MONNET ISPAT & ENERGY LTD. v. UNION OF INDIA AND ORS.

p. 701

AND ORS. [R.M. LODHA, J.] 2006 Notification seeks to reserve the area for "joint venture" A but that is not permissible under Section 17A of the 1957 Act. Section 17A(2) mandates that the area should be reserved "with the approval of the Central Government" and there was no approval granted to the 2006 Notification. Moreover, 2006 Notification by its own words, is nothing but merely an informatory Notification having no legal significance or consequence.

26. Dr. Rajiv Dhavan, learned senior counsel made his submissions on behalf of Jharkhand lspat. He vehemently contended that the 1962 Notification was wholly illegal and invalid as it was totally contrary to Rule 59 of 1960 Rules as it then stood which specifically allowed reservation for any purpose other than prospecting or mining for minerals. In this connection, he relied upon a decision of this Court in Janak Lal v. State of Maharashtra and Othersi. D

27. Learned senior counsel referred to changes that occurred in 1957 Act and 1960 Rules with effect from February 10, 1987. He submitted that by virtue of Section 17A(3) which was brought in 1987 the State Governments acquired power E of reservation for specific areas with the approval of the Central Government. From April 13, 1988 under Rule 59(2) of the 1960 Rules, the Central Government could relax the provisions of sub- rule (1) in any special case. According to learned senior counsel, reservation under 1969 Notification was technically F · permissible because Rule 59 was amended in 1963 by removing 'no mining restriction' but reservations after 1980 and especially 1988 could be made only under a new statutory regime.

28. Dr. Rajeev Dhavan also based his argument on the G doctrine of federalism and submitted that the State of Bihar had no legal power to reserve the area de hors the 1957 Act. He submitted that 1957 Act was wholly occupied field on the

j. 1989 (4) sec 121 H

p. 702

A subject of mines and minerals and that ousts the state legislative and congruent executive power wholly and squarely. In support of his submissions, he referred to the decisions of this Court in Hingir-Rampur Coal Co. a, Baijnath Kadioc , State of Assam and others v. Om Prakash Mehta and othersk, State of WB. B v. Kesoram Industries Ltd. and others 1 and Sandur Manganese and Iron Ores Limited v. State of Karnataka and Others"'.

29. Dr. Rajeev Dhavan submitted that merely because C State happens to be the owner of the land including mines, it does not give it power to mine or reserve outside the regime of 1957 Act and 1960 Rules. He submitted that Amritlal Nathubhai Shah's cased must be confined to its own facts. The decision in Amritlal Nathlibhai Shahd was founded on the specific finding that the State's action was consistent with Rule D 59; it does not test the proposition of a conflict between the State's power over land and the Union's take over of the field of mines and minerals. Moreover, learned senior counsel would submit that Amritlal Nathubhai Shahd failed to take note of earlier Constitution Bench decisions of this Court. Learned E senior counsel also submitted that the decision of this Court in Kesoraml has no application as the said decision deals with the State's power to tax.

30. Mr. Dhruv Mehta, learned senior counsel for Prakash F submitted that prior to November 16, 1980, there was no power with the State Governments to reserve any area for exploitation by the Government or a Corporation established by Central or State Act or a government company. It was only by way of amendment to Rule 58 on November 16, 1980 that for the first G time the State Governments were conferred power to reserve any area for exploitation by the Government or a Corporation established by the Central, State or Provincial Act or a

k. 1973 c1 l sec 584.

1. 2004 (10) sec 201. H m. 2010 (13) sec 1.

p. 703

AND ORS. [R.M. LODHA, J.] government company. According to him, the question for A consideration in the present context should be whether prior to 1980, the State had power either to 'prohibit mining' or to 'reserve mining for public sector undertaking'. In this regard, he referred to decisions of this Court in Baijnath Kadioc, D.K. Trivedi and Sons and Others v. State of Gujarat and Others", B State of Tamil Nadu v. Mis. Hind Stone and Others0 and Indian Metals and Ferro Alloys Ltd. v. Union of India & OrsP. He submitted that in view of the above, 1962 Notification reserving iron ore area in the State of Bihar for exploitation of mineral in public sector was clearly beyond the power of the c State. He submitted that the State did not have any inherent power to reserve any area for mining in view of the declaration made by Parliament under Section 2 of the 1957 Act and in any case Rule 59 of the 1960 Rules, as it originally stood, specifically excluded reservation with regard to prospecting or D mining of mineral prior to June 9, 1963.

31. As regards 2006 Notification, Mr. Mehta submitted that the said Notification firstly, was not a fresh exercise of reservation as it refers to reservation already made by 1962 and 1969 Notifications. Secondly, even if it is assumed that E 2006 Notification is a fresh order for reservation in exercise of the power under Section 17A(2) of the 1957 Act, yet the said Notification suffers from diverse infirmities, namely, (a) there is no approval by the Central Government and (b) being an exercise of subordinate legislation, it cannot be given F retrospective effect. Reliance was placed by the learned senior counsel on Hukam Chand etc. v. Union of India & Ors"-.

Central Government's Stand

32. Mr. Ashok Bhan, learned senior counsel for the Union G

n. 1986 (Suppl.) SCC 20. o. 1981 (2) sec 20s. p. 1992 Supp (1) sec 91. q. 1972 (2) sec 601. H

p. 704

A of India referred to Entry 54 of the Union List, Entry 23 of the State List, Article 246 of the Constitution, various Sections of 1957 Act and Rules of 1960 Rules and submitted that Central Government having taken power on to itself by enacting 1957 Act, the legislative field relating to 'minerals - regulation and B development' is occupied and the Central Government was the sole regulator. Mr. Ashok Bhan submitted that under the scheme of law, the State Government was denuded of its power other than what flows from the 1957 Act. In matters of regulation of mines and development of minerals, according to Mr. Ashok c Bhan, public interest is paramount.

Reply on behalf of the State Government

33. Mr. Ajit Kumar Sinha, learned senior counsel for the State of Jharkhand, in reply, strongly contested the contentions of learned senior counsel appearing for the appellants. He vehemently contended that the State Government had the inherent power to reserve any area for exploitation as the owner of the land and minerals vested in it. He submitted that the Bihar Legislature enacted 1950 Bihar Act which received the assent of the President and came into force on September 25, 1950. Section 4(a) thereof vested all pre-existing estates or tenures including rights in mines and minerals absolutely in the State free from all encumbrances. 1950 Bihar Act has been held to be constitutionally valid by a decision of this Court in The State F of Bihar v. Maharajadhiraja Sir Kameshwar Singh of Darbhanga and Ors.'. In any event, Mr. Ajit Kumar Sinha, learned senior counsel submitted that 1950 Bihar Act has been put in the Ninth Schedule of the Constitution and was, therefore, beyond the pale of challenge. Moreover, the sovereign executive G power of the State Government under Article 298 of the Constitution to carry on any trade or business and to acquire, hold and dispose of property for any purpose comprehends and includes the power to reserve land for exploitation of its minerals in the public sector. He heavily relied upon the decisions of this H r. 1952 SCR 889.

p. 705

AND ORS. [R.M. LODHA, J.] Court in Amritla/ Nathubhai Shahd, Indian Metals and Ferro A Alloys Ltd. P and Bhupatrai Magan/al Joshi and Others v. Union of India and another6.

34. Mr. Ajit Kumar Sinha, leaned senior counsel submitted that the source of power for issuance of 1962, 1969 and 2006 8 Notifications is clearly traceable to the relevant statutory provisions. Learned senior counsel would submit that source of 1962 and 1969 Notifications issued by the then State of Bihar was traceable to Rule 59 of i 960 Rules as it then stood followed by amendment in that rule on July 9, 1963, while 2006 Notification is traceable to Section 17A(2) of 1957 Act read with Rule 59(1)(e) as inserted with effect from April 13, 1988.

35. Mr. Ajit Kumar Sinha, learned senior counsel submitted that even otherwise there was no conflict or encroachment by the State of any occupied field. The State has neither been divested nor barred nor prohibited by 1957 Act or 1960 Rules. Instead, the unfettered power of reservation vested with the State alone under Rule 59 of 1960 Rules from 1962 to 1987 and thereafter under Section 17A(2). According to him, after 1987 there is a concurrent power of reservation both with State E Governments as well as Central Government as provided in Section 17A of the 1957 Act and Rule 59(1)(e) of the 1960 Rules. He relied upon decisions of this Court in Lord Krishna Textile Mills v. Its Workmen!, Life Insurance Corporation of India v. Escorts Limited and othersu, Municipal Corporation F for City of Pune & Ors. v. Bharat Forge Co. Ltd. & Ors. v and High Court of Judicature for Rajasthan v. P.P. Singh and Another"'.

