Case: Tamil Nadu  Vs. P.Krishnamurthy

Background facts2. We may briefly refer to the circumstances leading to the insertion of Rule 38A in the Rules. A public interest litigation (W.P. No.985/2000) was filed in the Madras High Court, complaining about indiscriminate illicit quarrying of sand in riverbeds. The High Court issued certain directions to curb illicit quarrying while disposing of the said writ petition. A contempt petition (Contempt Application No.561/2001) was filed complaining of non-implementation of the said directions by the State Government. In the said contempt proceedings, the High Court issued a direction to the State Government on 26.7.2002 to constitute a High Level Committee consisting of scientists, geologists and environmentalists to conduct a thorough scientific survey of the sand quarrying activities in rivers and riverbeds in the State and submit a report regarding the damage caused on account of indiscriminate illicit quarrying and to suggest the remedial measures. The High Court also suggested that a suitable regulatory legislation may be made by the State on the basis of the report of such Committee, and issued certain interim directions pending such legislation.3. Accordingly, a High Level Committee was constituted which submitted a report detailing the extensive damage that had occurred on account of haphazard, irregular and unscientific manner of quarrying sand by the quarry leaseholders, thereby impairing smooth flow of water and causing damage to riverbeds, river banks as also the structures (like bridges and transmission powerlines constructed across rivers or imbedded on the riverbed) and drinking water systems branching from rivers, leading to ecological imbalances. It was found that the unauthorized use of Poclain machines for quarrying, and the tendency of lessees to extend quarrying activities beyond the leased area and the permissible depth, were the main causes for the devastating situation. The Committee suggested several measures to remedy the situation, one of which was to impose total prohibition on quarrying by private parties. On considering the said report, the State Government took a decision in public interest to stop quarrying of sand in Government lands and Ryotwari (private patta) lands by private agencies and take upon itself exclusively, all sand quarrying activities in the State. It is in this background, Rule 38A came to be inserted in the Rules by Notification dated 1.10.2003 with effect from 2.10.2003.4. Prior to insertion of the said Rule, the State Government was granting quarrying leases, the term of such leases being three years or less, under Rule 8 of the Rules. It is stated that as on 2.10.2003, private agencies were holding 135 sand quarrying leases granted by the State Government and 52 permissions for sand quarrying in Ryotwari lands. Out of these, 19 were to expire in 2003, 102 were to expire in 2004, 33 were to expire in 2005 and the remaining 33 were to expire in 2006; and in addition, sand quarrying was carried on by some others on the authority of orders of court, even though no leases had been granted in their favour. With effect from 2.10.2003, the State Government stopped all sand quarrying by private agencies. Several writ petitions were filed in the Madras High Court by the Lessees/permission holders, challenging Rule 38A.Decision of the High Court5. On 8.10.2003, a learned Single Judge of the High Court granted an interim stay, until further orders or till the leases granted to the writ petitioners came to an end, whichever was earlier. Being aggrieved by the interim stay, the State Government moved the matter before a Division Bench immediately which in turn issued an interim direction on the same day (8.10.2003) directing both parties not to quarry sand from areas covered by leases or court orders, until further orders. Subsequently, the writ petitions, which were pending before the learned Single Judge, were taken up for hearing by the Division Bench along with the writ appeals against the interim order, and were disposed of by a common order dated 11.5.2004.6. The Division Bench upheld the validity of Rule 38A in so far as it created an exclusive right in the State to quarry sand. It was, however, of the view that the leases/permissions which had already been granted and were in force as on 2.10.2003 when the Rule came into force, could not be terminated without giving a hearing to the concerned lessees/permission-holders.Consequently, it upheld the validity of Rule 38A subject to the followingThe State is entitled to exploit the sand by quarrying itself on the Government lands, which are not covered by the mining leases of the writ petitioners. The same is applicable to patta lands subject to the permission of the landholders or their tenants or lessees in occupation, which are not covered by the mining leases.2. The writ petitioners whose Mining leases expired as on this day and which are covered by the Court orders shall not be entitled for any relief. This will not cover the Court orders passed to make up the deficiency of the lease period.3. The respective District Collectors shall issue notices to the petitioners with regard to the mining leases where there is an allegation of infraction of environmental laws and if there is a contest, then hold an enquiry by affording opportunity to them and then pass orders basing on the material on record. The above exercise shall be made by the District Collector within a period of two months from the date of receipt of a copy of this order and until then, the status quo with regard to mining operations as obtained on this day, shall be maintained.4. In so far as the cases not covered by environmental violations are concerned, the said writ petitioners shall be entitled to continue their sand quarry operations till the expiry of their respective lease periods. But this shall not preclude the respondents/Government from terminating their leases by issuing a prior notice of six months as contemplated under Clause 11 of Appendix I of the Rules in so far as the Government lands are concerned.5. In the cases relating to the petitioners, where there is an allegation of breach of conditions of lease, then a notice has to be issued to them affording opportunity and then pass orders basing upon the material on record. But until then, they shall be entitled toof the writ petitioners, being aggrieved by the judgment upholding validity of Rule 38A, approached this Court. This Court did not entertain the SLPs.

