PETITIONER: STATE OF TAMIL NADU Vs. RESPONDENT: HIND STONE ETC. DATE OF JUDGMENT05/02/1981 BENCH: REDDY, O. CHINNAPPA (J) BENCH: REDDY, O. CHINNAPPA (J) PATHAK, R.S. CITATION: 1981 AIR 711 1981 SCR (2) 742 1981 SCC (2) 205 1981 SCALE (1)237 CITATOR INFO : F 1985 SC 660 (24) RF 1986 SC1323 (49) D 1988 SC1301 (11) F 1990 SC 820 (31) ACT: Mines and Minerals (Regulation and Development) Act , 1957-Section 15-Rule 8-C of Tamil Nadu Minor Mineral Concession Rules 1959-Scope of-Rule if ultra vires the rule making power of <ORG>-Whether violative of Articles 301 and 303 of the Constitution. Interpretation-"Regulation" whether includes "prohibition". HEADNOTE: The Mines and Minerals (Regulation & Development) Act , 1957 (Central Act ) was enacted in the public interest to enable the <ORG> to take under its control the regulation of mines and the development of minerals. Exercising its power under this Act, <ORG> declared by a notification that black granite was a minor mineral. Exercising power vested in it by section 15 of the Act, <ORG> made the Tamil Nadu Minor Mineral Concession Rules, 1959. Rule 8 of the Rules prescribes the procedure for lease of quarries to private persons. By rule 8-C, introduced in 1977, leases for quarrying black granite in favour of private persons were banned. Sub-rule (2) of this rule enacts that <ORG> themselves may engage in quarrying black granite or grant leases for quarrying black granite in favour of any corporation wholly owned by <ORG>. Several applications for the grant of fresh leases as well as for the renewal of leases for quarrying black granite belonging to <ORG> were submitted to <ORG>, some prior to the introduction of rule 8C and some after the rule came into force. <ORG> considered all the applications and rejected all of them in view of rule 8C. The respondents filed writ petition questioning the vires of Rule 8-C on various grounds. <ORG> struck down Rule 8-C on the ground that it exceeded the rule making power given to <ORG> and held that it was not open to the appellant <ORG> to keep the applications pending for a long time and then to dispose them of on the basis of a rule which had come into force later. As a result all the applications were disposed of without reference to rule 8-C. The appellant contended that: (I) The approach of <ORG> was vitiated by its failure to notice the crucial circumstance that the minerals belonged to the <ORG>, (II) The respondents had no vested or indefeasible right to obtain a lease or a renewal to quarry the minerals, (III) There were good reasons for banning the grant of lease to quarry black granite to private parties and (IV) The <ORG> could not be compelled to grant leases which would result in the destruction of the mineral resources of the country. On behalf of the respondent it was submitted that (I) the question of ownership of the minerals was irrelevant, (II) It was not open to the appellant 743 to exercise its subordinate legislative function in a manner to benefit itself as owner of the minerals, nor was it open to the appellant to create monopoly by such means, (III) There was violation of articles 301 and 303 of the Constitution, (IV) Rule 8-C had no application to renewals and (V) That in any event it would not have the effect of affecting applications made more than 60 days before it came into force. Accepting the appeals, it was ^ HELD: Rule 8-C was made in bonafide exercise of the rule making power of the Appellant <ORG> and not in its misuse to advance its own self interest. Making a rule which is perfectly in order is not to be considered a misuse of the rule making power, if it advances the interest of <ORG>, which really means the people of the <ORG>. Rivers, forests, minerals and as such other resources constitute a nation's natural wealth. These resources are not to be frittered away and exhausted by any one generation. Every generation owes a duty to all succeeding generations to develop & conserve the natural resources of the nation in the best possible way. It is in the interest of mankind. It is in the interest of the Nation. It is recognised by <ORG>. <ORG> has declared that it is expedient in the public interest that the <ORG> should take under its control the regulation of mines and the development of minerals. [751C-D, 753G-H] 2. The Public interest which induced <ORG> to make the declaration contained in S.2 of the Mines & Minerals (Regulation and Development) Act , 1957 has naturally to be the paramount consideration in all matters concerning the regulation of Mines & Minerals. <ORG>'s Policy is clearly discernible from the provisions of the Act. It is the conservation and the prudent and discriminating exploitation of minerals, with a view to secure maximum benefit to the community. There are clear sign posts to lead and guide the subordinate legislating authority in the matter of the making of rules. [751G-H] 3. The other provisions of the Act, particularly sections 4A , 17 and 18 , indicate that the rule making authority under S.15 has not exceeded its powers in banning leases for carrying black granite in favour of private parties and in stipulating that <ORG> themselves may engage in quarrying black granite or grant leases for quarrying black granite in favour of any corporation wholly owned by <ORG>. To view such a rule made by the Subordinate legislating body as a rule made to benefit itself merely because <ORG> happens to be the subordinate legislating body is, but, to take too narrow a view of the functions of that body. [751H, 752A- <CITATION> .  3 SCR 742 @ 745, 752-753 referred to. 5. Whenever there is a switch over from 'private sector' to 'public sector' it does not necessarily follow that a change of policy requiring express legislative sanction is involved. It depends on the subject and the statute. But if a decision is taken to ban private mining of a single minor mineral for the purpose of conserving it, such a ban, if it is otherwise within the bounds of the authority given to the <ORG> by the Statute, cannot be said to involve any change of policy. The policy of the Act remains the same and it is, the conservation and the prudent and discriminating exploitation of 744 minerals, with a view to secure maximum benefit to the community. Exploitation of minerals by the private and/or the public sector is contemplated. If in the pursuit of the avowed policy of the Act, it is thought exploitation by the public sector is best and wisest in the case of a particular mineral and, in consequence, the authority competent to make the subordinate legislation makes a rule banning private exploitation of such mineral, which was hitherto permitted. There is no change of policy merely because that was previously permitted is no longer permitted. [756A-D] <ORG> v. Virgo  A.C. 88, Attorney General for Ontario v. Attorney General for the Dominion and <ORG>, A.C. 348, <CITATION> .,  3 SCR 709, <NAME> etc. v. The <ORG> of Tamil Nadu and Anr. etc.  2 SCR 715 @ 721, <ORG> v. <ORG>  A.C. 235 referred to. 6. The restrictions, freedom from which is guaranteed by Art. 301 would be such restrictions as directly and immediately restrict or impede the free flow or movement of trade. The Act and the rules properly made thereunder are, therefore, outside the purview of Art. 301. Even otherwise Art. 302 which enables <ORG>, by law, to impose such restrictions on the freedom of trade, commerce or intercourse between one <ORG> and another or within any part of the territory of India as may be required in the public interest also furnishes an answer to the claim based on the alleged contravention of Art. 301. [757F-H, 758A-B] 7. The Mines and Minerals (Regulation and Development) Act is a law enacted by <ORG> and declared by <ORG> to be expedient in the public interest. Rule 8-C has been made by the appellant <ORG>. by notification in the official <ORG>, pursuant to the power conferred upon it by sec. 15 of the Act. A statutory rule, while ever subordinate to the parent statute, is, otherwise, to be treated as part of the statute and as effective. "Rules made under the Statute must be treated for all purposes of construction or obligation exactly as if they were in the Act and are to be of the same effect as if contained in the act and are to be judicially noticed for all purposes of construction or obligation. [758B- <CITATION> .  1 SCR 809 <CITATION> .  1 SCR 491 and <CITATION>  2 SCR 679, referred to. 8. Rule 9 makes it clear that a renewal is not to be obtained automatically, for the mere asking. The applicant for the renewal has, particularly, to satisfy the <ORG> that the renewal is in the interests of mineral development and that the lease amount is reasonable in the circumstances of the case. These conditions have to be fulfilled in addition to whatever criteria is applicable at the time of the grant of lease in the first instance, suitably adapted, of course, to grant of renewal. Not to apply the criteria applicable in the first instance may lead to absurd results. Therefore rule 8-C is attracted in considering applications for renewal of leases also. [759A-D] 9. While the applications should be dealt with within a reasonable time, it cannot on that account be said that the right to have an application disposed 745 of in a reasonable time clothes an applicant for a lease with a right to have the application disposed of on the basis of the rules in force at the time of the making of the application. No one has a vested right to the grant or renewal of a lease and none can claim a vested right to have an application for the grant or renewal of a lease dealt with in a particular way, by applying particular provisions. In the absence of any vested rights in any one, an application for a lease has necessarily to be dealt with according to the rules in force on the date of the disposal of the application despite the fact that there is a long delay since the making of the application. [759G-H, 760A] 10. The language of Rule 8-C is clear that it can not have any application to lands in which the right to minerals belongs to the applicants themselves. In the case of lands in which the right to minerals belongs to private owners and those owners seek permission to quarry black granite the applications will have to be dealt with under the relevant rules in Sec. III of the Tamil Nadu Minor Mineral concession Rules. Rule 8-C does not impose a general ban on quarrying black granite but only imposes a bar on the grant of leases for quarrying black granite. [760D-F] JUDGMENT:

CIVIL APPELLATE JURISDICTION: Civil Appeal Nos. 2602- 2604 of 1980.

