http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 1 of 16  

PETITIONER: BAIJNATH KEDIA

       Vs.

RESPONDENT: STATE OF BIHAR & ORS.

DATE OF JUDGMENT: 28/08/1969

BENCH: HIDAYATULLAH, M. (CJ) BENCH: HIDAYATULLAH, M. (CJ) SHELAT, J.M. BHARGAVA, VISHISHTHA HEGDE, K.S. GROVER, A.N.

CITATION:  1970 AIR 1436            1970 SCR  (2) 100  1969 SCC  (3) 838  CITATOR INFO :  D          1972 SC2301  (30)  RF         1975 SC1389  (1,6,7,16)  D          1976 SC 714  (75)  RF         1976 SC1654  (5,25,51)  F          1980 SC 614  (29)  RF         1980 SC1955  (41)  RF         1981 SC 711  (1)  D          1982 SC 697  (27)  RF         1986 SC  85  (26)  RF         1986 SC1323  (27)  E          1991 SC1676  (45,46,47,49,55)

ACT: Constitution of India, 1950, Seventh Schedule List I,  Entry 54, List II Entry 23-Government of India Act, 1935,  Seventh Schedule,  List  I  Entry  36, List  II  Entry  23-Power  to legislate as to mines and minerals-State’s power is  subject to  Centre’s power-Bihar Legislature had no jurisdiction  to enact  2nd  proviso to s. 10(2) of Bihar Land  Reforms  Act, 1950-Field  already  covered  by s. 15  of  the  Mines   and Minerals  (Regulation  and Development) Act 67 of  1957-Rule 20(2) of Bihar Minor Minerals Concession Rules, 1964 invalid for lack of legislative support.

HEADNOTE: Entry 54 of the Union List I in the Seventh Schedule to  the Constitution  confers power for the regulation of mines  and mineral  development to the extent to which such  regulation and  development under the control of the union is  declared by Parliament by law to be expedient in the public interest. The  corresponding  entry in the Federal List  I  under  the Government  of  India Act, 1935 was entry 36  which  besides mines   and mineral development dealt with  oilfields  also. Entry  23  of List II of the Constitution  gives  power  for regulation  of mines and mineral  development to the  States subject  to  entry 54 of List I.   The  corresponding  entry under the Government of India Act was entry 23 of List Il.     The  Central  Assembly in exercise of  its  power  under

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 2 of 16  

entry 36. of List I in the Government off India Act  enacted the  Mines and Minerals (Regulation and Development) Act  53 of 1948 which dealt with mines, mineral development as  well as oilfields.  Rule 4 of the Mineral Concession Rules,  1948 made  under  the Act which  came into force on  October  25, 1949  gave power to the State Government to frame rules  for the  regulation  and  development  of  ’minor  minerals’  as defined  in the Rules.  In 1957 Parliament passed the  Mines and  Minerals (Regulation and Development) Act 67  of  1957. The Act of 194-8 was adapted to deal with oilfields and  gas only.   In  Act  67  of  1957  the  provisions  relating  to regulation  of  mines  in s.s. 4 to 13 were by  s.  14  made inapplicable  to  ’minor minerals’ as defined  in  the  Act. Rules  relating to minor minerals were  under s.  15 to   be made by State Governments and till such rules were made  any rules     enforce  at the commencement of the  Act  were  to continue.     The  appellant purchased in 1963 a lease  for  quarrying minor  minerals as defined in Act 67 of 1957 from  a  vendor who had taken the original lease from the then landlords  in 1955.   When under  s. 10(1) of the Bihar Land Reforms  Act, 1950) the rights of the intermediary  landlord vested in the State  of  Bihar  the  said  State  became  lessor  of   the appellant’s lease.  The lease was confirmed on behalf of the State  and  rent under the terms of the original  lease  was paid  by  the  appellant up to  September  1965.  The  Bihar Government  had  not  framed any  rules  relating  to  minor minerals under Act 53 of 1948 but it framed the Bihar  Minor Mineral Contession Rules, 1964 under s. 15 of the Act 67  of 1957.  Also, in 1964 the Bihar legislature amended s.  10(2) of the Reforms Act.  A second pro viso was added to  sub-el. (2)  whereby  the  terms and conditions  of  and  pubsisting leases  of minor minerals would be substituted by the  terms and 101 conditions  laid down in the Bihar Minor Mineral  Concession Rules  to the extent that the former were inconsistent  with the  latter. Rule 20 of  the said Bihar Rules as  originally framed  provided for realisation of dead rent,  royalty  and surface  rent in ’respect of leases granted or  renewed.  In terms  the rule was prospective only.  But in December  1964 it  was  amended  by  the  addition  of  a  second  sub-rule according to which the provisions as to dead rent etc. would also apply to leases granted or renewed prior to the date of the  commencement   of the  Act  and  subsisting   on   such date.   On  the strength of the  amended s.   10(2)  of  the Reforms   Act  and the amended r. 20  the  Bihar  Government demanded from the appellant, dead rent, royalty and  surface rent  contrary  to  the terms of his  lease.  The  appellant thereupon   filed  a  writ  petition  in  the  High   Court. Dissatisfied  with the judgment of that court the  appellant came  to  this Court.  It was contended on  behalf  of  the: appellant:  (i) that the subject of regulation of mines  and mineral  development came within the exclusive  jurisdiction of  Parliament as a result of the passing of Act 67 of  1957 with the result that the State Legislature was left with  no power  to pass the second proviso to s. 10(2) and  the  said proviso was therefore ultra vires, (ii) that r. 20(2)  being without  legislative  support   could  not  touch  a   lease granted, in 1955.  On behalf of the respondent State it  was urged  that (a) the 2nd proviso to s. 10(2) of  the  Reforms Act  fell not under entry 23 but under entry 18 of  List  II which  dealt with land and land tenures; (b) Act 67 of  1957 did  not result in control of the union as  contemplated  by entry  54 in List I and therefore the  State’s  jurisdiction

