Holding

Rule 38A is valid to the extent it creates an exclusive state right to quarry sand, but the clause that terminates existing leases without notice is ultra vires and must be read down to require six‑month notice or a hearing as per the lease provisions.

Summary

The State of Tamil Nadu, after a high‑level committee report on environmental damage caused by sand quarrying, inserted Rule 38A in the Tamil Nadu Minor Mineral Concession Rules to vest exclusive sand‑quarrying rights in the State and to terminate all existing private leases. The Madras High Court upheld the rule but conditioned it, requiring a hearing before terminating existing leases. The State appealed, contending that the rule could be applied unconditionally. The Supreme Court held that while the State may reserve exclusive rights, the provision terminating existing leases without notice violated Section 4A(3) of the Mines and Minerals (Development and Regulation) Act and the principles of natural justice; consequently, that part was read down to permit termination only by six‑month notice or after a hearing as per the lease terms. The Court allowed the appeal in part, confirming the exclusive right and modifying the rule, allowing leaseholders to continue quarrying for six months or the unexpired lease period, whichever is less.

Issues considered

The validity of Rule 38A insofar as it vests exclusive sand‑quarrying rights in the State.
Whether Rule 38A can terminate existing sand‑quarrying leases and permissions without giving a hearing, in light of Section 4A(3) of the Mines and Minerals (Development and Regulation) Act.
Whether the rule, as a piece of delegated legislation, must conform to the natural‑justice requirements imposed by the parent statute.

Legislation cited

Mines and Minerals (Development and Regulation) Act, 1957s. 15, s. 4A

Subjects

miningnatural justicedelegated legislationpremature terminationsand quarryingSection 4ARule 38Aenvironmental protectionlease terminationstatutory monopoly

Judgment

A STATE OF TAMIL NADU AND ANR.
v.
P. KRISHNAMURTHY AND ORS.

MARCH 24, 2006

B [R.V. RA VEENDRAN AND ARUN KUMAR, JJ.]

Mines and Minerals (Development and Regulation) Act 1957--Sections
15, 4A-Tamil Nadu Minor Mineral Concession Rules 1959-Rule 38A.

C Mining-Natural Justice-Premature Termination of Mining Leases/
Permissions-State Government making Rule providing for exclusive vesting
of right to exploit sand in itself and terminating permaturely all existing
mining /eases/permissions-Whether lease/permission holders are entitled to
protection of section 4A (3) requiring giving a reasonable opportunity of
D being heard to lease holders--Held, yes-However, lease agreement provided
for termination simplicitor by six months notice in writing on either side
without assigning cause-Held, lease can be terminated either by giving six
months as per terms of contract or by giving a hearing uls 4A (3)-Lease
holders permitted to carry on quarrying activities for 6 months.

E Section 15-Rule 38A--Power of State to Regulate Mining-Scope of-
Held, power lo regulute vested in the State Government extend to total
prohibition in appropriate cases-State can reserve exclusive right of quarrying
sand to the exclusion of lease/permission holders-Rule 38A which vests the
exclusive right to quarry sand in the State Government, held, was valid and
F suffer from no infirmity.

Sec 4A (3)-Rule 38A-Delegated Legislation-Natura/ Justice,
applicability of-Parent statute conferring power on executive authority to
prematurely terminate mining lease specifically requires observance of the
principles of natural justice for doing the act-Held, the delegate cannot,
G while making a rule in exercise ofpower granted under the Act, make provision
for termination of all leases without giving an opportunity of hearing to the
lease holders-Pare of Rule 38A which purports to terminate all leases
without notice or hearing to the lessees, held, invalid

Section 4(A}-Rule 38A-Rule making-Natural Justice-Application
H 396
STATE OFTAMIL NADU v. P. KRISHNAMURTHY 397
to Legislative Action-Held, making of Rule 38A is a legislative act and not A
an administrative act-It need not oblige the observance of rules of natural
justice, unless the enabling statute require their observance.

Section 4A-Premature termination of Mining Lease--Statutory
provision conferring power on executive authority to terminate mining lease-
Held, is an executive act-Opportunity of hearing must be afforded to the B
affected persons before taking decision under.

Administrative Law-Delegated Legislation-Validity of-Grounds of
i;:hallenge discussed-Held, subordinate legislation must conform to the parent
statute.
c
The State Government granted quarrying leases/permissions to
private agencies. On the recommendation of a High Level Committee, the
State Government took a decision in public interest to stop quarrying of
sand in Government lands and Ryotwari lands by private agencies and took
upon itself exclusively, all sand quarrying activities in the State w.e.f. D
2.10.2003. For this purpose a notification was issued inserting Rule 38A
in the Tamil Nadu Minor Mineral Concession Rules 1959. Lease/
permission holders filed several writ petitions in the High Court
challenging Rule 38A. The Division Bench upheld the validity of Rule 38A
in so far as it created an exclusive right in the State to quarry sand. It
was, however, of the view that the leases/permissions which had already E
been granted and were in force as on 2.10.2003 when the Rule came into
force, could not be terminated without giving a hearing to the lessees/
permission holders. The State came in appeal to this Court challenging
the conditions stipulated by the High Court while upholding the validity
of Rule 38A.
F
Allowing the appeal in part, the Court

HELD: I. The validity of Rule 38A in so far as it seeks to vest the
exclusive right in the State Government, in regard to sand quarrying, does
not arise as the High Court has rightly held that creation of such monopoly G
is not illegal having regard to the scheme of the Act and the decisions of this
Court recognizing the right of the State to create such monopoly.
[405-A, BJ

State of Tamil Nadu v. Hind Stone and Ors., (1981) 2 SCC 205 and Gem
Granites v. State of Tamil Nadu, 11995) 2 sec 413, relied upon. H
398 SUPREME COURT REPORTS (2006] 3 S.C.R.

A 2. There is a presumption in favour of constitutionality or validity of a
sub-ordinate legislation and the burden is upon him who attacks it to show
that it is invalid. A sub-ordinate legislation can be challenged under any of
the following grounds:-

(a) Lack of legislative competence to make the sub-ordinate
B legislation.

(b) Violation of Fundamental Rights guaranteed under the
Constitution of India.

(c) Violation of any provision of the Constitution of India.
c
(d) Failure to conform to the Statute under which it is made or
exceeding the limits of authority conferred by the enabling Act.

(e) Repugnancy to the laws of the land, that is, any enactment.

D (f) Manifest arbitrariness/unreasonableness (to an extent where court
might well say that legislature never intended to give authority to make
such Rules).

