# PREMIUM GRANITES AND ANR v. STATE OF TAMIL NADU AND ORS

- **Citation:** [1994] 1 S.C.R. 579
- **Court:** Supreme Court of India
- **Decided:** 1994
- **Case number:** Civil Appeal No. 4157 of 1993
- **Bench:** M.N. Venkatachaliah, G.N. Ray
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/premium-granites-and-anr-v-state-of-tamil-nadu-and-ors-12117
- **Pages:** 37

## Headnote

B
~ ,..._
Tamil Nadu Mineral Concession Rules, 1959: Rule B(c), 39-Power of
State Government to grant or renew quarry lease in special cases for reasons
to be recorded in writing in the interest of 'Mineral Development' and in 'Public
Interest'-R.ule 39 held valid and not violative of Article 14-Rule does not C
confer unguided and uncanalised power-Reading down of Rule will defeat
the purpose of Rule-Held expression 'Mineral Development' and 'Jn public
interest' are not vague-But are essential requirement for granting exemption
under Rule 39.
Constitution of India, 1950: Article 14: Statute-Discretion-Guidelines D
for exercise of-Need not be found in the impugned provision-Can be
ga•hered from the setting of the Act and the rules framed thereunder.
Interpretation of Statutes: Statute-Provision for relaxation or exemption-lnterpretation of-Purpose and effect of relaxation should be taken into E
account-R.ule of reading dowrz-,-Applicability of.
Administrative Law: Public policy-Judicial review-Scope of.
In exercise of the power conferred by sub-sections (1) and (l·A) of
Section 15 of the Mines and Minerals (Regulation and Development) Act F
1957 the State of Tamil Nadu enacted the Tamil Nadu Mineral Concession
Rules, 1959. Rule 39 of the said Rules empowers the State Government to
grant quarry leases to private persons in appropriate cases in the interest
o~ mineral development and in public interest for reasons to be recorded
in writing on the terms and conditions different from those laid down in G
Mineral Concession Rules. The validity of Rule 39 was challenged before
+
the High Court of Madras which declared it unconstitutional and void on
the ground that the impugned rule confers unguided and. uncanalised
powers on the State Government.
In appeal to tbis Court, supporting the decision of the High Court, H
579
580
SUPREME COURT REPORTS
[1994) 1 S.C.R.
A it was contended that (i) Rule 39 is quite valid and has been inserted in
the Mineral Concession Rules for a reasonable purpose. It is a part of the
policy underlying the Mineral Concession Rules which is consistent with
the object of the MMRD Act. As exercise of relaxation for grant of quarry
leases under Rule 39 can only be made within the parameters of 'public
B
c
interest' and for the 'mineral development' by recording the reasons in
writing, Rule 39 does not suffer from arbitrariness or unguided m: unbridled power offending Article 14 of the Constitution; (ii) Rule 39 does
not confer an uncanalised power and does not suffer from the vice of want
of guidelines. It contains the guidelines viz. that the grant must be for
mineral development and "in public interest". In other words, Rule 39 has
been inserted to provide for grant of lease which may not be done strictly
under Rule 8 A or 8(C) but which is warranted for mineral development
and 'in public interest' for good reasons to be recorded; (iii) the guidelines
need not be expressly founil in the impugned provisions but such
guidelines can be gathered from the setting of the Acts and the Rules
D framed thereunder; (iv) the power conferred under Rule 39 is not an
absolute, discretionary power of the State Government unfettered by any
valid consideration but exercise of such power within the aforesaid
parameter is always open to judicial scrutiny thereby affording ample
safeguard against any abuse in exercising the power. If in any individual
E
F
case, power has not been exercised properly and the reasons which have
got to be recorded in writing do not stand the scrutiny of reasonableness
and. the purposes for which such power of exemption can be exercised,
challenge for improper action in such individual cases before a wurt of
law can always be made; (v) since reasons are to be recorded in writing
while exercising the power under Rule 39, it can always be ascertained from
the order that may be passed under the said provisions of Rule 39 as to
whether the grant is one for furthering mineral development or not; (vi)
. the

## Text

_Characters 0–39,754 of 91,115. This is a partial read: ask again with offset=39754 for what follows._

PREMIUM GRANITES AND ANR.
A
v.
STATE OF TAMIL NADU AND ORS.
FEBRUARY 4, .1994
[M.N. VENKATACHALIAH, CJ. AND G.N. RAY, J.]
B
~ ,..._
Tamil Nadu Mineral Concession Rules, 1959: Rule B(c), 39-Power of
State Government to grant or renew quarry lease in special cases for reasons
to be recorded in writing in the interest of 'Mineral Development' and in 'Public
Interest'-R.ule 39 held valid and not violative of Article 14-Rule does not C
confer unguided and uncanalised power-Reading down of Rule will defeat
the purpose of Rule-Held expression 'Mineral Development' and 'Jn public
interest' are not vague-But are essential requirement for granting exemption
under Rule 39.
