Holding

Seashells are not minerals nor "lime shell" within the meaning of the Mines and Minerals (Regulation and Development) Act, 1957, and therefore the levy of royalty and the requirement of a mining lease on them are invalid.

Summary

The appellants, who collected and sold seashells from the Tamil Nadu coast, were directed by the State Government to obtain mining leases and pay royalty on the basis that seashells were classified as "lime shell", a major mineral under the Mines and Minerals (Regulation and Development) Act, 1957. The appellants challenged this order, and the Madras High Court held that seashells, although dug out of the earth, were not listed in the Second Schedule and thus could not attract royalty. The State appealed, and the Appellate Court reversed the High Court, deeming seashells a "lime shell" and a major mineral. The Supreme Court examined the statutory definition of "mineral", the meaning of "lime shell" in the Schedule, and the competence of a State to classify a substance under a Central Act, concluding that seashells are not minerals nor "lime shell" within the Act. Consequently, the requirement of a mining lease and royalty for seashells was held invalid, and the appeals were allowed, with no refund of already paid royalties ordered but pending demands stayed.

Issues considered

Whether seashells qualify as a "mineral" within the meaning of the Mines and Minerals (Regulation and Development) Act, 1957.
Whether seashells can be equated with "lime shell" as listed in Entry 28 of the Second Schedule, making them a major mineral subject to royalty.
Whether a State Government can, under a Central legislation, determine the classification of a substance as a mineral for the purposes of the Act.
Whether the levy of royalty and the requirement of a mining lease on seashells are legally valid.

Legislation cited

Mines and Minerals (Regulation and Development) Act, 1957s. 13(2), s. 2, s. 3(a), s. 3(e), s. 4, s. 5-13, s. 6, s. 9

Subjects

mineral definitionMines and Minerals Actseashellroyaltymajor mineralstate competencestatutory interpretationmining lease

Judgment

V.P. PITHUPITCHAI AND ANR. A
v.
THE SPECIAL SECRETARY TO THE GOVT. OF TAMIL NADU

APRIL 30, 2003

[RUMA PAL AND B.N. SRIKRISHNA, JJ.] B

Mines and Minerals (Regulation and Development) Act, 1957-Section
J(a), J(e)-Seashell-Whether a lime shell and as such a mineral within the
meaning of the Act-Held, such issue is to be determined with extensive research C
by_ technically competent person-In absence thereof it cannot be said that
seashell is lime shell and hence a mineral within the meaning of the Act-
Second Schedule to the Mines and Minerals (Regulation and Development)
Act, 1957, Entries 28 and 14.

Words and Phrases: D
'Minera/'-Meaning of

Appellants collected seashells from lands along the seashore and
traded in them. State Government issued an order that seashells are major
minerals as they arc the same as 'lime shell' which is classified as a major E
mineral under the Second Schedule to the Mines and Minerals (Regulation
and Development) Act, 1957. The Collector then called upon appellants to
take out leases and pay royalty on seashells at the rates prescribed for lime
shell in the Second Schedule to the Act. The appellants challenged the order.
The Single Judge of the High Court held that as seashells are dug out from
the earth, they are minerals and that seashells were not included in the F
Second Schedule to the Act, thus royalty could not be levied on seashells
in the absence of any Government notification. The State Government
appealed. The Appellate Court allowed the appeal. It held that the word
"lime" in item 14 of the Second Schedule includes seashells "in this part of
the country" and, therefore, was subject to levy of royalty as a major G
mineral. Hence the present appeal.

Allowing the appeal, the Court

HELD: I.I. Seashells cannot be termed to be 'mineral' within the
H
1045
1046 SUPREME COURT REPORTS (2003] 3 S.C.R.

