# TAMIL NADU v. HIND STONE

- **Citation:** [1981] 2 S.C.R. 742
- **Court:** Supreme Court of India
- **Decided:** 1981-02-05
- **Bench:** R. S. Pathak, 0. Chinnappa Reddy
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/tamil-nadu-v-hind-stone-7962
- **Pages:** 19

## Headnote

Mines and Minerals (Regulation and Development)
Act,
1951-Section
15-Rule 8-C of Tamil Nadu Minor Mineral Concession Rules, 1959-Scope
of-Rule, if ultra vires the rule making power of the State GovernmentWhether l'iolative of Articles 301 and 303 of the Constitution.
C
lnJerpretation-"Regulation" whether includes ''prohibition".
D
The Mines and Minerals (Regulation & Development) Act, 1957 (Central
Act) 'vas enacted in the public interest to enable the Union to take under its
contro1 the regulation of mines and the development of minerals. Exercising
its power u'.lder this Act, the Central Government declared by a notification
that b?ack granite was a minor mineral.
Exercising power vested in it by section 15 of the Act, the State Government
made the Tamil Nadu Minor Mineral Concession Rules, 1959. Rule 8 of the
Rules pre.scribes the procedure for lease of quarries to private persons.
Bv
rule 8·C, introduced in 1977. leases for quarrying black granite in favour of
private persons were banned.
Sub·rule (2) of this rule enacts that the Statt"
Government themselves may engage in quarrying black granite or grant leases
for quarrying black granite in favour of any corporation v,,·holly O"Wned by the
State Government.
Several applications for the grant of fresh leases as well as for the rene\Val
of leases for quarrying black granite belonging to the State Government were
submitted to the State Government. sOme prior to the introduction of rule 8C
and some after the rule ca·me into force. The State Government considered
all the applications and rejected all of them in view of nlle SC.
The respondents filed writ petition questioning the vircs of Rule S·C on
various grounds.
The High Court stn1ck do\vn Rule 8·C on the ground fhat
it exceeded the rule making power given to the State Government and held
that it was not open to the appellant Government to keep the applic~1tions
pending for a long time and then to dispose them of on the basis of n rule
\vhich had come into force later.
As a result all the aprlications were disposed
G
of without reference to rule 8·C.
H
The appellant contended that : (T) The approach of the High Court was
vitiated by its failure to notice the crucial circumstance thnt
the
minerals
belonged to the Government, (TI) The respondents had no vested or indefe<lsible
right to obtain a lease or :i renewal to Quarry the minerals, (TIT) There \Vere
good reasons for banning the grant of lease to quarry black granite to private
parties and (IV) The Government could not be compelled to grant leases \~1hich
would result in the destn1ction of the mineral resources of th~ or;:nntry.
On behalf of the respondent it was submitted that (l)
the ouestion
of
ownership of the minerals was irrelevant, (TI) It was not open to the appe11ant
···~
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TAMIL NADU V. HIND STONE
743
to exercise its subordinate legislative function in a manner to benefit itself
as owner of the minerals, nor was it open to the appellant to create monopoly
by such means, (Ill) There was violation of articles 301 and 303 of
the
Constitution, (IV) Rule 8-C had no application to renewals and (V) That in
any event it would not have the effect Qf affecting applications made more
than 60 days before it can1e into force.
Accepting the appeals, it was
l-lliLD ; llule 8-C was 111ade in bonafi<le
exercise 0£
the
rule making
power of the Appellant Government and not in its misuse to advance its own
self interest. Making a rule which is perfectly in order is not to be considered
a n1isuse of the rule making power, if it advances the interest of State, which
really 111eans the people of the State.
Rivers, forests, minerals and as such
other resojJrces constitute a nation's natural wealth.
These resources are not
to be frittered away and exhausted by any one generation.
Every generation
owes a duty to all succeeding generations to develop & conserve the natural
resources qf the nation in th~ best possible way.
It is in
the interest of
mankind. It is in the interest of

## Text

_Characters 0–39,759 of 53,722. This is a partial read: ask again with offset=39759 for what follows._

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742
STATE OF TAMIL NADU
11.
HIND STONE ETC.
February 5, 1981
[R. S. PATHAK AND 0. CHINNAPPA REDDY, JJ.J
Mines and Minerals (Regulation and Development)
Act,
1951-Section
15-Rule 8-C of Tamil Nadu Minor Mineral Concession Rules, 1959-Scope
of-Rule, if ultra vires the rule making power of the State GovernmentWhether l'iolative of Articles 301 and 303 of the Constitution.
C
lnJerpretation-"Regulation" whether includes ''prohibition".
D
The Mines and Minerals (Regulation & Development) Act, 1957 (Central
Act) 'vas enacted in the public interest to enable the Union to take under its
contro1 the regulation of mines and the development of minerals. Exercising
its power u'.lder this Act, the Central Government declared by a notification
that b?ack granite was a minor mineral.
