http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 1 of 45  

PETITIONER: TARA PRASAD SINGH ETC. ETC.

       Vs.

RESPONDENT: UNION OF INDIA & OTHERS

DATE OF JUDGMENT07/05/1980

BENCH: CHANDRACHUD, Y.V. ((CJ) BENCH: CHANDRACHUD, Y.V. ((CJ) BHAGWATI, P.N. KRISHNAIYER, V.R. SARKARIA, RANJIT SINGH UNTWALIA, N.L. KAILASAM, P.S. TULZAPURKAR, V.D.

CITATION:  1980 AIR 1682            1980 SCR  (3)1042  1980 SCC  (4) 179  CITATOR INFO :  RF         1980 SC2031  (2)  O          1983 SC 239  (2)  E          1984 SC1130  (49)  RF         1986 SC2123  (6)  D          1989 SC1629  (23)

ACT:      Coal Mines (Nationalisation) Amendment Act, 67 of 1976- Legislative  competence   of   the   Parliament   to   enact Nationalisation Amendment  Act-Whether the  Amending Act  is violative  of  the  provisions  of  Articles  14,  19(1)(f), 19(1)(g) and  31 of  the Constitution of India-Applicability of the  Act to  leases of composite mines in which there are alternate seams of coal and fire clay.

HEADNOTE:      Article 246(1)  of the  Constitution of  India  confers upon the  Parliament, notwithstanding  anything contained in clauses 2 and 3 of that Article, the exclusive power to make laws with respect to any of the matters enumerated in List I of the  Seventh Schedule, called the Union List, Clause 2 of Article 246  deals with  the power of the Parliament and the State Legislatures  to make  laws with respect to any of the matters enumerated  in the  Concurrent List,  while clause 3 deals with  the power of the State Legislatures to make laws with respect  to any  of the matters enumerated in the State List.      Entry 23 List II, Schedule VII of the Constitution read with Article  246(3) confers  legislative power on the State Legislatures in  respect of "Regulation of mines and mineral development" but that power is "subject to the provisions of List I  with respect to regulation and development under the control of the Union". Entry 54 List I enables Parliament to acquire legislative power in respect of "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

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 2 of 45  

interest". Entry  24 List  II relates to "Industries subject to the  provisions of  entries 7 and 52 of List I". Entry 7, List I,  relates to Industries declared by Parliament by law to be  necessary for  the purpose  of  defence  or  for  the prosecution of  war. Entry 52, List I, enables Parliament to acquire legislative  power in  respect of  "Industries,  the control of  which by  the Union is declared by Parliament by law to be expedient in the public interest".      Pursuant to  these powers  the Parliament  enacted  the Industries (Development  & Regulation)  Act, 65 of 1951, the Mines Act 35 of 1952, the Mines and Minerals (Regulation and Development)  Act   67  of   1957,  the  Coking  Coal  Mines (Emergency Provisions)  Act, 64  of 1971,  the  Coking  Coal Mines (Nationalisation)  Act, 36  of 1972,  the Coking  Coal Mines (Nationalisation)  Amendment Act, 56 of 1972, the Coal Mines (Taking  over of  Management) Act,  15 of 1973 and the Coal Mines  (Nationalisation) Act 26 of 1973. Thereafter the Coal Mines  (Nationalisation) Amendment  Act 67  of 1976 was passed, the objects and reasons being: 1043           "After the nationalisation of coal mines, a number           of   persons    holding   coal    mining    leases           unauthorisedly started  mining of coal in the most           reckless and unscientific manner without regard to           considerations of conservation, safety and welfare           of  workers.  Not  only  were  they  resorting  to           slaughter  mining   by  superficial   working   of           outcrops  and   thereby  destroying   a   valuable           national asset  and creating  problems  of  water-           logging fires,  etc. for the future development of           the deeper  deposits, their  unsafe  working  also           caused serious  and  fatal  accidents.  They  were           making larger  profits by  paying very  low wages,           and  by  not  providing  any  safety  and  welfare           measures.   Thefts    of   coal    from   adjacent           nationalised mines  were also  reported after  the           commencement  of   these  unauthorised  operations           which had shown an increasing trend of late. Areas           where illegal  and  unauthorised  operations  were           carried  on,   were  without   any  assessment  of           reserves in regard to quality and quantity of coal           which  could  be  made  available  after  detailed           exploration  work   was  undertaken   and  results           analysed.  No  scientific  exploitation  of  these           deposits could  be undertaken  in the nationalised           sector without  these details.  It was, therefore,           considered that it would not be appropriate either           to nationalise  these unauthorisedly  worked mines           after  taking  them  over  under  the  Coal  Mines           (Taking over  of Management)  Act, 1973  or to get           the concerned mining leases prematurely terminated           and regranted  to Government  Companies under  the           Mining and  Minerals (Regulation  and Development)           Act, 1957.  In view  of the policy followed by the           Central Government that the Coal Industry is to be           in the  nationalised sector,  it was  decided that           the Coal Mines Nationalisation Act, 1973 should be           enacted  to   provide  for   termination  of   all           privately held  coal leases  except those  held by           privately owned steel companies, so that it may be           possible for  the Central  Government,  Government           Company or Corporation to take mining leases where           necessary, after  necessary exploration  has  been           made as  to the  extent of  the deposits  of  coal           etc."

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 3 of 45  

    The petitioners  who were  the lessees of coal mines by the State  Government, being  aggrieved by the provisions of the Amendment  Act 67  of 1976, challenged the competence of Parliament to  enact the Amendment Act and also the validity of the Act and contended:      (a) Laws  made in  the exercise  of power  conferred by Entry 54  must stand the test of public interest because the very reason  for the  Parliament acquiring  power under that entry is  that it  is in public interest that the regulation of mines  and minerals  should be  under the  control of the Union. In  other words, Entry 54 confers a legislative power which is  purposive, that  is to  say, any  law made  in the exercise of  the power  under Entry  54 must  be designed to secure the  regulation and  development  of  coal  mines  in public interest  or else  it must  fail. The Nationalisation Amendment Act  is not  such a  law which Parliament can pass under Entry  54 because,  that Act  not only  terminates all leases but it destroys the contracts of service of thousands of workmen,  and indeed  it destroys all other contracts and all securities  for moneys  lent without  even  so  much  as making a  provision for priorities for the payment of debts. Since  the  Nationalisation  Amendment  Act  terminates  all leases, it  is a  complete negation of the integrated scheme of taking  over the  management of mines, acquisition of the rights of lease-holders and the running of the mines.      (b) The  word ’Regulation’ in Entry 54 does not include ’Prohibition’. ’Regulation’ should not also be confused with the expression ’Restrictions’ occur- 1044 ring in  Article 19(2)  to (6)  of the  Constitution. In the very nature  of things,  there cannot be a power to prohibit the regulation  and  development  of  mines  and  minerals’. Section 3(4)  inserted by  the Nationalisation Amendment Act imposes no obligation on the Central Government or any other authority to  obtain a  mining lease and work the mines, the leases in  respect of  which stand terminated under the Act. The words "it shall be lawful" for the Central Government to obtain a lease are words of discretionary power which create no obligation.  They only  enable the  Central Government to obtain a  lease, making  something legal  and  possible  for which there  would otherwise be no right or authority to do. Section 3(4) does not confer a power coupled with a duty; it merely confers a faculty or power. No Court can by a Writ of Mandamus or  otherwise  compel  the  Central  Government  to obtain a lease of a coal mine and to run it under any of the provisions of the Nationalisation Amendment Act.      (c) Where  the Legislative  power is  distributed among different legislative bodies, the Legislature may transgress its legislative  power either  directly  or  manifestly,  or covertly or indirectly. In the instant case, the exercise of power by  the Parliament  is colourable  because although in passing the  Nationalisation Amendment  Act it  purported to act within the limits of its legislative power, in substance and in reality it transgressed that power, the transgression being veiled  by what  appears on proper examination to be a mere pretence or disguise.      (d) In  order to  tear off  the veil or disguise and in order to  get at  the substance  of the law behind the form, the Court  must examine  the effect  of the  legislation and take into  consideration its  object,  purpose  and  design. Where the  legislative entry  is purposive, like Entry 54 of the  Union  List,  it  is  the  object  or  purpose  of  the legislation which  requires consideration.  The purpose  for which the  Parliament is  permitted to  acquire  legislative power of  Regulation and  Development of  mines must dictate

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 4 of 45  

the nature of law made in the exercise of that power because public interest  demands that power. Under the provisions of the Nationalisation  Amendment Act,  not only  is  there  no obligation on  the Central  Government to  run a  mine,  but there is  no obligation  imposed upon  it even  to carry out prospecting or  investigation in  order to  decide whether a particular mine should be worked at all. Section 3(4) merely authorises  the   Central  Government   to  apply   for   "a prospecting licence  or a  mining lease  in respect  of  the whole or  part of the land covered by the mining lease which stands determined".  A close  examination of  the  Act  thus discloses  that   far  from  providing  for  regulation  and development of  coal mines,  it totally prohibits all mining activity even  if the  State Government wants to run a mine. It does not impose prohibition as a step towards running the mines since there is neither any obligation to carry out the prospecting or investigation nor to run the mines.      (e) The  Nationalisation Amendment  Act  runs  directly counter  to   the   whole   policy   of   the   Coal   Mines (Nationalisation) Act of 1973, to acquire and run the mines. The Parent Act becomes a dead letter in regard to several of its provisions  as a  result of  the Amendment  Act. It only adopts a  colourable device to amend the Nationalisation Act while completely  negativing it  in fact.  The Act therefore lacks legislative competence and is, in the sense indicated, a colourable piece of legislation. 1045      (f) Article 31(A)(1)(e) only lifts a restriction on the legislative competence in so far as violation of fundamental rights is  concerned. The  most benign  motive cannot make a law valid if the legislative competence is lacking.      (g) Under  Article 31(1) of the Constitution, no person can be  deprived of  his property  without the  authority of law. Article  31A(1) which  exempts the  laws  mentioned  in clauses (a) to (e) from invalidity under Articles 14, 19 and 31 does  not dispense with the necessity of the authority of law for  depriving a  person of  his property,  because  the opening  words   of  Article  31A(1)  are  ".......  no  law providing for  ......." matters  mentioned in clauses (a) to (e) shall  be deemed to be void as offending Articles 14, 19 and 31.      (h)  The   Nationalisation  Amendment  Act  confers  no authority to terminate a composite lease for mining coal and fire-clay. The  right to  mine fire-clay  is  given  to  the petitioner by law and it can only be taken away by law.      (i) Though  the Nationalisation  Amendment Act does not in terms  prohibit the  petitioner from mining fireclay, the effect of  the law,  in a  practical business  sense, is  to prohibit the petitioner from mining fireclay and, therefore, the position  is the  same as though the Act had enacted the prohibition in  express terms.  The Court  must look  at the direct impact  of the  law on the right of the party, and if that impact  prohibits him  from exercising  his right,  the fact that  there is  no express  prohibition in  the Act  is immaterial.      (j) The  Nationalisation Amendment  Act  by  making  it punishable, to  mine coal,  in substance  and in a practical business  sense,   prohibits  the   petitioner  from  mining fireclay. For  this prohibition  the Amendment  Act does not provide, and therefore, there is no authority of law for it. Coal and  fireclay are  two distinct  minerals as  shown  by Schedule II  to  the  Mines  and  Minerals  (Regulation  and Development) Act, 67 of 1957 wherein item 1 is coal and item 15 is fireclay. The dictionary meanings of coal and fireclay also show that they are two distinct minerals.

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 5 of 45  

    (k)  The  Nationalisation  Amendment  Act  affects,  in substance, two  kinds of  transfers:  the  transfer  of  the lease-hold interests of the lessees in favour of the lessor, namely the State; and the transfer of the mining business of the lessees in favour of the Central Government. Since these transfers  amount  to  acquisition  within  the  meaning  of Article 31(2),  the Act  is open to challenge under Articles 14, 19(1)(g) and 31 of the Constitution.      (1)  The  Nationalisation  Amendment  Act  is  open  to challenge under  Article 14  because lessees who fall within that Act  are patently  discriminated against  in comparison with lessees of other mines, both coking and non-coking, who were paid  compensation when  their property  was taken over first for  management under  the Management  Acts  and  then under the Nationalisation Acts.      (m) The Nationalisation Amendment Act is open challenge under  Article  19(1)(g)  because  the  prohibition  against lessees from  carrying on their business and the transfer of their business, in substance, to the Central Government or a Company is  an unreasonable  restriction on the right of the lessees to  hold their  lease-hold property  and to carry on their business of mining.      (n) The  Act is  open to  challenge  under  Article  31 because no  provision is  made for the payment of any amount whatsoever to  the lessees  whose mining  business is  taken over under  the Act. No public purpose is involved either in the 1046 termination of  the lessees’  interest or in the acquisition of their  business. Expropriation  without  payment  of  any amount requires a very heavy public purpose.      (o) Since  no provision  whatsoever  is  made  for  the payment of  any amount  to  the  lessees  whose  leases  are terminated, the Nationalisation Amendment Act is not a ’Law’ within the  meaning of  Article 31(2)  and therefore Article 19(1)(f) is attracted.      (p) The Act is not saved from the challenge of Articles 14, 19  and 31  by Article  31A (1) (e) because that Article provides  for   extinguishment  which  does  not  amount  to acquisition by  the State.  If extinguishment  amounting  to acquisition was  intended to  be saved  under Article 31A(1) (e), the  subject matter dealt with by clause (e) would have been included in clause (a) of that Article.      Dismissing all the Writ Petitions except Writ Petitions Nos. 111, 178, 220, 221, 257, 352, 600 &  1130-1134/77 which are allowed in part, the Court, ^      HELD :  (1) The  provisions of  the Amendment Act 67 of 1976 are  not a  mere facade  for terminating  mining leases without any  obligation in the matter of regulation of mines and mineral development. [1071H, 1072A]      Grating that  Entry 54,  List I  is purposive  since it qualifies the power to pass a law relating to "Regulation of Mines  and   Mineral  Development"  by  the  addition  of  a restrictive clause,  "to the extent to which such regulation and development  under the  control of the Union is declared by  Parliament   by  law  to  be  expedient  in  the  public interest", the  provisions of  the Nationalisation Amendment Act show  that they  are designed to serve progressively the purpose of Entry 54. [1972 A-B]      The Coal  Mines (Nationalisation)  Act  was  passed  in order to  provide for  the acquisition  and transfer  of the right, title  and interest  of the  owners in respect of the Coal mines  specified in  the Schedule to that Act. This was done with  a view  to re-organising  and reconstructing such

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 6 of 45  

coal mines  so as  to ensure  the rational, co-ordinated and scientific development  and utilisation  of  coal  resources consistent with the growing requirements of the country. The high purpose  of that  Act was  to ensure that the ownership and control  of such  resources are  vested in the State and thereby so  distributed as best to subserve the common good. [1072 D-F]      The several provisions of the Nationalisation Amendment Act, are,  (1)  by  section  3(3)  (a)  of  the  Coal  Mines (Nationalisation) Act,  1973 which  was  introduced  by  the Nationalisation Amendment  Act, no  person other  than those mentioned in  clauses (i)  to (iii) can carry on coal mining operations after  April 29,  1976, being  the date  on which section 3  of the  Nationalisation Amendment  Act came  into force; (2)  by section  3 (3) (b) all mining leases and sub- leases stood  terminated except  those granted  before April 29, 1976  in favour  of the Central Government, a Government company or  corporation owned,  managed or controlled by the Central Government;  (3)  section  3(3)  (c)  prohibits  the granting of  a lease for winning or mining coal in favour of any person  other than  the Government, a Government company or a  corporation of  the above  description provided that a sub-lease could  be granted  by  these  authorities  to  any person if  the two  conditions mentioned  in the proviso are satisfied; and  (4) when  a mining  lease stands  terminated under section 3(3), "it shall 1047 be lawful"  for the  Central Government  or  the  Government company or  the   corporation owned  or  controlled  by  the Central Government  to obtain  a prospecting  licence  or  a mining lease  in respect  of the  whole or  part of the land covered by the mining lease which stands terminated. Section 4  of   the  Nationalisation  Amendment  Act  introduced  an additional penal provision in the parent Act. The provisions of Ss.  3 and  4 are not a direct negation of the principles of the  parent Act  and they  do not  destroy  the  integral scheme of  taking over the management of mines, of acquiring the rights of lease-holders and continuing to run the mines. On  the  contrary,  the  Nationalisation  Amendment  Act  is manifestly in  furtherance of  the object of nationalisation mentioned in  the preamble to the parent Act and effectuates the purpose  mentioned in sections 3(1) and 3(2) of that Act by the addition of a new sub-section, sub-section (3), which terminates all  coal mining  leases  and  sub-leases  except those referred in sub-section (3) (b). The circumstance that the marginal  note to  section 3 and the title of Chapter II of  the   Nationalisation  Act   are  not   amended  by  the Nationalisation Amendment Act, despite the addition of a new sub-section, is  of little  or  no  consequence.  That  sub- section is  a logical  extension of  the scheme envisaged by the original sub-sections (1) and (2) of section 3. [1073 C- H, 1074A-B]      2. Besides, marginal notes to the sections of a statute and the  titles of  its chapters cannot take away the effect of the,  provisions contained  in the  Act so  as to  render those provisions  legislatively  incompetent,  if  they  are otherwise within the competence of the legislature to enact. One must  principally have regard to the object of an Act in order to  find out  whether the  exercise of the legislative power is purposive, unless, of course, the provisions of the Act show  that the  avowed or  intended objects  is  a  mere pretence for  covering a  veiled transgression  committed by the legislative  upon its  own powers.  Whether a particular object can  be successfully achieved by an Act, is largely a matter of legislative policy. [1074 B-D]