The court considering the validity of a sub-ordinate Legislation, will
have to consider the nature, object and scheme of the enabling Act, and the
E area over which power has been delegated under the Act and then decide
whether the subordinate Legislation conforms to the parent Statute.
(408-8, C, D, E]

Indian Express Newspapers (Bombay) Pvt. Ltd v. Union of India, (1985]
F 1 SCC 641; Supreme Court Employees Welfare Association v. Union of India,
[1989] 4 SCC 187; Shri Sitaram Sugar Co. ltd v. Union of India, (1990] 3
SCC 223 and St. Johns Teachers Training Institute v. Regional Director.
NCTE, [2003] 3 SCC 321, referred to.

3. Making of Rule 38A is a legislative act and not an administrative
G act. An act which is legislative in character, as contrasted from an
executive act or a judicial/quasi-judicial function, does not oblige the
observance of rules of natural justice. A delegated legislation, though
legislative in character, will be invalid, on the ground of violation of principles
of natural justice, if the enabling Act under which the delegated legislation
is made, specifically requires observance of the principles of natural justice
H for doing the act. (410-H; 411-A; 414-Ff
STATEOFTAMILNADUv. P.KRISHNAMURTHY 399
Rameshchandra Kachardas Porwal v. State of Maharashtra, [1981) 2 A
SCC 722; Union ofIndia v. Cynamide India Ltd, [1987) 2 SCC 720 and Shri
Sitaram Sugar Co. Ltd v. Union of India, (199013 SCC 223, referred to.

4.1. Section 4A (Substituted by Act 37 of 1986) enables the State
Government to terminate a mining lease in regard to any minor mineral, where
the Government is of the opinion that it is expedient in the interest of the B
regulation of mines and mineral development, preservation of natural
environment, control of Hoods, prevention of pollution or to avoid danger to
public health or communication or to ensure safety of buildings, monuments,
or other structures or for such other purposes, by making an order of
premature termination. Premature termination of lease under section 4A, C
after giving a hearing to the lessee is an executive act and not legislative act.
(414-A, B, C, E)

State of Haryana v. Ram Kishan and Ors., [1988) 3 SCC 416, relied
upon.
D
4.2. When the Act is read as a whole, the legislative intent is clear
that a lease once validly granted can not be terminated prematurely without a
notice and hearing. The reason is obvious. Exercise of power of termination
will have civil consequences adversely affecting the interest of the
leaseholders. Sub-section (1) and (2) of Section 4A contemplates premature
termination only for certain specified purposes. Sub-section (3) of Section E
4A prohibits any order of a premature termination of a mining lease being
made, without giving a hearing to the lease holder, The Act does not
contemplate 'wholesale' termination of all existing leasesipermissions in
relation to a minor mineral without hearing. [415-D, E, F, G)
F
4.3. Even, section 17 while referring to the power of the Central
Government to...undertake mining operations excl.usively in any area,
excludes areas already held under mining leases. It is, tlrus, clear that the
Act extends a statutory protection to the holder of a mining lease to carry
on mining operations during the period of lease, in terms of the lease deed.
The Act further contemplates premature termination only for the reasons G
stated in sub-section (1) or (2) of section 4A and in the manner provided
in sub-section (3) of section 4A. There is no doubt that the Legislature can
make a provision in the Statute itself for termination of the mining lease
without observance of principles of natural justice. It did not choose to
do so. When the Act assures the.Lessee the right to carry on mining H
operations during the entire period of lease and provides for termination only
400 SUPREME COURT REPORTS [2006] 3 S.C.R.

A after giving a hearing, the delegate cannot, while making a rule in exercise
of the power granted under the Act, make a provision for termination of all
leases relating to a particular minor mineral, without giving an opportunity
of hearing to the lease I permission holders. That part of Rule 38A which
purports to terminate all leases forthwith, without notice or hearing to the
B lessees, does not conform to the object, scheme and the provisions of the Act
under which it is made and therefore, imalid. 1416-A, B, C, DI

5. If a rule is partly valid and partly invalid, the part that is valid
and severable is saved. Even the part which is found to be invalid, can be
read down to avoid being declared as invalid. If Rule 38A is read down
C as terminating all mining leases granted by the Government by six months
notice (in terms of clause 11 in the lease deeds based on the model form
at Appendix 1 to the Rules) or for the remainder period of the lease,
whichever is less, it can be save, as it will then terminate the leases after
notice, in terms of the lease. (416-E, 417-CI

D Beg Raj Singh v. State uf UP .. 1200311 SCC 726, followed.

CIVIL APPELLATE JURISDICTION: Civil Appeal Nos. 5572-5644/2005.
From the Judgment and Order dated 11.5.2004 of the High Court of
Madras in W.A. Nos. 3241 and 3242 of 2003 and W.P. Nos. 27705. 27706,
E 27758, 27768 to 27776, 27805. 27863, 27892 to 27898, 27936, 28079, 28203
to28205,28249,28349,28438,28464.28439,28584.28593,28606,28607,
28643, 28661. 28676, 28761. 28789, 28896. 28897, 28898. 28933, 28980,
29009, 29053, 29104, 29189, 29273. 29321, 29331to29334, 29519, 29573,
29719, 29738. 29840, 29863. 29964, 30190. 30225, 31080, 31234, 32058,
F 33274, 33326, 34148 and 35818 of 2003.

K. Ramamoorthy, C.S. Vaidyanathan. A.K. Ganguly. Subramonium
Prasad, Raghvendra S. Srivastava, Jai Kishore Singh, Sriram J. Thalapathy,
Arul Muruganatham, Jayanth Muth Raj. N.R. Shonkar. C.K. Sasi, K.K. Mani,
K.B. Sandeep. R.K. Pandey. Mayur R. Shah, A.T.M. Sampath, V. Balaji, T.S.
G Shanthi, Ms. R. Meena Kumari. K.R. Krishnan, P. Narasimhan, Y. Krishna
Murthy, K.V. Mohan. Harish V. Shankar, Arun Mani, Ms. V. Deepa, T. Raja,
Ms. Indira and John Mathew for the appearing parties.

