K.T. VARGHESE & ORS.versusSTATE OF KERALA & ORS.

                        (2008] 1S.C.R.1205


A                   K.T. VARGHESE & ORS.
                                 v.
                  STATE OF KERALA & ORS.
                 (Civil Appeal No. 6456 of 2001)
                       JANUARY 24, 2008
B
     [DR. ARIJIT PASAYAT, LOKESHWAR SINGH PANTA
                 AND P. SATHASIVAM, JJ.]
                                                                   I-


        Mines and minerals:
c      Kera/a Minor Mineral Concession Rules, 1967 - Selling
  stock of minor minerals-limeshell and exhibiting them for sale
  - Grant of licence subject to certain conditions - Minerals to
  be purchased only from authorised quarrying permit holders
  and that the sale would be only for domestic and agricultural
D purposes within State - Correctness of - Held: State
  Government does not have the power to exercise control over
  minor minerals after they have been excavated - Thus,
  conditions stipulated could not have been imposed and are
                                                                            --
  struck down - Mines and Minerals (Regulation and
E Development) Act, 1957 - Minor Mineral Concession Rules,
   1967.
       The appellants, engaged in the business of limeshell,
  were holding the dealers' licence to sell stock and exhibit
  for sale minor minerals under the Minor Mineral
F Concession Rules, 1967. Their licence was renewed
  subject to certain conditions and restrictions that the
  minerals permitted to be stocked were to be purchased
  only from authorised quarrying permit holders; and that
  they were permitted to sell the minerals only within the
G State of Kerala for domestic and agricultural purposes
  only. Appellant filed Original petition on the ground that            ~
  such restrictions were not imposed in case of the Co-
  operative Societies, and as such there was discrimination.
  Single Judge of the High Court dismissed the Petition
H                             1205
K.T. VARGHESE & ORS. v. STATE OF KERALA   1206 .
           & ORS. [PASAYAT, J.]
    1207       SUPREME COURT REPORTS                [2008] 1 S.C.R.


A        The appellants are enpaged in the business of limeshell.
  They have been holding the necessary dealers' licence issued
  under the Kerala Minor Mineral Concession Rules, 1967
  (hereinafter referred to as 'the State Rules') under Section 15
  of the Mines and Minerals (Regulation and Development) Act,
B 1957 (hereinafter referred to as 'the Act') and the Minor Mineral
  Concession Rules, 1967 (in short the 'Rules'). The appellants
  were given the licence under Rule 48-C of the State Rules. As
  per the licence the appellants got the licence to sell stock and
  exhibit for sale minor minerals under the Rules. Along with the
c licence certain conditions have also been laid down which the
  appellants are under obligation to comply with. When the
  appellants were not granted the renewal of licence fof the period
  1997-98, they approached the High Court by filing 0. PNo.14269/
  1997 which was disposed of by judgment dated 16.2.1998. The
  appellants filed a Writ Appeal against the said judgment and
0
  the Division Bench of this Court in Writ Appeal No.547/1998
  directed the first respondent to dispose of the representation
  filed by the appellants. Accordingly, the appellants were granted
  renewal of their licences for the period 1998-99.
E        3. The appellants' complaint is that certain conditions in
  the form of restrictions have been incorporated while issuing
  the licences. One of such conditions which the appellants attacks
  is that the minerals permitted to be stocked were to be
  purchased only from authorised quarrying permit holders on that
F behalf. Another condition is that they are permitted to sell the
  minerals only within the State of Kerala that too for domestic
  and agricultural purposes. The appellants' complaint is that as
  far as Co-operative Societies are concerned, they are not
  saddled with any such restrictions impcsed in the case of the
G appellants. Thus, according to the appellants. there is a clear
  discrimination between the Co-operative Societies and the            '   ""
  individuals in the matter of restrictions imposed in the :icences
  granted to them. Apart from that there is no legal sanction for
  such restrictions.
H          4. Learned Single Judge of the High Court was of the view
    K.T. VARGHESE & ORS. v. STATE OF KERALA                  1208 .
               & ORS. [PASAYAT, J.]

· that the licence was granted subject to certain conditions and A
  restrictions. The State Government was empowered to impose
  such conditions under the Act and the State Rules and the
  licences were issued in terms of provisions of the Act and the
  State Rules. Since the conditional licence was issued, the
  licencees cannot take up the benefit of licences without the B
  conditions imposed.
       5. The Division Bench in writ appeal did not specifically
 refer to these aspects.
      6. Learned counsel for the appellants submitted that the        c
 condition that sales would be for agricultural purposes and inside
 the State condition cannot be imposed under the Rules.
       7. Learned counsel for the State Government and its
 functionaries on the other hand supported the order of the High
 Court.                                                          D
       8. It appears that the impugned conditions stipulated run
 as follows:
      "While selling limeshell or the products made using the
      minerals you should give to the purchaser Cash E
      memorandum authenticated by the undersigned/Assistant
      Geologist of this office before use. Please note that any
      consignment of minor minerals without a valid cash
      memorandum shall be considered as illicit and the
      competent authority or such authorized person may F
      recover the mineral from the person concerned."
     9. It is to be noted that there is no serious challenge to the
 Condition No.1.
       10. Similarly another condition was imposed which read         G
 as follows:
      "For sale within Kerala State only for domestic and
      Agricultural purpose."
       11. Primarily it has been contended that no reason has         H
    1209       SUPREME COURT REPORTS                    (2008] 1 S.C.R.      ..