Exercising power vested in it by section 15 of the Act, the State Government
made the Tamil Nadu Minor Mineral Concession Rules, 1959. Rule 8 of the
Rules pre.scribes the procedure for lease of quarries to private persons.
Bv
rule 8·C, introduced in 1977. leases for quarrying black granite in favour of
private persons were banned.
Sub·rule (2) of this rule enacts that the Statt"
Government themselves may engage in quarrying black granite or grant leases
for quarrying black granite in favour of any corporation v,,·holly O"Wned by the
State Government.
Several applications for the grant of fresh leases as well as for the rene\Val
of leases for quarrying black granite belonging to the State Government were
submitted to the State Government. sOme prior to the introduction of rule 8C
and some after the rule ca·me into force. The State Government considered
all the applications and rejected all of them in view of nlle SC.
The respondents filed writ petition questioning the vircs of Rule S·C on
various grounds.
The High Court stn1ck do\vn Rule 8·C on the ground fhat
it exceeded the rule making power given to the State Government and held
that it was not open to the appellant Government to keep the applic~1tions
pending for a long time and then to dispose them of on the basis of n rule
\vhich had come into force later.
As a result all the aprlications were disposed
G
of without reference to rule 8·C.
H
The appellant contended that : (T) The approach of the High Court was
vitiated by its failure to notice the crucial circumstance thnt
the
minerals
belonged to the Government, (TI) The respondents had no vested or indefe<lsible
right to obtain a lease or :i renewal to Quarry the minerals, (TIT) There \Vere
good reasons for banning the grant of lease to quarry black granite to private
parties and (IV) The Government could not be compelled to grant leases \~1hich
would result in the destn1ction of the mineral resources of th~ or;:nntry.
On behalf of the respondent it was submitted that (l)
the ouestion
of
ownership of the minerals was irrelevant, (TI) It was not open to the appe11ant
···~
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(
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TAMIL NADU V. HIND STONE
743
to exercise its subordinate legislative function in a manner to benefit itself
as owner of the minerals, nor was it open to the appellant to create monopoly
by such means, (Ill) There was violation of articles 301 and 303 of
the
Constitution, (IV) Rule 8-C had no application to renewals and (V) That in
any event it would not have the effect Qf affecting applications made more
than 60 days before it can1e into force.
Accepting the appeals, it was
l-lliLD ; llule 8-C was 111ade in bonafi<le
exercise 0£
the
rule making
power of the Appellant Government and not in its misuse to advance its own
self interest. Making a rule which is perfectly in order is not to be considered
a n1isuse of the rule making power, if it advances the interest of State, which
really 111eans the people of the State.
Rivers, forests, minerals and as such
other resojJrces constitute a nation's natural wealth.
These resources are not
to be frittered away and exhausted by any one generation.
Every generation
owes a duty to all succeeding generations to develop & conserve the natural
resources qf the nation in th~ best possible way.
It is in
the interest of
mankind. It is in the interest of the Nation. It is recognised by Parliament.
Parliament bas declared that it is expedient in the public interest that
the
Union should take under its control the
regulation
of.
mines
and
the
development of minerals. [751C-D, 753G-H]
2. The Public interest which induced Parliament to make the declaration
contained in S.2 of the Mines & Minerals (Regulation and Development) Act,
i 957 has naturally to be the pnramount consideration in all matters concerning
the regulation of Mines & Minerals. Parliament's Policy is clearly discernible
froln the provisions of the Act. It is the conservation and the prudent an<l
discriminating exploitation of minerals, with a view
to
secure
maximum
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benefit to the community. There are clear sign posts to lead and guide the
E
subordinate legislating authority in the matter of the making of rules.
[751G-H]
3. The ether proyisions of the Act, particularly sections 4A, 17 and 18,
indicate that the rule making authority under S.15 has not exceeded its powers
in banning leases for carrying black granite in favour of private parties and
in stipulating that the State Government themselves may engage in quarrying
black granite or grant leases for quarrying black granite in favour of any
corporation wholly owned by the State Government.
To view such a rule
made by the Subordinate legislating body as a rule made to benefit
itself
merely l)ecause the State Government happens to be the subordinate legislating
body is, but, to take too narrow a view of the functions of that body.
[751H, 752A-BJ
F
If. C. Naraya11appa & Ors. v. Stale of Mysore & Ors. [ 1960] 3 SCR 742
G
@ 745, 752-753 referred to.
5. 'Vbenever there is a switch over from 'private sector' to 'public sector•
it does not necessarily follow that a change of policy
requiring express
legislative sanction is involved.
It depends on the subject and the statute.
