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Madhya Pradesh High Court · body

2003 DIGILAW 369 (MP)

Fateh Granite Ltd. v. State Of M. P.

2003-03-05

A.K.SHRIVASTAVA, DIPAK MISRA

body2003
JUDGMENT : DIPAK MISRA, J. By this writ petition preferred under Article 226 of the Constitution of India the petitioner, a company registered under the Indian Companies Act, 1956 has prayed for declaring the provisions of Rules 18 and 21 of Madhya Pradesh Minor Mineral Rules, 1996 (for brevity 'the Rules') as ultra vires and further to issue a writ of mandamus commanding the State Government to decide the review petition of the petitioner and set aside deemed rejection order and further to grant quarry lease to the petitioner as applied under Annexure-A and to pass such order/orders as may be deemed fit and proper in the facts and circumstances of the case. 2. The facts essential to be stated for the adjudication of this writ petition are that the petitioner-company carries on the business of mining and industries relating thereto and has installed a cutting and polishing plant for granite mineral which is supported by the mineral from the leases granted by the State Govt. It is engaged in the export of the aforesaid polished granite after cutting into proper sizes. The industry in question is 100% export oriented industry and earns valuable foreign exchange for the country. 3. According to the writ petitioner it applied for the grant of quarry lease for extraction of granite vide application dated 20-1-1994 in respect of an area of 5.00 hectares situate in Khasra No. 796 in village Bansia, Tahsil Gourihar, District Chhatarpur. As envisaged under Rule 8(2) of the M. P. Minor Mineral Rules, 1961 (in short 'the 1961 Rules') the application was required to be disposed of within a period of one year and on failure to do so the said application suffered deemed refusal. As the application was not decided, on 20-1-1995 by operation of law it suffered deemed refusal. The petitioner, thereafter, preferred an application for review under Rule 28 of the M. P. Minor Mineral Rules, 1961 before the State Government which was received by the competent authority of the State Government on 1-3-1995. As alleged the review application has not yet been decided. The petitioner, thereafter, preferred an application for review under Rule 28 of the M. P. Minor Mineral Rules, 1961 before the State Government which was received by the competent authority of the State Government on 1-3-1995. As alleged the review application has not yet been decided. In the meantime the State Government in exercise of its powers under section 15 of the Mines and Minerals (R & D) Act, 1957 (hereinafter referred to as 'the MMRD Act') brought into existence the M. P. Minor Mineral Rules, 1996 and repealed the earlier set of Rules, namely, M. P. Minor Mineral Rules, 1961. A reference has been made to Rule 18 which deals with grant of renewal of quarry lease. As per the said Rules all applications pending would be deemed to have been refused and fresh application in that behalf is required to be made in accordance with the procedure laid down under the new Rules. A reference has also been made to Rule 21 which deals with preferential rights. It is putforth in the writ petition that as per Rule 21 quarry of mineral granite would only be granted to the M. P. State Mining Corporation Limited for establishing, cutting and polishing unit in the State itself or as joint venture. It is urged in the petition that the aforesaid Rule 21 tantamounts to reserving of mineral viz. granite, for grant to the State Mining Corporation or to the Joint Venture with the said mining Corporation as the partner thereof. 4. It is contended in the petition that the Rule 21 of the Rules contravenes section 17(A) of the MMRD Act which postulates that the Central Government can reserve any area with the consultation of the State Government, not already held under any prospecting licence or mining lease, for undertaking prospecting or mining operation through a Government Company or Corporation owned or controlled by it and where it proposes to do so, it shall by notification in the Official Gazette, specify the boundaries of such area. It is also pleaded that the State Government with the prior approval of the Central Government may reserve any area not already held under any prospecting licence or mining lease, for undertaking prospecting or mining operations through a Government Company or Corporation or other Government undertakings. It is also pleaded that the State Government with the prior approval of the Central Government may reserve any area not already held under any prospecting licence or mining lease, for undertaking prospecting or mining operations through a Government Company or Corporation or other Government undertakings. According to the writ petitioner the State Government has not obtained the permission from the Central Government for reserving the area in an question and, therefore, the State Government has acted in illegal manner by making reservation under Rules 21 and 22 of the Rules. It is urged in the petition that the provision encroaches and entrenches in the legislative sphere of the Union of India in an uncontrolled manner. It is also purtforth that Rules violative of the equality clause enshrined under Article 14 of the Constitution of India as it creates discrimination between ordinary applicants and the State Mining Corporation though such a classification is not permissible in law. By incorporation of such a Rule likes of the petitioners have been excluded though they had applied for grant of lease. In this backdrop a prayer has been made to declare the Rules 18(3) and 21(1) as ultra vires being beyond the purview of the rule making power of the State Government. 5. A return has been filed by the answering respondents contending, inter alia, that M. P. Minor Mineral Rules have been framed in exercise of powers conferred under section 15 of the MMRD Act which authorises the State Government to frame Rules for grant of mining lease in respect minor minerals. The power conferred by section 15(1) of the Act is general power giving full power to the State Government in respect of all matters connected with minor minerals. A reference has been made to section 15(1)(a) of the Act to show that the said provision without curtailing the general power given under section 15 enumerates certain instances for which Rules are framed by the State Government and the same does not affect the rule making power of the State Government. It is averred that 73rd amendment to the Constitution of India provides for making provisions for creating and developing the Gram Panchayat and Municipalities as an effective unit of self governance. It is averred that 73rd amendment to the Constitution of India provides for making provisions for creating and developing the Gram Panchayat