State
of Tamil Nadu Vs. M.P.P. Kavery Chetty
[1995] INSC 72 (19
January 1995)
Bharucha
S.P. (J) Bharucha S.P. (J) Verma, Jagdish Saran (J) Paripoornan, K.S.(J) Bharuceia,
J.:
CITATION:
1995 AIR 858 1995 SCC (2) 402 JT 1995 (1) 537 1995 SCALE (1)297
ACT:
HEAD NOTE:
1.
Leave granted.
2. In
these appeals the State of Tamil Nadu impugns the judgment and order dated 23rd
December, 1992 of a Division Bench of the High Court at Madras whereby Rules 8D
and 19B of the Tamil Nadu Minor Mineral Concession Rules, 1959, ("the said
Rules") made Under the provisions of the Mines & Minerals (Regulation
& Development) Act, 1957, ("the said Act") were struck down as
unconstitutional. The Government Orders by which these provisions were introduced
into the said Rules were also quashed in part. A direction was issued to the
appellant State to permit the respondents herein, being the petitioners upon
whose writ petitions the judgments and orders were passed, to carry on
quarrying operations and transport the material quarried without reference the
aforementioned Rules, subject to the payment of royalty and seigniorage.
Rule
194 10. Prior to 10th
June, 1992, Rule 19-A
read thus:
540 "
19-A Permission for quarrying black, Pink.
red,
grey, green and other coloured granites and any other rock required for use for
decorative and ornamental purpose in ryotwari lands:- (1) Notwithstanding
anything to the contrary contained in Section III to these rules the authority
competent to grant permission for quarrying black, pink, red, grey, green and
other coloured granites and other rock required for use for decorative and
ornamental purposes in ryotwari lands shall be the State Government. The
application shall be in the form specified in Appendix III to these rules:
Provided
that the quarrying permission for the minerals above in ryotwari lands shall be
granted only to an applicant who is having an existing industry in Tamil Nadu
or distinct industrial programme to use the mineral in his proposed industry in
Tamil Nadu:
Provided
further that the permission holder for quarrying the above mineral shall remove
or transport the mineral shall remove or transport the mineral from the
specified land after payment of area assessment seigniorage, rates prescribed
from time in Appendix II to these rules and after obtaining transport permit
fawn the District Collector or the Officer authorised by him in the behalf;
Provided
also that the transport permit shall be issued only to the industry for which
the mineral is required to be supplied. The lessee shall keep correct accounts
showing the quantity and other particulars of all minerals obtained at the
factory site and despatched from the factory. The lessee shall also allow any
officer authorised by the State Government in this behalf to inspect the
industry and verify its records and accounts and furnish such information and
returns as may be required by him." 4.On 10th June, 1992, the State Government issued Government Order NO. 214. It
stated that under the said Rules as they stood, orders had been issued that
leases be granted to industries which had already been established for cutting
and polishing granite and to those who gave a definite industrial programme to
set up such units within the appellant State a period of two years from the
date of receipt of the letter of commitment. The Director of Geology and Mining
at Madras had reported to the State Government that illicit mining and
transportation was rampant in a number of districts, that the amount obtained
as tender bids for granite leases was very meagre and that there was an
alarming tendency for monopolies to be created in the granite trade. He had
also reported that there was a lot of wastage in the granite cutting and
polishing process.
He had
suggested that the State Government should take steps for conservation and
proper utilisation of the nonrenewable granite potential available in the
appellant State with a view to safeguard the interest at large. Granite was a
valuable mineral which earned valuable foreign exchange. It was, therefore,
necessary that it should be conserved and properly used without waste.
