THE QUARRY OWNERS ASSOCIATION ETC. v. THE STATE OF BIHAR AND ORS

Citation: [2000] SUPP. 2 S.C.R. 211

Court: Supreme Court of India

Bench: AJAY PRAKASH MISRA, N. SANTOSH HEGDE

Judgment text

THE QUARRY OWNERS ASSOCIATION ETC. V. THE STATE OF BIHAR AND ORS. AUGUST 8, 2000 [A. P. MISRA AND N. SANTOSH HEGDE, JJ. ] Mines and Minerals (Regulation and Development) Act, I957 : Sections I5(1), I5(1-A) and I3(1), (2)-Rate of royalty over minor minerals increased beyond maximum percentage prescribed in Schedule 11.

Item 54-High Court upheld impugned notifications ofState Government-On appeal held, State Government has power to make rules in respect of minor minerals-Introduction ofSection I5( I-A) illustrates the general power ofthe State Government to make rules-Ample guidelines are available in various provisions of the Act, Preamble and Statement of Objects and Reasons- Fixution of royalty is an inherent part of mineral development and State has to consider various factors including the fact that it is parting with its own wealth-Impugned notification valid as State Government acted within ambit of delegated power and there were sufficient guidelines and checks-Bihar Minor Minerals Concession Rules, I972. Sections I5(2) and (3)-Approval of Rules and Notifications made by State Government-As even existing rates ofroyalty or dead rent need approval ofParliament, it serves as a guiding.

factor-Proviso to Section I5(3) brings in an additional check on enhancement-Imposition of royalty not arbitrary or excessive and increase in royalty is very reasonable inspite of the power granted to the State Government. Schedule Il, Item 54-Rate of royalty to be within 12% ofthe sale price at the pits mouth-Language would only mean residual major minerals not specified in Item Nos. I-53-Neither the residuary nor the left over major minerals could be equated to minor minerals-Maximum prescribed percentage would not apply to minor minerals, but only acts as a guideline. Sections 4 to 12-General restrictions over Rule making power-Guidance provided to State Government while acting as a delegatee under Section 15-Section 9 specifically refers to royalty and along with Schedule Il is a good source of guidance. Section 28(/), (2) and (3 )-Laying n. f rules and not(fication.

1· before the Houses n_fthe legislature-Provisions regarding State Government differently worded for a purpose as it is better placed to deal with minor minerals used locally-Mere placement or laying n. f the rules and notifications would be sufficient check on power n. fState Government-Placement ofrules camwt be said to be n. fno consequence and the same is obligatory Impugned notifications are valid as they are within the ambit ofdelegation which is not excessive as there are enough guidelines and checks including laying them down before the houses n. f the Legislature-Second notification which has not been placed before the houses ofthe legislature should be done at the earliest, Howeve1; its non-placement would not affect its validity as the requirement is only directoiy.

Administrative Law-Delegated Legislation-State Government comes into scrutiny of concerned Legislature by mere laying of any notification or rule-House plays a positive role when it is entrusted with power 10 annul, modify or approve any rule or else acts as a vital and forceful check. Constitution ofIndia-VII Schedule-Entry 54, List-I and Entry 23, List II-Regulation ofMines and Minerals does not fall within Concurrent Li:. ·t- ConfT. ict is resolved as Entry 23, List II provides that Union may have full or partial control over regulation ofmines and minerals-Parliament has power to withdraw this control partially or fully if it so desires-A notification concerning an item absent in the concurrent list may also be laid before the State legislature-Mines and Minerals (Regulation and Development) Act, 1957- Section 28(3). Taxation-Royalty on minerals-Tax on this royalty is distinct. from other forms of taxes on income, wealth, sale or production of goods etc. and it includes the price.

for the consideration ofparting with the right and privileges ofan owner-A strict interpretation would be harsh considering the guidelines prescribed to a delegatee who also owns the minerals-Mines and Minerals (Regulation and Development) Act, 1957. Interpretation of statutes-Heydon's rule-The words "Regulation of Mines and Minerals development" connotes a different meaning when used in different context-Words are not static but dynamic and courts must adopt the dynamic meaning which uphold the validity of any provision-True meaning and intent of the legislature has to be gathered from the Preamble, Statement ofObject and Reasons and other provisions of the Act-A construction which suppresses the mischi~fand advances the remedy must be adopted-Mines and QUARRY OWNERS ASSOCIATION v. STATE 213 Minerals (Development and Regulation) Act, 1957-Constitution ofIndia-Vil Schedule-Entry 54, List I and Entry 23, List II.

Appellants are an association of quarry owners having permit/lease for mining operations. Respondents in exercise oftheir power underSection 15 of the Mines and Minerals (Regulation and Development) A. ct, 1957 made the Bihar Minor Mineral Concession Rules 1972 and fixed the royalty payable from time to time. The rate of royalty was increased by the two impugned notifications dated 17. 8. 1991and28. 9. 1994 to Rs. 12 per cubic metre and Rs. 25 per cubic metre respectively. The State was given power to make such rules and this delegation of power withstood its challenge in this Court. Section 15 was later amended in 1987 by introducing sub-section I- A, which further clarified the rule making power. These notifications were challenged but the High Court upheld them as valid. Hence this appeal.

Appellants contended that the delegation of power exceeded the limits laid down by this court, that Item 54, Schedule II of the Act controls and guides the State for fixing the rate of royalty which has to be within 12% of the sale price at the pit's mouth; that Section 15(1) or (1-A) does not lay down any guideline and so it becomes mandatory to follow the provisions of Item 54, Schedule II; that Section 28(1) of the Act provides sufficient guidelines to the Centre but no guidelines are provided to the State Government in respect of minor minerals; that Section 28(3) of the Act cannot be construed to confer authority of the State Legislature to modify any notifications or rules framed by the State Government; that Entry 54 of List I ofthe Constitution of India regulates mines and minerals development under the control ofUnion keeping public interest in view and no provisions of the Act can take away this control; that the power to fix the rate of tax can be delegated provided the statute provides guidelines for fixing such rate, which may be by fixing maximum rate oftax or by consulting affected people; that the taxing statute must be interpreted as read with no additions andsubtrac· tions ofwords and where two opinions are possible, the oue beneficial to the assessee must be adopted; and that in a delegated legislation the control and authority of the Principal to modify or cancel any act of the delegatee must remain as a living continuity and a constitutional necessity, which is absent in the present case.

Respondents contended that Section 15 (1) and (1-A) provide sufficient guidelines to the State Government; that though the phraseology of Section 28(3) is differently couched than what is in Section 28(1), still it cannot be said that placement of notifications and rules before the State Legislature is only a show piece and not meaningful; that minor minerals have less importance and are used locally and so their treatment is left to the State, however, major minerals are dealt by the Centre; that Entry 54, Schedule II is the recognition of the State's original power to determine royalty which is in tune with the principles of federalism; that the State has to part with minerals which it owns, therefore it imposes royalty and it would be unjust to make mining cheap so that appellants derive huge profits; and that the State Government inspite of such power to impose royalty has been very reasonable throughout. Dismissing the appeals, the Court HELD : 1.