A meaning of the Mines and Minerals (Regulation and Development) Act,
1957. (1048-B, q

1.2. A distinction must be drawn between (i) a substance identified
as a mineral, (ii) a substance containing minerals (for example bones which
contain large percentage of calcium and phosphate and to some extent
B carbonate) and (iii) a substance which may be the original source of a
mineral (for example plants which after being subjected to millions of years
of geological processes ultimately become coal). In the first case, the
classification of a substance as a mineral is simple. But ·the bones in the
second class and trees in the third class can hardly be termed to be minerals
C although they may contain or ultimately result in a mineral. Seashells may,
like bones, contain calcium carbonate, and may also like trees, through a
geological process result in a mineral such as limestone. But it cannot be
said that a seashell in its original form is a mineral. (1052-G, H; 1053-A(

1.3. The Appellate Court was not justified in arriving at the meaning
D of the word "limeshell" by treating it as a compound word, as if it were a
term evolved for the purposes of the Act by the Central Government. It
must be assumed that Parliament has used the word 'limeshell' with a
purpose. Besides even if lime may be a product of seashells, unprocessed
seashells cannot be equated with lime. Had 'limeshells' meant seashells and
E nothing more, Parliament would have referred to it as such without
resorting to convoluted description of a familiar object. The submission
that seashell was nothing but a synonym for 'limeshell' cannot be accepted.
There are three separate entries in the Second Schedule in which the word
'lime' finds place. The first is Entry 26 which specifies 'limestone', the
second 'Lime Kankar' under Entry 27 and the third is Entry 28 which
F refers to 'Limcshcll'. Further while seashells may evolve geologically into
a form of limestone, it is not limestone. (1053-B-D(

1.4. The issue whether seashell is mineral for the purposes of the Act,
could not be determined without extensive research by technically
G competent persons. The Government Order does not show that the State
Government had acted on the finding of any acknowledged expert. The
determination that seashells is lime-shell and a major mineral within the
meaning of the Act is not based upon any material whatsoever. Further
even the definitions put forward by the respondent in the counter affidavit

H
do not indicate that seashells by themselves are limeshell. Also the reason
given in GO rejecting representation of some of the appellants, that mining -
VP PITHUPITCHAI v. THE SPL. SECY. TO THE GOVT. OFT.N. I Q47

leases had already been issued in. otlier districts of the State in respect of A
seashells cannot be accepted. Thus the Government Order that seashell is
a major mineral cannot be sustained. Having regard to the fact that the

- Act is a Central Government's legislation which occupies the field, it is a
moot point whether the State Government was competent to have decided
the issue as to whether a particular substance was a mineral or not for the
purposes of the Act. (1053-G, H; 1054-A, C-Ef
B

2. Minerals need not necessarily be dug out from the earth and what
is dug out from the earth need not necessarily be a mineral. Therefore, a
mineral as judicially defined would mean an inorganic substance found
either on or in the earth which may be garnered and exploited for profits. C
The observation that as the seashells are admittedly dug out from the earth,
they fall within the definition of 'mineral' cannot be accepted. f1051-C-DI

State of M.P. v. Mahalaxmi Fabric Mills Ltd., (19951 Supp. I SCC 642;
Bhagwan Dass v. State of U.P., fl9761 3 SCC 784 and Mis. Banarsi Dass
Chadha and Brothers v. Lt. Governor, Delhi Administration and Ors., fl9781 D
4 SCC II, referred to.
l
Websters Third New International Dictionmy, 1968; Funk and Wagnalls,
Standard Dictionary, International Edition, Volume II; Oxford Illustrated
Dictionary; Grolier International Dictionary, Volume II; Oxford English E
Dictionary, 119331 Vol.VI, p. 296, referred to.

3. The requirement of taking out a mining lease under the 1957 Act
and of payment of royalty thereunder in respect of seashells cannot be
sustained. However, since the matter is pending before this Court for a long
time and realizations have been made by the State Government on the basis F
of the impugned decision of the High Court, it would not be appropriate
to direct refund of the amounts already collected by the respondent from
the appellants under the Act in respect of seashells. Howe\'er, if there are
any pending demands, they shall not be proceeded with and no recovery
would be made. 11085-A-Cf
r
CIVIL APPELLATE JURISDICTION: Civil Appeal Nos. 9811-9812
of 1995.

