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PETITIONER: STATE OF TAMIL NADU

       Vs.

RESPONDENT: HIND STONE ETC.

DATE OF JUDGMENT05/02/1981

BENCH: REDDY, O. CHINNAPPA (J) BENCH: REDDY, O. CHINNAPPA (J) PATHAK, R.S.

CITATION:  1981 AIR  711            1981 SCR  (2) 742  1981 SCC  (2) 205        1981 SCALE  (1)237  CITATOR INFO :  F          1985 SC 660  (24)  RF         1986 SC1323  (49)  D          1988 SC1301  (11)  F          1990 SC 820  (31)

ACT:      Mines and  Minerals (Regulation  and Development)  Act, 1957-Section  15-Rule   8-C  of  Tamil  Nadu  Minor  Mineral Concession Rules  1959-Scope of-Rule if ultra vires the rule making power  of the  State Government-Whether  violative of Articles 301 and 303 of the Constitution.      Interpretation-"Regulation"      whether       includes "prohibition".

HEADNOTE:      The Mines  and Minerals (Regulation & Development) Act, 1957 (Central  Act) was  enacted in  the public  interest to enable the Union to take under its control the regulation of mines and  the development of minerals. Exercising its power under  this  Act,  the  Central  Government  declared  by  a notification that black granite was a minor mineral.      Exercising power vested in it by section 15 of the Act, the State  Government made  the  Tamil  Nadu  Minor  Mineral Concession Rules,  1959. Rule  8 of the Rules prescribes the procedure for  lease of quarries to private persons. By rule 8-C, introduced  in 1977, leases for quarrying black granite in favour  of private  persons were  banned. Sub-rule (2) of this rule  enacts that  the State  Government themselves may engage in  quarrying  black  granite  or  grant  leases  for quarrying black  granite in favour of any corporation wholly owned by the State Government.      Several applications  for the  grant of fresh leases as well as  for the  renewal  of  leases  for  quarrying  black granite belonging  to the State Government were submitted to the State Government, some prior to the introduction of rule 8C and  some after  the rule  came  into  force.  The  State Government considered  all the applications and rejected all of them in view of rule 8C.      The respondents  filed writ  petition  questioning  the vires of  Rule 8-C on various grounds. The High Court struck down Rule 8-C on the ground that it exceeded the rule making power given to the State Government and held that it was not

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open to  the appellant  Government to  keep the applications pending for  a long  time and then to dispose them of on the basis of a rule which had come into force later. As a result all the  applications were  disposed of without reference to rule 8-C.      The appellant  contended that:  (I) The approach of the High Court was vitiated by its failure to notice the crucial circumstance that  the minerals  belonged to the Government, (II) The  respondents had no vested or indefeasible right to obtain a  lease or  a renewal  to quarry the minerals, (III) There were  good reasons  for banning  the grant of lease to quarry  black  granite  to  private  parties  and  (IV)  The Government could  not be  compelled to  grant  leases  which would result  in the destruction of the mineral resources of the country.      On behalf  of the  respondent it was submitted that (I) the question  of ownership  of the  minerals was irrelevant, (II) It was not open to the appellant 743 to exercise its subordinate legislative function in a manner to benefit  itself as owner of the minerals, nor was it open to the  appellant to  create monopoly  by such  means, (III) There  was   violation  of  articles  301  and  303  of  the Constitution, (IV)  Rule 8-C  had no application to renewals and (V)  That in  any event  it would not have the effect of affecting applications made more than 60 days before it came into force.      Accepting the appeals, it was ^      HELD: Rule  8-C was  made in  bonafide exercise  of the rule making power of the Appellant Government and not in its misuse to advance its own self interest. Making a rule which is perfectly  in order  is not  to be considered a misuse of the rule making power, if it advances the interest of State, which really means the people of the State. Rivers, forests, minerals and  as such  other resources constitute a nation’s natural wealth. These resources are not to be frittered away and exhausted by any one generation. Every generation owes a duty to all succeeding generations to develop & conserve the natural resources of the nation in the best possible way. It is in  the interest of mankind. It is in the interest of the Nation. It  is  recognised  by  Parliament.  Parliament  has declared that  it is  expedient in  the public interest that the Union  should take  under its  control the regulation of mines and the development of minerals. [751C-D, 753G-H]      2. The Public interest which induced Parliament to make the declaration  contained in  S.2 of  the Mines  & Minerals (Regulation and  Development) Act,  1957 has naturally to be the paramount  consideration in  all matters  concerning the regulation of  Mines  &  Minerals.  Parliament’s  Policy  is clearly discernible  from the  provisions of  the Act. It is the  conservation   and  the   prudent  and   discriminating exploitation of  minerals, with  a view  to  secure  maximum benefit to the community. There are clear sign posts to lead and guide  the  subordinate  legislating  authority  in  the matter of the making of rules. [751G-H]      3.  The  other  provisions  of  the  Act,  particularly sections 4A,  17 and  18,  indicate  that  the  rule  making authority under  S.15 has not exceeded its powers in banning leases for  carrying black  granite  in  favour  of  private parties  and   in  stipulating  that  the  State  Government themselves may  engage in  quarrying black  granite or grant leases  for   quarrying  black  granite  in  favour  of  any corporation wholly  owned by  the State  Government. To view such a  rule made  by the  Subordinate legislating body as a

