MINERAL DEVELOPMENTLTD Vs. UNION OF INDIA

JUDGEMENT

(1.) IN this case the plaintiff is Mineral Development, Limited, which is a public limited company incorporated under the INdian Companies Act, having its registered office at Calcutta. On 29-12-1947 the Raja of Ramgarh executed a registered lease in favour of the plaintiff in regard to 3026 villages comprised within the Ramgarh Estate on a Salami of Rs. 16,00,000. The term of the lease was for 999 years and there was an express provision in the lease granting power to the lessee to grant sub-leases. On 8-9-1948 the Dominion Legislature enacted the Mines and Minerals (Regulation and Development) Act, 1948. The Act received the Governor General's assent on 8-9-1948 but it came into force on 25-12-1949. Rules were framed by the Central Government under Section 5 of the Act for regulating the grant of mining leases. Among other matters the rules provided for the persons by whom applications for mining leases may be made, the authority by which mining leases may be granted and the maximum and minimum area and the period for which a mining lease may be granted. There was also provision in the rules for fixing the royalties and the minimum rent payable by the lessee. One of the rules prohibited the taking of premium from the lessee in respect of the mining lease. These rules came into force in the Province of Bihar on 25-10-1949. By a notification under Section 92 (1) of the Government of INdia Act, 1935, the Act and the rules were extended to Chotanagpore by a notification dated 16-1-1950. The plaintiff company granted a sub-lease to Bhagat Singh in respect of 40 acres in Mouza Ratansota and Mouza Barharia for a period of 15 years on 1-2-1950. But the Deputy Commissioner of Hazaribagh challenged the legality of the sub-lease and made a criminal complaint against two of the directors of the plaintiff company under Rule 51 of the Mineral Concession Rules. Rule 51 provided that if a private person grants a mining lease in contravention of any of the provisions or accepts any premium he shall be punishable with imprisonment which may extend to six months, or with fine which may extend to Rs. 1,000 or both. The plaintiff company therefore brought the present suit for a declaration (1) that the definition of the expression 'mining' as provided in the rules did not include the case of sub-leases, and (2) that in any event the rules were unconstitutional since the fundamental right of the plaintiff under Article 19 (1) (f) of the Constitution was violated, The Union of INdia and the State of Bihar who are impleaded as defendants have contested the suit on the ground that the rules are constitutional and valid, that the Act and the rules apply not only to leases but also to the case of sub-leases. They also said that the restrictions imposed by the rules are reasonable and in the public interest and are within the permissible limits under Article 19 (5) of the Constitution.

(2.) THE two issues arising in this case are therefore (1) whether the Mines and Minerals (Regulation and Development) Act, 1948 and the Mineral Concession Rules, 1949, apply to sub-leases? and (2) whether the Act and the rules are unconstitutional and void?

