The
Quarry Owners Association Vs. The State of Bihar & Ors [2000] INSC 456 (29
August 2000)
Appeal (civil) 5090 of 1997 Appeal (civil) 5091 of 1997
Appeal (civil) 5092 of 1997
A.P.Misra,
N.S.Hegde
L.I.T.J
MISRA, J.
The
issues in these appeals, apparently impress a common picturisation of usual
nature but they are raised in an interesting way while challenging the fixation
of the rate of royalty for the minor minerals under Section 15 of the Mines and
Minerals (Regulation and Development) Act, 1957 (hereinafter referred to as the
Act). The question for consideration is, the ambit of delegation of power by
the Parliament to the State Government under Section 15 of the said Act. Can it
be said that the delegation is unbridled without any check if it travels beyond
the guideline as spelt by this Court in the case of D.K.
1986
(Supp.) SCC 20? In the present case neither the validity of delegation under
Section 15 nor it being without any guideline is under challenge but both
appellants and the respondents State stress two different orbits for the
guideline, the appellants constrict it to be within what is spelt in the D.K. Trivedi
case (supra) while the respondent stresses it not to be confined to that case.
The impugned notifications dated 17th August, 1991 and 28th
September, 1994 issued
by the State of Bihar enhancing the rate of royalty have
to be tested as in which of the two orbits it falls. If it falls within the
restricted orbit, as submitted by the appellants, it may be ultra vires but
would be valid if it falls within the other orbit. Mr. F.S.
Nariman,
learned senior counsel, submits that extents and limitations of the power of
the delegatee have to be read as laid down by this Court in D.K. Trivedi case
(supra), where the validity of this very delegation of power to the State
Government was under challenge. Based on this the submission is, Item 54 of the
Second Schedule of the Act controls and guides the State Government
(hereinafter referred to as the State), for fixing or enhancing the rate of
royalty which has to be within the reasonable bounds of 12% of the sale price
at the pits mouth. Admittedly in the present case it is far beyond this, hence
the submission is that the impugned notifications are liable to be struck down.
On the other hand, submission for the respondents - the State of Bihar by
learned senior counsel Mr. Rakesh Dwivedi is that D.K. Trivedis case (Supra)
neither restricts nor limits the power of enhancement of royalty to Item 54, Schedule
II of the Act nor it exhaustively dealt with all other sources of guidelines
which was not necessary in that case, which can be gathered from other
provisions of the Act, the objects and reasons, the scheme of the Act and the
nature of material etc..
Before
entering into this legal tangle, it is necessary to turn to some of the
essential facts to appreciate more fully the controversies. The present appeal
is directed against the judgment and order dated 16th October, 1996 of the High
Court, passed in a writ petition by which the petition of the appellants,
namely, Quarry Owners Association challenging the aforesaid notifications dated
17th August, 1991 and 28th September, 1994, issued by the State including
challenge to the recovery of the enhanced royalty under it and for the refund
of the amount already paid was dismissed.
The
Preamble of the Act lays down:
An Act
to provide for the development and regulation of mines and minerals under the
control of the Union.
Section
2 declares the expediency of Union to
control the regulation of mines and development of minerals Section 3(a)
defines minerals which includes all minerals except mineral oils. Section 3(e)
defines minor minerals.
Section
4 refers to the prospecting or mining operations to be undertaken only under a licence
or lease. Section 4A is for termination of prospecting licences or mining
leases, sub-section (1) is for premature termination other than minor minerals
while sub-section (2) is for minor minerals.
Section
5 imposes restrictions on the grant of such licences or leases. Section 6
specifies the maximum area for which a licence and lease may be granted, while
Section 7 gives period for the grant and renewal of such prospective licences.
Section 8 deals with the periods for mining leases. Sub-sections (1) and (2) of
Section 9 refer to the payment of royalty at the rate specified in the Second
Schedule whether granted before coming into force of this Act or subsequently.
Sub-section (3), empowers the Central Government to amend the Second Schedule
so as to enhance or reduce the rate of royalty payable. Section 9A obliges
lessee to pay the dead rent. Sections 10 to 12 deal with the procedure for
obtaining prospective licence, or mining leases in respect of the land in which
minerals vest in the Government. Section 13 empowers the Central Government to
make rules in respect of minerals. Section 14 specifically excludes Sections 5
to 13 from application of quarrying leases, mining leases or other minerals
concessions in respect of minor minerals. Section 15 empowers the State to make
rules in respect of minor minerals. Section 16 entrusts power to modify mining
leases granted before 25th
October, 1949. Section
17 gives special power to the Central Government to undertake prospecting or
mining operations in certain lands. Section 18 refers to the mineral
development. Licences and mining leases under the Act to be void under Section
19 if made in contravention of the Act, while Section 20 makes the Act and
Rules to apply to all renewals. Section 21 imposes penalties. Section 22 refers
to the cognizance of offences. Section 23-C empowers the State to make rules
for preventing illegal mining, transportation and storage of minerals. Section
26 entrusts both Central and the State to delegate its power under the Act on
officer or authority of the Central or State.
Sub-section
(1) of Section 28 puts an obligation on the Central Government to place its
rules and notifications before the Parliament which is subject to its
modifications, if any. Similarly, the State is obliged to place its Rules and
notifications before each houses of State Legislature under sub-Section (3).
Section 29 makes existing rules to continue so long they are not in consistent
with the Act and Rules. Section 30 empowers the Central Government to revise
any order made by the State or any other authority. The First Schedule refers
to the specified minerals, viz., Hydro carbons/energy minerals Atomic minerals
and Metallic and non-metallic minerals with reference to Sections 4(3), 5(1), 7(2)
and 8(2) while the Second Schedule refer to the rate of royalty in all States
and Union Territories except the States of Assam and West Bengal while the
Third Schedule refers to the rate of Dead Rent. Thus, the aforesaid Act
expressly lays down the rates of royalty of the minerals through Schedule II
read with Section 9. It is significant that Section 14 excludes Sections 5 to
13 specifically for minor minerals which includes Section 9. Section 15,
entrusts power on the State to lay down Rules in respect of the minor minerals.
Original Section 15 as it stood at the time of D.K. Trivedi (Supra), is quoted
hereunder:
Section
15: Power of State Government to make rules in respect of minor minerals:- (1)
The State Government may, by notification in the Official Gazette, make rules
for regulating the grant of quarry leases, mining leases or other minerals
concessions 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 quarry leases, mining leases or other mineral
concessions in respect of minor minerals which are in force immediately before
the commencement of this Act shall continue in force.
(3)
The holder of a mining lease or any other mineral concession granted under any
rule made under sub-section (1) shall pay royalty in respect of minor minerals
removed or consumed by him or by his agent, manager, employee, contractor or
sub-lessee at the rate prescribed for the time being in the rules framed by the
State Government in respect of minor minerals.
Provided
that the State Government shall not enhance the rate of royalty in respect of
any minor minerals for more than once during any period of four years.
This
delegation of power to the State withstood its challenge in D.K. Trivedi case
(Supra), as aforesaid.
Later
this section was amended on 10th February, 1987, by introducing sub-section 1-A through Act No.37 of 1986. This was in
particular and without prejudice to the generality of power conferred by
sub-section 1 of Section 15. This sub-section 1-A is quoted hereunder:- (1-A):
In particular and without prejudice to the generality of the foregoing power,
such rules may provide for all or any of the following matters, namely:- (a)
the person by whom and the manner in which, applications for quarry leases,
mining leases or other mineral concessions may be made and the fees to be paid therefor;
(b) the
time within which, and the form in which, acknowledgement of the receipt of any
such applications may be sent;
(c) the
matters which may be considered where applications in respect of the same land
are received within the same day;
(d)
the terms on which, and the conditions subject to which and the authority by
which quarry leases, mining leases or other mineral concessions may be granted
or renewed;
(e) the
procedure for obtaining quarry leases, mining leases or other mineral
concessions;
(f)
the facilities to be afforded by holders of quarry leases, mining leases or
other mineral concessions to persons deputed by the Government for the purpose
of undertaking research or training in matters relating to mining operations;
(g)
the fixing and collection of rent, royalty, fees, dead rent, fines or other
charges and the time within which and the manner in which these shall be
payable;
(h) the
manner in which rights of third parties may be protected (whether by way of
payment of compensation or otherwise) in cases where any such party is
prejudicially affected by reason of any prospecting or mining operations;
(i)
the manner in which rehabilitation of flora and other vegetation, such as
trees, shrubs and the like destroyed by reason of any quarrying on mining
operations shall be made in the same area or in any other area selected by the
State Government (whether by way of reimbursement of the cost of rehabilitation
or otherwise) by the person holding the quarrying or mining lease;
(j) the
manner in which and the conditions subject to which, a quarry lease, mining
lease or other mineral concession may be transferred;
(k)
the construction, maintenance and use of roads, power transmission lines,
tramways, railways, aerial ropeways, pipelines and the making of passage for
water for mining purposes on any land comprised in a quarry or mining lease or
other mineral concession;
(l) the
form of registers to be maintained under this Act;
(m)
the reports and statements to be submitted by holders of quarry or mining
leases or other mineral concessions and the authority to which such reports and
statements shall be submitted;
(n)
the period within which and the manner in which and the authority to which
applications for revision of any order passed by any authority under these
rules may be made, the fees to be paid therefor, and the powers of the revisional
authority; and (o) any other matter which is to be, or may be prescribed.
