Judicial Analysis Court Copy Headnote Facts Arguments Court observation

2019 Supreme(SC) 226

SUPREME COURT OF INDIA
A.K. SIKRI, S. ABDUL NAZEER, M.R. SHAH, JJ.
STATE OF GUJARAT AND OTHERS ETC – APPELLANT(S)
Versus
JAYESHBHAI KANJIBHAI KALATHIYA ETC – RESPONDENT(S)
CIVIL APPEAL NOS. 10373 - 10374 OF 2010
Decided on : 01-03-2019

Advocates Appeared:
For the Appellant :Ms. Hemantika Wahi, Advocate and Ms. Puja Singh, Advocate
For the Respondent:Mr. D.N. Ray, Advocate, Mr. Lokesh K. Choudhary, Advocate, Mr. Dillip Kumar Nayak, Advocate, Ms. Disha Ray, Advocate and Mrs. Sumita Ray, Advocate.

IMPORTANT POINT
Rule 44-BB, Gujarat Minor Mineral Rules, 1966 and Rule 71, Gujarat Minor Mineral Concession Rules, 2010 are violative of the MMDR Act as also Article 301, Constitution of India.

Headnote:(a) Mines and Minerals (Development and Regulation) Act, 1957 – Section 15, 15(1A) and 23-C – Rule making power of State Government – Section 15 provides for making rules for minor minerals whereas section 23-C does not extend to minor minerals – However, provisions of section 15 do not extend to minor minerals after they are excavated – Restriction on inter-State trade, commerce and intercourse – Rule 44-BB, Gujarat Minor Mineral Rules, 1966 and Rule 71, Gujarat Minor Mineral Concession Rules, 2010 – State Government prohibiting transportation of sand beyond borders of the State – High Court declaring the Rules as ultra vires section 15 and 23-C as also Article 301, Constitution of India – Words 'transportation' and 'storage' in Section 23-C used in context of 'illegal mining' – Not legal mining of minor minerals like sand – Held, prohibition on transport or sale of already mined minerals outside State has no direct nexus with object and purpose of the MMDR Act. (Para 11, 12, 14, 36, 40, 42)
       (1995) 2 SCC 402; (2008) 3 SCC 735 – Relied upon
       AIR 2004 AP 234; Writ Petition Nos. 23317 and 24211 of 2008 – Overruled
       (2000) 8 SCC 655; (2003) 7 SCC 59; (1981) 2 SCC 205; (2006) 1 SCC 1; (2009) 6 SCC 235; (1985) 2 SCC 116; (2004) 5 SCC 430; (2012) 11 SCC 1; (1997) 3 SCC 665 – Referred
       1986 Supp SCC 20; (1976) 4 SCC 108 – Distinguished
       (b) Constitution of India – Article 301 and Rule 44-BB, Gujarat Minor Mineral Rules, 1966 and Rule 71, Gujarat Minor Mineral Concession Rules, 2010 – Rules restricting trade and commerce in sand under MMRD Act – The Act aims to regulate mines and mineral development, and not trade and commerce – Expression 'freedom' in Article 301 – Must be read with the expression 'throughout the territory of India' – Such Rules held violative of Article 301. (Para 43)
       (c) Constitution of India – Part XIII – Intended to achieve objective of economic integration of the country – A code on checks and balances on the legislative power. (Para 44, 45)
       (1990) 3 SCC 87 – Relied upon

       Facts of the case:
       Sand extracted in Gujarat, after processing, is sold outside the State. By Resolution No. GMR-102010-1-S-CHH dated May 04, 2010 State prohibited all leaseholders, stockists, traders and exporters from exporting ordinary sand excavated from the areas in the State of Gujarat by transporting such sand outside the State or the country. This resolution was challenged by way of two writ petitions. When these writ petitions were pending consideration, the Government of Gujarat issued a Notification on June 11, 2010 amending the Gujarat Minor Mineral Rules, 1966 by making the Gujarat Minor Mineral (Amendment) Rules, 2010 with the insertion of Rule 44-BB, with immediate effect prohibiting movement of sand beyond the border of the State of Gujarat.
       Within two months thereafter, i.e. on August 26, 2010, the State of Gujarat also notified the Gujarat Minor Mineral Concession Rules, 2010 so as to repeal the Gujarat Minor Mineral Rules, 1966. Rule 71 of the new Rules was to the same effect as Rule 44-BB.
       This led the respondents to amend the writ petitions thereby incorporating challenge to Rule 44-BB of Amendment Rules as well as Rule 71 of the Concession Rules. The High Court has allowed the writ petitions and struck down the aforesaid Rules as ultra vires. Notably, a Division Bench of the Andhra Pradesh High Court and Madras High Court has taken a contrary view.
       Finding of the Court:
       Rule 44-BB, Gujarat Minor Mineral Rules, 1966 and Rule 71, Gujarat Minor Mineral Concession Rules, 2010 are violative of the MMDR Act as also Article 301, Constitution of India.
       Result: Appeals dismissed.