The impugned notifications are valid as the State Government acted within the ambit of power delegated which has sufficient guidelines and checks. Requirement of, mere placement of Rules or Notifications before the State Legislature is a form of check on the State Government. The second notification has not been placed before the State Legislature, and shall be done at the earliest, however, its non-placement would not invalidate the same as the requirement is only directory. The imposition of royalty/dead rent can not be said to be arbitrary or excessive by the State Government as there is no material placed by the appellants in the writ petition to come to such a conclusion. Though by proviso to Section 15(3) it is open for the State Government to revise the royalty every three years but the history shows it has not done so. Since 1975 the State Government has increased royalty only four times and there is no increase since 28th September 1994 despite lapse of six years.

[260-B; C; D; 233-G] D. K. Trivedi &Sons and Ors. v. State o,fGujarat and Ors. , [1986] Supp. sec 207' relied on. 2. Sections 4 to 12 of the Mines and Minerals (Regulation and Development) Act, 1957 are not applicable to the minor ·minerals, so the figurative restrictions contained therein could not be made applicable, but they serve as a guideline to the State Government while framing rules. They are available not as restrictive or limiting guidelines but are available otherwise for consideration and adoption, wherever it is necessary. Such guidelines are not just confined to Sections 4 to 12 only but are also to be found in the object for which such power is conferred, namely, for regulating the QUARRY OWNERS ASSOCIATION v. STATE 215 grant ofquarry leases, mining leases or other mineral concessions in respect ofminor minerals and for the purposes connected therewith. [238-F; 240-D] ) 3.

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 in respect of 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) l butis more focused in sub section (2). There was no such similar sub-section in Section 15, though later it was brought in through amendment by incor- ) porating sub-section (1-A).

This Court held previ_ously that Section 13(2) which is illustrative of the general power conferred by Section 13(1) itself contains sufficient guidelines for the State Government to frame its own rules under Section 15(1). [240-E-F; 241-B) D. K. Trivedi &Sons and Ors. v. State ofGujarat and Ors. , [1986] Supp. sec 207, relied on. 4. The Parliament in order to bring parity, made similar provision for the minor minerals through insertion of Section 15(1-A) to equate it with Section 13(2), which is also illustrative of the general power, conferred on Section 15(1). Therefore, as Section 13(2) was held to be the guiding force to the State G,overnment, Section 15(1)(1-A) now acquires the similar position through infusion of ~ various sub-clauses. A restrictive interpretation to limit the State's power within Entry 54 of Schedule II will lead to various incongruities. [241-C; D; Fl 5.

Section 15(2) approves the rules made by the State Government as far as minor minerals are concerned, regulating the grant of quarry leases, mining leases or other mineral concessions in respect of miues and minerals prior to the enforcement of this Act and similarly Section 15(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 into force of this Act. Even approval of the then existing rates of royalty or dead rent is by Parliament itself which similarly is also a guiding factor to the State Government for any subsequent modification of the rates. The proviso to Section 15(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. [246-C-D] State ofM. P. v. Mahalakshmi Fabrics Mills Ltd. & Ors. , [1995] Supp. 1 sec 642, relied on. 6. Sda!!

dule II of the Act, which refers to the rate of royalty in view of Section 9 could only refer to the minerals other than minor mineratS: The language in Item 54 would only mean other residual major minerals not specified before i. e. in Item Nos. 1 to 53. This could never mean to include minor minerals so the residuary minerals under Item 54 could only be the left over major minerals. Neither the residuary nor the left over major minerals could be equated with the minor minerals nor there is any material on record to draw such inference. [239-B-C] 7. The reference ofgeneral restrictions as contained in Sections 4 to 12 would only mean to consider the broad principle and pattern while framing 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 royalties.

Each of the consideration may be taken note by the State Government while framing its own rules for the minor minerals and it may apply also the rate of royalty for the minor minerals at the same rate as what existed when this Act came into force. Schedule II with reference to Section 9 which fixes rate of royalty for various minerals, not being minerals, is also a good source of guideline. (239-E-F; H; 240-A] p D. K. Trivedi & Sons and Ors. v. State a/Gujarat and Ors. , (1986] Supp. sec 207, relied on. 8. Entry 54 List I of the Seventh Schedule of the Constitution and Entry 23 List II refer to the "Regulation of Mines and Minerals Development". This Entry has been reiterated both in the Preamble and the Statement of Objects and Reasons of the Act. These words clearly indicate the guidelines which the Parliament is projecting. Every word is impregnated and is flexible to connote different meaning, when used in different context.

Words are not static but dynamic and courts must adopt that dynamic meaning which uphold the validity of any provision. This dynamism is the cause of saving many statutes from being declared void dissolving the on- QUARRY OWNERS ASSOCIATION v. STATE 217 slaught of any rigid and literal interpretation, it gives full thrust and satisfaction to achieve the intended object. Whenever there are two possible interpretations, its true meaning and Legislature's intent has to be gathered, from the 'Preamble', Statement of Objects and Reasons and other provisions of the same statute. 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'scase, which laid down that the Court must adopt a construction which suppresses the mischief and advances the remedy. [242-G] Bengal Immunity Co. Ltd. v. State ofBihar & Ors. , AIR (1955) SC 661 (674); Commissioner of Income Tax, Patiala v. Mis. Shahzada Nand & Sons and Ors.

,AIR (1966) SC 1342; Mis. Sanghvi Teevraj Ghewar Chand &Ors. v. Secretary, Madras Chillies, Grains and Kirana Merchants Workers Union & Am:, AIR (1969) SC 530 (533); Union ofIndia v. Sankalchand Himatlal Sheth & Anr. , AIR (1977) SC 2328 (2358) and K. P. Varghese v. Income Tax Officer, Ernakulam & Anr. , AIR (1981) SC 1922 (1929), relied on. 9. The words "Regulation of Mines and Mineral Development" are incorporated both in the Preamble and Statement of Objects and Reasons of the Act. The Preamble of our Constitution in unequivocal words expresses to secure for our citizens social, economical and political justice.

It is in this background and in the context of the provisions of the Act, the word "regulation" may have different meaning but considering it in relation to various economic and social activities, development and excavation of mines, ecological and environmental factors including States' contribution in developing, manning and controlling such activities, and lastly parting with its wealth, viz, the minerals, the fixation of the rate of royalties ) would also be included within its meaning. While regulating mineral development, royalty/dead rent is an inherent part. State has before it number of factors, which 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, which are all relevant factors to be taken into consideration and a guiding force for fixing such royalty/dead rent. [243-A-C; G-H] State ofTamil Nadu v. Mis.