The
introduction of this sub-section 1-A including the Objects and Reasons, is
submitted further enlarges the area of the guidelines to the State. Its Objects
and Reasons are also quoted hereunder:- Statement of Objects and Reasons: The
Mines and Minerals (Regulation and Development) Act, 1957 provides for the
regulation of mines and the development of minerals under the control of the Union. Since the last amendment of the Act in 1972, many
problems have come to the force. The adverse effects of mining operation on
ecology and environment have increasingly come to notice. In many cases, mining
operations have been undertaken without proper prospecting resulting in
unscientific mining. Further, a number of Committees have stressed the need for
amending certain provisions of the Act with the object of removing bottle-necks
and promoting speedy development of mineral based Industries. State Governments
and representatives of trade and industry have in formal forums like the
Mineral Advisory Council as well as in other forums, expressed the desirability
of taking a fresh look at the various provisions of the Act with a view to
making them more effective and development oriented.
2. The
suggestions made from time to time have been considered and incorporated in the
present Bill, which, inter alia, includes the following salient features,
namely :- (i) inclusion of 11 more minerals of national importance in the First
Schedule to the Act;
(ii) premature
termination of prospecting licences and mining leases on ecological and other
grounds:
(iii) dispensing
with the Certificate of Approval, Income-tax Clearance Certificate, etc. for
the grant of prospecting licences and mining leases;
(iv) prospecting
of an area and preparation of mining plan as a pre-condition for the grant of a
mining lease;
(v) rationalisation
of the period of mining leases, and renewals thereof;
(vi) shorter
periodicity for purposes of revision of royalty and dead rent; and (vii)
provision for increasing the quantum of punishment to curb illegal mining
activities.
3. The
Bill seeks to provide for the above objects.
It is
also relevant to record here the rate of royalty fixed by the State for the
minor minerals through various notifications in various years. Initially on 1st April, 1975 the rate of royalty fixed was
Rs.2.50 per cubic meter that is Rs.7.07 per 100 cubic ft., Rs.1.75 per cubic
meter that is Rs.4.95 for 100 cubic ft for Ballast and Boulder.
Next
on 3rd August, 1977 the rate of stone chips, Ballast
and Boulder was increased to Rs.3/- per cubic
meter that is Rs.8.49 per 100 cubic ft and from 17th August, 1991 (impugned) the rate of royalty of stone chips, Ballast and Boulder was increased to Rs.12/- per cubic
meter that is Rs.33.96 per 100 cubic ft. By notification dated 28th November,
1994 (impugned) the rate of royalty was Rs.25/- per cubic meter or Rs.70.75 per
100 cubic ft. for Ballast, Boulder and stone chips, which according to the
appellants is more than 15 times as originally provided and more than 5 times
in excess of the maximum rate of 12% of sale price at pits mouth under Entry 54
of Schedule II. It is also not in dispute by the aforesaid Act, under Item 54
of List I, VII Schedule of the Constitution of India, the regulation of mines
and mineral development both of major and minor minerals came under the control
of the Union, including fixation of the rate of
royalty. The challenge to the aforesaid two notifications are that the State
trespassed the limit of the guideline as laid and spelt out in D.K.
Trivedis
case (Supra). Further, if that guideline has not to be, then there is no other
check and control or guideline of the Union
over the State Government. In contrast there is check over the other delegatee,
viz., Central Government where under Section 28(1) rules or notifications by it
including enhancement of royalty is to be laid before the Parliament. The High
Court repealed the contention of the appellants by holding:
No
doubt when the decision in the case of D.K.
Trivedi
and sons (Supra) was given there were no specific guidelines in Section 15 of
the Act. However..Amendment Act 1986 (Act No.37 of 1986) which came into force
on 10th February, 1987, guidelines have been provided in Section 15 itself.clause
(g) of sub-section 1-A provided that the rules may be framed by the State
Government for fixing and collecting rent, royalty, fees etcThe guidelines
provided for framing Rules in respect of minerals other than minor minerals do
not remain relevant after insertion of sub-section 1-A in Section 15 of the
Act.
However,
submission for the appellants is sub-section 1-A only empowers the State
Government but does not lay down any guideline, hence it cannot shield the
State to be providing with any guideline, for which State has only to fall
under Item 54 of Schedule II of the Act, which records:- Item 54: All other
materials not herein before specified = Twelve per cent of sale price at the
pits mouth.
The
submission is, this is residuary item which cover all other minerals not specified
in any of the preceding items in Schedule II. The minor minerals not being
specified in any of the items it would fall under this entry.
It is
also significant to record that minor minerals are used in the local areas for
local purposes while major minerals are used for the industrial development for
the National purpose. The crux of the matter for consideration is, whether is
it only Sections 4 to 12 which controls or guides the State in fixing the
royalty for the minor mineral and, if it is, whether Entry 54 of Schedule II
places any ceiling of 12% of the sale price at the pits mouth for fixing this
royalty by the State? In other words, does D.K.
Trivedi
case (Supra) fore closes the issue of guideline or is it open to travel to
other fields which guides the State for fixing the royalty.
The
appellants are an association of quarry owners.
They
were given permit/lease for the extraction of stone in respect of their
respective places of operation in pursuance to such permit/lease. The State
Government in exercise of its power under Section 15 of the aforesaid Act made
rules called Bihar Minor Mineral Concession Rules 1972, (hereinafter referred
to as the Rules) and fixed the royalties from time to time. Submission for the
appellants is since rate of royalty on building stone including stone chips ,
Bolder, Road medal and ballast has been increased to more than 100% , the
appellants are unable to pay, hence challenge this enhancement.
Mr.
F.S. Nariman, learned senior counsel for the appellants submits, in order to
judge the validity regarding excessive delegation one has to identify the power
which is sought to be delegated. The power delegated to the State Government
under Section 15 of the Act is the power to fix and collect royalty. It cannot
be disputed that royalty is a tax. The question is, are there any guideline to
vary the rate of royalty apart from D.K. Trivedis case (Supra).
The
submission is, this decision settles the guideline by placing the restrictions
on State power through Section 9 read with Item No.54 of the Second Schedule of
the Act. The introduction of sub-section 1A in Section 15 of the Act makes no
difference, as it is only an amplification and illustration of Section 15(1).
Further, sub-clause (g) of Section 15(1A) only clothes the State with power to
change the rate of royalty but it cannot be construed as giving any guideline.
It is only when legislature fixes any maximum rate, beyond which delegatee
cannot enhance the rate, it could be said it - retained sufficient control over
the delegatee. The control of the Parliament in relation to the major minerals
for such enhancement is enshrined in Section 28(1) of the Act, State of M.P. V.
Mahalakshmi 1995 (Supp) 1 SCC 642 upheld such a delegation. The delegatee,
viz., Central Government was entrusted with the power to amend the Second
Schedule which fixes royalty but obligates the delegatee to lay such amendment
before the Parliament. This is absent in the case of minor minerals.
Next
it is submitted, this Court in Baijnath Kedias 1969 (3) SCC 838, held that the
State legislature is denuded of all its legislative power over the minor
minerals after the passing of the said Act, hence it looses its legislative
control for fixing the royalty. The State only acts as delegatee of the
Parliament to enhance the rate of royalty.
So
far, Section 28(3), which is for minor minerals, merely provides laying down
procedure before the State legislature for information and not with any
entrustment of power to alter or modify the rate of royalty, hence Section
28(3) by itself cannot save the plea of excessive delegation of the legislative
power. The language used in Section 28(3) is different from what is in Section
28(1), hence both cannot be equated. There is nothing to show that, in fact,
the impugned notifications, were laid before the State legislature. So far
Delegation Legislation Provision (Amendment) Act of 1983, it refers to the
rules made by the State Government under a parliamentary Act for laying before
the State legislature only with respect to the subjects under concurrent List 3
of VII Schedule of the Constitution of India and not in respect of subjects in
exclusive competence of the Parliament under List I.
Learned
senior counsel Mr. P.P. Rao, also appearing for some of the appellants submits,
power to fix the rate of tax can be delegated provided the statute provides
guidance for fixing such rate. The guidance may be by fixing maximum rates of
tax or by providing consultation with the people, i.e., subject to the approval
by them as held in Municipal Corporation of Delhi V. Birla Cotton 1968 (3) SCR
251.
Reasserting
the principle as laid down in the case of Mahalakshim Fabrics (Supra), it is
submitted Parliament has itself laid down for the major minerals the rate of
royalty in the Second Schedule of the Act and authorised the Central Government
to revise the rates. In doing so the Central Government has the guidance to
keep in view the original rates. The fixation of royalty should have a direct
nexus with the minerals throughout the country on a uniform pattern. Further,
there is requirement that every rule or notification made by the Central
Government is to be placed before each House of Parliament subject to agreed
modification by both Houses. Thus, Section 28(1) permits Parliament to veto the
enhanced rate of royalty. In contrast there is no such guideline so far minor
minerals are concerned, except what is contained in D.K. Trivedis case (Supra).
Based on that it is submitted that only provision among Sections 4 to 12 of the
Act, which is relevant is Section 9(2) read with Entry 54 of the Second
Schedule of the Act which fixes the limit of royalty at 12% of the sale price
at the pits mouth. The very rationale of Entry 54 of List I of the Constitution
is to regulate the mines and mineral development under the control of Union in the public interest. The preamble as well as
Section 2 of the Act speak about the expedience of Union control of both major
and minor minerals. Thus no part of the Act can be construed so as to take away
the control of the Union.
Section
28(3) cannot be read so as to divest the Union
of its control and vest the control in the respective State legislature. In
view of difference in the language between Sections 28(3) and 28(1), the same
purport what is contained in sub-section (1) cannot be brought into sub-section
(3).
Further
the taxing statute must be interpreted as it reads with no additions or
subtractions of words and where two opinions are possible the one which
benefits an assessee must be adopted.
Learned
senior counsel Mr. S.B. Sanyal, in addition to the adoption of the submissions
by the aforesaid two learned counsels further submits that Section 28(3) which
is brought in through amendment cannot be construed to confer authority on the
State legislature to modify any notifications or rules framed by the State
Government. But laying of such rule or notification before the State
legislature is only for the purpose of information. In a delegated legislation
the control and authority of the Principal to modify or cancel any act of the delegatee
must remain. Parliamentary control over delegated legislation should be living
continuity as a constitutional necessity which is not to be found in the
present case.
