Case Note & Summary
The dispute concerned the validity of 203 quarry leases for granite in government lands granted by the State of Karnataka under Rule 3 of the Karnataka Minor Mineral Concession Rules, 1969, despite an express prohibition in Rule 3A. The State Government had earlier amended Rule 3A to relax the absolute restriction on private granite quarrying, but those amendments were challenged in writ petitions and stayed by the High Court. To bypass the stay, the Government issued order dated 18.6.1991, deciding to resort to Rule 3 for granting leases, based on legal opinion that Rule 3 could be used until the validity of Rule 3A amendments was determined. The Director of Mines and Geology processed 2350 applications under Rule 3 and granted 203 leases. P.G.R. Scindia, MLA and others challenged these grants in the Karnataka High Court, which quashed all 203 leases. The grantees filed writ appeals, which were dismissed by a Division Bench. Aggrieved, the grantees appealed to the Supreme Court by special leave. The appellants argued that the grants were valid under Rule 3 with prior Government approval, that Rule 66 allowed relaxation of rules in special cases, and that stay orders in earlier writ petitions made Rule 3 available or that grants should be tested against Rule 3A as it existed on the grant date. The Supreme Court rejected these submissions. It held that the Government Order dated 18.6.1991 expressly exercised power only under Rule 3 and made no reference to Rule 66, so Rule 66 could not later validate the grants. Rule 66 required the Government to form an opinion in each individual case that public interest required relaxation, and such opinion must precede the grant; here no such prior satisfaction was recorded, and the Director, not the Government, exercised the granting power. The Court further held that stay orders in earlier writ petitions did not strike down or suspend Rule 3A, and non-parties derived no benefit from them. Rule 3A prohibition continued to operate at the time of the impugned grants, making them invalid. The Supreme Court dismissed the appeals and upheld the High Court's judgment quashing all 203 quarry leases.
Headnote
A) Mines and Minerals - Grant of Quarry Leases - Prohibition under Rule 3A of Karnataka Minor Mineral Concession Rules, 1969 - Quarry leases for black, pink, and multi-coloured granite in government lands were granted under Rule 3 based on Government Order dated 18.6.1991 despite the absolute prohibition in Rule 3A; Rule 3A was neither struck down nor suspended; therefore grants under Rule 3 were void - Held that High Court rightly quashed all 203 leases (Paras not mentioned). B) Delegated Legislation - Relaxation of Rules - Rule 66 Karnataka Minor Mineral Concession Rules, 1969 - Belated attempt to sustain grants under Rule 66 rejected because power was exercised only under Rule 3 without reference to Rule 66; Rule 66 requires prior opinion of Government in each individual case that public interest requires relaxation on specified terms; no such opinion formed before grant; Director of Mines and Geology, not Government, exercised granting power; relaxation power must be exercised separately in each case - Held that Rule 66 cannot validate the grants (Paras not mentioned). C) Judicial Review - Interim Orders - Effect of Stay Orders - Stay orders in earlier writ petitions challenging amendments to Rule 3A did not suspend or obliterate Rule 3A; the prohibition continued to operate; non-parties derived no benefit; alternative argument that grants should be examined under Rule 3A as it existed on date of grant rejected because prohibition existed then - Held that grants made against existing prohibition are invalid (Paras not mentioned).
Issue of Consideration
Whether quarry leases granted under Rule 3 of Karnataka Minor Mineral Concession Rules, 1969 are valid despite prohibition in Rule 3A; whether Rule 66 can validate such grants; whether stay orders in earlier writ petitions suspended Rule 3A or benefited non-parties
Final Decision
Supreme Court dismissed the appeals and upheld the High Court's judgment quashing all 203 granite quarry leases. The Court held that the grants under Rule 3 were void as they contravened the express prohibition in Rule 3A; the belated reliance on Rule 66 was untenable; and the stay orders did not suspend Rule 3A. No relief was granted to the appellant grantees.
Law Points
- Grant of quarry lease under Rule 3 is invalid when Rule 3A prohibits such grant and is not struck down or suspended
- Rule 66 relaxation requires prior Government opinion in each individual case that public interest requires relaxation
- stay orders on amendments to Rule 3A do not suspend Rule 3A and confer no benefit on non-parties
- relaxation power under Rule 66 cannot be exercised retrospectively or by Director of Mines and Geology