36. Mr. Ajit Kumar Sinha, learned senior counsel referred G s. 2001 c10) sec 476. t. AIR 1961 SC 860. u. 1986 (1) sec 264. v. 1995 (3) sec 434. w. 2003 (4) sec 239. H

p. 706

A to the provisions of the 1957 Act, particularly Sections 2, 4(3), 4A, 10(1), 13(2)(e), 16(1)(b), 17(1), 17A(1)(A), 18A(6), 21(5), 28 and 30 to show that Parliament itself contemplated state legislation for vesting of lands containing mineral deposits in the State Government and Parliament did not intend to trench B upon powers of State legislatures under Entry 18 of List II. He relied upon the decisions of this Court in State of Haryana and Another v. Chanan Mal and Othersx, lshwari Khetan Sugar Mills (P) Limited & Ors. v. State of Uttar Pradesh and Othersr and Kesoraml1• He heavily relied upon the expression employed c in Entry 54, 'to the extent to which such regulation and development under the control of Union is declared by Parliament by law' and the expression 'to the extent hereinafter provided' in Section 2 of 1957 Act and submitted that what follows from this is that only when there is a bar or a prohibition 0 in the law declared by the Parliament in the 1957 Act and/or the Rules made thereunder and if the State encroaches on the field covered/occupied then to that extent, the act or action of the State would be ultra vires. Thus, Mr. Ajit Kumar Sinha would submit that the power or competence of the state legislatures to enact laws or of the State Government to issue notification E remains unaffected if the field is neither occupied nor disclosed nor prohibited. In this regard, he referred to few decisions of this Court, namely, Hingir-Rampur Coal Co.•, M.A. Tulloch & Cob., Baijnath Kadioc, India Cement Limitede, Bharat Coking Coal, Orissa Cement Limitedf and Kesoram 1 •

37. Learned senior counsel would submit that the Central Government also upon examination of the applications made by the appellants rejected the proposals on the ground of reservation made by the then State of Bihar under 1962 and G 1969 Notifications and, thus, it can be inferred that these Notifications received post facto approval from the Central Government. In this regard, learned senior counsel relied upon Mis Motilal Padampat Sugar Mills Co. Ltd. V. State of U.P. x. 1977 (1) sec 340. H y. rnao (4) sec 136.

p. 707

AND ORS. [R.M. LODHA, J.] & Ors.', Amrit Banaspati Ltd. and Another v. State of Punjab A and Another•, State of Punjab v. Nestle India Ltd. and Anothefib, M.P. Mathur and Others v. OTC and Otherscc and Sandur Manganese and Iron Ores Limitedmm.

38. Mr. Ajit Kumar Sinha, learned senior counsel submitted 8 that 1962 and 1969 Notifications issued by the then State of Bihar have been reiterated by the State Government on its formation by 2006 Notification. He referred to Section 85 of the Bihar Reorganization Act, 2000 that provides that the appropriate government may, before the expiration of two years adapt and/or modify the law and every such law shall have effect subject to the adaptations and modifications so made until altered, repealed or amended by a competent legislature. He, thus, submitted that by virtue of Section 85 of Bihar Reorganization Act, 2000 read with Sections 84 and 86 thereof, it is clear that the existing law shall have effect till it is altered, repealed and/or amended.

lnterveners' view

39. Mr. Vikas Singh, Mr. Krishnan Venugopal and Mr. P.S. E Narasimha, learned senior counsel, appeared for interveners. While adopting the arguments advanced on behalf of State of Jharkhand, Mr. Vikas Singh submitted that reservation of minerals is inherent right vested in the State. Mr. Krishnan Venugopal, learned senior counsel heavily relied upon the F decision of this Court in Amritlal Nathubhai Shahd and submitted that the said decision was binding and not per incuriam as contended on behalf of the appellants. He submitted that many provisions in 1957 Act and 1960 Rules acknowledge that all minerals vest in the State and that power to reservation is contemplated by Rule 59 of 1960 Rules. G

z. 1979 (2) sec 409. aa. 1992 (2) sec 411. bb. 2004 (6) sec 465. cc. 2006 (13) sec 106. H

p. 708

40. After this group of appeals was fully argued before us and the appeals were reserved for judgment, a Special Leave Petition, Geo-Minerals and Marketing (P) Ltd. v. State of Orissa & Ors., arising out of the judgment of Orissa High Court in W.A. © No. 6288/2006 came up for final disposal wherein one of the issues concerning reservation of mining area by the Government of Orissa for exploitation in public sector was found to be involved. We thought fit that learned senior counsel and counsel appearing in that matter were also heard so that we cal'.l have benefit ·of their view-point as well. Accordingly, we heard Mis. Harish Salve, K.K. Venugopal and R.K. Dwivedi, learned senior counsel, on the common legal aspect.

41. I would have preferred not to burden this judgment with the text of Entry 54 of List I, Entry 23 of List II and the relevant provisions contained in 1957 Act and 1960 Rules but reproduction of some of the provisions is necessary for having the point under consideration in proper perspective.

Relevant Entries

42. Entry 54, List I, is as follows : E "54. Regulation of mines and mineral development to the extent to which such regulation and development under the control of the Union is declared by Parliament by law to be expedient in the public interest." F

43. Entry 23, List II, is as under :

"23. Regulation of mines and mineral development subject to the provisions of List I with respect to regulation and development under the control of the Union." G Mines and Minerals (Regulation and Development) Act, 1948

44. The Mines and Minerals (Regulation and Development) H Act, 1948 (for short, '1948 Act') was enacted to provide for the

MONNET !SPAT & ENERGY LTD. v. UNION OF INDIA 709 AND ORS. [R.M. LODHA, J.] regulation of mines and oilfields and for the development of the A minerals under Entry 36 of the Government of India Act, 1935. It received the assent of the Governor General on September 8, 1948 and came into effect from that date. Under 1948 Act, the Central Government framed Mineral Concession Rules, 1W9. B

45. 1948 Act was repealed by 1957 Act. The introduction of 1957 Act reads as follows :

"In the Seventh Schedule of the Constitution in Union List entry 54 provides for regulation of mines and minerals development to the extent to which such regulation and development under the control of the Union is declared by Parliament by law to be expedient in the public interest. On account of this provision it became imperative to have a separate legislation. In order to provide for the regulation of mines and the development of minerals, the Mines and Minerals (Regulation and Development) Bill was introduced in the Parliament."

Mines and Minerals (Regulation and Development) Act, E 1957 and the Amendments

46. 1957 Act came into effect on June 1, 1958. It has been amended from time to time.

47. Section 2 of the 1957 Act reads as follows : F

"S. 2. Declaration as to the expediency of Union control.- - It is hereby declared that it is expedient in the public interest that the Union should take under its control the regulation of mines and the development of minerals to the G extent hereinafter provided."

48. Section 3(a),(c},(d),(e),(f), (g) and (h) defines 'minerals', 'mining lease', 'mining operations', 'minor minerals', 'prescribed' 'prospecting licence' and 'prospecting operations' in the 1957 Act as under: H

p. 709 — page break not located

p. 710

A "3(a) "minerals" includes all minerals except mineral oils;

(c) "mining lease" means a lease granted for the purpose of undertaking mining operations, and includes a sub-lease granted for such purpose; B (d) "mining operations" means any operations undertaken for the purpose of winning any mineral;

(e) "minor minerals" means building stones, gravel, ordinary clay, ordinary sand other than sand used for c prescribed purposes, and any other mineral which the Central Government may, by notification in the Official Gazette, declare to be a minor mineral;

(f) "prescribed" means prescribed by rules made under this Act; D (g) "prospecting licence" means a licence granted for the purpose of undertaking prospecting operations;

(h} "prospecting operations" means any operations undertaken for the purpose of exploring, locating or proving mineral deposits;"

49. The original Section 4 in 1957 Act read as follows :

"S.4. (1) No person shall undertake any prospecting or mining operations in any area, except under and in accordance with the terms and conditions of a prospecting licence or, as the case may be, a mining lease, granted under this Act and the rules made thereunder:

Provided that nothing in this sub-section shall affect any prospecting or mining operations undertaken in any area in accordance with the terms and conditions of a prospecting licence or mining lease granted before the commencement of this Act which is in force at such commencement. H

p. 711

AND ORS. [R.M. LODHA, J.] (2) No prospecting licence or mining lease shalrbe granted A otherwise than in a_ccordance with the provisions of this Act and the rules made thereunder."

50. In 1986, 1987 and 1999, Section 4 of the 1957 Act came to be amended. After these amendments, Section 4 B reads as under :

"5.4.- Prospecting or mining operations to be. under licence or lease.-(1) dd[No person shall undertake any reconnaissance, prospecting or mining operations in any area, except under and in accordance with the terms and c conditions of a reconnaissance permit or of a prospecting licence or, as the case may be, of a mining lease, granted under this Act and the rules made thereunder]:

Provided that nothing in this sub-section shall affect D any prospecting or mining operations undertaken in any area in accordance with the terms and conditions of a prospecting licence or mining lease granted before the commencement of this Act which is in force at such commencement: E ••[Provided further that nothing in this sub-section shall apply to any prospecting operations undertaken by the Geological Survey of India, the Indian Bureau of Mines, '![the Atomic Minerals Directorate for Exploration and Research] of the Department of Atomic Energy of the F Central Government, the Directorates of Mining and Geology of any State Government (by whatever name called), and the Mineral Exploration Corporation Limited, a Government company within the meaning of section 617 of the Companies Act, 1956:] G

dd. Subs. by Act 38 of 1999, sec. 5, for certain words (w.e.f. 18-12-1999). ee. Ins. by Act 37 of 1986, sec. 2 (w.e.f. 10-2-87). ff. Subs. by Act 38 1999, sec. 5, for "the Atomic Minerals Division" (w.e.f. 18- 12-1999) H

p. 712

A 99[Providedalso that nothing in this sub-section shall apply to any mining lease (whether called mining lease, mining concession or by any other name) in force immediately before the commencement of this Act in the Union Territory of Goa, Daman and Diu.] B hh[(1A) No person shall transport or store or cause to be transported or stored any mineral otherwise than in accordance with the provisions of this Act and the rules made thereunder.] c (2) ;;[No reconnaissance permit, prospecting licence or mining lease] shall be grated otherwise than in accordance with the provisions of this Act and the rules made thereunder.

D H[(3) Any State Government may, after prior consultation with the Central Government and in accordance with the rules made under section 18, kk[undertake reconnaissance, prospecting or mining operations with respect to any mineral specified in the First Schedule in any area within that State which is not already held under any reconnaissance permit, prospecting licence or mining lease]."

51. Section 5 of the 1957 Act, as originally enacted, provided that no prospecting licence or mining lease should be granted by a State Government to any person unless the conditions prescribed therein were satisfied. It mandated previous approval of the Central Government before grant of prospecting licence or mining lease by the State Government.