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 7 of 45  

    3. The Nationalisation Amendment Act needs no preamble, especially when  it is  backed up  by a statement of objects and reasons.  Generally, an amendment Act is passed in order to advance the purpose of the parent Act as reflected in the preamble to  that Act.  Acquisition of coal mines, is not an end in itself but is only a means to an end. The fundamental object  of   the  Nationalisation   Act  as   also  of   the Nationalisation Amendment  Act is  to bring into existence a state of  affairs which  will be  congenial  for  regulating mines  and   for  mineral  development.  In  regard  to  the scheduled mines,  that purpose  was achieved by the means of acquisition. In  regard to  mines which were not included in the Schedule,  the same  purpose was achieved by termination of leases  and sub-leases  and by  taking over  the right to work the mines. Termination of leases, vesting of lease-hold properties in  the State Governments and the grant of leases to  the  Central  Government  or  Government  Companies  are together the  means conceived in order to achieve the object of nationalisation of one of the vital material resources of the community. [1074 D-G]      4. Section  18 of the Mines and Mineral (Regulation and Development) Act  67, 1957  contains a  statutory behest and projects a  purposive legislative  policy. The later Acts on the subject  of regulation  of mines and mineral development are linked  up with  the policy  enunciated in  section  18. Therefore, nothing contained in the later analogous Acts can be construed as in derogation of the principle enunciated in section  18  of  the  Mines  and  Minerals  (Regulation  and Development) Act,  67 of  1957, which provides that it shall be the duty of the 1048 Central  Government  to  take  all  such  steps  as  may  be necessary for  the conservation  and development of minerals in India. Therefore, even in regard to matters falling under the Nationalisation  Amendment Act which terminates existing leases and  makes it  lawful for  the Central  Government to obtain fresh leases, the obligation of section 18 of the Act of 1957  will continue to apply in its full rigour. [1074 G- H, 1075 A-B]      5. Entry  54 refers  to two  things : (1) regulation of mines and (2) mineral development. It is true that the Entry is purposive, since the exercise of the power under Entry 54 has to  be guided  and  governed  by  public  interest.  But neither the  power to regulate mines nor the power to ensure mineral development  postulates that  no sooner  is a mining lease terminated  by the  force of  the  statute,  then  the Central Government  must begin to work the mine of which the lease  is   terminated.  It   is  possible  that  after  the Nationalisation Amendment  Act came  into force, there was a hiatus between  the termination  of existing  leases and the granting of  fresh ones.  But, the Nationalisation Amendment Act does not provide that any kind of type of mine shall not be  developed   or  worked.  Conservation,  prospecting  and investigation, developmental  steps and  finally  scientific exploitation of  the mines  and  minerals,  is  the  process envisaged  by  the  Nationalisation  Amendment  Act.  It  is undeniable that  conservation of  minerals, which is brought about by  the termination  of existing leases and subleases, is vital  for the  development of mines. A phased and graded programme of conservation is in the ultimate analysis one of the most satisfactory and effective means for the regulation of mines and the development of minerals. [1075 D-G]      6. The Nationalisation Amendment Act is not destructive of the  provisions of  the Parent Act. The destruction which the Nationalisation  Amendment Act  brings about  is of  the

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 8 of 45  

lease or  the sub-lease  and  not  of  its  subject  matter, namely, the mine itself. In terminating the lease of a house one does  not destroy  the house  itself. It may be arguable that prohibiting  the use  of  the  house  for  any  purpose whatsoever  may,  for  practical  purposes,  amount  to  the destruction  of   the  house   itself.  The  Nationalisation Amendment  Act   neither  contains  provisions  directed  at prohibiting the  working of  mines, the leases in respect of which are  terminated. A  simple provision for granting sub- leases  shows   that  the   object  of  the  Nationalisation Amendment Act  is to  ensure that  no mine  will lie idle or unexplored.  Interregnums   can  usefully  be  utilised  for prospecting  and   investigation.  They   do  not   lead  to destruction of  mines. In  fact, it is just as well that the Amendment Act  does not  require the new leases to undertake an adventure,  reckless and  thoughtless, which  goes by the name of  ’scratching of  mines’, which ultimately results in the slaughtering of mines. [1075H, 1976A-D]      Natural   resources,    however,    large    are    not inexhaustible, which  makes it  imperative to conserve them. Without a  wise and  planned conservation of such resources, there can  neither be a systematic regulation of mines nor a scientific  development   of  minerals.  The  importance  of conservation  of   natural  resources   in  any   scheme  of regulation and  development of  such resources  can be  seen from the fact that the Parliament had to pass in August 1974 an Act  called the Coal Mines (Conservation and Development) Act, 28  of 1974,  in order, principally, to provide for the conservation of  coal and development of coal mines, Section 4(1) of  that Act  enables the  Central Government,  for the purpose of  conservation of  coal and for the development of coal mines,  to exercise such powers and take or cause to be taken such  measures as  it may be necessary or proper or as may be prescribed. By section 5(1), a duty is cast on the 1049 owners of  coal mines to take such steps as may be necessary to ensure  the conservation  of coal  and development of the coal mines  owned by  them.  Measures  taken  for  judicious preservation  and  distribution  of  natural  resources  may involve restrictions on their use and even prohibition, upto a degree,  of the  unplanned working  of the repositories of such resources. [1076 D-F, 1077 B]      Attorney-General for  Ontario v.  Attorney-General  for Canada [1896]  A.C. 348,  363; Municipal Corporation of City of Toronto  v. Virgo  [1896] A.C.  88 explained and referred to.      7.  Section  3(4)  of  the  Act  uses  an  enabling  or permissive expression  in order that regulation of mines and mineral  development  may  be  ensured  after  a  scientific prospecting, investigation  and planning.  It  is  doubtless that, in  the language  of Lord  Cairns in  Julius (1880)  5 Appeal Cases  214, 222,  there is something in the nature of the things  which the Nationalisation Amendment Act empowers to be  done, something  in the  object for which it is to be done and something in the conditions under which it is to be done which  couples the  power conferred  by the  Act with a duty, the duty being not to act in haste but with reasonable promptitude depending  upon the  nature of the problem under investigation. An  obligation to act does not cease to be so merely because there is no obligation to act in an ad-hoc or impromptu manner.  It is  in the context of a conglomeration of these  diverse considerations  that one  must  appreciate why,  in   section  3(4)   which  was   introduced  by   the Nationalisation   Amendment   Act,   Parliament   used   the permissive expression "it shall be lawful". [1078 H, 1079 A-

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 9 of 45  

C]      A  broad   and  liberal   approach  to   the  field  of legislation demarcated by Entry 54, List I, an objective and practical understanding  of the  provisions contained in the Nationalisation Amendment  Act and a realistic perception of constitutional principles  will point to the conclusion that the Parliament  had the  legislative competence to enact the Nationalisation Amendment Act. [1079 C-D]      Julius v.  Bishop  of  Oxford  [1880]  5  Appeal  cases 214,222 referred to.      8. The  Coking Coal Mines (Nationalisation) Act of 1972 and the  Coal Mines  (Nationalisation) Act of 1973 cover the whole field of "Coal" which was intended to be nationalised. The titles  of the  two  Acts  and  the  various  provisions contained therein  show that what was being nationalised was three distinct  categories of  mines: mines containing seams of coking coal exclusively; mines containing seams of coking coal along  with seams  of other  coal; and mines containing seams of  other coal.  Though  Parliament  had  power  under Article 31A(1)(e)  of the  Constitution to  terminate mining leases without  payment of  any compensation or ’amount’, it decided to  nationalise coal  mines on  payment  of  amounts specified in  the Schedules  to the  Nationalisation Acts of 1972 and  1973. Besides,  even  when  something  apart  from coking coal  mines was acquired, namely, ’coke oven plants’, provision  was   separately  made   in  section  11  of  the Nationalisation Act of 1972, read with the 2nd Schedule, for payment of  amounts to  owners of  coke oven  plants.  Thus, whatever was  intended to  be acquired  was paid  for.  This scheme is  prima  facie  inconsistent  with  the  Parliament intending to  acquire leasehold  rights in  other  minerals, like fireclay, without the payment of any amount. [1082 B-E]      Coupled with this is the unambiguous wording of section 3(3)(b) and  section 3(3)(c)  of the  Nationalisation Act of 1973 which were introduced therein by 1050 section  3  of  the  Nationalisation  Amendment  Act.  These provisions carry  the  scheme of the Nationalisation Acts to their logical  conclusion by  emphasising that the target of those Acts  is coal  mines, pure  and  simple.  What  stands terminated under  section 3(3)(b)  is certain  mining leases and sub-leases  in so  far as  they relate to the winning or mining of  coal. The embargo placed by section 3(3)(c) is on the granting of leases for winning or mining coal to persons other than those mentioned in section 3(3)(a). [1082 E-F, H, 1083-A]      The definition  of ’coal  mine’ in  section 2(b) of the Coal Mines  (Nationalisation) Act,  1973  has  an  uncertain import and  the scheme  of that  Act and  of the Coking Coal Mines (Nationalisation)  Act, 1972  makes it  plausible that rights in  minerals  other  than  coke  and  coal  were  not intended to  be acquired under the two Nationalisation Acts. A comparison  of the  definition of  "coal mine"  in section 2(b) of  the Act of 1973 with the definition of "coking coal mine"  in   section  3(c)   of   the   Coking   Coal   Mines (Nationalisation) Act of 1972 makes it clear that whereas in regard to  coking coal  mines, the  existence of any seam of other coal was regarded as inconsequential, the existence of any  seam   of  another   mineral  was   not  considered  as inconsequential in  regard to a coal mine. The definition of coal mine  in section  2(b) of  the Act of 1973 scrupulously deleted the  clause, "whether exclusively or in addition to" any  other  seam.  The  same  Legislature  which  added  the particular clause in the definition of ’coking coal mine’ in the 1973  Act, deleted it in the definition of ’coal mine in

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 10 of 45  

the 1973  Act. In  so far  as coal  mines are  concerned, by reason of  the definition  of coal mine contained in section 2(b) of  the Act  of 1973, and the definition of coking coal mine in  section 3(c)  of the  Act of  1972 which presents a striking  contrast   to  the  definition  in  section  2(b), composite coal  mines, that  is to  say, coal mines in which there are  seams of coal and fireclay do not fall within the scope of  the definition  of "coal  mine" in section 2(b) of the Act of 1973. [1083 A-B, C-E, G-H]      9. The  lessees of composite mines, therefore, who hold composite mining leases of winning coal and fireclay, cannot continue  their   mining  operations  unabated  despite  the provisions of  the Nationalisation  Amendment Act. It is one thing to  say that  a composite mine is outside the scope of the  definition   of  coal  mine  in  section  2(b)  of  the Nationalisation Act  of 1972  and quite  another to conclude therefrom that the other provisions introduced into that Act by the  Nationalisation Amendment Act will have no impact on composite leases for winning coal and fireclay. Section 3(3) (a)  which  was  introduced  into  the  parent  Act  by  the Nationalisation Amendment Act provides expressly that on and from the  commencement. Of  section 3  of the Amendment Act, that is,  from April  29, 1976,  no person  other than those mentioned in  clauses (i)  to (iii)  shall  carry  on  "coal mining operation,  in India,  in any from." These provisions of sections  3(3)(a) and  30(2) of the parent Act will apply of their  own force,  whether or  not  the  lessee  holds  a composite lease for winning coal and fireclay and whether or not the  mine is a composite mine containing alternate seams of coal  and fireclay. In other words, if a person holding a composite lease  can do fireclay mining without mining coal, he may  do so. But if he cannot win or mine fireclay without doing a  coal mining  operation, that is, without winning or mining coal, he cannot do any mining operation at all. If he does so,  he will  be  liable  for  the  penal  consequences provided for  in section 30(2) of the Nationalisation Act of 1973. The  provision contained  in section  3(3)(a)  totally prohibiting the  generality of persons from carrying on coal mining  operation  in  India  in  any  form  and  the  penal provision of section 30(2) 1051 virtually leave with the lessees of composite mines the husk of a  mining interest.  That they cannot win or mine coal is conceded and,  indeed, there is no escape from that position in view of the aforesaid provisions. [1084 B-H, 1085 A]      The lessees  of composite  mines  cannot  win  or  mine fireclay though  their composite  lease is outside the scope of section  2(b) of  the Nationalisation  Act of  1973.  The lessees of composite mines will, for all practical purposes, have to  nurse their  deeds of  lease without  being able to exercise any  of the  rights flowing from them. On their own showing, they  will be acting at their peril if they attempt to win fireclay. If they cannot win fireclay without winning coal, they  cannot win  fireclay either,  even if  they hold composite leases  under which  they are entitled to win coal and fireclay. [1085 C-D]      (10). Though the Parliament provided for the payment of amounts for  acquisition  of  certain  interests  under  the Nationalisation Acts  of 1972 and 1973, it did not intent to pay any compensation or amount for the termination of lease- hold rights  in respect of composite mines. Mines which have alternate seams  of coal  and fireclay  are in  a  class  by themselves and  they appear  to be  far fewer  in number  as compared with the coking coal mines and coal mines, properly so called.  The authority  of law for the termination of the

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 11 of 45  

rights of  composite lessees  is the  provision contained in section 3(3)(a),  the violation  of which attracts the penal provisions of  section 30(2)  of the Nationalisation  Act of 1973. The Parliament has deprived composite lessees of their right to  win fireclay  because they  cannot do  so  without winning coal.  The winning  of coal  by  the  generality  of people is  prohibited by section 3(3)(a) of the Act of 1973. [1085 E-H]      This is just as well, because Parliament could not have intended that  such islands  of exception should swallow the main stream  of  the  Nationalisation  Acts.  Obviously,  no rights were  intended to be left outstanding once the rights in respect  of coking coal mines and coal mines were brought to an end. [1085 G-H]      11. A  close and  careful examination of the provisions of the  Coal Mines  (Nationalisation) Act,  1973 and  of the amendments made to that Act by Nationalisation Amendment Act makes it  clear that  by the  Nationalisation Amendment Act, neither the petitioners’ right to property has been acquired without the  payment  of  any  amount  nor  they  have  been unreasonably  deprived  of  their  right  to  carry  on  the business of mining. [1087 E-F]      The Coal Mines (Nationalisation) Act, 1973 nationalised coal  mines  by  providing  by  section  3(1)  that  on  the appointed day,  that is on May 1, 1973, the right, title and interest of  the  owners  in  relation  to  the  coal  mines specified in  the Schedule  shall stand  transferred to, and shall vest  absolutely in,  the Central Government free from all incumbrances.  The scheduled  mines, 711  in number  and situated in  reputed coal bearing areas, were the ones which were engaged  openly, lawfully  and uinterruptedly  in doing coal mining business. Since it was possible to ascertain and verify the  relevant facts pertaining to these undertakings, they were  taken over on payment of amounts mentioned in the Schedule  to  the  Act,  which  varied  from  mine  to  mine depending upon  the valve  of their  assets, their potential and their  profitability. In  the very nature of things, the list of  mines in  the  Schedule  could  not  be  exhaustive because  there   were,  and  perhaps  even  now  there  are, unauthorised mines worked by persons who did not possess the semblance of a title or right to do mining business. Persons falling within that category cannot cite the Constitution as their charter 1052 to continue  to indulge  in  unauthorised  mining  which  is unscientific, unsystematic  and detrimental  to the national interest by reason of its tendency to destroy the reserve of natural resources.  But alongside these persons, there could conceivably be  mine operators who may have been doing their business  lawfully  but  who  were  not  easily  or  readily identifiable. Section  3(2) of the Nationalisation Act, 1973 made provision  for taking over the management of such mines by declaring  for "the removal of doubts" that if, after the appointed day, the existence of any other coal mine comes to the knowledge  of the  Central Government, the provisions of the Coal Mines (Taking Over of Management) Act, 1973, shall, until  that   mine  is   nationalist   by   an   appropriate legislation, apply to such mine. Owners of mines whose mines were not included in the Schedule but whose right, title and interest was  to vest  eventually in  the Central Government under "an appropriate legislation" envisaged by section 3(2) of the  Nationalisation Act  were, by this method, placed on par with  the owners  of mines  of which  the management was taken over  under the Coal Mines (Taking Over of Management) Act, 1973.  That Act  provides by  section 7(1)  that  every

