applicants for renewal of leases may themselves be the
persons who are responsible for the changed outlook. To renew leases in favour
of such persons would make the making of Rule 8C a mere exercise in futility.
It must be remembered that an application for the renewal of a lease is, in
essence an application for the grant of a lease for a fresh period. We are,
therefore, of the view that Rule 8C is attracted in considering applications
for renewal of leases also.
Another submission of the learned counsel in
connection with the consideration of applications for renewal was that
applications made sixty days or more before the date of G.O.Ms. No. 1312
(2-12-1977) should be dealt with as if Rule 8C had not come into force. It was
also contended that even applications for grant of leases made long before the date
of G.O.Ms. No. 1312 should be dealt with as if Rule 8C had not come into force.
The submission was that it was not open to the Government to keep applications
for the grant of leases and applications for renewal pending for a long time
and then to reject them on the basis of Rule 8C notwithstanding the fact that
the applications had been made long prior to the date on which Rule 8C came
into force.
While it is true that such applications
should be dealt with within a reasonable time, it cannot on that account be
said that the right to have an application disposed of in a reasonable tune
clothes an applicant for a lease with a right to have the application disposed
of on the basis of the rules in force at the time of the making of the
application. None has a vested right to the grant or renewal of a lease and
none can claim a vested right to have an application for the grant or renewal
of a lease dealt with in a particular way, by applying particular provisions.
In the absence 760 of any vested rights in anyone, an application for a lease
has necessarily to be dealt with according to the rules in force on the date of
the disposal of the application despite the fact that there is a long delay
since the making of the application. We are, therefore, unable to accept the
submission of the learned counsel that applications for the grant of renewal of
leases made long prior to the date of G.O.Ms. No. 1312 should be dealt with as
if Rule 8C did not exist.
In the view that we have taken on the several
questions argued before us all the appeals arising out of applications for the
grant or renewal of leases for quarrying black granite in Government lands are
allowed and the Writ Petitions filed in the High Court are dismissed. Special
leave is granted in cases in which leave had not been previously granted. The
appeals are allowed and disposed of in the same manner.
There are, however, a few appeals in which
the applications were not for the grant or renewal of leases to quarry black
granite in Government lands but were for permission to quarry black granite in
Patta lands in which the right to minerals belonged to the applicants- private
owners themselves. Apart from the fact that Rule 8C occurs in a group of Rules
in Section II, which bears the head "Government lands in which the
minerals belong to the Government" while the rules relating to lands in
which the right to minerals belongs to private owners are dealt with in Section
III. The language of Rule 8C is clear that it cannot have any application to
lands in which the right to minerals belongs to the applicants themselves. Rule
8C is only concerned with leases for quarrying black granite and it cannot,
therefore, have any application to cases where no lease is sought from the
Government. In the case of lands in which the right to minerals belongs to
private owners and those owners seek permission to quarry black granite the
applications will have to be dealt with under the relevant rules in Sec. III of
the Tamil Nadu Minor Mineral Concession Rules. Rule 8C, it may be noted, does
not impose a general ban on quarrying black granite but only imposes a bar on
the grant of leases of quarrying black granite. Appeals and Special Leave
Petitions which arise out of applications for the grant of permission to quarry
black granite in the Patta lands belonging to the applicants themselves, have
therefore, to be dismissed. The result is, Special Leave Petition Nos. 9257,
9259, 9260, 9271, 9273 to 9282 and 9284 of 1980 are dismissed and Special Leave
Petition Nos 9234 to 9248, 9250 to 9256, 9258, 9261 to
9270,9272,9283,9285,9286,9288,9289 and 9290 of 1980 are granted and Appeals
allowed. Civil Appeal Nos. 2602 to 2604 of 1980 are allowed. There will be no
order as to costs.
N.K.A. Ordered accordingly.
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