Court's reasoning:
12. There is a presumption in favour of constitutionality or validity of a sub-ordinate Legislation and the burden is upon him who attacks it to show that it iscourt considering the validity of a sub-ordinate Legislation, will have to consider the nature, object and scheme of the enabling Act, and also the area over which power has been delegated under the Act and then decide whether the subordinate Legislation conforms to the parent Statute. Where a Rule is directly inconsistent with a mandatory provision of the Statute, then, of course, the task of the court is simple and easy. But where the contention is that the inconsistency or non-conformity of the Rule is not with reference to any specific provision of the enabling Act, but with the object and scheme of the Parent Act, the court should proceed with caution before declaring invalidity.There is no dispute that making of Rule 38A is a legislative act and not an administrative act. It is no doubt true that an act which is legislative in character, as contrasted from an executive act or a judicial/quasi-judicial function, does not oblige the observance of rules of naturalWhen the Act is read as a whole, the legislative intent is clear that a lease once validly granted can not be terminated prematurely without a notice and hearing. The reason is obvious. Exercise of power of termination will have civil consequences adversely affecting the interest of the lease-holders. We may refer to the three sections inserted by Act 37 of 1986 with effect from 10.2.1987, in this behalf. Section 24A deals with the rights and liabilities of a holder of a mining lease. It provides that on issue of a mining lease under the Act or the Rules made thereunder, it shall be lawful for the holder of such lease, to enter upon the leased land, at all times during its currency for carrying on mining operations. Sub-section (1) and (2) of Section 4A contemplates premature termination only when the concerned government is of the view that it is expedient to do so, in the interest of regulation of mines and mineral development, preservation of natural environment, control of floods, to prevent pollution or to avoid danger to public health or communication or to ensure safety of buildings, monuments or other structures or for such other purposes. Sub-section (3) of Section 4A prohibits any order of a premature termination of a mining lease being made, without giving a hearing to the lease holder. The Act does not contemplate wholesale termination of all existing leases/permissions in relation to a minor mineral without hearing. Section 17-A while empowering Central Government to reserve areas for purposes of conservation of minerals, and empowering Central/State Government to reserve areas for mining operation by Government Companies/Corporations, specifically exclude areas already held under mining leases. Even, section 17 while referring to the power of the Central Government to undertake mining operations exclusively in any area, excludes areas already held under mining leases. It is, thus, clear that the Act extends a statutory protection to the holder of a mining lease to carry on mining operations during the period of lease, in terms of the lease deed. The Act further contemplates premature termination only for the reasons stated in sub-section (1) or (2) of section 4A and in the manner provided in sub-section (3) of section 4A. There is no doubt that the Legislature can make a provision in the Statute itself for termination of the mining leases without observance or principles of natural justice. It did not choose to do so. When the Act assures the Lessee the right to carry on mining operations during the entire period of lease and provides for termination only after giving a hearing, the delegate cannot, while making a rule in exercise of the power granted under the Act, make a provision for termination of all leases relating to a particular minor mineral, without giving an opportunity of hearing to the lease/permission holders. That part of Rule 38A which purports to terminate all leases forthwith, without notice or hearing to the lessees, does not conform to the object, scheme and the provisions of the Act under which it is made and therefore, invalid.If a rule is partly valid and partly invalid, the part that is valid and severable is saved. Even the part which is found to be invalid, can be read down to avoid being declared as invalid. We have already held that premature termination of existing leases, in law, can be only after granting a hearing as required under sub-section (3) of section 4A for any of the reasons mentioned in section 4A(1) or (2). Therefore, let us examine whether we can save the offending part of Rule 38A (which terminates quarrying leases/permissions forthwith) by reading it down. Apart from the statutory provision for termination in section 4A(3), there is a contractual provision for termination in the mining leases granted by the State Government. This provision enables either party to terminate the lease by six months notice. No cause need be shown for such termination nor such termination entails payment of compensation or other penal consequences. In this case, after considering the High Level Committee Report, the State has taken a decision that all quarrying by private agencies in pursuance of the quarrying leases granted in regard government lands or permissions granted in respect of ryotwari land should be terminated in public interest. If Rule 38A is read down as terminating all mining leases granted by the government by six months notice (in terms of clause 11 in the lease deeds based on the model form at Appendix 1 to the Rules) or for the remainder period of the lease whichever is less, it can be saved, as it will then terminate the leases after notice, in terms of the lease.It is not the case of the State that all the leaseholders have violated the terms of the lease or acted in a manner detrimental to environment. Learned counsel appearing for the State, in fact, fairly admitted that several leaseholders had carried on quarrying activities without violating the terms of lease and without causing environmental degradation. If any leaseholder had acted or acts in a manner likely to result in environmental degradation etc., it is always open to the State Government to terminate the lease after giving a hearing, as provided in section 4A(3).25. Section 4A(3) requires the grant of an opportunity of hearing only for premature termination of mining leases (and prospective licences with which we are not concerned). If anyone was carrying on quarrying of sand as on 2.10.2003 in whatsoever circumstances other than in pursuance of mining leases, there is no question of hearing them before stopping quarrying activities in pursuance of Rule 38A, as hearing is required only in regard to those holding subsisting leases. Therefore, all quarrying permits for sand stood terminated with effect from 2.10.2003. All quarrying by any person, other than those holding mining leases also ceased with effect from 2.10.2003.26. In regard to mining leases subsisting as on 2.10.2003, we have read down Rule 38A as terminating such leases in terms of the contract (lease deeds) by six months, without assigning cause and without any liability to pay compensation. Such of those writ petitioners (Respondents herein) whose leases were subsisting on 2.10.2003 (and whose activities were stopped with effect from that day) will be entitled to carry on the quarrying activities for a period of six months or for the actual unexpired period of the lease (as on 2.10.2003), whichever is less. This benefit will be available to even those who have orders of court for grant of mining leases, but where mining leases were not executed for one reason or the other. It is, however, made clear that the State Government is at liberty to prematurely terminate the leases for any of the causes mentioned in section 4A(2), by giving a notice and hearing under Section 4A(3), if they want to terminate any lease within the said period of six months.