―xxxx xxxx xxxxx
In light of the content of application and submissions
made during the hearing, it is to mention that:
i. It is noted that the modifications in mining plan
approved vide letter dated 22.7.2022 were done, as per
the expression of interest by the State Government in
writing, recorded in the minutes of a meeting held in this
regard.
ii. Subsequent to approval of modification State could
not modify the MDPA, as per the communication received
by it from Ministry of Mines vide letter dated 26.7.2023.
iii. It is observed that while issuing Show Cause Notice
and subsequent order of revocation, Regional Controller
of Mine, Bhubaneswar referred the letter of Ministry of
Mines dated 26.7.2023 addressed to the State
Government.
iv. It is pertinent to note that not a word has been
mentioned in the said letter about the modifications in
the Mining Plan approved by the Regional Controller of
Mines, Bhubaneswar. Yet the reason cited for revocation
is this very letter of Ministry of Mines.
v. No rule has been cited, while issuing show cause
notice or revocation where, it is stated that the minimum
production, as per the MDPA has to be specified or flow
from the proposals of the 5 year production of concurrent
approved mining plan, necessitating such an action post
communication received by State Government.
vi. At the same time Rule 17(3) of Minerals (Other than
Atomic and Hydro Carbons Energy Minerals) Concession
Rules, 2016 gives right to the lease operator for
modifications in mine plan, as specified therein.
vii. It is understood that, the minimum production
requirement is specified by the State Government and
not mandated by any rule to be linked with the Mining
Plan.
Conclusion & Order
As mentioned above, it is clear that the reason cited for
revocation of modified mining plan is not supported by
the rule position, as a cause of revocation. Therefore, the
matter is remanded back to the Regional Controller of
Mines, Bhubaneswar for reconsideration and to take
further action, as considered prudent & just, as per the
extant Statute, in the instant matter.‖
31. Pursuant to the aforesaid order, the Regional
Controller of Mines, IBM vide Order/Letter dated 8th
October, 2025 withdrawn the order of revocation of the
modification of the Modified Mining Plan dated 20th
September, 2024. As a corollary, the Modified Mining Plan
was restored to be valid for the tenure of its operation.
The relevant portion of the order/letter dated 8 th January,
2025 reads as thus:-
―xxxx xxxx xxxxx
Sub:-Application for revision under Rule-61(1) of MCDR
2017 against the revocation order of approved
Modification of Mining Plan of Sukinda Chromite Mine
along with Progressive Mine Closure Plan (PMCP) of Tata
Steel Limited submitted under Rule 17(3) of MCR, 2016.
Sir,
In reference to the above, and in accordance with Rule
61(3) of the Mineral Conservation and Development
Rules, 2017, the hearing on the revision application was
conducted via Video Conferencing on 27.11.2024 at the
office of the Chief Controller of Mines, Indian Bureau of
Mines, Nagpur.
After reviewing the case, the Chief Controller of Mines
(IBM) and Revisionary Authority, in his order No.O-
11011(8)/5/2024-CCOM-MDR-IBM_HQ 1/45151/2024
dated 14-12-2024, concluded that the revocation of the
modified mining plan was not in alignment with the
relevant rules. As such, the matter was referred back to
the undersigned for reconsideration and further action in
accordance with the applicable statutes.
In light of the facts and observations provided by the
Revisionary Authority, the revocation of the mining plan,
as communicated in the undersigned's letter dated
20/09/2024 (which had been approved via letter dated
22/07/2022), is hereby withdrawn with immediate
effect.‖
32. Thereafter, on 16th January, 2025, IBM issued
a certificate confirming completion of mine closure
activities in terms of the approved FMCP, which was
communicated to the State Government on 20th January,
2025, by the petitioner reiterating its request for
acceptance of surrender.
33. On 7th January, 2025, the Deputy Director of
Mines issued a demand notice raising a demand of
Rs.1563.75 crores for the fourth year of the mining lease
(23rd July, 2023 to 22nd July, 2024), alleging shortfall in
dispatch. Relevant portion of the said demand notice
reads as thus:-
―xxxx xxxx xxxxx
Sub:-Assessment of shortfall in dispatch of chromite in
respect of Sukinda Chromite Block of M/s. Tata Steel
Ltd. for the period of 23.07.2023 to 22.07.2024
Ref:- Govt. of Odisha, Deptt. of Steel & Mines Letter
No.5336/SM, Dt. 16.07.2021.
Sir,
In inviting a reference to the above noted subject, I am to
say that the Govt. of Odisha, Deptt of Steel & Mines
letter under reference (copy enclosed) has communicated
regarding assessment of shortfall in dispatch vis-à-vis
the minimum dispatch required under sub-rule-1 & 1(A)
of 12(A) of M.C. Rules-2016 and amendment Rule 2021
with reference to Rule 13 of Mineral Auction Rule-2015.
Accordingly the assessment in respect of your Sukinda
Chromite Block for the period of 4th year of lease
execution i.e. w.e.f Dt. 23rd July 2023 to 22nd July 2024
has been made over 7,60,251.500 MT chromite as
shortfall quantity based upon which a penalty of
Rs.1563,75,95,980.92/- only (round off-
Rs.1563,75,95,981) is due for payment as per the
assessment sheet at Annexure-I. A calculation sheet of
penalty in details for the period from Dt.23.07.2023 to
22.07.2024 of said mines is enclosed herewith at
Annexure-II for reference.
You are therefore requested to make deposit the said
amount of Rs.1563,75,95,981/- (Rupees one thousand
five hundred sixty three crore seventy five lakhs
ninetyfive thousand nine hundred eighty one) only at
earliest for further course of action at this end.‖
34. On receipt of the aforesaid demand notice, the
Petitioners submitted a detailed representation dated 28th
January, 2025 disputing the demand on factual and legal
grounds. On 3rd July, 2025, a revised demand notice was
issued enhancing the demand to Rs. 1902.72 crore (from
Rs.1563.75 crore) on account of Differential Royalty,
District Mineral Fund charges and National Mineral
Exploration Trust charges, among other charges, for
alleged shortfall in dispatch of chromite and appropriation
of performance security for 4th MDPA Year i.e. from 23rd
July, 2023 to 22nd July, 2024. The relevant extract of the
revised demand notice is extracted hereunder:-
―xxxx xxxx xxxxx
Sub:-Revised Assessment of Shortfall under Rule 12A of
Mineral (Other than Atomic and Hydrocarbon Energy
Minerals) Concession Rules, 2016 in respect of Sukinda
Chromite Block of M/s. Tata Steel Ltd for 4th MDPA Year.
(Dt. 23.07.2023 to 22.07.2024) and appropriation of
performance security.
Ref:- Govt. of Odisha, Deptt. of Steel & Mines Letter
No.7495/SM, Bhubaneswar Dt. 02.08.2022 & Director of
Mines, Odisha, Bhubaneswar Letter No.7477/DM, Dt.
05.09.2022.
Sir,
With reference to the above cited letter on the subject
and on supersession of this office assessment letter
No.65/Mines, Dt.07.01.2025, this is to inform you that in
pursuance to the declaration of Average Sale Price (ASP)
by IBM and the provisions of Rule 12(A) of Mineral (Other
than Atomic and Hydrocarbon Energy Minerals)
Concession Rules, 2016 & Directorate of Mines letter
under reference the revised assessment of shortfall in
dispatch and appropriation of performance security for
the 4th MDPA Year (Dt.23.07.2023 TO 22.07.2024) has
been calculated of Rs.19027253760/- (Rupees One
thousand Nine hundred Two Crores Seventy two lakhs
Fifty three thousand Seven hundred Sixty only) along
with TCS as applicable at the earliest for further course
of action at this end.‖
35. The aforesaid revised demand notice dated 3rd
July, 2025 was assailed by the Petitioners before this
Court in W.P.(C) No. 22431 of 2025. The validity of Rule
12A of the MCR, 2016 has also impugned in the said writ
petition. By order dated 14th August, 2025, this Court,
while issuing notice, has granted interim protection by
staying the operation of the said demand notice dated 3 rd
July, 2025. The interim order dated 14th August, 2025
passed by this Court in W.P.(C) No.22431 of 2025 reads
as thus:-
―1. The petitioner has filed the instant writ petition
challenging the action of the authority in issuing the
demand notice dated 3rd July, 2025 by invoking the
provisions contained under Rule 12A of the Minerals
(Other than Atomic and Hydro Carbons Energy Mineral)
Concession Rules, 2016.
2. According to the petitioner, Rule 12A was
introduced in the said Rules, 2016, bringing not only the
minimum production for the first two years of the lease
and in sub-rule (2) thereof, the quantification was done
for the third year. At the advent of its introduction into
the statutory book, there was no concept of minimum
'dispatch' at the time of the initial incorporation of the
said provision but by virtue of a subsequent amendment
inserted with effect from 10th June, 2021, sub-rule (1A)
was introduced which imbibed within itself the concept
of a "minimum dispatch" to be assessed on a quarterly
basis in addition to other conditions and the criteria
required under the said provisions.
3. Sub-rule (1B) thereof further postulates that in the
event the lessee does not maintain the minimum
dispatch, the State Government may terminate such bids
after giving a reasonable opportunity of hearing. We
notice from sub-rule (1A) that at the time of its
incorporation, the annual production and the minimum
dispatch was also contemplated therein without any
quantification but, subsequently, the quantification was
done by virtue of ScheduleD of the Mine Development
and Production Agreement (MDPA) where the average
annual production of the preceding two years should be
1.70 Metric Tons Per Annum (MTPA) whereas the
minimum production target, i.e., 80% of the same should
be 1.36 MTPA.
4. As indicated above, subsequent to the said
introduction of Rule 12A, the petitioner was facing
inconvenience for undertaking open cast mining for
which the approach was made to the authorities and
also to competent authority for modifying the mining plan
as the mining activities cannot be undertaken without
conformity with the same.
5. It appears that the Indian Bureau of Mines (IBM)
approved the modified mining plan for the periods from
2022-23 to 2024-25 reducing the production from 1.36
MTPA to 0.6 MTPA for the year 2023-24 and 2024-25
which was subsequently withdrawn on 8th January,
2025.
6. The demand notice is issued upon the petitioner which
is a subject matter of challenge in the instant writ
petition. The challenge is made on multiple counts
including the violation of principles of natural justice.
There is no symmetry between the "production" and the
"dispatch" in terms of the aforesaid provisions and such
disparity have rendered the performance impossible.
Rule 12A is alleged as not only violative of the provisions
of the parent Act, but also is unconstitutional. Therefore,
the petitioner seeks it to be declared ultra vires. It is also
assailed that the demand notice is without jurisdiction
as it propagates the double levy of the applicable
amount/premium. The record would reveal that after the
first notice was issued in the month of January, the
petitioner responded to the same, but without adverting
to the issues raised therein, the impugned demand
notice is issued by the authorities without dealing with
the stand taken by the petitioner and is bereft of any
such reasons having provided therein.
7. We notice a distinguishing fact in the instant case
where the competent authority modified the mining plan
much before the period for which the demand is levied
and in the event the "production" is reduced, whether the
"dispatch" which is much higher than the production can
act adversely to the interest of the miner and, therefore,
we feel that the provisions which are challenged in the
instant writ petition require deep consideration.
8. We have been given to understand that the spate of
litigations have come up before this Court which are still
pending flagging and raising similar and identical issues
and are fixed for hearing on 2nd September, 2025. Let
this matter be also tagged with W.P.(C) No.5215 of 2025
and be heard analogously.
9. It appears from the stand taken before us that a prima
facie case has been made out for the reason that if the
competent authority has modified the mining plan and
reduced the statutory amount of the production, whether
in absence of any modification and/or clarification in
quantifying the dispatch, the same can withstand. We,
therefore, restrain the opposite party-authorities from
taking any coercive step till the next date of hearing. The
opposite party-authorities are directed to file counter
affidavit in opposition if they so like within the said
period.‖
36. During the subsistence of the aforesaid interim
protection, the Deputy Director of Mines issued yet
another demand notice dated 3rd October, 2025 raising a
demand of Rs. 2410,89,66,881/- for the fifth year of the
mining lease period, i.e., 23rd July, 2024 to 22nd July,
2025, again alleging shortfall in dispatch. The said
demand has been purportedly raised under Rule 12A of
the MCR, 2016 towards differential royalty, bid premium,
District Mineral Foundation contribution and National
Mineral Exploration Trust contribution, among other
statutory levies, for the alleged shortfall in dispatch for
the fifth MDPA year. Pertinently, this period coincided
with a certain period when the modified mining plan
continued to remain in force and further, the Final Mine
Closure Plan had already been approved with cessation of
mining operations with effect from 1st December, 2024 in
terms of such approved FMCP. The relevant portion of the
demand notice dated 3rd October, 2025 reveals as follows:-
―xxxx xxxx xxxxx
Sub:-Assessment for 5th MDPA year for the period from
23rd July-2024 to 22nd July-2025 towards shortfall in
dispatch of Chrome Ore in respect of your Sukinda
Chromite Block.
Sir,
Take a notice that a sum of Rs.2410,89,66,881 (Two
Thousand Four Hundred Ten Crore Eighty-Nine Lakh
Sixty-Six Thousand Eight Hundred Eight-One Only)
towards shortfall in dispatch of 13,05,987.090 MT of
Chrome Ore in respect of your Sukinda Chromite Block
as per 5th MDPA year assessment for the period from
23rd July-2024 to 22nd July-2025 is payable by you
(Copy of the calculation sheet enclosed). Hence you are
hereby directed to deposit the above amount along with
TCS as applicable at the earliest for further course of
action at this end.‖
37. Being aggrieved by the aforesaid demand notice
dated 3rd October, 2025, the Petitioners have filed the
present writ petition questioning constitutional validity of
Rule 12A of the MCR, 2016.
Counter affidavit filed by the opposite parties:
38. Opposite party nos.1, 3 and 4 in their counter
affidavit while challenging the maintainability of the writ
petition, stated that the impugned demand notice was
issued in consonance with the provisions of Rule 12A of
the MCR, 2016 read with the terms of the MDPA.
39. By virtue of Act 2 of 2020, Section 4B was
inserted into the MMDR Act empowering the Central
Government to prescribe conditions for sustained
production and dispatch, pursuant to which Rule 12A
was inserted into the MCR, 2016 vide G.S.R. 191(E) dated
20th March, 2020 and duly incorporated in the MDPA. By
virtue of Rule 9A of the MCR, 2016 read with Section 8B
of the MMDR Act, all statutory clearances of the previous
lessee stood vested in the petitioners to enable immediate
and sustained mining operations so as to enable the new
lessee for continuance of ming operation in public interest
and prevent any disruption of supply of raw material
(minerals) to the Industries.
40. Rule 12A(1) of the MCR, 2016 clearly stipulates
that the lessee during the first two years from the date of
execution of new lease, shall maintain such level of
production as to ensure minimum dispatch of eighty
percent of the average of the annual production of two
immediately preceding years on a pro rata basis. The
proviso to Rule 12A(2) inserted by G.S.R. 397(E) dated
10.06.2021 and effective from 01.07.2021 caste obligation
on the new lessee to ensure annual production beyond
two years form date of execution of new lease that at least
eighty percent of such annual production is dispatched in
the said year.
Submission by Dr. A.M. Singhvi, Senior Counsel on behalf
of the petitioners:
41. Heeding the submission of Dr. A.M. Singhvi,
learned Senior Advocate appearing for the petitioners in
W.P.(C) No.22431 of 2025 and W.P.(C) No.31035 of 2025.
42. There has been a paradigm shift from an earlier
regime of allotting the mines on the basis of an
application of the intending miners to an auction regime
introduced by the MMDR Amendment Act, 2015, which
creates a distinction between the mines, which were
operational, but have to be re-allotted under such auction
regime, which can be termed as brownfield leases and a
mine which is to be operationalized for the first time and
takes a characteristics of a greenfield mines.
43. By virtue of Section 8A(5) all the existing
captive mine leases were extended till 31st March, 2030.
On the other hand, sub-Section (6) whereof extended the
non-captive mine leases till 31st March, 2020.
44. Further amendment was brought by way of
Mineral Laws (Amendment) Act, 2020, which came into
effect from 13th March, 2020 introducing Section 4B and
Section 8B applicable to the category of non-captive
leases, which were extended till 31st March, 2020
providing an exhaustive provision relating to sustained
production of the minerals in the country and prescribing
the conditions for commencement and continuance of the
production by the holders of the mining leases, who
acquired rights, approvals and clearance under Section
8B.
45. Section 8B is relatable to the transfer of
statutory clearances and acquiring all valid rights,
approvals, clearances, licenses and the like, which were
vested with the previous lessee to be vested for a period of
two years into a new lessee subject to the conditions that
the new lessee shall apply and obtain all necessary rights,
approvals, clearances, licenses and the like within the
said period of two years from the date of the grant of new
lease.
46. Section 13(2)(aa) of the said Act empowers the
Central Government to make rules by imposing the
conditions as may be necessary for commencement and
continuance of the production by the holder of the mining
lease under Section 4B.
47. Apropos the power to make Rules, the Central
Government amended the existing MMDR Rules and
introduced Rule 12A to operate from 20th March, 2020,
which was further amended by inserting Rule 12A(1-A),
Rule 12A (1-B), Rule 12A (1-C) and the proviso to Rule
12A(2) to take effect from 1st July, 2021 thereby imposing
an imperative condition of compulsory dispatch of the
ores winned and/or extracted by the said lessee, which is
contrary to the spirit and purport of Sections 4B, 8B and
13(2)(aa) of the MMDR Act, which concerns the
production and not dispatch.
48. By such amendment under Rule 12A, the
imposition of notional compulsory dispatch/removal
would attract the civil consequences by imposing penalty
of royalty, DMF, NMET, bid premium irrespective of fact
whether the same is dispatched or not.
49. Section 9 of the Act encompasses the incidence
of imposition of royalty in respect of any mineral removed
or consumed from the leased area at a rate specified in
the Second Schedule to the said Act whereas Section 9B
and 9C postulates the payment to the District Mineral
Foundation and the National Mineral Exploration Trust
respectively.
50. It is a cardinal principle of law that the
delegated legislation cannot alter the core fabric of the
parent Sections nor can underpin the same.