Hind Stone and Ors. , [1981] 2 SCC 205 and - Mis. Bhatnagar & Co. Ltd. v. Union ofIndia & Ors. , AIR (1957) SC 478, relied on. 10. The policy of the Act is communicating loudly from its roof top through the words "Regulation of Mines and Mineral Development", with reference to the minor minerals, that let it be done by the delegatee's State who is fully aware of the local conditions as such minerals are also used for the local purposes and on whom this largesse falls. What delegatee should do and what it should not do is also enshrined in the Act. Section 18 is also not excluded from its application to the minor mineral development, where a duty is cast on the Central Government to take all necessary steps for the conservation and systemic development of minerals in India and highlights the periphery of its action which itself is a guidance which 'State' may take note of while framing its own rules. [244-C-D; El 11.

Itis true that royalty on minerals is a tax but the tax on this royalty, is distinct from other forms of taxes. This is not like a tax on income, wealth, sale or production of goods (excise) etc. and includes the price for the consideration ofparting with the right and privilege of the owner, namely, the State Government who owns the mineral. Both royalty and dead rent are integral parts of a lease, therefore, it does not constitute usual tax as commonly understood but includes return for the consideration for parting with its property. It would be too harsh to insist for a strict interpretation with reference to minerals while considering the guidelines to a delegatee who is also the owner of the minerals. [245-F-H; 246-A] India Cement Ltd. and Ors. v. State ofTamil Nadu & Ors. , [1990] 1 SCC 12; Orissa Cement Ltd. v. State ofOrissa and Ors. , [1991] Supp. 1 SCC 430; State ofM. P. v. Mahalakshmi Fabric Mills Ltd. & Ors. , [1995] Supp. 1 SCC 642 and P. Kannadasan & Ors. v.

State ofTamil Nadu & Ors. , [1996] 5 SCC 670, relied on. 12. 1. It is true that language of Section 28(1) and (2) are different and in view ofdifference in the language ofsub-section (3), the same meaning to it as that of sub-section (1) cannot be given. This difference has been carved out for a purpose to give different projection to the said two provisions. In the case of major mineral which play an important role in the National growth and wealth and where the delegatee is the Central Government, Parliament retained its full control but for the minor minerals. Parliament left out minor minerals as the subject is of local use and State Government being well versed and better placed to deal with it. Mere placement or laying of rules and notifications framed by it before the State Legislature would be a sufficient check on the exercise of its powers. This difference oflanguage gives two different thrusts as intended by the Parliament.

Any act of the Parliament, far less when it introduces any new pro- QUARRY OWNERS ASSOCIATION v. STATE 219 vision through amendment can be said to be in futility but the purpose has to be found. One of the reasons was that minor minerals are of less importance to the country, industry and economy. The Parliament brought this amendment also to keep a check on the exercise of power by the State Government's as dclegatee. [251-F; 252-C-E; HJ 12. 2. 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. No doubt in the case where House is entrusted with power to annual, modify or approve any rule, it plays positive role and have full control over it, but even where the matteris 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 cm;cernedState Government. Such placement cannot be construed to be non est. No act of Parliament should be construed to be ofhaving no purpose. A mere check on the State Government through Section 28(3) may have been found to be sufficient by the Parliament, with reference to the minor rninerals. Thus, the language of both sections 28(1) and (3) are different only for two different purposes.

Thus when Parliament introduced Section 28(3) through amendment, it was to further strengthen the control over the State Governments power. [253-H; 254-A-D; 254-G; HJ Mis. Arias Cycle Industries Lid. & Ors. v. Staie ofHaryana, [1979] 2 SCC 196; D. K. Trivedi & Sons and Ors. v. Slate ofGujarat and Ors. , [1986] Supp. sec 207, relied on. H. W. R. Wade & Forsyrh, Administrative Law, 7th Ed. At 898; Stanley De Smirh and Rodney Brazier, Constitutional and Administrative Law, 7th Ed. , referred to. 13. Since impugned notifications issued by the State are within the ambit of delegation and the delegation is not excessive as there are enough guidelines and control overthe StateGovernment notwithstanding its check on the State under Section 28(3) to place rules before the Legislature, it would not have any effect on its validity.

But when a statute as under Section 28(3) requires its placement, it is the obligation of the State Government to place it with this specific note before each House of the State Legislature. The State shall now place it before each Houses ofthe State legislature at the earliest and will also do so in future while framing rules or issuing any notification under the rules framed under sub-section 15(1) of the Act. [257-B-CJ Mis. Atlas Cycle Industries Ltd. &Ors. v. State ofHaryana, [1979] 2 SCC 196, relied on. 14. Placement ofany notification or rules framed by the State Government under Section 28(3) cannot be said to be something out of any novel procedure but is a well recognised principle. In a Federal structure of any Constitution, their fields are well defined, sometimes the same subject may be under the control of both legislatures as in the concurrent list of our Constitution.

'Regulation of mines and mineral development' does not fall in the Concurrent List, but still both fall in the field ofthe Parliament under Entry 54 List I and the State legislature underEntry 23 List II, their possible conflict is resolved by the following words in Entry 23 List II, "subject to the provisions of List I with respect to regulation and development under the control of the Union" and this control may be full or partial. Union came in full control over this subject by the 1957 Act and no field was left for the State to make the law. The covering of the entire field was by the 1957 Act itself not by any other constitutional limitation. The Act which takes the entire field can also withdraw from it both partially or fully.

In the present case the power of State Legislature has been completely denuded by the Parliament and it is always open for the Parliament to withdraw partially the eclipse and if it so desires it may leave the Legislature for such part to exercise its power. Section 28(3) along with the provision to lay the rule , • notification made by the State Government before the State Legislature cannot be said to be possible only when it is in the concurrent list. This placement cannot be said to be incompetent or keeping it beyond the control of the Parliament as such placement is for a limited purpose for which the Parliament is competent and it cannot be said to be of no consequence. [258-A-B; D-H; 259-A; B] Baijnath Kedia v. State ofBihar & Ors. , [1969] 3 SCC 838, relied on. QUARRY OWNERS ASSOCIATION v. STATE 221 15.

