CASE NO.: Appeal (civil) 5089 of 1997 Appeal (civil) 5090 of 1997 Appeal (civil) 5091 of 1997 Appeal (civil) 5092 of 1997 PETITIONER: THE QUARRY OWNERS ASSOCIATION Vs. RESPONDENT: THE STATE OF BIHAR & ORS. DATE OF JUDGMENT: 29/08/2000 BENCH: A.P.Misra, N.S.Hegde JUDGMENT:
L…..I………T…….T…….T…….T…….T…….T..J
MISRA, J.
The issues in these appeals, apparently impress a
common picturisation of usual nature but they are raised in
an interesting way while challenging the fixation of the
rate of royalty for the minor minerals under Section 15 of
the Mines and Minerals (Regulation and Development) Act,
1957 (hereinafter referred to as the Act). The question
for consideration is, the ambit of delegation of power by
the Parliament to the State Government under Section 15 of
the said Act. Can it be said that the delegation is
unbridled without any check if it travels beyond the
guideline as spelt by this Court in the case of D.K.
Trivedi & Sons and Ors. Vs. State of Gujarat and Ors.
1986 (Supp.) SCC 20? In the present case neither the
validity of delegation under Section 15 nor it being without
any guideline is under challenge but both appellants and the
respondents State stress two different orbits for the
guideline, the appellants constrict it to be within what is
spelt in the D.K. Trivedi case (supra) while the respondent
stresses it not to be confined to that case. The impugned
notifications dated 17th August, 1991 and 28th September,
1994 issued by the State of Bihar enhancing the rate of
royalty have to be tested as in which of the two orbits it
falls. If it falls within the restricted orbit, as
submitted by the appellants, it may be ultra vires but would
be valid if it falls within the other orbit. Mr. F.S.
Nariman, learned senior counsel, submits that extents and
limitations of the power of the delegatee have to be read as
laid down by this Court in D.K. Trivedi case (supra), where
the validity of this very delegation of power to the State
Government was under challenge. Based on this the
submission is, Item 54 of the Second Schedule of the Act
controls and guides the State Government (hereinafter
referred to as the State), for fixing or enhancing the
rate of royalty which has to be within the reasonable bounds
of 12% of the sale price at the pits mouth. Admittedly in
the present case it is far beyond this, hence the submission
is that the impugned notifications are liable to be struck
down. On the other hand, submission for the respondents –
the State of Bihar by learned senior counsel Mr. Rakesh
Dwivedi is that D.K. Trivedis case (Supra) neither
restricts nor limits the power of enhancement of royalty to
Item 54, Schedule II of the Act nor it exhaustively dealt
with all other sources of guidelines which was not necessary
in that case, which can be gathered from other provisions of
the Act, the objects and reasons, the scheme of the Act and
the nature of material etc..
Before entering into this legal tangle, it is
necessary to turn to some of the essential facts to
appreciate more fully the controversies. The present appeal
is directed against the judgment and order dated 16th
October, 1996 of the High Court, passed in a writ petition
by which the petition of the appellants, namely, Quarry
Owners Association challenging the aforesaid notifications
dated 17th August, 1991 and 28th September, 1994, issued by
the State including challenge to the recovery of the
enhanced royalty under it and for the refund of the amount
already paid was dismissed.
The Preamble of the Act lays down:
An Act to provide for the development and regulation
of mines and minerals under the control of the Union.
Section 2 declares the expediency of Union to control
the regulation of mines and development of minerals
Section 3(a) defines minerals which includes all minerals
except mineral oils. Section 3(e) defines minor minerals.
Section 4 refers to the prospecting or mining operations to
be undertaken only under a licence or lease. Section 4A is
for termination of prospecting licences or mining leases,
sub-section (1) is for premature termination other than
minor minerals while sub-section (2) is for minor minerals.
Section 5 imposes restrictions on the grant of such licences
or leases. Section 6 specifies the maximum area for which a
licence and lease may be granted, while Section 7 gives
period for the grant and renewal of such prospective
licences. Section 8 deals with the periods for mining
leases. Sub-sections (1) and (2) of Section 9 refer to the
payment of royalty at the rate specified in the Second
Schedule whether granted before coming into force of this
Act or subsequently. Sub-section (3), empowers the Central
Government to amend the Second Schedule so as to enhance or
reduce the rate of royalty payable. Section 9A obliges
lessee to pay the dead rent. Sections 10 to 12 deal with
the procedure for obtaining prospective licence, or mining
leases in respect of the land in which minerals vest in the
Government. Section 13 empowers the Central Government to
make rules in respect of minerals. Section 14 specifically
excludes Sections 5 to 13 from application of quarrying
leases, mining leases or other minerals concessions in
respect of minor minerals. Section 15 empowers the State to
make rules in respect of minor minerals. Section 16
entrusts power to modify mining leases granted before 25th
October, 1949. Section 17 gives special power to the
Central Government to undertake prospecting or mining
operations in certain lands. Section 18 refers to the
mineral development. Licences and mining leases under the
Act to be void under Section 19 if made in contravention of
the Act, while Section 20 makes the Act and Rules to apply
to all renewals. Section 21 imposes penalties. Section 22
refers to the cognizance of offences. Section 23-C empowers
the State to make rules for preventing illegal mining,
transportation and storage of minerals. Section 26 entrusts
both Central and the State to delegate its power under the
Act on officer or authority of the Central or State.
Sub-section (1) of Section 28 puts an obligation on the
Central Government to place its rules and notifications
before the Parliament which is subject to its modifications,
if any. Similarly, the State is obliged to place its Rules
and notifications before each houses of State Legislature
under sub-Section (3). Section 29 makes existing rules to
continue so long they are not in consistent with the Act and
Rules. Section 30 empowers the Central Government to revise
any order made by the State or any other authority. The
First Schedule refers to the specified minerals, viz., Hydro
carbons/energy minerals Atomic minerals and Metallic and
non-metallic minerals with reference to Sections 4(3), 5(1),
7(2) and 8(2) while the Second Schedule refer to the rate of
royalty in all States and Union Territories except the
States of Assam and West Bengal while the Third Schedule
refers to the rate of Dead Rent. Thus, the aforesaid Act
expressly lays down the rates of royalty of the minerals
through Schedule II read with Section 9. It is significant
that Section 14 excludes Sections 5 to 13 specifically for
minor minerals which includes Section 9. Section 15,
entrusts power on the State to lay down Rules in respect of
the minor minerals. Original Section 15 as it stood at the
time of D.K. Trivedi (Supra), is quoted hereunder:
Section 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 minerals 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 minerals for
more than once during any period of four years.
This delegation of power to the State withstood its
challenge in D.K. Trivedi case (Supra), as aforesaid.
Later this section was amended on 10th February, 1987, by
introducing sub-section 1-A through Act No.37 of 1986. This
was in particular and without prejudice to the generality of
power conferred by sub-section 1 of Section 15. This
sub-section 1-A is quoted hereunder:-
(1-A): In particular and without prejudice to the
generality of the foregoing power, such rules may provide
for all or any of the following matters, namely:-
(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
therefor;
(b) the time within which, and the form in which,
acknowledgement of the receipt of any such applications may
be sent;
(c) the matters 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 on 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 of 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 introduction of this sub-section 1-A including the
Objects and Reasons, is submitted further enlarges the area
of the guidelines to the State. Its Objects and Reasons are
also quoted hereunder:-
Statement of Objects and Reasons: 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 force. The
adverse effects 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
bottle-necks 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 suggestions 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 pre-condition for the grant of a 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.
It is also relevant to record here the rate of royalty
fixed by the State for the minor minerals through various
notifications in various years. Initially on 1st April,
1975 the rate of royalty fixed was Rs.2.50 per cubic meter
that is Rs.7.07 per 100 cubic ft., Rs.1.75 per cubic meter
that is Rs.4.95 for 100 cubic ft for Ballast and Boulder.
Next on 3rd August, 1977 the rate of stone chips, Ballast
and Boulder was increased to Rs.3/- per cubic meter that is
Rs.8.49 per 100 cubic ft and from 17th August, 1991
(impugned) the rate of royalty of stone chips, Ballast and
Boulder was increased to Rs.12/- per cubic meter that is
Rs.33.96 per 100 cubic ft. By notification dated 28th
November, 1994 (impugned) the rate of royalty was Rs.25/-
per cubic meter or Rs.70.75 per 100 cubic ft. for Ballast,
Boulder and stone chips, which according to the appellants
is more than 15 times as originally provided and more than 5
times in excess of the maximum rate of 12% of sale price at
pits mouth under Entry 54 of Schedule II. It is also not
in dispute by the aforesaid Act, under Item 54 of List I,
VII Schedule of the Constitution of India, the regulation of
mines and mineral development both of major and minor
minerals came under the control of the Union, including
fixation of the rate of royalty. The challenge to the
aforesaid two notifications are that the State trespassed
the limit of the guideline as laid and spelt out in D.K.
Trivedis case (Supra). Further, if that guideline has not
to be, then there is no other check and control or guideline
of the Union over the State Government. In contrast there
is check over the other delegatee, viz., Central Government
where under Section 28(1) rules or notifications by it
including enhancement of royalty is to be laid before the
Parliament. The High Court repealed the contention of the
appellants by holding:
No doubt when the decision in the case of D.K.
