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The essence of federalism lies in the sharing of legal sovereignty by the Union and
the federating units. And, in general, the most precise way of demarcating the
respective areas of the federation and federating units is to demarcate their
respective areas in regard to legislation. There are many reasons for this; but one of
the most important, is the demarcation of legislative power which helps in defining
boundaries that of the executive power also, as usually the former controls the
latter.
The constitutional provisions in India on the subject of distribution of legislative
powers between the Union and the States are spread out over several articles
(articles 245-254). However, the most important of those provisions i.e, the basic
one is that contained in articles 245-246.
Article 245 provides, inter alia, that (subject to the provisions of the Constitution).
# Parliament may make laws for the whole or any part of the territory of India and
# the legislature of a State may make laws for the whole or any part of the State.
Thus, article 245 sets out the limits of the legislative powers of the Union and the
States from the geographical (or territorial) angle. From the point of view of the
subject matter of legislation, it is article 246 which is important. Article 246 reads
as under:
1) Notwithstanding anything in clauses (2) and (3), Parliament has exclusive power
to make laws with respect to any of the matters enumerated in List 1 of the Seventh
Schedule (in this Constitution, referred to as the Union List).
2) Notwithstanding anything in clause (3), Parliament, and subject to clause (1), the
Legislature of any State also, shall have power to make laws with respect to any of
the matters enumerated in List III in the Seventh Schedule (in this Constitution,
referred to as the Concurrent List).
3) Subject to clauses (1) and (2), the Legislature of any State has exclusive power to
make laws for such State or any part thereof with respect to any of the matters
enumerated in List II in the Seventh Schedule (in this Constitution, referred to as
the State List)
4) Parliament has power to make laws with respect to any matter for any part of the
territory of India not included in a State, notwithstanding that such matter is a
matter enumerated in the State List.
The co-existence of Central and State laws in a particular area can give rise to
litigation. Such problems arise, either because the Union or a State may illegally
encroach upon the province of the other (parallel) legislature, or they may arise
because (though there is no encroachment, as such, on each others sphere), the
two laws clash with each other.
The two situations are, strictly speaking, different from each other; and they must
be judged by two different tests. Where the subject-matter of the legislation in
question falls within either the Union List or the State list only, then the question is
to be decided with reference to legislative competence. One of the two laws must
necessarily be void, because (leaving aside matters in the Concurrent List), the
Indian Constitution confers exclusive jurisdiction upon Parliament for matters in the
Union List and upon a State Legislature for matters in the State List. The correct
doctrine applicable in such cases is that of ultra vires. Since one of the two laws
must be void, the question of inconsistency between the two has no relevance. Only
one law will survive; and the other law will not survive, because ex hypothesi, it has
no life.
In contrast, where the legislation passed by the Union and the State is on a subject
matter included in the Concurrent List, then the matter cannot be determined by
applying the test of ultra vires because the hypothesis is, that both the laws are
(apart from repugnancy), constitutionally valid. In such a case, the test to be
adopted will be that of repugnancy, under article 254(2), of the Constitution.
It follows, that it is only where the legislation is on a matter in the Concurrent List,
that it would be relevant to apply the test of repugnancy. Notwithstanding the
contrary view expressed in some quarters, this appears to be the correct position.
Such a view was expressed by Dr. D. Basu in his Commentary on the Constitution of
India (1950) 1st edition, page 564, and it is this view, that seems to have been
upheld (impliedly) by the Supreme Court in the under - mentioned decisions: 1. Deep Chand v. State of U.P., AIR 1959 SC 648; (1959) Suppl. 2 SCR 8.
2. Premnath v. State of J & K, AIR 1959 SC 749 (1959) Suppl 2 SCR 270.
3. Ukha v. State of Maharashtra, AIR 1963 SC 1531, paragraph 20.
4. Bar Council, U.P. v. State of U.P., AIR 1973 SC 231, 238; (1973) 1 SCC 261.
5. Barani v. Henry, AIR 1983 SC 150, paragraph 15.
6. Hoechst Pharmaceuticals v. State of Bihar, AIR 1983 SC 1020, paragraphs 68, 69
and 76 (Full decisoon of the position).