Appeals by special leave from the Judgment and Order dated 20-6-1980 of <ORG> in Writ Petition Nos. 4467 of 1977, 2933 and 4793 of 1978.

<NAME> Genl. of India for the Appellant in CA 2602/80.

<NAME> for the Appellant in CA 2603/80. <NAME> for the appellant in CA 2604/80.

<NAME> and <NAME> for the Appellant in all the matters.

<NAME> (Dr.), Mrs. <NAME> and <NAME> for Respondent Nos. 11 and 42.

<NAME> and <NAME> for the Respondents. <NAME>, <NAME> and <NAME> for the interveners.

<NAME>, <NAME> and <NAME> for Respondent No. 45.

The Judgment of the Court was delivered by <NAME>, J.-Entry 23 of List II of the Seventh Schedule to the Constitution is, "Regulation of mines and mineral development subject to the provisions of List I with respect to regulation and development under the control of the <ORG>". Entry 54 of List of the Seventh Schedule is "Regulation of mines and mineral development to the extent to which such regulation and development under the control of the <ORG> is declared by <ORG> by law to be expedient in the public interest". Thus while 'regulation of mines and mineral development' is ordinarily a subject for <ORG> legislation. <ORG> may, by law, declare the extent to which control of such regulation and development by the <ORG> is expedient in the public interest, and, to that extent, it becomes a subject for <ORG>ary legislation. <ORG> has accordingly enacted the Mines and Minerals (Regulation and Development) Act , 1957. By S. 2 of the Act it is declared that it is expedient in the public interest that the <ORG> should take under its control the regulation of mines and the development of minerals to the extent thereafter provided. It is now common ground between the parties that as a result of the declaration made by <ORG>, by S. 2 of the Act, the <ORG> legislatures are denuded of the whole of their legislative power with respect to regulation of mines and mineral development and that the entire legislative field has been taken over by <ORG>. That this is the true position in law is clear from the pronouncements of this Court in <CITATION> v. <ORG>, <ORG> and <ORG> v. <ORG> of Bihar & Ors. S. 3 of the Mines and Minerals (Regulation and Development) Act , 1957, defines various expressions occurring in the Act. S. 3 (a) defines 'minor minerals' and it includes any mineral declared to be a minor mineral by <ORG> by a notification in <ORG>. 'Black granite' has been so notified by <ORG> as a minor mineral. Section 4 to 9A are grouped under the heading 'General Restrictions on undertaking prospecting and mining operations'. These provisions as well as Sections 10 to 13 are made inapplicable to 'minor minerals' by S. 14 . S. 4 prohibits all prospecting or mining operations except under a licence or a lease granted under the Act and the rules made thereunder. S.4A(1) enables the <ORG> <ORG> on a request made by <ORG> in the interest of regulation of mines and mineral development to terminate a mining lease pre-maturely and grant a fresh mining lease in favour of a <ORG> Company or <ORG> owned or controlled by <ORG>. Perhaps because s.4A(1) is inapplicable to minor minerals because of the provisions of S.14, S.4A(2) has been expressly enacted making somewhat similar provision, as in S.4A(1), in respect of 'minor minerals' also. S.4A(2) enables the <ORG> <ORG>, after consultation with <ORG>, if it is of opinion that it is expedient in the interest of regulation of mines and mineral development so to do, to prematurely terminate a mining lease in respect of any minor mineral and grant a fresh lease in respect of such mineral in favour of a <ORG> Company or <ORG> owned or controlled by <ORG>. S.5 imposes certain restrictions on the grant of prospecting licences and mining leases. S.6 prescribes the maximum area for which a prospecting licence or mining lease may be granted. S.7 prescribes the period for which prospecting licences may be granted or renewed. S.8 prescribes the period for which mining leases may be granted or renewed. S.9 provides for the payment of royalty and S.9A for the payment of dead rent. Sections 10 , 11 and 12 constitute a group of sections under the title 'Procedure for obtaining prospecting licences or mining leases in respect of land in which the minerals vest in the <ORG>'. S.10 provides for making applications for prospecting licences or mining leases in respect of any land in which the minerals vest in the <ORG>. S.11 provides for certain preferential rights in favour of certain persons in the matter of grant of mining leases. S. 12 prescribes the Register of prospecting licences and mining leases to be maintained by the <ORG> <ORG>. S.13 empowers <ORG> to make rules for regulating the grant of prospecting licences and mining leases. In particular we may mention that S.13(2) (a) empowers <ORG> to make rules providing for 'the persons by whom, and the manner in which, applications for prospecting licences or mining leases in respect of land in which the minerals vest in the <ORG> may be made and the fees to be paid therefor". S.13(2) (f), we may add, empowers <ORG> to make rules providing for 'the procedure for obtaining a prospecting licence or a mining lease in respect of any land in which the minerals vest in a person other than the <ORG> and the terms on which, and the conditions subject to which, such a licence or lease may be granted or renewed'. S.14 makes the provisions of Sections 4 to 13 inapplicable to minor minerals. S.15 empowers the <ORG> <ORG> to make rules for regulating the grant of quarry leases, mining leases and other mineral concessions in respect of minor minerals and purposes connected therewith. S.15(3) provides for the payment of royalty in respect of minor minerals at the rate prescribed by the rules framed by the <ORG> <ORG>. S.16 provides for the modification of mining leases granted before October 25, 1949. S.17 enables <ORG>, after consultation with the <ORG> <ORG> to undertake prospecting or mining operations in any area not already held under any prospecting licence or mining lease, in which event <ORG> shall publish a notification in the official <ORG> giving the prescribed particulars. The Central <ORG> may also declare that no prospecting licence or mining lease shall be granted in respect of any land specified in the notification. S.18 casts a special duty on <ORG> to take all necessary steps for the conservation and development of minerals in India. Sections 19 to 33 are various miscellaneous provisions with which we are not now concerned.

Pursuant to the power vested in it under S.15 of the Mines and Minerals (Regulation and Development) Act , 1957, <ORG> has made the Tamil Nadu Minor Mineral Concession Rules, 1959. Section II of the rules consisting of rules 3 to 16 is entitled "Government lands in which the minerals belong to the Government". Rule 8 prescribes the procedure for the lease of quarries to private persons. The ordinary procedure is to publish a notice in <ORG> inviting applications, thereafter to hold an auction and finally to grant a lease to the highest bidder. Rule 8A which was introduced by way of an amendment in 1972, provides for a special procedure for the sanctioning of leases in favour of applicants who require the minerals for their existing industries or who have an industrial programme for the utilisation of the mineral in their own industry. Rule 8B was introduced in 1975 making special provision for the grant of leases for quarrying black granite. The rule is as follows:

"8-B. Lease of quarries in respect of black granite to private persons (1) Notwithstanding anything to the contrary contained in rules 8 and 8A, the authority competent to grant leases in respect of quarrying black granite shall be <ORG>. (2) An application for the grant of a quarrying lease in respect of any land shall be made to the Collector of the District concerned in the prescribed form in triplicate and shall be accompanied by a fee of Rs. 100/-. The Collector shall after scrutiny, forward the application along with his remarks to the Director of <ORG> who shall technically scrutinise the industrial programme given by the applicant and forward the application with his remarks to the <ORG>."

"(G. O. Ms. No. 993 Industries dt. 25-8-1975". Rule 8-C was introduced by <ORG> dated December 2, 1977. By this rule leases for quarrying black granite in favour of private persons are banned. Leases can only be granted in favour of a <ORG> wholly owned by the State Government. It is the vires of this rule which was under challenge before <ORG> and is also under challenge now. It will be useful to extract the same. It is as follows:

"8-C Lease of quarries in respect of black granite to <ORG>, etc. (1) Notwithstanding anything to the contrary contained in these rules, on and from 7th December, 1977 no lease for quarrying black granite shall be granted to private persons.

(2) The State Government themselves may engage in quarrying black granite or grant leases for quarrying black granite in favour of any corporation wholly owned by <ORG>.

Provided that in respect of any land belonging to any private person, the consent of such person shall be obtained for such quarrying or lease".

Rule 9 provides for renewal of leases and it is in the following terms:

"9. Renewal of lease.-(1) The Collector may on application renew for a further period not exceeding the period for which the lease was originally granted in each case if he is satisfied that-

(i) such renewal is in the interests of mineral development, and

(ii) the lease amount is reasonable in the circumstances of the case.

(2) Every application for renewal shall be made to Collector, sixty days prior to the date of expiry of the lease:

Provided that a lease, the period of which exceeds ten years shall not be renewed except with the sanction of the Director of Industries and Commerce". A proviso was added to rule 9(2) in 1975 and it said: "provided also that the renewal for quarrying black granite shall be made by the Government".

