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Judgment
K. Govindarajan, J.—In all these writ petitions, the petitioners have challenged the validity of Rule 8-A of the Tamil Nadu Minor Mineral
Concession Rules, 1959, hereinafter called ''the Rules 1959'', as amended in G.O.Ms.No.86, Industries (MMC.2) Department, dated 22.2.2001.
The petitioners made application for prospecting licence and/or for lease to carry out the mining operation in the area which have been
prospected earlier for granite. Some applications were rejected by the Government. In some cases, pursuant to the interim orders of this Court, the
applications are pending before the Government. Since the applications were rejected or not considered on the basis of Rule 8-A of the Rules, the
petitioners have come forward with the above writ petitions challenging the said provision.
Mr. Ramakrishna Reddy, learned counsel appearing for the petitioners and the learned Advocate General appearing for the respondents made
their respective submissions regarding the issue raised in these writ petitions.
Before considering the said rival submissions, it is beneficial to go into the scope of The Mines and Minerals (Development & Regulation) Act,
1957, hereinafter called ''the Act'' and the Rules made thereunder and also the Tamil Nadu Minor Mineral Concession Rules, 1959.
5.Entry 54 of List I of Schedule VII deals with Regulation of mines and mineral development, which reads as follows:-
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.
So, Parliament have enacted The Mines and Minerals (Regulation and Development) Act, 1957 to provide for the development and regulation of
mines and minerals under the control of the Union.
6.The State Legislature also are given power to make law on the same subject under Entry 23 in List II of the Seventh Schedule to the Constitution
which reads thus:-
23.Regulation of mines and mineral development subject to the provision of List I with respect to regulation and development under the control of
the Union.
The Entries aforementioned disclose the power to make a law with respect to regulation of mines and minerals development lies with the State,
(Entry 23 in List II) but the said entry is made expressly subject to the provision of Entry 54 of List I, which means that if Parliament declares by
law that it is expedient in the public interest to take over the control and the regulation of mines and development of minerals, such regulation and
development of mines and minerals get transplanted to List I. In other words, the regulation and development of mines and minerals in respect of
which if Parliament makes a declaration contemplated by Entry 54 in List I, the States are denuded of the power to make any law with respect to
the Entry 23 in the List II. Parliament has specially made the declaration as contemplated by Entry 54 in List I in Sec. 2 of the Mines and Minerals
(Development and Regulation) Act 1957 which reads thus:-
2.Declaration as to the expediency of Union control
It is hereby 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 hereinafter provided"".
So, the States are thus denuded of legislative power in respect of mines and mineral development qua the legislative field under Entry 23 in List II
in the light of the pre-eminent occupation of the field by the Act. But, for the present purpose, this Court need not deal with the same in detail, as
we are concerned only with the scope of Sec. 15 of the Act.
Under Sec. 13 of the Act, Central Government is having power to frame Rules as they think fit by notification in the official Gazette. Under Sec.
15 of the Act, Parliament conferred power on the State Governments 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 thereto by notification in the Official Gazette. In exercise of powers
conferred by Sec. 15 of the Act, the Government of Tamil Nadu originally framed rules called the Tamil Nadu Minor Mineral Concession Rules,
1956. In suppression of the said Rules, the Government framed the present rules and notified the same in G.O.Ms.No.3757, Industries, Labour
and Cooperation, dated 24th September 1959, called The Tamil Nadu Minor Mineral Concession Rules, 1959, hereinafter called the Rules 1959.
Now we are concerned with Rule 8-A of the Rules 1959. Similarly, Central Government exercising powers conferred under Sections 13 and 18
of the Act framed Mineral Concession Rules 1960, Mineral Conservation and Development Rules 1988 respectively with respect to major
minerals. Now the Central Government for the first time framed the Rules exercising powers under Sec. 18 of the Act called the Granite
Conservation and Development Rules 1999, hereinafter called ""The Development Rules 1999"" with respect to minor mineral.
