Holding

Rule 39 of the Tamil Nadu Mineral Concession Rules is valid, does not offend Article 14, and may be exercised within the parameters of mineral development and public interest without the need for reading down.

Summary

The Supreme Court examined the validity of Rule 39 of the Tamil Nadu Minor Mineral Concession Rules, 1959, which permits the State Government to grant or renew quarry leases in special cases for mineral development and public interest. The petitioners argued that the rule conferred unguided, uncanalised discretion violating Article 14, while the State contended that the rule was a reasonable relaxation within the framework of the Mines and Minerals (Regulation and Development) Act, 1957. The Court held that the expressions "mineral development" and "public interest" provide sufficient objective guidelines, and that the rule is not per se arbitrary or unconstitutional. It rejected the need to read down the provision, emphasizing that the rule serves a valid policy purpose and is subject to judicial review. Consequently, the Court set aside the Madras High Court’s decision striking down Rule 39 and upheld the rule’s legality.

Issues considered

The constitutionality of Rule 39 under Article 14 of the Constitution.
Whether the terms "mineral development" and "public interest" furnish adequate guidelines to curb arbitrariness.
If Rule 39 should be read down to limit its application to variations of lease terms.
The compatibility of Rule 39 with the powers conferred by Section 15 of the Mines and Minerals (Regulation and Development) Act, 1957.
The validity of leases granted under Rule 39 after the High Court’s declaration of its unconstitutionality.

Legislation cited

Constitution of Indias. Article 14, s. Entry 54 of the Seventh Schedule
Mines and Minerals (Regulation and Development) Act, 1957s. 15, s. 31
Tamil Nadu Minor Mineral Concession Rules, 1959s. Rule 39, s. Rule 8(A), s. Rule 8(C)

Subjects

Article 14Mineral DevelopmentPublic InterestDiscretionary PowerRule 39Tamil NaduQuarry LeaseStatutory InterpretationReading DownAdministrative Law

Judgment

PREMIUM GRANITES AND ANR. A
v.
STATE OF TAMIL NADU AND ORS.

FEBRUARY 4, .1994

[M.N. VENKATACHALIAH, CJ. AND G.N. RAY, J.] B

~ ,..._ Tamil Nadu Mineral Concession Rules, 1959: Rule B(c), 39-Power of
State Government to grant or renew quarry lease in special cases for reasons
to be recorded in writing in the interest of 'Mineral Development' and in 'Public
Interest'-R.ule 39 held valid and not violative of Article 14-Rule does not C
confer unguided and uncanalised power-Reading down of Rule will defeat
the purpose of Rule-Held expression 'Mineral Development' and 'Jn public
interest' are not vague-But are essential requirement for granting exemption
under Rule 39.

Constitution of India, 1950: Article 14: Statute-Discretion-Guidelines D
for exercise of-Need not be found in the impugned provision-Can be
ga•hered from the setting of the Act and the rules framed thereunder.

Interpretation of Statutes: Statute-Provision for relaxation or exemp-
tion-lnterpretation of-Purpose and effect of relaxation should be taken into E
account-R.ule of reading dowrz-,-Applicability of.

Administrative Law: Public policy-Judicial review-Scope of.

In exercise of the power conferred by sub-sections (1) and (l·A) of
Section 15 of the Mines and Minerals (Regulation and Development) Act F
1957 the State of Tamil Nadu enacted the Tamil Nadu Mineral Concession
Rules, 1959. Rule 39 of the said Rules empowers the State Government to
grant quarry leases to private persons in appropriate cases in the interest
o~ mineral development and in public interest for reasons to be recorded
in writing on the terms and conditions different from those laid down in G
Mineral Concession Rules. The validity of Rule 39 was challenged before
+ the High Court of Madras which declared it unconstitutional and void on
the ground that the impugned rule confers unguided and. uncanalised
powers on the State Government.

In appeal to tbis Court, supporting the decision of the High Court, H
579
580 SUPREME COURT REPORTS [1994) 1 S.C.R.

A it was contended that (i) Rule 39 is quite valid and has been inserted in
the Mineral Concession Rules for a reasonable purpose. It is a part of the
policy underlying the Mineral Concession Rules which is consistent with
the object of the MMRD Act. As exercise of relaxation for grant of quarry
leases under Rule 39 can only be made within the parameters of 'public
B interest' and for the 'mineral development' by recording the reasons in
writing, Rule 39 does not suffer from arbitrariness or unguided m: un-
bridled power offending Article 14 of the Constitution; (ii) Rule 39 does
not confer an uncanalised power and does not suffer from the vice of want
of guidelines. It contains the guidelines viz. that the grant must be for
mineral development and "in public interest". In other words, Rule 39 has
c been inserted to provide for grant of lease which may not be done strictly
under Rule 8 A or 8(C) but which is warranted for mineral development
and 'in public interest' for good reasons to be recorded; (iii) the guidelines
need not be expressly founil in the impugned provisions but such
guidelines can be gathered from the setting of the Acts and the Rules
D framed thereunder; (iv) the power conferred under Rule 39 is not an
absolute, discretionary power of the State Government unfettered by any
valid consideration but exercise of such power within the aforesaid
parameter is always open to judicial scrutiny thereby affording ample
safeguard against any abuse in exercising the power. If in any individual
E case, power has not been exercised properly and the reasons which have
got to be recorded in writing do not stand the scrutiny of reasonableness
and. the purposes for which such power of exemption can be exercised,
challenge for improper action in such individual cases before a wurt of
law can always be made; (v) since reasons are to be recorded in writing
while exercising the power under Rule 39, it can always be ascertained from
F the order that may be passed under the said provisions of Rule 39 as to
whether the grant is one for furthering mineral development or not; (vi)
. the word 'public interest' is a word of definite concept. The said expression ·
does D9t suffer from any vagueness or indefiniteness. 'Mineral
development' also Is not a vague concept but has a definite meaning which
G can be tested objectively particularly when reasons are to be recorded in
writing under Rule 39. The provisions of the MMRD Act and the Rules
framed by the Central and the State Governments clearly furnish the scope
and purport of the word 'mineral development'. Scientific exploitation of
the minerals without waste is undoubtedly an exercise for mineral develop-
H ment envisaged by the Act and the Rules; (vii) the power of relaxation as
f
PREMIUM GRANITES v. STATEOFT.N. 581

contained in Rule 39 is similar to various statutes; Section 31 of the A
MMRD Act confers identical power on the Central Government but the
High Court while dealing with Section 31 of the MMRD Act, has not
questioned the validity of the said section; and (viii) where in respect of
prohibitied categories, the law carves out an exception or relaxation, the
rule to be applicable should be appreciated on a different perception.
There the question of unbridled power being allowed to be exercised does
B
not arise. The question is of taking out certain exceptions from the
prohibited area and keeping certain categories outside the prohibited area
for being allowed to exercise freedom of trade or business from the
restrictions imposed.
c
Supporting the decision of the High Court; it was contended on
behalf of the Writ Petitioner Respondent that (i) if Rule 39 was interpreted
to give a wide disc!'etionary power to the authorities to overlook other
provisions of the Mineral Concession Rules, then it would be violative of
Article 14 as being vague and unfettered and giving uncanalised power to D
.the State Government; (ii) the words "public_ interest", "reasons to be
recorded in writing" are not adequate to prevent arbitrary action; (iii) Even
if it is held that consideration of pubic interest and the interest of mineral
development coupled with requirement to record reasons provide
guidelines under which power under Rule 39 is to be exercised, Rule 39, if
given an expansive interpretation, would entitle the authorities concerned E
to disregard the various other provisions as contained in the Mineral
Concession Rules; (iv) when Ruh~ 8(C) epitomizes policy of the State
Government reserving grenite in all its uses to be exploited by the State
Government or through its Corporation, in exercise of the powers under
Rule 39, the State Government should not be permitted to give an inter- F
pretion to Rule 39 widely and grant a quarry lease contrary to the state
policy; and (v) the State Government is under a constitutional duty to act
fairly and justly and give equal opportunity to every individual who seeks
largess from the Government. The grant of licence to a few people and that
also on grounds of loss of foreign exchange is totally obnoxious to the
theory of just State action. The guiding principle for interpretation of Rule G
39 should be equality of opportunity to every person in the trade and at
the same time imposing sufficient restrictions or guidelines or safeguard
+ to prevent misuse of such a power and such interpretation must enable
Rule 39 to coexist with the other rules as being not inconsistent with the
other rules. H
I . 582 SUPREME COURT REPORTS [1994] 1 S.C.R.

A Disposing the appeal and the connected SLPS, this Court

HELD: 1. Rule 39 of the Mineral Concession Rules is legal and valid.
It cannot be said that Rule 39 is per se obnoxious and contain unbridled,
unguided and uncanalised discretionary power offending Article 14 of the
Constitution. It has been incorporate(! for a valid and reasonable purpose.
B The said rule also is not required to be,read down by limiting its exercise
only in respect of variation of some of the terms of lease and not otherwise.
[614-H, 610-E, 614-F-G]
2. For bringing harmonious construction, reading down a provision
in the statute, is an accepted principle. In the facts and circumstances of
C the case and the purpose sought to be achieved by Rule 39, such reading
down is not necesary so as to limit the application of Rule 39 only for
varying some of the terms and conditions of a lease. Such reading down
of Rule 39 and limiting its application will defeat the purpose for which
Rule 39 has been incorporated. [612-H, 613-A, 614-G]
D
Ranganath Reddy v. State of Kamataka, [1978] 1 S.C.R. 641; Kadar
Nath 'Singh v. State of Bihar, [1964] 6 S.C.R. 784; Jagdish Pandey v. Chan-
cellor, University of Bihar, [1968] 1 S.C.R. 231; Sunil Batra v. Delhi Ad-
ministration, [1978] 4 S.C.C. 494 and Dr. D.K Trivedi & Sons & Ors. v. State
of Gujarat & Ors. [1986] Supp. S.C.C. 20, referred to.
E
3.1. The MMRD Act and the rules framed thereunder either by the
Central Government or by the State Government are for mineral develop·
ment subserving the cause of public interest. The power of relaxation
under Rule 39 of Mineral Concession Rules is to be exercised for 'mineral
development' and 'in public interest' after recording reasons for such
F exercise of power. The exercise of power under the said Rule 39 cannot be
made arbitrarily, capriciously and on subjective satisfaction of the con-
cerned authority but the same is to be exercised within the parameters of
'mineral development' and 'in public interest' which are not vague and
indefinite concepts. It cannot also be disputed that 'mineral development' ·
G is not a vague expression and the MMRD Act and the rules framed under
it, clearly furnish the scope and purport of the word 'mineral development'.
The expression 'public interest' finds place in the Constitution and in
many enactments and the said expression is a word of definite concept.
Thus, considerations as to public interest and for furtherance of mineral
development as essential requirement to grant exemption under Rule 39
H make the said Rule wholly objective. [609-A, B, C, E, F; 600-B]
f
PREMIUM GRANITES v. STATE OF T.N. 583

T. G. Shivacharana Singh etc. v. State of Mysore, A.I.R. (1965) S.C. 280; A
Moti Ram Daka v. General Manager North East Frontier Railway, A.I.R.
(1964) S.C. 600; Shyam Lal v. State of UP & Anr., [1955) 1 S.C.R. 26 and
Ram Dial and Ors. v. State of Punjab, [1965) 2 S.C.R. 858, referred to.

