Important point
The State Government while acting as delegatee under Section 15(1) of the Act is not confined to fix the royalty/dead rent within the peripheral ambit of Entry 54 Schedule II of the Mines and Minerals (Regulation and Development) Act. Placement of Notifications issued under the Mines and Minerals (Regulation and Development) Act before the State Legislature as required under Section 28(3) is only directory.

Headnote:Mines and Minerals (Regulation and Development) Act, 1957—Section 15—Bihar Minor Mineral Concession Rules, 1972—Notifications dated 17.8.1991 and 28.9.1994 of State of Bihar—Challenge to notification on ground royalty fixed by State Government more than five times in excess of maximum rate of 12 of sale at pit’s mouth under Entry 54 of Schedule-II—Contention that State trespassed powers delegated to it—Untenable—State Government while acting as delegate under Section 15(1) is not confined to fix royalty/dead rent within peripheral ambit of Entry 54 to Schedule II of Act—State Government acted within ambit of power delegated to it—Delegation is with sufficient guidelines and check—Placement of Notification before State Legislature as required under Section 28(3) is only directory—Impugned notifications valid—Enhancement of royalty on facts and circumstances neither arbitrary nor illegal.
       The crux of the matter for consideration is, whether, is it only Sections 4 to 12 which controls or guides the State in fixing the royalty for the minor minerals and, if it is, whether Entry 54 of Schedule II places any ceiling of 12 of the sale price at the pit’s mouth for fixing this royalty by the State? In other words, does D.K. Trivedi case fore closes the issue of guideline or is it open to travel to other fields which guides the State for fixing the royalty. (Para 6)
       Any excessive exercise or arbitrary exercise of power by a delegatee could be controlled by the courts and if there are any, the courts would not hesitate to strike it down. Mere possibility of an abuse of power or arbitrary act, cannot invalidate any statute. To reach this, one has to make foundation with specific plea with reference to the facts and figures based on the circumstances of each case. In the present case, however, we are testing the submissions of the appellants, whether the said decision restricts the exercise of power by the State Government in enhancing the rate of royalty or dead rent to the rate as specified in Item 54 of Schedule II of the Act. This submission is based on the misconstruction of the statute and relying only on a part of the observation what is recorded in para 34 of that decision. This Court not only did not tie down the State Government to such restrictions, on the contrary left it open for it to prescribe such restrictions as it thinks fit. In other words, Sections 4 to 12, not being applicable to the minor minerals, the figurative restrictions what is contained there could not be made applicable, but of course they are available as a guideline to the State Government to take note of in other respects, while framing its rules. So, they are available not as restrictive or limiting guidelines but are available otherwise for its consideration and adoption, wherever it is necessary. If submission for the appellants is accepted, it would militate against the express mandate of Parliament as contained in Section 14 which excludes Sections 4 to 12 from its application to minor minerals. (Paras 18, 19 and 20)
       The fallacy of this submission that the rate of royalty and dead rent, for the minor minerals, is to be what is contained in Item 54 of Schedule II, is based on misconstruing both the said judgment of this Court and the provisions of the Act. The submission is, as Section 3(a) defines "minerals" which would include minor minerals, hence Item 54 as it records: "all other minerals not hereinbefore specified" would include minor minerals. It is an interpretation in abstract without taxing into consideration of Section 14. Section 14 specifically excludes Sections 5 to 13 (earlier it was Sections 4 to 13) from its application to minor minerals. Thus, Second Schedule which refers to the rate of royalty in view of Section 9 could only refer to the minerals other than minor minerals. The language as recorded in Item 54, as aforesaid would only mean other residual major minerals not specified hereinbefore meaning that what is not specified in Item Nos. 1 to 53. This could never mean to include minor minerals. Thus the residuary mineral under Item 54 could only be the left over major minerals. Neither the residuary nor the left over major mineral could be equated with the minor minerals nor there is any material on record to draw such inference. When this Court records: "guidelines for the exercise of rule-making power under Section 15(1) is to be found in the restrictions and in the other matters contained in Sections 4 to 12". The use of word "restriction" is in view of the same words being used in the heading of this group of Sections 4 to 12. The heading states, "General ‘restriction’ on undertaking, prospecting and minor operations". In other words, the restriction referred to in para 34 co-relates to this heading of general restrictions to be taken note while framing the rules. (Para 21)
       We may visualise this from another angle. This reference of general restrictions as contained in Sections 4 to 12 for it being taken note would only mean to consider its broad principle and pattern while forming its own rules. It cannot be doubted that Sections 4 to 12 also gives guidance to the State Government while acting as delegatee under Section 15 while fixing rate of royalty. This guidance is to be found in Section 9 itself which refers to the royalties. Sub-section (1) of Section 9 provides, holder of a mining lease granted before the commencement of this Act to pay royalty in respect of any mineral removed or consumed from the leased area at the rate for the time being specified in the Second Schedule in respect of that mineral notwithstanding anything to the contrary contained in the instrument of lease and similarly sub-section (2) provides, after the commencement of this Act the holder of a mining lease shall pay royalty at the rate specified for the time being in the Second Schedule in respect of any particular mineral. Each of the aforesaid consideration itself may be taken note by the State Government while framing its own rules for the minor minerals. In other words, it may apply also the rate of royalty for the minor minerals at the same rate as the then existing rate, when this Act came into force. Schedule II with reference to Section 9, fixes rate of royalty for various minerals not being minor minerals, is also a good source of guideline. There we find various methods applied for fixing or charging the royalty on the various minerals. It demonstrates charging of royalties per tonne, per unit per cent, per tonne of ore on prorata basis, per cent of sale price at the pit’s mouth etc.. In the case of gold, it is per one gram of gold per tonne of ore and on pro rata basis on the basis of per 100 kg. With reference to Uranium it is for dry ore with U3 O8 content of 0.05 per cent with pro rata increase/decrease @ Re. 1.00 per metric tonne of ore for 0.01 per cent. This pattern of charging also reveals a good guiding force while fixing any royalty by the State Government for the various minor minerals. (Paras 22 and 23)
