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PETITIONER: GEM GRANITES & ANR.

       Vs.

RESPONDENT: STATE OF TAMIL NADU & ORS

DATE OF JUDGMENT19/01/1995

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

CITATION:  1995 SCC  (2) 413        JT 1995 (1)   629  1995 SCALE  (1)273

ACT:

HEADNOTE:

JUDGMENT: 1.   What  has  been urged in these writ petitions  is  that rule   8-C,  as  amended  by  G.O.M.No.214  issued  by   the Government of Tamil Nadu on 10th June, 1992, and rule 38  of the Tamil Nadu Minor Mineral Concession Rules, 1959, are bad in law.  The challenge is grounded on the provisions of sub- section   2  of  section  17-A  of  the  Mines  &   Minerals (Regulation & Development) Act, 1957, which was inserted  in the statute by Amending Act 3 7 of 1986. 2.   Rule  8-C  is in Section 11 of the  Said  Rules,  which deals with Government lands in which minerals belong to  the Government.   The relevant portion of rule 8-C, as  amended, reads thus:               "8-C.  Lease of quarries in respect of  black,               red,   pink,  grey,  green,  white  or   other               coloured  or  multi-coloured granites  or  any               rock  suitable  for  use  as  ornamental   and               decorative   stones  to  a  State   Government               Company or Corporation owned. or controlled by               the State Government  (1) (a)  Notwithstanding               anything contained in these rules but  subject               to  rule 8-A and clause (b) of this sub  rule,               on  and from the 10th June 1992, no lease  for               quarrying black, red,pink, grey, green,  white               or  other coloured or multi-coloured  granites               or any rock suitable for use as ornamental and               decorative  stones  shall be  granted  to  any               person.               (b)   The  State  Government  themselves   nay                             engage  in  quarrying black, red,  pink,  grey ,               green,  white  or  other  coloured  or  multi-               coloured granites or any rock suitable for use               as  ornamental  and decorative stones  or  may               grant or renew leases for we above minerals to

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             a  State  Government  Company  or  Corporation               owned or controlled by the State Government." Rule  39 in Section V, dealing with  miscellaneous  matters. It reads thus:               "38.  Reservation of area for exploitation               631               in  the  public sector, etc.- The  State  Gov-               ernment  may, by notification in the  Official               Gazette, reserve any area for the exploitation               by  the Government, a Corporation  established               by any Central , State or Provincial Act or  a               Government  Company  within  the  meaning   of               section   617  of  the  Companies  Act,   1956               (Central Act 1 of 1956)".               Section 17-A of the Act reads thus:               "  17-A.  Reservation of area for purposes  of               conservation   (1).  The  Central  Government,               with  a  view to conserving  any  mineral  and               after consultation with the State  Government,               may  reserve any area not already  held  under               any  prospecting licence or mining lease  and,               where  it  proposes  to do so,  it  shall,  by               notification in the official Gazette,  specify               the boundaries of such area and the mineral or               minerals in respect of which such area will be               reserved.               (2)   The  State  Government  may,  with   the               approval  of the Central  Government,  reserve               any   area   not  already   held   under   any               prospecting  licence  or  mining  lease,   for               undertaking  prospecting or mining  operations               through  a Government Company  or  Corporation               owned  or controlled by it or by  the  Central               Government and where it proposes to do so,  it               shall,   by  notification  in   the   official               Gazette,  specify the boundaries of such  area               and  the  mineral or minerals  in  respect  of               which such areas will be reserved.               (3)   Where  jin exercise of the  powers  con-               ferred by sub-section (2) the State Government               undertakes prospecting or mining operations in               any  area  in  which the minerals  vest  in  a               private  person,  it shall be  liable  to  pay               prospecting. fee royalty, surface rent or dead               rent, as the case may be, from time to time at               the  same  rate at while it  would  have  been               payable under this Act if such prospecting  or               mining  Operations  had been undertaken  by  a               private  person under prospecting  licence  or               mining lease." 3.   It  is  an admitted position that the approval  of  the Central  Government was not obtained to rule 8-C as  amended on 10th June, 1992, either before or after that date. 4.   Section  17A  (2)  empowers  the  State  Government  to reserve  any area not already held under a mining lease  for undertaking  mining operations through a Government  Company or corporation owned or controlled by it may do so only with the approval of the Central Government.  When it purposes to do  so  it must, by notification in  the  Official  Gazette, specify  the  boundaries  of that area and  the  mineral  or minerals  in respect of which that area is to  be  reserved. Rule 8-C, as amended on 10th June 1992, states that no lease for  quarrying the granites therein specified and  any  rock suitable  for use for ornamental or decorative stones  shall be granted to any person.  It is also states that the  State