From the Judgment and Order dated 18.6.87 of the Chennai High Court
in W.A. Nos. 670 and 671 of 1980.
H
..
1048 SUPREME COURT REPORTS [2003] 3 S.C.R.

A Ambrish Kumar for the Appellants.

V. Balaji and P.N. Ramaiingam for the Respondent.

B
The Judgment of the Court was delivered by

RUMA PAL, J. The appellants gather and trade in seashells. The
seashells are collected from lands belonging to private individuals along the
-
seashore near Tuticorin in the state of Tamil Nadu.The question to be decided
is whether seashells can be termed to be 'mineral' within the meaning of the
Mines and Minerals (Regulation and Development) Act, 1957 (referred to as
the Act).
c
The Act was enacted by the Central Government in exercise of its
power under Entry 54 of List I of the Seventh Schedule read with Article
246 of the Constitution. Under Section 2 of the Act it was declared that it is
expedient in the public interest that the Union should take under its control
D the regulation of mines and the development of minerals to the extent provided
in the Act. The word 'minerals' has been somewhat un-helpfully, defined in
Section 3(a) as including "all minerals except mineral oils." Despite the
\
generality of this definition, from the provisions of the Act it is clear that
there are two classes of minerals. The first is that of "minor minerals" which
has been defined in Section 3(e) of the Act as meaning "building stones,
E gravel, ordinary clay, ordinary sand other than sand used for prescribed
purposes, and any other mineral which the Central Government may, by
notification in the Official Gazette, declare to be a "minor mineral". The
second group of minerals would be the "major minerals" or the minerals not
included within the definition ?f "minor minerals". The importance of this
distinction between the two types of minerals lies in the fact that as far as
F minor minerals are concerned the State Governments have been empowered
under Section 15 to make rules in respect of minor minerals by notification
in the Official Gazette for regulating the grant of quarry leases, mining leases
or other mineral concessions in respect of minor minerals and for the purposes
connected therewith. The provisions of the Act, namely, Section 5 to 13
G which relate to all other minerals do not apply to minor minerals.

The Act envisages three kinds of operations in respect of minerals-
mining, prospecting and reconnaissance. We are in this case concerned with
mining leases. Section 4 of the Act inter alia provides that no person shall
undertake mining operations in any area except under and in accordance with
H the terms and conditions of a mining lease granted under the Act and the
V.P. PITHUPITCHAI v. THE SPL. SECY. TO THE GOVT. OF T.N. (RUMA PAL, J.) 049

Rules framed thereunder. Sub-section (I) of Section 6 places restrictions on A
the acquisition of any mineral or prescribed group of associated minerals in
a State. The associated minerals have been specified in Rule 69 of the Mineral
Concession Rules, 1960. Secdon 9 provides for the payment of royiilty in
respect of mining leases in respect of any mineral removed or consumed by
the holder 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 B
in respect of that mineral. The Second Schedule contains a list of 50 specified
minerals. Entry 28 refers to "lime shell" and item 51 deals with 'all other
minerals not herein before specified'.

By a letter dated 24.9.73, the Collector, Tirunevelli, wrote to the State C
Government, stating (in so far as it is relevant) that large quantities of seashells
were being quarried from "patta lands" near Tuticorin village and transported
to various places for sale. Since seasheslls did not find place in the list of
"associated minerals" under Rule 69 of the Mineral Concession Rules, 1980,
the Collector requested that the Central Government should be moved to
notify seashells as an associated mineral under the Act. D
r On 3rd April 1975, the State Government issued a memo which said
that the proposal of the Collector had been carefully examined in consultation
with the Director of Industries and Commerce and that it was "reported that
seashells are the same as 'lime shell' which is classified as a major mineral
under the Second Schedule to the Mines and Minerals (Regulation and E
Development) Act. 1957 and royalty rates similar to "limestone" have been
prescribed. Hence seashells have to be treated only as "major minerals".
Pursuant to this order, the Collector called upon the appellants to take out
leases and pay royalty in respect of seashells at the rate prescribed for lime
shell in the Second Schedule to the said Act. F
Some of the appellants approached the Government with representations
against the levy and require111ent of taking a licence. The Govern111ent by
G.O. dated 26.5.1977 rejected the representations. The reason given was that
in other districts "seashell" had been treated as a major mineral and mining
leases had been granted by the Government in respect of seashells. G
The appellants then challenged the order dated 3.4.75 before the High
Court of Madras under Article 226 of the Constitution. Although the learned
Single Judge held, that as seashells are admittedly dug out from the earth,
they would fall within the definition of "minerals", the writ petitions were
allowed by holding that as seashells were not included in the Second Schedule H
1050 SUPREME COURT REPORTS [2003) 3 S.C.R.

