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PETITIONER: STATE OF TAMIL NADU

       Vs.

RESPONDENT: M.P.P. KAVERY CHETTY

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 AIR  858            1995 SCC  (2) 402  JT 1995 (1)   537        1995 SCALE  (1)297

ACT:

HEADNOTE:

JUDGMENT: BHARUCEIA, J.: 1.   Leave granted. 2.   In these appeals the State of Tamil Nadu     impugns the judgment and order dated  23rd   December,  1992  of   a Division Bench of the High Court at Madras whereby Rules  8D and  19B of the Tamil Nadu Minor Mineral  Concession  Rules, 1959,  ("the said Rules") made Under the provisions  of  the Mines & Minerals (Regulation & Development) Act, 1957, ("the said  Act")  were  struck  down  as  unconstitutional.   The Government Orders by which these provisions were  introduced into the said Rules were also quashed in part.  A  direction was issued to the appellant State to permit the  respondents herein, being the petitioners upon whose writ petitions  the judgments  and  orders were passed, to  carry  on  quarrying operations  and  transport  the  material  quarried  without reference  the aforementioned Rules, subject to the  payment of royalty and seigniorage.          Rule 194 10.  Prior to 10th June, 1992, Rule 19-A read thus: 540               "  19-A Permission for quarrying black,  Pink.               red,  grey, green and other coloured  granites               and  any  other  rock  required  for  use  for               decorative and ornamental purpose in  ryotwari               lands:-               (1)   Notwithstanding anything to the contrary               contained  in Section III to these  rules  the               authority  competent to grant  permission  for               quarrying  black, pink, red, grey,  green  and               other   coloured  granites  and   other   rock               required for use for decorative and ornamental               purposes in ryotwari lands shall be the  State               Government.   The application shall be in  the               form specified in Appendix III to these rules:

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             Provided that the quarrying permission for the               minerals  above  in ryotwari  lands  shall  be               granted only to an applicant who is having  an               existing  industry in Tamil Nadu  or  distinct               industrial programme to use the mineral in his               proposed industry in Tamil Nadu:               Provided  further that the  permission  holder               for  quarrying the above mineral shall  remove               or         transport the mineral shall  remove               or  transport the mineral from  the  specified               land   after   payment  of   area   assessment               seigniorage,  rates  prescribed from  time  in               Appendix II to these rules and after obtaining               transport  permit fawn the District  Collector               or  the  Officer  authorised  by  him  in  the               behalf;               Provided also that the transport permit  shall               be  issued only to the industry for which  the               mineral  is  required  to  be  supplied.   The               lessee shall keep correct accounts showing the               quantity and other particulars of all minerals               obtained  at the factory site  and  despatched               from the factory.  The lessee shall also allow               any officer authorised by the State Government               in  this  behalf to inspect the  industry  and               verify  its records and accounts  and  furnish               such   information  and  returns  as  may   be               required by him." 4.On 10th June, 1992, the State Government issued Government Order NO. 214.  It stated that under the said Rules as  they stood,  orders  had been issued that leases  be  granted  to industries  which had already been established  for  cutting and  polishing  granite  and to those who  gave  a  definite industrial  programme  to  set  up  such  units  within  the appellant  State  a  period of two years from  the  date  of receipt  of  the  letter of  commitment.   The  Director  of Geology  and  Mining  at Madras had reported  to  the  State Government  that  illicit  mining  and  transportation   was rampant  in a number of districts, that the amount  obtained as  tender bids for granite leases was very meagre and  that there was an alarming tendency for monopolies to be  created in the granite trade.  He had also reported that there was a lot of wastage in the granite cutting and polishing process. He had suggested that the State Government should take steps for conservation and proper utilisation of the  nonrenewable granite  potential available in the appellant State  with  a view  to  safeguard the interest at large.   Granite  was  a valuable mineral which earned valuable foreign exchange.  It was,  therefore, necessary that it should be  conserved  and properly used without waste.  Considering all these aspects, the  State  Government had been examining  the  question  of streamlining  the  procedure  for  utilising  the   valuable granite  deposits available in the appellant State,  and  it had decided that:               "(1)   henceforth  no  lease   for   quarrying               granites  on poramboke lands shall be  granted               to  private  persons  except  those  who   are               holding  letters of commitment.  Fresh  leases               will  be  given  only to  a  State  Government               Company  or a Corporation owned or  controlled               by the State Government;               541               (2)   ha   respect   of   quarrying   Paradiso               ,Kashmir,  White  Kunnam,   Paithur,  Bavanur,               Black, Blue Granite, Raw Silk and Red Granite,