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 3 of 16  

under  entry 23 List II was not ousted; (c) modification  of leases  was not covered by s. 15 of the said Act  and  since Parliament  was  silent on that subject the  field  remained open for legislation by the State.     HELD:  (i)  Entry 54 of the Union List  speaks  both  of regulation of mines and mineral development and entry 23  is subject  to entry 54.  It is open to Parliament  to  declare that it is expedient in the public interest that the control should  vest in Central Government.  Once: this  declaration is  made  and  the  extent laid  down  the  subject  of  the legislation  to  the extent laid down becomes  an  exclusive subject  for legislation by Parliament.  Any legislation  by the State after such declaration and touching upon the field disclosed.  in the field is extracted from  the  legislative competence of the State. [113 B--D]     The declaration contemplated by entry 54 is contained in s.  2 of Act 67 of 1957 and the Central Government is  given control as to regulation of mines and mineral development to the extent provided in the Act. Thus what is left within the competence of State Government has to be worked out from the terms of the Act itself. [113 F]     The Act deals with minor minerals separately from  other minerals. In respect of minor minerals it provides in s.  14 that  ss. 4 to 13 do not apply to prospecting  licences  and mining  leases.  It goes on to state in s. 15( 1 ) that  the State  Government  may  by  ’notification  make  ’rules  for regulating  the  grant of prospecting  licences  and  mining leases  in  respect  of  minor  minerals  and  for  purposes connected  therewith, and in s. 15(2) that till such  rules. are  framed  any rules already in force would  continue.  No ’rules  existed  in  the  State  of  Bihar  which  could  be preserved  under  s. 15(2). Therefore the whole  subject  of legislation  was covered in respect of minor minerals by  s. 15(1).   Whether rules under that section were made  or  not the  topic was covered by Parliamentary legislation  and  to that  extent  the  powers  of  the  State  Legislature  were wanting. [114 G--115 B]     It  must accordingly be held that by the declaration  in s.  2 and by the enactment of s. 15 the whole of  the  field relating’ to minor minerals came 102 within the jurisdiction of Parliament and no scope was  left ’for the enactment of the second proviso to s. 10(2) of  the Land  Reforms Act.  The second proviso was  therefore  ultra vires.     Hingir Rampur Coal Co. Ltd. & Ors. v. State of Orissa  & Ors. [1961] 2 S.C.R. 537 and State of Orissa v.M.A.  Tulloch JUDGMENT:     (ii) Vested interests cannot be taken away except by law made  by a competent legislature.  Mere  rule-making   power is  not  sufficient.  In view of Act 67 of  1957  the  Bihar Legislature  had lost jurisdiction to legislate about  minor minerals.  The power of the Central  Government;  to  modify existing mining leases  was confined  under s. 16 of the Act to  leases granted before October 25, 1949.   For  modifying leases granted after that date legislation by Parliament  on the  lines of s. 16 was necessary. Rule 20(2) of  the  Bihar Minor  Concession   Rules,  1964 was  ineffective  ’for  the purpose.   It  could  not derive  sustenance  from  the  2nd proviso to s. 10(2) of the Reforms Act as that proviso   was not  validly  enacted. There was also no  other  legislative support  since s. 15 of the Act of 1957 did not  contemplate alteration  of terms of leases already in  existence  before that Act was passed. [116 B--E; 116 G; 117 D]     (iii) The contentions raised on behalf of the State must

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 4 of 16  

be   rejected:   (a)  The  abolition  of   the   rights   of intermediaries  in the mines and vesting of these rights  as lessors  in the State Government was a topic connected  with land  and land tenures.  But after the mining  leases  stood between the State Government and the leases, any attempt  to regulate  those mining leases will fall not in entry 18  but in entry 23.  The pith and substance of the amendment to  s. 10  of the Reforms  Act  falls  within entry 23 although  it incidentally touches land. [115 C---E]     (b)   Union   consists  of  its  three   limbs   namely, Parliament, Union Government and Union Judiciary. Control by Parliament  is  therefore control of the  Union  within  the meaning  of  entry  54  and  for  the  purpose  of   ousting jurisdiction under entry 23. [115 F--G]     (c)  The  entire  legislative field  relating  to  minor minerals having been withdrawn from the State legislature it could  not  be  said that because s. 15 did  not  deal  with modification  of leases the State was free to  legislate  in this field. [117 A--C]

& CIVIL APPELLATE JURISDICTION: Civil Appeals Nos. 685 to  688 of 1967.     Appeals from the judgments and orders dated November  1, 1966,  December 21, 1966 and December 23, 1966 of the  Patna High Court in C.W.J.C. Nos..1036, 686, 1200 and 778 of  1965 respectively.     A.K. Sen and P.K. Chatterjee, for the appellants (in all the appeals).     Lal   Narain  Singha,  Lakshman  Saran  Sinha   and   D. Goburdhun, for the respondents (in C.A. No.. 685 o.f 1967). B.P. Jha, for the respondents (in C.A. No. 686 of 1967).     U.P.  Singh, for the respondents Nos. 1 to 3  (in  C.As. Nos. 687 and 688 of 1967). 103     Krishna  Sen,  M.M. Kshatriya and G.S.  Chatterjee,  for respondent  No. 4 (in C.A. No. 687 of 1967) and  respondents Nos. 5 to 8 (in C.A. No. 688 of 1967). R.C. Prasad, for the intervener (in C.A. No. 685 of 1967). The Judgment of the Court was delivered by     Hidayatullah,  C.J.  This judgment  will   also   govern the.  disposal of Civil Appeals 686 (Kanti Prasad Pandey  v. State  of  Bihar  and others),  687  (Shri  Krishna  Chandra Gangopadhya  v.  State of Bihar and others)  and  688  (M/s. Pakur  Quarries  Private Ltd. & Ant. v. State of  Bihar  and others)  of  1967.   These four appeals  have  been  brought against  a  common judgment, November 1, 1966, of  the  High Court  of Patna and arise out of four petitions  under  Art. 226  of the Constitution filed to question the  validity  of Proviso  (2)  to  s.  10(2)  added  by  Bihar  Land  Reforms (Amendment)  Act  1964  (Bihar  Act  4  of  1965),  and  the operation of the second sub-rule of r. 20 added on  December 10,  1964  by a notification of the Governor  in  the  Bihar Minor  Mineral Concession Rules, 1964. The facts of all  the four  cases  are  similar and the  same  points  arise  ,for determination.   It is, therefore, sufficient to  state  the facts  in Civil Appeals 685 and 686 as illustrative  of  the others as well.     One Jyoti Prakash Pandey obtained on March 23, 1955 from Babu  Bijan  Kumar  Pandey and Smt. Anita  Devi  acting  for herself’  and  also  as  legatee  under  the  will  of   one Baidyanath   Pandey,  registered  leases  to  quarry   stone ballast,  boulders and chips from and upon Blocks  Nos.  32,

