# THE QUARRY OWNERS ASSOCIATION ETC v. THE STATE OF BIHAR AND ORS

- **Citation:** [2000] Supp. 2 S.C.R. 211
- **Court:** Supreme Court of India
- **Decided:** 2000-08-08
- **Case number:** Civil Appeal No. 5089of1997
- **Bench:** A.P. Misra, N. Santosh Hegde
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/the-quarry-owners-association-etc-v-the-state-of-bihar-and-ors-17382
- **Pages:** 50

## Headnote

Mines and Minerals (Regulation and Development) Act, I957 :
Sections I 5(1 ), I 5(1-A) and I 3(1 ), (2)-Rate of royalty over minor
minerals increased beyond maximum percentage prescribed in Schedule 11.
Item 54-High Court upheld impugned notifications of State Government-On
appeal held, State Government has power to make rules in respect of minor
minerals-Introduction of Section I 5( I-A) illustrates the general power of the
State Government to make rules-Ample guidelines are available in various
provisions of the Act, Preamble and Statement of Objects and ReasonsFixution of royalty is an inherent part of mineral development and State has
to consider various factors including the fact that it is parting with its own
wealth-Impugned notification valid as State Government acted within ambit
of delegated power and there were sufficient guidelines and checks-Bihar
Minor Minerals Concession Rules, I972.
Sections I5(2) and (3)-Approval of Rules and Notifications made by
State Government-As even existing rates of royalty or dead rent need approval
of Parliament, it serves as a guiding.factor-Proviso to Section I 5( 3) brings in
an additional check on enhancement-Imposition of royalty not arbitrary or
excessive and increase in royalty is very reasonable inspite of the power
granted to the State Government.
Schedule Il, Item 54-Rate of royalty to be within 12% of the sale price
at the pits mouth-Language would only mean residual major minerals not
specified in Item Nos. I-53-Neither the residuary nor the left over major
minerals could be equated to minor minerals-Maximum prescribed percentage would not apply to minor minerals, but only acts as a guideline.
Sections 4 to 12-General restrictions over Rule making power-Guidance provided to State Government while acting as a delegatee under Section
15-Section 9 specifically refers to royalty and along with Schedule Il is a good
source of guidance.
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[2000] SUPP. 2 S.C.R.
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Section 28(/ ), (2) and (3 )-Laying n.f rules and not(fication.1· before the
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Houses n_f the legislature-Provisions regarding State Government differently
worded for a purpose as it is better placed to deal with minor minerals used
locally-Mere placement or laying n.f the rules and notifications would be
sufficient check on power n.f State Government-Placement of rules camwt be
said to be n.f no consequence and the same is obligatory Impugned notifications
are valid as they are within the ambit of delegation which is not excessive as
there are enough guidelines and checks including laying them down before the
houses n.f the Legislature-Second notification which has not been placed
before the houses of the legislature should be done at the earliest, Howeve1; its
non-placement would not affect its validity as the requirement is only directoiy.
Administrative Law-Delegated Legislation-State Government comes
into scrutiny of concerned Legislature by mere laying of any notification or
rule-House plays a positive role when it is entrusted with power 10 annul,
modify or approve any rule or else acts as a vital and forceful check.
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Constitution of India-VII Schedule-Entry 54, List-I and Entry 23, List
II-Regulation of Mines and Minerals does not fall within Concurrent Li:.·tConfT.ict is resolved as Entry 23, List II provides that Union may have full or
partial control over regulation of mines and minerals-Parliament has power
to withdraw this control partially or fully if it so desires-A notification conE
cerning an item absent in the concurrent list may also be laid before the State
legislature-Mines and Minerals (Regulation and Development) Act, 1957Section 28( 3 ).
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Taxation-Royalty on minerals-Tax on this royalty is distinct.from other
forms of taxes on income, wealth, sale or production of goods etc. and it
includes the price.for the consideration of parting with the right and privileges
of an owner-A strict interpretation would be harsh considering the guidelines
prescr

## Text

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THE QUARRY OWNERS ASSOCIATION ETC.
V.
THE STATE OF BIHAR AND ORS.
AUGUST 8, 2000
[A.P. MISRA AND N. SANTOSH HEGDE, JJ.]
Mines and Minerals (Regulation and Development) Act, I957 :
Sections I 5(1 ), I 5(1-A) and I 3(1 ), (2)-Rate of royalty over minor
minerals increased beyond maximum percentage prescribed in Schedule 11.
