Bihar Mica Exporters Associati vs State Of Jharkhand & Ors.

W.P.(C). No. 6244 of 2007 with W.P.(C). No. 6270 of 2007 with W.P.(C). No. 07 of 2008 with W.P.(C). No. 6342 of 2007 with W.P.(C). No. 2195 of 2008 with W.P.(C). No. 6402 of 2007 with W.P.(C). No. 2441 of 2009 ----- In the matter of an application under Article 226 of the Constitution of India. ------ Bihar MICA Exporters Association ............... Petitioner ( W.P.C. No. 6244/07) M/s H.R. Fireclay & others ............... Petitioner ( W.P.C. No. 6270/07) Industries and Commerce Association......... Petitioner( W.P.C. No. 07/08) Shivam Iron & Steel Co. Ltd. & ors. ............... Petitioner ( W.P.C. No. 6342/07) Sushil Kumar Agarwal & ors................ Petitioner ( W.P.C. No. 2195/08) M/s Lall Iron & Steels Co. Ltd. & anr............. Petitioner ( W.P.C. No. 6402/07) M/s Laghu Udyog Bharati & ors. ............... Petitioner ( W.P.C. No. 2441/09) Versus State of Jharkhand & others ......... Respondents (in all cases) -----

For the Petitioner ( W.P.C. No. 2195/08) : M/s V. Shivnath, A.N.Gupta & Birendra Kumar For the Petitioner ( W.P.C. No. 07/08) : M/s Biren Poddar, Darshan Poddar,Piyush Poddar For the Petitioner ( W.P.C. No. 6342/07) : M/s S.Arun , D.K.Dubey For the Petitioner ( W.P.C. No. 6402/07) : M/s S.Arun , D.K.Dubey For the Petitioner ( W.P.C. No. 2441/09) : M/s R.S.Mazumdar, Rohit Roy For the Petitioner ( W.P.C. No. 6270/07) : M/s R.S.Mazumdar, Rohit Roy For the Petitioner ( W.P.C. No. 6244/07) : M/s P.K.Prasad, A.Aditya, R.K.Gupta

For the respondents :M/s Rajesh Shankar, G.A & Abhay Prakash ( in all cases)

Present: HON'BLE THE CHIEF JUSTICE HON'BLE MR. JUSTICE APARESH KUMAR SINGH ----------- C.A.V. On: 29.3.2012 Pronounced on: 11/05/2012

Reportable

Aparesh Kumar Singh, J. In these batches of writ petitions the petitioners have

challenged the vires of " Jharkhand Minerals Dealers Rules, 2007", framed in

exercise of powers conferred under section 23C(1)(2) of the Mines and

Minerals(Development and Regulations)Act, 1957 by the State Government of

Jharkhand vide notification dated 21.9.2007. The petitioners have also sought

quashing of the consequential orders issued by the District Mining Officer under

the Rules of 2007 directing the petitioners to obtain registration under the 2

aforesaid rules. In the alternative the petitioners in W.P.C. No. 6244 of 2007

have sought for a declaration that the impugned Rules of 2007 does not apply

to the business of the petitioners as they are governed by the provisions of

the Bihar Mica Act, 1947 read with Bihar Mica Rules, 1948 as it is an

occupied field under the relevant statutes passed by the said legislature over

which the aforesaid Rules cannot apply. The petitioners have further prayed

inter-alia for a direction upon the respondents restraining them from taking

any coercive / penal action against the petitioners under the provisions of the

Rules of 2007.

2. Petitioners under W.P.C. No. 6244 of 2007 i.e., Bihar Mica Exporters

Association claim themselves to be the members carrying on the business

and trading in Mica on the basis of Dealers License granted under Section 6

of the Mica Act,1947 which, as per them are valid and subsisting. Learned

Senior Counsel, Mr. P.K.Prasad submitted that the Mica Act was enacted for

the purpose of regulating and controlling the possession and trade in Mica

and the Bihar Mica Rules framed thereunder provides the mode and manner

for carrying out the purpose of the said Act. By referring to the different

provisions of the Mica Act, 1947 and the Rules, learned counsel has

contended that the impugned rules have been framed in a field occupied

under the plenary powers of the State legislature. He has relied on a

judgment reported in (2006)4 SCC 327, para 17 thereof stating that the

impugned rules are contrary to the other existing legislation and therefore,

bad in law. The petitioners claim that they are carrying on their business

including export and trade in Mica in compliance of the provisions of the Mica

Act and Rules framed thereunder. The cause of action for these petitioners

have arisen on the issuance of the impugned letter dated 22.10.2007

( annexure-5) asking them to get registered under the provisions of Rules of

2007 or else face the penal consequences.

3. The petitioners in W.P.C. No. 7 of 2008 are members of Industries and

Commerce Association, who own and possess their respective hard coke 3

plants located in the district of Dhanbad and are companies duly registered

under Section 25 of the Company's Act. Learned Counsel, Mr. Biren Poddar

asserted on their behalf that they purchase coal from different collieries of

C.C.L. and B.C.C.L situated in the state of Jharkhand as raw materials for the

purpose of production of hard coke in the respective plants owned by them for

the purpose of selling them in the market. They are neither doing any mining

work nor holding any mining license. It is also submitted on their behalf that

coal is a major mineral and not a minor mineral as defined under Section 3(e)

of the Mines and Minerals (Development and Regulations )Act, 1957( herein

after referred to as MMDR Act) and that the State Government is empowered

under Section 15 of the said act for making Rules in respect of minor minerals

only. It is their contention that under the amended section 23C inserted by the

Act 38 of 1999, w.e.f. 18.12.1999 the State Government has been conferred

powers to make Rules for prevention of illegal mining, transportation and

storage of minor minerals only. It is further contended that the impugned

Rules are violative of Articles 19(1)(g), 14 and 300A of the Constitution,

besides having been framed in excess of the powers conferred under Section

23C and as per Section 28(3) of the M.M.D.R Act, they have not been laid

before the House of the State Legislature.

4. Petitioners in W.P.C. No. 6270 of 2007 claim themselves to be

manufacturer of Calcined Fireclay and Refractories having valid SSI

registration with the Industries Department and other Acts like the Factories

Act, VAT Act, Income Tax Act etc. It is contented on their behalf that for the

purpose of manufacturing they procure minerals from different mines under

valid challans and after undertaking treatment of minerals by different

methods it ends up in finished products, which do not contain any properties

of minerals which have been procured from the mines. These petitioners

contended that under the aforesaid impugned Rules the State Government

has proceeded to regulate the activities relating to mineral products which are

not within the compass of Rule making power conferred under Section 23C of 4

the M.M.D.R Act. That these petitioners have arbitrarily and unnecessarily

been brought under the domain of the impugned Rules by asking them to

have mandatory registration with the Mining & Geology Department,

Government of Jharkhand , failing which they are liable to face penalty for

contravention of provisions of any of the Rules, which are bad in law.

5. Petitioners in W.P.C no. 2195 of 2008 state that they are registered

coal dealers of the State Mineral Development Corporation Ltd. , which is

extracting coal from Sikni coal Project, Sikni, who after obtaining proper

transit permit despatch the said coal to different consumers in different parts

of Jharkhand . These petitioners are aggrieved by the impugned Rules as that

amounts to restriction in their Fundamental Right to do business under Article

19(1)(g) of the Constitution of India. They are also assailing the impugned

Rules on the ground of violation of Article 14 of the Constitution of India being

discriminatory in nature. It is submitted by learned Senior Advocate, Sri V.

Shivnath on behalf of these petitioners that they would be compelled to obtain

further license for carrying out their activities in transaction of coal validly

purchased from the Jharkhand State Mineral Development Co. Ltd., which

pays the royalty for the same , failing which they would be liable for penal

action under the impugned Rules. They have assailed the impugned Rules as

being violative of section 15, 23C, 28(3) of the MMDR Act and also with

respect to Entry 54 List 1 of the VIIth Schedule of the Constitution of India.

They further assailed the impugned Rules as being violative of Article 301 and

304 of the Constitution of India for causing impediment to free flow of trade,

commerce and intercourse through out the territory of India. It is their

assertion that coal being major mineral, it is only the Central Government ,

who has the power to frame Rules in relation to the major minerals like coal,

which is beyond the jurisdiction of the State Government.

6. Petitioners in W.P.C. No. 6342 of 2007 have also assailed the

impugned Rules, 2007 and the consequent notice issued thereunder.

Petitioner no.1 claim themselves to be the company involved in manufacturing 5

Iron Bars, angles, channel, ingots, silicon Maganeze whereas , petitioner no.

2 manufactures bellets and petitioner no.3 manufactures pig iron for which

they purchase raw material within the State and other State. They claim

themselves to be consumers and not mines holder and are aggrieved by the

impugned Rules, which in their submission also suffers from same vices and

have assailed it on similar grounds as in the other writ petitions referred to

herein above.

7. Petitioner in W.P.C. No. 6402 of 2007 have assailed the impugned

Rules under similar grounds as that of petitioners in W.P.C. No. 6342 of

2007. They are engaged in manufacturing Sponge Iron, Iron bar, pipe profile,

angle, channel and ingots purchase raw materials from within and outside the

State and are consumers and not mines holders.

8. Petitioners in W.P.C. No. 2441 of 2009 comprises association of small

scale industries and few member companies of the said association, who are

engaged in manufacturing of ceramics and refractories having SSI registration

of the Industries Department and other Act like the Factories Act, VAT,

Income Tax etc. They have asserted that for the purpose of manufacturing

they procure minerals from different mines under valid challan and those

minerals are subjected to different methods of treatment leading to

manufacture of finished products, which do not contain any properties of

minerals which are procured from mines. These petitioners are also aggrieved

by the impugned Rules, which purportedly regulate the activities of the

petitioners, so far as activities of possession, storage , trading, selling and

transportation of minerals products are concerned.

9. From perusal of the averments made in the writ petitions preferred on

behalf of the different petitioners referred to herein above and after hearing

the learned counsel appearing on their behalf, it appears that the common

grounds for assailing the impugned Rules are as follows:-

(i) That the Rules of 2007 have been framed by the State Government

in exercise of the delegated power conferred under Section 23C of the 6

M.M.D.R Act which is occupied by the existing legislation being Bihar Mica

Act, 1947 and Bihar Mica Rules, 1948 framed under the plenary power of the

State legislature which cannot be encroached upon by framing of the

impugned Rules under the provisions of MMDR Act relating to Entry 54 List 1

of the VIIth Schedule of the Constitution of India.

(ii) The impugned Rules have been challenged on the grounds

that they are violative of Article 19(1)(g) of the Constitution of India read with

Article 14 as they tend to interfere with the Fundamental Right to carry on

business and are discriminatory in nature.

(iii) The Rules of 2007 have further been assailed on the ground of

being violative of Article 301 and 304 of the Constitution of India as they tend

to impede free flow of trade, commerce and intercourse throughout the

territory of India.

(iv) These Rules have also been assailed for being violative of

provisions of Section 15,23C, 28 of the MMDR Act in the sense that the State

Government has framed Rules in respect of major minerals, although Section

15 specifically provides power upon the State Government to make Rules in

respect of miner minerals only . It is also alleged that Rules have not been

properly laid before the house of legislative assembly as required under

Section 28(3) of the MMDR Act.

(v) These Rules have also been assailed on the ground that they suffer

from being in excess of the delegated power conferred under Sections 23C of

the MMDR Act.

Petitioners have on these grounds assailed the impugned Rules and

consequential action taken thereunder.