Trivedi and sons (Supra) was given there were no specific
guidelines in Section 15 of the Act. However..Amendment
Act 1986 (Act No.37 of 1986) which came into force on 10th
February, 1987, guidelines have been provided in Section 15
itself.clause (g) of sub-section 1-A provided that the
rules may be framed by the State Government for fixing and
collecting rent, royalty, fees etcThe guidelines provided
for framing Rules in respect of minerals other than minor
minerals do not remain relevant after insertion of
sub-section 1-A in Section 15 of the Act.
However, submission for the appellants is sub-section
1-A only empowers the State Government but does not lay down
any guideline, hence it cannot shield the State to be
providing with any guideline, for which State has only to
fall under Item 54 of Schedule II of the Act, which
records:-
Item 54: All other materials not herein before
specified = Twelve per cent of sale price at the pits
mouth.
The submission is, this is residuary item which cover
all other minerals not specified in any of the preceding
items in Schedule II. The minor minerals not being
specified in any of the items it would fall under this
entry.
It is also significant to record that minor minerals
are used in the local areas for local purposes while major
minerals are used for the industrial development for the
National purpose. The crux of the matter for consideration
is, whether is it only Sections 4 to 12 which controls or
guides the State in fixing the royalty for the minor mineral
and, if it is, whether Entry 54 of Schedule II places any
ceiling of 12% of the sale price at the pits mouth for
fixing this royalty by the State? In other words, does D.K.
Trivedi case (Supra) fore closes the issue of guideline or
is it open to travel to other fields which guides the State
for fixing the royalty.
The appellants are an association of quarry owners.
They were given permit/lease for the extraction of stone in
respect of their respective places of operation in pursuance
to such permit/lease. The State Government in exercise of
its power under Section 15 of the aforesaid Act made rules
called Bihar Minor Mineral Concession Rules 1972,
(hereinafter referred to as the Rules) and fixed the
royalties from time to time. Submission for the appellants
is since rate of royalty on building stone including stone
chips , Bolder, Road medal and ballast has been increased to
more than 100% , the appellants are unable to pay, hence
challenge this enhancement.
Mr. F.S. Nariman, learned senior counsel for the
appellants submits, in order to judge the validity regarding
excessive delegation one has to identify the power which is
sought to be delegated. The power delegated to the State
Government under Section 15 of the Act is the power to fix
and collect royalty. It cannot be disputed that royalty is
a tax. The question is, are there any guideline to vary the
rate of royalty apart from D.K. Trivedis case (Supra).
The submission is, this decision settles the guideline by
placing the restrictions on State power through Section 9
read with Item No.54 of the Second Schedule of the Act. The
introduction of sub-section 1A in Section 15 of the Act
makes no difference, as it is only an amplification and
illustration of Section 15(1). Further, sub-clause (g) of
Section 15(1A) only clothes the State with power to change
the rate of royalty but it cannot be construed as giving any
guideline. It is only when legislature fixes any maximum
rate, beyond which delegatee cannot enhance the rate, it
could be said it – retained sufficient control over the
delegatee. The control of the Parliament in relation to the
major minerals for such enhancement is enshrined in Section
28(1) of the Act, State of M.P. V. Mahalakshmi 1995 (Supp)
1 SCC 642 upheld such a delegation. The delegatee, viz.,
Central Government was entrusted with the power to amend the
Second Schedule which fixes royalty but obligates the
delegatee to lay such amendment before the Parliament. This
is absent in the case of minor minerals.
Next it is submitted, this Court in Baijnath Kedias
1969 (3) SCC 838, held that the State legislature is denuded
of all its legislative power over the minor minerals after
the passing of the said Act, hence it looses its legislative
control for fixing the royalty. The State only acts as
delegatee of the Parliament to enhance the rate of royalty.
So far, Section 28(3), which is for minor minerals, merely
provides laying down procedure before the State legislature
for information and not with any entrustment of power to
alter or modify the rate of royalty, hence Section 28(3) by
itself cannot save the plea of excessive delegation of the
legislative power. The language used in Section 28(3) is
different from what is in Section 28(1), hence both cannot
be equated. There is nothing to show that, in fact, the
impugned notifications, were laid before the State
legislature. So far Delegation Legislation Provision
(Amendment) Act of 1983, it refers to the rules made by the
State Government under a parliamentary Act for laying before
the State legislature only with respect to the subjects
under concurrent List 3 of VII Schedule of the Constitution
of India and not in respect of subjects in exclusive
competence of the Parliament under List I.
Learned senior counsel Mr. P.P. Rao, also appearing
for some of the appellants submits, power to fix the rate of
tax can be delegated provided the statute provides guidance
for fixing such rate. The guidance may be by fixing maximum
rates of tax or by providing consultation with the people,
i.e., subject to the approval by them as held in Municipal
Corporation of Delhi V. Birla Cotton 1968 (3) SCR 251.
Reasserting the principle as laid down in the case of
Mahalakshim Fabrics (Supra), it is submitted Parliament has
itself laid down for the major minerals the rate of royalty
in the Second Schedule of the Act and authorised the Central
Government to revise the rates. In doing so the Central
Government has the guidance to keep in view the original
rates. The fixation of royalty should have a direct nexus
with the minerals throughout the country on a uniform
pattern. Further, there is requirement that every rule or
notification made by the Central Government is to be placed
before each House of Parliament subject to agreed
modification by both Houses. Thus, Section 28(1) permits
Parliament to veto the enhanced rate of royalty. In
contrast there is no such guideline so far minor minerals
are concerned, except what is contained in D.K. Trivedis
case (Supra). Based on that it is submitted that only
provision among Sections 4 to 12 of the Act, which is
relevant is Section 9(2) read with Entry 54 of the Second
Schedule of the Act which fixes the limit of royalty at 12%
of the sale price at the pits mouth. The very rationale of
Entry 54 of List I of the Constitution is to regulate the
mines and mineral development under the control of Union in
the public interest. The preamble as well as Section 2 of
the Act speak about the expedience of Union control of both
major and minor minerals. Thus no part of the Act can be
construed so as to take away the control of the Union.
Section 28(3) cannot be read so as to divest the Union of
its control and vest the control in the respective State
legislature. In view of difference in the language between
Sections 28(3) and 28(1), the same purport what is contained
in sub-section (1) cannot be brought into sub-section (3).
Further the taxing statute must be interpreted as it reads
with no additions or subtractions of words and where two
opinions are possible the one which benefits an assessee
must be adopted.
Learned senior counsel Mr. S.B. Sanyal, in addition
to the adoption of the submissions by the aforesaid two
learned counsels further submits that Section 28(3) which is
brought in through amendment cannot be construed to confer
authority on the State legislature to modify any
notifications or rules framed by the State Government. But
laying of such rule or notification before the State
legislature is only for the purpose of information. In a
delegated legislation the control and authority of the
Principal to modify or cancel any act of the delegatee must
remain. Parliamentary control over delegated legislation
should be living continuity as a constitutional necessity
which is not to be found in the present case.
Repelling the submissions, Mr. Rakesh Dwivedi,
learned senior counsel, appearing for the State of Bihar
submits, in D.K. Trivedis case (Supra) Section 15, as it
then stood, was questioned as suffering from the vice of
excessive delegation of its legislative power. This Court
held that sub-section (2) of Section 13 was merely
particularisation or illustration of the generality of power
already contained in sub-section (1) and since Section 15(1)
was similar to Section 13(1), it could necessarily contain
illustrations of Section 13(2) and the provisions of Section
13(2) being in the same sub-chapter as Section 15, would
furnish sufficient guidelines. Reliance was also placed on
the following observationsa made in that case:-
The exclusion of the application of these sections to
minor minerals means that these restrictions will not apply
to minor minerals but it is left to the state governments to
prescribe such restrictions as they think fit by rules made
under Section 15(1).
The submission is, Sections 4 to 12, as they stood
then, cannot be construed as restricting the power of
delegatee over the minor minerals in view of Section 14. In
fact, they were referred by this Court as it being available
to the State Government for taking note while framing the
rules. They are available not as restrictive or limiting
its power but for its adoption wherever necessary. In fact,
while judging the validity of the notifications impugned in
that case, this Court was not called upon nor did it examine
whether the State power to enhance royalty is restricted to
Schedule 2 of Section 9 of the Act. Further, the guideline
is also to be found in the preamble, the Statement of
Objects and Reasons and other provisions of the Act.
Sections 4A, 17 and 18 also provide the guideline. Further
after the amendment, the power of the Central Government
under Section 9(3) of the Act for the modification of the
rate of royalty for the major minerals is made very wide.
The only difference being that under Section 28(1)
Parliament has opportunity to modify the rate fixed by the
Central Government. This was because the Central Government
was modifying the rates fixed by the Parliament itself.
Secondly, major minerals are minerals of national importance
hence require uniform treatment at the national level. In
contrast, the minor minerals are mostly used locally and are
of local importance and hence their treatment is left to the
State Government at the provincial level. This is in
recognition of States original power to determine such
royalty under Entry 54 of List II of the Seventh Schedule.
This is also in tune with the principle of federalism which
requires local matters to be left for it being dealt with by
the State Government.