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 5 of 16  

45/1  45/2  and 45/3  in  tauzi  No. 1452, khata  No.  1  in Mouza  Malpahari  No.  89 in Pakur  SubDivision  of  Santhai Parganas.   The leases were  to  commence from  November  1, 1954  and to end on October 31, 1984, that is to  say,  they were  for a total period of 30 years.  Jyoti Prakash  Pandey was  working under the name and style of ’Stone  India’.  He sold  his rights, title and interest by a  registered  sale- deed  on September 9, 1963 to the present appellant.  It  is admitted  that  rent under the terms of the  original  lease was  deposited  upto September 1965.     On the passing of the Bihar Land Reforms Act, 1950  (Act 30  of  1950) the ex-landlords ceased to have  any  interest from  the  date of vesting and in their place the  State  of Bihar became lessor under s. 10(1) of the Land Reforms  Act. The terms of s. 10 were as given below. After the vesting of the estate of the inter-   "10. Subsisting leases of mines and minerals:- (1)Notwithstanding   anything  contained in this Act,  where immediately  before  the date of vesting of  the  estate  or tenure  there  is a subsisting lease of  mines  or  minerals comprised  in the estate or tenure or any part thereof,  the whole or that part of the estate or tenure comprised in such lease shall, with effect from the date of vesting, be deemed to have been 104 mediaries, the State of Bihar as the new lessor   recognised the  lease  for the quarrying of stones  for  the  remaining period  and the Deputy Commissioner, Santhal Parganas  asked for  the rent from the date of vesting to 30 April, 1965  at the  rate  of  Rs. 200/per year as stated  in  the  original lease.   This  was  by a letter issued from  his  office  on February  2,  1963.   On December 10,  1964  the  appellants received  a  letter which gives the gist of  the   facts  on which  the present controversy starts and the relevant  part may be quoted here:                      "Government have been pleased to  amend               the  section  10 of Bihar  Land  Reforms  Act,               1950,   and according to which the  terms  and               conditions  in  regard  to  leases  for  minor               minerals stand statutorily substituted by  the               corresponding  terms  and  conditions  by  the               Bihar Minor Mineral Concession Rules, 1964. As               a  result  of this, rent and royalty  etc.  in               respect   of  minor  minerals  in  the   State               irrespective  of the date on which  the  lease               was  granted are to be paid by all  categories               of leases according to the rates given in  the               aforesaid Rules with effect from 27-10-64". ’The  ’appellants  denied  their  liability  to  pay.    The Government informed them by letter as follows:                  "This  is to inform you that the terms  and               conditions   of your mining lease in so far as               they  are inconsistent   with the Bihar  Minor               Mineral  Concession Rules, 1964,    framed  by               the State Government under section 15 of   the               Mines & Minerals (Regulation  &   Development)               Act,   1957,   stand   substituted   by    the               corresponding    terms      and     conditions               prescribed  by  the Bihar  Mineral  Concession               Rules, 1964, from 27-1-1964.  Accordingly,    leased by the State Government to the holder of the  said subsisting  lease   for the  remainder of the term  of  that lease  and  such  holder  shall  be    entitIed  to   retain possession of the lease-hold property.  (2)   The  terms and conditions of the said  lease  by  the

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 6 of 16  

State  Government shall    mutatis mutandis be the  same  as the terms and conditions of the subsisting   condition that, if  in  the opinion of the State Government  the  holder  of the  lease had not,  before the date of the commencement  of this  Act,   done any prospecting or development  work,  the State Government shall   be entitled at any time before  the expiry  of  one year from the said date   to  determine  the lease by giving three months’ notice in writing:         Provided that nothing in this sub- section shall  be deemed  to  prevent   any modifications being  made  in  the terms and conditions of the said   lease in accordance  with the  provisions of any Central Act for the time    being  in force regulating the modification of existing mining leases.    (3) The holder of any such lease of mines and minerals as is  referred to in subsection (1) shall not be  entitled  to claim any damages from the outgoing   proprietor or  tenure- holder on the ground that the terms of the lease    executed by  such proprietor or tenure-holder in respect of the  said mines   and minerals have become incapable of fulfilment  by the operation  of this Act. 105               dead   rent,  royalty  and  surface  rent   in               addition  to  the other  substitution  as  per               Bihar   Mineral  Concession Rules, 1964,  will               be as follows :--                           1. Dead rent  ....   Rs. 50/-  per               acre perannum.                 2. Royalty    ....   Rs. 3/- per 100 cft. of               stone chips.                                      Rs. 2/- per 100 cft. of               stone ballast and boulders.                                      Rs. 4/- per 100 cft. on               building stones.                                      Re. 1/-per 100 Nos.  of               stones ’setts’.                   3.  Surface rent 3     ..     Rs.  10  per               acre per year." It is this additional demand and the liability to pay, which is  the subject of controversy here.  The  Bihar  Government contends  that  the terms of the original  lease  have  been validly altered by the operation of the second proviso to s. 10  (2)  of  the  Bihar Land  Reforms  Act  added  first  by Ordinance III of 1964  and  later incorporated  again by the Bihar Land Reforms (Amendment) Act, 1964 (Act 4 of 1965) and the  addition of s. 10A to the Act by the  same  enactments. The material part of the second section of Act 4 of 1965  is quoted  below. Section 10A provided  for the vesting of  the interest  of leases of mines or minerals which were  subject to  such  leases  and  need not be  read  here.   The  State Government  also  relied upon the Bihar  Mineral  Concession (First Amendment) Rules, 1964 by which a second sub-rule was added  to  Rule 20.  The twentieth rule,  purporting  to  be framed  under  s. 15 of the Mines and  Minerals  (Regulation ’and  Development)  Act, 1957 (67 of 1957)  was  amended  on December 19, 1964 and now reads:                      Rule  20.  ( 1 ) Dead   rent,   royalty               and  surface rent.--               When a lease is granted or renewed.                   (a)  dead  rent shall be  charged  at  the               rates specified in Schedule 1,                   (b) royalty shall be charged at the  rates               specified in Schedule II, and                   (c)  surface rent shall be charged at  the               rates  specified by the Govt. in  the  Revenue               Department from time to time.