and Municipalities as an effective unit of self governance. In pursuance of the 73rd amendment to the Constitution of India which relates to the Panchayat the Government of M. P. has enacted M.P. Panchayat Raj Avam Gram Swaraj Adhiniyam, 1993 making adequate provisions to ensure that the Gram Panchayats can function as an effective unit of Self Governance by conferring powers on the Gram Panchayats. In furtherance of the aforesaid objectives several provisions have been enacted giving adequate powers to the Gram Panchayat for the purpose of generation of revenue and resources development at the local level itself. M. P. Minor Mineral Rules have been framed to enable the Gram Panchayat to develop mineral resources within their area to generate revenue therefrom. The provisions for filing and disposal of application for quarry permit have been made in Rules 37 and 38. After coming into force of the aforesaid Rules application for grant of quarry lease are to be filed before the concerned Gram Panchayat, Janpad Panchayat or Jila Panchayat as the case may be. Reference has been made to Rule 38(4) which deals with the preferential right and stipulates that quarry permit shall be granted only to the resident of the Panchayat where the quarry is located in order to preference as laid down therein. It is also pleaded that Rules 18 and 21 have been framed to deal with the application preferred for grant and renewal of quarry lease. It is also urged that new procedure has been prescribed with the object to achieve the goal of the Constitution and hence, there is no impropriety or illegality in the same. Many a fact has been brought on record showing what is the procedure and how the deemed refusal takes place. It is contended in the return that the contentions of the petitioner that he has been totally excluded from obtaining the quarry lease is absolutely misconceived and deserves no consideration. 6. Many a fact has been brought on record showing what is the procedure and how the deemed refusal takes place. It is contended in the return that the contentions of the petitioner that he has been totally excluded from obtaining the quarry lease is absolutely misconceived and deserves no consideration. 6. It is purforth in the return that the petitioner has all the rights along with others to apply for it and in case after enquiry and after obtaining opinion of the respective Gram Panchayat if the petitioner or any other person is entitled to the quarry lease he shall be granted the same after following due procedure as prescribed under the Rules. Rule 21 of 1996 Rules provides for preferential right for grant of refusal of quarry lease. Sub-rule (1) of the said Rule lays down that quarry lease for minerals specified at serial No. 1 Schedule 1 shall be granted only to the M.P. State Mining Corporation Ltd. for establishing, cutting and polishing unit in the State by itself or as a joint venture. As far as grant of quarry lease in respect of those minerals as specified in Rules 2 to 7 of Schedule 1 and Schedule 2 are concerned, preference for the same is enumerated in Sub-rule (2) of Rule 21 Emphasis has been made on section 15 of the 1957 Act which confers powers on the State Government to make Rules for regulating grant of quarry lease and for all purposes connected thereto. In exercise of the regulatory powers the State Government has framed 1996 Rules providing for preferential right in respect of granite and other minerals as enumerated in Serial No. 1 of the 1996 Rules. The preference as given to the State Mining Corporation is not absolute as alleged. All the interested persons may apply and in case they are willing to operate quarry lease on a joint venture they can be granted quarry lease after following the due procedure as prescribed in 1996 Rules. It is putforth that no area has been reserved for the M.P. State Mining Corporation under Rule 21(1). All the interested persons may apply and in case they are willing to operate quarry lease on a joint venture they can be granted quarry lease after following the due procedure as prescribed in 1996 Rules. It is putforth that no area has been reserved for the M.P. State Mining Corporation under Rule 21(1). Reference has been made to Entry 23 in the List II of Seventh Schedule to the Constitution of Highlight that the power has been vested with the State Legislature to enact any law for regulation of mines and mineral developments subject to Entry 54 in the List I of the Seventh Schedule and accordingly Rules have been framed and no fault can be found with it inasmuch as it does not violate or contravene any provision of the MMRD Act. It is urged in the return that the said Rules are regulatory in nature and do not entrench upon any Central Legislation. It is also highlighted that the aforesaid Rules have been framed to ensure that the mineral is exploited in accordance with law and for the maximum benefit of the State as well as the local authorities. The plea of total reservation for M.P. Mining Corporation has seriously been controverted on the ground that the petitioner is also at liberty to apply for granite and there is no deprivation of his right. 7. It is further setforth in the return that the M. P. State Mining Corporation has only been given preference and the petitioner as well as any other person desirous of grant of lease of granite may apply, and in case he is willing to join in the Joint venture with the Corporation his case shall be considered, if he otherwise fulfils all the qualifications and requirement as laid down by the Rules of 1996. No person has a vested right or statutory right for grant of mining or quarry lease but he has right to file an application for grant of the same and, therefore, the contentions of the petitioner that he has been deprived of his right for obtaining grant of quarry lease is absolutely misconceived. According to the answering respondents the petitioner is at liberty to apply for grant of quarry lease and his case shall be considered in accordance with the Rules invogue. According to the answering respondents the petitioner is at liberty to apply for grant of quarry lease and his case shall be considered in accordance with the Rules invogue. Justification has been rendered for deemed dismissal of the application of the petitioner under Rule 18(3) by the State Government. The stand taken by the petitioner that the Rule contravenes section 17-A(2) is totally unjustified inasmuch as the Rule simply provides for grant of quarry lease on preferential basis and there is not question of reservation. That apart, preference in respect of State Mining Corporation is restricted to minerals enumerated in Item No. 1 of Schedule-I of the 1996 Rules. It is further pleaded that this preference is in public interest and in furtherance of the aims and objectives of the Act and in the absence of any reservation the grounds urged by the petitioner are totally unsustainable. It is highlighted that after deemed refusal the petitioner has not applied in accordance with the Rules 1996 and when he has not made any claim for grant of quarry lease he has no cause of action. It is also setforth in the return that if the petitioner files a fresh application for grant of quarry lease it would be appropriately dealt with in accordance with law. 8. We have heard Mr. P. K. Jaiswal, learned counsel for the petitioner, and Mr. S. K. Yadav, learned Government Advocate. 