Repelling
the submissions, Mr. Rakesh Dwivedi, learned senior counsel, appearing for the
State of Bihar submits, in D.K. Trivedis case (Supra) Section 15, as it then
stood, was questioned as suffering from the vice of excessive delegation of its
legislative power. This Court held that sub-section (2) of Section 13 was
merely particularisation or illustration of the generality of power already
contained in sub-section (1) and since Section 15(1) was similar to Section
13(1), it could necessarily contain illustrations of Section 13(2) and the
provisions of Section 13(2) being in the same sub-chapter as Section 15, would
furnish sufficient guidelines. Reliance was also placed on the following observationsa
made in that case:- The exclusion of the application of these sections to minor
minerals means that these restrictions will not apply to minor minerals but it
is left to the state governments to prescribe such restrictions as they think
fit by rules made under Section 15(1).
The
submission is, Sections 4 to 12, as they stood then, cannot be construed as
restricting the power of delegatee over the minor minerals in view of Section
14. In fact, they were referred by this Court as it being available to the
State Government for taking note while framing the rules. They are available
not as restrictive or limiting its power but for its adoption wherever
necessary. In fact, while judging the validity of the notifications impugned in
that case, this Court was not called upon nor did it examine whether the State
power to enhance royalty is restricted to Schedule 2 of Section 9 of the Act.
Further, the guideline is also to be found in the preamble, the Statement of
Objects and Reasons and other provisions of the Act.
Sections
4A, 17 and 18 also provide the guideline. Further after the amendment, the
power of the Central Government under Section 9(3) of the Act for the
modification of the rate of royalty for the major minerals is made very wide.
The
only difference being that under Section 28(1) Parliament has opportunity to
modify the rate fixed by the Central Government. This was because the Central
Government was modifying the rates fixed by the Parliament itself.
Secondly,
major minerals are minerals of national importance hence require uniform
treatment at the national level. In contrast, the minor minerals are mostly
used locally and are of local importance and hence their treatment is left to
the State Government at the provincial level. This is in recognition of States
original power to determine such royalty under Entry 54 of List II of the
Seventh Schedule.
This
is also in tune with the principle of federalism which requires local matters
to be left for it being dealt with by the State Government.
Further
submission is, in order to find the guidelines the nature of the subject matter
is also to be considered.
The
product, namely, minor minerals is neither produced nor it belong to the
appellants. So it is not a case of imposition of tax simplicitor on the
appellants but such tax in fact includes the price of the minerals which is the
property of the State. In other words, it includes the price of the property
which State parts with. Thus, royalty is a unique kind of tax which is
different from other taxes.
Both
royalty/dead rent are integral part of the lease as talked about in Section 4
of the Act and Section 105 of the Transfer of Property Act, 1882. Hence the
lessee cannot insist that in spite of the minerals being parted by the State
the mining should be made available cheaply so that they can derive profits,
and even super profits. Further, fixation of maximum limit for royalty under
Section 15 is not an absolute rule. In fact, the rate fixed has not been
demonstrated to be confiscatory or arbitrary, for which the courts are there
and if that be, it could be quashed.
Further
the history of regulation of minerals shows that royalty has always been fixed
by the State Government.
Under
Rule 4 of the Mineral Concession Rules, 1949 framed by the Central Government
under the 1948 Act, the State Government was given power to make rules with
regard to the minor minerals. In fact, what was then delegated to the State by
the Central Government has now been delegated by the Parliament itself. Thus
the status of State Government has changed from sub-delegatee to delegatee.
Next it is submitted, it is true that phraseology of Section 28(3) is
differently couched than what is in Section 28(1). This is because the
Parliament is directing the rules to be placed before the State legislature.
This was done in view of the observations by this Court in D.K. Trivedis case
(Supra).
It is
also submitted that placement of such notification and rules under Section
28(3) before the State legislature cannot be said to be only a show piece but
is meaningful.
He
also submits since 1st
April, 1975 the State
of Bihar has increased royalty only four
times and even now it has not raised royalty since 28.9.1994, despite the lapse
of six years. Thus raising of royalty only four times during 25 years despite
power to revise every three years shows that the Government has been more than
reasonable in fixing the royalty.
In
order to scrutinise the submissions of the learned counsels for the parties, it
would be appropriate first to focus as to what this Court said in D.K. Trivedis
case (Supra). The constitutionality of Section 15(1) of the said Act was raised
with reference to the delegation of power to the State Government delegating
essential legislative function, including charging and enhancing the rate of
dead rent and royalty that it being unbridled, including challenge to the
charging of the same during the subsistence of the existing leases, including
the validity of Rule 21(b) of the Gujarat Minor Minerals Rules, 1966 and few
notifications issued by the State Government under Section 15 in respect of the
minor minerals. The relevant notifications were, one dated 29.11.1974 by which
the State Government made Gujarat Minor Minerals (Fourth Amendment) Rules, 1974
whereby Rule (1) was substituted and Schedule II was amended w.e.f. 1.12.1974.
By this the rate of royalty and dead rent in respect of some of the minor minerals
were specified. Through the notification dated 29th October, 1975 the State
Government brought in Gujarat Minor Minerals (Second Amendment) Rules, 1975,
whereby Rule 21 of the said rules and Schedule I was substituted w.e.f.
1.11.1975, through which the rate of royalty in respect of several items were
enhanced. The next notification was dated 6th April, 1976, by which the State Government made
the Gujarat Minor Minerals (Second Amendment) Rules, 1976 through which it
substituted Schedule II in the said rules, by which the dead rent was enhanced.
The next notification was dated 26th March, 1979, through which the State Government made the Gujarat Minor
Minerals (Amendment) Rules, 1979. Through this new Rule 21-B was inserted and
Rule 22 was amended and Schedules I and II were substituted. By substituted
Schedule I the rate of royalty on all minor minerals were specified as 10 p.
per metric tonne and by substituted Schedule II the rate of dead rent per
hectare or part thereof in respect of quarry leases was enhanced to Rs.1200/-,
in certain cases Rs.1500/- in some other cases Rs.2,000/- in one case and
Rs.3,000/- in the remaining cases. The contention raised before this Court was,
that Section 15(1) of the Act is unconstitutional as it suffers from the vice
of excessive delegation of the essential legislative power to the executive as
it is unchannelised as there are no guidelines, which gives free hand to the
State Government to act arbitrary. This submission for the lessee was rejected
when this Court held:- We find that this contention is based upon a fallacy
inasmuch as it is founded upon reading the provisions of Section 15(1) in
isolation and without reference to other provisions of the 1957 Act and its
legislative history.
This
Court further held: 32. There is no substance in the contention that no
guidelines are provided in the 1957 Act for the exercise of the rule-making
power of the State Government under Section 15(1).
33.A
provision similar to sub-section (2) of Section 13, however, does not find
place in Section 15. In our opinion, this makes no difference. What sub-
section (2) of Section 13 does is to give illustrations of the matters in
respect of which the Central Government can make rules for regulating the grant
of prospecting licences and mining leases in respect of minerals and for
purposes connected therewith. The opening clause of sub-section (2) of Section
13, namely, In particular, and without prejudice to the generality of the
foregoing power, makes it clear that the topics set out in that sub- section
are already included in the general power conferred by sub-section (1) but are
being listed to particularize them and to focus attention on them. The
particular matters in respect of which the Central Government can make rules
under sub-section (2) of Section 13 are, therefore, also matters with respect
to which under sub-section (1) of Section 15 the State Government can make
rules for regulating the grant of quarry leases, mining leases or other mineral
concessions in respect of minor minerals and for purposes connected therewith.
When Section 14 directs that The provisions of Sections 4 to 13 (inclusive)
shall not apply to quarry leases, mining leases or other mineral concessions in
respect of minor minerals, what is intended is that the matters contained in
those sections, so far as they concern minor minerals, will not be controlled
by the Central Government but by the concerned State Government by exercising
its rule- making power as a delegate of the Central Government. Sections 4 to
12 form a group of sections under the heading General restrictions on
undertaking prospecting and mining operations. The exclusion of the application
of these sections to minor minerals means that these restrictions will not
apply to minor minerals but that it is left to the State Governments to
prescribe such restrictions as they think fit by rules made under Section
15(1). The reason for treating minor minerals differently from minerals other
than minor minerals is obvious. As seen from the definition of minor minerals
given in clause (e) of Section 3, they are minerals which are mostly used in
local areas and for local purposes while minerals other than minor minerals are
those which are necessary for industrial development on a national scale and
for the economy of the country. That is why matters relating to minor minerals
have been left by Parliament to the State Government while reserving matters
relating to minerals other than minor minerals to the Central Government.
This
Court finally upheld the validity of sub-section (1) of Section 15 by holding
that power conferred upon the State Governments does not amount to excessive
delegation of any essential legislative power. It further held, there are
sufficient guidelines for the exercise of rule-making power which are to be
found in the object for which such power is conferred, namely, for regulating
the grant of quarry leases, mining leases or mineral concessions in respect of
minor minerals and for the purposes connected therewith. It also held that power
to make rules under Section 15(1) includes to amend the rules so as to enhance
the rates of royalty and dead rent. Further there is a check on the State
Government not to enhance the rate of royalty/dead rent more than once during
any period of four years in view of proviso to Section 15(3). It upheld
notification dated 29th November, 1974, but held notification dated 29th
October, 1975 as void as it offends the prohibition contained in the proviso to
Section 15(3). It also similarly holds notification dated 6th April, 1976 as void as the same enhances the
rates of dead rent for the second time during the same period of four years. It
however holds notification dated 26th March, 1979 to be valid.