Constitution of India, 1950: Article 14: Statute-Discretion-Guidelines D
for exercise of-Need not be found in the impugned provision-Can be
ga•hered from the setting of the Act and the rules framed thereunder.
Interpretation of Statutes: Statute-Provision for relaxation or exemption-lnterpretation of-Purpose and effect of relaxation should be taken into E
account-R.ule of reading dowrz-,-Applicability of.
Administrative Law: Public policy-Judicial review-Scope of.
In exercise of the power conferred by sub-sections (1) and (l·A) of
Section 15 of the Mines and Minerals (Regulation and Development) Act F
1957 the State of Tamil Nadu enacted the Tamil Nadu Mineral Concession
Rules, 1959. Rule 39 of the said Rules empowers the State Government to
grant quarry leases to private persons in appropriate cases in the interest
o~ mineral development and in public interest for reasons to be recorded
in writing on the terms and conditions different from those laid down in G
Mineral Concession Rules. The validity of Rule 39 was challenged before
+
the High Court of Madras which declared it unconstitutional and void on
the ground that the impugned rule confers unguided and. uncanalised
powers on the State Government.
In appeal to tbis Court, supporting the decision of the High Court, H
579
580
SUPREME COURT REPORTS
[1994) 1 S.C.R.
A it was contended that (i) Rule 39 is quite valid and has been inserted in
the Mineral Concession Rules for a reasonable purpose. It is a part of the
policy underlying the Mineral Concession Rules which is consistent with
the object of the MMRD Act. As exercise of relaxation for grant of quarry
leases under Rule 39 can only be made within the parameters of 'public
B
c
interest' and for the 'mineral development' by recording the reasons in
writing, Rule 39 does not suffer from arbitrariness or unguided m: unbridled power offending Article 14 of the Constitution; (ii) Rule 39 does
not confer an uncanalised power and does not suffer from the vice of want
of guidelines. It contains the guidelines viz. that the grant must be for
mineral development and "in public interest". In other words, Rule 39 has
been inserted to provide for grant of lease which may not be done strictly
under Rule 8 A or 8(C) but which is warranted for mineral development
and 'in public interest' for good reasons to be recorded; (iii) the guidelines
need not be expressly founil in the impugned provisions but such
guidelines can be gathered from the setting of the Acts and the Rules
D framed thereunder; (iv) the power conferred under Rule 39 is not an
absolute, discretionary power of the State Government unfettered by any
valid consideration but exercise of such power within the aforesaid
parameter is always open to judicial scrutiny thereby affording ample
safeguard against any abuse in exercising the power. If in any individual
E
F
case, power has not been exercised properly and the reasons which have
got to be recorded in writing do not stand the scrutiny of reasonableness
and. the purposes for which such power of exemption can be exercised,
challenge for improper action in such individual cases before a wurt of
law can always be made; (v) since reasons are to be recorded in writing
while exercising the power under Rule 39, it can always be ascertained from
the order that may be passed under the said provisions of Rule 39 as to
whether the grant is one for furthering mineral development or not; (vi)
. the word 'public interest' is a word of definite concept. The said expression ·
does D9t suffer from any vagueness or indefiniteness. 'Mineral
development' also Is not a vague concept but has a definite meaning which
G can be tested objectively particularly when reasons are to be recorded in
writing under Rule 39. The provisions of the MMRD Act and the Rules
framed by the Central and the State Governments clearly furnish the scope
and purport of the word 'mineral development'. Scientific exploitation of
the minerals without waste is undoubtedly an exercise for mineral developH ment envisaged by the Act and the Rules; (vii) the power of relaxation as
f
PREMIUM GRANITES v. STATEOFT.N.
581
contained in Rule 39 is similar to various statutes; Section 31 of the A
MMRD Act confers identical power on the Central Government but the
High Court while dealing with Section 31 of the MMRD Act, has not
questioned the validity of the said section; and (viii) where in respect of
prohibitied categories, the law carves out an exception or relaxation, the
rule to be applicable should be appreciated on a different perception.
There the question of unbridled power being allowed to be exercised does
not arise. The question is of taking out certain exceptions from the
prohibited area and keeping certain categories outside the prohibited area
for being allowed to exercise freedom of trade or business from the
restrictions imposed.
