# BAIJNATH KEDIA v. STATE OF BIHAR & ORS

- **Citation:** [1970] 2 S.C.R. 100
- **Court:** Supreme Court of India
- **Decided:** 1969-08-28
- **Case number:** Civil Appeals Nos. 685 to 688 of 1967
- **Bench:** M. Hidayatullah, J. M. Shelat, V. Bhargava, K. S. Hegde, A. N. Grover
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/baijnath-kedia-v-state-of-bihar-ors-4746
- **Pages:** 18

## Headnote

ConsrUution of India, 1950, Seventh Schedule List I, Entry 54, List //
Entry 23-Governmenr of India Act, 1935, Seventh Schedule, List I Entry
36, List JI Entry 23-Power to legislate as to mines and minerals-State's
power is subject to Centre's power-Bihar Legislature had no jurisdiction
to enact 2nd proviso to s. 10(2) of Bihar Land Reforms Act, 1950-Field
already covered by s. 15 of the Mines and Minerals
(Regulation and
Development) Act 61 of 1951-Rule 20(2) of Bihar Minor Minerals
Concession Rules, 1964 invalid for Jack of legislative support.
Entry 54 of the Union List I in the Seventh Schedule to the Constitution confers power for the 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. The corresponding entry in the Federal Li•! I under the
Government of India Act, 1935 was entry 36 which besides mines and
mine-ral developme'Ot dealt with oilfields also.
Entry 23 of Li•t II df the
· Con~titution $Z:ives power for regulation of mines and mineral
develop~
ment to the Stales subject to entry 54 of List I. The corresponding entry
un~er the Government of India Act was entry 23 of List JI.
The Central Assembly in exercise of its power under entry 36 of List
I in the Government df India Act enacted the Mines and Minerals (Regulation and Development) Act 53 of 1948 which dealt with mines, mineraI
development as well as oilfields.
Rule 4 of the Mineral Concession Rules,
1948 made under the Act which
came int<' force on October 25, 1949
gave power to the State Government to frame rules for the regulation and'
development of 'minor minerals' as defined in the Rules.
In 1957 Parliament passed the Mines and Minerals (Regulation and Development) Acr
67 of 1957. The .Act of 1948 was adapted to deal with oilfields and gas
only.
In Act 67 o'f 1957 the provisions relating to regulation of mines in·
ss. 4 t0 13 were bys. 14 made inapplicable to 'minor minerals' as defined·
in the Act.
Rules relating to minor minerals were
under s.
15 to
be
made hy State Governments and till such rules were made any rules
in
force at the commencement of the Act were to continue.
The aopellant purchased in 1963 a lease for quarrying mifior minerals
as defined in Act 67 of 1957 from a vendor who had taken the original
lease from the then landlords in 1955. When under ' 10(1) of the
Bihar Land Reforms Act, 1950 the t;ghts of the intermediary landlord
vested in the State of Bihar the said State became lessor of the appellant's
lease.
The lease was confirmed on behalf of the State and rent unde'f the
terms of the original lease was paid by the appellant up to September 1965.
The Bihar Government had not framed any rules relating to minor mine~
rals under Act 53 of 1948 but it framed the Bihar Minc>r Minernl Contession Rules, 1964 under s. 15 <>f the Act 67 of 1957. Also in 1964 thr
Bihar Legislature amended s. 10(2) of the Reforms Act. A second pr~
>iso was added to sub-<:!. (2) whereby the terms and conditions of an<
iubsisting leases of minor minerals would be substituted by the terms and
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BAIJNATH v. BIHAR STATE (Hidayatul/ah, C.J.)
101
conditions laid down in the Bihar Minor Mineral Concession Rules to the
extent tllat the former were inconsistent with the latter. Rule 20 of the
said Bihar Rules as originally framed provided for realisation of dead rent,
ro1alty and surface rent in respect o'f leases granted or renewed. In terms
tl1e rule was prospective only.
But in December 1964 it was amended
by the addition of a seccind sub-rule according to which the provisions as
to dead. rent etc. would also apply to leases granted or renewed prior to
the date of the commencement of the Act and
subsisting on such
date. On the strength of the amended s.
10(2) of the Reforms Act
and the amended r. 20 the Bihar Government demanded from the appellant, dead rent, royalty and surface rent contrary to t

## Text

_Characters 0–39,941 of 49,654. This is a partial read: ask again with offset=39941 for what follows._

BAIJNATH KEDIA
v.
STATE OF BIHAR & ORS.
August 28, 1969
[M. HIDAYATULLAH, C.J., J. M. SHELAT,
V. BHARGAVA,
K. S. HEGDE AND A. N. GROVER, JJ.]
ConsrUution of India, 1950, Seventh Schedule List I, Entry 54, List //
Entry 23-Governmenr of India Act, 1935, Seventh Schedule, List I Entry
36, List JI Entry 23-Power to legislate as to mines and minerals-State's
power is subject to Centre's power-Bihar Legislature had no jurisdiction
to enact 2nd proviso to s. 10(2) of Bihar Land Reforms Act, 1950-Field
already covered by s. 15 of the Mines and Minerals
(Regulation and
Development) Act 61 of 1951-Rule 20(2) of Bihar Minor Minerals
Concession Rules, 1964 invalid for Jack of legislative support.