Several persons who held leases for quarrying black granite belonging to <ORG> and whose leases were about to expire, applied to <ORG> for renewal of their leases. In some of the cases applications were made long prior to the date of G. O. Ms. No. 1312 by which Rule 8 C was introduced. Some applications were made after Rule 8 C came into force. There were also some applications for the grant of fresh leases for quarrying black granite. All the applications were dealt with after Rule 8 C came into force and all of them were rejected in view of Rule 8C. Several Writ Petitions were filed in <ORG> questioning the vires of Rule 8C on various grounds. Apart from canvassing the vires of Rule 8C, it was contended that Rule 8C did not apply to grant of renewals of lease at all. It was also argued that in any event, in those cases in which the applications for renewal had been made prior to the coming into force of Rule 8C, their applications should have been dealt with without reference to Rule 8C. <ORG> while not accepting some of the contentions raised on behalf of the applicants, struck down Rule 8C on the ground that it exceeded the rule making power given to <ORG> under S.15 which, it was said, was only to regulate and not to prohibit the grant of mining leases. As a consequence all the applications were directed to be disposed of without reference to Rule 8C. It was also observed that even if Rule 8C was valid it applied only to the grant of fresh leases and not to renewals. It was also held that it was not open to the Government to keep the applications pending for a long time and then to dispose them of on the basis of a rule which had come into force later. <ORG> has come in appeal against the judgment of <ORG> while the respondent- applicants have tried to sustain the judgment of <ORG> on grounds which were decided against them by <ORG>.

The learned Attorney General who appeared for <ORG> submitted that the approach of <ORG> was vitiated by its failure to notice the crucial circumstance that the minerals belonged to the <ORG> and the applicants had no vested or indefeasible right to obtain a lease or a renewal to quarry the minerals. There were good reasons for banning the grant of leases to quarry black granite to private parties and in the light of those reasons the <ORG> could not be compelled to grant leases which would result in the destruction of the mineral resources of the country. <NAME>, learned counsel who led the argument for the respondents submitted that the question of ownership of the minerals was irrelevant. In making the rules the <ORG> <ORG> was acting as a delegate and not as the owner of the minerals. He submitted that it was not open to the <ORG> <ORG> to exercise its subordinate legislative function in a manner to benefit itself as owner of the minerals, nor was it open to the <ORG> <ORG> to create a monopoly by such means According to <NAME> creation of a monopoly in the <ORG> was essentially a legislative function and was incapable of delegation. It was claimed that there was violation of Articles 301 and 303 of the Constitution. It was further claimed that S. 15 of the Mines and Minerals (Regulation and Development) Act 1957, enabled the <ORG> <ORG> to make rules to regulate the grant of leases and not to prohibit them. In any case it was said that Rule 8G had no application to renewals and that in any event it would not have the effect of affecting applications made more than 60 days before it came into force.

Rivers, Forests, Minerals and such other resources constitute a nation's natural wealth. These resources are not to be frittered away and exhausted by any one generation. Every generation owes a duty to all succeeding generations to develop and conserve the natural resources of the nation in the best possible way. It is in the interest of mankind. It is in the interest of the Nation. It is recognised by <ORG>. <ORG> has declared that it is expedient in the public interest that the <ORG> should take under its control the regulation of mines and the development of minerals. It has enacted the Mines and Minerals (Regulation and Development) Act , 1957. We have already referred to its salient provisions. S. 18, we have noticed, casts a special duty on <ORG> to take necessary steps for the conservation and development of minerals in India. S. 17 authorises <ORG> itself to undertake prospecting or mining operations in any area not already held under any prospecting licence or mining lease. S.4A empowers <ORG> on the request of <ORG>, in the case of minerals other than minor minerals, to prematurely terminate existing mining leases and grant fresh leases in favour of a <ORG> Company or <ORG> owned or controlled by <ORG>, if it is expedient in the interest of regulation of mines and mineral development to do so. In the case of minor minerals, <ORG> is similarly empowered, after consultation with <ORG>. The public interest which induced <ORG> to make the declaration contained in S. 2 of the Mines & Minerals (Regulation and Development) Act , 1957. has naturally to be the paramount consideration in all matters concerning the regulation of mines and the development of minerals. <ORG>'s policy is clearly discernible from the provisions of the Act. It is the conservation and the prudent and discriminating exploitation of minerals, with a view to secure maximum benefit to the community. There are clear sign posts to lead and guide the subordinate legislating authority in the matter of the making of rules. Viewed in the light shed by the other provisions of the Act, particularly sections 4A , 17 and 18  752 it cannot be said that the rule making authority under S. 15 has exceeded its powers in banning leases for quarrying black granite in favour of private parties and in stipulating that <ORG> themselves may engage in quarrying black granite or grant leases for quarrying black granite in favour of any corporation wholly owned by <ORG>. To view such a rule made by the Subordinate legislating body as a rule made to benefit itself merely because <ORG> happens to be the subordinate legislating body, is, but, to take too narrow a view of the functions of that body. The reasons that prompted <ORG> to make Rule 8-C were explained at great length in the common counter affidavit filed on behalf of <ORG> before <ORG>. We find no good reason for not accepting the statements made in the counter affidavit. It was said there:

"I submit that the leases for black granite are governed by the Tamil Nadu Minor Mineral Concession Rules 1959 under which originally there was scope for auctioning of quarries of minor minerals. In amendment issued in the G.O. dated 6-12-1972. under Rule 8-A it was indicated that the Collector may sanction leases in favour of applicants who are having an industrial programme to utilise the minerals in their own industry. This provision is applicable to all minerals including black granites. However, it was found that there were several cases where lessees who obtained the black granite areas on lease by auction were not quarrying in a systematic and planned manner taking into consideration the welfare and safety measures of the workers as well as the conservation of minerals. Even after the introduction of the amendment under Rule 8-A in most cases, the industry set up was of a flimsy nature more to circumvent the rule than to really introduce industry including mechanised cutting and polishing. The lessees were also interested only in obtaining the maximum profit in the shortest period of time without taking into consideration the proper mining and development of the mineral. There was also considerable wastage of new materials due to wasteful mining. Therefore, <ORG> issued a further amendment as Rule 8-B wherein the competent authority to grant leases in respect of the quarrying black granite was transferred from the Collector to the <ORG> level. They also prescribed a standard form and an application fee to be paid with the application. The amendment states that the Director of Industries and Commerce shall technically scrutinise the industrial programme given by the applicant while forwarding the same to <ORG>. At the same time, in the G.O. issued along with amendment, it was stated that if any of the <ORG> Organisations like <ORG>, Tamil Nadu small Industries Development Corporation Limited, <ORG> is interested to obtain a lease for black granite in a particular area, preference will be given to <ORG> undertaking over other private entrepreneurs for granting the leases applied for by them. However, in spite of these amendments to regulate the grant of mining lease, there were a large number of lessees (exceeding 140), who were engaged in mining without proper technical guidance or safety measures etc. for the workers. These lessees made a strong representation to the then <ORG> in 1976 expressing that though they had given assurance to set up industries to use the granites they were not able to do so far various reasons. They also represented that they should be allowed to export the raw blocks of black granites. Therefore, <ORG> had issued a <ORG> Order dated 15-2-1977 relating to relaxation of the ban of export of raw blocks and provision for setting up a polishing or finishing unit was not made a pre- requisite. They have also stated that the terms and conditions for the existing losses would remain in force. However, on an examination of the performance of the lessees over the past several years, it has been found that excepting in a very few cases, none of the lessees had set up proper industries or developed systematic mining of the quarries. The exports continue to be mainly on the raw black granite materials and not out and polished slabs. A large number of the leases were not operating either due to speculation or lack of finance from the lessees. Therefore, <ORG> decided that there should be no further grant of lease to private entrepreneurs for black granite. This was mentioned in <ORG> dated 2-12- 1977.

We are satisfied that Rule 8C was made in bonafide exercise of the rule making power of <ORG> and not in its misuse to advance its own self-interest. We however guard ourselves against being understood that we have accepted the position that making a rule which is perfectly in order to be considered a misuse of the rule making power, if it advances the interest of a <ORG>, which really means the people of the <ORG>.

