TaxTMI 
TaxTMI 
1986 (3) TMI 328
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....ese Notifications are : (1). GU-74/121(A)/MCR-2173(49)7268/CHH dated November 29, 1974 (hereinafter referred to as "the 1974 Notification"), (2) GU-75/117-MCR-2173(49)/6431/CHH dated October 29, 1975 (hereinafter referred to as "the 1975 Notification"), (3) GU-76/39/MCR-2175(68) 4675-CHH dated April 6, 1976 (hereinafter referred to as "the 1976 Notification"). (4) GU-79/118/MCR-2178(127)-167-CHH dated March 26, 1979 (hereinafter referred to as "the Notification"), and (5). GU-81/75/MCR 2181/(168)-4536-CHH dated June 18, 1981 (hereinafter referred to as "the 1981 Notification"). The question of the validity of a circular, namely Circular No. M.C.R. 2180 (166) CHH dated February 12, 1981, issued by the Deputy Secretary, Industries, Mines and Electricity Department, Government of Gujarat, also falls for consideration in these Writ Petitions and Appeals. It is unnecessary in order to decide these Writ Petitions and Appeals to relate the facts of each individual matter. It will suffice if we state broadly how these Writ Petitions and Appeals have come to be filed. The parties before us, other than the State of Gujarat and governmental....
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....ould not be enhanced by the State Government more than once during any period of four years and that the rate of royalty on black trap and hard murrum having been increased by the 1974 Notification, it could not be increased again in 1975. A subsidiary contention raised was that the State Government had no power to classify building stones into black trap and hard murrum because by doing so what the State Government had done in effect and substance was to declare black trap and hard murrum as minor minerals and that it was only the Central Government which possessed the power to declare any mineral not covered by the definition of the expression "minor minerals" in clause (c) of section 3 of the 1957 Act to be a minor mineral. Both these contentions were rejected by a Division Bench of the Gujarat High Court consisting of Thakkar and Mankad, JJ., by its judgment dated September 16- 17, 1980. The Division Bench held that the 1974 Notification had not become operative and, therefore, in lssuing the 1975 Notification the State Government had not violated the proviso to section 15(3), and that building stones having been already included in the definition of "minor miner....
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....t to this policy decision the 1979 Notification was issued by the Government of Gujarat. By the 1979 Notification the Government of Gujarat made the Gujarat Minor Minerals (Amendment) Rules, 1979, with effect from April 1, 1979. By this amendment a new Rule 21-B was inserted in the said Rules, Rule 22 was amended, Chapter IV of the said Rules which dealt with grant of quarrying permits in respect of lands in which minerals belonged to the Government was deleted, Form was amended, Forms I, J and K were deleted, and Schedule I and II were substituted. By the substituted Schedule I, the rate of royalty on all minor minerals was specified as ten paise per metric tonne. By the substituted Schedule II the rate of dead rent per hectare or part thereof in respect of quarry leases was enhanced to ₹ 1,200 in certain cases, ₹ 1,500 in some other cases, ₹ 2,000 in one case and ₹ 3,000 in the remaining cases. So far as quarry parwanas were concerned, the rate was specified as one-tenth of the rate for quarry leases per parwana. A writ petition was filed by the said Ambalal Manilal Patel in the Gujarat High Court, being Special Civil Application No. 138 of 1978, challeng....
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....n would stand revived and would be applied. The Government thereafter made the Gujarat Minor Mineral (Amendment) Rules, 1981, by issuing the 1981 Notification which came into force on June 20, 1981. By the 1981 Notification Rule 21-B was deleted, Rule 22 was amended, Chapter IV and certain Forms were inserted, Schedule I to the said Rules was substituted and Schedule II thereto deleted. Several lessees of mining and quarry leases filed writ petitions in the Gujarat High Court challenging the validity of the 1981 Notification and the said Circular. These writ petitions were rejected on the ground that as connected proceedings were pending in this Court, it was open to the petitioners to move this Court if they so desired. Accordingly, the said petitioners as also others have filed Writ Petitions in this Court challenging the validity of the 1981 Notification and the said Circular as also in some cases Appeals against the order rejecting the writ petitions. The parties before us - whether Petitioners, Appellants, or Respondents - fall in different groups according to how their interests are affected by one or the other of the impugned Notifications. They have, therefore, advanced di....
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....t) provided as follows "36. Regulation of mines and oilfields and mineral development to which such regulation and develop ment under Federal control is declared by Federal law to be expedient in the public interest." Entry 23 in List II in the Seventh Schedule to that Act (namely. the provincial Legislative List) provided as follows: "23. Regulation of mines and oilfields and mineral development subject to the provisions of List I with respect to regulation and development under Federal control." The word "Federal" in the above entries was substituted by the word "Dominion" by the India (Provisional Constitution) Order, 1947. No legislation was, however, enacted in pursuance of the above power until after Independence, but in 1939 the Government of India made the Mining Concessions (Central) Rules, 1939, or regulating grants of prospecting licences and mining leases in Chief Commissioner's Provinces and British Baluchistan. Rule 6 of the 1939 Rules provided that these Rules were not to apply to minor minerals such as slate, building stone, limestone and clay, the extraction of which was to be regulated by such separate rules as the Ch....