In order to adjudicate, whether any delegation of power is unbridled or excessive the historical background ofsimilar provisions which preceded the impugned provision which should be kept in mind, as it is also a relevant consideration. When the present 1957 Act came into force, the Parliament was aware thatdifferentStateGovernments were regulating the grant of leases in respect of minor minerals including fixation of rate of royalties. Parliament was fully aware that even in the past it was the State Governments were entrusted with and were dealing with minor minerals as a delegatee. However, earlier the State Governments which 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 and could also be because minor minerals are more useful for local use and the State Government being the highest executive in the State knows its uses and management fully well, including the fixation of its prices. 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. [249-H; 250-A; C-F] Mis. Bhatnagar & Co. Ltd. and Am: v. Union of India and Ors. , AIR (1957) SC 478; Municipal Corporation ofDelhi v. Birla Cotton and Weaving Mills Delhi &Am:, [1968] 3 SCR 251 and D. K. Trivedi & Sons and Ors. v. State ofGujarat and Ors. , [1986] Supp. SCC 207, relied on. 16. In the present case, 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 itselfis 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 l provisions to the Act guiding it, checking it and controlling it then such delegation cannot be said to be unbridled. [246-E-F] D. K. Trivedi & Sons and Ors. v. State ofGujarat and Ors. , [1986] Supp. SCC 207; State ofM. P. v. Mahalakshmi Fabrics Mills Ltd. &Ors. , [1995] Supp. 1SCC642; Baijnath Kedia v. State ofBihar &Ors. , [1969] 3 SCC 838; Municipal Corporation ofDelhi v. Bir/a Cotton Spinning and Weaving Mills, Delhi & Am:, [1968] 3 SCR 251; Avinder Singh and Ors. v. State ofPunjab and Ors. , [1979] 1SCC137 and Corporation ofCalcutta &Anr. v.

Liberty Cinema, [1965] 2 SCR 477, relied on. CIVIL APPELLATE JURISDICTION: Civil Appeal No. 5089of1997. From the Judgment and Order dated 16. 10. 96 of the Patna High Court in C. W. J. C. No. 9821 of 1994. WITH Civil Appeal Nos. 5090/97, 5091/97 and 5092/97. F. S. Nariman, S. B. Sanyal, G. L. Sanghi, P. P. Rao, R. K. Dwivedi, A. K. Pandey, B. B. Singh, Subhro Sanyal, Subhash Sharma, Ms. Manita Verma, Jamshed Buy and Kumar Rajesh Singh for the appearing parties. The Judgment of the Court was delivered by 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 ofthe 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. , [1986] Supp. SCC 207 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 per cent 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~· 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.. 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.

The Preamble of the Act lays down: "An Act lo 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 c>r leases. Section 6 specifies the maximum area for which a licence and lease may be granted, while Section 7 gives period for the grant and renewal of such prospective licences. Section 8 deals with the periods for mining leases.

Sub-sections (1) and (2) of Section 9 refer to the payment of royalty at the rate specified in the Second Schedule whether granted before coming into force of this Act or subsequently. Sub-section (3), empowers the Central Government to amend the Second Schedule so as to enhance or reduce the rate of royalty payable. Section 9A obliges lessee to pay the dead rent. Sections 10 to 12 deal with the procedure for obtaining prospective licence, or mining leases in respect of the land in which minerals , vest in the Government. Section 13 empowers the Central Government to make rules in respect of minerals. Section 14 specifically excludes Sections 5 to 13 from application of quarrying leases, mining leases or other minerals concessions in respect of minor minerals. Section 15 empowers the State to make rules in respect of minor minerals. Section 16 entrusts power to modify mining leases granted before 25th October, 1949.

Section 17 gives special power to the Central Government to undertake prospecting or mining operations in certain lands. Section 18 refers to the mineral development. Licences and mining leases under the Act to be void under Section 19 if made in contravention of the Act, while Section 20 makes the Act and Rules to apply to all renewals. Section 21 imposes penalties. Section 22 refers to the cognizance of offences. Section 23-C empowers the State to make rules for preventing illegal mining, transportation and storage of minerals. Section 26 entrusts both Central and the State to delegate its power under the Act on officer or authority of the Central or State. Sub-section (1) of Section 28 puts an obligation on the Central Government to place its rules and notifications before the Parliament which is subject to its modifications, if any. Similarly, the State is ubliged to place its Rules and notifications before each houses of State Legislature under subsection (3).

Section 29 makes existing rules to continue so long they are not inconsistent with the Act and Rules. Section 30 empowers the Central Government to revise any order made by the State or any other authority. The First Schedule refers to the specified minerals, viz. , Hydro carbons/energy minerals - Atomic minerals and Metallic and non-metallic minerals with reference to Sections 4(3), 5(1), 7(2) and 8(2) while the Second Schedule refers to the rate of royalty in all States and Union Territories except the States of Assam and West Bengal while the Third Schedule refers to the rate of Dead Rent. Thus, the aforesaid Act expressly lays down the rates of royalty of the minerals through Sched! Jle II read with Section 9. It is significant that Section 14 excludes Sections 5 to 13 specifically for minor minerals which includes Section 9. Section 15, entrusts power on the State to lay down Rules in respect of the minor minerals. Original Section 15 as it stood at the time of D. K.

Trivedi (Supra), is quoted hereunder: "Section 15: Power of State Government 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 ofquarry leases, mining leases or other minerals concessions in respect of minor minerals and for purposes connected therewith. (2) Until rules are made under sub-section (1), any rules made by a State Government regulating the grant of quarry leases, mining leases or other mineral concessions in respect of minor minerals which are in force immediately before the commencement ofthis Act shall continue in force.

(3) The holder of a mining lease or any other mineral concession granted under any rule made under sub-section (1) shall pay royalty in respect of minor minerals removed or consumed by him or by his agent, manager, employee, contractor or sub-lessee at the rate prescribed for the time being in the rules framed by the State Government in respect of minor minerals. Provided that the State Government shall not enhance the rate of royalty in respect of any minor minerals for more than once during any period of four years. " This delegation of power to the State withstood its challenge in D. K. Trivedi case (Supra), as aforesaid. Later this section was amended on 10th February, 1987, by introducing sub-section 1-A th~ough Act No. 37 of 1986. This was in particular and without prejudice to the generality of power conferred by sub-section I of Section 15.