10. The Respondent- State have appeared and filed their counter affidavit

in respective cases broadly upholding the validity of the impugned Rules of

2007 inter-alia on the grounds that (a) these Rules have been framed under

the specific power conferred on the delegate i.e. State Government under the

provisions of 23C of the MMDR Act. (b) These Rules have been framed 7

pursuant to the amendment consciously introduced in the MMDR Act by

amending Act 38 of 1999 being 23C with specific aim and object to prevent

illegal mining , transportation and storage of minerals and for the purpose

connected therewith. (c) It is also stated by quoting the provisions of Section

23C that these Rules are framed under Section 23C(1)(2) , which confers

these powers upon the State Government in particular and without prejudice

to the generality of the foregoing power to frame Rules on all or any of the

following matters (a) to (g) enumerated under sub section (2) of 23C. The Act

and the Rules framed thereunder is to ensure prevention of illegal mining,

transportation and storage of minerals and for the purposes connected

therewith, which has attracted attention of the parliament leading to the

insertion of the provision of Section 23C in the act of 1999. (d) It is also

submitted that section 15 and 23 are independent in existence. While section

15 of the MMDR empowers the State Government to make Rules with respect

to minor minerals whereas under Section 23C the State Government has

been empowered to make rules for minerals in general including both minor

and major minerals. (e) The Respondents have further controverted the

submission of the petitioners in relations to the provisions of Entry 54 List I of

the VIIth Schedule by stating that the Parliament has specifically enacted the

MMDR Act, 1957 in exercise of its legislative power in respect of the subject

falling in Entry 54 List I of the VIIth Schedule and wherein the Parliament in

its wisdom has delegated power to frame Rules to the State Government for

preventing illegal mining and allied activities thereto.

11. The respondents have seriously contested the averments made on

behalf of the petitioner relating to their challenge to the impugned Rules on

the test of constitutional validity of the said Rules. The Respondents have in

answer to the contention made by the petitioners in W.P.C No. 6244 of 2007

concerning the Bihar Mica Act, 1947, specifically asserted that under the

impugned Rules of 2007 as framed under Section 23C of the MMDR Act,

Mica being a major mineral also comes in its purview and the said Rules by 8

no stretch of imagination can be said to be contravention of Bihar Mica Act,

1947.

12. Learned counsel for the State Mr. Rajesh Shankar has drawn the

attention of this court to a number of judgments delivered by the different High

Courts such as reported in AIR 2004(AP) 234, AIR 2008(Orissa) 126,

unreported decision of the Madras High Court delivered in the case of

D.Sivakumar Vrs. The Government of Tamil Nadu on 27th April,2009 in

W.P. Nos. 23317 and 24211 of 2008 and Allahabad High Court in the case of

Satya Deo Dikshit and another Vrs. The State of U.P. & others dated

21.5.2007

in W.P. No. 39234 of 2002, in order to support his contention that

similar Rules framed by the different States government in exercise of its

power under Section 23C of the MMDR Act have been upheld by the different

High Courts. He further contented on the strength of these judgments that the

provision of impugned Rules are neither in excess of the delegated power

conferred upon the State Government under Section 23C of the Act of 1957

nor are in any sense violative of Article 19(1)(g) or Articles 301 and 304 of the

Constitution of India. He has submitted that the Rules framed under the

aforesaid provisions of the MMDR Act by the different State Governments are

pari materia with the present impugned Rules and the validity of the aforesaid

Rules have already been upheld by the different High Courts and as such

there is no substance in the contention of the petitioners that the impugned

Rules suffers from violation of the provision of Article 19 (1)(g) of the

Constitution of India or they tend to impede the free flow of trade, commerce,

intercourse as permissible under Article 301 under Chapter XIII of the

Constitution of India.

13. Before proceeding to deal with the rival contentions of the parties and

delve upon the grounds to challenge the impugned Rules, it would be proper

to refer to the relevant provisions of the MMDR Act thereunder:-

"Section 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 extent hereinafter provided".

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

9 (e) "minor minerals' means building stones, gravel, ordinary clay, ordinary sand other than sand used for prescribed purposes, and any other minteral 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;

"Section 4.(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(this provision was introduced by amending act 38 of 1999)".

"Rules for Regulating the Grant of prospecting licenses and mining leases"

"Section 13. Power of Central Government to make rules in respect of minerals.-

(1) The Central Government may, by notification in the Official Gazette, make rules for regulating the grant of (reconnaissance permits, prospecting licenses and mining lease) in respect of minerals and for purpose connected therewith.

(2) In particular, and without prejudice to the generality of the foregoing power, such rules may provide for all or any of the following matters, namely:- (a) to (r)".

"Section14. (Section 5 to 13) not to apply to minor minerals.-The provisions of ( section 5 to 13)(inclusive) shall not apply to (quarry leases, mining leases or other mineral concessions) in respect of minor minerals and for purposes connected therewith".

"Section 15. Power of State Governments to make rules in respect of minor minerals (1) The State Government may, by notification in the Official Gazette, make rules for regulating the grant of (quarry leases, ming leases or other mineral concessions) in respect of minor minerals and for purposes connected therewith.

(1A) In particular and without prejudice to the generality of the foregoing power, such rules may provide for all or any of the following matters , namely:- (a) to (o)".

"Miscellaneous"

"Section 23C. Power of State Government to make rules for preventing illegal mining, transportation and storage of minerals.-(1) The State Government may, by notification in the official gazette, make rules for preventing illegal mining, transportation and storage of minerals and for the purposes connected therewith.

(2) In particular and without prejudice to the generality of the foregoing power, such rules may provide for all or any of the following matters, namely:- (a) establishment of check-posts for checking of minerals under transit; (b) establishment of weigh-bridges to measure the quantity of mineral being transported; (c) regulation of mineral being transported from the area granted under a prospecting licence or a mining lease of a quarrying licence or a permit, in whatever name the permission to excavate minerals, has been given;(d) inspection, checking and search of minerals at the place of excavation or storage or during transit;(e)maintenance of registers and forms for the purposes of these rules;(f) the period within which and the authority to which applications for revision of any order passed by any authority be preferred under any rule made under this section and the fees to be paid therefor and powers of such authority for disposing of such applications; and (g) any other matter which is required to be , or may be, prescribed for the purpose of prevention of illegal mining, transportation and storage of minerals.

(3) Notwithstanding anything contained in section 30, the Central Government shall have no power to revise any order passed by the State Government or any of its authorized officers or any authority under the rules made under sub- sections (1) and (2)".

"Section 28. Rules and notifications to be laid before Parliament and certain rules to be approved by Parliament.

(1)........

(2)........

(3) Every rule and every notification made by the State Government under this Act shall be laid , as soon as may be after it is made, before each House of the State Legislature where it consists of two houses, or where such legislature consists one house, before that house".

10 14. The State Government of Jharkhand in exercise of the delegated

power conferred under Section 23C of the MMDR Act, 1957 proceeded to

frame "Jharkhand Minerals Dealers Rules, 2007" issued vide notification

dated 21.9.2007, whereby it prescribed to regulate the possession, storage,

trading and transportation of minerals and mineral products and to check

evasion of royalty or seigniorage fee, stopping of illegal mining and

transportation in the State of Jharkhand and for the purposes connected

therewith.

The salient provisions of the instant Rule impugned herein are being

quoted for better appreciation which are as follows:-

"As per Rule 1(iii) the instant Rule shall come into force from the date of notification of the official gazette".

"Rule 2:- Definitions:

(f) "Dealer" means any person who carries on the business of buying , storing, selling, supplying, trading, transporting, distributing or delivering for sale of minerals and mineral products and includes the following: (a) persons, who buy and process mineral or mineral products for sale or for utilization for their own purposes beyond any lease area; and (b) Any person , who holds a mining lease granted under the Mineral Concession Rules, 1960- or the Jharkhand Minor Mineral concession Rules, 2004 issued by the Government, framed under the " Mines and Minerals ( Development and Regulation) Act, 1957;

(g) "Dealers Registration" means a registration granted under these rules authorizing a person, to whom it is granted, to engage in the transaction to buy or sell and be in possession of minerals defined in clause

(h) below;

(k) "Mineral' means, minerals of all types ( except the atomic minerals enlisted in part B of Schedule-I of Mines and Minerals ( Development and Regulation) Act, 1957 and varities including precious and semiprecious and un-cut stones and minor minerals as specified in Section 3(e) of the Mines and Minerals (Development and Regulation) Act, 1957 ( Central Act, 67 of 1957 for the purpose of these Rules.

Explanation: Any mineral shall not cease to be a mineral by reason of being subjected to any process like crushing, burning, breaking, drying , cutting, polishing, pulverising or any other procedure intended to make the mineral fit or suitable for sale or consumption.

(u) "Transport Challan" means a challan issued by the Officer authorized by the Government for Lawful transportation of any mineral raised in accordance with the provisions of the Act and the Rules made thereunder by a carrier, which is issued to a Mineral Dealer;

"Rule 3:- Prohibition (1) All dealer shall register themselves as dealers under the Mines and Geology Department, Government of Jharkhand as per the procedure mentioned in the following Rules.

(2) No person other than a deler or a mining lease holder shall buy or sell or offer for sale or engage in any transaction of buying and selling any mineral at any place or transport mineral for purposes of sale or consumption without being registered as a dealer.

Provided that no person purchasing and transporting minerals for use or consumption by himself, (where such use or consumption does not involve any commercial activity) and any holder of a mining lease in respect of the minerals for which he holds a lease shall be required to register himself as dealer".

11

Rule 4 refers to the grant of registration and its renewal. Rule 5

provides processing and disposal of application by District Mining Officer.

Rule 6 provides for transport challan.

Certain provisions of Rule 7 are quoted herein below which are

relevant for the purpose of appreciation of the instant case.

"(i) The dealer shall deposit an amount of Rs. 10,000/- as a security deposit duly pledged to the District / Assistant Mining Officer.

(ii) The dealer shall maintain correct and intelligible accounts of ores and minerals procured, stored, stacked , processed and despatched to different destination in Form-F

(iii) All traders in minerals, including those who deals with imported minerals should be registered as dealers.

(v) While removing the ore or minerals from the stores or factories the dealer shall obtain permission from the concerned District / Assistant Mining Officer and transport the material under prescribed Transport challan in Form-D obtained from the concerned District / Assistant Mining Officer.

(vi) The dealer shall maintain the details of stock and transport challans in Form-H and submit to the concerned District Mining Officer by the 15th of every succeeding month".

Rule 8 provides for penalties:-

"(1) Any person, who contravenes any of the provision of these rules, or buy or sells or stores minerals except under and in accordance with the dealer's registration or who transports the minerals except as mentioned in the transport challan shall be punishable with:

(a) A fine of Rs.5000/- or imprisonment for a term which may extend to one year or with both.

(b) In the case of continuing contravention, with an additional fine which may extend to five hundred rupees for every day during which such contravention continues after conviction for the first such contravention.

(2) Any person, who buys or sell minerals except under and in accordance with the registration, shall be punishable with a fine which may extend to Rs. 5000/- or imprisonment for a term which may extend to one year or with both".

(3) Any person, who transport minerals except to the destination specified in transport challan, shall be punishable with an imprisonment up to a term of one year or fine which may extend to Rs. 5000/- or with both". (4)....

Rule 9 refers to the seizure and confiscation by any officer authorized

by the government or competent authority to enter and inspect any premises

where mineral is kept and stored. The power of confiscation is conferred

under Rule 9 (iv) by order of the competent court which means Sub Divisional

Magistrate or Chief Judicial Magistrate of concerned district or Superior court

in the hierarchy to take cognizance of the offence committed under these

Rules.

Rule 10 relates to the custody of the seized property. Rule 11 provides

for remedy of appeal against the order of the District / Assistant Mining Officer

or competent authority for any action under these Rules within a period of 30

days from the date of communication of the order to the Collector in Form-J

while Rule 11(2) provides for disposal of the appeal by the appellate authority 12

within a period of 30 days from the date of its receipt.