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....or in any area. Under clause (d) of section 5(2), in particular, and without prejudice to the generality of the power conferred by section 5(1), such rules could provide for "the fixing of the maximum and minimum rent payable by a lessee, whether the mine is worked or not." Section 6(1) conferred power upon the Central Government to make rules for the conservation and development of minerals. Under clause (i) of section 6(2), in particular, and without prejudice to the generality of The power conferred by section 6(1), such rules could provide for "the levy and collection of royalties, fees or taxes in respect of minerals mined quarried, excavated or collected". Section 7 conferred upon the Central Government the power to make rules for the purpose of modifying or altering the terms and conditions of any mining lease granted prior to the commencement of the 1948 Act so as to bring such lease in conformity with the rules made under section 5 and 6. Under section lO, all rules made under the 1948 Act were to be laid, as soon as may be after they were made, before the Central Legislature and after the commencement of the Constitution of India, before the House of t....
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.... x x x (iii) The lessee shall also pay, for every year, except the first year of the lease, such yearly dead rent within the limits specified in the Third Schedule to these Rules, as may be fixed by the State Government in the lease; and if the lease permits the working of more than one mineral in the same area, the State Government may charge separate dead rent in respect of each mineral: Provided that the lessee shall be liable to pay the dead-rent or royalty in respect of each mineral, whichever be higher in amount, but not both. (iv) The lessee shall also pay, for the surface area used by him for the purposes of the mine, surface rent at such rate, not exceeding the land revenue and cesses assessable on the land, as may be specified by the State Government in the lease. x x x x Thus, even after the enactment of the 1948 Act and the framing of the Mineral Concession Rules, 1949, minor minerals continued to be governed by rules made by the State Governments. Until the coming into force of the State Reorganisation Act, 1956, on November 1, 1956, the territories of the State of Bombay included the territories now forming part of the State of Gujarat except Saurashtra which was ....
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....essee shall also pay, for the surface area used by him for the purposes of the quarry, surface rent at such rate, not exceeding the land revenue and cesses assessable on the land, as may be fixed by the Collector and specified in the lease. x x x x." Under the Government of India Act, 1935, "petroleum and other liquids and substances declared by Federal law to be dangerously inflammable, so far as regards possession, storage and transport" formed a separate legislative topic being Entry 32 in the Federal Legislative List, while oilfields and mineral oils fell under Entry 36 in the said List along with mines and mineral development. Under the Constitution of India, however, the old Entry 36 was divided into two and the regulation and development of oilfields and mineral oil resources became a separate legislative topic along with petroleum and petroleum products, and other liquids and substances declared by Parliament by law to be dangerously inflammable. The relevant legislative Entries in the Constitution of India are Entries 53 and 54 in List I in the Seventh Schedule to the Constitution of India, namely, the Union List. These two Entries read as follows : "....
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....cence or a mining lease was to be granted and the power to prescribe the rates of royalty for various minerals (see the Statement of Objects and Reasons to the Legislative Bill No. 49 of 1957, which when enacted became the 1957 Act, published in the Gazette of India, Extraordinary, dated July 29, 1957, Part II, sec.2, at page 392). The 1957 Act was amended with retrospective effect by the Mines and Minerals (Regulation and Developments Amendment Act, 1958 (Act No. 15 of 1958). This Amendment Act dealt with mining leases in respect of coal granted before October 29, 1949, and does not concern us. The 1957 Act was again amended by the Mines and Minerals (Regulation and Development) Amendment Act, 1972 (Act No. 56 of 1972), which came into force on September 12, 1972. The Amendment Act of 1972 was enacted mainly to carry out the recommendations made by the Mineral Advisory Board. Amongst the principal changes affected in the 1957 Act by the Amendment Act of 1972 were the imposition of a ceiling on the individual holdings of prospecting licences and mining leases; the imposition of a specific obligation on holders of mining leases in respect of payment of royalty for minerals removed b....
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....serted by the Amendment Act of 1972, where in the interest of regulation of mines and mineral development it is thought expedient to grant a mining lease in favour of a Government company or corporation owned or controlled by the Government and for that purpose to terminate prematurely a mining lease in respect of a mineral other than a minor mineral, it is for the Central Government, after consultation with the State Government, to form the opinion with respect to such expediency, while it is for the State Government, after consultation with the Central Government, to form the opinion with respect to such expediency in the case of a mining lease in respect of any minor mineral. Section 5 prescribes the restrictions on the grant of prospecting licences and mining leases. Section 6 prescribes the maximum area for which a prospecting licence or mining lease can be granted. Section 7 prescribes the period for which a prospecting licence can be granted or renewed and section 8 prescribes the period for which a mining lease can be granted or renewed. Section 9 is important and requires to be reproduced in extenso. It reads as follows : "9. Royalties in respect of mining leases.- (....