This sub-section (l-A) is quoted hereunder:- "(I-A): In particular and without prejudice to the generality of the foregoing power, such rules may provide for all or any ofthe following matters, namely:- (a) the person by whom and the manner in which, applications for quarry leases, mining leases or other mineral concessions may be made and the fees to be paid therefor; (b) the time within which, and the form in which, acknowledgement of the receipt of any such applications may be sent; (c) the matters which may be considered where applications in respect of the same land are received within the same day; (d) the terms on which, and the conditions subject to which and the authority by which quarry leases, mining leases or other mineral concessions may be granted or renewed; (e) the procedure for obtaining quarry leases, mining leases or other mineral concessions; (f) the facilities to be afforded by holders of quarry leases, mining leases or other mineral concessions to persons deputed by the Government for the purpose of undertaking research or training in matters relating to mining operations; (g) the fixing and collection of rent, royalty, fees, dead rent, fines or other charges and the time.

within which and the manner in which these shall be payable; (h) the manner in which rights of third parties may be protected (whether by way of payment of compensation or otherwise) in cases where any such party is prejudicially affected by reason of any prospecting or mining operations; (i) the manner in which rehabilitation of flora and other vegetation, such as trees, shrubs and the like destroyed by reason of any quarrying on mining operations shall be made in the same area or in any other area selected by the State Government (whether by way of reimbursement of the cost of rehabilitation or otherwise) by the person holding the quarrying or mining lease; Gl the manner in which and the conditions subject to which, a quarry lease, mining lease or other mineral concession may be transferred; (k) the construction, maintenance and use of roads, power transmission lines, tramways, railways, aerial ropeways, pipelines and the making of passage for water for mining purposes on any land comprised in a quarry or mining lease or other mineral concession; (I) the form of registers to be maintained under this Act; (m) the reports and statements to be submitted by holders of quarry or mining leases or other mineral concessions and the authority to which such reports and statements shall be submitted; (n) the period within which and the manner in which and the authority to which applications for revision of any order passed by any authority under these rules may be made, the fees to be paid therefor, and the powers of the revisional authority; and (o) any other matter which is to be, or may be prescribed.

" The introduction of this sub-section 1-A including the Objects and Reasons, it is submitted, further enlarges the· area of the guidelines to the State. Its Objects and Reasons are also quoted hereunder:- "Act 37 of 1986 : The Mines and Minerals (Regulation and Development) Act, 1957 provides for the regulation of mines and the development of minerals under the control of the Union. Since the last amendment of the Act in 1972, many problems have come to the fore. The adverse effects of mining operation on ecology and environment have increasingly come to notice. In many cases, mining operations have been undertaken without proper prospecting resulting in unscientific mining. Further, a number of Committees have stressed the need for amending certain provisions of the Act with the object of removing bottle-necks and promoting speedy development Of mineral based Industries.

State Governments and representatives of trade and industry have in formal forums like the Mineral Advisory Council as well as in other forums, expressed the desirability of taking a fresh look at the various provisions of the Act with a view to making them more effective and development-oriented. 2. The suggestions made from time to time have been considered and incorporated in the present Bill, which, inter alia, includes the following salient features, namely :- (i) inclusion of 11 more minerals of national importance in the First Schedule to the Act; (ii) premature termination of prospecting licences and mining leases on ecological and other grounds: (iii) dispensing with the Certificate of Approval, Income-tax Clearance Certificate, etc.

for the grant of prospecting licences and mining leases; (iv) prospecting of an area and preparation of mining plan as a pre-condition for the grant of a mining lease; (v) rationalisation of the period of mining leases, and renewals thereof; (vi) shorter periodicity for purposes of revision of royalty and dead rent; and (vii) provision for increasing the quantum ofpunishment to curb illegal mining activities. 3. The Bill seeks to provide for the above objects. " It is also relevant to record here the rate of royalty fixed by the State for the minor minerals through various notifications in various years. Initially on 1st April, 1975 the rate ofroyalty fixed was Rs. 2. 50 per cubic meter that is Rs. 7. 07 per 100 cubic ft. , Rs. 1. 75 per cubic meter that is Rs. 4. 95 for 100 cubic ft. for Ballast and Boulder. Next on 3rd August, 1977 the rate of stone chips, Ballast and Boulder was increased to Rs. 3 per cubic meter that is Rs. 8. 49 per 100 cubic ft.

and from 17th August, 1991 (impugned) the rate of royalty of stone chips, Ballast and Boulder was increased to Rs. 12 per cubic meter that is Rs. 33. 96 per 100 cubic ft. By notification dated 28th November, 1994 (impugned) the rate of royalty was Rs. 25 per cubic meter or Rs. 70. 75 per 100 cubic ft. for Ballast, Boulder and stone chips, which according to the appellants is more than 15 times as originally provided and more than 5 times in excess of the maximum rate of 12 per cent of sale price at pit's mouth under Entry 54 of Schedule II. It is also not in dispute by the aforesaid Act, under Item 54 of List I, VII Schedule of the Constitution of India, the regulation of mines and minerals development both of major and minor minerals came under the control of the Union, including fixation of the rate of royalty. The challenge to the aforesaid two notifications is that the State trespassed the limit of the guidelines as laid and spelt out in D. K. Trivedi's case (Supra).

Further, if that guidelines have not to be, then there is no other check and control or guideline of the Union over the State Government. In contrast there is check over the other delegatee, viz. , Central Government as under Section 28(1 ), rules or notifications by it including enhancement of royalty is to be laid before the Parliament. The High Court repealed the contention of the appellants by holding: "No doubt when the decision in the case of D. K. Trivedi and sons (Supra) was given there were no specific guidelines in Section 15 of the Act. However........... Amendment Act 1986 (Act No. 37 of 1986) which came into force on 10th February, 1987, guidelines have been provided in Section 15 itself....... clause (g) of sub-section 1-A provided that the rules may be framed by the State Government for fixing and collecting rent, royalty, fees etc......

The guidelines provided for framing Rules in respect of minerals otber than minor minerals do not remain relevant after insertion of sub-section (1-A) in Section 15 ofthe \ Act. " However, submission for the appellants is, sub-section ( 1-A) only empowers the State Government but does not lay down any guideline, hence it cannot shield tbe State to be providing with any guideline, for which State has only to fall under' Item 54 of Schedule II of the Act, which records:- "Item 54: All other materials not herein before specified= Twelve per cent of sale price at the pits mouth. " The submission is, this is residuary item which cover all other minerals not specified in any of the preceding items in Schedule II. The minor minerals not being specified in any of the items it would fall under this entry. It is also significant to record that minor minerals are used in the local areas for local purposes while major minerals are used for the industrial development for the National purpose.

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 mi'nerals and, if it is, whether Entry 54 of Schedule II places any ceiling of 12 per cent of the sale price at the pit's mouth for fixing this royalty by tbe State? In other words, does D. K. Trivedi case (Supra) fore closes the issue of guideline or is it open to travel to other fields which guides the State for fixing the royalty. The appellants are an association of quarry owners. They were given permiUlease for the extraction of stone in respect of tbeir respective places of operation in pursuance to such permit/lease. The State Government in exercise of its power under Section 15 of the aforesaid Act made rules called the Bihar Minor Mineral Concession Rules 1972, (hereinafter referred to as the 'Rules') and fixed the royalties from time to time.