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             the  lease in ryotwari lands will  be  granted               preferably to a State Government company or  a               corporation  owned or controlled by the  State               Government;               (3)   the  existing condition that the  lessee               who  has  been granted  permission  to  quarry               granite  in  ryotwari  lands  should  have  an               existing  industry in Tamil Nadu  or  distinct               Industrial programme to use the mineral in his               proposed  indusutry  in Tamil Nadu,  shall  be               dispensed with;               (4)   all  trade relating to granite shall  be               canalised  through  the  Tamil  Nadu  Minerals               Ltd." A  notification amending the said Rules was appended to  the said  Government  Order and, so fir as is material  for  our purposes,  it amended Rule 19A and introduced Rules  8B  and 19-A, as amended, read thus:               "  19-A Quarrying lease for  quarrying  black,               pink,   red,  grey,  green,  white  or   other               coloured  or  multi-coloured granites  or  any               other rock required for use for decorative and               ornamental   purposes   in   ryotwari   lands,               Notwithstanding   anything  to  the   contrary               contained  in section III to these  rules  the               authority  competent to grant quarrying  lease               for  quarrying black, pink. red, grey,  green,               white  or  other  coloured  or  multi-coloured               granites  or any other rock required  for  use               for  decorative  and  ornamental  purposes  in               ryotwari lands shall be the State  Government.               The application shall be in the form specified               in Appendix VII to these rules:               The said application shall be accompanied by a               mining  dues clearance certificate  issued  by               the  District Collector concerned in the  Form               prescribed  in Appendix VIII.  Receipt of  the               application  made  under this  rule  shall  be               acknowledged by the District Collector or  the               Officer  authorised by the District  Collector               in  this  behalf  in the  form  prescribed  in               Appendix IX to these rules:               Provided  that on and from the 10th June  1992               the  State  Government in  granting  quarrying               lease   for  quarrying  the  following   minor               minerals   in  ryotwari  lands,   shall   give               preference to a State Government Company or  a               Corporation or Company owned or controlled  by               the State Government, namely:-               (a) Paradiso -          (Gnessic Rock with                                         violet colour wavy                                          pattern)               (b)   Kashmir White -   (Leptynite White gran-                                       ite   with   gar   net               spees)               (c)   Kunnam Paithur,                     Bavanur Black        Black granite fine                                            and medium grade                                       with               brown back                                       ground                (d) Blue Granite-          Chamockite with                                             blue background.  (e) Raw Silk-             Leptynite with                     background.          yellow