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....ead rent to be paid by the lessee. - (1) The holder of a mining lease, whether granted before or after the commencement of the Mines and Minerals (Regulation and Development) Amendment Act, 1972, shall, notwithstanding anything contained in the instrument of lease or in any other law for the time being in force, pay to the State Government, every year, dead rent at such rate as may be specified, for the time being, in the Third Schedule, for all the areas included in the instrument of lease : Provided that where the holder of such mining lease becomes liable, under section 9, to pay royalty for any mineral removed or consumed by him or by his agent, manager, employee, contractor or sub-lessee from the leased area, he shall be liable to pay either such royalty or the dead rent in respect of that area, whichever is greater. (2) The Central Government may, by notification in the Official Gazette, amend the Third Schedule so as to enhance or reduce the rate at which the dead rent shall be payable in respect of any area covered by a mining lease and such enhancement or reduction shall take effect from such date as may be specified in the notification : Provided that the Central Governm....
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....ining 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 sublessee 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. In section 14 and in sub-sections (1) and (2) of section 15 the words "quarry leases, mining leases or other mineral concessions" were substituted by the Amendment Act of 1972 for the words "prospecting licences and mining leases". Sub- section (3) was inserted in section 15 with retrospective effect by the same Amendment Act. Section 19 provides as follows : "19. Prospecting licences and mining leases to be void if in contravention of Act. - Any prospecting licence or mining lease....
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....higher in amount but not both; (d) the lessee shall also, pay for the surface area used by him for the purpose of mining operations, surface rent and water rate at such rate not exceeding the land revenue, water and cesses assessable on the land, as may be specified by the State Government in the lease; x x x x (5) If the lessee makes any default in payment of royalty as required by section 9 or commits a breach of any of the conditions other than those referred to in sub-rule (4), the State Government shall give notice to the lessee requiring him to pay the royalty or remedy the breach, as the case may be, within sixty days from the date of the notice and if the royalty is not paid or the breach is not remedied within such period, the State Government may, without prejudice to any proceeding that may be taken against him, determine the lease and forfeit the whole or part of the security deposit. In exercise of the power conferred by section 15(1) of the 1957 Act various State Governments have made rules in respect of minor minerals. Although these rules vary from State to State, there are certain broad features present in all of them. The majority of States provide for two type....
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....nafter referred to as "the Gujarat Rules". me Gujarat Rules came into force on April 1, 1966. Rule 41 of the Gujarat Rules repealed the Bombay Minor Mineral Extraction Rules, 1955, and all other rules in force in any part of the State of Gujarat immediately before the coming into force of the Gujarat Rules. We will point out the relevant provisions of the Gujarat Rules when we come to discuss the question of the validity of Rule 21-B of the Gujarat Rules and the impugned Notifications and the impugned Circular dated February 12, 1981. The first contention which was raised before us was that section 15(1) of the 1957 Act 18 unconstitutional as suffering from the vice of excessive delegation of legislative power to the executive. It was submitted that the rule-making power conferred upon the State Governments by section 15(1) was an uncanalized power as no guidelines were prescribed for its exercise and thus it enabled the State Governments to act arbitrarily and as they liked with respect to leases of minor minerals. We find that this contention is based upon a fallacy inasmuch as it is founded upon reading the provisions of section 15(1) in isolation and without referenc....
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....e contrary, it established that the Union was exercising the control. One of the contentions raised in that case was that section 15 was unconstitutional as the delegation of legislative power made by it to the rule-making authority was excessive. This contention was, however, not decided by the Court as the appeals in that case were allowed on other points. The rule-making power conferred by section 15 (1) was for regulating the grant of prospecting licences and mining leases and for purposes connected therewith prior to the Amendment Act of 1972 and thereafter is for regulating the grant of quarry leases, mining leases and other mineral concessions in respect of minor minerals and for purposes connected therewith. The phraseology of section 15(1) is the same as that of section 13(1) which confers rule-making power upon the Central Government with this difference that by the Amendment Act of 1972 the expression "quarry leases, mining leases or other mineral concessions" has been substituted in section 15(1) for the words "prospecting licences and mining leases" while the expression "prospecting licences and mining leases" in section 13(1) remains unc....
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....apply to minor minerals. mus, the word "minerals" wherever used in the 1957 Act would include minor minerals unless minor minerals are expressly excluded or the context otherwise requires. Bearing this in mind, we now turn to examine the nature of the rule-making power conferred upon the State Governments by section 15(1). Although under section 14, section 13 is one of the sections which does not apply to minor minerals, the language of section 13(1) is in pari materia with the language of section 15(1). Each of these provisions confers the power to make rules for "regulating". The Shorter Oxford English Dictionary, Third Edition, defines the word "regulate" as meaning "to control, govern, or direct by rule or regulations; to subject to guidance or restrictions; to adapt to circumstances or surroundings". Thus, the power to regulate by rules given by sections 13(1) and 15(1) is a power to control, govern and direct by rules and grant of prospecting licences and mining leases in respect of minerals other than minor minerals and for purposes connected therewith in the case of section 13(1) and the grant of quarry leases, mining leases and oth....
