* THE HON’BLE MR. JUSTICE C.V.NAGARJUNA REDDY + WRIT PETITION No.5871, 5950, 5964, 6178, 6180, 6188 6210, 6440, 6563, 13321, 13470 and 13744 of 2001, 533 and 1729 of 2002 and 27640 of 2005 Between: # M/s. Novel Grnites Ltd., East Marredpally, Secunderbad & others. … Petitioners (in WP.No.5871 of 2001) M/s. Murali Krishna Pulvarizes, rep., by its Managing Partner Mr. M. Chandra Sekhar Reedy. … Petitioner (in WP.No.5950 of 2001) Muralidhar Chemical Lines Co., Dhone, Kurnool District & others. … Petitioners (in WP.No.5964 of 2001) Betamcherla Factory Owners Welfare Association, Betamcherla, Kurnool District. … Petitioner (in WP.No.6178 of 2001) M/s. Rajeshwari Granites Pvt., Ltd., Khanapuram, Mudigonda Mandal, Khammam District & others. … Petitioners (in WP.No.6180 of 2001) M/s. Hima Greesha Granites Tilaknagar, Hyderabad & others. … Petitioners (in WP.No.6188 of 2001) K. Govindu & others … Petitioners (in WP.No.6210 of 2001) The Tandur Stone Merchants Welfare Association, Tandur, Ranga Reddy District. … Petitioner (in WP.No.6440 of 2001) Visakhapatnam Mineral Traders, Visakhapatnam & another. … Petitioners (in WP.No.6563 of 2001) Ananthapur District Stone Crusher Association, Aravind Nagar, Ananthapur. … Petitioner (in WP.No.13321 of 2001) Sri Amulya Enterprises “Amulvilla” Aravinda Nagar, Dhone, Kurnool Dist. & another. … Petitioners (in WP.No.13470 of 2001) L. Hassan Khan & Co., Pathapeta, Dhone, Kurnool. … Petitioner (in WP.No.13744 of 2001) M/s. Siddardha Constructions (P) Ltd., Vishakapatnam. … Petitioner (in WP.No.553 of 2002 Muralidhar Chemical Limes Co., Dhone, Kurnool District & others. … Petitioners (in WP.No.1729 of 2002) Sri Lakshmi Refractories, Dwaraka Tirumala, W.G. Dist., & others. … Petitioners (in WP.No.27640 of 2005) Verses $ The Govt., of A.P., rep., by its Secretary, Industries & Commerce (M.I) Dept., Secretariat Buildings, Hyderabad & others. … Respondents (in all writ petitions) ! Counsel for the petitioners : Sri E. Ayyapa Reddy Smt. N. Shoba Sri M.R. Chakravarthy Sri S. Satyam Reddy ^ Counsel for the respondents: Sri G. Manohar, Special GP < Gist: > Head Note: ? Cases referred: 1. (2006) 4 SCC 327 21. (2005) 5 SCC 598 2. (2004) 1 SCC 256 22. (2006) 3 SCC 434 3. (2003) 3 SCC 122 23. (2006) 4 SCC 327 4. (2000) 2 SCC 254 24. AIR 1952 SC 115 5. (2005) 2 SCC 555 25. AIR 1954 SC 630 6. (1969) 3 SCC 838 26. AIR 1955 SC 188 7. AIR 1964 SC 922 27. AIR 1980 SC 1612 8. 1996 (2) ALD 1180 (DB) 28. AIR 1976 SC 1393 9. 2000 (7) Supreme 220 29. (1902) 47 Law Ed. 575 10. AIR 1995 SC 858 11. AIR 1978 SC 1587 12. (2003) 9 SCC 534 13. AIR 1964 SC 1037 14. AIR 1998 SC 3076 15. 1996 STC Vol.XVII 313 16. (1996) 3 SCC 709 17. (1997) 2 SCC 453 18. (2003) 4 SCC 104 19. (2008) 2 SCC 254 20. (2008) 4 SCC 720 IN THE HIGH COURT OF JUDICATURE, ANDHRA PRADESH AT HYDERABAD (Special Original Jurisdiction) FRIDAY, THE THIRTY FIRST DAY OF OCTOBER, TWO THOUSAND EIGHT ONLY PRESENT: THE HON’BLE MR. JUSTICE C.V.NAGARJUNA REDDY WRIT PETITION No.5871, 5950, 5964, 6178, 6180, 6188 6210, 6440, 6563, 13321, 13470 and 13744 of 2001, 533 and 1729 of 2002 and 27640 of 2005 Between: M/s. Novel Grnites Ltd., East Marredpally, Secunderbad & others. … Petitioners (in WP.No.5871 of 2001) M/s. Murali Krishna Pulvarizes, rep., by its Managing Partner Mr. M. Chandra Sekhar Reedy. … Petitioner (in WP.No.5950 of 2001) Muralidhar Chemical Lines Co., Dhone, Kurnool District & others. … Petitioners (in WP.No.5964 of 2001) Betamcherla Factory Owners Welfare Association, Betamcherla, Kurnool District. … Petitioner (in WP.No.6178 of 2001) M/s. Rajeshwari Granites Pvt., Ltd., Khanapuram, Mudigonda Mandal, Khammam District & others. … Petitioners (in WP.No.6180 of 2001) M/s. Hima Greesha Granites Tilaknagar, Hyderabad & others. … Petitioners (in WP.No.6188 of 2001) K. Govindu & others … Petitioners (in WP.No.6210 of 2001) The Tandur Stone Merchants Welfare Association, Tandur, Ranga Reddy District. … Petitioner (in WP.No.6440 of 2001) Visakhapatnam Mineral Traders, Visakhapatnam & another. … Petitioners (in WP.No.6563 of 2001) Ananthapur District Stone Crusher Association, Aravind