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 12 of 45  

owner  of  a  coal  mine  shall  be  given  by  the  Central Government an  amount in  cash for  the vesting in it, under section 3,  of the management of such mine. By section 7(2), for every  months during which the management of a coal mine remains  vested   in  the  Central  Government,  the  amount referred to in sub-section (1) shall be computed at the rate of twenty  paise per  tone of  coal on  the highest  monthly production of  coal from  such mine  during any month in the years 1969,  1970, 1971  and 1972.  The two provisos to that subsection and  the other  sub-sections of section 7 provide for other  matters relating  to payment  of amounts  to  the owners of coal mines of which the management was taken over. The Nationalisation  Amendment Act  carried  the  scheme  of these two  Acts to its logical conclusion by terminating the so-called leases  and sub-leases  which might  have remained outstanding. [1087 G-H, 1088 A-G]      Thus, the purpose attained by these Acts is (1) to vest in the  Central Government  the right  of management  of all coal mines;  (2) to  nationalise the  mines mentioned in the Schedule; (3)  to provide  for the taking over of management of coal  mines the existence of which comes to the knowledge of the Central Government after the appointed day and lastly (4) to  terminate all  mining leases. The Management Act and the Nationalisation  Act provide  for payment of amounts, by no means  illusory, to the owners of coal mines whose rights were taken  over. In  the normal  course of  human  affairs, particularly business  affairs, it  is difficult to conceive that owners  of coal  mines who  had even  the vestige  of a title thereto  would not  bring to the notice of the Central Government the  existence of  their mines,  when such  mines were not  included in  the Schedule  to the  Nationalisation Act. Those  who did not care to bring the existence of their mines to  the knowledge  of  the  Central  Government,  even though amounts  are payable under the Management Act for the extinguishment of  the right of management did not evidently possess even  the semblance  of a  title to  the mines.  The claims of  lessees, holding  or allegedly holding under such owners, would  be as  tenuous as the title of their putative lessors. [1088 G-H, 1089 A-C]      12. The  Nationalisation Amendment  Act by section 3(3) (b) undoubtedly  terminates all  existing  leases  and  sub- leases except  those already  granted in  favour of  persons referred to  in clauses  (i) to  (iii) of  section  3(3)(a). Similarly section  3(3)(a) imposes  an embargo on all future coal mining  operations except  in  regard  to  the  persons mentioned in clauses (i) to (iii). But the 1053 generality of  leases which  are alleged  to  have  remained outstanding despite  the coming into force of the Management Act and  the Nationalisation  Act, were  mostly  precarious, whose holders  could at best present the familiar alibi that the origin  of their  rights or  of  those  from  whom  they derived title  was lost in antiquity. Neither in law, nor in equity and  justice, nor  under the  Constitution can  these lessees be  heard to  complain of  the termination  of their lease-hold rights  without the  payment of  any amount.  The provision   contained    in   section    3(3)(b)   of    the Nationalisation Amendment  Act was made ex majore cautela so as not to leave any lease of a coal mine surviving after the enactment of the Management Act and the Nationalisation Act. There was  no  reasonable  possibility  of  a  lawful  lease surviving the  passing of  those Acts;  but if,  per chance, anyone claimed  that he  held a lease, that stood terminated under section 3(3)(b). [1089 C-G]      13. Section  3(3)(b) of  the Nationalisation  Amendment

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 13 of 45  

Act brings  about  an  extinguishment  simpliciter  of  coal mining leases  within the  meaning of  Article 31A(1) (e) of the Constitution.  The termination  of the mining leases and sub-leases  brought   about  by   section  3(3)(b)   of  the Nationalisation Amendment Act is not a mere pretence for the acquisition of  the mining  business of the lessees and sub- lessees. The  true intent  of the  Nationalisation Amendment Act was not to "acquire" anyone’s business. This would be so whether the  word  ’acquire’  is  understood  in  its  broad popular sense  or in the narrow technical sense which it has come  to  possess.  Whatever  rights  were  intended  to  be acquired were  paid for  by the fixation of amount or by the laying down  of a  formula for  ascertaining amounts payable for acquisition.  Having provided for payment of amounts for acquisition  of  management  and  ownership  rights,  it  is unbelievable that the legislature resorted to the subterfuge of acquiring  the mining  business of  the surviving lessees and sub-lessees  by the  device of  terminating their leases and sub-leases.  The  legislative  history  leading  to  the termination of  coal-mining leases  points to one conclusion only that,  by and  large, every  lawful interest  which was acquired was  paid for;  the extinguishment  of the interest which survived  or which  is alleged  to have  survived  the passing of  the Management  Act and  the Nationalisation Act was provided  for merely in order to ensure that no loophole was left  in the  implementation of  the scheme envisaged by those Acts.  Persons dealt  with by  section 3(3)(b)  of the Nationalisation Amendment  Act are differently situated from those who  were dealt  with by the two earlier Acts, namely, the Management Act and the Nationalisation Act. No violation of Article 14 is, therefore, involved.                                  [1089 G-1090 D-H, 1091 A-B]      14.   The    public   purpose    which   informs    the Nationalisation Amendment  Act is the same which lies behind its   two   precursors,   the   Management   Act   and   the Nationalisation Act.  The purpose  is to re-organise and re- structure coal  mines so  as to  ensure  the  rational,  co- ordinated and scientific development and utilisation of coal resources consistent  with the  growing requirements  of the country.  The  Statement  of  Objects  and  Reasons  of  the Nationalisation Amendment  Act points in the same direction. Public purpose  runs like  a continuous  thread through  the well-knit scheme of the three Acts under consideration.      [1091 B-D]      15. Making  every allowance  in favour  of the right to property which was available at the relevant time and having regard to  the substance of the matter and not merely to the form adopted for terminating the interest of the lessees and the sub-lessees,  the Nationalisation Amendment Act involves no acquisition  of the  interest of the lessees and the sub- lessees. It merely brings about in 1054 the language  of Article  31A(1)(e) "the  extinguishment" of their right, if any, to win coal. Whichever right, title and interest was  lawful and  identifiable was  acquired by  the Management Act  and the  Nationalisation Act.  And whichever interest was  acquired was  paid for.  Tenuous  and  furtive interests which  survived the  passing of  those  Acts  were merely extinguished  by the  Nationalisation Amendment  Act. [1091 F-H, 1092 A]      The interest  of the  lessees and sub-lessees which was brought  to   termination  by   section   3(3)(b)   of   the Nationalisation Amendment  Act does not come to be vested in the State.  The Act  provides that excepting a certain class of leases  and sub-leases,  all other  leases and sub-leases

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 14 of 45  

shall stand  terminated in  so far  as they  relate  to  the winning or  mining of coal. There is no provision in the Act by which  the interest so terminated is vested in the State; Nor does such vesting flow as a necessary consequence of any of the  Provisions of  the Act. Sub-section (4) of section 3 of the  Act  provides  that  where  a  mining  lease  stands terminated under sub-section (3), it shall be lawful for the Central Government  or a Government Company or a corporation owned or  controlled by  the Central  Government to obtain a prospecting licence  or a  mining lease  in respect  of  the whole or  part of the land covered by the mining lease which stands so terminated. The plain intendment of the Act, which is neither  a pretence  nor  a  facade,  is  that  once  the outstanding  leases   and  sub-leases  are  terminated,  the Central Government and the other authorities will be free to apply for  a mining lease. Any lease-hold interest which the Central Government,  for example,  may thus  obtain does not directly or  immediately flow  from the  termination brought about by  section 3(3)(b).  Another event  has to  intervene between the  termination of existing leases and the creation of new interests. The Central Government etc. have to take a positive step  for obtaining  a  prospecting  licence  or  a mining lease.  Without it,  the Act  would be ineffective to create of  its own  force any right or interest in favour of the Central Government a Government Company or a Corporation owned, managed  or controlled by the Central Government. The essential difference  between "acquisition  by the State" on the one  hand and "modification or extinguishment of rights" on the  other, is  that in the first case the beneficiary is the State  while in  the second  the beneficiary  is not the State. The Nationalisation Amendment Act merely extinguishes the rights  of the  lessees and  the sublesses.  It does not provide for  the acquisition  of those  rights, directly  or indirectly, by  the State.  Article 31A(2A)  will  therefore come  into   play.  It   follows  that  the  Nationalisation Amendment  Act   must  receive  the  protection  of  Article 31A(1)(e) of  the Constitution, that is to say, that the Act cannot be  deemed to  be void  on  the  ground  that  it  is inconsistent with  or takes  away or  abridges  any  of  the rights conferred by Articles 14, 19 and 31.                                         [1092 F-H, 1093 A-H]      Ajit Singh  v. State  of Punjab [1967] 2 SCR 143; Madan Mohan Pathak  v. Union  of India  & Ors.  [1978] 3  SCR  334 discussed and distinguished.      Dwarkadas Shrinivas  v. The Sholapur Spinning & Weaving Co. Ltd. [1954] SCR 674, 733-734 applied.

JUDGMENT:      ORIGINAL JURISDICTION: Writ Petitions Nos. 111,150-151, 180, 205-210,  220,226, 270-271, 346-352, 355, 403, 396-398, 599, 541,  543, 626,  635-639, 661, 687-692 and 758/77, 154, 178, 571-574,  600, 603,  605, 610,  611,257,221  and  1134- 1134/77. 1055      (Under Article 32 of the Constitution)      A. K.  Sen, S. C. Banerjee, Y. S. Chitale, K. K. Sinha, S. K.  Sinha, Pradeep Hajela, S. K. Verma, A. K. Srivastava, M. P. Jha, C. K. Ratnaparkhi, B. N. Lala, Surajdeo Singh, D. P. Mukherjee  and A. K. Ganguli for the Petitioners in W.Ps. Nos. 111, 150-151, 154, 178, 610-611 661, 180, 270-271, 599, 220, 226, 205-210, 396-398 and 600 of 1977.      H. M.  Seervai, Kamal  Nayan Choubey, A. K. Srivastava, B. P.  Singh and Bimal Kumar Sinha for the Petitioners in WP

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 15 of 45  

Nos. 237, 571-574, 603, 605, 355, 346 of 1977.      D. Goburdhan  for the  Petitioners in WP Nos. 687, 692, 635-639, 352, and Respondent No. 12 in WP Nos. 150-151/77.      A. K.  Sen, S.  C. Bannerjee,  Y.  S.  Chitale,  S.  B. Sanyal, A.  K. Banerjee and A. K. Nag for the Petitioners in WP Nos. 626, 541, 543 and Respondent No. 15 in WP 154/77.      S. V. Gupte, S. N. Kacker, U. R. Lalit, S. P. Nayar, R. N. Sachthey  and Gobind  Mukhoty for the Respondents Nos. 1, 9-12 in  WP No. 111, RR. 1, 7, 11 in WP Nos. 150-151, RR. 1, 8 to 12 in WP. 154, RR. 1&7 in WP. 178, RR. 1&7 in WPs. 610- 611 RR.  1,5,6 & 8 in WP. 661, RR. 1 & 7 in WP Nos. 270-271, RR 1  & 7 in WP in 599, RR. 1, 8, 9-12 & 15 in WPs. Nos 571- 574, RR.  1, 8-13  & 16  in WP  No. 603.  RR.  1,2&9  in  WP 605,RR.1,2,10,11,14&15 in  WP. 355,  RR. 1,  8-12 in WP 346, RR. 1, 3-5, 8, 9 in WP No. 626, RR. 1, 6-10 & 14 in WP. 541, RR. 1-5  & 9 in WP. 543, RR. 1, 8 & 12 and 15 in WP. 758, RR 1, 7 in WP. 257, RR. 1&7 in WPs. 220 and 226 RR. 1&8 in WPs. 205-210, RR.  1&8 in WP. 600, RR. 1, 3, 11-15 in WP 403, RR. 1, 9 & 10 in WP No. 180/77.      Lal Narain  Sinha, U. P. Singh, Shambhu Nath Jha and U. S. Prasad  for the  Respondents Nos. 2-8 in WP Nos. 111, 2-7 in 154,  2-6 in 610-611, 2-4, 7 & 8 in 661, 2-8 in 180, 2-6, 10-12 in 270-271, 2-6 and 10-13 in 599, 2-7 in 571-574, 2-7, 14-15, 17-20  & 23 in 603, 2-7 in 605, 3-8, 12, 13, 16-18 in 335, 2-6  in 687-692,  2-6 in 635-637, 2-6 in 352, 2, 6, 7 & 10 in  626, 2-5, 11-13 in 541, 6-8 in 543, 2-6 in 758/77, 2- 7, 13,  14 &  16 in  257, 2-6 in 220 and 226, 2-6, 13, 14 in 205-210, 2-7 in 600, 2-6 in 638-639, 2, 4 to 10 in 403/77.      Mr. P. S. Khera for Intervener No. 1 in WP. 111/77.      S. K. Verma for the Intervener No. 2 in WP. 111/77.      A. P. Chatterjee and G. S. Chatterjee for Respondents 2 & 6 in WPs. 150-151 & 2 to 6 in 396-398/77.      M. P. Jha for the Petitioner in WP. No. 758/77. 1056      The Judgment of the Court was delivered by      CHANDRACHUD, C. J.-This is a group of 61 Writ Petitions under  article   32  of  the  Constitution  challenging  the validity of  the Coal  Mines (Nationalisation) Amendment Act 67 of  1976, on  the ground  that it  is  violative  of  the provisions of articles 14, 19(1)(f), 19(1) (g) and 31 of the Constitution. For understanding the basis of that challenge, it will  be enough  to refer  to  the  broad  facts  of  two representative  groups  of  petitions.  The  facts  of  writ petitions 270  and 271 of 1977 are, by and large, typical of cases in  which the  petitioners claim to be lessees of coal mines, while  the facts  of writ  petition 257  of 1977  are typical of  cases in  which  the  petitioners  claim  to  be lessees of  composite mines  containing alternate  seems  of coal and fireclay. Most of the facts are undisputed and only a few of them are in controversy.      In writ petitions 270 and 271 of 1977, petitioner No. 1 claims to  be the  sole proprietor  of ’S.D.  Coal  Company’ which  is   engaged  in   coal  business   and  coal  mining operations. Petitioner  No. 2 is said to be the agent of the company. Both  the surface  and underground  rights in Mouza Bundu in  the  District  of  Hazaribagh,  Bihar,  previously belonged  to   the  Raja  of  Ramgarh  from  whom  or  whose successors-in interest,  the South  Karanpura Coal  Co. Ltd. appears to  have obtained  a lease  of 242  Bighas  of  coal bearing lands  in Mouza  Bundu, called the ’Bundu Colliery’. After the  enactment of  the Bihar  Land Reforms  Act 30  of 1950, all  rights of tenure-holders landlords and Zamindars, including the  rights in  mines and  minerals, vested in the State of  Bihar but,  by virtue  of section  10 of that Act, subsisting leases  of mines  and minerals  in any  estate or

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 16 of 45  

tenure became  leases under  the  State  Government.  It  is alleged that on 12th June, 1975 the South Karanpura Coal Co. Ltd. entered  into an  agreement with the S. D. Coal Company or prospecting,  developing, raising  and selling  coal from the  Bundu  Colliery  and  that  on  the  strength  of  that agreement, petitioner  No. 1  was put  in possession  of the entire area  of 242  Bighas of  coal bearing land. The S. D. Coal Company is stated to have made large investments in the colliery and to have started paying rents and royalty to the State of Bihar. The petitioners have cited various facts and figures in  support of  their contention that they have been in working  possession of the coal mine area in question and that they  were entitled  to remove  nearly 30,000 tonnes of coal raised  by them  at a  heavy cost. It appears that in a proceeding under section 144 of the Criminal Procedure Code, the Sub-divisional  Magistrate (Sadar), Hazaribagh, had made the rule  absolute against the South Karanpura Coal Co. Ltd. as well as the S. D. Coal Company, on the ground that 1057 the State Government had taken over the Bundu Colliery. But, in C.R.  Case No.  18318(W)  of  1975,  the  High  Court  of Calcutta is  stated to have set aside the order of the State Government cancelling  the lease  of petitioner 1 in respect of the  Bundu Colliery.  Since that  lease stands terminated under the  Coal Mines  (Nationalisation) Amendment Act 1976, the petitioners  have filed  writ petitions to challenge the validity of that Act.      On the  factual aspect,  the contention of the State of Bihar is that the lease of the Bundu Colliery which was held by M/s  South Karanpura  Coal Co. Ltd. was terminated by the Bihar Government  on November  24, 1975  on account  of  the violation of  Rule 37  of the Mineral Concession Rules, 1960 and that, actual possession of the colliery was taken by the State Government  on November  26, 1975  prior to the coming into force of the Amendment Act of 1976.      In writ petition No. 257 of 1977, the petitioner Nirode Baran Banerjee  made an application dated September 17, 1966 for the  grant of  a mining  lease in  respect  of  fireclay covering an  area of 1640.60 acres of the Hesalong Colliery. On September  19, 1966  he made  a  similar  application  in respect of  the same  area, for  a coal  mining lease. These applications were  deemed to  have been  rejected since  the State Government  did not  pass any order thereon within the prescribed period.  In a  Revision application  preferred by the petitioner,  the Central  Government directed  the State Government to  consider the petitioner’s application for the grant of  a mining lease in respect of fireclay. The dispute relating to  the petitioner’s  application for a coal mining lease was brought to the Supreme Court, as a result of which the Central  Government on  April 1, 1972 directed the State Government to  grant a  coal mining lease to the petitioner. On October 17, 1973 a formal lease was executed by the State of Bihar in favour of the petitioner in respect of both coal and fireclay. The lease was registered on October 18.      According to  the petitioner,  the Hesalong Colliery in respect of  which he  holds the  mining lease  for coal  and fireclay is  situated in  an  interior  area  of  the  hilly portion of  the District  of Hazaribagh  which has  its  own peculiar nature,  trait and  character. The reserves of coal in the area are said to be in isolated small pockets and are not sufficient for scientific or economical development in a co-ordinated and integrated manner. The coal is ungraded and is not required to be transported by rail.      On the composite nature of the mine, the petitioner has made a specific averment in paragraph 6 of his writ petition