Submission for the appellants is, since rate of royalty on building stone including stone chips , Bolder, Road medal and ballast has been increased to more than 100 per cent, the appellants are unable to pay, hence challenge this enhancement. Mr. F. S. Nariman, learned senior counsel for the appellants submits, in order to judge the validity regarding excessive delegation one has to identify the power which is sought to be delegated. The power delegated to the State Government under Section 15 of the Act is the power to fix and collect royalty. It cannot be disputed that royalty is a tax. The question is, are there any guideline to vary the rate of royalty apart from D. K. Trivedi scase (Supra). The submission is, this decision settles the guideline by placing the restrictions on State power through Section 9 read with Item No. 54 of the Second Schedule of the Act.

The introduction of sub-section (IA) in Section 15 of the Act makes no difference, as it is only an amplification and illustration of Section 15(1). Further, sub-clause (g) of Section 15(1A) only clothes the State with power to change the rate of royalty but it cannot be construed as giving any guideline. It is only when Legislature fixes any maximum rate, beyond which delegatee cannot enhance the rate, it could be said it retained sufficient control over the delegatee. The control of the Parliament in relation to the major minerals for such enhancement is enshrined in Section 28(1) of the Act, State of M. P. v. Maha/akshmi Fabric Mills Ltd. & Ors. , [1995] Supp l SCC 642, upheld such a delegation. The delegatee, viz. , Central Government was entrusted with the power to amend the Second Schedule which fixes royalty but obligates the delegatee to lay such amendment before the Parliament. This is absent in the case of minr r minerals.

Next it is submitted, this Court in Baijnath Kedia's (1969] 3 SCC 838, held that the State legislature is denuded of all its legislative power over the minor minerals after the passing of the said Act, hence it looses its legislative control for fixing the royalty. The State only acts as delegatee of the Parliament to enhance the rate of royalty. So Section 28(3), which is for the minor minerals, merely provides laying down procedure before the State legislature for information and not with any entrustment of power to alter or modify the rate of royalty, hence Section 28(3) by itself cannot save the plea of excessive delegation of the legislative power. The language used in Section 28(3) is different from what is in Section 28( 1), hence both cannot be equated. There is nothing to show that, in fact, the impugned notifications, were laid before the State legislature.

So far Delegated Legislation Provisions (Amendment) Act, 1983, which requies rules made by the State Government under a parliamentary Act for its laying before the State legislature it only relates to the subjects under Concurrent List 3 of VII Schedule of the Constitution of India and not in respect of subjects in exclusive competence of the Parliament under List I. Learned senior counsel Mr. P. P. Rao, also appearing for some of the appellants submits, power to fix the rate of tax can be delegated provided the statute provides guidance for fixing such rate. The guidance may be by fixing maximum rates of tax or by providing consultation with the people, i. e. , subject to the approval by them as held in Municipal Corporation o. f Delhi v. Bir/a Cotton Spinning and Weaving Mills. Delhi & Anr. , [1968] 3 SCR 251.

Reasserting the principle as laid down in the case of Mahalakshmi Fabrics (Supra), it is submitted Parliament has itself laid down for the major minerals the rate of royalty in the Second Schedule of the Act and authorised the Central Government to revise the rates. In doing so the Central Government has before it the guidance, to keep in view the original rates. The fixation of royalty should have a direct nexus with the minerals throughout the country on a uniform pattern. Further, there is requirement that every rule or notification made by the Central Government is to be placed before each House of Parliament is subject to the modification by both Houses. Thus, Section 28(1) permits Parliament to veto the enhanced rate of royalty. In contrast there is no such guideline so far minor minerals are concerned, except what is contained in D. K. Trivedi 's case (Supra).

Based on that it is submitted that only provision among Sections 4 to 12 of the Act, which is relevant is Section 9(2) read with Entry 54 of the Second Schedule of the Act which fixes the limit of royalty at 12 per cent of the sale price at the pit's mouth. The very rationale of Entry 54 of List I of the Constitution is to regulate the mines and mineral development under the control of Union in the public interest. The preamble as well as Section 2 of the Act speak about the expedience of Union control of both major and minor minerals. Thus no part of the Act can be construed so as to take away the control of the Union. Section 28(3) cannot be read so as to divest the Union of its control and vest the control in the respective State Legislature. In view of difference in the language between Sections 28(3) and 28(1), the same purport what is contained in sub-section (1) cannot be brought into sub-section (3).

Further the taxing statute must be interpreted as it reads with no additions or subtractions of words and where two opinions are possible the one which benefits an assessee must be adopted. Learned senior counsel Mr. S. B. Sanyal, in addition to the adoption of the submissions by the aforesaid two learned counsels further submits that Section 28(3) which is brought in through amendment cannot be construed to confer authority on the State legislature to modify any notifications or rules framed by the State Government. But laying of such rule or notification before the State legislature is only for the purpose of information. In a delegated legislation the control and authority of the Principal to modify or cancel any act of the delegatee must remain. Parliamentary control over delegated legislation should be living continuity as a constitutional necessity which is not j to be found in the present case. ( Repelling the submissions, Mr.

Rakesh Dwivedi, learned senior counsel, appearing for the State of Bihar submits, in D. K. Trivedi 's case (Supra) Section 15, as it then stood, was questioned as suffering from the vice of excessive delegation of its legislative power. This Court held that sub-section (2) of Section 13 was merely particularisation or illustration of the generality of power already contained in sub-section (1) and since Section 15(1) was similar to Section 13(1), it could necessarily contain illustrations of Section 13(2) and the provisions of Section 13(2) being in the same sub-chapter as Section 15, would furnish sufficient guidelines. Reliance was also placed on the following observations made in that case:- "The exclusion of the application of these sections to minor minerals means that these restrictions will not apply to minor minerals but it is left to the state governments to prescribe such restrictions as they think fit by rules made under Section 15(l).

" The submission is, Sections 4 to 12, as they stood then, cannot be construed as restricting the power of delegatee over the minor minerals in view of Section 14. In fact, they were referred by this Court as it being available to the State Government for taking note while framing the rules. They were available not as restrictive or limiting its power but for its adoption wherever necessary. In fact, while judging the validity of the notifications impugned in that case, this Court was not called upon nor did it examine whether the State power to enhance royalty is restricted to Schedule 2 and Section 9 of the Act. Further, the guideline is also to be found in the preamble, the Statement of Objects and Reasons and other provisions of the Act. Sections 4A, 17 and 18 also provide the guideline. Further after the amendment, the power of the Central Government under Section 9(3) of the Act for the modification of the rate of royalty for the major minerals is made very wide.

The only difference being that under Section 28(1) Parliament has opportunity to modify the rate fixed by the Central Government. This was . because th~ Central Governinent was modifying the rates fixed by the Parliament itself. Secondly, major minerals are minerals of national importance hence require uniform treatment at the national level. In contrast, the minor minerals are mostly used locally and are of local importance and hence their treatment is left to the State Government at the provincial level. This is in recognition of States original power to determine such royalty under Entry 54 of List II of the Seventh Schedule. This is also in tune with the principle of federalism which requires local matters to be left for it being dealt with by the State Government. Further submission is, in order to find the guidelines the nature of the subject matter is also to be considered. The product, namely, minor minerals is neither produced nor it belong to the appellants.