Nagar, Ananthapur. … Petitioner (in WP.No.13321 of 2001) Sri Amulya Enterprises “Amulvilla” Aravinda Nagar, Dhone, Kurnool Dist. & another. … Petitioners (in WP.No.13470 of 2001) L. Hassan Khan & Co., Pathapeta, Dhone, Kurnool. … Petitioner (in WP.No.13744 of 2001) M/s. Siddardha Constructions (P) Ltd., Vishakapatnam. … Petitioner (in WP.No.553 of 2002 Muralidhar Chemical Limes Co., Dhone, Kurnool District & others. … Petitioners (in WP.No.1729 of 2002) Sri Lakshmi Refractories, Dwaraka Tirumala, W.G. Dist., & others. … Petitioners (in WP.No.27640 of 2005) AND The Govt., of A.P., rep., by its Secretary, Industries & Commerce (M.I) Dept., Secretariat Buildings, Hyderabad & others. … Respondents (in all writ petitions) Counsel for the petitioners : Sri E. Ayyapa Reddy Smt. N. Shoba Sri M.R. Chakravarthy Sri S. Satyam Reddy Counsel for the respondents: Sri G. Manohar, Special GP This Court made the following: THE HON’BLE SRI JUSTICE C.V.NAGARJUNA REDDY WRIT PETITION No.5871, 5950, 5964, 6178, 6180, 6188 6210, 6440, 6563, 13321, 13470 and 13744 of 2001, 533 and 1729 of 2002 and 27640 of 2005 COMMON JUDGMENT:- In this batch of writ petitions, the petitioners called in question the legality and validity of the Andhra Pradesh Mineral Dealers Rules, 2000 (for short, ‘the Rules’) notiﬁed by respondent No.1 vide G.O.Ms.No.537, Industries and Commerce (M.I) Department, dated 11.10.2000. The petitioners, most of whom are industrial units involved in the processing and pulverizing of mineral and some of them who are lessees to extract mineral such as Granite, Dolamite, White Shale, Lime Stone, steatite have mainly felt aggrieved by the deﬁnition of ‘Mineral’ contained in Rule 2(1)(h) of the Rules as amended by G.O.Ms.No.330 dated 14.06.2001. THE PETITIONERS’ CASE:- The case of the petitioners in short is that the deﬁnition of ‘Mineral’, which enlarged the scope of mineral as deﬁned in Section 3(a) of the Mines and Minerals (Development and Regulation) Act, 1957 (for short, ‘the Act’) is far beyond the delegated power of respondent No.1. The petitioners averred that by enlarging the scope of the deﬁnition of Mineral, the respondents have brought the processed minerals and the ﬁnished products within their regulatory control, which resulted in violation of their fundamental rights guaranteed under Article 19(1)(g) of the Constitution of India. THE RESPONDENTS’ STAND:- The Act as it stood before its amendment introduced with eﬀect from 20.11.1999, contained Section 21, which provides for penalties for contravention of the rules made under the Act. The Andhra Pradesh Minor Mineral Concession Rules, 1966 framed by respondent No.1 contained Rule 26, which provides for penalties for unauthorized quarrying. These provisions were found insuﬃcient to check the illicit mining, storage, transport and trading of the mineral. In order to take measures for arresting the illegal mining, transportation, storage and processing, the Ministry of Mines, Government of India, constituted a Committee to suggest necessary measures. On the recommendations of the Committee, several amendments were introduced to the Act to curb illicit mining. The amendments have been introduced with eﬀect from 20.11.1999 by inserting certain provisions, which inter alia include Section 23-C. The said provision empowered the State Governments to make Rules for preventing illegal mining, transportation and storage of minerals. In exercise of its rule making power, the Government of Andhra Pradesh framed the Rules, which came into force with eﬀect from 01.04.2001. The main features of these Rules include bar on persons other than lease holder or a holder of Dealers Registration to stock, sell or oﬀer for sale any minerals in any place except under Dealers Registration issued by the competent authority; to transport, carry by any means or cause to transport or carry any mineral from the places of raising or sell at any place without a valid permit. If these Rules are contravened, the mineral shall be liable to be seized along with whole equipment, vehicles etc., either at the mine head or in transit or