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 17 of 45  

to the following effect: 1058           The coal  and fireclay  deposits in  the said area      are so  mixed  up  that  one  cannot  work  either  for      extraction  of  coal  or  for  extraction  of  fireclay      without disturbing  each of  the said two minerals. The      deposits are  such that at one layer there is coal, the      next layer  is fireclay,  the other  layer is coal, the      next layer is again fireclay and so on.      In paragraph 15 of his writ petition the petitioner has stated that  in the  Hesalong Mines, the deposit of fireclay is spread over the entire area of 1640.60 acres in the first layer and  just beneath  that, there is a deposit of coal in the second  layer, so  on and  so forth.  According  to  the petitioner, it  is absolutely  impossible to carry on mining operations in  coal without  disturbing the fireclay and any such disturbance  and inadvertent  extraction of either coal or fireclay  by different lessees, if the composite lease is split up, will amount to unauthorise mining.      The petitioner  contends that  he employs  about  9,000 workers, has  invested a huge amount for making the colliery workable and  that a  large amount  of coal, which was lying exposed and  unprotected, was  ready for despatch. Since his composite lease too was in jeopardy under the Amendment Act, he filed  a writ  petition in  this Court  to challenge  the validity of  the Act, contending in addition that the Act is not applicable to composite mines having alternate layers of fireclay and coal.      Some of the petitioners had filed writ petitions in the High  Courts   under  article   226  of   the   Constitution challenging the validity of the Amendment Act of 1976. Rules were issued  in those  petitions  and  interim  orders  were passed under  which the status quo was maintained on certain terms  and   conditions.  After  the  passing  of  the  42nd Constitution  Amendment   Act,  the   High   Courts   became incompetent  to   grant  any   relief  in   those  petitions whereupon, writ petitions were filed in this Court.      The petitions  were argued on behalf of the petitioners by Shri  A. K.  Sen, Shri H. M. Seervai, Shri Y. S. Chitale, Shri B.  K. Sinha, Shri D. Goburdhan and Shri A. K. Nag. The Attorney General  argued in  support of  the validity of the impugned Act  and so did the Solicitor General, appearing on behalf of the Union of India. Shri Lal Narain Sinha and Shri A. P.  Chatterjee argued respectively on behalf of the State of Bihar  and the State of West Bengal. Shri P. S. Khera and Shri S. K. Verma appeared on behalf of the interveners.      Before examining  the contentions advanced before us by the various  learned counsel,  it will  be useful  to  trace briefly the  history of laws bearing on the working of mines and exploitation of minerals, 1059 the taking  over of  management and  the nationalisation  of mines and  finally the  termination of  certain leases under the impugned Act.      According  to   "India  1976"  (Publications  Division, Ministry of  Information  and  Broadcasting,  Government  of India), coal  mining was  first started  at  Raniganj,  West Bengal, in 1774. Coal is an important mineral as a source of energy and in India it constitutes a prime source of energy. On the attainment of independence, the importance of coal to industrial development  was realised by the Planners and the problems  of  the  coal  industry  were  identified  by  the Planning Commission  in its  report on  the First  Five Year Plan. The  Fifth Plan  provided for  a production  target of 13.5 million tonnes of coal by 1978-79, which amounted to an

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 18 of 45  

increase of  5.7 million tonnes from the level of production of 7.79  million tonnes  at the  end of the Fourth Five Year Plan. In  1950,  after  coal  mining  was  stepped  up,  the production was  32 million  tonnes. In  1974-75 it reached a record figure  of 88.4  million tonnes. The overall reserves of coal,  both coking  and non-coking were estimated in 1976 at 8,095 crore tonnes.      But, howsoever  high the coal reserves may be, they are not inexhaustible,  which underlines  the need for a planned development of  the  natural  resources.  The  reckless  and unscientific methods of mining which were adopted by most of the colliery  owners without  regard  to  considerations  of conservation of  the  mineral  and  safety  and  welfare  of workers led  the Parliament  to pass various legislations on the subject  in the light of its accumulated experience. The coking coal  mines were  nationalised in  1972 and  the non- coking coal  mines were  nationalised in the following year. The  production  of  coal  in  the  country  is  now  almost completely  controlled   by  the   public  sector  with  the exception of  isolated  pockets  wherein  reserves  are  not sufficient for scientific and economical development and the production is  consumed locally.  The only  important  mines which are not nationalised are the captive coking coal mines of the  two private sector Steel Companies coking coal being a vital ingredient in the production of Steel.      The  production   of  coal  in  the  public  sector  is organised through  three companies: the Coal Mines Authority Ltd.,  the  Bharat  Coking  Coal  Ltd.,  and  the  Singareni Collieries  Company  Ltd.  A  holding  company,  Coal  India Limited, was  formed in  1975 incorporating  the Coal  Mines Authority,  the  Bharat  Coking  Coal  and  the  Coal  Mines Planning and Design Institute as separate Divisions, besides other subsidiaries.      Entry 23 List II, Schedule VII of the Constitution read with article  246(3) confers  legislative power on the State legislatures in respect of 1060 "Regulation of mines and mineral development" but that power is "subject  to the  provisions of  List I  with respect  to regulation and  development under the control of the Union". Entry 54  List I  enables Parliament  to acquire legislative power  in  respect  of  "Regulation  of  mines  and  mineral development to  the extent  to  which  such  regulation  and development under  the control  of the  Union is declared by Parliament by  law to  be expedient in the public interest". Entry 24  List II  relates to  "Industries  subject  to  the provisions of  entries 7 and 52 of List I". Entry 7, List I, relates to  Industries declared  by Parliament  by law to be necessary for  the purpose of defence or for the prosecution of war.  Entry 52,  List I,  enables Parliament  to  acquire legislative power  in respect of "Industries, the control of which by  the Union  is declared  by Parliament by law to be expedient in the public interest".      The Industries  (Development and Regulation) Act, 65 of 1951, which  came into  force on  May  8,  1952  contains  a declaration in section 2 that it was expedient in the public interest that  the Union  should take  under its control the industries specified in the First Schedule. Item 2(1) of the First Schedule  comprises ’coal,  lignite,  coke  and  their derivatives’ under the heading ’Fuels’. The Act provides for the  establishment   of  a   Central  Advisory  Council  and Development  Councils,   registration   and   licensing   of industrial undertakings,  the assumption  of  management  or control of industrial undertakings by the Central Government control  of   supply,  distribution  and  price  of  certain

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 19 of 45  

articles, etc.      The Mines  Act, 35  of 1952,  which came  into force on July 1, 1952, was passed by the Parliament in order to amend and consolidate the law relating to the regulation of labour and safety  in mines.  That Act  was evidently passed in the exercise of  power under  Entry 55,  List I,  "Regulation of labour and safety in mines and oil fields".      The Mines  and Minerals  (Regulation  and  Development) Act, 67  of 1957,  which came into force on June 1, 1958 was passed in  order to  provide for the regulation of mines and the development  of minerals under the control of the Union. Section 2  of that  Act contains  a declaration  that it was 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 provided in the Act. The Act  provides, inter  alia, for  general restrictions on undertaking prospecting and mining operations, the procedure for obtaining  prospecting  licences  or  mining  leases  in respect  of   lands  in  which  the  minerals  vest  in  the Government, the  rule making  power for regulating the grant of prospecting licences and mining leases, special powers of 1061 Central  Government   to  undertake  prospecting  or  mining operations  in   certain  cases,   and  for  development  of minerals.      There was  a lull  in legislative activity in regard to the enactment of further regulatory measures for controlling mines  and   minerals.  The  Coking  Coal  Mines  (Emergency Provisions) Ordinance, 12 of 1971, was passed on October 16, 1971, It  was replaced  by the  Coking Coal mines (Emergency Provisions) Act,  64 of 1971, which received the President’s assent on  December 23,  1971 but  was  given  retrospective operation from the date of the Ordinance. The Act was passed to provide  for the  taking over, in the public interest, of the management  of coking  coal mines  and coke oven plants, pending nationalisation of such mines and plants. By section 3 (1), the management of all coking coal mines vested in the Central Government  from the appointed day-October 17, 1971. Section 6(1)  provided that  every owner of coking coal mine shall be given by the Central Government an amount, in cash, for vesting  in it,  under section 3, the management of such mine.. Such  amount was  to be calculated in accordance with the provisions  of  section  6(2).  The  Coking  Coal  Mines (Nationalisation) Act,  36 of  1972, was  passed  in  order, inter alia,  to provide  for the acquisition and transfer of the right,  title and  interest of  the owners of the coking mines and  coke even  plants. Sections 30 and 31 of that Act dealing  respectively   with  penalties,   and  offences  by companies  came   into  force  at  once  but  the  remaining provisions were  deemed to  have come  into force  on May 1, 1972. Section 3(c) defines "coking coal mine" to mean-           "a coal  mine in  which there  exists one  or more      seams  of   coking  coal,  whether  exclusively  or  in      addition to any seam of other coal".      By section  4(1) the  right, title  and interest of the owners in relation to the coking coal mines specified in the First Schedule  shall stand  transferred to,  and shall vest absolutely  in,   the  Central  Government,  free  from  all incumbrances. By section 4(2), after the appointed day, that is May  1, 1972  if any other coal mine was found to contain coking  coal   the  provisions  of  the  Coking  Coal  Mines (Emergency Provisions)  Act, 1971 were to apply to such mine until it  was nationalised by an appropriate legislation. By section 6(1),  the Central  Government becomes the lessee of the State Government where the rights of the owner under any

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 20 of 45  

mining lease  granted in  relation to  a coking coal mine by the State  Government or  any  other  person,  vest  in  the Central Government  under section  4. Section  7(1) empowers the Central  Government to  direct that the right, title and interest of 1062 the owners  in relation  to coking  coal mines  or coke oven plants shall  vest in  a government company. Sections 10 and 11 of  the Act  provide for payment of the amounts to owners of the  coking coal  mines and  coke  oven  plants  for  the vesting of  their right,  title and  interest in the Central Government.      By an  Amendment Act, 56 of 1972, which came into force on September 12, 1972, section 4A was added to the Mines and Minerals (Regulation and Development) Act 1957. That section provides for  premature termination of mining leases and the grant  of   fresh  leases   to   Government   companies   or Corporations owned or controlled by Government.      The Coal  Mines (Taking  over of Management) Act, 15 of 1973, which  received the  assent of  the President on March 31, 1973  was given  retrospective effect  from January  30, 1973 except  section 8(2) which came into force at once. The Act was  passed in order "to provide for the taking over, in the public  interest,  of  the  management  of  coal  mines, pending nationalisation  of  such  mines,  with  a  view  to ensuring  rational  and  co-ordinated  development  of  coal production and for promoting optimum utilisation of the coal resources consistent  with the  growing requirements  of the country, and  for matters  connected therewith or incidental thereto." Section  2(b) of  the Act defines a "coal mine" to mean a mine           "in which there exists one or more seams of coal."      Section 3(1)  provides that  on and  from the appointed day (that  is, January  31, 1973) the management of all coal mines shall vest in the Central Government. By section 3(2), the coal  mines specified in the Schedule shall be deemed to be the  coal mines the management of which shall vest in the Central Government  under sub-section (1). Under the proviso to section  3(2), if, after the appointed day, the existence of any other coal mine comes to the knowledge of the Central Government, it  shall by a notified order make a declaration about the  existence of such mine, upon which the management of such  coal mine  also vests in the Central Government and the provisions of the Act become applicable thereto. Section 3(5) casts  an obligation  on every  person in charge of the management of  a coal  mine, immediately  before the date on which the  Act received  the assent  of  the  President,  to intimate the Central Government within 30 days from the said date the  name and  location of the mine as well as the name and the address of the owner, if the mine is not included or deemed  to  be  included  in  the  Schedule.  All  contracts providing for  the management  of any  coal mine made before the appointed day between the owner of the mine and any per- 1063 son in  charge of  the mine  and any person in charge of the management thereof  are to be deemed to have been terminated on the appointed day, under section 4, Section 6(1) empowers the Central Government to appoint Custodians for the purpose of taking  over of the management of the mines. Section 7(1) provides that  every owner  of a coal mine shall be given by the Central  Government an amount in cash for the vesting in it under  section 3, of the management of such mine. Section 18(1)(a) excludes  from the  operation of  the Act  any coal mine owned, managed or controlled by the Central Government, or by  a Government  Company or  by a  corporation which  is

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 21 of 45  

owned, managed  or controlled  by the Government. Clause (b) of section 18(1) also excludes from the operation of the Act a coal  mine owned by or managed by a company engaged in the production of iron and steel.      The Coal  Mines (Nationalisation)  Act, 26 of 1973, was given retrospective  operation with  effect from May 1, 1973 except sections  30 and  31 which  came into  force at once. This Act was passed,           "to provide  for the  acquisition and  transfer of      the right,  title and interest of the owners in respect      of the coal mines specified in the Schedule with a view      to re-organising  and reconstructing such coal mines so      as to  ensure the rational, co-ordinated and scientific      development   and   utilisation   of   coal   resources      consistent  with   the  growing   requirements  of  the      country, in  order that  the ownership  and control  of      such resources  are vested  in the State and thereby so      distributed as best to subserve the common good, and or      matters connected therewith or incidental thereto."      Section 2(b) defines a coal mine in the same way as the corresponding provision  of the  Management Act viz., a mine "in which  there exists  one or more seams of coal." Section 3(1) provides  that on  the appointed  day (that  is, May 1, 1973) the  right,  title  and  interest  of  the  owners  in relation to  the coal  mines specified in the Schedule shall stand transferred  to, and  shall  vest  absolutely  in  the Central Government  free from all incumbrances. Section 4(1) provides that  where the rights of an owner under any mining lease granted,  or deemed  to have been granted, in relation to a  coal mine,  by a State Government or any other person, vest in  the Central Government under section 3, the Central Government shall,  on and  from the date of such vesting, be deemed to  have become the lessee of the State Government or such other  person, as  the case may be, in relation to such coal mine as if a mining lease in relation to such coal mine had been  granted to  the Central  Government. The period of such lease 1064 is to  be the  entire period  for which the lease could have been granted  by the Central Government or such other person under the  Mineral Concession  Rules and  thereupon all  the rights under  the mining  lease granted to the lessee are to be deemed  to have  been transferred  to, and vested in, the Central Government.  By section  4(2), on  the expiry of the term of any lease referred to in sub-section (1), the lease, at the  option of  the Central  Government, is  liable to be renewed on  the same  terms and  conditions on  which it was held by the lessor for the maximum period for which it could be renewed  under the Mineral Concession Rules. Section 5(1) empowers the  Central Government under certain conditions to direct by  an order  in writing  that the  right, title  and interest of  an owner  in relation  to a  coal  mine  shall, instead of  continuing to  vest in  the Central  Government, vest in  the Government company. Such company, under section 5(2), is  to be deemed to have become the lessee of the coal mine as  if the  mining lease  had been  granted to  it.  By section 6(1),  the  property  which  vests  in  the  Central Government  or   in  a   Government  company  is  freed  and discharged from  all obligations  and incumbrances affecting it. The  mortgagees and  other holders  of incumbrances  are required by  section 6(2)  to give intimation thereof to the Commissioner  within   the  prescribed  time.  Section  7(1) provides that  the  Central  Government  or  the  Government company shall  not be  liable to  discharge any liability of the owner,  agent, manager  or managing contractor of a coal