Item 54-High Court upheld impugned notifications of State Government-On
appeal held, State Government has power to make rules in respect of minor
minerals-Introduction of Section I 5( I-A) illustrates the general power of the
State Government to make rules-Ample guidelines are available in various
provisions of the Act, Preamble and Statement of Objects and ReasonsFixution of royalty is an inherent part of mineral development and State has
to consider various factors including the fact that it is parting with its own
wealth-Impugned notification valid as State Government acted within ambit
of delegated power and there were sufficient guidelines and checks-Bihar
Minor Minerals Concession Rules, I972.
Sections I5(2) and (3)-Approval of Rules and Notifications made by
State Government-As even existing rates of royalty or dead rent need approval
of Parliament, it serves as a guiding.factor-Proviso to Section I 5( 3) brings in
an additional check on enhancement-Imposition of royalty not arbitrary or
excessive and increase in royalty is very reasonable inspite of the power
granted to the State Government.
Schedule Il, Item 54-Rate of royalty to be within 12% of the sale price
at the pits mouth-Language would only mean residual major minerals not
specified in Item Nos. I-53-Neither the residuary nor the left over major
minerals could be equated to minor minerals-Maximum prescribed percentage would not apply to minor minerals, but only acts as a guideline.
Sections 4 to 12-General restrictions over Rule making power-Guidance provided to State Government while acting as a delegatee under Section
15-Section 9 specifically refers to royalty and along with Schedule Il is a good
source of guidance.
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Section 28(/ ), (2) and (3 )-Laying n.f rules and not(fication.1· before the
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Houses n_f the legislature-Provisions regarding State Government differently
worded for a purpose as it is better placed to deal with minor minerals used
locally-Mere placement or laying n.f the rules and notifications would be
sufficient check on power n.f State Government-Placement of rules camwt be
said to be n.f no consequence and the same is obligatory Impugned notifications
are valid as they are within the ambit of delegation which is not excessive as
there are enough guidelines and checks including laying them down before the
houses n.f the Legislature-Second notification which has not been placed
before the houses of the legislature should be done at the earliest, Howeve1; its
non-placement would not affect its validity as the requirement is only directoiy.
Administrative Law-Delegated Legislation-State Government comes
into scrutiny of concerned Legislature by mere laying of any notification or
rule-House plays a positive role when it is entrusted with power 10 annul,
modify or approve any rule or else acts as a vital and forceful check.
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Constitution of India-VII Schedule-Entry 54, List-I and Entry 23, List
II-Regulation of Mines and Minerals does not fall within Concurrent Li:.·tConfT.ict is resolved as Entry 23, List II provides that Union may have full or
partial control over regulation of mines and minerals-Parliament has power
to withdraw this control partially or fully if it so desires-A notification conE
cerning an item absent in the concurrent list may also be laid before the State
legislature-Mines and Minerals (Regulation and Development) Act, 1957Section 28( 3 ).
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Taxation-Royalty on minerals-Tax on this royalty is distinct.from other
forms of taxes on income, wealth, sale or production of goods etc. and it
includes the price.for the consideration of parting with the right and privileges
of an owner-A strict interpretation would be harsh considering the guidelines
prescribed to a delegatee who also owns the minerals-Mines and Minerals
(Regulation and Development) Act, 1957.
Interpretation of statutes-Heydon 's rule-The words "Regulation of
Mines and Minerals development" connotes a different meaning when used in
different context-Words are not static but dynamic and courts must adopt the
dynamic meaning which uphold the validity of any provision-True meaning
and intent of the legislature has to be gathered from the Preamble, Statement
of Object and Reasons and other provisions of the Act-A construction which
suppresses the mischi~f and advances the remedy must be adopted-Mines and
QUARRY OWNERS ASSOCIATION v. STATE
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Minerals (Development and Regulation) Act, 1957-Constitution of India-Vil
Schedule-Entry 54, List I and Entry 23, List II.
Appellants are an association of quarry owners having permit/lease
for mining operations. Respondents in exercise of their power under Section
15 of the Mines and Minerals (Regulation and Development) A.ct, 1957 made
the Bihar Minor Mineral Concession Rules 1972 and fixed the royalty payable from time to time. The rate of royalty was increased by the two impugned notifications dated 17.8.1991and28.9.1994 to Rs. 12 per cubic metre and Rs. 25 per cubic metre respectively. The State was given power to
make such rules and this delegation of power withstood its challenge in this
Court. Section 15 was later amended in 1987 by introducing sub-section IA, which further clarified the rule making power. These notifications were
challenged but the High Court upheld them as valid. Hence this appeal.