3.2. It does not appear that consideration of foreign exchange and
export of granite in the State by effective and scientific exploitation of B
quarrying, polishing and sizing of the granite will be alien to the considera-
tion of mineral development in 'public interest'. [611-E]

• ....... 4.1. The Mineral Concession Rules have been framed by the State
of Tamil Nadu in exercise of power under Section 15(1) of the MMRD Act
for development of minor minerals in the State 'in public interest'. The
·c
development of minor minerals cannot and should not be confined to a set
principle or policy. With the advancement of technology and changes in
the socio, economic and political set up in the country and also changes
in the economic and political scenario in other countries, there is bound
to be exigencies requiring reappreciation of the policy of the development D
of minor minerals in the State. [611-C-D]

4.2. If the State Government has an authority to follow a particular
policy in the matter of quarrying of granite and it can change the
provisions in the Mineral Concession Rules from time to time either by
incorporating a particular rule or amending the same according to its
E
perception of the exigencies, it will not be correct to hold that on each and
every occassion when such perception requires a change in the matter of
policy of quarrying a minor mineral in the State, particular provision of
the Mineral Concession Rules is got to be amended. On the contrary, if a
suitable provision empowering exemption or relaxation of other provisions F
in the Mineral Concession Rules is made by confining its exercise in an
objective manner consistent with the MMRD Act and in furtherance of the
cause of mineral development and in public interest, by giving proper
guidelines, such provision containing relaxation or exemption cannot be
held to be unjustified or untenable on the score of violating the other
G
provisions of the Mineral Concession Rules. [613-B-D]

5. On account of the frequent changes in the policy as to the
+ quarrying of black granite in the State in respect of revenue lands, persons
who were otherwise eligible unde~ some existing rules before the change of
policy and consequential change in rules and who can effectively quarry H
584 SUPREME COURT REPORTS [1994] 1 S.C.R.

A such granite with advanced technological set up, in view of change of the
policy and consequential incorporation of different provisions for grant of
quarry lease, has suffered unmerited hardship by becoming ineligible for
grant of a quarry lease. If in mitgating such unmerited hardship and in
the greater interest for mineral development in the State and for better
revenue earning from such developmental operation, the question of grant-
B ing lease to such persons requires to be favourably considered in an
objective manner with the aid of a general provision for relaxation or
· exemption in an appropriate case, without changing the general policy as
a whole as contained in other provisions, it cannot be held that that such ,
provision is per se obnoxious or violates the principle of just and fair state ~'
c action affording equal opportunity to all. It should be borne in mind that
Article 14 has an inbuilt flexibility and it permits classificatfon amongst
persons if such classification has an objective basis consistent with the
object and purpose for which the reasonable classification is intended
(613-E-H]
D 6. It is not the domain of the court to embark upon unchartered
ocean of public policy in an exercise to consider as to whether a particular
public policy is wise or a better public policy can be evolved. Such exercise
must be left to the discretion of the executive and legislative authorities as
the case may be. The Court is called upon to consider the validity of .a
public policy only when a challenge is made that such policy decision
E
infringes fundamental rights guaranteed by the Constitution of India or
any other statutory right. (611-F-G]

It will not correct to contend that simply because under Rule 8(C)
of the Mineral Concession Rules, quarry leases are to be granted to
F particular agency or agencies, exemption from the operation of the said
Rule cannot be made with the aid of the other provisions of the Mineral
Concession Rules. If all the provisions of Miner~ Concession Rules are
held to form an integrated scheme then each of such provisions must be
held to be mutually complimentary. It will therefore; be not proper to hold
G that a policy decision envisaged in Rule 8(C) cannot be modified with the
aid of the other provisions of the Mineral Concession Rules and in the
field of operation, the said Rule 8(C) holds a supreme position. The
application of Rule 8(C) slwuld be understood and held as subject to other +
provisions in the Mineral Concession Rules. (611-H, 612-A-B]

H 7.1. Where in respect of prohibited categories, the law carves out
PREMIUM GRANITES v. STATEOFT.N. 585

restriction or relaxation, the purpose is to take out certain exceptions from A
-.( the. prohibited area and keeping certain categories outside the purview of
restriction imposed under other provisions in the Statue. In such cir-
cumstances, it will not be appropriate to holcl that the exception militates
against other provisions and hence should not be permitted. [612-D]

7.2. In interpreting the validity of a provision containing relai:ation B
or exemption of another provision of a statute, the purpose of such
relaxation and the scope and the effect of the same in the context of the
purpose of the statute should be taken into consideration and if it sppears
that such exemption or relaxation basically and intrinsically does not
violate the purpose of the statute rendering it unworkable but it is consis- C
tent with the purpose of the statute, there will be no occasion to hold that
such provision of relaxation or exemption is illegal or the same is ultra
vires other provisions of the statute. [612·E-F]

8. It cannot be validly contended that in no case departure from a D
prescribed norm and standard is not possible. Consequently, if a provision
empowers such departure from the prescribed norm by invoking discre-
tionary power of relaxation or exemption, per se it cannot be held to be
discriminatory and unfair state action. Whether in a given case, such
departure from the prescribed norm is based on some principle which is
in itself irrational, unreasonable or· discriminatory, needs to be E
demonstrated before a court of law if any challenge of unfair and dis-
criminatory action is taken. [614-E-F]

Prabhakaran Nair & Ors. v. State of Tamil Nadu & Ors., (1987] 4
S.C.C. 238; Ramana Daya Ram Shetty v. International Airport Authority of p
India & Ors., A.I.R. (1979) S.C. 1628 and Gardner v. Jay, 1885 29 Ch.D. 50,
referred to.

9. While no exception can be made to the observation that 'It would be
both unwise and impolitic to leave any aspect of its life to be governed by
discretion when it can conveniently and easily be covered1by the rule oflaw', G
it should also be borne in mind that it is not always feasible and practical to
lay down such exhaustive written guidelines which can cover. all contingen-
cies. It has, therefore, become necessary to make provisions for exercise of
discretion in appropriate cases by giving broad guidelines and indicating
the parameters within which such power is to be exercised. (610-B-C] H
586 SUPREME COURT REPORTS . [1994) 1 S.C.R.

A Delhi Transport Corporation v. D.TC. Mazdoor Sangh Congress,
[1991) Supp. 1 S.C.C. 600, held inapplicable.

9.1. The guidelines for exercise of the discretion need not be expressly
found in the impugned provisior.s but such guidelines can be gathered
from the setting of the Act and the rules framed thereunder. [609-C]
B
Pl. Irani v. State of Madras, [1962) 2 S.C.R. 169; S. Kandaswamy
Chettiar v. State of Tamz7 Nadu, [1985) 1 S.C.C. 290; la/an Trading Company
(P.) Ltd. v. Mill Mazdoor Union, [1967) 1 S.C.R. 15 and Workmen of
Meenakshi Mills Lt.ti. & Ors. etc. v. Meenakshi Mills Ltd. & Anr. etc., [1992)
C 3 S.C.C. 336, relied on.

Dwarka Prasad Laxmi Narain v. State of Uttar Pradesh & Ors., [1954]
S.C.R. 803; R.M. Seshadri v. Distt. Magistrate, Tanjor and Anr., A.I.R. (1954)
S.C. 747; Central Inland Water Transport Corporation Ltd. v. Brojo Nath
Gangun [1986) 3 S.C.C. 156; D.TC. Corporation v. D.TC. Mazdoor Con-
D gress, [1991) Suppl. 1 S.C.C. 600 and Harakchand Ratanchand Banthia &
Ors. etc. v. Union of India & Ors., [1970) 1 S.C.R. 479, referred to.

CIVIL APPELLATE JURISDICTION: Civil Appeal No. 4157 of
1993.
E
From the Judgment and Order dated 16.6.1993 of the Madras High
Court in W.P. No. 5793 of 1993.

WITH

F S.L.P. Nos. CC No. 21592, 21690, 21691, 21688, 22042/93, C.A. No.
4158/93, SLP (C) No. 15097/93, SLP. Nos. (CC Nos. 21899, 21929, 21940/93,
IA No. 1/93 in SLP (C) CC No. 21940)

Soli J. Sorabjee, R. Krishnamurthy, AK. Sen, Mrs. Nalini Chidam-
G baram, C.S. Vaidyanathan, Kapil Sibal, Harish N. Salve, G. Ramaswamy,
S.R. Hedge, K.K. Mani, K.R. Reddy, R. Muthukumaraswamy, Ms. Indu
Malhotra, Ms. Ayesha Khatri, Ms. Daina Pradhan, K. Rajendra
Chowdhary, P.R. Seetharaman, V. Krishnamurthy, S. Thanajayan and
Shailendra Bhardwaj for the appearing parties.