Supporting the decision of the High Court; it was contended on
behalf of the Writ Petitioner Respondent that (i) if Rule 39 was interpreted
B
c
to give a wide disc!'etionary power to the authorities to overlook other
provisions of the Mineral Concession Rules, then it would be violative of
Article 14 as being vague and unfettered and giving uncanalised power to D
. the State Government; (ii) the words "public_ interest", "reasons to be
recorded in writing" are not adequate to prevent arbitrary action; (iii) Even
if it is held that consideration of pubic interest and the interest of mineral
development coupled with requirement to record reasons provide
guidelines under which power under Rule 39 is to be exercised, Rule 39, if
given an expansive interpretation, would entitle the authorities concerned E
to disregard the various other provisions as contained in the Mineral
Concession Rules; (iv) when Ruh~ 8(C) epitomizes policy of the State
Government reserving grenite in all its uses to be exploited by the State
Government or through its Corporation, in exercise of the powers under
Rule 39, the State Government should not be permitted to give an interF
pretion to Rule 39 widely and grant a quarry lease contrary to the state
policy; and (v) the State Government is under a constitutional duty to act
fairly and justly and give equal opportunity to every individual who seeks
largess from the Government. The grant of licence to a few people and that
also on grounds of loss of foreign exchange is totally obnoxious to the
theory of just State action. The guiding principle for interpretation of Rule G
39 should be equality of opportunity to every person in the trade and at
the same time imposing sufficient restrictions or guidelines or safeguard
+
to prevent misuse of such a power and such interpretation must enable
Rule 39 to coexist with the other rules as being not inconsistent with the
other rules.
H
I
. 582
SUPREME COURT REPORTS
[1994] 1 S.C.R.
A
Disposing the appeal and the connected SLPS, this Court
B
HELD: 1. Rule 39 of the Mineral Concession Rules is legal and valid.
It cannot be said that Rule 39 is per se obnoxious and contain unbridled,
unguided and uncanalised discretionary power offending Article 14 of the
Constitution. It has been incorporate(! for a valid and reasonable purpose.
The said rule also is not required to be,read down by limiting its exercise
only in respect of variation of some of the terms of lease and not otherwise.
[614-H, 610-E, 614-F-G]
2. For bringing harmonious construction, reading down a provision
in the statute, is an accepted principle. In the facts and circumstances of
C the case and the purpose sought to be achieved by Rule 39, such reading
down is not necesary so as to limit the application of Rule 39 only for
varying some of the terms and conditions of a lease. Such reading down
of Rule 39 and limiting its application will defeat the purpose for which
Rule 39 has been incorporated. [612-H, 613-A, 614-G]
D
E
F
Ranganath Reddy v. State of Kamataka, [1978] 1 S.C.R. 641; Kadar
Nath 'Singh v. State of Bihar, [1964] 6 S.C.R. 784; Jagdish Pandey v. Chancellor, University of Bihar, [1968] 1 S.C.R. 231; Sunil Batra v. Delhi Administration, [1978] 4 S.C.C. 494 and Dr. D.K Trivedi & Sons & Ors. v. State
of Gujarat & Ors. [1986] Supp. S.C.C. 20, referred to.
3.1. The MMRD Act and the rules framed thereunder either by the
Central Government or by the State Government are for mineral develop·
ment subserving the cause of public interest. The power of relaxation
under Rule 39 of Mineral Concession Rules is to be exercised for 'mineral
development' and 'in public interest' after recording reasons for such
exercise of power. The exercise of power under the said Rule 39 cannot be
made arbitrarily, capriciously and on subjective satisfaction of the concerned authority but the same is to be exercised within the parameters of
'mineral development' and 'in public interest' which are not vague and
indefinite concepts. It cannot also be disputed that 'mineral development' ·
G is not a vague expression and the MMRD Act and the rules framed under
it, clearly furnish the scope and purport of the word 'mineral development'.
The expression 'public interest' finds place in the Constitution and in
many enactments and the said expression is a word of definite concept.
Thus, considerations as to public interest and for furtherance of mineral
development as essential requirement to grant exemption under Rule 39
H make the said Rule wholly objective. [609-A, B, C, E, F; 600-B]
f
PREMIUM GRANITES v. STATE OF T.N.
583
T. G. Shivacharana Singh etc. v. State of Mysore, A.I.R. (1965) S.C. 280; A
Moti Ram Daka v. General Manager North East Frontier Railway, A.I.R.
(1964) S.C. 600; Shyam Lal v. State of UP & Anr., [1955) 1 S.C.R. 26 and
Ram Dial and Ors. v. State of Punjab, [1965) 2 S.C.R. 858, referred to.
3.2. It does not appear that consideration of foreign exchange and
export of granite in the State by effective and scientific exploitation of B
quarrying, polishing and sizing of the granite will be alien to the consideration of mineral development in 'public interest'. [611-E]
•
.......
4.1. The Mineral Concession Rules have been framed by the State
of Tamil Nadu in exercise of power under Section 15(1) of the MMRD Act ·c
for development of minor minerals in the State 'in public interest'. The
development of minor minerals cannot and should not be confined to a set
principle or policy. With the advancement of technology and changes in
the socio, economic and political set up in the country and also changes
in the economic and political scenario in other countries, there is bound
to be exigencies requiring reappreciation of the policy of the development D
of minor minerals in the State. [611-C-D]
4.2. If the State Government has an authority to follow a particular
policy in the matter of quarrying of granite and it can change the
provisions in the Mineral Concession Rules from time to time either by E
incorporating a particular rule or amending the same according to its
perception of the exigencies, it will not be correct to hold that on each and
every occassion when such perception requires a change in the matter of
policy of quarrying a minor mineral in the State, particular provision of
the Mineral Concession Rules is got to be amended. On the contrary, if a
suitable provision empowering exemption or relaxation of other provisions
F
in the Mineral Concession Rules is made by confining its exercise in an
objective manner consistent with the MMRD Act and in furtherance of the
cause of mineral development and in public interest, by giving proper
guidelines, such provision containing relaxation or exemption cannot be
held to be unjustified or untenable on the score of violating the other G
provisions of the Mineral Concession Rules. [613-B-D]
+
5. On account of the frequent changes in the policy as to the
quarrying of black granite in the State in respect of revenue lands, persons
who were otherwise eligible unde~ some existing rules before the change of
policy and consequential change in rules and who can effectively quarry H
584
SUPREME COURT REPORTS
[1994] 1 S.C.R.