The Judgment of the Court was delivered by

H RA VEENDRAN, J. These appeals by special leave against the judgment
STATE OFTAMIL NADU v. P. KRISHNAMURTHY [RA VEENDRAN, J.] 40 J

dated 11.5.2004 of a Division Bench of the High Court of Madras in W.A. Nos. A
3241-42/2003 and connected cases, relate to the validity and scope of Rule
38A of the Tamil Nadu Minor Mineral Concession Rules, 1959 (for short 'the
Rules') which reads. as under :

"38-A. Quarrying of sand by the State Government:-
B
Notwithstanding anything contained in these rules, or any order made
or action taken thereunder or any judgment or decree or order of any
Court, all existing leases for quarrying sand in Government lands and
permissions/leases granted in ryotwari lands shall cease to be effective
on and from the date of coming into force of this rule and the right
to exploit sand in the State shall vest with the State Government to C
the exclusion of others. The proportionate lease amount for the
unexpired period of the lease and the unadjusted seigniorage fee, if
any, will be refunded."

Background facts D
2. We may briefly refer to the circumstances leading to the insertion
of Rule 38A in the Rules. A public interest litigation (W.P. No. 985/2000) was
filed in the Madras High Court, complaining about indiscriminate illicit quarrying
of sand in riverbeds. The High Court issued certain directions to curb illicit
quarrying while disposing of the said writ petition. A contempt petition E
(Contempt Application No. 561/200 I) was filed complaining of non-
implementation of the said directions by the State Government. In the said
contempt proceedings, the High Court issued a direction to the State
Government on 26.7.2002 to constitute a High Level Committee consisting
of scientists, geologists and environmentalists to conduct a: thorough scientific
survey of the sand quarrying activities in rivers and riverbeds in the State and F
submit a report regarding the damage caused on account of indiscriminate
illicit quarrying and to suggest the remedial measures. The High Court also
suggested that a suitable regulatory legislation may be made by the State on
the basis of the report of such Committee, and issued certain interim directions
pending such legislation. G
3. Accordingly, a High Level Committee was constituted which
submitted a report detailing the extensive damage that had occurred on account
of haphazard, irregular and unscientific manner of quarrying sand by the
quarry leaseholders, thereby impairing smooth flow of water and causing
damage to riverbeds, river banks as also the structures (like bridges and H ·
402 SUPREME COURT REPORTS (2006) 3 S.C.R.

A transmission powerlines constructed across rivers or imbedded on the riverbed)
and drinking water systems branching from rivers, leading to ecological
imbalances. It was found that the unauthorized use of Poclain machines for
quarrying, and the tendency of lessees to extend quarrying activities beyond
the leased area and the permissible depth, were the main causes for the
B devastating situation. The Committee suggested several measures to remedy
the situation, one of which was to impose total prohibition on quarrying by
private parties. On considering the said report. the State Government took a
decision in public interest to stop quarrying of sand in Government lands and
Ryotwari (private patta) lands by private agencies and take upon itself
exclusively, all sand quarrying activities in the State. It is in this background,
C Rule 38A came to be inserted in the Rules by Notification dated I. I0.2003
with effect from 2.10.2003.

4. Prior to insertion of the said Rule, the State Government was
granting quarrying leases, the term of such leases being three years or less,
under Rule 8 of the Rules. It is stated that as on 2.10.2003, private agencies
D were holding 135 sand quarrying leases granted by the State Government and
52 permissions for sand quarrying in Ryotwari lands. Out of these, 19 were
to expire in 2003, I02 were to expire in 2004, 33 were to expire in 2005 and
the remaining 33 were to expire in 2006; and in addition, sand quarrying was
carried on by some others on the authority of orders of court, even though
E no leases had been granted in their favour. With effect from 2.10.2003, the
State Government stopped all sand quarrying by private agencies. Several
writ petitions were filed in the Madras High Court by the Lessees/permission
holders, challenging Rule 38A.

Decision of the High Court
F
S. On 8.10.2003, a learned Single Judge of the High Court granted an
interim stay, until further orders or till the leases granted to the writ petitioners
came to an end, whichever was earlier. Being aggrieved by the interim stay,
the State Government. moved the matter before a Division Bench immediately
which in turn issued an interim direction on the same day (8.10.2003) directing
G both parties not to quarry sand from areas covered by leases or court orders,
until further orders. Subsequently, the writ petitions, which were pending
before the learned Single Judge, were taken up for hearing by the Division
Bench along with the writ appeals against the interim order, and were disposed
of by a common order dated I 1.5 .2004.
H
STATEOFTAMILNADUl'. P KRISHNAMURTHY[RAVEENDRAN,J.] 403
6. The Division Bench upheld the validity of Rule 38A in so far as it A
created an exclusive right in the State to quarry sand. It was, however, of the
view that the leases/permissions which had already been granted and were
in force as on 2.10.2003 when the Rule came into force, could not be terminated
without giving a hearing to the concerned lessees/permission-holders.
Consequently, it upheld the validity of Rule 38A subject to the following B
conditions :
It "1. The State is entitled to exploit the sand by quarrying itself on the
Government lands, which are not covered by the mining leases of the
writ petitioners. The same is applicable to patta lands subject to the
permission of the landholders or their tenants or lessees in occupation, C
which are not covered by the mining leases.

2: The'writ P!!thioners whose Mining leases expired as on this day
and which are covered by the Court orders shall not be entitled for
any relief. This will not cover the Court orders passed to make up the
deficiency of the lease period. D
3. The respective District Collectors shall issue notices to the petitioners
with regard to the mining leases where there is an allegation of
infraction of environmental laws and if there is a contest, then hold
an enquiry by affording opportunity to them and then pass orders
basing on the material on record. The above exercise shall be made E
by the District Collector within a period of two months from the date
of receipt of a copy of this order and until then, the status quo with
regard to mining operations as obtained on this day, shall be
maintained.

4. In so far as the cases not covered by environmental violations are p
concerned, the said writ petitioners shall be entitled to continue their
sand quarry operations till the expiry of their respective lease periods.
But this shall not preclude the respondents/Government from
tem1inating their leases by issuing a prior notice of six months as
contemplated under Clause 11 of Appendix I of the Rules in so far
as the Government lands are concerned. G
5. In the cases relating to the petitioners, where there is an allegation
of breach of conditions of lease, then a notice has to be issued to
them affording opportunity and then pass orders basing upon the
material on record. But until then, they shall be entitled to quarry."
H
404 SUPREME COURT REPORTS (2006) 3 S.C.R.

A Some of the writ petitioners, being aggrieved by the judgment
upholding validity of Rule 38A, approached this Court. This Court did
not entertain the SLPs.