A to the Act, royalty could not be levied in respect of seashells in the absence
of any notification by the Government of India under Section 13(2) of the
Act.

The Appellate Court allowed the appeals preferred by the State
Government. The Court considered the definition of minerals and came to the
B conclusion that a seashell was a mineral since it was not an organic substance.
The submission of the appellants that a mineral must form part of the earth's
crust, was also rejected. The Court found no definition of the word "limeshell"
in any English Dictionary and held that the word "limeshell" was a compound
word consisting of "lime" and "shell" and that "shell" which contains "lime"
C is classified as "limeshell". Although it was acknowledged by the Court as
not being an authority, reference was made to a paper submitted in a seminar
on Carbonate Rocks of Tamil Nadu organised by the Geologists Association
of Tamil Nadu in 1974 where, apparently, the material commonly known as
seashells was referred to as "limeshell" and the word limeshell and seashells
were taken as synonymous and "indiscriminately (sic) used" for giving the
D same meaning in different places. The Appellate Court therefore came to the
conclusion that the word "lime" shown in item 14 of the Second Schedule
includes what is known as seashells "in this part of the country" and therefore
was subject to levy of royalty as a major mineral.

We are unable to uphold the decision of the Appellate Court. The word
E 'mineral' although not defined in the Act has been judicially interpreted .
.According to this Court's view in State of M.P. v. Mahalaxmi Fabric
Mills ltd., [ 1995] Supp I SCC 642. ..
"Mineral in ordinary and common meaning is a comprehensive te1111
F including every description of stone and rock deposit whether
containing metallic or non-metallic substance. The word mineral in
popular sense means those inorganic constituents of the earth's crust
which are commonly obtained by mining or other process for bringing
them to the surface for profit." (p.665)
G However in Bhagwan Dass v. State of U.P. [1976] 3 SCC 784, 789, it
was said.

"it is wrong to assume that mines and minerals must always be sub-
soil and that there can be no minerals on the surface of the earth.
Such an assumption is contrary to infonned experience. In any case
H
V.P. PITHUPITCHAI "·THE SPL. SECY. TO THE GOVT. OFT.N. [RUMA PAL,J.] 05 J

the definition of mining operations and minor minerals in Section 3 A
(d) and (e) of the Act of 1957 and Rule 2(5) and (7) of the Rules of
1963 shows that minerals need not be subterranean and that mining
operations cover every operation undertaken for the purpose of
"winning" any minor mineral. "Winning" does not imply a hazardous
or perilous activity. The word simply means "extracting a mineral"
and is used generally to indicate any activity by which a mineral is B
secured."

See also : Mis. Banarasi Dass Chadha & Brothers v. Lt. Governor,
Delhi Administration and Ors., [1978] 4 SCC 11 at p. 13.

The learned Single Judges's observation that as seashells are admittedly C
dug out from the earth, therefore, they fall within the definition of 'mineral'
appears to be an incorrect approach. Minerals need not necessarily be dug out
from the earth and what is dug out from the earth need not necessarily be a
mineral. Therefore, a mineral as judicially defined would mean an inorganic
substance found either on or in the earth which may be garnered and exploited D
for profits.