One of the submissions on behalf of the respondents was that monopoly was a distinct legislative subject under entry 21 of List III of the Seventh Schedule to the Constitution and therefore monopoly, even in favour of a <ORG> Government can only be created by plenary and not subordinate legislation. <ORG> not having chosen to exercise its plenary power it was not open to the subordinate legislating body to create a monopoly by making a rule. Our attention was invited to <CITATION> .(1) where it was held that the expression 'Commercial and industrial monopolies' in entry 21 of List III of the Seventh Schedule to the Constitution was not confined to legislation to control of monopolies but was wide enough to include grant or creation of commercial or industrial monopolies in favour of <ORG>, also We are unable to agree with <NAME> submission. The very decision cited by him furnishes the answer. The validity of a scheme for nationalisation of certain routes made pursuant to the powers conferred by Chapter IVA of the Motor Vehicles Act was under attack in that case. One of the grounds of attack was that "by Chapter IVA of the Motor Vehicles Act, 1939, "<ORG> had merely attempted to regulate the procedure for entry by the <ORG>s into the business of motor transport in the <ORG>, and in the absence of legislation expressly undertaken by the <ORG> of Mysore in that behalf, that <ORG> was incompetent to enter into the arena of motor transport business to the exclusion of private operators;"

Sustenance for the submission was sought to be drawn from the language of Art. 19(6) (ii) which provides that nothing in Art. 19(1) (g) shall 'prevent the <ORG> from making any law relating to' 'the carrying on by the <ORG>, or by a <ORG> owned or controlled by the <ORG>, of any trade, business, industry or service, whether to the exclusion, complete or partial, of citizens or otherwise'. The argument was that the <ORG> or a <ORG> owned or controlled by the <ORG> could carry on a trade, business, industry or service to the exclusion, complete or partial, of citizens, only if the <ORG> made a law relating to it. The argument was repelled by the <ORG> in these words:

"The plea sought to be founded on the phraseology used in Art. 19(6) that the State intending to carry on trade or business must itself enact the law authorising it to carry on trade or business is equally devoid of force. The expression 'the State' as defined in Art. 12 is inclusive of the Government and Parliament of India and the Government and the Legisla-

ture of each of the <ORG>s. Under entry No. 21 of the Concurrent List, the <ORG> being competent to legislate for creating commercial or trading monopolies, there is nothing in the Constitution which deprives it of the power to create a commercial or trading monopoly in the constituent <ORG>s. Article 19(6) is a mere saving provision: its function is not to create a Power but to immunise from attack the exercise of legislative power falling within its ambit. The right of the <ORG> to carry on trade or business to the exclusion of others does not arise by virtue of Art. 19(6). The right of the <ORG> to carry on trade or business is recognised by Art. 298; authority to exclude competitors in the field of such trade or business is conferred on the <ORG> by entrusting power to enact laws under entry 21 of List III of the Seventh Schedule, and the exercise of that power in the context of fundamental rights is secured from attack by Art. 19(6).

In any event; the expression 'law' as defined in Art. 13(3) (a) includes any ordinance, order, bye-law, rule, regulation, notification, custom, etc., and the scheme framed under s.68C may properly be regarded as 'law' within the meaning of Art. 19(6) made by the <ORG> excluding private operators from notified routes or notified areas, and immune from the attack that it infringes the fundamental right guaranteed by Art. 19(1) (g)".

Earlier in <CITATION> , before the Seventh Amendment of the Constitution by which the present Article 298 was substituted for the old Article, the question arose whether it was beyond the competence of the executive Government to carry on a business without specific legislature sanction. The answer was that it was not. What was said by the <ORG> in that case was incorporated in the Seventh Amendment of the Constitution. In that case the facts were that the State of Punjab, by a series of executive orders had established for itself a monopoly in the business of printing and selling textbooks for use in schools. The argument that legislative sanction was necessary to enable <ORG> to carry on the business of printing and publishing text books was repelled and it was held that no fundamental right of the petitioners who had invoked the jurisdiction of the <ORG> had been infringed.

Another of the submissions of the learned counsel was that G.O.Ms No. 1312 dated December 2, 1977 involved a major change of policy, which was a legislative function and therefore beyond the competence of a subordinate legislating body. We do not agree with the submission. Whenever there is a switch over from private sector' to 'public sector' it does not necessarily follow that a change of policy requiring express legislative sanction is involved. It depends on the subject and the statute. For example, if a decision is taken to impose a general and complete ban on private mining of all minor minerals, such a ban may involve the reversal of a major policy and so it may require Legislative sanction. But if a decision is taken to ban private mining of a single minor mineral for the purpose of conserving it, such a ban, if it is otherwise within the bounds of the authority given to the Government by the Statute, cannot be said to involve any change of policy. The policy of the Act remains the same and it is, as we said, the conservation and the prudent and discriminating exploitation of minerals, with a view to secure maximum benefit to the community. Exploitation of minerals by the private and/or the public sector is contemplated. If in the pursuit of the avowed policy of the Act, it is thought exploitation by the public sector is best and wisest in the case of a particular mineral and, in consequence, the authority competent to make the subordinate legislation makes a rule banning private exploitation of such mineral, which was hitherto permitted we are unable to see any change of policy merely because what was previously permitted is no longer permitted.

One of the arguments pressed before us was that Sec. 15 of the Mines and Minerals (Regulation and Development) Act authorised the making of rules for regulating the grant of mining leases and not for prohibiting them as Rule 8-C sought to do, and, therefore, Rule 8-C was ultra vires Act, S. 15. Well known cases on the subject right from <ORG> v. <NAME> and Attorney General for the Dominion General for the Dominion and <ORG> upto <CITATION> ., were brought to our attention. We do not think that 'Regulation' has the rigidity of meaning as never to take in Prohibition'. Much depends on the context in which the expression is used in the Statute and the object sought to be achieved by the contemplated regulation. It was observed by <NAME> in <NAME> etc. etc. v. The <ORG> of Tamil Nadu & Anr. etc., "the word 'regulation has no fixed connotation. Its meaning differs according to the nature of the thing to which it is applied". In modern statutes concerned as they are with economic and social activities, 'regulation' must, of necessity, receive so wide an interpretation that in certain situations, it must exclude competition to the public sector from the private sector. More so in a welfare <ORG>. It was pointed out by <ORG> in <ORG> v. <ORG> we agree with what was stated therein-that the problem whether an enactment was regulatory or something more or whether a restriction was direct or only remote or only incidental involved, not so much legal as political, social or economic consideration and that it could not be laid down in no circumstances could the exclusion of competition so as to create a monopoly, either in a <ORG> or <ORG> agency, to be justified. Each case, it was said, must be judged on its own facts and in its own setting of time and circumstances and it might be that in regard to some economic activities and at some stage of social development, prohibition with a view to <ORG> monopoly was the only practical and reasonable manner of regulation. The statute with which we are concerned, the Mines and Minerals (Development and Regulation) Act , is aimed, as we have already said more than once, at the conservation and the prudent and discriminating exploitation of minerals. Surely, in the case of a scarce mineral, to permit exploitation by the <ORG> or its agency and to prohibit exploitation by private agencies is the most effective method of conservation and prudent exploitation. If you want to conserve for the future, you must prohibit in the present. We have no doubt that the prohibiting of leases in certain cases is part of the regulation contemplated by Sec. 15 of the Act.

The submission of the learned counsel that the impugned rule contravened Articles 301 and 303 of the Constitution is equally without force. Now, 'the restrictions freedom from which is guaranteed by Art. 301 would be such restrictions as directly and immediately restrict or impede the free flow or movement of trade" ( <CITATION> .).(2) And, "regulatory measures or measures imposing compensatory taxes for the use of trading facilities do not come within the purview of restrictions contemplated by Art. 301". "They are excluded from the purview of the provisions of Part XIII of the Constitution for the simple reason that they do not hamper, trade, commerce or inter-course but rather facilitate them" <CITATION> .(3). The Mines and Minerals (Regulation and Development) Act is, without doubt a regulatory measure, <ORG> having enacted it for the express purpose of "the regulation of mines and the development of minerals". The Act and the rules properly made thereunder are, therefore, outside the purview of Art. 301. Even otherwise Art. 302 which enables <ORG>, by law, to impose such restrictions on the freedom of trade, commerce or intercourse between one State and another or within any part of the territory of India as may be required in the public interest also furnishes an answer to the claim based on the alleged contravention of Art. 301. The Mines and Minerals (Regulation and Development) Act is a low enacted by <ORG> and declared by <ORG> to be expedient in the public interest. Rule 8C has been made by the State Government by notification in the official <ORG>, pursuant to the power conferred upon it by Sec. 15 of the Act. A statutory rule, while ever subordinate to the parent statute, is, otherwise, to be treated as part of the statute and as effective. "Rules made under the Statute must be treated for all purposes of construction or obligation exactly as if they were in the Act and are to be of the same effect as if contained in the Act and are to be judicially noticed for all purposes of construction or obligation.. ( <CITATION> )(1); (See also <NAME>; Interpretation of Statutes, 11th Edn. pp. 49-50). So, Statutory rules made pursuant to the power entrusted by <ORG> are law made by <ORG> within the meaning of Art. 302 of the Constitution. To hold otherwise would be to ignore the complex demands made upon modern legislation which necessitate the plenary legislating body to discharge its legislative function by laying down broad guidelines and standards, to lead and guide as it were, leaving it to the subordinate legislating body to fill up the details by making necessary rules and to amended the rules from time to time to meet unforeseen and unpredictable situations, an within the framework of the power entrusted to it by the plenary legislating body. <CITATION> (2) was cited to us to show that rules did not become part of the statute. This was case where by reference to Sec. 77 of the Mysore Forest Act which declared the effect of the rules, it was held that the rules when made did not become part of the Act. That was apparently because of the specific provisions of Sec. 77 which while declaring that the rules would have the force of law stopped short of declaring that they would become part of the Act. In the absence of any express provision, as now, the ordinary rule as enunciated in <CITATION> (supra) would perforce apply.

