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IN THE HIGH COURT OF KARNTAKA AT BANGALORE

DATED THIS THE 5th DAY OF NOVEMBER 2012

PRESENT

THE HON’BLE MR.VIKRAMAJIT SEN, CHIEF JUSTICE

AND

THE HON’BLE MRS. JUSTICE B.V. NAGARATHNA

WRIT APPEAL NO.3932/2004 (GM-MMS)

BETWEEN:

T.R. Narayanaswamy, S/o. T.K. Ramanatha Iyer, Aged about 66 years, No.226, C.V. Raman Avenue, Rajmahal Vilas,

Bangalore. : Appellant (By Shri. H. Srinivas Rao, Advocate) AND: 1. The State of Karnataka,

By its Secretary –II, Department of Commerce and Industries, M.S. Building, K.R. Circle, Bangalore.

2. The Director,

Department of Mines and Geology, Khanija Bhavan, Race Course Road, Bangalore. : Respondents

(By Shri. R.G. Kolle, Addl., Government Advocate for R-1 & 2)

R

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This Writ Appeal is filed under Section-4 of the Karnataka

High Court Act praying to set aside the order passed in Writ

Petition No.117/2003 dated 23rd July 2004 and to direct the

respondent No.1 to consider the Appellant’s application dated

12.02.2002 for renewal, read with the direction of this Court in

W.P.No.42001/1995.

This Writ Appeal having been heard and reserved for

pronouncement of judgment, this day, the Chief Justice

pronounced the following :

JUDGMENT

Vikramajit Sen, C.J.

In this Appeal the Appellant has called in question the legal

correctness of the decision dated 23.07.2004 of the learned

Single Judge in Writ Petition No.117/2003. The facts germane

to the controversy are not in dispute. On 15.03.1982 a Quarry

Lease pertaining to Survey No.421 of Maralabbe Kuppe village of

Kanakapura taluk, Bangalore Rural District, Karnataka,

admeasuring 54 acres came to be granted in favour of the

Petitioner/Appellant for a period of ten years. It was renewed

thereafter for another tranche of ten years. Accordingly, the

tenure of the lease was to terminate by efflux of time on

15.03.2002. The Appellant, as per Rule 9(2) of the Karnataka

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Minor Mineral Concession Rules, 1994 [hereafter referred to as

‘KMMCR 1994’] applied within the prescribed time, on

12.02.2002, for the renewal thereof. Rule 9 (2A) of KMMCR

1994, inserted with effect from 17.07.1997, ordains that where a

renewal application has been filed within the prescribed time the

lease shall be deemed to have been extended till such time as the

Government passes the requisite Orders; there is no automatic

renewal of the subject Lease postulated in the Rules.

Eventually on 21.11.2002 the Respondents accorded a renewal of

the lease, however restricting it to an extent of 10 acres only as

against the erstwhile 54 acres. This decision was predicated on

Rule 15 of the KMMCR 1994 on the ground that the Appellant

did not possess an “100% export oriented granite cutting and

polishing small scale industrial unit” as contemplated under

Rule 15 of the KMMCR 1994. It was this Order which came to

be impugned by way of the subject Writ Petition. The impugned

Order categorically claims support for the view of another learned

Judge taken in W.P. No.42001/1995 which was also filed by the

petitioner herein; it was allowed on 28.08.2000, remitting the

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matter back for reconsideration in accordance with law viz., by

means of a reasoned and speaking order.

2. Principally two arguments have been raised before us.

Firstly, that it is The Granite Conservation and Development

Rules, 1999 [‘GCDR 1999’ for brevity] (a Parliamentary as also be

a later enactment renders the KMMCR 1994 ineffectual).

Secondly, that the factual matrix of the case in hand concerned

the 'renewal' in contradistinction to the 'grant' of a quarry lease

and therefore, the terms of the original lease particularly with

reference to the extent of land could not have been altered by the

respondents.

3. The relevant Rules of the KMMCR 1994 are

reproduced for facility of reference:

“9. Application for grant or renewal of a

quarrying lease –

x x x x

9(2) - An application for renewal of a

quarrying lease to quarry specified minor

mineral belonging to the State Government

which has not been notified under Rule 8-B

shall be in FORM-R and shall be made to the

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Director at least twelve months before the expiry

of the lease. The application shall be

accompanied by a fee of rupees two thousand in

the form of a treasury challan under the

specified Head of account together with the

difference of amount of security deposit, if any,

to be paid by the lessee at the prevailing rates

in the form of treasury challan and a certificate

issued by the Competent Authority for having

cleared the arrears, if any, in respect of any

lease held by him as on the date of making

application for renewal..