G gg. Ins. by Act 16 of 1987, sec 14 (w.r.e.f. 1-10-1963). hh. Ins. by Act 38 of 1999, sec. 5 (w.e.f. 18-12-1999). ii. Subs. by Act 38of1999, sec 5, for "No prospecting licence of mining lease'( w.e.f. 18-12-1999). jj. Ins. by Act 37 of 1986, sec. 2 (w.e.f. 10-12-1987) H kk. Subs. by Act 38 of 1999, sec. 5, for certain words (w.e.f. 8-12-1999).

p. 713

AND ORS. [R.M. LODHA, J.]

52. The original Section 5 came to be amended in 1_986, A 1994 and 1999. After these amendments, Section 5 now provides that a State Government shall not grant a reconnaissance permit, prospecting licence or mining lease to any person unless he satisfies the requisite conditions. The provision mandates that in respect of any mineral specified in the First Schedule, no reconnaissance permit, prospecting licence or mining lease shall be granted except with the previous approval of the Central Government.

53. Section 6 of 1957 Act provides for maximum area for which a prospecting licence or mining lease may be granted. Section 7 makes provision for the periods for which prospecting licence may be granted or renewed and Section 8 provides for periods for which mining lease may be granted or renewed. D

54. Section 10 of the 1957 Act provides that application for reconnaissance permit, prospecting licence or mining lease in respect of any land in which the minerals vest in the Government shall be made to the State Government concerned. Inter alia, it empowers the concerned State Government to grant E or refuse to grant the permit, licence or lease having regard to the provisions of 1957 Act or 1960 Rules.

55. The original Section 11 of the 1957 Act read as follows: F "S.11.(1) Where a prospecting licence has been granted in respect of any land, the licensee shall have a preferential right for obtaining a mining lease in respect of that land over any other person:

Provided that the State Government is satisfied that G the licensee has not committed any breach of the terms and conditions of the prospecting licence and is otherwise a fit person for being granted the mining lease.

p. 714

A (2) Subject to the provisions of sub-section (1), where two or more persons have applied for a prospecting licence or a mining lease in respect of the same land, the applicant whose application was received earlier shall have a preferential right for the grant of the licence or B lease, as the case may be, over an applicant whose application was received later:

Provided that where any such applications are received on the same day, the State Government, after taking into consideration the mattes specified in sub- c section (3), may grant the prospecting licence or mining lease, as the case may be, to such one of the applicants as it may deem fit.

(3) The matters referred to in sub-section (2) are the D following :-

(a) any special knowledge of, or experience in, prospecting operations or mining operations, as the case may be, possessed by the applicant; E (b) the financial resources of the applicant;

(c) the nature and quality of the technical staff employed or to be employed by the applicant;

(d) such other matters as may be prescribed. F (4) Notwithstanding anything contained in sub-section (2) but subject to the provisions of sub-section (1), the State Government may for any special reasons to be recorded and with the previous approval of the Central Government, G grant a prospecting licence or a mining lease to an applicant whose application was received later in preference to an applicant whose application was received earlier."

56. The above provision was substituted by Act 38 of 1999 H

p. 715

AND ORS. [R.M. LODHA, J.] with effect from December 18, 1999. After substitution, Section A 11 now reads as under :

"S.11. Preferential right of certain persons.-(1) Where a reconnaissance permit or prospecting licence has been granted in respect of any land, the permit holder or the 8 licensee shall have a preferential right for obtaining a prospecting licence or mining lease, as the case may be, in respect of that land over any other person:

Provided that the State Government is satisfied that the permit holder or the licensee, as the case may be,- c {a) has undertaken reconnaissance operations or prospecting operations, as the case may be, to establish mineral resources in such land; D {b) has not committed any breach of the terms and conditions of the reconnaissance permit or the prospecting licence;

(c) has not become ineligible under the provisions of this Act; and E

(d) has not failed to apply for grant of prospecting licence or mining lease, as the case may be, within three months after the expiry of reconnaissance permit or prospecting licenc;:e, as the case may be, or within such further period, as may be extended by the said Government.

(2) Subject to the provisions of sub-section (1), where the State Government has not notified in the Official Gazette the area for grant of reconnaissance permit or prospecting licence or mining lease, as the case may be, and two or more persons have applied for a reconnaissance permit, prospecting licence or a mining lease in respect of any land in such area, the applicant whose application was received earlier, shall have the H

p. 716

A preferential right to be considered for grant of reconnaissance permit, prospecting licence or mining lease, as the case may be, over the applicant whose application was received later:

Provided that where an area is available for grant of B reconnaissance permit, prospecting licence or mining lease, as the case may be, and the State Government has invited applications by notification in the Official Gazette for grant of such permit, licence or lease, all the applications received during the period specified in such c notification and the applications which had been received prior to the publication of such notification in respect of the· lands within such area and had not been disposed of, shall be deemed to have been received on the same day for the purposes of assigning priority under this sub-section: D Provided further that where any such applications are received on the same day, the State Government, after taking into consideration the matter specified in sub- section (3), may grant the reconnaissance permit, E prospecting licence or mining lease, as the case may be, to such one of the applicants as it may deem fit.

(3) The matters referred to in sub-section (2) are the following :-

F (a) any special knowledge of, or experience in, reconnaissance operations, prospecting operations or mining operations, as the case may be, possessed by the applicant.

G (b) the financial resources of the applicant;

(c) the nature and quality of the technical staff employed or to be employed by the applicant;

(d) the investment which the applicant proposes to H make in the mines and in the industry based on the

p. 717

AND ORS. [R.M. LODHA, J.] minerals; A

(e) such other matters as may be prescribed.

(4) Subject to the provisions of sub-section (1 ), where the Sate Government notifies in the Official Gazette an area for grant of reconnaissance permit, prospecting license or mining lease, as the case may be, all the applications received during the period as specified in such notification, which shall not be less than thirty days, shall be considered simultaneously as if all such applications have been received on the same day and the State Government, after taking into consideration the matter specified in sub- section (3), may grant the reconnaissance permit, prospecting licence or mining lease, as the case may be, to such one of the applicants as it may deem fit. D (5) Notwithstanding anything contained in sub-section (2), but subject to the provisions of sub-section (1 ), the State Government may, for any special reasons to be recorded, grant a reconnaissance permit, prospecting licence or mining lease, as the case may be, to an E applicant whose application was received later in preference to an applicant whose application was received earlier:

Provided that in respect of minerals specified in the First Schedule, prior approval of the Central Government F shall be obtained before passing any order under this sub- section."

57. Section 13 of the 1957 Act empowers Central Government to make rules in respect of minerals. By virtue of G the power conferred upon the Central Government under Section 13(2)(e), 1960 Rules have been framed for regulating the grant of, inter alia, mining leases in respect of minerals and for purposes connected therewith.

58. Section 14 states that the provisions of Sections 5 to H

p. 718

A 13 (both inclusive) shall not apply to quarry leases, mining leases or other mineral concessions in respect of minor minerals. Section 15 empowers State Governments to make rules in respect of minor minerals.

59. Section 16 provides for power to modify mining leases 8 granted before 25th October, 1949. The original sub-section (1) of Section 16 mandated that all mining leases granted before October 25, 1949 shall be brought into conformity with the provisions of 1957 Act and the Rules made under Sections 13 and 18 after the commencement of 1957 Act. Then it provided that if the Central Government was of the opinion that in the interest of mineral development it was expedient so to do, it might permit any person to hold one or more such mining leases covering in any one State a total area in excess of that specified in clause (b) of Section 6 or for a period exceeding that specified in sub-section (1) of Section 8. Sub-section (1) of Section 16 has been amended in 1972 and 1994.

60. By virtue of Section 17, the Central Government has been given special powers to undertake prospecting or mining operations in certain cases. Section 17(1) was amended in

1972. After amendment, Section 17(1) reads as under :

"S. 17.- Special powers of Central Government to undertake prospecting or mining operations in certain lands.-( 1) The provisions of this section shall apply in respect of land in which the minerals vest in the Government of a State or any other person."

61. Section 17A was inserted in the 1957 Act by Act 37 of 1987. Thereafter, sub-section (1A) was added in Section G 17A by Act 25 of 1994. Section 17A, after its amendment in 1994, reads as follows :

"S. 17 A. Reservation of area for purposes of conservation.-(1) The Central Government, with a view to conserving any mineral and after consultation with the H

p. 719

AND ORS. [R.M. LODHA, J.] State Government, may reserve any area not already held A under any prospecting licence or mining lease and, where it proposes to do so, it shall, by notification in the Official Gazette, specify the boundaries of such area and the mineral or minerals in respect of which such area will be reserved. B

(1A) The Central Government may in consultation with the State Government, reserve any area not already held under any prospecting licence or mining lease, for undertaking prospecting or mining operations through a Government company or corporation owned or controlled c by it, and where it proposes to do so, it shall, by notification in the Official Gazette, specify the boundaries of such area and the mineral or minerals in respect of which such area will be reserved. D (2) The State Government may, with the approval of the Central Government, reserve any area not already held under any prospecting licence or mining lease, for undertaking prospecting or mining operations through a Government company or corporation owned or controlled E by it and where it proposes to do so, it shall, by notification in the Official Gazette, specify the boundaries of such area and the mineral or minerals in respect of which such areas will be reserved. F (3) Where in exercise of the powers conferred by sub-section (1A) or sub-section (2) the Central Government or the State Government, as the case may be, undertakes prospecting or mining operations in any area in which the minerals vest in a private person, it shall be liable, to pay prospecting fee, royalty, surface rent or dead G rent, as the case may be, from time to time at the same rate at which it would have been payable under this Act if such prospecting or mining operations had been undertaken by a private person under prospecting licence H

p. 720

A or mining lease."

62. Section 18 states that it shall be the duty of the Central Government to take all such steps as may be necessary for the conservation and systematic development of minerals in India and for the protection of environment by preventing or 8 controlling any pollution which may be caused by prospecting or mining operations and for such purposes the Central Government may make rules. Sub-section (2) of Section 18 empowers the Central Government to make rules and provide for the matters stated in clause (a) to clause (q).