So it is not a case of imposition of tax simplicitor on the appellants but such tax in fact includes the pric~ of the minerals which is the property of the State. In other words, it includes the price of the property which State parts with. Thus, royalty is a unique kind of tax which is different from other taxes. Both royalty/dead rent are integral part of the lease as talked about in Section 4 of the Act and Section 105 of the Transfer of Property Act, 1882. Hence the lessee cannot insist that in spite of the minerals being parted by the State the mining should be made available cheaply so that they can derive profits, and even super profits. Further, there should have been fixation of maximum limit for royalty under Section 15 is not an absolute rule. In fact, the rate fixed has not been demonstrated to be confiscatory or arbitrary, for which the courts are there and if that be, it could be quashed.

Further the history of regulation of minerals shows that royalty has always been fixed by the State Government. Under Rule 4 of the Mineral Concession Rules, 1949 framed by the Central Government under the 1948 Act, the State Governments were given power to make rules with regard to the minor minerals. In fact, what was then delegated to the State Government by the Central Government has now been delegated by the Parliament itself. Thus the status of State Government has changed from sub-delegatee to delegatee. Next it is submitted, it is true that phraseology of Section 28(3) is differently couched than what is in Section 28(1). This was done in view of the observations by this Court in D. K. Trivedi's case (Supra). It is also submitted that placement of such notification and rules under Section 28(3) before the State legislature cannot be said to be only a show piece but is meaningful.

He also submits since 1st April, 1975 the State of Bihar has increased royalty only four times and even now it has not raised royalty since 28. 9. 1994, despite the lapse of six years. Thus raising o; royalty only four times during 25 years despite power to revise every three years shows that the Government has been more than reasonable in fixing the royalty. In order to scrutinise the submissions of the learned counsels for the parties, it would be appropriate first to focus as to what this Court said in D. K. Trivedi's case (Supra).

The constitutionality of Section 15(1) of the said Act i was raised with reference to the delegation of power to the State Government delegating essential legislative function, including charging and enhancing the rate of dead rent and royalty that it being unbridled, including challenge to the charging of the same during the subsistence of the existing leases, including the validity of Rule 2l(b) of the Gujarat Minor Minerals Rules, 1966 and few notifications issued by the State Government under Section 15 in respect of the minor minerals. The relevant notifications were, one dated 29. 11. 1974 by which the State Government made Gujarat Minor Minerals (Fourth Amendment) Rules, 1974 whereby Rule (1) was substituted and Schedule II was amended w. e. f. 1. 12. 1974. By this the rate of royalty and dead rent in respect of some of the minor minerals were specified.

Through the notification dated 29th October, 1975 the State Government brought in Gujarat Minor Minerals (Second Amendment) Rules, 1975, whereby Rule 21 of the said rules and Schedule I was substituted w. e. f. 1. 11. 1975, through which the rate of royalty in respect of several items were enhanced. The next notification was dated 6th April, 1976, by which the State Government made the Gujarat Minor Minerals (Second Amendment) Rules, 1976 through which it substituted Schedule II in the said rules, by which the dead rent was enhanced. The next notification was dated 26th March, 1979, through which the State Government made the Gujarat Minor Minerals (Amendment) Rules, 1979. Through this new Rule 21-B was inserted and Rule 22 was amended and Schedules I andU were substituted. By substituted Schedule I the rate of royalty on all minor minerals were specified as 10 p.

per metric tonne and by substituted Schedule II the rate of dead rent per hectare or part thereof in respect of quarry leases was enhanced to Rs. 1200 in certain cases, Rs. 1500 in some other cases, Rs. 2,000 in one case and Rs. 3,000 in the remaining cases. The contention raised before this Court was, that Section 15(1) of the Act is unconstitutional as it suffers from the vice of p excessive delegation of the essential legislative power to the executive as it is unchannelised as there are no guidelines, which gives free hand to the State Government to act arbitrary. This submission for the lessee was rejected when this Court held:- "We find that this contention is based upon a fallacy inasmuch as it is founded upon reading the provisions of Section 15(1) in isolation and without reference to other provisions of the 1957 Act and its legislative history.

" This Court further held: ''There is no substance in the contention that no guidelines are ) provided in the 1957 Act for the exercise of the rule-making power of the State Government under Section 15(1)...... . A provision similar to sub-section (2) of Section 13, however, does not find place in Section 15. In our opinion, this makes no difference. What sub-section (2) of Section 13 does is to give illustrations of the matters in respect of which the Central Government can make rules for "regulating the grant ofprospecting licences and mining leases in respect of minerals and for purposes connected therewith". The opening clause of sub-section (2) of Section 13, namely, "In particular, and without prejudice to the generality of the foregoing power'', makes it clear that the topics set out in that sub-section are already included in the general power conferred by sub-section (I) but are being listed to particularize them and to focus attention on them.

The particular matters in respect of which the Central Government can make rules under sub-section (2) of Section 13 are, therefore, also matters with respect to which under sub-section (I) of Section 15 the State Government can make rules for "regulating the grant of quarry leases, mining leases or other mineral concessions in respect of minor minerals and for purposes connected therewith". When Section 14 directs that "The provisions of Sections 4 to 13 (inclusive) shall not apply to quarry leases, mining leases or other mineral concessions in respect of minor minerals", what is intended is that the matters contained in those sections, so far as they concern minor minerals, will not be controlled by the Central Government but by the concerned State Government by exercising its rule-making power as a delegate of the Central Government. Sections 4 to 12 form a group of sections under the heading "General restrictions on undertaking prospecting and mining operatio:1s".

The exclusion of the application of these sections to minor minerals means that these restrictions will not apply to minor minerals but that it is left to the State Governments to prescribe such restrictions as they think fit by rules made under Section 15(1). The reason for treating minor minerals differently from minerals other than minor minerals is obvious. As seen from the definition of minor minerals given in clause (e) of Section 3, they are minerals which are mostly used in local areas and for local purposes while minerals other than minor minerals are those which are necessary for industrial development on a ·national scale and for the ~conomy of the country. That is why matters relating to minor minerals have been left by Parliament to the State Governments while reserving matters relating to minerals other than minor minerals to the Central Government.

" This Court finally upheld the validity of sub-section (1) of Section 15 by holding that power conferred upon the State Governments does not amount to excessive delegation of any essential legislative power. It further held, there are sufficient guidelines for the exercise of rule-making power which are to be found in the object for which such power is conferred, namely, for regulating the grant of quarry leases, mining leases or mineral concessions in respect of minor minerals and for the purposes connected therewith. It also held that power to make rules under Section 15(1) includes to amend the rules so as to enhance the rates of royalty and dead rent. Further there is a check on the State Government not to enhance the rate of royalty/dead rent more than once during any period of four years in view of proviso to Section 15(3).