(2A) If an application for renewal of a

quarrying lease made within the time referred to

in sub-rule (2) is not disposed of by the State

Government before the date of expiry of the

lease, the period of that lease shall be deemed

to have been extended by a further period till

the State Government passes orders thereon.

x x x x

11. Grant or renewal of quarrying lease:-

(1) There shall be a Committee to make

recommendations for grant or renewal of a

quarrying lease under this rule. …...

xxx

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(3) On receipt of applications from the

Director, the committee shall having regard to

the priorities under rule 12, and the guidelines

issued by the State Government, if any,

consider such applications and make

recommendations to the Government.

Provided that the Committee shall not

consider such applications in respect of any

area, which is notified under rule 8B after the

receipt of the application on or before the date

of consideration and all such application shall

be liable to be return to the applicants and

security deposit and fee paid, if any, may be

refunded.

xxx

12. Priorities:- (1) Selection from amongst the

applicants for grant of quarrying lease under

this chapter shall normally be made in the

following order of preference, namely:-

(i) a Corporation or undertaking owned or

controlled by the State or Central

Government and Joint Sector projects with

such Government Corporations or

Undertakings;

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(ii) persons who have already established

hundred per cent export oriented units for

cutting and polishing of granites in the

State;

(iii) Persons who have already established a

small scale Industrial unit for cutting and

polishing of granites in the State;

(iv) Persons who hold a valid licence for

establishment of a granite cutting and

polishing unit within the State for the

purpose of hundred per cent export and

persons who hold a permanent Registration

Certificate for establishment of a Small

Scale Industrial Unit in the State;

(v) a society registered under the Karnataka

Co-operative Societies Act,1959, and the

members of which belong to the Scheduled

Castes & Scheduled Tribes;

(vi) a Society registered under the Karnataka

Co-operative Societies Act,1959, and the

members of which belong to economically

weaker sections of the Society and who are

also stone quarry workers by tradition;

(vii) all others:

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(2) In case of applicants falling under clause

(iv) of this rule 12 who require specified minor

mineral for their proposed industry they shall

set up industry in accordance with their

industrial program within a period of twenty

four months from the date of execution of lease

deed and shall keep the Director informed of the

progress made every six months from the date

of execution of lease deed. On setting up of

industry the lessees shall inform the fact in

writing to the Director failing which the lease

shall be deemed to have been terminated on the

expiry of the said period of twenty four months.

Where the lessees are unable to set up industry

within the said period for reasons beyond their

control they may submit before the expiry of the

said period an application to the Director

explaining the reasons for the same together

with affidavits. The Director shall forward such

applications to the State Government and it

may on being satisfied that such failure in

setting up the industry was due to reasons

beyond the control of the lessee, extend the

period of such lease by one more year either

prospectively or retrospectively.

x x x

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14. Disposal of application for grant or renewal

of lease:-

(1) Application for grant or renewal of lease

shall be disposed-

(i) in the case of an existing industry

within a period of One hundred and

eighty days from the date of receipt of

application failing which the

applicants shall be informed of the

reasons for delay within fifteen days

after the expiry of the disposal

period.

(ii) in all other cases within a period of

four months from the date of receipt

of applications failing which the

applicants shall be informed of the

delay within fifteen days after the

expiry of the disposal period.

15. Maximum area of Quarrying lease to be

granted:-

(1) Total area of one or more quarry leases to

quarry specified minor minerals shall not

exceed;

(i) fifty acres in case of an existing hundred

percent export oriented granite cutting and

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polishing unit in the State, falling under

clause (ii) of sub-rule (1) of rule of 12;

(ii) forty acres in case of other granite cutting

and polishing units in the State, falling

under clause (iii) (iv) and (v) of Sub-rule (1)

of rule 12;

(iii) ten acres in all other cases, falling under

clause (iv),(v),(vi) and (vii) of sub-rule (1) of

rule 12.

xxx xxx

x x x

57. Application of these rules for renewal:-

Where a quarrying lease or any other right for

quarrying a minor mineral has been granted

before the commencement of these rules is

renewed after such commencement, these rules

shall apply in relation to such renewal of a

quarrying lease or licence granted after such

commencement”.