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 7 of 16  

             2. Amendment of section 10 of Bihar Act XXX of               1950.--                      In Section 10 of the Bihar Land Reforms               Act, 1950 (Bihar Act XXX of 1950) (hereinafter               referred to as the said Act).--               (a)  in sub-section (2), the following  second               proviso shall be added, namely :-        "Provided  further that the terms and  conditions  of the said lease in regard to minor minerals as defined in the Mines  and Minerals (Regulation and Development)  Act,  1957 (Act  LXVII  of  1957),  shall,  in  so  far  as  they   are inconsistent  with  the rules made by the  State  Government under  section  15  of that Act, stand  substituted  by  the corresponding terms and conditions prescribed by those rules and  if  further ascertainment and settlement of  the  terms will  become necessary then necessary proceedings  for  that purpose shall be undertaken by the Collector"; and      (b) after sub-s. LISup. Cl/70--8 106                     (2)   On   and   from    the   date   of               commencement of these rules, the provisions of               sub-rule  (1)  shall  also  apply  to   leases               granted  or renewed prior to the date of  such               commencement and subsisting on such date." The  contention is that the amendment of s. 10 of the  Bihar Land  Reforms Act is ultra vires the Constitution  and  that rule  20(2)  does not legally entitle the  recovery  of  the dead-rent,  royalty  etc. as in the Schedules to  the  Bihar Minor Mineral Concession Rules, 1964.     To  understand  fully  the argument  on  behalf  of  the appellants  a  resume of the legislation on the  subject  of mines  and  minerals is necessary. Under the  Government  of India  Act,  1935,  the subject of Mines  and  Minerals  was covered  by Entry 36 of the Federal Legislative List  I  and entry  No. 23 of the ’Provincial Legislative List II of  the 7th Schedule.  These entries read as follows:                     "Entry  36. Regulation of mines and  oil               fields and mineral developments to which  such               regulation   and development under  a  Federal               control  is  declared  by Federal  law  to  be               expedient in the public interest."                     "Entry  23. Regulation of mines and  oil               fields and mineral development subject to  the               provisions   of   List  I  with   respect   to               regulation   and  development   under  Federal               control."               When  the  Indian Independence Act,  1947  was               passed  the word federal’ where it occurs  for               the first time in entry 36 and in entry 23 was               changed  to  ’dominion’.   The   entries   are               practically    repeated   in    the    present               Constitution and may be read immediately here:               "Entry 54, of List H--Union List--reads:                     "Regulation   of   mines   and   mineral               development  to  the  extent  to  which   such               regulation  and development under the  control               of the Union is declared by Parliament by  law               to be expedient in the public interest."               Entry 23 of List II--State List--reads:                     "Regulation   of   mines   and   mineral               development subject to the provisions of  List               I  with respect to regulation and  development               under  the  control  of  the Union."               The  difference  between the  entries  of  the               Government of India Act, 1935 and the  present

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 8 of 16  

             Constitution lies in the removal of  oilfields               from  the  entries and  the  declaration   now               must    be  by Parliament. Entry 53 in List  I               deals with oilfields and  mineral resources. 107     In 1948 the Legislative Assembly enacted  the Mines  and Minerals  (Regulation and Development) Act, 1948 (Act 53  of 1948).   It received the assent of the  Governor-General  on September  8,  1948.   It  was an Act  to  provide  for  the regulation of mines and oilfields and for the development of minerals.   In  s.  2  of  that  Act  is  to  be  found  the declaration contemplated by entries 36 and 23, 7th  Schedule of the Government of India Act, 1935. That declaration reads as follows:                      "2.  It is hereby declared that  it  is               expedient  in  the public  interest  that  the               Central  Government  should  take  under   its               control the regulation of mines and oil fields               and the development of minerals to the  extent               hereinafter provided." Section  3 of the Act of 1948 contained definitions.   There were definitions of ’mine’ and ’minerals’.  The former meant an excavation for the purpose of searching for or  obtaining minerals  and included an oil-well and the  latter  included natural  gas  and  petroleum.  Section 4  provided  that  no mining lease would be granted after the commencement of that Act  otherwise than in accordance with the rules made  under that  Act  and that a mining lease granted contrary  to  the provisions  would  be  void and of  no  effect.   Section  5 empowered  the Central Government, by notification  to  make rules  for  regulating  the grant of mining  leases  or  for prohibiting  the  grant  of such leases in  respect  of  any mineral  or  in  any area. In  particular  the  rules  could provide  for the manner in which, the minerals or  areas  in respect of which and the persons by whom, ’applications  for mining leases could be made and the fees payable, the  terms on which and the conditions subject to which, mining  leases might  be  granted, the areas and the period for  which  any mining  lease might be granted and the maximum  and  minimum rent  payable  by a lessee, whether the mine was  worked  or not.  Under  s. 6 the Central Government had power  to  make rules  as  respect  mineral development.  Section   7   then provided  as follows:                     "7.  (1) The Central Government may,  by               notification  in  the official  Gazette,  make               rules for the purpose of modifying or altering               the  terms and conditions      of  any  mining               lease  granted prior to the   commencement  of               this  Act  so  as to  bring  such  lease  into               conformity with the rules made under  sections               5 and 6:                     Provided  that any rules so  made  which               provide  for the matters mentioned  in  clause               (c)  of  sub-section (2) shall not  come  into               force  until they have been  approved,  either               with   or  without  modification’s,  by   ’the               Central Legislature. 108                     (2) The rules made under sub-section (1)               shall provide--                  (a)  for  giving  previous  notice  of  the               modification or alteration proposed to be made               thereunder to the lessee, and when the  lessor               is  not  the Central Government, also  to  the               lessor  and for affording them an  opportunity