63. Section 18A was inserted in 1957 Act to enable the Central Government to authorize Geological Survey of India to carry out necessary investigation for the purpose of obtaining information with regard to availability of any mineral in or under any land in relation to which any prospecting licence or mining lease has been granted by a State Government or by any other person. Proviso that follows sub-section (1) of Section 18A provides that in cases of prospecting licences or mining leases granted by a State Government, no such authorization shall be made except after consultation with the State Government. To the extent Section 18A is relevant, it is reproduced as under :

"S. 18A. Power to authorize Geological Survey of India, etc., to make investigation.-(1) Where the Central Government is of opinion that for the conservation and development of minerals in India, it is necessary to collect as precise information as possible with regard to any mineral available in or under any land in relation to which any prospecting licence or mining lease has been granted, whether by the State Government or by any other person, the Central Government may authorize the Geological Survey of India, or such other authority or agency as it may specify in this behalf, to carry out such detailed investigation for the purpose of obtaining such information as may be necessary: H

p. 721

AND ORS. [R.M. LODHA, J.] Provided that in the cases of prospecting licences A or mining leases granted by a State Government, no such authorization shall be made except after consultation with the State Government.

xxx xxx xxx xxx xxx B (6) The costs of the investigation made under this section shall be borne by the Central Government.

Provided that where the State Government or other person in whom the minerals are vested or the holder of c any prospecting licence or mining lease applies to the Central Government to furnish to it or him a copy of the report submitted under sub-section (5), that State Government or other person or the holder of a prospecting licence or mining lease, as the case may be, shall bear D such reasonable part of the costs of investigation as the Central Government may specify in this behalf and shall, on payment of such part of the costs of investigation, be entitled to receive from the Central Government a true copy of the report submitted to it under sub-section (5}." E

64. Section 19 provides that any prospecting licence or mining lease granted, renewed or acquired in contravention of the provisions of 1957 Act or any rules or orders made thereunder shall be void and of no effect. Section 19 underwent amendments in 1994 and 1999 but these amendments are not of much relevance for the purposes of these matters.

65. By virtue of Section 29, the rules made or purporting to have been made under the 1948 Act insofar as consistent with the matters provided in 1957 Act were made to continue until superseded by the rules made under the 1957 Act. Thus, the rules framed under 1948 Act continued to operate until 1960 Rules were framed.

p. 722

A Mineral Concession Rules, 1960 and the Amendments

66. 1960 Rules were framed by the Central Government in exercise of the powers conferred by Section 13 of the 1957 Act. These Rules were published on November 11, 1960. As noticed above, until these Rules came into effect, the Rules 8 framed under 1948 Act remained operative.

67. By virtue of Rule 8, the provisions of Chapters 11, Ill and IV have been made applicable to the grant of reconnaissance permits as well as grant and renewal of prospecting licences C and mining leases in respect of the land in which the minerals vest in the State Government.

68. Rule 9 provides that an application for a prospecting licence and its renewal in respect of land in which the minerals vest in Government shall be made to the State Government in 0 Form B and Form D respectively. The State Government is empowered to relax the provisions of clause (d) of sub-rule (2) of Rule 9.

69. Chapter-IV deals with grant of mining leases in respect of land in which the minerals vest in the Government. Sub-rule E (1) of Rule 22 provides that an application for the grant of a mining lease in respect of land in which the minerals vest in the Government shall be made to the State Government in Form I. Sub-rule (4) of Rule 22 provides that on receipt of the application for the grant of a mining lease, the State F Government shall take decision to grant precise area and communicate such decision to the applicant. The applicant, on receipt of communication from the State Government of the precise areas to be granted, is required to submit a mining plan within a period of six months or such other period as may be G allowed by the State Government, to the Central Government for its approval. The applicant is required to submit the mining plan, duly approved by the Central Government or by an officer duly authorized by the Central Government, to the State Government to grant mining lease over that area. Sub-rule (4A) H of Rule 22 is a non-obstante clause and empowers the State Government to approve mining plan of open cast mines (mines

p. 723

AND ORS. [R.M. LODHA, J.] other than the underground mines) in respect of non-metallic A or industrial minerals set out in clauses (i) to (xxix) in their respective territorial jurisdiction. Such power of approval of mining plan has to be exercised by the State Government through officer or officers having qualification, experience and post and pay-scale as set out therein. Under sub-rule (48) of B Rule 22, the Central Government or the State Government has to dispose of the application for approval of mining plan within a period of ninety days from the date of receiving such application.

70. Rule 22D substituted by Notification dated January 17, c 2000 makes provision for a minimum size of the mining lease.

71. Rule 26 that was substituted by Notification dated July 18, 1963 was amended in 1979, 1988, 1991 and 2002. Rule 26 now reads as under: D

"26. Refusal of application for grant and renewal of mining lease.- (1) The State Government may, after giving an opportunity of being heard and for reasons to be recorded in writing and communicated to the applicant, refuse to grant or renew a mining lease over the whole or part of the area applied for.

(2) An application for the grant or renewal of a mining lease made under rule 22 or rule 24A, as the case may be, shall not be refused by the State Government only on the ground that Form I or Form J, as the case may be, is not complete in all material particulars, or is not accompanied by the documents referred to in sub-clauses (d),(e),(f),(g) and (h) of clause (i) of sub-rule 22. G (3) Where it appears that the application is not complete in all material particulars or is not accompanied by the required documents, the State Government shall, by notice, require the applicant to supply the omission or, as the case H

p. 724

A may be, furnish the documents, without delay and in any case not later than thirty days from the date of receipt of the said notice by the applicant.

72. Rule 31 provides for the time period within which lease is to be executed. It also provides for the date of 8 commencement of the period.

73. Rule 58, as it originally stood, read as under:

"58. Availability of areas for reg rant to be notified. (1) c No area which was previously held or which is being held under a prospecting licence or a mining lease as the case may be, or in respect of which the order granting licence or lease has been revoked under sub-rule (1) of rule 15 or sub-rule (1) of rule 31, shall be available for grant unless- D (a) an entry to the effect made in the register referred to in sub-rule (2) of rule 21 or sub-rule (2) of rule 40, as the case may be in ink; and

(b) the date from which the area shall be available for grant E is notified in the Official Gazette at least thirty days in advance.

(2) The Central Government may, for reasons to be recorded in writing, relax the provisions of sub-rule (1) in any special case." F Rule 58 was amended on November 16, 1980 and the amended Rule 58 read as under :

"58. Reservation of area for exploitation in the public G sector etc.- The State Government may, by notification in the Official Gazette, reserve any area for the exploitation by the Government, a Corporation established by the Central, State or Provincial Act or a Government company within the meaning of section 617 of the Companies Act, H 1956 (1 of 1956)."

MONNET !SPAT & ENERGY LTD. v. UNION OF INDIA 725 AND ORS. [R.M. LODHA, J.] Later on, Rule 58 has been omitted. A

74. Rule 59, as originally framed in 1960 Rules, read as under:

"59. Availability of certain areas for grant to be notified.- In the case of any land which is otherwise available for the B grant of a prospecting licence or a mining lease but in respect of which the State Government has refused to grant a prospecting licence or a mining lease on the ground that the land should be reserved for any purpose, other than prospecting or mining for minerals, the State C Government shall, as soon as such land becomes again available for the grant of a prospecting or mining lease, grant the licence or lease after following the procedure laid down in rule 58." D The original Rule 59 was amended vide Notification dated July 9, 1963. After the said amendment, the Rule read as under :

"59. - Availability of certain areas for grant to be notified.- In the case of any land which is otherwise available for the grant of a prospecting licence or a mining E lease but in respect of which the State Government has refused to grant a prospecting licence or a mining lease on the ground that the land should be reserved for any purpose, the State Government shall, as soon as such land becomes again available for the grant of a F prospecting or mining lease, grant the licence or lease after following the procedure laid down in rule 58."

Rule 59 was again amended in 1980. After amendment, the said rule read as under : G "59. Availability of area for regrant to be notified-(1) No area-

(a) which was previously held or which is being held under a prospecting licence or a mining lease; or H

p. 725 — page break not located

p. 726

A (b) in respect of which an order had been made for the grant of a prospecting licence or mining lease, but the applicant has died before the grant of the licence or the execution of lease, as the case may be; or

(c) in respect of which the order granting a licence or lease B has been revoked under sub-rule (1) of rule 15 or sub-rule (1) of rule 31; or

(d) in respect of which a notification has been issued under sub-section (2) or sub-section (4) of section 17; or c (e) which has been reserved by Government under rule 58,

shall be available for grant unless-

(i) an entry to the effect that the area is available for D grant is made in the register referred to in sub-rule (2) of rule 21 or sub-rule (2) of rule 40, as the case may be, in ink; and

(ii) the availability of the area for grant is notified in the E Official Gazette and specifying a date (being a date not earlier than thirty days from the date of the publication of such notification in the Official Gazette) from which such area shall be available for grant:

F Provided that nothing in this rule shall apply to the renewal of a lease in favour of the original lessee or his legal heirs notwithstanding the fact that the lease has already expired:

Provided further that where an area reserved under rule G 58 is proposed to be granted to a Government Company, no notification under clause (ii) shall be required to be issued.

