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CASE NO.: Appeal (civil)  6456 of 2001

PETITIONER: K.T. Varghese & Ors

RESPONDENT: State of Kerala & Ors

DATE OF JUDGMENT: 24/01/2008

BENCH: Dr. ARIJIT PASAYAT,LOKESHWAR SINGH PANTA & P. SATHASIVAM

JUDGMENT: J U D G M E N T

Dr. ARIJIT PASAYAT, J.  

1.      Challenge in this appeal is to the order passed by a  Division Bench of the Kerala High Court.  Challenge before the  High Court was to the order passed by a learned Single Judge  dismissing the Original Petition filed.       2.      Background facts as projected by the appellants in a  nutshell are as follows:      The appellants are engaged in the business of limeshell.  They have been holding the necessary dealers’ licence issued  under the Kerala Minor Mineral Concession Rules, 1967  (hereinafter referred to as ’the State Rules’) under Section 15  of the Mines and Minerals (Regulation and Development) Act,  1957 (hereinafter referred to as ’the Act’) and the Minor  Mineral Concession Rules, 1967 (in short the \021Rules\022). The  appellants were given the licence under Rule 48-C of the State  Rules. As per the licence the appellants got the licence to sell  stock and exhibit for sale minor minerals under the Rules.  Along with the licence certain conditions have also been laid  down which the appellants are under obligation to comply  with. When the appellants were not granted the renewal of  licence for the period 1997-98, they approached the High  Court by filing O.P.No.14269/1997 which was disposed of by  judgment dated 16.2.1998. The appellants filed a Writ Appeal  against the said judgment and the Division Bench of this  Court in Writ Appeal No.547/1998 directed the first  respondent to dispose of the representation filed by the  appellants. Accordingly, the appellants were granted renewal  of their licences for the period 1998-99.

3.      The appellants’ complaint is that certain conditions in  the form of restrictions have been. incorporated while issuing  the licences. One of such conditions which the appellants  attacks is that the minerals permitted to be stocked were to   be purchased only from authorised quarrying permit holders  on that behalf. Another condition is that they are permitted to  sell the minerals only within the State of Kerala that too for  domestic and agricultural purposes. The appellants’ complaint  is that as far as Co-operative Societies are concerned, they are  not saddled with any such restrictions imposed in the case of  the appellants. Thus, according to the appellants, there is a  clear discrimination between the Co-operative Societies and  the individuals in. the matter of restrictions imposed in the  licences granted to them. Apart from that there is no legal  sanction for such restrictions.

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     4.      Learned Single Judge of the High Court was of the view  that the licence was granted subject to certain conditions and  restrictions.  The State Government was empowered to impose  such conditions under the Act and the State Rules and the  licences were issued in terms of provisions of the Act and the  State Rules.  Since the conditional licence was issued, the  licencees cannot take up the benefit of licences without the  conditions imposed.       5.      The Division Bench in writ appeal did not specifically  refer to these aspects.       6.      Learned counsel for the appellants submitted that the  condition that sales would be for agricultural purposes and  inside the State condition cannot be imposed under the Rules.       7.      Learned counsel for the State Government and its  functionaries on the other hand supported the order of the  High Court.       8.      It appears that the impugned conditions stipulated run  as follows:

\023While selling limeshell or the products made  using the minerals you should give to the  purchaser Cash memorandum authenticated  by the undersigned/Assistant Geologist of this  office before use.  Please note that any  consignment of minor minerals without a valid  cash memorandum shall be considered as  illicit and the competent authority or such  authorized person may recover the mineral  from the person concerned.\024

9.      It is to be noted that there is no serious challenge to the  Condition No.1.       10.     Similarly another condition was imposed which read as  follows:

\023For sale within Kerala State only for domestic  and Agricultural purpose.\024

11.     Primarily it has been contended that no reason has been  indicated as to the basis for imposition of such conditions and  there is no such prescription for licencees who were co- operative societies.       12.     It is to be noted that dealer does not extract the minerals.  In State of Tamil Nadu v. M.P.P. Kavery Chetty [1995 (2) SCC  402] considering a similar challenge it was inter alia observed  as follows: \02317. Rules 8-D and 19-B were introduced into  the said Rules by Government Order No. 214  dated 10-6-1992. The two rules are identical,  except that Rule 8-D is in Section II which  relates to Government lands in which the  minerals belong to the Government and Rule  19-B is in Section III which relates to ryotwari  land in which the minerals belong to  Government. This being so, it is enough to  quote Rule 19-B. It reads thus:

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\02319-B. Constitution of black, red, pink,  grey, green, white or other coloured or  multi-coloured granites or any rock  suitable for use as ornamental and  decorative stones quarried by the  permit-holder etc. -(1) Notwithstanding  anything contained in these rules, on  and from 10-6-1992 the sale of the  quarried black, red, pink, grey, green,  white or other coloured or multi- coloured granites or any rock suitable  for use as ornamental and decorative  stone by every permit-holder who has  been granted permission by the State  Government and every person who  has been permitted by a competent  court having jurisdiction, for  quarrying black, red, pink, grey,  green, white or other coloured or  multi-coloured granites or any rock  suitable for use as ornamental and  decorative stone, shall be regulated  by the State Government or by an  officer of the State Government or by  a State Government company or by a  corporation owned or controlled by  the State Government, as the State  Government may direct in this behalf.   (2) Where the above sale is regulated  by\027    ( i )   the State Government or by an  officer of the State Government, the  minimum price shall be as fixed by  the State Government;     (ii)   the State Government company  or a corporation owned or controlled  by the State Government, the  minimum price shall be as fixed by  the said company or corporation, as  the case may be:       Provided that in fixing the  minimum price under this sub-rule,  the fair market price prevailing at the  time of the sale shall be taken into  account.\024  18. On the same day that Rules 8-D and 19-B  were introduced, that is, 10-6-1992,  Government Order No. 216 was also issued. It  directed, under the provisions of the two rules,  that the Tamil Nadu Minerals Limited, a State  Government company, would regulate the sale  of quarried black, red, pink, grey, green, white  or other coloured or multi-coloured granite or  any rock suitable for use as ornamental and  decorative stones.    19. The High Court quashed Rules 8-D and  19-B principally on the ground that Section 15  of the said Act gave no power to the State  Government to frame rules to regulate internal  or foreign trade in granite after it had been  quarried. Section 15 also did not empower the  State Government to frame rules to enable a  State Government company or corporation to

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fix a minimum price for granite.    20. Learned counsel for the appellant State  submitted that Rules 8-D and 19-B were valid  having regard to the Preamble of the said Act  and Section 18 thereof. He submitted that the  rule-making power of the State under Section  15( o ) was wide enough to encompass Rules 8- D and 19-B.  23. It is difficult to see how granite resources  can be protected by controlling the sale of  granite after its excavation and fixing the  minimum price thereof.  24. There is no power conferred upon the  State Government under the said Act to  exercise control over minor minerals after they  have been excavated. The power of the State  Government, as the subordinate rule-making  authority, is restricted in the manner set out  in Section 15. The power to control the sale  and the sale price of a minor mineral is not  covered by the terms of clause ( o ) of sub- section (1-A) of Section 15. This clause can  relate only to the regulation of the grant of  quarry and mining leases and other mineral  concessions and it does not confer the power  to regulate the sale of already mined minerals.\024   13.     In view of what has been stated by this Court in M.P.P.  Kavery Chetty\022s case (supra) the impugned conditions  stipulated could not have been imposed and are accordingly  struck down.       14.     The appeal is allowed to the aforesaid extent without any  order as to costs.