Civil Appeal Nos
2602 2604 of 1980
Appeals by special leave from the Judgment and Order dated 20 6 1980 of the Madras High Court in Writ Petition Nos 4467 of 1977 2933 and 4793 of 1978
Lal Narain Sinha Att
of India for the Appellant in CA 260280
Soli J Sorabjee for the Appellant in CA 260380
R Krishnamurthy Adv
for the appellant in CA 260480
A V Rangam and K Venkatawani for the Appellant in all the matters
Y section Chitale Dr Mrs section Ramachandran and Mukul Mudgal for Respondent Nos 11 and 42
P Chidambaram and A section Nambiyar for the Respondents
F section 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 CHINNAPPA REDDY J
Entry 23 of List II of the Seventh Schedule to the Constitution is Regulation of mines and mineral development subject to the provisions of List I with respect to regulation and development under the control of the Union
Entry 54 746 of List 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 
By section 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 section 2 of the Act the State legislatures are denuded of the whole of their legislative power with respect 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
vs The State of Orissa  Ors
State of Orissa vs MA Tulloch  Co and Baijnath Kedia vs State of Bihar  Ors
section 3 of the  defines various expressions occurring in the Act
section 3 a defines minor minerals  and it includes any mineral declared to be a minor mineral by the Central Government by a notification 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 section 14
section 4 prohibits all prospecting or mining operations except under a licence or a lease granted under the Act and the rules made thereunder
S4A1 enables the State Government on a request made by the Central Government in the interest of regulation of mines and mineral development 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 s4A1 is inapplicable to minor minerals because of the provisions of S14 S4A2 has been expressly enacted making somewhat similar provision as in S4A1 in respect of minor minerals  also
S4A2 747 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
S5 imposes certain restrictions on the grant of prospecting licences and mining leases
S6 prescribes the maximum area for which a prospecting licence or mining lease may be granted
S7 prescribes the period for which prospecting licences may be granted or renewed
S8 prescribes the period for which mining leases may be granted or renewed
S9 provides for the payment of royalty and S9A 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 
S10 provides for making applications for prospecting licences or mining leases in respect of any land in which the minerals vest in the Government
S11 provides for certain preferential rights in favour of certain persons in the matter of grant of mining leases
section 12 prescribes the Register of prospecting licences and mining leases to be maintained by the State Government
S13 empowers the Central Government to make rules for regulating the grant of prospecting licences and mining leases
In particular we may mention that S132 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 land in which the minerals vest in the Government may be made and the fees to be paid therefor
S132 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 land in which the minerals vest in a person other than the Government and the terms on which and the conditions subject to which such a licence or lease may be granted or renewed 
S14 makes the provisions of Sections 4 to 13 inapplicable to minor minerals
S15 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
S153 provides for the payment of royalty in respect of minor minerals at the rate prescribed by the rules framed by the State Government
S16 provides for the modification of mining leases granted before October 25 1949
S17 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 748 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 of any land specified in the notification
S18 casts a special duty on the Central Government to take all necessary steps for the conservation and development of minerals in India
Sections 19 to 33 are various miscellaneous provisions with which we are not now concerned
Pursuant to the power vested in it under S15 of the  the Government of Tamil Nadu has made the Tamil Nadu Minor Mineral Concession Rules 1959
Section II of the rules consisting of rules 3 to 16 is entitled Government lands in which the minerals belong to the Government
Rule 8 prescribes the procedure for the lease of quarries to private persons
The ordinary procedure is to publish a notice in the District Gazette inviting applications thereafter to hold an auction and finally to grant a lease to the highest bidder
Rule 8A 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 8B was introduced in 1975 making special provision for the grant of leases for quarrying black granite
The rule is as follows 8 B Lease of quarries in respect of black granite to private persons 1 Notwithstanding anything to the contrary contained in rules 8 and 8A 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 the District concerned in the prescribed form in triplicate and shall be accompanied by a fee of Rs 100 
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 Government G O Ms No 993 Industries dt
25 8 1975
Rule 8 C was introduced by G O Ms No 1312 Industries dated December 2 1977
By this rule leases for quarrying black granite 749 in 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 under 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 black granite or grant 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 such quarrying or lease
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 satisfied that i such renewal is in the interests of mineral development and ii the lease amount is reasonable in the circumstances of the case