Further submission is, in order to find the guidelines
the nature of the subject matter is also to be considered.
The product, namely, minor minerals is neither produced nor
it belong to the appellants. So it is not a case of
imposition of tax simplicitor on the appellants but such
tax in fact includes the price of the minerals which is the
property of the State. In other words, it includes the
price of the property which State parts with. Thus, royalty
is a unique kind of tax which is different from other taxes.
Both royalty/dead rent are integral part of the lease as
talked about in Section 4 of the Act and Section 105 of the
Transfer of Property Act, 1882. Hence the lessee cannot
insist that in spite of the minerals being parted by the
State the mining should be made available cheaply so that
they can derive profits, and even super profits. Further,
fixation of maximum limit for royalty under Section 15 is
not an absolute rule. In fact, the rate fixed has not been
demonstrated to be confiscatory or arbitrary, for which the
courts are there and if that be, it could be quashed.
Further the history of regulation of minerals shows that
royalty has always been fixed by the State Government.
Under Rule 4 of the Mineral Concession Rules, 1949 framed by
the Central Government under the 1948 Act, the State
Government was given power to make rules with regard to the
minor minerals. In fact, what was then delegated to the
State by the Central Government has now been delegated by
the Parliament itself. Thus the status of State Government
has changed from sub-delegatee to delegatee. Next it is
submitted, it is true that phraseology of Section 28(3) is
differently couched than what is in Section 28(1). This is
because the Parliament is directing the rules to be placed
before the State legislature. This was done in view of the
observations by this Court in D.K. Trivedis case (Supra).
It is also submitted that placement of such notification and
rules under Section 28(3) before the State legislature
cannot be said to be only a show piece but is meaningful.
He also submits since 1st April, 1975 the State of Bihar has
increased royalty only four times and even now it has not
raised royalty since 28.9.1994, despite the lapse of six
years. Thus raising of royalty only four times during 25
years despite power to revise every three years shows that
the Government has been more than reasonable in fixing the
royalty.
In order to scrutinise the submissions of the learned
counsels for the parties, it would be appropriate first to
focus as to what this Court said in D.K. Trivedis case
(Supra). The constitutionality of Section 15(1) of the said
Act was raised with reference to the delegation of power to
the State Government delegating essential legislative
function, including charging and enhancing the rate of dead
rent and royalty that it being unbridled, including
challenge to the charging of the same during the subsistence
of the existing leases, including the validity of Rule 21(b)
of the Gujarat Minor Minerals Rules, 1966 and few
notifications issued by the State Government under Section
15 in respect of the minor minerals. The relevant
notifications were, one dated 29.11.1974 by which the State
Government made Gujarat Minor Minerals (Fourth Amendment)
Rules, 1974 whereby Rule (1) was substituted and Schedule II
was amended w.e.f. 1.12.1974. By this the rate of royalty
and dead rent in respect of some of the minor minerals were
specified. Through the notification dated 29th October,
1975 the State Government brought in Gujarat Minor Minerals
(Second Amendment) Rules, 1975, whereby Rule 21 of the said
rules and Schedule I was substituted w.e.f. 1.11.1975,
through which the rate of royalty in respect of several
items were enhanced. The next notification was dated 6th
April, 1976, by which the State Government made the Gujarat
Minor Minerals (Second Amendment) Rules, 1976 through which
it substituted Schedule II in the said rules, by which the
dead rent was enhanced. The next notification was dated
26th March, 1979, through which the State Government made
the Gujarat Minor Minerals (Amendment) Rules, 1979. Through
this new Rule 21-B was inserted and Rule 22 was amended and
Schedules I and II were substituted. By substituted
Schedule I the rate of royalty on all minor minerals were
specified as 10 p. per metric tonne and by substituted
Schedule II the rate of dead rent per hectare or part
thereof in respect of quarry leases was enhanced to
Rs.1200/-, in certain cases Rs.1500/- in some other cases
Rs.2,000/- in one case and Rs.3,000/- in the remaining
cases. The contention raised before this Court was, that
Section 15(1) of the Act is unconstitutional as it suffers
from the vice of excessive delegation of the essential
legislative power to the executive as it is unchannelised as
there are no guidelines, which gives free hand to the State
Government to act arbitrary. This submission for the lessee
was rejected when this Court held:-
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 reference to other
provisions of the 1957 Act and its legislative history.
This Court further held: 32. There is no substance
in the contention that no guidelines are provided in the
1957 Act for the exercise of the rule-making power of the
State Government under Section 15(1).
33.A provision similar to sub-section (2) of Section
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. The 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 (1) of Section 15 the State
Government 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 13 (inclusive) shall not apply to quarry
leases, mining leases or other mineral concessions in
respect of minor minerals, what is intended is that the
matters contained in those sections, so far as they concern
minor minerals, will not be controlled by the Central
Government but by the concerned State Government by
exercising its rule- making power as a delegate of the
Central Government. Sections 4 to 12 form a group of
sections under the heading General restrictions on
undertaking prospecting and mining operations. The
exclusion of the application of these sections to minor
minerals means that these restrictions will not apply to
minor minerals but that it is left to the State Governments
to prescribe such restrictions as they think fit by rules
made under Section 15(1). The reason for treating minor
minerals differently from minerals other than minor minerals
is obvious. As seen from the definition of minor minerals
given in clause (e) of Section 3, they are minerals which
are mostly used in local areas and for local purposes while
minerals other than minor minerals are those which are
necessary for industrial development on a national scale and
for the economy of the country. That is why matters
relating to minor minerals have been left by Parliament to
the State Government while reserving matters relating to
minerals other than minor minerals to the Central
Government.
This Court finally upheld the validity of sub-section
(1) of Section 15 by holding that power conferred upon the
State Governments does not amount to excessive delegation of
any essential legislative power. It further held, there are
sufficient guidelines for the exercise of rule-making power
which are to be found in the object for which such power is
conferred, namely, for regulating the grant of quarry
leases, mining leases or mineral concessions in respect of
minor minerals and for the purposes connected therewith. It
also held that power to make rules under Section 15(1)
includes to amend the rules so as to enhance the rates of
royalty and dead rent. Further there is a check on the
State Government not to enhance the rate of royalty/dead
rent more than once during any period of four years in view
of proviso to Section 15(3). It upheld notification dated
29th November, 1974, but held notification dated 29th
October, 1975 as void as it offends the prohibition
contained in the proviso to Section 15(3). It also
similarly holds notification dated 6th April, 1976 as void
as the same enhances the rates of dead rent for the second
time during the same period of four years. It however holds
notification dated 26th March, 1979 to be valid.
Strong hammering has been done by the learned counsels
for the appellantss with reference to the observation made
by this Court in D.K.Trivedis case (supra), where this
Court records that the guidelines for the exercise of
rule-making power under Section 15(1) are to be found in the
restrictions and other matters contained in Sections 4 to 12
of the Act. Based on this, submission is that this
restriction could only be, what is contained in Item 54
Schedule II read with Section 9 of the Act. The submission
is, Item 54 refers to all other mines and minerals not
hereinbefore specified which would include minor minerals
as Section 3(a) defines Minerals very widely to mean all
minerals except minerals oil. Hence the restriction which
is stated, is really the restriction not to enhance the
royalty beyond the rate specified in Item 54 which could
only be upto 12% of sale price at the pits mouth.
In our considered opinion such a restrictive
interpretation is not to be found in the D.K. Trivedis
case (Supra). In that case, through the aforesaid 1979
notification, rate of dead rent was enhanced by substituting
the then existing Schedule II. The then existing rate of
dead rent in Schedule II was:
1. For specified minor minerals
For every 100 sq. metres or part thereof, up to 5
hectares .. Re. 0.35
For each additional hectare or part thereof, exceeding
5 hectares ..Rs.50.00
2. For other minor minerals
For every 100 sq. metres or part thereof upto 5
hectares ..Re. 0.20
For each additional hectare or part thereof exceeding
5 hectares ..Rs.35.00
This was substituted and the rate of dead rent per
hectare was enhanced to Rs.1200/-, 1500/-, 2,000/- and
3,000/- in various cases. Though the enhancement through
this notification of 1979 was enormous yet no submission was
made, nor this Court adverted or recorded that this
enhancement has to be restricted to 12% of the sale price at
pits mouth in terms of Item 54 of Schedule II. In fact, in
spite of this large enhancement, 1979 notification was
upheld. The question, whether any such increase is
arbitrary, excessive or violative of Article 14 is to be
tested on a different pedestal. Any excessive exercise or
arbitrary exercise of power by a delegatee could be
controlled by the courts and if there are any, the courts
would not hesitate to strike it down. Mere possibility of
an abuse of power or arbitrary act, cannot invalidate any
statute. To reach this, one has to make foundation with
specific plea with reference to the facts and figures based
on the circumstances of each case. In the present case,
however, we are testing the submissions of the appellants,
whether the said decision restricts the exercise of power by
the State Government in enhancing the rate of royalty or
dead rent to the rate as specified in Item 54 of Schedule II
of the Act. This submission is based on the misconstruction
of the statute and relying only on a part of the observation
what is recorded in para 34 of that decision. This Court
further records in the same para 34 that the guidelines with
reference to Section 15(1) are to be found in the object for
which such power is conferred, the illustrative matters set
out in sub-section (2) of Section 13 and in the restriction
and other matters contained in Section 4 to 12. Para 34 of
the said decision records:-
34. 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, the illustrative matters set out in
sub-section (2) of Section 13, and in the restrictions and
other matters contained in Sections 4 to 12.