A
such granite with advanced technological set up, in view of change of the
policy and consequential incorporation of different provisions for grant of
quarry lease, has suffered unmerited hardship by becoming ineligible for
grant of a quarry lease. If in mitgating such unmerited hardship and in
the greater interest for mineral development in the State and for better
B
c
D
E
F
revenue earning from such developmental operation, the question of granting lease to such persons requires to be favourably considered in an
objective manner with the aid of a general provision for relaxation or
· exemption in an appropriate case, without changing the general policy as
a whole as contained in other provisions, it cannot be held that that such
provision is per se obnoxious or violates the principle of just and fair state
action affording equal opportunity to all. It should be borne in mind that
Article 14 has an inbuilt flexibility and it permits classificatfon amongst
persons if such classification has an objective basis consistent with the
object and purpose for which the reasonable classification is intended
(613-E-H]
6. It is not the domain of the court to embark upon unchartered
ocean of public policy in an exercise to consider as to whether a particular
public policy is wise or a better public policy can be evolved. Such exercise
must be left to the discretion of the executive and legislative authorities as
the case may be. The Court is called upon to consider the validity of .a
public policy only when a challenge is made that such policy decision
infringes fundamental rights guaranteed by the Constitution of India or
any other statutory right. (611-F-G]
It will not correct to contend that simply because under Rule 8(C)
of the Mineral Concession Rules, quarry leases are to be granted to
particular agency or agencies, exemption from the operation of the said
Rule cannot be made with the aid of the other provisions of the Mineral
Concession Rules. If all the provisions of Miner~ Concession Rules are
held to form an integrated scheme then each of such provisions must be
held to be mutually complimentary. It will therefore; be not proper to hold
G that a policy decision envisaged in Rule 8(C) cannot be modified with the
aid of the other provisions of the Mineral Concession Rules and in the
field of operation, the said Rule 8(C) holds a supreme position. The
,
~'
application of Rule 8(C) slwuld be understood and held as subject to other
+
provisions in the Mineral Concession Rules. (611-H, 612-A-B]
H
7.1. Where in respect of prohibited categories, the law carves out
PREMIUM GRANITES v. STATEOFT.N.
585
restriction or relaxation, the purpose is to take out certain exceptions from A
-.(
the. prohibited area and keeping certain categories outside the purview of
restriction imposed under other provisions in the Statue. In such circumstances, it will not be appropriate to holcl that the exception militates
against other provisions and hence should not be permitted. [612-D]
7.2. In interpreting the validity of a provision containing relai:ation B
or exemption of another provision of a statute, the purpose of such
relaxation and the scope and the effect of the same in the context of the
purpose of the statute should be taken into consideration and if it sppears
that such exemption or relaxation basically and intrinsically does not
violate the purpose of the statute rendering it unworkable but it is consisC
tent with the purpose of the statute, there will be no occasion to hold that
such provision of relaxation or exemption is illegal or the same is ultra
vires other provisions of the statute. [612·E-F]
8. It cannot be validly contended that in no case departure from a D
prescribed norm and standard is not possible. Consequently, if a provision
empowers such departure from the prescribed norm by invoking discretionary power of relaxation or exemption, per se it cannot be held to be
discriminatory and unfair state action. Whether in a given case, such
departure from the prescribed norm is based on some principle which is
in itself irrational, unreasonable or· discriminatory, needs to be E
demonstrated before a court of law if any challenge of unfair and discriminatory action is taken. [614-E-F]
Prabhakaran Nair & Ors. v. State of Tamil Nadu & Ors., (1987] 4
S.C.C. 238; Ramana Daya Ram Shetty v. International Airport Authority of p
India & Ors., A.I.R. (1979) S.C. 1628 and Gardner v. Jay, 1885 29 Ch.D. 50,
referred to.
9. While no exception can be made to the observation that 'It would be
both unwise and impolitic to leave any aspect of its life to be governed by
discretion when it can conveniently and easily be covered1by the rule oflaw', G
it should also be borne in mind that it is not always feasible and practical to
lay down such exhaustive written guidelines which can cover. all contingencies. It has, therefore, become necessary to make provisions for exercise of
discretion in appropriate cases by giving broad guidelines and indicating
the parameters within which such power is to be exercised. (610-B-C]
H
A
B
586
SUPREME COURT REPORTS
. [1994) 1 S.C.R.