51. It is well settled that the subordinate legislation
cannot create substantive rights, obligations and
disabilities not provided in the parent statute as held by
the apex Court in Kunj Behari Lal Butail v. State of
H.P.: (2000) 3 SCC 40 and Global Energy Limited v.
Central Electricity Regulatory Commission: (2009) 15
SCC 570.
52. In the event the subordinate legislation
transgress the boundaries of the substantive provisions
contained in the parent Act, it would be regarded as ultra
vires in view of the judgment rendered by the apex Court
in case of Indian Express Newspapers (Bombay) Private
Ltd. v. Union of India : (1985) 1 SCC 641 and State of
Tamil Nadu v. P. Krishnamurthy and others : (2006) 4
SCC 517.
53. The doctrine of ultra vires envisages the strict
adherence of rule making power as such power derives
from the parent statute and susceptible to be declared as
ultra vires, if it crosses the boundaries thereof and placed
reliance upon a recent judgment of this Court in Naresh
Chandra Agrawal v. Institute of Chartered
Accountants of India : (2024) 13 SCC 241.
54. The Section as mentioned above does not
mandate the compulsory or the notional dispatch, but the
introduction of Rule 12A (2) of the said Rules compels the
removal and/or dispatch which is beyond the rule making
power and, therefore, is ultra vires in that sense.
55. The conjoint meaningful reading of Sections 4B
and 8B would exposit that Rule 12A (1) has its limited
applicability to the initial two years, but the introduction
of Rule 12A (2) altogether abandons the anchor of two
years and purports to provide an open-ended and
uncircumscribed regime without any guidelines for the
3rd year to the 50th year of the lease.
56. The intention of the legislation can be
envisioned by incorporating the Rules relatable to the first
two years being in tune with the aforementioned Sections,
but incorporating the provisions to operate beyond two
years is in complete departure from the spirit of the
provisions contained in the parent Act and, therefore,
could be declared as ultra vires.
57. To buttress the contention and in order to
ascertain the purport and the intention of bringing a cap
of two years can be rationally visualized taking aid of a
judgment of the apex Court in Re: Special Reference
No.1 of 2012: (2012) 10 SCC 1 and Manohar Lal
Sharma v. Principal Secretary and others : (2014) 9
SCC 614 proposing to alter the regime of grant of mineral
leases by auction.
58. The rationale behind the introduction of the
auction regime primarily aims to achieve two goals; firstly,
by resetting and syncing button to get all the old lease
existing and legacy/ brownfield leases to restart on a
common date and secondly, to ensure certain transition
from the existing regime to new regime in relation to non-
captive mines, which was to start after five years from the
amendment having brought in 2015 so that it may not
invite the huge national wide disruption of minerals.
59. In the backdrop of the above, the introduction
of Rule 12A(2) to operate beyond the period from 3rd to
50th year offends the statutory scheme and beyond the
purview thereof.
60. The importance of a primacy and mandatory
efficacy of a mining plan specifying the phased and
planned manner of mineral production on a year-wise
basis is a vital lynchpin/foundational document of all the
mining regimes under the said parent Act and the Rules
framed thereunder.
61. Mining plan becomes operatives only after the
approval by the apex scientific, technical and statutory
Central Government regulator i.e. the Indian Bureau of
Mines, the existence whereof can be traced from Section
5(2)(b) and Rule 10 of the MCDR Rules, 2017.
62. Even though the sizable number of functions
and the activities in the realm of mining is delegated to
the State Government, but an important exception is
created conferring power upon the Central Government to
play an important and significant role in approving the
mining plan through the regulatory organ i.e. IBM.
63. The mining plan is basically approved by the
said regulatory body upon much analysis and scrutiny by
way of specification of the production limits in every year
to ensure scientific, systematic, non-exploitative and
phased sequence of extraction keeping a paramount
consideration of environmental, ecological and safety in
mind.
64. It is axiomatic that there cannot be any removal
or compulsory dispatch without winning or extracting the
mines and no sync can be conceptualized where the
mining plan approved by the IBM specifying the
production figures for different years and superimposition
of compulsory dispatch under Rule 12A of the said Rules.
In this regard, the same can be said to be ultra vires for
undermining the superior hierarchy of the statutory
mining plan.
65. Section 5 of the Act encompasses the
restriction on grant of prospecting license or mining leases
and the importance of having a mining plan duly
approved by the Central Government or the State
Government is highlighted for the development of the
mineral deposits in the area concerns.
66. Section 18 of the Act also contains the
exhaustive provisions relating to mineral development, not
only in relation to opening of new mines and the
regulation of the mining operations, but also excavation or
collection of the minerals from any mines.
67. Precisely for such provisions in the parent Act,
Rule 13 (2) of the MCR 2016 prohibits any mining
operations de hors the mining plan approved by any
officer of the IBM. Though Rule 13 of the MCR, 2016
postulates the tentative scheme of mining and annual
programme and plan for excavation from year to year for
five years, yet Rule 17 ordains the review and updatation
of the said mining plan at an interval of every five years.
The power is also conferred upon the holder of a mining
lease to seek modification in the approved plan keeping in
mind the business environment or facilitating increase in
production capacity or in the interest of safe and scientific
mining, conservation of minerals, for protection of
environment or for any other reasons specified in writing.
Even Rule 29 of the said Rules makes imperative by
imposing the conditions which includes operation of the
mine in accordance with the mining plan.
68. Even Rules 10, 11 and 35 of the MCDR, 2017
recognize the supremacy, the primacy and the importance
of a mining plan having a statutory flavour and, therefore,
any mining operation de hors the mining plan, is not
permissible and may attracts several civil consequences.
69. The language or the expressions used in Rule
12A conveys a laudable intention on its applicability to
one class of leases i.e. brownfield leases, which was
previously held by a lessee and allotted to a new lessee.
The same is governed by Section 4B and Section 8B read
with Section 13(2)(aa) of the MMDR Act, 1957 providing
the benefit of automatic vesting of statutory clearances
held by the previous lessee to ensure the immediate
sustainable operation of the mines for a period of two
years, but by incorporation of Rule 12A (2), it creates an
oppressive regime for such leases from 3rd year to 50th
year and, thus, treating unequal as equal. The stark
disparity between the greenfield or the virgin leases and
the brownfield leases can be reasonably gathered that
there is no obligation imposed under the Rule in case of
greenfield to compulsorily dispatch minerals for the
entirety of fifty years whereas the same is sought to be
introduced for the entire period of a lease under Rule
12A(2). Such unequal treatment is violative of traditional
anti-discrimination facet of Article 14 of the Constitution
of India and, therefore, cannot be sustained in law.
70. Dr. Singhvi, learned Senior Advocate arduously
submits that there has been a significant shift in the
evolution of applicability of the equality clause emanating
from Article 14 of the Constitution of India. He fervently
submits that in the formative years till mid-1970s, it
encapsulated only the anti-discrimination concept
prohibiting unequals to be treated equally and equals
unequally. Except the reasonable classification having
nexus to object sought to be achieved and relied upon a
judgment of the apex Court in Charanjit Lal Chowdhuri
v. Union of India: (1950) SCC 833 and Shri Ram
Krishna Dalmia v. Shri Justice S.R. Tendolkar: (1959)
SCR 279.
71. Subsequently, an evolution has taken place in
introducing the anti-arbitrariness facet in the judgment
delivered in case of E. P. Royappa v. State of Tamil
Nadu: (1974) 4 SCC 3 where Article 14 was held both as
a sword and a shield in any form of arbitrariness.
72. The anti-arbitrariness principles gained
momentum encompassing variety forms of arbitrariness
in diverse judgment viz. Maneka Gandhi v. Union of
India: (1978) 1 SCC 248; Ajay Hasia v. Khalid Mujib
Sehravardi: (1981) 1 SCC 722 and Ramana Dayaram
Shetty v. International Airport Authority of India:
(1979) 3 SCC 489.
73. According to Dr. Singhvi, there was a
considerable deliberation and/or discourse amongst
members of the constituent assembly on incorporation of
―substantive due process‖ in the Indian legal
system/laws, but in Maneka Gandhi (supra), it was
projected as ―procedural due process‖, but a conscious
decision was taken to introduce the expression ―except
according to procedure established by law‖ which was
considered in the abovementioned constitution Bench
decision as procedural due process.
74. Subsequently, in the era of late 1990's and
early 2000, there continues a divergence in the expanded
horizon of Article 14. In embracing the traditional
procedural due process doctrine to a substantive due
process doctrine where the apex Court in State of Tamil
Nadu v. Ananthi Ammal: (1995) 1 SCC 519 and Dr.
K.R. Lakshmanan v. State of Tamil Nadu: (1996) 2
SCC 226 held that every plenary legislation could be
invalidated on the ground of arbitrariness which is further
reiterated and restated in a decision rendered in State of
Andhra Pradesh v. McDowell & Co.: (1996) 3 SCC 709
and Khoday Distilleries Ltd. v. State of Karnataka:
(1996) 10 SCC 304.
75. Till the last decade, the invalidation of a
substantive legislation under Article 14 of the
Constitution of India continued to be the consistent view
appearing in Malpe Vishwanath Acharya v. State of
Maharashtra: (1998) 2 SCC 1 and Mardia Chemicals
Ltd. v. Union of India: (2004) 4 SCC 311. Yet a
significant departure on the touchstone of the evolution is
significantly made in the constitution Bench judgments
rendered in Shayara Bano v. Union of India: (2017) 9
SCC 1; Navtej Singh Johar v. Union of India: (2018)
10 SCC 1 and Joseph Shine v. Union of India: (2019) 3
SCC 39 by giving a go-bye to the fig leaf and the fiction of
mere procedural due process and introducing the
substantive due process in no unequivocal term that even
a plenary legislation could be invalidated on the ground of
a non-arbitrariness.
76. Dr. Singhvi succinctly argues that the genesis,
the prelude and the evolution received by Article 14 have
been articulately summarized in a recent decision of the
Supreme Court in Association for Democratic Reforms
(Electoral Bond Scheme) v. Union of India: (2024) 5
SCC 1.
77. Dr. Singhvi would submit that Rule 12A (2) of
the said Rules have to be analyzed and scrutinized on the
comprehensive evolution of applicability of Article 14 as
developed in an Indian judicial parlance and it would
evince therefrom that sub-Rule (2) of Rule 12A is not only
contrary to sub-Rule (1) thereof, but also Section 4B and
8B of the said Act. As there was no two year restriction
imposed therein nor contains any specific provision
relating to the period commencing from 3rd year to 50th
year. He further submits that though Rule 12A(1)
contains the expression ―average of annual production of
two immediately preceding years‖, but it is conspicuously
absent in sub-Rule (2) thereof, more particularly, in
relation to 3rd year to 50th year, which could further be
seen from the expressions ―annual production by the
previous lessee‖. The distinct and different expression
used in the aforesaid sub-Rules creates a confusion and
anomaly into its applicability as to whether the expression
―annual production of previous lessee‖ would mean the
annual production of the entire period of previous lease or
any specific period thereof.
78. There appears to be a disparity in working and
construction of the words and expressions used in sub-
Rule (2) of Rule 12A of the said Rules which at one place
creates an obligation to subsequently work out and
implement an annual production plan to ensure the full
exploitation of the mineral resources during the period of
the lease and simultaneously contains the expression
―annual production of previous lessee‖. Such anomaly is
further aggravated by introducing the proviso which
stipulates 80% of such annual production to be
dispatched which apparently does not contain any severe
and/or adverse consequences unlike sub-Rule (1) of Rule
12A of the said Rules. Such disparity was further
perceived by the regulatory authority i.e. IBM in a letter
dated 26th September, 2022 issued to the Central
Government and a letter dated 2nd April, 2024 issued by
the State Government to the Central Government which
would further corroborate the stand of the petitioners that
there is vagueness ambiguity in its workability and,
therefore, the Court may take into such aspect under the
principle of contemporanea expositio i.e. interpreting a
statue or any other document by reference to the
exposition it has received from contemporary authority.
The said principles have been recognized in a judgment
rendered in Desh Bandhu Gupta and Co. v. Delhi Stock
Exchange Association Limited: (1979) 4 SCC 565.
79. Dr. Singhvi further submits that if the provision
appears to be vague and violative of the Constitution of
India, there is no fetter on the part of the Court to apply
the doctrine of severability to strike down the said
provision and places reliance upon the judgment of the
apex Court rendered in case of State of Bombay v. F.N.
Balsara: (1951) SCC 860; State of Madhya Pradesh v.
Baldeo Prasad: (1961) 1 SCR 970; Delhi Transport
Corporation v. DTC Mazdoor Congress: (1991) Suppl.
(1) SCC 600; Cellular Operators Association of India
v. Telecom Regulatory Authority of India; (2016) 7
SCC 703; Hiralal P. Harsora v. Kusum Narottamdas
Harsora: (2016) 10 SCC 165 and R.M.D.
Chamarbaugwalla v. Union of India, (1957) SCR 930.
80. Dr. Singhvi succinctly submits that the vice of
disproportionality is the another facet of Article 14 of the
Constitution of India which can be noticeably seen from
the judgment rendered in Coimbatore District Central
Cooperative Bank v. Coimbatore District Central
Cooperative Bank Employees Association: (2007) 4
SCC 669 and Sheel Kumar Roy v. Secretary, Ministry
of Defence: (2007) 12 SCC 462.
81. Though the vice of disproportionality is
considered in relation to a substantive legislation, yet it
expanded its applicability to a subordinate legislation as
well. In Index Medical College, Hospital and Research
Centre v. State of Madhya Pradesh: (2023) 11 SCC
570 and Kerala State Beverages (M and M)
Corporation Limited v. P.P. Suresh: (2019) 9 SCC 710.
82. According to Dr. Singvi, the doctrine of
disproportionality or proportionality test has two
balancing factors i.e. a balancing test and the necessity
test, which can be seen from the judgment in Coimbatore
District Central Cooperative Bank (supra).
83. On the merit of the instant writ petition, Dr.
Singhvi submits that the manner in which the authorities
have construed Rule 12A of the said Rules and raised the
demand, is not only contrary to the purport of the said
provisions, but also brings an absurdity in its application
which can be visualized from the fact that the moment the
mining plan indicated the specified quantity of the ores to
be produced, the lessee cannot be compelled to dispatch
more than the said quantity.
84. He succinctly submits that in the present case,
the petitioner was permitted to produce only 0.6 MTPA
and in the event, the 80% of the said production is
mandatorily required to be dispatched, the obligation in
this regard is 0.48 MTPA. On the other hand, the State
Government is compelling the petitioner to dispatch 1.36
MTPA which is more than the permitted production. He,
thus, submits that the law cannot compel the
performance of an obligation which is impossible or
which, in effect, violates the statutory provisions as
fortified in the judgment rendered in Chandra Kishore
Jha v. Mahavir Prasad: (1999) 8 SCC 266; Mohammed
Gazi v. State of Madhya Pradesh:(2000) 4 SCC 342
and Managing Director, Army Welfare Housing
Organization v. Sumangal Services (P) Ltd.: (2004) 9
SCC 619.
85. Apart from the same, the impugned demand
notice is invalid and bad in law having violative principle
of natural justice as it was not proceeded with any show
cause notice nor an opportunity of personal hearing was
afforded to the petitioners.
86. Dr. Singhvi submits that denial of an
opportunity to respond to the show cause notice is a
violation of principles of natural justice as held in Canara
Bank v. Debasis Das: (2003) 4 SCC 557; Raghunath
Thakur v. State of Bihar: (1989) 1 SCC 229 and State
of Orissa v. Dr. (Miss) Binapani Dei;(1967) 2 SCR 625.
87. It is further submitted that if a notice is issued
with a premeditation and invites idle formality, it would
also come within the contour of violation of principles of
natural justice and placed reliance upon a judgment of
the Supreme Court in Oryx Fisheries Private Limited. v.
Union of India: (2010) 13 SCC 427 and Siemens Ltd. v.
State of Maharashtra: (2006) 12 SCC 33.
88. Dr. Singhvi, thus, concludes that not only Rule
12A(1) has its restricted applicability to the first two years
from the date of lease in respect of a brownfield leases,
but cannot be extended to a situation contemplated under
Rule 12A(2) of the said Rules, which applies in a different
situation.
89. Dr. Singhvi, thus, submits that not only Rule
12A is ultra vires to the Constitution provision as well as
the provisions contained in the parent Act, but also on the
ground of principles of proportionality and its workability
in a given situation.
Submissions by Mr. Gopal Subramanium, Senior Counsel on
behalf of the petitioners
90. Mr. Gopal Subramanium, learned Senior
Counsel appearing on behalf of the petitioner in W.P.(C)
No.5215 of 2025, at the very outset, submits that the
submissions advanced by Dr. Abhishek Manu Singhvi,
learned Senior Counsel on the issues relating to the
validity of Rule-12A of the Mineral (Other than Atomic and
Hydrocarbons Energy Minerals) Concession Rules, 2016
are also adopted by him and proceeded to make further
submissions on such aspects from different angles as
well.
91. In his fairness, he submits that the case
concerning the present petitioner would stand on the
stronger footing on the facts and the applicability of the
provisions without touching the vires of Rule-12A of the
said Rules yet in alternative, the petitioner seeks to
challenge the validity of the said provision.
92. Mr. Subramanium arduously submits that
before proceeding to address the issue on the vires of
Rule-12A of the said Rules, the prelude to the genesis of
various amendments having brought is required to be
recapitulated, which would clearly demonstrate that the
incorporation of the word ―dispatch‖ in Rule-12A of the
said Rules not only in excess of rule making powers but
also violates the core fabric of a substantive provision
brought by way of an amendment in the parent Act.
93. Mr. Subramanium fervently submits the objects
and reasons for bringing an amendment by virtue of the
Mineral Laws (Amendment) Act, 2020 which was enacted
on 13th March, 2020 would evince that the primary object
in bringing the amendments into the legislation is to
remove the hurdles created by obtaining several
clearances from the different Government organs causing
inordinate delay in commencing the mining operation and
subsequent productions in the minerals.
94. To overcome such difficulties, Section-8B of the
parent Act was inserted to facilitate and streamline the
uninterrupted and continuous production of the minerals
by the new lessee on the basis of an approval granted to
the earlier lessee for a period of two years. Mr.
Subramanium, learned Senior Counsel further submits
that a further amendment was made simultaneously by
inserting Section-4B of the Act with a broad head
―Conditions for efficiency in Production‖ with an intent to
maintain the sustained production of the minerals by the
holder of the mining leases having acquired the rights
approvals and clearances under Section-8B of the said
Act.