But if a decision is taken to ban private mining of a single minor mineral for
the purpose of conserving it, such a ban, if it is otherwise within the bounds
of the authority given to the Government by the Statute, cannot be said to B
involve any change of policy. The policy of the Act rem&ins the same and
it is, the conservation and the prudent and discriminating
exploitation
of
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SUPREME COURT REPORTS
[1981] 2 s.c.il.
minerals, with a view
to
secure
maximum
benefit
to
the community,
E.'Xploitation of minerals by the private and/ or the public sector is contemplated.
If in the pursuit of the avowed policy of the Act, it is thought exploitation
by the public sector is best and wisest in the case of a particular mineral and1
in consequence, the authority competent to make
the subordinate iegislation
makes a rule banning private exploitation of such mineral, which was hitherto
permitted. There is no chaJlSC of policy merely because that was previously
permitted is no longer permitted. [756A-D]
AJunicipal Corporation of the City of Toronto v. Virgo [1896] A.C 88,
AtJorney General for Ontario v. Attorney General fol'
the Dominion
and the Di~tillers and Brewers Association, [1896] A.C. 348, State
of
Uttar Ptadcsh and Others v. Hindustan Alunzinium Corporation Ltd. and
Ors., [19i9] 3 SCR 709, G. K. Krishnan etc. v. The State of Tamil Nadu
ilnd .1i11r. t:tc. [1975] 2 SCR 7
115 @ 721, Co1n1nonwealth of Australia v ..
Bank of New South Wales [1950) A.C. 235 referred to.
6. The restrictions, freedom from which is guaranteed by Art. 301 would
be such restrictions as directly and immediately restrict or impede the free
How or movement of trade. The A~t and the rules properly made thereunder
are, therefore, outside the purview of Art. 301.
Even otherwise Art. 302
which enables Parliament, by law, to impose such restrictions on the freedom
of trade, commerce or intercourse between one State and another or within
any part of the territory of India as may be required in the public interest
also furnishes an answer to the claim based on the alleged contravention of
Art. 301.
[757F-H, 758A-B]
7. The Mines and Minerals (Regulation and Development) Act is a law
enacted by Parliament and declared by Parliament to be expedient m the
public interest. Rule 8-C has been made by the appellant Govt. by notification
in the official Gazette, pursuant to the poWer conferred upon it by sec. 15
of the Act. A statutory rule, while ever subordinate to the parent statute,
is, otherwise, to be treated as part of the statute and as effective. "Rules made
under the Statute must be treated for all purposes of construction or obligation
exactly as if they were in the Act and are to be of the same effect
as
if
contained in the act and are to be judicially noticed for
a·ll
purposes of
construction or obligation. [758B-G]
Atiabari Tea Co. Ltd. v.
State of Assam & Ors. [1961] 1 SCR 809
The Automobile Transport Rajasthan Ltd., v. State of Rajasthan
&
Ors. [1963] 1 SCR 491 and State of U.P. & Ors. v. Babu Ram Upadhya
[1961] 2 SCR 679, referred to.
8. Rule 9 makes it clear that a renewal is not to be obtained automatically,
for the mere asking.
The applicant for the renewal has, particularly,
to
satisfy the Government that the renewal is in the interests of mineral development and that the lease amount is reasonable in the circumstances of the case.
These conditions have to be fulfilled in addition to whatever criteria is applicable
at the time of the grant of lease in the first instance, suitably adapted, of.
course, to grant of renewal.
Not to apply the criteria applicable in the first
instance may lead to absurd results. Therefore rule 8-C is
attracted in
considering applications for renewal of leases also.
[759A-D]
9. While the applications should be dealt with within a reasonable time,
it cannot on that account be said that the right to have an application disposed
(
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TAMIL NADU v. HIND STONE (Chinnappa Reddy, J.)
7 45
of in a reasonable time clothes an applicant for a lease with a right to have
the application disposed of on the basis of the rules in force at the time of
the making of the application. No one has a vested right to the grant or
rene\val of a lease and none can claiin a vested right to have an application
for the grant or renewal of a lease dealt with in a particular way, by applying
particular provisions.
In the absence of any vested rights in any one,
an
application for a lease has necessarily to be dealt with according to the rules
in force on the date of the dJsposal of the application despite the fa~t_ that there
is a long delay since the making of the application.
[759G-H, 760!.~
10. The language of Rule 8-C is clear that it can not have any application
to lands in which the right to minerals belongs to the applicants themselves.
In the case of lands in which the right to minerals belongs to private owners
and those owners seek permission to quarry black granite the applications will
have to be dealt with under the relevant rules in Sec. III of the Tamil Nadu
Minor Mineral concession Rules.
Rule 8-C does not impose a general ban
on quarrying black granite but only imposes a bar on the grant of leases for
quarrying black grnnite.
[760D-F]
·CIVIL APPELLATE JURISDICTION : Civil Appeal Nos. 2602-2604
of 1980.
A\ppeals by special leave from the Judgment and Order
dated
20-6-1980 of the Madras High Conrt in Writ Petition Nos. 4467 of
1977, 2933 and 4793 of 1978 .