The next question for consideration is whether Rule 8C is attracted when applications for renewal of leases are dealt with. The argument was that Rule 9 itself laid down the criteria for grant of renewal of leases and therefore rule 8C should be confined, in its application, to grant of leases in the first instance. We are unable to see the force of the submission. Rule 9 makes it clear that a renewal is not to be obtained automatically, for the mere asking. The applicant for the renewal has, particularly, to satisfy the <ORG> that the renewal is in the interests of mineral development and that the lease amount is reasonable in the circumstances of the case. These conditions have to be fulfilled in addition to whatever criteria is applicable at the time of the grant of lease in the first instance, suitably adapted, of course, to grant of renewal. Not to apply the criteria applicable in the first instance may lead to absurd results. If as a result of experience gained after watching the performance of private entrepreneurs in the mining of minor minerals it is decided to stop grant of leases in the private sector in the interest of conservation of the particular mineral resource, attainment of the object sought will be frustrated if renewal is to be granted to private entrepreneurs without regard to the changed outlook. In fact, some of the applicants for renewal of leases may themselves be the persons who are responsible for the changed outlook. To renew leases in favour of such persons would make the making of Rule 8C a mere exercise in futility. It must be remembered that an application for the renewal of a lease is, in essence an application for the grant of a lease for a fresh period. We are, therefore, of the view that Rule 8C is attracted in considering applications for renewal of leases also.

Another submission of the learned counsel in connection with the consideration of applications for renewal was that applications made sixty days or more before the date of G.O.Ms. No. 1312 (2-12-1977) should be dealt with as if Rule 8C had not come into force. It was also contended that even applications for grant of leases made long before the date of G.O.Ms. No. 1312 should be dealt with as if Rule 8C had not come into force. The submission was that it was not open to the <ORG> to keep applications for the grant of leases and applications for renewal pending for a long time and then to reject them on the basis of Rule 8C notwithstanding the fact that the applications had been made long prior to the date on which Rule 8C came into force. While it is true that such applications should be dealt with within a reasonable time, it cannot on that account be said that the right to have an application disposed of in a reasonable tune clothes an applicant for a lease with a right to have the application disposed of on the basis of the rules in force at the time of the making of the application. None has a vested right to the grant or renewal of a lease and none can claim a vested right to have an application for the grant or renewal of a lease dealt with in a particular way, by applying particular provisions. In the absence of any vested rights in anyone, an application for a lease has necessarily to be dealt with according to the rules in force on the date of the disposal of the application despite the fact that there is a long delay since the making of the application. We are, therefore, unable to accept the submission of the learned counsel that applications for the grant of renewal of leases made long prior to the date of G.O.Ms. No. 1312 should be dealt with as if Rule 8C did not exist.

In the view that we have taken on the several questions argued before us all the appeals arising out of applications for the grant or renewal of leases for quarrying black granite in <ORG> lands are allowed and the Writ Petitions filed in <ORG> are dismissed. Special leave is granted in cases in which leave had not been previously granted. The appeals are allowed and disposed of in the same manner.

There are, however, a few appeals in which the applications were not for the grant or renewal of leases to quarry black granite in <ORG> lands but were for permission to quarry black granite in Patta lands in which the right to minerals belonged to the applicants- private owners themselves. Apart from the fact that Rule 8C occurs in a group of Rules in Section II, which bears the head "<ORG> lands in which the minerals belong to the <ORG>" while the rules relating to lands in which the right to minerals belongs to private owners are dealt with in Section III. The language of Rule 8C is clear that it cannot have any application to lands in which the right to minerals belongs to the applicants themselves. Rule 8C is only concerned with leases for quarrying black granite and it cannot, therefore, have any application to cases where no lease is sought from the <ORG>. In the case of lands in which the right to minerals belongs to private owners and those owners seek permission to quarry black granite the applications will have to be dealt with under the relevant rules in Sec. III of the Tamil Nadu Minor Mineral Concession Rules. Rule 8C, it may be noted, does not impose a general ban on quarrying black granite but only imposes a bar on the grant of leases of quarrying black granite. Appeals and Special Leave Petitions which arise out of applications for the grant of permission to quarry black granite in the Patta lands belonging to the applicants themselves, have therefore, to be dismissed. The result is, Special Leave Petition Nos. 9257, 9259, 9260, 9271, 9273 to 9282 and 9284 of 1980 are dismissed and Special Leave Petition Nos 9234 to 9248, 9250 to 9256, 9258, 9261 to 9270,9272,9283,9285,9286,9288,9289 and 9290 of 1980 are granted and Appeals allowed. Civil Appeal Nos. 2602 to 2604 of 1980 are allowed. There will be no order as to costs.

N.K.A. Ordered accordingly.


JUDGMENT <NAME>, J.

1. The controversy that I am called upon to decide in the present case under Article 227 of the Constitution essentially relates to the situs of the matrimonial home of the Petitioner, who is the daughter in law of the Respondents.

2. The Petitioner was married to <NAME> on 14th April 2000. They have a male child born on 27th November 2001. Soon after their marriage, as per the prevailing practice, the Petitioner shifted into the home of <NAME> and the Respondents, that is, in the ground floor of property No. B-135, Ashok Vihar, Phase I, Delhi. The entire property belongs to the Respondents but all of them lived together on the ground floor.

3. It seems that sometime in early 2002, relations between the parties deteriorated. According to the Petitioner, the Respondents treated her cruelly, and so the Petitioner and <NAME> later shifted to the second floor of the said property, which became their matrimonial home. However, it appears that their shifting to the second floor of the said property did not improve relations between the Petitioner and the Respondents. On the contrary, relations deteriorated to such an extent that the Petitioner registered an FIR against the Respondents, <NAME> and other family members under the provisions of Sections 406 / 498A / 506 and 34 of the . On the basis of her complaint, the Respondents, their son in law and <NAME> were arrested in January 2003.

4. According to the Petitioner, these events made it even more difficult for her to stay in the matrimonial home, and so she shifted to her parents' residence. Later, when she tried to enter the matrimonial home, she found that the main entrance was locked and so she was unable to enter her matrimonial home. This led the Petitioner to file Suit No. 87 of 2003 for a mandatory injunction directing the Respondents (and their son in law and her husband <NAME>) to open the main entrance to enable her to reside in the matrimonial home, that is, the second floor of property bearing No. B-135, Ashok Vihar, Phase I, Delhi and for a permanent injunction restraining the Respondents from breaking open the locks of her matrimonial home and removing her goods there from.

5. The suit was contested by the Respondents, who also applied for a mandatory direction to the Petitioner to hand over possession of the second floor of the Ashok Vihar property.

6. The Respondents alleged before the Trial Judge, as also before me, that from sometime in September, 2002 the Petitioner was not residing in the second floor property. On the contrary, during the pendency of the suit, the Petitioner trespassed upon the property and on an inspection of the second floor, it was noted on 23rd February, 2003 that only one blanket belonging to the Petitioner was found therein. It was further contended by the Respondents that their son <NAME> had purchased some property in Ghaziabad and had shifted there. It was consequently contended that that was now the matrimonial home of the Petitioner. It was submitted that, in law, the user of the second floor of the property by the Petitioner was merely permissive, in as much as the entire property was owned by the Respondents and the Petitioner really had no right to reside in their property, except with their permission.

7. On these broad facts, the learned Trial Judge decided on 4th March, 2003 both the applications for ad interim injunction filed by the parties. He held that the Petitioner was 'admittedly' in possession of the second floor of the said property and that it would be in the fitness of things if both the parties did not interfere in each others possession and each others right to have access to the common passage.

8. Feeling aggrieved by the decision of the learned Trial Judge, the Respondents appealed to the Senior Civil Judge who, by his order dated 17th September, 2004 held that the Petitioner was not residing in the second floor premises since her goods (other than one blanket) were not there and the premises had no electricity and water. Furthermore, it was held that since the Petitioner's husband was not living in the property, but elsewhere, the matrimonial home could not be where only the wife (Petitioner) was residing. It was also held that the Petitioner had no right over property belonging to persons other than her husband and, therefore, the application for an ad interim injunction filed by the Petitioner deserved dismissal. It was, however, directed that the Petitioner may visit the property "once or twice in a month along with local Police to see that the locks in the suit premises are intact or not." The parties were also directed to maintain status quo.

9. Both the parties are aggrieved by the order of the learned Senior Civil Judge and have, therefore, filed respective petitions under Article 227 of the Constitution. The issues in the petitions being the same, they were heard together on 25th November, 2004 and are being disposed of by a common decision. Both learned counsels reiterated their submissions made before the learned Trial Judge and the learned Senior Civil Judge.

