Case Note & Summary
These writ petitions, filed before the Supreme Court of India, challenged the validity of Rule 8-C of the Tamil Nadu Minor Mineral Concession Rules, 1959, as amended by G.O.M.No.214 dated 10 June 1992, and Rule 38 of the same Rules. The petitioners, private parties interested in granite quarrying leases, contended that the rules were bad in law because they permitted the State Government to reserve granite quarrying areas for itself and for State Government companies or corporations without obtaining the prior approval of the Central Government as required under Section 17-A(2) of the Mines & Minerals (Regulation & Development) Act, 1957, which was inserted by Amendment Act 37 of 1986. The State of Tamil Nadu was the respondent. The impugned Rule 8-C, as amended, provided that from 10 June 1992 no lease for quarrying black, red, pink, grey, green, white or other coloured or multi-coloured granites or any rock suitable for ornamental and decorative stones shall be granted to any person; it further allowed the State Government itself to engage in quarrying such granites or to grant or renew leases to a State Government Company or Corporation owned or controlled by the State Government. Rule 38 provided that the State Government may, by notification in the Official Gazette, reserve any area for exploitation by the Government, a Corporation established by any Central, State or Provincial Act, or a Government Company within the meaning of Section 617 of the Companies Act, 1956. It was an admitted position that the approval of the Central Government had not been obtained to Rule 8-C as amended, either before or after its issuance on 10 June 1992. The legal issue before the court was whether Rule 8-C and Rule 38, insofar as they allowed reservation for State Government companies or corporations, required compliance with Section 17-A(2) of the MMDR Act, 1957, which mandates Central Government approval for reserving areas for prospecting or mining operations through a Government Company or Corporation. The petitioners argued that the rules were ultra vires Section 17-A(2) for lack of approval. The respondent State contended that Rule 8-C did not reserve areas for State companies or corporations but merely preserved the granites, and that as owner of the minerals the State could decline to lease and quarry itself without Central approval, relying on Amritlal Nathubhai Shah v. Union Government of India (1977) 1 S.C.R. 372. The Supreme Court accepted that as owner of the granites and rock, the State Government may decline to grant any lease and itself engage in quarrying; that portion of Rule 8-C was not struck down. However, the court held that the rule went further by permitting the State to grant or renew leases to State Government companies or corporations, which constituted a reservation for such entities under Section 17-A(2) and required prior Central Government approval. Since no approval was obtained, that portion of Rule 8-C was bad in law. The court further held that Rule 38, insofar as it related to exploitation by Central or State Government companies or corporations, must be read in conjunction with Section 17-A(2), meaning that any reservation for such entities could only be made with Central Government approval. Accordingly, the writ petitions were partly allowed. Rule 8-C as amended was declared bad in law and struck down only to the extent that it permitted the State Government to grant or renew leases in favour of State Government companies and corporations to quarry the specified granites and rock. Rule 38 was directed to be read as subject to the provisions of Section 17-A(2). There was no order as to costs.
Headnote
A) Mines and Minerals - Reservation of Area for State Exploitation - State Government as owner may refuse to grant quarrying leases and itself engage in quarrying without Central approval - Mines & Minerals (Regulation & Development) Act, 1957, Section 17-A(2); Tamil Nadu Minor Mineral Concession Rules, 1959, Rule 8-C - The State, as owner of minerals, may decline to grant any lease and itself engage in quarrying; Rule 8-C provision prohibiting grants to private persons was upheld. Held that the State's proprietary right to exploit its own minerals is not subject to Section 17-A(2) approval (Paras 4-7). B) Mines and Minerals - Reservation for Government Companies - Requirement of Central Government Approval - Mines & Minerals (Regulation & Development) Act, 1957, Section 17-A(2); Tamil Nadu Minor Mineral Concession Rules, 1959, Rule 8-C - Rule 8-C, as amended, permitted grant or renewal of leases to State Government companies/corporations; this constituted reservation for such entities and required prior approval of Central Government under Section 17-A(2), which was admittedly not obtained; thus that portion was struck down. Held that absence of approval rendered the provision bad in law (Paras 4-9). C) Mines and Minerals - General Reservation Rule - Rule 38 Subject to Section 17-A(2) - Tamil Nadu Minor Mineral Concession Rules, 1959, Rule 38; Mines & Minerals (Regulation & Development) Act, 1957, Section 17-A(2) - Rule 38 permits reservation of area for exploitation by Government, Central/State Government companies or corporations; insofar as it relates to companies/corporations, it must be read subject to Section 17-A(2) approval. Held that rule 38 is valid only if such approval is obtained for reservation in favour of companies/corporations (Paras 8-9).
Issue of Consideration
Whether Rule 8-C of the Tamil Nadu Minor Mineral Concession Rules, 1959, as amended by G.O.M.No.214 dated 10 June 1992, is invalid for want of Central Government approval under Section 17-A(2) of the Mines & Minerals (Regulation & Development) Act, 1957 insofar as it permits the State Government to grant or renew leases to State Government companies/corporations; and whether Rule 38 of the said Rules, relating to reservation of area for exploitation in public sector, must be read subject to Section 17-A(2)
Final Decision
The writ petitions were partly allowed. Rule 8-C as amended by G.O.M.No.214 dated 10 June 1992 was declared bad in law and struck down insofar as it permits the State Government to grant or renew leases in favour of State Government companies and corporations to quarry the granites and rock therein mentioned. Rule 38 must be read as being subject to the provisions of Section 17-A(2). There shall be no order as to costs.
Law Points
- State Government as owner may decline to grant quarrying leases and itself engage in quarrying without Central approval
- reservation for State Government companies/corporations requires prior approval of Central Government under Section 17-A(2) of Mines & Minerals (Regulation & Development) Act
- 1957
- Rule 38 of Tamil Nadu Minor Mineral Concession Rules
- 1959 must be read subject to Section 17-A(2)
- absence of Central approval renders Rule 8-C invalid insofar as it permits grant/renewal of leases to State companies/corporations