(2) The Central Government may, for reasons to be recorded in writing relax the provisions of sub-rule (1) in H

p. 727

AND ORS. [R.M. LODHA, J.] any special case. A

Rule 59 was further amended on April 13, 1988. The amended Rule 59 reads as under :

"59. Availability of area for regrant to be notified:- (1) No area- B

(a) which was previously held or which is being held under a prospecting licence or a mining lease; or

(b) in respect of which an order had been made for the C grant of a prospecting licence or mining lease, but the applicant has died before the grant of the licence or the execution of the lease, as the case may be; or

(c) in respect of which the order granting a licence or lease has been revoked, under sub-rule (1) of rule 15 or sub-rule D (1) of rule 31; or

(d) in respect of which a notification has been issued under sub section (2) or sub-section (4) of section 17; or

(e) which has been reserved by State Government under E Rule 58, or under section 17-A of the Act shall be available for grant unless-

(i) an entry to the effect that the area is available for grant is made in the register referred to in sub-rule (2) of rule F 21 or sub-rule (2) of rule 40, as - the case may be, in ink; and

(ii) the availability of the area for grant is notified in the Official Gazette and specifying a date (being a date not G earlier than thirty days from the date of the publication, of such notification in the Official Gazette) from which such area shall be available for grant:

Provided that nothing in this rule shall apply to the renewal of a lease in favour of the original lessee or his legal heirs H

p. 728

A notwithstanding the fact that the lease has already expired:

Provided further that where an area reserved under Rule 58 or under section 17-A of the Act to be granted to a Government Company, no notification under clause (ii) shall be required to be issued; B (2) The Central Government may, for reasons to be recorded in writing relax the provisions of sub-rule (1) in any special case.

c 75. Rule 60 of the 1960 Rules has been amended twice, first vide Notification dated January 16, 1980 and thereafter by the Notification dated January 17, 2000. After amendment, Rule 60 reads as under :

"60.Premature applications.-Applications for the grant D of a reconnaissance permit, prospecting licence or mining lease in respect of areas whose availability for grant is required to be notified under rule 59 shall, if-

(a) no notification has been issued, under that rule; or E (b) where any such notification has been issued, the period specified in the notification has not expired, shall be deemed to be premature and shall not be entertained."

76. Rule 63 of the 1960 Rules provides that where previous approval of the Central Government is required under the 1957 Act or the 1960 Rules, the application for such approval shall be made to the Central Government through the State Government. G

77. The above provisions give us complete view of the statutory framework and legal regime with regard to regulation of mines and mineral development and the role and powers of the State Governments in that regard. H

p. 729

AND ORS. [R.M. LODHA, J.] Decisions A Hingir-Rampur Coal Co. Ltd.

78. A Constitution Bench of this Court in Hingir-Rampur Coal Co. Ltd.a was concerned with the question of the validity of Orissa Mining Areas Development Fund Act, 1952. lnter-alia, the contention raised on behalf of the petitioners was that even if the cess imposed thereunder was a 'fee' relatable to Entries 23 and/or 66 of List II, the same would be ultra vires Entry 54 of List I in light of declaration made in Section 2 of the 1948 Act which read, 'it is hereby declared that it is expedient in the public interest that the Central Government should take under its control the regulation of mines and oilfields and the development of minerals to the extent hereinafter provided' and other provisions. D

79. The majority view considered the above contention as follows:

"23. The next question which arises is, even if the cess is a fee and as such may be relatable to Entries 23 and 66 in List II its validity is still open to challenge because the legislative competence of the State Legislature under Entry 23 is subject to the provisions of List I with respect to regulation and development under the control of the Union; and that takes us to Entry 54 in List I. This Entry reads thus: "Regulation of mines and mineral development to the extent to which such regulation and development under the control of the Union is declared by Parliament by law to be expedient in the public interest". The effect of reading the two Entries together is clear. The jurisdiction of the State Legislature under Entry 23 is subject to the limitation imposed by the latter part of the said Entry. If Parliament by its law has declared that regulation and development of mines should in public interest be under the control of the Union, to the extent of such declaration the jurisdiction of the State Legislature is excluded. In other words, if a H

730 SUPREME COURT REPORTS [20121 7 S.C.R.

A Central Act has been passed which contains a declaration by Parliament as required by Entry 54, and if the said declaration covers the field occupied by the impugned Act the impugned Act would be ultra vires, not because of any repugnance between the two statutes but because the B State Legislature had no jurisdiction to pass the law. The limitation imposed by the latter part of Entry 23 is a limitation on the legislative competence of the State Legislature itself. This position is not in dispute.

24 ............. If it is held that this Act contains the c declaration referred to in Entry 23 there would be no difficulty in holding that the declaration covers the field of conservation and development of minerals, and the said field is indistinguishable from the field covered by the impugned Act. What Entry 23 provides is that the legislative competence of the State Legislature is subject to the provisions of List I with respect to regulation and development under the control of the Union, and Entry 54 in List I requires a declaration by Parliament by law that regulation and development of mines should be under the control of the Union in public interest. Therefore, if a Central Act has been passed for the purpose of providing for the conservation and development of minerals, and if it contains the requisite declaration, then it would not be competent to the State Legislature to pass an Act in respect of the subject-matter covered by the said declaration. In order that the declaration should be effective it is not necessary that rules should be made or enforced; all that this required is a declaration by Parliament that it is expedient in the public interest to take the regulation and development of mines under the control of the Union. In such a case the test must be whether the legislative declaration covers the field or not. Judged by this test there can be no doubt that the field covered by the impugned Act is covered by the Central Act Liii of H 1948.

MONNET !SPAT & ENERGY LTD. v. UNION OF INDIA 731 AND ORS. [R.M. LODHA, J.]

25. It still remains to consider whether S. 2 of the said Act A amounts in law to a declaration by Parliament as required by Article 54. When the said Act was passed in 1948 the legislative powers of the Central and the Provincial Legislatures were governed by the relevant Entries in the Seventh Schedule to the Constitution Act of 1935. Entry B 36 in List I corresponds to the present Entry 54 in List I. It reads thus: "Regulation of Mines and Oil Fields and mineral development to the extent to which such regulation and development under Dominion control is declared by Dominion law to be expedient in public interest". It would c be noticed that the declaration required by Entry 36 is a declaration by Dominion law. Reverting then to S. 2 of the said Act it is ciear that the declaration contained in the said section is put in the passive voice; but in the context there would be no difficulty in holding that the said declaration by necessary implication has been made by Dominion law. It is a declaration contained in a section passed by the Dominion Legislature and so it is obvious that it is a declaration by a Dominion law, but the question is: Can this declaration by a Dominion law be regarded constitutionally as declaration by Parliament which is required by Entry 54 in List I."

The majority view found that the declaration by Parliament required under Entry 54, List I was absent as the declaration under Section 2 of the 1948 Act by the Dominion Legislature F was not held equivalent to declaration by the Parliament under Section 2 of the 1957 Act.

M.A. Tulloch & Co.

80. In M.A. Tulloch & Co.b, a Constitution Bench of this G Court was concerned with legality of certain demands of fee under the Orissa Mining Areas Development Fund Act, 1952 (Orissa Act). The Constitution Bench considered the question, 'whether the extent of control and regulation provided by the H

pp. 730–731 — page break not located

p. 732

A 1957 Act takes within its fold the area or the subject covered by Act 27 of 1952 Act'. The High Court had held that fee imposed by the Orissa Act was rendered ineffective in view of the 1957 Act. The State of Orissa was in appeal from that judgment. The Court in para 5 and para 6 of the Report noted B as follows:

"5. Before proceeding further it is necessary to specify briefly the legislative power on the relevant topic, for it is on the precise wording of the entries in the 7th Schedule to the Constitution and the scope, purpose and effect of c the State and the Central legislations which we have referred to earlier that the decision of the point turns. Article 246(1) reads:

"Notwithstanding anything in clauses (2) and (3), D Parliament has exclusive power to make laws with respect to any of the matters enumerated in List I in the Seventh Schedule (in this Constitution referred to as the Union List)"

and we are concerned in the present case with the State E power in the State field. The relevant clause in that context is clause (3) of the Article which runs:

"Subject to clauses (1) and (2), the legislature of any State ... has exclusive power to make laws for such State or any F part thereof with respect to any of the matters enumerated in List II in the seventh Schedule (in this Constitution referred to as the 'State List')."

Coming now to the Seventh Schedule, Entry 23 of the G State List vests in the State legislature power to enact laws on the subject of 'regulation of mines and mineral development subject to the provisions of List I with respect to regulation and development under the control of the Union'. It would be seen that "subject" to the provisions of List I the power of the State to enact Legislation, on the H

MONNET ISPAr & ENERGY LTD. v. UNION OF INDIA 733 AND ORS. [R.M. LODHA, J.] topic of "mines and mineral development" is plenary. The A relevant provision in List I is, as already noticed, Entry 54 of the Union List. It may be mentioned that this scheme of the distribution of legislative power between the Centre and the States is not new but is merely a continuation of the State of affairs which prevailed under the Government B of India Act, 1935 which included a provision on the lines of Entry 54 of the Union List which then bore the number Item 36 of the Federal List and an entry corresponding to Entry 23 in the State List which bore the same number in the Provincial Legislative List. There is no controversy that C the Central Act has been enacted by Parliament in exercise of the legislative power contained in Entry 54 or as regards the Central Act containing a declaration in terms of what is required by Entry 54 for it enacts by Section 2: D "It is hereby declared that it is expedient in the public interest that the Union should take under its control the regulation of mines and the development of minerals to the extent hereinafter provided." E It does not need much argument to realise that to the extent to which the Union Government had taken under "its control" "the regulation and development of minerals" so much was withdrawn from the ambit of the power of the State legislature under Entry 23 and legislation of the State F which had rested on the existence of power under that entry would to the extent of that "control" be superseded or be rendered ineffective, for here we have a case not of mere repugnancy between the provisions of the two enactments but of a denudation or deprivation of State legislative G power by the declaration which Parliament is empowered to make and has made.

6. It would, however, be apparent that the States would lose legislative competence only to the "extent to which regulation and development under the control of the Union H

p. 733 — page break not located

p. 734

A has been declared by Parliament to be expedient in the public interest". The crucial enquiry has therefore to be directed to ascertain this "extent" for beyond it the legislative power of the State remains unimpaired. As the legislation by the State is in the case before us the earlier one in point of time, it would be logical first to examine and analyse the State Act and determine its purpose, width and scope and the area of its operation and then consider to what "extent" the Central Act cuts into it or trenches on it.

