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STATE OF TAMIL NADU V. HIND STONE AND ORS.

State of Tamil Nadu v. Hind Stone AIR 1981 SC 711

ISSUE:

  • Whether Rule 8-C, which reserves the exploitation of black granite for the State or State-owned corporations, is valid under the Mines and Minerals (Regulation and Development) Act, 1957, and whether it improperly limits competition in violation of constitutional principles?
  • Whether the imposition of a royalty on granite stone extracted from quarries in Tamil Nadu by the State violates the constitutional provisions regarding freedom of trade and commerce under Article 19(1)(g) of the Indian Constitution?

RULE:

  • The State government has the power to make rules and regulations under the Mines and Minerals (Regulation and Development) Act, 1957, and such power includes the authority to regulate mining activities, even to the extent of creating monopolies for government-run corporations when done in the public interest.
  • The delegated power must be exercised in alignment with the public interest and within the framework established by the primary legislation.
  • Rule 8-C of the Tamil Nadu government regulations allows the State to exclusively control the mining of black granite, asserting that public interest justifies such an arrangement.

FACTS:

  • The Mines and Minerals (Regulation and Development) Act, 1957 grants the government authority to regulate the prospecting and mining of minerals, including the ability to reserve certain minerals for exploitation by government-owned entities.
  • The State of Tamil Nadu introduced Rule 8-C which prohibited private individuals from applying for quarrying rights for black granite, effectively reserving such rights for government-controlled corporations.
  • The respondents, Hind Stone along with other private parties, who held mining leases for quarrying black granite, challenged the validity of Rule 8-C, arguing that it created an unconstitutional monopoly and was contrary to the Mines and Minerals Act.
  • The petitioners contended that the State’s actions were in line with the regulatory framework under the Mines and Minerals (Regulation and Development) Act, 1957, which allows the reservation of resources for government exploitation if deemed in the public interest.

HELD:

  • The Supreme Court held that the State, under the Mines and Minerals (Regulation and Development) Act, could reserve the mining of black granite for itself or its corporations.
  • The Court upheld the validity of Rule 8-C, finding it was made in bona fide exercise of the State’s regulatory powers and was not unconstitutional.
  • It reasoned that, as per the statutory framework, the creation of a monopoly for public purposes, such as regulating a natural resource, was permissible within the powers vested in the State.
  • The Court clarified that while creating monopolies was typically a legislative function, the legislature had delegated this power to the State through the Mines and Minerals Act, thus the creation of a monopoly in this case was within the permissible limits of legislative delegation.
  • The Court upheld the delegation of legislative power to the State Government as there was clear guidance to the subordinate authority to make rules.