Appellants contended that the delegation of power exceeded the limits
laid down by this court, that Item 54, Schedule II of the Act controls and
guides the State for fixing the rate of royalty which has to be within 12 % of
the sale price at the pit's mouth; that Section 15(1) or (1-A) does not lay
down any guideline and so it becomes mandatory to follow the provisions of
Item 54, Schedule II; that Section 28(1) of the Act provides sufficient guidelines to the Centre but no guidelines are provided to the State Government
in respect of minor minerals; that Section 28(3) of the Act cannot be construed to confer authority of the State Legislature to modify any notifications or rules framed by the State Government; that Entry 54 of List I of the
Constitution of India regulates mines and minerals development under the
control of Union keeping public interest in view and no provisions of the Act
can take away this control; that the power to fix the rate of tax can be
delegated provided the statute provides guidelines for fixing such rate, which
may be by fixing maximum rate of tax or by consulting affected people; that
the taxing statute must be interpreted as read with no additions and subtrac·
tions of words and where two opinions are possible, the oue beneficial to the
assessee must be adopted; and that in a delegated legislation the control and
authority of the Principal to modify or cancel any act of the delegatee must
remain as a living continuity and a constitutional necessity, which is absent
in the present case.
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Respondents contended that Section 15 (1) and (1-A) provide sufficient guidelines to the State Government; that though the phraseology of
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Section 28(3) is differently couched than what is in Section 28(1), still it
cannot be said that placement of notifications and rules before the State
Legislature is only a show piece and not meaningful; that minor minerals
have less importance and are used locally and so their treatment is left to
the State, however, major minerals are dealt by the Centre; that Entry 54,
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Schedule II is the recognition of the State's original power to determine
royalty which is in tune with the principles of federalism; that the State has
to part with minerals which it owns, therefore it imposes royalty and it
would be unjust to make mining cheap so that appellants derive huge profits; and that the State Government inspite of such power to impose royalty
has been very reasonable throughout.
Dismissing the appeals, the Court
HELD : 1. The impugned notifications are valid as the State Government acted within the ambit of power delegated which has sufficient guidelines and checks. Requirement of, mere placement of Rules or Notifications
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before the State Legislature is a form of check on the State Government.
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The second notification has not been placed before the State Legislature,
and shall be done at the earliest, however, its non-placement would not
invalidate the same as the requirement is only directory. The imposition of
royalty/dead rent can not be said to be arbitrary or excessive by the State
Government as there is no material placed by the appellants in the writ
petition to come to such a conclusion. Though by proviso to Section 15(3) it
is open for the State Government to revise the royalty every three years but
the history shows it has not done so. Since 1975 the State Government has
increased royalty only four times and there is no increase since 28th September 1994 despite lapse of six years. [260-B; C; D; 233-G]
D.K. Trivedi & Sons and Ors. v. State o,f Gujarat and Ors., [1986] Supp.
sec 207' relied on.
2. Sections 4 to 12 of the Mines and Minerals (Regulation and Development) Act, 1957 are not applicable to the minor ·minerals, so the figurative restrictions contained therein could not be made applicable, but they
serve as a guideline to the State Government while framing rules. They are
available not as restrictive or limiting guidelines but are available otherwise for consideration and adoption, wherever it is necessary. Such guidelines are not just confined to Sections 4 to 12 only but are also to be found
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in the object for which such power is conferred, namely, for regulating the
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QUARRY OWNERS ASSOCIATION v. STATE
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grant of quarry leases, mining leases or other mineral concessions in respect
of minor minerals and for the purposes connected therewith. [238-F; 240-D]
3. Section 13 gives power to the Central Government to make rules in
respect of minerals other than minor minerals, while Section 15 gives power
to the State Government to make rules in respect of minor minerals. The
extent of exercise of power in both these sections are similar. The only
difference is, Central Government exercises power in respect of all other
minerals other than minor minerals, while the State Government exercises
power in respect of minor minerals only. Section 13(2), particularizes the
power given to the Central Government to make rules in respect of matters
enumerated therein. Though they are already covered under Section 13(1)
but is more focused in sub section (2). There was no such similar sub-section
in Section 15, though later it was brought in through amendment by incorporating sub-section (1-A). This Court held previ_ously that Section 13(2)
which is illustrative of the general power conferred by Section 13(1) itself
contains sufficient guidelines for the State Government to frame its own
rules under Section 15(1). [240-E-F; 241-B)
D.K. Trivedi & Sons and Ors. v. State of Gujarat and Ors., [1986] Supp.
sec 207, relied on.