This is in keeping with the meaning given in the several dictionaries
referred to by the High Court to determine the meaning of the word 'mineral'
which are reproduced:
E
(i) Websters Third New International Dictionary, 1968 defines 'mineral'
as:

"a solid homogenous crystalline chemical element or compound - as
diamond or quartz) that results from the inorganic processes of nature
and that has a characteristic crystal structure and chemical composition F
or range of compositions .... :.......................................... .
....................... something that is neither animal nor vegetable as in the
old general classification of things into three kingdoms; animal,
vegetable and mineral".

(ii) Funk and Wagnalls' Standard Dictionary, International Edition, G
Volume II:

"a naturally occurring, homogenous substance or material formed by
inorganic processes and having a characteristic set of physical
properties, a definite range of chemical composition, and a molecular
structure usually expressed in crystalline forms ..... Any· inorganic H
1052 SUPREME COURT REPORTS [2003] 3 S.C.R.

A substance, as ore, a rock, or a fossil."

(iii) Oxford Illustrated Dictionary:

"Substance (e.g. metal, coal, salt) got by mining .....

....(chem) element or compound occurring naturally as a product of
B inorganic processes ....... .

substance which is neither animal nor vegetable."

(iv) Groliar International Dictionary Volume II,

C "any naturally occurring, homogenous inorganic substance having a
definite chemical composition and characteristic crystalline structure,
colour and hardness ...... .

Any of various natural substances.

a. An element, such as gold or silver.
D
b. A mixture of inorganic compounds, such as hornblende or granite.
c. An organic derivative such as coal or petroleum ..... any substance
that is neither animal nor vegetable, inorganic matter."

E It is not really necessary for us to consider whether seashells fall within
the residuary entry in the Second Schedule as that was nobody's case at any
stage of the proceedings. We are strictly called upon to determine the
correctness of the High Court's opinion that a seashell is limeshell within the
meaning of Item 28 of the Second Schedule to the Act because the term
'lime' denotes the chemical composition of the .shell and the term 'sea'
F denotes the place of its occurrence.

A distinction must be drawn between (i) a substance identified as a
mineral, (ii) a substance conloining minerals (for example bones which contain
large percentages of calcium and phosphate and to some extend carbonate)
and (iii) a substance which may be the original source of a mineral (for
G example plants which after being subjected to millions of years of geological
processes ultimately become coal). In the first case, the classification of a
substance as a mineral is simple. But the bones in the second class and trees
in the third class can hardly be termed to be minerals although they may
contain or ultimately result in a mineral. Seashells may, like bones, contain
H calcium carbonate, and may also like trees, through a geological process
V.P. PITBUPITCHAI r. THE SPL. SECY. TO THE GOVT .. OF T.N. fRUMA PAI.. J) 053

result in a mineral such as limestones. But ·it cannot be said that a seashell A
in its original form is a mineral.

The Appellate Court was in any event not justified in arriving at the
meaning of the word "limeshell" by treating it as a compound word, as if it
were a term evolved for the purposes of the Act by the Central Government.
It must be assumed that the Parliament has used the word 'limeshell' with a B
purposes. Besides even if lime may be a product of seashells, unprocessed
seashells cannot be equated with lime. Had 'limeshells' meant seashells and
nothing more, Parliament would have referred to it as such wilhout resorting
to convoluted description of a familiar object. The respondents sought to
contend that seashell was nothing but a synonym for 'limeshell' and have C
relied upon the chemical composition of limestone to justify this assertion.
The submission is unacceptable. There are three separate entries in the Second
Schedule in which the word 'lime' finds place. The first is Entry 26 which
specifies 'limestone', the second 'Lime Kankar' under Entry 27 and the third
is Entry 28 which refers to 'Limeshell'. Further while seashells may evolve
geologically into a form of limestone, it is not limestone. If a person wanted D
to have a tonne of limestone, it is doubtful whether he would be satisfied
with a tonne of seashells instead.

