IN THE HIGH COURT OF JUDICATURE, ANDHRA PRADESH AT HYDERABAD (Special Original Jurisdiction) TUESDAY, THE TWENTY THIRD DAY OF SEPTEMBER TWO THOUSAND AND EIGHT PRESENT THE HON'BLE MR JUSTICE GODA RAGHURAM and THE HON'BLE MR JUSTICE P.V.SANJAY KUMAR WRIT PETITION NO : 20067 of 2008 Between: 1 Ch.Chinna Polaiah S/o.late Pothanna Dibbapalem Village, Pedagantyada Mandal, Visakhapatnam District. 2 Ch.Muthuraju S/o.late Pothanna Dibbapalem Village, Pedagantyada Mandal, Visakhapatnam District. 3 P.Sathish Kumar S/o.late Sathiraju Dibbapalem Village, Pedagantyada Mandal, Visakhapatnam District. 4 Kadiri Somanna S/o.late Peda Polamma Dibbapalem Village, Pedagantyada Mandal, Visakhapatnam District. 5 Kadiri Veeranna S/o.late Ademma Dibbapalem Village, Pedagantyada Mandal, Visakhapatnam District. 6 Kadiri Tatarao S/o.late Ramulaiah Dibbapalem Village, Pedagantyada Mandal, Visakhapatnam District. ..... PETITIONER(S) AND 1 The Union of India, Rep. by its Ministry of Law and Legislative Affairs, New Delhi 2 The Government of Andhra Pradesh, rep. by Law, Legislative Affairs, Secretariat, Hyderabad. 3 The Government of Andhra Pradesh, rep. by its Principal Secretary, Transport, Roads and Buildings (Ports) Department, Secretariat, Hyderabad. 4 The Government of Andhra Pradesh, rep. by its Principal Secretary, Industries and Commerce Department, Secretariat, Hyderabad. 5 The Gangavaram Port, Rep. by its Managing Director/ Conservator, having its office Plot No.62, Road No.1, Jubilee Hills, Hyderabad-33. 6 The Director of Mines and Geology, A.P., Hyderabad. 7 The Assistant Director of Mines and Geology, Visakhapatnam, Visakhapatnam District. .....RESPONDENT(S) Petition under Article 226 of the constitution of India praying that in the circumstances stated in the Aﬃdavit ﬁled herein the High Court will be pleased to to issue a writ, order or direction more particularly one in the nature of Writ of Mandamus declaring Proviso to Rule-5 and 11(1) (d) of A.P. Minor Mineral Concession Rules, 1966, as illegal, arbitrary and unconstitutional as violative of Principles of impermissible delegation of legislative power and ultra-virus of the provisions of Mines and Mineral Development Act, 1957 and consequently set-aside G.O.Ms.No.145 dt. 18.5.2006 issued by the 3rd respondent herein in so far as granting exemption of quarry lease is concerned and pass such other order or orders. Counsel for the Petitioner:MR.V.RAGHUNATH Counsel for the Respondent No.: MR.A.RAJASHEKAR REDDY (ASST SOLICITOR GEN) The Court made the following : THE HON’BLE SRI JUSTICE GODA RAGHURAM AND THE HON’BLE SRI JUSTICE P.V.SANJAY KUMAR WRIT PETITION NO.20067 OF 2008 ORAL ORDER: (Per Hon’ble Sri Justice Goda Raghuram) Heard the learned counsel appearing for the petitioners, the learned Assistant Solicitor General of India for R-1, the learned Government Pleader for Home for R-2, the learned Government Pleader for R&B for R-3, the learned Government Pleader for Industries and Commerce for R-4, 6 and 7, and Sri Y.V.Ravi Prasad, learned counsel appearing for R-5. A pure question of law is involved in this writ petition. Hence pleadings in opposition to the writ petition is not insisted upon. The petitioners assail the proviso to Rule 5 and provisions of Rule 11(1)(d) of the A.P. Minor Mineral Concession Rules, 1966 (for brevity, ‘the 1966 Rules’) as inter alia inconsistent with the provisions of the Mines and Minerals (Development & Regulation) Act, 1957 (for brevity, ‘the Act’), in particular Section 4 thereof. They also seek a consequent order invalidating the order of the third respondent dated 18.05.2006 contained in G.O.Ms.No.145, Industries and Commerce [M-1(2)] Department, dated 18.05.2006. By G.O.Ms.No.145 dated 18.05.2006 the fourth respondent exempted the ﬁfth respondent inter alia from obtaining any lease or permit for quarrying any minor minerals and payment of seigniorage fee, of the mineral excavated from within the land allocated for Gangavaram Port and also on the quantities of minor mineral outside the area of Gangavaram Port as allocated by the sixth respondent, to the extent of the quantities consumed in the civil construction works of Gangavaram Port during the construction period. Sans the verbiage, suﬃce it to notice that under the provisions of G.O.Ms.No.145 dated 18.05.2006, the ﬁfth respondent is immunized from the obligation to pay seigniorage fee on the minor mineral (granite stone) excavated and utilized for the purpose of the civil works of Gangavaram Port, apart from the immunity from obtaining a lease or permit for performing the quarrying operations. On 02.08.2005, the seventh respondent exercising powers under the 1966 Rules granted mining leases for quarrying stones in Pedagantyada Mandal, Visakhapatnam District, in an extent of 5 acres each in Survey No.224 in Nellumukku village in Sy.No.274, 219 of Pedagantyada Mandal, to the ﬁfth respondent for the Gangavaram Port. While so, another extent of 1800 acres is stated to have been handed over to the ﬁfth respondent by the State. In view of the mining leases granted by the seventh respondent, the ﬁfth respondent is entitled to pursue mining/quarrying operations for stones only in the area in respect of which such mining leases have been granted. However, the ﬁfth respondent is alleged to be carrying on mining/quarrying operations in areas beyond and other than the areas for which mining leases were granted by the seventh respondent. The petitioners allege that under the orders of the State in G.O.Ms.No.145 