4. The GCDR 1999 has been formulated by the Central

Government in exercise of the powers conferred by Section 18 of

the MMDR Act 1957. In the event of any irreconcilable

differences between the two pandects of Rules, the Central Rules

which are also later in time would prevail. There can be no cavil

however that subsequent legislation or formulations of Rules and

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Regulations will not automatically repeal or annul all that is then

in existence. It is for the Courts to peruse the two pandects in

an endeavor to give effect to both in so far as that may be

possible. This position stands clarified, although arguably it

need not have been so done, by Rule 52 of GCDR 1999. Under

these circumstances, we need not discuss in detail the exposition

of the law enunciated by the Constitution Bench titled Ishwari

Khetan Sugar Mills Vs. State of Uttar Pradesh, AIR 1980 SC

1955 : (1980) 4 SCC 136 as well as the series of other

pronouncements to the same effect. The relevant Rules of the

GCDR 1999 are also reproduced for facility of reference.

“6. Period for which leases may be granted

or renewed –

(1) The maximum period for which a lease

may be granted shall not exceed thirty

years:

Provided that the minimum period

for which any such lease may be granted

shall not be less than twenty years.

(2) A lease may be renewed for a period not

exceeding twenty years.

(3) Notwithstanding anything contained in

sub-rule (2), if the State Government is of

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the opinion that in the interest of

development of granite it is necessary to

do so, it may, for reasons to be recorded,

authorize the renewal of a lease for a

further period or periods not exceeding

twenty years in each case.

7. Minimum and maximum area for grant of a

mining lease:-

(1) The minimum area that may be granted

or renewed under a lease for ensuring

mining activities to optimum depth shall

not be less than one hectare.

(2) The maximum area that may be granted

under a mining lease shall not exceed

fifty hectares:

Provided that the State Government, if it is

satisfied on the basis of proposed production level,

geological or topographical conditions, may for the

reasons to be recorded in writing, grant or renew a

lease over an area more than the maximum area or

less than the minimum area specified under this

rule.

52. Applicability of the provisions of Minor

Miner Concession Rules framed by the State

Government.

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The provisions of the Minor Mineral

Concession Rules or any other rules framed by the

State Government under Section 15 of the Act shall

be applicable to granite quarry leases to the extent

they are not repugnant to or inconsistent with

these rules”.

5. Rule 15 of the KMMCR 1994 (supra) stipulates that

the maximum area that can be granted for a quarry lease cannot

exceed 50 acres in case of an existing hundred percent export

oriented granite cutting and polishing unit; and 40 acres in case

of other granite cutting and polishing units (see supra). Since

the petitioner does not fall in either, it is entitled only to ten

acres. On the other hand, Rule 7 of the GCDR 1999 ordains that

the minimum area shall not be less than one hectare and the

maximum area shall not exceed 50 hectares; the proviso

thereto, however, should not be overlooked as it vests informed

discretion on the State Government to breach both the maximum

and minimum areas. We must immediately note that in the

case in hand, this discretion has obviously not been even

exercised since the impugned Order dated 21.11.2002 does not

even attempt to articulate any reason for the Respondent-State

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Government to have transgressed the aforementioned

parameters. As is known, an acre of land is equal to 4840

square yards (4047 square meters) whereas one hectare is

equivalent to 100 ares or 10000 square meters or 2.471 acres.

Even though the renewal of the Appellant’s quarry lease has been

confined only to ten acres by the respondent, it is nonetheless

more than one hectare which is the minimum area prescribed by

the Rule 7(1) of the GCDR 1999. Even without taking recourse

to the discretion of the State Government preserved by the

proviso, the reduction of area does not infringe or violate either

the GCDR 1999 or the KMMCR 1994. Therefore, the challenge to

the area/extent of the land as contained in the renewed lease

does not have any substance as it is well within the

postulation/parameter of both the enactments mentioned above.

The decision of the Constitution Bench of the Apex Court is

rendered in respect of the facts of that case. There is no

repugnancy in the two pandects. Arguably, it would have arisen

had the area covered by the renewed lease fallen short of one

hectare i.e., less than 2.47 acres. Even in such a situation, had

valid and articulated reasons been disclosed by the State

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Government justifying going below one hectare, advantage of the

proviso to Rule 7 of the GCDR 1999 could have been availed.

