Case: State Of Tamil Nadu Vs. M.P.P.Kavery Chetty

2. In these appeals the State of Tamil Nadu impugns the judgment and order dated 23-12-1992 of a Division Bench of the High Court at Madras whereby Rules 8-D and 19-B and a part of Rule 19-A of the Tamil Nadu Minor Mineral Concession Rules, 1959, ("the said Rules") made under the provisions of the Mines and Minerals (Regulation and Development) Act, 1957 ("the said Act") were struck down as unconstitutional. The government orders by which these provisions were introduced into the said Rules were also quashed in part. A direction was issued to the appellant State to permit the respondents herein, being the petitioners upon whose writ petitions the judgments and orders were passed, to carry on quarrying operations and transport the material quarried without reference to the aforementioned rules, subject to the payment of royalty and seigniorageRule 19-A3. Prior to 10-6-1992, Rule 19-A readPermission for quarrying black, pink, red, grey, green and other coloured granites and any other rock required for use for decorative and ornamental purpose in ryotwari lands. - (1) Notwithstanding anything to the contrary contained in Section III to these rules the authority competent to grant permission for quarrying black, pink, red, grey, green and other coloured granites and other rock required for use for decorative and ornamental purposes in ryotwari lands shall be the State Government. The application shall be in the form specified in Appendix III to these rulesProvided that the quarrying permission for the minerals above in ryotwari lands shall be granted only to an applicant who is having an existing industry in Tamil Nadu or distinct industrial programme to use the mineral in his proposed industry in Tamil NaduProvided further that the permission-holder for quarrying the above mineral shall remove or transport the mineral from the specified land after payment of area assessment, seigniorage, rates prescribed from time to time in Appendix II to these rules and after obtaining transport permit from the District Collector or the officer authorised by him in that behalfProvided also that the transport permit shall be issued only to the industry for which the mineral is required to be supplied. The lessee shall keep correct accounts showing the quantity and other particulars of all minerals obtained at the factory site and despatched from the factory. The lessee shall also allow any officer authorised by the State Government in this behalf to inspect the industry and verify its records and accounts and furnish such information and returns as may be required by him.On 10-6-1992, the State Government issued Government Order No. 214. It stated that under the said Rules as they stood, orders had been issued that leases be granted to industries which had already been established for cutting and polishing granite and to those who gave a definite industrial programme to set up such units within the appellant State within a period of two years from the date of receipt of the letter of commitment. The Director of Geology and Mining at Madras had reported to the State government that illicit mining and transportation was rampant in a number of districts, that the amount obtained as tender bids for granite leases was very meagre and that there was an alarming tendency for monopolies to be created in the granite trade. He had also reported that there was a lot of wastage in the granite-cutting and polishing process. He had suggested that the State Government should take steps for conservation and proper utilisation of the non-renewable granite potential available in the appellant State with a view to safeguard the interest of future generations and the public interest at large. Granite was a valuable mineral which earned valuable foreign exchange. It was a non-renewable mineral. It was, therefore, necessary that it should be conserved and properly used without waste. Considering all these aspects, the State Government had been examining the question of streamlining the procedure for utilising the valuable granite deposits available in the appellant State, and it had decidedHenceforth no lease for quarrying granites on poramboke lands shall be granted to private persons except those who are holding letters of commitment. Fresh leases will be given only to a State Government company or a corporation owned or controlled by the State Government;(2) in respect of quarrying Paradiso, Kashmir, White, Kunnam, Paithur, Bavanur, Block, blue Granite, raw Silk and red granite, the lease in ryotwari lands will be granted preferably to a State government company or a corporation owned or controlled by the State Government;(3) the existing condition that the lessee who has been granted permission to quarry granite in ryotwari lands should have an existing industry in Tamil Nadu or distinct industrial programme to use the mineral in his proposed industry in Tamil Nadu, shall be dispensed with;(4) all trade relating to granite shall be canalised through the Tamil Nadu Minerals Ltd."notification amending the said Rules was appended to the said government Order and, so far as is material for our purposes, it amended Rule 19-A and introduced Rules 8-B and 19-B. Rule 19-A, as amended, readQuarrying lease for quarrying black, pink, red, grey, green, white or other coloured or multi-coloured granites or any other rock required for use for decorative and ornamental purposes in ryotwari lands. - Notwithstanding anything to the contrary contained in Section III to these rules the authority competent to grant quarrying lease for quarrying black, pink, red, grey, green, white or other coloured or multi-coloured granites or any other rock required for use for decorative and ornamental purposes in ryotwari lands shall be the State Government. The application shall be in the form specified in Appendix VII to these rulesThe said application shall be accompanied by a mining dues clearance certificate issued by the District collector concerned in the form