10. I proceed on the basis that the Petitioner is presently not residing in the second floor of property bearing No. B-135, Ashok Vihar, Phase I, Delhi. This is because, to my mind, whether she is presently residing there or not is inconsequential for deciding if her matrimonial home is on the second floor of that property. Moreover, her actual possession or at least her constructive possession of the second floor of the property is not seriously doubted. I also proceed on the basis that the Petitioner's husband is now residing at a place other than the second floor property. The question still remains whether, notwithstanding these assumptions, the second floor of the property is the Petitioner's matrimonial home or not. If the answer is in the affirmative, then she has a right to reside there (subject to the objections of the Respondents) otherwise not.

11. I am of the view that in the context of Indian society, a pragmatic view has to be taken while attempting to understand what is meant by the matrimonial home of a married couple, because there is no statute in this respect unlike in England where the Matrimonial Homes Act, 1983 would govern the situation. It appears that in England, an innocent spouse who is in occupation of the matrimonial home as a joint owner has a right not to be evicted from there except by an order of a <ORG> and if that spouse is not in occupation, he or she has a right to obtain a <ORG> order to enter and occupy such a matrimonial home. A spouse who has no proprietary interest in the matrimonial home but is in occupation thereof has a right to remain in occupation of the matrimonial home as against the spouse who has left that matrimonial home. In this regard, it may be mentioned that in <CITATION> , the Supreme <ORG> made a reference to the Matrimonial Homes Act, 1967 in England and the rights of occupation of a spouse and observed:

"But such rights are not granted in India though it may be that with change of situation and complex problems arising it is high time to give the wife or the spouse a right of occupation in a truly matrimonial home, in case of marriage breaking up or in case of strained relationship between the husband and the wife."

12. We all know that the accepted practice in India is that immediately after marriage, the bride resides with her husband usually in the parental home of the husband and their place of residence then becomes their matrimonial home. Of course, now there are may instances where the couple reside separately since the joint family system is breaking up but, as in the present case, residence is usually along with the parents of the husband. In either case, the place of residence of the couple becomes their matrimonial home. A woman, therefore, would have the right to remain in that matrimonial home as long as she is married and if she is "obliged" to leave that matrimonial home, I think she would be entitled to obtain an injunction from an appropriate Court protecting her right and preventing her from being thrown out.

13. Consequently, going by the generally accepted practice in most parts of India, if not in the entire country, it can be said that the ground floor of property bearing No. B-135, Ashok Vihar Phase-I, Delhi was the matrimonial home of the Petitioner and her husband <NAME> even though the entire property belonged to the parents of <NAME>. It can also be said that later on, the Petitioner and her husband shifted their matrimonial home to the second floor of the said property, with the knowledge and consent of the Respondents, the owners thereof.

14. There can be no doubt that there is a legal obligation on <NAME> to provide a residence to the Petitioner and their son. It is one thing for <NAME> and the Respondents to say that since <NAME> is now staying in Ghaziabad, that would be the matrimonial home and he is prepared to have the Petitioner reside with him there. The fact of the matter is that <NAME> applied for a divorce from the Petitioner (although the divorce petition is now said to have been dismissed in default). Consequently, it is extremely unnatural to expect the Petitioner to treat <NAME>'s Ghaziabad residence as her matrimonial home. In other words, <NAME>'s shifting from the second floor of the said property to Ghaziabad would not ipso facto shift the Petitioner's matrimonial home to Ghaziabad.

15. Reference may usefully be made to <CITATION> ., which clearly holds that there is a legal obligation on the husband to provide a residence for his wife and that the wife also needs access to her matrimonial home. It has further been held that the mere fact that the husband shifts out of the matrimonial home to set up a home somewhere else does not, in all cases, mean that his new place of residence becomes the matrimonial home. This is precisely what has happened in the present case, namely, that <NAME> shifted out of the second floor of the said property to set up what he and his parents call a new matrimonial home in Ghaziabad. The motive for setting up a new matrimonial home in Ghaziabad may or may not be suspect (as contended by learned counsel for the Petitioner) - I am not concerned with that. But, given the antecedent facts that I have already adverted to including the fact that <NAME> had actually filed a petition seeking to divorce the Petitioner (since dismissed in default), it cannot reasonably be held that the Ghaziabad residence of <NAME> is now the matrimonial home of the Petitioner and her husband.

16. In view of the factual context given above, it can safely be said that the second floor of the Ashok Vihar property continues to be the Petitioner's matrimonial home being the place where she and <NAME> last resided together as husband and wife and where they voluntarily shifted from the ground floor. A mere change of residence by <NAME>, for whatever reason, would not shift the matrimonial home away from Ashok Vihar, more particularly on the facts of the present case when <NAME> had applied for a divorce from the Petitioner.

17. It was contended by learned counsel for the Respondents that his clients, who own the Ashok Vihar property, had only permitted the Petitioner to reside on the second floor of the said property. This permissive user, according to him, did not give her any right to continue to reside in that property and she had no proprietary interest in the property. I am not impressed with this contention. I have already held that the second floor of the said property was the matrimonial home of the Petitioner and, therefore, she has a right to stay there as against <NAME>. As regards her proprietary interest, it cannot be forgotten that the Respondents are not complete strangers, in which case the position may be completely different - the Respondents are the parents of <NAME> and the parents in law of the Petitioner and I do not think the theory of permissive user can be advantageously used by them in the Indian context particularly when their son and the Petitioner actually lived together with them on the ground floor and thereafter shifted to the second floor of the same property with their full knowledge and consent, with a view to shift their matrimonial home from the ground floor to the second floor.

18. Under the circumstances, I am of the view that the learned Trial Judge was quite right in concluding, though for different reasons, that the Petitioner is entitled to continue to reside in the second floor of property bearing No.B-135, Ashok Vihar, Phase-I, Delhi. Consequently, the impugned order dated 17th September, 2004 passed by the learned Senior Civil Judge is set aside and it is held that the Petitioner is entitled to continue to reside with her son on the second floor of B-135, Ashok Vihar, Phase-I, Delhi, which is her matrimonial home and that the Respondents or anyone claiming under them cannot deny her access to her matrimonial home or interfere in her possession thereof.

19. The writ petition is, therefore, allowed. The Petitioner will be entitled to litigation expenses of Rs. 5,000/- which should be paid by the Respondents within a period of six weeks from today, and in any case before 4th March, 2005.


JUDGMENT <NAME>, J.

1. This is an application for a writ of certiorari to quash a notice issued under Section 148 of the Income-tax Act, 1961 (hereinafter referred to as "the Act"), and for a direction prohibiting the revenue from taking any proceeding in terms of the notice.

2. Petitioner is an assessee under the 'Act and for the assessment year 1958-59 a regular assessment under Section 23(3) of the Indian Income-tax Act, 1922, had been completed for the year as per annexure "10". By notice dated 16th January, 1974, under Section 148 of the Act, the Income-tax Officer, Ward-B (opposite party No. 1), issued a notice to the petitioner to the following effect:

"Whereas I have reason to believe that your income chargeable to tax for the assessment year 1958-59 has escaped assessment within the meaning of Section 147 of the Income-tax Act, 1961.

I, therefore, propose to reassess the income for the said assessment year and I hereby require you to deliver to me within 30 days from the date of service of this notice, a return in the prescribed form of your income assessable for the said assessment year.

This notice is being issued after obtaining the necessary satisfaction of <ORG>."

3. On the same day, the opposite party No. 1 wrote the following letter to the assessee-petitioner :

"Dear Sir, Process server is carrying along with this letter a notice under Section 148 for the assessment year 1958-59. The notice is intended for reopening your assessment for the above assessment year for which purpose necessary satisfaction of <ORG> has been obtained.

I have tried to contact you a couple of times over telephone regarding this. But on both the occasions you were reported to be taking rest. I, therefore, had to send the notice through the process server. Regarding your assessments of income-tax and wealth-tax for the years which are open for assessment, I am desirous of having a short interview with you for about 10 minutes or so. Kindly let me know the date and time on which it wilt be convenient for you to spare this 10 minutes at your Ekambra Nivas residence for the proposed interview. I will be obliged if the interview would be held tomorrow or the day-after-tomorrow."

4. It is not known as to when and where the interview took place, but on May 24, 1974, the petitioner applied to the Income-tax Officer for copies of a number of documents including records, reports, orders initiating the proceeding under Section 147 of the Act, the correspondence between the Income-tax Officer and the superior officers of the revenue in the matter of reopening of the assessment, reasons recorded for the initiation of the proceeding, the sanction by <ORG> for the reopening and instructions from <ORG>, if any, in this connection. As it appears, the petitioner's counsel was permitted inspection of certain documents by the Income-tax Officer and the Income-tax Officer thereafter required him to comply with the direction in the notice in the matter of making of a fresh return. Ultimately, the petitioner came before this court asking for quashing of the proceeding and contended, inter alia :

(i) Petitioner had disclosed all material facts and made no omission or failure to disclose fully and truly any of them when he had made the return in due course and after consideration of all primary and material facts, the Income-tax Officer had made the order of assessment under Section 23(3) of the old Act. Therefore, there was no justification for initiating the proceeding. At any rate, Clause (a) of Section 147 of the Act was not applicable.