H The Judgment of the Court was delivered by
PREMIUM GRANITES v.STATEOFT.N. [G.N.RAY,J.] 587

G.N. RAY, J. 1. This appeal and the connected matters are directed A
against the judgment dated 16th June, 1993 passed by the Division Bench
-(
of the Madras High Court in Writ Petition No. 5793 of 1993. The Writ
Petitioner Durai Raju Naidu moved the aforesaid writ petition before the
Madras High Court for a declaration that Rule 39 of The Tamil Nadu
Minor Mineral Concession Rules, 1959 (hereinafter referred to as the
Mineral Concession Rules) as unconstitutional and void. The said Writ
B
Petitioner contended inter alia that he was granted lease with respect to
quarry in Survey No. 782/1 in Kulathur village and he had been agitating
before the State Government for the renewal of the said lease but he
apprehended that the concerned authorities were likely to exercise their
prerogative under the said Rule ·39 to grant lease to somebody else and in c
order to safeguard his interest, the Writ Petition was moved by him for the
aforesaid declaration.

2. To sustain the challenge to the said Rule 39, the Writ Petitioner,
Shri Naidu, urged two main grounds, namely, (a) The State Government
had no power to frame a rule deviating from the Mineral Concession Rules
D
already made in exercise of the powers conferred under Section 15(1) of
the Mines and Minerals (Regulation and Development) Act 1957
(hereinafter referred to as MMRD Act) and (b) Rule 39 had conferred
arbitrary, uncanalised and unguided power on the executive thereby of-
fending Article 14 of the Constitution of India. The expression "public E
purpose and interest of mineral development" as referred to in the said
Rule 39 is vague and do not constitute sufficient guidelines. The said Writ
Petition was contested by the State of Madras and also by other respon-
dents who were impleaded in the Writ proceedings, namely, the Tamil
Nadu Granites Quarry Owners and Exporters Association, Shanthi
F
Granites and the Premium Granites.

3. The Division Bench of the Madras High Court by the impugned
judgment did not accept the first contention of the Writ Petitioner but
upheld the second contention and declared that Rule 39 of the Mineral
Concession Rules was unconstitutional and void. G

4. Premium Granites and Shanthi Granites preferred a Special Leave
+ Petition No. 10306 of 1993 before this Court inter alia challenging the
impugned decision of the Madras High Court impleading the State of
Tamil Nadu represented by its Commissioner and Secretary to the Govern- H
588 SUPREME COURT REPORTS [1994] 1 S.C.R.

A ment Industries Department, Sri Durai Raju Naidu, the Writ Petitioner and
the Tamil Nadu Granites Quarry Owners and Exporters Association. As
aforesaid, Civil Appeal No. 4157 of 1993 arises on such special leave
petition filed by the said applicants. The State of Madras has also preferred
special leave petition challenging the said decision of the Madras High
Court and some other parties also made applications before the Court for
B leave to move special leave petitions and to intervene either to oppose the
said appeals or to support the decision of Madras High Court and all these
matters have been heard analoguously and are being disposed of by this
common judgment.

C 5. To appreciate the contentions raised by the contesting parties,
certain dates and events may be stated as hereunder :-

In 1957 the Mines and Minerals (Regulation and Deve~opment) Act
(MMRD Act) was passed by the parliament. In 1959, the Tamil Nadu
D Minor Minerals Concession Rules were issued under Section 15 of the
MMRD Act. Rule 8 of the Mineral concession Rules provided for the
grant of quarry leases in respect of all Minor Minerals. On December 16,
1972, G.O. No, 1932 was issued by the State of Madras inserting Rule 8
(A) of the Mineral concession Rules providing grant of lease to persons
for quarrying minerals for their existing industries or having industrial
E programmes. It is the case of some of the parties in the above matter before
this Court that they had set up industries based on the above rules and
obtained leases of land for quarrying granite for specified period. On
August 25, 1975 by G.O. Ms. No. 993 Rule 8 (A) was amended thereby
enabling the State Government to grant leases for quarrying Black Granite
F subject to the applicant having an industry or agreeing to set up an industry
within two years.

6. On December 2, 1977 by G.o: Ms. No. 1312, Rule 8 (C) was
inserted thereby prohibiting grant of leases in Government lands for quar-
rying Black Granite for private persons. Since such Rule 8 (C) provided
G for exclusive exploitation of Black Granite by the State Government, the
validity of Rule 8 (C) was challenged in a writ proceeding before the
Madras High Court. The validity of Rule 8(C) was ultimately upheld by
this Court on 5.2.1981 in the case of Hind Stone (reported in A.l.R. 1981
S.C. 711). Some of the lessee whose leases had expired by efflux of time,
H made applications for renewal of their leases but no renewal was granted.
PREMIUM GRANITES v.STATEOFT.N.[G.N.RAY,J.) 589

i:n 1984 Writ Petition No. 12267 of 1984 was filed by one of such applicants A
for renewal before this Court for a mandamus to direct State Government
to grant renewal of lease for a further period of ten years and similar Writ
Petitions were also moved before this Court for the aforesaid relief by some
of the leassees whose leases had also expired. In such Writ Petitions this
Court has passed ad-interim order of status quo on May 3, 1984 as regards B
possession. Applications were also filed before this Court for vacating
status quo order but such applications were dismissed by this Court on
September 28, 1984 and the Writ Petitioners who were lessees but whose
leases had expired, continued to remain in possession of land in terms of
the interim order of this Court without, however, any right to quarry
operations. On December 9, 1988, by G.O. No. 1273 Rule 8(C) was C
amended thereby providing for grant of lease to quarry Black Granite to
private persons for their existing industries or having industrial programme.
A number of lessees whose leai;es had expired made applications for grant
of lease to quarry Black Granite. Their claims were considered by the
concerned department and were recommended to the State Government D
It appears that on September 2, 1989, the rules were further amended by
G.O. No. 608 thereby providing for lease for quarrying Black Granite only
to persons having industries but the said grant was made under a tender
system. On June 10, 1992 by G.O. Ms. No. 214, Rule 8(C) was amended.
Rule 8(C) as amended provides for grant of quarry lease to Government
Company and Rule 8(A) as amended by G.O. 214 provides for quarry lease E
to be granted only to persons having "Letter of Commitment". The said
G.O. also provided for canalisation of granite quarried. The validity of Rule
8(D) containing canalising privisions wrre challenged before the High
Court of Madras and such Rule 8(D) was struck down by the High Court.
On March 5, 1993, this Court, in Writ Petition No. 12267 of 1984 and F
connected matters passed an order to the effect that the State Government
could consider and pass orders in respect of relief sought for by the
petitoners for lease of quarrying Black Granite. On March 8, 1993, G.O.
No. 97 was passed introducing Rule 39 of the Mineral Concession Rules
providing for grant of leases "in special circumstances in the interest of
mineral development" and "in public interest" otherwise than in accordance G
+ with the Mineral Concession Rules. As stated earlier, the validity of Rule
39 was challenged in a writ petition before the Madras High Court.

7. It may be stated here that by G.O. Nos. 125 and 197 the State of
Madras granced quarry leases in favour of some persons who had estab- H
590 SUPREME COURT REPORTS [1994] 1 S.C.R.

A lished industries and had been granted quarry leases earlier and who had
been allowed to continue in possession all through. After Rule 39 was
struck down by the Madras High Court two Writ Petitions were filed
before the Madras High Court for cancelling leases granted by the said
G.O. Nos. 125 and 197 in exercise of the power under Rule 39 of the
Mineral Concession Rules. The State Government opposed such Writ
B Peitions for cancelling the leases and inter alia contended that the grant of
leases to existing industries was traceable to Rule 8(A) as amended by G.O.
No. 214 dated June 10, 1992 and such grant of lease could be sustained
without reference to Rule 39 since struck down by ~he Madras High Court
but the High Court allowed the said Writ Petitions and set aside G.O. Nos.
c 125 and 197 by which the leases were granted in favour of some persons.
It has been held by the High Court that the grattt of leases cannot be
sustained under Rule 8(A) of the Mineral Concession Rules and such grant
of leases can be referable only to Rule 39 and since Rule 39 has been struck
down, the grant made under the said Rule 39 is also liable to be set aside.
D Such grantees, therefore, have also moved special leave petitions before
this Court inter alia challenging the decision of the Madras High Court
striking down Rule 39.

8. To appreciate the rival contentions raised by the parties either in
support or against the validity of Rule 39 of the Mineral Concession Rules,
E the provisions of Rule 39 are set out as hereunder:

"In exercise of the powers conferred by sub-section (1) and (lA) of
Section 15 of the Mines and Minerals (Regulation and Development Act,
1957 (Central Act 67of1957) the Governor of Tamil Nadu hereby makes
the following amendment to the Tamil Nadu Minor Mineral Concession
F Rules, 1950."

The amendment hereby made shall come into force on the 8th March
1992.

AMENDMENT
G
In the said rules, after rule, 38, the following rule shall be added,
namely:

"39. Powers of State Government to grant or renew quarry lease or
H permission etc. in special cases:
PREMIUM GRANITES v. STATE OFT.N. [G.N. RAY, J.) 591

Notwithstanding anything contained in these rules, the State Govern- A
ment, if in any case, are of opinion that in the interest of mineral develop-
ment and in the public interest it is necessary so to do, they may, by order
and for reasons to be recorded:

(a) grant or renew a lease or permission to quarry any mineral; or
B
(b) allow the working of any quarry for quarrying any miner~;

on terms and conditions different from those laid down in those rules".

9. The learned counsel challenging the correctness of the decision of C
the Division Bench of the Madras High Court striking down Rule 39 as
arbitrary, have urged a number of points. Since all the matters are being
disposed of by common judgment, we do not propose to deal with the
contentions made by each of the learned counsel challenging or supporting
the impugned decision of the Madras High Court separately in view of the
fact that the grounds urged by the learned counsel are more or less similar D
and at times overlapping. We, therefore, propose to deal with the conten-
tions raised by the learned counsel not individually but generally.