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             (f)Red Granite-            Porphyritic granite                                          and granites with                                          red background.               Provided further that the quarrying holder for               quarrying  the above mineral shall  remove  or               transport the mineral from the specified  land               after payment of area assessment,  seigniorage               fee  or dead rent whichever is higher  at  the               rate; prescribed from time to time in Appendix               11   to  these  rules  and   after   obtaining               transport  permit from the District  Collector               or  the  Officer  authorised by  him  in  this               behalf.               Provided also that the lessee shall keep               542               correct  accounts showing the quantity of  the                             minerals  quarried and shall allow any  office               authorised  by  the State Government  in  this               behalf  to inspect the quarry and  verify  its               records   and   accounts  and   furnish   such               information and returns as may be required  by               him. 5.   It  was the first proviso in Rule 19A as amended  which was  under challenge and was struck down by the High  Court. By reason thereof, the State Government was obliged to  give preference to State Government companies and Corporation  in granting  quarrying leases for the varieties of granite  set out therein. 6.   The High Court found that the firs proviso in Rule  19A did not contain an guideline in the matter of giving  prefer ence  to  a State Governmment company of  Corporation.   The grant of preference was left to the unfettered discretion of the  State  Government.  It was, therefore ultra  vires  the Constitution 7.   Learned  counsel  for  the  appellant  State  drew  our attention  to the judgment of this Court in State  of  Tamil Nadu v. Hind Stone etc.,(1981) 2 S.C.R. 742.  The High Court of Madras had struck do Rule 8C of the said Rules as it then read.   Rule 8C stated that on and from 2nd December,  1977, no  lease  for quarrying black granite would be  granted  to private  persons and that the State Government itself  could engage  in  quarrying  black granite  or  grant  leases  for quarrying  black granite in favour of any  State  Government Corporation.   This Court referred to the  declaration  made under  Section 2 of the said act, which states that  "it  is expedient in the public interest that the Union should  take under  its  control  the regulation of  the  mines  and  the development of minerals" to the extent provided in the  said Act.   The public interest, this court said,  which  induced parliament to make this declaration had to be the  paramount consideration  in all matters concerning the  regulation  of mines and the development of minerals.  Parliament’s  policy was clearly discernible from the provisions of the said Act. It  was the conservation and the prudent and  discriminating exploitation  of  minerals  with a view  to  secure  maximum benefit  to the community.  There were clear sign  posts  to lead and guide the subordinate legislating authority in  the matter of making rules.  It could not be said, having regard to  the  provisions of the said Act, that  the  rule  making authority  had  exceeded  its power in  banning  leases  for quarrying black granite in favour of private parties and  in stipulating that the State Government itself could engage in quarrying black granite or grant leases for quarrying  black granite  in favour of any State Government Corporation.   To view such a rule as a rule to benefit the State  Government,

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the  subordinate legislating body, was to take too narrow  a view  of  its functions.  If in the pursuit  of  the  avowed policy  of the Act it was thought that exploitation  by  the public  sector  was  best  and  wisest  in  the  case  of  a particular  mineral,  the authority competent  to  make  the subordinate  legislation could make a rule  banning  private exploitation  of  such  mineral,  which  had  hitherto  been permitted.  In the case of scare mineral the most  effective method  of  conservation  and prudent  exploitation  was  to permit  exploitation  by the State or its  agencies  and  to prohibit exploitation by private agencies.  "If’, the  Court said  "you want to conserve in 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 section 15 of the Act." 543 8.   That valid differentia exists between State  Government companies and Corporations on the one hand and private  min- ers on the other and that it bears close nexus to the object of the said Act is not in serious dispute.  With the  object of  conserving a rare and precious mineral and ensuring  its exploitation  in the best possible manner,it is open to  the State  Government, the rule making authority in  respect  of minor  minerals  under section 15 of the said Act,  to  keep mining  operations in granite of the kind specified  in  the amended Rule 19-A, so far as is possible, in its own  hands, and  to  do  this  by giving  preference  in  the  grant  of quarrying  leases for such granite to State Government  com- panies or Corporations. 9.   The  principal challenge to the first proviso  in  Rule 19-A  was  that  it was arbitrary in that  it  conferred  no guidelines  in  the  matter of giving  preference  to  State Government  companies or Corporations.  In  this  connection attention  was invited by learned counsel for the  appellant State to Appendix X to the said Rules.  Appendix X sets  out the  form  of the application for a quarrying permit  to  be mad-.  in  accordance  with the provisions of  Rule  3.  The applicant is required to state, inter alia whether he or  it is  an  individual or a firm or a company.   The  applicants nationality or place of registration or incorporation is  to be  set  out,  as also his or its profession  or  nature  of business.  The form requires the applicant to state  whether it  has filed on affidavit, as required by Rule 3,  that  no mining  dues  arc  outstanding  in its  name.   It  is  also required  to  state  whether it has  previously  worked  the mineral  in  the  area in which it  seeks  the  permit,  the quantity that it seeks to remove and the period during which it  will  be quarried and transported.  It  is  required  to state the purpose for which the mineral is to be used.  Such guidelines as are required, it was submitted, are  furnished by the form read with rule 3. Quite clearly, preference to a State  Government company or Corporation must be given,  all things  being equal having regard to the various factors  in respect  of  which information is sought  by  the  aforesaid form.  These are the guideline in this behalf 10.It  was submitted by learned counsel for the  respondents that the Government company or Corporation was free to apply for one piece of land but not another and that the said rule should  have  provided guidelines for the  State  Government company  or Corporation in this behalf.  It is difficult  to see  how  a Government company or Corporation can  be  bound down   by  guidelines  provided  by  the  said  Rules.    As commercial undertakings, they would be guided by  commercial considerations,  and it must be assumed that they would  act bona fide.