Lal Narain Sinha Att. Genl. of India for the Appellant in CA
A
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2602/80.
E
Soll l. Sorabjee for the Appellant in CA 2603/80.
R. Krishnamurthy Adv. Genl. for the appellant in CA 2604/80.
A. V. Rangam and K. Venkatawani for the Appellant in all the
matters.
Y. S. Chitale (Dr.), Mrs. S. Ramachandran and Mukul Mudgal
for Respondent Nos. 11 and 42.
P. Chidambaram and A. S. Nambiyar for the Respondents.
F. S. Nariman, A. V. Rangam and R. N. Sachthey for the interveners.
V. Srinivasan, A. Venkatarayana and P. N. Ramalingam for Respondent No. 45.
The Judgment of the Court was delivered by
G
CHINNAPPA REDDY, J.-Entry 23
of List II of the Seventh
Schedule to the Constitution is, "Regulation of mines
and mineral
R
development subject to the proviJ;ions of List I with respect to regulation and development under the control .of the Union".
Entry 54
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746
SUPREME COURT REPORTS
[1981] 2 S.C.R
of List I of the Seventh Schedule is "Regulation of mines and mineral
development to the extent to which such regulation and development
under the control of the Union is declared by Parliament by law to
be expedient in the public interest". Thus while 'regulation of mines
and mineral development' is ordinarily a subject for State legislation.
Parliament may, by law, declare the extent to which control of such
regulation and development by the Union is expedient in the public
interest, and, to that extent, it becomes a subject for Parliamentary
legislation.
Parliament has accordingly
enacted
the Mines
and
Minerals (Regulation and Development) Act, 1957. By S. 2 of the
Act it is declared that it is expedient in the public interest that! the
Union should take under its control the regulation of mines and the
development of minerals to the extent thereafter provided. It is now
common ground between the parties that as a result of the declaration made by Parliament, by S. 2 of the Act, the State legislatures are
denuded of the whole of their legislative power with resp_ect to regulation of mines and mineral development and that the entire legislative .
field has been taken over by Parliament. That this is the true position
in law is clear from the pronouncements of this Court in The Hingir·
Rampur Coal Co. Ltd. & Ors. v. The State of Orissa & Ors.( 1) State
of Orissa v. M.A., Tulloch & Co.(2) and Baijnath Kedia v. State of
Bihar & Ors.(') S. 3 of the Mines and Minerals (Regulation and
Development) Act, 1957, defines various expressions occurring in the
Act. S. 3 (a) defines 'minor minerals' and it includes any mineral declared to be a minor =era! by the Central Government by a notifica ·
tion in the Official Gazette. 'Black granite' has been so notified by the
Central Government as a minor mineral. Section 4 to 9A are grouped
under the heading 'General Restrictions on undertaking
prospecting
and mining operations'. These provisions as well as Sections 10 to
13 are made inapplicable to 'minor minerals' by S. 14. S. 4 prohibits
all prospecting or mining qperations except under a licence or a lease
granted under the Act and the rules made
thereunder.
S.4A(l)
enables the State Government on a request made by the Central
Government in the interest of regulation of mines and mineral develdpment to terminate a mining lease pre-maturely and grant a fresh
mining lease in favour of a Government Company or Corporation
owned or controlled by Government.
Perhaps because s.4A(l)
is
inapplicable to minor minerals because of the
provisions of S.14,
S.4A(2) has been expressly enacted making somewhat similar provision, as in S.4A(l), in ~
of 'minor minerals' also. S.4A(2)
(I) [1961] 2 SCR 537
(2) (1964) 4 SCil 461.
(3) [1970) 2 SCil 100.
(
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TAMIL NADU r. HIND STONE (Chinnappa Reddy, J.)
747
J
enables the State Government, after consultation with the
Central
Government, if it is of opinion that it is expedient in the interest of
.)
regulation of mines and mineral development so to do, to prematurely
terminate a mining lease in respect of any minor mineral and grant
a fresh lease in respect of such mineral in favour of a Government
Company or Corporation owned or controlled by Government. S.5
imposes certain restrictions on the grant of prospecting licences and
mining leases. S.6 prescribes the maximum area for which a prospecting licence or mining lease may be granted.
S. 7 prescribes the
period for which prospecting licences may be granted or renewed.
S.8 prescribes the period for which mining leases may be granted or
, renewed. S.9 provides for the payment of royalty and S.9A for the
payment of dead rent.
Sections 10, 11 and 12 constitute a group
of sections under the title 'Procedure for obtaining prospecting licences
or mining leases in respect of land in which the minerals vest in the
Government'.
S.10 provides for making applications for prOSiP<:cting
licences or mining leases in respect of any land in which the minerals
vest in the Government. S.11 provides for certain preferential rights
in favour of certain persons in the matter of grant of mining leases.