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....s in force immediately before the commencement of that Act would continue in force until superseded by rules made under sub-section (1) of section 15. Regulating the grant of mining leases in respect of minor minerals and other connected matters was, therefore, not something which was done for the first time by the 1957 Act but followed a well-recognized and accept legislative practice. In fact, even so far as minerals other than minor minerals were concerned, what Parliament did, as pointed out earlier, was to transfer to the 1957 Act certain provisions which had until then been dealt with under the rule-making power of the Central Government in order to restrict the scope of subordinate legislation. To take into account legislative history and practice when considering the validity of a statutory provision or while interpreting a legislative entry is a well-established principle of construction of statutes : see, for instance, State of Bombay v. Narothamdas Jethabhai and Anr. [1951] S.C.R. 51 and State of Madras v. Gannon Dunkerley & Co. (Madras) Ltd. [1959] S.C.R. 379. There is no substance in the contention that no guidelines are provided in the 1957 Act for the exercise of t....
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....on 13, however, does not find place in section 15. In our opinion, this makes no difference. What sub-section (2) of section 13 does is to give illustrations of the matters in respect of which the Central Government can make rules for "regulating the grant of prospecting licences and mining leases in respect of minerals and for purposes connected therewith". The opening clause of sub-section (2) of section 13, namely, "In particular, and without prejudice to the generality of the foregoing power", makes it clear that the topics set out in that sub-section are already included in the general power conferred by sub-section (1) but are being listed to particularize them and to focus attention on them. m e particular matters in respect of which the Central Government can make rules under sub-section (2) of section 13 are, therefore, also matters with respect to which under sub-section(l) of section 15 the State Governments can 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". When section 14 directs that "The provisions of sections 4 to ....
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....te Governments to follow in framing the rules under section 15(1), and in the same way, the State Governments have before them the restrictions and other matters provided for in sections 4 to 12 while framing their own rules under section 15(1). The guidelines for the exercise of the rule-making power under section 15(1) are, thus, to be found in the object for which such power is conferred (namely, "for regulating the grant of quarry leases, mining leases or other mineral concessions in respect of minor minerals and for purposes connected therewith)", the meaning of the word "regulating", the scope of the phrase "for purposes connected therewith," illustrative matters set out in sub-section (2) of section 13, and in the restrictions and other matters contained in sections 4 to 12. The next question to be considered is whether the rule making power of the State Governments under section 15(1) includes a power to charge dead rent and royalty. Before embarking upon a consideration of this question, it will be useful to know the meaning of the expression "dead rent" and "royalty" and their connotation. Wharton's "Law Lexicon....
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....ade to an author or composer by an assignee, licensee or copyright holder in respect of each copy of his work which is sold, or to an inventor in respect of each article sold under the patent. Royalty is share of product or profit reserved by owner for permitting another to use the property. In its broadest aspect, it is share of profit reserved by owner for permitting another the use of property.... In mining and oil operations, a share of the product or profit paid to the owner of the property..... In H.R.S. Murthy v. Collector of Chittor and Anr.., [1964] 6 S.C.R. 666, 673 this Court said that "royalty" normally connotes the payment made for the materials or minerals won from the land. In Halsbury's "Laws of England", Fourth Edition in the volume which deals with "Mines, Minerals and Quarries", namely, volume 31, it is stated in paragraph 224 as follows: "224. Rents and royalties. An agreement for a lease usually contains stipulations as to the dead rents and other rents and royalties to be reserved by, and the covenants and provisions to be inserted in, the lease..... " The topics of dead rent and royalties are dealt with in Hals....
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.... transferor is called the lessor, the transferee is called the lessee, the price is called the premium, and the money, share, service or other thing to be so rendered is called the rent." In a mining lease the consideration usually moving from the lessee to the lessor is the rent for the area leased (often called surface rent), dead rent and royalty. Since the mining lease confers upon the lessee the right not merely to enjoy the property as under an ordinary lease but also to extract minerals from the land and to appropriate them for his own use or benefit, in addition to the usual rent for the area demised, the lessee is required to pay a certain amount in respect of the minerals extracted proportionate to the quantity so extracted. Such payment is called "royalty". It may, however, be that the mine is not worked properly so as not to yield enough return to the lessor in the shape of royalty. In order to ensure for the lessor a regular income, whether the mine is worked or not, a fixed amount is provided to be paid to him by the lessee. This is called "dead rent". "Dead rent" is calculated on the basis of the area leased while royalty is calcu....
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....erred upon the Central Government the power to make rules "for the conservation and development of minerals". Both section 5 and 6 contained a sub-section (2) which set out the different matters in respect of which the Central Government could make rules and both these sub- sections opened with the clause "In particular, and without prejudice to the generality of the foregoing power". As seen earlier, the particular matters so set out were illustrative of the general power conferred by the earlier sub-sections. Under clause (d) of section 5(2), the rules to be made by the Central Government could provide for "the fixing of the maximum and minimum rent payable by a lessee, whether the mine is worked or not." This clause thus provided for a dead rent. Under clause (i) of section 6(2), the rules to be made by the Central Government could provide for "the levy and collection of royalties, fees or taxes in respect of minerals mined, quarried, excavated or collected". Rule 41 of the Mineral concession Rules, 1949, made by the Central Government in exercise of the powers conferred by section 5 of the 1948 Act prescribed the conditions which were to ....