       Section 13 gives power to the Central Government to make rules in respect of minerals other than minor minerals, while Section 15 gives power to the State Government to make rules in respect of minor minerals. The extent of exercise of power in both these sections are similar. The only difference is, Central Government exercises power in respect of all other minerals other than minor minerals, while the State Government exercises power for the minor minerals only. Section 13(2), particularizes the power given to the Central Government to make rules in respect of matters enumerated therein. Though they are already covered under Section 13(1) but is more focused in sub section (2). There was no such similar sub-section in Section 15 when D.K. Trivedi’s case was decided, though later it was brought in through amendment by incorporating sub-section (1A) through Act No. 37 of 1986 w.e.f. 10th February, 1987. (Para 24)
       It seems the Parliament in order to bring on parity, made similar provision for the minor minerals through insertion of Section 15(1-A) to equate it with Section 13(2). This sub-section (1-A) similarly as Section 13(2) is also illustrative of the general power conferred on Section 15(1). Thus as sub-section (2) of Section 13 was held to be the guiding force to the State Government is now applicable to this sub-section (1-A) through the infusion of various sub-clauses in sub-section (1-A). The submission that it is only a power, is equally applicable to sub-section (2) of Section 13. Even this sub-dividing the exercise of power through these various sub-clauses, both in Section 13(2) and sub-section (1-A) of Section 15 implicitly gives guideline to the delegatee. In fact, the Parliament itself through various amendments has been strengthening the guidelines to the State Government. Not only sub-section (1-A) of Section 15 but even Section 4-A and Section 17-A were inserted through the same amending Act No. 37 of 1986. Similarly, sub-section (3) was inserted in Section 28 by Act No. 25 of 1994 and Section 23-C was inserted by Act No. 38 of 1999. Even Section 14 was amended by the aforesaid Act No. 37 of 1986. Earlier Sections 4 to 13 were excluded for the minor minerals but through this amendment, the exclusion shrunk to Sections 5 to 13. In other words, both Sections 4 and 4-A were made applicable even to the minor minerals. Further Section 4(1-A) which was inserted through Act No. 38 of 1999 covers transport or storage of any mineral in accordance with the Act and Rules. In case the restrictive interpretation, as submitted for the appellants, to limit the State’s power within Entry 54 of Schedule II is accepted, it will lead to various incongruities. Section 6 fixes the maximum area of lease to be twenty-five square kilometers under sub-section (a) and ten square kilometers under sub-section (b), Section 7 fixes 3 years for prospecting licence and Section 8 fixes maximum period of 30 years for mining lease. If the State Government has to take literally what is contained there then even for the minor Minerals State Government has to issue leases for such large area for such a long period. This would be impracticable, in view of difference in the nature of major and minor minerals. Thus the fixation of period, area of leases and the rate of royalty for the major minerals is not equitable with that of the minor minerals. (Para 25)
       The words "Regulation of Mines and Mineral Development" are incorporated both in the Preamble and Statement of Objects and Reasons of this Act. Before that we find Preamble of our Constitution in unequivocal words expresses to secure for our citizen social, economical and political justice. It is in this background and in the context of the provisions of the Act, we have to give meaning of the word "regulation". The word "regulation" may have different meaning in different context but considering it in relation to the economic and social activities including the development and excavation of mines, ecological and environmental factors including States’ contribution in developing, manning and controlling such activities, including parting with its wealth, viz., the minerals, the fixation of the rate of royalties would also be included within its meaning. So in regulating mineral development, the royalty/dead rent is the inherent part of it. State has thus before it number of factors, as aforesaid, which would guide it to fix, enhance or modify the rate of royalty/dead rent payable by a lessee. The conservation and regulation of mines and mineral development include wide activity of the State including parting with its wealth, are all relevant factors to be taken into consideration as a guiding force for fixing such royalty/dead rent. (Para 28)
       So far minor minerals, also we find sub-section (2) of Section 15 approves the rules made by the State Government, regulating the grant of quarry leases, mining leases or other mineral concessions in respect of mines and minerals prior to the enforcement of this Act and similarly subsection (3) approves the rate of royalty/dead rent prescribed for its payment in respect of minor minerals for the time being in force, i.e., what existed prior to the coming in force of this Act. Thus, even approval of the then existing rates of royalty or dead rent is by the Parliament itself which similarly is also a guiding factor to the State Government for any subsequent modification of the rates. The proviso to sub-section (3) brings an additional check on the enhancement of rate of royalty/dead rent that it cannot be enhanced more than once during any period of three years. (Para 32)