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rule  made  to  benefit  itself  merely  because  the  State Government happens  to be  the subordinate  legislating body is, but,  to take too narrow a view of the functions of that body. [751H, 752A-B]      H. C.  Narayanappa &  Ors. v.  State of  Mysore &  Ors. [1960] 3 SCR 742 @ 745, 752-753 referred to.      5. Whenever  there  is  a  switch  over  from  ’private sector’ to  ’public sector’  it does  not necessarily follow that  a  change  of  policy  requiring  express  legislative sanction is  involved. It  depends on  the subject  and  the statute. But if a decision is taken to ban private mining of a single  minor mineral  for the  purpose of  conserving it, such a  ban, if  it is  otherwise within  the bounds  of the authority given  to the Government by the Statute, cannot be said to  involve any change of policy. The policy of the Act remains the same and it is, the conservation and the prudent and discriminating exploitation of 744 minerals, with  a view  to secure  maximum  benefit  to  the community. Exploitation  of minerals  by the  private and/or the public  sector is contemplated. If in the pursuit of the avowed policy  of the Act, it is thought exploitation by the public sector is best and wisest in the case of a particular mineral and, in consequence, the authority competent to make the subordinate  legislation makes  a rule  banning  private exploitation of  such mineral, which was hitherto permitted. There is  no  change  of  policy  merely  because  that  was previously permitted is no longer permitted. [756A-D]      Municipal Corporation  of the  City of Toronto v. Virgo      [1896]  A.C.   88,  Attorney  General  for  Ontario  v.      Attorney General  for the  Dominion and  the Distillers      and Brewers Association,[1896] A.C. 348, State of Uttar      Pradesh and  Others v.  Hindustan Aluminium Corporation      Ltd. and Ors., [1979] 3 SCR 709, G. K. Krishnan etc. v.      The State  of Tamil Nadu and Anr. etc. [1975] 2 SCR 715      @ 721,  Commonwealth of  Australia v. Bank of New South      Wales [1950] A.C. 235 referred to.      6. The  restrictions, freedom  from which is guaranteed by Art.  301 would  be such  restrictions  as  directly  and immediately restrict  or impede the free flow or movement of trade. The  Act and  the rules properly made thereunder are, therefore, outside  the purview  of Art. 301. Even otherwise Art. 302  which enables  Parliament, by  law, to impose such restrictions  on   the  freedom   of  trade,   commerce   or intercourse between one State and another or within any part of the  territory of  India as may be required in the public interest also  furnishes an answer to the claim based on the alleged contravention of Art. 301. [757F-H, 758A-B]      7. The  Mines and Minerals (Regulation and Development) Act  is   a  law  enacted  by  Parliament  and  declared  by Parliament to  be expedient in the public interest. Rule 8-C has been  made by the appellant Govt. by notification in the official Gazette, pursuant to the power conferred upon it by sec. 15 of the Act. A statutory rule, while ever subordinate to the  parent statute, is, otherwise, to be treated as part of the  statute and  as effective.  "Rules  made  under  the Statute must  be treated for all purposes of construction or obligation exactly  as if they were in the Act and are to be of the  same effect as if contained in the act and are to be judicially noticed  for  all  purposes  of  construction  or obligation. [758B-G]      Atiabari Tea Co. Ltd. v. State of Assam & Ors. [1961] 1      SCR 809  The Automobile  Transport Rajasthan  Ltd.,  v.      State of Rajasthan & Ors. [1963] 1 SCR 491 and State of      U.P. &  Ors. v.  Babu Ram  Upadhya [1961]  2  SCR  679,

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    referred to.      8. Rule  9 makes  it clear  that a renewal is not to be obtained automatically,  for the  mere asking. The applicant for the renewal has, particularly, to satisfy the Government that the  renewal is in the interests of mineral development and that the lease amount is reasonable in the circumstances of the  case. These  conditions  have  to  be  fulfilled  in addition to  whatever criteria  is applicable at the time of the grant  of lease in the first instance, suitably adapted, of course,  to grant  of renewal.  Not to apply the criteria applicable in the first instance may lead to absurd results. Therefore rule  8-C is attracted in considering applications for renewal of leases also. [759A-D]      9. While the applications should be dealt with within a reasonable time,  it cannot on that account be said that the right to have an application disposed 745 of in  a reasonable  time clothes  an applicant  for a lease with a  right to  have the  application disposed  of on  the basis of the rules in force at the time of the making of the application. No  one has  a vested  right to  the  grant  or renewal of a lease and none can claim a vested right to have an application  for the  grant or  renewal of  a lease dealt with in a particular way, by applying particular provisions. In  the  absence  of  any  vested  rights  in  any  one,  an application for  a lease  has necessarily  to be  dealt with according to  the rules in force on the date of the disposal of the  application despite  the fact  that there  is a long delay since the making of the application. [759G-H, 760A]      10. The  language of  Rule 8-C is clear that it can not have any application to lands in which the right to minerals belongs to  the applicants  themselves. In the case of lands in which the right to minerals belongs to private owners and those owners  seek permission  to quarry  black granite  the applications will  have to  be dealt with under the relevant rules in Sec. III of the Tamil Nadu Minor Mineral concession Rules. Rule  8-C does  not impose a general ban on quarrying black granite  but only imposes a bar on the grant of leases for quarrying black granite. [760D-F]

JUDGMENT:      CIVIL APPELLATE  JURISDICTION: Civil  Appeal Nos. 2602- 2604 of 1980.      Appeals by  special leave  from the  Judgment and Order dated 20-6-1980  of the  Madras High  Court in Writ Petition Nos. 4467 of 1977, 2933 and 4793 of 1978.      Lal Narain  Sinha Att. Genl. of India for the Appellant in CA 2602/80.      Soli J. Sorabjee for the Appellant in CA 2603/80.      R. Krishnamurthy  Adv. Genl.  for the  appellant in  CA 2604/80.      A. V.  Rangam and  K. Venkatawani  for the Appellant in all the matters.      Y. S.  Chitale (Dr.),  Mrs. S.  Ramachandran and  Mukul Mudgal for Respondent Nos. 11 and 42.      P. Chidambaram and A. S. Nambiyar for the Respondents.      F. S.  Nariman, A. V. Rangam and R. N. Sachthey for the interveners.      V. Srinivasan,  A. Venkatarayana  and P.  N. Ramalingam for Respondent No. 45.      The Judgment of the Court was delivered by      CHINNAPPA REDDY,  J.-Entry 23 of List II of the Seventh Schedule to  the Constitution  is, "Regulation  of mines and