Rule 12 provide remedy for a person aggrieved against the order

passed in an appeal to prefer an application of revision before the Mines

Commissioner within 30 days from the date of communication of the said

order in Form K. The appellate or revisional authority is conferred with power

to condone the delay in filing the appeal or revision. The relevant forms A to L

are part of the Rules of 2007.

15. We now proceed to deal with the contention relating to the grounds of

challenge to the impugned Rules. It has been contended that Bihar Mica Act,

1947 read with Rules 1948 framed thereunder being plenary legislation of the

State legislature over the subject matter of legislation relating to regulation of

the possession and transport of, and trading in, mica in the Province of Bihar

occupy the filed of legislation under relevant entry of List 2 of the VIIth

Schedule in favour of the State legislature which renders the impugned Rules

framed under Section 23C of the MMDR Act as ultravires and/ or inapplicable,

so far as the mineral Mica is concerned. The petitioners in W.P.C. No. 6244 of

2007, Bihar Mica Exporters Association have contended in so many words

that the MMDR Act and the impugned Rules framed thereunder could not

have provided for making delegated legislation in respect of mineral like Mica

which is controlled by a plenary legislation of the State Legislature i.e. Bihar

Mica Act, 1947 in existence, and as such are either ultravires or wholly

inapplicable to the mineral of Mica and the activities controlled by the Mica

Act, 1947 and the Rules framed thereunder in which these petitioners are

doing their business.

16. In order to answer the aforesaid question it is important to first refer to

the relevant provisions of the Constitution of India which relate to the

distribution of the legislative powers as engrafted in Part -XI " RELATION

BETWEEN THE UNION AND THE STATES" Chapter -1 thereof provides for

distribution of legislative powers.

"Article 245:-Extent of Laws made by Parliament and by the 13

Legislatures of States:- (1) Subject to the provisions of this constitution, Parliament may make laws for the whole or any part of the territory of India, and the Legislature of a State may make laws for the whole or any part of the State.

(2) No Law made by Parliament shall be deemed to be invalid on the ground that it would have extra-territorial operation."

"Article 246 :- Subject-matter of laws made by Parliament and by the Legislatures of States:- (1) Notwithstanding anything in clauses(2) and (3), 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").

(2) Notwithstanding anything in clause (3), Parliament and, Subject to clause (1), the Legislature of any State also, have power to make laws with respect to any of the matters enumerated in List III in the Seventh Schedule( in this Constitution referred as the "Concurrent List".

(3) Subject to clause(1) and (2), the Legislature of any State has exclusive power to make laws for such State or any 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") (4) Parliament has power to make laws with respect to any matter for any part of the territory of India not included in a State notwithstanding that such matter is a matter enumerated in the State List."

17. It is also appropriate to quote the relevant Entries of the the List I

(Union List) and List II ( State List) herein on the aforesaid subject in the

Seventh Schedule of the Constitution of India:-

"List I Entry 54 reads " 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".

"List II Entry 23 reads - " 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".

18. The scheme of distribution of legislative powers in the Constitution as

contained in Article 246 (quoted supra) has been interpreted in the celebrated

case of M/s Hoechst Pharmaceuticals Ltd & ors. Vrs. State of Bihar

reported in 1983(4) SCC 45, para 38 of the opinion is quoted herein below:-

" It is obvious that Article 246 imposes limitations on the legislative powers of the Union and State legislatures and its ultimate analysis would reveal the following essentials:

(1) Parliament has exclusive power to legislate with respect to any of the matters enumerated in List I notwithstanding anything contained in clauses(2) and (3). The non obstante clause in Article246(1) provides for predominance or supremacy of Union legislature. This power is not encumbered by anything contained in clauses (2) and (3) for these clauses themselves are expressly limited and made subject to the non obstante clause in Article 246(1). The combined effect of the different clauses contained in Article 246 is no more and no less than this: that in respect of any matter falling with List I, Parliament has exclusive power of legislation.

(2) The State legislature has exclusive power to make laws for such State or any part thereof with respect to any of the matter enumerated in List II of the Seventh Schedule and it also has power to make laws with respect to any of the matter enumerated in List III. The exclusive power of State Legislature to legislate with respect to any of the matter enumerated in List II is to be exercised subject to clause (1) i.e. the exclusive power of Parliament to legislate with respect to matters enumerated in List I. As a consequence, if there is a conflict between an entry in List I and an entry in List II which is not capable of reconciliation, the power of Parliament to legislate with respect to a matter enumerated in List II must supersede pro tanto the exercise of power of the State legislature 14

(3) Both Parliament and the State legislature have concurrent powers of legislation with respect to any of the matters enumerated in List III".

(underline supplied to add emphasis and are not part of original text)

The aforesaid principle laid down by the Hon'ble Supreme Court have

been noted with approval by the Hon'ble Supreme Cout of India in several

judgments including that of Girnar Traders Vrs. The State of Maharashtra

reported in (2011) 3 SCC by a Constitution Bench ( Paras 173 to 176):-

"Application of doctrine of pith and substance and incidental encroachment to the issue raised in the present case

173. The doctrine of pith and substance can be applied to examine the validity or otherwise of a legislation for want of legislative competence as well as where two legislations are embodied together for achieving the purpose of the principal Act. Keeping in view that we are construing a federal Constitution, distribution of legislative powers between the Centre and the State is of great significance. Serious attempt was made to convince the Court that the doctrine of pith and substance has a very restricted application and it applies only to the cases where the court is called upon to examine the enactment to be ultra vires on account of legislative incompetence.

174. We are unable to persuade ourselves to accept this proposition. The doctrine of pith and substance finds its origin from the principle that it is necessary to examine the true nature and character of the legislation to know whether it falls in a forbidden sphere. This doctrine was first applied in India in Prafulla Kumar Mukherjee v. Bank of Commerce Ltd. The principle has been applied to the cases of alleged repugnancy and we see no reason why its application cannot be extended even to the cases of present kind which ultimately relates to statutory interpretation founded on source of legislation.

175. In Union of India v. Shah Goverdhan L. Kabra Teachers' College this Court held that in order to examine the true character of the enactment, the entire Act, its object and scope is required to be gone into. The question of invasion into the territory of another legislation is to be determined not by degree but by substance. The doctrine of pith and substance has to be applied not only in cases of conflict between the powers of two legislatures but also in any case where the question arises whether a legislation is covered by a particular legislative field over which the power is purported to be exercised. In other words, what is of paramount consideration is that the substance of the legislation should be examined to arrive at a correct analysis or in examining the validity of law, where two legislations are in conflict or alleged to be repugnant.

176. An apparent repugnancy upon proper examination of substance of the Act may not amount to a repugnancy in law. Determination of true nature and substance of the laws in question and even taking into consideration the extent to which such provisions can be harmonised, could resolve such a controversy and permit the laws to operate in their respective fields. The question of repugnancy arises only when both the legislatures are competent to legislate in the same field i.e. when both, the Union and the State laws, relate to a subject in List III (Hoechst Pharmaceuticals Ltd. v. State of Bihar)."

(underline supplied to add emphasis).

19. It would be appropriate by way of passing reference to indicate herein

that Article 254 provides the method of resolving conflict between law made

by the Parliament and Law made by the Legislature of the State with respect

to the matter falling under the Concurrent List. The Doctrine of Repugnancy

is, therefore, available to only such laws, which are made by the parliament

and the State legislature in respect of matters falling within the Concurrent

List of the VIIth Schedule. This shall not detain us any further as admittedly

the legislations in question do not fall within the entries of the Concurrent List 15

so as to invite any attention of the principle enumerated in Article 254

concerning Doctrine of Repugnancy. The extent and control in exercise of

legislative powers in respective fields of legislation under List II of the Seventh

Schedule are exclusively controlled by the provisions of Article 246 of the

Constitution of India. In the present case we are confronted with interpretation

to the legislative field under List II viz-a-viz entry 54 List I of the Seventh

Schedule. The Bihar Mica Act, 1948 prima facie appears to be a legislation

under entry 23 List II while the MMDR Act, 1957 is a Parliamentary Act falling

under the exclusive field of legislation falling under entry 54 List I of the

Seventh Schedule. The words expressed in entry 23 List II is very

unambiguous . It states that "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" and Entry 54 reads " 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. Such a law was passed in 1957- The Mines

and Minerals (Regulation and Development) Act, 1957. The Act of 1957, as

per Section 3 covers all mineral, including minor minerals except mineral oils.

20. It is important to mention here that the scheme of distribution in the

three Lists of Seventh Schedule is carefully crafted and the taxing fields are

separately provided for. In the case of M.P.V. Sundararamier & Co. Vrs.

State of Andhra Pradesh and others reported in AIR 1958 SCC 468

Justice Venkatarama Aiyar traced the history of legislations preceding the

Constitution, analyzed the scheme underlying the division of legislative

powers between the Centre and State and then succinctly summed up the

quintessence of the analysis. Para 51 of the said decision is referred to herein

below:-

"In list I, Entries 1 to 81 mention the several matters over which parliament has authority to legislate. Entries 82 to 92 enumerate the taxes which could be imposed by a law of Parliament. An examination of these two groups of Entries shows that while the main subject of legislation figures in the first group, a tax in relation thereto is separately mentioned in the second. Thus, Entry 22 in List I is "Railway", and Entry 89 is "Terminal Taxes on goods or passengers, carried by railway, sea or airtaxes on railway fares 16

and freights". If Entry 22 is to be construed as involving taxes to be imposed, then Entry 89 would be superfluous. Entry 41 mentions "Trade and commerce with foreign countries ; import and export across customs frontiers. If these expressions are to be interpreted as including duties to be levied in respect of that trade and commerce, then Entry 83 which is "Duties of customs including export duties" would be wholly redundant. Entries 43 and 44 relate to incorporation , regulation and winding up of corporation. Entry 85 provides separately for Corporation Tax. Turning to List II, Entries 1 to 44 form one group mentioning the subjects on which the States could legislate. Entries 45 to 63 in that List form another group, and they deal with taxes. Entry 18, for example, is "Land" and Entry 45 is "Land revenue". Entry 23 is "Regulation of mines" and Entry 50 is "Taxes on mineral rights ".

However, the reference to the opinion in the aforesaid judgment is only

to elucidate the scheme of distribution of entries in the legislative fields in

different List of the Seventh Schedule as summed up in aforesaid Constitution

Bench decision of the Hon'ble Supreme Court of India. The position in law is

that where ever framers of the Constitution wanted to limit the fields of entries

in List II, it has used the expression " subject to". Please see entries

1,2,3,12,13, 17, 22, 23,24,26,27, 33 of the List II (General Entries) and

50,51,54,57,62(Taxation Entries).

21. It is also a settled principle that entry in the Lists under the VIIth

Schedule of the Constitution must be construed widely and liberally and all

that is incidental and ancillary to the subject. In fact in the language of the

Hon'ble Supreme Court of India the allocation of the subject to the Lists is not

by way of scientific and logical definition but by way of mere simplex

enumeratio of broad categories. A power to legislate as to the principal

matters specifically mentioned in the entry shall also include within its

expanse the legislation touching the incidental and ancillary matters.

22. The Hon'ble Supreme Court of India on a review of the available

decision in the case of M/s Hoechst Pharmaceuticals Ltd & ors. Vrs. State

of Bihar(supra) clearly held that inspite of the fields of legislations having

been demarcated the question of repugnancy being made by law by the

Parliament and later made by the State legislature may arise only in case

where both the legislations occupy same fields with respect to one of the

matter enumerated in the Concurrent List and direct conflict is seen. If there is

repugnancy due to overlapping found between List II on one hand and List I

and III on the other the State law will be ultravires and shall have to give way 17

to the Union law.