95. The rule making power was also inserted
through introduction of Section-13(2)(aa) of the Act
empowering the Central Government to prescribe the
conditions for commencement and the continuation of the
production by the holders of the mining leases under
Section-4B of the said Act. According to Mr.
Subramanium, the conjoint reading of the Statement of
Objects and Reasons and the newly inserted sections like
Sections-4B, 8B and 13(2)(aa) would exposit that the
intention was to ensure immediate commencement of the
production as well as the continued and sustained
production by the new lessee without any disruption,
which has no relation to an obligation of dispatch.
96. Rule-12A of the said Rules was inserted in
exercise of powers contained under Section-13(2)(aa) on
20th March, 2020 in pursuance of Section-4B which not
only postulates the maintenance of similar and identical
level of production on the basis of the average of annual
production of two (02) immediately preceding years on a
pro-rata basis but also to ensure minimum dispatch of
80% of the minimum dispatch. Mr. Subramanium
submits that once the words ―production‖ and ―dispatch‖
are distinctly defined in the Act, it has to be assigned the
same meaning and intended to be used as words having
different and distinctive meaning.
97. According to Mr. Subramanimum, Sections-4A
and 4B were introduced simultaneously by way of such
amendment Act wherein, the word ―dispatch‖ was
introduced in Section-4A, which was conspicuously
absent in Section-4B would lead to an inescapable
inference that the legislators were conscious of their
operations in a definite and defined fields and the
conscious omission of the word ―dispatch‖ and retaining
the word ―production‖ in Section-4B excludes the
mandate of dispatch and restricts its operation to
production only. In support of the contention that if the
words defined in the statute distinctly and differently, it
cannot be used interchangeably, the reliance is placed
upon a judgment of the apex Court in case of Indore
Development Authority v. Manoharlal and others;
reported in (2020) 8 SCC 129.
98. Mr. Subramanium would further submit that
the subordinate/delegated legislation, if travelled beyond
the purview of the parent Act or any of its provisions, the
same can be declared invalid and/or ultra vires in view of
the judgments of the apex Court rendered in Kerala SEB
v. Thomas Joseph; reported in (2023) 11 SCC 700 and
Naresh Chandra Agrawal v. ICAI; reported in (2024) 13
SCC 241. It is further submitted that the
subordinate/delegated legislation can be rendered invalid
and/or ultra vires not only on the sole ground of being
violative of the provisions contained in the parent Act but
also on manifest arbitrariness and/or unreasonableness
and placed reliance upon a judgment of the Supreme
Court rendered in case of State of Tamil Nadu v. P.
Krishnamurthy; reported in (2006) 4 SCC 517.
99. Mr. Subramanium, learned Senior Counsel
fervently submits that several provisions of the Rules are
also required to be seen which encompasses several facets
of the production and the dispatch and the rights of the
State or the Central Government in charging the amount
can be visualized to further the primary object of the said
legislation. According to him, Rules-38 and 42 of the said
Rules relate to the determination of a sale value from the
sale invoice and the computation of the average sale price
on the basis of which such revenue be determined by the
State. It further mandates the furnishing of a monthly
return in a prescribed form by reporting the dispatches by
giving the details of the purchasers along with the sale
value in order to ensure such sale having affected with the
genuine purchasers and right of pre-emption is also
provided under Rule-12(1)(i) of the said Rules upon the
Government.
100. It is just submitted that Rule-12A of the said
Rules is introduced by implementing the provisions
contained under Section-4B of the said Act in exercise of
the rule making power enshrined under Section-13(2)(aa)
and, therefore, introduction of any concept of dispatch is
de hors the said parent section. It not only contrary to the
said provision but also have no nexus to the object sought
to be achieved and comes within the ambit of
arbitrariness and/or unreasonableness.
101. On the aspect of merit of the instant writ
petition, Mr. Subramanium submits that the impugned
notice is not only invalid and/or bad in law but also
violative of the Rules contained in the said Rules.
According to him, neither sub-Rule (1) of Rule-12A nor the
Mine Development and/or Production Agreement (MDPA)
contains any provision of imposing any penalty for short
fall in minimum dispatch requirement, as the same is
primarily intended to apply to minimum production
requirement. Even, the Letter of Intent (LoI) dated 18th
March, 2020 issued in favour of the petitioner contains a
specific clause relating to minimum production
requirement equals to 80% of average of last two years'
production of previous lessee without any reference to any
minimum dispatch requirement.
102. Mr. Subramanium vehemently submits that the
minimum dispatch requirement was introduced for the
first time by bringing an amendment on 10th June, 2021
and, therefore, at best, it can be made applicable
prospectively and not retrospectively. According to him,
the lease was entered into on 29th June, 2020 and if the
first year is to be counted for which the demand is raised,
it expires well before the insertion of the amended
provisions and, therefore, the interpretation and/or
construction of the said provision at the behest of the
State is ex facie illegal and the demand cannot be
sustained. He further submits that there has been a
considerable delay at the behest of the State
instrumentalities in issuing the permission and/or license
and cannot be permitted to take advantage of his own
wrong and/or lapses by raising a demand on the notion of
minimum dispatch requirement and relied upon a
judgment of the Supreme Court in case of Municipal
Committee Katra v. Ashwani Kumar; reported in
(2024) SCC OnLine SC 840.
103. Lastly, he submits that the penalty or tax
cannot be imposed on a deemed notional basis when
there is no evidence of any taxable event and, therefore,
the demand is liable to be quashed and set aside.
Submissions by Mr. Rakesh Dwivedi, Senior Counsel on
behalf of the petitioners:
104. Mr. Rakesh Dwivedi, learned Senior Counsel
adopts and reiterates the submissions made by Dr.
Singhvi, learned Senior Counsel as well as Mr. Gopal
Subramaniam, learned Senior Counsel on the
constitutional validity of Rule 12A of the said Rules but
advanced the arguments in contending that its
applicability in the event, the same is found to be valid in
law, is in a defined sphere and not in the manner
contemplated by the State Government in issuing a
demand notice.
105. He fervently submits that the several provisions
of the Act and the Rules framed in exercise of rule-making
power provided under Section 13 thereof are required to
be harmoniously construed to subserve the rights and
liabilities of both the State and the lessee, which has been
crystallized under the mining lease and the Mine
Development and Production Agreement (MDPA) to
operate in tandem.
106. Mr. Dwivedi would further submit that while
inserting Section 8A in the said Act, all mining leases were
intended to be granted for fifty (50) years including the
leases which would expire as per the procedure specified
in the Act. He, therefore, submits that once the auction is
the basis for grant of the mining lease and the terms
being resettled, it is a mining lease which is put in auction
and, thus, the financial terms cannot be altered to surge
the liability upon the lessee or imposed new financial
penal terms.
107. The moment the bidder participated in the
tender and upon being declared successful has entered
into a mining lease and the MDPA creating bundle of
rights and liabilities of the contracting parties, the entire
mining operation is to be conducted under such
concluded contract and the terms relating to a fiscal
aspect cannot be changed unilaterally.
108. The introduction of Rules 12A (1-A), 12A (2)
and the proviso inserted thereto are unconstitutional if it
extended its horizon of applicability to the third years
onward, as it creates imposition of a huge financial
liability, which is expropriatory and confiscatory resulting
into a deprivation of property without any authority of
law, which is interdicted by Article 300 A of the
Constitution of India. Even the Rules subsequently
amended and/or enacted cannot impact the existing
concluded contract unilaterally by giving retrospective
operation is contrary to the judgment of the Supreme
Court rendered in case of Commissioner of Income
Tax-1, New Delhi v. Vatika Township Pvt. Ltd.;
reported in (2015) 1 SCC 1.
109. He fervently submits that the word "property"
appearing in Article 300 A of the Constitution of India
engulfed within itself all kinds of properties including of
monetary nature and placed reliance upon judgments of
the apex Court in K.T. Plantation Private Limited and
another v. State of Karnataka; reported in (2011) 9
SCC 1; Mohanlal Nanbhai Choksi v. State of Gujarat;
reported in (2010) 12 SCC 726, Laxman Lal v. State of
Rajasthan; reported in (2013) 3 SCC 764 and N.
Padmamma v. S. Rama Krishna Reddy, reported in
(2008) 15 SCC 517.
110. Mr. Dwivedi strongly submits by placing
reliance upon GSR 397 (E) dated 7th June, 2021 to
contend that Rule 12A came into existence by insertion
thereunder and at such relevant point of time Sub-Rules
(1-A), (1-B) and (1-C), and the proviso to Rule 12A (2) were
not part of it. According to him, the Mineral Laws
(Amendment) Act, 2020 which came into effect from 10th
January, 2020 which was notified in the Official Gazette
on 13th March, 2020 clearly stipulates that the said
amended Act shall come into force from the date of the
assent by the President and shall remain in force for a
period of sixty days therefrom and shall be deemed to
have been repealed after the expiry of the said period.
111. As per Mr. Dwivedi, Sections 4B and 8B were
inserted by way of such Amendment Act of 2020, which
has a self-life of sixty days and gets automatically
repealed on the expiry thereof, which would be evident
from the fact that by virtue of the Amendment Act, 2021
Section 8B was reintroduced but Section 4B was not
resurrected. As a corollary, the rule-making power under
Section 13 in relation to Section 4B cannot be resorted to
in carrying out an amendment in Rule 12A, nor will
enable the Central Government to make the said Rule
applicable to the past concluded contracts. He further
submits that even it is assumed for the sake of an
argument that Section 4B continues to exist, it does not
support the insertion of Sub-Rules (1-A), (1-B) and (1-C)
in Rule 12A of the said Rules, 2016.
112. According to him, the Amendment Act of
2021 does not contain any automatic expiry period,
unlike the Amendment Act of 2020 and such a
distinction is critical in understanding the exercise of
legislative power in bringing amendment in the
subordinate/delegated legislation. By Amendment Act of
2021, separate definitions of "dispatch and
production" were given and in Section 4A the expression
"Mining Operation" were substituted by the expressions
"production and dispatch" which are conspicuously
absent in Section 4B and Section 8B (2) of the said Act.
113. Mr. Dwivedi would submit that when the
legislation does not incorporate the word "dispatch" in
Section 4B and restrict its operation to production, it does
not lend any support in making Sub-Rules (1-A), (1-B)
and (1-C) in Rule 12A of Rules, 2016.
114. It is further submitted that even Rule 12A(1A)
has no correlation to the expectation of the State to earn
extra sum of money in the form of installment of bid
amount, which is dependent upon the production and
dispatch of the minerals. In absence of any production
and/or dispatch of the minerals, the recovery under the
several heads like royalty, DMF, NMET, Performance
Security and Bid Premium taking aid of Rule 12A(1A) is
misplaced and would uphold the intent and purpose of
the Act and would tantamount to the recovery of the
double payment of the royalty and under the different
heads by virtue of several sections subsequently inserted
by way of an amendment. Mr. Dwivedi submits that the
purported demand notices issued against the petitioner in
the above writ petition pertains to a 3rd and 4th year
respectively which is invalid and not sustainable in law by
invoking Rule 12A, which only enables to the State
Government to take appropriate action in accordance with
the MDPA. It is further submitted that at best it permits
an initiation of the proceeding, which in common parlance
mandates an opportunity of hearing to be given to the
lessee and the decision must be supported by reasons,
which in the instant proceeding has not been followed. He
further submits that Rule 12A(2) of the said Rules is
relatable to ensuring the production equal to or more than
the annual production of the previous lessee and
thereafter the auction is given to the lessee to work out
and implement an annual production plan, to ensure the
full expectation of the mineral resources during the period
of lease, which in fact has been resorted to by the
petitioners. He adversely submits that the mining lease
was granted for hematite iron ore containing equivalent
and/or more than 45% Fe, which if it is carried out would
exhaust the entire mineral resources within 8 to 9 years.
Subsequently, it was detected that there are considerable
quantity of a magnetite iron ore, which can only be used
after beneficiation and an application was made so as to
expand the life of the mines to 34 years and if the stand of
the State as manifested from the demand notice, is held
valid, it would impact the exchequer in depriving the State
of the bid amount for the rest of the periods. The
contention of the State that, the writ petitioner has not
willfully dispatched the iron ore having a grade of more
than 45% Fe but selectively sought permission to dispatch
less than 45% Fe grade ore is incorrect and not
sustainable.
115. The Indian Bureau of Mines (IBM) on the basis
of a letter issued by the petitioner has accepted the low
marketability of an iron ore pertaining 15-55 % Fe grade
in its letter dated 01.12.2023 while granting approval, it
can only be sold in the market after beneficiation. Thus, it
is evident that the construction of the provisions requires
the exploration of the minerals during the entire life span
of the lease despite of its exhaustion within a short span
and, therefore, the action of the State is not sustainable.
Mr. Dwivedi, learned Senior Counsel would further submit
that the imposition of an absolute no fault liability within
Rule 12A (1A) of the Rules 2016 cannot be imported as
there being a variety of circumstances beyond the control
of the lessee in securing the dispatch and therefore, any
such interpretation, which runs contrary to the spirit and
purpose of the Act is to be eschewed. In support of his
contention that in absence of any reasons behind the
imposition of absolute no fault fiscal penalty on account
of a shortfall in dispatch, he relies upon the judgments of
the Supreme Court in Citizenship Act, 1955 Section 6-
A, In Re reported in (2024) 16 SCC 105; Shayara Bano
Vs. Union of India, reported in (2017) 9 SCC 1; Joseph
Shine Vs. Union of India, reported in (2019) 3 SCC 39
and Cellular Operators Association of India Vs. TRAI,
reported in (2016) 7 SCC 703. The stand of the State on
a concept of hoarding in failing to dispatch the required
quantity of minerals, a distinction must be drawn between
the lessees, who are resorting to hoarding and a lessee
defaulted in dispatching the required quantity of mineral,
there is no reason for treating unequals equally, which
appears to have been done in the instant case and learned
Senior Counsel places reliance upon the judgment of the
apex Court in Kunnathat Thatehunni Moopil Nair Vs.
State of Kerala, reported in AIR 1961 SC 552 and
Rustom Cavasjee Cooper (Banks Nationalisation) Vs.
Union of India, reported in (1970) 1 SCC 248. According
to Mr. Dwivedi, learned Senior Counsel, Rule 12A(1A) to
(1C) does not vest any discretion in the mining authority
to determine whether the non-dispatch due to hoarding
for the reasons beyond the control of the lessee and,
therefore, is manifestly arbitrary. He thus, submits that in
the event, there is no reasonable nexus to create a
classification within the class, such classification is
arbitrary and, therefore, required to be interfered with. He
further submits that there is an apparent and manifest
distinction between sub-rule (1A) and sub-rule (2) of Rule
12A and have its applicability in a different scenario and
creating any broadness in its operation by issuing a
demand notice is impermissible. He further submits that
the mining plan is a foundational document to regulate
the mining operation upon approval by the IBM under
Rule 13(1) of the MCR, 2016. Such being the creature of
an Act, any violation would attract the consequences as
provided in the relevant provisions and, therefore,
controls and governs the working of the lease. Mr. Dwivedi
further took a plea that the moment the production and
dispatch are differently defined, it has to be given such
meaning and in the event the language in the definition is
plain/simple and does not lead to any absurdity, the
literal interpretation should be adopted. According to Mr.
Dwivedi, the marginal note of Section 4B clearly spelt out
the purpose of its insertion in expressive words ―condition
for efficiency in production‖ and, therefore, its
applicability is restricted to a production and not
dispatch, which appears to have been resorted to by the
State, while issuing the demand notice.
116. Mr. Dwivedi, learned Senior Counsel submits
that the facts discerned from the record would reveal that
the petitioner has acted strictly within the purview of the
law in approaching the IBM in securing the sustainable
production to live up with the life span of the lease and,
therefore, the demand is per se illegal, arbitrary and not
sustainable in law.
Submission of learned Attorney General of India
117. Learned Attorney General of India, at the very
outset, concededly submits that since the vires of Rule
12A of the Rules, 2016 framed by the Central Government
in exercise of rule making power emanating from the
MMDR Act is challenged in the batch of the instant writ
petitions wherein the demand notices issued by the State
Government are also assailed, he would be restricting his
arguments on the validity, legality and competence of the
Central Government to incorporate the said Rules as the
learned Advocate General of the State will be arguing on
the merit of the said demand notices. He fervently
submits the Court must borne in mind that the legislation
is made by the Parliament for a greater public interest
aiming to achieve the avowed purpose ensuring the
development and regulating the mines in the public
interest as the mineral wealth is a wealth of a nation
creating a larger impact on a social and economic
development.
118. According to him, mere extracting or winning
the minerals alone cannot achieve the public interest
occurring in Entry 54 of List -I and Section 2 of the said
Act, if the dispatch and the sale of the minerals are
segregated therefrom. He, thus, submits that in the event
the public purpose is pitted against the individual gain,
the economic activities is intended to serve the former,
which is further fortified by the judgments of the apex
Court in State of Tamil Nadu v. Hind Stone: (1981) 2
SCC 205 and State of Gujarat v. Mirzapur Moti
Kureshi: (2005) 8 SCC 534. Even Article 39(b) of the
Constitution obligated the State to distribute its resources
the manmade and natural to sub-serve the common good
and there is no fetter on the part of the Government to
legislate by making a regulation, which is one of the facets
of a distribution. The entire scheme of the MMDR Act and
the amendments having brought from time to time to
meet the changing demands in the economic realities
having two primary objectives i.e., sustainable
development of minerals to ensure intergenerational
equity and sustained development of minerals without
any disruption to downstream industries, whose
development and growth is dependent on these minerals.
119. Learned Attorney General further submits that
the Mineral Laws (Amendment) Act, 2020 was passed by
the Parliament keeping such broad aspect and inserted
Sections 4B, 8B and 13(2)(aa) into the said MMDR Act to
ensure the continuity in supply and not mere extraction
which is hoarded or stockpiled.
120. He arduously submits that the contention of
the petitioners in isolating the aforesaid inserted
provision, more particularly, Section 13(2)(aa) to be
restricted to commencement and continuance for
production is misplaced and should be read conjointly
and purposively with the phrase ―maintaining sustained
production of minerals in the country‖ appearing in
Section 4B of the Act. Any attempt to interpret the
expressions in isolation to the others, more particularly,
the production requirement only would be opposed to the
legislative intent of prescribing dispatch, which is a
necessary incident of continuation for production.