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11.It was submitted that Rule 19A as amended had no nexus to the  objects  stated  in G.O. No. 214  quoted  above.   This submission is not well founded.  The State Government  would be  better  able  to  control  the  mining  of  the  granite mentioned  in the amended Rule if it was in the hands  of  a State  Government company or Corporation It was so  held  in the Hind Stone Case cited above. 12.It was submitted that under Rule 19-A as it stood  before 10th  June  1992,  applicants who qualified  to  be  granted quarrying  leases were those who had an  existing  polishing unit  or distinct industrial programme to set up one.   Many pri- 544 vate persons had set up polishing units on the basis of this policy  and  had  applied  for  quarrying  leases.   In  the meantime,  Rule  19A  was amended,  and  these  persons  had suffered great hardship.  The amendment of Rule 19-A to give preference to State Government companies or Corporations was detrimental to such persons.  It was arbitrary and, applying also  the  principle  of promissory estoppel,  ought  to  be struck down.  Rule 19-A as it read prior to its amendment on 10th  June,  1992,  has already been quoted.   There  is  no promise  or representation therein; the principle  of  prom- issory estoppel is, therefore, not attracted: nor can it  be said   that  there  is  any  arbitrariness  in   the   State Government’s  decision to alter its policy in regard to  the mining of granite having regard to its perception, from time to time, of the need to conserve it. 13.  Learned  counsel  for the  respondents  submitted  that granite was a major as also a minor mineral, depending  upon its  end use; if it was used for industrial  or  engineering purposes  it  was  not a building stone  and  could  not  be treated as a minor mineral.  Under the provisions of Section 15  of the said Act the State Government has power  to  make rules  for regulating the grant of quarry and mining  leases only  "in  respect of minor minerals." The said  Rules  are, therefore,   only  in  relation  to  minor  minerals.    The applicants  that  we are here concerned with are  those  who desire to quarry minor minerals.  The submission, therefore, has no relevance to the validity of Rule 19A. 14.  Learned  counsel  for the  respondents  submitted  that under the first proviso of Rule 19A the consent of the owner of  the land was not made a condition and it was bad in  law on that account The submission does not take note of section 24A  of  the said Act.  Thereunder the holder  of  a  mining lease  under  the  said  Act or-  rules  made  under  it  is empowered  to  enter the land on which the  lease  has  been granted and carry out mining operations-.  He is obliged  to compensate  the land owner for any loss or damage  that  his operations  may cause.  Consent of the occupier is  required only  when  the holder of the lease desires entry  into  any building or enclosed court or garden. 15.  The provisions of section 17A(2) of the said  Act  were adverted  to and it was submitted that they were being  cir- cumvented by the first proviso of Rule 19A.  Section  17A(2) reads thus:               "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               purposes  to do so, it shall, by  notification               in  the official Gazette, specify  the  bound-

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             arises  of such area and the mineral  or  min-               erals  in  respect  of  which  areas  will  be               reserved." Section 17A(2) applies when an area is sought to be reserved by  the State Government for undertaking  mining  operations exclusively  through  a Government company  or  corporation. When  such  area  is notified the  mineral  or  minerals  in respect  of which it is notified must also be stated.   Such reservation  cannot  be  made without the  approval  of  the Central Government.  The first proviso of Rule 19A does  not wholly exclude private parties from 545 obtaining  quarrying  leases  for  the  minerals   specified therein.   It states that for such leases preferences  shall be  given  to State Government companies  and  corporations. Where,  therefore, there are, for the same mining lease  for the specified minerals, rival applications, all things being equal  having regard to the requirements of Rule 3  and  the form   at  Appendix  X,  a  State  GoveRNment   company   or corporation  is to be preferred.  The first proviso to  Rule 19A cannot, therefore, be said to circumvent the  provisions of section 17(2). 16.  The  provisions of the amended Rule 19-A have not  been attacked on grounds other than those set out above.  We find no  substance  in the attack.  We are of the view  that  the High Court was in error in holding that the first proviso in Rule 19-A was ultra vires the Constitution. Rules 8D and 19B: 17.  Rules  8D and 19B were introduced in to the said  Rules by Government Order No. 214. dated 10th June, 1992.  The two rules  are identical, except that Rule 8D is in  Section  11 which relates to Government lands which the minerals  belong to  the  Government  and Rule 19B is in  Section  III  which relates  to ryotwari land in which the minerals  belong  to. This  being  so, it is enough to quote Rule 19B.   It  reads thus:               " 19-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 the  10th  June,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  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-               (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