Strong
hammering has been done by the learned counsels for the appellantss with
reference to the observation made by this Court in D.K.Trivedis case (supra),
where this Court records that the guidelines for the exercise of rule-making
power under Section 15(1) are to be found in the restrictions and other matters
contained in Sections 4 to 12 of the Act. Based on this, submission is that
this restriction could only be, what is contained in Item 54 Schedule II read
with Section 9 of the Act. The submission is, Item 54 refers to all other mines
and minerals not hereinbefore specified which would include minor minerals as
Section 3(a) defines Minerals very widely to mean all minerals except minerals
oil. Hence the restriction which is stated, is really the restriction not to
enhance the royalty beyond the rate specified in Item 54 which could only be
upto 12% of sale price at the pits mouth.
In our
considered opinion such a restrictive interpretation is not to be found in the
D.K. Trivedis case (Supra). In that case, through the aforesaid 1979
notification, rate of dead rent was enhanced by substituting the then existing
Schedule II. The then existing rate of dead rent in Schedule II was:
1. For
specified minor minerals For every 100 sq. metres or part thereof, up to 5 hectares
.. Re. 0.35 For each additional hectare or part thereof, exceeding 5 hectares
..Rs.50.00
2. For
other minor minerals For every 100 sq. metres or part thereof upto 5 hectares
..Re. 0.20 For each additional hectare or part thereof exceeding 5 hectares ..Rs.35.00
This was substituted and the rate of dead rent per hectare was enhanced to
Rs.1200/-, 1500/-, 2,000/- and 3,000/- in various cases. Though the enhancement
through this notification of 1979 was enormous yet no submission was made, nor
this Court adverted or recorded that this enhancement has to be restricted to
12% of the sale price at pits mouth in terms of Item 54 of Schedule II. In
fact, in spite of this large enhancement, 1979 notification was upheld. The
question, whether any such increase is arbitrary, excessive or violative of
Article 14 is to be tested on a different pedestal. Any excessive exercise or
arbitrary exercise of power by a delegatee could be controlled by the courts
and if there are any, the courts would not hesitate to strike it down. Mere
possibility of an abuse of power or arbitrary act, cannot invalidate any
statute. To reach this, one has to make foundation with specific plea with
reference to the facts and figures based on the circumstances of each case. In
the present case, however, we are testing the submissions of the appellants,
whether the said decision restricts the exercise of power by the State
Government in enhancing the rate of royalty or dead rent to the rate as
specified in Item 54 of Schedule II of the Act. This submission is based on the
misconstruction of the statute and relying only on a part of the observation
what is recorded in para 34 of that decision. This Court further records in the
same para 34 that the guidelines with reference to Section 15(1) are to be
found in the object for which such power is conferred, the illustrative matters
set out in sub-section (2) of Section 13 and in the restriction and other
matters contained in Section 4 to 12. Para
34 of the said decision records:-
34.
The guidelines for the exercise of the rule-making power under Section 15(1)
are, thus, to be found in the object for which such power is conferred (namely,
for regulating the grant of quarry leases, mining leases or other mineral
concessions in respect of minor minerals and for purposes connected therewith),
the meaning of the word regulating, the scope of the phrase for purposes
connected therewith, the illustrative matters set out in sub-section (2) of
Section 13, and in the restrictions and other matters contained in Sections 4
to 12.
It is
relevant to refer here the preceding paragraph 33 with reference to Sections 4 to 12 were this Court records:
Sections
4 to 12 forms a group of sections under the heading General restrictions on
undertaking prospecting and mining operations. The exclusion of the application
of these sections to minor minerals means that these restrictions will not
apply to minor minerals but that is left to the State Government to prescribe
such restriction as they think fit by rules made under Section 15(1).
Thus
this Court not only did not tie down the State Government to such restrictions,
on the contrary left it open for it to prescribe such restrictions as it thinks
fit.
In
other words Sections 4 to 12, not being applicable to the minor minerals, the
figurative restrictions what is contained there could not be made applicable,
but of course they are available as a guide line to the State Government to
take note of in other respects, while framing its rules.
So,
they are available not as restrictive or limiting guidelines but are available
otherwise for its consideration and adoption, wherever it is necessary. If
submission for the appellants is accepted, it would militate against the
express mandate of Parliament as contained in Section 14 which excludes
Sections 4 to 12 from its application to minor minerals.
The
fallacy of this submission that the rate of royalty and dead rent, for the
minor minerals, is to be what is contained in Item 54 of Schedule II, is based
on misconstruing both the said judgment of this Court and the provisions of the
Act. The submission is, as Section 3(a) defines minerals which would include
minor mineral, hence Item 54 as it records: all other minerals not hereinbefore
specified would include minor minerals. It is an interpretation in abstract
without taking into consideration Section 14. Section 14 specifically excludes
Sections 5 to 13 (earlier it was Sections 4 to 13) from its application to
minor minerals. Thus Second Schedule which refers to the rate of royalty in
view of Section 9 could only refer to the minerals other than minor minerals.
The language as recorded in Item 54, as aforesaid would only mean other
residual major minerals not specified hereinbefore meaning that what is not
specified in Item Nos. 1 to 53. This could never mean to include minor minerals.
Thus the residuary mineral under Item 54 could only be the left over major
minerals. Neither the residuary nor the left over major mineral could be
equated with the minor mineral nor there is any material on record to draw such
inference.
When
this Court records : guidelines for the exercise of rule-making power under
Section 15(1) is to be found in the restrictions and in the other matters
contained in Sections 4 to 12. The use of word restriction is in view of the
same words being used in the heading of this group of Sections 4 to 12. The
heading states, General restriction on undertaking, prospecting and minor
operations. In other words, the restriction referred to in para 34 co- relates
to this heading of general restrictions to be taken note while framing the
rules.
We may
visualise this from another angle. This reference of general restrictions as
contained in Sections 4 to 12 for it being taken note would only means to
consider its broad principle and pattern while framing its own rules.
It
cannot be doubted that Sections 4 to 12 also gives guidance to the State
Government while acting as delegate under Section 15 while fixing rate of
royalty. This guidance is to be found in Section 9 itself which refers to the
royalties. Sub-section (1) of Section 9 provides, holder of a mining lease
granted before the commencement of this Act to pay royalty in respect of any
mineral removed or consumed from the leased area at the rate for the time being
specified in the Second Schedule in respect of that mineral notwithstanding
anything to the contrary contained in the instrument of lease and similarly
sub-section (2) provides, after the commencement of this Act the holder of a
mining lease shall pay royalty at the rate specified for the time being in the
Second Schedule in respect of any particular mineral. Each of the aforesaid
considerations itself may be taken note by the State Government while framing
its own rules for the minor minerals. In other words, it may apply rate of
royalty for the minor minerals at the same rate as the then existing rate, on
the date this Act came into force. Schedule II with reference to Section 9
fixes rate of royalty for various minerals not being minor minerals is also a
good source of guideline. There we find various methods applied for fixing or
charging the royalty on the various minerals. It demonstrate charging of
royalties per tone, per unit per cent, per tone of ore on prorata basis, per
cent of sale price at the pits mouth etc.. In the case of gold, it is per one
gram of gold per tonne of ore and on pro rata basis on the basis of per 100 kg.
With reference to Uranium it is for dry ore with U3 O8 content of 0.05 per cent
with pro rata increase/decrease @ Re.1.00 per metric tonne of ore for 0.01 per
cent.
This
pattern of charging also reveals a good guiding force while fixing any royalty
by the State Government for the various minor minerals.
This
apart, the guidelines even in the D.K. Trivedis case (Supra) does not confine
itself to Sections 4 to 12 but further records, it to be found in the object
for which such power is conferred, (namely, for regulating the grant of quarry
leases, mining leases or other mineral concessions in respect of minor minerals
and for the purposes connected therewith) the meaning of the word regulating the
scope of the phrase for purpose connected therewith the illustrative matters as
set out in sub-section (2) of Section 13. We find that Section 13 gives power
to the Central Government to make rules in respect of minerals other than minor
minerals, while Section 15 gives power to the State Government to make rules in
respect of minor minerals. The extent of exercise of power in both these
sections are similar. The only difference is, Central Government exercises
power in respect of all other minerals other than minor minerals, while the
State Government exercises power for the minor minerals only. Section 13(2), in
particular, gives power to the Central Government to make rules in respect of
matters enumerated therein. Though they are already covered under Section 13
(1) but is more focused in sub section (2). There was no such similar
sub-section in Section 15 when D.K. Trivedis case (Supra) was decided, though
later it was brought in through amendment by incorporating sub-section 1A
through Act No.37 of 1986 w.e.f. 10th February, 1987. This Court very clearly held in that case:- The ambit of
the power under Section 13 and under Section 15 is, however, the same, the only
difference being that in one case it is the Central Government which exercises
the power in respect of minerals other than minor minerals while in the other
case it is the State Government which do so in respect of minor minerals. Sub-
section (2) of Section 13 which is illustrative of the general power conferred
by Section 13(1) contains sufficient guidelines for the State Governments to
follow in framing the rules under Section 15(1).
So,
this Court held that sub-section (2) of Section 13, which is illustrative of
the general power conferred by Section 13(1) itself contains sufficient guidelines
for the State Government to frame its own rules under Section 15( 15(1).