6. It seems to us that both the State and the Central Rules

can coexist and in fact tend to prescribe similar principles and

endeavour to achieve common objectives. The preamble of GCDR

1999 clarifies that its intendment is “for conservation and

systematic development and scientific mining to conserve the

granite resources and to prescribe a uniform framework with

regard to systematic and scientific exploitation of granite

throughout the country. . .”. Therefore, both GCDR 1999 as well

as KMMC 1994 can coexist since their provisions are not

repugnant or incompatible to each other. So far as the present

factual matrix is concerned, the problem would have become

acutely manifest had the grant or renewal pertained to an area

which was less than 2.4 acres. It should be kept in perspective

that since granite is a minor mineral, by virtue of Section 14 of

the MMDR Act 1957 the postulations contained in Sections 5 to

13 thereof would not be applicable.

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7. We shall now consider the second argument placed by

the learned counsel for the appellant. As has already been

narrated above, the first renewal was granted on 10.10.1994 with

effect from 15.03.1992 for a period of ten years. The second

renewal was applied for by the appellant on 12.02.2002, by

which time the KMMCR 1994 had come into operation having

been published in the Karnataka Gazette Extraordinary, dated

28.05.1994. It must immediately be observed that to accord a

renewed term, the KMMCR 1994 also governed the first renewal

since the decision was taken five months later, but since this

question has not been argued by either side, we shall not dwell

on it any further. Indubitably, by virtue of Rule 57 of KMMCR

1994, the respondents were obliged to apply them atleast when

the second renewal had been asked for. Furthermore, after

08.07.1999, Rule 16 contains an embargo against granting a

quarry lease for a period in excess of twenty years, which period

has been crossed on 15.03.2002 so far as the present case is

concerned, if the KMMCR 1994 are adverted to. However, unlike

the case of the extent of land which can be granted for a quarry

lease, there is variance between the State and Central Rules so

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far as the tenure thereof is concerned, as the GCDR 1999

prescribes a maximum of thirty years and a minimum of twenty

years tenure for a lease. In addition, a renewal is postulated for

a period not exceeding twenty years, and the third sub-rule

enables further renewals if so justified in writing by the State

Government, in the event it is of the persuasion that the opinion

that these renewals would be in the interest of the development

of the granite industry. With regard to the tenure of a granite

quarry lease the KMMCR 1994 must give way to the GCDR 1999.

It was this dialectic which prevailed on us to hold so, in

W.P.Nos.16107-108/2012 disposed of on 17.09.2012.

8. Another significant difference between KMMCR 1994

and the GCDR 1999 concerns the initial grant of a quarry lease.

Rule 12 of the KMMCR 1994 contains an enumeration of

priorities which would prevail on the State to grant a quarry

lease to an applicant. The learned Single Judge in the impugned

Order has held that “the petitioner’s application for renewal of

lease requires to be considered on the basis of the priorities in

Rule 12. If that be so, the application of Rule 15 fixing the

ceiling on the area of quarrying lease cannot be restricted to

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applications for grant of quarrying lease, but, is applicable also

to applications for renewal.” Contrary to the submissions

made by the learned counsel for the Appellant/Petitioner there is

little in substance or no difference between the ‘grant’ and

‘renewal’ of the lease. The argument of learned counsel for the

appellant before us appears to be somewhat different. It is

contended that the renewal cannot bring into existence fresh or

altered covenants except those pertaining to the tenure or

periodicity of the lease. We are not persuaded by this

argument. In Delhi Development Authority Vs. Durga Chand

Kaushish (1973) 2 SCC 825 their Lordships have clarified that –

“a renewal of lease is really grant of a fresh lease. It is called a

‘renewal’ simply because it postulates the existence of a prior

lease which generally provides for renewal as of right. In all

other respects, it is really a fresh lease.” In that case a lease

was admittedly for a period of 90 years, and an

increase/enhancement of rent prior to the expiry of its tenure or

during its tenure was held to be impermissible since no covenant

in the lease envisaged such an action. Even though the factual

matrix of the two cases are different, the foregoing enunciation of

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the law by the Apex Court is relevant and must be applied. In the

present case, we shall abjure from pronouncement as to whether

the priorities contained in Rule 12 of the KMMCR 1994 would

once again have to be kept in perspective even at the time of its

renewal, as this aspect does not arise for our determination.