It is relevant to refer here the preceding paragraph
33 with reference to Sections 4 to 12 were this Court
records:
Sections 4 to 12 forms a group of sections under the
heading General restrictions on undertaking prospecting and
mining operations. The exclusion of the application of
these sections to minor minerals means that these
restrictions will not apply to minor minerals but that is
left to the State Government to prescribe such restriction
as they think fit by rules made under Section 15(1).
Thus this Court not only did not tie down the State
Government to such restrictions, on the contrary left it
open for it to prescribe such restrictions as it thinks fit.
In other words Sections 4 to 12, not being applicable
to the minor minerals, the figurative restrictions what is
contained there could not be made applicable, but of course
they are available as a guide line to the State Government
to take note of in other respects, while framing its rules.
So, they are available not as restrictive or limiting
guidelines but are available otherwise for its consideration
and adoption, wherever it is necessary. If submission for
the appellants is accepted, it would militate against the
express mandate of Parliament as contained in Section 14
which excludes Sections 4 to 12 from its application to
minor minerals.
The fallacy of this submission that the rate of
royalty and dead rent, for the minor minerals, is to be what
is contained in Item 54 of Schedule II, is based on
misconstruing both the said judgment of this Court and the
provisions of the Act. The submission is, as Section 3(a)
defines minerals which would include minor mineral, hence
Item 54 as it records: all other minerals not hereinbefore
specified would include minor minerals. It is an
interpretation in abstract without taking into consideration
Section 14. Section 14 specifically excludes Sections 5 to
13 (earlier it was Sections 4 to 13) from its application to
minor minerals. Thus Second Schedule which refers to the
rate of royalty in view of Section 9 could only refer to the
minerals other than minor minerals. The language as
recorded in Item 54, as aforesaid would only mean other
residual major minerals not specified hereinbefore meaning
that what is not specified in Item Nos. 1 to 53. This
could never mean to include minor minerals. Thus the
residuary mineral under Item 54 could only be the left over
major minerals. Neither the residuary nor the left over
major mineral could be equated with the minor mineral nor
there is any material on record to draw such inference.
When this Court records : guidelines for the exercise of
rule-making power under Section 15(1) is to be found in the
restrictions and in the other matters contained in Sections
4 to 12. The use of word restriction is in view of the
same words being used in the heading of this group of
Sections 4 to 12. The heading states, General
restriction on undertaking, prospecting and minor
operations. In other words, the restriction referred to in
para 34 co- relates to this heading of general restrictions
to be taken note while framing the rules.
We may visualise this from another angle. This
reference of general restrictions as contained in Sections 4
to 12 for it being taken note would only means to consider
its broad principle and pattern while framing its own rules.
It cannot be doubted that Sections 4 to 12 also gives
guidance to the State Government while acting as delegate
under Section 15 while fixing rate of royalty. This
guidance is to be found in Section 9 itself which refers to
the royalties. Sub-section (1) of Section 9 provides,
holder of a mining lease granted before the commencement of
this Act to pay royalty in respect of any mineral removed or
consumed from the leased area at the rate for the time being
specified in the Second Schedule in respect of that mineral
notwithstanding anything to the contrary contained in the
instrument of lease and similarly sub-section (2) provides,
after the commencement of this Act the holder of a mining
lease shall pay royalty at the rate specified for the time
being in the Second Schedule in respect of any particular
mineral. Each of the aforesaid considerations itself may be
taken note by the State Government while framing its own
rules for the minor minerals. In other words, it may apply
rate of royalty for the minor minerals at the same rate as
the then existing rate, on the date this Act came into
force. Schedule II with reference to Section 9 fixes rate
of royalty for various minerals not being minor minerals is
also a good source of guideline. There we find various
methods applied for fixing or charging the royalty on the
various minerals. It demonstrate charging of royalties per
tone, per unit per cent, per tone of ore on prorata basis,
per cent of sale price at the pits mouth etc.. In the case
of gold, it is per one gram of gold per tonne of ore and on
pro rata basis on the basis of per 100 kg. With reference
to Uranium it is for dry ore with U3 O8 content of 0.05 per
cent with pro rata increase/decrease @ Re.1.00 per metric
tonne of ore for 0.01 per cent.
This pattern of charging also reveals a good guiding
force while fixing any royalty by the State Government for
the various minor minerals.
This apart, the guidelines even in the D.K. Trivedis
case (Supra) does not confine itself to Sections 4 to 12 but
further records, it 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 the purposes connected
therewith) the meaning of the word regulating the scope of
the phrase for purpose connected therewith the
illustrative matters as set out in sub-section (2) of
Section 13. We find that Section 13 gives power to the
Central Government to make rules in respect of minerals
other than minor minerals, while Section 15 gives power to
the State Government to make rules in respect of minor
minerals. The extent of exercise of power in both these
sections are similar. The only difference is, Central
Government exercises power in respect of all other minerals
other than minor minerals, while the State Government
exercises power for the minor minerals only. Section 13(2),
in particular, gives power to the Central Government to make
rules in respect of matters enumerated therein. Though they
are already covered under Section 13 (1) but is more focused
in sub section (2). There was no such similar sub-section
in Section 15 when D.K. Trivedis case (Supra) was decided,
though later it was brought in through amendment by
incorporating sub-section 1A through Act No.37 of 1986
w.e.f. 10th February, 1987. This Court very clearly held
in that case:-
The ambit of the power under Section 13 and under
Section 15 is, however, the same, the only difference being
that in one case it is the Central Government which
exercises the power in respect of minerals other than minor
minerals while in the other case it is the State Government
which do so in respect of minor minerals. Sub- section (2)
of Section 13 which is illustrative of the general power
conferred by Section 13(1) contains sufficient guidelines
for the State Governments to follow in framing the rules
under Section 15(1).
So, this Court held that sub-section (2) of Section
13, which is illustrative of the general power conferred by
Section 13(1) itself contains sufficient guidelines for the
State Government to frame its own rules under Section 15(
15(1).
It seems the Parliament in order to bring on parity,
made similar provision for the minor minerals through
insertion of Section 15(1-A) to equate it with Section 13
(2). This sub-section (1-A) similarly as Section 13 (2) is
also illustrative of the general power conferred on Section
15 (1). Thus as sub-section (2) of Section 13 was held to
be the guiding force to the State Government is now
applicable to this sub-section (1-A) through the infusion of
various sub-clauses in sub-Section (1-A). The submission
that it is only power is equally applicable to sub-section
(2) of Section 13. Even sub-dividing the exercise of power
through various sub-clauses, both in Section 13 (2) and
sub-Section (1-A) of Section 15 implicitly gives guideline
to the delegatee. In fact, the Parliament itself through
various amendments has been strengthening the guidelines to
the State Government. Not only sub-Section (1-A) of Section
15 but even Section 4A and Section 17A were inserted through
the same amending Act No.37 of 1986. Similarly, sub-
section (3) was inserted in Section 28 by Act No.25 of 1994
and Section 23- C was inserted by Act No.38 of 1999. Even
Section 14 was amended by the aforesaid Act No.37 of 1986.
Earlier Sections 4 to 13 were excluded for the minor
minerals but through this amendment, the exclusion shrunk to
Sections 5 to 13. In other words, both Sections 4 and 4A
were made applicable even to the minor minerals. Further
Section 4(1-A) which was inserted through Act No.38 of 1999
covers transport or storage of any mineral in accordance
with the Act and Rules. In case the restrictive
interpretation, as submitted for the appellant, to limit the
States power within Entry 54 of Schedule II is accepted, it
will lead to various incongruities. Section 6 fixes the
maximum area of lease to be twenty-five square kilometers
under sub-Section (a) and ten square kilometers under
sub-section (b). Section 7 fixes 3 years for prospecting
licence and Section 8 fixes maximum period of 30 years for
mining lease. If the State Government has to take literally
what is contained there then even for the minor Minerals
State Government has to issue leases of such area for such a
large period. This would be impracticable, in view of
difference in the nature of major and minor minerals. Thus
the fixation of period, area of leases and the rate of
royalty for the major minerals is not equitable with that of
the minor minerals.
Half hearted submission was also made by Mr. Sanyal,
one of the learned senior counsel, that proviso to Section
9(3) limits the power of the Central Government to fix the
rate of royalty not exceeding 20% while there is no such
limitation on the power of the State Governments. It is
sufficient to record here that this limitation has been
lifted by amending sub-section (3) of Section 9. Now there
is no such limitation on the power of the Central
Government.