The doctrine of occupied field applies only when there is a clash

between the Union and the State Lists within an area common to both. There

the doctrine of pith and substance is to be applied and if the impugned

legislation substantially falls within the power expressly conferred upon the

legislature which enacted it, an incidental encroaching in the field assigned to

another legislature is to be ignored. While reading the three lists, List I has

priority over Lists III and II and List III has priority over List II .

23. The specific issues relating to the legislations under entry 23 of the

State List and entry 54 of the Union List attracted the attention of the Hon'ble

Supreme Court of India in the case of Hingir-Rampur Coal Co. Ltd. &

others Vrs. The State of Orissa reported in AIR 1961 SCC 459 in which the

Constitution Bench laid down the following Principles in para 23 which are

relevant for our purpose.

"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 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 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 disputed".

(underline supplied to add emphasis)

24. In the instant case the Bihar Mica Act, 1947 deals with the subject to

regulate the possession and transport of, and trading in, mica in the Province

of Bihar. Various provisions of the Act of 1947 like Section 4 provides for

restriction/prohibition of possession of, and trading in mica without license,

proprietor's certificate or digger's permit. "Licensee" under sub Section 2(i) 18

means a person to whom a miner's license or a dealer's license has been

granted; Section 2(m) provides for definition of 'miner's license"; sub Section

2(p) provides for definition of "proprietor's certificate' granted under Section 5

authorizing the person to whom it is granted to have in his possession and

sell mica extracted from a mica mine of which he is in possession and which

is situated in land of which he is the proprietor or from a mica dump of which

he is possession. Section 6 provides for grant of license i.e. miner's license

or dealer's license. It also provides that controller may refuse to grant such a

license to a person, who is not in lawful possession of the mica mines.

Section 10 provides for accounts to be kept by licensees and registered

proprietors while Section 12 provides for licensee, registered proprietor and

digger to notify places used for storing mica. Section 14 provides for transport

of mica and no person shall carry mica from one place to another unless he

carries a pass in the prescribed form specifying the date and time of its issue

signed by licensee or registered proprietor on his duly authorized agent.

Section 17 to 21 (A) provides for offences and penalties and in the

miscellaneous provision under Section 22 the power of police officer to arrest

without warrant any person found committing an offence under Sections 17

or 19 of the Act are provided for. Sections 23 and 24 further provides for

seizure and detention of mica removed without pass and power of search and

seizure. Section 25 provides for cancellation of license and proprietor's

certificates for violation of conditions enumerated thereunder including

unauthorized usage by licensee or proprietor's certificate by any person for

buying or having in his possession or sell mica from mica or mica dump.

Powers of revision has been conferred to the State Government under

Section 26(A) while Section 27 provides power to make rules to the State

Government to carry out the purposes of the act enumerated thereunder. The

Bihar Mica Rules, 1948 has been framed in order to carry out purposes of the

said enactment with prescribed forms for obtaining proprietor's certificate,

mica dealer's license etc. A broad enumeration of the object of the act of 1947 19

and the provisions thereunder together with the Rules indicate that the Bihar

Mica Act, 1947 was enacted by the State Legislature to regulate the

possession , transportation and trading of Mica in the Province of Bihar

relatable to Entry 23 of List II of VIIth Schedule of the Constitution.

25. In this background it is important to consider that the provision of

Section 23C, as quoted above earlier, provides for conferring power upon the

State Government to make Rules for preventing illegal mining, transportation

and storage of minerals. The aforesaid provision inserted by the Act 38 of

1999 by the Parliament was consciously introduced to prevent rampant case

of illegal mining, transportation and storage being carried out in different parts

of the country for which the existing legislation had proved inadequate. Not

only by the acts of such illegal mining the public exchequer was being denied

huge amount of revenue, but at the same time it had the effect of degrading

the environment. It also had effect of defeating the avowed objectives

contained in the Directive Principles of State Policy in Part-IV of the

Constitution of India particularly Article 39(b),(c), 48-A and other related

provisions. The aforesaid amendment has therefore, sought to curtail the

aforesaid mischief by a conscious act of Parliament brought into effect from

18.12.1999 by specifically conferring the State Government with powers to

frame Rules for preventing illegal mining, transportation and storage of

minerals and for the purpose connected therewith. These powers includes the

power of the State Government to frame Rules in respect of the enumerated

matters without prejudice to the generality to the power conferred under

Section23C(1). The power was specially conferred upon the State

Government in order to enable the State Government as a delegate for

control and regulation of the activities relating to the illegal mining,

transportation and storage as the State Government is best suited to deal with

the local conditions and the problems arising thereof. This provision read in

the light of the declaration in Section 2 of the M.M.D.R Act, therefore clearly

emphasize the intent of the Parliament to legislate on the subject of 20

"regulation of mines and mineral development and to the extent to

which such regulation and development under the control of the Union

is declared by Parliament "to be expedient in the public interest" by

making specific provisions for preventing illegal mining, transportation

and storage of minerals as per Rules framed by the State Government.

26. There is not even an iota of doubt left after the aforesaid

discussion that the Parliamentary legislation i.e. MMDR Act specially

the provision of Section 23C inserted in the year 1999 and Rules

framed by the State of Jharkhand in the year 2007 occupy an exclusive

field of legislation conferred upon the Union legislature under Entry 54

of List I of Seventh Schedule. The effect of this is that the relevant State

legislation like the Bihar Mica Act, 1947 which consciously sought to

regulate possession, transportation and trading of Mica, a major mineral

in the Province of Bihar and latter the successor State of Jharkhand

was superseded by the Parliamentary enactment and the Rules framed

thereunder. The contention of the petitioner specially in W.P.C.No. 6244

of 2007, so far as the plea of occupied field by a plenary State

legislation i.e. Bihar Mica Act,1947 is wholly misconceived and

ill founded and the judgment relied on their behalf is of no application to

the facts of the instant case.

27. The scope of the powers conferred under Section 23C

of the M.M.D.R Act introduced in the year 1999 is to be seen from

another perspective as well vis a vis the power of State Government

to frame Rules in respect of 'Minerals' both major and minor as

raised by the petitioner herein above. In the case of State of Tamil

Nadu Vrs. M.P.P. Kavery Chetti reported in 1995(2) SCC 402 the

Hon'ble Supreme Court of India upheld the decision of the Madras

High Court whereby and where under the provisions of Rule 21

8(D) and 19-B of the Tamil Nadu Minor Mineral Concession Rules, 1959 were

struck down as unconstitutional. By the impugned Rules the State

Government and its officers were empowered to direct control of the sale of

every permit holder of quarried granite or other rock suitable for ornamental

and decorative purpose. It also empowered the State Government or its

officers or corporation to fix the minimum price for the sale thereof in order to

conserve and protect granite resources. It was considered that the State

Government had no power to exercise control over the minor minerals after

they have been excavated and power to control sale and sale price of minor

mineral is not covered by the terms of clause (o) Sub Section (1-A) of

Section15 of the MMDR Act. The Hon'ble Supreme Court held that these

clauses are related to the regulation of grant of quarry and mining lease and

other mineral concessions and it does not have power to regulate the sale of

already mined minerals. In the aforesaid circumstances Hon'ble Supreme

Court of India upheld the decision of the Madras High Court striking down the

Rules 8D and 19B as being beyond the purview of the Rule making power of

the State Government and also the government order issued consequent

thereto. The Judgment of the Hon'ble Supreme Court of India was rendered in

the context of the provisions of Section 15 of the M.M.D.R Act in which the

State Government had the power to frame Rules in respect of minor minerals

for the provisions of regulating the grant of quarry lease, mining lease or other

mineral concession.

28. On the report of Tandon Committee a comprehensive amendment Act

38 of 1999 was introduced and passed by the Parliament incorporating

Section 4(1-A), Section 23C in the MMDR Act in order to address the mischief

of rampant incidences of illegal mining, transportation and storage of 22

minerals. In the case of C. Narayana Reddy Vrs. Commissioner of

Panchayati Raj & Rural Employment reported in A.I.R. 2004(A.P) 234, the

Andhra Pradesh High Court had the occasion to uphold the validity of Rule 9-

W of Andhra Pradesh Mines Mineral Concessions Rules, 1966, as inserted on

1.1.2001 under the Rule making powers of State Government under Section

23C of MMDR Act. The background for introduction of Section 23C

specifically discussed in para 23 and 28 are of relevance and also quoted

herein below:-

"23. After decision of the Supreme Court in Kavery Chetty's case, AIR 1995 SC 858 holding that the power of the State Government as subordinate rule making authority is restricted in the manner set out in Section 15 of the Act and it does not confer power to regulate the sale of minor mineral, which has already been mined but only confers power to frame rules to regulate grant of quarry and mining lease and other matters connected therewith, Parliament amended the principal Act and inserted Section 23C therein act which reads:.......

"28. .......We have to keep in mind that the Parliament passed the Amendment Act, 1999 (Act No. 38 of 1999) thereby inserting Section 23- C in the Principal Act after the decision of the Supreme Court in Kavery Chetty's case , AIR 1995 Sc 858(supra). By the said provision, power was specifically conferred on the State Government to make rules for preventing illegal mining, transportation and storage of minerals.........."

29. The rules framed under Section 23C of the M.M.D.R Act by different

States have also been subjected to scrutiny by other High Courts. In the case

of D. Shivkumar Vrs. Government of Tamil Nadu & others and another

case of A. Chandrashekharan Vrs. Government of Tamil Nadu & others

being W.P.(S) Nos. 23317 of 2008 and 24211 of 2008, vide judgment dated

27th April 2009, the Madras high Court had the occasion to consider the

challenge to Rule 38, introduced by way of Government order dated

25.8.2008 in the Tamil Nadu Minor Mineral Concessions Rules, which were

challenged as being illegal, ultra vires of Section 15 of the MMDR Act of 1957

and violative of Article 14, 19 (1)(g), 301 and 304 of the Constitution of India.

By virtue of the said provision it was mandated that no transfer of sand

covered under Rule 38 of the said Rule shall be made across the border to

other states. Although , the State has purported to exercise its power under

Section 15(1) of the MMDR Act, 1957, the said provisions were upheld by the

Madras High Court invoking the power conferred under Section 23C of the

MMDR Act, 1957.

23

On a survey of the Rules framed by the different State Governments

under Section 23C of M.M.D.R Act this court found that the State of Kerala

has also framed " The Kerela State Minerals (Prevention Of Illegal Mining,

Storage And Transportation) Rules, 2009" under power conferred under

Section 23C of the MMDR Act, 1957. Similarly the State of M.P. has also

framed its Rules under the said provision; "Madhya Pradesh Minerals

(Prevention of Illegal Mining, Transportation And Storage) Rules, 2006".

The State of Orissa has also framed its Rules being "Orissa Minerals

(Prevention Of Theft, Smuggling And Illegal Mining And Regulation Of

Possession, Storage, Trading and Transportation) Rules, 2007". The

State of Bihar has also framed its rule under the aforesaid provision being

"Bihar Minerals (Prevention Of Illegal Mining , Transportation And

Storage) Rules, 2003". Obviously, different states have given different

nomenclatures to their Rules and in some of them besides regulating the

activities of possession, storage and transportation, provide for prevention of

theft, smuggling and trading of the said minerals like in the Orissa Rules . The

impugned Rules have been framed by the Government of Jharkhand in

exercise of the said power also with an objective to prevent illegal mining,

transportation and storage and for the purpose connected therewith, which

includes buying and selling and trading in such minerals.