Now, we are concerned with Rule 8-A of the Rules 1959. Rule 8-A of the Rules 1959 was framed for the first time in G.O.Ms.No.1932
Industries dated 16.12.1972` giving power to the Collector to sanction the leases in favour of the applicants who require the mineral for their
existing industry. Subsequently, it had undergone so many changes either by amendments or by substitutions. Ultimately, under the Government
Order in G.O.Ms.No.86, Industries (MMC.2) Department, dated 22.2.2001, the present Rule 8-A was substituted in the place of the earlier Rule
which came into effect on 22.2.2001. Under the present Rule 8-A, power is given to the State Government to grant quarry lease to any person
subject to the conditions and procedures given under the other portion of the Rules for grant of lease in respect of granite.
According to the said Rule (2) to Rule 8-A of the Rules 1959, quarrying lease shall be granted only in the name under which the industry by
cutting, polishing and by other means to the granite has been granted, and no lease can be granted unless the applicant is having an existing industry
in Tamil Nadu or having a distinct industrial programme to utilise the mineral in his granite cutting and polishing industry proposed to be set up in
Tamil Nadu.
Under Sub-Rule(3) to Rule 8-A of the Rules 1959, the District Collector is empowered to publish a notice in the official Gazette and also issue
an advertisement in two dailies one in Tamil and another in English inviting tenders in sealed cover for grant of lease of area where the existence of
granite has been established to quarry the mineral.
Under sub-Rule (5) to Rule 8-A of the Rules 1959, it is stated that if any application is made for the area when there is no invitation of
application by the Collector as stated above, it shall summarily be rejected as premature application.
As contemplated under Sub-Rule (6) of Rule 8-A of the Rules 1999, before opening the tenders received pursuant to the notification, an
auction shall be conducted in which all tenderers and also others can participate. It is also contemplated that where only one tender application is
received for an area, if there is no one to bid in the auction, the State Government may grant lease in favour of the single applicant, if in their
opinion, the tender amount offered by the applicant is reasonable.
The petitioners have challenged the above said Rule only on the ground that they are inconsistent with the Development Rules 1999. So, it is
also necessary to deal with the scope of relevant provisions in the Development Rules 1999. The said Development Rules 1999 came into force on
1.6.1999. The Central Government framed the said Development Rules 1999 for consideration and systematic development of scientific mining to
conserve mining resources and to prescribe unique framework with regard to systematic and scientific exploitation of granite which is minor mineral
throughout the country.
15.According to the Rule 2 of the Development Rules 1999, the said Rules shall apply to prospecting and quarrying of granite. ""Prospecting
licence"" has been defined under Rule 3(m) of the Development Rules 1999, which means a licence granted for the purpose of exploring or
providing granite deposits. Rule 4 of the Development Rules 1999 prohibits the State Government from granting lease without satisfying that there
is evidence to show that the area for which lease is applied for has been prospected earlier for granite or the existing granite therein has been
established by otherwise. The maximum period of prospecting licence is fixed for a period of two years under Rule 5 of the Development Rules
1999. Under Rule 6 of the Development Rules 1999, the period for which lease can be granted is only for a maximum period of 30 years and the
minimum period is 20 yeas. Such a lease can be renewed for further period not exceeding 20 years. The State Government is also authorised to
renew the lease for a further period or periods not exceeding 20 years in each case. A scheme of prospecting indicating the manner in which the
licensee proposes to carry out the prospecting operations is contemplated under Rule 8 of the Development Rules 1999. Rule 12 of the
Development Rules 1999, prohibits the grant of lease or renewal of lease without production of mining planning duly approved by the State
Government or any person authorised by the State Government. Rule 15 of the Development Rules 1999, deals with the procedure regarding the
disposal of the application received. We are not concerned with respect to the other rules except Rule 52 of the Development Rules 1999 for the
present purpose.
Rule 52 of the Development Rules 1999 sustains the applicability of the Rules already framed exercising powers under Sec. 15 of the Act
which reads as follows:-
52.Applicability of the provisions of Minor Mineral Concession Rules framed by the State Government:- The provisions of the Minor Mineral
Concession Rules or any other rules framed by the State Government u/s 15 of the Act shall be applicable to granite quarry leases to the extent
they are not repugnant to or inconsistent with these Rules"".