Now, we may proceed to examine another perceivable
guideline to the State Government. It is significant, both
Entry 54 List I of the Seventh Schedule of the Constitution
and Entry 23 List II refer to the Regulation of mines and
minerals development. This Entry has been reiterated both
in the Preamble and the Statement of Objects and Reasons of
this Act. This regulation of mines and minerals
development clearly indicates the guidelines which the
Parliament is projecting. Every word in a language is
impregnated with and is flexible to connote different
meaning, when used in context. That is why it is said,
words are not static but dynamic and courts must adopt it
that dynamic meaning which uphold the validity of any
provision. This dynamism is the cause of saving many
statutes of it being declared void, it dissolves the
onslaught of any rigid and literal interpretation, it gives
full thrust and satisfaction to achieve the objectivity
which the legislature intended. Whenever there are two
possible interpretations its true meaning and legislature
intended has to be gathered, from the Preamble, Statement
of Objects and Reasons and other provisions of the same
statute. In order to find true meaning of any or what the
legislature intended one has to go to the principle
enunciated in the Heydons case, which laid down the
following principle as early in the sixteenth century. 76
E.R. 637 = (1584) 3 Co. Rep. 7a 9.7; (1) What was the
law before making of the Act; (2) What was the mischief or
defect for which the law did not provide; (3) What is the
remedy that the Act has provided; and (4) What is the
reason of the remedy. The Court must adopt that
construction which suppresses the mischief and advances the
remedy. This Court has followed this principle in Bengal
Immunity Co. Ltd. Vs. State of Bihar & Ors., AIR 1955 SC
661 (674); The Commissioner of Income tax, Patiala Vs. M/s
Shahzada Nand & Sons, AIR 1966 SC 1342 (1347); Sanghvi
Jeevraj Ghewar Chand & Ors. Vs. Secretary, Madras
Chillies, Grains and Kirana Mercants Workers Union &
Anr.,AIR 1969 SC 530 (533); Union of India Vs.
Sankalachand Himatlal Sheth & Anr., AIR 1977 SC 2328 (2358)
and K.P. Varghese Vs. Income Tax Officer, Ernakulam &
Anr., AIR 1981 SC 1922 (1929).
Returning to the present case we find the words
regulation of mines and mineral development are
incorporated both in the Preamble and Objects and Reasons of
this Act. Before that we find Preamble of our Constitution
in unequivocal words expresses for securing for our citizen,
social, economical and political justice. It is in this
background and in the context of the provisions of the Act
we have to give meaning of the word regulation. The word
regulation may have different meaning in different context
but considering it in relation to the economic and social
activities including the development and excavation of
mines, ecological and environmental factors including
States contribution in developing, manning and controlling
such activities including parting with its wealth, viz., the
minerals, the fixation of the rate of royalties would also
be included within its meaning. This Court in State of
Tamil Nadu Vs. M/s Hind Stone and Ors. 1981 (2) SCC 205
held:-
Word regulation has not got that rigidity of
meaning as never to take in prohibition. In modern
statutes concerned as they are with economic and social
activities, regulation must of necessity, receive so wide
an interpretation that in certain situations, it must
exclude competition to the public sector from the private
sector. More so in a welfare State. Must depends on the
context in which the expression is used in the statute and
the object sought to be achieved by the contemplated
legislation. Each case must be judged on its own facts and
in its own setting of time and circumstances and it may be
that in regard to some economic activities and at some state
of social development, prohibition with a view to State
monopoly is the only practical and reasonable manner of
regulation. The Mines and Minerals (Development and
Regulation) Act aims at the conservation and the prudent and
discriminating exploitation of minerals and prohibiting of
leases in certain cases is part of the regulation
contemplated by Section 15 of the Act.
So in regulating mineral development, the royalty/dead
rent is the inherent part of it. State has thus before it
number of factors which would guide it to fix, enhance or
modify the royalty/dead rent payable by a lessee. The
conservation and regulation of mines and mineral development
includes wide activity of the State including parting with
its wealth, are all relevant factors to be taken into
consideration as a guiding force for fixing such
royalty/dead rent. For interpretation of a Statute with
reference to Preamble we may usefully refer the case of
Bhatnagar & Co. Ltd. Vs. Union of India & Ors., AIR 1957
SC 478 where Constitution Bench held: In other words, in
considering the question as to whether guidance was afforded
to the delegate in bringing into operation the material
provisions of the Act by laying down principles in that
behalf, the Court consid/bn ered the statement of the
principles contained in the preamble to the Act as well as
in the material provisions of s. 3 itself. This decision
shows that if we can find a reasonably clear statement of
policy underlying the provisions of the Act either in the
provisions of the Act or in the preamble, then any part of
the Act cannot be attacked on the ground of delegated
legislation by suggesting that questions of policy have been
left to the delegate…..
With reference to the regulation of mineral
development, with reference to the minor minerals the policy
of the Act is communicating loudly from its roof top, that
let it be done by the delegatees State who is fully aware of
the local conditions as such mineral is also used for the
local purposes and on whom this larges falls. What
delegatee should do what it should not do is also enshrined
in the Act. Section 18 is also not excluded from its
application to the minor mineral development. Under it duty
is cast duty on the Central Government to take all necessary
steps for the conservation and systemic development of
minerals in India. Its sub-section (2) focuses the
periphery within which it has to do and what not to do.
This itself is a guidance which State may take note of
while framing its own rules. Similarly Section 23-C gives
detail guidance what State should provide to check illegal,
mining, storage and transportation.
We have said Sections 4-A, 17, 18 and 23 C also
provides for the guidelines. Sub-section (2) of Section 4-A
empowers the State Government to premature terminate any
prospecting licence or mining lease if it is expedient in
the interest of regulation of mines and mineral development,
preservation of natural environment, control of floods,
prevention of population or for avoiding danger to the
public health or communication or to ensure safety of
buildings, monuments, structures or for other purposes.
Under sub-section (2) of Section 17, the Central Government
undertakes reconnaissance, prospecting or mining operations
in any area not already covered by any licence or lease,
after consultation with the State Government but sub-section
(3) obligates it to pay the permit fee, prospecting fee,
royalty, surface rent or dead rent, at the same rate at
which it would have been payable by any other person under
this Act. This also is a check on the State Government,
while fixing the rate of the royalty. 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 the protection of environment by
preventing or controlling any pollution for which it may
make rules and sub-section (2), in particular, specifies
large list on which such rules may be framed, which has 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 check its
wastage, protecting environment and controlling pollution
etc. which are provided in this Act. This all require
expenditure to be incurred by the State coupled with
considerations for parting with the wealth of the State, as
minerals belongs 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.
One of the submission for the appellant is, since
royalty is a tax, delegation for its enhancement cannot be
left unbridled on the delegatee and if two interpretations
are possible, the one which favours an assesee should be
accepted. It is true that this Court has held royalties on
the minerals to be a tax in India Cement Ltd. and Ors. Vs.
State of Tamil Nadu and Ors. 1990(1) SCC 12, Orissa Cement
Ltd. Vs. State of Orissa and Ors. 1991 Supp.(1) SCC 430,
State of M.P. Vs. Mahalaxmi Fabric Mills Ltd. and Ors.
1995 Supp. (1) SCC 642 and P. Kannadasan etc. etc.Vs.
State of Tamil Nadu & Ors. etc. etc. 1996(7) SC 16.
In considering this submission we have to keep in
mind, tax on this royalty is distinct from other forms of
taxes. This is not like a tax on income, wealth, sale or
production of goods (excise) etc. This royalty includes the
price for the consideration of parting with the right and
privilege of the owner, namely, the State Government who own
the mineral. In other words, the royalty/dead rent, which a
lessee or licensee pays, includes the price the minerals
which is the property of the State. Both royalty and dead
rent are integral part of a lease. Thus, it does not
constitutes usual tax as commonly understood but includes
return for the consideration for parting with its property.
In view of this special nature of the subject under
consideration, namely, the minerals, it would be too harsh
to insist strict interpretation with reference to the
guidelines to a delegatee who is also the owner of its
mineral. In the present case, we are not considering any
liability of tax on the assessee but whether delegation to
the State by the Parliament with reference to minor minerals
is unbridled.
One of the guidelines in the case of Mahalaxmi Fabric
Mills Ltd. and Ors. (Supra) was that the Parliament had
itself laid down with reference to major minerals, the rates
of royalty in the Second Schedule of the Act and authorised
the Central Government to revise the rates from time to
time. So far minor minerals, also we find sub-section (2)
of Section 15 approves the rules made by the State
Government, regulating the grant of quarry leases, mining
leases or other mineral concessions in respect of mine and
mineral prior to the enforcement of this Act and similarly
sub-section (3) approves the rate of royalty/dead rent
prescribed for its payment in respect of minor minerals for
the time being in force, i.e., what existed prior to the
coming in force of this Act. Thus, even approval of the
then existing rates of royalty or dead rent by the
Parliament itself is similarly a guiding factor for any
subsequent modification of its rate. The proviso to
sub-section (3) brings an additional check on the
enhancement of rate of royalty/dead rent that it cannot be
enhanced more than once during any period of three years.
Prior to the Act No.37 of 1996 this period was of 4 years.