Entry 54 of the Union List I in the Seventh Schedule to the Constitution confers power for the 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. The corresponding entry in the Federal Li•! I under the
Government of India Act, 1935 was entry 36 which besides mines and
mine-ral developme'Ot dealt with oilfields also.
Entry 23 of Li•t II df the
· Con~titution $Z:ives power for regulation of mines and mineral
develop~
ment to the Stales subject to entry 54 of List I. The corresponding entry
un~er the Government of India Act was entry 23 of List JI.
The Central Assembly in exercise of its power under entry 36 of List
I in the Government df India Act enacted the Mines and Minerals (Regulation and Development) Act 53 of 1948 which dealt with mines, mineraI
development as well as oilfields.
Rule 4 of the Mineral Concession Rules,
1948 made under the Act which
came int<' force on October 25, 1949
gave power to the State Government to frame rules for the regulation and'
development of 'minor minerals' as defined in the Rules.
In 1957 Parliament passed the Mines and Minerals (Regulation and Development) Acr
67 of 1957. The .Act of 1948 was adapted to deal with oilfields and gas
only.
In Act 67 o'f 1957 the provisions relating to regulation of mines in·
ss. 4 t0 13 were bys. 14 made inapplicable to 'minor minerals' as defined·
in the Act.
Rules relating to minor minerals were
under s.
15 to
be
made hy State Governments and till such rules were made any rules
in
force at the commencement of the Act were to continue.
The aopellant purchased in 1963 a lease for quarrying mifior minerals
as defined in Act 67 of 1957 from a vendor who had taken the original
lease from the then landlords in 1955. When under ' 10(1) of the
Bihar Land Reforms Act, 1950 the t;ghts of the intermediary landlord
vested in the State of Bihar the said State became lessor of the appellant's
lease.
The lease was confirmed on behalf of the State and rent unde'f the
terms of the original lease was paid by the appellant up to September 1965.
The Bihar Government had not framed any rules relating to minor mine~
rals under Act 53 of 1948 but it framed the Bihar Minc>r Minernl Contession Rules, 1964 under s. 15 <>f the Act 67 of 1957. Also in 1964 thr
Bihar Legislature amended s. 10(2) of the Reforms Act. A second pr~
>iso was added to sub-<:!. (2) whereby the terms and conditions of an<
iubsisting leases of minor minerals would be substituted by the terms and
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BAIJNATH v. BIHAR STATE (Hidayatul/ah, C.J.)
101
conditions laid down in the Bihar Minor Mineral Concession Rules to the
extent tllat the former were inconsistent with the latter. Rule 20 of the
said Bihar Rules as originally framed provided for realisation of dead rent,
ro1alty and surface rent in respect o'f leases granted or renewed. In terms
tl1e rule was prospective only.
But in December 1964 it was amended
by the addition of a seccind sub-rule according to which the provisions as
to dead. rent etc. would also apply to leases granted or renewed prior to
the date of the commencement of the Act and
subsisting on such
date. On the strength of the amended s.
10(2) of the Reforms Act
and the amended r. 20 the Bihar Government demanded from the appellant, dead rent, royalty and surface rent contrary to the terms of his lease.
The appellant thereupon filed a writ petition in the High Court. Dissatisfied with the judgment of that court the appellant came to this Court. It
was contended on behalf of the appellant: (i) that the subject of regulation of mines and mineral development came within the exclusive jurisdiction of Parliament as a result of the passing of Act 67 of 1957 with the
result that the State Legislature was left with no power to pass the second
proviso to s. 10(2) and the said pro\iso was therefore ultra vires, (ii)
that r. 20(2) being without legislative support could not touch a lease
granted in 1955. On behalf of the respondent State it was ur11ed that (a)
the 2nd proviso to s. 10(2) of the Reforms Act fell not under entrY 23
but under •~try 18 of List II which dealt with land and land tenures; (b)
Act 67 of 1957 did not result in control of the union as contemplated by
entry 54 in List I and therefore the State's jurisdiction under entry 23
List II was not ousted; ( c) modification of leases was not covered by s. 15
of the said Act and since Parliament was silent on that subject the field
remained open for Je~slation by the State.
HELD : (i) Entry 54 of the Union List opeaks botil of regulation of
mines and mineral development and entry 23 is subject to entry 54.
It is
open to Parliament to declare that it is expedient in the public interest
that the control 1hould vest in Central Government Once this declaration is made and the extent laid down the subject of the legislation to the
extent laid dawn becomes an exclusive s11bject for legislation by Parliament Any legislation by the State after such declaration and touching
upon tho field disclosed in the field is extracted from the legislative competence of the State. [113 B-D]
The declaration contemplated by entry 54 is contained in s. 2 of Act
67 of 1957 and the Central Government is' given control as to regulation
of mines and mineral deve!opment to the extent provided in the Act. Thus
what is left within the competence of State Government has to be warked
out from the terms of the Act itself. [113 F]
The Act deals with minor minerals separately from other minerals. In
respect of minor minerals it provides in s. 14 that ss. 4 to 13 do not apply
'.o prospecting licences and minln~ leases. It goes on to state ins. 15(1)
that the State Government may by notification make rules for regulating
the grant of prospecting licences and mining leases in respect of minor
minerals and for purposes comtected therewith, and in s. 15(2) that till
such rules are framed any rules already in force would continue. No rules
existed in the State of Bihar which could be preserved under s. 15 ( 2).