S. 12 prescribes the Register of prospecting licences and mining leases
to be maintained by the State Government.
S.13
empowers
the
Central Government to make rules for regulating the grant of prospecting licences and mining leases.
In particular we may mention
that S.13(2) (a) empowers the Central Government to make rules
providing for 'the persons by whom, and the manner in which, applications for prospecting licences or mining leases in respect of J:oand in
which the minerals vest in the Government may be made and the fees
to be paid therefor". S.13(2) (f), we may add, empowers the Central Government to make rules providing for 'the procedure for obtaining a prospecting licence or a mining lease in respect of any
J:oand
in which the minerals vest in a person other than the Government
and the terms on which, and the conditions subject to which, such
~. licence or lease may be granted or renewed'.
S. I 4 makes the pro--
visions of Sections 4 to 13 inapplicable to
minor
minerals. S.15
empowers the State Government to make rules for regulating
the
grant of quarry leases, mining leases and other mineral concessions
in respect of minor minerals and
purposes connected
therewith.
S.15(3) provides for the payment
of royalty in respect of minor
J
minerals at the rate prescribed by the rules framed
by the State
Government. S.16 provides for the modification of mining leases
\
granted before October 25, 1949. S.17 enables the Central Government, after consultation with the State Government
to undertake
prospecting or mining operations in any area not already held under
any prospecting licence or mining lease, in which event the Central
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748
SUPREME COURT REPORTS
[1981] 2 S.C.R.
A
Government shall publish a notification in the official Gazette giving
the prescribed particulars. The Central Government may also declare
.that no prospecting licence or mining lease shall be granted in respect
pf any land specified in the notification. S. l S casts a special duty on
the Centra;I. Government to take all necessary steps for the conservation and development of minerals in India.
Sections 19 to 33
are
B
various miscellaneous provisions with which we are not now concerned.
Pursuant to the power vested in it under S.15 of the Mines
and
Minerals (Regulation and Development) Act, 1957, the Government
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of Tamil Nadu has made the Tamil Nadu Minor Mineral Concession 1
Rules, 1959. Section II of the rules consisting of rules 3 to 16is_
entitled "Government lands in which the minerals belong to
the
Government".
Rule 8 prescribes the procedure for the kase of
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quarries to private persons.
The ordinary procedure is to publish
a notice in the District Gazette inviting applications, thereafter to hold
~n auction and finally to grant a lease to the highest bidder. Rule SA
which was introduced by way of an amendment in 1972, provides for
a special procedure for the sanctioning of leases in favour of applicants who require the minerals for their existing industries or who
have an industrial programme for the utilisation of the mineral in
their own industry.
Rule SB was introduced in 1975 making special
provision for the grant of leases for quarrying b1'ack granite.
The
rule is as follows :
"S-B. Lease of quarries in respect of black granite to private
persons (1) Notwithstanding anything to the contrary contained in rules 8 and SA, the authority competent to grant
leases in respect of quarrying black granite shall be the State
Government.
(2) An application for the grant of a quarrying lease in
respect of any land shall be made to the Collector of thf.
District concerned in the prescribed form in triplicate and shall
be accompanied by a fee of Rs. 1001-. The Collector shall
after scrutiny, forward the application along with his remarks
to the Director of Industries & Commerce who shall technically scrutinise the industrial programme given by the applicant and forward the application with his
remarks
to the
Govetnment."
"(G. o. Ms. No. 993 Industries dt. 25-S-1975". Rnle 8-C
was introduced
by G. 0. Ms.
No.
1312 Industries
dated
December 2,
1977. By this rule leases for qaurrying black granite
(
•
TAMii, NADIJ v. HIND STONE (Chinnappa Reddy,!.)
749
ln favour of private persons are banned. Leases can only be granted
in favour of a Corporation wholly owned by the State Government.
It is the vires of this rule which was nnder challenge before the High
Court and is also under challenge now. It will be useful to extract
the same. It is as follows :
"8-C Lease of quarries in respect of black granite to Government Corporation, etc.
( 1) Notwithstanding anything to the contrary contained
in these rules, on and from 7th December, 1977 no lease for
quarrying black granite shall be granted to private persons.
(2) The State Government themselves
may engage
in
quarrying blaek granite or gmnt leases for quarrying
black
granite in favour of any corporation wholly owned by the State
Government.
Provided that in respect of any land belonging to any private person, the consent of such person shall be obtained for
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such quarrying or lease".
D
Rule 9 provides for renewal of leases and it is in the following
terms :
"9. Renewal of lease.-{1) The Collector may on application renew for a further period not exceeding the period for
which the lease was originally granted in each case if he
is
E
satisfied that-
(i) such renewal is in the interests of mineral development, and
(ii) the lease amo)lnt is reasonable in the circumstances
of the case.