The key paper referred to by the High Court has not been produced
before us. We do not know who submitted the paper nor what the qualifications
of the person were. Nor can we ascertain what was in fact said. The High E
Court was right in saying that the paper cannot be cited as an authority for
the definition of limeshell. The word 'limeshells' has been defined in the
Oxford English Dictionary (1933 edn. Vol. VI at page 296) as "Burnt lime
before it is slaked". According to this definition therefore, "lime shell" is the
product of lime. It is not either the lime itself nor the substance from which F
lime may be derived.

All this discussion clearly shows that the issue whether seashell is
mineral for the purposes of the Act, was not one which could be determined
without extensive research by technically competent persons. According to
the respondent the State Government was guided by the report of the Additional G
State Geologist .in issuing the order dated 3.4.1975. The order does not refer
to any report nor has the report been brought on record nor its contents
disclosed. The letter dated 3rd April 1975 does not show that the State
Government had acted on the finding of any acknowledged expert. The
determination that seashells is lime-shell and a major mineral within the H
'
r

1054 SUPREME COURT REPORTS j2003] 3 S.C.R.

A me·aning of the Act does not appear to have been based upon any ·material
whatsoever. The reason given in GO dated 26.5.1977 for rejection of the
representation of some of the appellants, namely, that mining leases had
already been issued in other districts of the State in respect of seashells, is
no reason at all. The counter affidavit which has been filed before this Court
on behalf of the respondent has been affirmed by the Deputy Secretary,
B Industrial Department. His competence as a geological expert is not known.
In his counter-affidavit he has sought to define limeshell as "desposition
from marine animals with lime skeletons as unconsolidated deposits of loose
shells admixed with fine silt and sand", meaning thereby that limeshell are I.

deposits from marine animal skeletons, upon their being admixed with silt
C and sand. It is also said that limeshell are found as "stratified deposits varying
in thickness ........ " and further, as "lagoonal deposits ....... river bed deposits ...... .
and marine/sea deposits". It is therefore apparent that even the definitions put
forward by the deponent, do not indicate the seashells by themselves are
limeshell. Limeshell according to the definition advanced by the respondent
is in the nature of a deposit of lime, which might be derived from marine
D animal shells upon further processing and after admixture with other inorganic
elements. For all these reasons the decision of the State Government be as
expressed in the G.O dated 3.4.1975 cannot be sustained.

There is another aspect of the matter. Having regard to the fact that the
E Act is a Central Government's legislation which occupies the field, it is a
moot point whether the State Government was competent to have decided the
issue as to whether a particular substance was a mineral or not for the purposes
of the Act.

We, therefore, allow these appeals and set aside the impugned decision
p of the High Court. At the time of entertaining the special leave petitions, out
of which these appeals arise, on 26th February 1988, this Court had directed.

"Pending notice there will be interim stay subject to the condition
that the petitioner will deposit 50% of the royalty payable to the
Collector and furnish Bank Guarantee in respect of the rest of the
G royalty to the satisfaction of the Collector concerned within six weeks."

This interim order is still operative."

In view of our decision in the appeals, the requirement of taking out a
mining lease under the 1957 Act and of payment or royalty thereunder in
H respect of seashells cannot, of course, be suatained. However since the matter
)
V.P. PITHUPITCHAI 1• THE SPL. SECY. TO THE GOVT. OF T.N. [RUMA PAL, J.) 055

is pending before this Court for a long time and realisations have been made A
by the State Government on the basis of the impugned decision of the High
Court, it would not be appropriate to direct refund of the amounts already
collected by the respondent from the appellants under the Act in respect of
seashells. However, if there are any pending demands, they shall not be
proceeded with and no recovery would be made. As far as the bank guarantees
I are concerned, they shall stand discharged. It is made clear that the respondent B
shall not be entitled to any amount from the appelfants except such amount
as may have· already been deposited with the State Government by the
respondent. No demand whether already raised or pendings will lie against
the appellant under the Act.

NJ. Appeals allowed.
c