The Contentions & the Issue

B 7. The State has challenged the judgment of the High Court in these
appeals by special leave, being aggrieved by the conditions stipulated by the
court while upholding the validity of Rule 38A. According to the State, the
Rule ought to have been upheld unconditionally, so that there could be
cessation of all quarrying activities relating to sand in the State by private
C agencies with effect from 2.10.2003. Though leave was granted on 5.9.2005,
the interim prayer of the State to stay the conditions imposed by the High
Court was not granted. Instead, hearing was expedited. The State has raised
the following contentions :-

(i) The High Court having upheld the validity of Rule 38A, ought not
D to have excluded the existing leaseholders (in regard to Government
lands) and permission holders (in regard to Ryotwari lands) from the
operation of the said rule. Continuation of quarrying operations by
the existing leaseholders/permission-holders would negate the very
purpose (to save riverbeds from indiscriminate quarrying) of the
amendment to the Rules by adding Rule 38A.
E
(ii) The State has the power to regulate the grant of quarrying and
mining leases relating to minor minerals by making appropriate rules,
in view of the power delegated to it by the Parliament under section
15 of the Mines and Minerals (Development and Regulation) Act,
1957 (for short the 'Act'). The power to regulate includes the power
F to prohibit, in appropriate cases. Termination of all quarrying leases
and permissions is nothing but prohibition of quarrying by lease/
permission holders. The State was, therefore, well within its power in
making a rule which directed cessation of quarrying of sand by all
lease/ permission holders in the State and Rule 38A in entirety is
valid.
G
(iii) The decision to put an end to all leases/pe.rmissions was not
arbitrary or unreasonabie. Rule 38A manifested the policy of the State
Government, formulated after duly considering all relevant aspects
and the recommendations of the High Level Committee. Therefore, the
H High Court erred in imposing conditions, for the applicability of Rule
STATE OFTAMIL NADU v. P. KRISHNAMURTHY [RA VEENDRAN, J.] 405

38A to existing lease/permission holders. A
8. The validity of Rule 38A in so far as it seeks to vest the exclusive
right in the State Government, in regard to sand quarrying, does not arise for
our consideration as the High Court has held that creation of such monopoly
is not illegal having regard to the scheme of the Act and the decisions of this
Court recognizing the right of the State to create such monopoly in State of B
Tamil Nadu v. Hind Stone & Ors., [1981] 2 SCC 205 and Gem Granites v.
State of Tamil Nadu, [1995] 2 SCC 413. In Hind Stone (supra), this Court held
that the power of regulation vested in the State Government can extend to
total prohibition of leases and the State was entitled, in exercise of its regulatory
power, in appropriate cases, to take over exclusive exploitation of a particular C
minor mineral or give it to a sole agency or prohibit exploitation by private
agencies with the intention of conservation and prudent exploitation. In Gem
Granites (supra), this Court held that the State Government as owner of a
minor mineral, may decline to give any lease to quarry such minor mineral to
anyone and may engage in such quarrying operations itself. Therefore, the
High Court rightly held that Rule 38A reserving the exclusive right of quarrying D
sand, in itself, to the exclusion of others, was valid and did not suffer from
any infirmity. This Court also refused to entertain the SLPs., filed by lessees
in view of the said settled legal position.

9. The question that arises in these appeals by the State relates to the
other part of the Rule, that is, whether the State can, while making a rule E
providing for exclusive vesting of right to exp lo it sand in itself, provide that
all existing leases relating to quarrying of sand in Government land (and all
existing permissions to quarry sand in ryotwari lands) shall cease to be effective
on and from the date when such rule comes into force, and that too without
providing a reasonable opportunity of hearing to the aggrieved lease/pennission p
holders. In other words, the question is whether Rule 38A ought to be upheld
unconditionally or whether holders of existing leases (Government lands)
and permissions (ryotwari lands) should be protected till the expiry or
termination of their leases/permissions as per law.

I 0. The Respondents contend that Rule 38A does not conform to section G
4A(3) of the Act. It is pointed out that sub-section (3) of Section 4A of the
Act mandates that no order making a premature termination of a mining lease
shall be made except after giving the holder of the lease a reasonable opportunity
of being heard; and that it, therefore, follows that any Rule made by the State

-- Government for regulating mining leases in respect of minor minerals, in
exercise of the rule-making power conferred by the Act, should conform to
H
406 SUPREME COURT REPORTS [2006] 3 S.C.R.

A Section 4A(3); and that Rule 38A made by the State, to the extent it provides
for termination or cessation of all existing leases/permissions relating to sand,
without affording a hearing to the affected leaseholder/s, is clearly contrary
to the express provisions of Section 4A(3) is invalid.

B Legal Provisions
11. A brief reference to the relevant provisions of the Act and Rules
will facilitate decision on the said question.

(11. l.) Section 3(e) of the Act defines "Miner minerals" as building
stones, gravel, ordinary clay, ordinary sand (other than sand used for prescribed
C purposes), and any other mineral which the Central Government may, by
notification in the Official Gazette, declare to be a minor mineral. Section 4
requires the mining operations to be under leases granted under the Act and
the Rules made thereunder. Section 4A deals with termination of mining
leases. While sub-section (I) enables the Central Government to request the
D State Government to terminate a mining lease in respect of any mineral other
than a minor mineral in the circumstances stated therein, sub-section (2)
enables the State Government to make premature termination of mining lease
in regard to minor minerals. We extract below sub-sections (2) and (3) of
section 4A which are relevant for our purpose :-

E "(2) Where the State Government is of opinion that it is expedient in
the interest of regulation of mines and mineral development,
preservation of natural environment, control of floods, prevention of
pollution or to avoid danger to public health or communication or to
ensure safety of buildings, monuments or other structures or for such
other purposes, as the State Government may deem fit, it may, by an
F order, in respect of any minor mineral, make premature termination
of prospecting licence or mining lease with respect to the area or any
part thereof covered by such licence or lease.

(3) No order making a premature termination of a prospecting licence
or mining lease shall be, made except after giving the holder of the
G licence or lease a reasonable opportunity of being heard. "

[Emphasis supplied]