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mineral development subject to the provisions of List I with respect to  regulation and  development under the control of the Union". Entry 54 746 of List  of the Seventh Schedule is "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". Thus  while  ’regulation  of  mines  and  mineral development’ is  ordinarily a subject for State legislation. Parliament may,  by law, declare the extent to which control of such regulation and development by the Union is expedient in the  public interest,  and, to  that extent, it becomes a subject  for   Parliamentary  legislation.   Parliament  has accordingly enacted  the Mines  and Minerals (Regulation and Development) Act,  1957. By  S. 2  of the Act it is declared that it  is expedient  in the public interest that the Union should take  under its  control the  regulation of mines and the  development   of  minerals  to  the  extent  thereafter provided. It  is now  common ground between the parties that as a  result of  the declaration made by Parliament, by S. 2 of the  Act, the State legislatures are denuded of the whole of their  legislative power  with respect  to regulation  of mines  and   mineral  development   and  that   the   entire legislative field  has been  taken over  by Parliament. That this  is  the  true  position  in  law  is  clear  from  the pronouncements of  this Court  in The Hingir Rampur Coal Co. Ltd. & Ors. v. The State of Orissa & Ors. State of Orissa v. M.A., Tulloch  & Co.  and Baijnath Kedia v. State of Bihar & Ors.  S.  3  of  the  Mines  and  Minerals  (Regulation  and Development)  Act,   1957,   defines   various   expressions occurring in  the Act. S. 3 (a) defines ’minor minerals’ and it includes  any mineral  declared to  be a minor mineral by the Central  Government by  a notification  in the  Official Gazette. ’Black granite’ has been so notified by the Central Government as  a minor  mineral. Section 4 to 9A are grouped under  the  heading  ’General  Restrictions  on  undertaking prospecting and mining operations’. These provisions as well as Sections  10  to  13  are  made  inapplicable  to  ’minor minerals’ by S. 14. S. 4 prohibits all prospecting or mining operations except  under a  licence or a lease granted under the Act  and the  rules made thereunder. S.4A(1) enables the State Government on a request made by the Central Government in  the   interest  of   regulation  of  mines  and  mineral development to  terminate a  mining lease  pre-maturely  and grant a fresh mining lease in favour of a Government Company or Corporation  owned or  controlled by  Government. Perhaps because s.4A(1) is inapplicable to minor minerals because of the provisions  of S.14,  S.4A(2) has been expressly enacted making somewhat similar provision, as in S.4A(1), in respect of ’minor minerals’ also. S.4A(2) 747 enables the  State Government,  after consultation  with the Central Government, if it is of opinion that it is expedient in  the   interest  of   regulation  of  mines  and  mineral development so  to do,  to prematurely  terminate  a  mining lease in  respect of  any minor  mineral and  grant a  fresh lease in  respect of  such mineral in favour of a Government Company or  Corporation owned  or controlled  by Government. S.5 imposes certain restrictions on the grant of prospecting licences and  mining leases. S.6 prescribes the maximum area for which  a prospecting  licence or  mining  lease  may  be granted. S.7  prescribes the  period for  which  prospecting licences may  be granted  or  renewed.  S.8  prescribes  the period for  which mining  leases may  be granted or renewed.

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S.9 provides  for the  payment of  royalty and  S.9A for the payment of  dead rent.  Sections 10,  11 and 12 constitute a group of  sections under  the title ’Procedure for obtaining prospecting licences  or mining leases in respect of land in which the  minerals vest  in the  Government’. S.10 provides for making  applications for  prospecting licences or mining leases in  respect of any land in which the minerals vest in the  Government.  S.11  provides  for  certain  preferential rights in  favour of  certain persons in the matter of grant of  mining   leases.  S.   12  prescribes  the  Register  of prospecting licences  and mining  leases to be maintained by the State  Government. S.13  empowers the Central Government to make  rules  for  regulating  the  grant  of  prospecting licences and  mining leases.  In particular  we may  mention that S.13(2)  (a) empowers  the Central  Government to  make rules providing  for ’the persons by whom, and the manner in which,  applications  for  prospecting  licences  or  mining leases in  respect of land in which the minerals vest in the Government may  be made  and the  fees to be paid therefor". S.13(2) (f),  we may add, empowers the Central Government to make rules  providing for  ’the procedure  for  obtaining  a prospecting licence or a mining lease in respect of any land in which  the minerals  vest in  a  person  other  than  the Government and  the  terms  on  which,  and  the  conditions subject to  which, such a licence or lease may be granted or renewed’. S.14  makes the  provisions of  Sections 4  to  13 inapplicable to  minor minerals.  S.15  empowers  the  State Government to  make rules for regulating the grant of quarry leases, mining  leases  and  other  mineral  concessions  in respect of  minor minerals and purposes connected therewith. S.15(3) provides  for the  payment of  royalty in respect of minor minerals at the rate prescribed by the rules framed by the State  Government. S.16 provides for the modification of mining leases  granted before October 25, 1949. S.17 enables the Central  Government, after  consultation with  the State Government to  undertake prospecting or mining operations in any area  not already  held under any prospecting licence or mining lease, in which event the Central 748 Government shall  publish a  notification  in  the  official Gazette  giving  the  prescribed  particulars.  The  Central Government may  also declare  that no prospecting licence or mining lease  shall  be  granted  in  respect  of  any  land specified in  the notification. S.18 casts a special duty on the Central  Government to  take all necessary steps for the conservation and  development of minerals in India. Sections 19 to  33 are various miscellaneous provisions with which we are not now concerned.      Pursuant to  the power  vested in  it under S.15 of the Mines and  Minerals (Regulation  and Development) Act, 1957, the Government  of Tamil  Nadu has made the Tamil Nadu Minor Mineral Concession  Rules, 1959.  Section II  of  the  rules consisting of rules 3 to 16 is entitled "Government lands in which  the  minerals  belong  to  the  Government".  Rule  8 prescribes the  procedure  for  the  lease  of  quarries  to private persons.  The ordinary  procedure is  to  publish  a notice  in   the  District  Gazette  inviting  applications, thereafter to  hold an  auction and finally to grant a lease to the  highest bidder.  Rule 8A which was introduced by way of an  amendment in  1972, provides  for a special procedure for the  sanctioning of  leases in  favour of applicants who require the  minerals for  their existing  industries or who have an  industrial programme  for the  utilisation  of  the mineral in  their own  industry. Rule  8B was  introduced in 1975 making  special provision  for the  grant of leases for