10. As already indicated, the only ground on which Rule 39 of the
Mineral Concession Rules has been struck down by the Madras High Court E
is that such Rule gives unguided and uncanalised powers to the State
Government. The arguments advanced by the learned counsel challenging
the decision of the Madras High Court striking down Rule 39 may be
summarised to the following effect:

(1) Rule 39 contains the guidelines viz. the grant under Rule 39 can F
be made only "in the interest of mineral development" and "in public
interest" for reasons to be recorded in writing.

(2) The object of the MMRD Act itself is for regulation of mining
and "mineral development". The Rules framed under the MMRD Act are
also intended to subserve the said object, namely, mineral development. G
+ The provisions of the MMRD Act and the Rules framed by the Central
and the State Governments clearly furnish the scope and purport of the
Word 'mineral development'. Scientific exploitation of the minerals without
waste is undoubtedly an exercise for mineral development envisaged by the
Act and the Rules. H
592 SUPREME COURT REPORTS [1994} 1 S.C.R.

A (3) Since reasons are to be recorded in writing while exercising the
power under Rule 39, it can always be ascertained from the order that may
be passed under the said provisions of Rule 39 as to whether the grant is
one for furthering mineral development or not. .

(4) The word "public interest" is a word of definite concept which
B has been referred to in the Constitution and in many other Acts. The
import of the expression "public interest" has been considered and noted
in the decisons of this Court. Hence, the said expression does no longer
suffer from any vagueness or indefiniteness.

C (5) Power under Rule 39, being controlled by such consideration "in
the interest of mineral development" and in "public interest", cannot be
exercised arbitrarily and capriciously but such exercise has to be made with
definite objective purpose. There is, therefore, no occasion to strike down
Rule 39 on the score of being potentially arbitrary and capricious and open
to unguided and uncanalised exercise of power. If in any particular case,
D the aforesaid purposes are not followed in exercising power under Rule 39,
then such improper action, and not Rule 39 itself, can be challenged.

( 6) In different Acts and Rules, both Central and State including
Rules framed by some other states under MMRD Act, provisions similar
E to Rule 39 have been made and such provisions have been noticed by
courts of law but for good reasons have not been struck down as violative
of Article 14 of the Constitution.

11. We have already indicated the outlines of various government
orders amending the Mineral Con.cession Rules from time to time. The
F picture which emerges from the aforesaid amendments made in the
Mineral Concession Rules may be stated as hereunder: -

12. The Mineral Concession Rules were framed under Section 15 of
the MMRD Act providing for grant of quarry leases and permission in
G respect of minor mint..rals both in revenue land and patta lands. In the year
1972 the Mineral Concession Rules were amended and under such amend-
ment, the grant of lease of revenue land to quarry granite could be made
in favour of private persons only if they had industries or industrial
programmes indicating that the policy of the government to exploit black
granite scieutifically to avoid wastage was being implemented. A number
H of persons including some of the appellants in these proceedings had
PREMIUM GRANITES v. STATE OFT.N. [G.N. RAY, J.] 593

established industries pursuant to the Rules as amended and applied and A
obtained leases for quarrying black granite for a period of ten years in 1973
- such leases being valid upto 1983. In December, 1977, Rule 8(C) was
introduced prohibiting grant of leases for quarrying black granite by private
persons and confining expliotation only by the Government. The validity of
such rule was challenged but as aforesaid the said rule was upheld by this B
Court in the case of Hind Stone. When the leases for quarrying black
granite in revenue lands for a period of ten years expired in 1983, the
lessees including some of the appellants made applications for grant of
renewal but they were not eligible for getting such renewal in view of Rule
8(C) the validity of which was upheld by this. Court. The applicants for
getting such renewal of lease including some of the appellants filed Writ C
Petitions before this Court and as indicated hereinbefore orders for main-
taining status quo as to the possession of the lands were passed by this
Court without however giving any right to quarry. In 1988, Rule 8(C) was
amended when,by provision was made for grant of leases for quarrying
black granite to private persons having industries or having industrial D
programmes. Such amendment of Rule 8(C) virtually restored the position
as was prevailing in· 1972. The persons who had set up industries or had
industrial programmes for quarrying black granite scientifically as desired
by the government, made applicantions for grant of renewal of leases. Such
applications were scrutinised by the concerned department and recommen-
dations for grant of renewal of leases were made by the department. At E
that stage, in 1989 the Mineral Concession Rules were further amended
inter alia providing that quarry leases were to be granted to industries only
under tender system. Tenders were floated and some of the aspirants for
getting leases participated in such tenders and those who had participated
and were successful were given the letters of commitment assuring grant F
of lease to them if they would set up industries. In 1992, the rules were
amended again by G.O. Ms. 214 drastically. As per the amended rules,
grant of quarry leases to quarry black granite were to be made only to
government companies and the companies having letters of commitment.

13. It does not require any imagination to note that there were G
frustration and resentment of such persons.like some of the appellants who
had set up industries based on the old rules and who had been starving for
raw materials but who had become disabled from getting any lease in view
of restriction of granting of such lease and confining the grant of lease in
favour of only such private persons who held the letters of commitment. H
594 SUPREME COURT REPORTS [1994] 1 S.C.R.

A 14. It has been contended by the learned counsels in support of Rule
39 that the State Government having realised the injustice and unmerited
hardship to be suffered by some persons and also having realised that for
furthering mineral development which will be in the public interest, it was
desiiable to nittke suitable provisions so that the ·rigours created because
of the amendment made by G.O. Ms. 214 in 1992 confining grant of leases
B to private persons holding letters of commitment, should be relaxed. It was
on such perception that Rule 39 was introduced in the Mineral Concession
Rules enabling the government to grant quar!y leases to private persons in
appropriate cases in the interest of mineral development and in public
interest for reasons to be recorded in writing. It is, threrfore, necessary to
c decides whether introduction of Rule 39 in the Mineral Concession Rules
was justified and desirable and even if it may be justified or desirable, as
a matter of policy, whether in .Jaw such amendment can be sustained.

15. Elaborating the contentions made before this Court in support o!
D Rule 39, it has been contended by the learned counsels that Rule 39 does
not confer an uncanalised power and does not suffer from the vice of want
of guidelines. It has been urged that Rule 39 contains the guidelines viz.
that the grant must be for mineral development and "in public interest". In
other words, Rule 39 has been inserted to provide for grant of.lease which
may not be done strictly.under Rule 8(A) or 8(C) but which is warranted
E for mineral development and "in public interest" for good reasons to be
recorded.

16. It has been urged that mineral development is not a vague
concept but has a- definite meaning which can be tested objectively par-
ticularly when reasons are to be recorded in writing under Rule 39.
F
17. The learned counsel have contended that the object of the
MMRD Act is for regulations of mineral.development and the rules framed
under the MMRD Act both by the Central and State Government clearly
furnish the scope-and purport of the word "mineral development". It has
G been s.trongly contended that scientific exploitation of minerals without
waste is undoubtedly a part of mineral development as envisaged by the
MMRD Act and the rules framed thereunder. It ha~ been urged by the
learned counsel that the word "public interest" having been referred to in
the Constitution and. in many enactments is a word of definite concept.

H 18. The validity of service rules including fundamental Rule 56 J
PREMIUMGRAt"IITTES v. STATE OFT.N. [G.N.RAY,J.) 595

empowering the Government to terminate the service by way of premature A
retirement had been challenged before this Court as ultra vires Articles 14
and 16 of the Constitution but this Court in a series of decisions has held
that if the power to retire prematurely in public service is exercised in
"public interest" the provisions empowering such premature retirement
does not become invalid on the score of offending Articles 14 and 16 of
the Constitution. The Constitution Bench of this Court in T.G. B
Shivacharana Singh etc. v. State of Mysore, A.LR. (1965) S.C. 280, in
,..._ upholding Rule 285 of Mysore Civil Services Rules, 1958, providing for
premature retirement in public "interest" has held that the Rule 285
authorising the Government to retire a government servant compulsorily in
public interest did not offend Articles 14 and 16 of the Constitution. It was C
indicated by the Constitution Bench that the law in relation to the validity
of the rules permitting compulsory premature retirement of government
servants had been well settled by a series of prior decisions of this Court
in Moti Ram Deka v. General Manager, North East Frontier Railway, A.I.R.
(1964) S.C. 600 and Shyam Lal v. State of Uttar Pradesh & Anr., [1955) 1 D
S.C.R. 26.

19. The learned counsel have further contended that the guidelines
need not be expressly found in the impugned provisions but such guidelines
can be gathered _from the setting of the Acts and the Rules framed
thereunder. In support of this contention 'reference has been made to the E
decision of this Court made in the case of P.J. Irani v. State of Madras,
[1962) 2 S.C.R. 169. Section 13 of Madras Buildings (Lease land Rent
Control) Act, 1949 was challenged as ultra vires Article 14 of the Constitu-
tion as the said provisions gave uncontrolled and unguided discretion to
the Government to exempt any building from all or any of the provisions F
of the said Act. It was held in the said decision that enough guidance was
given in the preamble and the operative portion of the Act to exercise the
discretion of exemption. The decision in P.J. /rani's case was followed by
this Court in the decision in S. Kandaswamy Chettiar v. State of Tamil
Nadu, [1985] 1 S.C.C. 290. Section 29 of Tamil Nadu Buildings (Lease and
Rent Control) Act 1960 providing for discretion to the State Government G
to grant total exemption to buildings belonging to public trust from the
purview of the Rent Act was held valid and not offending Article 14 of the
Constitution on the ground of giving unbridled discretion. It was held that
sufficient guideline was afforded by the Preamble and the operative
provisions of the Rent Act for the exercise of discretionary power vested H
596 SUPREME COURT REPORTS [1994] 1 S.C.R.

A in the Government.