point of storage or at the place of consumption. The main aim and objective of these Rules was to curb the illicit mining, transportation of minerals and to prevent the leakage of the mineral revenue to the State Exchequer and they have facilitated the dealers and processors to procure and trade minerals with the legal documents apart from getting free transit passes on production of valid proof of payment of royalty/seigniorage fee of raw/processed mineral. CONTENTIONS:- Sri E. Ayyapu Reddy and Smt. N. Shoba, who advanced arguments on behalf of the petitioners, submitted that the State Government, being a delegate, cannot add to, amend or vary in any manner the deﬁnition of ‘Mineral’ contained in Section 3(a) of the Act. The expanded deﬁnition of the ‘Mineral’ under the Rules resulted in bringing the processed mineral under the States’ regulatory control for the ﬁrst time, which is far beyond the delegated powers of the State Government. In support of their contentions, the learned counsel referred to and relied upon the following decisions; Kerala Samasthana Chethu Thozhilali Union vs. State of Kerala and others[1], S. Samuel, M.D. Haririsos Malayalam and another vs. Union of India and others[2], Tej Bahadur Dube (Dead) by LRs., vs. Forest Range Officer F.S. (S.W.), Hyderabad[3], Kunj Behari Lal Butail and others vs. State of H.P. and others [4], O.K. Play (India) Limited vs. Commissioner of Central Excise-II, New Delhi[5], Baijnath Kadri vs. State of Bihar and others[6], A. Abdur Quader and Co., vs. Sales Tax Oﬃcer [7], Ranjana Granites (P) Limited vs. State of Andhra Pradesh[8], Saurashtra Cement and Chemical Industries and another vs. Union of India[9], State of Tamilnadu vs. M.P.P. Kavery Chetty [10], M/s. Banarasi Dass Chadha and Bros vs. LT. Governor, Delhi Administration[11], V.P. Pithupitchai and another vs. Special Secretary to the Govt., of Tamilnadu [12], Bhopal Sugar Industry Limited, M.P., and another vs. D.P. Dube Sales Tax Oﬃcer, Bhopal Region, Bhopal and another[13], M/s. Siel Limited and others vs. Union of India and others[14]. Sri G. Manohar, learned Special Government Pleader, while opposing the contentions of the learned counsel for the petitioners, submitted that the State Government has not expanded the scope of the deﬁnition of ‘Mineral’, but it has merely made explicit what is implicit in the deﬁnition of ‘Mineral’ in Section 3(a) of the Act. While distinguishing the judgments relied upon by the learned counsel for the petitioners, he relied upon the judgments of the Supreme Court in The State of Madhya Bharat (Now the State of Madhya Pradesh) and others vs. Hiralal[15] and M/s. Banarsi Dass Chadha and Bros (11 supra). He further submitted that either the Rules in general or the deﬁnition of Mineral in particular do not in any manner aﬀect the interests of the petitioners, because they were intended only to check the illicit mining, which escaped the revenue to the Government and that they do not impose any additional obligations on the petitioners except obtaining necessary licenses and getting registered as Dealers. He denied harassment of the petitioners in the course of enforcement of these Rules. THE LEGAL ENVIRONMENT:- Entry 54 of List-I of Seventh Schedule to the Constitution empowers the Union of India to regulate mines and mineral development by enactment of law by the Parliament. Entry 23 of List-II also concerns itself with 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. In order to provide for regulation and development of mines and minerals, the Parliament enacted the Act in the year 1957. In this context, it is useful to refer to the relevant provisions of the Act. In Section 2, 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 provided under the Act. Section 3(a) deﬁned ‘Minerals’ as including all minerals except mineral oils. Section 4 prohibits reconnaissance, prospecting or mining operations in any area, except under and in accordance with the permit, license or the lease as the case may be granted under the Act and the Rules made thereunder. Section 5 envisages restrictions on the grant