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quarrying black granite. The rule is as follows:      "8-B. Lease  of quarries in respect of black granite to      private persons  (1)   Notwithstanding anything  to the      contrary contained  in rules  8 and  8A, the  authority      competent to grant leases in respect of quarrying black      granite shall be the State Government.           (2) An  application for  the grant  of a quarrying      lease in  respect of  any land  shall be  made  to  the      Collector of  the District  concerned in the prescribed      form in triplicate and shall be accompanied by a fee of      Rs. 100/-.  The Collector shall after scrutiny, forward      the application  along with his remarks to the Director      of  Industries   &  Commerce   who  shall   technically      scrutinise  the   industrial  programme  given  by  the      applicant and  forward the application with his remarks      to the Government."      "(G. O. Ms. No. 993 Industries dt. 25-8-1975". Rule 8-C was introduced  by G.  O.  Ms.  No.  1312  Industries  dated December 2,  1977. By  this rule  leases for quarrying black granite 749 in favour  of private persons are banned. Leases can only be granted in favour of a Corporation wholly owned by the State Government. It  is the  vires of  this rule  which was under challenge before  the High Court and is also under challenge now. It  will be  useful to  extract  the  same.  It  is  as follows:      "8-C Lease  of quarries  in respect of black granite to      Government Corporation, etc.           (1)  Notwithstanding   anything  to  the  contrary      contained in  these rules,  on and  from 7th  December,      1977 no  lease for  quarrying black  granite  shall  be      granted to private persons.           (2) The  State Government themselves may engage in      quarrying black  granite or  grant leases for quarrying      black granite in favour of any corporation wholly owned      by the State Government.           Provided that  in respect of any land belonging to      any private person, the consent of such person shall be      obtained for such quarrying or lease".      Rule 9  provides for renewal of leases and it is in the following terms:           "9. Renewal  of lease.-(1)  The Collector  may  on      application renew  for a  further period  not exceeding      the period  for which  the lease was originally granted      in each case if he is satisfied that-           (i) such  renewal is  in the  interests of mineral      development, and           (ii)  the   lease  amount  is  reasonable  in  the      circumstances of the case.           (2) Every application for renewal shall be made to      Collector, sixty  days prior  to the  date of expiry of      the lease:           Provided that a lease, the period of which exceeds      ten years shall not be renewed except with the sanction      of the Director of Industries and Commerce".      A proviso was added to rule 9(2) in 1975 and it said:           "provided also  that  the  renewal  for  quarrying      black granite shall be made by the Government".      Several persons  who held  leases for  quarrying  black granite belonging  to the  State Government and whose leases were about  to expire,  applied to  the Government  of Tamil Nadu for  renewal of  their leases.  In some  of  the  cases applications were made long prior 750

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to the  date of  G. O.  Ms. No.  1312 by  which Rule 8 C was introduced. Some  applications were made after Rule 8 C came into force.  There were also some applications for the grant of  fresh  leases  for  quarrying  black  granite.  All  the applications were  dealt with after Rule 8 C came into force and all  of them  were rejected  in view of Rule 8C. Several Writ Petitions  were filed in the High Court questioning the vires of  Rule 8C  on various grounds. Apart from canvassing the vires  of Rule 8C, it was contended that Rule 8C did not apply to  grant of  renewals of  lease at  all. It  was also argued that  in any  event, in  those  cases  in  which  the applications for  renewal had  been made prior to the coming into force  of Rule  8C, their applications should have been dealt with  without reference  to Rule  8C. The  Madras High Court while  not accepting some of the contentions raised on behalf of  the applicants, struck down Rule 8C on the ground that it  exceeded the  rule making  power given to the State Government under  S.15 which,  it  was  said,  was  only  to regulate and  not to prohibit the grant of mining leases. As a consequence  all the  applications  were  directed  to  be disposed of  without reference  to  Rule  8C.  It  was  also observed that  even if  Rule 8C was valid it applied only to the grant  of fresh  leases and not to renewals. It was also held that  it was  not open  to the  Government to  keep the applications pending  for a  long time  and then  to dispose them of  on the  basis of  a rule  which had come into force later. The  State Government  has come in appeal against the judgment of  the Madras  High Court  while  the  respondent- applicants have  tried to sustain the judgment of the Madras High Court on grounds which were decided against them by the Madras High Court.      The learned  Attorney  General  who  appeared  for  the Government of  Tamil Nadu submitted that the approach of the High Court was vitiated by its failure to notice the crucial circumstance that  the minerals  belonged to  the Government and the  applicants had  no vested  or indefeasible right to obtain a  lease or  a renewal  to quarry the minerals. There were good  reasons for banning the grant of leases to quarry black granite  to private  parties and in the light of those reasons the  Government could  not  be  compelled  to  grant leases which  would result in the destruction of the mineral resources of  the country.  Shri K.  K.  Venugopal,  learned counsel who  led the  argument for the respondents submitted that  the   question  of   ownership  of  the  minerals  was irrelevant. In  making the  rules the  State Government  was acting as  a delegate  and not as the owner of the minerals. He submitted that it was not open to the State Government to exercise its subordinate legislative function in a manner to benefit itself  as owner of the minerals, nor was it open to the State Government to create a monopoly by such means 751 According to  Shri Venugopal  creation of  a monopoly in the State  was   essentially  a  legislative  function  and  was incapable of  delegation. It  was  claimed  that  there  was violation of  Articles 301  and 303  of the Constitution. It was further  claimed that  S. 15  of the  Mines and Minerals (Regulation and  Development) Act  1957, enabled  the  State Government to make rules to regulate the grant of leases and not to  prohibit them.  In any case it was said that Rule 8G had no  application to  renewals and  that in  any event  it would not  have the  effect of  affecting applications  made more than 60 days before it came into force.      Rivers, Forests,  Minerals  and  such  other  resources constitute a  nation’s natural  wealth. These  resources are not  to   be  frittered   away  and  exhausted  by  any  one