       Delegation of power is on the State Government which is the highest executive in the State, which is responsible to the State Legislature. In a Parliamentary democracy every act of the State Government is accountable to its people through State Legislature which itself is an additional factor which keeps the State Government under check not to act arbitrarily or unreasonably. When a policy is clearly laid down in a statute with reference to the minor minerals with main object under the Act being for its conservation and development, coupled with various other provisions to the Act guiding it, checking it and controlling it then how such delegation could be said to be unbridled. The Parliament was fully aware that even in the past it was the State Governments which were entrusted and were dealing with minor minerals as a delegatee. The only difference being, earlier the State Governments were acting as sub-delegatee of the Central Government but now they act as delegatee of the Parliament. This was the pattern adopted and approved since inception. This seems to be also because minor minerals being more useful for the local uses and the State Government being the highest executive in the State knowing fully well of its uses, management including fixation of its prices. Thus, in this historical background there is nothing wrong to delegate to the State Government power to fix rate of royalty/dead rent for the minor minerals. (Paras 33 and 39)
       The Parliament through its wisdom, apart from above brought this amendment also to keep a check on the exercise of power by the State Government’s as delegatee. The question is whether mere laying rules and notification before the legislature, as in the present case, can be construed as a check on the State Government power. In a democratic set up, every State Government is responsible to its State Legislature. When any statute require mere laying of any notification or Rule before the Legislature its execution, viz., State Government comes under the scrutiny of the concerned Legislature. Every’ function and every exercise of power, by the State Government is under one or other Ministry who in turn is accountable to the legislature concerned. Where any document, rule or notification requires placement before any House or when placed, the said House inherently gets the jurisdiction over the same. Each member of the House, subject to its procedure gets right to discuss the same, they may put questions to the concerned Ministry. Irrespective of the fact that such rules or notifications may not be under purview of its modification, such members may seek explanation from such Ministry of their inaction, arbitrariness, transgressing limits of their statutory orbit on any such other matter. Short of modification power, it has a right even to condemn the Ministry. No doubt in the case where House is entrusted with power to annul, modify or approve any rule, it plays positive role and have full control over it, but even where the matter is merely placed before any House, its positive control over the executive, makes even mere laying to play a very vital and forceful role which keeps a check over the concerned State Government. Even if submission for the appellants is accepted that mere placement before a House is only for the information, even then such information, inherently in it makes legislature to play an important role as aforesaid for keeping a check on the activity of the State Government. Such placement cannot be construed to be non est. No act of Parliament should be construed to be of having no purpose. As we have said mere discussion and questioning the concerned ministry or authority in the House in respect of such laying would keep such authority on guard to act with circumspection which is a check on such authority, specially when such authority is even otherwise answerable to such Legislature. Further examining the scheme of the Act, with its historical background, we find there is clear demarcation in dealing between the Major minerals and the Minor minerals. For minor minerals all its activity before this Act has been delegated to the State Government as it having all conceivable knowledge over it, as it being of local use and not being of much national importance. For this difference also stricter control is made for the Major minerals through Section 28(1) than for the minor minerals. Thus, this mere check on the State Government, as aforesaid, may have been found to be sufficient by the Parliament, with reference to the minor minerals. Thus, the language of both sub-section (1) and sub-section (3) though different, this is only for two different purposes. Thus when Parliament introduced sub-section (3) through amendment, it was to further strengthen the control over the State Government power. Any other submission, the one made by the appellants, makes such an Act of the Parliament meaningless, which cannot be attributed to the Parliament. (Paras 41 and 44)
       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 Houses of Parliament. Even if it has not been done, the State shall now do place it before each houses of the State legislature at the earliest the notification dated 28.9.1994 and will also do so in future while framing rules or issuing any notifications under the rules framed under sub-section (1) of Section 15 of the Act. This placement before the State legislature is for a limited purpose for which the Parliament is competent. Thus introduction of sub-section (3) in Section 28, in this light cannot be said to be of no consequence. It was done for a purpose, as aforesaid, and that purpose is sufficient to hold the State Government under check while exercising its power as a delegatee. (Paras 51 and 53)
       In view of the aforesaid discussion and findings we conclude :
       (a) The impugned two notifications dated 17th August, 1991 and 28th September, 1994 are valid.
       (b) The State Government while acting as delegatee under Section 15(1) of the Act is not confined to fix the royalty/dead rent within the peripheral ambit of Entry 54 Schedule II of the Act. Neither D.K. Trivedi has said so, nor can it be construed to be so.
       (c) The State Government has acted within the ambit of the power delegated to it and such delegation is with sufficient guidelines and check in view of the Preamble, object and reasons and various provisions of the Act.
       (d) Requirement of mere placement of the Rules or the Notifications before the State Legislature is also one of the form of check on the State Government to exercise its powers as a delegatee.
       (e) In this case the impugned notification dated 28.9.1994 has not been placed as required by sub-section (3) of Section 28 of the Act. The State Government is directed to do so now at the earliest.
       (f) However, non-placement of the said notification would not invalidate the same, as this requirement is only directory,
       (g) The enhancement of royalty on the facts and circumstances of this case cannot be said to be arbitrary or otherwise illegal. (Para 57)