According to him, by a subsequent amendment Act, 2021,
the words ‗production' and ‗dispatch' were introduced
where the production is not restricted to an activity of
winning minerals, but also removal from the leased area.
He, thus, arduously submits that the word ‗production' is
to be read and understood in the context and the
legislative purpose by using the tool of the purposive and
functional interpretation. Sub-Rule (1) of Rule 12A of the
Rules, 2016 imposes an obligation upon the lessee to
maintain the minimum level of production and to make
dispatch of 80% of the average of the annual production
of two immediately preceding years and the contention in
this regard that there is a possibility of lack of requisite
demand is misplaced and not acceptable.
121. Learned Attorney General relies upon empirical
data relating to iron ore production between the year
2000-01 and 2024-25, which would reveal that State of
Odisha contributes more than half of the total production
and plays a vital and important role in growth potential in
creating an infrastructure.
122. Learned Attorney General arduously submits
that the expressions ―mining operations‖ appearing in
Section 4B of the Act and ―production and dispatch‖
appearing in Section 4A of the said Act may be a technical
expressions per se to achieve the primary object of
sustained mineral development and, therefore, carries
penumbral meaning of making available minerals from
several end uses as a mere winning of the mineral i.e. the
production alone is purposeless unless the both are used
complementing each other and synonyms under the
penumbra doctrine. As per the learned Attorney General,
it is not a legislatively required to use the expressed words
of the expression related to the set of activities, but may
be construed so within the penumbra of mining
operations which engulfed both the production and
dispatch.
123. The doctrine of penumbra and/or applying the
penumbral tool while ascribing the meaning of the
expressions or the words, Schlesinger v. Wisconsin: 270
US 230 (1926) advocated the applicability of a penumbra
in interpreting and construing the provision of the law in
going beyond the outline of its object to secure the same.
The same is further reiterated and restated in a
subsequent decision rendered in Olmstead v. United
States: 277 US 438 (1928) and Commissioner of
Internal Revenue v. Ickelheimer: 132 F.2d 660 (2nd
Circuit 1943). Learned Attorney General, thus, submits
that both the production and the dispatch cannot be
segregated from the hub of a sustained mining operation
and, therefore, are interlinked to each other. The
argument advanced by the respective petitioners in
segregating the incident of production with the dispatch is
conceptually and logically unacceptable and shall invite
the hoarding of the mineral wealth at once whin for self-
determined profit ends. He, thus, submits that Section
4A, 4B and Rule 12A are intricately connected to achieve
the common purpose of sustained mining operation and
any attempt to dissect their operation will frustrate the
very object and the purpose of its incorporation.
124. The contention of the petitioners that Rule 12A
(1) invites a double payment of the royalty and the other
components is not correct as the amount so charged is
not on an actual, but a penalty under Section 4B read
with Section 13(2)(aa) and 13(2)(i) of the MCR, 2016.
Section 4B and 8B are not limited to two years after the
amendment Act, 2021 as it provides for vesting of all
clearances approval of the previous lessee into new lessee
for entire period of 50 years to maintain a sustained
production of minerals in the country, which can further
be seen from Section 5(2)(b) mandating a duly approved
mining plan before grant of mining lease. The harmonious
and cumulative effect of a conjoint reading of Section 4B
and Section 5 mandates the lessee to prepare the mining
plan in such a manner that it would made the
requirement of Section 4B i.e. sustained production of
mineral. Similarly, Rule 12A (2) postulates two
requirements for the new lessee i.e., the annual
production by the new lessee should be equal or more
than the annual production by the previous lessee and
working out to implement an annual production plan so
that the mineral resources are fully exploited during the
period of lease.
125. Learned Attorney General submits that Rule
12A does not create any substantive obligation beyond
those prescribed in Section 4B and 8B of the MMDR Act,
and, therefore, cannot be rendered ultra vires to the
provisions of the parent Act. According to him, the
expression ―sustained production of minerals‖ engulfed all
those activities and operations that may fall within its
penumbra that those integrally connected activities serve
the public interest of the country. The said Rule is
enacted to secure a guarantee the sustained production of
the minerals in the manner and method by which the
purpose of Section 4B can be fully realized. Thus, the said
Rule is enacted to ensure that within the duration of the
lease when adequate annual production plan shall be put
in a position which would imbibe well organized
production and dispatch in the effective manner towards
maintaining sustained production of minerals and
precisely for such reasons, the MDPA is an important
instrument of law necessary in a contractual framework
and securing conformity with Section 4B and Rule 12A.
126. Learned Attorney General dispels the
contention of the respective petitioners that the mining
plan is a vital statutory document having its impact on
governance of the legal relationship between the lessee
and the Government. It is submitted that the mining plan
is only a matter of technical and all operational related
guidelines.
127. According to learned Attorney General, the
mining plan is a condition precedent for execution of a
mining lease and, therefore, cannot override amend or
prevail over the binding terms and conditions of the
Mineral Development and Production Agreement (MDPA)
executed under the Act. The MDPA is a statutory
agreement flowing from the different provisions of the Act
and the Rules and, thus, after its execution, it becomes a
primary source of rights and obligations governing the
parties. Apart from the same, the mining plan is
susceptible to be reviewed and/or modified and/or revised
under Rule 17 of the MCDR, 2017 and, therefore, does
not create a financial or the performance obligations. It is
only the MDPA which is recognized as a statutory contract
and, therefore, should be complied with in letter and
spirit. The moment the MDPA is executed, it requires the
compliance of the mining plan as well as the several
provisions of the Rules and, therefore, after entering into
an agreement, the challenge to the vires of Rule 12A of the
Rules, 2016 is not sustainable. In the event, Rule 12A of
the Rules, 2016 is declared ultra vires to the parent Act, it
would not only invite an anomalous situation, but shall
have a larger impact in the mining sector and, therefore,
the Court should show a circumspect in declaring the said
provision ultra vires.
128. The contention of Mr. Dwivedi that the Mineral
Laws (Amendment) Act, 2020 was a temporary legislation
having duration of 60 days and, therefore, after expiration
of the said period, the provisions sought to be inserted
through such amendment Act cease to exist is
unacceptable. According to learned Attorney General,
once the amendment is carried out in the parent Act, the
purpose of the amendment Act is achieved and there is no
need for retention of the said amending Act in the statute
book and placed reliance upon a judgment of the Calcutta
High Court in Khuda Bux v. Manager: AIR 1954 Cal
484 and a judgment of the apex Court in Jethanand
Betab v. State of Delhi: AIR 1960 SC 89. In this regard,
Section 6A of the General Clauses Act can also be pressed
in action and to be read in this context and, therefore, the
contention of the petitioners that all such amendments
sought to be brought through a temporary amended
legislation is legally not sustainable.
129. Learned Attorney General lastly submits that
there is no disparity and/or incongruity in Rule 12A of the
said Rules, which is in tune with the provisions of the
parent Act, and, therefore, cannot be declared ultra vires.
Submission of learned Advocate General
130. Learned Advocate General while adopting the
arguments advanced by learned Attorney General,
submits that in order to ascertain the legality, validity and
constitutionality of any provision in the substantive law,
the source of power in this regard is required to be
recapitulated by taking reference to the judgment
rendered by the apex Court in Jacob M. Puthuparambil
v. Kerala Water Authority, reported in (1991) 1 SCC
28, wherein it is held that Directive Principles are not
enforceable by Court, but they are nevertheless the
fundamental principles in the governance of the country.
131. Learned Advocate General refers to Article 38 of
the Constitution, which mandates the State to promotes
the welfare of the people by securing a social order in
which, justice-social, economic and political-shall inform
all the institutions of the national life to minimize the
inequalities in income, status, facilities and opportunities.
Article 39 (b) of the Constitution makes imperative of the
State to ensure that the ownership and control of the
material resources are distributed to subserve the
common good. He thus submitted that the public interest
being paramount guiding factor in relation to exploration
of the mineral resources, it engulf within itself the
generation of revenue in the form or royalty, dead rent
and other statutory reliefs to promote the social and
economic welfare. The source of power to enact law in this
regard emanates from Entry 54, List-I of the Seventh
Schedule of the Constitution of India to legislate on the
regulation of the mines and mineral development to
subserve the larger public interest and MMDR Act, 1957
is to testament to not only the obligations imposed under
the Directive Principles, but also by invocation of such
power to make legislation from the Seventh Schedule. The
public interest doctrine underpinning the said MMDR Act
synonymies with the collective welfare of the people which
would be evident from the observations made in the
judgment rendered by the Supreme Court in Mineral
Area Development Authority reported in (2024) 10 SCC
1, relied on by the learned Advocate General. The said
notion can be reasonably gathered from Section 2 of the
MMDR Act declaring that the said Act is for the larger
public interest and the Central Government assumes
power to regulate the mines in pursuit of development of
minerals and, therefore, cannot be perceived as a mere
formality. The amendments were brought into the Act to
strengthen and streamline the mining activities or
operation for systematic constraints in the mineral
production and avoidance of the hoarding or stockpiling.
By virtue of Act 16 of 2021, which came into effect from
28.03.2021, the words ―production‖ and ―dispatch‖ have
been succinctly and or explicitly defined and the language
employed therein have to be read in juxtaposition with the
other and not in isolation thereof. The definition of
production encompasses the dispatch and, therefore, any
attempt to segregate the ―dispatch‖ from the ―production‖
would undermine the primary object and purpose of the
Act and, therefore, have to be read together.
132. Section 4A of the Act introduced subsequently
by way of an amendment substituted the expression
―Production and Dispatch‖ in place of ―Mining Operation‖,
makes an imperative obligation not only to ensure
production thereunder, but also the dispatch of the
minerals for smooth and continuous availability of the
natural resources in the relevant sector. Section 4B of the
Act which was introduced simultaneously with Section 4A
is a repository of putting conditions for efficiency in
production encompassing the entire continuum from the
stage of winning or extraction of minerals to an eventual
dispatch. Taking the source of powers to make rules,
Rule 12A of MCR, 2016 was inserted to stabilize the
mineral development and conservation through optimum
utilization of mineral resources and sustainable mining
operation by ensuring supply of ores in the market. Any
conservative and narrow interpretation given to the word
―production‖ in Section 4B of the Act and Rule 12A of the
MCR Rules, 2016 would disturb the fabric of public
interest. Section 8B of the Act which primarily deals with
the transfer of statutory clearances was envisaged for a
deemed transfer of the existing lincences and the permits
held by the previous lessees into the new lessees for
uninterrupted supply of the minerals in the market and
the continuous flow of the government revenue. Although
Section 9 of the Act deals with the royalties required to be
paid in respect of the minerals either removed or
consumed, but if a narrow construction is given to the
word ―production‖, it will have a larger cascading effect
and, therefore, the dispatch becomes an integral part of
the entire mining operation.
133. Learned Advocate General thus submits that
the word ―production‖ has to be given a purposive
meaning without isolating and/or segregating from the
word ―dispatch‖ in relation to a context and the scheme of
the Act and the object sought to be achieved. To buttress
the aforesaid submission, reliance is placed to the
judgment of the Supreme Court in case of Poppatlal
Shah v. State of Madras, reported in (1953) 1 SCC 492
and S. Surjit Singh Kalra v. Union of India, reported in
(1991) 1 SCC 87.
134. He fervently submits that Mineral Concession
Rules, 2016 was framed by the Central Government
placing the source of power from Section 13 of MMDR Act
and the subsequent amendment having brought by
inserting Rule 12A is in tune with the spirit and the
purport of the said rule making power and, therefore,
cannot be said to be ultra vires to the provision of the
parent Act. The said rule casts a statutory obligation on
the new mining lessee to maintain such level of
production so as to ensure the minimum dispatch of 80%
of the average annual production of the two immediately
preceding years on a pro-rata basis with further
consequences that in the event any default has
occasioned, appropriate action in accordance with MDPA
shall be initiated. Sub-Rule (1-A) of Rule 12A, which was
inserted with effect from 10.06.2021 concerns the non-
achievement of the minimum production and dispatch
requirement and in the event of shortfall in dispatch, the
lessee is obligated not only to pay the amount in terms of
Rule 13 of Mineral Auction Rules, 2015, but an additional
amount as provided in the said sub Rule. Sub-Rule (1-B)
also confers power upon the State Government to
terminate the lease after giving a reasonable opportunity
of hearing. Sub-Rule (2) of Rule 12A of MCR, 2016 makes
it imperative on the new lessee not only to workout and
implement the annual production plan, but also maintain
the same equal to or more than the annual production by
the previous lessee. He thus submits that it is manifest
from the said provision that the same is not restricted or
dependent upon sub Rule 1 of Rule 12A, but
compliments the same and, therefore, the attempt to
segregate the same is not desirable. He arduously submits
that MDPA, which is defined in Rule 2 (c) of Mineral
Auction Rules, 2015 is a statutory requirement in relation
to commencement of mining operation and, therefore, the
terms and conditions embodied at the time of floating the
tender can be clearly discerned therefrom and after
understood the import and the purport thereof, it is not
open to the said lessee to lay any claim thereupon or to
wriggle out from it. The said MDPA engulfs the entire
statutory frame work governing the mining operation
including the relevant laws and amendments having
brought from time to time and, therefore, the expression
applicable law appearing therefrom has to be understood
in such perspective.
135. On the plea of violation of the principle of
natural justice in raising a demand, learned Advocate
General submits that a show cause was issued indicating
the shortfall in dispatch under sub Rule 1 of Rule 12A of
MCR, 2016, which was duly replied to and an opportunity
of hearing was afforded and, thereafter the final order was
passed. According to him, the aforesaid exercise would
indicate that there has been complete adherence to the
principle of natural justice which cannot be put into a
straightjacket formula as held by the Supreme Court in
the case of Board of Directors, Himachal Pradesh
Transport Corporation v. K.C. Rahi, reported in (2008)
11 SCC 502.
136. He thus submits that not only the challenge to
the validity and/or legality of Rule 12A is unsustainable,
but the demand notices issued by the State Government
cannot be invalidated on the violation or misconstruction
of provisions of law or violation of the principle of natural
justice.
Discussion and Analysis
137. The other Senior Counsel appearing in the
batch of writ petitions, which were heard analogously,
replicated the submissions advanced by the learned
Senior Counsel, as succinctly adumbrated hereinbefore
and, therefore, recording of their separate submissions
would simply augment the volume of the judgment and,
therefore, to avoid the prolixity of repetition, we treat such
arguments to have been advanced by them in determining
the identical issues raised in the said respective writ
petitions. The argument is advanced by the respective
Senior Counsel to reach a common destination through
different paths and, therefore, narration of the facts of
each case unless necessary and inevitable are not jotted
down with exactitude as the decision that would be taken,
would govern their respective writ petitions and will touch
upon the reliefs claimed thereunder.
138. Prelude to the promulgation of the Act and the
Rules framed thereunder and the object and purpose
underlined the same needs recapitulation before
embarking upon the nuances in relation to a
construction, applicability and above all legality under
various tools recognized in the Indian Legal
Jurisprudence.
139. It is no gain saying that the mineral is a
national resource given by the mother earth and its
responsible utilization for the mankind in a regulated
manner, is a core obligation not only of the Government
but each of the individual. The Government is the
custodian as natural resources is the asset of the country
and creates an obligation on the Government to make law
for its regulation, management and utilization under the
robust structure emanating under Entry 54 of the Union
List (List I) and Entry 23 of the State List (List II) of the 7 th
Schedule of the Constitution of India. The natural
resources in the form of minerals are primarily used as
raw materials in different sectors and largely impact both
the economic and other developments of the country and
while adopting a policy to ensure sustainable regulatory
environment, the laws have to be made to regulate and
control the exploration of such minerals. The Mines and
Minerals (Development and Regulation) Act, 1957 is one of
the major steps taken by the Central Government to
control and regulate the mines and the development of the
minerals in the public interest under Section 2 of the said
Act. The public interest being the paramount
consideration as the mineral is the wealth of the nation,
should be understood in a larger perspective and should
not be squeezed in a limited contour and in the event of
any conflict between the individual interest and the public
interest, the interpretative tools to be applied, must sub-
serve the larger public interest over the individual
interest. Such notions can be reasonably gathered from a
declaration made under Section 2 of the said Act and,
therefore, it is no gain-saying that while interpreting
various provisions of the Act, the larger public interest
must be kept in mind. In this regard, the reference can be
made to a judgment of the Supreme Court in the case of
Hind Stones(supra), wherein it is held:
―6. Rivers, Forests, Minerals and such other resources
constitute a nation's natural wealth. These resources are
not to be frittered away and exhausted by any one
generation. Every generation owes a duty to all
succeeding generations to develop and conserve the
natural resources of the nation in the best possible way.