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generation. Every  generation owes  a duty to all succeeding generations to develop and conserve the natural resources of the nation  in the  best possible way. It is in the interest of mankind.  It is  in the  interest of  the Nation.  It  is recognised by Parliament. Parliament has declared that it is expedient in  the public interest that the Union should take under  its   control  the   regulation  of   mines  and  the development of  minerals.  It  has  enacted  the  Mines  and Minerals (Regulation  and Development)  Act, 1957.  We  have already referred  to its  salient provisions. S. 18, we have noticed, casts  a special  duty on the Central Government to take necessary steps for the conservation and development of minerals in  India. S.  17 authorises the Central Government itself to  undertake prospecting or mining operations in any area not  already held  under  any  prospecting  licence  or mining lease.  S.4A empowers  the State  Government  on  the request of  the Central  Government, in the case of minerals other than minor minerals, to prematurely terminate existing mining  leases  and  grant  fresh  leases  in  favour  of  a Government Company  or Corporation  owned or  controlled  by Government, if it is expedient in the interest of regulation of mines  and mineral  development to  do so. In the case of minor minerals, the State Government is similarly empowered, after consultation  with the  Central Government. The public interest which  induced Parliament  to make  the declaration contained in  S. 2  of the  Mines & Minerals (Regulation and Development) Act,  1957. has  naturally to  be the paramount consideration in  all matters  concerning the  regulation of mines and  the development  of minerals. Parliament’s policy is clearly discernible from the provisions of the Act. It is the  conservation   and  the   prudent  and   discriminating exploitation of  minerals, with  a view  to  secure  maximum benefit to the community. There are clear sign posts to lead and guide  the  subordinate  legislating  authority  in  the matter of  the making  of rules. Viewed in the light shed by the other  provisions of  the Act, particularly sections 4A, 17 and 18 752 it cannot be said that the rule making authority under S. 15 has exceeded  its powers  in banning  leases  for  quarrying black  granite   in  favour   of  private   parties  and  in stipulating that  the State Government themselves may engage in quarrying  black granite  or grant  leases for  quarrying black granite  in favour  of any corporation wholly owned by the State  Government. To  view such  a  rule  made  by  the Subordinate legislating  body as  a  rule  made  to  benefit itself merely because the State Government happens to be the subordinate legislating  body, is, but, to take too narrow a view of  the  functions  of  that  body.  The  reasons  that prompted  the   State  Government  to  make  Rule  8-C  were explained at  great length  in the  common counter affidavit filed on  behalf of  the State  Government before  the  High Court.  We  find  no  good  reason  for  not  accepting  the statements made in the counter affidavit. It was said there:           "I submit  that the  leases for  black granite are      governed by  the Tamil  Nadu Minor  Mineral  Concession      Rules 1959  under which  originally there was scope for      auctioning of  quarries of minor minerals. In amendment      issued in  the G.O.  dated 6-12-1972. under Rule 8-A it      was indicated that the Collector may sanction leases in      favour of  applicants  who  are  having  an  industrial      programme  to   utilise  the   minerals  in  their  own      industry. This  provision is applicable to all minerals      including black  granites. However,  it was  found that      there were several cases where lessees who obtained the

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    black granite  areas  on  lease  by  auction  were  not      quarrying in  a systematic  and planned  manner  taking      into consideration  the welfare  and safety measures of      the workers  as well  as the  conservation of minerals.      Even after the introduction of the amendment under Rule      8-A in  most cases, the industry set up was of a flimsy      nature more  to circumvent  the  rule  than  to  really      introduce industry  including  mechanised  cutting  and      polishing. The  lessees were  also interested  only  in      obtaining the  maximum profit in the shortest period of      time  without  taking  into  consideration  the  proper      mining and  development of  the mineral. There was also      considerable wastage  of new  materials due to wasteful      mining.  Therefore,   Government   issued   a   further      amendment as  Rule 8-B  wherein the competent authority      to grant  leases in  respect  of  the  quarrying  black      granite was transferred from the Collector to the State      Government level.  They also prescribed a standard form      and an application fee to be paid with the application.      The amendment  states that  the Director  of Industries      and Commerce shall technically 753      scrutinise  the   industrial  programme  given  by  the      applicant while  forwarding the  same to Government. At      the same time, in the G.O. issued along with amendment,      it was  stated that  if any  of  the  State  Government      Organisations  like   Tamil   Nadu   Small   Industries      Corporation  Limited,   Tamil  Nadu   small  Industries      Development Corporation  Limited, Tamil Nadu Industrial      Development Corporation Limited is interested to obtain      a  lease  for  black  granite  in  a  particular  area,      preference will be given to Government undertaking over      other private  entrepreneurs for  granting  the  leases      applied  for  by  them.  However,  in  spite  of  these      amendments to regulate the grant of mining lease, there      were a  large number  of lessees  (exceeding 140),  who      were  engaged   in  mining   without  proper  technical      guidance or safety measures etc. for the workers. These      lessees  made  a  strong  representation  to  the  then      Government in  1976 expressing  that  though  they  had      given  assurance  to  set  up  industries  to  use  the      granites they  were not  able  to  do  so  far  various      reasons. They  also represented  that  they  should  be      allowed to  export the  raw blocks  of black  granites.      Therefore, Government  had issued  a  Government  Order      dated 15-2-1977  relating to  relaxation of  the ban of      export of  raw blocks  and provision  for setting  up a      polishing  or  finishing  unit  was  not  made  a  pre-      requisite. They  have also  stated that  the terms  and      conditions for  the existing  losses  would  remain  in      force. However, on an examination of the performance of      the lessees  over the  past several  years, it has been      found that  excepting in  a very few cases, none of the      lessees had  set  up  proper  industries  or  developed      systematic mining of the quarries. The exports continue      to be mainly on the raw black granite materials and not      out and  polished slabs.  A large  number of the leases      were not operating either due to speculation or lack of      finance from the lessees. Therefore, Government decided      that there  should be  no further  grant  of  lease  to      private  entrepreneurs  for  black  granite.  This  was      mentioned in  G.O.Ms. No.  1312 Industries  dated 2-12-      1977. We are  satisfied that Rule 8C was made in bonafide exercise of the  rule making power of the State Government and not in