We have to keep in mind, in the present case,
delegation of power is on the State Government which is the
highest executive in the State, which is responsible to the
State Legislature. In a Parliamentary democracy every act
of the State Government is accountable to its people through
State Legislature which itself is an additional factor which
keeps the State Government under check to act arbitrarily or
unreasonably. When a policy is clearly laid down in a
statute with reference to the minor mineral with main object
of the Act for its conservation and development, coupled
with various other provisions to the Act guiding it,
checking it and controlling it then how such delegation
could be unbridled. With reference to Municipal Corporation
of Delhi Vs. Birla Cotton, Spinning and Weaving Mills,
Delhi, 1968 (3) SCR 251, the question of delegation of power
to the Municipal Corporation and the State Government was
considered in which Avinder Singh and Ors. Vs. State of
Punjab and Ors. 1979 (1) SCC 137 was considered and relied
as under:
In the Municipal Corporation of Delhi case, the
proposition that where the power conferred on the
corporation was not unguided, although widely worded, it
could not be said to amount to excessive delegation, was
upheld. Delegation coupled with a policy direction is good.
Counsel emphasised that the court had made a significant
distinction between the local body with limited functions
like a municipality and Government:
The needs of the State are unlimited and the purposes
for which the State exists are also unlimited. The result
of making delegation of a tax like sales tax to the State
Government means a power to fix the tax without any limit
even if the needs and purposes of the State are to be taken
into account. On the other hand, in the case of
municipality, however large may be the amount required by it
for its purposes it cannot be unlimited, of the amount that
a municipality can spend is limited by the purposes for
which it is created. A municipality cannot spend anything
for any purposes other than those specified in the Act which
creates it. Therefore in the case of a municipal body,
however large may be its needs, there is a limit to those
needs in view of the provisions of the Act creating it. In
such circumstances there is a clear distinction between
delegating a power to fix rates of tax, like the sales tax,
to the State Government and delegating a power to fix
certain local taxes for local needs to a municipal body.
It is too late in the day to contend that the
jurisprudence of delegation of legislative power does not
sanction parting with the power to fix the rate of taxation,
given indication of the legislative policy with sufficient
clarity. In the case of a body like a municipality with
functions which are unlimited and the requisite resources
also limited, the guideline contained in the expression for
the purposes of the Act is sufficient, although in the case
of the State or Central Government a mere indication that
taxation may be raised for the purposes of the State may be
giving a carte blanche containing no indicium of policy or
purposeful limitation. {Empahsis supplied}
With reference to the question what is the policy of
the legislature this very decision holds:
We are clearly of the view that there is fixation of
the policy of the legislation in the matter of taxation, as
a close study of Section 90 reveals; and exceeding that
policy will invalidate the action of the delegate. What is
that policy? The levy of the taxes shall be only for the
purposes of the Act. Diversion for other purposes is
illegal. Exactions beyond the requirements for the
fulfilment of the purposes of the Act are also invalid.
Like in Section 90(1), Section 90(2) also contains the words
of limitation for the purposes of this Act and that
limiting factor governs sub- sections (3), (4) and (5)The
expression purposes of this Act is pregnant with meaning.
It sets a ceiling on the total quantum that may be
collected. It canalises the objects for which the fiscal
levies may be spent. It brings into focus the functions,
obligatory or optional, of the municipal bodies and the
raising of resources necessary for discharging those
functions nothing more, nothing else.
Thus this case clearly lays down that fixation of the
policy of the Act in the matter of taxation itself is a
guidance to a delegatee, which is also be found in the
present case, when its preamble, objects and reasons and
various other provisions refers to for the development and
regulation of mines and minerals. The fixation of rate has
co-relate for this purpose of the Act and not beyond it.
With reference to another submission that only
purposeful guidance with control over the State Government
would be to fix maximum limit of rate of royalty, which is
not there in the present case. Similar question was also
submitted and this Court in the case of Corporation of
Calcutta Vs. Liberty Cinema 1965 (2) SCR 477 held:
No doubt when the power to fix rates of taxes is left
to another body, the legislature must provide guidance for
such fixation. The question then is, was such guidance
provided in the Act? We first wish to observe that the
validity of the guidance cannot be tested by a rigid uniform
rule; that must depend on the object of the Act giving
power to fix the rate. It is said that the delegation of
power to fix the rates of taxes authorised for meeting the
needs of the delegate to be valid, must provide the maximum
rate that can be fixed, or lay down rules indicating that
maximum. We are unable to see how the specification of the
maximum rate supplies any guidance as to how the amount of
the tax which no doubt has to be below the maximum, is to be
fixed. Provision for such maximum only sets out a limit of
the rate to be imposed and a limit is only a limit and not a
guidance.
It seems to us that there are various decisions of
this Court which support the proposition that for a
statutory provision for raising revenue for the purposes of
the delegate, as the section now under consideration is, the
needs of the taxing body for carrying out its functions
under the statute for which alone the taxing power was
conferred on it, may afford sufficient guidance to make the
power to fix the rate of tax valid.
Before we take up the history of delegation of the
power of the State Government as delegatee, it is necessary
to refer to two decisions of this Court in messrs.
Bhatnagar & Co. and Anr. Vs. The Union of India and Ors.
AIR 1957 SC 478. This case also considers the history of
the earlier provisions of the Act where challenge of vires
was made. It held:
Thus, if the preamble and the relevant section of
the earlier Act are read in the light of the preamble of the
present Act, it would be difficult to distinguish this Act
from the Essential Supplies Act with which this Court was
concerned in Harishankar Baglas case, AIR 1954 SC 465.
Incidentally we may also observe that in Pannalal Binjraj v.
Union of India, Petns. Nos. 97 and 97A etc. of 1956( (8)
AIR 1957 SC 397, (B), where the vires of s. 5 (7-A) of the
Income tax Act were put in issue before this Court, the
challenge was repelled and during the course of the judgment
delivered on December 21, 1956, the previous history of the
earlier Income tax Acts was taken into account to decide
what policy could be said to underlie the provisions of the
impugned section.
This Court in Municipal Corporation of Delhi (Supra)
also referred to the history of enactment while examining
and testing vires of the Act. It records: According to
our history also there is a wide area of delegation in the
matter of imposition of taxes to local bodies subject to
controls and safeguards of various kinds which partake of
the nature of guidance in the matter of fixing rates for
local taxation. It is in this historical background that we
have to examine the provisions of the Act impugned before
us.
We may further examine this question from another
angle. In order to adjudicate, whether any delegation of
power is unbridled or excessive, the historical background
of similar provisions which preceded the impugned provision
should also be kept in mind as it is also a relevant
consideration. In fact, D.K. Trivedis case (supra) itself
has taken the note of its historical background. It is
significant that Entry 54 List I of the Seventh Schedule of
the Constitution of India, reproduces Entry 36 in the
Federal Legislative List in the Government of India Act,
1935, except by omitting the words and oil fields. Under
this Entry 36 the Mines and Minerals (Regulation and
Development) Act, 1948 was enacted as we have now the
present 1957 Act under Entry 54 List I. This Act conferred
very wide rule making power upon the Central Government, for
regulating and granting of mining leases. The
constitutional maker also knew that Central Government in
exercise of this rule making power, made the Minerals
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, the 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, 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 be continue in force, unless
superseded by the Rules made under sub- section (1). Thus,
the 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 the Parliament. This was the pattern adopted
and approved since 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 the State Government to
fix rate of royalty/dead rent.
In D.K. Trivedis case (supra) this Court records:
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 Jethabai
(1951 SCR 51) and State of Madras v. Gannon Dunkerley & Co.
(Madras) Ltd. (1959 SCR 379).
This takes us to the next submission, whether the
introduction of sub- section (3) of Section 28 by the
Parliament in any way strengthen the guideline and put a
check on the exercise of power by the State Government.
Sub-section (1) of Section 28 refers to the placement of
every rule and every notification made by the Central
Government before each House of Parliament for a period of
30 days when the same becoming effective subject to its
modification, if any. Sub-section (3) of Section 28 directs
placement of every rule or notification made by the State
Government before each House of State Legislature. The
submission is, there is no provision in sub-section (3) as
in sub-section (1), of such rule being subject to scrutiny
for its approval or modification by the State Legislature.
The submission is, sub-section (3) in no way places any
check on the State Government, as State Legislature is not
entrusted with power to approve or modify. In other words,
introduction of sub-section (3) is merely for the sake of
information and nothing more. Further it is submitted, when
language of two different sub-sections in the same Section
are different it has to be differently interpreted, which
cannot be construed to connote same meaning and same effect.
It is also submitted, even if sub-section (3) was brought on
the Statute Book, it was not sufficient for the State, as it
has to show that in fact both the impugned notifications
were so laid before both the Houses of the Legislature. The
submission is, actually they were not so laid. Further
reliance is placed in the case of Atlas Cycle Industries
Ltd. Vs. State of Haryana, 1979 (2) SCC 196 (para 30)
where this Court held that a mere laying procedure is
directory not mandatory. On the other hand, submission on
behalf of the State is that this laying procedure before the
Legislature cannot be a mere show, but it is for a purpose,
the effect of which it has to be given. In our considered
opinion, the incorporation of this by the Parliament cannot
be said to be in futility. In fact, this was brought in, in
view of the observation made by this Court in the case of
D.K. Trivedis (supra).
It is true that the language of both sub-sections (1)
and sub-sections (3) of Section 28 are different. They are
reproduced below:
28. Rules and notifications to be laid before
Parliament and certain rules to be approved by Parliament.