4. The Parliament in order to bring parity, made similar provision
for the minor minerals through insertion of Section 15(1-A) to equate it
with Section 13(2), which is also illustrative of the general power, conferred
on Section 15(1). Therefore, as Section 13(2) was held to be the guiding
force to the State G,overnment, Section 15(1)(1-A) now acquires the similar
position through infusion of ~ various sub-clauses. A restrictive interpretation to limit the State's power within Entry 54 of Schedule II will lead to
various incongruities. [241-C; D; Fl
5. Section 15(2) approves the rules made by the State Government as
far as minor minerals are concerned, regulating the grant of quarry leases,
mining leases or other mineral concessions in respect of miues and minerals
prior to the enforcement of this Act and similarly Section 15(3) approves
the rate of royalty /dead rent prescribed for its payment in respect of minor
minerals for the time being in force, i.e., what existed prior to the coming
into force of this Act. Even approval of the then existing rates of royalty or
dead rent is by Parliament itself which similarly is also a guiding factor to
the State Government for any subsequent modification of the rates. The
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proviso to Section 15(3) brings an additional check on the enhancement of
rate of royalty/dead rent that it cannot be enhanced more than once during
any period of three years. [246-C-D]
State of M.P. v. Mahalakshmi Fabrics Mills Ltd. & Ors., [1995] Supp. 1
sec 642, relied on.
6. Sda!!dule II of the Act, which refers to the rate of royalty in view of
Section 9 could only refer to the minerals other than minor mineratS: The
language in Item 54 would only mean other residual major minerals not
specified before i.e. in Item Nos. 1 to 53. This could never mean to include
minor minerals so the residuary minerals under Item 54 could only be the
left over major minerals. Neither the residuary nor the left over major
minerals could be equated with the minor minerals nor there is any material on record to draw such inference. [239-B-C]
7. The reference of general restrictions as contained in Sections 4 to 12
would only mean to consider the broad principle and pattern while framing
rules. It cannot be doubted that Sections 4 to 12 also gives guidance to the
State Government while acting as delegatee under Section 15 while fixing
rate of royalty. This guidance is to_ be found in Section 9 itself, which refers
to royalties. Each of the consideration may be taken note by the State Government while framing its own rules for the minor minerals and it may
apply also the rate of royalty for the minor minerals at the same rate as
what existed when this Act came into force. Schedule II with reference to
Section 9 which fixes rate of royalty for various minerals, not being minerals, is also a good source of guideline. (239-E-F; H; 240-A]
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D.K. Trivedi & Sons and Ors. v. State a/Gujarat and Ors., (1986] Supp.
sec 207, relied on.
8. Entry 54 List I of the Seventh Schedule of the Constitution and
Entry 23 List II refer to the "Regulation of Mines and Minerals Development". This Entry has been reiterated both in the Preamble and the StateG
ment of Objects and Reasons of the Act. These words clearly indicate the
guidelines which the Parliament is projecting. Every word is impregnated
and is flexible to connote different meaning, when used in different context.
Words are not static but dynamic and courts must adopt that dynamic
meaning which uphold the validity of any provision. This dynamism is the
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cause of saving many statutes from being declared void dissolving the on-
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QUARRY OWNERS ASSOCIATION v. STATE
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slaught of any rigid and literal interpretation, it gives full thrust and satisA
faction to achieve the intended object. Whenever there are two possible
interpretations, its true meaning and Legislature's intent has to be gathered,
from the 'Preamble', Statement of Objects and Reasons and other provisions of the same statute. In order to find the true meaning of any word or
what the Legislature intended, one has to go to the principle enunciated in
Heydon'scase, which laid down that the Court must adopt a construction
which suppresses the mischief and advances the remedy. [242-G]
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Bengal Immunity Co. Ltd. v. State of Bihar & Ors., AIR (1955) SC 661
(674); Commissioner of Income Tax, Patiala v. Mis. Shahzada Nand & Sons
and Ors.,AIR (1966) SC 1342; Mis. Sanghvi Teevraj Ghewar Chand & Ors. v.
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Secretary, Madras Chillies, Grains and Kirana Merchants Workers Union &
Am:, AIR (1969) SC 530 (533); Union of India v. Sankalchand Himatlal Sheth
& Anr., AIR (1977) SC 2328 (2358) and K.P. Varghese v. Income Tax Officer,
Ernakulam & Anr., AIR (1981) SC 1922 (1929), relied on.