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 22 of 45  

mine in  respect of  any period  prior to the appointed day. Section 8  requires that  the owner  of every  coal mine  or group of  coal mines  specified in  the second column of the Schedule shall  be given  by the  Central Government in cash and in  the manner  specified in Chapter VI, for the vesting in it  under section  3 of  the right, title and interest of the owner,  an amount  equal to the amount specified against it in  the corresponding  entry in  the fifth  column of the Schedule. By  section 11(1),  the  general  superintendance, direction,  control   and  management  of  the  affairs  and business of a coal mine, the right, title and interest of an owner in  relation to  which  have  vested  in  the  Central Government under  section 3,  shall vest  in the  Government company or  in the  Custodian as  the case  may be.  For the purpose of  disbursing the  amount payable to the owner, the Central   Government is required by section 17(1) to appoint a Commissioner  of Payments.  By section  18(1), the Central Government shall within thirty days from the specified date, pay, in  cash, to  the Commissioner for payment to the owner of a  coal mine,  an amount  equal to  the amount  specified against the  coal mine in the Schedule and also such sums as may be  due to  the owner  under section  9.  Section  26(1) provides that if out of the monies paid to the Commissioner, any balance is left after meeting the liabilities of all the secured and un- 1065 secured creditors  of the  coal mine,  he shall disburse the same to the owner.      The Coal  Mines (Nationalisation)  Amendment  Ordinance which was  promulgated on April 29, 1976 was replaced on May 27, 1976  by the Coal Mines (Nationalisation) Amendment Act, 67 of  1976. The  Amendment Act consists of five sections by which certain  amendments were introduced into the Principal Act, namely,  the Coal  Mines (Nationalisation)  Act, 26  of 1973.  The   Statement  of   objects  and   Reasons  of  the Nationalisation Amendment Act reads thus:           "After the nationalisation of coal mines, a number      of persons  holding coal  mining leases  unauthorisedly      started  mining  of  coal  in  the  most  reckless  and      unscientific manner without regard to considerations of      conservation, safety  and welfare  of workers. Not only      were they  resorting to slaughter mining by superficial      working of  outcrops and  thereby destroying a valuable      national asset  and creating  problems of water-logging      fires, etc.  for the  future development  of the deeper      deposits, their  unsafe working also caused serious and      fatal accidents.  They were  making larger  profits  by      paying very  low wages, and by not providing any safety      and welfare  measures. Thefts  of  coal  from  adjacent      nationalised  mines   were  also   reported  after  the      commencement of these unauthorised operations which had      shown an  increasing trend of late. Areas where illegal      and  unauthorised  operations  were  carried  on,  were      without any assessment of reserves in regard to quality      and quantity  of coal  which could  be  made  available      after detailed  exploration  work  was  undertaken  and      results analysed.  No scientific  exploitation of these      deposits could be undertaken in the nationalised sector      without these  details. It  was, therefore,  considered      that it  would not be appropriate either to nationalise      these unauthorisedly  worked mines  after  taking  them      over under  the Coal  Mines (Taking Over of Management)      Act,  1973  or  to  get  the  concerned  mining  leases      prematurely  terminated  and  regranted  to  Government      Companies under the Mining and Minerals (Regulation and

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 23 of 45  

    Development) Act,  1957. In view of the policy followed      by the  Central Government that the Coal Industry is to      be in  the nationalised sector, it was decided that the      Coal Mines  Nationalisation Act, 1973 should be enacted      to provide  for termination  of all privately held coal      leases except  those  held  by  privately  owned  steel      companies, so  that it  may be possible for the Central      Government, Government company or Corporation to take 1066      mining leases  where  necessary,  after  the  necessary      exploration has  been made  as to  the  extent  of  the      deposits of coal, etc".      Sections 2  and 3  of the Nationalisation Amendment Act were brought into operation with effect from April 29, 1976. By section 2 of the Amendment Act a new section, section 1A, was  introduced  under  Sub-section  (1)  of  which  it  was declared that  it was  expedient in the public interest that the Union  should take  under its control the regulation and development  of   coal  mines  to  the  extent  provided  in subsections 3  and 4 of section 3 of the Nationalisation Act and subsection  2 of section 30. By sub-section 2 of section 1A, the  declaration contained  in sub-section (1) was to be in addition  to and  not in  derogation of  the  declaration contained in section 2 of the Mines and Minerals (Regulation and Development)  Act, 1957.  By section  3 of the Amendment Act a new sub-section, namely, sub-section 3, was introduced in section  3 of  the principal Act. Under clause (a) of the newly introduced sub-section 3 of section 3, on and from the commencement of  section 3  of the  Amendment Act  no person other than  (i)  the  Central  Government  or  a  Government company or a corporation owned, managed or controlled by the Central Government,  or (ii)  a person  to whom a sub-lease, referred to in the proviso to clause (c) has been granted by any such  Government, company  or corporation,  or  (iii)  a company engaged  in the  production of iron and steel, shall carry on coal mining operation, in India, in any form. Under clause (b)  of sub-section  3, excepting  the mining  leases granted  before   the  Amendment   Act  in   favour  of  the Government, company  or corporation  referred to  in  clause (a), and  any sub-lease  granted  by  any  such  Government, company or  corporation, all  other mining  leases and  sub- leases in  force immediately  before such commencement shall in so  far as  they relate to the winning or mining of coal, stand terminated.  Clause (c)  of the newly  introduced sub- section 3 of section 3 provides that no lease for winning or mining coal  shall be  granted in favour of any person other than the  Government, company  or corporation referred to in clause (a). Under the proviso to clause (c), the Government, the company  or the  corporation to whom a lease for winning or mining  coal has been granted may grant a sublease to any person in  any area if, (i) the reserves of coal in the area are in  isolated small  pockets or  are not  sufficient  for scientific and  economical development in a co-ordinated and integrated manner,  and (ii)  the coal  produced by the sub- lessee will  not be  required to  be transported by rail. By sub-section 4  of section  3, where  a mining  lease  stands terminated under  sub-section 3,  it shall be lawful for the Central Government  or a  Government company  or corporation owned 1067 or  controlled   by  the  Central  Government  to  obtain  a prospecting licence  or mining lease in respect of the whole or part of the land covered by the mining lease which stands terminated. Section  4 of  the Amendment  Act introduces  an additional provision  in Section  30 of the Principal Act by

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 24 of 45  

providing that  any person  who engages, or causes any other person to  be engaged,  in winning  or mining  coal from the whole or  part of  any land  in respect  of which  no  valid prospecting licence  or mining  lease  or  sub-lease  is  in force, shall  be punishable  with imprisonment  for  a  term which may  extend to  two years and also with fine which may extend  to   ten  thousand   rupees.  Section   5   of   the Nationalisation  Amendment   Act  repeals   the  Coal  Mines (Nationalisation) Amendment Ordinance, 1976.      As stated  at the  beginning of  this Judgment,  we are concerned in  these writ petitions to determine the validity of the  Coal Mines  Nationalisation (Amendment)  Act, 67  of 1976,  to  which  we  will  refer  as  ’The  Nationalisation Amendment Act’.      Shri Seervai,  who appears on behalf of the petitioners in writ petition No. 257 of 1977, challenges the legislative competence of  the Parliament  to enact  the Nationalisation Amendment Act.  Article 246 (1) confers upon the Parliament, notwithstanding anything  contained in  clauses 2  and 3  of that Article,  the exclusive power to make laws with respect to any  of the  matters enumerated  in List I of the Seventh Schedule, called  the ’Union  List’. Clause 2 of Article 246 deals with  the  power  of  the  Parliament  and  the  State Legislatures to make laws with respect to any of the matters enumerated in the Concurrent List, while clause 3 deals with the power  of the  State  Legislatures  to  make  laws  with respect to any of the matters enumerated in the State List.      The relevant  entries in  List I  are Entries 52 and 54 which read thus:           Entry 52:-Industries,  the control of which by the      Union is  declared by Parliament by law to be expedient      in the public interest.           Entry  54:-Regulation   of   mines   and   mineral      development to  the extent to which such regulation and      development under  the control of the Union is declared      by Parliament  by law  to be  expedient in  the  public      interest. Entry 24 of the State List reads thus:           Entry 24:-Industries  subject of the provisions of      entries 7 and 52 of List I. 1068 We are  not concerned  here with  Entry 7  of List  I  which relates to  ’Industries declared  by Parliament by law to be necessary for  the purpose of defence or for the prosecution of war’.      Shri Seervai’s argument runs thus:           (a)  Laws made  in the exercise of power conferred                by Entry  54 must  stand the  test of  public                interest because  the  very  reason  for  the                Parliament acquiring  power under  that entry                is that  it is  in public  interest that  the                regulation of  mines and  minerals should  be                under the  control of  the  Union.  In  other                words, Entry  54 confers  a legislative power                which is  purposive, that  is to say, any law                made in the exercise of the power under Entry                54 must  be designed to secure the regulation                and  development  of  coal  mines  in  public                interest  or   else   it   must   fail.   The                Nationalisation Amendment  Act is  not such a                law which  Parliament can pass under Entry 54                because, that  Act not  only  terminates  all                leases  but  it  destroys  the  contracts  of                service of  thousands of  workmen, and indeed                it  destroys  all  other  contracts  and  all

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 25 of 45  

              securities for  moneys lent  without even  so                much as making a provision for priorities for                the   payment    of    debts.    Since    the                Nationalisation Amendment  Act terminates all                leases, it  is a  complete  negation  of  the                integrated  scheme   of   taking   over   the                management  of   mines,  acquisition  of  the                rights of  lease-holders and  the running  of                the mines.           (b)  The word  ’Regulation’ in  Entry 54  does not                include  ’Prohibition’.  ’Regulation’  should                not also  be  confused  with  the  expression                ’Restrictions’ occurring  in Article 19(2) to                (6) of  the Constitution.  In the very nature                of  things,   there  cannot  be  a  power  to                prohibit ’the  regulation and  development of                mines and minerals’. Section 3(4) inserted by                the Nationalisation  Amendment Act imposes no                obligation on  the Central  Government or any                other authority  to obtain a mining lease and                work the  mines, the  leases  in  respect  of                which stands  terminated under  the Act.  The                words "it  shall be  lawful" for  the Central                Government to  obtain a  lease are  words  of                discretionary   power    which   create    no                obligation.  They  only  enable  the  Central                Government  to   obtain   a   lease,   making                something legal  and possible for which there                would otherwise be no 1069                right or  authority to do. Section 3 (4) does                not confer  a power  coupled with  a duty; it                merely confers  a faculty  or power. No Court                can by a Writ of Mandamus or otherwise compel                the Central  Government to  obtain a lease of                coal mine  and to  run it  under any  of  the                provisions of  the Nationalisation  Amendment                Act.           (c)  Where the  Legislative power  is  distributed                among  different   legislative  bodies,   the                Legislature may  transgress  its  legislative                power  either   directly  or  manifestly,  or                covertly or  indirectly. In the instant case,                the exercise  of power  by the  Parliament is                colourable because  although in  passing  the                Nationalisation Amendment Act it purported to                act within  the  limits  of  its  legislative                power,  in   substance  and   in  reality  it                transgressed that  power,  the  transgression                being  veiled   by  what  appears  on  proper                examination  to   be  a   mere  pretence   or                disguise.           (d)  In order to tear off the veil or disguise and                in order  to get  at the substance of the law                behind the  form, the  Court must examine the                effect  of  the  legislation  and  take  into                consideration its object, purpose and design,                Where the  legislative  entry  is  purposive,                like Entry  54 of  the Union  List, it is the                object or  purpose of  the legislation  which                requires consideration. The purpose for which                the  Parliament   is  permitted   to  acquire                legislative   power    of   Regulation    and                Development of  mines must dictate the nature                of law  made in  the exercise  of that  power

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 26 of 45  

              because public  interest demands  that power.                Under the  provisions of  the Nationalisation                Amendment  Act,   not  only   is   there   no                obligation on the Central Government to run a                mine, but there is no obligation imposed upon                it  even   to  carry   out   prospecting   or                investigation in  order to  decide whether  a                particular mine  should  be  worked  at  all.                Section 3(4)  merely authorises  the  Central                Government  to   apply  for   "a  prospecting                licence or  a mining  lease in respect of the                whole or  part of  the land  covered  by  the                mining  lease  which  stands  determined".  A                close examination  of the  Act thus discloses                that far  from providing  for regulation  and                development  of   coal  mines,   it   totally                prohibits all  mining activity  even  if  the                State Government wants to run a mine. It does 1070                not impose  prohibition  as  a  step  towards                running the  mines since there is neither any                obligation to  carry out  the prospecting  or                investigation nor to run the mines.           (e)  The  Nationalisation   Amendment   Act   runs                directly counter  to the  whole policy of the                Coal Mines  (Nationalisation) Act of 1973, to                acquire and  run the  mines. The  Parent  Act                becomes a dead letter in regard to several of                its provisions  ass a result of the amendment                Act. It  only adopts  a colourable  device to                amend   the    Nationalisation   Act    while                completely negativing  it in  fact.  The  Act                therefore lacks  legislative  competence  and                is, in  the  sense  indicated,  a  colourable                piece of legislation.           (f)  Article 31(A)(1)(e)  only lifts a restriction                on the  legislative competence  in so  far as                violation of fundamental rights is concerned.                The most  benign motive  cannot  make  a  law                valid  if   the  legislative   competence  is                lacking.      In support of his submission that the provisions of the Nationalisation Amendment  Act are  not conceived  in public interest and  therefore they  transgress the  limitations of Entry 56, List I, learned counsel relies on the circumstance that whereas  the Coal  Mines Management  Act and  the  Coal Mines  Nationalisation   Act  of   1973  contain   elaborate preambles, the  Amendment Act  contains no  preamble setting out the  mischief to  be  remedied  or  the  benefit  to  be secured, for  which the parent Act had failed to provide. At first blush,  it is  said, it would appear that the preamble to the  parent Act  can be  read  into  the  Nationalisation Amendment Act  but that is impermissible since that preamble provides for  acquisition and  running of  the mines and can have no application to an Act which provides for termination simpliciter of  all mining  leases.  The  preambles  to  the Management Act  and the  Nationalisation Act  are said to be significant in  that they  show that those Acts were enacted in public  interest with a view to rational and co-ordinated development of coal production and for promoting the optimum utilisation of coal production consistently with the growing requirements  of  the  country.  Learned  counsel  has  also compared and  contrasted the  provisions of  these two  Acts with the provisions of the Nationalisation Amendment Act for making good  his point  that the  latter  serves  no  public

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 27 of 45  

interest since it merely terminates all existing leases. The contrast, it  is argued,  is also  provided by section 4A of the Mines  and Mineral  Regulation and  Development Act 1957 which, while  providing for  premature termination of mining leases, requires that 1071 such termination  has to  be followed  by the  granting of a fresh mining  lease so that the mines will continue to work. Reliance is  placed by counsel on the decision of this Court in K.  C. Gajapati Narayan Deo & Ors. v. The State of Orissa to show  how although  the legislature  in  passing  an  Act purports to  act within the limits of its legislative power, in substance  and in  reality it  can transgress that power, the transgression  being veiled  by what  appears on  proper examination to  be a mere pretence or disguise. Attention is then drawn to the decision in Attorney General of Alberta v. Attorney General of  Canada as showing that in order to tear off the veil or disguise or in order to get at the substance of the law behind the form, the court can examine the effect of the  legislation and  take into consideration its object, purpose or  design. In  support of  the submission  that the word regulation  in Entry  54 does  not include prohibition, reliance is  placed on  the decision of the Federal Court in Bhola Prasad  v. The  King Emperor wherein after setting out two decisions  of the Privy Council in Municipal Corporation of City of Toronto v. Virgo and Attorney-General for Ontario v. Attorney-General  for Canada  in which  it was  held that ’regulation’ did  not  include  ’prohibition’,  Gwyer,  C.J. Observed that  he saw  no reason  to differ  from  the  view expressed in those cases.      The central  theme of these diverse points is only one: that the  laws made  in the  exercise of  power conferred by Entry 54,  List I,  must stand  the test  of public interest since the  very reason  for the  Parliament acquiring  power under that  Entry is  that it is in the public interest that the regulation  of mines  and mineral  development should be under the control of the Union. The contention is that since the Nationalisation  Amendment Act  does not impose upon the Government the duty to run the mines which are taken over or even to  carry out  prospecting and investigation but simply provides for  the termination  of mining  leases, the Act is not in  public interest.  What is  in public interest is the regulation  and   development  of   coal  mines,  not  total prohibition of their working.      On a  careful consideration  of this argument which was made plausible  in its  presentation, we see no substance in it. The  learned Attorney  General and the learned Solicitor General have  drawn  our  attention  to  various  facts  and circumstances  and   to  the   provisions  of  various  Acts including the  Nationalisation Amendment  Act which  make it impossible to  hold that  the provisions  of that  Act are a mere 1072 facade for  terminating mining leases without any obligation in  the   matter  of   regulation  of   mines  and   mineral development.      Granting that  Entry 54,  List I  is purposive since it qualifies the power to pass a law relating to "Regulation of Mines  and   Mineral  Development"  by  the  addition  of  a restrictive clause,  "to the extent to which such regulation and development  under the  control of the Union is declared by  Parliament   by  law  to  be  expedient  in  the  public interest", the  provisions of  the Nationalisation Amendment Act show  that they  are designed to serve progressively the purpose of Entry 54.