Considering all these aspects, the State Government had been examining the
question of streamlining the procedure for utilising the valuable granite
deposits available in the appellant State, and it had decided that:
"(1)
henceforth no lease for quarrying granites on poramboke lands shall be granted
to private persons except those who are holding letters of commitment. Fresh
leases will be given only to a State Government Company or a Corporation owned
or controlled by the State Government;
541
(2) ha respect of quarrying Paradiso ,Kashmir, White Kunnam, Paithur, Bavanur,
Black, Blue Granite, Raw Silk and Red Granite, the lease in ryotwari lands will
be granted preferably to a State Government company or a corporation owned or
controlled by the State Government;
(3)
the existing condition that the lessee who has been granted permission to
quarry granite in ryotwari lands should have an existing industry in Tamil Nadu
or distinct Industrial programme to use the mineral in his proposed indusutry
in Tamil Nadu, shall be dispensed with;
(4) all
trade relating to granite shall be canalised through the Tamil Nadu Minerals
Ltd." A notification amending the said Rules was appended to the said
Government Order and, so fir as is material for our purposes, it amended Rule
19A and introduced Rules 8B and 19-A, as amended, read thus:
"
19-A Quarrying lease for quarrying black, pink, red, grey, green, white or
other coloured or multi-coloured granites or any other rock required for use
for decorative and ornamental purposes in ryotwari lands, Notwithstanding
anything to the contrary contained in section III to these rules the authority
competent to grant quarrying lease for quarrying black, pink. red, grey, green,
white or other coloured or multi-coloured granites or any other rock required
for use for decorative and ornamental purposes in ryotwari lands shall be the
State Government.
The
application shall be in the form specified in Appendix VII to these rules:
The
said application shall be accompanied by a mining dues clearance certificate
issued by the District Collector concerned in the Form prescribed in Appendix
VIII. Receipt of the application made under this rule shall be acknowledged by
the District Collector or the Officer authorised by the District Collector in
this behalf in the form prescribed in Appendix IX to these rules:
Provided
that on and from the 10th June 1992 the State Government in granting quarrying
lease for quarrying the following minor minerals in ryotwari lands, shall give
preference to a State Government Company or a Corporation or Company owned or
controlled by the State Government, namely:-
(a) Paradiso
- (Gnessic Rock with violet colour wavy pattern)
(b)
Kashmir White - (Leptynite White gran- ite with gar net spees)
(c) Kunnam
Paithur, Bavanur Black Black granite fine and medium grade with brown back
ground
(d)
Blue Granite- Chamockite with blue background.
(e)
Raw Silk- Leptynite with background. yellow
(f)Red
Granite- Porphyritic granite and granites with red background.
Provided
further that the quarrying holder for quarrying the above mineral shall remove
or transport the mineral from the specified land after payment of area
assessment, seigniorage fee or dead rent whichever is higher at the rate;
prescribed from time to time in Appendix 11 to these rules and after obtaining
transport permit from the District Collector or the Officer authorised by him
in this behalf.
Provided
also that the lessee shall keep 542 correct accounts showing the quantity of
the minerals quarried and shall allow any office authorised by the State
Government in this behalf to inspect the quarry and verify its records and
accounts and furnish such information and returns as may be required by him.
5. It
was the first proviso in Rule 19A as amended which was under challenge and was
struck down by the High Court.
By
reason thereof, the State Government was obliged to give preference to State
Government companies and Corporation in granting quarrying leases for the
varieties of granite set out therein.
6. The
High Court found that the firs proviso in Rule 19A did not contain an guideline
in the matter of giving prefer ence to a State Governmment company of
Corporation. The grant of preference was left to the unfettered discretion of
the State Government. It was, therefore ultra vires the Constitution
7.
Learned counsel for the appellant State drew our attention to the judgment of
this Court in State of Tamil Nadu v. Hind Stone etc.,(1981) 2 S.C.R. 742. The
High Court of Madras had struck do Rule 8C of the said Rules as it then read.
Rule 8C stated that on and from 2nd December, 1977, no lease for quarrying black granite would be granted to
private persons and that the State Government itself could engage in quarrying
black granite or grant leases for quarrying black granite in favour of any
State Government Corporation. This Court referred to the declaration made under
Section 2 of the said act, which states that "it is expedient in the
public interest that the Union should take under its control the regulation of
the mines and the development of minerals" to the extent provided in the
said Act. The public interest, this court said, which induced parliament to
make this declaration had to be the paramount consideration in all matters
concerning the regulation of mines and the development of minerals.
Parliament's policy was clearly discernible from the provisions of the said
Act.
It was
the conservation and the prudent and discriminating exploitation of minerals
with a view to secure maximum benefit to the community. There were clear sign
posts to lead and guide the subordinate legislating authority in the matter of
making rules. It could not be said, having regard to the provisions of the said
Act, that the rule making authority had exceeded its power in banning leases
for quarrying black granite in favour of private parties and in stipulating
that the State Government itself could engage in quarrying black granite or
grant leases for quarrying black granite in favour of any State Government
Corporation. To view such a rule as a rule to benefit the State Government, the
subordinate legislating body, was to take too narrow a view of its functions.