9. The words "Regulation of Mines and Mineral Development" are
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incorporated both in the Preamble and Statement of Objects and Reasons
of the Act. The Preamble of our Constitution in unequivocal words expresses to secure for our citizens social, economical and political justice. It
is in this background and in the context of the provisions of the Act, the
word "regulation" may have different meaning but considering it in relation to various economic and social activities, development and excavation
of mines, ecological and environmental factors including States' contribution in developing, manning and controlling such activities, and lastly parting with its wealth, viz, the minerals, the fixation of the rate of royalties
would also be included within its meaning. While regulating mineral development, royalty/dead rent is an inherent part. State has before it number of
factors, which guide it to fix, enhance or modify the rate of royalty/dead
rent payable by a lessee. The conservation and regulation of mines and
mineral development include wide activity of the State including parting
with its wealth, which are all relevant factors to be taken into consideration
and a guiding force for fixing such royalty/dead rent. [243-A-C; G-H]
State of Tamil Nadu v. Mis. Hind Stone and Ors., [1981] 2 SCC 205 and
Mis. Bhatnagar & Co. Ltd. v. Union of India & Ors., AIR (1957) SC 478, relied
on.
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10. The policy of the Act is communicating loudly from its roof top
through the words "Regulation of Mines and Mineral Development", with
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reference to the minor minerals, that let it be done by the delegatee's State
who is fully aware of the local conditions as such minerals are also used for
the local purposes and on whom this largesse falls. What delegatee should
do and what it should not do is also enshrined in the Act. Section 18 is also
not excluded from its application to the minor mineral development, where
a duty is cast on the Central Government to take all necessary steps for the
conservation and systemic development of minerals in India and highlights
the periphery of its action which itself is a guidance which 'State' may take
note of while framing its own rules. [244-C-D; El
11. It is true that royalty on minerals is a tax but the tax on this royalty,
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is distinct from other forms of taxes. This is not like a tax on income, wealth,
sale or production of goods (excise) etc. and includes the price for the consideration of parting with the right and privilege of the owner, namely, the State
Government who owns the mineral. Both royalty and dead rent are integral
parts of a lease, therefore, it does not constitute usual tax as commonly
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understood but includes return for the consideration for parting with its
property. It would be too harsh to insist for a strict interpretation with reference to minerals while considering the guidelines to a delegatee who is also
the owner of the minerals. [245-F -H; 246-A]
India Cement Ltd. and Ors. v. State of Tamil Nadu & Ors., [1990] 1 SCC
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12; Orissa Cement Ltd. v. State of Orissa and Ors., [1991] Supp. 1 SCC 430;
State of M.P. v. Mahalakshmi Fabric Mills Ltd. & Ors., [1995] Supp. 1 SCC
642 and P. Kannadasan & Ors. v. State of Tamil Nadu & Ors., [1996] 5 SCC
670, relied on.
12.1. It is true that language of Section 28(1) and (2) are different and
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in view of difference in the language of sub-section (3), the same meaning to
it as that of sub-section (1) cannot be given. This difference has been carved
out for a purpose to give different projection to the said two provisions. In the case of major mineral which play an important role in the
National growth and wealth and where the delegatee is the Central GovernG
ment, Parliament retained its full control but for the minor minerals. Parliament left out minor minerals as the subject is of local use and State
Government being well versed and better placed to deal with it. Mere placement or laying of rules and notifications framed by it before the State Legislature would be a sufficient check on the exercise of its powers. This
difference oflanguage gives two different thrusts as intended by the ParliaH
ment. Any act of the Parliament, far less when it introduces any new pro-
QUARRY OWNERS ASSOCIATION v. STATE
219
vision through amendment can be said to be in futility but the purpose has
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to be found. One of the reasons was that minor minerals are of less importance to the country, industry and economy. The Parliament brought this
amendment also to keep a check on the exercise of power by the State
Government's as dclegatee. [251-F; 252-C-E; HJ
12.2. In a democratic set up, every State Government is responsible to
its State Legislature. When any statute require mere laying of any notificaB
tion or Rule before the Legislature, its execution viz., State Government
comes under the scrutiny of the concerned Legislature. Every function and
every exercise of power, by the State Government is under one or other
Ministry who in turn is accountable to the legislature concerned. Where any
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document, rule or notification requires placement before any House or when
placed, the said House inherently gets the jurisdiction over the same. No
doubt in the case where House is entrusted with power to annual, modify or
approve any rule, it plays positive role and have full control over it, but even
where the matter is merely placed before any House, its positive control over
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the executive, makes even mere laying to play a very vital and forceful role
which keeps a check over the cm;cerned State Government. Such placement
cannot be construed to be non est. No act of Parliament should be construed
to be of having no purpose. A mere check on the State Government through
Section 28(3) may have been found to be sufficient by the Parliament, with
reference to the minor rninerals. Thus, the language of both sections 28(1)
and (3) are different only for two different purposes. Thus when Parliament
introduced Section 28(3) through amendment, it was to further strengthen
the control over the State Governments power. [253-H; 254-A-D; 254-G; HJ
Mis. Arias Cycle Industries Lid. & Ors. v. Staie of Haryana, [1979] 2 SCC
196; D.K. Trivedi & Sons and Ors. v. Slate of Gujarat and Ors., [1986] Supp.
sec 207, relied on.