It
seems the Parliament in order to bring on parity, made similar provision for
the minor minerals through insertion of Section 15(1-A) to equate it with
Section 13 (2). This sub-section (1-A) similarly as Section 13 (2) is also
illustrative of the general power conferred on Section 15 (1). Thus as
sub-section (2) of Section 13 was held to be the guiding force to the State
Government is now applicable to this sub-section (1-A) through the infusion of
various sub-clauses in sub-Section (1-A). The submission that it is only power
is equally applicable to sub-section (2) of Section 13. Even sub-dividing the
exercise of power through various sub-clauses, both in Section 13 (2) and sub-Section
(1-A) of Section 15 implicitly gives guideline to the delegatee. In fact, the
Parliament itself through various amendments has been strengthening the
guidelines to the State Government. Not only sub-Section (1-A) of Section 15
but even Section 4A and Section 17A were inserted through the same amending Act
No.37 of 1986. Similarly, sub- section (3) was inserted in Section 28 by Act
No.25 of 1994 and Section 23- C was inserted by Act No.38 of 1999. Even Section
14 was amended by the aforesaid Act No.37 of 1986.
Earlier
Sections 4 to 13 were excluded for the minor minerals but through this
amendment, the exclusion shrunk to Sections 5 to 13. In other words, both
Sections 4 and 4A were made applicable even to the minor minerals. Further
Section 4(1-A) which was inserted through Act No.38 of 1999 covers transport or
storage of any mineral in accordance with the Act and Rules. In case the
restrictive interpretation, as submitted for the appellant, to limit the States
power within Entry 54 of Schedule II is accepted, it will lead to various
incongruities. Section 6 fixes the maximum area of lease to be twenty-five
square kilometers under sub-Section (a) and ten square kilometers under
sub-section (b). Section 7 fixes 3 years for prospecting licence and Section 8
fixes maximum period of 30 years for mining lease. If the State Government has
to take literally what is contained there then even for the minor Minerals
State Government has to issue leases of such area for such a large period. This
would be impracticable, in view of difference in the nature of major and minor
minerals. Thus the fixation of period, area of leases and the rate of royalty
for the major minerals is not equitable with that of the minor minerals.
Half
hearted submission was also made by Mr. Sanyal, one of the learned senior
counsel, that proviso to Section 9(3) limits the power of the Central
Government to fix the rate of royalty not exceeding 20% while there is no such
limitation on the power of the State Governments. It is sufficient to record
here that this limitation has been lifted by amending sub-section (3) of
Section 9. Now there is no such limitation on the power of the Central
Government.
Now,
we may proceed to examine another perceivable guideline to the State
Government. It is significant, both Entry 54 List I of the Seventh Schedule of
the Constitution and Entry 23 List II refer to the Regulation of mines and
minerals development. This Entry has been reiterated both in the Preamble and
the Statement of Objects and Reasons of this Act. This regulation of mines and
minerals development clearly indicates the guidelines which the Parliament is
projecting. Every word in a language is impregnated with and is flexible to
connote different meaning, when used in context. That is why it is said, words
are not static but dynamic and courts must adopt it that dynamic meaning which
uphold the validity of any provision. This dynamism is the cause of saving many
statutes of it being declared void, it dissolves the onslaught of any rigid and
literal interpretation, it gives full thrust and satisfaction to achieve the
objectivity which the legislature intended. Whenever there are two possible
interpretations its true meaning and legislature intended has to be gathered,
from the Preamble, Statement of Objects and Reasons and other provisions of the
same statute. In order to find true meaning of any or what the legislature
intended one has to go to the principle enunciated in the Heydons case, which
laid down the following principle as early in the sixteenth century. 76 E.R.
637 = (1584) 3 Co. Rep. 7a 9.7; (1) What was the law before making of the Act;
(2) What was the mischief or defect for which the law did not provide; (3) What
is the remedy that the Act has provided; and (4) What is the reason of the
remedy. The Court must adopt that construction which suppresses the mischief
and advances the remedy. This Court has followed this principle in Bengal Shahzada
Nand & Sons, AIR 1966 SC 1342 (1347); Sanghvi Chillies, Grains and Kirana Mercants
Workers Union & Sankalachand Himatlal Sheth & Anr., AIR 1977 SC 2328
(2358) Anr., AIR 1981 SC 1922 (1929).
Returning
to the present case we find the words regulation of mines and mineral
development are incorporated both in the Preamble and Objects and Reasons of
this Act. Before that we find Preamble of our Constitution in unequivocal words
expresses for securing for our citizen, social, economical and political
justice. It is in this background and in the context of the provisions of the
Act we have to give meaning of the word regulation. The word regulation may
have different meaning in different context but considering it in relation to
the economic and social activities including the development and excavation of
mines, ecological and environmental factors including States contribution in
developing, manning and controlling such activities including parting with its
wealth, viz., the minerals, the fixation of the rate of royalties would also be
included within its meaning. This Court in State of held:- Word regulation has
not got that rigidity of meaning as never to take in prohibition. In modern
statutes concerned as they are with economic and social activities, regulation
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. Must depends on the context in which the
expression is used in the statute and the object sought to be achieved by the
contemplated legislation. Each case must be judged on its own facts and in its
own setting of time and circumstances and it may be that in regard to some
economic activities and at some state of social development, prohibition with a
view to State monopoly is the only practical and reasonable manner of regulation.
The Mines and Minerals (Development and Regulation) Act aims at the
conservation and the prudent and discriminating exploitation of minerals and
prohibiting of leases in certain cases is part of the regulation contemplated
by Section 15 of the Act.
So in
regulating mineral development, the royalty/dead rent is the inherent part of
it. State has thus before it number of factors which would guide it to fix,
enhance or modify the royalty/dead rent payable by a lessee. The conservation
and regulation of mines and mineral development includes wide activity of the
State including parting with its wealth, are all relevant factors to be taken
into consideration as a guiding force for fixing such royalty/dead rent. For
interpretation of a Statute with reference to Preamble we may usefully refer
the case of SC 478 where Constitution Bench held: In other words, in
considering the question as to whether guidance was afforded to the delegate in
bringing into operation the material provisions of the Act by laying down
principles in that behalf, the Court consid/bn ered the statement of the
principles contained in the preamble to the Act as well as in the material
provisions of s. 3 itself. This decision shows that if we can find a reasonably
clear statement of policy underlying the provisions of the Act either in the
provisions of the Act or in the preamble, then any part of the Act cannot be
attacked on the ground of delegated legislation by suggesting that questions of
policy have been left to the delegate.....
With
reference to the regulation of mineral development, with reference to the minor
minerals the policy of the Act is communicating loudly from its roof top, that
let it be done by the delegatees State who is fully aware of the local
conditions as such mineral is also used for the local purposes and on whom this
larges falls. What delegatee should do what it should not do is also enshrined
in the Act. Section 18 is also not excluded from its application to the minor
mineral development. Under it duty is cast duty on the Central Government to
take all necessary steps for the conservation and systemic development of
minerals in India. Its sub-section (2) focuses the
periphery within which it has to do and what not to do.
This itself
is a guidance which State may take note of while framing its own rules.
Similarly Section 23-C gives detail guidance what State should provide to check
illegal, mining, storage and transportation.
We
have said Sections 4-A, 17, 18 and 23 C also provides for the guidelines.
Sub-section (2) of Section 4-A empowers the State Government to premature
terminate any prospecting licence or mining lease if it is expedient in the
interest of regulation of mines and mineral development, preservation of
natural environment, control of floods, prevention of population or for
avoiding danger to the public health or communication or to ensure safety of
buildings, monuments, structures or for other purposes.
Under
sub-section (2) of Section 17, the Central Government undertakes
reconnaissance, prospecting or mining operations in any area not already
covered by any licence or lease, after consultation with the State Government
but sub-section (3) obligates it to pay the permit fee, prospecting fee,
royalty, surface rent or dead rent, at the same rate at which it would have
been payable by any other person under this Act. This also is a check on the
State Government, while fixing the rate of the royalty. Similarly, Section 18
which refers to the mineral development as aforesaid casts an obligation on the
Central Government to take all such steps for the conservation and systematic
development of minerals in India and for the protection of environment by
preventing or controlling any pollution for which it may make rules and
sub-section (2), in particular, specifies large list on which such rules may be
framed, which has been framed (the Mineral Conservation and Development Rules,
1988), which would be binding on the Government including the State Government.
In conserving or regulating the development of any mineral resources, the price
factor is inherent. Any development requires, planning, execution, management
and with reference to the excavation of mines, controlling the extent and
manner of mining, to check its wastage, protecting environment and controlling
pollution etc. which are provided in this Act. This all require expenditure to
be incurred by the State coupled with considerations for parting with the
wealth of the State, as minerals belongs to the State except on private land.
They are all guiding factors in fixing, modifying or enhancing the rate of
royalty. Thus development of mineral resources inherently refers to the price
factor to be recovered by the owner.
One of
the submission for the appellant is, since royalty is a tax, delegation for its
enhancement cannot be left unbridled on the delegatee and if two
interpretations are possible, the one which favours an assesee should be
accepted. It is true that this Court has held royalties on State of Tamil Nadu and Ors. 1990(1) SCC 12, Orissa Cement State of Tamil Nadu & Ors. etc. etc.
1996(7) SC 16.
In
considering this submission we have to keep in mind, tax on this royalty is
distinct from other forms of taxes. This is not like a tax on income, wealth,
sale or production of goods (excise) etc. This royalty includes the price for
the consideration of parting with the right and privilege of the owner, namely,
the State Government who own the mineral. In other words, the royalty/dead
rent, which a lessee or licensee pays, includes the price the minerals which is
the property of the State. Both royalty and dead rent are integral part of a
lease. Thus, it does not constitutes usual tax as commonly understood but
includes return for the consideration for parting with its property.
In
view of this special nature of the subject under consideration, namely, the
minerals, it would be too harsh to insist strict interpretation with reference
to the guidelines to a delegatee who is also the owner of its mineral. In the
present case, we are not considering any liability of tax on the assessee but
whether delegation to the State by the Parliament with reference to minor
minerals is unbridled.