9. It is submitted by Mr. Jaiswal that the Rules indirectly create a reservation and monopoly in favour of the mining corporation whereas such reservation is not sustainable in view of the provisions enshrined under the MMRD Act. It is argued by Mr. Jaiswal that the Rule Making Authority does not have the competence to make a rule pertaining to reservation and efforts made clearly expose that the Rules is a colourable piece of delegated legislation. 10. Resisting the aforesaid submissions it is contended by Mr. Yadav, learned Government Advocate, that if the Rules are read in proper perspective they do not in any manner create a reservation in favour of the M. P. Mining Corporation but only carves out a preference and conferral of benefit of preference cannot, by any stretch of imagination, be given the status of total reservation or monopoly and hence, there is no infringement in regard to the central legislation. It is further propounded by him that the edifice built by the petitioner is unsustainable inasmuch as the petitioner's application has faced deemed refusal and he has not preferred any other application. 11. The moot question that really falls for adjudication in this context is whether any part of the Rules, namely, Rules 18 and 21 of the Rules run counter to section 17-A of the MMRD Act and thereby entrenching in the different filed. To appreciate the aforesaid facet it is seemly to reproduce section 17-A of the MMRD Act which reads as under :- "17-A. Reservation of area for purposes of conservation. - (1) The Central Government, with a view to conserving any mineral and after consultation with the State Government, may reserve any area not already held under any prospecting licence or mining lease and, where it proposes to do so, it shall, by notification in the Official Gazette, specify the boundaries of such area and the mineral or minerals in respect of which such area will be reserved. (2) The State Government may, with the approval of the Central Government, reserve any area not already held under any prospecting licence or mining lease, for undertaking prospecting or mining operations through a Government Company or Corporation owned or controlled by it or by the Central Government and where it proposes to do so, it shall, by notification in the Official Gazette, specify the boundaries of such area and the mineral or minerals in respect of which such area will be reserved. (3) Where in exercise of the powers conferred by sub-section (2) the State Government undertakes prospecting or mining operations in any area in which the minerals vest in a private person, it shall be liable to pay prospecting fee, royalty, surface rent or dead rent as the case may be, from time to time at the same rate at which it would have been payable under this Act if such prospecting or mining operations had been undertaken by a private person under prospecting licence or mining lease." 12. On a reading of the aforesaid provision it is luminously clear that the Central Government for the purpose of conserving any mineral and after consultation with the State Government may reserve any area not already held under any prospecting licence or mining lease and where it proposes to do so, it shall, by notification in the Official Gazette, specify the boundaries of such area. It is also provided therein that the Central Government in consultation with the State Government reserve any area not already held under prospecting licence or mining lease, for undertaking prospecting or mining operations through a Government Company or Corporation and in that event it shall by notification in the Official Gazette specify the boundaries of such area. The State Government has also the authority to do so with the approval of Central Government. Thus, in essence, the process of reservation has been categories into various compartments and procedures have been provided. 12A. The Rules are to be scrutinised in the backdrop of the aforesaid provision. Rules 18 and 21 read as under :- "18. Disposal of applications for the grant or renewal of quarry lease.-(1) On receipt of an application for the grant or renewal of a quarry lease, its details shall be first circulated for display on the notice board of the Zila Panchayat, Janpad Panchayat and Gram Panchayat concerned of the district and Collectorate of the district concerned. (2) The Sanctioning Authority, after making such inquiries as he may deem fit and after obtaining opinion of the respective Gram Panchayat, may sanction the grant or renewal of a quarry lease to the applicant or refuse to sanction it. (3) Notwithstanding anything contained in sub-rule (2), all pending applications for the grant inclusive of such applications on which agreements have not been executed on the date of commencement of these rules shall be deemed to have been refused by the Sanctioning Authority. Fresh applications in this behalf may be made according to the procedure laid down under these rules. 21. Preferential Rights. - (1) A quarry lease for minerals specified in S. No. 1 of Schedule 1 shall be granted only to the Madhya Pradesh State Mining Corporation Limited (A Government of Madhya Pradesh Undertaking) for establishing cutting and polishing unit in the State by itself or as a Joint Venture. 21. Preferential Rights. - (1) A quarry lease for minerals specified in S. No. 1 of Schedule 1 shall be granted only to the Madhya Pradesh State Mining Corporation Limited (A Government of Madhya Pradesh Undertaking) for establishing cutting and polishing unit in the State by itself or as a Joint Venture. (2) Minerals specified at S. No. 2 to 7 of Schedule I and minerals specified in Schedule II - (i) Co-operative Society/Association of Scheduled Tribe/Scheduled Caste/Backward Classes, Co-operative Society/Association of educated unemployed youths or individuals where more than fifty per cent of the members belong to the concerned category and also where the Chairman of the Society is of the concerned category and also where the executive committee have the representation in the ratio of the members of the concerned category and hail from below Poverty Line families listed in the District Rural Development Agency or educated unemployed youth belonging to Scheduled Tribe/Schedule Caste/Backward Classes in that order. (ii) An educated unemployed youth belonging to below Poverty Line