30. Therefore, while attempting to make the construction of the relevant

provision of Section 23C and the Rules framed there under, it is indeed

pertinent to rely upon the famous Rule laid down in the Heydon's Case. It is

profitable to quote the resolution of the Barons of the Exchequer as made in

the Heydon's case as discussed under Section 291 of Chapter XIX by the

celebrated author Francis Bennion in his treatise "Bennion on Statutory

Interpretation", 5th Edition

"Section 291:- The resolution in Heydon's Case In Heydon's case the Barons of the Exchequer resolved as follows:-

"That for the sure and true interpretation of all statutes in general(be they penal or beneficial, restrictive or enlarging of the common law), four things are to be discerned and considered.

(1) what was the common law before the making of the Act. (2) What was the mischief and defect for which the common law did 24

not provide;

(3) What remedy the parliament hath resolved and appointd to cure, the diseases of the commonwealth; and (4) The true reason of the remedy, and then the office of all Judges is always to make such construction as shall:

(a) supress the mischief and advance the remedy, and

(b) supress subtle inventions and evasion for the continuance of the mischief pro privato commodo( for private benefit), and

(c) add force and life to the cure and remedy according to the true intent of the makers of the Act pro bono publico (for the public good);"

The said author in the aforesaid chapter also deals with the role of the

Courts in interpretation of such a statute or provision by suggesting that the

approach of the court should be to suppress mischief and advance remedy in

suppressing subtle inventions and evasions for continuance of the mischief

for providing benefit and to add force and live to the cure and remedy

according to the true intents of the makers of Act pro-bono-publico (for the

public good). The learned author has also discussed the circumstances where

the mischief favours the wider construction and the circumstances where the

mischief favours the narrower construction. In any case it holds that it is

presumed that Parliament having identified the mischief with which it

processes to deal, intends the remedy to operate in a way that may

reasonably be expected to cure the mischief. The modern version of what

used to be called the mischief Rule( Heydon's Rule) is known as the

principles of purposive construction where under a construction which

promotes remedy to cure the particular mischief which Parliament has

provided for is to be advanced by the Court . The aforesaid principles of

interpretation have been reiterated in number of decisions laid down by the

Hon'ble Supreme Court of India. In the case of Quarry Owners' Association

-Vs.- State of Bihar & ors., reported in 2000 (8) SCC 655, the Hon'ble

Supreme Court while relying on the Mischief Rule upheld the delegation of

power on the State Government to fix rate of royalty/dead rent for the minor

minerals.

"Para 30: Now, we may proceed to examine another perceivable guideline to the State Government. It is significant, both Entry 54 List I of the Seventh Schedule of the Constitution and Entry 23 List II refer to the "regulation of mines and mineral development". This entry has been reiterated both in the Preamble and the Statement of Objects and Reasons of this Act.This "regulation of mines and mineral development" clearly indicates the guidelines which Parliament is projecting. Every word of a language is impregnated with and is flexible to connote a different meaning, 25

when used in a different context. That is why it is said, words are not static but dynamic and courts must adopt that dynamic meaning which upholds the validity of any provision. This dynamism is the cause of saving many statutes from their being declared void, it dissolves the onslaught of any rigid and literal interpretation, it gives full thrust and satisfaction to achieve the objectivity which the legislature intended. Whenever there are two possible interpretations, its true meaning and the legislature's intent has to be gathered, from the "preamble", the Statement of Objects and Reasons and other provisions of the same statue. In order to find the true meaning of any word or what the legislature intended, one has to go to the principle enunciated in Heydon's case which laid down the following principle as early as the sixteenth century:

(1) What was the law before making of the Act?

(2) What was the mischief or defect for which the law did not provide?

(3) What is the remedy that the Act has provided?

(4) What is the reason of the remedy?"

Again in the case of Southern Electricity Supply Co. of Orissa Ltd.

v. Sri Seetaram Rice Mill, reported in (2012) 2 SCC 108, the Hon'ble

Supreme Court while interpreting the meaning of the expression

"unauthorized use of electricity" in Section 126 of the Electricity Act, 2003

relied upon the above principle of purposive construction to advance the

legislative intent and suppress the mischief by holding that any consumption

of electricity in excess of sanctioned/contracted load shall be "unauthorized

use of electricity" in terms of Section 126. That view has also been taken for

the reason that overdrawal of electricity amounts to breach of the terms and

conditions of the contract and the statutory conditions, besides such

overdrawal being prejudicial to the public at large, as it is likely to throw out of

gear the entire supply sustem, undermining its efficiency, efficacy and even

increasing voltage fluctation. The relevant paragraphs containing the opinion

as enunciated by Hon'ble Swatanter Kumar,J on behalf of the Hon'ble Court

are quoted herein below:

"16. First and foremost, we have to examine how provisions like Section 126 of the 2003 Act should be construed. From the objects and reasons stated by us in the beginning of this judgment, it is clear that "revenue focus" was one of the principal considerations that weighed with the legislature while enacting this law. The regulatory regime under the 2003 Act empowers the Commission to frame the tariff, which shall be the very basis for raising a demand upon a consumer, depending upon the category to which such consumer belongs and the purpose for which the power is sanctioned to such consumer. We are not prepared to accept the contention on behalf of the respondent that the provisions of Section 126 of the 2003 Act have to be given a strict and textual construction to the extent that they have to be read exhaustively in absolute terms".

"17. This is a legislation which establishes a regulatory regime for the generation and distribution of power, as well as deals with serious fiscal repercussions of this entire regime. In our considered view, the two maxims which should be applied for interpretation of such statutes are ex visceribus actus (construction of the Act as a whole) and ut res magis valeat quam pereat (it is better to validate a thing than to invalidate it). It is a settled 26

canon of interpretative jurisprudence that the statute should be read as a whole. In other words, its different provisions may have to be construed together to make consistent construction of the whole statute relating to the subject-matter. A construction which will improve the workability of the statute, to be more effective and purposive, should be preferred to any other interpretation which may lead to undesirable results."

"19. The provisions of the 2003 Act, applicable Regulations and the Agreement executed between the parties at the time of sanction of the load prohibit consumption of electricity in excess of maximum sanctioned/ installed load. In the event of default, it also provides for the consequences that a consumer is likely to face. It embodies complete process for assessment, determination and passing of a demand order. This defined legislative purpose cannot be permitted to be frustrated by interpreting a provision in a manner not intended in law. This Court would have to apply the principle of purposive interpretation in preference to textual interpretation of the provisions of Section 126 of the 2003 Act. We shall shortly discuss the meaning and scope of the expressions used by the legislature under these provisions. At this stage, suffice it to note that this Court would prefer to adopt purposive interpretation so as to ensure attainment of the object and purpose of the 2003 Act, particularly, of the provisions of Section 126 in question." .....

"46. "Purposive construction" is certainly a cardinal principle of interpretation. Equally true is that no rule of interpretation should either be overstated or overextended. Without being overextended or overstated, this rule of interpretation can be applied to the present case. It points to the conclusion that an interpretation which would attain the object and purpose of the Act has to be given precedence over any other interpretation which may not further the cause of the statute. The development of law is particularly liberated both from literal and blinkered interpretation, though to a limited extent."

"48. Another similar rule is the rule of practical interpretation. This test can be effectually applied to the provisions of a statute of the present kind. It must be understood that an interpretation which upon application of the provisions at the ground reality, would frustrate the very law should not be accepted against the common sense view which will further such application."

"49. Once the court decides that it has to take a purposive construction as opposed to textual construction, then the legislative purpose sought to be achieved by such an interpretation has to be kept in mind. We have already indicated that keeping in view the legislative scheme and the provisions of the 2003 Act, it will be appropriate to adopt the approach of purposive construction on the facts of this case. We have also indicated above that the provisions of Section 126 of the 2003 Act are intended to cover the cases over and above the cases which would be specifically covered under the provisions of Section 135 of the 2003 Act".

"50. In other words, the purpose sought to be achieved is to ensure stoppage of misuse/unauthorised use of the electricity as well as to ensure prevention of revenue loss."

(underline supplied to add emphasis)

31. While applying the aforesaid mischief rule, we cannot but came to

inescapable conclusion that the impugned Rules have been framed in

exercise of the powers conferred under Section 23 C of the MMDR Act, with

the purpose and object to prevent illegal mining, transportation and storage

of minerals within the State of Jharkhand. It would not be out of place to

mention here that issue relating to illegal mining was once again seriously

taken up by the Standing Committee of the Parliament on Coal and Steel in

the year 2005-06 on the specific subject of prevention of illegal mining. The

Hon'ble Standing Committee of the Parliament submitted its 19th report in 27

August, 2006 which was presented to the Lok Sabha on 4.8.2006 and laid in

Rajya Sabha on 4.8.2006. The report is in detail deliberating upon various

aspect of the matter. Chapter-III deals with the subject of "PREVENTION OF

ILLEGAL MINING-LEGAL FRAMEWORK". It takes note of the introduction

of Section 23C in the M.M.D.R Act pursuant to the Tandon Committee report

of 1998 by the Parliament by enacting the amending act 38 of 1999. Section

4(1-A) ,Section 21(4) and Section 23C empowering the State Government to

make Rules for prevention of illegal mining, transportation and storage. It

would be profitable to quote para 3.5 and 3.7 of the aforesaid chapter:-

Para 3.5:- " On being asked whether Indian Bureau of Mines(IBM) found any defeciency/ lacunae in the acts of rules while implementing them to curb illegal mining, the ministry has stated that :-

"The Tandon Committee had suggested certain amendments in MMDR Act for prevention of illegal mines. Section 4(1A) was introduced and Section 21(4) of the Act was amended to bring transportation and storage of illegally raised minineral within the purview of law. Further , a new section 23C was introduced on 20th December, 1999 under the MMDR Act, giving powers to State Governments to make Rules for prevention of illegal mining, transportation and storage. As per this amendment, the Central Government shall have no power to revise any order passed by the State Government or its authorized Officer. Section 24(1) as also amended delegates the powers to entry and inspection to the State Governments enabling them to authorize any person to undertake entry and inspection of any mine or abandoned mine or for any other purpose connected there with. These amendments have made the State Governments better equipped to handle the problems of illegal mining.

Since the nature and magnitude of the problem of illegal mining activities varies from State to State, the full powers have been delegated to the State Government to form their own Rules for curbing illegal mining under Section 23C of MMDR Act, 1957. if the power to frame the Rules is fully vested with the State governments, then it will be possible for each of them to address the problem of illegal mining by suitably listing out the target areas depending upon the strength of its law and order machinery and revenue implication for the States.

The issue of further delegation of powers to IBM to effectively control illegal mining was discussed in the meeting of the State Governments on 17th January, 2005 under the Chairmanship of Secretary (Mines). The State governments were unanimous that the provisions for prevention of illegal mine should continue to be under the administrative authority of the State Governments, as the mineral Rules and collection of revenue also vests with the State governments and police and law and order machinery is with the respective States".

Para 3.7:- " when enquired about section 23 MMDR Act, which requires State Governments to frame Rules for preventing illegal mining, the ministry States that :-

"As per available information, 9 States governments namely, Andhra Pradesh, Bihar, Goa, Himachal Pradesh, Jammu & Kashmir, Maharashtra, West Bengal, Uttar Pradesh, Uttaranchal have framed and notified the Rules for preventing illegal mining/transportation/ storage of minerals under Section 23 C of MMDR Act, 1957. In case of Tamil Nadu, Orissa, Rajasthan, Karnataka, Kerala, Chattisgarh, Gujrat, Harayana and Jharkhand the Rules are in the process of being framed / approved by the respective State Governments. Other 10 States & 6 Union Territories are yet to frame these Rules . Government of Madhya Pradesh is of the view that there are suitable provisions for taking action against illegal mining within the existing provisions of law. State Government of Andhra Pradesh has framed Andhra Pradesh Mineral Dealers Rules, 2000, Bihar has framed Bihar Minerals( Prevention of illegal Mine, Transportation and Storage) Rules, 2003 and Maharashtra has framed Maharashtra Minerals(Prevention of 28

illegal Mining, Transportation and Storage Rule, 2001 u/s 23 C of the MMDR Act, 1957. Government of Chattisgarh has " the Minerals transit pass regulation, 1996", for the purpose of checking of illegal mining. Government of Orissa has framed Orissa Minerals(Prevention of theft, smuggling and other unlawful Activities)Act, 1999".