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its misuse  to advance  its own  self-interest.  We  however guard  ourselves  against  being  understood  that  we  have accepted the  position that making a rule which is perfectly in order to be considered a misuse of the rule making power, if it  advances the  interest of a State, which really means the people of the State. 754      One of the submissions on behalf of the respondents was that monopoly was a distinct legislative subject under entry 21 of  List III  of the Seventh Schedule to the Constitution and therefore monopoly, even in favour of a State Government can  only   be  created   by  plenary  and  not  subordinate legislation. Parliament  not having  chosen to  exercise its plenary power it was not open to the subordinate legislating body to  create a  monopoly by  making a rule. Our attention was invited to H. C. Narayanappa & Ors. v. State of Mysore & Ors.(1) where  it was  held that  the expression ’Commercial and industrial  monopolies’ in  entry 21  of List III of the Seventh Schedule  to the  Constitution was  not confined  to legislation to  control of monopolies but was wide enough to include  grant  or  creation  of  commercial  or  industrial monopolies in  favour of  the State  Government, also We are unable to  agree with  Shri Venugopal’s submission. The very decision cited  by him furnishes the answer. The validity of a scheme for nationalisation of certain routes made pursuant to the powers conferred by Chapter IVA of the Motor Vehicles Act was  under attack  in that  case. One  of the grounds of attack was  that "by  Chapter IVA of the Motor Vehicles Act, 1939,      "Parliament  had   merely  attempted  to  regulate  the      procedure for  entry by the States into the business of      motor transport  in the  State, and  in the  absence of      legislation expressly undertaken by the State of Mysore      in that  behalf, that  State was  incompetent to  enter      into the  arena of  motor  transport  business  to  the      exclusion of private operators;" Sustenance for  the submission  was sought  to be drawn from the language  of Art. 19(6) (ii) which provides that nothing in Art.  19(1) (g)  shall ’prevent the State from making any law relating  to’ ’the  carrying on  by the  State, or  by a Corporation owned  or controlled by the State, of any trade, business, industry  or service,  whether to  the  exclusion, complete or partial, of citizens or otherwise’. The argument was that  the State  or a Corporation owned or controlled by the State  could carry  on a  trade, business,  industry  or service to  the exclusion, complete or partial, of citizens, only if  the State  made a  law relating to it. The argument was repelled by the Court in these words:           "The plea  sought to be founded on the phraseology      used in Art. 19(6) that the State intending to carry on      trade or business must itself enact the law authorising      it to  carry on  trade or business is equally devoid of      force. The expression ’the State’ as defined in Art. 12      is inclusive  of the Government and Parliament of India      and the Government and the Legisla- 755      ture of  each of  the States. Under entry No. 21 of the      Concurrent List,  the  Parliament  being  competent  to      legislate   for    creating   commercial   or   trading      monopolies, there  is nothing in the Constitution which      deprives it  of the  power to  create a  commercial  or      trading monopoly  in the  constituent  States.  Article      19(6) is  a mere  saving provision: its function is not      to create  a Power  but to  immunise  from  attack  the      exercise of legislative power falling within its ambit.

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    The right of the State to carry on trade or business to      the exclusion  of others  does not  arise by  virtue of      Art. 19(6). The right of the State to carry on trade or      business  is  recognised  by  Art.  298;  authority  to      exclude competitors  in the  field  of  such  trade  or      business is  conferred on the State by entrusting power      to enact laws under entry 21 of List III of the Seventh      Schedule, and the exercise of that power in the context      of fundamental  rights is  secured from  attack by Art.      19(6).           In any  event; the  expression ’law’ as defined in      Art. 13(3)  (a) includes any ordinance, order, bye-law,      rule, regulation,  notification, custom,  etc., and the      scheme framed  under s.68C  may properly be regarded as      ’law’ within  the meaning  of Art.  19(6) made  by  the      State excluding  private operators from notified routes      or notified  areas, and  immune from the attack that it      infringes the  fundamental  right  guaranteed  by  Art.      19(1) (g)".      Earlier in  Rai Sahib  Ram Jawaya  Kapur &  Ors. v. The State  of  Punjab,  before  the  Seventh  Amendment  of  the Constitution  by   which  the   present  Article   298   was substituted for  the old Article, the question arose whether it was  beyond the competence of the executive Government to carry on  a business  without specific legislature sanction. The answer  was that  it was not. What was said by the Court in that  case was  incorporated in  the Seventh Amendment of the Constitution. In that case the facts were that the State of Punjab,  by a  series of executive orders had established for itself  a monopoly  in  the  business  of  printing  and selling textbooks  for use  in schools.  The  argument  that legislative sanction  was  necessary  to  enable  the  State Government  to   carry  on  the  business  of  printing  and publishing text  books was  repelled and it was held that no fundamental right  of the  petitioners who  had invoked  the jurisdiction of the Court had been infringed.      Another of  the submissions  of the learned counsel was that G.O.Ms No. 1312 dated December 2, 1977 involved a major change of  policy, which  was  a  legislative  function  and therefore beyond the competence 756 of a  subordinate legislating body. We do not agree with the submission. Whenever  there is  a switch  over from  private sector’ to  ’public sector’  it does  not necessarily follow that  a  change  of  policy  requiring  express  legislative sanction is  involved. It  depends on  the subject  and  the statute. For  example, if  a decision  is taken  to impose a general and  complete ban  on private  mining of  all  minor minerals, such  a ban  may involve  the reversal  of a major policy and  so it may require Legislative sanction. But if a decision is  taken to  ban private  mining of a single minor mineral for  the purpose of conserving it, such a ban, if it is otherwise within the bounds of the authority given to the Government by  the Statute,  cannot be  said to  involve any change of policy. The policy of the Act remains the same and it is,  as we  said, the  conservation and  the prudent  and discriminating exploitation  of minerals,  with  a  view  to secure maximum  benefit to  the community.  Exploitation  of minerals  by   the  private  and/or  the  public  sector  is contemplated. If  in the pursuit of the avowed policy of the Act, it is thought exploitation by the public sector is best and wisest  in the  case of  a particular  mineral  and,  in consequence, the authority competent to make the subordinate legislation makes  a rule  banning private  exploitation  of such mineral,  which was hitherto permitted we are unable to