Therefore tho whole subject of legislation was covered in respect of minor
minerab by s. IS ( 1) . Whether rules under that section were made oc
not the topic was covered by Parliamentary legislation and to that extent
the powers of the State Le~slature were wanting. [114 G-115 B]
It must accordingly he held that by the declaration in s. 2 and by the
enactmept of •· 15 the whole of the field relating to minor minerals came
102
SUPREME COURT REPORTS
[ 1970] 2 S.C.R.
within the jurisdiction of Parliament and no sclJPe was left for the enactA
men( of the second proviso to s. I 0( 2) of tho .Land Reforms A.ct. The
second proviso was therefore Ultra vires.
Bingir Rampur Coal Co. Ltd. :, Ors. v. State of Orissa & Ors. [1961)
2 S.C.R. 537 and State of Orissa v. M. A. Tulloch & Co. [1964) 4 S.C.R.
461, applied.
(ii) Vested interests cannot be taken away except by law made by a
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competent legislature.
Mere
rule-making
power is not sufficient.
In
view of Act 67 of 1957 the Bihar Legislature had lost jurisdiction to legislate about minor minerals. The power of the Central Government to
modify existing mining leases
was confined
under s. 16 of the Act to
leases granted before O<:tober 25, 1949. For modifying leases granted
after that date legislation by Parliament on the lines of s. 16 was necessary.
Rule 20(2) of the Bihar Minor Concession
Rules, 1964 was ineffective
'for the purpose. It could not derive sustenance from the 2nd proviso to
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s. 10(2) of the Reforms Act as that proviso was
not validly enacted.
There was also no other legislative support since s. 15 of the Act of 1957
did not contemplate alteration of term• of leases already in existence before that Act was passed. [116 B-E; 116 G; 117 DJ
(iii) The contentions raised on behalf of the State must be r~jected :
(a) The abolition of the rights of intermediaries in the mines and vesting
of these rights "" lessors in the State Government was a topic connected
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with land and land tenures.
But after the mining leases stood between
the State Government and the leases, any attempt to regulate those mining
leases will fall not in entry 18 but in entry 23. The pith and substance
of the amendment to s. IO of the Reforms Act falls
within entry 23
although it incidentally touches land. [115 C-E]
(b) Union consi~ts of its three limbs namely, Parliament, Union Government and Union Judiciary. Control by Parliament is therefore control
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of the Union within the meaning of entry 54 and for the purpose of ousting jurisdiction under entry 23. [115 F-G)
( c) The entire legislative field relating to minor minerals having been
withdrawn from the State legislature it could not be said that because '· 15
did not deal with modification of leases the State was free to legislate in
this field. [117 A-Cl
CIVIL APPELLATE JURISDICTION: Civil Appeals Nos. 685 to
688 of 1967.
Appeals from the judgments and orders dated November 1,
1966, December 21, 1966 and December 23, 1966 of the Patna
High Court in C. W.J.C. Nos. J 036, 686, 1200 aind 778 of 1965
respectively.
A. K. Sen and P. K. Chatterjee, for the appellants (in all the
appeals).
Lal Narain Singha, Lakshman Saran Sinha and D. Goburdhun,
for the respondents (in C.A. No. 685 of 1967)'.
B. P. Iha, for the respondents (in C.A. No. 686 of 1967).
U, P. Singh, for the respondents Nos. 1 to 3 (in C.As. Nos.
687-and 688 of 1967).
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BAIJNATH v. BIHAR STATE (Hidayaiullah, C.l.)
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Krishna Sen, M. M. Kshatriya and G. S. Chatterjee, for res-.
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pondent No. 4 (in C.A. No._ 687 of 1967) and respondents Nos ...
5 to 8 (in C.A. No. 688 of 1967).
R. C. Prasad, for the il:ltervener (in C.A. No. 685 of 1967).
The Judgment of the Court was delivered by
Hidayatullah; C.J.
This judgment will
also govern
the·
disposal of Civil Appeals 686 (Kanli Prasad Pandey v. State of
Bihar and others), 687 (Shri Krishna Chandra Gangopadhya v._
State of Bihar and others) and 688 (Mis. Pakur Quarries Private
Ltd. & Anr. v. State of Biha~ and others) of 1967. These four
appeals have been brought against a common judgment, Novem·
ber 1, 1966, of the High Court ot Patna and arise out of four
petitions under Art. 226 of the Constitution filed to question the
validity of Proviso (2) to s. 10(2) added by Bihar Land Reforms
(AmeaK!ment) Act 1964 (Bihar Act 4 of 1965), and the operation of the second sub-rule of r. 20 added on December 10, 1964
by a notification of the Governor in the Bihar Minor Mineral
Concession Rules, 1964. The facts of all the four cases are similar and the same points arise for determination.