Delhi Transport Corporation v. D.TC. Mazdoor Sangh Congress,
[1991) Supp. 1 S.C.C. 600, held inapplicable.
9.1. The guidelines for exercise of the discretion need not be expressly
found in the impugned provisior.s but such guidelines can be gathered
from the setting of the Act and the rules framed thereunder. [609-C]
Pl. Irani v. State of Madras, [1962) 2 S.C.R. 169; S. Kandaswamy
Chettiar v. State of Tamz7 Nadu, [1985) 1 S.C.C. 290; la/an Trading Company
(P.) Ltd. v. Mill Mazdoor Union, [1967) 1 S.C.R. 15 and Workmen of
Meenakshi Mills Lt.ti. & Ors. etc. v. Meenakshi Mills Ltd. & Anr. etc., [1992)
C 3 S.C.C. 336, relied on.
Dwarka Prasad Laxmi Narain v. State of Uttar Pradesh & Ors., [1954]
S.C.R. 803; R.M. Seshadri v. Distt. Magistrate, Tanjor and Anr., A.I.R. (1954)
S.C. 747; Central Inland Water Transport Corporation Ltd. v. Brojo Nath
Gangun [1986) 3 S.C.C. 156; D.TC. Corporation v. D.TC. Mazdoor ConD gress, [1991) Suppl. 1 S.C.C. 600 and Harakchand Ratanchand Banthia &
Ors. etc. v. Union of India & Ors., [1970) 1 S.C.R. 479, referred to.
E
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 4157 of
1993.
From the Judgment and Order dated 16.6.1993 of the Madras High
Court in W.P. No. 5793 of 1993.
WITH
F
S.L.P. Nos. CC No. 21592, 21690, 21691, 21688, 22042/93, C.A. No.
4158/93, SLP (C) No. 15097/93, SLP. Nos. (CC Nos. 21899, 21929, 21940/93,
IA No. 1/93 in SLP (C) CC No. 21940)
Soli J. Sorabjee, R. Krishnamurthy, AK. Sen, Mrs. Nalini ChidamG baram, C.S. Vaidyanathan, Kapil Sibal, Harish N. Salve, G. Ramaswamy,
S.R. Hedge, K.K. Mani, K.R. Reddy, R. Muthukumaraswamy, Ms. Indu
Malhotra, Ms. Ayesha Khatri, Ms. Daina Pradhan, K. Rajendra
Chowdhary, P.R. Seetharaman, V. Krishnamurthy, S. Thanajayan and
Shailendra Bhardwaj for the appearing parties.
H
The Judgment of the Court was delivered by
PREMIUM GRANITES v.STATEOFT.N. [G.N.RAY,J.]
587
G.N. RAY, J. 1. This appeal and the connected matters are directed A
-(
against the judgment dated 16th June, 1993 passed by the Division Bench
of the Madras High Court in Writ Petition No. 5793 of 1993. The Writ
Petitioner Durai Raju Naidu moved the aforesaid writ petition before the
Madras High Court for a declaration that Rule 39 of The Tamil Nadu
Minor Mineral Concession Rules, 1959 (hereinafter referred to as the B
Mineral Concession Rules) as unconstitutional and void. The said Writ
Petitioner contended inter alia that he was granted lease with respect to
quarry in Survey No. 782/1 in Kulathur village and he had been agitating
before the State Government for the renewal of the said lease but he
apprehended that the concerned authorities were likely to exercise their
prerogative under the said Rule ·39 to grant lease to somebody else and in c
order to safeguard his interest, the Writ Petition was moved by him for the
aforesaid declaration.
2. To sustain the challenge to the said Rule 39, the Writ Petitioner,
Shri Naidu, urged two main grounds, namely, (a) The State Government D
had no power to frame a rule deviating from the Mineral Concession Rules
already made in exercise of the powers conferred under Section 15(1) of
the Mines and Minerals (Regulation and Development) Act 1957
(hereinafter referred to as MMRD Act) and (b) Rule 39 had conferred
arbitrary, uncanalised and unguided power on the executive thereby offending Article 14 of the Constitution of India. The expression "public E
purpose and interest of mineral development" as referred to in the said
Rule 39 is vague and do not constitute sufficient guidelines. The said Writ
Petition was contested by the State of Madras and also by other respondents who were impleaded in the Writ proceedings, namely, the Tamil
Nadu Granites Quarry Owners and Exporters Association, Shanthi F
Granites and the Premium Granites.
3. The Division Bench of the Madras High Court by the impugned
judgment did not accept the first contention of the Writ Petitioner but
upheld the second contention and declared that Rule 39 of the Mineral
G
Concession Rules was unconstitutional and void.
4. Premium Granites and Shanthi Granites preferred a Special Leave
+
Petition No. 10306 of 1993 before this Court inter alia challenging the
impugned decision of the Madras High Court impleading the State of
Tamil Nadu represented by its Commissioner and Secretary to the GovernH
588
SUPREME COURT REPORTS
[1994] 1 S.C.R.