H. W.R. Wade & Forsyrh, Administrative Law, 7th Ed. At 898; Stanley
De Smirh and Rodney Brazier, Constitutional and Administrative Law, 7th
Ed., referred to.
13. Since impugned notifications issued by the State are within the
ambit of delegation and the delegation is not excessive as there are enough
guidelines and control over the State Government notwithstanding its check
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on the State under Section 28(3) to place rules before the Legislature, it
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would not have any effect on its validity. But when a statute as under Section
28(3) requires its placement, it is the obligation of the State Government to
place it with this specific note before each House of the State Legislature.
The State shall now place it before each Houses of the State legislature at the
earliest and will also do so in future while framing rules or issuing any notiB
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fication under the rules framed under sub-section 15(1) of the Act.
[257-B-CJ
Mis. Atlas Cycle Industries Ltd. & Ors. v. State ofHaryana, [1979] 2 SCC
196, relied on.
14. Placement ofany notification or rules framed by the State Government under Section 28(3) cannot be said to be something out of any novel
procedure but is a well recognised principle. In a Federal structure of any
Constitution, their fields are well defined, sometimes the same subject may
be under the control of both legislatures as in the concurrent list of our
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Constitution. 'Regulation of mines and mineral development' does not fall
in the Concurrent List, but still both fall in the field of the Parliament under
Entry 54 List I and the State legislature under Entry 23 List II, their possible
conflict is resolved by the following words in Entry 23 List II, "subject to the
provisions of List I with respect to regulation and development under the
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control of the Union" and this control may be full or partial. Union came in
full control over this subject by the 1957 Act and no field was left for the
State to make the law. The covering of the entire field was by the 1957 Act
itself not by any other constitutional limitation. The Act which takes the
entire field can also withdraw from it both partially or fully. In the present
case the power of State Legislature has been completely denuded by the
Parliament and it is always open for the Parliament to withdraw partially
the eclipse and if it so desires it may leave the Legislature for such part to
exercise its power. Section 28(3) along with the provision to lay the rule , •
notification made by the State Government before the State Legislature
cannot be said to be possible only when it is in the concurrent list. This
placement cannot be said to be incompetent or keeping it beyond the control
of the Parliament as such placement is for a limited purpose for which the
Parliament is competent and it cannot be said to be of no consequence.
[258-A-B; D-H; 259-A; B]
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Baijnath Kedia v. State of Bihar & Ors., [1969] 3 SCC 838, relied on.
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QUARRY OWNERS ASSOCIATION v. STATE
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15. In order to adjudicate, whether any delegation of power is unbridled or excessive the historical background of similar provisions which preceded the impugned provision which should be kept in mind, as it is also a
relevant consideration. When the present 1957 Act came into force, the
Parliament was aware that different State Governments were regulating the
grant of leases in respect of minor minerals including fixation of rate of
royalties. Parliament was fully aware that even in the past it was the State
Governments were entrusted with and were dealing with minor minerals as
a delegatee. However, earlier the State Governments which were acting as
sub-delegatee of the Central Government but now they act as delegatee of
the Parliament. This was the pattern adopted and approved since inception
and could also be because minor minerals are more useful for local use and
the State Government being the highest executive in the State knows its uses
and management fully well, including the fixation of its prices. In this historical background there is nothing wrong to delegate to the State Government power to fix rate of royalty/dead rent for the minor minerals.
[249-H; 250-A; C-F]
Mis. Bhatnagar & Co. Ltd. and Am: v. Union of India and Ors., AIR
(1957) SC 478; Municipal Corporation of Delhi v. Birla Cotton and Weaving
Mills Delhi & Am:, [1968] 3 SCR 251 and D.K. Trivedi & Sons and Ors. v. State
of Gujarat and Ors., [1986] Supp. SCC 207, relied on.
16. In the present case, delegation of power is on the State Government which is the highest executive in the State, which is responsible to the
State Legislature. In a Parliamentary democracy every act of the State
Government is accountable to its people through State Legislature which
itself is an additional factor which keeps the State Government under check
not to act arbitrarily or unreasonably. When a policy is clearly laid down in
a statute with reference to the minor minerals with main object under the
Act being for its conservation and development, coupled with various other
provisions to the Act guiding it, checking it and controlling it then such
delegation cannot be said to be unbridled. [246-E-F]
D.K. Trivedi & Sons and Ors. v. State of Gujarat and Ors., [1986] Supp.