If in the pursuit of the avowed policy of the Act it was thought that
exploitation by the public sector was best and wisest in the case of a
particular mineral, the authority competent to make the subordinate legislation
could make a rule banning private exploitation of such mineral, which had hitherto
been permitted. In the case of scare mineral the most effective method of
conservation and prudent exploitation was to permit exploitation by the State
or its agencies and to prohibit exploitation by private agencies. "If',
the Court said "you want to conserve in the future you must prohibit in
the present. We have no doubt that the prohibiting of leases in certain cases
is part of the regulation contemplated by section 15 of the Act." 543
8.
That valid differentia exists between State Government companies and
Corporations on the one hand and private min- ers on the other and that it
bears close nexus to the object of the said Act is not in serious dispute. With
the object of conserving a rare and precious mineral and ensuring its
exploitation in the best possible manner,it is open to the State Government,
the rule making authority in respect of minor minerals under section 15 of the
said Act, to keep mining operations in granite of the kind specified in the
amended Rule 19-A, so far as is possible, in its own hands, and to do this by
giving preference in the grant of quarrying leases for such granite to State
Government com- panies or Corporations.
9. The
principal challenge to the first proviso in Rule 19-A was that it was arbitrary
in that it conferred no guidelines in the matter of giving preference to State
Government companies or Corporations. In this connection attention was invited
by learned counsel for the appellant State to Appendix X to the said Rules.
Appendix X sets out the form of the application for a quarrying permit to be
mad-. in accordance with the provisions of Rule 3. The applicant is required to
state, inter alia whether he or it is an individual or a firm or a company. The
applicants nationality or place of registration or incorporation is to be set
out, as also his or its profession or nature of business. The form requires the
applicant to state whether it has filed on affidavit, as required by Rule 3,
that no mining dues arc outstanding in its name. It is also required to state whether
it has previously worked the mineral in the area in which it seeks the permit,
the quantity that it seeks to remove and the period during which it will be
quarried and transported. It is required to state the purpose for which the
mineral is to be used. Such guidelines as are required, it was submitted, are
furnished by the form read with rule 3. Quite clearly, preference to a State
Government company or Corporation must be given, all things being equal having
regard to the various factors in respect of which information is sought by the
aforesaid form. These are the guideline in this behalf 10.It was submitted by
learned counsel for the respondents that the Government company or Corporation
was free to apply for one piece of land but not another and that the said rule
should have provided guidelines for the State Government company or Corporation
in this behalf. It is difficult to see how a Government company or Corporation
can be bound down by guidelines provided by the said Rules. As commercial undertakings,
they would be guided by commercial considerations, and it must be assumed that
they would act bona fide.
11.It
was submitted that Rule 19A as amended had no nexus to the objects stated in
G.O. No. 214 quoted above. This submission is not well founded. The State
Government would be better able to control the mining of the granite mentioned
in the amended Rule if it was in the hands of a State Government company or
Corporation It was so held in the Hind Stone Case cited above.
12.It
was submitted that under Rule 19-A as it stood before 10th June 1992, applicants who qualified to be
granted quarrying leases were those who had an existing polishing unit or
distinct industrial programme to set up one. Many pri- 544 vate persons had set
up polishing units on the basis of this policy and had applied for quarrying
leases. In the meantime, Rule 19A was amended, and these persons had suffered
great hardship. The amendment of Rule 19-A to give preference to State
Government companies or Corporations was detrimental to such persons. It was
arbitrary and, applying also the principle of promissory estoppel, ought to be
struck down. Rule 19-A as it read prior to its amendment on 10th June, 1992, has already been quoted. There is
no promise or representation therein; the principle of prom- issory estoppel
is, therefore, not attracted: nor can it be said that there is any
arbitrariness in the State Government's decision to alter its policy in regard
to the mining of granite having regard to its perception, from time to time, of
the need to conserve it.
13.