A
ment Industries Department, Sri Durai Raju Naidu, the Writ Petitioner and
the Tamil Nadu Granites Quarry Owners and Exporters Association. As
aforesaid, Civil Appeal No. 4157 of 1993 arises on such special leave
petition filed by the said applicants. The State of Madras has also preferred
special leave petition challenging the said decision of the Madras High
B Court and some other parties also made applications before the Court for
leave to move special leave petitions and to intervene either to oppose the
said appeals or to support the decision of Madras High Court and all these
matters have been heard analoguously and are being disposed of by this
common judgment.
C
5. To appreciate the contentions raised by the contesting parties,
certain dates and events may be stated as hereunder :-
In 1957 the Mines and Minerals (Regulation and Deve~opment) Act
(MMRD Act) was passed by the parliament. In 1959, the Tamil Nadu
D Minor Minerals Concession Rules were issued under Section 15 of the
MMRD Act. Rule 8 of the Mineral concession Rules provided for the
grant of quarry leases in respect of all Minor Minerals. On December 16,
1972, G.O. No, 1932 was issued by the State of Madras inserting Rule 8
(A) of the Mineral concession Rules providing grant of lease to persons
for quarrying minerals for their existing industries or having industrial
E programmes. It is the case of some of the parties in the above matter before
this Court that they had set up industries based on the above rules and
obtained leases of land for quarrying granite for specified period. On
August 25, 1975 by G.O. Ms. No. 993 Rule 8 (A) was amended thereby
enabling the State Government to grant leases for quarrying Black Granite
F
subject to the applicant having an industry or agreeing to set up an industry
within two years.
6. On December 2, 1977 by G.o: Ms. No. 1312, Rule 8 (C) was
inserted thereby prohibiting grant of leases in Government lands for quarrying Black Granite for private persons. Since such Rule 8 (C) provided
G for exclusive exploitation of Black Granite by the State Government, the
validity of Rule 8 (C) was challenged in a writ proceeding before the
Madras High Court. The validity of Rule 8(C) was ultimately upheld by
this Court on 5.2.1981 in the case of Hind Stone (reported in A.l.R. 1981
S.C. 711). Some of the lessee whose leases had expired by efflux of time,
H made applications for renewal of their leases but no renewal was granted.
+
PREMIUM GRANITES v.STATEOFT.N.[G.N.RAY,J.)
589
i:n 1984 Writ Petition No. 12267 of 1984 was filed by one of such applicants A
for renewal before this Court for a mandamus to direct State Government
to grant renewal of lease for a further period of ten years and similar Writ
Petitions were also moved before this Court for the aforesaid relief by some
of the leassees whose leases had also expired. In such Writ Petitions this
Court has passed ad-interim order of status quo on May 3, 1984 as regards B
possession. Applications were also filed before this Court for vacating
status quo order but such applications were dismissed by this Court on
September 28, 1984 and the Writ Petitioners who were lessees but whose
leases had expired, continued to remain in possession of land in terms of
the interim order of this Court without, however, any right to quarry
operations. On December 9, 1988, by G.O. No. 1273 Rule 8(C) was C
amended thereby providing for grant of lease to quarry Black Granite to
private persons for their existing industries or having industrial programme.
A number of lessees whose leai;es had expired made applications for grant
of lease to quarry Black Granite. Their claims were considered by the
concerned department and were recommended to the State Government D
It appears that on September 2, 1989, the rules were further amended by
G.O. No. 608 thereby providing for lease for quarrying Black Granite only
to persons having industries but the said grant was made under a tender
system. On June 10, 1992 by G.O. Ms. No. 214, Rule 8(C) was amended.
Rule 8(C) as amended provides for grant of quarry lease to Government
Company and Rule 8(A) as amended by G.O. 214 provides for quarry lease E
to be granted only to persons having "Letter of Commitment". The said
G.O. also provided for canalisation of granite quarried. The validity of Rule
8(D) containing canalising privisions wrre challenged before the High
Court of Madras and such Rule 8(D) was struck down by the High Court.
On March 5, 1993, this Court, in Writ Petition No. 12267 of 1984 and F
connected matters passed an order to the effect that the State Government
could consider and pass orders in respect of relief sought for by the
petitoners for lease of quarrying Black Granite. On March 8, 1993, G.O.
No. 97 was passed introducing Rule 39 of the Mineral Concession Rules
providing for grant of leases "in special circumstances in the interest of
mineral development" and "in public interest" otherwise than in accordance G
with the Mineral Concession Rules. As stated earlier, the validity of Rule
39 was challenged in a writ petition before the Madras High Court.
7. It may be stated here that by G.O. Nos. 125 and 197 the State of
Madras granced quarry leases in favour of some persons who had estab- H
590
SUPREME COURT REPORTS
[1994] 1 S.C.R.