7. Pochanna Lingappa v. State of Maharashtra, AIR 1985 SC 389, paragraph 26;
(1985) 1 SCC 425.
8. Vijay Kumar Sharma v. State of Karnataka, AIR 1990 SC 2072 [For decisions in
section 107, Government of India Act, 1935 see Lakhi Narayan Das v. Province of
Bihar, AIR 1950 FC 59.]
The State Governments grant the mineral concessions for all the minerals located
within the boundary of the State, under the provisions of the Mines and Minerals
(Development and Regulation) Act, 1957 (MMDR) and Mineral Concession Rules,
1960 ( MCR) framed thereunder. Under the provisions of the MMDR Act, 1957 and
MCR, 1960, prior approval of the Central Government is required in the following
cases:
# Granting mineral concessions in respect of minerals specified in the First Schedule
to the Mines and Minerals (Development and Regulation) Act, 1957.
# Granting areas under prospecting licence and mining lease to a person in excess
of limits prescribed under Section 6(1) (a) and Section 6(1) (b) of the Act.
# Imposing special condition(s) in mining lease under Rule 27(3), in prospecting
licence under Rule 14(3) and in reconnaissance permit under Rule 7(3) of Mineral
Concession Rules, 1960 over and above the conditions prescribed in MCR, 1960.
# Granting mineral concession in an area previously reserved by the Government,
or previously held under a mineral concession, without first notifying the same by
relaxing the provisions of Rule 59(1) under # Rule 59(2) of MCR, 1960.
# Revision of any order made by State Government with respect to any mineral
except a minor mineral. ( Section 30 of MMDR Act.)
# Relaxation of Rules in special cases under Section 31 of the Act, keeping in view
the interest of mineral development.
There are three kinds of mineral concessions, viz Reconnaissance Permit (RP),
Prospecting License(PL) and Mining Lease(ML). RP is granted for preliminary
prospecting of a mineral through regional, aerial, geophysical or geochemical
surveys and geological mapping. The RP for any mineral or prescribed group of
associated minerals is granted for 3 years and for a maximum area of 5,000 sq.
kms, to be relinquished progressively. After 2 years, the area should be reduced to
1,000 sq. kms or 50% of the area granted, whichever is less. At the end of 3 years,
area held under an RP should be reduced to 25 sq kms. In a State, a person can be
granted a maximum area of 10,000 sq. kms under RP subject to the condition that
area in a single RP does not exceed 5000 sq. kms. A RP holder has preferential right
to obtain PL(s) in the area concerned.
PL is granted for undertaking operations for the purpose of exploring, locating or
proving mineral deposit. A PL for any mineral or prescribed group of associated
minerals is granted for a maximum period of 3 years. A PL can be renewed in such a
manner that the total period for which a PL is granted does not exceed 5 years. In a
State, a person can be granted a maximum area of 25 sq. kms in one or more PLs,
but if the Central Government is of the opinion that in the interest of development
of any mineral it is necessary to do so, the maximum area limit can be relaxed. A PL
holder has preferential right to obtain ML in the area concerned.
ML is granted for undertaking operations for winning any mineral. A ML for any
mineral or prescribed group of associated minerals is granted for a minimum period
of 20 years and a maximum period of 30 years. A ML can be renewed for periods
not exceeding 20 years each. In a State, a person can be granted a maximum area
of 10 sq. kms in one or more MLs, but if the Central Government is of the opinion
that in the interest of development of any mineral it is necessary to do so, the
maximum area limit can be relaxed.
In pursuance of the reforms initiated by the Government of India in July, 1991 in
fiscal, industrial and trade regimes, the National Mineral Policy was announced in
March, 1993. The National Mineral Policy recognized the need for encouraging
private investment, including foreign direct investment and for attracting state-ofthe-art technology in the mineral sector. Further, the policy stressed that the Central
Government, in consultation with the State Governments, shall continue to
formulate legal measures for the regulation of mines and the development of
mineral resources to ensure basic uniformity in mineral administration so that the
development of mineral resources keeps pace, and is in consonance with the
national policy goals.