(11.2.) Section 15 empowers the State Government to make rules for

H
regulating the grant of quarry leases, mining leases or other mineral
concessions in respect of minor minerals and for purposes connected therewith. -
STATE OF TAMIL NADU v. P. KRISHNAMURTHY [RA VEENDRAN, J.] 407
" Section 17 deals with the special power of the Central Government to undertake A
prospecting or mining operations in certain lands. Section 17A provides for
reservation of any area (not already held under any mining lease) for purposes
of conservation of any mineral or for undertaking mining operations through
any company/corporation owned by the Central Government or State
Government.
B
(11.3.) The Tamil Nadu Minor Mineral Concession Rules, 1959 were
made by the State Government in exercise of its power under Section 15 of
the Act. Rule 1(3) provides that the said Rules shall apply to all the lands in
the State of Tamil Nadu. Rule 2(6) defines "quarry", "quarrying leases" and
"quarrying operations" and provides that they shall have the same meaning C
assigned to "mine'', "mining lease" and "mining operations" in the Act. Rule
8 relates to leasing of Government lands for quarrying minor minerals (other
than certain types of granites covered by Rules 8-A and 8-C). It contemplates
the District Collector granting lease to an applicant who offers the highest bid
amount for an area advertised and notified for grant of such lease, followed
by execution of a lease deed by the State Government and the lessee. Sub- D
ru,Le (8) of Rule 8 provides that the period of quarry lease for sand shall be
three years; and Sub-rules (8) and ( 11) of Rule 8 make it clear that a lease
granted under Rule 8 shall neither be extended nor be renewed. Rule 15
provides for absolute prohibition or regulation of quarrying or removal of
sand from riverbeds to which Madras River Conservancy Act, 1884 has been E
extended and for regulating the quarrying or removal of sand from beds of
river in charge of the Public Works Department. The form of lease for
quarrying and removing minor minerals by private persons is contained in
Appendix I to the Rules and Clause 11 thereof provides that such lease may
b.e terminated by six months notice in writing on either side (without any
right in the Lessee to seek compensation). It is not in dispute that all quarrying F
leases granted by the State Government contained such a provision for
termination simplicitor. Rule 36 deals with general restrictions in respect of
quarrying operations. The proviso to sub-Rule (I) of Rule 36 provides that
there shall be no quarrying of any minor mineral in the river beds or adjoining
areas within 200 meters radial distance from the location of any bridge, water G
supply system, infiltration well, or pumping installation of any of the local
bodies or Central or State Governments or the State Water Supply and Drainage
Board head works. Sub-rule 5(c) of Rule 36 provides that the lessees and
permit holders shall carry out quarrying operations in a skilful, scientific and

- systematic manner, keeping in view proper safety of the labour, structure and
the public, and public works located in that vicinity of the quarrying area and H
408 SUPREME COURT REPORTS [2006) 3 S.C.R.

A in a manner to preserve the environment and ecology of the area.

Whether the Rule is valid in entirety ?

12. There is a presumption in favour of constitutionality or validity of
a sub-ordinate Legislation and the burden is upon him who attacks it to show
B that it is invalid. It is also well recognized that a sub-ordinate legislation can
be challenged under any of the following grounds .-

(a) Lack oflegislative competence to make the sub-ordinate legislation.
(b) Violation ofFundamental Rights guaranteed under the Constitution
c of India.
(c) Violation of any provision of the Constitution of India.
(d) Failure to conform to the Statute under which it is made or
exceeding the limits of authority conferred by the enabling Act.
(e) Repugnancy to the laws of the land, that is, any enactment .
D
(f) Manifest arbitrariness/unreasonableness (to an extent where court
might well say that Legislature never intended to give authority
to make such Rules).

The court considering the validity of a sub-ordinate Legislation, will have to
E consider the nature, object and sclleme of the enabling Act, and also the area
over which po...,er has been delegated under the Act and then decide whether
the subordinate Legislation conforms to the parent Statute. Where a Rule is
directly inconsistent with a mandatory provision of the Statute, then, of course,
the task of the court is simple and easy. But where the contention is that the
F inconsistency or non-conformity of the Rule is not with reference to any
specific provision of the enabling Act, but with the object and scheme of the
Parent Act, the court should proceed with caution before declaring invalidity.

13. II} fndwn Express New~papers (Bombay) Pvt. ltd. v. Union of
India, [ 1985] I SCC 641, this Court referred to several grounds on which a
G subordinate legislation can be challenged as follows:

"A piece of subordinate legislation does not carry the same degree of
immunity which is enjoyed by a statute passed by a competent
legislature. Subordinate legislation may be questioned on any of the
grounds on which plenary legislation is questioned. In addition it may
H also be questioned on the ground that it does not conform to the ·-
•

STATE OF TAMIL NADU v. P. KRISHNAMURTHY [RA VEENDRAN,J.] 409
statute under which it is made. It may further be questioned on the A
ground that it is contrary to some other statute. That is because
subordinate legislation must yield to plenary legislation. It may also
be questioned on the ground that it is unreasonable, unreasonable
not in the sense of not being reasonable, but in the sense that it is
manifestly arbitrary."
B
[Emphasis supplied]

In Supreme Court Employees Welfare Association v. Union of India,
[1989] 4 SCC 187, this Court held that the validity ofa sub-ordinate legislation
is open to question if it is ultra vires the Constitution or the governing Act C
or repugnant to the general principles of the laws of the land or is so arbitrary
or unreasonable that no fair-minded authority could ever have made it. It was
further held that Rules are liable to be declared invalid if they are manifestly
unjust or oppressive or outrageous or directed to be unauthorized and/or
violative of general principles of law of the land or so vague that it cannot
be predicted with certainty as to what it prohibited or so unreasonable that D
they cannot be attributed to the power delegated or otherwise discloses bad
faith.

In Shri Sitaram Sugar Co. Ltd. v. Union of India, [I 990] 3 SCC 223,
a Constitution Bench of this Court reiterated :
E
"Power delegated by statute is limited by its terms and subordinate to
its objects. The delegate must act in good faith, reasonably, intra
vires the power granted, and on relevant consideration of material
facts. All his decisions, whether characterized as legislative or
administrative or quasi-judicial, must be in harmony with the F
Constitution and other laws of the land. They must be "reasonably
related to the purposes of the enabling legislation". See Leila Mourning
v. Family Publications Service, [411 US 356]. If they are manifestly
unjust or oppressive or outrageous or directed to an unauthorized end
or do not tend in some degree to the accomplishment of the objects
of delegation, court might well say, "Parliament never intended to G
give authority to make such rules; they are unreasonable and ultra
vires": per Lord Russel of Killowen, C.J. in Kruse v. Johnson (1898)
2 QB 91."

In St. Johns Teachers Training Institute v. Regional Director, NCTE,
[2003] 3 sec 321, this Court explained the scope and purpose of delegated H
410 SUPREME COURT REPORTS (2006] 3 S.C.R.