A
lished industries and had been granted quarry leases earlier and who had
been allowed to continue in possession all through. After Rule 39 was
struck down by the Madras High Court two Writ Petitions were filed
before the Madras High Court for cancelling leases granted by the said
G.O. Nos. 125 and 197 in exercise of the power under Rule 39 of the
B
c
Mineral Concession Rules. The State Government opposed such Writ
Peitions for cancelling the leases and inter alia contended that the grant of
leases to existing industries was traceable to Rule 8(A) as amended by G.O.
No. 214 dated June 10, 1992 and such grant of lease could be sustained
without reference to Rule 39 since struck down by ~he Madras High Court
but the High Court allowed the said Writ Petitions and set aside G.O. Nos.
125 and 197 by which the leases were granted in favour of some persons.
It has been held by the High Court that the grattt of leases cannot be
sustained under Rule 8(A) of the Mineral Concession Rules and such grant
of leases can be referable only to Rule 39 and since Rule 39 has been struck
down, the grant made under the said Rule 39 is also liable to be set aside.
D Such grantees, therefore, have also moved special leave petitions before
this Court inter alia challenging the decision of the Madras High Court
striking down Rule 39.
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8. To appreciate the rival contentions raised by the parties either in
support or against the validity of Rule 39 of the Mineral Concession Rules,
the provisions of Rule 39 are set out as hereunder:
"In exercise of the powers conferred by sub-section (1) and (lA) of
Section 15 of the Mines and Minerals (Regulation and Development Act,
1957 (Central Act 67of1957) the Governor of Tamil Nadu hereby makes
the following amendment to the Tamil Nadu Minor Mineral Concession
Rules, 1950."
The amendment hereby made shall come into force on the 8th March
1992.
AMENDMENT
In the said rules, after rule, 38, the following rule shall be added,
namely:
"39. Powers of State Government to grant or renew quarry lease or
H permission etc. in special cases:
PREMIUM GRANITES v. STATE OFT.N. [G.N. RAY, J.)
591
Notwithstanding anything contained in these rules, the State GovernA
ment, if in any case, are of opinion that in the interest of mineral development and in the public interest it is necessary so to do, they may, by order
and for reasons to be recorded:
(a) grant or renew a lease or permission to quarry any mineral; or
B
(b) allow the working of any quarry for quarrying any miner~;
on terms and conditions different from those laid down in those rules".
9. The learned counsel challenging the correctness of the decision of C
the Division Bench of the Madras High Court striking down Rule 39 as
arbitrary, have urged a number of points. Since all the matters are being
disposed of by common judgment, we do not propose to deal with the
contentions made by each of the learned counsel challenging or supporting
the impugned decision of the Madras High Court separately in view of the
fact that the grounds urged by the learned counsel are more or less similar D
and at times overlapping. We, therefore, propose to deal with the contentions raised by the learned counsel not individually but generally.
10. As already indicated, the only ground on which Rule 39 of the
Mineral Concession Rules has been struck down by the Madras High Court E
is that such Rule gives unguided and uncanalised powers to the State
Government. The arguments advanced by the learned counsel challenging
the decision of the Madras High Court striking down Rule 39 may be
summarised to the following effect:
(1) Rule 39 contains the guidelines viz. the grant under Rule 39 can F
be made only "in the interest of mineral development" and "in public
interest" for reasons to be recorded in writing.
(2) The object of the MMRD Act itself is for regulation of mining
and "mineral development". The Rules framed under the MMRD Act are
also intended to subserve the said object, namely, mineral development. G
+
The provisions of the MMRD Act and the Rules framed by the Central
and the State Governments clearly furnish the scope and purport of the
Word 'mineral development'. Scientific exploitation of the minerals without
waste is undoubtedly an exercise for mineral development envisaged by the
Act and the Rules.
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(3) Since reasons are to be recorded in writing while exercising the
B
power under Rule 39, it can always be ascertained from the order that may
be passed under the said provisions of Rule 39 as to whether the grant is
one for furthering mineral development or not. .
( 4) The word "public interest" is a word of definite concept which
has been referred to in the Constitution and in many other Acts. The
import of the expression "public interest" has been considered and noted
in the decisons of this Court. Hence, the said expression does no longer
suffer from any vagueness or indefiniteness.
C
(5) Power under Rule 39, being controlled by such consideration "in
the interest of mineral development" and in "public interest", cannot be
exercised arbitrarily and capriciously but such exercise has to be made with
definite objective purpose. There is, therefore, no occasion to strike down
Rule 39 on the score of being potentially arbitrary and capricious and open
to unguided and uncanalised exercise of power. If in any particular case,
D the aforesaid purposes are not followed in exercising power under Rule 39,
then such improper action, and not Rule 39 itself, can be challenged.
( 6) In different Acts and Rules, both Central and State including
Rules framed by some other states under MMRD Act, provisions similar
E to Rule 39 have been made and such provisions have been noticed by
courts of law but for good reasons have not been struck down as violative
of Article 14 of the Constitution.
