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2019 (3) TMI 1743
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.... filed by ten petitioners (respondents in the second appeal). They are in the business of processing ordinary river sand after buying it from leaseholders. The process involves washing, cleaning and mixing fly ash to convert it into IS-Zone-2-Sand, which is then sold in 50 kg. Bags under a brand name. These respondents supply that sand to builders in the State of Maharashtra. 2) As is clear from the aforesaid facts, sand, after processing, is sold outside the State of Gujarat. The challenge laid in the writ petitions was against the Resolution No. GMR-102010-1-S-CHH dated May 04, 2010 whereby all leaseholders, stockists, traders and exporters were prohibited from exporting ordinary sand excavated from the areas in the State of Gujarat to other States within the country or other countries by transporting such sand outside the State or the country. When these writ petitions were pending consideration, the Government of Gujarat issued a Notification on June 11, 2010 thereby amending the Gujarat Minor Mineral Rules, 1966 by making the Gujarat Minor Mineral (Amendment) Rules, 2010 with the insertion of Rule 44-BB, with immediate effect. This amendment was done in purported exercise of ....
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....ugned judgment, the Gujarat High Court has, however, differed with the Andhra Pradesh and Madras High Courts. Having regard to the conflicting opinion of the High Courts, leave was granted in this matter. This is how the instant appeals came to be heard finally by this Court. 5) Before proceeding further, we would like to recapitulate, in broad, the scheme of the MMDR Act insofar as it relates to regulating minor minerals are concerned and the powers that are delegated by the Central Government to the State Governments in respect of minor minerals. In this very hue, we also propose to take note of the relevant provisions of the MMDR Act. 6) The MMDR Act is enacted by Parliament to provide for the regulation of mines and development of minerals under the control of the Union, i.e. the Central Government. Section 2 provides a declaration to this effect with the stipulation that it is expedient in the public interest that Union should take under its control, the regulation of mines and development of minerals, to the extent provided in the Act. It is for this reason the Union took control insofar as regulation of mines and development of minerals is concerned. In order to exercise t....
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....ng to grant and renewal of prospecting licences and mining leases and other related approvals and to suggest measures to reduce delay in this regard, review of the existing laws and procedures governing the regulation and development of minerals to make them more compatible with the changed policies and measures for prevention of illegal mining. The Committee in his report made wideranging recommendations in the area of delegation of powers to the State Governments, procedural simplifications, etc. which will go a long way to mitigate the problems faced by the States and the prospective investors while, at the same time, keeping the interests of the mining industry in particular and the national interest, in general, in tact. After careful consideration of the recommendations of the Committee, the Government has decided to amend the Mines and Minerals (Regulation and Development) Act, 1946. 2. Some of the more important amendments to be made are as follows: xx xx xx (iii) A new provision is proposed to be inserted in the Act prohibiting transportation or storage or anything causing transportation or storage of any mineral except under the due provisions of the Act, with a view....
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.... Section 23-C of the MMDR Act. Further, as Section 14 categorically states that provisions of Section 5 to 13 are not applicable in respect of minor minerals, rule making power of the Central Government contained in Section 13 does not extend to minor minerals. It is in this context Section 15 gives power to the State Government to make rules in respect of minor minerals. The State Government, thus, is given power under Section 15. It is also given power under Section 23-C. 11) A perusal of Sections 15 and 23-C in relation to the aforesaid discussion would clearly suggest that the power of the State Government to make rules is restricted to: (a) making rules for grant of quarry leases, mining leases orother mineral concessions in respect of minor minerals and for the purposes connected therewith; and (b) making rules for preventing illegal mining, transportation andstorage of minerals and for the purposes connected therewith. 12) In the aforesaid context, question arose before the High Court as to whether in exercise of such powers delegated by the Legislature upon the State Government, could the State Government make a rule to the effect that the sand which is a minor ....
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....rnment has admittedly made the Gujarat Mineral (Prevention of Illegal Mining, Transportation and Storage) Rules, 2005 in exercise of the powers conferred by section 23-C of the Act for regulating transport, possession and storage of minerals in the State; and those rules are not under challenge. Although it is not significant, in light of the view being taken herein about validity of the impugned rules, it needs to be noted that the part of new Rule 71 taking away the facility of compounding is apparently repugnant to section 23-A of the Act. And, if validity of the impugned rules cannot be upheld, the impugned resolution cannot stand without the support of any legal, executive or legislative authority." 13) We may also, at this stage, refer to the reasoning given by the High Courts of Andhra Pradesh and Madras in support of their view, which is in conflict with the view taken by the Gujarat High Court. The judgment of the Andhra Pradesh High Court proceeds to decide the issue in the following manner: "27. Sector 23-C of the Act authorises the State Government to make rules not only for the purpose of preventing illegal mining but also for transportation and storage of minor min....