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....se (i) of section 13(2) the rules to be made by the Central Government can provide "for the fixing and the collection of dead rent, fines, fees or other charges and the collection of royalties". Although clause (i) of section 13(2) speaks of fixing and collection in the case of dead rent and only collection in the case of royalties, the reason is not that the power to fix royalties was not thought to be comprehended in the general rule-making power of the Central Government under section 13(1). The reason was that a separate provision in that behalf was made by section 9 with respect to mining leases granted both before the commencement of the 1957 Act as also after the commencement of the 1957 Act. Another reason for doing so was to specify the rates for royalties in respect of different minerals other than minor minerals in the Second Schedule to the 1957 Act in order to restrict the scope of subordinate legislation as pointed out in the Statement of Objects and Reasons to the Legislative Bill No. 83 of 1972. As seen earlier, Rule 27 of the Mineral Concession Rules, 1960, provides that every mining lease is to contain a provision requiring the lessee to pay surface rent....
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....I.R. 1969 Pun. & Har. 79 and M/s. Amar Singh Modi Lal v. State of Haryana and Ors., A.I.R. 1972 Punj. & Har. 356 and the Rajasthan High Court in M/s. Brimco Bricks, Bharatpur v. State of Rajasthan and Anr., A.I.R. 1972 Ra;. 145 have all taken this view. These were all cases prior to the Amendment Act of 1972 when sub-section (3) of section 15 was not then on the statute book. After the enactment of the Amendment Act of 1972, the Allahabad High Court in Sheo Varan Singh v. State of U.P., A.I.R. 1980 All 92 has held that the power of the State Governments to Charge royalty and dead rent is to be found only in section 15(1). The Rajasthan High Court in Bal Mukund Arora etc. v. State of Rajasthan and Ors., A.I.R. 1981 Raj. 95 has also taken the same view disagreeing with the view taken by the Andhra Pradesh High Court in M.V. Subba Rao's Case. A proper reading of sub-section (3) of section 15 shows that it does not confer any power upon the State Governments to make rules with respect to royalty. Royalty is payable by the holder of a quarry lease or mining lease or other mineral concession granted under rules made under sub- section (1) of section 15. What sub-section (3) does is ....
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....th a view to prohibit the Central Government from enhancing the rate of dead rent more than once during any period of four years. It is pertinent to note that by the Amendment Act of 1972 section 9 was also amended. While under the original sub-section (1) of section 9 the liability of the holder of a mining leave was only to pay royalty in respect of any mineral removed by him, after the amendment he is made liable to pay royalty in respect of any mineral "removed or consumed by him or by his agent, manager, employee, contractor of sub-lessee". By the Amendment Act of 1972 the power of the Central Government to amend by notification the Second Schedule which specifies the rate of royalty was also curtailed by inserting a proviso to section 9(3) in order to provide that the Central Government shall not enhance the rate of royalty in respect of any mineral more than once during any period of four years. The amendments made by the Amendment Act of 1972 have, therefore, no relevance for ascertaining the scope of the rule-making power of the State Governments under section 15(1). We therefore, hold that the view taken by the Gujarat High Court in Smt. Sonbai's Case and b....
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....oncessions are granted and not with respect to any point of time subsequent thereto and there being no provision similar to sub-section (3) of section 15 with respect to dead rent, any rule providing for increase in the rate of dead rent during the subsistence of a lease would be ultra vires section 15. This submission is devoid of substance. As pointed out earlier, sub-section (3) of section 15 does not confer any power to amend the rules made under section 15(1), for the power to amend the rules is comprehended within the power to make the rules conferred by sub-section (1) of section 15. The construction sought to be placed upon the word "grant" in section 15(1) also cannot be accepted. While granting a lease it is open to the grantor to prescribe conditions which are to be observed during the period of the grant and also to provide for the forefeiture of the lease on breach of any of those conditions. If the grant of a lease were not to prescribe such conditions, the lessee could with impunity commit breaches of the conditions of the lease. Ordinary leases of immovable property at times provide for periodic increases of rent and there is no reason why such increases s....
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....by the Court in State of Tamil Nadu v. Hind Stone Etc., [1981] 2.S.C.R. 742, 751. It was for achieving the object set out above that both the 1948 Act and the 1957 Act were enacted. The long title of the 1957 Act is "An Act to provide for the regulation of mines and the development of minerals under the control of the Union." The 1948 Act contained a preamble which stated "WHEREAS it is expedient in the public interest to provide for the regulation of mines and minerals and for the development of minerals to the extent hereinafter specified". The makers of the Constitution recognized the importance to the nation of the regulation of mines and mineral development and, therefore, enacted Entry 54 of the Union List and Entry 23 of the State List. In the exercise of the power conferred by Entry 54, Parliament has made a declaration in section 2 of the 1957 Act 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". The presumption is that an authority clothed with a statutory power will exercise such power reasonably, and if in the....