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see any  change of policy merely because what was previously permitted is no longer permitted.      One of the arguments pressed before us was that Sec. 15 of the  Mines and  Minerals (Regulation and Development) Act authorised the  making of  rules for regulating the grant of mining leases  and not  for prohibiting  them  as  Rule  8-C sought to  do, and, therefore, Rule 8-C was ultra vires Act, S. 15.  Well known cases on the subject right from Municipal Corporation of  the City  of Toronto  v. Virgo  and Attorney General for  the Dominion  General for  the Dominion and the Distillers and  Brewers Association of Ontario upto State of Uttar Pradesh & Ors. v. Hindustan Aluminium Corporation Ltd. & Ors.,  were brought to our attention. We do not think that ’Regulation’ has the rigidity of meaning as never to take in Prohibition’. Much  depends on  the  context  in  which  the expression is  used in  the Statute and the object sought to be achieved  by the contemplated regulation. It was observed by Mathew  J. in  G. K.  Krishnan etc.  etc. v. The State of Tamil Nadu  & Anr.  etc., "the word ’regulation has no fixed connotation. Its  meaning differs according to the nature of the thing  to which  it  is  applied".  In  modern  statutes concerned as  they are  with economic and social activities, ’regulation’ 757 must, of  necessity, receive  so wide an interpretation that in certain  situations, it  must exclude  competition to the public sector  from the private sector. More so in a welfare State.  It   was  pointed   out  by  the  Privy  Council  in Commonwealth of  Australia v. Bank of New South Wales(1)-and we agree  with what  was  stated  therein-that  the  problem whether an  enactment was  regulatory or  something more  or whether a  restriction was  direct or  only remote  or  only incidental involved,  not so much legal as political, social or economic consideration and that it could not be laid down in no circumstances could the exclusion of competition so as to create  a monopoly,  either in  a State  or  Commonwealth agency, to  be justified.  Each case,  it was  said, must be judged on  its own  facts and in its own setting of time and circumstances and  it  might  be  that  in  regard  to  some economic activities and at some stage of social development, prohibition with  a view  to State  monopoly  was  the  only practical and  reasonable manner  of regulation. The statute with  which   we  are  concerned,  the  Mines  and  Minerals (Development and  Regulation) Act,  is  aimed,  as  we  have already said  more than  once, at  the conservation  and the prudent and discriminating exploitation of minerals. Surely, in the  case of  a scarce mineral, to permit exploitation by the State  or its  agency and  to prohibit  exploitation  by private  agencies   is  the   most   effective   method   of conservation  and  prudent  exploitation.  If  you  want  to conserve for  the future,  you must prohibit in the present. We have  no doubt  that the prohibiting of leases in certain cases is  part of  the regulation contemplated by Sec. 15 of the Act.      The submission of the learned counsel that the impugned rule contravened Articles 301 and 303 of the Constitution is equally without  force. Now,  ’the restrictions freedom from which is  guaranteed by  Art. 301 would be such restrictions as directly and immediately restrict or impede the free flow or movement  of trade"  (Atiabari Tea  Co. Ltd.  v. State of Asssam &  Ors.).(2) And,  "regulatory measures  or  measures imposing  compensatory   taxes  for   the  use   of  trading facilities do  not come  within the  purview of restrictions contemplated by  Art. 301".  "They  are  excluded  from  the purview of  the provisions  of Part XIII of the Constitution

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for the  simple reason  that  they  do  not  hamper,  trade, commerce or  inter-course but  rather facilitate  them"  The Automobile Transport  Rajasthan Ltd. v. State of Rajasthan & Ors.(3). The Mines and Minerals (Regulation and Development) Act is,  without  doubt  a  regulatory  measure,  Parliament having enacted it for the express purpose of "the regulation of mines  and the  development of minerals". The Act and the rules 758 properly made thereunder are, therefore, outside the purview of  Art.   301.  Even   otherwise  Art.  302  which  enables Parliament, by  law, to  impose  such  restrictions  on  the freedom of  trade, commerce or intercourse between one State and another  or within any part of the territory of India as may be  required in  the public  interest also  furnishes an answer to  the claim  based on  the alleged contravention of Art.  301.   The  Mines   and   Minerals   (Regulation   and Development) Act is a low enacted by Parliament and declared by Parliament  to be  expedient in the public interest. Rule 8C has  been made by the State Government by notification in the official  Gazette, pursuant  to the power conferred upon it by  Sec. 15  of the  Act. A  statutory rule,  while  ever subordinate to  the parent  statute, is,  otherwise,  to  be treated as part of the statute and as effective. "Rules made under the  Statute must  be  treated  for  all  purposes  of construction or  obligation exactly  as if  they were in the Act and  are to be of the same effect as if contained in the Act and  are to  be judicially  noticed for  all purposes of construction or  obligation.. (State  of U.P. & Ors. v. Babu Ram  Upadhya)(1);   (See  also  Maxwell;  Interpretation  of Statutes, 11th  Edn. pp.  49-50). So,  Statutory rules  made pursuant to  the power  entrusted by Parliament are law made by  Parliament  within  the  meaning  of  Art.  302  of  the Constitution. To  hold otherwise  would  be  to  ignore  the complex  demands   made  upon   modern   legislation   which necessitate the  plenary legislating  body to  discharge its legislative function  by laying  down broad  guidelines  and standards, to  lead and  guide as it were, leaving it to the subordinate legislating  body to  fill  up  the  details  by making necessary rules and to amended the rules from time to time to  meet unforeseen  and unpredictable  situations,  an within the  framework of  the power  entrusted to  it by the plenary  legislating   body.   State   of   Mysore   v.   H. Sanjeeviah(2) was  cited to  us to  show that  rules did not become part of the statute. This was case where by reference to Sec.  77 of  the Mysore  Forest Act  which  declared  the effect of  the rules,  it was  held that the rules when made did not  become part of the Act. That was apparently because of the  specific provisions of Sec. 77 which while declaring that the  rules would have the force of law stopped short of declaring that  they would  become part  of the  Act. In the absence of  any express provision, as now, the ordinary rule as enunciated  in Maxwell  and State of Uttar Pradesh & Ors. v. Babu Ram Upadhya (supra) would perforce apply.      The next  question for consideration is whether Rule 8C is attracted  when applications  for renewal  of leases  are dealt with.  The argument  was that  Rule 9 itself laid down the criteria  for grant  of renewal  of leases and therefore rule 8C should be confined, in its application, to 759 grant of  leases in the first instance. We are unable to see the force  of the  submission. Rule  9 makes it clear that a renewal is  not to  be obtained  automatically, for the mere asking. The  applicant for the renewal has, particularly, to satisfy the  Government that the renewal is in the interests