It is in the interest of mankind. It is in the interest of the
nation. It is recognised by Parliament. Parliament has
declared that it is expedient in the public interest that
the Union should take under its control the regulation of
mines and the development of minerals. It has enacted
the Mines and Minerals (Regulation and Development)
Act, 1957. We have already referred to its salient
provisions. Section 18, we have noticed, casts a special
duty on the Central Government to take necessary steps
for the conservation and development of minerals in
India. Section 17 authorises the Central Government
itself to undertake prospecting or mining operations in
any area not already held under any prospecting licence
or mining lease. Section 4-A empowers the State
Government on the request of the Central Government, in
the case of minerals other than minor minerals, to
prematurely terminate existing mining leases and grant
fresh leases in favour of a Government company or
corporation owned or controlled by government, if it is
expedient in the interest of regulation of mines and
mineral development to do so. In the case of minor
minerals, the State Government is similarly empowered,
after consultation with the Central Government. The
public interest which induced Parliament to make the
declaration contained in Section 2 of the Mines and
Minerals (Regulation and Development) Act, 1957, has
naturally to be the paramount consideration in all
matters concerning the regulation of mines and the
development of minerals. Parliament's policy is clearly
discernible from the provisions of the Act. It is the
conservation and the prudent and discriminating
exploitation of minerals, with a view to secure maximum
benefit to the community. There are clear signposts to
lead and guide the subordinate legislating authority in
the matter of the making of rules. Viewed in the light
shed by the other provisions of the Act, particularly
Sections 4-A, 17 and 18, it cannot be said that the rule-
making authority under Section 15 has exceeded its
powers in banning leases for quarrying black granite in
favour of private parties and in stipulating that the State
Government themselves may engage in quarrying black
granite or grant leases for quarrying black granite in
favour of any corporation wholly owned by the State
Government. To view such a rule made by the
subordinate legislating body as a rule made to benefit
itself merely because the State Government happens to
be the subordinate legislating body, is, but, to take too
narrow a view of the functions of that body. The reasons
that prompted the State Government to make Rule 8-C
were explained at great length in the common counter-
affidavit filed on behalf of the State Government before
the High Court. We find no good reason for not accepting
the statements made in the counter-affidavit. It was said
there:
―I submit that the leases for black granite are
governed by the Tamil Nadu Minor Mineral
Concession Rules, 1959 under which originally there
was scope for auctioning of quarries of minor
minerals. In amendment issued in the GO dated
December 6, 1972, under Rule 8-A it was indicated
that the Collector may sanction leases in favour of
applicants, who are having an industrial programme
to utilise the minerals in their own industry. This
provision is applicable to all minerals including black
granites. However, it was found that there were
several cases where lessees who obtained the black
granite areas on lease by auction were not quarrying
in a systematic and planned manner taking into
consideration the welfare and safety measures of the
workers as well as the conservation of minerals. Even
after the introduction of the amendment under Rule 8-
A in most cases, the industry set up was of a flimsy
nature more to circumvent the rule than to really
introduce industry including mechanised cutting and
polishing. The lessees were also interested only in
obtaining the maximum profit in the shortest period of
time without taking into consideration the proper
mining and development of the mineral. There was
also considerable wastage of new materials due to
wasteful mining. Therefore, Government issued a
further amendment as Rule 8-B wherein the
competent authority to grant leases in respect of the
quarrying black granite was transferred from the
Collector to the State Government level. They also
prescribed a standard form and an application fee to
be paid with the application. The amendment states
that the Director of Industries and Commerce shall
technically scrutinise the industrial programme given
by the applicant while forwarding the same to
government. At the same time, in the GO issued along
with amendment, it was stated that if any of the
State Government organisations like Tamil Nadu
Small Industries Corporation Limited, Tamil Nadu
Small Industries Development Corporation Limited,
Tamil Nadu Industrial Development Corporation
Limited is interested to obtain a lease for black
granite in a particular area, preference will be given
to Government undertaking over other private
entrepreneurs for granting the leases applied for by
them. However, in spite of these amendments to
regulate the grant of mining lease, there were a large
number of lessees (exceeding 140), who were
engaged in mining without proper technical guidance
or safety measures etc., for the workers. These
lessees made a strong representation to the then
Government in 1976 expressing that though they had
given assurance to set up industries to use the
granites, they were not able to do so for various
reasons. They also represented that they should be
allowed to export the raw blocks of black granites.
Therefore, government had issued a Government
Order dated February 15, 1977 relating to relaxation
of the ban of export of raw blocks and provision for
setting up a polishing or finishing unit was not made
a prerequisite. They have also stated that the terms
and conditions for the existing leases would remain
in force. However, on an examination of the
performance of the lessees over the past several
years, it has been found that excepting in a very few
cases, none of the lessees had set up proper
industries or developed systematic mining of the
quarries. The exports continue to be mainly on the
raw block granite materials and not cut and polished
slabs. A large number of the leases were not
operating either due to speculation or lack of finance
from the lessees. Therefore, government decided that
there should be no further grant of lease to private
entrepreneurs for black granite. This was mentioned
in GOMs No. 1312 industries dated December 2,
1977.‖
We are satisfied that Rule 8-C was made in bona fide
exercise of the rule-making power of the State
Government and not in its misuse to advance its own
self-interest. We however guard ourselves against being
understood that we have accepted the position that
making a rule which is perfectly in order is to be
considered a misuse of the rule-making power, if it
advances the interest of a State, which really means the
people of the State.‖
140. The larger public interest being the substratum
of the exercise of legislative powers has an edge over the
individual interests; and in the event of any conflict arises
between the two, the Court must strike a balance without
undermining the larger public interest as held in
Mirzapur Moti Kureshi's judgment (supra) by the
Supreme Court:
"176. xxxx The court should guard zealously
fundamental rights guaranteed to the citizens of the
society, but at the same time strike a balance between
the fundamental rights and the larger interests of the
society. But when such right clashes with the larger
interest of the country it must yield to the latter.
Therefore, wherever any enactment is made for
advancement of directive principles and it runs counter
to the fundamental rights an attempt should be made to
harmonise the same if it promotes a larger public
interest.‖
141. Apart from the same, Article 39(B) of the
Constitution of India ordains in its scheme and
philosophy the distribution of natural resources by the
sovereign either manmade or natural, thus, making the
regulatory framework through enactment in exercise of
the legislative powers to sub-serve the common goal for
social and economic development becomes the primary
aspect before the Court is entrusted with the task of
considering any provisions of the substantive Act or the
subordinate/delegated legislation framed thereunder to be
declared ultra vires.
142. The major significant initiative taken by the
Central Government in bringing an amendment in the
said Act by introducing the Mines and Minerals
(Development and Regulation) Bill, 2011, and extensive
consultations preceded the finalization of the draft of the
said Bill by the Standing Committee and a report was
prepared in the month of May, 2013. However, the Bill
could not be passed because of the dissolution of the
15thLokSabha and, thus, elapsed. The major paradigm
shift envisioned in the said Bill was to introduce the
auction regime instead of allotting the mines on the basis
of an application, which lack transparency. The Bill
further envisioned to enhance the share of the value of the
mineral resources and the empirical data so collected
revealed a sharp decline in production affecting the major
sectors which depend upon the same and utilize as raw
materials. Ultimately, the Mines and Minerals
(Development and Regulation) Amendment Act, 2015 was
enacted after receiving the assent of the President of India
on 26th March, 2015 and duly notified in the Gazette of
India on 27th March, 2015 which came into force on and
from 12th January, 2015.
143. Apart from the other, Section 8A was
introduced containing a clause that after expiry of the
lease period, such lease shall be put in auction and sub-
section (5) thereof, extended all captive mining leases till
31st March, 2030 whereas sub-section (6) of Section 8A
extended other leases than the captive leases to be
extended till 31st March, 2020. By introduction of Section
9B, the State was obligated to establish a trust to be
called as the ―District Mineral Foundation Trust‖ which
would be a non-profitable body and the Central
Government to establish National Mineral Exploration
Trust which every mining lease holder shall make
contribution therein, which would utilize in terms of the
purport and the scheme of the aforesaid provisions.
144. Despite being a significant social reform in the
mining sector having brought in introducing the auction
regime by the amendment Act of 2015 and the
incorporation of several Sections by virtue of an
amendment Act of 2020, the Mines and Minerals
(Development and Regulation) Amendment Bill, 2021 was
drafted to eradicate the distinction between the captive
and the merchant mines and allowing the existing captive
mines including the captive coal mines to sell 50% of the
minerals in order to increase in production and supply of
the minerals.
145. It further aimed to introduce the payment of
the additional amount to the State Government at the
time of granting the mining lease to the Government
companies to create a level playing field between the
auctioned mines and the mines of Government companies
apart from the utilization of the funds of the trust so
created.
146. The Mines and Minerals (Development and
Regulation) Act, 2021 after receiving the assent of the
President of India, was published in the Gazette of India
on 28th March, 2021. The significance of the said
amendment for the present purpose can be reasonably
gathered, which in our opinion, is relevant in the present
context, is the introduction of definition provisions
defining the ―production‖ and ―dispatch‖ in Section 3 of
the parent Act and removal of the expression ―Mining
Operation‖ and the insertion of the words ―Production and
Dispatch‖ in Section 4A of the said Act. The said
amendment further introduced provisos in Section 4A of
the Act in relation to an extension of period for production
and dispatch and consequences of lapsing the mining
lease in the event of failure to make production and
dispatch within the time so specified.
147. Section 8B of the principle Act, which was
earlier inserted, was substituted with an intent to
continue all valid rights, approvals, clearances, licenses
and the like to continue after the expiration or
termination of the lease and automatic transfer of such
rights into a successful bidder selected through auction.
148. It would be noteworthy that by virtue of the
amendment having brought in 2020 Section 13 (2) (aa)
was introduced empowering the Central Government to
make Rules by imposing conditions as may be necessary
for commencement and continuation of the production by
the holders of the mining leases under Section 4B of the
said Act.
149. Rule 12A of the Rules, 2016 being central to
the issues involved in the instant writ petitions were
introduced on 20th March, 2020 after the introduction of
Section 4B in the parent Act which was further amended
on 10th June, 2021 with addition of Sub-Rules (1-A), (1-B)
and (1-C) and the proviso to Section 12A (2) to have its
effect from 1st July, 2021.
150. To have clarity and in pursuit of determining
the respective contentions raised in the instant writ
petitions, the relevant provisions of the Act and the Rules
are quoted as under:
―4A. Termination of prospecting licences,
exploration licences or mining leases.―
(1) Where the Central Government, after consultation
with the State Government, is of opinion that it is
expedient in the interest of regulation of mines and
mineral development, preservation of natural
environment, control of floods, prevention of pollution, or
to avoid danger to public health or communications or to
ensure safety of buildings, monuments or other
structures or for conservation of mineral resources or for
maintaining safety in the mines or for such other
purposes, as the Central Government may deem fit, it
may request the State Government to make a premature
termination of a prospecting licence or exploration licence
or mining lease in respect of any mineral other than a
minor mineral in any area or part thereof, and, on receipt
of such request, the State Government shall make an
order making a premature termination of such
prospecting licence or exploration licence or mining lease
with respect to the area or any part thereof.
(2) Where the State Government is of opinion that it is
expedient in the interest of regulation of mines and
mineral development, preservation of natural
environment, control of floods, prevention of pollution or
to avoid danger to public health or communications or to
ensure safety of buildings, monuments or other
structures or for such other purposes, as the State
Government may deem fit, it may, by an order, in respect
of any minor mineral, make premature termination of
prospecting licence or mining lease with respect to the
area or any part thereof covered by such licence or lease.
(3) No order making a premature termination of a
prospecting licence or exploration licence or mining lease
shall be, made except after giving the holder of the
licence or lease a reasonable opportunity of being heard.
(4) Where the holder of a mining lease fails to undertake
production and dispatch for a period of two years after
the date of execution of the lease or, having commenced
production and dispatch, has discontinued the same for
a period of two years, the lease shall lapse on the expiry
of the period of two years from the date of execution of
the lease or, as the case may be, discontinuance of the
production and dispatch:
Provided that the State Government may, on an
application made by the holder of such lease before it
lapses and on being satisfied that it shall not be possible
for the holder of the lease to undertake production and
dispatch or to continue such production and dispatch for
reasons beyond his control, make an order, within a
period of three months from the date of receipt of such
application, to extend the period of two years by a
further period not exceeding one year and such
extension shall not be granted for more than once during
the entire period of lease: Provided further that such
lease shall lapse on failure to undertake production and
dispatch or having commenced the production and
dispatch fails to continue the same before the end of
such extended period.
4B. Conditions for efficiency in production.--
Notwithstanding anything contained in section 4A, the
Central Government may, in the interest of maintaining
sustained production of minerals in the country,
prescribe such conditions as may be necessary for
commencement and continuation of production by the
holders of mining leases who have acquired rights,
approvals, clearances and the like under section 8B.
5. Restrictions on the grant of mineral
concession.―
(1) A State Government shall not grant a mineral
concession to any person unless such person―
(a) is an Indian national, or company as defined in
clause (20) of section 2 of the Companies Act, 2013 (18
of 2013); and
(b) satisfies such conditions as may be prescribed:
Provided that in respect of any mineral specified in Part
A and Part B of the First Schedule, no mineral
concession shall be granted except with the previous
approval of the Central Government.
Provided further that the previous approval of the
Central Government shall not be required for grant of
mineral concession in respect of the minerals specified in
Part A of the First Schedule, where,--
(i) an allocation order has been issued by the Central
Government under section 11A; or
(ii) a notification of reservation of area has been issued
by the Central Government or the State Government
under sub-section (1A) or sub-section (2) of section 17A;
or
(iii) a vesting order or an allotment order has been issued
by the Central Government under the provisions of the
Coal Mines (Special Provisions) Act, 2015 (11 of 2015).
PROVIDED ALSO that the composite licence or mining
lease shall not be granted for an area to any person
other than the Government, Government company or
corporation, in respect of any minerals specified in Part
B of the First Schedule where the grade of such mineral
in such area is equal to or above such threshold value as
may be notified by the Central Government.
Explanation.―For the purposes of this sub-section, a
person shall be deemed to be an Indian national,―
(a) in the case of a firm or other association of
individuals, only if all the members of the firm or
members of the association are citizens of India; and
(b) in the case of an individual, only if he is a citizen of
India.
(2) No mining lease shall be granted by the State
Government unless it is satisfied that.―
(a) there is evidence to show the existence of mineral
contents in the area for which the application for a
mining lease has been made in accordance with such
parameters as may be prescribed for this purpose by the
Central Government;
(b) there is a mining plan duly approved by the Central
Government, or by the State Government, in respect of
such category of mines as may be specified by the
Central Government, for the development of mineral
deposits in the area concerned:]
Provided that a mining lease may be granted upon the
filing of a mining plan in accordance with a system
established by the State Government for preparation,
certification, and monitoring of such plan, with the
approval of the Central Government.
xxx xxx xxx
8B. Provisions for period and transfer of statutory
clearances.―
(1) Notwithstanding anything contained in this Act or
any other law for the time being in force, all valid rights,
approvals, clearances, licences and the like granted to a
lessee in respect of a mine (other than those granted
under the provisions of the Atomic Energy Act, 1962 (33
of 1962), and the rules made thereunder) shall continue
to be valid even after expiry or termination of lease and
such rights, approvals, clearances, licences and the like
shall be transferred to, and vested; subject to the
conditions provided under such laws; in the successful
bidder of the mining lease selected through auction
under this Act:
Provided that where on the expiry of such lease period,
mining lease has not been executed pursuant to an
auction under provisions of sub-section (4) of section 8A,
or lease executed pursuant to such auction has been
terminated within a period of one year from such
auction, the State Government may, with the previous
approval of the Central Government, grant lease to a
Government company or corporation for a period not
exceeding ten years or till selection of new lessee
through auction, whichever is earlier and such
Government company or corporation shall be deemed to
have acquired all valid rights, approvals, clearances,
licences and the like vested with the previous lessee:
Provided further that the provisions of sub-section (1) of
section 6 shall not apply where such mining lease is
granted to a Government company or corporation under
the first proviso:
Provided also that in case of atomic minerals having
grade equal to or above the threshold value, all valid
rights, approvals, clearances, licences and the like in
respect of expired or terminated mining leases shall be
deemed to have been transferred to, and vested in the
Government company or corporation that has been
subsequently granted the mining lease for the said mine.
(2) Notwithstanding anything contained in any other law
for the time being in force, it shall be lawful for the new
lessee to continue mining operations on the land till
expiry or termination of mining lease granted to it, in
which mining operations were being carried out by the
previous lessee.
9. Royalties in respect of mining leases.―
(1) The holder of a mining lease granted before the
commencement of this Act shall, notwithstanding
anything contained in the instrument of lease or in any
law in force at such commencement, pay royalty in
respect of any mineral removed or consumed by him or
by his agent, manager, employee, contractor or sub-
lessee from the leased area after such commencement,
at the rate for the time being specified in the Second
Schedule in respect of that mineral.
(2) The holder of a mining lease granted on or after the
commencement of this Act shall pay royalty in respect of
any [mineral removed or consumed by him or by his
agent, manager, employee, contractor or sub-lessee] from
the leased area at the rate for the time being specified in
the Second Schedule in respect of that mineral.
(2A) The holder of a mining lease, whether granted
before or after the commencement of the Mines and
Minerals (Regulation and Development) Amendment Act,
1972 (56 of 1972), shall not be liable to pay any royalty
in respect of any coal consumed by a workman engaged
in a colliery provided that such consumption by the
workman does not exceed one-third of a tonne per
month.
(3) The Central Government may, by notification in the
Official Gazette, amend the Second Schedule so as to
enhance or reduce the rate at which royalty shall be
payable in respect of any mineral with effect from such
date as may be specified in the notification:
PROVIDED that the Central Government shall not
enhance the rate of royalty in respect of any mineral
more than once during any period of three years.
xxx xxx xxx
9B. District Mineral Foundation.―
(1) In any district affected by mining related operations,
the State Government shall, by notification, establish a
trust, as a non-profit body, to be called the District
Mineral Foundation.
(2) The object of the District Mineral Foundation shall be
to work for the interest and benefit of persons, and areas
affected by mining related operations in such manner as
may be prescribed by the State Government.
(3) The composition and functions of the District Mineral
Foundation shall be such as may be prescribed by the
State Government.
Provided that the Central Government may give
directions regarding composition and utilisation of fund
by the District Mineral Foundation.
(4) The State Government while making rules under sub-
sections (2) and (3) shall be guided by the provisions
contained in article 244 read with Fifth and Sixth
Schedules to the Constitution relating to administration
of the Scheduled Areas and Tribal Areas and the
Provisions of the Panchayats (Extension to the Scheduled
Areas) Act, 1996 (40 of 1996), and the Scheduled Tribes
and Other Traditional Forest Dwellers (Recognition of
Forest Rights) Act, 2006 (2 of 2007).
(5) The holder of a mining lease or a composite licence
granted on or after the date of commencement of the
Mines and Minerals (Development and Regulation)
Amendment Act, 2015 other than those covered under
the provisions of sub-section (2) of section 10A, shall, in
addition to the royalty, pay to the District Mineral
Foundation of the district in which the mining operations
are carried on, an amount which is equivalent to such
percentage of the royalty paid in terms of the Second
Schedule, not exceeding one-third of such royalty, as
may be prescribed by the Central Government.
(6) The holder of a mining lease granted before the date
of commencement of the Mines and Minerals
(Development and Regulation) Amendment Act, 2015
[and those covered under the provisions of sub-section
(2) of section 10A], shall, in addition to the royalty, pay
to the District Mineral Foundation of the district in which
the mining operations are carried on, an amount not
exceeding the royalty paid in terms of the Second
Schedule in such manner and subject to the
categorisation of the mining leases and the amounts
payable by the various categories of lease holders, as
may be prescribed by the Central Government.