of licenses, leases and permits. Section 9 provides for payment of royalty in respect of any mineral removed or consumed by the holder of a mining lease to the Agent, Manager, Employee, Contractor or sub-lessee from the leased area at the rates as specified in the Second Schedule. Under Section 9(a), the holder of a mining lease shall pay to the State Government every year dead rent at the rates as prescribed in the Third Schedule. Under Section 13, the Central Government is empowered to make rules for regulating the grant of reconnaissance permits, prospecting licenses and mining leases. Section 15 empowered the State Government to make rules for regulating the grant of quarry leases, mining leases or other mineral concessions in respect of minor minerals and for purposes connected therewith. The Rules so made inter alia may relate to matters such as ﬁxing and collection of rent, royalty, fees, dead rent, ﬁnes or other charges and the procedure for obtaining quarry leases, mining leases or other mineral concessions. Section 21 prescribes penalties including imprisonment to be imposed on persons, who contravened the provisions of the terms and conditions of reconnaissance permits, prospecting licenses or mining leases and persons who transport or store or cause to be raised or transported or stored any mineral other than the mineral in accordance with the provisions of the Act and the Rules made thereunder as provided under Section 4(1) and (1)(a) of the Act. Section 23 deals with oﬀences by companies and identiﬁes the persons responsible for commission of offences by the companies. The pivotal provision, which requires a speciﬁc mention, is Section 23-C, which was introduced by Amendment Act 38 of 1999 with eﬀect from 20.12.1999. It is useful to reproduce this provision hereunder: “23-C. Power of State Government to make rules for preventing illegal mining, transportation and storage of minerals:- (1) The State Government may, by notiﬁcation in the Oﬃcial Gazette, make rules for preventing illegal mining, transportation and storage of minerals and for the purposes connected therewith. (2) 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) establishment of check-posts for checking of minerals under transit; (b) establishment of weigh-bridges to measure the quantity of mineral being transported; (c) regulation of mineral being transported from the area granted under a prospecting license or a mining lease or a quarrying license or a permit, in whatever name the permission to excavate minerals, has been given; (d) inspection, checking and search of minerals at the place of excavation or storage or during transit; (e) maintenance of registers and forms for the purposes of these rules; (f) the period within which and the authority to which applications for revision of any order passed by any authority be preferred under any rule made under this Section and the fees to be paid therefore and powers of such authority for disposing of such applications; and (g) any other matter which is required to be, or may be, prescribed for the purpose of prevention of illegal mining, transportation and storage of minerals. (3) Notwithstanding anything contained in Section 30, the Central Government shall have no power to revise any order passed by a State Government or any of its authorized oﬃcers or any authority under the rules made under sub-sections (1) and (2).” In exercise of the rule making power conferred by the above-extracted provision, the State Government framed the impugned Rules with eﬀect from 01.04.2001. Rule 2(1)(d) deﬁned ‘Dealer’ as the person, who holds a Dealers Registration including the mining lease and or quarry lease to whom the leases have been sanctioned as per Mineral Concession Rules, 1960 and the Andhra Pradesh Minor Mineral Concession Rules, 1966 respectively and who intends to deal with minerals other than the minerals sanctioned. Clause (h) of Rule 2(1) deﬁned ‘Mineral’ as the minerals deﬁned in clause (a) of Section 3 of the Mines and Minerals (Development and Regulation) Act and includes precious and semi-precious and uncut