It is, therefore,
sufficient to state the facts in Civil Appeals 685 and 686 as illus-.
trative of the others as well.
One Jyoti Prakash Pandey obtained on March 23, 1955 from
Babu Bijan Kumar Pandey and Smt. Auila Devi acting for herself.
and also as legatee under the will of one Baidyanath Pandey,
1egistered leases to quarry stone ballast boulders and chips from
and up<'n Blocks Nos. 32, 45/1 45/2 and 45/3 in tauzi No.
1452, khata No. 1 in Mouza Malpahari No. 89 in Pakur SubDivision of Santhal Parganas.
The leases were to commence
from November 1, 1954 and to end on October 31, 1984, that is.
to say, they were for a total period of 30 years.
Jyoti Prakash
Pandey was working under the name and style ot 'Stone India'.
He sold his rights, title and interest by a registered sale-deed on
September 9, 1963 to the present appellant. It is admitted that
rent under the terms of the original lease was deposited upto
September 1965.
On the passing of the Bihar Land Reforms Act, 1950 (Act 30of 1950) the ex-landlords ceased to have any interest fr<Jru the
date of vesting and in their place the State of Bihar became lessor
under s. 10(1) of the Land Reforms Act .. The terms of s. 10
were as given below*. After the vesting of the estate of the inter·
.
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•"JO., Subsisting leases of mines and minera/s.-
(1) Notwithstanding
anything
contained in this Act, where immediately
before the date of vesting of the est2te or tenure there is a sub~isting Jease
of mines or minerals comprised in the e.$tate or tenure or any part
thereof, the whole or that part of the estate or tenure comprised in such ·
•lease shall, with effect from the date of vestirg, be deemed to have been-
:104
SUPREME COURT REPORTS
[1970] 2 S.C.R.
:mediaries, the State of Bihar as the new Jessor recognised the
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lease for the quarrying of stones for the remaining period and
the Deputy Commissioner, Santhal Parganas asked for the .rent
:from the date of vestinlg to 30 April, 1965 at the rate of Rs. 200 /-
per year as stated in the original lease.
This was by a letter
issued from his office on February 2, 1963. On December 10,
1964 the appellants received a letter which gives the gist of the
B
. facts on which the present controversy starts and the relevant part
.may be quoted here :
"Government have been pleased to amend the section 10 of Bihar Land Reforms Act,. 1950, and
according to which the terms and conditions in regard
to leases for minor minerals stand statutorily substituted
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by the corresponding terms and conditions by the Bihar
Minor Mineral Concession Rules, 1964. As a result of
this, rent and royalty etc. in respect of minor minerals
in the State irrespective of the date on which the lease
·was granted are to be paid by all categories of leases
according to the rates given in the aforesaid Rules with
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effect from 27-10-64".
'The ·appellants denied their liability to pay.
The Government
iidormed them by letter as follows :
"This is to inlorm you that the terms and conditions
of your mining lease in so far as they are inconsistent
with the Bihar Minor Mineral Concession Rules, 1964,
framed by the State Government ~er section 15 of
the Mines & Minerals (Regulation & Develop!l'ent)
Act, 1957, stand subs~tuted by the correspondir.6 terms
and conditions prescribed by tho Bihar Mineral Concession Rules, 19&4, from 27-1-1964.
Accordingly,
leased by the State Government to the holder of the said subsisting' lease
for the remainder of the term of that lease, and such holder shall be
entitled to retain possession of the lease-hold property.
(2) The terms and conditions of the said lease by the State Government shall
mutatis mutandis be the same as the terms and condition!:i of the subsisting
condition that, if in the opinion of the State Government the holder of
the lease had not, before the date of the commencement of this Act,
done any prospectina or development work, the State GoverilIPent shall
be entitled at any time before the expiry of one year from the said date
to determine the lease by giving three months' notice in 1writing:
Provided th~t nothing in this 'sub· section shall be deemed to prevent
any modifications being made in the terms and conditions of the said
lease in accordance with the provisions of any Central Act for the time
beiag in force regulating the modification of existing mining leases.
1 (3) The holder of any such lease of mines and miperals as is referred to in subsection (I) shall not be entitled to claim any damages from the outgoing
proprietor or tenure-holder on the ground that the terms of the lease
executed by such proprietor or tenure~holder in respect of the said mines
and minerals have become incapable of fulfilment by the operation of
,this Act.
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RAIJNATH V. BIHAR STATE (Hidayatul/ah, C.J.)
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dead rent, royalty and surface rent in addition to the
other substitution as per Bihar
Mineral Concession'
Rules, 1964, will be as follows :-
l. Dead rent
2. Royalty
3. Surface rent 3
Rs. 50/- per acre per annum.
Rs. 3;'- per 100 cft. of stone chips.
Rs. 2.'- per 100 cft. of stone ballast and boulder).
Rs. 4.1. per 100 cft. on building stones.
Re. If- per 100 Nos. of stones 'setts'.
Rs. 10 per acre per year."
It is this additional demand and the liability to pay, which is the
subject of controversy here.