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 28 of 45  

    The Nationalisation  Amendment Act,  as its  very title shows, is  an  amending  Act.  It  amended  the  Coal  Mines (Nationalisation) Act,  26 of  1973. One must primarily have regard to  the object  and purpose  of that  Act in order to find out  whether the Nationalisation Amendment Act destroys the structure  of that  Act  and  is  a  mere  pretence  for acquiring new  rights without  providing for  payment of any amount for such acquisition.      The Coal  Mines (Nationalisation)  Act  was  passed  in order to  provide for  the acquisition  and transfer  of the right, title  and interest  of the  owners in respect of the Coal mines  specified in  the Schedule to that Act. This was done with  a view  to reorganising  and reconstructing  such coal mines  so as  to ensure  the rational, co-ordinated and scientific development  and utilisation  of  coal  resources consistent with the growing requirements of the country. The high purpose  of that  Act was  to ensure that the ownership and control  of such  resources are  vested in the State and thereby so  distributed as best to subserve the common good. In order  to achieve  that purpose,  the Nationalisation Act provides by section 3(1) that:           On  the   appointed  day,  the  right,  title  and      interest of  the owners  in relation  to the coal mines      specified in  the Schedule  shall stand transferred to,      and shall  vest absolutely  in, the  Central Government      free from all incumbrances. The appointed  day is May 1, 1973. For the removal of doubts it was declared by section 3(2) that:           If, after  the appointed day, the existence of any      other coal  mine comes  to the knowledge of the Central      Government, the  provisions of  the Coal  Mines (Taking      over of Management) Act, 1973, shall until that mine is      nationalised by  an appropriate  legislation, apply  to      such mine. 1073      By section  4, the Central Government became the lessee of the  scheduled coal mines while, section 5 empowers it to transfer its  leasehold  rights  to  a  Government  company. Chapter II of the Coal Mines (Nationalisation Act deals with acquisition of  the rights  of owners of coal mines, Chapter III with payment of amounts to owners of coal mines, Chapter IV with  management of  coal  mines,  Chapter  V  lays  down provisions relating  to employees  of coal mines, Chapter VI contains provisions  governing the payments of amounts to be made by  the Commissioner  of Payments and the last Chapter, Chapter VII, contains miscellaneous provisions.      We  have   already  set   out  the  provisions  of  the Nationalisation Amendment  Act in  extenso, a  little before enumerating the  various points  made out  by Shri  Seeravai during the  course of his argument. It will now be enough to say by  way  of  a  summing-up  of  the  provisions  of  the Nationalisation Amendment  Act that: (1) by section 3(3) (a) of the  Coal Mines  (Nationalisation) Act,  1973  which  was introduced by  the Nationalisation  Amendment Act, no person other than those mentioned in clauses (i) to (iii) can carry on coal  mining operations  after April  29, 1976, being the date on which section 3 of the Nationalisation Amendment Act came into  force; (2) by section (3)(3)(b) all mining leases and sub-leases  stood terminated except those granted before April 29,  1976 in  favour  of  the  Central  Government,  a Government  company   or  corporation   owned,  managed   or controlled by  the Central  Government; (3)  section  (3)(c) prohibits the granting of a lease for winning or mining coal in favour  of  any  person  other  than  the  Government,  a Government company or a corporation of the above description

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 29 of 45  

provided  that   a  sub-lease  could  be  granted  by  these authorities to any person if the two conditions mentioned in the proviso  are satisfied;  and (4)  when  a  mining  lease stands terminated  under section  3(3), "it shall be lawful" for the  Central Government or the Government company or the corporation owned or controlled by the Central Government to obtain a prospecting licence or a mining lease in respect of the whole  or part  of the  land covered by the mining lease which stands  terminated. Section  4 of  the Nationalisation Amendment Act  introduced an  additional penal  provision in the parent Act.      We  are   unable  to   appreciate   the   argument   so meticulously  woven  that  these  provisions  are  a  direct negation of  the principles  of the parent Act and that they destroy the integral scheme of taking over the management of mines,  of   acquiring  the   rights  of  lease-holders  and continuing  to   run  the   mines.  On   the  contrary,  the Nationalisation Amendment  Act is  manifestly in furtherance of the  object of  nationalisation mentioned in the preamble to the parent Act and effec- 1074 tuates the  purpose mentioned  in sections  3(1) and 3(2) of that Act  by the  addition of a new sub-section, sub-section (3), which  terminates all coal mining leases and sub-leases except   those   referred   in   sub-section   (3)(b).   The circumstance that  the marginal  note to  section 3  and the title of  Chapter II  of the  Nationalisation  Act  are  not amended by  the Nationalisation  Amendment Act,  despite the addition  of   a  new   sub-section,  is  of  little  or  no consequence. That  sub-section is a logical extension of the scheme envisaged by the original sub-sections (1) and (2) of section 3.  Besides, marginal  notes to  the sections  of  a statute and  the titles of its chapters cannot take away the effect of  the provisions  contained in  the Act  so  as  to render those  provisions legislatively  incompetent, if they are otherwise  within the  competence of  the legislature to enact. One  must principally have regard to the object of an Act in  order to  find  out  whether  the  exercise  of  the legislative power  is  purposive,  unless,  of  course,  the provisions of  the Act  show that  the  avowed  or  intended object  is   a  mere   pretence  for   covering   a   veiled transgression committed  by the  legislature  upon  its  own powers. Whether  a particular  object  can  be  successfully achieved by  an Act,  is largely  a  matter  of  legislative policy.      The Nationalisation  Amendment Act  needs no  preamble, especially when  it is  backed up  by a statement of objects and reasons.  Generally, an amendment Act is passed in order to advance the purpose of the parent Act as reflected in the preamble to  that Act.  Acquisition of  coal  mines,  be  it remembered, is  not an  end in itself but is only a means to an end. The fundamental object of the Nationalisation Act as also of  the Nationalisation  Amendment Act is to bring into existence a  state of  affairs which  will be  congenial for regulating mines  and for  mineral development. In regard to the scheduled  mines, that purpose was achieved by the means of acquisition.  In regard  to mines which were not included in  the   Schedule,  the   same  purpose   was  achieved  by termination of  leases and sub-leases and by taking over the right to  work the  mines. Termination of leases, vesting of lease-hold properties in the State Governments and the grant of leases  to the Central Government or Government Companies are together  the means  conceived in  order to  achieve the object of  nationalisation of  one  of  the  vital  material resources of  the community.  An infirmity in Shri Seervai’s

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 30 of 45  

argument is  its inarticulate  premise that mere acquisition of coal mines is the end of the Nationalisation Act.      It is  also important  to bear  in mind while we are on the purposiveness  of the Nationalisation Amendment Act that nothing  contained  in  the  later  analogous  Acts  can  be construed as  in derogation  of the  principle enunciated in section  18   of  the  Mines  and  Minerals  Regulation  and (Development) Act, 67 of 1957, which provides that it 1075 shall be the duty of the Central Government to take all such steps  as   may  be   necessary  for  the  conservation  and development of  minerals in India. Therefore, even in regard to matters  falling under  the Nationalisation Amendment Act which terminates existing leases and makes it lawful for the Central Government to obtain fresh leases, the obligation of section 18  of the Act of 1957 will continue to apply in its full rigour.  As contended by the learned Solicitor General, section 18  contains  a  statutory  behest  and  projects  a purposive legislative  policy. The later Acts on the subject of regulation of mines and mineral development are linked up with the policy enunciated in Section 18.      Much was  made by  Mr. Seervai of the circumstance that the  Nationalisation   Amendment  Act,  While  providing  by section 3(4)  that "it  shall be  lawful"  for  the  Central Government, etc.,  to obtain  a  prospecting  licence  or  a mining lease,  did not  impose an  obligation on  any one to work the  mine of  which the  mining lease stood statutorily terminated. No mandamus, it was urged, could therefore issue to compel,  for example  the Central  Government to work any particular mine.  This  argument  overlooks  that  Entry  54 refers to  two things:  (1)  regulation  of  mines  and  (2) mineral development. It is true that the Entry is purposive, since the  exercise of  the power  under Entry  54 has to be guided and  governed by  public interest.  But  neither  the power to  regulate mines  nor the  power to  ensure  mineral development postulates  that no  sooner is  a  mining  lease terminated by  the force  of the  statute, than  the Central Government must begin to work the mine of which the lease is terminated. It  is possible  that after  the Nationalisation Amendment Act  came into  force, there  was a hiatus between the termination of existing leases and the granting of fresh ones.  But,  the  Nationalisation  Amendment  Act  does  not provide that any kind or type of mine shall not be developed or  worked.  Conservation,  prospecting  and  investigation, developmental steps  and finally  scientific exploitation of the mines  and minerals  is the  process  envisaged  by  the Nationalisation  Amendment   Act.  It   is  undeniable  that conservation of  minerals, which  is brought  about  by  the termination of  existing leases and sub-leases, is vital for the development  of mines.  A phased and graded programme of conservation is  in the  ultimate analysis  one of  the most satisfactory and effective means for the regulation of mines and the development of minerals.      Learned  counsel  contended  that  the  Nationalisation Amendment Act is destructive of the provisions of the parent Act. This contention 1076 is   wholly   unjustified.   The   destruction   which   the Nationalisation Amendment  Act brings  about is of the lease or the  sub-lease and not of its subject matter, namely, the mine itself.  In terminating  the lease  of a house one does not destroy  the house  itself.  It  may  be  arguable  that prohibiting the  use of the house for any purpose whatsoever may, for  practical purposes,  amount to  the destruction of the house  itself. But  we cannot accept the contention that

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 31 of 45  

the  Nationalisation   Amendment  Act   contains  provisions directed at  prohibiting the working of mines, the leases in respect of  which are  terminated. A  simple  provision  for granting  sub-leases   shows  that   the   object   of   the Nationalisation Amendment Act is to ensure that no mine will lie  idle   or  unexplored.  Interregnums  can  usefully  be utilised for prospecting and investigation. They do not lead to destruction  of mines.  In fact,  it is just as well that the Amendment  Act  does  not  require  the  new  lessee  to undertake an adventure, reckless and thoughtless, which goes by the  name of  ’scratching  of  mines’,  which  ultimately results in the slaughtering of mines.      Natural   resources,    howsoever   large,    are   not inexhaustible, which  makes it  imperative to conserve them. Without a  wise and  planned conservation of such resources, there can  neither be a systematic regulation of mines nor a scientific  development   of  minerals.  The  importance  of conservation  of   natural  resources   in  any   scheme  of regulation and  development of  such resources  can be  seen from the fact that the Parliament had to pass in August 1974 an Act  called the Coal Mines (Conservation and Development) Act, 28  of 1974,  in order, principally, to provide for the conservation of coal and development of coal mines. Section. 4(1) of  that Act  enables the  Central Government,  for the purposes of  conservation of coal and for the development of coal mines,  to exercise such powers and take or cause to be taken such  measures as  it may be necessary or proper or as may be  prescribed. By  section 5(1),  a duty is cast on the owners of  coal mines to take such steps as may be necessary to ensure  the conservation  of coal  and development of the coal mines  owned by  them. While moving the Nationalisation Amendment Act in the Lok Sabha on May 17, 1976, the Minister of Energy said that:           for proper  scientific working  of coal mines, you      have to have the geological data; you have to have mine      plans; you  have to know the size of the coal reserves,      the quantity  of coal that can be mined; the quality of      coal etc.  For this, the detailed exploration has to be      undertaken. It  is only after all this is done that the      experts can  decide whether  it  will  be  economically      viable and  technically feasible-technical  feasibility      comes first and then economic viability-to 1077      mine the  coal in  that particular  area. No scientific      exploration of  coal is possible from these areas until      all the  facts are  known, until investigation is done.      The nationalised  sector cannot step in unless all this      information  is   gathered.  (Lok  Sabha  Debates,  5th      series, volume 61, May 17, 1976, columns 91-92.)      Measures   taken   for   judicious   preservation   and distribution of  natural resources  may involve restrictions on their  use and  even prohibition,  upto a  degree, of the unplanned working  of the repositories of such resources. We may in  this connection  refer usefully to a passage at page 383 of the First Five Year Plan:           "Though a mining industry has been in existence in      this  country   for  about   half  a  century,  only  a      comparatively small number of mines are being worked in      an efficient  manner under  proper technical  guidance.      Many units are too small in size or too poorly financed      for such working. Lack of a conservation policy is also      responsible for  the present condition of the industry.      There is  large  wastage,  especially  in  minerals  of      marginal grades,  as these  are either abandoned in the      mines or  thrown away on the mine dumps. Ways and means

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 32 of 45  

    must be  devised for  the mining  and recovery of these      low grade  materials. Ores  which it is not possible to      work economically  under normal  conditions  should  be      left in  the mines  so that  they may be extracted at a      later date  without serious  loss. The  mine dumps  all      over the  country have  to be  carefully  examined  and      sampled so  that their  valuable mineral content may be      recovered by methods of beneficiation now available. It      should be  a rule  that selective  mining of high grade      minerals alone  should not  be undertaken  and that all      grades should  be worked and wherever possible, blended      to produce marketable grades."      It was observed in Attorney-General for Ontario (supra) that  a   power  to   regulate  assumes,  naturally  if  not necessarily, the  conservation of  the thing  which is to be made the  subject of  regulation.  This  position  does  not militate against  what was  observed by  Lord Davey in Virgo (supra) that  "there  is  marked  distinction  to  be  drawn between the  prohibition or  prevention of  a trade  and the regulation or  governance of  it,  and  indeed  a  power  to regulate and  govern seems  to imply the continued existence of that which is to be regulated or governed". In the former case, the  Canada Temperance  Act, 1886 was held ultra vires the Dominion  as it  purported  to  repeal  the  prohibitory clauses of  a provincial  Act, but  its own  provisions were held 1078 valid when  duly brought  into operation  in any  provincial area as relating to the peace, order, and good Government of Canada. In  Virgo the  question turned on the scope of power to frame  by-laws and  the decision of the Privy Council was that  a   statutory  power   conferred  upon   a   municipal corporation to make by-laws for ’regulating and governing’ a trade, "does  not authorise  the making it unlawful to carry on a  lawful trade  in a  lawful manner". It may be borne in mind that different considerations apply in the construction of power  to frame  by-laws but even then, the Privy Council qualified the  above statement  of law by adding the clause, "in the absence of an express power of prohibition".      In  support   of  his   submission   that   under   the Nationalisation Amendment  Act there is no obligation on any person or  authority to run a mine, Shri Seervai relies on a passage in  Craies on Statute Law, 6th edition, page 284, to the following effect:           Statutes  passed   for  the  purpose  of  enabling      something  to   be  done   are  usually   expressed  in      permissible language,  that is  to say,  it is  enacted      that ’it  shall be lawful’, etc. or that ’such and such      a thing may be done’. Prima facie, these words import a      discretion, and they must be construed as discretionary      unless there be anything in the subject-matter to which      they are  applied, or in any other part of the statute,      to show that they are meant to be imperative".      But the very passage, after enunciating this principle, refers to  a decision in Julius v. Bishop of Oxford in which Lord Cairns  said that though the words ’it shall be lawful’ are words  making that  legal and possible which there would otherwise be  no right  or authority  to do  and that though those words confer a faculty or power, still           "there may be something in the nature of the thing      empowered to be done, something in the object for which      it is  to be  done, something  in the  conditions under      which it  is to  be done, something in the title of the      persons for whose benefit the power is to be exercised,      which may couple the power with a duty, and make it the

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 33 of 45  

    duty of  the person  in whom  the power  is reposed  to      exercise that power when called upon to do so".      It seems to us clear, and we have discussed that aspect at length,  that section 3(4) uses an enabling or permissive expression in  order that  regulation of  mines and  mineral development may  be ensured  after a scientific prospecting, investigation and planning. It is doubt- 1079 less that,  in the  language of Lord Cairns in Julius, there is  something   in  the   nature  of  the  thing  which  the Nationalisation Amendment Act empowers to be done, something in the  object for  which it  is to be done and something in the conditions  under which  it is  to be done which couples the power  conferred by  the Act with a duty, the duty being not  to   act  in  haste  but  with  reasonable  promptitude depending   upon   the   nature   of   the   problem   under investigation. An  obligation to act does not cease to be so merely because there is no obligation to act in an ad-hoc or impromptu manner.  It is  in the context of a conglomeration of these  diverse considerations  that one  must  appreciate why,  in   section  3(4)   which  was   introduced  by   the Nationalisation   Amendment   Act,   Parliament   used   the permissive expression "it shall be lawful".      Thus, a  broad and  liberal approach  to the  field  of legislation demarcated by Entry 54, List I, an objective and practical understanding  of the  provisions contained in the Nationalisation Amendment  Act and a realistic perception of constitutional principles  will point to the conclusion that the Parliament  had the  legislative competence to enact the Nationalisation Amendment Act.      The argument  which we  have just disposed of is common to all  the matters  before us.  The contention  to which we will now  turn is  limited in  its application  to composite mines which  contain layers  of coal and some other mineral, usually fireclay.  This branch  of Shri  Seervai’s  argument relates   to    the   construction   of   the   Coal   Mines (Nationalisation) Act,  26 of  1973, and the Nationalisation Amendment Act.  The argument  is that  leases  of  composite mines in  which  there  are  alternate  seams  of  coal  and fireclay do not fall within the scope of these Acts.      The pleadings  in this  behalf are full and complete in Writ Petition  No. 257  of 1977  argued by  Shri Seervai and they are  tolerably adequate in a few other petitions. It is expressly averred  and not  effectively  traversed  in  Writ Petition 257 of 1977 that:           the coal  and fireclay  deposits in  the said area      are so  mixed  up  that  one  cannot  work  either  for      extraction  of  coal  or  for  extraction  of  fireclay      without disturbing  each of  the said two minerals. The      deposits are  such that at one layer there is coal, the      next layer  is fireclay,  the other  layer is coal, the      next layer is again fireclay and so on. Nirode Baran  Banerjee, who  is the  petitioner in that Writ Petition, holds a composite lease dated October 17, 1973 for mining coal as well as fireclay. 1080      It  is   urged  by   the  learned   counsel  that   the Nationalisation Amendment  Act terminates  mining leases  in respect of coal only and that the law terminating leases for mining coal  cannot apply  to a mine which contains not only coal but  fireclay also.  The totality  of the submission on this point may be put thus:           (a) Under  Article 31(1)  of the  Constitution, no      person can  be deprived  of his  property  without  the      authority of law. Article 31A(1) which exempts the laws