20. Reference has also been made to the decision of this Court in
Ram Dial and others v. State of Punjab, [1965] 2 S.C.R. 858. In the said
decision the expression "public interest" has been explained at page 866 of
the Report. It has been held that while considering the power given ~o the
B government to remove a member under Section 14(e) of the Punjab
Municipalities Act, the expression "public interest" would necessarily
depend upon the time, place and circumstances with reference to which
the considerations was made. It may be noted here that Section 14(e) was
struck down not on the score that expression "public interest" is vague and
C it introduces unguided, and unbridled power but the same was struck down
in view of the fact that Section 14(e) providing for removal without a
hearing circumvents Section 16(1) which contemplates a hearing to be
given to the members to be affected.

D 21. The learned counsel have also referred .to the decision of this
Court made in the case of Harakchand Ratanchand Banthia and others etc.
v. Union of India and others, [1970] 1 S.C.R. 479. In considering the
expression "so far as it appears to be necessary or expedient for carrying
out the provisoins of the Act (Gold Control Act), the Constitution Bench
E in the said decsion held that the said phrase was not subjective in the
context of the scheme and object of, the legislation. The opinion of the
administrator as to the necessity of making the order must be made
objectively and must be reasonably tenable in a court of law. Reference has
also been made to another decision of this Court made in Jalan Trading
Co. (P.) Ltd. v. Mill Mazdoor Union, [1967] 1S.C.R.15. In the said decision
F validity of several provisions of the Payment of Bonus Act including Section
36 was taken into consideration by the Constitution Bench of this Court. It
has been held that the power to exempt certain establishments from the
operation of the Act given to the appropriate Government under Section
36 was not an unguided power because the Government was enjoined to
G take public interest, the financial position of the establishment, and other
relevant circumstances into consideration before exercising the said power.
Therf was therefore no excessive delegation of legislative authority by
Section 36 and the Section was held valid.

H 22. The learned counsel have again relied on recent decision of the
f
PREMIUM GRANITES v. STATEOFT.N. [G.N.RAY,J.l 597

Constitution Bench of this Court made in the case of Workmen of Meenak- A
~ shi Mills Ltd. and others etc. v. Meenakshi Mills Ltd. & another etc., [1992]
3 S.C.C. 336. The vires of Section 25(N) of the Industrial Disputes Act (as
prevalent at the relevant time) was considered in the said decision. It has
been held that powers conferred under Sub-Section (2) of the Section
25(N) to grant or refuse permission for retrenchment has to be exercised
in accordance with objective indicated and statement of object and reasons B
given in the amending Act 32 of 1976 and also the basic idea of settlement
of industrial disputes and maintaining industrial peace. It has been held
that in exercising power under Sub-Section (2) of Section 25{N), with the
requirement of passing a speaking order containing reasons does not
amount to unreasonable restrictiun. It has also been held that the require- C
ment of reasons for exercise of such power by itself excludes chanees of
arbitrariness. It has also been held in the said decision that Section 25(N)
is not vitiated on the ground of absence of a provision for appeal or review
of the order passed by the government or authority as the order is required
to be a speaking order tv be passed on objective considerations. It hasbeen D
further held that the remedy of judicial review available under Article 226
cannot be said to be inadequate because even in a case of refusal of
permission for retrenchment on policy considerations, it is open to the
Court to examine whether policy is in consonance with the objcet and
purport of the Act.
E
23. The learned counsel have also contended that Entry 54 List 1 to
7th Schedule to the Constitution of India enables the Central Government
to regulate mines and mineral development in "public interest" by making
a declaration of such intention and Parliament has in fact made such
declaration by Section 2 of the MMRD Act. By the said MMRD Act, F
Parliament has left the power of regulating quarry leases in respect of
minor minerals to the State Governments under Section 15 of the MMRD
Act. The State Government has the authority to deal with the minor
minerals under which the Mineral Concession Rules have been framed by
the Government of Tamil Nadu. It is by the said rules that the State
Government has been regulating grant of leases from time to time. In 1992 G
the government thought it fit to prohibit grant of quarry leases to private
persons except in patta lands and providing for grant of quarry leases to
revenue lands only to government companies in terms of Rule 8(C). On a
reconsideration and as a part of policy decision, the government though it
fit to introduce Rule 39 providing for the grant of quarry leases to private H
598 SUPREME COURT REPORTS [1994) 1 S.C.R.

A persons "in the interest of mineral development" and "in public interest" by
indicating reasons in writing by relaxing the rigours of other provisions of
the Mineral Concession Rules. Rule 39 is a part of the policy underlying
the Mineral Concession Rules whkh is consistent with the object of the
MMRD Act. As exercise of relaxation for grant of quarry leases under
Rule 39 can onls be made within the parameters of public interest and for
B the mineral development by recording the reasons in writing, Rule 39 does
not suffer from arbitrariness or unguided or unbridled power offending
Article 14 of the Constitution. It has also been contended that the power
exercised under Article 39 is not an absolute, discretionary power of the
State Government unfettered by any valid consideration but exercise of
c such power within the aforesaid parameter is always open to judicial
scrutiny thereby affording ample safeguard against any abuse in exercising
the power under Article 39.

24. Commenting on the reasons for which Article 39 was introduced
D in the Mineral Concession Rules, it has been submitted by the learned
counsels that various persons under the existing rules had set up industries
by incurring substantial costs for sizing and polishing granites for export
and sale in the domestic market. Such scientific exploitation and ancillary
steps in that regard are undoubtedly right steps for mineral development.
The cases of some of the persons who had set up proper industrial
E establishments for .quarrying granites and for polishing and sizing them for
effective user under the existing rules and had been possessing lands and
were reasonably aspiring for renewal of leases required proper considera-
tion. Although "their cases were recommended on scrutiny of relevant facts
by the concerned department, no such lease could be granted because of
F the amendment effected in 1992 in the Mineral Concession Rules. As not
only injustice was meted out to such persons put non renewal of leases to
such persons was also considered to be not "in the interest of mineral
development" and "in the public interest". The State Government, therefore
felt that Rule 39 containing provision for relaxation in the matter of grant
G of quarry leases should be i.1 1.roduced so that in an appropriate case in the
greater interest of mineral development case and in public interest, grant
of lease can be made notwithstanding other provisions in the Mineral
Concession Rules. In the aforesaid facts, it cannot be contended that Rule
39 was introduced without any justificaton whatsoever or the same suffers
from any excessive delegation or vice of uncanalised and unbridled power
H or the same was introduced to give favours to a chosen few.
PREMIUM GRANITES v.STATEOFT.N.[G.N.RAY,J.] 599

25. The High Court in striking down Rule 39 has held that Rule 39 A
provides for an arbitrary power and the guidelines of public interest and
in the interest of mineral development do not provide any objective stand-
ard. For such finding, the High Court has relied on the decision of this
Court made in Mis Dwarka Prasad Laxmi..Narain v. State of Uttar Pradesh
and Others, [1954] S.C.R. 803, R.M. Seshadari v. District Magistrate, Tanjore B
and Anr., A.l.R. (1954) S.C. 747, Harakchantl Ratanchand Banthia and
others etc. v. .Union of India and others, [1970] 1 S.C.R. 479 and Jalan
Trading Co. (P.) Ltd. v.Mill Mazdoor Union, [1967] 1S.C.R.15. It has been
contended by the learned counsel that all the said decisions do not support
the propositim that Rule 39 is ultra vires Article 14 of the Constitution.
The decisions relied on by the High Court primarily relate to laws or rules C
which seek to prohibit a person from carrying on a legal trade or profession
excepting on licences. Such laws prescribing the restriction require to be
precise and objective so that the prohibitions would clearly be understood
and made enforceable. Provisions enabling a grant have necessarily dif-
ferent import. D

26. It may be noted here that the decision in Dwarka Prasad's case
relates to a case relates to a case where the power is given under Clause
4(3) of the Uttar Pradesh Coal Control Order to grant or refuse to renew,
suspend, revoke or cancel or modify any licence issued under the said
Control Order. The said clause further ·authorised the Controller to E
delegate such power in favour of any person. Such provision was held
unreasonable and invalid. The decision in R.M. Seshadri v. District
Magistrate, Tanjore and Anr., A.I.R. (1954) S.C. 747, relates to the validity
of condition 5(a) and special condition 3 which required a licence under
Cinematograph Act to exhibit at each performance one or more approved p
films of such length and for such time as the Provincial Government or the
Central Government may direct. Under special condition 3 the licencee
was required to exhibit at the commencement of each performance not
more than 2000 feet of one or more approved films. It was held by this
Court that such conditions did not amount to reasonable restrictions with
the meaning of Article 19(6) of the Constitution and therefore was ultra G
~ vires Article 19(1) of the Constitution.

27. The decision made in Harakchand Ratanchand Banthia and others
was a case where the validity of various sections of the Gold Control Act
and the Regulations made thereunder fell for consideration. Section H
600 SUPREME COURT REPORTS (1994] 1 S.C.R.

A 5(2)(b), section 27(2)(d), section 27(6)(a) Sections 32, 46, 88 and 100 were
held ultra vires for reasons indicated therein. Indeed this decision is relied
on to support of the validity of Rule 39 of the Mineral Concession Rules.
Some of the sections of the said Gold Control Act were held valid. The
reasons for which the said other sections were held invalid are entirely
different and do not apply so far as Rule 39 is concerned. Moreover,
B considerations as to public interest and for furtherance of mineral develop-
ment as essential requirement to grant exemption under Rule 39 make the
said Rule wholly objective. The decision in Banthia's case has no applica-
tion in interpreting Rule 39.

C 28. It has been further contended that where in respect of prohibited
categories, the law carves out an exception or relaxation, the rule to be
applicable should be appreciated on a different perception. There the
question of unbridled power being allowed to be exercised does not arise.
The question is of taking out certain exceptions from the prohibited area
and keeping certain categories outside the prohibited area for being al-
D lowed to exercise freedom of trade or business from the restrictions
imposed.

29. Elaborating on the contention that the power of relaxation as
contained in Rule 39 is similar in various statutes it has been urged that
E the power granted under Section 31 of the MMRD Act confers identical
power on the State Government as Rule 39 confers the power on the State
Government. Section 31 of the MMRD Act may be set out as hereunder:

"31. Relaxation of rules in special cases - The Central
Government may, if it is of the opinion that in the interests
F of mineral development it is necessary so to do, by order
in writing and for reasons to be recorded authorise in any
case the grant, renewal or transfer of any prospecting
licence or mining lease, or the working of any mine for
the purpose of searching fo:r winning any mineral on terms
and conditions different from those laid down in the rules
G
made under Section 13".