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Government  itself may engage in quarrying such granites  or rock  or may grant or renew leases to quarry the same  to  a State Government company or corporation. 5.   This  Court in Amritlal Nathubhai Shah & ors. v.  Union Government of India and anr. (1977) 1 S.C.R.372,  considered the provisions of section 17 of the said Act, it was  argued on  behalf of the appellants that they were only  provisions for specifying the boundaries of the reserved areas and,  as they  related  to  prospecting or mining  operations  to  be undertaken  by the Central Government, they showed that  the said  Act did not contemplate or provide for reservation  by any 632 other authority or for any other purpose.  The argument  was repelled by this Court in these words:               "The argument is however untenable because the               aforesaid  sub-sections of section 17  do  not               cover  the  entire field of the  authority  of               refusing  to grant a prospecting licence or  a               mining lease to any one else, and do not  deal               with  the  State  Government’s  authority   to               reserve  any  area for itself.   As  has  been               stated,  the  authority to  order  reservation               flows  from  the fact that the  State  is  the               owner  of the ?nines and the  minerals  within               its territory, which vest in it.  "  (Emphasis               supplied). 6.   Mr.  Sanghi, learned counsel for the respondent  State, was,  therefore,  justified in asserting that rule  8-C,  as amended,  did not, in any event, debar the State  Government from making a rule that no lease to quarry the said granites and  rock would be granted to any person and that the  State Government  itself could engage in such quarrying.   As  the owner of the said granites and rock the State Government may decline  to  give to anyone a lease to quarry the  same  and engage in such quarrying operations in itself 7.   The  real question is whether the State  Government  is entitled  to go further and state that it would be  free  to grant  or renew leases to quarry the said granites and  rock to  a State Government company or corporation.   Mr.  Sanghi argued that the provisions of Rule 8-C, as amended, were not intended to make a reservation of such granites and rock  in favour of the State Government or its companies or  corpora- tions  but  to preserve the same and, therefore,  the  State Government  was  not obliged to obtain the approval  of  the Central  Government thereto under the provisions of  Section 17A-(2).   We cannot agree.  Clearly, rule 8-C, as  amended, is intended to reserve the quarrying of be said granites and rock  for  the State Government and for a  State  Government companies  and corporations.  Insofar as the reservation  is for  State Government companies and corporations, it is  hit by  the  provisions  of Section 17-A(2)  because,  for  such reservation,  the  approval  of the  Central  Government  is required and has not been obtained. 8.   Rule  38  purports to permit the  State  Government  to reserve  any  area  for exploitation by  the  Government  or Central  or  State Government corporations  companies.   The provisions  of rule 38, insofar as they relate to the  State Government itself, are unexceptionable but, insofar as  they relate   to  Central  or  State  Government   companies   or corporation  they  must  be read  in  conjunction  with  the provisions  of  section 17-A(2). In other words,  the  State Government  may,  by notification in the  Official  Gazette, reserve  any  area  for exploitation  by  Central  or  State Government companies or corporation only if it has  obtained

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the approval of the Central Government under section 17-A(2) for doing so. 9.   The writ petitions are partly allowed in that rule  8-C as  amended  by  G.O.M.No.214  dated  10th  June,  1992,  is declared to be bad in law and is struck down in so far as it permits  the  State Government to grant or renew  leases  in favour  of State Government companies and con  porations  to quarry the granites and rock therein mentioned and that rule 38  must  be  read as being subject  to  the  provisions  of Section 17-A(2). 10.There shall be no order as to costs. 633