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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

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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

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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

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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;

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(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

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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

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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

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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

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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

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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

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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

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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

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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

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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

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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

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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

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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

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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

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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

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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

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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

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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

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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

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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

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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:

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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

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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

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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

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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

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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

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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.