In furtherance of the objective of the National Mineral Policy, the MMDR Act, 1957
has been amended twice in 1994 and 1999. The Mineral Concession Rules, 1960
(MCR) and the Mineral Conservation and Development Rules 1988 (MCDR), framed
under the MMDR Act, 1957 have also been modified. Salient features of the
amended mining legislation are as follows:
(i) There is no restriction on foreign equity holding in mining sector companies
registered in India.
(ii) There is a greater stability of tenure of mineral concessions, since the minimum
period of a mining lease is twenty years and a maximum period of thirty years. A
mining lease may be renewed for a period not exceeding twenty years and may
again be renewed for a period not exceeding twenty years in respect of minerals
specified in Part C of the First Schedule of the Act. In respect of minerals specified in
Part A and B of the First Schedule of the Act such renewal may be granted with the
previous approval of the Central Government. The period of prospecting license now
is three years, with possibility of renewal for a further period of two years.
(iii) Thirteen minerals like iron ore, manganese ore, chrome ore, sulphur, gold,
diamond, copper, lead, zinc, molybdenum, tungsten, nickel and platinum group of
minerals which were reserved exclusively for exploitation by the public sector, have
now been thrown open for exploitation by the private sector.
(iv) With the 1999 amendment, a concept of reconnaissance operations, as a stage
of operation distinct from and prior to actual prospecting operations, was
made to Revenue and Forest Department to ascertain their views on the suitability
of the site from the point of public nuisance or forestry angle. The area is also
inspected by a geologist of this Directorate to ascertain the suitability of the area
from mineral potential point of view including the possible adverse effects arising
from prospecting or mining activity. If the area involved is a forest land the case is
processed for clearance under section 2 of FCA if the state government agrees in
principle to grant the prospecting licence/mining lease. Clearance under section 2 of
FCA 1980 involves a detailed proposal from the applicant in terms of Forest
Conservation Rules and the guidelines prescribed by Ministry of Environment. The
applicant is also directed to obtain environmental clearance in terms of EIA
Notification dated 14/09/2006.
Irrespective of the above scrutiny and action under FCA if required, the application
is also processed for obtaining a prior approval of the Ministry of Mines, Government
of India, if the mineral involved is listed in Schedule I to the Act 1957. After
obtaining the prior approval of the Ministry of Mines, Government of India as well
Ministry Of Environmental Forest, Government of India (where forest land is
involved) and the environmental clearance, the case is put up for approval of the
State Government. After the issue of the order of grant by the State Government,
the area applied for grant of mineral concession is surveyed and demarcated on the
ground. A plan is prepared by the surveyor which is signed by the surveyor, the
Senior Geologist and the Director and kept in the file as the original document. A
true copy of the plan is prepared by the draughtsman, which forms a part of the
lease deed document. The applicant is thereafter called upon to effect the payment
towards security deposit as well as expenses involving survey, issue of certified
copy of plan. A lease deed is thereafter executed at Government level.
Entry 23 of the State List relates to Regulation of mines and mineral development.
However, it is expressly subject to the provisions of the Union List with respect to
regulation and development under the control of the Union. Entry 54 of the Union
List provides for Regulation of mines and mineral development to the extent to
which such regulation and development under the control of the Union is declared
by Parliament by law to be expedient in the public interest. It is significant that
Entry 23 of List II has not been made subject to any specific Entry of List I. This
means that apart from Entry 54, there are other Entries in List I which may, to an
extent, overlap and control, the field of Entry 23 of List II.
The Constitutional arrangements regarding the regulation of Mines and Minerals
Development are generally on the lines of Government of India Act, 1935, except
that the Entry relating to Oil fields has been dealt within a separate Entry, of the
Union List in the Constitution. (Entry 53 List I).
Parliament has enacted the Mines and Minerals (Regulation and Development) Act,
1957 (MMRD Act) to provide for regulation of mines and the development of
The findings in this case have been followed in other cases. In a subsequent
case, the Supeme Court held:
Subject to the provisions of List I, the power of the State to enact Legislation on the
topic of mines and minerals development is plenary. To the extent to which the
Union Government had taken under its control the regulation and development
of minerals under Entry 54 of List I so much was withdrawn from the ambit of the
power of the State Legislature under Entry 23 of List II and legislation of the State
which had rested on the existence of power under that Entry would, to the extent of
the control, be superseded or be rendered ineffective; for here we have a case not
of mere repugnancy between the provisions of the two enactments but of
denudation or deprivation of State legislative power by the declaration which
Parliament is empowered to make under Entry 54 of List I and has made. The
Central Act 67 of 1957 covered the entire field of minerals development that being
the extent to which Parliament had declared by law that it was expedient that the
Union should assume control.