11. We have already indicated the outlines of various government
orders amending the Mineral Con.cession Rules from time to time. The
F
picture which emerges from the aforesaid amendments made in the
Mineral Concession Rules may be stated as hereunder: -
12. The Mineral Concession Rules were framed under Section 15 of
the MMRD Act providing for grant of quarry leases and permission in
G respect of minor mint..rals both in revenue land and patta lands. In the year
1972 the Mineral Concession Rules were amended and under such amendment, the grant of lease of revenue land to quarry granite could be made
in favour of private persons only if they had industries or industrial
programmes indicating that the policy of the government to exploit black
granite scieutifically to avoid wastage was being implemented. A number
H of persons including some of the appellants in these proceedings had
PREMIUM GRANITES v. STATE OFT.N. [G.N. RAY, J.]
593
established industries pursuant to the Rules as amended and applied and A
obtained leases for quarrying black granite for a period of ten years in 1973
- such leases being valid upto 1983. In December, 1977, Rule 8(C) was
introduced prohibiting grant of leases for quarrying black granite by private
persons and confining expliotation only by the Government. The validity of
such rule was challenged but as aforesaid the said rule was upheld by this B
Court in the case of Hind Stone. When the leases for quarrying black
granite in revenue lands for a period of ten years expired in 1983, the
lessees including some of the appellants made applications for grant of
renewal but they were not eligible for getting such renewal in view of Rule
8(C) the validity of which was upheld by this. Court. The applicants for
getting such renewal of lease including some of the appellants filed Writ C
Petitions before this Court and as indicated hereinbefore orders for maintaining status quo as to the possession of the lands were passed by this
Court without however giving any right to quarry. In 1988, Rule 8(C) was
amended when,by provision was made for grant of leases for quarrying
black granite to private persons having industries or having industrial D
programmes. Such amendment of Rule 8(C) virtually restored the position
as was prevailing in· 1972. The persons who had set up industries or had
industrial programmes for quarrying black granite scientifically as desired
by the government, made applicantions for grant of renewal of leases. Such
applications were scrutinised by the concerned department and recommendations for grant of renewal of leases were made by the department. At E
that stage, in 1989 the Mineral Concession Rules were further amended
inter alia providing that quarry leases were to be granted to industries only
under tender system. Tenders were floated and some of the aspirants for
getting leases participated in such tenders and those who had participated
and were successful were given the letters of commitment assuring grant F
of lease to them if they would set up industries. In 1992, the rules were
amended again by G.O. Ms. 214 drastically. As per the amended rules,
grant of quarry leases to quarry black granite were to be made only to
government companies and the companies having letters of commitment.
13. It does not require any imagination to note that there were G
frustration and resentment of such persons.like some of the appellants who
had set up industries based on the old rules and who had been starving for
raw materials but who had become disabled from getting any lease in view
of restriction of granting of such lease and confining the grant of lease in
favour of only such private persons who held the letters of commitment.
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SUPREME COURT REPORTS
[1994] 1 S.C.R.
14. It has been contended by the learned counsels in support of Rule
39 that the State Government having realised the injustice and unmerited
hardship to be suffered by some persons and also having realised that for
furthering mineral development which will be in the public interest, it was
desiiable to nittke suitable provisions so that the ·rigours created because
of the amendment made by G.O. Ms. 214 in 1992 confining grant of leases
to private persons holding letters of commitment, should be relaxed. It was
on such perception that Rule 39 was introduced in the Mineral Concession
Rules enabling the government to grant quar!y leases to private persons in
appropriate cases in the interest of mineral development and in public
interest for reasons to be recorded in writing. It is, threrfore, necessary to
decides whether introduction of Rule 39 in the Mineral Concession Rules
was justified and desirable and even if it may be justified or desirable, as
a matter of policy, whether in .Jaw such amendment can be sustained.
15. Elaborating the contentions made before this Court in support o!
D Rule 39, it has been contended by the learned counsels that Rule 39 does
not confer an uncanalised power and does not suffer from the vice of want
of guidelines. It has been urged that Rule 39 contains the guidelines viz.
that the grant must be for mineral development and "in public interest". In
other words, Rule 39 has been inserted to provide for grant of.lease which
may not be done strictly.under Rule 8(A) or 8(C) but which is warranted
E
for mineral development and "in public interest" for good reasons to be
recorded.
F
16. It has been urged that mineral development is not a vague
concept but has a- definite meaning which can be tested objectively particularly when reasons are to be recorded in writing under Rule 39.
17. The learned counsel have contended that the object of the
MMRD Act is for regulations of mineral.development and the rules framed
under the MMRD Act both by the Central and State Government clearly
furnish the scope-and purport of the word "mineral development". It has
G been s.trongly contended that scientific exploitation of minerals without
waste is undoubtedly a part of mineral development as envisaged by the
MMRD Act and the rules framed thereunder. It ha~ been urged by the
learned counsel that the word "public interest" having been referred to in
the Constitution and. in many enactments is a word of definite concept.
H
18. The validity of service rules including fundamental Rule 56 J
PREMIUMGRAt"IITTES v. STATE OFT.N.