2 Every application for renewal shall be made to Collector 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 92 in 1975 and it said provided also that the renewal for quarrying black granite shall be made by the Government
Several persons who held leases for quarrying black granite belonging to the State Government and whose leases were about to expire applied to the Government of Tamil Nadu for renewal of their leases
In some of the cases applications were made long prior 750 to the date of G O Ms No 1312 by which Rule 8 C was introduced
Some applications were made after Rule 8 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 8 C came into force and all of them were rejected in view of Rule 8C
Several Writ Petitions were filed in the High Court questioning the vires of Rule 8C on various grounds
Apart from canvassing the vires of Rule 8C it was contended that Rule 8C did not apply 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 had been made prior to the coming into force of Rule 8C their applications should have been dealt with without reference to Rule 8C
The Madras High Court while not accepting some of the contentions raised on behalf of the applicants struck down Rule 8C on the ground that it exceeded the rule making power given to the State Government under S15 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 disposed of without reference to Rule 8C
It was also observed that even if Rule 8C 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 of Tamil Nadu submitted that the approach of the High Court was vitiated by its failure to notice the crucial circumstance that the minerals belonged to the Government and the applicants had no vested or indefeasible right to obtain a lease or a renewal to quarry the minerals
There were good reasons for banning the grant of leases to quarry black granite to private parties and in the light of those reasons 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 ownership of the minerals was irrelevant
In making the rules the State Government was acting as a delegate and not as the owner of the minerals
He submitted that it was 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 751 According 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 section 15 of the  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 that in any event it would not have the effect of affecting applications made more than 60 days before 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 
We have already referred to its salient provisions
section 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
section 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
S4A empowers the State Government on the request of the Central Government in the case of minerals other than minor minerals 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 consultation with the Central Government
The public interest which induced Parliament to make the declaration contained in section 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 rules
Viewed in the light shed by the other provisions of the Act particularly sections 4A 17 and 18 752 it cannot be said that the rule making authority under section 15 has exceeded its powers in banning leases for quarrying 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 because the State Government happens to be the subordinate legislating 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 originally there was scope for auctioning of quarries of minor minerals
In amendment issued in the GO 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 granites
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 mining
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 Government level
They also prescribed a standard form and an application fee to be paid with the application
The amendment states that the Director of Industries and Commerce shall technically 753 scrutinise the industrial programme given by the applicant while forwarding the same to Government
At the same time in the GO 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 Tamil Nadu Industrial Development Corporation Limited is interested to obtain a lease for 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 regulate 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 1976 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 past several years it has 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 black granite materials and not out and polished slabs
A large number of the leases were not operating either due to speculation or lack of finance from the lessees
Therefore Government decided that there should be no further grant of lease to private entrepreneurs for black granite
This was mentioned in GOMs
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 have accepted the position that making a rule 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
754 One of the submissions on behalf of the respondents was that monopoly was a distinct legislative subject under entry 21 of List III of the Seventh Schedule to the Constitution and therefore monopoly even in favour of a State Government can only be created by plenary 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
vs State of Mysore  Ors1 where it was held that the expression Commercial and industrial monopolies  in entry 21 of List III 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 monopolies 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 IVA of the Motor Vehicles Act was under attack in that case
One of the grounds of attack was that by Chapter IVA of the  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 undertaken by the State of Mysore in that behalf that State was incompetent to enter into the arena of motor transport business to the exclusion of private operators Sustenance for the submission was sought to be drawn from the language of article 196 ii which provides that nothing in article 191 g shall prevent the State from making any law relating 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 service to the exclusion complete or partial of citizens only if the State made a law relating to it