The result, therefore, of Parliament having occupied the entire field is that the State
legislature thereafter lacks legislative competence and consequentially, executive
authority in regard to regulation and development of mines and minerals. Therefore,
where a law is attributable in pith and substance to Entry 23 of List II, it would not
be valid in as much as Parliament has occupied the entrie field.
States have legislative competence with respect to land and connected matters
under Entry 18 of List II and regarding taxes on lands and buildings under Entry 49
of List II. Conflicts have arisen in the matter of levies under Entries 18, 49 and 50 of
List II on the ground that they impinge upon Entry 54 of List I. These Entries should
also be read with Entry 54 of List I. The State Legislatures' competence is not taken
away unless it is shown that in pith and substance the enactment relates to Entry
23 of List II. Dealing with the validity of demand for payment of land cess under
Sections 78 and 79 of the Madras District Boards Act (1920), the Supreme Court
held that these Sections had nothing to do with the development of mines and
mineral or their regulation because the proceeds of the land cess were to be used
for providing amenities to the people of the area like education, health, etc. It was
also observed that the land cess was not a tax or mineral right but was in pith and
substance a tax on lands under entry 49 of List II.
Entry 50 of List II relates to taxes on mineral rights. However, this has been made
expressly subject to any limitations imposed by Parliament, by law, relating to
mineral development. Taxes under Entry 50 of List II do not include royalty and
cess.
The MMRD Act, 1957 mainly deals with general restrictions on prospecting and
mining operations and the rules and procedures for regulating grants of prospecting
licences and mining leases. Section 2 of the Act makes a declaration that it is
expedient in the public interest that the Union should take under its control the
regulation of mines and the development of minerals to the extent provided in the
said Act. In Section 3, the words Minerals, Mineral Oils, Minor Minerals have
been separately defined. State Governments are competent to give licences for
prospecting and for granting mining leases. The Act specifically provides that in the
case of minerals included in the First Schedule to the Act, the State Governments
shall not grant or renew, prospecting licences or mining leases without the prior
permission of the Union Government. Sections 4 to 12 of the Act deal with the
conditions and procedures and other allied matters regarding the prospecting or
mining operations under licence or lease. Sections 13 and 13A deal with the rule
making power of the Central Government.
It is, however, significant that Section 14 provides that Sections 4 to 13 of the Act
shall not apply to minor minerals. Further, Section 15 provides that the State
Government's may by notification in the Official Gazette make rule for regarding
grant of quarry-lease, mining-lease or other mineral concessions in respect of minor
minerals and for the purposes connected therewith. A combined reading of Section
4 to 13 and Section 14, 15 and 18 show that while Parliament's enactment (viz., the
MMRD Act) has occupied the entire field, it has specifically exempted minor
minerals from the application of Sections 4 to 12 and has also empowered the State
Governments in respect of minor minerals.
(Relating To Entry 54 Of List I And Entry 23 of List II and Other Related Matters)
Development Fund Act, 1952 [the same Act was under challenge in HingirRampur
Coal Co. Vs. State of Orissa 1961 (2) ACR 537]. The fee under this Act which became
due between July 1951 and March 1952 became the subject matter of litigation. A
demand was made from the Company. The Company filed a petition before the High
Court impugning the legality of the demand and claimed certain assets. The writ
petition was allowed by the High Court.