JUDGMENT

Misra, J.—The issues in these appeals, apparently impress a common picturisation of usual nature but they are raised in an interesting way while challenging the fixation of the rate of royalty for the minor minerals under Section 15 of the Mines and Minerals (Regulation and Development) Act, 1957 (hereinafter referred to as ‘the Act’). The question for consideration is, the ambit of delegation of power by the Parliament to the State Government under Section 15 of the said Act. Can it be said that the delegation is unbridled without any check if it travels beyond the guidelines as spelt by this Court in the case of D.K. Trivedi & Sons and Ors. v. State of Gujarat and Ors.1? In the present case neither the validity of delegation under Section 15 nor it being without any guideline is under challenge but both the appellants and the respondents State stress two different orbits for the guideline, the appellants constrict it to be within what is spelt in the D.K. Trivedi case (supra) while the respondents stress it not to be confined to that case. The impugned notifications dated 17th August, 1991 and 28th September, 1994 issued by the State of Bihar enhancing the rate of royalty have to be tested as in which of the two orbits it falls. If it falls within the restricted orbit, as submitted by the appellants, it may be ultra vires but would be valid if it falls within the other orbit. Mr. F.S. Nariman, learned senior counsel, submits that extents and limitations of the power of the delegatee have to be read as laid down by this Court in D.K. Trivedi case (supra), where the validity of this very delegation of power to the State Government was under challenge. Based on this, the submission is, Item 54 of the Second Schedule of the Act controls and guides the State Government (hereinafter referred to as ‘the State’), for fixing or enhancing the rate of royalty which has to be within the reasonable bounds of 12 of the sale price at the pit’s mouth. Admittedly in the present case it is far beyond this, hence the submission is that the impugned notifications are liable to be struck down. On the other hand, submission for the respondents - the State of Bihar by learned senior counsel Mr. Rakesh Dwivedi is that D.K. Trivedi’s case (supra) neither restricts nor limits the power of enhancement of royalty to Item 54, Schedule II of the Act nor it exhaustively dealt with all other sources of guidelines which was not necessary in that case, which can be gathered from other provisions of the Act, the objects and reasons, the scheme of the Act and the nature of material etc..

2. Before entering into this legal tangle, it is necessary to turn to some of the essential facts to appreciate more fully the controversies. The present appeals are directed against the judgments and orders dated 16th October, 1996 of the High Court passed in writ petitions by which the petition of the appellants, namely, Quarry Owners Association etc. challenging the aforesaid notifications dated 17th August, 1991 and 28th September, 1994, issued by the State including challenge to the recovery of the enhanced royalty under it and for the refund of the amount already paid were dismissed.

3. The Preamble of the Act lays down :

"An Act to provide for the development and regulation of mines and minerals under the control of the Union."

Section 2 declares the expediency of Union to control the regulation of mines and development of minerals—Section 3(a) defines ‘minerals’ which includes all minerals except mineral oils. Section 3(e) defines ‘minor minerals’. Section 4 refers to the prospecting or mining operations to be undertaken only under a licence or lease. Section 4A is for termination of prospecting licences or mining leases, sub-section (1) is for premature termination other than minor minerals while sub-section (2) is for minor minerals. Section 5 imposes restrictions on the grant of such licences or leases. Section 6 specifies the maximum area for which a licence a

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2000 Supreme(SC) 1281

Cases Referred (16)