It has been submitted that the High Court while dealing with Section 31 of
the MMRD Act, has not questioned the validity of the said section al-
though it contains simillar provisions. fa this context reference to Section
H 29 of the Tamil Nadu Buildings (Lease and Rent Control) Act, 1960 has
PREMIUM GRANITES 1:'· STATEOFT.N. [G.N.RAY,J.] 601

also been made. The provisions of Section 29 is set out as hereunder: A
"Notwithstanding anything contained in this Act, the
Government may, subject to such conditions as they deem
fit, by notifications, exempt ~ny building or class of build-
ings from all or any of the provisions of the Act".
B
30. This provision has been upheld by the Supreme Court in the
decisions S. Kandaswamy Chettiar v. State of Tamil Nadu and Anr., (1985)
1 S.C.C. 290 and Prabhakaran Nair & Ors. v. State of Tamil Nadu and Ors.,
(1987) 4 s.c.c. 238.

31. Reference was also made to Section 8-A of the Karnataka Sales c
Tax Act which is set out as hereunder:

"The State Government may by notification make an
exemption or reduction in rate, in respect of any tax
payable under this Act; D
Any exemption from tax or reduction in the rate of tax
notified under Sub-Section (1) may be subject to such
restrictions and conditions as may be specified in the
notification.
E
The State Government may, by notification, transpose
any entry or part thereof from one schedule to another
schedule and alter the point of levy of sale or purchase,
but not so as to enhance the rate of tax in any case".

Reference to Section 25(1) of the Customs Act, 1961 was also made. F
The provision is set out as hereunder:

"If the Central Government is satisfied that it is neces-
sary in the public interest so to be, it may, by notification
in the official gazette, exempt general, either absolutely or
subject to such conditions as may be specified in the
G
notification, goods of any class or description from all or
any of the provisions of Chapter IV A or Chapter IV B".

This section has been upheld by his Court in a case,reported in (1985]
1 s.c.c. 641.
H
602 SUPREME COURT REPORTS (1994) 1 S.C.R.

A Section 14 of the Tamil Nadu General Sales Act since referred is set out
as hereunder:

"Power of Government to notify exemption any reduc-
tions of tax - (1) The Government may by notification
(issued whethe! prospectively or retrospectively) make an
B exemption of reduction in rate, in respect of. any tax
payable under the Act".

32. It is contended that Section 14· is quite similar to Rule 39 of the
Mineral Concession Rules. In this connection, reference has also been
C made to Rule 66 of the Karnataka Minor Mineral Concession Rules. 1969,
containing provisions for relaxation of Rules in special cases. The said ·Rule
is set out as hereunder:

"66. Relaxation of Rules in special cases - In cases
where the Go_vernment is of the opinion that public inter-
D est so requires, it may authorise the grant of a quarrying
lease or a quarrying permit on such terms and conditions
other than those prescribed in the rules, as the government
may by order specify.

Provided that notwithstanding ~ything contained in
E these rules such safeguards, territorial, financial or other-
wise may be provided to the leases with a view to
safeguarding the interests of any industry or trade in order
to avoid unhealthy competition among the lessees and to
prevent any fall in the trade and to see that minor mineral
F is exploited in a scientific and systematic manner".

Basing the arguments on the aforesaid- contentions the learned counsel
have submitted that there was no occasion to strike down Rule 39 by the
High Court as invalid and ultra vires Article 14 of the Constitution by
G holding that the said Rule conferred unguided and unbridled discretionary
power to the State Government. The learned counsel have submitted that
as the said Rule 39 is quite valid and has been inserted in the Mmeral
Concession Rules for a reasonable purpose, Rule 39 cannot per se be
declared as ultra vires to sought to be done by the Madras High Court. If
in any individual case, power has not been exercised properly and the
H reasons which have got to be recorded in writing do not stand the scrutiny
PREMIUMGRANITES v.STATEOFT.N.[G.N.RAY,J.] 603

of reasonableness and the purposes for which such power of exemption A
can be exercised, challenge for improper action in such individual cases
before a court of law can always be made. The learned counsel have
therefore submitted that the decision of the Madras High Court should be
set aSide thereby enabling the State Government to give effect to Rule 39
in appropriate cases.
B
33. Supporting the decision of the Madras High Court striking down
Rule 39 of the Mineral Concession Rules, it has been urged by the learned
counsel opposing the appeals that the High Court felt that if Rule 39 was
to be interpreted to give a wide discretionary power to the authorities to
overlook other provisions of the Mineral Concession Rules then it would C
be violative of Article 14 as being vague and unfettered and giving un-
canalised power to the State Government. It was on such finding that Rule
39 was struck down at unconstitutional.

34. It has been very strongly contended that the submission that the D
words "public interest", "reasons to be recorded in writing" would be
~ adequate to prevent arbitrary action is not tenable in view of the decision
of this Court by the Constitution Bench in Delhi Transport Corporation v.
D. T.C. Mazdoor Congress, [1991] Suppl. 1 S.C.C. 600. The attention of this
Court has been drawn to paragraph 230 at page 716 in the majority
decision. It has been held in the said paragraph: E

"There is need to minimise the scope of the arbitrary
use of power in all walks of life. It is inadvisable to depend
on the good sense of the individuals, however, high placed
they may be. It is all the more improper and undesirable F
to expose the precious rights like the rights of life, liberty
and property to the vagaries of the individual whims and
fancies. It is trite to say that individuals are not and do
not become wise because they occupy high seats of power,
and good sense, circumspection and fairness does not go
with the posts, however, high they may be. There is only G
a complacent presumption that those who occupy high
posts, have a high sense of responsibility. The presumption
is neither legal nor rational. History does not support it
and reality does not warrant it. In particular, in a society
pledged to uphold the rule of law, it would be both unwise H
604 SUPREME COURT REPORTS [1994] 1 S.C.R.

A and impolitic to leave any aspect of its life to be governed
by discretion when it can conveniently and easily be
covered by the rule of law''.

It has also been contended that it is also not factually correct that all the
ten grantees (13 leases) are having their own industries or factories and
B they are not exporting any raw granite or raw block to foreign countries
but they are processing and polishing after cutting them and sizing them
and it was only the said polished goods that are being exported by them.
It has been contended that only M/s Enterprising Enterprises and Gem
Granite have their own factories at Madras. Pallavan Granite has a factory
C at Pondicheny. All othet grantees do not possess any industry of thair own
either inside or outside the State of Tamil Nadu. It is also contended that
75% to 80% of the quarried materials are straightaway exported abroad
without cutting and polishing even by the persons who possess industries.

D 35. It has also been contended that although under G.O. Ms. 1273
introduced on December 9, 1989 which was in force on June 9, 1992
permitting grant of lease to persons with industries, Mis Enterprising
Enterprises and Gem Granite did not choose to apply under that scheme
which was in force for nearly 3 1/2 years only because the granites quarried
E must be captively used in their own industries for the purpose of polishing
before the same are exported. It has been contended that relevant facts
have not been taken Qi.to consideration for granting lease in the purported
exercise of power of relaxation under Rule 39. Such factual contentions
are, however, not admitted. We do not propose to scrutinise facts and
circumstances concerning the grantees in favoµr of whom the exercise of
F power under Rule 39 had been made because we do not think that for
deciding the validity of Rule 39 a case of improper exercise of power under
Rule 39 in an,y particular case, is required to be considered by this Court.

36. It has been contended that even if it is held that consideration of
G public interest and the interest of mineral development coupled with
requirement to record reasons provide guidelines under which power
under Rule 39 is to be exercised, Rule 39 introduced on March 8, 1993 in
the Mineral Concession Rules, if given an expansive introduction, would
entitle the authorities concerned to disregard the various other provisions
H as contained in the Mineral Concession Rules framed under Section 15 of
PREMIUMGRANITES v.STATEOFT.N.[G.N.RAY,J.] 605

MMRD Act and would entitle th~ authorities concerned eith_er to grant or A
renew a quarry lease contrary to the avowed policy of the State Govern-
ment incorporated in certain other provisions of the Mineral Concession
Rules.

37. It has been contended that when Rule 8(C) epitomizes policy of B
the State Government reserving granite in all its uses to be exploited by
the State Government or through its Corporation, in exercise of the powers
under Rule 39, the State Government should not be permitted to give an
interpretation to Rule 39 widely and grant a quarry lease contrary to the
state polky. Mr. Sibal, the learned counsel in this connection has referred
to the decision in Gardner v. Jay, (1885) 29 Ch. D 50 at 58. Lord Justice C
Bowen in dealing with the judicial discretion has held that "If a court is
invested by Act of Parliament with a discretion, that discretion, like other
judicial discretion, must be exercised according to common sense". The.
learned counsel has also contended that it is a settled principle of inter-
pretation of statute that a court should not interpret a statute in such a D
fashion as to render other provisions redundant. There should always be
an attempt to read different sections of a statute harmoniously so that one
provision does not invalidate the other. It has been contended that the
statutory rule should be considered as a part of an integrated scheme and
no one provisions should be so interpreted as to render the scheme as
envisaged in other provisions inoperative: It has been submitted that Rule E
8(C) represents the part of a scheme in respect of which the State Govern-
ment d·Jes not allow exploitation of granite except by itself or through its
Corporations. It must therefore be held that the authorities in framing Rule
39 could not have intended that such plicy should be rendered inoperative
and ineffective by interpreting Rule 39 in a wide manner. It has been F
further submitted that it is well established rule of interpretation that courts
must interpret an enactment in such a way as to inplement rather than
defeat its purpose. In this connection, reference has been made to the
observation of Francis Bennion in - Statutory Interpretation, 2nd Edition
at page 411. The learned author has indicated that "An Act must be
construed so that its provisions are given force and effect rather than being G
rendered nugatory". The learned author has also indicated that "Ut res
magis principle requires inconsistencies within an act to be reconciled". In
this context, the learned author has referred to Blackstone to the effect
that "one part of che statute must be so construed by another, that the
whole may, if possible, stand: ut res magis valeat quam pereat". It has been H
606 SUPREME COURT REPORTS (1994) 1 S.C.R.