The question arose whether the Mines and Minerals (Development & Regulations)
Act, 1948 which is a Central Act has rendered the Orissa Act ineffective. The
Supreme Court held as follows:
Subject to the provisions of List I, the power of the State to enact Legislation on the
topic of mines and mineral development is plenary. To the extent to which the
Union Government had taken under its control the regulation and development
of minerals under Entry 54 of List I so much was withdrawn from the ambit of the
power of the State Legislature under Entry 23 of List II and legislation of the State
which had rested on the existence of power under that Entry would, to the extent of
that control, be superseded or be rendered ineffective, for here we have a case
not of mere repugnancy between the provisions of the two enactments but of a
denudation or deprivation of State legislative power by the declaration which
Parliament is empowered to make under Entry 54 of List I and has made. The
Central Act 67 of 1957 covered the entire field of mineral development, that being
the extent to which Parliament had declared by law that it was expedient that the
Union should assume control.
Relaying on the provisions of Sec. 18(1) which cast a duty upon Union Government
to take all such steps as may be necessary for the conservation and development
of minerals in India and for that purpose the Central Government may, by
notification, make such rules as it may deem fit, it was contended that the entire
field of mineral development including the provision of amenities to workmen
employed in the mines, vested with the Union Government. The Court was inclined
to agree to this contention but held that this position has been concluded by its
decision in Hingir-Rampur Coal Co. Vs. State of Orissa [1961 (2) SCR 537].
To raise finance for carrying out local administration in the District Board, several
taxes are leviable. Among them, Section 78 of the Madras Distribution Act of 1920
imposes a land cess on lands in the State.
After his father's death, two notices were issued on the appellant demanding
payment of the land cess by the District Board for the years 195254 and 1955
57 and threatening action in the event of non-payment. The appellant challenged
the validity of the notices in the High Court of Andhra Pradesh. The Petition was
dismissed. The matter came in appeal before the Supreme Court. One of the
contentions was that with the passing of Mines and Minerals (Development and
Regulation) Act, 1957, the land cess that could be levied under the District Board
Act must be exclusive of royalty under the mining lease.
It was held that there was no connection between regulations and development of
mines and minerals dealt with in the Central Act of 1957 and the levy and collection
of land cess for which the provision was made by Sections 78 and 79 of the District
Boards Act. Therefore, there was no scope at all for the argument that there was
anything common in between the District Board's Act and Central Act of 1957 so as
to require a detailed examination of these enactments for discovering whether there
was any overlapping.
It was further held that land cess imposed by the Madras District Board Act was in
truth a tax on land as per Entry 49 of State List and not a tax on minerals under
Entry 50 of State List.
The Court also relied on its earlier decisions AIR 1961 SC 459 (Hingir-Rampur Coal
Co. Vs. State of Orissa and AIR 1964 SC 1284State of Orissa Vs. M.A. Tullock and
Company).
The main question that came up for consideration before the Supreme Court was
the effect of the combined reading of Entry 54 of the Union List and Entry 23 of the
State List of the Seventh Schedule to the Constitution. The Court held
....it is open to Parliament to declare that it is expedient in the public interest
that the control should rest in the Central Government. To what extent such a
declaration can go is for the Parliament to determine and this must be
commensurate with the public interest. Once this declaration is made and
extent laid down, the subject of legislation to the extent laid down becomes an
exclusive subject for legislation by Parliament. Any legislation by the State after
such declaration and trenching upon the field disclosed in the declaration must
necessarily be unconstitutional because that field is abstracted from the
legislative competence of the State Legislature .
The Court also relied upon its own decisions in Hingir-Rampur Coal Company v.
State of Orissa (AIR 1961 SC 459) and State of Orissa v. M.A. Tulloch & Co. (AIR 1964
SC 1284). The Court further held:
these two cases binding and apply here. Since the Bihar Legislature amended
the land reforms Act after coming into force of Act 67 of 1957, the declaration in
the latter Act would carve out a field to the extent provided in that Act and to
that extent Entry 23 would stand cut down. To sustain the amendment, the
State must show that the matter is not covered by the Central Act. The other
side must of course, show that the matter is already covered and there is no
room for legislation.
********************
# Hingir-Rampur Coal Co. v. State Of Orissa
# State Of Orissa Vs. M.A. Tulloch & Co. (Air 1964 Sc 1284)
# Baijnath Kedya Vs. State Of Bihar And Rest (Air 1970 Sc 1436)
# H.R.S. Murthy Vs. Collector Of Chittoor And Others (Air 1965 Sc 177)