(3.) THE next point to be determined is whether the Act and the Rules are constitutional and valid. Mr. P.R. Das did not contest the validity of the Act but concentrated his argument upon the legality of certain provisions contained in the Mineral Concession Rules. Counsel referred in the first place to Rule 5 of Chapter 2 which states that a certificate of approval shall be granted only by a Provincial Government. Counsel also referred to Rule 45 which states that no mining lease shall be granted except to a person holding a certificate of approval from the Provincial Government. THE argument on behalf of the plaintiff is that it was prevented from granting a sub-lease of mineral rights to any person of its choice and the restriction imposed by Rule 45 was unreasonable in nature. Mr. P.R. Das conceded that under Article 19(5) of the Constitution the State is authorised to enact any law imposing reasonable restriction on the exercise of fundamental right, but the argument of the counsel is that the restriction imposed under Rule 45 is unreasonable. Counsel referred in this connection to Rule 6 which, states-- "A certificate of approval may be granted to any person who, in the opinion of the Provincial Government, is in a position to employ an efficient prospecting agency, or possesses special knowledge of geology or mining; Provided that, if such person is a Company or firm, it shall be registered or incorporated in India." THE argument is that Rule 6 grants an uncontrolled power to the State Government in the matter of the grant of a certificate of approval and that no machinery has been provided for determining the question whether a certain person should be granted certificate or not. It was contended by Mr. P.R. Das that the subjective determination cf the State Government has been made final under the rule and the restriction imposed is not reasonable from the procedural stand point. THE argument of the plaintiff was that unless the rule provided that the decision of the Government should be ultimately tested in a civil court, the restriction imposed cannot be held to be reasonable within the meaning of Article 19(5) of the Constitution. In support of this proposition, counsel relied upon certain passages of the Supreme Court judgment in -- ' Raghubir Singh v. Court of Wards', AIR 1353 SC 373 (G). It was argued in that case that the Ajmer Tenancy and Land Records Act read ' with the Ajmer Government Wards Regulation, 1888 (1 of 1888) enabled the Court of Wards in its own discretion and on its subjective determination to assume the superintendence of the property of a landlord who habitually infringed the rights of his tenants and the exercise of the discretion of the Court of Wards could not be questioned in a civil Court. It was further argued that the law enacted in Section 112 was not a reasonable restriction inasmuch as it completely negatived the right by making its enjoyment depend on the mere discretion of the executive. THE argument succeeded in the Supreme Court and it was held that Section 112 was invalid and was not saved by Clause 5 of Article 19. But the ratio of that case has no application to the present case. THE basis of the Supreme Court decision is that the provisions of Section 112 were penal in character and that legislation which prescribes a penalty for misconduct of a landlord could not by any stretch of reasoning be regard-ed as a restriction on a fundamental right. It was further held that Section 112 was an ingenious device to punish landlords who habitually infringed the rights of the tenant; that the section authorised the use for an ulterior and punitive purpose of the machinery of Regulation 1 of 1888 which was really enacted to make better provision for the superintendence of Government Wards in Ajmer Merwara. That is the true principle on which the Supreme Court decision is based. At page 375 Mahajan J. (as he then was) observes-- "It was argued that the provisions of Section 112 amount to reasonable restrictions on the exercise of the right conferred by Article 19(1) (f) of the Constitution on a citizen, and these restrictions are in the interests of the general public. In our judgment, this argument also is not sound. As indicated above, the provisions of a Section 112 of Act 42 of 1950 are penal in nature and are intended by way of punishment of a landlord who habitually infringes the rights of his tenants. He is punished by being placed at the mercy of the Court of Wards and by being made subject to the stringent provisions of Regulation 1 of 1888. An enactment which prescribes a punishment or penalty for bad behaviour or for misconduct of a landlord cannot possibly be regarded as restriction on a fundamental right. Indeed, a punishment is not a restriction." It should be noticed that the Ajmer Tenancy end Lands Records Act prescribed no machinery for the determination of the question whether a landlord is guilty of habitually infringing the rights of his tenants, because Section 112 of the Act was merely of a declaratory character and declared such a landlord as being under a disability and suffering from an infirmity. This declaration became operative and effective when the Court of Wards in its discretion decides to assume superintendence of the property of such a proprietor. Upon these facts it was held by the Supreme Court that the statutory provisions violated the guarantee under Article 19(1) (f) of the Constitution and were not within the limits of reasonableness permitted under Article 19(5). In the present case the material provisions are different. Rule 6 provides that a certificate of approval may be granted to any person who, in the opinion of the Provincial Government, is in a position to employ an efficient prospecting agency, or possesses special