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 9 of 16  

             of showing cause against the proposal.                  (b) for the payment of compensation by  the               party  who would be benefited by the  proposed               modification or alteration to the party  whose               rights   under  the  existing   lease    would               thereby  be adversely affected; and                  (c)for the principles or which, the  manner               in  which and the authority by which the  said               compensation shall be determined." Section 8 provided that the  Central  Government  might   by notification   direct  that ’any  power  exercisable   under that  Act might be exercised, subject  to  such   conditions if  any, as might be specified by such officer or  authority or  might be specified in the direction.  In furtherance  of the  powers  conferred  the Central  Government  framed  the Mineral  Concession Rules 1949 and they came into  force  on the  twenty-fifth day of October 1949.  These rules for  the first time defined minor minerals and after amendments  from time to time the term meant:                     "3   (ii)   ’minor    mineral’     means               building   stone,  boulder,  shingle,  gravel,               Chalcedony   pebbles  (used  ,for  ball   mill               purposes   only),   limeshell,   kankar    and               limestone  used  for  lime  burning,   murrum,               brick-earth   (Fuller’s   earth),   Bentonite,               ordinary  clay, ordinary sand (used  for  non-               industrial purposes), road  metal,  reh-matti,               slate   and  shale  when  used  for   building               material."               Rule 4 however provided:                     "4.  Exemption.--These rules shall   not               apply  to  minor minerals, the  extraction  of               which shall be regulated by such rules as  the               Provincial Government may prescribe."               The  word  "provincial" was later  changed  to               ’State’.  Although some of the Provinces  (now               States)  made Minor Mineral Concession  Rules,               it  is admitted that Bihar Government did  not               frame any such rules.                   The    leases    of    the     appellants’               predecessors were  granted in 1955 during  the               subsistence  of the Act of 1948 and the  Rules               of 1949. It is also to be noticed that a fresh               declaration was made by Parliament as required               by entry 54 List I--Union List of the 7th 109 Schedule   of  the   Constitution.   The   existing    laws, however, continued.  Without a declaration by Parliament the field  of  legislation  might have been open  to  the  State Legislatures  under entry 23 of List II--State List  of  the Constitution but no law was made except what was enacted  by the Bihar Legislature in the Land Reforms Act about  vesting of  mines in the State and the emergence of the State  as  a lessor in place of all original lessors.     Further  rules  were made by the Central  Government  in 1955   and  1956.   In  1955  Minerals   Conservation    and Development  Rules  were made which were later  replaced  in 1958.   On  September  4, 1956, the  Central  Government  in exercise of the powers conferred by s. 7 of the Act of  1948 made  the Mining Leases (Modification of Terms) Rules  1956. Under  these  rules existing Conservation  ’and  Development Rules.   The expression ’existing mining leases were  to  be brought  into conformity with the Minerals Conservation  and Development  Rules. The expression ’existing mining  leases’ was defined as a mining lease granted before    25th day  of

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 10 of 16  

October  1949  and subsisting at the commencement  of  those rules ’but did not include any lease in respect of any minor mineral within the meaning of clause (c) of s. 3 of the  Act of 1948.     We now come to the year 1957.  In that  year  Parliament enacted  the Mines and Minerals (Regulation and  Development Act,  1957  (Act  67  of 1957).  It  came  into  force  from December  28, 1957.  Act 67 of 1957 made amendments  in  the Act  of  1948 so as to make the latter relate  to  oilfields only.   All  references  to minerals  other  than  oil  were removed,   with  the  result  that  it  became   legislation exclusively relating  to oil and gas.  Since the Act of 1948 was  thus  altered, Parliament enacted  new  provisions  for minerals in Act 67 of 1957. We are primarily concerned  with this  Act  in  these  appeals.  A  glance  at  some  of  the provisions of Act 67 of 1957 is necessary.     The Act 67 of 1957 came into force on 1st June, 1958 and extended  to  the  whole  of  India.    It   contained   the following declaration in s. 2:                     "It  is  hereby  declared  that  it   is               expedient  in  the public  interest  that  the               Union  should  take  under  the  control   the               regulation  of  mines and the  development  of               minerals to the extent hereinafter provided." By definition minerals excluded mineral oils because the Act of  1948 exclusively dealt with oil.  ’Minor minerals’  were defined  to  mean building stones,  gravel,  ordinary  clay, ordinary  sand other than sand used for  prescribed purposes and  any  other mineral which the Central Government may, by notification in the Official Gazette, declare to be a  minor mineral.   Act 67 of 1957 contained 33 sections  which  were separated by general headings 110 showing the topics dealt with. The first group of   sections 4--9   contained   general   restrictions   on   undertaking prospecting   and mining operations.  of this group  we  may quote here s. 4 which will be considered later:                      "4. Prospecting or mining operations to               be under license or lease--                   (1   )  No  person  shall  undertake   any               prospecting or mining operations in ,any area,               except under and in accordance with the  terms               and conditions of a prospecting licence or, as               the case may be, a mining lease, granted under               this Act  and the rules made thereunder:                          Provided  that  nothing  in    this               sub-section  shall affect any  prospecting  or               mining  operations undertaken in any  area  in               accordance with the terms and conditions of  a               prospecting  licence or mining  lease  granted               before the commencement of this Act which   is               in  force  at  such commencement.                   (2) No prospecting licence or mining lease               shall be granted otherwise than in  accordance               with the provisions of this Act and the  rules               made thereunder." Section  5  lays  down  restrictions   on  the   grant    of prospecting   licences   or  mining   leases.    Section   6 prescribes. the maximum area for which a prospecting license or mining lease may be granted and section 7 the periods for which  prospecting  licences may be granted or  renewed  and section 8 the periods for which mining leases may be granted or  renewed.   Section 9 fixes the royalties in  respect  of mining leases.     Then  follows  another group of  sections  10--12  which