Learned counsel for the respondents submitted that granite was a major as also
a minor mineral, depending upon its end use; if it was used for industrial or
engineering purposes it was not a building stone and could not be treated as a
minor mineral. Under the provisions of Section 15 of the said Act the State
Government has power to make rules for regulating the grant of quarry and
mining leases only "in respect of minor minerals." The said Rules
are, therefore, only in relation to minor minerals. The applicants that we are
here concerned with are those who desire to quarry minor minerals. The
submission, therefore, has no relevance to the validity of Rule 19A.
14.
Learned counsel for the respondents submitted that under the first proviso of
Rule 19A the consent of the owner of the land was not made a condition and it
was bad in law on that account The submission does not take note of section 24A
of the said Act. Thereunder the holder of a mining lease under the said Act or-
rules made under it is empowered to enter the land on which the lease has been
granted and carry out mining operations-. He is obliged to compensate the land
owner for any loss or damage that his operations may cause. Consent of the
occupier is required only when the holder of the lease desires entry into any
building or enclosed court or garden.
15.
The provisions of section 17A(2) of the said Act were adverted to and it was
submitted that they were being cir- cumvented by the first proviso of Rule 19A.
Section 17A(2) reads thus:
"The
State Government may, with the approval of the Central Government, reserve any
area not already held under any prospecting licence or mining lease, for
undertaking prospecting or mining operations through a Government, company or
corporation owned or controlled by it or by the Central Government and where it
purposes to do so, it shall, by notification in the official Gazette, specify
the bound- arises of such area and the mineral or min- erals in respect of
which areas will be reserved." Section 17A(2) applies when an area is
sought to be reserved by the State Government for undertaking mining operations
exclusively through a Government company or corporation.
When
such area is notified the mineral or minerals in respect of which it is
notified must also be stated. Such reservation cannot be made without the
approval of the Central Government. The first proviso of Rule 19A does not
wholly exclude private parties from 545 obtaining quarrying leases for the
minerals specified therein. It states that for such leases preferences shall be
given to State Government companies and corporations.
Where,
therefore, there are, for the same mining lease for the specified minerals,
rival applications, all things being equal having regard to the requirements of
Rule 3 and the form at Appendix X, a State GoveRNment company or corporation is
to be preferred. The first proviso to Rule 19A cannot, therefore, be said to
circumvent the provisions of section 17(2).
16.
The provisions of the amended Rule 19-A have not been attacked on grounds other
than those set out above. We find no substance in the attack. We are of the
view that the High Court was in error in holding that the first proviso in Rule
19-A was ultra vires the Constitution.
Rules
8D and 19B:
17.
Rules 8D and 19B were introduced in to the said Rules by Government Order No.
214. dated 10th June,
1992. The two rules
are identical, except that Rule 8D is in Section 11 which relates to Government
lands which the minerals belong to the Government and Rule 19B is in Section
III which relates to ryotwari land in which the minerals belong to.
This
being so, it is enough to quote Rule 19B. It reads thus:
"
19-B Constitution of black, red, pink, grey, green, white or other coloured or
multi- coloured granites or any rock suitable for use as ornamental and
decorative stones quarried by the permit holder, etc.- (1) Notwithstanding
anything contained in these rules, on and from the 10th June,1992 the sale of
the quarried black, red, pink, grey, green, white or other Coloured or multi- coloured
granites or any rock suitable for use as ornamental and decorative stone by
every permit holder who has been granted permission by the State Government and
every person who has been permitted by a competent court having jurisdiction,
for quarrying black, red, pink, grey, green, white or other coloured or multi- coloured
granites or any rock suitable for use as ornamental and decorative stone, shall
be regulated by the State or by an Officer of the State Government or by a
State Government company or by a corporation owned or controlled by the State
Government as the State Government may direct in this behalf (2) Where the
above sale is regulated by- (i) The State Government or by an Officer of the State
Government, the minimum price shall be as fixed by the State Government;
(ii)
The State Government-Company or a corporation owned or controlled by the State
Government, the minimum price shall be as fixed by the said company or
corporation, as the case may be:
Provided
that in fixing the minimum price under this sub-rule the fair market price
prevailing at the time of the sale shall be taken into account." 18.On the
same day that Rule 8D and 19B were introduced, that is, 10th, June, 1992,
Government Order No. 216 was also issued. It directed, under the provisions of
the two Rules, that the Tamil Nadu Minerals Limited, a State Company, would
regulate the sale of quarried black, red, pink, grey, green, white or other 546
coloured or multi-coloured granite or any rock suitable for use as ornamental
and decorative stones.
