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PETITIONER: M/S.ALANKAR GRANITES INDUSTRIES & ORS.

       Vs.

RESPONDENT: P.G.R.SCINDIA, MLA & ORS.

DATE OF JUDGMENT:       18/01/1996

BENCH: VERMA, JAGDISH SARAN (J) BENCH: VERMA, JAGDISH SARAN (J) BHARUCHA S.P. (J) VENKATASWAMI K. (J)

CITATION:  1996 SCC  (7) 416        JT 1996 (1)   320  1996 SCALE  (1)373

ACT:

HEADNOTE:

JUDGMENT: (with Civil  Appeal Nos.1717-18,  1719-22, 1723-28, 1729-44, 1745-66, 1767-68,  1769-72, 1773-74, 1775-77, 1778-79, 1780- 85, and 1788-89 of 1996)                           JUDGMENT J.S. VERMA, J.:      The grant  of in  all 203 leases for quarrying granites in Government  lands under  Rule 3  of the  Karnataka  Minor Mineral Concession  Rules, 1969  contrary to the Prohibition contained in Rule 3A therein was challenged in the Karnataka High Court  in writ  petitions which  were  allowed  by  the learned single Judge and those grants were quashed. The writ appeals by  the grantees of the mineral concession have also been dismissed by a Division Bench of the High Court. Hence, these appeals by special leave by the grantees.      All the  203 leases,  out of  which 61  were of renewal while the  rest were  fresh grants  relate to  quarrying  of minerals in Government lands.      In exercise  of the  powers conferred  by Section 15 of the Mines  and Minerals  (Regulation and  Development)  Act, 1957 Government  of Karnataka  made rules known as Karnataka Minor  Mineral   Concession  Rules,  1969  (for  short  "the Rules"). Rule  3 provides for restriction on grant of quarry leases.  Rule   3A  was   introduced  by   amendment  by   a notification dated  5.9.1979  restricting  grant  of  quarry leases in  respect of Black Granites. Rule 3A was amended by a notification  dated 21.5.1980  extending the definition of ’Black Granite’.  Then by  a notification  dated  23.6.1981, Rule 3A was further amended by substituting the words ’Black Granite or  Pink Granite’  for the  words ’Black Granite’. A further amendment  was made  in Rule  3A by  a  notification dated 27.3.1982. Later by a notification dated 22.5.1990 the Government amended Rule 3A by which the absolute restriction on the  grant of  lease of  government lands  for  quarrying granites in  favour of private parties was relaxed in favour

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of certain categories of persons specified therein; and then by a notification dated 4.1.1991 a further amendment in Rule 3A was  made. A  challenge to  the validity of the amendment made in  Rule 3A  in 1990  and 1991 was made in certain writ petitions wherein the High Court granted a stay in favour of the petitioners  therein. At  this stage  the Government  of Karnataka issued  an order  dated  18.6.1991  for  grant  of quarry leases  for black,  Pink and  multi-coloured  granite under Rule  3. It  is under  the said  order dated 18.6.1991 that these  203 quarry leases were granted under Rule 3. The challenge in  the writ  petitions which  have  been  allowed leading to  these appeals  is to  the 203  quarry leases  so granted under Rule 3.      It is  appropriate at  this stage to quote in extension the aforesaid order dated 18.6.1991 which is as under :      "PROCEEDING   OF   THE   GOVERNMENT   OF      KARNATAKA      Sub: Granting of quarry Leases for black      Pink and  multi-coloured  granite  under      Rule  3   of  Karnataka   Minor  Mineral      Concessions Rules, 1969.                                       -------      READ: Government letters No.CI.51 MMN 91      dated 3-5-1991, 4-5-1991 and 9-5-1991.      PREAMBLE:           With a view to encash the favorable      international market trend in respect of      ornamental granite  and keeping  in view      the export  potential on  the request of      Government  of   India  in  this  behalf      besides bringing  in additional  revenue      to  the   State  exchequer   apart  from      checking the  illegal  and  unscientific      granite exploitation,  the Government of      Karnataka  amended   Rule  3A   of   the      Karnataka   Minor   Mineral   Concession      Rules,  1969   providing  for  grant  of      Quarry Leases  in favour of 100% Export-      oriented       industries,       private      entrepreneurs    who    have    distinct      industrial programme. In this behalf two      notifications   were   issued   as   per      No.Cl.304 MRC87  (P) dated 22-5-1990 and      CI.214 MRC  90 (P)  dated 4-1-1991.  The      amendment  so  effected  have  been  the      subject matter  of  litigations  as  the      validity of  these amendments  have been      challenged before the Hon’ble High Court      and  some   of  the   writ   petitioners      obtained stay  orders to  operate  these      amendments.           By virtue  of such  stay orders the      purpose behind  which Rule  3A has  been      amended could not be achieved. While the      Government have made efforts to get stay      vacated the  plethora of  writ petitions      filed before  the High  Court in the way      of ensuring scientific quarry activities      in this  State forcing the Government to      search  for   other  provisions  in  the      Karnataka   Minor   Mineral   Concession      Rules, 1969.           Rule 3  of Karnataka  Minor Mineral      Con-cession Rules, 1969 is the Principal      Rule conferring  power on the department