dated 18.05.2006 the ﬁfth respondent has been granted exemption from the requirement of obtaining mining/quarrying permission and that this order of the State is inconsistent with the obligation enjoined by Section 4 of the Act. Section 4 of the Act enjoins that no person shall undertake inter alia mining operations in any area, except under and in accordance with the terms and conditions of a mining lease, granted under the Act and the Rules made thereunder. Sections 5 to 13 of the Act deal with restrictions on the grant of prospecting licences or mining leases; speciﬁcation of the maximum area for which a prospecting licence or mining lease may be granted; periods for which prospecting licences may be granted or renewed; periods for which mining leases may be granted or renewed; royalty in respect of mining leases; payment of dead rent by the lessee; application for prospecting licences or mining leases; preferential right of speciﬁc person; requisite registers that are required to be maintained in respect of the prospecting licences and mining leases; and the power of Central Government to make rules in respect of minerals; apart from the power of the Central Government to make rules for the grant of prospecting licences or mining leases in respect of territorial waters and the continental shelf of India. Section 14 of the Act speciﬁes that the provisions of Sections 5 to 13 (inclusive) shall not apply to quarry leases, mining leases or other mineral concessions in respect of minor minerals. Section 15 enacts the power of the State Government to make rules in respect of minor minerals and the grant of power to the State to make Rules in this area is open textured as is apparent from the provisions of sub-section (1A) of Section 15 which states that “in particular and without prejudice to the generality of the power under sub-section (1), the power of the State to make rules” shall be in respect of the aspects enumerated in clauses (a) to (o) of Section 15(1A). Sub-section (1) of Section 15 enables 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 for purposes connected therewith. Prior to the Central Act 37 of 1986, Section 14 of the Act enjoined that Sections 4 to 13 would not apply to minor minerals. By the amendment introduced by Central Act 37 of 1986, Section 14 was amended and as amended it is only Sections 5 to 13 (inclusive) which would not apply to minor minerals, on and with eﬀect from 10.02.1987, the date with eﬀect from which the provisions of the Central Act 37of 1986 were operable. Now provisions of Section 4 are thus applicable to minor minerals as well. As already noticed, Section 4 enjoins a prohibition on any person undertaking mining operations except under and in accordance with the terms and conditions of a mining lease granted under the Act and the Rules made thereunder. The 1966 Rules have been made by the State of Andhra Pradesh in exercise of the rule making power under Section 15 of the Act. Rule 5 of these Rules enjoins that no person shall undertake quarrying of any minor minerals in any area except under and in accordance with the terms and conditions of a quarry lease or a permit granted under these Rules. The proviso to Rule 5 of the 1966 Rules is challenged and reads as under: “Provided that the Government shall have power to grant exemption from obtaining a lease or permit for quarrying any minor mineral in any area in the case of any category of persons, subject to such conditions as may be specified in the order granting such exemption.” The petitioner challenges the proviso to Rule 5 as being inconsistent with the non-derogable obligations under Section 4 of the Act. Section 4 enjoins, as already noticed, that no person shall undertake any mining operations except under and in accordance with the terms and conditions of a mining lease granted. Rule 5 of the 1966 Rules enjoins a complementary requirement. It is the proviso (to Rule 5) which enables the Government to grant exemption from obtaining a lease or a permit for quarrying any minor mineral. These Rules have been made by the State in 1966, before the amendment to Section 14 of the Act by Central Act 37of 1986. As already noticed, prior to the amendment by Central Act 37 of 1986, Section 4 was also inapplicable to minor minerals and, therefore, the State could have made a Rule as set out in the proviso to Rule 5 which enables the Government to exempt any person from obtaining a lease or permit from quarrying minor minerals. After amendment of Section 14 by Central Act 37 of 1986, since minor minerals are not exempt from the regulatory domain of the provisions of Section 4, the Rules made under Section 15 could not enable the State to exempt any person from the requirement of obtaining a mining lease for quarrying minor minerals. The State ought to have updated the 1966 Rules to be in conformity with the legislative dynamics of the provisions of the Act, namely, to be in conformity with the provisions of Central Act 37 of 1986 and on such exercise by the State, the State should have deleted the proviso to Rule 5, but that was not done. It is the admitted factual scenario that the relationship between the ﬁfth respondent and the State was entered into after the coming into operation of the provisions of the Central Act 37 of 1986. The grant of lease of the lands to the ﬁfth respondent also occurred thereafter. Therefore, the ﬁfth respondent could not have lawfully undertaken, nor could the State have permitted the ﬁfth