Coming to the issue raised in this case, learned counsel appearing for the petitioners submitted that Rule 8-A of the Rules 1959 is repugnant
and contrary to the Development Rules 1999, which came into force on 1.6.1999. Learned Advocate General also relying on Rule 52 of the
Development Rules 1999 submitted that they are entitled to frame Rules which are not repugnant to or inconsistent with the Development Rules
1999. According to him, Rule 8-A of the Rules 1959 is not repugnant to or inconsistent with the Development Rules 1999 and so they can sustain
the validity of Rule 8-A in view of Rule 52.
Learned counsel appearing for the petitioners has not argued that the State Government are not having any power to frame the Rules exercising
powers under Sec. 15 of the Act. As stated already, his argument is that once the Central Government framed Rules with respect to the particular
issue, the State Government cannot frame the Rules inconsistent to the Development Rules 1999. But, Rule 52 of the Development Rules 1999
relied on by the learned Advocate General will apply only to the Rules already framed exercising powers under Sec. 15 of the Act and so the
learned Advocate General cannot rely on Rule 52 of the Development Rules 1999 to sustain the present Rule as it came into force after 1.6.1999
when the Development Rules 1999 came into force.
The provisions of Sections 4 to 13 are excluded from their application to minor minerals. By amending Act 37/1986, the said exclusion shrunk
to Sections 5 to 13. Originally Sec. 15 was as follows:-
15.Power of State Government to make rules in respect of minor minerals:- (1) The State Government may, by notification in the Official Gazette,
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.
(2)Until rules are made under sub-section (1), any rules made by a State Government regulating the grant of quarry leases, mining leases or other
mineral concessions in respect of minor minerals which are in force immediately before the commencement of this Act shall continue in force.
(3)The holder of a mining lease or any other mineral concession granted under any rule made under sub-section (1) shall pay royalty in respect of
minor minerals removed or consumed by him or by his agent, manager, employee, contractor or sub-lessee at the rate prescribed for the time
being in the rules framed by the State Government in respect of minor minerals;
Provided that the State Government shall not enhance the rate of royalty in respect of any minor mineral for more than once during any period of
four years.
After the judgment of the Apex Court in D.K.Trivedi case 1986 Supp SCC 20, the above said provision had undergone amendment through Act
37 of 1986 by introducing sub-section(1-A). This Section was in particular and without prejudice to the generality of power conferred by sub-
section(1) of Section 15. The said sub-section (1-A) of Section 15 is extracted hereunder:-
a)the person by whom and the manner in which, applications for quarry leases, mining leases or other mineral concessions may be made and the
fees to be paid thereof;
(b)the time within which, and the form in which, acknowledgment of the receipt of any such applications may be sent;
(c)the matter which may be considered where applications in respect of the same land are received within the same day;
(d)the terms on which, and the conditions subject to which and the authority by which quarry leases, mining leases or other mineral concessions
may be granted or renewed;
(e)the procedure for obtaining quarry leases, mining leases or other mineral concessions;
(f)the facilities to be afforded by holders of quarry leases, mining leases or other mineral concessions to persons deputed by the Government for
the purpose of undertaking research or training in matters relating to mining operations;
(g)the fixing and collection of rent, royalty, fees, dead rent, fines or other charges and the time within which and the manner in which these shall be
payable;
(h)the manner in which rights of third parties may be protected (whether by way of payment of compensation or otherwise) in cases where any
such party is prejudicially affected by reason of any prospecting or mining operations;
(i)the manner in which rehabilitation of flora and other vegetation such as trees, shrubs and the like destroyed by reason of any quarrying or mining
operations shall be made in the same area or in any other area selected by the State Government (whether by way of reimbursement of the cost of
rehabilitation or otherwise) by the person holding the quarrying or mining lease;
(j)the manner in which and the conditions subject to which, a quarry lease, mining lease or other mineral concession may be transferred;
(k)the construction, maintenance and use of roads, power transmission lines, tramways, railways, aerial ropeways, pipelines and the making of
passage for water for mining purposes on any land comprised in a quarry or mining lease or other mineral concession;
(l)the form or registers to be maintained under this Act;
(m)the reports and statements to be submitted by holders of quarry or mining leases or other mineral concessions and the authority to which such
reports and statements shall be submitted;
(n)the period within which and the manner in which and the authority to which applications for revision of any order passed by any authority under
these rules may be made, the fees to be paid therefor, and the powers of the revisional authority; and
(o)any other matter which is to be, or may be, prescribed.