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    of Mines  and Geology  to  grant  quarry      leases with  the prior  approval of  the      Government. In  the light of stay orders      and availability of the principal Rule 3      the  matter   has   been   got   legally      examined. It is felt that because of the      pendency of  the litigation  under  Rule      3A,   there   is   no   systematic   and      scientific quarry-  ing and the interest      of the  State Revenue  is affected  to a      great extent  and therefore  it is  felt      that there is no bar to act under Rule 3      of   the    Karnataka   Minor    Mineral      Concession   Rules,   1969   until   the      validity or  otherwise of  the  Rule  3A      brought out  by  the  two  notifications      dated   22-5-1990    and   4-1-1991   is      determined.        GOVERNMENT ORDER NO.CI.51 MMN 91(1)             BANGALORE, DATED 18-6-1991           In the  circumstances explained  in      the preamble  Government have decided to      resort to  Rule  3  of  Karnataka  Minor      Mineral Concession  Rules, 1969  and  at      the same  time vest with the Director of      Mines and  Geology power  to dispose  of      the applications  seeking Quarry  Leases      in respect  of all  lands and  that  the      Director of  Mines and  geology shall be      the controlling  officer even in respect      of  land   coming  under   Forest  Zone.      However, in  respect of Forest area, the      grant of  lease would  be subject to the      applicants obtaining clearance under the      Forest Conservation Act.      2.   Necessary   amendments    to   Rule      2(1)(c) defining the Controlling officer      in respect  of forest  area also  on the      above lines are being issued separately.      Similarly,   the    Government    hereby      notifies the  Deputy  Director  (Mineral      Administration) as  the Competent Office      in  respect   of  all   specified  minor      minerals   including    the   ornamental      granites.      3.   The Director  of Mines  and Geology      while  disposing   off  the  application      received under  Rule 3 of the Rules 1969      shall ensure  that the  area  for  which      applications seeking  Quarry Leases  are      received is  not involved  in any of the      High  Court   Litigation.  Further,  the      Director of Mines and Geology shall also      follow scrupulously  the separate set of      guide-lines issued in this behalf.                     By order & in the name of                     the Governor of Karnataka                          Sd/- (Nanjegowda)                             Desk Officer,                Commerce and Industries Dept.,                               (Mines)"      Rule 3(1)  and Rule 66 which alone are relevant for the points raised  for consideration  in these  appeals  are  as under :                    "CHAPTER II

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    GRANT OF  QUARRYING LEASE  IN RESPECT OF      LAND IN  WHICH MINES  MINERALS BELONG TO      GOVERNMENT.      3.   Restrictions on  grant of Quarrying      Lease -  (1) No quarrying lease shall be      granted to  any  person  other  than  an      Indian citizen,  except with  the  prior      approval of the Government.       xx           xx         xx           xx      66.  Relaxation  of   rules  in  Special      Cases In  cases where  the Government is      of the  opinion that  public interest so      requires, it  may authorise the grant of      a quarrying  lease or a quarrying permit      on such  terms and conditions other than      those prescribed  in these rules, as the      Government may, by order, specify:           Provided    that    notwithstanding      anything contained  in these  rules such      safaguards,  territorial,  financial  or      otherwise may be provided to the lessees      with a view to safeguarding the interest      of any  industry or  trade in  order  to      avoid unhealthy  competition  among  the      lessees, and  to prevent any fall in the      trade and  to see that the minor mineral      is  exploited  in  a  scientific  and  a      systematic manner." It is unnecessary to quote Rule 3A as originally inserted in 1979 and  amended later from time to time since the grant of the aforesaid  203 quarry  leases in  the  present  case  is neither made  thereunder nor  are  they  supported  on  that basis.      These grants were expressly made under Rule 3 by virtue of the Government Order dated 18.6.1991. However, an attempt was made  in the  High Court  to support these grants on the basis of  Rule 66  which confers on the Government the power of relaxation  of Rules in special cases. The High Court has rejected the  submission that  these grants can be sustained on the basis of Rule 66.      The High  Court has held that Rule 66 does not apply in the field  covered by  Rule 3A  and since these leases could not be  granted because of the prohibition contained in Rule 3A, the  power of  relaxation of the Rules conferred by Rule 66 is  not available.  In our  opinion, in  the present case even this  further question  does not arise. A plain reading of the Government Order dated 18.6.1991 leaves no doubt that it was  the power  only under Rule 3 which was exercised for making these  grants and  this conclusion was reached on the basis of  legal opinion  obtained by the Government for this purpose. There  is a  clear statement  in the order that the Government had  decided to  resort to Rule 3 for the purpose of making  these grants  on applications which had been made expressly  under   Rule  3   of  the  1969  Rules.  In  such circumstances, the  belated attempt  at the  hearing of  the matters in the High Court to support the grant under Rule 66 is clearly  untenable when  power was  exercised only  under Rule 3  without even a reference to Rule 66. It is difficult to accept  the submission  that  Rule  66  is  available  to support these  grants. Even  otherwise Rule  66 requires the Government to form its opinion that public interest requires the grant  of quarrying  leases on such terms and conditions other  than   those  prescribed   in  these  rules,  as  the Government may, by order, specify. It is implicit in Rule 66 that such  opinion of  the Government  must be  formed after