At the end of para 3.11 the committee report says " therefore,

under the federal framework as police and law and order machinery is with

the State Government, all the powers for checking/prevention of illegal mining

activities have been delegated to the State Government". In fact the

committee went on to deprecate the lackadaisical attitude of the State

Government as well as failure of the ministry to convince them to frame such

Rules resulting in rampant illegal mining. It appears that the State

Government of Jharkhand had thereafter woken up and finally framed the

Rules of 2007, only under the enabling provision section 23C, which was

inserted in the MMDR Act in the year 1999 itself.

32. Jharkhand, being an immensely rich mineral State having 176

numbers of mines as per the above report relating to Mica , Fireclay, Lime

Stone, Iron Ore and China Clay and apart from these, coal mines is an ideal

State where the rigours of the law should be enforced with full force and

severity to prevent illegal mining, transportation and storage of Minerals. The

challenge to powers of the State Government to frame the impugned Rules

under Section 23 C is therefore wholly unsustainable.

33. It is imperative to state here that the enacted Rule under the delegated

powers conferred upon the State Government provides for a mechanism to

prevent illegal mining, transportation and storage of minerals. The provision of

Section 23C read with the definition of minerals under Section 3(a) leaves no

iota of doubt that the expression "minerals" used in 23C includes major as

well as minor minerals. While Section 13 of the MMDR Act provides for the

Central Government to make Rules in respect of royalty, grant of

reconnaissance, permits, prospecting licenses and mining lease in respect of

minerals and for purposes connected therewith, Section 14 clearly indicates

that the aforesaid provisions of section 5 and 13 will not apply to minor

minerals. Whereas Section 15 confers power upon the State Government on 29

similar terms to make rules for regulating the grant of quarry leases, mining

leases and other mineral concessions in respect of minor minerals and for

purposes connected therewith. However the provision of Section 23C do not

make any such distinction while conferring power upon the State Government

to make Rules for preventing illegal mining, transportation and storage of

minerals which read with Section 3(a) clearly removes any doubt that

minerals includes all minerals including minor minerals as well except mineral

oils. The argument of the petitioners that aforesaid provision of Section 23 C

confers power upon the State Government to frame Rules only in respect of

minor minerals is wholly misconceived and bound to be rejected. The object

and purpose of introduction of section 23C in the Act of 1957 together with the

report of the Standing Committee referred to herein above and the decisions

of the different High Courts under the subject leaves no iota of doubt

regarding the scope and expanse of Rule making power of the State

Government in respect of all major and minor minerals.

34. The petitioners have assailed the Rules of 2007 on the ground that

they are violative of Article 19(1)(g) of the Constitution of India which

guarantees fundamental right to carry on any occupation, trade or business.

They have submitted that the restrictions imposed by the impugned Rules are

unreasonable and are protected under Article 19(6) of the Constitution of

India. They are not reasonable restrictions within the meaning of aforesaid

provision.

The aims and objects for introduction of the provision of Section 23C in

the M.M.D.R Act have been discussed in detail in the earlier part of the

judgment which is specifically framed to prevent the incidences of illegal

mining,transportation and storage of minerals and "for the purposes

connected therewith" enabling the State Government to frame Rules to

achieve the aforesaid objectives and to carry on the purposes for which the

said power has been conferred. The issue can be addressed from two angles.

Firstly, no one has a fundamental right to carry out illegal activities and 30

thereby claim a fundamental right to carry on business in the said activities.

Further no one can be allowed to contend that the restrictions imposed by the

legislature on carrying out unlawful trading activities i.e "res extra

commercium" are unreasonable in nature. In other words, the Fundamental

Right to carry on trade, business or occupation under Article 19 (1)(g) are only

those activities which could be regarded as lawful trading activities. Secondly,

while seeing from another angle if a person is engaging in the trading

activities or carrying on a business in transportation, storage etc. of legally

mined minerals, then the impugned Rules only tend to provide a regulatory

regime. Therefore under the Rules of 2007 a person is required to obtain a

dealer's license by paying a fee of Rs. 10,000/- in lieu thereof to carry out the

activities for transportation, storage, buying or selling after obtaining a transit

permit/challan in a required prescribed format from the concerned authority.

At the same time he is required to maintain a record of such acts of

transportation, storage, buying or selling as prescribed under the Rules.

These regulatory mechanism are framed under the Rules with the aim and

object to prevent incidences of illegal mining, transportation, storage and "for

the purposes connected therewith" while, at the same time regulating the

lawful trading activities in legally mined minerals. Such a regulatory

mechanism, therefore, is intended to facilitate lawful trading activities and

cannot be termed as unreasonable restriction on the Fundamental Right to

carry on occupation, trade or business. These regulatory mechanism are

framed by the law making power of the Union of India in the interest of

general public as permissible under Article 19(6) of Constitution of India and

cannot be said to be an unreasonable restrictions on the said activities.

35. These Rules have also been assailed as being discriminatory in

nature, being violative of Article 14 of the Constitution of India, but the writ

petitioners have completely failed to provide foundational facts in order to

sustain their plea. The presumption relating to the constitutionality of statute is

well settled and a person alleging violation of a fundamental right by the 31

impugned provisions has to establish the same by asserting necessary

foundational facts in order to create a prima facie case of the violation

alleged, which the petitioners in this case have miserably failed to

demonstrate.

36. These rules have also been subjected to a challenge of being violative

of the constitutional right guaranteed under Article 301 of the Constitution of

India under Part XIII thereof, which is as under:

"301. Freedom of trade, commerce and intercourse.- Subject to the other provisions of this Part, trade, commerce and intercourse throughout the territory of India shall be free."

The writ petitioners have also alleged that the impugned rules framed by

the State Government do not fulfill the requirement of Article 304 under Part

XIII thereof and in fact imposed unreasonable restrictions on the freedom of

trade, commerce or intercourse within or outside that State. Further under the

proviso of article 304(b) no assent of previous sanction of the President has

been sought for, or obtained before framing these rules.

That the argument that the impugned rule contravenes Articles 301 and

303 of the Constitution is wholly without force. In the case of Atiabari Tea

Co.Ltd.-Vs.- The State of Assam reported in AIR 1961 SC 232, the

Constitution bench of five judges of the Hon'ble Supreme Court of India by

majority held that the restrictions, freedom from which is guaranteed by Article

301, would be such restrictions as directly and immediately restrict or impede

the free flow or movement of trade. Regulatory measures or measures

imposing compensatory taxes for the use of trading facilities do not come within

the purview of restrictions contemplated by Article 301. They are excluded

from the purview of provisions of Part-XIII of the Constitution for the simple

reason that they do not hamper trade, commerce or intercourse, but rather

facilitate them. The aforesaid position was reiterated in the case of Automobile

Transport, Rajasthan Ltd. Vrs. State of Rajasthan & others by a

Constitution Bench of seven judges of the Hon'ble Supreme Court of India

reported in AIR 1962 SC 1406.

The provisions contained in the impugned Rules as stated earlier, clearly 32

have been framed to carry out the legislative intent and purpose by introduction

of Section 23C of the M.M.D.R Act in order to prevent illegal mining,

transportation, storage of minerals and for the purposes connected therewith.

The State Government has framed the Rules thereunder which provide for

regulatory mechanism under which, as stated above, a person intending to

carry on activities in relation to a mineral like transportation, storage, buying ,

selling or delivering for sale is required to obtain a dealer's license and obtain

transit permit by paying of a prescribed fee in order to ensure the ultimate aim

and object of regulating and preventing the activities of illegal mining,

transportation, storage etc. From the very nature of the mechanism provided

under the impugned Rules, it is clear that they are regulatory in nature and do

not impose any tax even a compensatory tax for indulging in such trading

activities.

Even otherwise Article 302 enables Parliament, by law, to impose such

restrictions on the freedom of trade, commerce or intercourse between one

state and another or within any part of the territory of India, as may be required

in the public interest. The aforesaid provisions itself furnishes an answer to the

claim based on the alleged contravention of Article 301. The M.M.D.R Act is a

law enacted by Parliament and declared by Parliament to be expedient in the

public interest. The impugned Rules have been framed by the State

Government as delegate of the Central Government under the law making

power of the parliament.

A statutory Rule while ever subordinate to the parent statute, is

otherwise to be treated as part of the statute and as effective. The Rules made

under a statute must be treated for all purposes of construction or obligation

exactly as if they were in the Act and are to be of the same effect as if

contained in the Act, and are to be judicially noticed for all purposes of

construction or obligation. Therefore, statutory Rules made pursuant to the

power entrusted by Parliament are law made by Parliament within the meaning

of Article 302 of the Constitution of India.

33

The Hon'ble Supreme Court of India had the occasion to examine the

validity of Rule framed under Section 15 of M.M.D.R Act by the State of Tamil

Nadu in the case of State of Tamil Nadu-Vs.-M/s. Hind Stone & others

reported in (1981) 2 SCC 205 wherein the State Government had introduced

the Rule 8C prohibiting quarrying of black granite by private person under the

said Rule which was assailed on a number of grounds including on the ground

of being violative of Article 301 of the Constitution of India. The validity of the

said Rule imposing a prohibition under the powers of regulation conferred

under Section of M.M.D.R. Act upon the State Government concerned were

upheld by Hon'ble Supreme Court. Para 11 of the opinion is to be quoted

hereunder for the present purposes:

"Para 11: The submission of the learned counsel that the impugned rule contravened Articles 301 and 303 of the Constitution is equally without force. Now, " the restrictions freedom from which is guaranteed by Article 301would be such restricitons as directly and immediately restrict or imped the free flow or movement of trade" (Atiabri Tea Co. Ltd. Vs.- State of Assam). And, "regulatory measures or measures imposing compensatory taxes for the use of trading facilities do not come within the purview of restrictions contemplated by Article 301". "They are excluded from the purview of provisions of Part-XIII of the Constitution for the simple reason that they do not hamper trade, commerce or intercourse, but rather facilitate them". [Automobile Transport (Rajasthan) Ltd. v. State of Rajasthan]. The Mines and Minerals ( Regulation and Development) Act is, without doubt a regulatory measure, Parliament having enacted it for the express purpose of " the regulation of mines and the development of minerals".