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of  mineral   development  and  that  the  lease  amount  is reasonable  in   the  circumstances   of  the   case.  These conditions have  to be  fulfilled in  addition  to  whatever criteria is  applicable at the time of the grant of lease in the first instance, suitably adapted, of course, to grant of renewal. Not  to apply  the criteria applicable in the first instance may  lead to  absurd results.  If as  a  result  of experience gained  after watching the performance of private entrepreneurs in  the mining of minor minerals it is decided to stop  grant of  leases  in  the  private  sector  in  the interest of conservation of the particular mineral resource, attainment of  the  object  sought  will  be  frustrated  if renewal is  to be  granted to  private entrepreneurs without regard  to  the  changed  outlook.  In  fact,  some  of  the applicants for  renewal of  leases  may  themselves  be  the persons who  are responsible  for the  changed  outlook.  To renew leases in favour of such persons would make the making of  Rule  8C  a  mere  exercise  in  futility.  It  must  be remembered that  an application  for the  renewal of a lease is, in essence an application for the grant of a lease for a fresh period. We are, therefore, of the view that Rule 8C is attracted in  considering applications for renewal of leases also.      Another submission of the learned counsel in connection with the  consideration of applications for renewal was that applications made  sixty days  or more  before the  date  of G.O.Ms. No. 1312 (2-12-1977) should be dealt with as if Rule 8C had  not come into force. It was also contended that even applications for  grant of  leases made long before the date of G.O.Ms.  No. 1312  should be dealt with as if Rule 8C had not come into force. The submission was that it was not open to the  Government to  keep applications  for the  grant  of leases and  applications for renewal pending for a long time and  then   to  reject   them  on   the  basis  of  Rule  8C notwithstanding the fact that the applications had been made long prior  to the  date on  which Rule  8C came into force. While it is true that such applications should be dealt with within a  reasonable time, it cannot on that account be said that the  right to  have an  application disposed  of  in  a reasonable tune  clothes an  applicant for  a lease  with  a right to  have the  application disposed  of on the basis of the rules  in force  at  the  time  of  the  making  of  the application. None has a vested right to the grant or renewal of a  lease and  none can  claim a  vested right  to have an application for  the grant  or renewal of a lease dealt with in a  particular way,  by applying particular provisions. In the absence 760 of any  vested rights  in anyone, an application for a lease has necessarily  to be  dealt with according to the rules in force on the date of the disposal of the application despite the fact  that there is a long delay since the making of the application.  We   are,  therefore,  unable  to  accept  the submission of  the learned counsel that applications for the grant of  renewal of  leases made  long prior to the date of G.O.Ms. No.  1312 should be dealt with as if Rule 8C did not exist.      In the view that we have taken on the several questions argued before us all the appeals arising out of applications for the  grant or  renewal of  leases  for  quarrying  black granite  in  Government  lands  are  allowed  and  the  Writ Petitions filed  in the  High Court  are dismissed.  Special leave is  granted in  cases in  which  leave  had  not  been previously granted.  The appeals are allowed and disposed of in the same manner.

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    There  are,   however,  a  few  appeals  in  which  the applications were  not for the grant or renewal of leases to quarry black  granite  in  Government  lands  but  were  for permission to  quarry black  granite in Patta lands in which the right  to minerals  belonged to  the applicants- private owners themselves.  Apart from  the fact that Rule 8C occurs in a  group of  Rules in  Section II,  which bears  the head "Government lands  in  which  the  minerals  belong  to  the Government" while  the rules  relating to lands in which the right to  minerals belongs  to private owners are dealt with in Section  III. The  language of  Rule 8C  is clear that it cannot have  any application  to lands in which the right to minerals belongs  to the  applicants themselves.  Rule 8C is only concerned  with leases  for quarrying black granite and it cannot, therefore, have any application to cases where no lease is sought from the Government. In the case of lands in which the  right to  minerals belongs  to private owners and those owners  seek permission  to quarry  black granite  the applications will  have to  be dealt with under the relevant rules in Sec. III of the Tamil Nadu Minor Mineral Concession Rules. Rule  8C, it  may be noted, does not impose a general ban on quarrying black granite but only imposes a bar on the grant of  leases of  quarrying black  granite.  Appeals  and Special Leave  Petitions which arise out of applications for the grant of permission to quarry black granite in the Patta lands  belonging   to  the   applicants   themselves,   have therefore, to  be dismissed.  The result  is, Special  Leave Petition Nos.  9257, 9259, 9260, 9271, 9273 to 9282 and 9284 of 1980 are dismissed and Special Leave Petition Nos 9234 to 9248,     9250      to     9256,      9258,     9261      to 9270,9272,9283,9285,9286,9288,9289  and  9290  of  1980  are granted and  Appeals allowed. Civil Appeal Nos. 2602 to 2604 of 1980 are allowed. There will be no order as to costs. N.K.A.                                  Ordered accordingly. 761