19.
The High Court quashed Rules 8D and 19B principally on the ground that Section
15 of the said Act gave no power to the State Government to frame rules to
regulate internal or foreign trade in granite after it had been quarried.
Section
15 also did not empower the State Government to frame rules to enable a State
Government company or corporation to fix a minimum price for granite.
20.
Learned counsel for the appellant State submitted that Rules 8D and 19B were
valid having regard to the Preamble of the said Act and Section 18 thereof He
submitted that the rule making power of the State under Section 15 (o) was wide
enough to encompass Rules 8D and 19B.
21.
The said Act is enacted to provide for the regulation of mines and the
development of minerals under the control of the Union. Section 2 of the said Act declares that it is expedient in
the public interest that the Union should
take under its control the regulation of mines and development of minerals to
the extent provided in the said Act. Section 13 empowers the Central Government
to make rules for regulating the grant of prospecting licences and mineral
leases in respect of minerals and for purposes connected therewith.
Sub-section
(1) of section 15 empowers the State Government to make rules for regulating
the grant of quarry leases, mining leases and other mineral concessions in
respect of minor minerals and for purposes connected therewith. Sub- section
(1A) of section 15 states that such rules may provide for the matters set out
herein, namely, the person by whom and the manner in which an application for a
quarry lease, mining lease and the like may be made; the fees to be paid
therefore; the time and the form in which an application is to be made; the
matters which are to be considered where application in respect of the same
land are received on the same day; the terms and conditions on which leases may
be granted or regulated; the procedure in this behalf, the facilities to be
afforded to lease-holders; the fixation and collection of rent and other
charges and the time within which they are payable; the protection of the
rights of third parties; the protection of flora; the manner in which leases
may be transferred; the construction, maintenance and use of roads, power
transmission lines, etc.
on the
land; the form of registers to be maintained; reports and statements to be
submitted and to whom ; and the revision of any order passed by any authority
under the said Rules. Clause (o) of sub-section (IA) reads, "any other
matter which is to be or may be prescribed." Section 18 of the said Act
states that it shall be the duty of the Central Government to take all such
steps as may be necessary for the conservation and systematic development of
the environment by preventing or controlling any pollution which may be caused
by prospecting or mining operations.
22.Rules
8D and 19B empowers the State Government company or corporation as the State
Government may direct to control the sale by every permit-holder of quarried
granite or other or rock suitable for ornamental or decorative purposes.
They
also empower the State Government or its officers or a State Government company
or corporation, as the case may be, to fix the minimum price for the sale
thereof. The object, as is shown by the terms of 547 Government Order No. 214
dated 10th June, 1992, quoted above, is to conserve and protect granite
resources.
23. It
is difficult to see how granite resource scan be protected by controlling the
sale ofgranite after its excavation and fixing the minimum price thereof
24.
There is no power conferred upon the State Government under the said Act to
exercise control over minor minerals after they have been excavated. The power
of the State Government, as the subordinate rule making authority, is
restricted in the manner set out in Section 15. The power to control the sale
and the sale price of minor mineral is not covered by the terms of clause (o)
of sub- section (IA) of Section 15. This clause can relate only to the
regulation of the grant of quarry and mining leases and other mineral
concessions and it does not confer the power to regulate the sale of already
mined minerals.
25. In
our view, therefore, the High Court was clearly right in striking down Rules 8D
and 19B as being beyond the purview of the rule making power of the State
Government.
These
Rules having been struck down, the High Court was also right in striking down
Government Order No.214 to the extent that it prescribed these Rules and
Government Order No.216 made in pursuance of these Rules.
26. In
the result, these appeals succeed in part. The judgment and order of the High
Court is set aside in so far as it holds that Rule 19A as amended by Government
Order No.214 dated 10th June, 1992, is bad in law. The judgment and order of
the High Court is affirmed in so far as it holds that Rules 8D and 19B are bad
in law. It is affirmed also in so far as it holds that Government Order No. 214
dated 10th June, 1992, in so far as it prescribes Rules 8D and 19, and
Government Order No.216 dated 10th June, 1992, are bad in law, 27. There shall
be no order as to costs.
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