F
(2) Every application for renewal shall be made to Col4
lector, sixty days prior to the date of expiry of the lease :
Provided that a lease, the period of which
exceeds
ten
years shall not be renewed except with the sanction of the
Director of Industries and Commerce".
A proviso was added to rule 9(2) in 1975 'Ind it said :
"provided also that the renewal for quarrying black granite
shall be made by the Government".
G
)
~~veral persons who held leases for
quarrying black granite
belonging to the State Government and whose leases were about to
H
expire, applied to the Government of Tamil Nadu for renewal of their
leases.
In some of the cases applications were made
long
prior
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SUPREME COURT REPORTS
(1981] 2 S.C.J<
to the date of G. 0. Ms. No. 1312 by which Rule SC was introduced.
Some applicatious were made after Rule S C came into force. There
were also some applications for the grant of fresh leases for quarrying
(
black granite. All the applications were dealt with after Rule S C
came into force a.nd all of them were rejected in view of Rule
SC.
Several Writ Petitions were filed in the High Court questioning the
vires of Rule SC on various grounds. Apart from
canvassing the
vires of Rule SC, it was contended that Rule SC did not aipply
to
grant of renewals of lease at all. It was
also
argued that in any
event, in those cases in which the applications for renewal bad been
made prior to the coming into force of Rule SC, their applications .......
should have been dealt with without reference to Rule
SC.
The---· -.....
Madras High Court while not accepting some of the contentions raised
D
E
on behalf of the aplicants, struck down Rule SC on the ground that
it exceeded the rule making power given to the State Government
under S.15 which, it was said, was only to regulate and not to prohibit the grant of mining leases. As a consequence all the applications were directed to be di!\JlOSed of without reference to Rule SC.
It was also observed that even if Rule SC was valid it applied only
to the grant of fresh leases and not to renewals.
It was also held
that it was not open to the Government to keep the applications
pending for a long time and then to dispose them of on the basis of
a rule which had come into force later. The State Government has
come in appeal against the judgment of the Madras High Court while
the respondent-applicants have tried to sustain the judgment of the
Madras High Court on grounds which were decided against them by
the Madras High Court.
The learned Attorney General who appeared for the Government
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of Tamil Nadu submitted that the approach of the High Court was
vitiated by its failure to notice the crndal circumstance that the minerals belonged to the Government and the applicants had no vested or
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indefeasihle right to obtain a lease or a renewal to quarry the mine-.
rals. There were good reasons for banning the grant of leases to
quarry black granite to private parties and in the light of those reasons
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the Government could not be compelled to grant leases which would
result in the destruction of the mineral resources of the country. Shri
K. K. Venugopal, learned counsel who led the argument for the respondents submitted that the question of o_wnership of the minerals was irrelevant. In making the rules the State Government was acting as a dele~te and not as the owner of the minerals. He submitted that it was
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not open to the State Government to exercise its subordinate legislative
function in a manner to benefit itself as owner of the minerals, nor was
it open to the State Government to create a monopoly by such means.
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TAMIL NADU v. HIND STONE (Chinnappa Reddy, J.)
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Accordin~ to Shri Venugopal creation of a monopoly in the State was
essentially a legislative function and was incapable of delegation. It
was claimed that there was violation of Articles 301 and 303 of the
Constitution. It was further claimed that S. 15 of the Mines and
Minerals (Regulation and Development) Act 1957, enabled the State
Government to make rules to regulate the grant of leases and not to
prohibit them. In any case it was said that Rule 8G had no application to renewals and tbat in any event it would not have the effect of
affecting applications made more than 60 days befc:·o it came into
force.
Rivers,
Forests, Minerals and such other resources constitute
a
nation's natural wealth.
These resources are not to be frittered away
and exhausted by any one generation.
Every generation owes a duty
to all succeeding generations to develop and conserve the natural
resources of the nation in the best possible way. It is in the interest
of mankind. It is in the interest of the Nation. It is recognised
by
Parliament. Parliament has declared that it is expedient in the public
interest that the Union should take under its control the regulation of
mines and the development of minerals. It has enacted the Mines and
Minerals (Regulation and Development) Act, 1957. We have already
referred to its salient provisions. S. 18, we have noticed, casts a special duty on the Central Government to take necessary steps for the
conservation and development of minerals in India.