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 34 of 45  

    mentioned in  clauses (a)  to (e) from invalidity under      Articles 14,  19 and  31 does  not  dispense  with  the      necessity of  the authority  of  law  for  depriving  a      person his  property,  because  the  opening  words  of      Article 31A(1)  are "....  no law  providing  for  ..."      matters mentioned in clauses (a) to (e) shall be deemed      to be void as offending Articles 14, 19 and 31.           (b) The  Nationalisation Amendment  Act confers no      authority to  terminate a  composite lease  for  mining      coal and  fireclay. The right to mine fireclay is given      to the  petitioner by law and it can only be taken away      by law.           (c) Though  the Nationalisation Amendment Act does      not  in  terms  prohibit  the  petitioner  from  mining      fireclay, the effect of the law in a practical business      sense,  is  to  prohibit  the  petitioner  from  mining      fireclay and,  therefore, the  position is  the same as      though the  Act had  enacted the prohibition in express      terms. The  Court must look at the direct impact of the      law on  this right  of the  party, and  if that  impact      prohibits him  from exercising his right, the fact that      there  is   no  express   prohibition  in  the  Act  is      immaterial,           (d) The Nationalisation Amendment Act by making it      punishable  to   mine  coal,  in  substance  and  in  a      practical business sense, prohibits the petitioner from      mining fireclay. For this prohibition the Amendment Act      does not  provide, and therefore, there is no authority      of law  for it.  Coal and  fireclay  are  two  distinct      minerals as  shown by  Schedule II  to  the  Mines  and      Minerals (Regulation  and Development) Act, 67 of 1957,      wherein item  1 is  coal and  item 15  is fireclay. The      dictionary meanings of coal and fireclay also show that      they are two distinct minerals. In support  of these  submissions Shri  Seervai relies  very strongly on the definition of ’coal mine’ in section 2(b) of the Coal  Mines (Nationalisation  Act, 26  of 1973,  and the definition, by  contrast, of  ’coking coal  mine’ in section 3(c) of  the Coking  Coal Mines (Nationalisation) Act, 36 of 1972. 1081      These submissions  are  met  by  the  learned  Attorney General with the answer that if a mine has a seam of coal it is a  coal mine within the meaning of section 2(b) of Act 26 of 1973,  and that,  for the purposes of that definition, it makes no  difference whether  the mine has seams of fireclay also. The  Attorney General says further that the definition of ’coking  coal mine’  in section  3(c) of  Act 36  of 1972 contains words  of  surplusage  which  ought  rather  to  be ignored than  be allowed  to  determine  the  scope  of  the definition contained  in section 2(b) of Act 26 of 1973. The contention, in other words, is that a coal mine is a mine in which there  is at least one seam of coal, no matter whether there are seams therein of fireclay or any other mineral.      The  learned   Solicitor  General   contends  that  the authority of  Law  extends  to  whatever  is  the  necessary consequence of  that which  is authorised.  In other  words, authority to  do a  thing necessarily includes the authority to do  all other things which are necessary for the doing of that which  is authorised. If law authorises the termination of coal  mining  leases,  it  must  be  taken  to  authorise whatever is necessarily incidental to and consequential upon it. Therefore,  composite leases cannot be excepted from the provisions of  an Act  which terminates  coal mining leases. Section 3(3) (a) introduced by the Nationalisation Amendment

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 35 of 45  

Act, it  is contended,  prohibits persons  other than  those mentioned in  clauses (i)  to (iii)  from carrying  on  coal mining  operation  in  any  form.  If  a  person  holding  a composite lease  can do fireclay mining without mining coal, he may do so; otherwise section 3(3) (a) is the authority of law to  prevent him  from mining  fireclay. In  other words, according to  the learned  Solicitor General,  the necessary implication of  law is  that though  a composite  lease  for mining coal  and fireclay  may remain  outstanding after the enactment of  the Nationalisation  Amendment Act, the lessee cannot work it, if it involves a coal-mining operation.      The point  raised by Shri Seervai is so nicely balanced that it  is as  difficult to  reject it  wholly as  it is to accept it  wholly. The  contrast in definitions favours him. The Coal  Mines (Nationalisation) Act, 26 of 1973, defines a coal mine by section 2(b) thus:           "Coal mine" means a mine in which there exists one      or more seams of coal. If this  definition is  considered in isolation, the learned Attorney General  could perhaps  be right  in his submission that any  mine in  which there is one seam of coal, at least one, is  a coal  mine. The  definition takes  no account  of whether there  are seams  of other  minerals, and if so, how many, in the mine. One seam of coal is enough to make a mine a coal mine. For reasons which we will presently mention, it is not easy to 1082 stretch the definition as far as logic may take it, for that will produce  the result  that just  one seam of coal at the roof of a mine or at its base will be enough to bring a mine within the definition contained in section 2(b).      The scheme  of the  Coal Nationalisation  Acts on which Shri Seervai  relies has  a relevance  of its  own  on  this point. The  Coking Coal  Mines (Nationalisation) Act of 1972 and the  Coal Mines  (Nationalisation) Act of 1973 cover the whole field of ’Coal’ which was intended to be nationalised. The titles  of the  two  Acts  and  the  various  provisions contained therein  show that what was being nationalised was three distinct  categories of  mines: mines containing seams of coking coal exclusively; mines containing seams of coking coal along  with seams  of other  coal; and mines containing seams of  other coal.  Though  Parliament  had  power  under Article 31A(1)  (e) of  the Constitution to terminate mining leases without  payment of  any compensation or ’amount’, it decided to  nationalise coal  mines on  payment  of  amounts specified in  the Schedules  to the  Nationalisation Acts of 1972 and  1973. Besides,  even  when  something  apart  from coking coal  mines was acquired, namely, ’coke oven plants’, provision  was   separately  made   in  section  11  of  the Nationalisation Act of 1972, read with the 2nd Schedule, for payment of  amounts to  owners of  coke oven  plants.  Thus, whatever was  intended to  be acquired  was paid  for.  This scheme is  prima  facie  inconsistent  with  the  Parliament intending to  acquire lease-hold  rights in  other  minerals like fireclay, without the payment of any amount.      Coupled with this is the unambiguous wording of section 3(3) (b)  and section 3(3) (c) of the Nationalisation Act of 1973, which  were introduced  therein by  section 3  of  the Nationalisation Amendment  Act. Section  3(3)(b)  says  that excepting the  mining leases  and sub-leases  granted before the commencement  of the  Act in  favour of  or  by  certain bodies or  authorities, all  other mining  leases  and  sub- leases in force before such commencement,           "shall in  so far as they relate to the winning or      mining of coal, stand terminated". (emphasis supplied)

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 36 of 45  

    Section 3(3)(c) provides that:           "no lease  for winning  or mining  coal  shall  be      granted  in   favour  of  any  person  other  than  the      Government, company  or corporation, referred in clause      (a)". (emphasis supplied). These provisions  carry the  scheme of  the  Nationalisation Acts to  their logical  conclusion by  emphasising that  the target of  those Acts  is coal  mines, pure and simple. What stands terminated under 1083 section 3(3)(b)  is certain  mining leases and sub-leases in so far  as they relate to the winning or mining of coal. The embargo placed  by section  3(3)(c) is  on the  granting  of leases for  winning or  mining coal  to persons  other  than those mentioned in section 3(3)(a).      Since the  definition of ’coal mine’ in section 2(b) of the Coal  Mines (Nationalisation) Act, 1973 has an uncertain import and  the scheme  of that  Act and  of the Coking Coal Mines (Nationalisation)  Act, 1972  makes it  plausible that rights in  minerals  other  than  coke  and  coal  were  not intended to  be acquired under the two Nationalisation Acts, it becomes  necessary to compare and contrast the definition of ’coal  mine’ in  section 2(b) of the Act of 1973 with the definition of  ’coking coal  mine’ in  section 3(c)  of  the Coking Coal  Mines (Nationalisation)  Act of  1972.  Section 3(c) of the latter Act says:           "’coking coal  mine’ means  a coal  mine in  which      there exists  one or more seams of coking coal, whether      exclusively or  in addition to any seam of other coal".      (emphasis supplied).      This definition  justifies Shri Seervai’s argument that whereas in regard to coking coal mines, the existence of any seam of  other coal  was regarded  as  inconsequential,  the existence of  any seam of another mineral was not considered as inconsequential  in regard to a coal mine. The definition of coal mine in section 2(b) of the Act of 1973 scrupulously deleted the  clause, "whether exclusively or in addition to" any  other  seam.  The  same  Legislature  which  added  the particular clause in the definition of ’coking coal mine’ in the 1972 Act, deleted it in the definition of ’coal mine’ in the 1973 Act.      The position  in regard  to the  coking coal  mines  is crystal clear,  namely, that  by section  4(1) of the Act of 1972, the right, title and interest of owners in relation to the coking coal mines specified in the First Schedule to the Act stood  transferred  to  and  vested  absolutely  in  the Central  Government   free  from  all  incumbrances  on  the appointed day. The same position obtained under section 5 of that Act  in regard  to coke  oven plants  specified in  the Second Schedule.  But in so far as coal mines are concerned, we have, willy-nilly, to proceed on the basis that by reason of the  definition of coal mine contained in section 2(b) of the Act  of 1973,  and the definition of coking coal mine in section 3(c)  of the  Act of  1972 which presents a striking contrast to  the definition  in section 2(b), composite coal mines, that  is to  say, coal mines in which there are seams of coal and fireclay (we are only concerned with fireclay in these petition),  do  not  fall  within  the  scope  of  the definition of ’coal mine’ in section 2(b) of the 1084 Act of  1973. To  that extent Shri Seervai’s contention must succeed.      But what  then is  the sequitur?  Can  the  lessees  of composite mines (like the petitioners in Writ Petitions Nos. 257, 220, 111, 600, 1130-1134, 352, 221 and 178 of 1977) who

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 37 of 45  

hold composite  mining leases for winning coal and fireclay, continue  their   mining  operations  unabated  despite  the provisions of  the Nationalisation  Amendment Act?  We think not. It is one thing to say that a composite mine is outside the scope  of the definition of coal mine in section 2(b) of the  Nationalisation  Act  of  1973  and  quite  another  to conclude therefrom that the other provisions introduced into that Act  by the  Nationalisation Amendment Act will have no impact on  composite leases  for winning  coal and fireclay. Section 3(3) (a) which was introduced into the parent Act by the Nationalisation Amendment Act provides expressly that on and from the commencement of section 3 of the Amendment Act, that is,  from April  29, 1976,  no person  other than those mentioned in  clauses (i)  to (iii)  shall  carry  on  "coal mining operation,  in India,  in any form". Section 4 of the Nationalisation Amendment  Act which  introduced sub-section (2) in section 30 of the parent Act provides:           "Any person  who  engages,  or  causes  any  other      person to be engaged in winning or mining coal from the      whole or  part of any land in respect of which no valid      prospecting licence  or mining lease or sub-lease is in      force, shall be punishable with imprisonment for a term      which may  extend to two years and also with fine which      may extend to ten thousand rupees".      These provisions  of sections  3(3)(a) and 30(2) of the parent Act will apply of their own force, whether or not the lessee holds a composite lease for winning coal and fireclay and whether  or not  the mine is a composite mine containing alternate seams  of coal  and fireclay.  In other  words, as contended by  the learned  Solicitor General,  if  a  person holding a  composite lease  can do  fireclay mining  without mining coal,  he may  do so.  But if  he cannot  win or mine fireclay without  doing a  coal mining  operation, that  is, without winning  or mining  coal, he  cannot do  any  mining operation at  all. If  he does so, he will be liable for the penal consequences  provided for  in section  30(2)  of  the Nationalisation Act of 1973.      The provision  contained  in  section  3(3)(a)  totally prohibiting the  generality of persons from carrying on coal mining  operation  in  India  in  any  form  and  the  penal provision of section 30(2) virtually 1085 Leave with  the lessees  of composite  mines the  husk of  a mining interest.  That they  cannot  win  or  mine  coal  is conceded and,  indeed, there is no escape from that position in view  of the  aforesaid provisions.  The  only  surviving question then is whether they can win or mine fireclay since their composite  lease is  outside the scope of section 2(b) of the  Nationalisation Act of 1973. The answer has to be in the negative  on the basis of the very averments made by the petitioners  in  their  Writ  Petitions.  For  example,  the petitioner in  Writ Petition  No. 257  of 1957 has stated in his petition, more particularly in paragraph 5 thereof, that the seams  of coal  and fireclay are so situated in the mine of which  he is  a lessee,  that it  is not possible to mine fireclay without  mining coal.  This position  was not  only admitted but  reiterated by  Shri Seervai,  both during  the course of  his oral  argument and  in his written brief. The conclusion is  therefore  inevitable  that  the  lessees  of composite mines  will, for  all practical  purposes, have to nurse their  deeds of  lease without  being able to exercise any of  the rights  flowing from them. On their own showing, they will  be acting  at their  peril if they attempt to win fireclay. If  they cannot win fireclay without winning coal, they cannot win fireclay either, even if they hold composite

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 38 of 45  

leases under  which  they  are  entitled  to  win  coal  and fireclay.      This position  fortifies the  argument of  the  learned Solicitor General  that though  the Parliament  provided for the payment  of amounts for acquisition of certain interests under the  Nationalisation Acts of 1972 and 1973, it did not intend to pay any compensation or amount for the termination of leasehold  rights in  respect of  composite mines.  Mines which have  alternate seams  of coal  and fireclay  are in a class by  themselves and  they appear  to be  far  fewer  in number as  compared with  the coking  coal  mines  and  coal mines, properly  so called.  The authority  of law  for  the termination of  the  rights  of  composite  lessees  is  the provision contained  in section  3(3) (a),  the violation of which attracts  the penal provisions of section 30(2) of the Nationalisation Act  of 1973.  The Parliament  has  deprived composite lessees  of their  right to  win fireclay  because they cannot  do so without winning coal. The winning of coal by the  generality of  people is  prohibited by  the section 3(3) (a) of the Act of 1973.      This is just as well, because Parliament could not have intended that  such islands  of exception should swallow the main stream  of  the  Nationalisation  Acts.  Obviously,  no rights were intended to be left outstanding, once the rights in respect  of coking coal mines and coal mines were brought to an end. 1086      The petitioners  in Writ  Petitions Nos. 257, 220, 111, 600, 1130  1134, 352,  221 and  178 of  1977 hold  composite mining  leases  for  mining  fireclay  and  coal.  In  these Petitions we had passed the following order on May 5, 1978:           "These petitions  are allowed  partly in  that the      petitioners therein shall be entitled, for the duration      of the  unexpired portion  of their existing leases, to      carry on  mining operations  for the purpose of winning      fireclay so  long as,  and to  the extent that, they do      not carry  on any  coal mining  operation or  engage in      winning or  mining coal.  In these Writ Petitions there      will be no order as to costs".      As we  have already  stated, no  tangible benefit  will accrue to  the petitioners from this order because, on their own showing,  they cannot carry on mining operations for the purpose of  winning fireclay  without  carrying  on  a  coal mining operation  or without  engaging in  winning or mining coal. That is how the matter rests.      The only  other arguments  which requires consideration is the  one made  principally by  Shri A. K. Sen which, like Shri Seervai’s argument of legislative competence, is common to all the writ petitions. Shri Sen’s argument may be stated thus:           (1) The  Nationalisation Amendment Act affects, in      substance, two  kinds of transfers: the transfer of the      leasehold interests  of the  lessees in  favour of  the      lessor, namely  the State;  and  the  transfer  of  the      mining business of the lessees in favour of the Central      Government. Since these transfers amount to acquisition      within the meaning of Article 31(2), the Act is open to      challenge under  Articles 14,  19(1) (g)  and 31 of the      Constitution.           (2) The  Nationalisation Amendment  Act is open to      challenge under  Article 14  because lessees  who  fall      within that  Act are  patently discriminated against in      comparison with lessees of other mines, both coking and      non-coking,  who  were  paid  compensation  when  their      property was taken over, first for management under the