stones, all minor minerals as speciﬁed in the Andhra Pradesh Minor Mineral Concession Rules, 1966 and also processed pulverized and finished products. The Rules were amended by the State Government and notiﬁed in G.O.Ms.No.330 dated 14.06.2001 in the Oﬃcial Gazette of the State published on 21.06.2001. By the said amendment, the deﬁnition of ‘Dealer’ was substituted as under: “(d) ‘Dealer’ means any person who carries on the business of buying, selling, supplying, transporting, distributing or delivering for sale of minerals and mineral products and includes. (a) Person who buy and process mineral or mineral products for sale or for utilization for their own purposes. (b) Any person who holds a mining lease or a quarry lease granted under the Mineral Concession Rules, 1960 or the A.P. Minor Mineral Concession Rules, 1966 issued by the Government, framed under the Mines and Minerals (Development and Regulation) Act, 1957.” The deﬁnition of ‘Mineral’ in clause (h) has been amended as under: “(h) ‘Mineral’ means, minerals of all types and varieties including precious and semi-precious and uncut stones and minor minerals as speciﬁed in Section 3 (e) of the Mines and Minerals (Development and Regulation) Act, 1957 (Central Act 67 of 1957) for the purposes of these rules. Explanation:- Minerals shall not cease to be minerals by reason of being subjected to any process like crushing burning, breaking, drying, cutting, polishing, pulverizing or any other procedure intended to make the mineral ﬁt or suitable for sale or consumption.” Rule 3, as it originally stood, was substituted to the eﬀect that all dealers shall register themselves as dealers with the Mines and Geology Department of the Government of Andhra Pradesh as per the procedure indicated in the Rules. It also prohibits persons other than a dealer or a mining lease holder from buying or selling or oﬀer for sale or engaging in any transaction of buying and selling any mineral at any place or transport mineral for purposes of sale or consumption without being registered as a dealer. Under proviso, the requirement of registration is exempted in favour of the persons, who purchase and transport minerals for use or consumption by himself and where the said use or consumption does not involve any commercial activity and also holder of a mining lease or a quarry lease in respect of the minerals for which he holds a lease. Rule 6 envisages obtaining of transit passes by persons desirous of transporting or carrying away any mineral from any place from the Deputy Director of Mines and Geology concerned. Rule 8 prescribes penalties for violation of any of the Rules. Rule 9 empowers the competent authority to seize and conﬁscate the mineral in respect of which an offence is committed. Rules 11 and 12 provide for the remedies of appeal and revision against the orders passed under the Rules. ANALYSIS:- Constitutionality of an Act can be challenged on two grounds, namely, (i) lack of Legislative competence and (ii) Violation of any of the fundamental rights guaranteed under Part-III of the Constitution or any other constitutional provision. (State of Andhra Pradesh vs. Mc Dowell and Company Limited[16]; State of Bihar vs. Bihar Distillery Limited[17]; Public Services Tribunal Bar Association vs. State of Utter Pradesh[18]; Karnataka Bank Ltd. Vs. State of Andhra Pradesh & others[19] and Government of Andhra Pradesh and others vs. P. Laxmi Devi[20]). The vires of Rules made under statutory enactments can be challenged on an additional ground, namely, substantive ultravires i.e., the delegated legislation goes beyond the scope of the authority conferred by the statute or it is in conﬂict with the parent Act. (See Ashok Lanka vs. Rishi Dixit[21], Bombay Dyeing and Manufacturing Co., Ltd., vs. Bombay Environmental Action Group[22]; Kerala Samsthana Chethu Thozhilali Union vs. State of Kerala[23]. As regards the Legislative competence to make rules, the learned counsel for the petitioners concede existence of such Legislative competence in the State Government by virtue of power of delegation contained in