families listed in the District Rural Development Agency. (iii) Any other person belonging to below Poverty Line families listed in the District Rural Development Agency; (iv) Any other applicant; Provided that the above priorities shall hold good only if the applications are received within one month from the date of first application. (iii) Any other person belonging to below Poverty Line families listed in the District Rural Development Agency; (iv) Any other applicant; Provided that the above priorities shall hold good only if the applications are received within one month from the date of first application. (3) Whenever more than one application in any particular category are received for minerals of Schedule I for an area, the Sanctioning Authority shall while sanctioning a quarry lease take into consideration the following matters in respect of the applicants - (i) Any special knowledge or experience of mining and export; (ii) Technical and special management experience of establishing, running and maintaining cutting polishing industry; and (iii) The nature and quality of the technical staff and the plant and machinery deployed or to be deployed by the applicant; (iv) The financial resources of the applicant; (v) The proposed phased programme of establishing the industry; Notwithstanding anything contained in sub-rule (1) or (2), it shall be competent for the Sanctioning Authority for reasons to be recorded in writing and with the prior approval of the State Government to grant a lease in variance with the order of priority specified in sub-rule (1) and (2) : Provided that in cases falling under category (i) to (iv) in sub-rule (2), the grant of lease shall be subject to the condition that lesse shall work the quarry directly and shall not hand it over to any other party for working; Provided further that the Sanctioning Authority may refuse to accord preference to the application of a Co-operative Society/Association if he finds that the particular society does not work properly in the interest of the workers concerned; The lessee shall give priority in employment to the resident of the village in which the quarry lease is granted." 13. Assailing the validity of Rule 18(3) Mr. P. K. Jaiswal, learned counsel, has advanced a contention that the said provision is wholly arbitrary and violative of Article 14 of the Constitution. It is contended that by filing an application at a particular point of time the petitioner has got right of priority and he is entitled for preference while dealing with his application, the said right has been taken away without any valid reason. At this juncture he has also submitted that same has been given to the Mining Corporation without obtaining prior approval of the central government. 14. At this juncture he has also submitted that same has been given to the Mining Corporation without obtaining prior approval of the central government. 14. To appreciate the aforesaid submission we have carefully scanned the tenor of language in which Sub-rule 3 of Rule 18 has been couched. The said rule deals with pending applications on the date of commencing of the Rule. The Rule envisages submission of fresh application. It is worth noting here that the matter would have been different had the applications been decided and the agreement been executed. In that event the Rule possibly could not have been made to destroy the said right. In the present set of rules the fate of pending applications has been annulled and the fresh applications are to be submitted to be dealt with in accordance with the new rules. Where no right has accrued under the old provision it cannot be said that the new rule is arbitrary or unreasonable. It treats all concerned in a uniform manner and does not destroy or annihilate any right. No classification is made by the new set of rules. All have been put in one compartment. As far as arbitrariness is concerned we do not perceive any. In fact, what is being submitted by Mr. Jaiswal that this recourse has been taken to confer the privilege on the M. P. State Mining Corporation. This cannot be a ground to declare the Rule ultra vires. In our considered view this action has been done for taking recourse to sub-rule (1) of Rule 21 with which we are going to deal at a later stage. Hence, we are not impressed with the submission of Mr. P. K. Jaiswal, learned counsel for the petitioner and accordingly we hold that sub-rule (3) of Rule 18 is intravires as it does not invite the frown of Article 14 of the Constitution. It is also propounded by the learned counsel that the reliance on the stand taken in the return that certain quarries have been transferred to the Panchayat and renewal can be made after obtaining permission of the Panchayat is unreasonable. On a scrutiny of the entire provision we are disposed to think that to give effect to 1996 Rules in proper perspective such a provision was essential and same has been done by not affecting anyone's right and requiring everyone to file a fresh application. On a scrutiny of the entire provision we are disposed to think that to give effect to 1996 Rules in proper perspective such a provision was essential and same has been done by not affecting anyone's right and requiring everyone to file a fresh application. Hence, we do not find any fault with the said Rule. 15. The next aspect which requires consideration is whether sub-rule (1) of Rule 21 runs counter to the provisions of M.M.R.D. Act. On an X-ray of sub-rule (1) it is luminescent that a quarry lease for mineral specified in S. No. 1 of Schedule I shall be granted only to the Madhya Pradesh State Mining Corporation Limited for establishing cutting and polishing unit in the State by itself or as a Joint Venture. Submission of Mr. Jaiswal is that the word "only" is of immense significance inasmuch as no one can be considered for the said mineral. It is relevant to state that S. No. 1 of Schedule I deals with dimensional stone-Granite, dolerite, and other igneous and metamorphic rocks used for cutting and polishing purpose for making blocks, slabs, tiles of specific dimension. It is urged by him that though Rule 21 stipulates preferential rights as an actual fact, it quintessentially makes reservation. 