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 11 of 16  

lays  down the procedure for obtaining prospecting  licences or  mining leases in respect of land in which  the  minerals vest in the Government. The next group of sections 13--16 is headed   Rules   for  regulating the  grant  of  prospecting licences  and mining leases. Section 13 gives power  to  the Central  Government  to make rules in respect  of  minerals. Section  14  however excludes the  application  of  sections 4--13 to minor minerals.  It reads:                     "The  provisions  of sections  4  to  13               (inclusive)  shall  not apply  to  prospecting               licences and mining leases in respect of minor               minerals." Section  15  gives power to the State  Governments  to  make rules in respect of minor minerals.  It reads: 111                     "15  (1 ). The State Government may,  by               notification  in  the official  Gazette,  make               rules.   for    regulating    the   grant   of               prospecting  licences  and  mining  leases  in               respect  of minor  minerals  and for  purposes               connected therewith.                     (2)  Until  rules are  made  under  sub-               section  (1  ),  any rules  made  by  a  State               Government regulating the grant of prospecting               licences and mining leases m respect of  minor               minerals which are in force immediately before               the commencement of this Act shall continue in               force." Section  16  gives  power to modify  mining  leases  granted before 25th October, 1949.  It reads:                     "16(1  ).  All  mining  leases   granted               before  the 25th day of October, 1949,  shall,               as  soon as may be after the  commencement  of               this Act, be brought into conformity with  the               provisions  of  this Act and  the  rules  made               under sections 13 and 18:                     Provided that if the Central  Government               is  of  opinion  that  in  the  interests   of               minerals development it is expedient so to do,               it may, for reasons to be recorded, permit any               person to hold one or more  such mining leases               covering  in  any one State a  total  area  in               excess  of  that specified in  clause  (b)  of               section  6  or  for a  period  exceeding  that               specified in sub-section (1 ) of section 8.                     (2)  The  Central  Government  may,   by               notification  in  the official  Gazette,  make               rules for the purpose of giving effect to  the               provisions   of   sub-section   (1)   and   in               particular such rules shall provide-                  (a)  for  giving  previous  notice  of  the               modification or alteration proposed to be made               in any existing mining lease to the lessee and               where the lessor is not the Central Government               also  to the lessor and for affording  him  an               opportunity  of  showing  cause  against   the               proposal.                  (b) for the payment of compensation to  the               lessee in respect of the reduction of any area               covered by the existing mining. lease; and                  (c) for the principles on which, the manner               in which and the authority by which, the  said               compensation shall be determined." Section 17 stands by itself as a group and contains  special powers of Central Government  to undertake  prospecting   or

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 12 of 16  

minning operations in certain cases.  Section 18 deals  with mineral development ’and gives additional rule making  power to the Central 112 Government.   Next follow some   miscellaneous   provisions; of  these, only two interest us.  Section 19 lays down  that prospecting  licences or mining leases granted,  renewed  or acquired   in  contravention of the provisions  of  the  Act shall  be  void and of no effect and  section  20  that  the provisions  apply to prospecting licences or  mining  leases whether  granted before or after the Act. The rest  of  this Act does not concern this dispute.     It may be pointed out here that the rules made under  s. 13 do not apply to minor minerals in view of the  provisions of s. 14. The State of Bihar had not made any rules till the Bihar  Minor Mineral Concession Rules, 1964 were made.   The modification  of  the terms of existing  mining  leases  was provided  for in s. 16 but that provision applied to  mining leases granted before 25th October, 1949.  The provisions of Mining  Leases (Modification of Terms) Rules, 1955  did  not apply to minor minerals because the definition of  ’existing mining  lease’ excluded a lease in respect of any  minerals. The  power to modify the existing leases in the case had  to be found elsewhere.     The  argument  of the appellant is that apart  from  the provisions  of  the 2nd proviso to s. 10 added to  the  Land Reforms Act, 1950 in 1964 by Act IV of 1965 and second  sub- rule added to rule 20 of the Bihar Minor Mineral  Concession Rules,  1964, there is  no power to modify the terms.  These provisions  of law are said to be outside the competence  of the  State   Legislature  and the   Bihar  Government.  With regard  to  the State Legislature it is contended  that  the scheme of the relevant entries in the Union and  State  List is  that  to  the extent to which regulation  of  mines  and mineral  development is declared by Parliament by law to  be expedient in the public interest, the subject of legislation is withdrawn from the jurisdiction of the State  Legislature and therefore Act 67 of 1957 leaves no legislative field  to the  Bihar Legislature to enact Act 4’ of 1965 amending  the Land   Reforms Act.  As  regards Rule 20(2) it is  contended that  the  rule making power of its own force  cannot  reach mining  leases granted in 1955 and that  this could only  be done by a competent legislature.  These are the two  matters which need decision.     The  main  arguments are supplemented by  the  following contentions.   That the Bihar Rules in so far as  they  make demands  of  rent and royalty on the existing  leases  which were  executed prior to their coming into force  are  beyond the  power to make rules in respect of minor minerals  under s.   15   of  Act  67  of  1957,  that  s.  15   itself   is unconstitutional  and void because it delegates  legislative power  to  the  rule-making authority and  it  is  excessive delegation and that the amendment of Bihar Land Reforms. Act is  void  because it affects the fundamental rights  of  the appellants  guaranteed  under  Articles 31 ’and  19  of  the Constitution. 113       Although  these supplementary arguments  were   raised it  is obvious that they can arise according as the two main arguments  are  allowed  or  disallowed.  Therefore  it   is necessary  to address ourselves to the first  argument  that the  legislative competence to enact the amendment to s.  10 of  the Reform Act was wanting.  As the amendment  was  made after  Act 67 of 1957 we have to consider  the  position  in relation  to it.  Entry 54 of the Union List speaks both  of