The said Section was introduced for the following objects and reasons as set out hereunder:-
The Mines and Minerals (Regulation and Development) Act, 1957 provides for the regulation of mines and the development of minerals under the
control of the Union. Since the last amendment of the Act in 1972, many problems have come to the fore. The adverse effect of mining operation
on ecology and environment have increasingly come to notice. In many cases, mining operations have been undertaken without proper prospecting
resulting in unscientific mining. Further, a number of Committees have stressed the need for amending certain provisions of the Act with the object
of removing bottlenecks and promoting speedy development of mineral-based industries. State Governments and representatives of trade and
industry have in formal forums like the Mineral Advisory Council as well as in other forums, expressed the desirability of taking a fresh look at the
various provisions of the Act with a view to making them more effective and development-oriented.
2.The suggestion made from time to time have been considered and incorporated in the present Bill, which, inter alia, includes the following salient
features, namely,
(i)inclusion of 11 more minerals of national importance in the First Schedule to the Act;
(ii)premature termination of prospecting licences and mining leases on ecological and other grounds;
(iii)dispensing with the Certificate of Approval, Income Tax Clearance Certificate, etc., for the grant of prospecting licences and mining leases;
(iv)prospecting of an area and preparation of mining plan as a precondition for the grant of mining lease;
(v)rationalisation of the period of mining leases, and renewals thereof;
(vi)shorter periodicity for purposes of revision of royalty and dead rent; and
(vii)provision for increasing the quantum of punishment to curb illegal mining activities.
3.The Bill seeks to provide for the above objects.
From the above it is clear that Sec. 13 gives power to the Central Government to make rules in respect of minerals other than minor minerals,
while Sec. 15 gives power to the State Government to make rules in respect of minor minerals. The extent of exercise of power in both the
provisions is similar. Even without introduction of sub-section (1-A) of Sec. 15 of the Act, the Apex Court has held in the said decision in 1986
Supp SCC 20 (supra), as stated above that Sec. 13(1) contains several guidelines for the State Government to follow the Rules under Sec. 15(1)
of the Act.
Sec. 18 of the Act obligates the Central Government to take all steps as may be necessary for the conservation and systematic development in
India and for protection of environment by preventing or controlling any pollution which may be caused by prospecting or mining operations and
for that purpose the Central Government may, by notification in the official Gazette make such rules as it thinks fit. Sub-section(2) focusses the
power within which it has to act and not to act. Sec. 18 of the Act is also not excluded from its application to the minor mineral development and
under the said provision duty is cast on the Central Government to take all necessary steps for the conservation and systematic development of
mineral in India. The said provisions and any rules made thereunder give guidelines to the State to take note of while framing its own rules as such
guidelines bind on the State. Similarly Sec. 23C gives detailed guidelines with respect to the State power to provide a check on illegal mining,
storage and transportation.
While construing the power of the State Governments under the Central legislature in the decision in The Quarry Owners Association Vs. The
State of Bihar and Others, , the Apex Court has held as follows:-
... The constitution makers also knew that the Central Government in exercise of this rule-making power, made the Mineral Concession Rules,
1949 and by Rule 4 the extraction of minor minerals was left to be regulated by the rules made by the Provincial Governments. When the present
1957 Act came into force, Parliament was aware that different State Governments in pursuance of this Rule 4 were regulating the grant of leases in
respect of minor minerals including fixation of rate of royalties. This Parliament approved in the present Act through sub-sections (2) and (3) of
Section 15, the then existing Rules which were in force immediately before the commencement of this Act which included the rate of royalty/dead
rent for it to continue in force, unless superseded by the Rules made under sub-section (1). Thus, Parliament was fully aware that even in the past it
was the State Governments which were entrusted and were dealing with minor minerals as a delegatee. The only difference being, earlier the State
Governments were acting as sub-delegatee of the Central Government but now they act as delegatee of Parliament. This was the pattern adopted
and approved since the inception. This seems to be also because minor minerals being more useful for the local uses and the State Government
being the highest executive in the State knowing fully well of its uses, management including fixation of its prices. Thus, in this historical background
there is nothing wrong to delegate to the State Government power to fix rate of royalty/dead rent for the minor minerals.