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 39 of 45  

    Management Acts  and  then  under  the  Nationalisation      Acts.           (3) The  Nationalisation Amendment  Act is open to      challenge  under   Article  19(1)   (g)   because   the      prohibition against  lessees  from  carrying  on  their      business  and   the  transfer  of  their  business,  in      substance, to the Central Government or a Company is an      unreasonable restriction on the 1087      right of  the lessees to hold their lease-hold property      and to carry on their business of mining.           (4) The  Act is open to challenge under Article 31      because no  provision is  made for  the payment  of any      amount whatsoever  to the lessees whose mining business      is taken  over under  the Act.  No  public  purpose  is      involved either  in the  termination  of  the  lessees’      interest or  in  the  acquisition  of  their  business.      Expropriation without  payment of any amount requires a      very heavy public purpose.           (5) Since  no provision whatsoever is made for the      payment of  any amount  to the lessees whose leases are      terminated, the  Nationalisation Amendment Act is not a      ’Law’ within the meaning of Article 31(2) and therefore      Article 19 (1) (f) is attracted.           (6) The  Act is  not saved  from the  challenge of      Articles 14,  19 and  31 by  Article 31A(1)(e)  because      that Article provides for extinguishment which does not      amount to  acquisition by  the State. If extinguishment      amounting to acquisition was intended to be saved under      Article 31A(1)  (e), the  subject matter  dealt with by      clause (e)  would have  been included  in clause (a) of      that Article.      It shall  have been  noticed that  the entire  argument hinges around  the  premise  that,  by  the  Nationalisation Amendment Act,  the petitioners  right to  property has been acquired without  the payment  of any  amount and  that they have been  unreasonably deprived  of their right to carry on the business  of mining.  A close and careful examination of the provisions of the Coal Mines (Nationalisation) Act, 1973 and  of   the  amendments   made  to   that   Act   by   the Nationalisation Amendment  Act will  show that  there is  no substance in either of these contentions.      The Coal Mines (Nationalisation Act, 1973) nationalised coal  mines  by  providing  by  section  3(1)  that  on  the appointed day,  that is on May 1, 1973, the right, title and interest of  the  owners  in  relation  to  the  coal  mines specified in  the Schedule  shall stand  transferred to, and shall vest  absolutely in,  the Central Government free from all incumbrances.  The Scheduled  mines, 711  in number  and situated in  reputed coal bearing areas, were the ones which were engaged  openly, lawfully  and uninterruptedly in doing coal mining business. Since it was possible to ascertain and verify the  relevant facts pertaining to these undertakings, they were taken over on payment of amounts 1088 mentioned in the Schedule to the Act, which varied from mine to mine  depending upon  the value  of their  assets,  their potential and  their profitability.  In the  very nature  of things, the  list of  mines in  the Schedule  could  not  be exhaustive because  there were  and perhaps  even now  there are, unauthorised  mines  worked  by  persons  who  did  not possess the  semblance of  a title  or right  to  do  mining business. Persons  falling within  that category cannot cite the Constitution  as their charter to continue to indulge in unauthorised mining  which is unscientific, unsystematic and

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 40 of 45  

detrimental to  the national  interests  by  reason  of  its tendency to  destroy the  reserve of  natural resources. But alongside these  persons, there  could conceivably  be  mine operators who  may have  been doing  their business lawfully but who  were not  easily or  readily identifiable.  Section 3(2) of  the Nationalisation  Act, 1973  made provision  for taking over  the management  of such  mines by declaring for "the removal  of doubts"  that if,  after the appointed day, the existence  of any other coal mine comes to the knowledge of the  Central Government, the provisions of the Coal Mines (Taking Over  of Management)  Act, 1973,  shall, until  that mine is nationalised by an appropriate legislation, apply to such mine.  Owners of mines whose mines were not included in the Schedule but whose right, title and interest was to vest eventually in  the Central  Government under "an appropriate legislation"   envisaged    by   section    3(2)   of    the Nationalisation Act were, by this method, placed on par with the owners  of mines  of which the management was taken over under the  Coal Mines (Taking Over of Management) Act, 1973. That Act provides by section 7(1) that every owner of a coal mine shall  be given  by the Central Government an amount in cash for  the  vesting  in  it,  under  section  3,  of  the management of  such mine.  By section  7(2), for every month during which the management of a coal mine remains vested in the Central  Government, the  amount  referred  to  in  sub- section (1)  shall be  computed at  the rate of twenty paise per tonne  of coal on the highest monthly production of coal from such  mine during  any month  in the  years 1969, 1970, 1971 and  1972. The two provisos to that sub-section and the other sub-sections  of section  7 provide  for other matters relating to  payment of  amounts to the owners of coal mines of which  the management was taken over. The Nationalisation Amendment Act  carried the  scheme of  these two Acts to its logical conclusion  by terminating  the so-called leases and sub-leases which  might have remained outstanding. Thus, the purpose attained by these Acts is (1) to vest in the Central Government the right of management of all coal mines; (2) to nationalise the  mines mentioned  in the  Schedule;  (3)  to provide for  the taking over of management of coal mines the existence of  which comes  to the  knowledge of  the Central Government after the appoint- 1089 ed day  and lastly  (4) to  terminate all mining leases. The Management Act  and  the  Nationalisation  Act  provide  for payment of  amounts, by  no means illusory, to the owners of coal mines  whose rights  were taken  over.  In  the  normal course of  human affairs,  particularly business affairs, it is difficult  to conceive  that owners of coal mines who had even the  vestige of  a title thereto would not bring to the notice of  the Central  Government the  existence  of  their mines, when  such mines were not included in the Schedule to the Nationalisation Act. Those who did not care to bring the existence of  their mines  to the  knowledge of  the Central Government,  even  though  amounts  are  payable  under  the Management Act  for  the  extinguishment  of  the  right  of management, did  not evidently possess even the semblance of a title  to the  mines. The  claims of  lessees, holding  or allegedly holding  under such owners, would be as tenuous as the title of their putative lessors.      The Nationalisation  Amendment Act  by section 3(3) (b) undoubtedly terminates  all existing  leases and  sub-leases except those  already granted  in favour of persons referred to in  clauses (i)  to (iii) of section 3 (3)(a). Similarly, section 3  (3)(a) imposes  an embargo  on  all  future  coal mining operations  except in regard to the persons mentioned

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 41 of 45  

in clauses  (i) to (iii). But the generality of leases which are alleged  to have remained outstanding despite the coming into force  of the  Management Act  and the  Nationalisation Act, were  mostly precarious,  whose holders  could at  best present the  familiar alibi  that the origin of their rights or of  those from  whom  they  derived  title  was  lost  in antiquity. Neither  in law,  nor in  equity and justice, nor under  the  Constitution  can  these  lessees  be  heard  to complain of  the  termination  of  their  lease-hold  rights without the  payment of  any amount. The provision contained in section  3(3)(b) of the Nationalisation Amendment Act was made ex  majore cautela  so as  not to  leave any lease of a coal mine  surviving after  the enactment  of the Management Act and  the Nationalisation  Act. There  was no  reasonable possibility of a lawful lease surviving the passing of those Acts; but  if, per  chance, anyone  claimed that  he held  a lease, that stood terminated under section 3(3)(b).      Once the  real nature  of the  scheme envisaged  by the Management   Act    the   Nationalisation    Act   and   the Nationalisation Amendment  Act is  appreciated, it  will  be easy to  see that  section 3(3)  (b) of  the Nationalisation Amendment Act  brings about an extinguishment simpliciter of coal mining  leases within the meaning of Article 31A (1)(e) of the  Constitution. That Article, as it stood prior to the 44th Amendment, read thus: 1090           "31A. (1)  Notwithstanding anything  contained  in      Article 13, no law providing for           (e)  the extinguishment  or  modification  of  any                rights accruing  by virtue  of any agreement,                lease or licence for the purpose of searching                for, or  winning, any mineral or mineral oil,                or the  premature termination or cancellation                of any such agreement, lease or licence,      shall be  deemed to  be void  on the  ground that it is      inconsistent with, or takes away or abridges any of the      rights conferred  by article  14, article 19 or article      31".      We are  not concerned  with the amendment introduced by the 44th  Amendment  Act  which  deleted  the  reference  to Article  31,  since  that  Amendment  Act  came  into  force prospectively with effect from June 20, 1979.      We are  unable to  accept that  the termination  of the mining  leases  and  sub-leases  brought  about  by  section 3(3)(b) of  the Nationalisation  Amendment  Act  is  a  mere pretence for  the acquisition  of the mining business of the lessees and  the sub-lessees.  We have already shown how, in the context  of  the  scheme  of  the  Management  Act,  the Nationalisation Act  and the  Nationalisation Amendment Act, it is  impossible to  hold that  the true intent of the last mentioned Act was to ’acquire’ anyone’s business. This would be so  whether the word ’acquire’ is understood in its broad popular sense  or in the narrow technical sense which it has come  to  possess.  Whatever  rights  were  intended  to  be acquired were  paid for by the fixation of amounts or by the laying down  of a  formula for  ascertaining amounts payable for acquisition.  It is hard to believe that having provided for payment  of amounts  for acquisition  of management  and ownership rights, the legislature resorted to the subterfuge of acquiring  the mining  business of  the surviving lessees and sub-lessees  by the  device of  terminating their leases and sub-leases.  The  legislative  history  leading  to  the termination of  coal-mining leases  points to one conclusion only that,  by and  large, every  lawful interest  which was acquired was  paid for;  the extinguishment  of the interest

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 42 of 45  

which survived  or which  is alleged  to have  survived  the passing of  the Management  Act and  the Nationalisation Act was provided  for merely in order to ensure that no loophole was left  in the  implementation of  the scheme envisaged by those Acts. 1091      This will provide a short answer to Shri Sen’s argument that persons  whose leases  and  sub-leases  are  terminated without payment  of any  amount are discriminated against in comparison with  other lessees  who were  paid amounts  when their property  was taken  over. The  answer is that persons dealt  with   by  section  3(3)(b)  of  the  Nationalisation Amendment Act  are differently  situated from those who were dealt with  by the two earlier Acts. No violation of Article 14 is therefore involved.      Likewise, we see no substance in the contention that no public  purpose  is  involved  in  the  termination  of  the interest of  the lessees  and sub-lessees  which was brought about by  the  Nationalisation  Amendment  Act.  The  public purpose which informs that Act is the same which lies behind its   two   precursors,   the   Management   Act   and   the Nationalisation Act.  The purpose  is to  reorganize and re- structure  coal   mines  so   as  to  ensure  the  rational, coordinated and  scientific development  and utilisation  of coal resources  consistent with  the growing requirements of the country.  The Statement  of Objects  and Reasons  of the Nationalisation  Amendment  Act  points  in  the  direction. Public purpose  runs like  a continuous  thread through  the well-knit scheme of the three Acts under consideration.      This discussion is sufficient to meet the contention of the petitioners  that the  interest of  the lessees and sub- lessees  has   been  "acquired"  under  the  Nationalisation Amendment Act  by the  termination of leases and sub-leases. But, we  may examine  that contention  in the  light of  the relevant Constitutional  provisions and  principles. It  was observed in  Dwarkadas Shrinivas  v. The Sholapur Spinning & Weaving Co.  Ltd. that  the provisions  of the  Constitution touching fundamental  rights must  be construed  broadly and liberally in  favour of  those on  whom the rights have been conferred. "The  form is  unessential. It  is the  substance that we  must seek". Making every allowance in favour of the right to  property which  was available at the relevant time and having  regard to  the substance  of the  matter and not merely to  the form  adopted for terminating the interest of the lessees  and the sub-lessees, we are of the opinion that the Nationalisation Amendment Act involves no acquisition of the interest  of the  lessees and the sub-lessees. It merely brings about  in the  language  of  Article  31A(1)(e)  "the extinguishment"  of  their  right,  if  any,  to  win  coal. Whichever  right,   title  and   interest  was   lawful  and identifiable was  acquired by  the Management  Act  and  the Nationalisation Act. And whichever interest was acquired was paid for. Tenuous and furtive interests 1092 which  survived  the  passing  of  those  Acts  were  merely extinguished by the Nationalisation amendment Act.      In Ajit  Singh v.  State of  Punjab, it was observed by Hindayatullah, J.  in the  dissenting judgment which he gave on behalf  of himself  and Shelat,  J., that  in the case of extinguishment within the meaning of Article 31A, if all the rights in  a property  are extinguished  the result would be nothing else  than  acquisition,  because  no  property  can remain in  suspense without  the rights therein being vested in some  one or  the other.  These observations  made by the learned Judge  are not contrary to anything contained in the

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 43 of 45  

majority judgment  delivered by  Sikri,  J.,  and  naturally therefore,  great  reliance  is  placed  upon  them  by  the petitioners.  Even   greater  sustenance  is  drawn  by  the petitioners from  the judgment  of a  7-Judge Bench  of this Court in Madan Mohan Pathak v. Union of India & Ors. In that case, a  settlement which the Life Insurance Corporation had arrived at  with its  employees  was  substantially  set  at naught by  the Life  Insurance Corporation  (Modification of Settlement) Act,  1976. It  was held  by this Court that the Act was  violative of Article 31(2) since it did not provide for payment  of any amount for the compulsory acquisition of the debts  owed by  the Life  Insurance Corporation  to  its employees; that the direct effect of the impugned Act was to transfer ownership  of the  debts due and owing to Class III and Class  IV employees  in respect  of annual cash bonus to the  Life   Insurance  Corporation   and  that,   since  the Corporation is  owned by  the State,  the impugned Act was a law providing for compulsory acquisition of the debts by the State within the meaning of Article 31(2A).      These decisions have no application to the instant case because the  interest of  the lessees  and sub-lessees which was brought  to termination  by  section  3(3)  (b)  of  the Nationalisation Amendment  Act does not come to be vested in the State.  The Act  provides that excepting a certain class of leases  and sub-leases,  all other  leases and sub-leases shall stand  terminated in  so far  as they  relate  to  the winning or  mining of coal. There is no provision in the Act by which  the interest so terminated is vested in the State; Nor does such vesting flow as a necessary consequence of any of the  provisions of  the Act. Sub-section (4) of section 3 of the  Act  provides  that  where  a  mining  lease  stands terminated under sub-section (3), it shall be lawful for the Central Government  or a Government company or a corporation owned or  controlled by  the Central  government to obtain a prospecting licence  or a  mining lease  in respect  of  the whole or  part of the land covered by the mining lease which stands so terminated. 1093 The  plain   intendment  of   the  Act,  which,  may  it  be reiterated, is neither a pretence nor a facade, is that once the outstanding  leases and  subleases are  terminated,  the Central Government and the other authorities will be free to apply for  a mining lease. Any lease-hold interest which the Central Government,  for example,  may thus  obtain does not directly or  immediately flow  from the  termination brought about by  section 3(3)(b).  Another event  has to  intervene between the  termination of existing leases and the creation of new  interests. The Central Government, etc. have to take a positive  step for  obtaining a  prospecting licence  or a mining lease.  Without it,  the Act  would be ineffective to create of  its own  force any right or interest in favour of the  Central   Government,  a   Government  Company   or   a Corporation owned,  managed or  controlled  by  the  Central Government. As observed by Sikri, J., in Ajit Singh, (supra) the essential  difference between "acquisition by the State" on the  one hand  and  "modification  or  extinguishment  of rights" on  the  other,  is  that  in  the  first  case  the beneficiary is the State while in the second the beneficiary is not  the State.  The Nationalisation Amendment Act merely extinguishes the  rights of the lessees and the sub-lessees. It does  not provide  for the  acquisition of  those rights, directly or  indirectly, by  the State.  Article 31(2A) will therefore come into play, by which,           "Where a  law does not provide for the transfer of      the ownership or right to possession of any property to

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 44 of 45  

    the State  or to  a corporation  owned or controlled by      the State,  it shall  not be  deemed to provide for the      compulsory acquisition  or requisitioning  of property,      notwithstanding that  it deprives  any  person  of  his      property." The position  in Madan  Mohan Pathak  (supra)  was  entirely different because  the direct effect of the impugned Act was to transfer  ownership of  the debts  due and owing to Class III and  Class IV  employees in respect of annual cash bonus to the  Life Insurance  Corporation; since  the L.I.C.  is a Corporation owned by the State, the impugned Act was held to be a law providing for compulsory acquisition of these debts by the  State within  the meaning  of clause (2A) of Article 31.      Shri Sen’s  argument on  the question of acquisition of the rights of lessees and sub-lessees by the State therefore fails. It  follows that  the Nationalisation  Amendment  Act must receive  the protection  of Article  31A(1)(e)  of  the Constitution, that  is to say, that the Act cannot be deemed to be  void on  the ground  that it  is inconsistent with or takes away  or abridges  any  of  the  rights  conferred  by Articles 14, 19 and 31. 1094      These are our reasons for the order passed by us on May 5, 1978 which reads thus :           The stay orders passed in these Writ Petitions are      vacated except  in those  Writ  Petitions,  viz.,  Writ      Petitions Nos.  257, 220, 111, 600, 1130-1134, 352, 221      and 178/77  in which  composite mining leases have been      granted for  mining both  fireclay and  coal. The  stay      orders in  these latter  petitions shall stand modified      as from  to-day on  the lines  of  the  order  recorded      below.           All the  Writ Petitions  are dismissed  with costs      except Writ  Petitions Nos.  257, 220,  111, 600, 1130-      1134, 352,  221 and  178/77 in each of which there is a      composite mining  for mining  fireclay and  coal. These      Petitions are  allowed partly  in that  the petitioners      therein shall  be entitled,  for the  duration  of  the      unexpired portion of their existing leases, to carry on      mining operations  for the  purpose of winning fireclay      so long  as, and  to the extent that, they do not carry      on any  coal mining  operation or  engage in winning or      mining coal.  In these  writ petitions there will be no      order as to costs. We  have  already  indicated  how,  though  the  petitioners holding composite  leases were  permitted to carry on mining operations  for  the  purpose  of  winning  fireclay,  they, according to  their own showing, cannot win or mine fireclay without doing a coal mining operation or without engaging in winning  or   mining  coal.   It  is  self-evident  that  in attempting to  win fireclay,  they will have to act at their own peril  since they  will run the risk of being prosecuted under section 30(2) of the Coal Mines (Nationalisation) Act, 1973.      Petition Nos.  111, 178,  220, 221,  257, 352,  600 and 1130-1134 partly allowed.      Petition Nos.  150, 151,  180, 205-210,  226,  270-271, 346, 355,  403, 396-398,  599, 541,  543, 626, 635-639, 661, 687-692, 758/77  and 154,  571-574, 603, 605, 610 and 611/77 dismissed. S. R. 1095

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 45 of 45