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 13 of 16  

regulation of mines and minerals development and entry 23 is subject  to entry 54.  It is open to parliament  to  declare that it is expedient in the public interest that the control should  rest in Central Government.  To what extent  such  a declaration  can go is for Parliament to determine and  this must  be   commensurate  with public  interest.   Once  this declaration is made and the extent laid down, the subject of legislation  to the extent laid  down becomes  an  exclusive subject  for legislation by Parliament.  Any legislation  by the  State  after such declaration and  trenching  upon  the field  disclosed  in the declaration  must   necessarily  be unconstitutional  because that field is abstracted from  the legislative  competence  of  the  State  Legislature.   This proposition is also self evident that no attempt was rightly made to contradict it.  There are also two decisions of this Court reported in the Hingir-Rampur Coal Co. Ltd. & Ors.  v. State of Orissa and Ors.(1) and State Orissa v.M. A. Tulloch &  Co.  (2)  in which the matter is   discussed.   The  only dispute, therefore, can be to what extent the declaration by Parliament  leaves any scope for legislation by  the   State Legislature.  If the impugned legislation  falls within  the ambit of such scope it will be valid; if outside it, then it must be declared invalid.       The declaration is contained in s. 2 of Act 67 of 1957 and  speaks  of the taking and the control  of  the  Central Government  the  regulation  of  mines  and  development  of minerals to the extent provided in the Act itself.  We  have thus not to look outside Act 67 of 1957 to determine what is left within the competence of the State Legislature but have to  work  it  out  from the terms  of  that  Act.   In  this connection  we may notice what was decided in the two  cases of this Court.  In the Hingir-Rampur(1) case a question  had arisen  whether  the Act of 1948 so completely  covered  the fields  of  conservation and development of minerals  as  to leave  no room for State legislation. It was held  that  the declaration  was  effective even if the  rules  contemplated under  the  Act  of  1948  had  not  been  made.    However, considering further whether a declaration made by a Dominion law could be regarded as a declaration by Parliament for the purpose of entry 54, it was held that it could not and there was thus a lacuna which the Adaptation of [1961]  2  S.C.R. 537.                 (2) [1964]  4  S.C.R. 461. 114 Laws  Order, 1950 could not remove.  Therefore, it was  held that   there   was  room  for  legislation  by   the   State Legislature.     In  the  M.  A.Tulloch case(1) the firm  was  working  a mining  lease  granted  under the Act of  1948.   The  State Legislature  of Orissa then passed the Orissa  Mining  Areas Development  Fund  Act,  1952,  and levied  a  fee  for  the development  of  mining areas within the State.   After  the provisions came into force a demand was made for payment  of fees  due  from July 1957 to March 1958 and the  demand  was challenged.  The High Court held that after the coming  into force  of Act 67 of 1957 the Orissa Act must be held  to  be non-existent.   It was held on appeal that since Act  67  of 1957  contained  the requisite  declaration  by   Parliament under  entry 54 and that Act covered, the same field as  the Act of 1948 in regard to mines and mineral development,  the ruling in Hingir Rampur(2) case applied and as ss. 18(1) and (2)  of  the  Act  67  of 1957  were  very  wide  ruled  out legislation  by  the State Legislature.   Where  a  superior legislature  evinced an intention to cover the whole  field, the  enactments  of  the other  legislature  whether  passed

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 14 of 16  

before  or after must be held to be overborne.  It was  laid down  that inconsistency could be proved not by  a  detailed comparison of the provisions of the conflicting Acts but  by the mere existence of two pieces of legislation.  As s.  19( 1  )  covered the entire field, there was no scope  for  the argument  that  till rules were framed under  that  section, room was available.     These two cases bind us and apply here.  Since the Bihar State  Legislature  amended the Land Reforms Act  after  the coming into force of Act 67 of 1957, the  declaration in the latter   Act would carve out a field to the extent  provided in  that  Act and to that extent entry 23  would  stand  cut down.   To  sustain  the amendment the State must show  that the  matter  is not covered by the Central Act.   The  other side  must,  of  course, show that  the  matter  is  already covered and there is no room for legislation.     We have already analysed Act 67 of 1957.  The Act  takes over  the control of regulation of mines and development  of minerals  to the Union; of course, to the  extent  provided. It  deals  with  minor minerals separately  from  the  other minerals.  In respect of minor minerals it provides in s. 14 that  ss.  4--13  of the Act do  not  apply  to  prospecting licences  and mining leases.  It goes on to state in  s.  15 that  the  State  Government may,  by  notification  in  the official  Gazette,  make rules for regulating the  grant  of prospecting  licences and mining leases in respect of  minor minerals  and  for purposes connected  therewith,  and  that until  rules  ’are  made,  any  rules  made  by  the   State Government regulating the grant of prospecting licences  and mining  lease  in respect of minor minerals  which  were  in force immediately before the commencement of (1) [1964] 4S.C.R.461.                   (2) [1961] 2 S.C.R. 537. 115 the  Act  would continue in force.  It is admitted  that  no such  rules were made by the State Government.   It  follows that  the  subject of legislation is covered in  respect  of minor minerals by the express words of s. 15(1).  Parliament has undertaken legislation and laid down that regulation  of the  grant  of  prospecting licences and  mining  leases  in respect  of  minor  minerals  and  for  purposes   connected therewith  must  be by rules made by the  State  Government. Whether  the rules are made or not the topic is  covered  by Parliamentary  legislation and to that extent the powers  of State  Legislature  are wanting.   Therefore,  there  is  no room for State legislation.     Mr.  L.N.  Sinha argued that the  topic  of  legislation concerns  land  and therefore falls under entry  18  of  the State List and he drew our attention to other provisions  on the  subject of mines in the Land Reforms Act as  originally passed.   The abolition of the rights of  intermediaries  in the  mines and vesting these rights as lessors in the  State Government was a topic connected with land and land tenures. But  after  the  mining  leases  stood  between  the   State Government  and the lessees, any attempt to  regulate  those mining leases will fall not in entry 18 but in entry 23 even though  the regulation incidentally touches land.  The  pith and  substance of the amendment to s. 10 of the Reforms  Act falls within entry 23 although it incidentally touches  land and not vice versa. Therefore this amendment was subject  to the overriding power of Parliament as declared in Act 67  of 1957 in s. 15.  Entry 18 of the State List, therefore, is no help.     Mr. Lal Narain Sinha next contended that the  provisions of ss. 4--14 do not envisage control of the Union which is a