One of
the guidelines in the case of Mahalaxmi Fabric Mills Ltd. and Ors. (Supra) was
that the Parliament had itself laid down with reference to major minerals, the
rates of royalty in the Second Schedule of the Act and authorised the Central
Government to revise the rates from time to time. So far minor minerals, also
we find sub-section (2) of Section 15 approves the rules made by the State
Government, regulating the grant of quarry leases, mining leases or other
mineral concessions in respect of mine and mineral prior to the enforcement of
this Act and similarly sub-section (3) approves the rate of royalty/dead rent
prescribed for its payment in respect of minor minerals for the time being in
force, i.e., what existed prior to the coming in force of this Act. Thus, even
approval of the then existing rates of royalty or dead rent by the Parliament
itself is similarly a guiding factor for any subsequent modification of its
rate. The proviso to sub-section (3) brings an additional check on the
enhancement of rate of royalty/dead rent that it cannot be enhanced more than
once during any period of three years.
Prior
to the Act No.37 of 1996 this period was of 4 years.
We
have to keep in mind, in the present case, delegation of power is on the State
Government which is the highest executive in the State, which is responsible to
the State Legislature. In a Parliamentary democracy every act of the State
Government is accountable to its people through State Legislature which itself
is an additional factor which keeps the State Government under check to act
arbitrarily or unreasonably. When a policy is clearly laid down in a statute with
reference to the minor mineral with main object of the Act for its conservation
and development, coupled with various other provisions to the Act guiding it,
checking it and controlling it then how such delegation could be unbridled.
With reference to Municipal Corporation Delhi, 1968 (3) SCR 251, the question
of delegation of power to the Municipal Corporation and the State Government
was Punjab and Ors. 1979 (1) SCC 137 was
considered and relied as under:
In the
Municipal Corporation of Delhi case, the proposition that where the power
conferred on the corporation was not unguided, although widely worded, it could
not be said to amount to excessive delegation, was upheld. Delegation coupled
with a policy direction is good.
Counsel
emphasised that the court had made a significant distinction between the local
body with limited functions like a municipality and Government:
The
needs of the State are unlimited and the purposes for which the State exists
are also unlimited. The result of making delegation of a tax like sales tax to
the State Government means a power to fix the tax without any limit even if the
needs and purposes of the State are to be taken into account. On the other
hand, in the case of municipality, however large may be the amount required by it
for its purposes it cannot be unlimited, of the amount that a municipality can
spend is limited by the purposes for which it is created. A municipality cannot
spend anything for any purposes other than those specified in the Act which
creates it. Therefore in the case of a municipal body, however large may be its
needs, there is a limit to those needs in view of the provisions of the Act
creating it. In such circumstances there is a clear distinction between
delegating a power to fix rates of tax, like the sales tax, to the State
Government and delegating a power to fix certain local taxes for local needs to
a municipal body.
It is
too late in the day to contend that the jurisprudence of delegation of
legislative power does not sanction parting with the power to fix the rate of
taxation, given indication of the legislative policy with sufficient clarity.
In the case of a body like a municipality with functions which are unlimited
and the requisite resources also limited, the guideline contained in the expression
for the purposes of the Act is sufficient, although in the case of the State or
Central Government a mere indication that taxation may be raised for the
purposes of the State may be giving a carte blanche containing no indicium of
policy or purposeful limitation. {Empahsis supplied} With reference to the
question what is the policy of the legislature this very decision holds:
We are
clearly of the view that there is fixation of the policy of the legislation in
the matter of taxation, as a close study of Section 90 reveals; and exceeding
that policy will invalidate the action of the delegate. What is that policy?
The levy of the taxes shall be only for the purposes of the Act. Diversion for
other purposes is illegal. Exactions beyond the requirements for the fulfilment
of the purposes of the Act are also invalid.
Like
in Section 90(1), Section 90(2) also contains the words of limitation for the
purposes of this Act and that limiting factor governs sub- sections (3), (4)
and (5)The expression purposes of this Act is pregnant with meaning.
It
sets a ceiling on the total quantum that may be collected. It canalises the
objects for which the fiscal levies may be spent. It brings into focus the
functions, obligatory or optional, of the municipal bodies and the raising of
resources necessary for discharging those functions nothing more, nothing else.
Thus
this case clearly lays down that fixation of the policy of the Act in the
matter of taxation itself is a guidance to a delegatee, which is also be found
in the present case, when its preamble, objects and reasons and various other
provisions refers to for the development and regulation of mines and minerals.
The fixation of rate has co-relate for this purpose of the Act and not beyond
it.
With
reference to another submission that only purposeful guidance with control over
the State Government would be to fix maximum limit of rate of royalty, which is
not there in the present case. Similar question was also submitted and this
Court in the case of Corporation of No doubt when the power to fix rates of
taxes is left to another body, the legislature must provide guidance for such
fixation. The question then is, was such guidance provided in the Act? We first
wish to observe that the validity of the guidance cannot be tested by a rigid
uniform rule; that must depend on the object of the Act giving power to fix the
rate. It is said that the delegation of power to fix the rates of taxes authorised
for meeting the needs of the delegate to be valid, must provide the maximum
rate that can be fixed, or lay down rules indicating that maximum. We are
unable to see how the specification of the maximum rate supplies any guidance
as to how the amount of the tax which no doubt has to be below the maximum, is
to be fixed. Provision for such maximum only sets out a limit of the rate to be
imposed and a limit is only a limit and not a guidance.
It
seems to us that there are various decisions of this Court which support the
proposition that for a statutory provision for raising revenue for the purposes
of the delegate, as the section now under consideration is, the needs of the
taxing body for carrying out its functions under the statute for which alone
the taxing power was conferred on it, may afford sufficient guidance to make
the power to fix the rate of tax valid.
Before
we take up the history of delegation of the power of the State Government as delegatee,
it is necessary to refer to two decisions of this Court in messrs.
AIR
1957 SC 478. This case also considers the history of the earlier provisions of
the Act where challenge of vires was made. It held:
Thus,
if the preamble and the relevant section of the earlier Act are read in the
light of the preamble of the present Act, it would be difficult to distinguish
this Act from the Essential Supplies Act with which this Court was concerned in
Harishankar Baglas case, AIR 1954 SC 465.
Incidentally
we may also observe that in Pannalal Binjraj v.
Union of India, Petns. Nos. 97 and 97A etc. of 1956( (8) AIR 1957 SC 397,
(B), where the vires of s. 5 (7-A) of the Income tax Act were put in issue
before this Court, the challenge was repelled and during the course of the
judgment delivered on December 21, 1956, the previous history of the earlier
Income tax Acts was taken into account to decide what policy could be said to
underlie the provisions of the impugned section.
This
Court in Municipal Corporation of Delhi (Supra) also referred to the history of enactment while examining and
testing vires of the Act. It records: According to our history also there is a
wide area of delegation in the matter of imposition of taxes to local bodies
subject to controls and safeguards of various kinds which partake of the nature
of guidance in the matter of fixing rates for local taxation. It is in this
historical background that we have to examine the provisions of the Act
impugned before us.
We may
further examine this question from another angle. In order to adjudicate,
whether any delegation of power is unbridled or excessive, the historical
background of similar provisions which preceded the impugned provision should
also be kept in mind as it is also a relevant consideration. In fact, D.K. Trivedis
case (supra) itself has taken the note of its historical background. It is
significant that Entry 54 List I of the Seventh Schedule of the Constitution of
India, reproduces Entry 36 in the Federal Legislative List in the Government of
India Act, 1935, except by omitting the words and oil fields. Under this Entry
36 the Mines and Minerals (Regulation and Development) Act, 1948 was enacted as
we have now the present 1957 Act under Entry 54 List I. This Act conferred very
wide rule making power upon the Central Government, for regulating and granting
of mining leases. The constitutional maker also knew that Central Government in
exercise of this rule making power, made the Minerals Concession Rules, 1949
and by Rule 4 the extraction of minor minerals was left to be regulated by the
rules made by the Provincial Governments. When the present 1957 Act came into
force, the Parliament was aware that different State Governments in pursuance
of this Rule 4 were regulating the grant of leases in respect of minor minerals
including fixation of rate of royalties. This Parliament approved in the
present Act through sub-sections (2) and (3) of Section 15, then existing Rules
which were in force immediately before the commencement of this Act which
included the rate of royalty/dead rent for it to be continue in force, unless
superseded by the Rules made under sub- section (1). Thus, the Parliament was
fully aware that even in the past it was the State Governments which were
entrusted and were dealing with minor minerals as a delegatee. The only
difference being, earlier the State Governments were acting as sub-delegatee of
the Central Government but now they act as delegatee of the Parliament. This
was the pattern adopted and approved since inception. This seems to be also
because minor minerals being more useful for the local uses and the State
Government being the highest executive in the State knowing fully well of its
uses, management including fixation of its prices thus, in this historical
background there is nothing wrong to delegate the State Government to fix rate
of royalty/dead rent.
In
D.K. Trivedis case (supra) this Court records:
To
take into account legislative history and practice when considering the
validity of a statutory provision or while interpreting a legislative entry is
a well established principle of construction of statutes :
see,
for instance, State of Bombay v. Narothamdas Jethabai (1951 SCR 51) and State
of Madras v. Gannon Dunkerley & Co.
(Madras) Ltd. (1959 SCR 379).
This
takes us to the next submission, whether the introduction of sub- section (3)
of Section 28 by the Parliament in any way strengthen the guideline and put a
check on the exercise of power by the State Government.
Sub-section
(1) of Section 28 refers to the placement of every rule and every notification
made by the Central Government before each House of Parliament for a period of
30 days when the same becoming effective subject to its modification, if any.
Sub-section (3) of Section 28 directs placement of every rule or notification
made by the State Government before each House of State Legislature. The
submission is, there is no provision in sub-section (3) as in sub-section (1),
of such rule being subject to scrutiny for its approval or modification by the
State Legislature.