16. Mr. Yadav, per contra, has laid immense emphasis on the concept of preferential rights and has referred to sub-rule (3) to highlight how the applications are to be dealt with. He has especially commended us to sub-rule 3(v) to contend that sub-rule (3) incorporates a clause which lays a postulate that not withstanding anything contained in sub-rule (1) or (2) it is competent for the Sanctioning Authority of reasons to be recorded in writing with the prior approval of the State Government to grant a lease in variance with the order of priority specified in sub-rule (1) and (2). It is vehemently urged by Mr. Yadav that non obstante clause makes it graphically clear that there is no reservation for Mining Corporation as the competent authority for reasons to be recorded with prior approval of the State Government can grant a lease in variance with the order of priority specified in sub-rule (1) and (2) and, therefore, sub-rule (1) of Rule 21 has to be treated to be the Rule dealing with the preference but not reservation or creation of monopoly. It is his further submission that any one is entitled to apply to be a partner in the Joint Venture with the State Mining Corporation and, therefore, filing of an application is not forbidden. Submission of the learned Government Advocate is that the Constitution confers power on the State Legislature to enact any law for regulation of mines and mineral development and accordingly the State Legislature has the authority to frame any Rule regulating the filed and a regulatory measure having been taken for the purpose of exploring of mineral by the Mining Corporation singularly or in Joint Venture in a systematic and planned manner, the same cannot be treated to be unconstitutional. 17. To appreciate the rivalised stance it is apposite to refer to Entry 54 of List-I of the Seventh Schedule of the Constitution. It reads as under :- "54. Regulation of mines and mineral development to the extent to which such regulation and development under the control of the Union is declared by Parliament by law to be expedient in the publish interest." 18. In this regard it is worthwhile to refer to section 15 of the MMRD Act : "15. Power of State Government to make rules in respect of minor minerals. - (1) The State Government may, by notification in the Official Gazette, make Rules for regulating the grant of quarry leases, mining leases or other mineral concessions in respect to minor minerals and for purposes connected therewith. Power of State Government to make rules in respect of minor minerals. - (1) The State Government may, by notification in the Official Gazette, make Rules for regulating the grant of quarry leases, mining leases or other mineral concessions in respect to minor minerals and for purposes connected therewith. (1-A) In particular and without prejudice to the generality of the foregoing power, such rules may provide for all or any of the following matters, namely : (a) the person by whom and the manner in which, applications for quarry leases and mining leases or other mineral concessions may be made and the fees to be paid therefore; (b) the time within which, and the form in which, acknowledgement of the receipt of any such applications may be sent; (c) the matters which may be considered where applications in respect of the same land are received within the same day; (d) the terms on which, and the conditions subject to which and the authority by which quarry leases, mining leases or other mineral concessions may be granted or renewed; (e) the procedure for obtaining quarry leases, mining lease or other mineral concessions; (f) the facilities to be afforded by holders of quarry leases, mining leases or other mineral concession to persons deputed by the Government for the purpose of undertaking research or training in matters relating to mining operation; (g) the fixing and collection of rent, royalty, fees, dead rent, fines or other charges and the time within which and the manner in which these shall be payable; (h) the manner which rights of third parties may be protected (whether by way of payment of compensation or otherwise) in cases where any such party is prejudicially affected by reason of any prospecting or mining operations; (i) the manner in which rehabilitation of flora and other vegetation such as trees, shrubs and the like destroyed by reason of any quarrying on mining operations shall be made in the same area or in any other area selected by the State Government (whether by way of reimbursement of the cost of rehabilitation or otherwise) by the person holding the quarrying of mining lease; (j) the manner in which and the conditions subject to which, a quarry lease, mining lease or other mineral concession may be transferred; (k) the construction, maintenance and used of roads, power transmission lines, tramways, aerial ropeways, pipelines and the making of passage for water for mining purposes on any land comprised in a quarry of mining lease or other mineral concession; (l) the form of registers to be maintained under this Act; (m) the reports and statement to be submitted by holders of quarry or mining leases or other mineral concessions and the authority to which such reports and statements shall be submitted; (n) the period within which and the manner in which and the authority to which applications for revision of any order passed by any authority under these rules may be made, the fees to be paid therefore, and the powers of the revisional authority; and (o) any other matter which is to be, or may be, prescribed. (2) Until rules are made under sub-section (1), any rules made by a State Government regulating the grant of quarry leases, mining leases or other mineral concessions in respect of minor minerals which are in force immediately before the commencement of this Act, shall continue in force. (3) The holder of a mining lease or any other mineral concessions granted under any rule made under sub-section (1) shall pay royalty or dead rent, whichever is more in respect of minor minerals removed or consumed by him or by his agent, manager, employee, contractor or sub-lessee at the rate prescribed for the time being in the rules framed by the State Government in respect of minor minerals : Provided that the State Government shall not enhance the rate of royalty or dead rent in respect of any minor mineral for more than once during any period of three years." 19. At this juncture it is also profitable to refer to Entry 23 of List II of the Seventh Schedule of the Constitution : "23. Regulation of mines and mineral development subject to the provisions of List I with respect of regulation and development under the control of the Union." 20. Submission of Mr. Yadav is that the aforesaid provision confers power on the State Government to make Rules and when Rules have been made conferring preferential rights it cannot be found fault with. The aforesaid submission on a first flush looks quite attractive but it requires deeper probe and greater scanning. Rule 21(1) and Rule 21(3)(v) are to be appreciated in a studied manner to appreciate and understand the intention of the Rule making authority and what they eventually convey. Proponement of Mr. Jaiswal is that when section 17-A deals with the reservation of an area for the purpose of conservation and the modes are provided which also include for undertaking prospecting mining licences through a government company the same cannot be by-passed in a vicarious manner. The learned counsel has attacked the provision on two counts, namely, what cannot be done directly, cannot be allowed to be done indirectly; and second that the concept of reservation is in the realm of MMRD Act which is a central piece of legislation and, therefore, the State Government cannot make any Rule entrenching upon that or corroding the effect of such legislation. To buttress his submission he has place reliance on the decision rendered in the case of Gem Granites and another vs. State of T. N. and others, (1995) 2 SCC 413 . 