The Bihar Government contends
:hat the terms uf the origill!al lease have been validly altered by
:he operation o.f the second proviso to s. 10(2) of the Bihar Land
Reforms Act added first by Ordinance III of 1964
and later
incorporated again by the Bihar Land Reforms (Amendment)
Act, 1964 (Act 4 of 1965) and the addition of s. 1 Of). to the Act
by the same enactments.
The material part of the second section
of Act 4 of 1965 is quoted below''"· Section JOA provided for
the vesting of the interest of leases of mines or minerals which
were subject to such leases ·and need not be read here. The State
Government also relied upon the Bihar Mineral Concession (First
Amendment) Rules, 1964 by which a second sub-rule was added
to Rule 20. The twentieth rule, purporting to be framed under
s. 15 of the Mines and Minerals (Regulation and Development)
Act, 1957 (67 of 1957) was amended on December 19, 1964
and now 1 eads :
Rule 20. ( 1) Dead
rent,
royalty
and
surface
r.~nt.-
When a lease is granted or renewed.
(a) dead rent shall be charged at the rates specified
in Schedule 1,
(b)
(c)
royalty shall be charged at the rates specified in
Schedule II, and
surface rent shall be charged at the rates specified by the Govt. in the Revenue Department
from time to time.
---
••2. A111endment of section 10 of Bihar Act xxx0r 1950.-
ln Section 10 of the Bihar land Refonns Act, 1950 (Bihar Act XXX
of 1950) (hereinafter referred to as the said Act).-
(a) in sub-section (2), the following second pro\·iso shall be adrled, namely:·
"Provided further that the terms and conditions of the said lease in
regard to minor minerals as defined in the Mines and Minerals (Regulation
and Development) Act, 1957 (Act LXVII of 1957), shall, in so far as they are
inconsistent with the rules made by the.State Government under section 15
of that Act, stand substituted by the corresponding terms and conditions
prescribed by those rules and if further ascertainn1ent and settlement of the
tcrn1s will become necessary then necessary proceedings for that purpose
shall be undertaken by the Collector": and
c'h) 01ftcr sub-s.
LJSup. Cl/70-8
10 6
SUPREME COURT REPORTS
[1970]2 S.C.R.
( 2) On and from
the date of commencement of
these rules, the provisions of sub-rule ( 1) shall also
apply to ]eases granted or renewed prior to the date of
such commencement and subsisting on such date."
The contention is that the amendment of s. 10 of the Bihar Land
Reforms Act is ultra vires the Constitution and that rule 20(2)
does not legally entitle the recovery of the dead-rent, royalty etc.
as in the Schedules to the Bihar Minor Mineral Concession Rules,
1964.
To understand fully the argument on behalf of the appellants
a resume of the legislation on the subject of mines ?.nd minerals
is necessary. Under the Government of India Act, 1935, the subject of Mines and Minerals was covered by Entry 36 of the Federal Legislative List I and .entry No. 23 of the Provincial Legislative List II of the 7th Schedule. These entries read as follows :
"Entry 36. Regulation of mines and oil fields and
mineral developments to which such
regulation and
development under
a Federal c(\ntrol is declared by
Federal law to be expedient in the public interest."
"Entry 23. Regulation of mines and oil fields and
mineral development subject to the provisions of List I
with respect to regulation
and
development
under
Federal confrol."
When the Indian Independence Act, 194 7 was passed the word
'federal' where it occurs for the first time iJ entry 36 and in entry
23 was changed to 'dominion'.
The entries
are
practically
repeated in the present Constitution and may be re~d immediately
here:
"Entry 54, of List I-Union List-reads :
"Regulation of. mines and mineral C:evelopment to
the extent to which such regulation aind development
under the control of the Union is declared by Parliament by law to be expedient in the public interest."
Entry 23 of List II-State List-reads :
"Regulation of mines and mineral development
subject to the provisiQ!ls of List I with respect to regulation and development under the control of the
Union."
The difference between the entries of the Government of India
Act,· 1935 and the present Constitution lies in the removal of oilfields from the entries and the declaration now must be by
Parliament. Entry 53 in List I deals with oilfields and mineral
resources.
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BAIJNATH v. BIHAR STATE (Hidayatul/ah, C.J.)
IO 7
In 1948 the Legislative Assembly enacted the Mines and
Minerals (Regulation and Development) Act, 1948 (Act 53 of
1948). It received the assent of the Governor-General on September 8, 1948. It was an Act to provide for the regulation of
.mines and oilfields and for the development of minerals. In s. 2
of that Act is to be found the declaration contemplated by entries
36 and 23, 7th Schedule of the Government of India Act, 1935.
That declaration reads as follows :
"2. It is hereby declared that it is expedient in the
public interest that the Central Government should take
under its control the regulation of mines and oilfields
and the development o{ minerals to the extent hereinafter provided."
Section 3 of the Act of 1948 contained definitions. There were
definitions of 'mine' and 'minerals'.
The former meant an excavation: for the purpo~e of searching for or obtaining minerals and
included an oil-well and the latter included natural gas and petroleum.