The Act and the rules properly made thereunder are, therefore, outside the purview of Article 301. Even otherwise Article 302 which enables Parliament, by law, to impose such restrictions on the freedom of trade, commerce or intercourse between one state and another or within any part of the territory of India, as may be required in the public interest also furnishes an answer to the claim based on the alleged contravention of Article 301. The Mines and Minerals (Regulation and Development) Act is a law enacted by Parliament and declared by Parliament to be expedient in the public interest. Rule 8-C has been made by the State Government by notification in the official Gazette, pursuant to the power conferred upon it by Section 15 of the Act. A statutory rule, while ever subordinate to the parent statute, is, otherwise, to be treated as part of the statute and as effective." Rules made under the statute must be treated for all purposes of construction or obligation exactly as if they were in the Act and are to be of the same effect as if contained in the Act and are to be judicially noticed for all purposes of construction or obligation" (State of U.P. v Babu Ram Upadhya; see also Maxwell : Interpretation of Statutes, 11 th Edn., pp. 49-50). So, statutory rules made pursuant to the power entrusted by Parliament are law made by Parliament within the meaning of Article 302 of the Constitution. To hold otherwise would be to ignore the complex demands made upon modern legislation which necessitate the plenary legislating body to discharge its legislative function by laying down broad guide-lines and standards, to lead and guide as it were, leaving it to the subordinate legislating body to fill up the details by making necessary rules and to amend the rules from time to time to meet unforeseen and unpredictable situation, all within the framework of the power entrusted to it by the plenary legislating body. State of Mysore v. H. Sanjeeviah was cited to us to show that rules did not become part of the statute. That was a case where by reference to Section 77 of the Mysore Forest Act which declared the effect of the rules, it was held that the rules when made did not become part of the Act. That was apparently because of the specific provisions of Section 77 which declaring that the rules would have the force of law stopped short of the declaring that they would become part of the Act. In the absence of any express provision, as now, the ordinary rule as enunciated in Maxwell and State of Uttar Pradesh v. Babu Ram Upadhya would perforce apply."

34

37. In view of the discussions made hereinabove and clear enunciation of

law by the Hon'ble Supreme Court of India, it is to be held that the impugned

Rules do not infringe on the freedom of trade, commerce and intercourse

through out the territory of India. It is not necessary to burden this judgment by

multiplying the authorities on the aforesaid issue.

38. The next contention raised by the Petitioners that the Rules have been

framed in excess of the delegated power is to be examined . The provisions of

the impugned Rules of 2007 have been quoted in the earlier part of the

judgment and it is relevant to note that the impugned Rules make provisions to

regulate the possession, storage, trading and transportation of minerals and

mineral products to check the evasion of royalty or seigniorage fee, stopping of

illegal mining and transportation in the State of Jharkhand and for the purposes

connected therewith. What is significant to take note of is that while providing

for definition of Rule 2 specifically the definition of dealer under 2(f), the

expression used are "dealer means any person who carries on the business of

buying, storing, selling, supplying, trading, transportation, distribution or

delivering for sale of minerals and mineral products and includes the

following:-

(a) Persons, who buy and process mineral or mineral products

for sale or for utilization for their own purposes beyond any lease area; and

(b) Any person, who holds a mining lease granted under the

Mineral Concession Rules, 1960 or the Jharkhand Minor Mineral Concession

Rules, 2004 issued by the Government, framed under the " Mines and

Minerals (Development and Regulation) Act, 1957":

Under Section 2(g) dealers registration means registration

granted under these Rules authorizing a person to engage in the transaction

to buy or sell and be in possession of minerals defined in clause(h) below.

The definition of mineral has been quoted in earlier part of the judgment as

well.

35 39. It is worth noticing that while the expression mineral has been used in

Section 23C the impugned Rules also tends to regulate different activities

relating to mineral products as well, which obviously appears to be beyond

the scope of the delegated power of the State Government. However, while

the definition of dealer also uses the expression buying, selling, delivering for

sale, to engage in the transaction to buy or sale as also necessary for having

registration, but Rule 3(2) contains the provision of prohibition while making

an exception which is quoted herein below:-

"No person other than a dealer or a mining lease holder shall buy or

sell or offer for sale or engage in any transaction of buying and selling any

mineral at any place or transport mineral for purposes of sale or consumption

without being registered as a dealer.

Provided that no person purchasing and transporting minerals for use

or consumption by himself,(where such use or consumption does not involve

any commercial activity) and any holder of a mining lease in respect of the

minerals for which he holds a lease shall be required to register himself as

dealer".

40. It appears that by making the aforesaid provision under Rule

3(2) and proviso thereafter, the State Government has taken care to exclude

the categories of persons who are purchaser transporting minerals for use

and consumption by himself where such use or consumption does not involve

any commercial activities. It has also excepted the holder of mining lease in

respect of the minerals who shall not be required to register himself as dealer.

From perusal of the provision in Rules relating to issuance of transportation

challan by the District Mining Officer and the condition prescribed under Rule

7, it can be easily inferred that the provisions contained in the impugned

Rules basically seek to regulate the activities of transportation, storage and

possession of the minerals in question. However, any person indulging in the

the activities of buying or selling obviously is supposed to have valid dealer's

license along with those who undertake transportation or storage of minerals 36

in question under proper and valid transport challan. This expression of

buying and selling, therefore, do not tend to impose any further restriction

beyond obtaining the dealer's license which is also required to validly

transport, store and be in possession of minerals in question. They are only

incidental for the purposes of regulating the activities of illegal mining,

transportation and storage. The provisions of the Rules of 2007 as referred to

in this Judgment earlier, however, do prescribe sufficient guidelines as to the

exercise of power by the competent authority so far as concerns the grant of

registration or its renewal, processing of applications, issue of Transport

Challans and maintenance of Records in prescribed forms. A request for

issuance of Transport Challan can only be refused for reasons to be recorded

in writing and if it fails to provide the necessary materials particulars

prescribed before its issuance as per Rule 6 and the forms prescribed therein.

The rules do not suffer from absence of guidelines for exercise of

administrative power. It would only be appropriate to quote the observation of

the Hon'ble Supreme Court of India delivered in the case of St. Johns

Teachers Training Institute v. Regional Director, National Council for

Teacher Education, reported in (2003) 3 SCC 321, at page 332 (para 12 is

relevant):-

"12. The question whether any particular legislation suffers from excessive delegation has to be decided having regard to the subject-matter, the scheme, the provisions of the statute including its preamble and the facts and circumstances in the background of which the statute is enacted. It is also well settled that in considering the vires of subordinate legislation one should start with the presumption that it is intra vires and if it is open to two constructions, one of which would make it valid and the other invalid, the courts must adopt that construction which makes it valid and the legislation can also be read down to avoid its being declared ultra vires."

41. At this stage it would be appropriate to consider the meaning of

expression " for the purposes connected therewith" as used in section 23 C of

the M.M.D.R Act which is again quoted for the present purpose:

"Section 23C. Power of State Government to make rules for preventing illegal mining, transportation and storage of minerals.-(1) The State Government may, by notification in the official gazette, make rules for preventing illegal mining, transportation and storage of minerals and for the purposes connected therewith.

(2) In particular and without prejudice to the generality of the foregoing power, such rules may provide for all or any of the following matters, namely:-

37 a.......

b......

c.....

d....

e.....

f.......

g......

42. In the background of the discussion made in the earlier part of this

judgment, obviously this provision of Section 23C has been introduced by the

parliament in the year 1999 consciously with the object of preventing illegal

mining, transportation and storage of mineral in order to suppress every

serious mischief of illegal mining within the country, incidences of which have

surfaced in different States and are of enormous proportions. The effect of

such illegal mining is not only having an adverse effect on public exchequer

by denying it valuable revenue but at the same time has the effect of

degrading and denuding the environment. As such,it has also a long term

effect of decline of scarce natural resources of the country such as minerals,

forests reserve etc. The National Mineral Policy 2008 also seeks to develop a

sustainable frame work for optimal utilization of the country's natural mineral

resources for the Industrial growth of the country and at the same time

improving the life of the people living in the mining areas, which are generally

located in the backward and tribal regions of the country. These resources

are not to be frittered away and exhausted by any generation. Every

generation owes a duty to all the succeeding generation to develop and

preserve the natural resources in the country and preventing pollution, which

is in the interest of the mankind. It is recognized by the Parliament and

Parliament has declared that it is expedient in the public interest that the

Union take under its control regulation of mines and development of minerals.

Seen in the aforesaid light, the introduction of the aforesaid provision of

section 23C with the expression "for the purposes connected therewith" is to

be read in a manner to carry out the legislative intent and object. Section 23C

therefore intends to prevent illegal mining, transportation, storage of mineral

in question and for the purposes connected therewith i.e. buying and selling of

illegal mined minerals. It cannot be said that the persons indulging in the 38

activity of buying or selling or trading of such minerals can escape the rigour

of law while only those who are indulging in mining, transportation and

storage thereof are to be subjected to the regulatory regime. Such a

construction could defeat the very aim and object of the legislature.

Therefore, the meaning of the expression " for the purposes connected

therewith" has to be interpreted in a way which advances the remedy and

suppresses the mischief by curtailing the activities relating to illegal mining,

transportation, storage and which are consequentially meant for the purposes

of buying and selling of such minerals and trading therein. A person who has

bought or sold or is trading in such an illegally transported or stored minerals

cannot be contended to say that he does not fall within the rigour of the law

and the regulatory mechanism cannot prohibit such activity of illegal buying or

selling or in trade of such minerals while a person who is indulging in illegal

transportation, storage or mining of such minerals only can be subject to such

regulatory mechanism. Therefore, the parliament has specifically used the

expression "for the purposes connected therewith". An illegally mined mineral

is transported or stored only for the purpose of carrying out an illegal activity

which may also include the illegal buying or selling of those minerals. These

unlawful activities therefore cannot be allowed to escape the dragnet of law

as framed by the parliament to suppress the larger mischief. The impugned

rules have provided for regulating such activities relating to illegal mining,

transportation, storage, buying, selling trading or delivering for sale in

furtherance of the broad aims and objects of the Parent Act. Even otherwise

the regulation and development of mineral also includes within its domain,

regulation of such illegal activity in such mineral. As has earlier been

discussed in this judgment, the entries in the VIIth Schedule are mere

simplex enumeratio of broad categories. A power of the legislature as to the

principal matter specifically mentioned in the entry shall include within its

expanse the legislation touching the incidental and ancillary matters. The

validity of the impugned rules therefore have to be upheld also in relation to 39

such provisions which include buying, selling, trading apart from the activity of

illegal mining, transportation, storage and possession of the said minerals.

The parliament under Entry 54 of List I of VIIth Schedule has the power to

regulate all such activities in relation to the minerals in question and with the

aforesaid aim and object under the MMDR Act, the provisions of section 23C

have been introduced consciously using the expression " for the purposes

connected therewith" to suppress any mischief relating to the unlawful activity

of illegal mining, transportation, storage of minerals and for the purposes

connected therewith which include activities of illegal buying, selling or trading

in such minerals.

43. That the impugned rules, however, also tend to regulate such activities

like transportation, storage, possession, buying,storing, selling, trading etc.

not only in relation to the minerals but also in relation to the mineral products.

However, minerals products are not contemplated in the Parent Act or even in

the provision of Section 23C. The enabling Section 23C do not provide for

the definition of mineral product nor does the impugned rule provides thereof.

The expression mineral product has a very wide connotation as the very

nature of the mineral changes because of certain processes whether it be

manufacturing process resulting into a totally new and different product which

is not defined in the Act or the Rules. Obviously, the M.M.D.R Act or Section

23C thereof has at no place purported to regulate the minerals products under

the scheme of the Act. The impugned Rules therefore appear to go beyond

the scope of the powers conferred under Section 23C to also regulate the

activities contemplated under the impugned rules so far as minerals products

are concerned.