The argument was repelled by the Court in these words The plea sought to be founded on the phraseology used in article 196 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 expression the State  as defined in article 12 is inclusive of the Government and Parliament of India and the Government and the Legisla 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 commercial or trading monopoly in the constituent States
Article 196 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 business to the exclusion of others does not arise by virtue of article 196
The right of the State to carry on trade or business is recognised by article 298 authority to exclude competitors 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 article 196
In any event the expression law  as defined in article 133 a includes any ordinance order bye law rule regulation notification custom etc and the scheme framed under s68C may properly be regarded as law  within the meaning of article 196 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 article 191 g
Earlier in Rai Sahib Ram Jawaya Kapur  Ors
vs 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 legislature 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 selling 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 GOMs No 1312 dated December 2 1977 involved a major change of policy which was a legislative function and therefore beyond the competence 756 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
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 involve any change of policy
The policy of the Act remains the same and it is as we said the conservation and the prudent and discriminating exploitation of minerals with a view to secure maximum benefit to the community
Exploitation of minerals by the private andor 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 and in consequence the authority competent to make the subordinate legislation makes a rule banning private exploitation of such mineral which was hitherto permitted we are unable to see any change of policy merely because what was previously permitted is no longer permitted
One of the arguments pressed before us was that Sec
15 of the authorised the making of rules for regulating the grant of mining leases and not for prohibiting them as Rule 8 C sought to do and therefore Rule 8 C was ultra vires Act section 15
Well known cases on the subject right from Municipal Corporation of the City of Toronto vs Virgo and Attorney General for the Dominion General for the Dominion and the Distillers and Brewers Association of Ontario upto State of Uttar Pradesh  Ors
vs Hindustan Aluminium Corporation Ltd  Ors were brought to our attention
We do not think that Regulation  has the rigidity of meaning as never to take in Prohibition 
Much depends on the context in which the expression is used in the Statute and the object sought to be achieved by the contemplated regulation
It was observed by Mathew J in G K Krishnan etc
vs The State of Tamil Nadu  Anr
 the word regulation has no fixed connotation
Its meaning differs according to the nature of the thing to which it is applied
In modern statutes concerned as they are with economic and social activities regulation  757 must of necessity receive so wide an interpretation that in certain situations it must exclude competition to the public sector from the private sector
More so in a welfare State
It was pointed out by the Privy Council in Commonwealth of Australia vs Bank of New South Wales1 and we agree with what was stated therein that the problem whether an enactment was regulatory or something more or whether a restriction was direct or only remote or only incidental involved not so much legal as political social or economic consideration and that it could not be laid down in no circumstances could the exclusion of competition so as to create a monopoly either in a State or Commonwealth agency to be justified
Each case it was said must be judged on its own facts and in its own setting of time and circumstances and it might be that in regard to some economic activities and at some stage of social development prohibition with a view to State monopoly was the only practical and reasonable manner of regulation
The statute with which we are concerned the Mines and Minerals Development and Regulation Act is aimed as we have already said more than once at the conservation and the prudent and discriminating exploitation of minerals
Surely in the case of a scarce mineral to permit exploitation by the State or its agency and to prohibit exploitation by private agencies is the most effective method of conservation and prudent exploitation
If you want to conserve for the future you must prohibit in the present
We have no doubt that the prohibiting of leases in certain cases is part of the regulation contemplated by Sec 15 of the Act
The submission of the learned counsel that the impugned rule contravened Articles 301 and 303 of the Constitution is equally without force
Now the restrictions freedom from which is guaranteed by article 301 would be such restrictions as directly and immediately restrict or impede the free flow or movement of trade Atiabari Tea Co Ltd vs State of Asssam  Ors2 And regulatory measures or measures imposing compensatory taxes for the use of trading facilities do not come within the purview of restrictions contemplated by article 301
They are excluded from the purview of the provisions of Part XIII of the Constitution for the simple reason that they do not hamper trade commerce or inter course but rather facilitate them The Automobile Transport Rajasthan Ltd vs State of Rajasthan  Ors3
The is without doubt a regulatory measure Parliament having enacted it for the express purpose of the regulation of mines and the development of minerals