21. Mr. S. K. Yadav, learned Government Advocate to bolster his submission that there is no entrenchment inasmuch as there is no reservation and as a necessary corollary section 17-A is not applicable has placed reliance on the decisions rendered in the cases of Aswini Kumar Ghose and another vs. Arabinda Bose and another, AIR 1952 SC 369 , M/s Orient Paper and Industries Ltd. and another vs. State of Orissa and others, AIR 1991 SC 672 , M. Venugopal vs. The Divisional Manager, Life Insurance Corporation of India, Machilipatnam, Andhra Pradesh and another, AIR 1994 SC 1343 and Smt. Parayankandiyal Eravath Kanapravan Kalliani Amma and other vs. K. Devi and others, AIR 1996 SC 1963 . 22. The hub of the matter is that whether the Rules have reserved any area for the mining lease for Mining Corporation without obtaining prior permission as stipulated under section 17-A(2) of the MMRD Act. Mr. Jaiswal has commended us to the decision rendered in the case of Gem Granites (supra). In the said case the Apex Court in paragraphs 6 and 7 has expressed the view as under :- "6. The real question is whether the State Government is entitled to go further and state that it would be free to grant or renew leases to quarry the said granites and rock to a State Government company or corporation. Mr. Sanghi argued that the provisions of Rule 8-C, as amended, were not intended to make a reservation of such granites and rock in favour of the State Government or its companies or corporations but to preserve the same and, therefore, the State Government was not obliged to obtain the approval of the Central Government thereto under the provisions of section 17-A(2). We cannot agree. Clearly, Rule 8-C, as amended, is intended to reserve the quarrying of the said granites and rock for the State Government and for State Government companies or corporations, it is hit by the provisions of section 17-A(2) because, for such reservation, the approval of the Central Government is required and has not been obtained. 7. We cannot agree. Clearly, Rule 8-C, as amended, is intended to reserve the quarrying of the said granites and rock for the State Government and for State Government companies or corporations, it is hit by the provisions of section 17-A(2) because, for such reservation, the approval of the Central Government is required and has not been obtained. 7. Rule 38 purports to permit the State Government to reserve any area for exploitation by the Government or Central or State Government corporations or companies. The provisions of Rule 38, insofar as they relate to the State Government itself, are unexceptionable but, insofar as they relate to Central or State Government companies or corporations, they must be read in conjunction with the provisions of section 17-A(2). In other words, the State Government may, by notification in the Official Gazette, reserve any area for exploitation by Central or State Government companies or corporations only if it has obtained the approval of the Central Government under section 17-A(2) for doing so." 23. Mr. S. K. Yadav, learned Government Advocate, as has been indicated, placed reliance on number of decisions. We have carefully gone through the said decisions and are of the considered view that the said decisions relate to different sphere altogether and not applicable to the present case. Hence, we are not going to delve into the said decisions. It is vehemently urged by the learned counsel for the State that Sub-rule (1) of Rule 21 deals with preferential rights and that cannot be separated from sub-rule (3)(v) of Rule 21. It is his submission that if both the provisions are read conjointly it would be clear that no reservation is created but a preferential right is created. The heart of the matter is whether the provisions tantamount to conferral of preference or in the name of preference a reservation has been created which runs counter to section 17-A(2) of the MMRD Act. In this context we may profitably refer to the decision rendered in the case of K. C. Gajapati Narayan Deo and others vs. State of Orissa, AIR 1954 SC 596 wherein the Apex Court dealt at length with the doctrine of colourable legislation. We quote with profit : "It may be made clear at the outset that the doctrine of colourable legislation does not involve any question of bona fides or mala fides on the part of the legislature. We quote with profit : "It may be made clear at the outset that the doctrine of colourable legislation does not involve any question of bona fides or mala fides on the part of the legislature. The whole doctrine resolves itself into the question of competency of a particular legislature to enact a particular law. If the legislature is competent to pass a particular law, the motives which impelled it to act are really irrelevant. On the other hand, if the legislature lacks competency, the question of motive does not arises at all. Whether a statute is constitutional or not is thus always a question of power. A distinction, however, exists between a legislature which is legally omnipotent like the British Parliament and the laws promulgated by which could not be challenged on the ground of incompetency, and a legislature which enjoys only a limited or a qualified jurisdiction. If the Constitution of a State distributes the legislative powers amongst different bodies, which have to act within their respective spheres marked out by specific legislative entries, of life there are limitations on the legislative authority in the shape of fundamental rights, questions do arise as to whether the legislature in a particular case has or has not, in respect to the subject-matter of the statute or in the method of enacting it, transgressed the limits of its constitutional powers. Such transgression may be patent, manifest or direct, but it may also be disguised, covert and indirect and it is to this latter class of cases that the expression "colourable legislation has been applied in certain judicial pronouncements. The idea conveyed by the expression is that although apparently a legislature in passing a statute purported to act within the limits of its powers, yet in substance and in reality it transgressed these powers, the transgression being veiled by what appears, on proper examination, to be a mere pretence or disguise. The idea conveyed by the expression is that although apparently a legislature in passing a statute purported to act within the limits