Section 4 provided that no mining lease would be granted
after the co1J1111encement of that Act other\vise than in accordance
with the rules made under that Act and that a mining lease granted
contrary to the provisions would be void a.nd of no effect.
Section
5 empowered the Central Government, by notification to make
rules for regulating the grant of mining leases or for prohibiting
the grant of such leases in respect of any mineral or in any area.
In particular the rules could provide for the manner in which, the
minerals or areas in respect of which and the persons by whom,
applications for mining leases could be made and the fees payable,
the terms on which and the conditions subject to which, mining
leases might be granted, the areas and the period for which any
mining lease might be granted and the maximum and minlmum
rent payable by a lessee, whether the mine was worked or not.
Under s. 6 the Central Government had power to make rules as
respect mineral development.
Section 7 then provided as
follows :
"7. (I) The Central Government may, by r.otification in the official Gazette, make rules for the purpose of modifying or altering the terms and conditions
of a.ny mining lease granted prior to the commencement of this Act so as to bring such lease into conformity with the rules made under sections 5 and 6 : ·
Provided that any rules so made which provide for
the matters mentioned in clause (c) of sub-section (2)
shall not come into force until they have been approved,
either with
or without modifications, by the Central
Legislature:
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SUPREME COURT REPORTS
[1970] 2 S.C.R.
( 2) The rules made under sub-section (1 ) shall
provide-
( a) for giving previous notice of the modification or
alteration proposed to be made thereunder to the
Jessee, and when the lessor is not the Central
Government, also to the lessor and for affording
them an opportu.nity of showing cause against
the proposal.
( b) for the payment of compensation by the party
who would be benefited by the proposed modification or alteration to the party whose rights
under the existing
lease
would thtreby be
adversely affected; and
( c) for the principles on which, the manner in which
and the authority by which the said compensation shall be determined."
Section 8 provided that the
Central
Government
might by
notification
direct that any power exercisable under that
Act might be exercised, subject to such conditions
if
any,
as might be specified by such officer or authority or might be
specified in the direction.
In furtherance of the powers c6nferred
the Central Government framed the Mineral Concession Rules
1949 and they came into force on the twenty-fifth day of October
1949.
These rules for the first time defined minor minerals and
after ame.ndments ffom time to time the tem1 meant :
"3(ii) 'minor
mineral'
means
building
stone,
ooulder, shingle, gravel, Chalcedony pebbles (used for
ball mill pμrposes only), limeshell, k?nkar and limestone
used for lime burning, murrum, brick-earth (Fuller's
earth), Bentonite, ordinary clay, ordinary sand (used
for non-industrial purposes), road
metal,
reh-matti,
slate and shale when used for building material."
Rule 4 however provided :
"4. Exemption.-These rules shall
not
apply to
minor minerals, the extraction of which shall be regulated by such rules as the Provincial Government may
prescribe."
The word "provincial" was later changed to 'State'.
Although
some of the Provinces (now States) made Minor Mineral Concession Rules, it is admitted that Bihar Government did not frame
any such rules.
The leases of the appellants'
predecessors were granted in
1955 during the subsistence of the Act of 1948 and the Rules of
1949. It is also-lo be noticed that a fresh deCJaration was made by
Parliament as required bv entry 54 List I-Union List of the 7th
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Schedule of the
Constitution.
The
existing laws, however,
continued.
Without a declaration by Parliament the field of legislation might have been open to the State Legislatures under entry
· 23 of List II--Sta,te List of the Constitution but no law was made
except what was enacted by the Bihar Legislature in the Land
Reforms A~t about vesting of mines in the State and the emergence of the State as a lessor in place of all original lessors.
Further rules were made by the Central Government in 1955
and 1956.
In 1955 Minerals Conservation
and Development
Rules were made which were later replaced in 1958. On September 4, 1956, the Central Government in exercise of the powers
conferred by s. 7 of the Act o,f 1948 made the Mining Leases
(Modification of T.~rms) Rules 1956. Under 1he·:e r:iles existing
Conservation and Development Rules.
The expression 'existing
minin)! 1.~oses were to be brought into c0nformity with the Minerals Conservation and Development Rules. The expression 'existing minin)! leases· was defined as a mining lease granted before
the 25th day of October 1949 and subsisting at the commence·
ment of those rules but did not include any lease in respect of any
minor mineral within the meaning of clause (c) of s. 3 of the
Act o.f 1948.
We now come to the year 1957.
In that year Parliament
enacted the Mines and Minerals (Regulation and Development)
Act, 1957 (Act 67 of 1957). It came into force from December
28, 1957.
Act 67 of 1957 made amendments \n the Act of 1948
so as to make the latter relate to oilfields only. AIJ references to
minerals other than oil were removed, with the result that it became legislation exclusively relating
to oil and gas.
Sinc,e the
Act of 1948 was thus altered, Parliament enacted new provislons
for minerals in Act 67 of 1957. We are primarily co.ncerned with
this Act in these appeals. A glance at some of the provisions of
Act 67 cf 1957 is necessary.
The Act 67 of 1957 came into force on 1st June, 1958 and
extended to the whole of India.