The Act and the rules 758 properly made thereunder are therefore outside the purview of article 301
Even otherwise article 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 article 301
The is a low enacted by Parliament and declared by Parliament to be expedient in the public interest
Rule 8C has been made by the State Government 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 all purposes of construction or obligation State of UP  Ors
vs Babu Ram Upadhya1 See also Maxwell Interpretation of Statutes 11th Edn
49 50
So Statutory rules made pursuant to the power entrusted by Parliament are law made by Parliament within the meaning of article 302 of the Constitution
To hold otherwise would be to ignore the complex demands made upon modern legislation which necessitate the plenary legislating body to discharge its legislative function by laying down broad guidelines and standards to lead and guide as it were leaving it to the subordinate legislating body to fill up the details by making necessary rules and to amended the rules from time to time to meet unforeseen and unpredictable situations an within the framework of the power entrusted to it by the plenary legislating body
State of Mysore vs H Sanjeeviah2 was cited to us to show that rules did not become part of the statute
This was case where by reference to Sec 77 of the Mysore Forest Act which declared the effect of the rules it was held that the rules when made did not become part of the Act
That was apparently because of the specific provisions of Sec 77 which while declaring that the rules would have the force of law stopped short of declaring that they would become part of the Act
In the absence of any express provision as now the ordinary rule as enunciated in Maxwell and State of Uttar Pradesh  Ors
vs Babu Ram Upadhya supra would perforce apply
The next question for consideration is whether Rule 8C is attracted when applications for renewal of leases are dealt with
The argument was that Rule 9 itself laid down the criteria for grant of renewal of leases and therefore rule 8C should be confined in its application to 759 grant of leases in the first instance
We are unable to see the force of the submission
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
If as a result of experience gained after watching the performance of private entrepreneurs in the mining of minor minerals it is decided to stop grant of leases in the private sector in the interest of conservation of the particular mineral resource attainment of the object sought will be frustrated if renewal is to be granted to private entrepreneurs without regard to the changed outlook
In fact some of the applicants for renewal of leases may themselves be the persons who are responsible for the changed outlook
To renew leases in favour of such persons would make the making of Rule 8C a mere exercise in futility
It must be remembered that an application for the renewal of a lease is in essence an application for the grant of a lease for a fresh period
We are therefore of the view that Rule 8C is attracted in considering applications for renewal of leases also
Another submission of the learned counsel in connection with the consideration of applications for renewal was that applications made sixty days or more before the date of GOMs
No 1312 2 12 1977 should be dealt with as if Rule 8C had not come into force
It was also contended that even applications for grant of leases made long before the date of GOMs
No 1312 should be dealt with as if Rule 8C had not come into force
The submission was that it was not open to the Government to keep applications for the grant of leases and applications for renewal pending for a long time and then to reject them on the basis of Rule 8C notwithstanding the fact that the applications had been made long prior to the date on which Rule 8C came into force
While it is true that such applications should be dealt with within a reasonable time it cannot on that account be said that the right to have an application disposed of in a reasonable tune 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
None has a vested right to the grant or renewal of a lease and none can claim 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 760 of any vested rights in anyone an application for a lease has necessarily to be dealt with according to the rules in force on the date of the disposal of the application despite the fact that there is a long delay since the making of the application
We are therefore unable to accept the submission of the learned counsel that applications for the grant of renewal of leases made long prior to the date of GOMs
No 1312 should be dealt with as if Rule 8C did not exist
In the view that we have taken on the several questions argued before us all the appeals arising out of applications for the grant or renewal of leases for quarrying black granite in Government lands are allowed and the Writ Petitions filed in the High Court are dismissed
Special leave is granted in cases in which leave had not been previously granted
The appeals are allowed and disposed of in the same manner
There are however a few appeals in which the applications were not for the grant or renewal of leases to quarry black granite in Government lands but were for permission to quarry black granite in Patta lands in which the right to minerals belonged to the applicants private owners themselves
Apart from the fact that Rule 8C occurs in a group of Rules in Section II which bears the head Government lands in which the minerals belong to the Government while the rules relating to lands in which the right to minerals belongs to private owners are dealt with in Section III
The language of Rule 8C is clear that it cannot have any application to lands in which the right to minerals belongs to the applicants themselves
Rule 8C is only concerned with leases for quarrying black granite and it cannot therefore have any application to cases where no lease is sought from the Government