In para 9, the question under consideration was whether 'the extent of control and regulation' provided by 1957 Act took within its fold the area or the subject covered by the Orissa Act. This Court in para 11 observed that the matter was concluded by earlier decision in Hingir-Rampur Coal Co. Ltd.a. While following Hingir-Rampur Coal Co. Ltd.a, it was observed in para D 12 of the Report that sub-sections (1) and (2) of Section 18 of 1957 Act were wider in scope and amplitude and conferred larger powers on the Central Government than the corresponding provisions of the 1948 Act.

E Baijnath Kadio

81. In Baijnath Kadioc, the validity of proviso (2) to Section 10(2) added by Bihar Land Reforms (Amendment) Act, 1964 (Bihar Act 4 of 1965) and the operation of Rule 20(2) added on December 10, 1964 by a Notification of Governor in the F Bihar Minor Mineral Concession Rules, 1964 were in issue. The Court referred to the Government of India Act, 1935, 1948 Act and 1957 Act in light of Entry 54 of List I and Entry 23 of List 11 and the earlier decisions in Hingir-Rampur Coal Co. Ltd.• and M.A. Tulloch & Co. b and observed as under : G "13. .. ........... Entry 54 of the Union List speaks both of Regulation of mines and minerals development and Entry 23 is subject to Entry 54. It is open to Parliament to declare that it is expedient in the public interest that the H control should rest in Central Government. To what extent

p. 735

AND ORS. [R.M. LODHA, J.] such a declaration can go is for Parliament to determine and this must be commensurate with public interest. Once this declaration is made and the extent laid down, the subject of legislation to the extent laid down becomes an exclusive subject for legislation by Parliament. Any legislation by the State after such declaration and trenching upon the field disclosed in the declaration must necessarily be unconstitutional because that field is abstracted from the legislative competence of the State Legislature. This proposition is also self-evident that no attempt was rightly made to contradict it. There are also two decisions of this c Court reported in the Hingir Rampur Coal Co. Ltd. & Ors. v. State of Orissa & Ors. and State of Orissa v. M.A. Tulloch and Co. in which the matter is discussed. The only dispute, therefore, can be to what extent the declaration by Parliament leaves any scope for legislation by the State D Legislature. If the impugned legislation falls within the ambit of such scope it will be valid; if outside it, then it must be declared invalid.

14. The declaration is contained in Section 2 of Act 67 of 1957 and speaks of the taking under the control of the E Central Government the regulation of mines and development of minerals to the extent provided in the Act itself. We have thus not to look outside Act 67 of 1957 to determine what is left within the competence of the State Legislature but have to work it out from the terms of that F Act. In this connection we may notice what was decided in the two cases of this Court. In the Hingir Rampur case a question had arisen whether the Act of 1948 so completely covered the field of conservation and development of minerals as to leave no room for State G legislation. It. was held that the declaration was effective even if the rules contemplated under the Act of 1948 had not been made. However, considering further whether a declaration made by a Dominion Law could be regarded as a declaration made by Parliament for the purpose of H

p. 736

A Entry 54, it was held that it could not and there was thus a lacuna which the Adaptation of Laws Order, 1950 could not remove. Therefore, it was held that there was room for legislation by the State Legislature.

15. In the M.A. Tulloch case the firm was working a mining B lease granted under the Act of 1948. The State Legislature of Orissa then passed the Orissa Mining Areas Development Fund Act, 1952 and levied a fee for the development of mining areas within the State. After the provisions came into force a demand was made for c payment of fees due from July 1957 to March 1958 and the demand was challenged. The High Court held that after the coming into force of Act 67 of 1957 the Orissa Act must be held to be non existent. It was held on appeal that since Act 67 of 1957 contained the requisite declaration by D Parliament under Entry 54 and that Act covered the same field as the Act of 1948 in regard to mines and mineral development, the ruling in Hingir Rampur's case applied and as Sections 18(1) and (2) of the Act 67 of 1957 were very wide they ruled out legislation by the State Legislature. E Where a superior legislature evinced an intention to cover the whole field, the enactments of the other legislature whether passed before or after must be held to be overborne. It was laid down that inconsistency could be proved not by a detailed comparison of the provisions of F the conflicting Acts but by the mere existence of two pieces of legislation. As Section 18(1) covered the entire field, there was no scope for the argument that till rules were framed under that Section, room was available."

G Amritlal Nathubhai Shah

82. In Amritla/ Nathubhai Shahd, a three-Judge Bench of this Court was concerned with an issue similar to the controversy presented before us. That was a case relating to grant of mining leases for bauxite in the reserved areas in the H State of Gujarat. On December 31, 1963, the Government of

MONNET !SPAT & ENERGY LTD. v. UNION OF INDIA 737 AND ORS. [R.M. LODHA. J.] Gujarat issued a Notification intimating that lands in all talukas A of Kutch district and in Kalyanpur taluka of Jamnagar district had been reserved for exploitation of bauxite in the public sector. By another Notification of February 26, 1964 in respect of all areas of Jamnagar and Junagarh districts, the exploitation of bauxite was reserved in the public sector. The appellants 8 therein made applications to the Government of Gujarat for grant of mining leases for bauxite in the reserved areas. Though there were no other applications, the State Government rejected the applications of the appellants on the ground that areas had already been notified as reserved for the public sector. The C appellants, aggrieved by the order of the State Government moved the Central Government invoking its revisional jurisdiction. The Central Government rejected the revision applications. The appellants then moved the High Court but they were unsuccessful there and from the common judgment of the High Court and the certificate granted by it, the matter reached D this Court. The Court considered Entry 54 of List I, declaration made by Parliament in Section 2 of 1957 Act and State Legislature's power under Entry 23 of List 11, and observed that in pursuance of its exclusive power to make laws with respect to the matters enumerated in Entry 54 of List I, Parliament E specifically declared in Section 2 of the 1957 Act that it was expedient in the public interest that the Union should take under its control the regulation of mines and the development of minerals to the extent provided in the Act. The State Legislature's power under Entry 23 of List II was, thus, taken F away and the regulation of mines and development of minerals had to be in accordance with 1957 Act and 1960 Rules. While saying so, this Court held as follows:

"3 .......... The mines and the minerals in question (bauxite) G were, however, in the territory of the State of Gujarat and, as was stated in the orders which were passed by the Central Government on the revision applications of the appellants, the State Government is the "owner of minerals" within its territory, and the minerals "vest" in it. H

p. 737 — page break not located

p. 738

A There is nothing in the Act or the Rules to detra~t from this basic fact. That was why the Central Government stated further in its revisional orders that the State Government had the "inherent right to reserve any particular area for exploitation in the public sector". It is therefore quite clear 8 that, in the absence of any law or contract etc. to the contrary, bauxite, as a mineral, and the mines thereof, vest in the State of Gujarat and no person has any right to exploit it otherwise then in accordance with the provisions of the Act and the Rules. Section 10 of the Act and Chapters II, Ill and IV of the Rules, deal with the grant of c prospecting licences and mining leases in the land in which the minerals vest in the Government of a State. That was why the appellants made their applications to the State Government."

83. In Amritlal Nathubhai Shahd, this Court referred to Section 4 of the 1957 Act and held that there was nothing in 1957 Act or 1960 Rules to require that the restrictions imposed by Chapters 11,111 and IV of the 1960 Rules would be applicable even if State Government itself wanted to exploit a mineral for, it was its own property. The Court held :

"4 .......... There is therefore no reason why the State Government could not, if it so desired, "reserve" any land for itself, for any purpose, and such reserved land would then not be available for the grant of a prospecting licence or a mining lease to any person."

84. The Court then considered Section 10of1957 Act and held as follows :

G "5 ...... The section is therefore indicative of the power of the State Government to take a decision, one way or the other, in such matters, and it does not require much argument to hold that that power included the power to refuse the grant of a licence or a lease on the ground that H the land in question was not available for such grant by

MONNET !SPAT & ENERGY LTD. v. UNION OF INDIA 739 AND ORS. [R.M. LODHA, J.] reason of its having been reserved by the State A Government for any purpose.''

85. With reference to Section 17, particularly, sub-sections (2) and (4) thereof, the Court held that the said provisions did not cover the entire field of the authority of refusing to grant a B prospecting licence or a mining lease to anyone else and the State Government's authority to reserve any area for itself was not taken away. It was further held :

"6 .......... As has been stated, the authority to order reservation flows from the fact that the State is the owner C of the mines and the minerals within its territory, which vest in it. But quite apart from that, we find that Rule 59 of the Rules, which have been made under Section 13 of the Act, clearly contemplates such reservation by an order of the State Government. ........ " D

86. In Amritlal Nathubhai Shahd, the Court also considered Rules 58, 59 and 60 of the 1960 Rules and it was observed that it was not permissible for any person to apply for a licence or a lease in respect of a reserved area until after it becomes E available for such grant. It was held on the facts of the case that the areas under consideration had been reserved by the State Government for the purpose stated in its notifications and as those lands did not become available for the grant of prospecting licence or a mining lease, the State Government F was well within its rights in rejecting the applications of the appellants under Rule 60 as premature and the Central Government was also justified in rejecting the revision applications which were filed against the orders of rejection passed by the State Government. G

87. In Chanan Mal', a four-Judge Bench of this Court was concerned with constitutional validity of Haryana Minerals (Vesting of Rights) Act, 1973 (for short, 'Haryana Act;). One of the contentions in challenging the Haryana Act was that enactment was beyond the competence of the State Legislature H