prescribed in Appendix VIII. Receipt of the application made under this rule shall be acknowledged by the District Collector or the officer authorised by the District collector in this behalf in the form prescribed in Appendix IX to these rulesProvided that on and from 10th June, 1992 the State Government in granting quarrying lease for quarrying the following minor minerals in ryotwari lands, shall give preference to a State Government company or a corporation or company owned or controlled by the State Government, namely(a) Paradiso - (Gnessic rock with violet colourwavy pattern)(b) Kashmir White - (Leptynite white granite with garnet spees)(c) Kunnam, Paithur, - Black granite fine and medium grade with brownBavanur Black background(d) Blue Granite - Charnockite with blue background(e) Raw Silk - Leptynite with yellow background(f) Red Granite - Porphyritic granite and granites with readbackgroundProvided further that the quarrying lease-holder for quarrying the above mineral shall remove or transport the mineral from the specified land after payment of area assessment, seigniorage fee or dead rent whichever is higher, at the rates prescribed from time to time in Appendix II to these rules and after obtaining transport permit from the District Collector or the officer authorised by him in this behalfProvided also that the lessee shall keep correct accounts showing the quantity of the minerals quarried and shall allow any office authorised by the State Government in this behalf to inspect the quarry and verify its records and accounts and furnish such information and returns as may be required by him.It was the first proviso in Rule 19-A as amended which was under challenge and was struck down by the High Court. By reason thereof, the State Government was obliged to give preference to State Government companies and corporations in granting quarrying leases for the varieties of granite set out therein6. The High Court found that the first proviso in Rule 19-A did not contain any guideline in the matter of giving preference to a State Government company or corporation. The grant of preference was left to the unfettered discretion of the State Government. It was, therefore, ultra vires the Constitution

Court's reasoning:
21. The said Act is enacted to provide for the regulation of mines and the development of minerals under the control of the Union. Section 2 of the said Act declares 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 in the said Act. Section 13 empowers the Central Government to make rules for regulating the grant of prospecting licences and mineral leases in respect of minerals and for purposes connected therewith. Sub-section (1) of Section 15 empowers the State Government to make rules for regulation the grant of quarry leases, mining leases and other mineral concessions in respect of minor minerals and for purposes connected therewith. Sub-section (1-A) of Section 15 states that such rules may provide for the matters set out therein, namely, the person by whom and the manner in which a application for a quarry lease, mining lease and the like may be made; the fees to be paid therefor; the time and the form in which the application is to made; the matters which are to be considered where applications in respect of the same land are received on the same day; the terms and conditions on which leases may be granted or regulated; the procedure in this behalf; the facilities to be afforded to lease-holders; the fixation and collection of rent and other charges and the time within which they art payable; the protection of the rights of third parties; the protection of flora; the manner in which leases may be transferred; the construction, maintenance and use of roads, power transmission lines, etc. on the land; the form of registers to be maintained; reports and statements to be submitted and to whom; and the revision of any order passed by an authority under the said Rules. Clause (o) of Sub-section (1-A) reads "any other matter which is to be or may be prescribed". Section 19 of the said Act states that it shall be the duty of the Central Government to take all such steps as may be necessary for the conservation and systematic development of the environment by preventing or controlling any pollution which may be caused by prospecting or mining operations22. Rules 8-D and 19-B empower the State Government or its officers or a State Government company or corporation as the State Government any direct to control the sale by every permit-holder of quarried granite or other rock suitable for ornamental or decorative purposes. They also empower the State Government or its officers or a State Government company or corporation, as the case may be to fix the minimum price for the sale thereof. The object, as is shown by the terms of Government Order No. 214 dated 10-6-1992, quoted above, is to conserve and protect granite resources23. It is difficult to see how granite resources can be protected by controlling the sale of granite after its excavation and fixing the minimum price thereof24. There is no power conferred upon the State Government under the said Act to exercise control over minor minerals after they have been excavated. The power of the State Government, as the subordinate rule-making authority, is restricted in the manner set out in Section 15. The power to control the sale and the sale price of a minor mineral is not covered by the terms of clause(o) ofThis clause can relate only to the regulation of the grant of quarry and mining leases and other mineral concessions and it does not confer the power to regulate the sale of already mined minerals25. In our view, therefore, the High Court was clearly right in striking down Rules 8-D and 19-B as being beyond the purview of the rule-making power of the State Government. These rules having been struck down. The High Court was also right in striking down Government order No. 214 to the extent that it prescribed these rules and Government Order No. 216 made in pursuance of these rules