– (1) Every rule and every notification made by the Central
Government under this Act shall be laid, as soon as may be
after it is made before each House of Parliament while it is
in session for a total period of thirty days which may be
comprised in one session or in two or more successive
sessions and if, before the expiry of the session
immediately following the session or the successive sessions
aforesaid, both Houses agree in making any modification in
the rule or notification or both Houses agree that the rule
or notification should not be made, the rule or notification
shall thereafter have effect only in such modified form or
be of no effect, as the case may be; so, however, that any
such modification or annulment shall be without prejudice to
the validity of anything previously done under the rule or
notification.
xxx xxx
(3) Every rule and every notification made by the
State Government under this Act shall be laid, as soon as
may be after it is made, before each House of the State
Legislature where it consists of two Houses, or where such
Legislature consists of one House, before that House.
There is no difficulty for us to uphold their
submission that in view of difference in the language of
sub-section (3), the same meaning to it as that of
sub-Section (1) cannot be given. This difference has been
carved out for a purpose to give different projection to the
said two provisions. In the case of major mineral which
plays important role in the National growth and wealth and
where the delegatee is the Central Government, Parliament
retained its full control but for the minor mineral,
Parliament felt as the subject is for local use and State
Government well versed to deal with it in the historical
background, mere placement of rules, notifications framed by
it before the State Legislature would be a sufficient check
on the exercise of its powers. Thus, this difference of
language gives two different thrust as intended by the
Parliament. Any act of the Parliament, far less when it
introduces any new provision through amendment, it could be
said for it to be in futility. The purpose has to be found.
What could be the purpose for such an amendment? One of the
reasons is that this was brought in, in view of the
observation made by this Court in D.K. Trivedis (supra).
This Court records:
It was, therefore, for Parliament to decide whether
rules and notifications made by the State Governments under
Section 15(1) should be laid before Parliament or the
legislature of the State or not. It, however, thought it
fit to do so with respect to minerals other than minor
minerals since these minerals are of vital importance to the
country’ industry and economy, but did not think if fit to
do so in the case of minor minerals because it did not
consider them to be of equal importance..
The Parliament through its wisdom, apart from above
brought this amendment also to keep a check on the exercise
power by the State Governments as delegatee. The question
is whether mere laying rules and notification before the
legislature, as in the present case, can be construed as a
check on the State Government power. Laying before House of
Parliament are made in the three different ways. Laying of
any rule may be subject to any negative resolution within
specified period or may be subject to it confirmation. This
is spoken as negative and positive resolution respectively.
Third may be mere laying before the House. In the present
case, we are not concerned with either affirmative or
negative procedure but consequence of mere laying before the
legislature.
Administrative Law by HWR Wade & Forsyth, 7th Edition,
page 898 records with reference to mere laying: Laying
before Parliament An Act of Parliament will normally require
that rules or regulations made under the Act shall be laid
before both Houses of Parliament. Parliament can then keep
its eye upon them and provide opportunities for criticism.
Rules or regulations laid before Parliament may be attacked
on any ground. The object of the system is to keep them
under general political control, so that criticism in
Parliament is frequently on grounds of policy. The
legislation concerning laying has already been explained.
Laying before Parliament is done in a number of
different ways. The regulations may merely have to be laid;
or they may be subject to negative resolution within forty
days; or they may expire unless confirmed by affirmative
resolution.
Constitutional and Administrative Law, Stanely De
Smith and Rodney Brazier, 7th Edn., records:
If the instrument has merely to be laid, or laid in
draft, before Parliament, it will be delivered to the Votes
and Proceedings Office of the House of Commons. No
opportunity is provided by parliamentary procedure for the
instrument to be discussed, but its existence will at least
be brought to the notice of members and the Minister is more
likely to be questioned about it than if it is not laid
before Parliament at all.
In a democratic set up, every State Government is
responsible to its State Legislature. When any statute
require mere laying of any notification or Rule before the
Legislature its execution, viz., State Government comes
under the scrutiny of the concerned Legislature. Every
function and every exercise of power, by the State
Government is under one or other Ministry who in turn is
accountable to the legislature concerned. Where any
document, rule or notification requires placement before any
House or when placed, the said House inherently gets the
jurisdiction over the same. Each member of the House,
subject to its procedure gets right to discuss the same,
they may put questions to the concerned Ministry.
Irrespective of the fact that such rules or notifications
may not be under purview of its modification, such members
may seek explanation from such Ministry of their inaction,
arbitrariness, transgressing limits of their statutory orbit
on any such matter. Short of modification power, it has a
right even to condemn the Ministry. No doubt in the case
where House is entrusted with power to annually modify or
approve any rule, it plays positive role and have full
control over it, but even where the matter is merely placed
before any House, its positive control over the executive,
makes even mere laying to play a very vital and forceful
role which keeps a check over the concerned State
Government. Even if submission for the appellant is
accepted to be that mere placement is only for the
information, even then such information, inherently in it
makes legislature to play an important role as aforesaid for
keeping a check on the activity of the State Government.
Such placement cannot be construed to be non est. No act of
Parliament should be construed to be of having no purpose.
As we have said mere discussion and questioning the
concerned ministry or authority in the House in respect of
such laying would keep such authority on guard to act with
circumspection which is a check on such authority, specially
when such authority is even otherwise answerable to such
Legislature. Further examining the scheme of the Act, with
its historical background, we find there is clear
demarcation in dealing between the Major minerals and the
Minor minerals. For minor minerals all its activity from
before this Act has been delegated to the State Government
as it having all conceivable knowledge over it, as it being
of local use and not being of much national importance. For
this difference also stricter control is made for the Major
minerals through Section 28(1) than for the minor minerals.
Thus, this mere check on the State Government, as aforesaid,
may have been found to be sufficient by the Parliament, with
reference to the minor minerals. Thus, the language of both
sub-section (1) and sub-section (3) though different, this
is only for two different purposes. Thus when Parliament
introduced sub-section (3) through amendment, it was to
further strengthen the control over the State Government
power. Any other submission, the one made by the
appellants, makes such an Act of the Parliament meaning
less, which cannot be attributed to the Parliament.
This takes us to the next submission. It is submitted
that the State Government, in spite of the mandate under
sub-section (3) of Section 28, to place the rules and the
notifications framed by it before each House of Legislature
the impugned notifications have not been placed.
Appellants case is that stating they were not placed, while
for the respondent State submission is it were placed.
Subsequent to the conclusion of the hearing, learned counsel
for the State sought leave of this court, which was granted,
to place affidavit with annexures to substantiate its
submission. An additional affidavit by Mr. Anand Vardhan,
District Mining Officer dated 1st May, 2000 was filed on
behalf of the respondent State of Bihar. A reply affidavit
dated 4th June, 2000 was filed by one Mr. Subhash Kumar,
Secretary of the appellants association.
It may be pointed here, out of the two impugned
notifications only one notification dated 28.9.1994 was
required to be placed before the House of the State
Legislature since sub-section (3) of Section 28 was only
brought in the year 1994. As per the State affidavit, on
the date the arguments concluded in this case, a fax message
was received by the Standing Counsel that the notification
dated 28.9.1994 had been placed before two houses in the
May-June 1994 and 1995 session through Administrative Report
of the Department of Mines and Geology. The affidavit
further states, every year Department of Mines and Geology
prepares Administrative Report, which includes the revenue
earned from mining and there is a section in the office
which reports the prevailing rates of royalty and the
notifications under which it is fixed. This report is sent
every year to both the houses of the State Legislature
through their respective Sections. In 1994-95
Administrative Report, the impugned notification dated
28.9.1994 is mentioned in para 4.40 of Chapter IV at page 6
and notification as a whole is included as Annexure 6 at
page 29. Similarly, the Administrative Report for 1995-96
mentions the fixation of royalty as fixed by notification
dated 28.9.1994, is mentioned para 4.4 of Chapter at page 7.
Similarly, Administrative Report for 1996-97 also mentions
fixation of royalty on mines minerals through notification
dated 28.9.1994. Each year these reports were supplied to
the Secretary, Bihar Vidhan Sabha with sufficient number of
copies enable its circulation to the members of the two
Houses. About 400 copies were sent to Vidhan Sabha and 100
copies to Vidhan Parishad. Based on the aforesaid averment
in the concluding para of the affidavit it is averred:
it is clear that the notification dated 28.9.1994
fixing royalty had been laid before the two houses of the
State legislature as required by Section 28(3) of the Mines
and Minerals (Regulation and Development) Act, 1957.
In the reply affidavit for the appellants one Mr..
Subhash Kumar, a letter dated 4.6.2000 which is in response
to a quary is annexed, which is of under Secretary, State
Minister Homes, annexing letter No. 4/99-4-7 dated 27th
May, 2000 of the Dy. Secretary, Bihar Legislative Assembly,
which records:
.as per direction (1) have to inform that Bihar
Legislative Assembly has no knowledge of Bihar Minor Mineral
Concession Rules, 1972 and amendment made therein of any
regulation made in this connection:.
The perusal of the two affidavit makes it clear that
truly as required by sub section (3) of Section 28 the
impugned notification dated 28.9.1994 was not placed. It
seems various departments of the Government sends its
administrative report every year with respect to its
functioning and revenue earned. It is in this context
department of Mines and Geology prepared and sent its
administrative report for 1994-95, 1995-96 and 1996-97 and
the notification dated 28.9.1994 is referred in these
reports. Further 400 copies for the Vidhan Sabha and 100
copies for Vidhan parishand were sent for circulation.