It contained the following
declaration in s. 2 :
"It is hereby declared that it is expedient in the public interest that the Union should take under the control
the regulation of mines and the development of minerals to the extent hereinafter provided."
By definition minerals excluded mineral oils because the Act of
1948 exclusively dealt with oil.
':vlinor minerals' were defined
to mean building stones, gravel, ordinary clay,
ordinary sand
other than sand .used for prescribed purposes and any other
mineral which the Central Government may, by notification in the
Official Gazette, declare to be a minor mineral. Act 67 of 1957
contained 33 sections which were separated by general headings
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SUPREME COURT REPORTS
(19 70] 2 S.C.R.
showing the topics dealt with. The first group of sections 4-9
contained general restrictions on undertaking prospecting
and
mining operations.
Of this group we may quote here s. 4 which
will be considered later :
"4. Prospecting or mining operations to be under
licence or lease-
(1) No person shall undertake any prospecting or
mining operations in ·any area, except under and
in accordance with the terms and conditions of
a prospecting licence or, as the case may be, a
mining lease, granted under this Act and the
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rules made thereunder :
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Provided that nothing in this
sub-section
shall affect any pro:.pecting or mini,ng operations
undertaken in any area in accordarice with the
terms and conditions of a prospecting licence
or mining lease grar.ted before the commencement of this Act which is in force at such
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commencement.
( 2) No prospecting licence or mining lease shall be
granted otherwise than in accordance with the
provisions of this Act and the rules made thereunder."
Section 5 Jays down restrictions on the grant of prospecting
licences or mining leases. Section 6 prescribes the maximum area
for which a prospecting licence or mining lease may be granted
and section 7 the periods for which prospecting licences may be
granted or renewed and section 8 the periods for which mining
leases may be granted or renewed.
Section 9 fixes the royalties
in respect of mining leases.
Then follows another group of sections I 0-12 which
Jays
down the procedure for obtaining prospecting licences or mining
leases in respect of land in which the minerals vest in the Government. The next group of sections 13-16 is headed Rules for
rego!ating the grant of prospecting licences and mining leases.
Section 13 gives power to the Central Government to make rules
in respect of minerals. Section 14 however excludes the application of sections 4-13 to minor minerals. It reads :
"The provisions of sections 4 to 13 (inclusive) shall
not apply to prospecting !icen~es and mining leases in
respect of minor minerals."
Section 15 gives powe; to the State Governments to make rules in
respect of minor minerals.
It reads :
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BAIJNATH v. BIHAR STAIE (Hidayatul!ah, C.J.)
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"15 (1). The State Government may, by notification
in the official Gazette, make rules for regulating the
grant of prospecting licences and mining leases in respect of minor minerals
and for purposes connected
therewith.
(2) Until rules are made under sub-section (1),
any rules made by a State Government regulati,n,g the
grant of prospecting licences and mining leases in respect of minor minerals which are in force immediately
before the commencement of this Act shall conti,nue in
force."
Section 16 gives power to modify mining leases granted before
25th October, 1949. It reads:
"16(1 ). All mining leases granted before the 25th
day of October, 1949, shall, as soon as may be after
the commencement of this Act, be brought into conformity with the provisions of this Act ap'd the rules made
under sections 13 and 18 :
Provided that if the Central Government is of opinion that in the interests of minerals development it is
expedient so to do, it may, for reasons to be recorded,
permit any perso)l. to hold one or more such mining
leases covering in any one State a total area in excess
of that specified in clause (b) of section 6 or for a period
exceeding that specified in sub-section ( 1) of section 8.
(2) The Central Government may, by notificatio)l.
in the official Gazette, make rules tor the purpose of
giving effect to the provisions of sub-section (I) and
in particular such rnles shall provide--
Ca) for giving previous notice of the modification or
alteration ,iroposed to be made in any existi)l.~
mining lease to the lessee and where the lessor
is not the Central Government also to the lessor
and for affording him an opportunity of showing cause against the proposal.
(b) for the paym~nt of compensation to the lessee
in respect of the reduction of any area covered
by the existing mining lease; and
( c) for the principles on which, the manner in which,
and the authority by which, the said compensation shall be deter,nined."
Sectio)l. 17 stands by itself is a group and contains special powers
of Central Gnvernment to undertake prospecting or mining
operations in certain cases.
Section 18 deals with mineral development ·and gives additional rule making power to the Ce.ntral
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SUPREME COURT REPORTS
[ 1970] 2 S.C.R.
Go\·ernment.
Next follow some miscellaneous provisions; of
these, only two interest us.
Section 19 Jays down that prospecting licences or mining leases gra,nted, renewed or acquired in
contrave:ntion of the provisions of the Act shall be void and of no
effect and section 20 that the provisions apply to prospecting
licences or mini.ng leases whether granted before or after the Act.
The rest of this Act does not concern this dispute.
It may be pointed out here that the rules made under s. 13
do not apply to minor minerals in view of the provisions of s. 14.
The State o.f Bihar had not made any rules till the Bihar Minor
Mineral Concession Rules, 1964 wer c made.
The modification
of the terms of existing minini! leases was provided for in s. J 6
but that p1ov;sion applied to mining leases g1anted before 25tt
October, 1949.
