State power over minor minerals upheld, but repeated royalty and dead-rent enhancements within four years were struck down.

Section 15(1) of the Mines and Minerals (Regulation and Development) Act, 1957 was treated as a wide regulatory power authorising a State to prescribe and amend royalty and dead rent for minor minerals, including for subsisting leases, and the power was upheld as constitutionally valid. The Court also held that royalty and dead rent enhancements could not be made more than once within the governing four-year period, so the 1975 notification was invalid to the extent of a repeated royalty increase, the 1976 notification was invalid for a second dead-rent increase, and the 1981 circular could not override the notification scheme. Classification of building stones into different varieties for different royalty rates was permissible and did not infringe Article 19(1)(g).

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Issues: (i) Whether section 15(1) of the Mines and Minerals (Regulation and Development) Act, 1957, is valid and whether the State Government's rule-making power under that provision includes the power to prescribe, and amend, rates of royalty and dead rent for minor minerals, including in relation to subsisting leases. (ii) Whether the impugned Gujarat notifications and the circular dated February 12, 1981, were valid, including the validity of the 1974, 1975, 1976, 1979 and 1981 amendments and the legality of enhancing royalty or dead rent more than once within a four-year period. (iii) Whether building stones could be classified into different varieties for different royalty rates and whether the higher rates imposed were unreasonable restrictions under Article 19(1)(g) of the Constitution of India.

Issue (i): Whether section 15(1) of the Mines and Minerals (Regulation and Development) Act, 1957, is valid and whether the State Government's rule-making power under that provision includes the power to prescribe, and amend, rates of royalty and dead rent for minor minerals, including in relation to subsisting leases.

Analysis: The rule-making power under section 15(1) was held to be a wide regulatory power, read with the legislative history, the definition of minor minerals, the restrictions in sections 4 to 12, and the illustrative matters in section 13(2). The power to regulate the grant of leases was treated as including the power to fix the consideration for the grant, namely surface rent, dead rent and royalty, and the power to amend rules under section 15(1) was held to include the power to alter those rates. The Court also held that the proviso to section 15(3) controlled enhancement of royalty and, by necessary parity, dead rent, and that the State Government need not give lessees a prior hearing before amending the rules.

Conclusion: Section 15(1) is constitutionally valid, and the State Government has power under it to make and amend rules prescribing royalty and dead rent, even as to subsisting leases.

Issue (ii): Whether the impugned Gujarat notifications and the circular dated February 12, 1981, were valid, including the validity of the 1974, 1975, 1976, 1979 and 1981 amendments and the legality of enhancing royalty or dead rent more than once within a four-year period.

Analysis: The 1974 Notification was held to be operative and valid. The 1975 Notification was valid only to the extent that it did not offend the four-year bar on enhancement of royalty; to the extent it again enhanced royalty within the same four-year period, it was invalid. The 1976 Notification, which enhanced dead rent a second time within the same four-year period, was invalid. The 1979 Notification was held valid, both as to royalty and dead rent. The circular dated February 12, 1981, was invalid because executive instructions could not override the operative notification framework. The 1981 Notification was upheld as valid and constitutional. The Court further held that where a substituted schedule fails in part, the earlier valid schedule is not treated as repealed if substitution was the intended single process.

Conclusion: The 1974 and 1979 Notifications were valid; the 1975 Notification was invalid to the extent of impermissible royalty enhancement; the 1976 Notification was invalid; the circular dated February 12, 1981, was invalid; and the 1981 Notification was valid.

Issue (iii): Whether building stones could be classified into different varieties for different royalty rates and whether the higher rates imposed were unreasonable restrictions under Article 19(1)(g) of the Constitution of India.

Analysis: Building stones were already within the statutory definition of minor minerals, and the State Government was not confined to a single uniform royalty rate for all varieties. The Court held that classification of building stones into different varieties for royalty purposes was permissible. As to Article 19(1)(g), the enhancements were examined in the context of the overall regulatory scheme and the simultaneous reduction or abolition of other levies, and were not found to be unreasonable.

Conclusion: The State Government could classify building stones into different varieties and levy different royalty rates, and the impugned rates did not infringe Article 19(1)(g).

Final Conclusion: The regulatory power over minor minerals was upheld in principle, but the leaseholders succeeded in part because one royalty enhancement and one dead-rent enhancement were struck down, the circular was invalidated, and the remaining notifications were sustained in the manner set out above.

Ratio Decidendi: A statutory power to regulate the grant of mining or quarry leases includes power to prescribe and amend lease consideration, including royalty and dead rent, but fiscal enhancements under the governing proviso may not be made more than once within the prescribed four-year period.

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