A further submitted that the principle of reconciling inconsistencies within a
Act means that if the obvious intention of the enactment gives rise to
difficulties in implementation, the court must do its best to find ways of
resolving these. It has been submitted that looking from this angle, Rule 39
would only mean that the State Government is entitled to grant or renew
a quarry lease if in a given case or in a special class of cases it is of the
B opinion that in the interest of mineral development and in the public
interest it is necessary to change the terms and conditions of the lease
different from those statutorily prescribed under the rules. In no other
circumstances, this power can be exercised. Such .an interpretation would
render Rule 39 consistent with the scheme formulated by the State Govern-
c ment under other-provisions in particular Rule 8A and 8(C). It is con-
tended that any other interpretation would render Rule 39 a Henry VIII
Clause.

38. It has been submitted that this Court had many occasions to deal
with similar Henry VIII Clause (that king is regarded popularly as the
D impersonation of executive autocracy). In Central Inland Water Transport
Corporation Limited v. Brojo Nath Ganguli, [1986) 3 S.C.C. 156, at pages
220, 221 and in Delhi Transport Corporation v. D.T.C. Mazdoor Congress,
(1991) Suppl. 1 S.C.C. 600 at page 707 and 717, this Court held that such
clauses are constitutionally impermissible.
E
39. It has been very strongly contended that in case this Court finds
Rule 39 to be vague and ambiguous then this Court may, in the light of
scheme of the entire rules, the policy of the State Government as expressed
in the said rules, permit Rule 39 to be read down in such a manner so as
F to give effect to the policy of the government and also to the scheme of
the MMRD Act. It has been submitted that this Court has repeatedly
followed doctrine of reading down in Ranganath Reddy v. State of Kar-
nataka, (1978) 1 S.C.C. 641, Kedar Nath Singh v. State of Bihar, (1964) 6
S.C.R. 784, Jagdish Pandey v. Chancellor, University of Bihar, (1968) 1 S.C.R.
G 231, Sunil Bhadra v. Delhi Admtnistration, (1978) 4 S.C.C. 494.

40. It has been further submitted that as Rule 39 cannot be given a
wide interpretation thereby giving extraordinary power to .relax other
provisions of the rules and consequently rendering the scheme of the entire
rules ineffective. The only interpretation by reading down Rule 39 which
H can be given is that the said rule would permit the State Government under
PREMIUM GRANITES v.STATEOFT.N.[G.N.RAY,J.] 607

ex~raordinary circumstances or in special cases to very certain terms and A
conditions of the lease in a given case. It has been submitted that therefore
it becomes necessary to understand the import of the words "terms and
conditions'' in contradistinction to the policy of the Government as con-
tained in the Mineral Concession Rules. The words "terms and condition"
according to the learned counsels would mean a stipulation or require- B
ment, the failure of which would render the Act subject to repudiation.

41. It has been contended that the Mineral Concession Rules
prescribed certain conditions as to the grant of leases - how an application
is lo be made, to whom it is to be made, the maximum period of lease, to
the extent of maximum area which can be leased out to the applicant etc. C
All the.se conditons are also provided in the MMRD Act itself. In D.K
Trivedi & sons and others v. State of Gujarat & Ors., [1986] Suppl. S.C.C.
20), this Court has held that the r'Jie making power of the State Govern-
ment under Section 15 is controlled by Sections 4 to 13 (now sections 5 to
13) of the MMRD Act. On the principle of harmonious construction and D
reading down statutory provision for reconciliation in a special case, in the
interest of mineral development and in the public interest the State
Government may change or relax some of the conditions of lease e.g. may
at the most grant a lease for more than ten years if the applicant satisfied
the State Government the necessity to do so. Similatly, in a given case, the
Government may charge less seniorage fee, dead rent etc. in the interest E
of mineral development and in public interest. But the State Government
cannot and should not utilize such an extraordinary power under Rule 39
to exempt few persons alone, while applying the policy to all others e.g.
Dharmapuri ,District is completely reserved for exploitation by Government
owned Corporation. It has been contended that it has been demonstrated F
before this Court with the aid of the affidavit filed by the State Government
in Civil Appeal No. 1655 of 1992 at pages 450 to 456 that more than 70
applications have been rejected on the sole ground that Dharmapuri
District is reserved for State exploitation. Despite such avowed policy of
reservation, the State Government in the purported exercise of a wide
power under Rule 39 has granted three leases in the same Dharmapuri G
District only on the ground that there was huge loss of foreign exchange.
The learned counsel have contended that such an exercise in completely
overlooking the other provisions will be wholly capricious and. therefore
impermissible under Article 14 of the Constitution and consideration of
loss of foreign exchange is alien to the relevant considerations permissible H
~I

608 SUPREME COURT REPORTS [1994} l S.C.R.

A under the Mineral Concession Rules.
42. It has been co.i.tended that in case the government wants to grant
leases in Dharmpuri District to persons who were not in possession of
letters of commitment as on June 10, 1992, the only course open to the
State Government is to change its policy of reservation as well as its policy
B in relation to letters of committment and allow all individuals who are
interested in a quarrying licence consistent with the concept of equal
opportunity.

43. It has been further contended that the State Government is under 1'
C a constitutional duty to act fairly and justly and give equal opportunity to
every individual who seeks lar~s from the Government. The grant of
licence to a few people and that also on grounds of loss of foreign exchange
is totally obnoxious to the theory of just State action. The guiding principle
for interpretation of Rule 39 should be equality of opportunity to every
D person in the trade and at the same time imposing sufficient restrictions or
guidelines or safeguards to prevent misuse of such a power and such
interpretation must enable Rule 39 to coexist with the other rules as being
not inconsistent with other rules.

44. It is therefore only possible to reconcile Rule 39 by reading it
E down and indicating that in appropriate case by exercise of power con-
ferred in Rule 39, it is permissible for the State Government only to very
the terms and conditio~s of the lease "in the interest of mineral develop-
ment" and "public interest".

F 45. After considering the facts and circumstances of the case and
giving our careful consideration to the arguments advanced by the learned
counsels for the respective parties, it appears to us that the MMRD Act
was enacted by the P.:-rliament under Entry 54 List 1 of the 7th Schedule
to the Constitution. The aforesaid Entry enables the Central Government
G to regulate mines and mineral development in public interest by making
such declaration and the Parliament, has, in fact, made such declaration
by Section 2 of the MMRD Act. In respect of minor minerals, the Parlia-
ment by the said MMRD Act has left the powers of regulating minor
minerals to the State Governments under Section 15 of the MMRD Act.
Different State Governments have exercised such power under Section 15
H of the MMRD Act and State of Tamil Nadu has enacted in 1959 the
f
PREMIUM GRANITES v.STATEOFT.N.(G.N.RAY,J.] 609

Mineral Concession Rules. There is no dispute that the M~lRD Act and A
the rules framed thereunder either by the Central Government or by the
State Government are for mineral development subserving the cause of
public interest. It cannot also be disputed that mineral development is not
a vague expression and the MMRD Act and the rules framed under it,
clearly furnish the scope and purport of the word "mineral development". B
It has been very reasonably contended that scientific exploitation of
minerals Without waste is undoubtedly a part of mineral development as
envisaged by the MMRD Act and the rules framed thereunder. The
T expression "public interest" finds place in the Constitution and in many
enactments which have since been noted and considered by this Court in
various decisions. The said expression is, therefore, a word of definite C
concept. There is also force in the contention of the appellants that the
guidelines need not be expressly found in the impugned provisions but such
guidelines can be gathered from the setting of the Act and the rules framed
thereunder. Such contention gets support from the decisions of this Court
in P.J. Irani (supra), K Kandaswamy Chettiar (supra), Jalan Trading Co. D
(supra), Ut'orkment of Meenakshi Mills Ltd. (supra).

46. The power of relaxation under Rule 39 of Mineral Concession
Rules is to be exercised for "mineral development" and "in public interest"
after recording reasons for such exercise of power. In our view, it has been
rightly contended by the learned counsel in support of the vcilidity of the E
Rule 39, that the exercise of power under the said Rule 39 cannot be made
arbitrarily, capriciously and on subsective satisfaction of the concerned
authority but the same ii; to be exercised Within the para meters of "mineral
development" and "in public interest" which as aforesaid, are not vague and
indefinite concepts. Such exercise of power must satisfy the reasonableness p
of state action before a court of law if any challenge of improper action in
exercise of the said power under Rule 39 in a given case is made. It has
been held by the Constitution Bench of this Court in Meenakshi Mill's case
(supra) that if a speaking order is required to be passed on objective
consideration, such provision is not vitiated on the ground of absence of 11 G
provision for appeal or review because the remedy available by way of
judicial review is by itself an adequate safeguard against imporper and
arbitrary exercise of power. It has also ~Jeen held by this Court in the said
decision that requirement of giving reasons for exercise of the power by
itself excludes chances of arbitrariness.
H
~
I

610 SUPREME COURT REPORTS [1994] 1 S.C.R.

A 47. The observation made in the majority decision in Delhi Transport
Corporation's case (supra) as referred to hereinbefore should be ap-·
preciated with reference to the facts and circumstances of a case and the
true import of a provision under which a discretionary power is to be
exercised. While no exception can be made to the observation of this Court
B in the said decision that "It would be both unwise and impolitic to leave
any aspect of its life to be governed by discretion when it can conveniently
and easily be covered by the rule of law", it should also be borne in mind
that it is not always feaSible and practical to lay down such exhaustive
written guidelines which can cover all contingencies. It has, therefore,
become necessary to make provisions for exercise of discretion in ap-
c propriate cases by giving broad guidelines and indicating the para meters
within which such power is to be exercised. In various decisions referred
to hereinbefore, this Court has upheld such exercise of discretion if the
same does not appear to be wholly uncontrolled, uncanalised and without
any objective basis.
D
48. "Public interest" is a paramount consideration in the MMRD Act "'-
itself and the rules framed thereunder cannot but subserve 'public interest'
in furthering the cause of mineral development. We are, therefore, unable
to hold that Rule 39 is per se obnoxious and having contained unbridled,
E unguided and uncanalised discretionary power offends Article 14 of the
Constitution.