The
submission is, sub-section (3) in no way places any check on the State
Government, as State Legislature is not entrusted with power to approve or
modify. In other words, introduction of sub-section (3) is merely for the sake
of information and nothing more. Further it is submitted, when language of two
different sub-sections in the same Section are different it has to be
differently interpreted, which cannot be construed to connote same meaning and
same effect.
It is
also submitted, even if sub-section (3) was brought on the Statute Book, it was
not sufficient for the State, as it has to show that in fact both the impugned
notifications were so laid before both the Houses of the Legislature. The
submission is, actually they were not so laid. Further reliance is placed in
the case of Atlas Cycle Industries where this Court held that a mere laying
procedure is directory not mandatory. On the other hand, submission on behalf
of the State is that this laying procedure before the Legislature cannot be a
mere show, but it is for a purpose, the effect of which it has to be given. In
our considered opinion, the incorporation of this by the Parliament cannot be
said to be in futility. In fact, this was brought in, in view of the
observation made by this Court in the case of D.K. Trivedis (supra).
It is
true that the language of both sub-sections (1) and sub-sections (3) of Section
28 are different. They are reproduced below:
28.
Rules and notifications to be laid before Parliament and certain rules to be
approved by Parliament.
- (1)
Every rule and every notification made by the Central Government under this Act
shall be laid, as soon as may be after it is made before each House of
Parliament while it is in session for a total period of thirty days which may
be comprised in one session or in two or more successive sessions and if,
before the expiry of the session immediately following the session or the
successive sessions aforesaid, both Houses agree in making any modification in
the rule or notification or both Houses agree that the rule or notification
should not be made, the rule or notification shall thereafter have effect only
in such modified form or be of no effect, as the case may be; so, however, that
any such modification or annulment shall be without prejudice to the validity
of anything previously done under the rule or notification.
xxx xxx
(3) Every rule and every notification made by the State Government under this
Act shall be laid, as soon as may be after it is made, before each House of the
State Legislature where it consists of two Houses, or where such Legislature
consists of one House, before that House.
There
is no difficulty for us to uphold their submission that in view of difference
in the language of sub-section (3), the same meaning to it as that of
sub-Section (1) cannot be given. This difference has been carved out for a
purpose to give different projection to the said two provisions. In the case of
major mineral which plays important role in the National growth and wealth and
where the delegatee is the Central Government, Parliament retained its full
control but for the minor mineral, Parliament felt as the subject is for local
use and State Government well versed to deal with it in the historical
background, mere placement of rules, notifications framed by it before the
State Legislature would be a sufficient check on the exercise of its powers.
Thus, this difference of language gives two different thrust as intended by the
Parliament. Any act of the Parliament, far less when it introduces any new
provision through amendment, it could be said for it to be in futility. The
purpose has to be found.
What
could be the purpose for such an amendment? One of the reasons is that this was
brought in, in view of the observation made by this Court in D.K. Trivedis
(supra).
This
Court records:
It
was, therefore, for Parliament to decide whether rules and notifications made
by the State Governments under Section 15(1) should be laid before Parliament
or the legislature of the State or not. It, however, thought it fit to do so
with respect to minerals other than minor minerals since these minerals are of
vital importance to the country' industry and economy, but did not think if fit
to do so in the case of minor minerals because it did not consider them to be
of equal importance..
The
Parliament through its wisdom, apart from above brought this amendment also to
keep a check on the exercise power by the State Governments as delegatee. The
question is whether mere laying rules and notification before the legislature,
as in the present case, can be construed as a check on the State Government
power. Laying before House of Parliament are made in the three different ways.
Laying of any rule may be subject to any negative resolution within specified
period or may be subject to it confirmation. This is spoken as negative and
positive resolution respectively.
Third
may be mere laying before the House. In the present case, we are not concerned
with either affirmative or negative procedure but consequence of mere laying
before the legislature.
Administrative
Law by HWR Wade & Forsyth, 7th Edition, page 898 records with reference to
mere laying: Laying before Parliament An Act of Parliament will normally
require that rules or regulations made under the Act shall be laid before both
Houses of Parliament. Parliament can then keep its eye upon them and provide
opportunities for criticism.
Rules
or regulations laid before Parliament may be attacked on any ground. The object
of the system is to keep them under general political control, so that
criticism in Parliament is frequently on grounds of policy. The legislation
concerning laying has already been explained.
Laying
before Parliament is done in a number of different ways. The regulations may
merely have to be laid;
or
they may be subject to negative resolution within forty days; or they may
expire unless confirmed by affirmative resolution.
Constitutional
and Administrative Law, Stanely De Smith and Rodney Brazier, 7th Edn., records:
If the
instrument has merely to be laid, or laid in draft, before Parliament, it will
be delivered to the Votes and Proceedings Office of the House of Commons. No
opportunity is provided by parliamentary procedure for the instrument to be
discussed, but its existence will at least be brought to the notice of members
and the Minister is more likely to be questioned about it than if it is not
laid before Parliament at all.
In a
democratic set up, every State Government is responsible to its State
Legislature. When any statute require mere laying of any notification or Rule
before the Legislature its execution, viz., State Government comes under the
scrutiny of the concerned Legislature. Every function and every exercise of
power, by the State Government is under one or other Ministry who in turn is
accountable to the legislature concerned. Where any document, rule or
notification requires placement before any House or when placed, the said House
inherently gets the jurisdiction over the same. Each member of the House,
subject to its procedure gets right to discuss the same, they may put questions
to the concerned Ministry.
Irrespective
of the fact that such rules or notifications may not be under purview of its
modification, such members may seek explanation from such Ministry of their
inaction, arbitrariness, transgressing limits of their statutory orbit on any
such matter. Short of modification power, it has a right even to condemn the
Ministry. No doubt in the case where House is entrusted with power to annually
modify or approve any rule, it plays positive role and have full control over
it, but even where the matter is merely placed before any House, its positive control
over the executive, makes even mere laying to play a very vital and forceful
role which keeps a check over the concerned State Government. Even if
submission for the appellant is accepted to be that mere placement is only for
the information, even then such information, inherently in it makes legislature
to play an important role as aforesaid for keeping a check on the activity of
the State Government.
Such
placement cannot be construed to be non est. No act of Parliament should be
construed to be of having no purpose.
As we
have said mere discussion and questioning the concerned ministry or authority
in the House in respect of such laying would keep such authority on guard to
act with circumspection which is a check on such authority, specially when such
authority is even otherwise answerable to such Legislature. Further examining
the scheme of the Act, with its historical background, we find there is clear
demarcation in dealing between the Major minerals and the Minor minerals. For
minor minerals all its activity from before this Act has been delegated to the
State Government as it having all conceivable knowledge over it, as it being of
local use and not being of much national importance. For this difference also
stricter control is made for the Major minerals through Section 28(1) than for
the minor minerals.
Thus,
this mere check on the State Government, as aforesaid, may have been found to
be sufficient by the Parliament, with reference to the minor minerals. Thus,
the language of both sub-section (1) and sub-section (3) though different, this
is only for two different purposes. Thus when Parliament introduced sub-section
(3) through amendment, it was to further strengthen the control over the State
Government power. Any other submission, the one made by the appellants, makes
such an Act of the Parliament meaning less, which cannot be attributed to the
Parliament.
This
takes us to the next submission. It is submitted that the State Government, in
spite of the mandate under sub-section (3) of Section 28, to place the rules
and the notifications framed by it before each House of Legislature the
impugned notifications have not been placed.
Appellants
case is that stating they were not placed, while for the respondent State
submission is it were placed.
Subsequent
to the conclusion of the hearing, learned counsel for the State sought leave of
this court, which was granted, to place affidavit with annexures to
substantiate its submission. An additional affidavit by Mr. Anand Vardhan,
District Mining Officer dated 1st May, 2000
was filed on behalf of the respondent State of Bihar. A reply affidavit dated 4th June, 2000 was filed by one Mr. Subhash Kumar, Secretary of the
appellants association.
It may
be pointed here, out of the two impugned notifications only one notification
dated 28.9.1994 was required to be placed before the House of the State
Legislature since sub-section (3) of Section 28 was only brought in the year
1994. As per the State affidavit, on the date the arguments concluded in this
case, a fax message was received by the Standing Counsel that the notification
dated 28.9.1994 had been placed before two houses in the May-June 1994 and 1995
session through Administrative Report of the Department of Mines and Geology.
The affidavit further states, every year Department of Mines and Geology
prepares Administrative Report, which includes the revenue earned from mining
and there is a section in the office which reports the prevailing rates of
royalty and the notifications under which it is fixed. This report is sent
every year to both the houses of the State Legislature through their respective
Sections. In 1994-95 Administrative Report, the impugned notification dated
28.9.1994 is mentioned in para 4.40 of Chapter IV at page 6 and notification as
a whole is included as Annexure 6 at page 29. Similarly, the Administrative
Report for 1995-96 mentions the fixation of royalty as fixed by notification
dated 28.9.1994, is mentioned para 4.4 of Chapter at page 7.
Similarly,
Administrative Report for 1996-97 also mentions fixation of royalty on mines
minerals through notification dated 28.9.1994. Each year these reports were
supplied to the Secretary, Bihar Vidhan Sabha with sufficient number of copies enable
its circulation to the members of the two Houses. About 400 copies were sent to
Vidhan Sabha and 100 copies to Vidhan Parishad. Based on the aforesaid averment
in the concluding para of the affidavit it is averred:
it is
clear that the notification dated 28.9.1994 fixing royalty had been laid before
the two houses of the State legislature as required by Section 28(3) of the
Mines and Minerals (Regulation and Development) Act, 1957.
In the
reply affidavit for the appellants one Mr..