From the above discussion it is clear that though the State Government are having power to frame the rules exercising the power of delegation,
given by the Parliament under Sec. 15 of the Act, as held by the Apex Court in the decision in The Quarry Owners Association Vs. The State of
Bihar and Others, any guidelines issued under Sec. 18 of the Act would be binding the State Government and they can frame the rules only in
compliance with the same.
23.The above said view of mine is supported by the decision in The Quarry Owners Association Vs. The State of Bihar and Others, : which reads
as follows:-
.... Similarly, Section 18 which refers to the mineral development as aforesaid casts an obligation on the Central Government to take all such
steps for the conservation and systematic development of minerals in India and for protection of the environment by preventing or controlling any
pollution for which it may make rules and sub-section (2), in particular, specifies a large list on which such rules may be framed, which have been
framed (the Mineral Conservation and Development Rules, 1988), which would be binding on the Government including the State Government. In
conserving or regulating the development of any mineral resources, the price factor is inherent. Any development requires planning, execution,
management and with reference to the excavation of mines, controlling the extent and manner of mining, to which are provided in this Act. All this
requires expenditure to be incurred by the State coupled with consideration for parting with the wealth of the State, as minerals belong to the State
except on private land. They are all guiding factors in fixing, modifying or enhancing the rate of royalty. Thus development of mineral resources
inherently refers to the price factor to be recovered by the owner.
The scope of Sec. 18 of the Act is also dealt with by the Apex court in the decision in Kartar Singh Bhadana Vs. Hari Singh Nalwa and
Others, : holding as follows:-
... Section 18 deals with mineral development and says 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 minerals in India and for the protection of the environment by preventing or
controlling any pollution which may be caused by prospecting or mining operations and for such purposes the Central Government may, by
notification in the Official Gazette, make such rules as it thinks fit. The obligation u/s 18, such as it is, is that of the Central Government and not that
of the State of Haryana, the appropriate Government. Secondly, the obligation of the Central Government u/s 18 is to take steps for the systematic
development of minerals in India and for such purpose to make rules. There is no obligation cast upon the Central Government to exploit minerals;
the obligation is to ensure that such exploitation as takes place is systematic.
On the basis of the above said decisions, now we have to find out whether the State Government have complied with the scheme of the
development rules 1999 even if the same is taken as a guideline given under Sec. 18 of the Act.
Under Rule 3(l) of the Development Rules 1999, ''prospect'' has been defined as an area where existence of granite has been established.
Under the said Rules, ""prospecting licence"" has been defined under Rule 3(m) of the Development Rules 1999, which reads as follows:-
''prospecting licence'' means a licence granted for the purpose of undertaking any operation for the purpose of exploring, locating or proving
granite deposits.
Rule 4 of the Development Rules 1999, contemplates prospecting to precede mining operations which reads as follows:-
4.Prospecting to precede mining operations
No lease shall be granted by the State Government unless it is satisfied that there is evidence to show that the area for which the lease is applied for
has been prospected earlier for granite of the existence of granite therein has been established otherwise.
Rule 5 of the Development Rules 1999, contemplates the period for which the prospecting licence has to be granted not exceeding two years. The
maximum period of lease is contemplated under Rule 6 of the Development Rules 1999.