9C. National Mineral Exploration and Development
Trust.―
(1) The Central Government shall, by notification,
establish a Trust, as a non-profit autonomous body, to
be called the National Mineral Exploration and
Development Trust.
(2) The object of the Trust shall be to use the funds
accrued to the Trust within India, including the offshore
areas, and outside India for the purposes of regional and
detailed exploration and development of mines and
minerals in such manner as may be prescribed by the
Central Government.
(3) The composition and functions of the Trust shall be
such as may be prescribed by the Central Government.
(4) The holder of a mining lease or a composite licence
shall pay to the Trust, a sum equivalent to [three per
cent.] of the royalty paid in terms of the Second
Schedule, in such manner as may be prescribed by the
Central Government.
(5) The entities specified and notified under sub-section
(1) of section 4 shall be eligible for funding under the
National Mineral Exploration and Development Trust.
13***(2)**
(aa) the conditions as may be necessary for
commencement and continuation of production by the
holders of mining leases, under section 4B;
Rule:-12A of MCR:- Additional conditions for
commencement and continuation of production as
per section 4B of the Act.-(1) Notwithstanding
anything contained in these rules, during the first two
years from the date of execution of new lease, the holder
of mining lease, to whom the order of vesting of rights,
approvals, clearances, licences and the like have been
issued under section 8B of the Act, shall maintain such
level of production so as to ensure minimum dispatch of
eighty percent of the average of the annual production of
two immediately preceding years on pro-rata basis,
failing which appropriate actions in accordance with the
Mine Development and Production Agreement shall be
initiated.
(1A) In case of shortfall in dispatch from the minimum
dispatch required under sub-rule (1), which shall be
assessed on a quarterly basis, the lessee shall, in
addition to the amounts payable under rule 13 of the
Mineral (Auction) Rules, 2015 (hereinafter referred to as
the Auction Rules) for the actual dispatch, also pay to the
State Government, an amount equal to the difference
between the following, namely:--
(a) the amounts payable under rule 13 of the Auction
Rules for the quantity equal to the minimum dispatch
required under sub-rule (1) in the said quarter on the
basis of the weighted average of grade of minerals
dispatched during the quarter; and
(b) the amounts paid under rule 13 of the Auction Rules
for the quantity actually dispatched in the said quarter:
Provided that a reconciliation of the amounts paid under
rule 13 of the Auction Rules shall be done at the end of
the year and on such reconciliation, if it is found that the
lessee has dispatched more than or equal to the
minimum dispatch required under sub-rule (1) for that
year as a whole, then any amount paid by lessee for the
shortfall in dispatch in any quarter or quarters of that
year shall be adjusted with the amounts to be paid for
the last quarter of that year:
Provided further that the amount payable under this
sub-rule shall be in addition to any appropriation of
performance security for non-compliance of any
minimum production or dispatch requirement under the
Mine Development and Production Agreement.
(1B) Where the lessee does not maintain minimum
dispatch required under sub-rule (1) for the year as a
whole, the State Government may terminate such lease
after giving the lessee a reasonable opportunity of being
heard.
(1C) In cases where the mining lease is executed on or
before the commencement of the Mineral (Other than
Atomic and Hydro Carbons Energy Minerals) Concession
(Third Amendment) Rules, 2021, the provisions of sub-
rule (1A) and (1B) shall apply after a period on one year
from the date of such execution of mining lease or the
date of commencement of the Mineral (Other than Atomic
and Hydro Carbons Energy Minerals) Concession (Third
Amendment) Rules, 2021, whichever is later.
(2) The new lessee shall ensure that the annual
production beyond two years from date of execution of
new lease is equal to or more than the annual production
by the previous lessee and shall subsequently workout
and implement an annual production plan to ensure that
the mineral resources are fully exploited during the
period of the lease, failing which appropriate actions in
accordance with the Mine Development and Production
Agreement shall be initiated.
Provided that the new lessee shall also ensure that at
least eighty percent of such annual production is
dispatched in the said year.‖
151. Such being the prelude and the genesis of
enacting legislation for development and regulation of the
mines and the minerals, amendment have been brought
from time to time. The main thrust put uniformly by all
respective Senior Counsels as to whether Rule 12A is
contrary to any provision of the parent Act or an
inconsistent therewith and, therefore, exposed itself liable
to be declared ultra vires.
152. Before we proceed further nuances of law
relating to the invalidation of a subordinate/delegated
legislation is required to be recapitalized.
153. It admits no ambiguity in fundamental
principles that the promulgation of the Rules must
eminent from the conferment of powers to make rules and
the primary object is to carry out the purpose of the said
Act within the contour of such rule making power.
154. The enlightening observation rendered in case
of Kunj Bihari Lal Butail (supra) can be borne in mind
wherein it is held in unequivocal terms that the
subordinate/delegated legislation cannot create a new
right, obligation and/or disability, which is not
contemplated in the parent Act in the following:
―13. It is very common for the legislature to provide for a
general rule-making power to carry out the purpose of
the Act. When such a power is given, it may be
permissible to find out the object of the enactment and
then see if the rules framed satisfy the test of having
been so framed as to fall within the scope of such
general power confirmed. If the rule-making power is not
expressed in such a usual general form then it shall
have to be seen if the rules made are protected by the
limits prescribed by the parent act. (See: Sant Saran
Lal v. Parsuram Sahu [AIR 1966 SC 1852 : (1966) 1
SCR 335] , AIR para 19.) From the provisions of the Act
we cannot spell out any legislative intent delegating
expressly, or by necessary implication, the power to
enact any prohibition on transfer of land. We are also in
agreement with the submission of Shri Anil Divan that
by placing complete prohibition on transfer of land
subservient to tea estates no purpose sought to be
achieved by the Act is advanced and so also such
prohibition cannot be sustained. Land forming part of a
tea estate including land subservient to a tea plantation
have been placed beyond the ken of the Act. Such land
is not to be taken in account either for calculating the
area of surplus land or for calculating the area of land
which a person may retain as falling within the ceiling
limit. We fail to understand how a restriction on transfer
of such land is going to carry out any purpose of the Act.
We are fortified in taking such view by the Constitution
Bench decision of this Court in Bhim Singhji v. Union of
India [(1981) 1 SCC 166] whereby sub-section (1) of
Section 27 of the Urban Land (Ceiling and Regulation)
Act, 1976 was struck down as invalid insofar as it
imposed a restriction on transfer of any urban or
urbanisable land with a building or a portion only of
such building which was within the ceiling area. The
provision impugned therein imposed a restriction on
transactions by way of sale, mortgage, gift or lease of
vacant land or buildings for a period exceeding ten
years, or otherwise for a period of ten years from the
date of the commencement of the Act even though such
vacant land, with or without a building thereon, fell
within the ceiling limits. The Constitution Bench held (by
majority) that such property will be transferable without
the constraints mentioned in sub-section (1) of Section 27
of the said Act. Their Lordships opined that the right to
carry on a business guaranteed under Article 19(1)(g) of
the Constitution carried with it the right not to carry on
business. It logically followed, as a necessary corollary,
that the right to acquire, hold and dispose of property
guaranteed to citizens under Article 19(1)(f) carried with
it the right not to hold any property. It is difficult to
appreciate how a citizen could be compelled to own
property against his will though he wanted to alienate it
and the land being within the ceiling limits was outside
the purview of Section 3 of the Act and that being so the
person owning the land was not governed by any of the
provisions of the Act. Reverting back to the case at hand,
the learned counsel for the State of Himachal Pradesh
has not been able to satisfy us as to how such a
prohibition as is imposed by the impugned amendment
in the Rules helps in achieving the object of the Act.‖
(emphasis supplied)
155. The principles of law as laid down in the above
noted report is reiterated in a subsequent judgment
rendered in Global Energy Limited and another (supra)
in the following:
―25. It is now a well-settled principle of law that the
rule-making power ―for carrying out the purpose of the
Act‖ is a general delegation. Such a general delegation
may not be held to be laying down any guidelines. Thus,
by reason of such a provision alone, the regulation-
making power cannot be exercised so as to bring into
existence substantive rights or obligations or disabilities
which are not contemplated in terms of the provisions of
the said Act.
26. We may, in this connection refer to a decision of this
Court in Kunj Behari Lal Butail v. State of H.P. [(2000)
3 SCC 40] wherein a three-Judge Bench of this Court
held as under: (SCC p. 47, para 14)
―14. We are also of the opinion that a delegated power to
legislate by making rules ‗for carrying out the purposes
of the Act' is a general delegation without laying down
any guidelines; it cannot be so exercised as to bring into
existence substantive rights or obligations or disabilities
not contemplated by the provisions of the Act itself.‖
[See also State of Kerala v. Unni [(2007) 2 SCC 365]
(SCC paras 32 to 37) and A.P. Electricity Regulatory
Commission v. R.V.K. Energy (P) Ltd. [(2008) 17 SCC
769 : (2008) 9 Scale 529] ]
27. The power of the regulation-making authority, thus,
must be interpreted keeping in view the provisions of the
Act. The Act is silent as regards conditions for grant of
licence. It does not lay down any pre-qualifications
therefor. Provisions for imposition of general conditions of
licence or conditions laying down the pre-qualifications
therefor and/or the conditions/qualifications for grant or
revocation of licence, in absence of such a clear provision
may be held to be laying down guidelines by necessary
implication providing for conditions/qualifications for
grant of licence also.
xxx xxx xxx
44. A disqualifying statute, in our opinion, must be
definite and not uncertain; it should not be ambiguous or
vague. Requisite guidelines in respect thereof should be
laid down under the statute itself. It is well settled that
essential legislative function cannot be delegated.
46. It is now a well-settled principle of law that
essential legislative functions cannot be delegated. The
delegatee must be furnished with adequate guidelines
so that arbitrariness is eschewed. On what basis and in
particular, keeping in view the possible loss of reputation
and consequently the business of an applicant for grant
of licence would suffer, it was obligatory on the part of
Parliament to lay down requisite guidelines therefor.
47. The factors enumerated in the Explanation
appended to clause (f) of Regulation 6-A are unlimited.
For determining the question as to whether the applicant
is a fit and proper person, a large number of factors may
be taken into consideration. It for all intent and purport
would be more than the technical requirement, capital
adequacy requirement and creditworthiness for being an
―electricity trader‖ as envisaged under Section 52 of the
Act. An applicant usually would be a new applicant. It is
possible that there had been no dealings by and
between the applicant and the licensor. Each one of the
criteria laid down in the Explanation refers to
creditworthiness.‖
156. It is a cardinal principle of law that the
subordinate legislation is subservient to the parent Act
and traces its source from the rule making power
therefrom and cannot either underpin the provisions of
the parent Act or stand contrary to the spirit of the parent
Act. The primary object is to carry out the object and the
purpose of the parent Act and the provisions contained
therein to make it more efficient, workable and meets the
requirements of the legislative intent.
157. It has been held in Indian Express
Newspapers (Bombay) Pvt. Ltd. (supra) that a distinction
is manifest when the validity, legality and the
constitutionality of the parent Act and of the subordinate
legislation. The immunity enjoined by the parent Act may
not be same with the subordinate legislation and one of
the cardinal principles in relation to a subordinate
legislation is whether it contravenes any of the provision
of the parent Act in the following:
―75. A piece of subordinate legislation does not carry
the same degree of immunity which is enjoyed by a
statute passed by a competent Legislature. Subordinate
legislation may be questioned on any of the grounds on
which plenary legislation is questioned. In addition it
may also be questioned on the ground that it does not
conform to the statute under which it is made. It may
further be questioned on the ground that it is contrary to
some other statute. That is because subordinate
legislation must yield to plenary legislation. It may also
be questioned on the ground that it is unreasonable,
unreasonable not in the sense of not being reasonable,
but in the sense that it is manifestly arbitrary. In
England, the Judges would say ―Parliament never
intended authority to make such rules. They are
unreasonable and ultra vires‖. The present position of
law bearing on the above point is stated by Diplock, L.J.
in Mixnam's Properties Ltd. v. Chertsey Urban District
Council [(1964) 1 QB 214 : (1963) 2 All ER 787 : (1963)
3 WLR 38 (CA)] thus:
―The various special grounds on which subordinate
legislation has sometimes been said to be void ...
can, I think, today be properly regarded as being
particular applications of the general rule that
subordinate legislation, to be valid, must be shown
to be within the powers conferred by the statute.
Thus, the kind of unreasonableness which
invalidates a bye-law is not the antonym of
‗reasonableness' in the sense in which that
expression is used in the common law, but such
manifest arbitrariness, injustice or partiality that a
court would say: ‗Parliament never intended to give
authority to make such rules; they are
unreasonable and ultra vires'...if the courts can
declare subordinate legislation to be invalid for
‗uncertainty' as distinct from unenforceable...this
must be because Parliament is to be presumed not
to have intended to authorise the subordinate
legislative authority to make changes in the existing
law which are uncertain.‖
158. The first and foremost principle in relation to
constitutionality and validity of the subordinate legislation
is to uphold the same unless it fails to meet the requisite
parameters. Ordinarily, the validity and the
constitutionality of the subordinate legislation is tested on
the anvil of lack of the legislative competence, violation of
fundamental rights, violative of any constitutional
provisions and failure to adhere to the object and purpose
of the parent Act or its provisions and transgressing the
boundaries of the rule making powers but can also be
challenged on the ground of manifest, arbitrariness
and/or unreasonableness as held in P. Krishnamurthy
and others (supra);
―15. There is a presumption in favour of
constitutionality or validity of a subordinate legislation
and the burden is upon him who attacks it to show that
it is invalid. It is also well recognised that a subordinate
legislation can be challenged under any of the following
grounds:
(a) Lack of legislative competence to make the
subordinate legislation.
(b) Violation of fundamental rights guaranteed under the
Constitution of India.
(c) Violation of any provision of the Constitution of India.
(d) Failure to conform to the statute under which it is
made or exceeding the limits of authority conferred by
the enabling Act.
(e) Repugnancy to the laws of the land, that is, any
enactment.
(f) Manifest arbitrariness/unreasonableness (to an
extent where the court might well say that the legislature
never intended to give authority to make such rules).‖
159. In Naresh Chandra Agrawal (supra) the apex
Court restated the principles relating to the validity and
constitutionality of the subordinate legislation and held
that, in the event, the subordinate legislation extends the
scope and the general operation of the enactment as the
same is always regarded as ancillary thereto, the same
may be a ground to invalidate such subordinate
legislation in the following:
"37. From reference to the precedents discussed above
and taking an overall view of the instant matter, we
proceed to distil and summarise the following legal
principles that may be relevant in adjudicating cases
where subordinate legislation are challenged on the
ground of being ―ultra vires‖ the parent Act:
37.1. The doctrine of ultra vires envisages that a rule-
making body must function within the purview of the
rule-making authority, conferred on it by the parent Act.
As the body making Rules or Regulations has no
inherent power of its own to make rules, but derives
such power only from the statute, it must necessarily
function within the purview of the statute. Delegated
legislation should not travel beyond the purview of the
parent Act.
37.2. Ultra vires may arise in several ways; there may
be simple excess of power over what is conferred by the
parent Act; delegated legislation may be inconsistent
with the provisions of the parent Act; there may be non-
compliance with the procedural requirement as laid
down in the parent Act. It is the function of the courts to
keep all authorities within the confines of the law by
supplying the doctrine of ultra vires.
37.3. If a rule is challenged as being ultra vires, on the
ground that it exceeds the power conferred by the parent
Act, the Court must, firstly, determine and consider the
source of power which is relatable to the rule. Secondly,
it must determine the meaning of the subordinate
legislation itself and finally, it must decide whether the
subordinate legislation is consistent with and within the
scope of the power delegated.
37.4. Delegated rule-making power in statutes
generally follows a standardised pattern. A broad
section grants authority with phrases like ―to carry out
the provisions‖ or ―to carry out the purposes‖. Another
sub-section specifies areas for delegation, often using
language like ―without prejudice to the generality of the
foregoing power‖. In determining if the impugned rule is
intra vires/ultra vires the scope of delegated power,
courts have applied the ―generality vs. enumeration‖
principle.
37.5. The ―generality vs. enumeration‖ principle lays
down that, where a statute confers particular
powers without prejudice to the generality of a general
power already conferred, the particular powers are only
illustrative of the general power, and do not in any way
restrict the general power. In that sense, even if the
impugned rule does not fall within the enumerated
heads, that by itself will not determine if the rule is ultra
vires/intra vires. It must be further examined if the
impugned rule can be upheld by reference to the scope of
the general power.
37.6. The delegated power to legislate by making rules
―for carrying out the purposes of the Act‖ is a general
delegation, without laying down any guidelines as such.
When such a power is given, it may be permissible to
find out the object of the enactment and then see if the
rules framed satisfy the Act of having been so framed as
to fall within the scope of such general power confirmed.
37.7. However, it must be remembered that such power
delegated by an enactment does not enable the
authority, by rules/regulations, to extend the scope or
general operation of the enactment but is strictly
ancillary. It will authorise the provision of subsidiary
means of carrying into effect what is enacted in the
statute itself and will cover what is incidental to the
execution of its specific provision. In that sense, the
general power cannot be so exercised as to bring into
existence substantive rights or obligations or disabilities
not contemplated by the provisions of the Act itself.
37.8. If the rule-making power is not expressed in such
a usual general form but are specifically enumerated,
then it shall have to be seen if the rules made are
protected by the limits prescribed by the parent Act.‖
160. The judgment rendered in General Officer
Commanding-in-Chief v. Dr. Subhash Chandra Yadav,
reported in (1988) 2 SCC 351 laid down two principles
pertaining to a Rule to be framed in exercise of the rule
making power contained in the parent Act; firstly, it must
conform to the provisions of the statute under which it is
framed; secondly, it must also come within the scope and
purview of the rule making power of the authority framing
the rules.
161. It is axiomatic that while promulgating the rule
on the basis of conferment of a rule making power in the
substantive Act, the authority must travel within the
circumference of the rule-making authority and not to
transgress such boundaries nor to make a rule
inconsistent therewith or repugnant thereto, as held in
Additional District Magistrate (Rev.) Delhi Admn v.
Siri Ram, reported in (2000) 5 SCC 451, Sukhdev
Singh v. Bhagatram Sardar Singh Raghuvanshi,
reported in (1975) 1 SCC 421, State of Karnataka v. H.