Subhash
Kumar, a letter dated 4.6.2000 which is in response to a quary is annexed,
which is of under Secretary, State Minister Homes, annexing letter No. 4/99-4-7
dated 27th May, 2000 of the Dy. Secretary, Bihar Legislative Assembly, which
records:
.as
per direction (1) have to inform that Bihar Legislative Assembly has no
knowledge of Bihar Minor Mineral Concession Rules, 1972 and amendment made
therein of any regulation made in this connection:.
The
perusal of the two affidavit makes it clear that truly as required by sub
section (3) of Section 28 the impugned notification dated 28.9.1994 was not
placed. It seems various departments of the Government sends its administrative
report every year with respect to its functioning and revenue earned. It is in
this context department of Mines and Geology prepared and sent its
administrative report for 1994-95, 1995-96 and 1996-97 and the notification
dated 28.9.1994 is referred in these reports. Further 400 copies for the Vidhan
Sabha and 100 copies for Vidhan parishand were sent for circulation.
Thereafter
there are no other document showing it was actually placed before the House.
Even if these reports were sent and placed before the House it were said
administrative report which did contain the said notification dated 28.9.1994.
In fact, the letter dated 27th May, 2000
from Shri Jagdish Prasad Yadav, Dy.
Secretary
Bihar Legislative Assembly, reveals that the House has no knowledge of the
Bihar Mineral Concessions Rule 1972 and amendment made thereunder or any
regulation made in this connection.
So, it
is not possible to hold, based on affidavits of the parties that the impugned
notification dated 28.9.1994 was actually placed in terms of Section 28(3). It
being part of some administrative report cannot constitute to be a fact to hold
its placement in terms of said sub-section (3).
Though
the affidavit on behalf of State reveals that under rules of procedure and
conduct of business of the Bihar Vidhan Sabha, there is a delegated legislation
committee, which examines, all the rules which are required to be laid before
the House, which also inspects and examines the working of such personals
involved under it.
M/s
Atlas Cycle Industries Ltd. and Ors. 1979 (2) SCC 196. In this case also one of
the contentions was that the notifications were not placed before the
Parliament as required by sub-section (6) of Section 3 of the Essential
Commodity Act 1955 The sub-section (6) of Section 3 of this Act requires that
every order made under this section by the Central Government or by any officer
or authority of the Central Government shall be laid before both houses of
Parliament, as soon as may be, after it is made. This is similar to the
provision which we are considering under sub-sectionn (3) of Section 28. The
Court held such provision to be directory and hence for this default of not
placing the Iron and steel control order 1956 and notification under clause
15(3) before the Parliament the order shall not become be invalid.
However,
since we have upheld that impugned notifications issued by the State to be
within the ambit of delegation and that delegation is not excessive as there
are enough guidelines and control over the State Government notwithstanding its
check on the State under sub-section (3) of Section 28, it would not have any
effect on its validity.
But we
make it clear when a statute as under sub-section (3) of Section 28 requires
its placement it is the obligation of the State Government to place such with
this specific note, while placing before each Houses of Parliament. Even if it
has not been done, the State shall now do place it before each houses of the
State legislature at the earliest the notification dated 28.9.1994 and will
also do so in future while framing rules or issuing any notifications under the
rules framed under sub-section (1) of Section 15 of the Act.
Another
submission for the appellants is that the delegator or the Parliament must
retain its control over the delegatee and such delegatee cannot be entrusted to
another Legislature, namely, State Legislature as in the present case. To repel
this submission learned counsel for the State, referred to the The Delegated
Legislation Provisions (Amendment) Act, 1983. This Act amended various
Parliament Acts to implement the recommendations of the Committees on
Subordinate Legislation regarding laying of certain rules framed by the delegatee
before the State legislatures. The Schedule of this Act, refers to the large
number of such amendments made by the Parliament. Few of them are being
referred hereunder, namely, The Religious Endowments Act, 1863, amendment
Section 8 which requires Every rule framed under this section shall be laid, as
soon as it is framed, before the State Legislature. By amending Section 20 of
the Press and Registration of Books Act, 1867 it directs, Every rule made by
the State Government under this Section shall be laid, as soon as may be after
it is made, before the State Legislature. Similarly Section 83 of the Indian
Christian Marriage Act, 1872, requires that Every rule made by the State
Government under this Section shall be laid, as soon as may be after it is
made, before the State Legislature. The Registration Act, 1908 amended Section
91 (1) through which the following was brought in Every rule prescribed under
this Section or made under Section 69 shall be laid, as soon as it is made,
before the State Legislature.
We are
not further enumerating such is large number of cases recorded in the Schedule
itself. Each one of them were the act of Parliament in which with reference to
a delegatee, provisions are made for placing its rules framed by it, before the
State Legislature. Thus, placement of any notification or rules framed by the
State Government under sub-section (3) of Section 28 cannot be said to be
something out of any novel procedure but is a well recognised principle. The
submission was how can a delegatee under one legislature, viz., the Parliament
be placed under the control of another legislature. This submission has no
merit. In a Federal structure of any constitution, their fields are well defined,
sometime same subject may be under control of both legislatures as in the
concurrent list of our Constitution. Thus in a given case, as in the above,
large numbers of such cases were a delegatee is of the Parliament were put
under the control of the State legislature. This submission is sought to be challenged
by submitting by learned senior counsel Mr. Nariman that the cases in the
Schedule under the 1983 Act are all cases falling under the Concurrent List of
the Seventh Schedule of our Constitution. This was because both the Parliament
and the State Legislature had the plenary power to make laws over the same
subject. This in our considered opinion would make no difference. It is
significant to record, though the subject we are dealing with, viz., Regulation
of mines and mineral development does not fall in the Concurrent List, but
still both falls in the field of the Parliament under Entry 54 List I and the
State legislature under Entry 23 List II, their possible conflict is resolved
by the following words in Entry 23 List II, subject to the provisions of List I
with respect to regulation and development under the control of the Union. This
control may be full, or partial. In the present case when this 1957 Act was
passed, Union came in full control over this
subject and no field was left for the State to make the law. But this covering
of the entire field was by the 1957 Act itself not by any other constitutional
limitation. Then the Act which takes the entire field can also withdraw from it
both partial or fully. In the present case since the Parliament has exercised
its discretion under Item 54 List I, the State Legislature is denuded of its
power under Entry 23 List II.
It may
be said so long that Act remains in force it eclipses the power of the State
Legislature. In the present case as held in Baij Nath Kedias case (supra) after
passing of the aforesaid 1957 Act the power of State Legislature has been
completely denuded by the Parliament. If that be so, it is always open for the
Parliament to withdraw partially the eclipse if so desires, may leave the
Legislature for such part to exercise its power which it originally have by
virtue of Item 23 of List II. It is in this light when we examine the amendment
by introducing sub-section (3) of Section 28, with provision to lay the rule or
notification made by the State Government before the State Legislature it
cannot be said it can only be when it is in the concurrent list. Thus such
placement cannot be said to be incompetent or keeping if beyond the control of
the Parliament. As we have said this placement before the State legislature is
for a limited purpose for which the Parliament is competent.
Thus
introduction of sub-section (3) in Section 28, in this light cannot be said to
be of no consequence. It was done for a purpose and that purpose, as aforesaid,
is sufficient to hold the State Government under check while exercising its
power as a delegatee.
We
also find there are few provisions in our Constitution which require mere laying
before the Parliament. Article 151 requires laying of the report of the
Comptroller and Auditor-General of India before each House of Parliament and with reference to the State, to be
laid before the Legislature of the State. Article 338 (5) requires placing of
the report of the Commission before each House of Parliament and with reference
to the State Government, under sub-Article (7) it to be laid before the
Legislature of the State. Though they are mere provisions of mere laying before
the Parliament, but it is always open to any Member of the House to discuss and
comment on the said report.
Next
coming to the quantum of imposition, on the facts of this case, the imposition
of royalty/dead rent could be said to be arbitrary or excessive by the State
Government.
We do
not find any material placed by the appellants in the writ petition to come to
such a conclusion. Though by proviso to sub-section (3) of Section 15 it is
open for the State Government to revise the royalty every three years but the
history shows it has not done so. Since 1975 the State Government has increased
royalty only four times and there is no increase since 28th September 1994
despite lapse of six years, in other words, raising royalty only four times
during 25 years. Even in the case of D.K. Trivedis case (supra) as we have
recorded above a large percentage of increase in royalty has been made yet it
was not struck down on that account. Before concluding we would like to record
our appreciation in the manner in which learned counsels for the parties made
their valuable submissions which made our task easy. Though at times their
ingenuity made us to think and rethink but the precision through which the
submissions were made helped us to conclude to the best of our conscience.
In
view of the aforesaid discussion and findings we conclude:
(a)
The impugned two notification dated 17th August, 1991 and 28th September, 1994 are valid. (b) The State Government while acting as delegatee
under Section 15(1) of the Act is not confined to fix the royalty/dead rent
within the peripheral ambit of Entry 54 Schedule II of the Act.
Neither
D.K. Trivedi (Supra) has said so, nor can it be construed to be so. (c) The
State Government has acted within the ambit of the power delegated to it and
such delegation is with sufficient guidelines and check in view of the
Preamble, object and reasons and various provisions of the Act. (d) Requirement
of mere placement of the Rules or the Notifications before the State
Legislature is also one of the form of check on the State Government to
exercise its powers as a delegatee. (e) In this case the impugned notification
dated 28.9.1994 has not been placed as required by sub-section (3) of Section
28 of the Act. The State Government is directed to do so now at the earliest.
(f) However, non-placement of the said notification would not invalidate the
same, as said requirement is only directory.
(g)
The enhancement of royalty on the facts and circumstances of this case cannot
be said to be arbitrary or otherwise illegal.
In
view of the aforesaid findings, we do not find any merit in these appeals and
accordingly they are dismissed.
We
upheld the judgment of the High Court but on a different reasoning as recorded
by us earlier. The appeals stand dismissed with costs.
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