(ii) If the notice under Section 148 was grounded upon the provision in Section 147(b) of the Act, the initiation of the proceeding was barred by time in terms of Section 149(2) of the Act. There was no valid sanction to the initiation of the proceeding as required under the law.

(iii) The conditions precedent to the initiation of the proceeding, namely, the Income-tax Officer must have reason to believe that the income, profits or gains chargeable to income-tax had been under-assessed and he must have reason to believe either of omission or failure on the part of the assessee to make a return of his income or omission or failure on the part of the assessee to disclose fully and truly all material facts necessary for the relevant assessment, having not been satisfied, the notice itself is untenable in law.

(iv) All primary facts having already been disclosed and no new material having come to the possession of the Income-tax Officer, merely on a change of opinion of the next assessing officer, the proceeding is unsustainable.

5. The Income-tax Officer made a return to the rule nisi on behalf of all the opposite parties and appended to the affidavit the reasonings recorded by the then Income-tax Officer for initiation of the proceeding, the report made in this matter to <ORG> and the sanction accorded by the Board. In the return to the rule, reference was made to the correspondence between the Income-tax Officer and the assessee when the regular assessment for the year was taken up by the assessing officer. It may now be stated that the assessee is an ex-Chief Minister of the State. The State Government of Orissa in the year 1968 had appointed Sri Justice <NAME>, a retired judge of <ORG>, to make preliminary enquiries against some political figures of the State including the assessee and subsequently there was a regular commission of inquiry headed by Shri Justice <NAME>. Before the inquiry commission, evidence was led by one <NAME> in support of the story that 21/2 lakhs of rupees had been paid to the assessee in respect of kendu leaf deals. According to the Income-tax Officer, the following materials had not been placed before the assessing officer when assessment was completed under Section 23(3) of the Indian Income-tax Act, 1922, namely :

(i) The evidence of <NAME> as stated above ;

(ii) The evidence of the tahsildars and other public officers regarding the extent of land of the assessee and his brother;

(iii) Dates of receipt of compensation by the assessee and his brother from Government on account of abolition of estate;

(iv) An affidavit of the assessee's brother, <NAME>;

(v) Information regarding purchase of land by the assessee's brother;

(vi) The basis of calculation of agricultural income of the assessee and his brother ; and

(vii) A letter of the assessee to the then <ORG> President regarding his assets.

6. The Income-tax Officer averred in his counter-affidavit that the afore, said fresh evidence was prima facie material in his possession which led him to hold that there had been under-assessment.

7. With regard to the accord of sanction by <ORG>, it has been pleaded in paragraph 19 of the counter-affidavit:

"The sanction order of <ORG> has not been correctly quoted by the petitioner at page 25 of the writ petition and the approval order has been given after due consideration of the materials on the records and is in accordance with the requirements of the law and is within the jurisdiction and it has not been given mechanically without application of mind as asserted in the writ petition, but was given with due application of the mind and there is material to show that income chargeable to tax which has escaped assessment is likely to exceed Rs. 50,000 or more for the year and, accordingly, sanction has been obtained and proceedings have been started under Section 147(a) of the Act. The <ORG> has considered the amount of alleged escaped income and the sanction is in accordance with law. The sanction order is an order by <ORG> and is not an opinion of the Under-Secretary to the <ORG>, i.e., opposite party No. 4......"

8. In a part of the report made by the Income-tax Officer in the matter of obtaining sanction, it was stated:

"The assessment has already been made on salary income of Rs. 12,635 for the assessment year in question. The income which has escaped assessment, viz., Rs. 2,04,128, requires to be assessed for which action under Section 147 is proposed."

9. In the counter-affidavit itself, there is an admission that when the normal assessment was completed, detailed enquiries had been made; the Income-tax Officer had obtained information on all the aspects which are now made the basis for reopening of the proceeding. We may now refer to the report of the Income-tax Officer appended to the recording of reasons by him which is a part of the counter-affidavit. According to the Income-tax Officer, a sum of Rs. 2,04,128 has escaped assessment and he has proceeded to determine the. same as would appear from paragraph 8 of his aforesaid report in the following way :

"Computation of escaped income for the assessment year 1958-59--Income from undisclosed sources:

(i) Deposits-

The deposits have been stated in detail in para. 3 above.

The deposits in banks by cheque may be treated as monies belonging to the <ORG> party, <ORG> and other organisations since the sources can be traced and since bank account reflects debit towards these organisations.

The entire cash deposit has, however, to be considered as his own money. This comes to Rs. 2,63,816

(ii) Investments by way of additions and alterations of the building ' Usha Villa ' at Bhubaneswar 60,000

(iii) <ORG> savings bank deposit 15,000 3,38,816 Less : Receipts and income available to the assessee from property and zamindary as discussed at para. 7 above 1,34,688 2,04,128"

10. Rs. 2,63,815.87 which was rounded and treated as Rs. 2,63,816 was made up of five deposits in the following way:

Rs.

15-4-1957 11,000.00 8-6-1957 15,000.00 25-6-1957 1,80,000.00 27-6-1957 56,000.00 27-2-1958 1,815.87 2,63,815.87

11. Assessee has placed before us a letter dated 24th of December, 1962 (annexure "4"), which had been written by the Income-tax Officer of the Salary circle to the then Inspecting Assistant Commissioner. Therein, categorical reference has been made to this amount of Rs. 2,63,815.87. The relevant reference is thus :

"I then next questioned him as to why he made cash deposits to the extent of Rs. 2,63,815.87 out of his agricultural income when according to his earlier statement he was not in the practice of keeping money in bank, accounts. To this he replied that these deposits were made to enable purchase of National Plan Certificates, <ORG> Savings Certificates and Annuity Certificates through bank transfers. I suggested to him that these certificates could be directly purchased with the cash in hand instead of going through a circuitous route of making purchases through the bank. In reply, he stated that obviously with the position held by him he could not go personally for the purchase of those certificates and it was also not safe to entrust any of his employees with such heavy sums in cash for the purchase of these certificates lest they decamped with the money. He, therefore, preferred to keep the cash in bank and send somebody with a cheque for the purchase of these certificates. The transfers from the bank for investment in the said securities lend support to his version."

12. Reference to this amount had also been made by the Income-tax Officer in his letter to the Commissioner of Income-tax dated 4th September, 1962 (annexure "5") Therein, it had been stated : "It will thus be seen that in the accounting period 1957-58 relevant to the assessment year 1958-59 which is pending, Dr. <NAME> made a deposit of Rs. 2,63,315.67 in cash and Rs. 28,579.31 by cheques, making a total deposit of Rs. 2,92,594.18 against his returned income of Rs. 12,655-48...... Presently we are concerned with the assessment for the year 1958-59, which gets barred this year and subject to Commissioner's approval, I now intend to fix a date of hearing under Section 23(2) with a forwarding letter along with a notice under Section 22(4) also requesting Dr. <NAME> to meet me with his bank pass book in my office at Puri. In case, the Commissioner so directs, I shall take up this case at Bhubaneswar camp and ask him to explain the source of heavy cash deposits as also explain the discrepancies in the figures of investment as apparent from his bank accounts and those owned by him. On hearing from him and obtaining his explanation in the matter I shall submit a draft assessment order for the Commissioner's and/or <ORG>'s approval as may be directed....... " 13. The Income-tax Officer of <ORG> then wrote a letter on 22nd November, 1962, to the assessee (annexure "7"). Therein it was stated :

"After looking into your accounts with the above banks, I find that in the financial year 1957-58 you made a deposit of Rs. 2,92,394.18 Rs. 2,63,815.87 in cash and Rs. 28,578.31 by cheques) against your returned total income of Rs. 12,635.48 during the said year."

14. On 22nd December, 1962, the assessee wrote to the Income-tax Officer, vide annexure "9", giving all particulars of the deposits amounting to Rs. 2,63,815.87 and on February 15, 1963, the order of assessment was passed by the Income-tax Officer.

15. In the aforesaid setting, there can be no scope for doubt in our mind that the Income-tax Officer had before him the particulars relating to the bank deposits and as has been stated in the letter of the Income-tax Officer to the Inspecting Assistant Commissioner, vide annexure "4", the Income-tax Officer was prepared to accept the assessee's explanation.