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....tral Government is to be laid before Parliament and if not approved, it is to be of no effect. There is no such provision with respect to a rule or notification amending a rule made by a State Government. It was, therefore, submitted that in the absence of any provision for legislative approval with respect to the rules made by the State Governments or a notification amending such rules, it is all the more necessary that an opportunity should be given to the concerned lessees to raise their objections to any proposed enhancement. The argument that the lessees who would be affected by an enhancement in the rate of royalty or dead rent should be heard before making such enhancement is based upon a total misunderstanding of the rule-making process and the power to make rules. The enhancement in the rates of royalty and dead rent is made in the exercise of the power to amend the rules framed under section 15(1). It is thus made in the exercise of statutory power. There is no such principle of law that before such a statutory power is exercised, persons who may be affected thereby should be heard. Whether any opportunity is to be given to persons affected to make representations to the ....
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....elf is erroneous as pointed out above, the submission based upon it must also fall. Under clause (c) of section 3, "mining lease" inter alia means "a lease granted for the purpose of undertaking mining operations". Under clause (d) of section 3, the expression "mining operations" means "any operations undertaken for the purpose of winning any mineral". "Quarry" is define in the Shorter Oxford English Dictionary, Third Edition, as "an excavation from which stone for building, etc. is obtained for cutting, blasting, or the like" and "to quarry" is defined in the same Dictionary as meaning "to obtain (stone, etc.) by the processes employed in a quarry". The Concise Oxford Dictionary, Sixth Edition, defines "to quarry" as "Extract (stone) from quarry". Quarrying minerals is, therefore, a mining operation inasmuch as it consists of an operation undertaken for the purpose of winning particular classes of minerals. Clause (vi) of Rule 2 of the Gujarat Rules defines "quarry lease" as meaning "a kind of mining lease in respect of a minor mineral granted under these rules."....
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....960, by the proviso to clause (c) of Rule 27 under which the lessee is liable to pay the dead rent or royalty in respect of each mineral, whichever be higher in amount, but not both. In all State rules which provide for payment of both dead rent and royalty, there is a provision that only dead rent or royalty, whichever is higher in amount, is to be paid, but not both. Rules made under the 1948 Act, as for example, Rule 41 of the Mineral Concession Rules, 1949, and Rule 18 of the Bombay Mineral Extraction Rules, 1955, also contained a similar provision. Thus, the practice followed throughout in exercising the power to make rules regulating the grant of mining leases has been to provide that either dead rent or royalty, whichever is higher in amount, should be paid by the lessee, but not both. A construction placed upon section 15(1) which leaves the State Governments free to enhance the rate of dead rent as and when they like while the proviso to section 15(3) prohibits them from enhancing the rate of royalty more than once during a period of four years would amount to nullifying the object for which the proviso to section 15(3) was enacted. The same restrictions as contained in ....
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....e once during the period of four years from the coming into force of the rules and after each period of four years expires at any time during each succeeding period of four years. The Gujarat Rules came into force on April 1, 1966. Therefore, in the case of the Gujarat Rules the first period of four years would be 1.4.1966 to 31.3.1970, the second period would be 1.4.1970 to 31.3.1974, the third period would be 1.4.1974 to 31.3.1978, the fourth period would be 1.4.1978 to 31.3.1982, the fifth period would be 1.4.1982 to 31.3.1986 and so on thereafter. Thus, during any of these periods of four years both dead rent and royalty can be enhanced by the Government of Gujarat but only once during each such period. In the light of what we have held above we will now examine the Gujarat Rules and the validity of the impugned amendments thereto. The Gujarat Rules were made by the Government of Gujarat by Notification No. GU 125-MCR 2164/5089 CHH dated March 18, 1966. They extended to the whole of the State of Gujarat and came into force on April 1, 1966. Clause (vi) defines the term "Quarry lease" as meaning "a kind of mining lease in respect of a minor mineral granted under ....
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....spect of other minor minerals they were reduced. Accordingly, Rule 21-A was inserted in the Gujarat Rules providing for remission of any excess amount of royalty collected at the rates specified in the original Schedule I and further providing that where the royalty had not been paid, collected or recovered, it was to be paid, collected or recovered at the rates specified in the substituted Schedule I. Rule 22 contains the general conditions to be included in every quarry lease. The relevant provisions of Rule 22 are as follows : "22. General Conditions of lease. - Every quarry lease shall be subject to the following conditions and such conditions shall be included in every quarry lease :- (i)(a) The lessee shall, during the subsistence of the lease, pay to Government royalty on minor minerals quarried from the leased area at the rates for the time being specified in Schedule I at such times and in such manner as the Government may prescribe. (b) The lessee shall also pay to Government for every year of the lease the yearly dead rent specified in Schedule II and if the lease permits the working of more than one minor mineral in the same area, the Director may fix separate ....