JUDGMENT

A.K. Sikri, J.

Two writ petitions were filed in the High Court of Gujarat under Article 226 of the Constitution of India. One writ petition was filed by a single person (respondent herein) who had been awarded contract for one year to extract, collect, gather and remove ordinary sand from river Tapi falling within certain area at village Amboli, Taluka Kamrej, Surat. The sand being a mine and mineral, it is the State Government which is empowered to grant such leases. After the excavation of sand, a part there of was subjected to further processing by addition of fly ash and the other part was sold as sand outside the State of Gujarat. Second petition was filed by ten petitioners (respondents in the second appeal). They are in the business of processing ordinary river sand after buying it from leaseholders. The process involves washing, cleaning and mixing fly ash to convert it into IS-Zone-2-Sand, which is then sold in 50 kg. Bags under a brand name. These respondents supply that sand to builders in the State of Maharashtra.

2. As is clear from the aforesaid facts, sand, after processing, is sold outside the State of Gujarat. The challenge laid in the writ petitions was against the Resolution No. GMR-102010-1-S-CHH dated May 04, 2010 whereby all leaseholders, stockists, traders and exporters were prohibited from exporting ordinary sand excavated from the areas in the State of Gujarat to other States within the country or other countries by transporting such sand outside the State or the country. When these writ petitions were pending consideration, the Government of Gujarat issued a Notification on June 11, 2010 thereby amending the Gujarat Minor Mineral Rules, 1966 by making the Gujarat Minor Mineral (Amendment) Rules, 2010 with the insertion of Rule 44-BB, with immediate effect. This amendment was done in purported exercise of powers conferred under Section 15 read with Section 23-C of the Mines and Minerals (Development and Regulation)Act, 1957 (hereinafter referred to as the 'MMDR Act'). By way of Rule 44-BB, movement of sand beyond the border of the State of Gujarat was prohibited. Rule 44-BB reads as under:

"No movement of sand shall be allowed beyond the border of the State. In case any vehicle is found transporting sand to the neighbouring State, even with authorized royalty pass or delivery challan, it shall be treated as violation of the Act and the Rules made thereunder and the penal provisions as specified therein shall be applicable."

3. Within two months thereafter, i.e. on August 26, 2010, the State of Gujarat also notified the Gujarat Minor Mineral Concession Rules, 2010 so as to repeal the Gujarat Minor Mineral Rules, 1966. Rule 71 of the new Rules was to the same effect as Rule 44-BB and the same is as under:

"Rule 71. Prohibition to transport sand beyond border.- No movement of sand shall be allowed beyond the border of the State. In case any vehicle is found transporting sand to the neighbouring State even with authorized royalty pass or delivery challan, it shall be treated as violation of the Act and the rules made thereunder and the penal provisions, except compounding, as specified therein shall be applicable."

4. This led the respondents to amend the writ petitions thereby incorporating challenge to Rule 44-BB of Amendment Rules as well as Rule 71 of the Concession Rules. The High Court has, vide impugned judgment, allowed the writ petitions and struck down the aforesaid Rules as ultra vires on the ground that the rule making power of the State Government does not empower and cannot be stretched to empower the State Government to make Rules directly prohibiting movement of mineral so as to impinge upon the freedom guaranteed by Article 301 of the Constitution. It may be noted here itself that a Division Bench of the Andhra Pradesh High Court in C. Narayana Reddy and etc. v. Commissioner of Panchayat Raj and Rural Employment, A.P., Hyderabad and others, AIR 2004 AP 234 had taken a contrary view. Like

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2019 Supreme(SC) 226

SUPREME COURT OF INDIAA.K. SIKRI, S. ABDUL NAZEER, M.R. SHAH, JJ.STATE OF GUJARAT AND OTHERS ETC – APPELLANT(S) VersusJAYESHBHAI KANJIBHAI KALATHIYA ETC – RESPONDENT(S)CIVIL APPEAL NOS. 10373 - 10374 OF 2010Decided on : 01-03-2019

IMPORTANT POINTRule 44-BB, Gujarat Minor Mineral Rules, 1966 and Rule 71, Gujarat Minor Mineral Concession Rules, 2010 are violative of the MMDR Act as also Article 301, Constitution of India.

SUPREME COURT OF INDIA
A.K. SIKRI, S. ABDUL NAZEER, M.R. SHAH, JJ.
STATE OF GUJARAT AND OTHERS ETC – APPELLANT(S)
Versus
JAYESHBHAI KANJIBHAI KALATHIYA ETC – RESPONDENT(S)
CIVIL APPEAL NOS. 10373 - 10374 OF 2010
Decided on : 01-03-2019

IMPORTANT POINT
Rule 44-BB, Gujarat Minor Mineral Rules, 1966 and Rule 71, Gujarat Minor Mineral Concession Rules, 2010 are violative of the MMDR Act as also Article 301, Constitution of India.