49. Although it does not appear that any argument on harmonious
construction of the statute coupled with the principle of interpretation by
reading down was advaced before the Madras High Court but since such
F contention has been raised before this Court and it appears to us that for
considering the validity of Rule 39 and its true import, it may be necessary
to consider the question of harmonious construction and the principle of
, reading down a statutory provision; we propose to examine the contentions
made in that regard. It has been contended that all the provisians in the
G Mineral Concession Rules must be understood as an integraded scheme
and no particular provision should be permitted to govern the field in
isolation particularly when it runs counter to the scheme envisaged by the
other provisions of the Mineral Concession Rules. It has been contended
that since under the other provisions of the Mineral Concession Rules,
H exploitation of black granite in Dharmapuri District is restricted to a
PREMIUM GRANITES v.STATEOFT.N. [G.N.RAY,J.) 611

particular class of operators as a policy decision of the State Government, A
so long such policy decision remains in force no relaxation of the same is
permissible in the purported exsercise of power under Rule 39. Accord-
ingly, Rule 39 may be held valid only if the same is interpreted as a
provision having a limited application and being wholly confined in varying
the terms and conditions of leases in appropriate cases. B

50. Although, at the first glance, such argument appears to be
reasonable but on closer scrutiny the same does not appear to be sus-
tainable. The Mineral Concession Rules have been framed by the State of
Tamil Nadu in ex~rcise of power under Section 15(1) of the MMRD Act C
for development of minor minerals in the State "in public interest". The
development of minor minerals cannot and should not be confined to a set
principle or policy. With the advancement of technology and changes in
the socio, economic and politioal set up the country and also changes in
the economic and political scenario in other countries, there is bound to
be exigencies requiring reappreciation of the policy of the development of D
minor minerals in the State. As a matter of fact, the Government of Tamil
Nadu has from time to time changed its policy as to the manner in which
the exploitation of granite in the State should be made in respect of
revenue lands by different agencies and under different operational
methodology. It does not appear to us that consideration of foreign ex- E
change and export of granite in the State by effective and scientific ex-
ploitation of quarrying, polishing, and sizing of the granite will be alien to
the consideration of mineral development in "public interest".

51. It is not the domain of the Court to ~mbark upon unchartered
F
ocean of public policy in an exercise to consider as to w)lether a particular
public poli.cy is wise or a better public policy can be evolved. Such exercise
----must be left to the discretion of the executive and legislative authorities as
the case may be. The Court is called upon to consider the validity of a
public policy only when a challenge is made that such policy decision G
infringes fundamental rights guaranteed by the Constitution of India or any
other statutory right. In our view, it will not be correct to contend that
simply because under Rule 8(C) of the Mineral Concession Rules, quarry
leases are to be granted to particul..1r agency or agencies, exemption from
the operation of the said Rule cannot be made with the aid of the. other H
612 SUPREME COURT REPORTS [1994] 1 S.C.R.

A provisions of the Mineral Concession Rules. If all the provisions of the
Mineral Concession Rules are held to form an integraded scheme then
each of such provisions must be held to be mutually complimentary. It will
therefore, be not proper to hold that a policy decision envisaged in Rule
8(C) cannot be modified with the aid of the other provisions of the
B Mineral Concession Rules and in its. field of operation, the said Rule 8(C)
holds a supreme position. The application ~f Rule 8(C) should be under-
stood and held as subject to other pr.ovisions in the Mineral Concession
Rules.

52. In various statutes, the provision of relaxation or exemption finds
C place and it has been indicated that such provisions of relaxation and
exemption have been noticed and upheld by this Court in some of the
statutes. In the MMRD Act itself, there is such provision for relaxation
being Section 31. Such provision of relaxation in Karnataka .Minor Mineral
Concession Rules, 1969 is contained in Rule 66. It has been rightly con-
D tended that where in respect of prohibited categories, the law carves out
restriction or relaxation, the purpose is to take out certain exceptions from ·
the prohibited area and keeping certain categories outside the purview of
restrictions imposed under other provisions in the Statute. In such cir-
cumstances, it will not be appropriate to hold that the exception militates
E with other provisions and hence should not be permitted. In our view, in
interpreting the validity of a provision containing relaxation or exemption
of another provision of a statute, the purpose of such relaxation and the
scope and the effect of the same in the context of the purpose of the statute
should be taken into consideration and if it appears that such exemption
or relaxation basically and intrinsically does not violate the purpose of the
F statute rendering it unworkable but it is consistent with the purpose of the
statute, there will be no occasion to hold that such provision of relaxation
or exemption is illegal or the same ultra virf!s other provisions of the statute.
The question of exemption or relaxation exhypothesi indicates the existence
of some provisions in the statute in respect of which exemptions or relaxa-
G tion is intended for some obvious purpose.

53. There is no manner of doubt that for bringing harmonious ~
construction, reading down a provision in the statute, is an accepted
principle and such exercise has been made by this Court in a number of
H decisions, reference to which has already been made. But we do not think
PREMIUM GRANITES v.STATEOFT.N.[G.N.RAY,J.] 613

that in the facts and circumstances of the case, and the purpose sought to A
be achieved by Rule 39, such reading down is necessary so as to limit the
application of Rule 39 only for varying some terms and conditions of a
lease. If the State Government has an authority to follow a particular policy
in the matter of quarrying of granite and it can change the provisions in
the Mineral Concession Rules from time to time either by incorporating a B
particular rule or amending the same according to its perception of the
exigencies, it will not be correct to hold that in each and every occasion
y when such perception requires a change in the matter of policy of quarry-
ing a minor mineral in the State, particular provision of the Mineral
Concession Rules is got to be amended. On the contrary, if a suitable
provision empowering exemption or relaxation of other provisions in the
c
Mineral Concession Rules is made by confining its exercise in an objective
manner consistent with the MMRD Act and in furtherance of the cause of
mineral development and in public interest, by giving proper guidelines,
such provision containing relaxation or exemption cannot be held to be
unjustified or untenable on the score of violating the other provisions of D
the Mineral Concession Rules.

54. It appears to us that because of the frequent changes in the policy
as to the quarrying of black granite in the State in respect of revenue lands,
persons who were otherwise eligible under some existing rules before the E
change of policy and consequential change in rules and who can effectively
quarry such granite with advanced technological set up, in view of change
of the policy and consequential incorpOl"ation of different provisions for
grant of quarry lease, has suffered unmerited hardship by becoming in-
eligible for grant of a quarry lease. If in mitgating such unmerited hardship
and in the greater interest for mineral development in the State and for F
better revenue earning from such developmental operation, the question
of granting lease to such persons requires .to be favourably considered in
an objective manner with the aid of a general provision for relaxation or
exemption in an appropriate case, without changing the general policy as
a whole as contained in other provisions it cannot be held that such G
provision is per se obnoxious or violates the pri~ciple of just and fair state
-, action affording equal opportunity to all. It should be borne in mind that
Article i 4 has an inbuilt flexibility and it permits classification amongst
persons if such classification has an objective basis consistent with the
object and purpose for which the reasonable classification is intended.
H
614 SUPREME COURT REPORTS [1994] 1 s.c.R:

A 55. In Ramana Dayaram Shetty v. 17ie International Airport Authority
of India and Others, A.LR. (1979) S.C. 1628, while discus~ing the power of
discretion of the Government in the matter grant of largess etc.. It has been
held by the Supreme Court that:

"The pQwer of discretion of the Gov.ernment in the
B
matter of grant of largess including award of jobs, con-
tracts quotas, licences etc. must be confined and struc-
tured by rationttl, relevant and non-discriminatory ....
"'f
standard or norm and if the government departs from such
standard or norm in any particular case or cases, the
c action of the Government would be liable to be struck
down, unless it can be shown by the Government that the
departure was not arbitrary, but was based on some valid
principle which in itself was not rational, unreasonable or
discriminatory".
D )r..._
(Emphasis supplied)

It, therefore cannot be validly contended that in no case departure from a
prescribed norm and standard is not possible. Consequently, if a provision
empowers such departure from the prescribed norm by invoking discre-
E tionary power of relaxation or exemption, per se it cannot be held to be
discriminatory and unfair state action as sought to be contended. Whether
in a given case, such departure from the prescribed norm is based on some
principle which is in itself irrational, unreasonable or discriminatory, needs
to be demonstrated before a court of law if any challenge of unfair and
discriminatory action is made.
F
56. It appears to us that Rule 39 has been incorporated for a valid
and reasonable purpose. Accordingly, such Rule cannot be held per se
invalid or ultra vires Article 14 of the Constitution. The said rule also is not
required to be read down by liL..: ~ng its exercise only in respect of variation
G in some terms of lease and not otherwise as sought to be contended. Such
reading down of Rule 39 and limiting its application in the manner
~
aforesaid will defeat the purpose for which Rule 39 has been incorporated.
We, therefore set aside the decision of the Madras High Court since
impugned in these proceedings and declare that Rule 39 of the Mineral
H Concession Rules is legal and valid. In view of such declaration, the order
· PREMIUM GRANITES v.STATEOFT.N.[G.N.RAY,J.) 615

of the High Court in cancelling leases which were granted in exercise of A
power under Rule 39, simply on the score that no such power could have
been exercised under Rule 39 which had been declared ultra vires and
invalid, is also set aside. It is, hcwever, made clear that although a lease
granted in exercise of power under Rule 39 cannot per se be held invalid,
whether the exercise of power under Rule 39 in a given case has been B
properly made or not can always be questioned. If such question is raised
in a case, it will be open to the High Court to decide the question on merits.
'r In the facts and cirucmstances of the case, there will be no order as to
CO$tS.

T.N.A. Appeal disposed of.