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 8C it may be noted does not impose a general ban on quarrying black granite but only imposes a bar on the grant of leases of quarrying black granite
Appeals and Special Leave Petitions which arise out of applications for the grant of permission to quarry black granite in the Patta lands belonging to the applicants themselves have therefore to be dismissed
The result is Special Leave Petition Nos
9257 9259 9260 9271 9273 to 9282 and 9284 of 1980 are dismissed and Special Leave Petition Nos 9234 to 9248 9250 to 9256 9258 9261 to 9270927292839285928692889289 and 9290 of 1980 are granted and Appeals allowed
Civil Appeal Nos 2602 to 2604 of 1980 are allowed
There will be no order as to costs
NKA Ordered accordingly


Summary:
The Mines and Minerals Regulation  Development Act 1957 Central Act was enacted in the public interest to enable the Union to take under its control the regulation of mines and the development of minerals
Exercising its power under this Act the Central Government declared by a notification that black 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 prescribes the procedure for lease of quarries to private persons
By 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 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
Several applications for the grant of fresh leases as well as for the renewal 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 came into force
The State Government considered all the applications and rejected all of them in view of rule 8C
The respondents filed writ petition questioning the vires of Rule 8 C on various grounds
The High Court struck down Rule 8 C on the ground that 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 applications pending for a long time and then to dispose them of on the basis of a rule which had come into force later
As a result all the applications were disposed of without reference to rule 8 C
The appellant contended that I The approach of the High Court was vitiated by its failure to notice the crucial circumstance that the minerals belonged to the Government II The respondents had no vested or indefeasible right to obtain a lease or a renewal to quarry the minerals III There were 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 which would result in the destruction of the mineral resources of the country
On behalf of the respondent it was submitted that I the question of ownership of the minerals was irrelevant II It was not open to the appellant 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 III 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 of affecting applications made more than 60 days before it came into force
Accepting the appeals it was  HELD Rule 8 C was made in bonafide exercise of 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 misuse of the rule making power if it advances the interest of State which really means the people of the State
Rivers forests minerals and as 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  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
751C D 753G H 2
The Public interest which induced Parliament to make the declaration contained in S2 of the Mines  Minerals Regulation and Development Act 1957 has naturally to be the paramount consideration in all matters concerning the regulation of Mines  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 rules
751G H 3
The other provisions of the Act particularly sections 4A 17 and 18 indicate that the rule making authority under S15 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 because 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 B H C Narayanappa  Ors
vs State of Mysore  Ors
  745 752 753 referred to
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
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 involve any change of policy
The policy of the Act remains the same and it is the conservation and the prudent and discriminating exploitation of 744 minerals with a view to secure maximum benefit to the community
Exploitation of minerals by the private andor 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 and in consequence the authority competent to make the subordinate legislation makes a rule banning private exploitation of such mineral which was hitherto permitted
There is no change of policy merely because that was previously permitted is no longer permitted
756A D Municipal Corporation of the City of Toronto vs Virgo  Attorney General for Ontario vs Attorney General for the Dominion and the Distillers and Brewers Association  State of Uttar Pradesh and Others vs Hindustan Aluminium Corporation Ltd and Ors   G K Krishnan etc
vs The State of Tamil Nadu and Anr etc
1975 2 SCR 715  721 Commonwealth of Australia vs Bank of New South Wales referred to
The restrictions freedom from which is guaranteed by article 301 would be such restrictions as directly and immediately restrict or impede the free flow or movement of trade
The Act and the rules properly made thereunder are therefore outside the purview of article 301
Even otherwise article 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 article 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 in 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 all purposes of construction or obligation
758B G Atiabari Tea Co Ltd vs State of Assam  Ors  The Automobile Transport Rajasthan Ltd vs State of Rajasthan  Ors
1963 1 SCR 491 and State of UP  Ors
vs Babu Ram Upadhya   referred to
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 745 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 renewal of a lease and none can claim 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 disposal of the application despite the fact that there is a long delay since the making of the application
759G H 760A 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 granite
760D F