A legislation thus :

"A regulation is a rule or order prescribed by a superior for the
management of some business and implies a rule for general course
of action. Rules and regulations are all comprised in delegated
legislations. The power to make subordinate legislation is derived
B from the enabiing Act and it is fundamental that the delegate on
whom such a power is conferred has to act within the limits of
authority conferred by the Act. Rules cannot be made to supplant the
provisions of the enabling Act but to supplement it. What is permitted
is the delegation of ancillary or subordinate legislative functions, or,
C what is fictionally called, a power to fill up details. The legislature may,
after laying down the legislative policy confer discretion on an
administrative agency as to the execution of the policy and leave it
to the agency to work out the details within the framework of policy.
The need for delegated legislation is that they are framed with care
and minuteness when the statutory authority making the rule, after
D coming into force of the Act, is in a better position to adapt the Act
to special circumstances. Delegated legislation pennits utilization of
experience and consultation with interests affected by the practical
operation of statutes."

[Emphasis supplied]
E
14. It is submitted on behalf of the Appellant that where the power
exercised does not concern with the interest of an individual, but relates to
public in general, or where the power exercised concerns with a direction of
a general character laying down the future course of action, it should be held
F to be an exercise of legislative power and not an exercise of administrative
or judicial/quasi-judicial power. It is contended that Section 4A(3) refers to
performing executive or administrative acts and not to a legislative act, as it
requires hearing before making a premature termination of mining leases
held by an individual. It is submitted that termination of all leases/permissions
relating to quarrying of sand, as a class, under Rule 38A, is a legislative act
G and not an executive act and therefore, section 4A(3) has application. It is
submitted that Rule 38A being a delegated legislation, legislative in character,
is not open to question on the ground that it violates the principles of natural
justice.

H 15. There is no dispute that making of Rule 38A is a legislative act and
not an administrative act. It is no doubt true that an act which is legislative
STA TE OF TAMIL NADU v. P KRISHNAMURTHY [RA VEENDRAN, J.] 411

in character, as contrasted from an executive act or a judicial/quasi-judicial A
function, does not oblige the observance of rules of natural justice. In
Rameshchandra Kachardas Porwal v. State of Maharashtra, [1981] 2 SCC
722, th is Court observed:

"We are here not concerned with the exercise of a judicial or quasi-
judicial function where the very nature of the function involves the B
application of the rules of natural justice, or of an administrative
function affecting the rights of persons, wherefore, a duty to act
fairly. We are concerned with legislative activity; we are concerned
with the making of a legislative instrument, the declaration by
notification of the government that a certain place shall be a principal C
~·
market yard for a market area, upon which declaration certain statutory
provisions at once spring into action and certain consequences
prescribed by statute follow forthwith. The making of the declaration,
in the context, is certainly an act legislative in character and does not
oblige the observance of the rules of natural justice."
D
16. In Union of India v. Cynamide India Ltd., [1987] 2 SCC 720, this
Court differentiated between legislative acts and non-legislative acts thus :-

The distinction between the two has usually been expressed as 'one
between the general and the particular'. 'A legislative act is the cn:ation
and promulgation of a general: rule of conduct without reference to E
particular cases; an administrative act is the making and issue of a
specific direction or tke application of a general rule to a particular
case in accordance with the requirements of policy'. 'Legislation is
the process of formulating a general rule of conduct without reference
to particular cases and usually operating in future; administration is p
the process of performing particular acts, of issuing particular orders
or of making decisions which apply general rules to particular cases.'
It has also been said "Rule making is normally directed toward the
formulation of requirements having a general application to all
members of a broadly identifiable class" while, "an adjudication, on
the other hand, applies to specific 'individuals or situations". But, this G
is only a broad distinction, not necessarily always true. Administration
and administrative adjudication may also be of general application and
there may be legislation of particular application only. That is not
ruled out. Again, adjudication determines past and present facts and
declares rights and liabilities while legislation indicates the future H
412 SUPREME COURT REPORTS [2006) 3 S.C.R.

A course of action. Adjudication is detenninative of the past and the
present while legislation is indicative of the future. The object of the
rule, the reach of its application, the rights and obligations arising out
of it, its intended effect on past, present and future events, its form,
the manner of its promulgation are some factors which may help in
drawing the line between legislative and non-legislative acts.
B
17. The contention that the act of premature termination referred to in
section 4A(3) is an executive act and not a legislative act, finds support from
the decision in State of Haryana v. Ram Kishan & Ors., [ 1988] 3 SCC 416
wherein this Court considered the scope of section 4-A, as it originally stood
C prior to the substitution thereof by Act No. 37of1986. Section 4-A, considered
in that case, read as under :-

"4-A(I). Where the Central Government, after consultation with the
State Government, is of opinion that it is expedient in the interest of
regulation of mines and mineral development so to do, it may request
D the State Government to make a premature termination of a mining
lease in respect of any ·mineral. other than minor mineral. and, on
receipt of such request, the State Government shall make an order
making a premature termination of such mining lease and granting a
fresh mining lease in favour of such government company or
corporation owned or controlled by government as it may think fit.
E
(2) Where the State Government, after consultation with the Central
Government, is of opinion that it is expedient in the interest of
regulation of mines and mineral development so to do, it may, by an
order, make premature tennination of a mining lease in respect of any
minor mineral and grant a fresh lease in respect of such mineral in
F
favour of such government company or corporation owned or
controlled by government as it may think fit."

Old section 4A did not provide for a hearing before premature tennination
of the ieases. This Court held that section 4A providing for premature
G tennination of a lease, was a provision conferring power to the executive to
take adverse decisions involving civil consequences. This Court further held
that as the act of tennination was an executive act and not a legislative act,
the provision must be interpreted as implying to preserve a right of hearing
to the affected person before taking the decision, in the absence of exclusion
of rules of natural justice. We may, for convenience, extract the following
H reasoning of this Court :
STA TE OF TAMIL NADU v. P. KRISHNAMURTHY [RA VEENDRAN, J.] 413

"The language of Section 4-A clearly indicates that the section by A
itself does not prematurely terminate any mining lease. A decision in
this regard has to be taken by the Central Government after considering
the circumstances of each case separately. For exercise of power it is
necessary that the essential condition mentioned therein is fulfilled,
namely, .thaUhe proposed action would be in the interest of regulation B

- of mines and mineral development. The section does not direct
termination of all mining leases, merely for the reason that a
government company or corporation has equipped itself for the
purpose ......... ,,

Considered in this light, the section must be interpreted to imply that C
the person who may be affected by such a decision should be afforded
an opportunity to prove that the proposed step would not advance the
interest of mines and mineral developme!lt. Not to do so will be
violative of the principles of natural justice. Since there is no suggestion
in the section to deny the right of the affected persons to be heard,
the provisions have to be interpreted as implying to preserve such a D
right. Reference may be made to the observations of this Court in
Baldev Singh v. State of Himachal Pradesh, [1987] 2 SCC 510, that
where exercise of a power results in civil consequences to citizens,
unless the statute specifically rules out the application of natural justice,
such rule would apply. The learned counsel placed reliance on the
observations in paragraphs 5 to 7 of the judgment in Union of India E
v. Cynamide India Ltd, [1987] 2 SCC 720, which were made in
connection with legislative activity which is not subject to the rule of
the audi alteram partem. The principles of natural justice have no
application to legislative activities, but that is not the position here.
It has already been pointed out earlier that the existing mining leases F
were not brought to their end directly by Section 4-A itself. They had
to be terminated by the exercise of the executive authority of the
State Government."