It upheld notification dated 29th November, 1974, but held notification dated 29th October, 1975 as void as it offends the prohibition contained in the proviso to Section 15(3). It also similarly holds notification dated 6th April, 1976 as void as the same enhances the rates ofdead rent for the second time during the same period of four years. It however, holds notification dated 26th March, 1979 to be valid. Strong hammering has been done by the learned counsels for the appellants with reference to the observation made by this Court in D. K. Trivedi's case (supra), where this Court records that the guidelines for the exercise of rule-making power under Section 15(1) are to be found in the restrictions and other matters contained in Sections 4 to 12 of the Act. Based on this, submission is that this restriction could only be, what is contained in Item 54 Schedule II read with Section 9 of the Act.

The submission is, Item 54 refers to "all other mines and minerals not hereinbefore specified" which would include minor minerals as Section 3(a) defines "Minerals" very widely to mean all minerals except minerals oil. Hence the restriction which is stated, is really the restriction not to enhance the royalty beyond the rate specified in Item 54 which could only be upto 12 per cent of sale price at the pit's mouth. In our considered opinion such a restrictive interpretation is not to be found in the D. K. Trivedi 's case (Supra). In that case, through the aforesaid 1979 notification, rate of dead rent was enhanced by substituting the then existing Schedule II. The then existing rate of dead rent in Schedule II was: "Schedule II Rates of Dead Rent [See Rule 22 (I)(b)] "l. For specified minor minerals For every 100 sq. metres or part thereof, up to 5 hectares .. Re. 0. 35 For each additional hectare or part thereof, exceeding 5 hectares .. Rs. 50. 00 2.

For other minor minerals For every 100 sq. metres or part thereof upto 5 hectares .. Re. 0. 20 For each additional hectare or part thereof exceeding 5 hectares .. Rs. 35. 00" This was substituted and the rate of dead rent per hectare was enhanced to Rs. 1200, 1500, 2,000 and 3,000 in various cases. Though the enhancement through this notification of 1979 was enormous yet no submission was made, nor this Court adverted or recorded that this enhancement has to be restricted to 12 per cent of the sale price at pit's mouth in terms of Item 54 of Schedule II. In fact, in spite of this large enhancement, notification of 1979 was upheld. The question, whether any such increase is arbitrary, excessive or violative of Article 14 is to be tested on a different pedestal. 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 sμbmissions 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 further records in the same para 34 that the guidelines with reference to Section 15(1) are to be found in the object for which such power is conferred, the illustrative matters set out in sub-section (2) of Section 13 and in the restriction and other matters contained in Section 4 to 12.

Para 34 of the said decision records:- "The guidelines for the exercise of the rule-making power under Section 15(1) are, thus, to be found in the object for which such power is conferred (name! y, "for regulating the grant of quarry leases, mining leases or other mineral concessions in respect of minor minerals and for purposes connected therewith"), the meaning of the word "regulating", the scope of the phrase "for purposes connected therewith", the illustrative matters set out in sub-section (2) of Section 13, and in the restrictions and other matters contained in Sections 4 to 12. " It is relevant to refer here the preceding paragraph 33 with reference to Sections 4 to 12 where this Court records: "Sections 4 to 12 forms a group of sections under the heading "General restrictions on undertaking prospecting and mining operations".

The exclusion of the application of these sections to minor minerals means that these restrictions will not apply to minor minerals but that is left to the State Governments to prescribe such restrictions as they think fit by rules made under Section 15(! ). " Thus 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 takr 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. 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 judgments of this Court and the provi- QUARRY OWNERS ASSOCIATION '" STATE [MISRA, J. ] 239 sions of the Act. The submission is, as Section 3(a) defines "minerals" which would include minor mineral, hence Item 54 as it records: "all other minerals not hereinbefore specified" would include minor minerals. It is an interpretation in abstract without taking into consideration 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 B.

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. 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 framing 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 (I) 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 considerations 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 08 content of 0. 05 per cent with pru rata increase/decrease@ Re. LOO 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. This apart, the guidelines even in the D. K. Trivedi'.

\' case (Supra) does not confine itself to Sections 4 to 12 but further records, it to be found in the object for which such power is conferred, (namely, for regulating the grant of quarry leases, mining leases or other mineral concessions in respect of minor minerals and for the purposes connected therewith the meaning of the word 'regulating' the scope of the phrase 'for purpose connected therewith' and the illustrative matters as set out in sub-section (2) of Section 13. We find that 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 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 sucil similar sub-section in Section 15 when D. K. Trivedi's case (Supra) was decided, though later it was brought in through amendment by incorporating sub-section (IA) through Act No. 37 of 1986 w. e. f. 10th February, 1987. This Court very clearly held in that case:- "The ambit of the powenmder Section 13 and under Section 15 is, however, the same, the only difference being that in one case it is the Central Government which exercises the power in respect of minerals other than minor minerals while in the other case it is the State Governments which do so in respect of minor minerals.

Subsection (2) of Section 13 which is illustrative of the general power conferred by Section 13(1) contains sufficient guidelines for the State Governments to follow in framing the rules under Section 15(I). " So, this Court held that sub-section (2) of Section 13, which is illustrative of the general power conferred by Section 13(1) itself contains sufficient guidelines for the State Government to frame its own rules under Section 15(1). 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 subsection (2) of Section 13 was held to be the guiding force to the State Government is now applicable to this sub-section (I-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 there 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 (I-A) of Section 15 but even Section 4A and Section 17A 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 4A 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 subsection (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 t~e literally what is contained there then even for the minor Minerals State Government has to issue leases of such area for such a lt-ng 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. Half hearted submission was also made by Mr. Sanyal, one of the learned senior counsels, that proviso to Section 9(3) limits the power of the Central Government to fix the rate of royalty not exceeding 20 per cent while there is no such limitation on the power of the State Government. It is sufficient to record here that this limitation has been lifted by amending sub-section (3) of Section 9. Now there is no such limitation on the power of the Central Government. 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 minerals 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 minerals development' clearly indicates the guidelines which the Parliament is projecting. Every word of a language is impregnated with and is flexible to connote different meaning, when used in different context. That is why it is said, words are not static but dynamic and courts must adopt its that dynamic meaning which uphold the validity of any provision. This dynamism is the cause of saving many statutes of it 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 Legislatures intent has to be gathered, from the 'Preamble', Statement of Objects and Reasons and other provisions of the same statute. In order to find true meaning of any word or what the legislature intended, one has to go to the principle enunciated in the Heydon scase, 76 E. R.

637 =(1584) 3 Co. Re