State of Gujarat and Others etc. vs Jayeshbhai Kanjibhai Kalathiya etc.

15 of the Mines and Minerals (Development and Regulation) Act, 1957 (MMDR Act) does not include control over minor minerals after they are excavated. Therefore, it is not correct that sub-section (1) of Section 15 of MMDR Act empowers the State Government to make rules for ‘regulating’ the grant of quarry leases, mining leases or other concessions in respect of minor minerals and for the purposes connected therewith. Section 23-C of the MMDR Act was inserted by the Amendment Act of 1999 with the objective to prevent illegal mining. That is clearly spelled out in the Statement of Objects and Reasons. The words ‘transportation’ and ‘storage’ in Section 23-C are used in the context of ‘illegal mining’. It is clear that it is the transportation and storage of illegal mining and not the mining of minor minerals like sand which is legal and backed by duly granted license, which can be regulated under this provision. Therefore, no power flows from this provision to make rule for regulating transportation of the legally excavated minerals. [Paras 35, 36, 41 and 42][120-AD; 123-G; 124-C, D]

State of Tamil Nadu v. M.P.P. Kavery Chetty (1995) 2 SCC 402 : [1995] 1 SCR 441; K.T. Varghese & Ors. v. State of Kerala & Ors. (2008) 3 SCC 735 : [2008] 1 SCR 1205 – relied on.

D.K. Trivedi & Sons and Others v. State of Gujarat and Others (1986) Supp SCC 20 : [1986] SCR 479; Amritlal Nathubhai Shah and Others v. Union Government of India and Another (1976) 4 SCC 108 : [1977] 1 SCR

372 – distinguished.

2.1 The impugned rules also violate Part XIII of the Constitution as the effect thereof is to fetter the freedom of trade, commerce and intercourse under Article 301 of the Constitution. Under this Article, the expression ‘freedom’ must be read with the expression ‘throughout the territory of India’. Under Article 302, Parliament may impose restrictions on the freedom of trade, commerce or intercourse between one State and another as may be required in the public interest. The expression ‘public interest’ may include a regional interest as well. However, Article 302 is qualified by Article 303 which prohibits Parliament and the State Legislatures from making any law that gives preference to one State over another or discriminates between one State and another. Situations of scarcity are to be dealt with by Parliament under Article 302(2). The power of State Legislature to impose reasonable restrictions on the freedom of trade, commerce or intercourse, as may be required in the public interest, requires such a Bill or amendment to be moved in the State Legislature only after receiving previous sanction from the President. The President, being the head of the State and the guardian of the federation, must be satisfied that such a law is indeed required and, thus, acts as a check on the promotion of provincial interests over national interest. Going by the aforesaid scheme of this Chapter, it becomes apparent that when there are such restrictions on a State Legislature, then the State Government could not have imposed such a prohibition under a statute whose object is to regulate mines and mineral development, and not trade and commerce per se. [Para 43][124-E-H; 125-A]

2.2 Balanced development of the country is an equally vital facet of economic integration. No doubt, Part XIII permits some forms of differentiation, for example, to encourage a backward region or to create a level playing field for parts of the country that may not have reached the desired level of development. In this context, Part XIII envisions a two-fold object: (i) facilitation of a common market through ease of trade, commerce and intercourse by erasing barriers; and (ii) Regulations (or restrictions) which may have the effect of differentiating between States or regions which may be necessary not only in emergent circumstances of scarcity etc. or but even for development of economically backward regions or otherwise justified in the public interest. That Part XIII is not about “freedom” alone but is a code of checks and balances, intended at achieving economic unity and parity. [Para 45][126-A-C]

Video Electronics Pvt. Ltd. & Anr. v. State of Punjab & Anr. (1990) 3 SCC 87 : [1989] 2 Suppl. SCR 731 – relied on.

2.3 In order to justify any ‘preference’ or ‘discrimination’ under Article 303, a scarcity of goods would have to be made out. It is a matter of record that the Study Group’s report on which reliance is placed by the appellant focuses on the need to restrict the export of sand outside India and not within India. In any case, nothing prevents the appellant from restricting the quantum of sand being excavated. However, once the appellant State permits sand to be excavated, neither can it legally restrict its movement within the territory of India nor is the same constitutionally permissible. Likewise, there is no restriction on the State importing sand from other states. If it is the case that the demand of any State is not being met, it may purchase sand from other states. In any event, the market will dictate trade in sand inasmuch as it may make no business sense for mining company to transport and sell its sand in a far away destination after incurring large costs on transportation. [Para 46][127-B-D]

C. Narayana Reddy and etc. v. Commissioner of Panchayat Raj and Rural Employment, A.P. Hyderabad and others AIR 2004 AP 234; State of Tamil Nadu v. Hind Stone and Others (1981) 2 SCC 205 : [1981] 2 SCR 742; T.N. Godavarman Thirumulpad v. Union of India and Others (2006) 1 SCC 1 : [2005] 3 Suppl. SCR 552; Uttar Pradesh Power Corporation Limited v. National Thermal Power Corporation Limited and Others (2009) 6 SCC 235 : [2009] 3 SCR 1060; K. Ramanathan v. State of Tamil Nadu and Another (1985)

2 SCC 116 : [1985] 2 SCR 1028; U.P. Cooperative Cane Unions Federations v. West U.P. Sugar Mills Association and Others (2004) 5 SCC 430 : [2004] 2 Suppl. SCR 238; Monnet Ispat and Energy Limited v. Union of India and Others (2012) 11 SCC 1 : [2012] 7 SCR 644; State of Tripura and Others v. Sudhir Ranjan Nath (1997) 3 SCC 665 : [1997] 2 SCR 29 – referred to.