A been indicated as to the basis for imposition of such conditions
  and there is no such prescription for licencees who were co-
  operative societies.
        12. !tis to be noted that deciler does net extract the minerals ..
  In State of Tamil Nadu v. M.PP Kavery Chetty [1995 (2) SCC
8 402) considering a similar challenge it was inter alia observed
  as follows:
           "17. Rules 8-D and 19-8 were introduced into the said
           Rules by Government Order No. 214 dated 10-6-1992.
c          The two rules are identical, except that Rule 8-D is in
           Section II which relates to Government lands in which the
           minerals belong to the Government and Rule 19-8 is in
           Section Ill which relates to ryotwari land in which the
           minerals belong to Government. This being so, it is enough
           to quote Rule 19-8. It reads thus:
D
                "19-8. Constitution of black, red, pink, grey, green,
                white or other coloured or multi-coloured granites
                or any rock suitable for use as ornamental and
                decorative stones quarried by the permit-holder etc.
E               -(1) Notwithstanding anything contained in these rules,
                on and from 10-6-1992 the sale of the quarried black,
                red, pink, grey, green, white or other coloured or multi-
                coloured granites or any rock suitable for use as
                ornamental and decorative stone by every permit-
F               holder who has been granted permission by the State
                Government and every person who has been
                permitted by a competent court having jurisdiction,
                for quarrying black, red, pink, grey, green, white or
                other coloured or multi-coloured granites or any rock
                suitable for use as ornamental and decorative stone,
G
                shall be regulated by the State Government or by an
                officer of the State Government or by a State
                Government company or by a corporation owned or
                controlled by the State Government, as the State
                Government may direct in this behalf. (2) Where the
H
K.T. VARGHESE & ORS. v. STATE OF KERALA                  1210
          . & ORS. [PASAYAT, J.]

      above sale is regulated by-                               A
      ( i ) the State Government or by an officer of the
      State Government, the minimum price shall be as
      fixed by the State Government;
      (it) the State Government company or a corporation         B
      owned or controlled by the State Government, the
      minimum p~ice shall be as fixed by the said company
      or corporation, as the case may be:

         ·Provided that in fixing the minimum price under
      this sub-rule, the fair market price prevailing at the C
      time of the sale shall be taken into account."

 18. On the same day that Rules 8-D and 19-B were
 introduced, that is, 10-6-1992, Government Order No. 216
 was also issued. It directed, under the provisions of the
                                                                  0
 two rules, that the Tamil Nadu Minerals Limited, a State
 Government company, would regulate the sale of quarried
 black, red, pink, grey, green, white or other coloured or
 multi-coloured granite or any rock suitable for use as
 ornamental and decorative stones.
                                                                  E
 19. The High Court quashed Rules 8-D and 19-B principally
 on the ground that Section 15 of the said Act gave no
 power to the State Government to frame rules to regulate
 internal or foreign trade in granite after it had been quarried.
 Section 15 also did not empower the State Government F
 to frame rules to enable a State Government company or
 corporation to fix a minimum price for granite.
 20. Learned counsel for the appellant State submitted that
 Rules 8-D and 19-B were valid having regard to the
 Preamble of the said Act and Section 18 thereof. He G
 submitted that the rule-making power of the State under
 Section 15( o ) was wide enough to encompass Rules 8-
 D and 19-B.
  23. It is difficult to see how granite resources can be        H
    1211       SUPREME COURT REPORTS                    [2008] 1 S.C.R.


A               protected by controlling the sale of granite after its
                excavation and fixing the minimum price thereof.
           24. There is no power conferred upon the State
           Government under the said Act to exercise control over
           minor minerals after they have been excavated. The power
B          of the State Government, as the subordinate rule-making
           authority, is restricted in the manner set out in Section 15.
           The power to control the sale and the sale price of a minor
           mineral is not covered by the terms of clause ( o) of sub-
           section (1-A) of Section 15. This clause can relate only to
c          the regulation of the grant of quarry and mining leases and
           other mineral concessions and it does not confer the power
           to regulate the sale of already mined minerals."
        13. In view of what has been stated by this Court in M.PP
  Kavery Chetty's case (supra) the impugned conditions
0
  stipulated could not have been imposed and are accordingly
  struck down.
         14. The appeal is allowed to the aforesaid extent without
    any order as to costs.
E
    N.J.                                              Appeal allowed.