of its powers, yet in substance and in reality it transgressed these powers, the transgression being veiled by what appears, on proper examination, to be a mere pretence or disguise. As was said by Duff, J. in Attorney General for Ontario vs. Reciprocal Insurers and others, "Where the law making authority is of a limited or qualified character it may be necessary to examine with some strictness the substance of the legislation for the purpose of determining what is that the legislature is really doing." In other words, it is the substance of the Act that is material and not merely the form or outward appearance, and if the subject-matter in substance is something which is beyond the powers of that legislature to legislate upon, the form in which the law is clothed would not save it from condemnation. The legislature cannot violate the constitutional prohibitions by employing an indirect method. In cases like these, the enquiry must always be as to the true nature and character of the challenged legislation and it is the result of such investigation and not the form alone that will determine as to whether or not it relates to a subject which is within the power of legislative authority. For the purpose of this investigation the Court could certainly examine the effect of the legislation and take into consideration its object, purpose or design....." 24. In this context we think it appropriate to refer to the recent decision rendered in the case of Union of India and others vs. Shah Goverdhan L. Kabra Teachers College, AIR 2002 SC 3675 wherein the Apex Court expressed the view as under :- "6.. The power to legislate is engrafted under Article 246 of the Constitution and the various entries for the three lists of the Seventh Schedule are the "fields of legislation". The different entries being legislative heads are all of enabling character and are designed to define and delimit the respective areas of legislative competence of the Union and the State legislatures. They neither impose any restrictions on the legislative powers nor prescribe any duty for exercise of the legislative power in any particular manner. The different entries being legislative heads are all of enabling character and are designed to define and delimit the respective areas of legislative competence of the Union and the State legislatures. They neither impose any restrictions on the legislative powers nor prescribe any duty for exercise of the legislative power in any particular manner. It has been a cardinal principle of construction that the language of the entries should be given the widest scope of which their meaning is fairly capable and while interpreting an entry of any List it would not be reasonable to import any limitation therein. The rule of widest construction, however, would not enable the legislature to make a law relating to a matter which has no rational connection with the subject matter of an entry. When the vires of enactment is challenged, the Court primarily presumes the constitutionality of the statute by putting the most liberal construction upon the relevant legislative entry so that it may have the widest amplitude and the substance of the legislation will have to be looked into. The Court sometimes is duty bound to guard against extending the meaning of the words beyond their reasonable connotation in anxiety to preserve the power of the legislature. 25. In the aforesaid decision their Lordships also dealt with the doctrine "pith and substance" in the following terms :- "7.. The doctrine of "pith and substance" means that if an enactment substantially falls within the powers expressly conferred by the Constitution upon the legislature which enacted it, it cannot be held to be invalid, merely because it incidentally encroaches on matters assigned to another legislature. When a law is impugned as being ultra-vires of the legislative competence, what is required to be ascertained is the true character of the legislation. If on such an examination it is found that the legislation is in substance one on a matter assigned to the legislature then it must be held to be valid in its entirety even though it might incidentally trench on matters which are beyond its competence. In order to examine the true character of the enactment, the entire Act, its object and scope and effect, is required to be gone into. The question of invasion into the territory of another legislation is to be determined not by degree but by substance. In order to examine the true character of the enactment, the entire Act, its object and scope and effect, is required to be gone into. The question of invasion into the territory of another legislation is to be determined not by degree but by substance. The doctrine of "pith and substance" has to be applied not only in case of conflict between the powers of two legislatures but in any case where the question arises whether a legislation is covered by particular legislative power in exercise of which it is purported to be made." 26. We have referred to the aforesaid decisions only to show that where the State Government has framed a set of rules which has the statutory force, such power flowing from the Central Act has, in fact, transgressed the provisions of the Act in a manner which can be called deceptive. We are conscious that the decisions which have been referred to above deal with the function of legislature and field of legislation. We have dealt with the concept only to highlight that a Rule making authority which is empowered to make a rule under the Statute cannot go beyond the enactment by taking recourse to understanding of the language in a different manner. The Rules have been framed in exercise of the powers conferred by the Central statute. Submission of Mr. Jaiswal is that this particular rule has travelled beyond the statute under which it has been made. It is his submission that under section 17-A(2) of the Act it is graphical that prior approval of the Central Government is necessary for the reservation. The State Government has the power the make rules because conferral of such powers under the statute but it cannot violate the provisions of the enactment. It is well settled in law that a rule making authority cannot travel beyond the law provided in the enactment. In this context we may profitably refer to the decision rendered in the case of State of M. P. vs. Mahalaxmi Fabric Mills Ltd., AIR 1995 SC 2213 . In the said case their Lordships were considering the validity of notification issued under section 9(3) of the MMRD Act. In that context their Lordship addressed themselves to the issue of colourable exercise of power. In paragraphs 23 to 25 their Lordships dealt with that. In the said case their Lordships were considering the validity of notification issued under section 9(3) of the MMRD Act. In that context their Lordship addressed themselves to the issue of colourable