16. Next comes the question of Rs. 60,000 by way of investment in alteration of the building. Usha Villa is the same as <NAME>. This fact has been admitted at page 12 of the counter-affidavit (running page 94 of the paper book). This aspect was very much before the assessing officer at the time when the regular assessment was being considered. In annexure "4" it has been stated :

"I also questioned him about some of the cheques issued by him for purchase of building materials and he stated that they were for <ORG> and for <ORG> party meetings. He further added that the department was wrong in suspecting that the materials were purchased for reconstruction or remodelling of his brother's house known as Ekambra Nivas in Bhubaneswar town which according to a complaint was purchased by him in the name of his natural brother, <NAME>. My notes against these individual cheques may be seen on the overleaf of sl. 15 in the miscellaneous file for 1958-59. At this stage Dr. <NAME> told me that he was fully aware that one complaint had been sent against him to <NAME>, Minister of <ORG> in <ORG>, New Delhi, in the fictitious name of one <NAME>, and it was a result of the said complaint that the department had been making this searching inquiry. He instantly showed me the original complaint petition (copy of which is with us) forwarded to him by the hon'ble Minister, <NAME>, with his D.O. letter dated 10-10-1960. In the said D.O. to Dr..<NAME> the hon'ble Minister has amongst others said in the following words :

'It seems somebody has started an invidious campaign against you.' From the facts stated above, I am inclined to accept the explanation dated 22-12-1962 of Dr. <NAME>...... "

17. In his explanation referred to above, the assessee had stated :

"A new house has been constructed by me in the new capital at a cost of Rs. 50,000 approximately. The investment in the building has been made partly by loan of about Rs. 20,000 from <ORG> and partly from my income from agricultural land and also I have not yet been able to clear some of the private loans on account of the construction of this house."

18. It cannot thus be said that the matter of investment and the renovation of the building was not known to the Income-tax Officer.

19. So far as the deposit of Rs. 15,000 in the postal savings bank is concerned, reference to it has been made in the assessee's explanation dated 22nd December, 1962, as also in the various correspondence referred to above. It is thus clear that all the three amounts referred to in the reasonings noted by the Income-tax Officer on the basis of which sanction of <ORG> had been asked for were within the knowledge of the Income-tax Officer when the regular proceeding had been taken up and the assessee's explanations had been obtained and obviously accepted when the order of assessment had been made.

20. One of the new materials to which the Income-tax Officer has referred is the statement of <NAME> before <ORG>. Assessee has contended that steps had been taken to malign him for other collateral purposes by appointing a <ORG> and evidence had been procured to support the charges against him. It is not for us in the present proceeding to deal with this submission, but one pertinent aspect for consideration is the stand of the assessee that even accepting the statement of <NAME> nothing was paid to the petitioner during the year. In the rejoinder dated 12th May, 1975, the assessee has extracted the evidence of <NAME>. In runs thus :

"This meeting with the Secretaries of Finance and Development took place in the month of October, 1959. In November, 1959, Mr. <NAME> appeared on behalf of the kendu leaf traders before <ORG>-Committee and argued their case. I was waiting outside when Mr. <NAME> was arguing before <ORG>-Committee. It was decided that 2% of the lease amount for the year 1959, an amount of Rs. 2,50,000, was collected from all the kendu leaf traders by <ORG>, <NAME> and <NAME>, and this amount was paid to Dr. <NAME> at his Ekambra Nivas residence. <NAME>, the president of our Association, handed over the amount of Rs. 2,50,000 to Dr. <NAME> in my presence. Mr. <NAME> was also present at that time. This payment was made to Dr. <NAME> a few days after the order for remission was passed."

21. This evidence would indeed go to show that in October-November, 1959, the payment was made. We are concerned with the assessment year 1958-59, corresponding to the accounting period ending with the financial year 1958. Even if this payment was made and this could legitimately be relied upon by the Income-tax Officer as a fresh material, it does not pertain to the year in question and, therefore, this could not be a material for the conclusion that the assessment required reopening.

22. Section 147 of the Act provides :

"If-

(a) the Income-tax Officer has reason to believe that, by reason of the omission or failure on the part of an assessee to make a return under Section 139 for any assessment year to the Income-tax Officer or to disclose fully and truly all material facts necessary for his assessment for that year, income chargeable to tax has escaped assessment for that year, or

(b) notwithstanding that there has been no omission or failure as mentioned in Clause (a) on the part of the assessee, the Income-tax Officer has in consequence of information in his possession reason to believe that income chargeable to tax has escaped assessment for any assessment year, he may, subject to the provisions of Sections 148 to 153 , assess or reassess such income or recompute the loss or the depreciation allowance, as the case may be, for the assessment year concerned (hereafter in Sections 148 to 153 referred to as the relevant assessment year)...... "

23. As we have already indicated, it is the definite stand of the revenue that the notice under Section 148 of the Act has been issued with reference to Clause (a) of Section 147 . Admittedly, the assessee had made a return for the year. Therefore, the only question for consideration is whether there has been escapement of assessment on account of the fact that the assessee had omitted or failed to disclose fully and truly all material facts necessary for his assessment. As we find, all the three items which have been referred to by the Income-tax Officer in his report for the purpose of obtaining sanction were very much before the Income-tax Officer when the normal assessment was completed on February 15, 1963, by the Income-tax Officer of <ORG>. With reference to these amounts, the assessee had been asked to explain and the assessee offered explanation. The Income-tax Officer, as would appear from his letter (annexure "4"), addressed to the Inspecting Assistant Commissioner, indicated that he had applied his mind and was prepared to accept the explanation of the assessee. It is true, as learned standing counsel for the revenue has argued, and rather curious that the assessee has been able to produce papers which were interdepartmental communications. The opposite parties have, however, not questioned the genuineness of these documents. We are, therefore, inclined to agree with the petitioner's counsel that the facts stated in these documents reflect the true state of affairs. It would thus not be correct to say that the assessee had either omitted or failed to make a full and true disclosure of material facts.

24. In the case of <CITATION>  41 ITR 191, 200 (SC), it has been observed :

"......The words used are 'omission or failure to disclose fully and truly all material facts necessary for his assessment for that year'. It postulates a duty on every assessee to disclose fully and truly all material facts necessary for his assessment. What facts are material and necessary for assessment will differ from case to case. In every assessment proceeding, the assessing authority will, for the purpose of computing or determining the proper tax due from an assessee, require to know all the facts which help him in coming to the correct conclusion. From the primary facts in his possession, whether on disclosure by the assessee, or discovered by him on the basis of the facts disclosed, or otherwise, the assessing authority has 'to draw inferences as regards certain other facts; and ultimately, from the primary facts and the further facts inferred from them, the authority has to draw the proper legal inferences, and ascertain on a correct interpretation of the taxing enactment, the proper tax leviable." (Underlining* is ours).

25. The case before us is one where the facts are slightly different from the leading cases on this topic. Here, all the materials were before the revenue authorities and with reference to them investigation had once been made and on the assessee's explanation being accepted, assessment was completed. This seems to be a case where, on change of opinion, the Income-tax Officer has tried to reopen the assessment. It is not a case of any new material which was not before the Income-tax Officer on the earlier occasion.

26. In the case of <CITATION>  100 ITR 1 (SC), where while making a best judgment assessment, the Income-tax Officer had discovered certain transactions evidenced by the drafts which the assessee had not disclosed. In spite of this discovery and the knowledge of all the material facts, the Income-tax Officer did not make necessary enquiries and draw proper inferences as to whether the amounts invested in the purchase of the drafts could be treated as part of the total income of the assessee during the relevant year. The court came to hold that it was plainly a case of oversight and the Income-tax Officer could not take recourse to Section 147(a) to remedy the error resulting from his own oversight and that, therefore, the notice under Section 148 should be quashed.

27. In the case of <CITATION>  97 ITR 239 (SC), the court did not permit second thoughts on the same material for initiation of an action under Section 147 of the Act. The later decision of <ORG> in the case of <CITATION>  106 ITR 1 also supports the same view.

28. In the case of <CITATION>  103 ITR 797 (SC), the court indicated that the jurisdiction of the Income-tax Officer to initiate a proceeding under Section 147 of the Act is on the basis of reasonable belief and that is the sine qua non for initiation of the proceeding. As we have indicated, there indeed cannot be any reasonable belief on the Income-tax Officer for initiation of the proceeding when all the matters on which move for the re-opening is grounded were already before the revenue when the normal assessment was completed. It must, therefore, follow that the notice under Section 148 of the Act is bad.

29. Learned counsel for the petitioner has argued against the proceeding on the basis that there is no valid sanction. Facts asserted in support of the objection have been refuted. The original order of sanction has not been produced In the circumstances, we do not think it appropriate to enter into an examination of that aspect.

30. Learned standing counsel had contended when the hearing began that this application must abate under the provisions of Article 226(3) of the Constitution. He does not dispute that several writ applications have been entertained for quashing the notice under Section 148 of the Act. In fact.

there are direct authorities of <ORG> as indicated by this court in the case of <CITATION>  109 ITR 370 (Orissa) in support of this position. It is, however, claimed by learned standing counsel that as appeals and references are provided under the statute when assessments are completed, there is alternative remedy available and this application, therefore, must be declared to have abated. Such a contention does not impress us at all. The question of alternative remedy has to be examined with reference to the present dispute. If there is any remedy provided under the Income-tax Act where the assessee can have the notice under Section 148 vacated, that alone would constitute alternative remedy. Learned standing counsel has not been able to satisfy us that there is any alternative forum for the relief claimed before us. The objection must, therefore, fail.

31. We allow the writ application, quash the notice under Section 148 of the Act and direct that a writ of prohibition be issued to the opposite parties from acting in furtherance of the notice. This application is allowed with costs. Hearing fee is assessed at rupees two hundred.

<NAME>, J.

32. I agree.