The old section 4A enabled the termination of lease .either by the Central
Government or by the State Government (in consultation with the other) only G
for the purpose of granting a fresh lease in favour of any government company/
corporation owned by such government, if it was of the opinion that it was
expedient in the interest of regulation of mines and mineral development to
do so. Though old section 4A did not provide for a hearing before termination,
this Court read such a requirement into the section. On the other hand, present H
414 SUPREME COURT REPORTS (2006] 3 S.C.R.

A section 4A (substituted by Act 37 of i 986) enables the Central Government
to request the State Government to terminate a mining lease in regard to any
mineral (other than a minor mineral) and also enables the State Government
to tenninate a mining lease in regard to any minor mineral, where the concerned
government is of the opinion that it is expedient in the interest of the
regulation of mines and mineral development, preservation of natural
B environment, control of floods, prevention of pollution or to avoid danger to
public health or communication or to ensure safety of buildings, monuments,
or other structures (and also additionally on the ground of conservation of
mineral resources or for maintaining safety in the mines in the case of minerals
other than minor minerals) or for such other purposes, by making an order
C of premature termination. Granting a lease in favour of government company/
corporation is no longer a purpose for which an existing lease could be
tenninated under section 4A. In fact, along with substitution of section 4A by
Act 37 of 1986 with effect from I0.2.1987, a new section (section 17A) was
introduced which provides for reservation of any area for purpose of granting
of a mining lease to a government company or corporation provided such
D area is not already held under a mining lease. The ground on which a lease
could be prematurely terminated under old section 4A and the grounds on
which a lease can be terminated under new section 4A are completely different.
Though the grounds for premature termination have changed in section 4A,
the principle laid down in Ramkishan that premature termination of lease
E under section 4A, after giving a hearing to the lessee is an executive act and
not legislative act, however, continues to hold good. Therefore, the act of
tennination of a mining lease, even under the new section 4A, is an executive
act.

18. A delegated legislation, though legislative in character, will be
F invalid, on the ground of violation of principles of natural justice, if the
enabling Act under which the delegated legislation is made, specifically
requires observance of the principles of natural justice for doing the act. This
was made clear in Rameshchandra Kachardas Porwal (supra) itself. In
Cynamide India Ltd., (supra), this Court observed :

G "..... legislative action, plenary or subordinate, is not subject to rules
of natural justice. In the case of Parliamentary legislation, the
proposition is self-evident. In the case of subordinate legislation, it
may happen that Parliament may itself provide for a notice and for
--
a hearing .... But, where the legislature has not chosen to provide for
any notice or hearing, no one can insist upon it and it will not be
H
STA TE OFTAMIL NADU v. P. KRISHNAMURTHY (RA VEENDRAN, J.] 4 J5
permissible to read natural justice into such legislative activity ......" A
[Emphasis supplied]

Reference may also be made to the following observations of a
Constitution Bench in Shri Sitaram Sugar (supra) :
B
"If a particular function is termed legislative rather than judicial,
practical results may follow as far as the parties are concerned. When
the function is treated as legislative, a party affected by the order
has no right to notice and hearing, unless, of course, the statute so
requires. It being of general application engulfing a wide sweep of
powers, applicable to all persons and situations of a broadly identifiable C
class, 1he legislative order may not be vulnerable to challenge merely
by reason of its omission to take into account individual peculiarities
and differences amongst those falling within the class."

[Emphasis supplied]
D
19. When the Act is read as a whole, the legislative intent is clear that
a lease once validly granted can not be terminated prematurely without a
notice and hearing. The reason is obvious. Exercise of power of termination
will have civil consequences adversely affecting the interest of the lease-
holders. We may refer to the three sections inserted by Act 37 of 1986 with
effect from 10.2.1987, in this behalf. Section 24A deals with the rights and E
liabilities of a holder of a mining lease. It provides that on issue of a mining
lease under the Act or the Rules made thereunder, it shall be lawful for the
holder of such lease, to enter upon the leased land, at all times during its
currency for carrying on mining operations. Sub-section (1) and (2) of Section
4A contemplate premature termination only when the concerned government F
is of the view that it is expedient to do so, in the interest of regulation of
mines and mineral development, preservation of natural environment, control
of floods, to prevent pollution or to avoid danger to public health or
communication or to ensure safety of buildings, monuments or other structures
or for such other purposes. Sub-section (3) of Section 4A prohibits any order
of a premature termination of a mining lease being made, without giving a G
hearing to the lease holder. The Act does not contemplate 'wholesale'
termination of all existing leases/permissions in relation to a minor mineral
without hearing. Section 17-A while empowering Central Government to
reserve areas for purposes of conservation of minerals, and empowering
Central/State Government to reserve areas for mining operation by Government H
416 SUPREME COURT REPORTS (2006) 3 S.C.R.

A Companies/Corporations, specifically exclude areas already held under mining
leases. Even, section 17 while referring to the power of the Central Government
to undertake mining operations exclusively in any area, excludes areas already
held under mining leases. It is, thus, clear that the Act extends a statutory
protection to the holder of a mining lease to carry on mining operations
B during the period of lease, in terms of the lease deed. The Act further
contemplates premature termination only for the reasons stated in sub-section
(I) or (2) of section 4A and in the manner provided in sub-section (3) of
section 4A. There is no doubt that the Legislature can make a provision in
the Statute itself for termination of the mining leases without observance or
principles of natural justice. It did not choose to do so. When the Act assures
C the Lessee the right to carry on mining operations during the entire period of
lease and provides for termination only after giving a hearing, the delegate
cannot, while making a rule in exercise of the power granted under the Act,
make a provision for termination of all leases relating to a particular minor
mineral. without giving an opportunity of hearing to the lease/permission
holders. That part of Rule 38A which purports to terminate all leases forthwith,
D without notice or hearing to the lessees, does not conform to the object,
scheme and the provisions of the Act under which it is made and therefore,
invalid. Borrowing the words of Russell of Killowen CJ, we may as well say
'Parliament never intended to give authority to make such a rule'.