Thereafter there are no other document showing it was
actually placed before the House. Even if these reports
were sent and placed before the House it were said
administrative report which did contain the said
notification dated 28.9.1994. In fact, the letter dated
27th May, 2000 from Shri Jagdish Prasad Yadav, Dy.
Secretary Bihar Legislative Assembly, reveals that the House
has no knowledge of the Bihar Mineral Concessions Rule 1972
and amendment made thereunder or any regulation made in this
connection.
So, it is not possible to hold, based on affidavits of
the parties that the impugned notification dated 28.9.1994
was actually placed in terms of Section 28(3). It being
part of some administrative report cannot constitute to be a
fact to hold its placement in terms of said sub-section (3).
Though the affidavit on behalf of State reveals that under
rules of procedure and conduct of business of the Bihar
Vidhan Sabha, there is a delegated legislation committee,
which examines, all the rules which are required to be laid
before the House, which also inspects and examines the
working of such personals involved under it.
M/s Atlas Cycle Industries Ltd. and Ors. 1979 (2)
SCC 196. In this case also one of the contentions was that
the notifications were not placed before the Parliament as
required by sub-section (6) of Section 3 of the Essential
Commodity Act 1955 The sub-section (6) of Section 3 of
this Act requires that every order made under this section
by the Central Government or by any officer or authority of
the Central Government shall be laid before both houses of
Parliament, as soon as may be, after it is made. This is
similar to the provision which we are considering under
sub-sectionn (3) of Section 28. The Court held such
provision to be directory and hence for this default of not
placing the Iron and steel control order 1956 and
notification under clause 15(3) before the Parliament the
order shall not become be invalid.
However, since we have upheld that impugned
notifications issued by the State to be within the ambit of
delegation and that delegation is not excessive as there are
enough guidelines and control over the State Government
notwithstanding its check on the State under sub-section (3)
of Section 28, it would not have any effect on its validity.
But we make it clear when a statute as under sub-section (3)
of Section 28 requires its placement it is the obligation of
the State Government to place such with this specific note,
while placing before each Houses of Parliament. Even if it
has not been done, the State shall now do place it before
each houses of the State legislature at the earliest the
notification dated 28.9.1994 and will also do so in future
while framing rules or issuing any notifications under the
rules framed under sub-section (1) of Section 15 of the Act.
Another submission for the appellants is that the
delegator or the Parliament must retain its control over the
delegatee and such delegatee cannot be entrusted to another
Legislature, namely, State Legislature as in the present
case. To repel this submission learned counsel for the
State, referred to the The Delegated Legislation Provisions
(Amendment) Act, 1983. This Act amended various Parliament
Acts to implement the recommendations of the Committees on
Subordinate Legislation regarding laying of certain rules
framed by the delegatee before the State legislatures. The
Schedule of this Act, refers to the large number of such
amendments made by the Parliament. Few of them are being
referred hereunder, namely, The Religious Endowments Act,
1863, amendment Section 8 which requires Every rule framed
under this section shall be laid, as soon as it is framed,
before the State Legislature. By amending Section 20 of the
Press and Registration of Books Act, 1867 it directs, Every
rule made by the State Government under this Section shall
be laid, as soon as may be after it is made, before the
State Legislature. Similarly Section 83 of the Indian
Christian Marriage Act, 1872, requires that Every rule made
by the State Government under this Section shall be laid, as
soon as may be after it is made, before the State
Legislature. The Registration Act, 1908 amended Section 91
(1) through which the following was brought in Every rule
prescribed under this Section or made under Section 69 shall
be laid, as soon as it is made, before the State
Legislature.
We are not further enumerating such is large number of
cases recorded in the Schedule itself. Each one of them
were the act of Parliament in which with reference to a
delegatee, provisions are made for placing its rules framed
by it, before the State Legislature. Thus, placement of any
notification or rules framed by the State Government under
sub-section (3) of Section 28 cannot be said to be something
out of any novel procedure but is a well recognised
principle. The submission was how can a delegatee under one
legislature, viz., the Parliament be placed under the
control of another legislature. This submission has no
merit. In a Federal structure of any constitution, their
fields are well defined, sometime same subject may be under
control of both legislatures as in the concurrent list of
our Constitution. Thus in a given case, as in the above,
large numbers of such cases were a delegatee is of the
Parliament were put under the control of the State
legislature. This submission is sought to be challenged by
submitting by learned senior counsel Mr. Nariman that the
cases in the Schedule under the 1983 Act are all cases
falling under the Concurrent List of the Seventh Schedule of
our Constitution. This was because both the Parliament and
the State Legislature had the plenary power to make laws
over the same subject. This in our considered opinion would
make no difference. It is significant to record, though the
subject we are dealing with, viz., Regulation of mines and
mineral development does not fall in the Concurrent List,
but still both falls in the field of the Parliament under
Entry 54 List I and the State legislature under Entry 23
List II, their possible conflict is resolved by the
following words in Entry 23 List II, subject to the
provisions of List I with respect to regulation and
development under the control of the Union. This control
may be full, or partial. In the present case when this 1957
Act was passed, Union came in full control over this subject
and no field was left for the State to make the law. But
this covering of the entire field was by the 1957 Act itself
not by any other constitutional limitation. Then the Act
which takes the entire field can also withdraw from it both
partial or fully. In the present case since the Parliament
has exercised its discretion under Item 54 List I, the State
Legislature is denuded of its power under Entry 23 List II.
It may be said so long that Act remains in force it eclipses
the power of the State Legislature. In the present case as
held in Baij Nath Kedias case (supra) after passing of the
aforesaid 1957 Act the power of State Legislature has been
completely denuded by the Parliament. If that be so, it is
always open for the Parliament to withdraw partially the
eclipse if so desires, may leave the Legislature for such
part to exercise its power which it originally have by
virtue of Item 23 of List II. It is in this light when we
examine the amendment by introducing sub-section (3) of
Section 28, with provision to lay the rule or notification
made by the State Government before the State Legislature it
cannot be said it can only be when it is in the concurrent
list. Thus such placement cannot be said to be incompetent
or keeping if beyond the control of the Parliament. As we
have said this placement before the State legislature is for
a limited purpose for which the Parliament is competent.
Thus introduction of sub-section (3) in Section 28, in this
light cannot be said to be of no consequence. It was done
for a purpose and that purpose, as aforesaid, is sufficient
to hold the State Government under check while exercising
its power as a delegatee.
We also find there are few provisions in our
Constitution which require mere laying before the
Parliament. Article 151 requires laying of the report of
the Comptroller and Auditor-General of India before each
House of Parliament and with reference to the State, to be
laid before the Legislature of the State. Article 338 (5)
requires placing of the report of the Commission before each
House of Parliament and with reference to the State
Government, under sub-Article (7) it to be laid before the
Legislature of the State. Though they are mere provisions
of mere laying before the Parliament, but it is always open
to any Member of the House to discuss and comment on the
said report.
Next coming to the quantum of imposition, on the facts
of this case, the imposition of royalty/dead rent could be
said to be arbitrary or excessive by the State Government.
We do not find any material placed by the appellants in the
writ petition to come to such a conclusion. Though by
proviso to sub-section (3) of Section 15 it is open for the
State Government to revise the royalty every three years but
the history shows it has not done so. Since 1975 the State
Government has increased royalty only four times and there
is no increase since 28th September 1994 despite lapse of
six years, in other words, raising royalty only four times
during 25 years. Even in the case of D.K. Trivedis case
(supra) as we have recorded above a large percentage of
increase in royalty has been made yet it was not struck down
on that account. Before concluding we would like to record
our appreciation in the manner in which learned counsels for
the parties made their valuable submissions which made our
task easy. Though at times their ingenuity made us to think
and rethink but the precision through which the submissions
were made helped us to conclude to the best of our
conscience.
In view of the aforesaid discussion and findings we
conclude:
(a) The impugned two notification dated 17th August,
1991 and 28th September, 1994 are valid. (b) The State
Government while acting as delegatee under Section 15(1) of
the Act is not confined to fix the royalty/dead rent within
the peripheral ambit of Entry 54 Schedule II of the Act.
Neither D.K. Trivedi (Supra) has said so, nor can it be
construed to be so. (c) The State Government has acted
within the ambit of the power delegated to it and such
delegation is with sufficient guidelines and check in view
of the Preamble, object and reasons and various provisions
of the Act. (d) Requirement of mere placement of the Rules
or the Notifications before the State Legislature is also
one of the form of check on the State Government to exercise
its powers as a delegatee. (e) In this case the impugned
notification dated 28.9.1994 has not been placed as required
by sub-section (3) of Section 28 of the Act. The State
Government is directed to do so now at the earliest. (f)
However, non-placement of the said notification would not
invalidate the same, as said requirement is only directory.
(g) The enhancement of royalty on the facts and
circumstances of this case cannot be said to be arbitrary or
otherwise illegal.
In view of the aforesaid findings, we do not find any
merit in these appeals and accordingly they are dismissed.
We upheld the judgment of the High Court but on a different
reasoning as recorded by us earlier. The appeals stand
dismissed with costs.