44. In the aforesaid context therefore the validity of the rules so far as it

relates to minerals products has to be tested. The Hon'ble Supreme Court of

India in the case of R. M. D. Chamarbaugwalla-Vrs.- The Union of India

reported in 1957 SCR 930, by a constitution bench judgment invoked the

doctrine of severability to uphold the validity of a legislation by reading down 40

certain offending provisions of the impugned Act in question. The Hon'ble

Supreme Court held that the doctrine of severability applies not only when the

legislation is in the excess of competence of the legislation qua its subject

matter but also when it infringes some constitutional prohibitions. The subject

matter of challenge in the said case was relating to the constitutionality of

Sections 4 and 5 of the Prize Competition Act, (42 of 1955) and Rules 11 &

12 framed under Section 20 of the Act. The question that fell for

consideration before the Hon'ble Supreme Court was whether Prize

Competition in which success depended to a substantial degree on skill and

competition and those in which it does not so depend, form distinct and

separate categories. The impugned Act and the Rules had chosen to impose

restrictions on both the categories of such prize competitions. The Hon'ble

Supreme Court proceeded to employ the doctrine of severability to hold that

the impugned provisions should be held severable in their application to the

two distinct and separate categories of competitions and consequently, could

not be void as regards gambling competitions. After discussing the ratio of a

number of earlier judgments Venkatarama Aiyar, J. speaking on behalf of the

court summarized the positions which are as follows:(Page 950-951 of the

report)

"1. In determining whether the valid parts of a statute are separable from the invalid parts thereof, it is the intention of the legislature that is the determining factor. The test to be applied is whether the legislature would have enacted the valid part if it had known that the rest of the statute was invalid. Vide Corpus Juris Secundum, Vol. 82, p. 156; Sutherland on Statutory Construction, Vol. 2, pp. 176-177.

2. If the valid and invalid provisions are so inextricably mixed up that they cannot be separated from one another, then the invalidity of a portion must result in the invalidity of the Act in its entirety. On the other hand, if they are so distinct and separate that after striking out what is invalid, what remains is in itself a complete code independent of the rest, then it will be upheld notwithstanding that the rest has become unenforceable. Vide Cooley's Constitutional Limitations, Vol. 1 at pp. 360-361; Crawford on Statutory Construction, pp. 217-218.

3. Even when the provisions which are valid are distinct and separate from those which are invalid, if they all form part of a single scheme which is intended to be operative as a whole, then also the invalidity of a part will result in the failure of the whole. Vide Crawford on Statutory Construction, pp. 218-219.

4. Likewise, when the valid and invalid parts of a statute are independent and do not form part of a scheme but what is left after omitting the invalid portion is so thin and truncated as to be in substance different from what it was when it emerged out of the legislature, then also it will be rejected in its entirety.

5. The separability of the valid and invalid provisions of a statute does not depend on whether the law is enacted in the same section or different sections; ( Vide Cooley's Constitutional Limitations, Vol. 1, pp. 361-362); it is not the form, but the substance of the matter that is material, and that has to be ascertained on an examination of the Act as a whole and of the setting of the relevant provisions therein.

6. If after the invalid portion is expunged from the statute what remains cannot 41

be enforced without making alterations and modifications therein, then the whole of it must be struck down as void, as otherwise it will amount to judicial legislation. Vide Sutherland on Statutory Construction, Vol. 2, p. 194.

7. In determining the legislative intent on the question of separability, it will be legitimate to take into account the history of the legislation, its object, the title and the preamble to it. Vide Sutherland on Statutory Construction, Vol. 2, pp. 177-178."

45. These principles have also been relied by Hon'ble Supreme Court of

India in a latest unreported judgment relating to the challenge to the validity of

the Right to Education Act,2009 delivered by a Bench presided over by

Hon'ble the Chief Justice of India S.H.Kapadia,J on 12th April, 2012 in Writ

Petition(C) No. 95 of 2010 in the case of Society for Unaided Private

Schools of Rajashthan-Vs-Union of India. The Hon'ble Supreme Court of

India in the aforesaid case has applied the principle of severability and held

that Sections 12(1)(c) and Section 18(3) infringes the fundamental freedom

guaranteed to Unaided Minority Schools under Article 30(1) and shall not

apply to such schools. Paragraph 20 of the opinion as delivered by His

Lordship Hon'ble the Chief Justice of India S.H.Kapadia,J. is quoted

hereinbelow:-

"20. Accordingly, we hold that the Right of Children to Free and Compulsory Education Act, 2009 is constitutionally valid and shall apply to the following: (i) a school established, owned or controlled by the appropriate Government or a local authority; (ii) an aided school including aided minority school(s) receiving aid or grants to meet whole or part of its expenses from the appropriate Government or the local authority; (iii) a school belonging to specified category; and (iv) an unaided non- minority school not receiving any kind of aid or grants to meet its expenses from the appropriate Government or the local authority. However, the said 2009 Act and in particular Sections 12(1)(c) and 18(3) infringes the fundamental freedom guaranteed to unaided minority schools under Article 30(1) and, consequently, applying the R.M.D. Chamarbaugwalla v. Union of India [1957 SCR 930] principle of severability, the said 2009 Act shall not apply to such schools."

The doctrine of reading down is now a well settled tool to uphold the

vires of statute or a subordinate legislation by reading down the provisions

which are either ultra vires the legislative competence of the legislature in

question or are ultra vires the Parent Act under which the rules have been

framed or do offend the other provisions of the constitution and the

fundamental right guaranteed under the Constitution of India. This court

therefore by relying upon the aforesaid tool declares that the provisions of the

impugned rules shall not apply so far as the subject of minerals product are

concerned while upholding the vires of the aforesaid Rules of 2007 on other

grounds of challenge.

42

46. The impugned rules have also been challenged on the ground that the

said rules have not been laid before the House of the State Legislature as

required under Section 28(3) of the MMDR Act. Although in the counter

affidavit filed by the State a statement has been made in paragraph 14 that

the said rules have been forwarded to be laid before the Legislative Assembly

of the State of Jharkhand vide letter dated 18.12.2007 issued by the Mines

and Mineral Department of the Government of Jharkhand to the Secretary

Jharkhand Legislative Assembly, but it is not clear whether the said rules

have actually been laid before the legislative assembly of the State of

Jharkhand as contemplated under Section 28(3) of the MMDR Act.

It cannot be gainsaid that the requirement of laying a subordinate

legislation is not an empty formality and is a method to exercise effective

check and control over the rule making power of the Executive by the

legislature of the Union or the State concerned. However, in the case of

Quarry Owners' Association -Vs.- State of Bihar & others reported in

(2000) 8 SCC 655 while dealing with the challenge to the rules framed by the

State Government under Section 15 of the MMDR Act relating to the

requirement of Section 28(3) of the Act, the Hon'ble Supreme Court after

detailed discussion held in the following terms, the relevant para 55 of the

opinion delivered by Hon'ble Mr. Justice A.P.Misra is a complete answer to

the aforesaid question

Para 55:-"However, since we have upheld the impugned notifications issued by the State to be within the ambit of delegation and that delegation is not excessive as there are enough guidelines and control over the State Government, notwithstanding its check on the State under sub-section(3) of Section 28, it would not have any effect on its validity. But we make it clear that when a statute as under sub-section (3) of Section 28 requires its placement, it is the obligation of the State Government to place such with this specific note before each House of State legislature. Even if it has not been done, the State shall now do place before each House of the State Legislature at the earliest , the notification dated 28.9.1994 and will also do so in future while framing rules or issuing any notifications under the Rules framed under sub section (1) of Section 15 of the Act."

The State Government should proceed to place the Rules of 2007

before the House of the State Legislature without any further delay as per the

requirement of Section 28(3) of the M.M.D.R.Act, if not already laid before the 43

House.

47. Petitioners in some of the writ petitions have also challenged the

impugned rules on the ground that under the powers conferred under Rule

6(3) relating to issuance of transport challan the District Mining Officer may

reject an application to grant transport challan by indulging in arbitrary use of

this power and rejecting the application of the dealers' concerned on wholly

unreasonable grounds. Therefore, the rules have been assailed on the

ground that the power conferred upon an authority under the said rules can

be subject to arbitrary use. The instant argument is only fit to be rejected as

the validity of rule or statute in question conferring a discretionary power upon

a prescribed authority cannot be declared to be invalid on the specific ground

that the power can be exercised in an arbitrary manner by an authority

concerned. In that case the act of exercise of that power by the

administrative authority concerned may be subject to challenge on the usual

grounds of being arbitrary or unreasonable and such other grounds of

wednesbury rules of unreasonableness but the same cannot be a ground for

invalidating the Rule itself if the Parent Act and the Rules prescribes for

sufficient guidelines. In the instant case as has been held earlier the Parent

Act containing the enabling provision of Section 23C and the provisions of the

impugned rules quoted extensively in the earlier part of the judgment

prescribe sufficient guidelines which are required to be fulfilled by a person

seeking issuance of a transport challan for transporting the minerals in

question. The delegated power contains sufficient guidelines and therefore it

cannot be subjected to a challenge to its validity on a ground that the authority

concerned may indulge in arbitrary exercise of such power. Such an exercise

of administrative authority is always amenable to judicial review or are open to

appeal and revision provided under the said Act itself as an alternative

efficacious remedy. It would be better to quote the opinion of the Hon'ble

Supreme Court of India reported in 1986 Supp. SCC Page 20, in the case of

D.K.Trivedi & Sons -Vs.- State of Gujrat 44

"Para 50:- Where a statute confers discretionary powers upon the executive or an administrative authority, the validity or constitutionality of such power cannot be judged on the assumption that the executive or such authority will act in an arbitrary manner in the exercise of the discretion conferred upon it. If the executive or the administrative authority acts in an arbitrary manner, its action would be bad in law and liable to be struck down by the courts but the possibility of abuse of power or arbitrary exercise of power cannot invalidate the statute conferring the power or the power which has been conferred by it."

The Rules of 2007 can therefore not be invalidated on the aforesaid

ground of possibility of arbitrary exercise of power by the authority concerned.

48. In view of the detailed discussions made herein above, in order to

summarize, it is held that the challenge to the impugned Rules on the grounds

of lack of legislative competence on a field occupied by a State Legislature

are without substance. The writ petitioners have also failed to make a case of

violation of the Fundamental Right under Article 19(1)(g) and 14 of the

Constitution of India or as to any infringement of Article 301 or 304 of the

Constitution. These Rules are within the purview of the delegated power

conferred upon the State Government under Section 23C of the MMDR Act

and are intra vires the Parent Act i.e. M.M.D.R Act except to the provisions

relating to the "Mineral Products" as indicated hereinabove and as such the

provisions of the impugned Rules shall not apply to the "Mineral Products."

The impugned Rules have otherwise been validly framed in order to suppress

the mischief of illegal mining, transportation and storage of minerals and for

the purposes connected therewith. Jharkhand being a immensely mineral rich

state, these rules are required to be enforced with full force and rigour to fulfill

the aims and object of the legislation.

49. This court, however, feels it proper to employ the technique of reading

down of the provisions relating to mineral products used in the impugned

Rules which apparently are not covered under the delegated powers

conferred by Section 23C of the Act of 1957 without rendering the entire

Rules inoperative or ultravires. Whether a mineral remains a mineral or has

undergone a change in its fundamental nature into a mineral product is a

question of fact to be determined in each individual case by the competent

authority under the Act and the Rules. So long the minerals excavated remain 45

mineral, they are subjected to the Rules in question. There is an avowed

object behind the aforesaid Rules framed under Section 23 C of the MMDR

Act which have to advanced by resorting to the principle of purposive

construction. Therefore, we deem it appropriate to uphold the validity of the

impugned Rule subject to the reading down of the provision relating to mineral

products used in the impugned Rules.

50. Accordingly, while upholding the validity of the Rules of 2007 under

challenge in these writ petitions, it is declared that the provisions of these

Rules shall not apply to mineral products. These writ petitions are therefore

devoid of any merit and have to fail. They are accordingly dismissed, however

with no order as to costs.

(Aparesh Kumar Singh, J.)

(Prakash Tatia, C.J.)

(Prakash Tatia, C.J.) Jharkhand High Court, Ranchi The 11-05-2012 JK/A. Mohanty