Section 23-C of the Act. While a contention is raised that the explanation of the deﬁnition of ‘Mineral’ resulted in violation of fundamental rights of the petitioners guaranteed by Article 19(1) of the Constitution, the main thrust of their contention is on the State Government exceeding its delegated power as noted hereinbefore. The main stay of the arguments of the learned counsel for the petitioners is that the State Government widened the deﬁnition of ‘Mineral’ contained in Section 3(a) by bringing within its fold the processed mineral and according to the learned counsel such a power is not inhered in the delegate. The legal proposition put forth by the learned counsel that a delegate shall always remain within the parameters of the delegated power is unexceptionable (Mohamad Yaseen vs. Town Area Committees, Jalalabad [24]; Tahir Hussain vs. District Board, Muzafarnagar[25], Ganapathi Singhji vs. State of Ajmer[26] and Bar Counsel of Delhi vs. Surjeet Singh[27]). The question therefore here is whether the State Government wandered out side its designated area of delegated power? To answer this question, the statement of objects and reasons for introducing various amendments including Section 23-C, in the Act, the deﬁnition of Mineral in Section 3(a) and the deﬁnition contained in clause (h) of Rule 2 are required to be analyzed. The statement of objects and reasons inter alia mentioned that in the conference of the State Ministers/Secretaries of Mines and Geology held in December, 1996, a Committee under the Chairmanship of the then Secretary, Ministry of Mines was constituted in February, 1997, to inter alia make recommendations regarding delegation of powers to the State Governments relating to grant and renewal of prospecting licenses and mining leases and other related approvals and to suggest measures to reduce delay in this regard, review of the existing laws and procedures governing the regulation and development of minerals to make them more compatible to the changed polices and measures of prevention of illegal mining. After considering the recommendations of the Committee, the Union of India decided to amend the Act. The statement referred to some of the important amendments, which included the amendment delegating the power to the State Government to make rules for preventing illegal mining, transportation and storage of minerals and for purposes connected therewith. It is apt to reproduce the statement relating to this amendment hereunder: “(iii) A new provision is proposed to be inserted in the Act prohibiting transportation or storage or anything causing transportation of storage of any mineral except under the due provisions of the Act, with a view to preventing illegal mining. Further, the Act is proposed to be amended to cover the breach of the provisions of the proposed new provision of the Act to be punishable. It is also proposed to insert a new provision to provide for anything seized under the Act as liable for conﬁscate under Court orders. A new section is proposed to be inserted to empower the State Government to make rules for preventing illegal mining transportation and storage of minerals and for purposes connected therewith.” The question referred to supra is therefore to be examined in the light of the object with which rule making power is delegated to the State Government. Section 3(a), which deﬁned ‘Mineral’ is couched in generic but not in precise terms. While deﬁning the ‘Mineral’, it has neither restricted its width to the raw mineral nor included in its ambit processed mineral. The Supreme Court in M/s. Banarsi Dass Chadha (11 supra) considered the deﬁnition of ‘Mineral’ and held that the word ‘Mineral’ is not a term of art, but a word of common parlance, capable of a multiplicity of meanings depending upon the context. In V.P. Pithupitchai (12 supra) , the Supreme Court, while considering whether seashells were ‘Minerals’ within the deﬁnition of Section 3(a) of the Act, held that though the Act did not deﬁne ‘Mineral’, it is judicially interpreted as to mean an inorganic substance found either on or in