Ganesh Kamath, reported in (1983) 2 SCC 402.
162. In St. Johns Teachers Training Institute v.
Regional Director, National Council for Teacher
Education, reported in (2003) 3 SCC 321, the apex
Court restated well-nigh principles that the power to make
a subordinate legislation flows from the provisions
contained in the enabling Act and must confirm to the
limits of the authority so conferred. It is further held that
the rules cannot supplant the provision of the enabling
Act but supplement the same and such delegation of
power is ancillary and to fill up the details. In a
subsequent judgment rendered in case of Global Energy
Limited (supra), the apex Court restated and reapplied
the aforesaid principles of law relating to the validity and
constitutionality of the subordinate legislation in the
following:
―39. The superior courts would ensure that the
subordinate legislation has been framed within the four
corners of the Act and is otherwise valid. The issue
therefore which arises for our consideration is as to
whether the delegation having been made for the
purpose of carrying out the object, could the limitation be
imposed for ascertaining as to whether the applicant is
fit and proper person and disregarding his
creditworthiness. There cannot be any doubt whatsoever
that a statute cannot be vague and unreasonable.
40 Strong reliance has also been placed by the learned
Additional Solicitor General on a decision of this Court
in Clariant International Ltd. v. SEBI [(2004) 8 SCC
524] wherein it was held that a discretionary jurisdiction
has to be exercised having regard to the purpose for
which it was conferred, the object sought to be achieved
and the reasons for granting such wide discretion. It
was furthermore held that when any criterion is fixed by
a statute or by a policy, an attempt should be made by
the authority making the delegated legislation to follow
the policy formulation broadly and substantially and act
in conformity therewith. (See also Ministry of Chemicals
& Fertilizers, Govt. of India v. Cipla Ltd. [(2003) 7 SCC
1] , SCC para 4.1). There cannot be any doubt or dispute
with regard to the aforementioned legal proposition.‖
163. The law enunciated in this regard can be
broadly culled out from the aforementioned reports that--
(i) there must be an express provision in the enabling
or a parent act delegating power to promulgate the
subordinate/delegated legislation;
(ii) the authority delegated with the power to make a
subordinate legislation must travel within the specified
territory expressed in the rule-making power as conferred
in the parent act; [See--Thomas Joseph (supra)]
(iii) the authority conferred with the power to make
rules shall make such provisions in the subordinate
legislations which carry out further the object and
intention of the parent legislation;
(iv) the provisions contained in the rule nor the rule as
a whole should be inconsistent with any of the provisions
of the parent Act;
(v) the rule or any of its provisions shall not offends
any provision of the Constitution of India;
(vi) the rule if creates new rights, privileges,
restrictions and/or prohibition not contemplated in the
parent Act renders the same invalid and/or ultra virus;
(vii) the rules are amenable to be declared ultra virus
having a vice of arbitrariness and/or unreasonableness;
[See-- Shayara Bano, Navtej Singh Johar, Joseph Shine,
Association for Democratic Reforms (Electoral Bond
Scheme) & Desh Bandhu Gupta and Co. (supra)]
(viii) it should not transgress the contour of a limitation
set forth in the rule making power nor shall be
inconsistent with or in derogation of the substantive
provision of the parent Act;
164. The emphasis was laid by the appearing Senior
Counsels on the validity and the legality of Rule 12A of
MCR, 2016 on the premise that it crosses the boundaries
of Section 4B of the said Act which is restricted to the
commencement and continuation of production by the
holders of the mining leases and does not have any
application in relation to dispatch of the minerals.
165. Section 9 of the Act as it stands, contain the
incident of liability to pay royalty in the event of removal
or consumption from the leased area and, therefore,
imposition of an obligation to ensure notional dispatch
when the incident of actual removal and/or consumption
has not arisen under Rule 12A of the said Rules is being
argued to have altered the fundamentals and conceptual
underpinning of the main Sections.
166. Several amendments having brought through
the Amendment Act as adumbrated herein before carry
with it the legislative intent underlying the incorporation
thereof with the paramount avowed object to streamline
the mining activities within the regulated framework. The
shift to an auction regime from the conventional
allotment in a selective manner was envisioned to ensure
transparency, fairness and distribution of the natural
mineral resources on an equitable principle, which is not
ultra vires as held in Re: Special Reference No.1 of
2012 and Manohar Lal Sharma (supra).
167. The amendment brought by Act 2 of 2020 to
come in force from 10th January, 2020 was basically
founded upon the empirical data received by the
Government where 334 mines of iron ore, manganese
and chromium were expiring by 31 st March, 2020 out of
which 46 were working non-captive mines. The new
lessees were facing difficulty in continuing with the
mining operations in getting several licenses which were
impeding the sustainable supply of minerals as raw
materials in various sectors, such amendment was
brought and Section-8B was introduced where all the
valid rights, approval, clearances and licenses and/or
alike obtained by the previous lessee stood vested into
the new lessee for a period of two years. Section-4B was
also introduced contemporaneously to maintain the
sustained production of the minerals with such
conditions as may be necessary who have acquired all
such rights envisaged under Section-8B of the said Act.
168. The cumulative effect of both the sections
convey the legislative intent that the brown-field leases
which were in operation, but the tenure of the lease
expired and by virtue of a new regime of auction having
introduced in the interregnum, the new lessee is vested
with all the clearances, permits and the license or alike
to maintain the sustained production and continue with
the mining operation.
169. Before we proceed further, an interesting
argument is advanced by Mr. Dwivedi, learned Senior
Counsel that Act 2 of 2020 has a self-life of sixty days
and, therefore, any amendment having brought through
such Amendment Act, evaporates and/or effaces after the
expiration of the said period. It is trite law that the
Amendment Acts are enacted for a specific purpose of
inserting, modifying and/or substituting the provisions
into the parent Act and the moment the purpose is
achieved, the same becomes an integral part of the
parent Act and even the Amendment Acts have a limited
duration, it does not alter the effects having given
thereto.
170. Once the provision contained in the
Amendment Act is brought into the parent Act and
becomes an integral part thereof, its retention into the
amending Act ceases to exist. The judgment of the
Calcutta High Court in case of Khuda Bux v. Manager,
reported in AIR 1954 Cal 484 : 1954 SCC OnLine Cal
132 may be gainfully applied wherein it is observed as
under:
―7. That argument was founded on a misconception.
Section 8 of the General Clauses Act does not require
that the later Act, repealing and re-enacting an earlier
Act, should be a repealing and amending Act. All that
it requires is that a Central Act should repeal and re-
enact a former enactment. To that it was replied that
even the repeal of the Factories Act of 1934 had now
disappeared, because the repeal was effected by
section 120 of the Act of 1948, read with a table of
enactments therein set out, but by the Repealing and
Amending Act of 1950, the table of repealed
enactments had itself been repealed. With the table
gone, the operative words of section 120 of the Act of
1948 had been left without any content and the Act
had been reduced to a purely consolidating and
amending Act, repealing nothing. The Act of 1934
could no longer be said to have been repealed or, in
any event, the Act of 1948 could no longer be said to
have repealed and re-enacted it.
8. This contention was based, in my view, on a
mistaken notion of the scope and effect of a repealing
and amending Act. Such Acts have no legislative
effect, but are designed for editorial revision, being
intended only to excise dead matter from the statute
book and to reduce its volume. Mostly, they expurgate
amending Acts, because having imparted the
amendments to the main Acts, those Acts have served
their purpose and have no further reason for their
existence. At times, inconsistencies are also removed
by repealing and amending Acts. The only object of
such Acts which, in England, are called Statute Law
Revision Acts, is legislative spring-cleaning and they
are not intended to make any change in the law. Even
so, they are guarded by saving clauses drawn with
elaborate care, of which section 3 of the Repealing
and Amending Act of 1950 is itself an apt illustration.
Besides providing for other savings, that section says
that the Act shall not affect ―any principle or rule of
law *** notwithstanding that the same may have
been *** derived by, in, or from any enactment hereby
repealed‖. The principle of law derived from the
repeal by section 120 of the Factories Act of 1948 of
the Act of 1934, namely, that references in other Acts
to the Act of 1934 should be read as references to the
Act of 1948, is thus not affected by the Repealing and
Amending Act of 1950 which repealed the) operative
part of section 120 of the Act of 1948. From another
principle also, the same result follows. The repeal of
the repealing section of the 1948 Act could not have
the effect of reviving the Act of 1934, repealed thereby
and, consequently, since the repeal of the Act of 1934
continued to subsist, section 8 of the General Clauses
Act continued to apply. The Commissioner was
therefore right in applying the definition of
―manufacturing process‖ contained in the Factories
Act of 1948 and also right in holding on the basis of
that definition that the appellant was a workman.‖
171. The aforesaid principles of law are restated
and approved by the apex Court in Jethanand Betab v.
State of Delhi (supra) in the following:
―6. The general object of a repealing and amending Act
is stated in Halsbury's Laws of England, 2nd Edn., Vol.
31, at p. 563, thus:
―A statute Law Revision Act does not alter the
law, but simply strikes out certain enactments
which have become unnecessary. It invariably
contains elaborate provisos.‖
In Khuda Bux v. Manager, Caledonian Press [AIR
1954 Cal 484] Chakravartti, C.J., neatly brings out the
purpose and scope of such Acts. The learned Chief
Justice says at p. 486:
―Such Acts have no Legislative effect, but are
designed for editorial revision, being intended
only to excise dead matter from the statute
book and to reduce its volume. Mostly, they
expurgate amending Acts, because having
imparted the amendments to the main Acts,
those Acts have served their purpose and
have no further reason for their existence. At
times, inconsistencies are also removed by
repealing and amending Acts. The only object
of such Acts, which in England are called
Statute Law Revision Acts, is legislative
spring-cleaning and they are not intended to
make any change in the law. Even so, they
are guarded by saving clauses drawn with
elaborate care,....‖
It is, therefore, clear that the main object of the 1952 Act
was only to strike out the unnecessary Acts and excise
dead matter from the statute book in order to lighten the
burden of ever increasing spate of legislation and to
remove confusion from the public mind. The object of the
Repealing and Amending Act of 1952 was only to
expurgate the amending Act of 1949, along with similar
Acts, which had served its purpose.
172. In view of the law as enunciated in the above
reports, we are unable to countenance the submissions
advanced by Mr. Dwivedi, learned Senior Counsel that
Section-4B of the Act cannot occupy a space in the
parent Act as the amending Act has a limited life.
173. As indicated hereinbefore, let us examine the
intention behind the incorporation of Section-4B of the
said Act. It can be safely noticed the words and the
language used therein that it has a superseding effect on
Section-4A of the Act for a non-obstante clause appearing
therein. Section-4A of the Act broadly deals with the
termination of the prospective license, exploration license
or the mining leases, wherein sub-section (4) received a
subsequent amendment by Act 16 of 2021 with a
substitution of the words ―production and dispatch‖ for
the words ―mining operation‖. It is no gain saying that
the words ―production and dispatch‖ is not incorporated
in Section-4B of the said Act and even if the same is
conspicuously absent, the question boils down whether it
comes within the expressions ―sustained production of
minerals in the country‖ and ―commencement and
continuance of production‖.
174. Section-4B further bestowed power on the
Central Government to prescribe such conditions as may
be necessary for commencement and continuance of the
production by the holders of the mining leases who have
acquired all the rights, approval, clearances and the like
under Section-8B. Likewise, Section-13(2)(aa) of the Act
confers the power to make rules in relation to the
conditions as may be necessary under Section-4B of the
Act. The expression "sustained production of minerals"
as a corollary effect imbibed all those activities and
operations which falls within its ambit all connected
activities which would serve the common public interest.
175. Mr. R. Venkataramani, learned Attorney
General attempted to give a wider meaning to sustained
production of minerals to engulf within itself all activities
which would fall within the penumbra of the mining
operations as it is not legislatively required to expressly
state all related set of activities in order to achieve
completeness. According to him, the penumbra of mining
means the matters not literally covered by words or
terms used in a provision and there is no fetter in the law
to permeate the object beyond the outline in order to
secure the broader objects.
176. In Schlesinger v. Wisconsin (supra) relied
upon by learned Attorney General was considering a case
of Fourteenth Amendment under which the tax was
imposed as an inherent tax in relation to a transfer of
property by gift executed within six (06) years of the
death. The said amendment postulates that if such gift is
made in contemplation of the death of a donor, it would
come within the peripheral of the said tax regime. The
Supreme Court of the State was of the view that if the
transfer is inter vivos and not in contemplation of the
death, even executed within six (06) years of the death of
the donor, would not come within the purview of the said
inheritance tax regime. Justice Holmes, however,
dissented and applied the penumbral doctrine that there
is no fetter having put to embrace the law that goes
beyond the outline of its object in order that the object
may be secured.
177. In a subsequent judgment rendered in case of
Roschen v. Ward, reported in 279 U.S. 337 (1929) have
applied the penumbral principles in a case pertaining to
a sale of ordinary spectacles with convex spherical lens
which simply magnify the object as it would not cause
any harm without being examined by the optometrists.
The law mandates the presence of optometrists at the
spectacles shop and an argument was advanced that
mere presence does not make it imperative to examine
the eyes of a customer. Repelling the contention, it was
held that "a statute is not invalid under the Constitution
because it might have gone farther than it did or because
it may not succeed in bringing about the result that
tends to produce".
178. The aforesaid observations came with the
reasons that the role of an optometrist is to examine the
eyes and the presence of the optometrist under the law
engulfed within itself the examination of the eyes, which
is inseparable. We find it difficult to apply such
penumbral doctrine in the Indian legal jurisprudence. It
has been a constant view taken by the Courts of the
country that in the event any meaning is to be ascribed
to the words or the expressions used in the statute, the
first attempt is to assign the literal meaning in the event
the same is clear, explicit and in conformity with the
object and the purpose of the said statute. The resort to a
purposive interpretation is permissible in the event the
literal interpretation would lead to an obscurity or would
offend the core fabric of the object and the purpose of the
Act.
179. The paramount consideration is to draw a
presumption of the legality of the provisions and the
construction which would inure to the workability thereof
should be adopted unless the Court finds difficulty in
this regard. It is a cardinal principle of law that where
the word or the expressions are expressly defined in the
statute itself, the meaning assigned to such word or the
expression should be adhered to wherever such words or
expressions are appearing in the said statute.
180. The aforesaid principles of law and the
interpretative tools adopted by the Courts can be
conveniently recapitulated.
The Constitution Bench decision rendered in the
case of Indore Development Authority (supra) was
considering a case where the word ‗paid' and the word
‗deposits' were sought to be assigned the meaning
appearing in different provisions of the statute. It is held
that if two expressions are used differently, the same
meaning cannot be given as the Parliament does not use
any words or expressions carrying the same meaning in
the following:
"217. Two different expressions have been used in
Section 24(2). The expression ―paid‖ has been used in
Section 24(2) and whereas in the proviso ―deposited‖
has been used. ―Paid‖ cannot include ―deposit‖, or else
Parliament would have used different expressions in the
main sub-section and its proviso, if the meaning were to
be the same. The Court cannot add or subtract any
word in the statute and has to give plain and literal
meaning and when compensation has not been paid
under Section 24(2), it cannot mean compensation has
not been deposited as used in the proviso. While
interpreting the statutory provisions, addition or
subtraction in the legislation is not permissible. It is not
open to the court to either add or subtract a word. There
cannot be any departure from the words of law, as
observed in legal maxim ―a verbis legis non est
recedendum‖. In Principles of Statutory
Interpretation (14th Edn.) by Justice G.P. Singh,
plethora of decisions have been referred. There is a
conscious omission of the word ―deposit‖ in Section
24(2), which has been used in the proviso. Parliament
cannot be said to have used the different words carrying
the same meaning in the same provision, whereas words
―paid‖ and ―deposited‖ carry a totally different meaning.
Payment is actually made to the landowner and deposit
is made in the court, that is not the payment made to
the landowner. It may be discharge of liability of
payment of interest and not more than that. Applying
the rule of literal construction also natural, ordinary
and popular meaning of the words ―paid‖ and
―deposited‖ do not carry the same meaning; the natural
and grammatical meaning has to be given to them, as
observed in Principles of Statutory Interpretation by
Justice G.P. Singh (at p. 91) thus:
―... Natural and grammatical meaning. The words of a
statute are first understood in their natural, ordinary or
popular sense and phrases and sentences are construed
according to their grammatical meaning, unless that
leads to some absurdity or unless there is something in
the context, or in the object of the statute to suggest the
contrary.‖ ―The true way‖, according to LORD
BROUGHAM is, ―to take the words as the legislature have
given them, and to take the meaning which the words
given naturally imply, unless where the construction of
those words is, either by the preamble or by the context
of the words in question, controlled or alter‖
[Crawford v. Spooner, 1846 SCC OnLine PC 7 : (1846-
50) 4 Moo IA 179, 187 : 13 ER 582] ; and in the words
of VISCOUNT HALDANE, L.C., if the language used ―has a
natural meaning we cannot depart from that meaning
unless reading the statute as a whole, the context directs
us to do so.‖ [Attorney General v. Milne, 1914 AC 765,
771 (HL)] In an oft-quoted passage, LORD
WENSLEYDALE stated [Grey v. Pearson, (1857) 6 HLC 61,
104-105 : 10 ER 1216] the rule thus:―In construing wills
and indeed statutes and all written instruments, the
grammatical and ordinary sense of the word is adhered
to, unless that would lead to some absurdity, or some
repugnance or inconsistency with the rest of the
instrument in which case the grammatical and ordinary
sense of the words may be modified, so as to avoid that
absurdity, and inconsistency, but no further‖. And
stated [Corpn. of the City of Victoria v. Bishop of
Vancouver Island, 1921 SCC OnLine PC 75, para 7 :
(1921) 2 AC 384 (PC)] LORD ATKINSON:―In the
construction of statutes, their words must be
interpreted in their ordinary grammatical sense unless
there be something in the context, or in the object of the
statute in which they occur or in the circumstances in
which they are used, to show that they were used in a
special sense different from their ordinary grammatical
sense‖. VISCOUNT SIMON, L.C., said [Nokes v. Doncaster
Amalgamated Collieries Ltd., 1940 AC 1014, 1022
(HL)] :―The golden rule is that the words of a statute must
prima facie be given their ordinary meaning‖. Natural
and ordinary meaning of words should not be departed
from ―unless it can be shown that the legal context in
which the words are used requires a different meaning‖.