S. 17 authorises
the Central Government itself to undertake prospecting or mining
operations in any area not already held under any prospecting licence
or mining lease. S. 4A empowers the State Government on the request
of the Central Government, in the case of minerals other than minor
mineral,, to prematurely terminate existing
mining leases and grant
fresh
leases in favour of a Government Company or Corporation
owned or controlled by Government, if it is expedient in the interest
of regulation of mines and mineral development to do so. In the case
of minor minerals, the State Government is similarly empowered, after
consultaticm with the Central Government. The public interest which
induced Parliament to make the declaration contained in S. 2 of the
Mines & Minerals
(Regulation and Development)
Act, 1957. has
naturally to be the paramount consideration in all matters concerning
the regulation of mines and the development of minerals. Parliament's
policy is clearly discernible from the provisions of the Act. It is the
conservation and the prudent and discriminating exploitation of minerals, with a view to secure maximum benefit to the community. There
are clear sign posts to lead and guide the subordinate legislating authority in the matter of the making of roles. Viewed in the light shed by
the other provisions of the Act, particularly sections 4A, 17 and 18
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it cannot be said that the rule making authority under S. 15 has exceeded its powers in banning leases for quaiTying black granite in
favcur of private parties and in stipulating
that the State Government themselves may engage in quarrying black granite or grant leases
for quarrying black granite in favour of any corporation wholly owned
by the State Government.
To view such a rule made by the Subordinate legislating body as a rule made to benefit itself merely because
the State Government happens to be the subordinate legislatitng body,
is, but, to take too narrow a view of the functions of that body.
The
reasons that prompted the State Government to make Rule 8-C were
explained at great length in the common counter affidavit filed on behalf of the State Government before the High Court. We find no good
reason for not accepting the statements made in the counter affidavit.
It was said there :
"I submit that the leases for black granite are governed
by the Tamil Nadu Minor Mineral Concession Rules 1959
under which ori14nally there was scope for auctioning of
quarries of minor minerals.
In amendment
i'5ned in the
G.O. dated 6-12-1972.
under Rule 8-A it was indicated
that the Collector may sanction leases in favour of applicants
who are having an industrial programme to utilise the minerals in their own industry.
This provision is applicable to
all
minerals including black granite..
However, it was
found that there were several cases where lessees who obtained the black granite areas on lease by auction were not
quarrying in a systematic and planned manner taking into
consideration the welfare and safety measures of the workers as well
as the conservation of minerals.
Even after
the introduction of the amendment under Rule 8-A in most
cases, the industry set up was of a flimsy nature more to
circumvent the rule than to really introduce industry including mechanised cutting and polishing. The lessees were also
interested only in obtaining the maximum profit in the shortest period
of time without taking into consideration the
proper mining and development of the mineral.
There was
also considerable wastage of new materials due to wasteful
mmmg.
Therefore, -Government issued a further amendment as Rule 8-B wherein the competent authority to grant
leases in respect of the quarrying black granite was transferred
from the Collector to the State Govenunent level.
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They also prescribed a standard form and an application fee
to be paid with the application. The amendment states that
l he Director of Industries and Commerce shall technically
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TAMIL NADU v. HIND STONE (Chinnappa Reddy,!.)
753
scrutinise the industrial programme given by the applicant
while forwarding
the same to Government.
At the same
time, in the G.O. issued along with amendment, it was stated
that if any of the State Government Organisations like Tamil
Nadu
Small Industries Corporation Limited, Tamil Nadu
Small Industries Development Corporation Limited, famil
Nadu Industrial Development Corporation Limited is interested to obtain a lease ior black granite in a particular area,
preference will be given to Government
undertaking over
other private entrepreneurs for granting the leases applied
for by them.
However, in spite of these amendments to re.-
gulate the grant of mining lease, there were a large number
of lessees
(exceeding 140), who were engaged in mining
without proper technical guidance or safety measures etc.
for the workers. These lessees made a strong representation
to the then Government in 19 7 6 expressing that though they
had given assurance to set up industries to use the granites
they were not able to do so far various reasons. They also
represented that they should be allowed to export the raw
blocks of black granites. Therefore, Government had issued
a. Government Order dated 15-2-1977 relating to relaxation
of the ban of export of raw blocks and provision for setting
up a polishing or finishing unit was not made a pre-requisite.
They have also stated that the terms and conditions for the
existing losses would remain in force. However, on an examination of the performance of the lessees over the
pa~t
several years, it h.as been found that excepting in a very few
cases, none of the lessees had set up proper industries or developed
systematic mining
of the quarries.
The exports
continue to be mainly on the raw b:ack granite materials and
not cut and polished slabs. A large number of the leases
were
not operating ~ither due to speculation or lack
of
finance from the lessees.
Therefore, Government decided
that there should be no further grant of ]ease to private
entrepreneurs for black granite.
This was mentioned
in
G.0.Ms. No. 1312 Industries dated 2-12-1977.
We are satisfied that Rule 8C was made in bonafide exercise of the
rule making power of the State Government and not in its misuse
to advance its own self-interest. We however guard ourselves against
being understood that we h&ve accepted the position that making a
rnle which is perfectly in order to be considered a misuse of the
rule making power, if it advances the interest of a State, which really
means the people of the State.
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One of the submissions on behalf of the respondents
"'as that
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monopoly was a distinct legislative subject under entry 21 of List Ill
of the Seventh Schedule to the Constitution and therefore monopoly,
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even in favour of a State Government can only be created by plenari
and not subordinate
legislation.