exercise of power. In paragraphs 23 to 25 their Lordships dealt with that. We may produce paragraph 23 in toto and the relevant portion of paragraph 24 : "23. The question is whether the impugned Notification is a piece of colourable exercise of power and, therefore null and void. It has to be kept in view that it is an exercise of delegated legislative function entrusted to the Central Government by Parliament under section 9(3). The concept of colourable legislation has a well defined connotation so far as parent legislation is concerned. If the legislation trespasses on a filed not reserved for it under the relevant entry of this Seventh Schedule it can be said to be a colourable legislation meaning thereby it purports to get covered by an entry which does not give legislation competence to the legislature concerned to enact such a law. Adverting to be concept of colourable legislation a Constitution Bench of this Court in case of Federation of Hotel & Restaurant vs. Union of India ( AIR 1990 SC 1637 ), made the following pertinent observations :- "The constitutionally of the law becomes essentially a question of power which in a federal constitution, unlike a legally omnipotent legislature like the British Parliament, turns upon the construction of the entries in the legislative lists. If a legislature with limited or qualified jurisdiction transgressed its powers, such transgression may be open, direct and overt or disguised indirect and covert. The latter kind of trespass is figuratively referred to as 'colourable legislation', connoting that although apparently the legislature purports to act within the limits of its own powers yet, in substance and in reality, it encroaches upon a field prohibited to it, requiring an examination, with some strictness, the substance of the legislation for the purpose of determining what is that the legislature was really doing. Wherever legislative powers are distributed between the Union and the States situations may arise where the two legislative fields might apparently overlap. Wherever legislative powers are distributed between the Union and the States situations may arise where the two legislative fields might apparently overlap. It is the duty of the Courts however, difficult it may be, to ascertain to what degree and the what extent, the authority to deal with matters falling within these classes of subjects exists in each legislature and to define in the particular case before them, the limits of the respective powers." 24. It is obvious that this aspect of colourable legislation would not strictly apply while judging the legality of the exercise of the delegated legislative function. In fact it could not be contended by learned counsel for the writ petitions that the Central Government had no power to act under section 9(3). Therefore, in the strict sense, there is no question of the said Notification being a piece of colourable legislation touching upon the power of some other authority functioning under any other provision of delegated legislation. However, it has also to be observed that even in cases of delegated legislation, there are well defined limitations beyond which if such an exercise projects itself, it would become ultra vires the provision permitting such an exercise. We may profitably refer to a decision of this Court in case Indian Express Newspapers (Bombay) Pvt. Ltd. and others etc. etc. vs. Union of India & others, ( AIR 1986 SC 515 ). A Bench of three learned Judges of this Court speaking through Venkataramian, J., as he then was, in connection with Notification issued under section 25 of the Customs Act which was a piece of subordinate legislation has made the following observations :- "A piece of subordinate legislation does not carry the same degree of immunity which is enjoyed by a Statute passed by the 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. 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 arbiraty." Keeping in view this legal position, let us examine the challenge to the impugned Notification on the ground that it is a colourable device.." (Underlining is ours) 27. We have referred to the aforesaid decision solely for the purpose that when a Rule which is attacked, it may expose a colourble device. We may repeat at the cost of repetition that we have referred to certain decisions with regard to colourable exercise of power though they relate to different field altogether. But a power can be used in a deceptive manner. We have referred to the case of Mahalaxmi (supra) only to show the concept of colourable device. The Central piece of legislation clearly postulates that the reservation can be made with the prior approval of the Central Government. Section 15 of the Act confers powers on the State to make rules. The field of making the rules is quite clear. The State has framed a set of rules and has taken the stance that under Rule 21(c) there is only categorisation of preference and such stipulation is regulatory in nature. On a proper scanning of the Rules we are compelled to observe that it is a colourable device to usurp the power which is not conferred on the State under section 15 of the MMRD Act. The Rule Making Authority has travelled beyond the powers conferred on it. Hence, we are inclined to think that in the guise of preference, reservation has been made. The language which is assiduously used in Rule 21(3)(v) appears to us is a deception and no romantic interpretation can save it. Mr. Yadav, learned Government Advocate has endeavoured hard to impress upon us that any person can apply for a Joint venture and the Mining Corporation is only given the preference but we must clearly state here that such a contention does not clear the maze but, on the contrary, creates a labyrinthine. Mr. Yadav, learned Government Advocate has endeavoured hard to impress upon us that any person can apply for a Joint venture and the Mining Corporation is only given the preference but we must clearly state here that such a contention does not clear the maze but, on the contrary, creates a labyrinthine. The jargon of words appear to us fuzz-logic and such a logic cannot convey to mean that the Rule does not really transgress the power conferred on the State. However, dexterously designed it may be, it does not lose its essential feature and we have no hesitation in holding that it is a colourable device. If we allow ourselves to say so, it is a fraud on the Act. Thus, we hold that sub-rule (1) and sub-rule 3(v) of Rule 21 are ultra vires. 28. In view of our declaration that sub-rule (1) and sub-rule (3(v) of Rule 21 as ultra vires, the necessary consequences shall follow and be worked out and the petitioner would be at liberty to file an application in accordance with the rules and it will be dealt with as per the parameters of the rules. 29. The writ petition is accordingly disposed of without any order as to costs.