The provisions of Mining Leases (Modification
of Terms) Rules, 1955 did not apply to minor minerals because
the. definition of 'existing mining lease' excluded a lease in respect
of any minerals.
The power to modify the existing leases in the
ca'c had to be found elsewhere.
The argument of the appellant is that apart from the provisions
of the 2nd proviso to i l 0 added to the Land Reforms Act, 1950
in 1964 by Act IV of 1965 and second sub-rule added to rule 20 of
the Bihar Minor Mineral Concession Rules,
1964. there is
nc
power to modify the terms. These provisions of law are said to be
outside the competence of the State
Legislat~re and the
Bihar
Government. With regard to the State Legislature it is contended
that the scheme of the relevant entries in the Union and State
List is that to the extent to which regulation of mines and mineral
development is declared by Parliament by law to be expedient in
the public interest, the subject of legislation is withdrawn fron'.
the jurisdiction of the State Legislature and therefore Act 67 0f
1957 leaves no legislative field to the Bihar Legislature to enact
Act 4 of 1965 amending the Land Reforms Act. As regards
Rule 20(2) it is contended that the rule making power of its own
force cannot reach mining leases granted in 1955 and that thi.'
could only be done by a competent legislature. These are the two
matters which need decision.
The main arguments are supplemented by the followi;ng contentions. That the Bihar Rules- in so far as they make demands of
rent and royalty on the existing le·ases which were executed prior
to their coming into force are beyond the power to make rules in
respect of minor minerals under s. 15 of Act 67 of 1957. thats.
15 -itself is unconstitutional and void because it delegates legislative power to the rule-making authority and it is excessive delegati0n and that the amendment of Bihar Land Reforms Act is
void because it affects the fundamental rights of the appell~.nt>
guaranteed under Articles 31 and 19 of the Constitution.
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Although these supplementary arguments were raised it is
obvious that they can arise according as the two main arguments
are allowed or disallowed. Therefore it is necessary to address ourselves to the first argument that the legislative competence to enact
the amendment to s. 10 of the Reform Act was wanting. As the
amendment was made after Act 67 of 1957 we have to consider
the position in relation to it.
Entry 54 o.f the Union List speaks
both of r.~gulation of mines and minerals development and entry
23 is subject to entry 54. It is open to Parliament to declare that
it is expedient in the public interest that the control should rest in
Central Government. To what extent such a declaration can go
is for Parliament to determine and this must be
commensurate
with public interest. Once this declaration is made and the extent
laid down, the subject of legislation ID the extent laid
down be·
comes an exclusive subject for legislation by Parliament.
All)
legislation by the State after such declarntion and trenching upon
the field disclosed in the declaration must
necessarily be un·
constitutional because that field is abstracted from the legislative
competence of the State Legislature. This proposition is also self.
evident that no attempt was rightly made to contradict it.
There
are also two decisions of this Court reported in the Hingir-Rampur
Coal Co. Ltd. & Ors. v. State of Orissa and Ors.(1) and State a}
Oriua v. M. A. Tulloch & Co. (') in which the matter is discussed.
The only dispute. therefore. can be to what extent the
declaration by Parliament leaves any scop.e for legislation by the
State Legislature. If the impugned legislation
falls within the
ambit of such scope it will be valid: if outside it, then it must be
declared invalid.
The declaration is contained in s. 2 of Act 67 of 1957 and
speaks of the taking and the control of the Central Government
the regulation of mines and development of minerals to the extent
provided in th.e Act itself. We have thus not to look outside Act
67 of 1957 to determine what is left within the competence oE the
State Legislature but have to work it out from the terms of that
Act. In this connection we may notice what was decided in the
two cases of this Court.
In the Hingir-Rampur(1) case a question had arisen whether the Act of 1948 so comi::etely covered the
fields of conservation and development of minerals as to leave no
room for State legislation. It was held that the declaration
was
effective even if the rules contemplated under the Act of l 948
had not been made. However, considerin~ further whether a declaration mad.e by a Dominion law could be regarded as a declarntion by Parliament for the purpose of entry 54, it was held that it
could no_t and there was thus a lacuna which the Adaptation of
(I) [1961) 2 S.C.R. 537.
(2) [1964] 4 S.C.R. 461.
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SUPREME COURT REPORTS
[1970)2 S.C.R.
Laws vrder, 1950 could not remove. Therefore, it was held that
there was room for legislation by the State Legislature.
In the M.A .Tulloch case(') the firm was working a mining lease
granted under the Act of 1948. The State Legislature of Orissa
then passed the Orissa Mining Areas Development Fund Act,
1952, and levied a fee for the development of mining areas within
the State.
After the provisions came into force a demand was
made for payment of fees due from July 1957 to March 1958 and
the demand was challenged.
The High Court held that after the
coming into force of Act 67 of 1957 the Orissa Act must be held
to be non-existent. It was held on appeal that since Act 67 of
1957 contained the requisite declaration by Parliament under
entry 54 and that Act covered the same field as the Act of 1948
in regard to mines and mineral development, the ruling in HingirRampur(') case applied and as ss.