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....nd Stone), the Hon'ble Supreme Court has held as follows: "10. One of the arguments pressed before us was that Section 15 of the Mines and Minerals (Regulation and Development) Act authorised the making of rules for regulating the grant of mining leases and not for prohibiting them as Rule 8-C sought to do, and, therefore, Rule 8-C was ultra vires Section 15. Well-known cases on the subject right from Municipal Corporation of the City of Toronto v. Virgo and Attorney-General for Ontario v. AttorneyGeneral for the Dominions up to State of U.P. v. Hindustan Aluminium Corporation Ltd. were brought to our attention. We do not think that "regulation" has that rigidity of meaning as never to take in "prohibition". Much depends on the context in which the expression is used in the statute and the object sought to be achieved by the contemplated regulation. It was observed by Mathew, J. in G.K. Krishnan v. State of Tamil Nadu : "The word 'regulation' has no fixed connotation. Its meaning differs according to the nature of the thing to which it is applied." In modern statutes concerned as they are with economic and social activities, "regulation" must, of necessity, receive so wide an int....
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....de the State in view of the overwhelming public interest. Therefore, we are of the opinion that the definition of the word 'regulation' is wide enough to cover the prohibition and movement of minerals outside the State. xx xx xx 16. Environmental Perspective The said rule has been introduced in view of the attempt made by the dealers of sand and contractors of building to transport the sand purchased from the Government outside the State. According to the Government, the said rule has been made in public interest and also taking into consideration of the hardship that caused to the consumers in the State of Tamil Nadu as well as the high rate of urbanisation in the State. In the counter affidavit, it is also stated by the Government that illegal, unaccounted sand is also transported outside the State. It is well known that sand in the present form has already undergone various changes over thousands of years. As found by the Expert Committee, due to over exploitation and indiscriminate mining of river sand, the environment and the eco-system got very much affected. The Expert Committee has also found out that the indiscriminate mining has resulted in deepening of the river bed....
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....nd continues to control activities even post grant. (iii) In respect of minor minerals, Parliament has not retained any control under the Act. Historically as well as under the 1957 Act, complete control over minor minerals has been delegated by Parliament to the State Government since these minerals have always been viewed as being important for local development. 17) To support the above plea, he invited the attention of this Court to the judgment in D.K. Trivedi & Sons and Others v. State of Gujarat and Others 1986 Supp SCC 20 wherein this Court considered the power of the State Governments to make rules under the said Section 15 to enable them to charge dead rent and royalty in respect of leases of minor minerals granted by them and to enhance the rates of dead rent and royalty during the subsistence of such leases - a power exercised by the State to govern conditions subsequent to the grant of the lease. After tracing the legislative history in respect of minor minerals, it was observed that by virtue of the Act the whole of the field was taken over by Parliament and thereafter all powers in respect of minor minerals had been delegated to the State Governments. The Court al....
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....xx xx xx 23...One of the ways in which such regulation or control over the production, supply and distribution of, and trade and commerce in, an essential commodity like foodstuffs may be exercised is by placing a ban on inter-State or intra-State movement of foodstuffs to ensure that the excess stock of foodstuffs held by a wholesale dealer, commission agent or retailer is not transported to places outside the State or from one district to another with a view to maximise the procurement of such foodstuffs from the growers in the surplus area for their equitable distribution at fair prices in the deficit areas. The placing of such ban on export of foodstuffs across the State or from one part of the State to another with a view to prevent outflow of foodstuffs from a State which is a surplus State prevents the spiral rise in prices of such foodstuffs by artificial creation of shortage by unscrupulous traders...These are nothing but regulatory measures." 20) Mr. Kapur further submitted that the above observations and the expansive interpretation given to the power of regulation in both the aforesaid cases have been approved by a Constitution Bench of this Court in U.P. Cooperative....
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....nt and flow of such minerals as well. He also took support from the following observations in Monnet Ispat and Energy Limited v. Union of India and Others (2012) 11 SCC 1: "86...The judgment of this Court in Amritlal Nathubhai Shah establishes the distinction between the power of reservation to exploit a mineral as its own property on the one hand and the regulation of mines and minerals development under the 1957 Act and the 1960 Rules on the other. The authority of the State Government to make reservation of a particular mining area within its territory for its own use is the offspring of ownership; and it is inseparable therefrom unless denied to it expressly by an appropriate law by the 1957 Act that has not been done by Parliament. Setting aside by a State of land owned by it for its exclusive use and under its dominance and control, in my view, is an incident of sovereignty and ownership." 23) in any case, argued Mr. Kapur, power to frame the impugned rule is conferred by Section 23-C of the MMDR Act as well. According to him, it would be erroneous to contend that the word 'illegal' occurring in Section 23-C (1) must qualify the words'transportation and storage' as well. I....
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....deralism. 26) Having regard to the fact that it is the Union which can regulate and control the minerals in this country and States exercise power of minor minerals as delegates of the Union, this Court had deemed it fit to issue notice of these proceedings to Union of India as well in order to elicit its stand on this issue. The Union of India has filed its reply, taking a specific stand that there is no such power to frame rule like 44-BB of the 1966 Rules or Rule 71 of the 2010 Rules. Ms. Madhavi Divan, learned Additional Solicitor General, appeared for Union of India and pitched the case to even a higher level. Her argument was that there is no such power even with the Union of India to frame rules of the nature impugned in these proceedings as these would be offensive of Article 301 of the Constitution. Therefore, under no circumstances, such a power can vest with the State Government. She argued that Section 15 which empowers the State Government to make rules in respect of minor minerals does not extend to the regulation of already excavated minor minerals under the terms and conditions of a mining lease. This is made clear by the three Judge Bench in M.P.P. Kavery Chetty w....