20. We may look at it from another angle. The government order dated
E
1.10.2003 states the reasons for making Rule 38A. It states that rule is
introduced as the High Level Committee appointed by it found that illicit and
haphazard sand mining has led to deepening of river beds, widening of the
rivers, damage to civil structures, depletion of groundwater table, degradation
of ground water quality, sea water intrusion in coastal areas, damages to river
F systems and reduction in bio-diversity, apart from causing health hazards and
environmental degradation. These are the very grounds which are referred to
in section 4A as grounds for premature termination. \\tben the Act requires
a hearing for termination on such grounds, it is inconceivable that the delegate

G
will be permitted to exercise the power of termination on such grounds without
a hearing.

21. If a rule is partly valid and partly invalid, the part that is valid and
-
severable is saved. Even the pa~ which is found to be invalid, can be read
down to avoid being declared as invalid. We have already held that premature
termination of existing leases, in law, can be only after granting a hearing as
H required under sub-section (3) of section 4A for any of the reasons mentioned
STATE OFTAMIL NADU v. P. KRISHNAMURTHY [RA VEENDRAN, J.] 4 J7

in section 4A(I) or (2). Therefore, let us examine .whether we can save the A
offending part of Rule 38A (which terminates quarrying leases/permissions
forthwith) by reading it down. Apart from the statutory provision for termination
in section 4A(3), there is a contractual provision for termination in the mining
leases granted by the State Government. This provision enables either party
to terminate the lease by six months notice. No cause need be shown for such B
termination nor such termination entails payment of compensation or other
penal consequences. In this case, after considering the High Level Committee
Report, the State has taken a decision that all quarrying by private agencies
in pursuance of the quarrying leases granted in regard government lands or
permissions granted in respect of ryotwari land should be terminated in
public interest. If Rule 38A is read down as terminating all mining leases C
granted by the government by six months notice (in terms of clause 11 in the
lease deeds based on the model form at Appendix l to the Rules) or for the
remainder period of the lease, whichever is less, it can be saved, as it will then
terminate the leases after notice, in terms of the lease.
D
Whether conditions imposed by High Court require to be modified ?

22. The respondents submitted that from 2.10.2003 when Rule 38A
was inserted, the State Government had prevented the existing leaseholders/
permission holders from quarrying and removing sand. It is submitted that on
8.10.2003, the Division Bench issued a direction that neither party should E
quarry sand in regard to the area covered by the existing leases and that order
was in force till the disposal of the writ petitions. On I I .5.2004, the writ
petitions were disposed of upholding Rule 38A and, at the same time,
recognizing the right of the existing leaseholders to continue with the quarrying
operations till the expiry of their respective lease period. It is submitted that
in spite of the said judgment, the State did not permit the lease holders to F
carry on quarrying operations, apparently, in view of its decision to challenge
the said judgment. The State filed the SLPs in November, 2004. As this
Court did not stay the order of the High Court, the state government was
bound to permit the Respondents to carry on quarrying operations in terms
of the order of the High Court, but did not do so. The respondents, therefore, G
submit that they should be permitted to continue quarrying operations for the
unexpired periods of lease as on 2. I0.2003. They rely on the decision of this
Court in Beg Raj Singh v. State of U.P. (2003] I SCC 726, wherein the leas~
holders were permitted to carry on operations during the lease period of three
years, subject to adjustment of the period during which they have already
~~~. H
418 SUPREME COURT REPORTS [2006) 3 S.C.R.

A 23. On the other hand, learned counsel for the State Government,
submitted that Rule 38-A was made to prevent environmental degradation and
indiscriminate quarrying and, therefore, if the leaseholders are permitted to
continue the quarrying operations, the very purpose of Rule 38A will be
defeated.

B 24. It is not the case of the State that all the leaseholders have violated
the terms of the lease or acted in a manner detrimental to environment.
Learned counsel appearing for the State, in fact, fairly admitted that several
leaseholders had carried on quarrying activities without violating the terms of
lease and without causing environmental degradation. If any leaseholder had
C acted or acts in a manner likely to result in environmental degradation etc.,
it is always open to the State Government to terminate the lease after giving
a hearing, as provided in section 4A(3 ).

25. Section 4A(3) requires the grant of an opportunity of hearing only
for premature termination of mining leases (and prospective licences with
D which we are not concerned). If anyone was carrying on quarrying of sand
as on '.!.I 0.2003 in whatsoever circumstances other than in pursuance of
mining leases, there is no question of hearing them before stopping quarrying
activities in pursuance of Rule 38A. as hearing is required only in regard to
those holding subsisting leases. Therefore. all quarrying permits for sand
E stood terminated with effect from 2.10.2003. All quarrying by any person,
other than those holding mining leases also ceased with effect from 2.10.2003.

26. In regard to mining leases subsisting as on 2.10.2003, we have read
down Rule 38A as terminating such leases in terms of the contract (lease
deeds) by six months, without assigning cause and without any liability to
F pay compensation. Such of those writ petitioners (Respondents herein) whose
leases were subsisting on 2.10.2003 (and whose activities were stopped with
effect from that day) will be entitled to carry on the quarrying activities for
a period of six months or for the actual unexpired period of the lease (as on
2.10.2003), whichever is less. This benefit will be available to even those
G who have orders of court for grant of mining leases, but where mining leases
were not executed for one reason or the other. It is, however, made clear that
the State Government is at liberty to prematurely terminate the leases for any
of the causes mentioned in section 4A(2), by giving a notice and hearing
under Section 4A(3), if they want to terminate any lease within the said period -
of six months.
H
STATE OFTAMIL NADU v. P. KRISHNAMURTHY [RA VEENDRAN,J] 419

27. We, accordingly, allow these appeals in part. In place of the A
conditions stipulated by the Division Bench while upholding the validity of
Rule 38A, we hold and direct as follows :

(i) That part of Rule 38A which vests the exclusive right to quarry
sand, in the State Government, is upheld.
(ii) That part of Rule 38A which purports to terminate quarrying
B
leases/permissions forthwith (from 2.10.2003) is read down in
terms of Para 26 above.
(iii) The provision in Rule 38A for refund of proportionate lease
amount for the unexpired period of lease and unadjusted
seigniorage fee, shall remain undisturbed. c
(iv) It is made clear that except to the limited relief as a consequence
of reading down as per para 26 above, the respondents will not
be entitled to any other reliefs which have been granted by the
High Court.
D
(v) Parties to bear their respective costs.

K.G. Appeal partly allowed.