SCC 207; State of M.P. v. Mahalakshmi Fabrics Mills Ltd. & Ors., [1995] Supp.
1SCC642; Baijnath Kedia v. State of Bihar & Ors., [1969] 3 SCC 838; Municipal Corporation of Delhi v. Bir/a Cotton Spinning and Weaving Mills, Delhi &
Am:, [1968] 3 SCR 251; Avinder Singh and Ors. v. State of Punjab and Ors.,
[1979] 1SCC137 and Corporation of Calcutta &Anr. v. Liberty Cinema, [1965]
2 SCR 477, relied on.
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CIVIL APPELLATE JURISDICTION: Civil Appeal No. 5089of1997.
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From the Judgment and Order dated 16.10.96 of the Patna High Court
in C.W.J.C. No. 9821 of 1994.
WITH
Civil Appeal Nos. 5090/97, 5091/97 and 5092/97.
F.S. Nariman, S.B. Sanyal, G.L. Sanghi, P.P. Rao, R.K. Dwivedi, A.K.
Pandey, B.B. Singh, Subhro Sanyal, Subhash Sharma, Ms. Manita Verma,
Jamshed Buy and Kumar Rajesh Singh for the appearing parties.
The Judgment of the Court was delivered by
MISRA, J. The issues in these appeals, apparently impress a common
picturisation of usual nature but they are raised in an interesting way while
challenging the fixation of the rate of royalty for the minor minerals. under
Section 15 of the Mines and Minerals (Regulation and Development) Act, 1957
(hereinafter referred to as 'the Act'). The question for consideration is, the
ambit of delegation of power by the Parliament to the State Government under
Section 15 of the said Act. Can it be said that the delegation is unbridled
without any check if it travels beyond the guidelines as spelt by this Court
in the case of D.K. Trivedi & Sons and Ors. v. State of Gujarat and Ors.,
[1986] Supp. SCC 207 In the present case neither the validity of delegation
under Section 15 nor it being without any guideline is under challenge but
both the appellants and the respondents State stress two different orbits for
the guideline, the appellants constrict it to be within what is spelt in the D.K.
Trivedi case (supra) while the respondents stress it not to be confined to that
case. The impugned notifications dated 17th August, 1991 and 28th September, 1994 issued by the State of Bihar enhancing the rate of royalty have to
be tested as in which of the two orbits it falls. If it falls within the restricted
orbit, as submitted by the appellants, it may be ultra vires but would be valid
if it falls within the other orbit. Mr. F.S. Nariman, learned senior counsel,
submits that extents and limitations of the power of the delegatee have to be
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read as laid down by this Court in D.K. Trivedi case (supra), where the validity
of this very delegation of power to the State Government was under challenge.
Based on this the submission is, Item 54 of the Second Schedule of the Act
controls and guides the State Government (hereinafter referred to as 'the
State'), for fixing or enhancing the rate of royalty which has to be within the
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reasonable bounds of 12 per cent of the sale price at the pit's mouth. Admittedly
QUARRY OWNERS ASSOCIATION v. STATE [MISRA, J.]
223
in the present case it is far beyond this, hence the submission is that the
impugned notifications are liable to be struck down. On the other hand, submission for the respondents - the State of Bihar by learned senior counsel Mr.
Rakesh Dwivedi is that D.K. Trivedi~· case (Supra) neither restricts nor limits
the power of enhancement of royalty to Item 54, Schedule II of the Act nor
it exhaustively dealt with all other sources of guidelines which was not necessary in that case, which can be gathered from other provisions of the Act,
the objects and reasons, the scheme of the Act and the nature of material etc ..
Before entering into this legal tangle, it is necessary to turn to some of
the essential facts to appreciate more fully the controversies. The present
appeals are directed against the judgments and orders dated 16th October, 1996
of the High Court, passed in writ petitions by which the petition of the appellants, namely, Quarry Owners Association etc. challenging the aforesaid notifications dated 17th August, 1991 and 28th September, 1994, issued by the
State including challenge to the recovery of the enhanced royalty under it and
for the refund of the amount already paid were dismissed.
The Preamble of the Act lays down:
"An Act lo provide for the development and regulation of mines
and minerals under the control of the Union".
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Section 2 declares the expediency of Union to control the regulation of
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mines and development of minerals - Section 3(a) defines 'minerals' which
includes all minerals except mineral oils. Section 3( e) defines 'minor minerals'.