Parliament not having chosen to
exercise its plenary power it was not open to the subordinate legislating body to create a monopoly by making a rule.
Our attention was
invited to H. C. Narayanappa & Ors. v. Stare of Mysore & Ors.( 1)
where it was held that the expression 'Commercial
and industrial
monopolies' in entry 21 of List Ill of the Seventh Schedule to
the
Constitution was not confined to legislation to control of monopolies · _ ....
but was wide enough to include grant or creation of commercial or -
..,.
industrial m,onopolics in favour of the State Government, also.
We
are unable to agree with Shri Venugopal's submission.
The
very
decision cited by him furnishes the answer. The validity of a scheme
for nationalisation of certain routes made pursuant to
the
powers
conferred by Chapter IV A of the Motor Vehicles
Act was under
attack in that case. One of the grounds of attack was that "by Chapter
IVA of the Motor Vehicles Act, 1939,
"Parliament had merely attempted to regulate the procedure
for entry by the States into the business of motor transport in
the State, and in the absence of legislation expressly undertuken by the State of Mysore in that behalf, that State was
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incompetent to enter into the arena of motor transport busiF
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ness to the exclusion of private operators;"
Sustenance for the submission was
sought to be drawn from
the
language of Art. 19 ( 6) (ii) which provides that nothing in Art. 19 ( l )
(g) shall 'prevent the State from making any law rel'ating to' 'the
carrying on by the State, or by a Corporation owned or controlled
by the State, of any trade, business, industry or service. whether to
the exclusion, complete or partial, of citizens or otherwise'.
The
argument was that the State or a Corporation owned or controlled
by the State could carry on a trade, business, industry or senice to
the exclusion. complete or partial, of citizens, only if the State made
a Jaw relating to it.
The argument was repelled by the Court
in
these words :
"The plea sought to be founded on the phraseology used
in Art. 19 ( 6) that the State intending to carry on trade or
business must itself enact the law authorising it to carry on
trade or business is equally devoid of force.
The exnression
'the State' as defined in Art. 12 is inclusive of the Government
and Parliament of India and the Government and the Legisla-
,,_
(I) [1960] J SCR 742@ 745, 752-753.
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TAMIL NADU v. HIND STONE (Chinnappa Reddy, J.)
755
ture of each of the States. Under entry No. 21 of the Concurrent List, the Parliament being competent to legislate for
creating commercial or trading monopolies, there
is nothing
in the Constitution which deprives it of the power to create
a co=erial or trading monopoly in the constituent
States.
Article 19(6) is a mere saving provision : its function is not
to create a [power but to immunise from attack the exercise
of legislative power falling within its ambit. The right of the
State to carry on trade or busine;s to the exclusion of others
does not arise by virtue of Art. 19(6). The right
of the
State to carry on trade or business is recognised by Art. 29R:
authority to exclude COID[petitors in the field of such trade or
business is conferred on the State by entrusting power to enact
laws under entry 21 of List III of the Seventh Schedule, and
the exercise of that power in the context of fundamental rights
is secured from attack by Art. 19(6).
In any event; the expression 'law' as defined in Art. 13(3)
(a) includes any ordinance, order, bye-law, rule, regulation,
notification, custom, etc., and the scheme framed under s.68C
may properly be regarded as 'law' within the meaning
of
Art. 19 ( 6) made by the State excluding private operators from
notified routes or notified areas, and immune from the attack
that it infringes the fundamental right guaranteed
by Art.
19(1){g)".
Earlier in Rai Sahib Ram Jawaya Kapur & Ors. v. The State of
Punjab('), before the Seventh Amendment of the Constitution by
which the present Article 298 was substituted for the old Article, the
question arose whether it was beyond the competence of the executive
Government to carry on a business without specific Jegislatuve sanction. The answer was that it was not. What was said by the Court
in that case was incorporated in the Seventh Amendment of the
Constitution. In that case the facts were that the State of Punjab.
by a series of executive orders had established for itself a monopoly
in the business of printing and celling textbooks for use in schools.
The argument that legislative sanction was necessary to enable the
State Government to carry on the business of printing and publishing
text books was repelled and it was held that no fundamental right of
the petitioners who had invoked the jurisdiction of the Court had been
infringed.
Another of the submissions of the learned counsel was that G.0.Ms.
No. 1312 dated December 2, 1977 involved a major change of policy.
which was a legislative function and therefore beyond the competence
(1) [1955]2 SCR 225.
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of a subordinate legislating body.
We do not agree with the submission.
Whenever there is a switch over from 'private sector' to 'public
sector' it does not necessarily follow that a change of policy requiring
express legislative sanction is involved.
It depends on the subject and
the statute.
For example, if a decision is taken to impose a general
and complete ban on private mining of all minor minerals, such a
ban may involve the reversal of a major policy and so it may require
Legislative sanction.