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A inasmuch as the filed in which the Haryana Act operated was necessarily occupied by the provisions of 1957 Act under Entry 54 of the Union List (List I) of the Seventh Schedule to the Constitution. The Bench considered extensively the provisions contained in the 1957 Act and earlier decisions of this Court B in Hingir-Rampur Coal Co Ltd.•, M.A. Tulloch & Companyb and Baijnath Kadio 0 • The Court then referred to Section 16(1)(b) and Section 17 of the 1957 Act and held as under:

"38. We are particularly impressed by the provisions of Sections 16 and 17 as they now stand. A glance at Section c 16( 1)(b) shows that the Central Act 67 of 1957 itself contemplates vesting of lands, which had belonged to any proprietor of an estate or tenure holder either on or after October 25, 1949, in a State Government under a State enactment providing for the acquisition of estates or tenures in land or for agrarian reforms. The provision lays down that mining leases granted in such land must be brought into conformity with the amended law introduced by Act 56 of 1972. It seems to us that this clearly· means that Parliament itself contemplated State legislation for vesting of lands containing mineral deposits in the State Government. It only required that rights to mining granted in such land should be regulated by the provisions of Act 67 of 1957 as amended. This feature coul~ only be explained on the assumption that Parliament did' not intend to trench upon powers of State legislatures under Entry 18 of List II, read with Entry 42 of List Ill. Again, Section 17 of the Central Act 67 of 1957 shows that there was no intention to interfere with vesting of lands in the States by the provisions of the Central Act." G lshwari Khetan Sugar Mills

88. In /shwari Khetan Sugar Milfsv although question related to constitutional validity of U.P. Sugar Undertakings (Acquisition) Act, 1971 enacted by the State of U.P. and H different entries in List I and List II were involved but with

MONNET !SPAT & ENERGY LTD. v. UNION OF INDIA 741 AND ORS. [R.M. LODHA, J.] reference to the declaration made in Section 2 of the Industries A (Development and Regulation) Act, 1951 (for short, 'IDR Act') vis-a-vis the State Act under challenge, the majority judgment relying upon the earlier decisions of this Court in Baijnath Kadioc and Chanan Mal\ held that to the extent the Union acquired control by virtue of declaration in Section 2 of the IDR B Act, as amended from time to time, the power of the State Legislature under Entry 24 of List II to enact any legislation in respect of declared industry so as to encroach upon the field of control occupied by IDR Act would be taken away. It was held that 1957 Act only required that rights to mining granted in such c land should be regulated by the provisions contained therein.

Mis. Hind Stone

89. In Mis. Hind Stone0 , the question under consideration was about the validity of Rule 8-C of the Tamil Nadu Minor D Mineral Concession Rules, 1959 which provided for lease for quarries in respect of black granite to the government corporation or by the government itself and that from December 7, 1977 no lease for quarrying black granite should be granted to private persons. The matter arose out of the application for renewal of lease. The Court considered Entry 23 of List II and Entry 54 of List I of Seventh Schedule and the earlier decisions of this Court in Hingir-Rampur Coal Co. 0 , M.A. Tulloch & Companyt' and Baijnath Kadioc. The Court made the following general observations with regard to minerals and natural resources and the scheme of 1957 Act:

"6. Rivers, Forests, Minerals and such other resources constitute a nation's natural wealth. These resources are not to be frittered away and exhausted by any one generation. Every generation owes a duty to all succeeding generations to develop and conserve the natural resources of the nation in the best possible way. It is in the interest of mankind. It is in the interest of the nation. It is recognised by Parliament. Parliament has declared that it is expedient H

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A in the public interest that the Union should take under its control the regulation of mines and the development of minerals. It has enacted the Mines and Minerals (Regulation and Development) Act, 1957. We have already referred to its salient provisions. Section 18, we have B noticed, casts a special duty on the Central \ Government to take necessary steps for the conservation and development of minerals in India. Section 17 authorises the Central Government itself to undertake prospecting or mining operations in any area not already held under any c prospecting licence or mining lease. Section 4-A empowers the State Government on the request of the Central Government, in the case of minerals other than minor minerals, to prematurely terminate existing mining leases and grant fresh leases in favour of a Government company or corporation owned or controlled by D government, if it is expedient in the interest of regulation of mines and mineral development to do so. In the case of minor minerals, the State Government is similarly empowered, after consultation with the Central Government. The public interest which induced Parliament E to make the declaration contained in Section 2 of the Mines and Minerals (Regulation and Development) Act, 1957, has naturally to be the paramount consideration in all matters concerning the regulation of mines and the development of minerals. Parliament'!? policy is clearly discernible from the provisions of the Act. It is the conservation and the prudent and discriminating exploitation of minerals, with a view to secure maximum benefit to the community. There are clear signposts to lead and guide the subordinate legislating authority in the matter of the making of rules. Viewed in the light shed by the other provisions of the Act, particularly Sections 4-A, 17 and 18, it cannot be said that the rule-making authority under Section 15 has exceeded its powers in banning leases for quarrying black granite in favour of private parties and in stipulating that the State Government themselves may

MONNET !SPAT & ENERGY LTD. v. UNION OF INDIA 743 AND ORS. [R.M. LODHA, J.] engage in quarrying black granite or grant leases for quarrying black granite in favour of any corporation wholly owned by the State Government. To view such a rule made by the subordinate legislating body as a rule made to benefit itself merely because the State Government happens to be the subordinate legislating body, is, but, to take too narrow a view of the functions of that body .......... "

90. The Court then considered Rule 8-C in light of the statement made in the counter affidavit filed by the State of C Tamil Nadu and it was held that Rule 8-C was made in bona fide exercise of the rule making power of the State Government. In paragraph 10 of the Report, the Court stated thus:

"10. One of the arguments pressed before us was that Section 15 of the Mines and Minerals (Regulation and D Development) Act authorised the making of rules for regulating the grant of mining leases and not for prohibiting them as Rule 8-C sought to do, and, therefore, Rule 8-C was ultra vires Section 15. Well-known cases on the subject right from Municipal Corporation of the City of E Toronto v. Virgo [1896 AC 88] and Attorney-General for Ontario v. Attorney-General for the Dominions [1896 AC 348) up to State of U.P. v. Hindustan Aluminium Corporation Ltd. [1979 (3) sec 229] were brought to our attention. We do not think that "regulation" has that rigidity F of meaning as never to take in "prohibition". Much depends on the context in which the expression is used in the statute and the object sought to be achieved by the contemplated regulation. It was observed by Mathew, J. in G.K. Krishnan v. State of Tamil Nadu [1975 (1) SCC 375]: G "The word 'regulation' has no fixed connotation. Its meaning differs according to the nature of the thing to which it is applied." In modern statutes concerned as they are with economic and social activities, "regulation" must, of necessity, receive so wide an interpretation that in H

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A certain situations, it must exclude competition to the public sector from the private sector. More so in a welfare State. It was pointed out by the Privy Council in Commonwealth of Australia v. Bank of New South Wales [1950 AC 235]- and we agree with what was stated therein - that the B problem whether an enactment was regulatory or something more or whether a restriction was direct or only remote or only incidental involved, not so much legal as political, social or economic consideration and that it could not be laid down that in no circumstances could the c exclusion of competition so as to create a monopoly, either in a State or Commonwealth agency, be justified. Each case, it was said, must be judged on its own facts and in its own setting of time and circumstances and it might be that in regard to some economic activities and at some stage of social development, prohibition with a D view to State monopoly was the only practical and reasonable manner of regulation. The statute with which we are concerned, the Mines and Minerals (Development and Regulation) Act, is aimed, as we have already said more than once, at the conservation and the prudent and discriminating exploitation of minerals. Surely, in the case of a scarce mineral, to permit exploitation by the State or its agency and to prohibit exploitation by private agencies is the most effective method of conservation and prudent exploitation. If you want to conserve for the future, you must prohibit in the present. We have no doubt that the prohibiting of leases in certain cases is part of the regulation contemplated by Section 15 of the Act."

D.K. Trivedi and Sons G

91. In D.K. Trivedi and Sons", this Court was concerned with the constitutional validity of Section 15(1) of 1957 Act; the power of the State Governments to make rules under that Section to enable them to charge dead rent and royalty in H respect of leases of minor minerals granted by them and

p. 745

AND ORS. [R.M. LODHA, J.] enhance the rates of dead rent and royalty during the A subsistence of such lease, the validity of Rule 21-B of the Gujarat Minor Mineral Rules, 1966 and certain notifications issued by the Government of Gujarat under Section 15 amending the said Rules so as to enhance the rates of royalty and dead rent in respect of leases of minor minerals. The Court B traced the legislative history of the enactment; referred to Baijnath Kadioc and in paragraph 27 of the Report (Pgs. 46- 47) observed as follows:

"27. The 1957 Act is made in exercise of the powers conferred by Entry 54 in the Union List. The said Entry 54 C and Entry 23 in the State List fell to be interpreted by a Constitution Bench of this Court in Baijnath Kedia v. State of Bihar. In that case this Court held that Entry 54 in the Union List speaks both of regulation of mines and mineral development and Entry 23 in the State List is subject to D Entry 54. Under Entry 54 it is open to Parliament to declare that it is expedient in the public interest that the control in these matters should vest in the Central Government. To what extent such a declaration can go is for Parliament to determine and this must be commensurate with public interest but once such declaration is made and the extent of such regulation and development laid down the subject of the legislation to the extent so laid down becomes an exclusive subject for legislation by Parliament. Any legislation by the State after such declaration which touches upon the field disclosed in the declaration would necessarily be unconstitutional because that field is extracted from the legislative competence of the State legislature. In that case the court further pointed out that the expression "under the control of the Union" occurring in Entry 54 in the Union List and Entry 23 in the State List did not mean "control of the Union Government" because the Union consists of three limbs, namely, Parliament, the Union Government and the Union Judiciary, and the control of the Union which is to be exercised under the said two H

p. 746

A entries is the one to be exercised by Parliament, namely, the legislative organ of the Union, which is, therefore, the control by the Union. The court fLniher held that the Union had taken all the power in respect of minor minerals to itself and had authorized the State Governments to make rules B for the regulation of leases and thus by the declaration made in Section 2 and the enactment of Section 15 the whole of the field relating to minor minerals came within the jurisdiction of Parliament and there was no scope left to the State legislatures to make any enactment with c respect thereto. The court also held that by giving the power to the State Governments to make rules, the control of the Union was not negatived but, on the contrary, it established that the Union was exercising the control. One of the contentions raised in that case was that Section 15 was unconstitutional as the delegation of legislative power D made by it to the rule-making authority was excessive. This contention was, however, not decided by the court as the appeals in that case were allowed on other points."