knowledge of geology or mining. THEre is a proviso to Rule 6 which states that it the applicant is an incorporated company or a firm it shall be registered or incorporated in India. Rule 7 states- "An application for the grant or removal of a certificate of approval shall be submitted to the Provincial Government, and the former shall contain the following particulars: " (a) (i) if the applicant is an individual, his name, nationality profession and residence, and (ii) if the applicant is a company, syndicate partnership or private firm, its name, nature and place of business, place of registration or incorporation and (b) A statement showing the technical qualifications and mining experience of the applicant, and his Manager, if any, and such other particulars as may be necessary to satisfy the Provincial Government of the competence of the applicant to hold the certificate." Rule 7 therefore prescribes that the applicant must furnish sufficient information about his technical qualification and mining experience so as to satisfy the Provincial Government of his competence. Rule 52 is also important in this connection. Rule 52 provides that any person aggrieved by an order of a Provincial Government may, within two months of the date of such order, apply to the Central Government for reviewing the same. Rule 54 states- "Upon receipt of such application, the Central Government may, if it thinks fit, call for the relevant records and other information from the Provincial Government, and after considering any explanation that may be offered by the Provincial Government, cancel the order of the Provincial Government or revise it in such manner as the Central Government may deem just and proper." In my opinion, these rules provide a reasonable machinery for dealing with applications for certificate or approval and for granting such certificates. It is true that Rule 6 has conferred a highly discretionary power on the Provincial Government in granting the certificate but that discretion is not an uncontrolled or untramelled discretion. If Rule 6 is read in the context of Rule 7, it is clear that before the grant of a certificate of approval the Provincial Government must apply its mind and satisfy itself that the applicant or his manager has sufficient technical qualifications and mining experience or whether the applicant is competent to employ an efficient prospecting agency. That is a condition limiting the exercise of the discretionary power on the part of the Provincial Government. In my opinion the language of Rule 6 cannot therefore be interpreted in a wholly subjective sense and the power granted under Rule 6 is not an arbitrary power but a power which is subject to a condition which is capable of an objective test (see the reasoning of Lord Radcliffe on a similar question in -- 'Nakhuda Ali v. Jayratne', 1951 AC 66 at p. 76 (H). Further, Rule 52 grants a right of appeal if an applicant is dissatisfied with the order of the Provincial Government. THE appeal lies to Central Government from the order of the Provincial Government and Rule 54 prescribes what is the procedure to be adopted by the Central Government in hearing such an appeal. Mr. P.R. Das referred to Rule 55 which makes the order of the Central Government under Rule 54 final. THE contention of the counsel is that the restrictions imposed by the rules should be held to be unreasonable since there is no provision for ultimate decision of the matter by a civil court. I am unable to accept this argument. A decisive answer to the argument is the decision of the Supreme Court in -- ' Dr. N. B. Khare v. State of Delhi', AIR 1950 SC 211 (I) in which the scope of the guarantee under Article 19(1)(d) end 19(5) was fully considered. In that case, the subjective satisfaction of the State Government regarding the necessity for externment of a person, coupled with a reference of the matter to the Advisory Board, whose opinion had, however, no binding force, was considered by the Supreme Court to be a 'reasonable' procedure for restricting the right conferred under Article 19(1)(d). THE truth of the matter is that there is no uniform standard, no uniform pattern of reasonableness which can be laid down in the abstract. THE test of reasonableness prescribed under Article 19(5) must depend upon the scope, the subject-matter and the context of each individual statute which is impugned. That is the principle enunciated by the learned Chief Justice of India in -- ' State of Madras v. V. G. Row', AIR 1952 SC 196 at p. 200 (J); "It is important in this context to bear in mind that the test of reasonableness, wherever prescribed, should be applied to each individual statute impugned, and no abstract standard, or general pattern of reasonableness can be laid down as applicable to all cases. THE nature of the right alleged to have been infringed, the underlying purpose of the restrictions imposed, the extent and urgency of the evil sought to be remedied thereby, the disproportion of the imposition, the prevailing conditions at the time, should all enter into the judicial verdict. In evaluating such elusive factors and forming their own conception of what is reasonable, in all the circumstances of a given case, it is inevitable that the social philosophy and the scale of values of the judges participating in the decision should play an important part, and the limit to their interference with legislative judgment in such cases can only be dictated by their sense of responsibility and self-restraint and the sobering reflection that the Constitution is meant not only for people of their way of thinking but for all, and that the majority of the elected representatives of the people have, in authorising the imposition of the restrictions, considered them to be reasonable."