respondent to undertake any mining operations except under and in accordance with a mining lease granted to the ﬁfth respondent in respect of speciﬁed extents of land and as speciﬁed in such mining/quarrying leases. The ﬁfth respondent, however, appears to have pursued mining operations unmindful of the non-derogable obligation under Section 4 of the Act and this ignorance appears to have been shared by the State as well. The State Government guided by the textual currency of the proviso to Rule 5 and in clear transgression of the provisions of Section 4 of the Act, issued G.O.Ms.No.145, Industries and Commerce [M-1(2)] Department, dated 18.05.2006 exempting the ﬁfth respondent inter alia from obtaining any lease or permit for quarrying any minor minerals. This exemption granted by the State is in accord with the proviso to Rule 5 of the 1966 Rules. The proviso to Rule 5 is now clearly inconsistent with the provisions of Section 4 of the Act. Since Section 4 now applies to minor minerals as well, in view of the legislative dynamics brought about the Central Act 37 of 1986, the proviso to Rule 5 cannot exist or operate on and with eﬀect from the date from which the Central Act 37 of 1986 has amended the provisions of the Act, i.e. with eﬀect from 10.02.1987. The power of the State to issue exemptions to the ﬁfth respondent from obtaining a quarrying lease for minor minerals in G.O.Ms.No.145 dated 18.05.2006 is traceable exclusively to the proviso to Rule 5. That is the justiﬁcation of the exercise by the State as set out in the G.O.Ms.No.145 dated 18.05.2006 and that also the doctrinal justiﬁcation presented before this Court by the learned Government Pleader for Industries and Commerce. He has not shown any other justiﬁcation or authority for grant of exemption by the State to the ﬁfth respondent from the non-derogable obligation to obtain a mining lease qua Section 4 of the Act, except the proviso to Rule 5. It is contended by the petitioner and none of the parties herein dispute the position that the State has no independent legislative or executive authority except qua the provisions of the Act. In view of the declaration as to the expediency of Union control and the federal intervention spelt out in Section 2 of the Act and in view of the provisions of Entry 54 of List-I of the Seventh Schedule to the Constitution read with Entry 23 of List-II of the said Schedule, the exercise of State authority either in its legislative or coextensive executive domain is excluded and wholly abrogated by the provisions of the Act. The State exercises its power only qua the extent of delegation under Section 15 of the Act read with immunizing provisions of Section 14 which disapplies the provisions of Section 5 to 13 (inclusive) to minor minerals. Since after the amendment by Central Act 37 of 1986, Section 4 is applicable to minor minerals, the obligations under Section 4 cannot be avoided by any State action and by any creative exercise of rule making power of the State under Section 15. The State exercises neither a legislative nor an executive power under the Constitution but such limited power as is delegated to it under Section 15 of Act. For the aforesaid reasons and analyses, the proviso to Rule 5 of the A.P. Minor Mineral Concession Rules, 1966 must be held to be inconsistent with the provisions of Section 4 of the Mines and Minerals (Development and Regulation) Act, 1957 and consequently the proviso to Rule 5 is declared invalid. As the order of the State Government in G.O.Ms.No.145, Industries and Commerce [M-1(2)] Department, dated 18.05.2006, to the extent it exempts the ﬁfth respondent from the obligation of obtaining lease or permit for quarrying any minor minerals invoke the authority for granting such exemption under the proviso to Rule 5, the order of the State Government in G.O.Ms.No.145 is also declared invalid but only insofar as it exempts the ﬁfth respondent form obtaining any lease or permit for quarrying any minor minerals (vide paragraph 3 of the G.O.Ms.No.145 dated 18.05.2006). The petitioners also challenge the exemption granted to the ﬁfth respondent from payment of seigniorage fee by seeking invalidation of the provisions of Rule 11(1)(d) of the 1966 Rules. Rule 11(1)(c) preserves to the Government the right to waive the collection of seigniorage fee and dead rent at the Government’s discretion. The power of the State Government to make Rules in respect of minor minerals qua the grant of such power under Section 15 of the Act is plenitudinous and constrained only by the applicable provisions of the Act. The grant of power as set out in Section 15(1) and (1A) and in particular clause (o) of Section 15(1)(a) “any other matter which is to be, or may be, prescribed” does not enjoin any restriction on the State which disables the State from exercising discretion to waive the obligation of payment of seigniorage fee. The petitioners have not made out a case either in pleadings or in oral argument at the Bar regarding the abuse of such discretion by the State, nor do the petitioners point out any inﬁrmity in the exercise of such power by the State. For these reasons, the challenge to the State action, of granting exemption from payment of seigniorage fee to the ﬁfth respondent, must fail and is accordingly rejected. The writ petition is allowed as indicated above. There shall however be no order as to costs. ___________________ GODA RAGHURAM, J. _____________________ P.V. SANJAY KUMAR, J. 23rd September, 2008. VGSR