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considering  the  question  of  making  such  a  grant  with reference to the facts and circumstances of each case and on reaching the  conclusion that  it  was  the  requirement  of public interest  to authorise the grant of a quarry lease on such terms  and conditions  other than  those prescribed  in these rules  as may  be specified  by the  Government.  This requirement precedes  the making  of the  grant on the terms and conditions  specified for  the purpose  and it cannot be subsequent to  the grant  for the  purpose of justifying the grant without  prior satisfaction  to this effect leading to the relaxation  of the rules. More-over, by its very nature, the power  of relaxation  is to  be exercised  separately in each individual  case, which  too has  not been  done in the case  of  these  203  leases.  The  Government  order  dated 18.6.1991 merely  authorises grant  of mining  leases  under Rule 3, notwithstanding the prohibition contained in Rule 3A and it  is thereafter that the Director of Mines and Geology proceeded to  consider the  total of  2350 applications made under Rule  3 for  making the  grant in  203 cases only. The ultimate power  of granting  the quarry leases was exercised by the  Director in  each case  and not by the Government in individual cases  as is required by Rule 66. There is, thus, no basis  to uphold  the grant  of any  of these  203 quarry leases under  Rule 66,  particularly, when that rule was not even resorted  to by  the Government for making any of these grants.      The further  question whether  in the present case Rule 66 was  available to make the relaxation notwithstanding the express  prohibition   contained  in   Rule  3A   does  not, therefore, arise  for consideration and it is unnecessary to express any  concluded opinion  on that point. This argument on behalf  of the  grantees who  are the appellants in these appeals is, therefore, rejected.      Shri Soli  J.Sorabjee, the  learned counsel for some of the appellants,  advanced another  argument to support these grants. He submitted that by virtue of the said order of the High Court  in the  earlier writ  petitions challenging  the further amendments  made in  Rule 3A,  the power  under Rule 3(1) was  available for  making these  grants with the prior approval of  the Government  which was  given by  the  order dated 18.6.1991.  We are  unable to  accept this submission. The said  order in the earlier writ petitions merely had the effect of  requiring the  applications of the petitioners in those writ  petitions to be disposed of without reference to Rule 3A  but  the  validity  of  the  grant  made  to  those petitioners had  to be adjudicated with reference to Rule 3A unless Rule  3A was struck down leading to its obliteration. Admittedly, Rule  3A was not struck down and, therefore, the validity of  the grant, if any, made even in favour of those petitioners had  to be  decided with  reference to  Rule 3A. This being  so, no  benefit accrued  to any  other person by virtue of  those stay orders. It is clear that the operation of Rule 3A was not suspended and Rule 3A has not been struck down. The  prohibition contained  in Rule  3A against making any such grant, therefore, continued to operate.      Shri Sorabjee  also contended  in the  alternative that even after the stay order in the earlier writ petitions came to an  end after the High Court judgment, the grants already made have  to be  examined on  the basis  of Rule  3A as  it existed on  the date  of the grant. We find no merit in this submission. The prohibition in Rule 3A did exist at the time of making  the impugned  grants and, therefore, these grants having been  made against  the said prohibition were rightly held  to   be  invalid   and  do  not  require  any  further consideration. The  judgment of the High Court holding these

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grants to be invalid does not suffer from any infirmity.      Consequently,  these   appeals,  along   with  all  the connected matters aforementioned, are dismissed with costs.