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 15 of 16  

condition precedent to the ousting of the jurisdiction under Entry  23.  Obviously Mr. Lal Narain Sinha  reads  Union  as equivalent  to Union Government.  This is erroneous.   Union consists   of   its three limbs, namely,  Parliament,  Union Government  and    the Union Judiciary.  Here the control is being exercised by Parliament, the legislative organ of  the Union and that is also control by the Union.  By giving  the power to the State Government to make rules, the control  of Union  is not negatived.  In fact, it establishes  that  the Union is exercising the control.  In view of the two rulings of  this  Court  referred to earlier we must  hold  that  by enacting s. 15 of Act 67 of 1957 the Union has taken all the power to itself and authorised the State Government to  make rules for the regulation of leases.  By the declaration  and the  enactment of s. 15 the whole of the field  relating  to minor  minerals came within the jurisdiction  of  Parliament and  no  scope  was left for the  enactment  of  the  second proviso to s. 10 in the Land Reforms Act.  The enactment ’of the  proviso  was,  therefore,  without jurisdiction. 116     This leaves for consideration the second sub-rule  added to  Rule 20 in December, 1964 by the State  Government.   It will be noticed that the rule as it stood previously applied prospectively to all 1eases which came to be executed  after the  promulgation  of the rules.  The second  sub-rule  made ,applicable those provisions to all leases subsisting on the date of the promulgation of the rules. The short question is whether the rules could operate on leases in existence prior to  their  enactment without the authority  of  a  competent legislature.  Vested  rights cannot be taken   away   except under  authority of law ,and mere rule-making power  without the  support  of a legislative enactment is not  capable  of achieving  such  an  end. There being  two  legislatures  to consider,  namely, Parliament and the State  Legislature  we have first to decide which legislature would be competent to grant such power.     We  have already held that the whole of the  legislative field  was  covered ’by the Parliamentary  declaration  read with  provisions of Act 67 of 1957, particularly s. 15.   We have  also held that entry 23 of List II was to that  extent cut  down by entry 54 of List I  The whole of the  topic  of minor minerals became a Union subject.  The Union Parliament allowed rules to be made but that did not  recreate a  scope for   legislation  at  the  State   level.  Therefore,    if the    old   1eases   were   to   be modified a  legislative enactment  by Parliament on the lines of s. 16 of Act 67  of 1957  was necessary.  The place of such a law could  not  be taken  by  legislation  by  the  State  Legislature  as   it purported  to do by enacting the second Proviso to s. 10  of the   Land   Reforms  Act.  It will  further  be  seen  that Parliament in s. 4 of Act 67 of 1957 created an express  bar although s. 4 was not applicable to minor minerals.  Whether s. 4 was intended to apply to minor minerals as well or  any part of it applies to minor minerals are questions we cannot consider in view of the clear declaration in s. 14 of Act 67 of 1957 that the provisions of ss. 4--13 (inclusive) do  not apply.  Therefore, there does not exist any prohibition such as  is  to be found in s. 4(1) Proviso in respect  of  minor minerals.  Although s. 16 applies to minor minerals it  only permits modification of mining leases granted before October 25,  1949.  In regard to leases of minor  minerals  executed between  this  date and December 1964 when  Rule  20(1)  was enacted,  there  is no provision of law  which  enables  the terms of existing leases to be altered.  A mere rule is  not sufficient.

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 16 of 16  

   Faced   with  this  difficulty  Mr.  Lal  Narain   Sinha attempted to claim power for the second Proviso to s. 10  of the Land Reforms Act .from entry 18 of List II, a contention we  have  rejected.  He also attempted to find a  field  for enactment  by  the State Legislature for the  said  proviso. This  argument  was extremely ingenious and  needs  separate notice. 117     The contention was that modification of existing  leases was a separate topic altogether and was not covered by s. 15 of  Act  67 of 1957.  Therefore if Parliament had  not  said anything  on  the subject the field was open  to  the  State Legislature.   The other side pointed to the words ’and  for purposes  connected therewith’ in s. 15 and  contended  that those  words were sufficiently wide to take in  modification of leases.  Mr. Lal Narain Sinha’s argument is unfortunately not tenable in view of the two rulings  of  this Court.   On the  basis  of those rulings we have held  that  the  entire legislative  field  in relation to minor minerals  had  been withdrawn  from  the State Legislature.  We have  also  held that vested rights could only be taken away by law made by a competent  legislature. Mere rule-making power of the  State Government was not able to reach them.  The authority to  do so  must,  therefore,  have emanated from  Parliament.   The existing  provision   related  to regulation of  leases  and matters connected therewith to be granted in future and  not for  alteration  of  the  terms  of  leases  which  were  in existence   before  Act  67  of  1957.   For  that   special legislative   provision   was   necessary.    As   no   such parliamentary  law  had been passed the second  sub-rule  to Rule  20  was ineffective.  It could not  derive  sustenance from the second Proviso to s. 10(2) of the Land Reforms  Act since that proviso was not validly enacted.     In  the result, therefore, these appeals  must  succeed. They  are  allowed  with  costs.   A  mandamus  shall  issue restraining   the  State  Government  from   enforcing   the provisions of the  second Proviso to s. 10(2) added by Bihar L,  and Reforms (Amendment) Act, 1964 (Bihar Act 4 of  1965) and  the second sub-rule of Rule 20 added by a  notification on December 10, 1964 to the Bihar Mineral Concession  Rules, 1964. G.C.                                                 Appeals allowed. 118