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....ons of this Court in D.K. Trivedi & Sons were in the context of enhancement of dead rent which is collected as a fixed amount in consideration for the grant of the lease by the lessor apart from royalty and is incidental to the regulation and development of mines and minerals which is avowed object of the MMDR Act as stated in its Preamble. But, in the present case, what is sought is a blanket prohibition of the sale of minor minerals beyond the borders of the State of Gujarat. She argued that on the other hand, both M.P.P. Kavery Chetty and K.T. Varghese were matters wherein what was sought to be controlled post grant of lease was the sale of the excavated minerals. Such restrictions were found to be beyond the powers granted to the State as a delegate of Parliament and were accordingly struck down. 28) The learned Additional Solicitor General also rebutted the argument of the appellants that power to regulate would encompass power to restrict the movement beyond the State. She argued that while it is well settled that the expression 'regulation' has many shades of meaning and can refer to prohibition (Sudhir Ranjan Nath and Hind Stone), the issue in the present case is whether a....
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....e country is equally vital facet of economic integration, stressed the learned Additional Solicitor General. She referred to various judgments of this Court on the aforesaid aspects and concluded her submissions with the submission that the conclusion of the High Court in the impugned judgment was correct on this aspect as well. 32) Mr. D.N. Ray, Advocate, appeared on behalf of the private respondents and made his submissions almost on the same lines as argued by the learned Additional Solicitor General. Therefore, it is not necessary to repeat the same. 33) We have give our due consideration to the arguments advanced by the counsel for the parties on both sides. 34) From the subject matter of these appeals as well as arguments noted above, it clearly follows that the main issues that arise for consideration are as under: (a) Whether the impugned rules framed by the State of Gujarat as a delegate of Parliament are beyond the powers granted to it under the MMDR Act? In other words, whether the impugned rules are ultra vires Sections 15, 15A and 23-C of the MMDR Act? (b) Whether the impugned rules are violative of Part XIII of the Constitution of India? 35) The appellants ha....
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....rs the State Government to make rules for regulating 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 an 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 be 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 are 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 or....
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....he minerals only within the State of Kerala, that too for domestic and agricultural purposes. The appellants' complaint is that as far as cooperative societies are concerned, they are not saddled with any such restrictions imposed in the case of the appellants. Thus, according to the appellants, there is a clear discrimination between the cooperative societies and the individuals in the matter of restrictions imposed in the licences granted to them. Apart from that there is no legal sanction for such restrictions." 38) Argument of Mr. Kapur that M.P.P. Kavery Chetty did not consider the earlier judgment in D.K. Trivedi & Sons is misplaced. In this behalf, we entirely agree with the learned Additional Solicitor General that judgment in D.K. Trivedi & Sons and other judgments cited by Mr. Kapur are clearly distinguishable as the context and the subject matters in those cases were entirely different. It is not necessary to point out the differences in two sets of cases, as we entirely agree with the argument of Ms. Divan in drawing the distinction between the two and pointing out that there is no conflict whatsoever. She is right that the two sets of cases can be read harmoniousl....
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....osed to insert a new provision to provide for anything seized under the Act as liable for confiscation under court orders. A new section is proposed to be inserted to empower the State Governments to make rules for preventing illegal mining, transportation and storage of minerals and for purposes connected therewith. (emphasis supplied)" 42) It is in this context the words 'transportation' and 'storage' in Section 23-C are to be interpreted. Here the two words are used in the context of 'illegal mining'. It is clear that it is the transportation and storage of illegal mining and not the mining of minor minerals like sand which is legal and backed by duly granted license, which can be regulated under this provision. Therefore, no power flows from this provision to make rule for regulating transportation of the legally excavated minerals. 43) As far as Issue No. (b) above is concerned, we are also of the considered opinion that the impugned rules violate Part XIII of the Constitution as the effect thereof is to fetter the freedom of trade, commerce and intercourse under Article 301 of the Constitution. Under this Article, the expression 'freedom' must be read with the expression '....
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....he situation, in a growing and evolving society, economically, politically and socially. The meaning of the expressions used there must, therefore, be so interpreted that it attempts to solve the present problem of distribution of power and rights of the different States in the Union of India, and anticipate the future contingencies that might arise in a developing organism. Constitution must be able to comprehend the present at the relevant time and anticipate the future which is natural and necessary corollary for a growing and living organism. That must be part of the constitutional adjudication. Hence, the economic development of States to bring these into equality with all other States and thereby develop the economic unity of India is one of the major commitments or goals of the constitutional aspirations of this land. For working of an orderly society economic equality of all the States is as much vital as economic unity." Freedom of movement of goods, services and the creation of a common market must be understood contextually and as necessary for creating an economic union. 45) It is also rightly contended by all the respondents that balanced development of the country i....