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....deed in every year)." Clause (3) of Part VI of the said Schedule confers upon the State Government the power to enter upon the leased premises and distrain all or any of the mineral or beneficiated processed/dressed products or movable property there and to sell the same or so much as is necessary to recover the rent or royalties due and all costs and expenses in case the royalty or rent or both reserved and made payable by the lessee is not paid within sixty days after the date fixed in the lease for the payment thereof. Under clause (3) of Part IX of the said Schedule, if a lessee or his transferee or assignee commits any breach of any of the conditions specified inter alia in clauses (i), (ii), (iii) and (iv) of Rule 22 of the Gujarat Rules, the competent officer is to give notice in writing to the lessee or his transferee or assignee, as the case may be, asking him to remedy the breach within sixty days from the date of the notice and if the breach is not remedied within such period, to determine the lease. By Notification dated August 25, 1969, clause (12) was inserted in Part IX of the Schedule to Form D. This clause provides as follows : "12. This quarrying lease....
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....chedule I substituted by the 1975 Notification that a proper amendment in the rates of royalty was effected and, therefore, what was operative was the 1975 Notification. We are unable to accept either the above conclusions reached by the Gujarat High Court or the reasoning upon which these conclusions were based. The Explanation to Rule 21 provided that "For the purpose of this rule Schedule I means Schedule I as substituted by the Gujarat Minor Minerals (Third Amendment) Rules, 1966." Thus, the reference to Schedule I in Rule 21 was to Schedule I as substituted by the Notification dated November 25, 1966. That Schedule was, however, again substituted by the 1974 Notification. The effect of such substitution was to repeal the 1966 Schedule I and to substitute it by a new Schedule I. Under section 8(1) of the General Clauses Act, 1897, where the said Act or any Central Act or Regulation made after the commencement of the said Act, repeals and re- enacts, with or without modification, any provision of a former enactment, then references in any other enactment or in any instrument to the provision so repealed are, unless a different intention appears, to be constured as refe....
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.... rates of royalty during the subsistence of a lease but altogether omitted to notice the said clause while dealing with the question whether the 1974 Notification had become operative or not. The High Court also omitted to notice clause 12 of Part IX of the Schedule to Form D under which a quarrying lease is to be "subject to the Gujarat Minor Mineral Rules, 1966, as amended from time to time". We, therefore, hold that the 1974 Notification was valid in law and the amendments made thereby became operative with effect from December 1, 1974. Under the proviso to section 15(3), the State Government had no power to enhance the rate of royalty in respect of any minor mineral more than once during any period of four years. The enhancement in the rates of royalty by the 1974 Notification was in the third period of four years reckoned from the date of coming into force of the Gujarat Rules, namely, from April 1, 1966. This third period was from April 1, 1974, to March 31, 1978. The rates of royalty having been enhanced once by the 1974 Notification, they could not be enhanced again during this period and could only be enhanced during the subsequent period which commenced from Ap....
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.... 1979 Notification the Government of Gujarat made the Gujarat Minor Minerals (Amendment) Rules, 1979, which came into force with effect from April 1, 1979. The 1979 Notification inserted a new rule in the Gujarat Rules, namely, Rule 21-B. The said Rule 21-B is as follows : "21-B. Rate of dead rent. - The holder of a mining lease of any other mineral concession granted under these rules shall pay yearly dead rent in respect of minor minerals specified in column I, for the areas mentioned in column 2, at the rates respectively specified against them in column 3 of Schedule II". It further substituted in sub-clause (b) of clause (i) of Rule 22 the words "as may be specified from time to time" for the word "specified". It further substituted in clause (2) of Part V of the Schedule to Form D appended to the Gujarat Rules the words "at the rate as may be specified from time to time" for the words "at the rate mentioned". It also substituted Schedule I to the Gujarat Rules so as to reduce the rate of royalty on all minor minerals to ten paisa per metric tonne. It also substituted Schedule II so as to enhance the rates of dead rent. In S....
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....e than once during any period of four years. As a consequence of the judgment of the Gujarat High Court in Smt. Sonbai's case the Government of Gujarat issued the impugned Circular dated February 12, 1981. In the said Circular it was stated that as the 1979 Notification had been declared ultra vires by the High Court, the Government was advised that royalty could be charged from April 1, 1979, at the rates which were in force on the eve of the publication of the 1979 Notification. By the said Circular instructions were issued to all Collectors, District Development Officers and the Director, Geology and Mining, Ahmedabad, to collect royalty on minor minerals quarried from April 1, 1979, on this basis and in making such recovery to adjust the amounts paid by the holder of the lease by way of dead rent. Accordingly, royalty was demanded and collected from the lessees on the basis of the rates specified in the 1975 Notification, the validity of which had been upheld by the Gujarat High Court. The validity of the said Circular and the directions given thereunder have been challenged on the ground that the Gujarat High Court had merely held that the State Government had no power t....
