2019 (3) TMI 1743 - SC - Indian Laws

Prohibition of movement of sand beyond the border of the State of Gujarat - challenge is that all leaseholders, stockists, traders and exporters were prohibited from exporting ordinary sand excavated from the areas in the State of Gujarat to other States within the country or other countries by transporting such sand outside the State or the country - Rule 71 of Gujarat Minor Mineral Rules, 1966. Whether the impugned rules framed by the State of Gujarat as a delegate of Parliament are beyond the powers granted to it under the MMDR Act? - HELD THAT - The words transportation and storage in Section 23-C are to be interpreted. Here the two words are used in the context of illegal mining . It is clear that it is the transportation and storage of illegal mining and not the mining of minor minerals like sand which is legal and backed by duly granted license, which can be regulated under this provision. Therefore, no power flows from this provision to make rule for regulating transportation of the legally excavated minerals. Whether the impugned rules are violative of Part XIII of the Constitution of India? - HELD THAT - The power of State Legislature to impose reasonable restrictions on the freedom of trade, commerce or intercourse, as may be required in the public interest, requires such a Bill or amendment to be moved in the State Legislature only after receiving previous sanction from the President. The President, being the head of the State and the guardian of the federation, must be satisfied that such a law is indeed required and, thus, acts as a check on the promotion of provincial interests over national interest. Going by the aforesaid scheme of this Chapter, it becomes apparent that when there are such restrictions on a State Legislature, then the State Government could not have imposed such a prohibition under a statute whose object is to regulate mines and mineral development, and not trade and commerce per se. Freedom of movement of goods, services and the creation of a common market must be understood contextually and as necessary for creating an economic union. It is also rightly contended by all the respondents that balanced development of the country is an equally vital facet of economic integration. No doubt, Part XIII permits some forms of differentiation, for example, to encourage a backward region or to create a level playing field for parts of the country that may not have reached the desired level of development. In this context, Part XIII envisions a two-fold object (i) facilitation of a common market through ease of trade, commerce and intercourse by erasing barriers; and (ii) Regulations (or restrictions) which may have the effect of differentiating between States or regions which may be necessary not only in emergent circumstances of scarcity etc. or but even for development of economically backward regions or otherwise justified in the public interest. That Part XIII is not about freedom alone but is a code of checks and balances, intended at achieving economic unity and parity. In order to justify any preference or discrimination under Article 303, a scarcity of goods would have to be made out. It is a matter of record that the Study Group s report on which reliance is placed by the appellant focuses on the need to restrict the export of sand outside India and not within India. In any case, nothing prevents the appellant from restricting the quantum of sand being excavated. However, once the appellant State permits sand to be excavated, neither can it legally restrict its movement within the territory of India nor is the same constitutionally permissible. Likewise, there is no restriction on the State importing sand from other states. Both the questions answered against appellants.

Summary

Issues Involved:
1. Whether the impugned rules framed by the State of Gujarat are beyond the powers granted under the MMDR Act.
2. Whether the impugned rules are violative of Part XIII of the Constitution of India.

Issue-wise Detailed Analysis:

Issue 1: Whether the impugned rules framed by the State of Gujarat are beyond the powers granted under the MMDR Act.

The Supreme Court analyzed the powers conferred by the MMDR Act, particularly Sections 15, 15A, and 23-C. It was observed that the MMDR Act is aimed at regulating mines and development of minerals under the control of the Union. Section 15 empowers the State Government to make rules for regulating the grant of quarry leases, mining leases, or other mineral concessions in respect of minor minerals and for purposes connected therewith. However, this power does not extend to regulating the movement of already excavated minerals. The Court referred to previous judgments, including M.P.P. Kavery Chetty and K.T. Varghese, which categorically held that the State Government's power under Section 15 does not include control over minor minerals after they are excavated. The Court also noted that Section 23-C, inserted by the Amendment Act of 1999, was aimed at preventing illegal mining, transportation, and storage of minerals. The impugned rules, which prohibit the movement of legally excavated sand beyond the State borders, were found to be beyond the powers conferred by the MMDR Act. The Court concluded that the impugned rules are ultra vires Sections 15, 15A, and 23-C of the MMDR Act.

Issue 2: Whether the impugned rules are violative of Part XIII of the Constitution of India.

The Supreme Court held that the impugned rules violate Part XIII of the Constitution, which ensures the freedom of trade, commerce, and intercourse throughout the territory of India. Article 301 guarantees this freedom, while Article 302 allows Parliament to impose restrictions in the public interest. Article 303 prohibits laws that give preference to one State over another or discriminate between States. The Court emphasized that the State Government could not impose such a prohibition under a statute aimed at regulating mines and mineral development, as it would fetter the freedom of trade, commerce, and intercourse. The Court also highlighted the importance of economic integration and balanced development, as envisioned by Part XIII of the Constitution. The prohibition on the transport or sale of already mined minerals outside the State was found to have no direct nexus with the object and purpose of the MMDR Act. Consequently, the impugned rules were held to be violative of Article 301 and the scheme of Part XIII of the Constitution.

Conclusion:

The Supreme Court dismissed the appeals, affirming the judgment of the Gujarat High Court and holding that the impugned rules are ultra vires the MMDR Act and violative of Part XIII of the Constitution. The Court did not approve the contrary views of the Andhra Pradesh High Court and Madras High Court.