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             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." 18.On  the  same day that Rule 8D and 19B  were  introduced, that is, 10th, June, 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 Company, would regulate the sale of quarried black, red, pink, grey, green, white or other 546 coloured or multi-coloured granite or any rock suitable  for use as ornamental and decorative stones. 19.  The High Court quashed Rules 8D and 19B 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 fix a minimum price for granite. 20.  Learned counsel for the appellant State submitted  that Rules 8D and 19B 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 8D and 19B. 21.  The  said Act is enacted to provide for the  regulation of  mines and the development of minerals under the  control of the Union.  Section 2 of the said Act declares that it is expedient in the public interest that the Union should  take under its control the regulation of mines and development of minerals to the extent provided in the said Act.  Section 13 empowers the Central Government to make rules for regulating the  grant  of prospecting licences and  mineral  leases  in respect  of minerals and for purposes  connected  therewith. Sub-section (1) of section 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 for purposes connected therewith.   Sub- section  (1A)  of  section 15 states  that  such  rules  may provide  for the matters set out herein, namely, the  person by whom and the manner in which an application for a  quarry lease, mining lease and the like may be made; the fees to be paid   therefore;  the  time  and  the  form  in  which   an application  is  to  be made; the matters which  are  to  be considered where application in respect of the same land are received on the same day; the terms and conditions on  which leases  may be granted or regulated; the procedure  in  this behalf, the facilities to be afforded to lease-holders;  the fixation  and collection of rent and other charges  and  the time  within which they are payable; the protection  of  the rights of third parties; the protection of flora; the manner in  which  leases  may  be  transferred;  the  construction, maintenance and use of roads, power transmission lines, etc. on the land; the form of registers to be maintained; reports and  statements  to  be  submitted and to  whom  ;  and  the revision of any order passed by any authority under the said Rules.   Clause  (o) of sub-section (IA) reads,  "any  other matter  which is to be or may be prescribed." Section 18  of the said Act states that it shall be the duty of the Central Government  to take all such steps as may be  necessary  for the   conservation   and  systematic  development   of   the environment by preventing or controlling any pollution which

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may be caused by prospecting or mining operations. 22.Rules 8D and 19B empowers the State Government company or corporation  as the State Government may direct  to  control the sale by every permit-holder of quarried granite or other or  rock  suitable for ornamental  or  decorative  purposes. They also empower the State Government or its officers or  a State Government company or corporation, as the case may be, to fix the minimum price for the sale thereof.  The  object, as is shown by the terms of 547 Government  Order  No.  214 dated 10th  June,  1992,  quoted above, is to conserve and protect granite resources. 23.  It  is  difficult to see how granite resource  scan  be protected  by  controlling  the  sale  ofgranite  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  minor mineral  is not covered by the terms of clause (o)  of  sub- section (IA) 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. 25.  In  our  view, therefore, the High  Court  was  clearly right in striking down Rules 8D and 19B as being beyond  the purview  of the rule making power of the  State  Government. These Rules having been struck down, the High Court was also right in striking down Government Order No.214 to the extent that  it prescribed these Rules and Government Order  No.216 made in pursuance of these Rules. 26.  In  the  result, these appeals succeed  in  part.   The judgment and order of the High Court is set aside in so  far as  it  holds that Rule 19A as amended by  Government  Order No.214  dated 10th June, 1992, is bad in law.  The  judgment and  order  of the High Court is affirmed in so  far  as  it holds that Rules 8D and 19B are bad in law.  It is  affirmed also  in  so far as it holds that Government Order  No.  214 dated  10th June, 1992, in so far as it prescribes Rules  8D and  19, and Government Order No.216 dated 10th June,  1992, are bad in law, 27.  There shall be no order as to costs. 548