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....on of the repealed provision had taken place, only the repeal survived with the result that neither the old Explanation II nor the substituted Explanation II was in operation. This contention was rejected by this Court. This Court held (at pages 1009- 1010) : "We do not think that the word `substitution' necessarily or always cannotes two severable steps, that is to say, one of repeal and another of a fresh enactment even if it implies two steps. Indeed, the natural meaning of the word 'substitution' is to indicate that the process cannot be split up into two pieces like this. If the process described as 'substitution' fails, it is totally ineffective so as to leave intact what was sought to be displaced. That seems to us to be the ordinary and natural meaning of the words 'shall be substituted'. This part could not become effective without the assent of the Governor General. The State Governor's assent was insufficient. It could not be inferred that, what was intended was that, in case the substitution failed or proved ineffective, some repeal, not mentioned at all, was brought about and remained effective so as to create what may be described....
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....re, invalid. As a further consequence of the judgment of the Gujarat High Court in Smt. Sonbai's case the Government of Gujarat made the Gujarat Minor Mineral (Amendment) Rules, 1981, by issuing the 1981 Notification. The Gujarat Minor Mineral (Amendment) Rules, 1981, came into force on June 20, 1981. As a result of the amendments made by the 1981 Notification, Schedule I was substituted and Schedule II deleted. Thus, with effect from June 20, 1981, only royalty became payable and not dead rent. It was contended that the rates of royalty specified in the 1981 Notification were so excessive and arbitrary as to be totally unreasonable and, therefore, the 1981 Notification violated Article 19(1)(g) of the Constitution because it placed unreasonable restrictions on the Fundamental Right of the holders of quarry leases to carry on their trade and business. We find no substance in this contention. It is true that by the 1981 Notification the rates of royalty have been enhanced manifold. During the particular period of your years, namely, the fourth period commencing on April, 1, 1978, and ending on March 31, 1982, the rates of royalty had not been enhanced but drastically reduced b....
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....with; the meaning of the word 'regulating'; the scope of the phrase "for purposes connected therewith"; the illustrative matters set out in sub-section (2) of section 13; and the restrictions and other matters contained in sections 4 to 12 of the 1957 Act. (3) The power to make rules conferred by section 15(1) includes the power to make rules charging dead rent and royalty. (4) The power to make rules under section 15(1) includes the power to amend the rules so made, including the power to amend the rules so as to enhance the rates of royalty and dead rent. (5) A State Government is entitled to amend the rules under section 15(1) enhancing the rates of royalty and dead rent even as regards leases subsisting at the date of such amendment. (6) Sub-section (3) of section 15 does not confer upon the State Governments the power to make rules charging royalty or to enhance the rate of royalty so charged from time to time. (7) The sole repository of the power of the State Governments to make rules and amendments thereto, including amendments enhancing the rates of royalty and dead rent, is sub-section (1) of section 15. (8) A State Government is not required to giv....
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...., 1979, whereby the Government of Gujarat made the Gujarat Minor Minerals (Amendment) Rules, 1979, was valid and was not ultra vires either section 15 or Article 19(1)(g) of the Constitution. (20) The case of Smt. Sonbai Pathalji v. State of Gujarat & Anr., was wrongly decided by the Gujarat High Court and the judgment in that case is hereby reversed. (21) The case of M.V. Subba Rao v. State of Andhra Pradesh & Anr., was wrongly decided by the Andhra Pradesh High Court and that decision is hereby overruled. (22) The rates of royalty and dead rent specified by the Notification dated November 29, 1974, namely, the Gujarat Minor Mineral (Fourth Amendment) Rules, 1974, continued to be operative and in force until the coming into force of the Notification dated March 26, 1979, on April 1, 1979. (23) The directions contained in the Circular No. M.C.R. 2180(166) CHH dated February 12, 1981, issued by the Government of Gujarat were invalid and inoperative. (24) Notification No. GU-81/75/MCR-2181/(168)-4536-CHH dated June 18, 1981, whereby the Government of Gujarat made the Gujarat Minor Mineral (Amendment) Rule, 1981, is valid and constitutional and does not offend Article 19(1)(g) of....
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...., the writ petitions filed by the Appellants in these Appeals challenging the validity of the directions contained in the Circular No. M.C.R.2180(166) CHH dated February 12, 1981, and for an order restraining the State of Gujarat and its officers from acting upon the said Circular and the Notification dated October 29, 1975, and directing the State of Gujarat to implement the Notification dated March 26, 1979. We accordingly allow both these appeals, reverse the judgment of the Gujarat High Court in Smt. Sonbai Pathalji v. State of Gujarat & Anr., set aside the orders of the learned Single Judge appealed against, restrain the State of Gujarat and its officers from acting upon the directions contained in the said Circular dated February 12, 1981, and direct the State of Gujarat to collect royalty and dead rent in accordance with the Notification dated March 26, 1979, for the period commencing on April 1, 1979 and ending on June 19, 1981. Writ Petitions Nos. 1656, 2108, 4097 and 7697 of 1981, 762, 874 to 942, 946 to 968, 1616 and 1617, 4455 to 4473, to 4484, 5589 to 5605, 5895 to 5969, 5971 to 6005, 6309, 6463 to 6479 and 10104 to 10122 of 1982 and 3993 to 4003, 8813 to 8820 and 953....