Section 4 refers to the prospecting or mining operations to be undertaken only
under a licence or lease. Section 4A is for termination of prospecting licences
or mining leases, sub-section ( 1) is for premature termination other than minor
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minerals while sub-section (2) is for minor minerals. Section 5 imposes restrictions on the grant of such licences c>r leases. Section 6 specifies the maximum
area for which a licence and lease may be granted, while Section 7 gives period
for the grant and renewal of such prospective licences. Section 8 deals with
the periods for mining leases. Sub-sections (1) and (2) of Section 9 refer to
the payment of royalty at the rate specified in the Second Schedule whether
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granted before coming into force of this Act or subsequently. Sub-section (3),
empowers the Central Government to amend the Second Schedule so as to
enhance or reduce the rate of royalty payable. Section 9A obliges lessee to
pay the dead rent. Sections 10 to 12 deal with the procedure for obtaining
prospective licence, or mining leases in respect of the land in which minerals
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vest in the Government. Section 13 empowers the Central Government to make
rules in respect of minerals. Section 14 specifically excludes Sections 5 to 13
from application of quarrying leases, mining leases or other minerals concessions in respect of minor minerals. Section 15 empowers the State to make rules
in respect of minor minerals. Section 16 entrusts power to modify mining leases
granted before 25th October, 1949. Section 17 gives special power to the
Central Government to undertake prospecting or mining operations in certain
lands. Section 18 refers to the mineral development. Licences and mining
leases under the Act to be void under Section 19 if made in contravention of
the Act, while Section 20 makes the Act and Rules to apply to all renewals.
Section 21 imposes penalties. Section 22 refers to the cognizance of offences.
Section 23-C empowers the State to make rules for preventing illegal mining,
transportation and storage of minerals. Section 26 entrusts both Central and the
State to delegate its power under the Act on officer or authority of the Central
or State. Sub-section (1) of Section 28 puts an obligation on the Central
Government to place its rules and notifications before the Parliament which is
subject to its modifications, if any. Similarly, the State is ubliged to place its
Rules and notifications before each houses of State Legislature under subsection (3). Section 29 makes existing rules to continue so long they are not
inconsistent with the Act and Rules. Section 30 empowers the Central Government to revise any order made by the State or any other authority. The First
Schedule refers to the specified minerals, viz., Hydro carbons/energy minerals
- Atomic minerals and Metallic and non-metallic minerals with reference to
Sections 4(3), 5(1), 7(2) and 8(2) while the Second Schedule refers to the rate
of royalty in all States and Union Territories except the States of Assam and
West Bengal while the Third Schedule refers to the rate of Dead Rent. Thus,
the aforesaid Act expressly lays down the rates of royalty of the minerals
through Sched!Jle II read with Section 9. It is significant that Section 14
excludes Sections 5 to 13 specifically for minor minerals which includes
Section 9. Section 15, entrusts power on the State to lay down Rules in respect
of the minor minerals. Original Section 15 as it stood at the time of D.K. Trivedi
(Supra), is quoted hereunder:
"Section 15: Power of State Government to make rules in respect of
minor minerals:-
( 1)
The State Government may, by notification in the Official Gazette, make rules for regulating the grant of quarry leases, mining
leases or other minerals concessions in respect of minor minerals and for purposes connected therewith.
,
QUARRY OWNERS ASSOCIATION v. STATE [MISRA, J.]
225
(2)
Until rules are made under sub-section (1), any rules made by a
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State Government regulating the grant of quarry leases, mining
leases or other mineral concessions in respect of minor minerals
which are in force immediately before the commencement of this
Act shall continue in force.
(3)
The holder of a mining lease or any other mineral concession
granted under any rule made under sub-section (1) shall pay
royalty in respect of minor minerals removed or consumed by
him or by his agent, manager, employee, contractor or sub-lessee
at the rate prescribed for the time being in the rules framed by
the State Government in respect of minor minerals.
Provided that the State Government shall not enhance the rate of
royalty in respect of any minor minerals for more than once during any
period of four years."
This delegation of power to the State withstood its challenge in D.K.
Trivedi case (Supra), as aforesaid. Later this section was amended on 10th
February, 1987, by introducing sub-section 1-A th~ough Act No.37 of 1986.
This was in particular and without prejudice to the generality of power conferred by sub-section I of Section 15. This sub-section (l-A) is quoted hereunder:-
"(I-A): In particular and without prejudice to the generality of the
foregoing power, such rules may provide for all or any of the following
matters, namely:-
(a)
the person by whom and the manner in which, applications for
quarry leases, mining leases or other mineral concessions may be
made and the fees to be paid therefor;
(b)
the time within which, and the form in which, acknowledgement
of the receipt of any such applications may be sent;
( c)
the matters which may be considered where applications in
respect of the same land are received within the same day;
(d)
the terms on which, and the conditions subject to which and the
authority by which quarry leases, mining leases or other mineral
concessions may be granted or renewed;
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