27.From the above said Rules, it is clear that anybody can make an application for prospecting licence so as to enable him to identify the existence
of the granite. In the presence case, the Government have come forward with the plea that they have prospected with respect to existence of
granite and they will call for application only with respect to those quarries and the individuals cannot make applications for prospecting licence by
themselves with reference to any other quarry. This stand was taken by the Government only on the basis of Rule 8-A 5(c) of the Rules. When the
scheme of the Development Rules 1999, contemplates for granting licence for prospecting, the State Government cannot refuse to consider such
applications stating that there is no provision under the Rules for dealing with such applications. Admittedly, no rule is framed by the State
Government for the purpose of granting prospecting licence. In the counter filed by the Government, in paragraph 10 it is stated that the State
Government is empowered to evolve procedure of their own and in the absence of any provision for prospecting licence in the Rules 1959 for
grant of prospecting licence, the question of applying the same will not arise. It is also stated by the Government in the counter that by introduction
of the Development Rules 1999, the State Government have not been denuded of their power conferred under Sec. 15 of the Act to frame their
own Rules for minor minerals. The above said stand of the State Government cannot be countenanced as the power to make Rules given under
Sec. 15 of the Act, as held by the Apex Court, should be in accordance with the guidelines or Rules framed under Sec. 18 of the Act with regard
to minor minerals. Even appreciating the scope of Rule 52 of the Development Rules 1999, it is clear that the intention for framing the Development
Rules 1999 is that the State Rules cannot exist, if they are repugnant to or inconsistent with the Development Rules 1999. Hence, if any rule is
framed by the State Government, it can be sustained only if it is framed in compliance of the scheme of the Development Rules 1999.
28.Under Rule 8-A of the Rules 1959, the State Government is empowered to grant lease only by calling for tenders with respect to particular
quarry. As stated already, if any application is made with respect to a particular area for which no application was called for, the State Government
are having power to reject the same as premature application. It amounts to prohibiting the petitioners from making application with respect to
granite quarry for which they want to get a lease. Rule 15 of the Development Rules 1999 deals with receipt of application for grant of mining lease
taking decision of the said applications and communicating the same to the applicants. The intention of the above said Rule 15 clearly shows that
the Government have to receive the applications and take decision on the same in accordance with law, without rejecting the same on the basis that
they have not called for applications. So, the provisions of Rule 8-A of the Rules 1959 calling for application by way of tender and preventing the
petitioners from making application with respect to grant of quarry lease on the basis that the State Government have not called for tender, is
inconsistent with the scope of Rule 15 of the Development Rules 1999 which enables the petitioners to make applications and consideration of the
same by the State Government to take a decision to grant lease for a precise area for undertaking mining operation for granite.
29.From the above discussion, it is clear that Rule 8-A of the Rules 1959 as it now stands is contrary to the scheme of the Development Rules
1999. The other conditions mentioned in Rule 8-A of the Rules 1959 emerge only after granting of lease on the basis of the tender called for. The
said conditions cannot stand independently. So, Rule 8-A of the Rules 1959 which is contrary to the Development Rules 1999 ultra vires Sec. 18
of the Act and the Development Rules 1999, as the State Government have not carried out the scheme of the Development Rules 1999 strictly and
so Rule 8-A of the Rules 1959 is liable to be struck down.
30.Learned Advocate General submitted that with respect to Rule 8-A as it stood earlier was upheld by this Court on occasions and so the
petitioners'' case has to be rejected. Such submission can be accepted if the Development Rules 1999 are not framed. Further, the judgment of the
Division Bench reported in V.Ganagarathinam v. State of Tamil Nadu, rep., by Commissioner & Secretary to Govt., Industries Dept., Fort St.
George, Madras-9 and another 1990 TNLJ 374, was also delivered before 1999. In view of the judgment of the Apex Court (cited supra)
holding that the development Rules 1999 bind the State Government, the State Government have to frame the Rules only in accordance with the
said Development Rule 1999 and not contrary to the scheme of the same.
31.In view of the above discussion, the impugned Rule 8-A of the Rules 1959 is struck down as it gives power to the authorities to refuse to
entertain the applications with respect to grant of quarry lease for which applications are made by the petitioners on the basis that they can make
application only if it is called for by way of tenders and not providing any procedure to grant prospecting licence even with respect to granite
quarry which is not prospected by the State Government. As the other sub-rules of Rule 8-A cannot stand independent of the above said
provisions, the entire Rule 8-A of the Rules 1959 is struck down.
32.For all the reasons stated above, these writ petitions are allowed accordingly. No costs. Connected W.M.Ps., are closed.