While dealing with the meaning of the word 'regulation', E particularly the expression, 'the act of regulating, or the state of being regulated' and Entry 54 in the Union List, this Court stated in paragraph 31 of the Report (Pgs. 48-49) as follows :

"31. Entry 54 in the Union. List uses the word "regulation". "Regulation" is defined in the Shorter Oxford English F Dictionary, 3rd Edn., as meaning "the act of regulating, or the state of being regulated". Entry 54 reproduces the language of Entry 36 in the Federal Legislative List in the Government of India Act, 1935, with the omission of the words "and oilfields". When the Constitution came to be G enacted, the framers of the Constitution knew that since early days mines and minerals were being regulated by rules made by Local Governments. They also knew that under the corresponding Entry 36 in the Federal Legislative List, the 1948 Act had been enacted and was H

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AND ORS. [RM. LODHA, J.] on the statute book and that the 1948 Act conferred wide A rule-making power upon the Central Government to regulate the grant of mining leases and for the conservation and development of minerals. It also knew that in the exercise of such rule-making power the Central Government had made the Mineral Concession Rules, 8 1949, and that by Rule 4 of the said Rules the extraction of minor minerals was left to be regulated by rules to be made by the Provincial Governments. Thus, the makers of the Constitution were not only aware of the legislative history of the topic of mines and minerals but were also c aware how the Dominion legislature had interpreted Entry 36 in the Federal Legislative List in enacting the 1948 Act. When the 1957 Act came to be enacted, Parliament knew that different State Governments had, in pursuance of the provisions of Rule 4 of the Mineral Concession Rules, D 1949, made rules for regulating the grant of leases in respect of minor minerals and other matters connected therewith and for this reason it expressly provided in sub- section (2) of Section 15 of the 1957 Act that the rules in force immediately before the commencement of that Act would continue in force until superseded by rules made under sub-section (1) of Section 15. Regulating the grant of mining leases in respect of minor minerals and other connected matters was, therefore, not something which was done for the first time by the 1957 Act but followed a well recognized and accepted legislative practice. In fact, even so far as minerals other than minor minerals were concerned, what Parliament did, as pointed out earlier, was to transfer to the 1957 Act certain provisions which had until then been dealt with under the rule-making power of the Central Government in order to restrict the scope of subordinate legislation .......... "

Then in paragraph 33 of the Report (Pgs. 50-51 ), the Court with reference to sub-section (2) of Section 13 of the 1957 Act further held: H

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A "33 .......... 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 B 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 c Governments 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 D 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 E Central Government. Sections 4 to 12 form a group of sections under the heading "General restrictions on undertaking prospecting and mining operations". The exclusion of the application of these sections to minor minerals means that these restrictions will not apply to minor minerals but that it is left to the State Governments to prescribe such restrictions as they think fit by rules made under Section 15(1 ). The reason for treating minor minerals differently from minerals other than minor minerals is obvious. As seen from the definition of minor minerals given in clause (e) of Section 3, they are minerals which are mostly used in local areas and for local purposes while minerals other than minor minerals are those which are necessary for industrial development on a national scale and for the economy of the country. That is why matters relating to minor minerals have been left by Parliament to

p. 749

AND ORS. [R.M. LODHA, J.] the State Governments while reserving matters relating to A minerals other than minor minerals to the Central Government. Sections 13, 14 and 15 fall in the group of sections which is headed "Rules for regulating the grant of prospecting licences and mining leases". These three sections have to be read together. In providing that Section s 13 will not apply to quarry leases, mining leases or other mineral concessions in respect of minor minerals what was done was to take away from the Central Government the power to make rules in respect of minor minerals and to confer that power by Section 15(1) upon the State c Governments. The ambit of the power under Section 13 and under Section 15 is, however, the same, the only difference being that in one case it is the Central Government which exercises the power in respect of minerals other than minor minerals while in the other case it is the State Governments 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), and in the same way, the State Governments have before them the restrictions and other matters provided for in Sections 4 to 12 while framing their own rules under Section 15(1)."

Janak Lal F

92. In Janak LaP, this Court had an occasion to consider meaning and scope of Rule 59 of 1960 Rules. The Court considered Rule 59, as it stood prior to amendment in 1963, and the provision after amendment. In paragraph 6 of the Report (Pg. 123) the Court held as under: G "6. Earlier the expression "reserved for any purpose" was followed by the words "other than prospecting or mining for minerals", which were omitted by an amendment in

1963. Mr. Dholakia, learned counsel for the respondents, appearing in support of the impugned judgment, has H

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A contended that as a result of this amendment the expression must now be confined to cases of prospecting or mining for minerals and all other cases where the earlier reservation was for agricultural, industrial or any other purpose must be excluded from the scope of the rule. We B are not persuaded to accept the suggested interpretation. Earlier the only category which was excluded from the application of Rule 59 was prospecting or mining leases and the effect of the amendment is that by omitting this exception, prospecting and mining leases are also placed c in the same position as the other cases. We do not see any reason as to why by including in the rule prospecting and mining leases, the other cases to which it applied earlier would get excluded. The result of the amendment is to extend the rule and not to curtail its area of operation. The words "any purpose" is of wide connotation and there D is no reason to restrict its meaning."

The Court clarified that intention of amendment in 1963 was to extend the rule and not to curtail its area of operation.

E Bharat Coking Coal

93. In the case of Bharat Coking Coal, the Court said that the State Legislature was competent to enact law for the regulation of mines and mineral development under Entry 23 of State List but such power was subject to the declaration which may be made by Parliament by law as envisaged by Entry 54 of the Union List. It was held that the legislative competence of the State Legislature to make law on the topic of mines and mineral was subject to parliamentary legislation. While dealing with Section 18(1) prior to its amendment by amending Act 37of1986 and after amendment, the Court held in paragraph 16 of the Report (Pg. 572) as under:

"16 ......... The amended and unamended sections both lay down that it shall be the duty of the Central Government to take all such steps as may be necessary "for the

p. 751

AND ORS. [R.M. LODHA, J.] conservation and development of minerals" in India and for A that purpose it may make such rules as it thinks fit. The expression "for the conservation of minerals" occurring under Section 18(1) confers wide power on the Central Government to frame any rule which may be necessary for protecting the mineral from loss, and for its preservation. B The expression 'conservation' means "the act of keeping or protecting from loss or injury". With reference to the natural resources, the expression in the context means preservation of mineral; the wide scope of the expression "conservation of minerals" comprehends any rule c reasonably connected with the purpose of protecting the loss of coal through the waste of coal mine, such a rule may also regulate the discharge of slurry or collection of coal particles after the water content of slurry is soaked by soil. In addition to the general power to frame rules for D the conservation of mineral, ............. "

The Court further held in para 19 of the Report (Pgs. 575-576) as follows:

" ......... No doubt under Enfry 23 of List II, the State E legislature has power to make law but that power is subject to Entry 54 of List I with respect to the regulation and development of mines and minerals. As discussed earlier the State legislature is denuded of power to make laws on the subject in view of Entry 54 of List I and the F Parliamentary declaration made under Section 2 of the Act. Since State legislature's power to make law with respect to the matter enumerated in Entry 23 of List II has been taken away by the Parliamentary declaration, the State Government ceased to have any executive power in the G matter relating to regulation of mines and mineral development. Moreover, the proviso to Article 162 itself contains limitation on the exercise of the executive power of the State. It lays down that in any matter with respect to which the legislature of a State and Parliament have power H

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A to make laws, the executive power of State shall be subject to limitation of the executive power expressly conferred by the Constitution or by any law made by Parliament upon the Union or authority thereof .......... "

B Orissa Cement Ltd.

94. A three-Judge Bench of this Court in Orissa Cement Limited was concerned with the validity of the levy of a cess based on the royalty derived from mining lands by States of Bihar, Orissa and Madhya Pradesh. The case of the petitioners therein was that similar levy had been struck down by a seven- Judge Bench of this Court in India Cement Limited• . The contention of the States, on the other hand, was that issue was different from the India Cement Limited• as the nature and character of the levies imposed by these States was different from Tamil Nadu levy. The Bench considered Entries 52 and 54 of the Union List and Entries 18, 23, 45, 49, 50 and 66 of the State List and also considered earlier decisions of this Court in HRS Murthy v. Collector of Chittoor', Hingir-Rampur Coal Co.•, M.A. Tulloch & Co. b, lshwari Khetan Sugar Mi/ls E (P) Ltd.Y, Baijnath Kadioc, ·M. Karunanidhi v. Union of India and Anr. mm , Mis. Hind Stoneo, I. T. C. & Ors. v. State of Kamataka & Ors. nn and Western Coalfields Limited v. Special Area Development Authority Korba & Anr. 00 • I shall cite paragraphs 49, 50, 51 and 53 (Pgs. 480-486) of the Report F which read as follows:

"49. It is clear from a perusal of the decisions referred to above that the answer to the question before us depends on a proper understanding of the scope of M.M.R.D. Act, 1957, and an assessment of the encroachment made by G the impugned State legislation into the field covered by it.

II. AIR (1965) SC 177. mm. (1979) 3 sec 431. nn. 1985 (Supp) SCC 476. H oo. 1982 (1) sec 125.

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