Such a meaning cannot be departed from by the Judges
―in the light of their own views as to policy‖ although
they can ―adopt a purposive interpretation if they can
find in the statute read as a whole or in material to
which they are permitted by law to refer as aids to
interpretation an expression of Parliament's purpose or
policy‖. For a modern statement of the rule, one may
refer to the speech of LORD SIMON OF GLAISDALE in a case
where he said [Suthendran v. Immigration Appeal
Tribunal, 1977 AC 359, 368 : (1976) 3 WLR 725 (HL)] :
‗Parliament is prima facie to be credited with
meaning what is said in an Act of Parliament. ... The
drafting of statutes, so important to a people who hope
to live under the rule of law, will never be satisfactory
unless courts seek whenever possible to apply ―the
golden rule‖ of construction, that is, to read the statutory
language, grammatically and terminologically, in the
ordinary and primary sense which it bears in its context,
without omission or addition.
Of course, Parliament is to be credited with good
sense; so that when such an approach produces
injustice, absurdity, contradiction or stultification of
statutory objective, the language may be modified
sufficiently to avoid such disadvantage, though no
further.'
The rules stated above have been quoted with
approval by the Supreme Court [Indore Development
Authority v. Shailendra, (2018) 3 SCC 412 : (2018) 2
SCC (Civ) 426] ....‖
(emphasis supplied)
Thus, when different words are used in the same statute
or in relation to a same subject matter, there is always a
presumption that they are not used in the same sense.
181. The MMDR Act has given a definite meaning to
the word "production" and the word "dispatch" in
Section-3(fa) and 3(aa) respectively. Once the words have
been clearly and expressly defined in the statute, it
hardly makes any room to ascribe its meaning or to treat
those words as synonyms. Thus both the words, i.e.
―production‖ and ―dispatch‖ carries distinct and definite
meaning and not interchangeable and, therefore, the
contention that it should be read in such perspective is
not acceptable.
182. It takes us to another interesting facet of an
argument advanced by the respective counsels where the
expression ―sustained production‖ appearing in Section
4B of the Act is concomitant to a compulsory dispatch.
The object and purpose behind the incorporation of an
amendment in the year 2020 was on the basis of the
mass expiry of the earlier leases within a close proximity
of time after adoption of the auction regime which may
create an imbalance in seamless availability and supply
of the mineral resources and to overcome such impasse
envisioned, Section 8B of the Act was also introduced
contemporaneously with Section 4B of the said Act. The
laudable object in Section 8B is to ensure the sustained
production of the minerals in the country which implicit
the dispatch of the minerals to make it available in the
market. The said section was aimed to eradicate any
procedural hassles, which the new lessee would face in
getting clearance of varied types impeding the sustained
production with an implicit of obligation to make it
available in the market by way of dispatch. The
continuity of all the licences, clearances and of like
nature which the previous lessee had with the new lessee
marks a significant step enuring the sustained
availability of the minerals in the country. Thus, the said
provision had to be read and understood in conjunction
with Section 4B of the said Act and, therefore, any
attempt to abridge its operation and/or applicability shall
be underpinning the legislative intent and shall defeat
the very purpose though the words ―production‖ and
―dispatch‖ are defined separately having distinct and
different meaning, but are ingrained and inhered into a
broader aspect of the mining operation to sub serve the
broader object and intention behind such legislation.
Rule 12A was another step taken to meet the objectives
of sustainable supply of the mineral resources by
imposing certain obligations into the new lessees. Sub-
rule (1) of Rule 12A can be reasonably seen from the
language and words used therein by reaffirmation of the
said objectives emanating from conjoint reading of
Section 4B and Section 8B of the said Act. It makes
obligatory on the part of the new lessee who gets the
privilege of all the previous rights, approvals, clearances,
licences and the like enjoined by the previous lessee into
the new lessee to ensure the level of production during
the preceding two years in order to ensure dispatch of
80% of the average of the annual production on pro rata
basis with further consequences of an appropriate action
to be taken, in the event of default, in accordance with
MDPA. We are unable to appreciate and countenance the
submissions of respective counsels for the petitioners
that the word ―dispatch‖ which is conspicuously absent
in Section 4B of the Act cannot occupy any place in the
said Rule as it cannot impose a new obligation de hors
the said substantive provision appearing in the parent
Act. The argument that Rule 12A of the said Rules
received the vice of arbitrariness is also not acceptable as
it ensures the broader object of sustainable supply of the
minerals in the market. The narrow and conservative
meaning if assigned to the workability and applicability
of the said rule would permit a sense of hoarding and/or
stock piling of the mineral resources creating scarcity in
the market and invite an imbalance between ―production‖
and ―dispatch‖. It admits no ambiguity that sub-rule (1)
of Rule 12A is applicable to a period of two years from the
date of the execution of new lease and does not have any
applicability after the expiration of the said period
enshrined therein. Even sub-rule (1A) and (1B) applies to
a situation contemplated under sub-rule (1) of Rule 12A
and does not exceed its operation beyond the period
contemplated under sub-rule (1) of Rule 12A. However,
an exception is carved out in sub-rule (1C) of Rule 12A in
relation to a lease executed on or before the
commencement of the amended Rules, 2021 with clear
precision that the operation of sub-rules (1A) and (1B)
would apply only after a period of one year from the date
of execution of the mining lease or from the date of
coming into force of the said amendment Rules,
whichever is later. It thus gives a moratorium to the
applicability of sub-rules (1A) and (1B) to a new lessee for
a first period of one year and the final consequences as
contemplated in sub-rule (1) of Rule 12A gets interdicted
for initial period of one year. Sub-rule (2) of Rule 12A has
its applicability after the expiration of period provided in
sub-rule (1) of Rule 12A, which obligated the new lessee
to work out and implement an annual production plan
for full exploitation of the mineral resources during the
period of lease, failing which appropriate action shall be
initiated in accordance with MDPA.
183. As indicated above, the words ―production‖
and ―dispatch‖ are differently and distinctly defined in
the Act itself and the legislatures being conscious of the
same created an obligation on the production and the
consequences in the event of failure to meet such
requirement. Sub-rule (2) of Rule 12A as stood before the
incorporation of a proviso does not confer any power on
the authorities to initiate action for not ensuring the
dispatch conveys the message that it has its applicability
to the production, even though the dispatch is an
integral part of sustainable supply of the materials, but
consequences for its failure cannot be resorted to. The
significant distinction can be reasonably gathered from
the language and words used in sub-rule (1) and sub-
rule (2) that the word dispatch was conspicuously absent
for any action to be taken under MDPA and, therefore,
operates in the respective fields. The proviso was inserted
to sub-rule (2) on 10.06.2021 with effect from
01.07.2021 without containing any provision for
initiation under MDPA in the event of default in dispatch.
It is a trite law that the penal provision must exist in the
statutory provision relatable to the specific consequences
and in the event any consequences attracting the
initiation under MDPA is not provided, it cannot be
assumed nor by necessary implication be presumed to
exist.
184. It is thus clear that when the consequences for
failure to dispatch are not expressly provided, any
attempt to impose penalty or raise a demand in this
regard is not permissible.
185. Apart from the above, a distinctive differential
feature can also be manifestly seen from the scheme and
object in relation to a green field i.e. virgin leases and the
brown field i.e. the lease already in operation. The
argument advanced by the respective counsels on the lack
of intelligible differentia in making a classification within
the class as the mines being a homogeneous class in
itself, there is no rational in treating the green-filed and
brown-field in different minerals, is not acceptable for a
distinct reason, which is manifest and apparent from the
legislative intent and, therefore, the judgments cited in
this regard viz. Charanjit Lal Chowdhuri, Shri Ram
Krishna Dalmia, E. P. Royappa, Maneka Gandhi, Ajay
Hasia, Ramana Dayaram Shetty, Ananthi Ammal, Dr.
K.R. Lakshmanan, McDowell & Co., Khoday
Distilleries Ltd., Malpe Vishwanath Acharya &
Mardia Chemicals Ltd., (supra) have no bearing on the
said issue. The entire scheme of Rule 12A is applicable
only to a green field which was previously held by the
lessee but subsequently, entrusted upon a new lessee
after the auction regime.
186. The tenet of Rule 12A which incorporated
conditions in relation to Section 4B of the Act envisaged
the sustained production in commensurate with the
production achieved by the previous lessee preceding 2
years from the date of the execution of the new lease. As
Section 8B of the Act postulates for continuance of all
licences, privileges and/or like obtained by the previous
lessee to have vested into a new lessee, obviously, the
intention was to ensure immediate operationalization of
the mines without any gaps and to eradicate unnecessary
delay in getting various statutory clearances required for
starting the mining operation. Rule 12A(2) creates
unreasonable obligations on brown field leases for 3 years
to 50 years though the same is conspicuously absent in
the case of the green field leases. Thus, an obligation of
dispatch by insertion of proviso in Section 12A(2) creates
two distinct classes of the leases without there being any
intelligible differentia nor it would achieve the objects
envisioned while enacting the same. Therefore, we do not
find that Proviso to Rule 12A(2) which was introduced by
an amendment in the year 2021 w.e.f. 01.07.2021 have
supplemented the consequential penal provision relating
to ‗shortfall in dispatch' and, therefore, such requirement
is mere ‗directory' and not ‗mandatory' nor can be read
into the MDPA in order to attract the consequential
penalty.
187. It takes to an another point on the supremacy
and/or importance of a mining plan within the folds of
MMDR Act, 1957 and the Rules framed thereunder.
Section 5 (2)(b) of the Act postulates that there should be
a mining plan duly approved by the Central Government
or the State Government in respect of such category of
mines as may be specified by the Central Government for
development of mineral deposits in the area concerned.
The phrase ―development of mineral deposits‖ is further
corroborated by Section 18 of the Act encompassing the
mineral development for protection of the environment by
preventing or controlling any pollution which may be
caused by prospecting or mining operation and its
regulation relatable to excavation or collection of minerals
from any time and makes it further obligatory upon the
Government to maintain and submit such plans as may
be specified. The legal recognition of a mining plan can
further be seen from Rule 13 (2)(F) of MCR, 2016 which
prohibits any mining operation except in accordance with
the mining plan duly approved by any officer of the Indian
Bureau of Mines which would incorporate the tentative
scheme of mining and annual programme and plan for
excavation from year to year for 5 years. By limiting the
period i.e. 5 years Rule 17(3) of MCR, 2016 confers power
upon the authority to review and update such mining
plan at the interval of every 5 years commencing from the
date of execution of the mining lease deed. The power is
further bestowed upon the holder of a mining lease to
seek modification in the approved mining plan as
considered expedient in view of the changes in the
business environment or facilitating increase in
production capacity or in the interest of safe and scientific
mining or conservation of minerals for protection of the
environment or on any reasons to be specified in writing
by the holder of the mining lease. Even, Rule 29 of the
MCR, 2016 mandates the operation of mine in accordance
with the mining plan duly approved by the Indian Bureau
of Mines (IBM). Rule 11 of MCDR, 2017 creates a
prohibition in commencement and on carrying out mining
operation except in accordance with the mining plan so
approved, modified or reviewed by the IBM with further
consequences of suspension of all mining operation in the
event, it is not carried out in accordance therewith.
188. The Apex Court in case of Common Cause vs.
Union of India, reported in (2017) 9 SCC 499 in
categorical terms held that the mining plan is sacrosanct
and sine qua non for grant of a mining lease in the
following:
―142. Section 21(1) of the MMDR Act is clearly
relatable to a penal offence and applies if any one
contravenes the provisions of Section 4(1) of the MMDR
Act. Section 4(1) of the MMDR Act prohibits the
undertaking of any mining operation in any area
except under and in accordance with the terms and
conditions of a mining lease and the Rules made
thereunder. Therefore, when a person carries out a
mining operation in any area other than a leased area
or violates the terms of a mining lease, which
incorporates the mining plan and which requires
adherence to the law of the land, that person becomes
liable for prosecution under Section 21(1) of the MMDR
Act. In the event of a conviction, he or she shall be
punishable with imprisonment for a term which may
extend to five years and with fine which may extend to
Rs 5 lakhs per hectare of the area.‖
(emphasis supplied)
189. The cumulative effect of the aforesaid
provisions and the judgment rendered in the above noted
report, leaves no ambiguity that the mining plan is a vital
document and the strict adherence thereto should be
ensured as no mining lease holders would be permitted to
operate the mines in departure therefrom or in
contradiction with the mining plan. We do not persuade
ourselves to the stand that it is merely a technical
document having no statutory recognition. The MCDR
envisaged a scheme for production, abandonment, closure
and operation in accordance with the mining plan duly
approved by the competent authority. In this regard, Rule
22 of the MCDR contains an exhaustive provision relating
to the closure of a mine which engulf within itself a
progressive mine closure plan and final mine closure plan.
It obligated the lease holders to prepare a closure plan
strictly in terms of the norms and the guidelines issued by
the IBM from time to time which is further obligated
under Rule 23 thereof. It ordained that such closure plan
must be initiated and/or submitted two years before it
takes its final shape and to receive the approval of the
competent authority. We cannot overlook the provision
contained in Rule 26 of the MCDR which obligated the
lease holders to ensure all protective measures including
the reclamation and rehabilitation work to be carried out
in accordance with the approved mining closure plan or in
the event, the same is modified to ensure the modified
terms so approved. Thus, the mining plan so proposed by
the lessee after its approval which is obviously upon
making a deep analysis and scrutiny by the IBM being a
vital lynchpin, intended to ensure a systematic, scientific
and non-exploitative extraction of minerals in a
systematic manner keeping in mind the ecology,
environment and the safety. Though the MDPA is
concomitant to a sustainable mining operations yet the
mining plan having received a statutory recognition
prevails over the MDPA as all mining operations have to
be undertaken according to the mining plan and,
therefore, the State Government is precluded from
imposing a penalty on any lease holder taking aid of the
MDPA when the same is strictly within the parameter of a
mining plan. In some of the cases before us even the
MDPA does not contain any penal provision relating to a
non-adherence of a dispatch but has restricted its
operation to a level of production strictly in compliance
with the mining plan.
190. In view of the discussions made hereinabove,
the contention that the statute is vague and does not
ascribe the definite intention cannot be acceptable and,
therefore, the law laid down in F.N. Balsara, Baldeo
Prasad, DTC Mazdoor Congress, Cellular Operators
Association of India, Hiralal P. Harsora & R.M.D.
Chamarbaugwalla (supra) though authoritative, yet has
no manner of application in the facts and circumstances
of the instant cases.
191. On the analysis of a discussion made
hereinabove. We thus, summarized the entire gamut of
disputes and made our conclusion in the following:
1. There is no incongruity in exercising the legislative
powers by inserting Rule 12A(1) by virtue of an
amendment dated 20.03.2020 and, therefore,
cannot be said to be constitutionally invalid or ultra
vires to the spirit and the purport of the parent Act;
2. The subsequent amendment dated 10.06.2021
which came into effect on and from 1st July, 2021
by introducing sub-rules (1A), (1B) and (1C) of Rule
12A of the said Rules are relatable to and the
consequences provided therein are restricted to the
eventualities contemplated under Rule 12A(1) and,
therefore, cannot be said to be ultra vires offending
the core fabric of the parent statute;
3. Rule 12A(1) was brought by way of an amendment
dated 20th March, 2020 makes imperative in
relation to adherence of the production and/or
extraction of mineral so as to ensure 80% dispatch
of the average of the annual production of two
preceding years on pro rata basis and any default
in achieving the stipulated production level attracts
the consequences provided under MDPA only. The
penal consequences for non adherence of minimum
dispatch obligation is introduced by inserting sub-
rules (1A), (1B) and (1C) with effect from
01.07.2021, which cannot be applied
retrospectively;
4. Sub-rule (1C) of Rule 12A postulates the penal
provisions contemplated under sub-rules (1A) and
(1B) with regard to short fall in the dispatch applies
prospectively, i.e. 01.07.2021 or after a period of
one year from the date of the mining lease,
whichever is earlier, provided the mining lease is
executed before the commencement of the
amendment Act 2021;
5. The Mining Plan cannot be said to be a mere
technical document, but the annual production
shall be strictly made in conformity therewith,
which is seemingly envisaged in Rule 12A(2) of the
said Rules. In the event the Mining Plan provides
annual production below the average annual
production of the previous lessee or the MDPA, it
could prevail in view of the exposition of law in
Common Cause case;
6. The regulatory Authority tracing its source from the
statutory provisions as discussed hereinabove,
approves the Mining Plan strictly in conformity with
the provisions contained under MMDR Act, 1957,
MCR, 2016 and MCDR, 2017 to ensure the
sustainable and scientific mining so that the
resources are fully exploited during the period of
lease and in the event of any default, the
consequences as provided in MDPA can only be
resorted to;
7. The proviso introduced to Rule 12A(2), which came
into effect from 1st July, 2021 pertaining to the
ensurance of dispatch of 80 % of the annual
production does not contemplate any penal
consequences under sub-rules (1A) and (1B) of Rule
12A of MCR, 2016 and, therefore, cannot be
construed as mandatory nor can be applied to have
been impliedly incorporated in the MDPA as a
consequential effect;
8. The Mining Plan being a statutory requirement
operates throughout the currency of the lease deed
until its closure as per the final mine closure plan,
as approved by the competent authority from time
to time, is sacrosanct under the various provisions
of the MMDR Act, 1957, MCR, 2016 and MCDR,
2017. There is no prohibition/ restriction while
approving the Mining Plan for production below the
minimum production obligation contemplated under
the MDPA and in case of any inconsistency
between the Mining Plan and MDPA, the Mining
Plan shall prevail;
9. All the impugned demand notices issued by the
State Government to the extent they are contrary to
the above conclusions, shall stand quashed. The
State Government and other Authorities are
directed to take steps in light of the above
conclusions and directions.
192. The writ petitions along with the IAs are
disposed of in terms of the conclusions and directions
made above. There shall be no order as to cost.
I agree.
(M.S. Raman) (Harish Tandon)
Judge Chief Justice
Designation: ADR-cum-Addl. Principal Secretary
Arun/Sanjay/Mrutyunjay/ Location: High Court of Orissa, Cuttack
Date: 27-Apr-2026 12:18:30
Subas/Sumanta/Sisira