However, it appears to us that on the coming into effect of the

GCDR 1999, Rule 12 of the KMMCR 1994 has been rendered

otiose. If Rule 12 is not applicable to ‘grant of leases’ then it

could be argued that having regard to 1999 Rules, Rule 15 is

also not applicable to grant of lease as the extent is dependent on

nature of unit specified in Rule 12. It could further be argued

that if Rule 12 is not applicable to “renewal of leases” then

automatically Rule 15 also would not apply with regard to

renewal of leases. Therefore, the argument could be that if Rule

12 is not applicable for grant or renewal of leases, then Rule 15

also would not be applicable. In other words Rules 12 and 15

would not be applicable for renewal of a lease but we do not say

anything regarding their applicability for grant of a lease. They

also do not refer to “renewal of a lease” but only “grant of a lease”

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unlike other provisions such as Rules 8, 9, 11, 14, 16, 18 which

refer to both expressions.

9. On the other hand, it could also be interpreted that

Rule 15 would apply to all renewals of leases subsequent to the

enforcement of the KMMCR 1994, though the initial lease was

prior to 1994, even though the word “renewal” is not found in

Rule 15. We say so because renewal of a lease is in substance

grant of a fresh lease. But Rule 12 cannot be applied to a

renewal of lease granted prior to 1994. Rule 12 cannot be

applied for considering a renewal of a lease granted prior to

KMMCR 1994 as the word ‘renewal’ would then lose its

contextual meaning having regard to priorities for grant of lease

stated in Rule 12. On the other hand, in respect of a lease

granted after the enforcement of KMMCR 1994 both Rules 12

and 15 would apply for grant of lease. With regard to renewal of

a lease, depending on the nature of the unit at the time of

renewal, Rule 15 is applicable but not Rule 12. We say this

because the GCDR 1999 prescribe the grant of a prospecting

licence prior to the execution of a quarry lease. The

comprehensive preferences put into place by Rule 12 have

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escaped the postulation of the GCDR 1999 either in respect of

grant of a prospecting licence or of a quarrying lease, and this

being so it seems to us that Rule 12 prioritization would apply

mutatis mutandis to the grant of prospecting licence, as that is

the threshold or springboard for the grant of quarry leases or

prospecting licences. As is apparent, it is an arduous task that

the Court has to perform an ironing out the creases of the statute

or Rules and Regulations when they appear to collide with or

confront each other; the Court will always endeavour to apply

the rationale of both unless it becomes impossible to do so.

10. Since the renewal tantamounts to a fresh grant,

irrespective of the time of grant i.e., when with respect to a grant

made prior to KMMCR Rules, the State Government is duly

empowered to consider the extent of land which it finds

expedient to convey to any applicant such as the

Petitioner/Appellant having regard to the statutory provisions

relating to renewal of a lease. Unlike in the case of the tenure of

the lease, both the GCDR 1999 and KMMCR 1994 can coexist so

far as the extent of land sought to be given on lease is concerned.

We do not find any infraction of any law or of any Rules in the

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decision of the State Government to reduce the area of the leased

land from 54 acres to 10 acres, as contained in the impugned

Order. Both the GCDR 1999 and KMMCR 1994 accord

preference to parties who have already invested or are willing to

invest moneys for the “Conservation and Systematic

Development of the Scientific Mining to conserve, the granite

resources”. So far as the petitioner is concerned, it is not his

case that he is entitled to 50 acres, possibly because he has not

set up hundred percent export oriented granite cutting and

polishing unit. It is also not his case that he is entitled to 40

acres because he has established a granite cutting and polishing

unit. Therefore, in our opinion, the grant of a lease for 10 acres

as against erstwhile 54 acres is totally justified and reasonable.

It is ubiquitously believed in the trade or market that Indian

granite is of high quality; pink granite available in Karnataka is

amongst the best and therefore is must sought after. A person

who is not willing to or has neglected to plough in requisite

investment, in the ultimate analysis, deprives others from

engaging the enterprise to the optimum; and prevents the State

from generating/recoverable maximum returns. Our attention

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has been drawn to the exposition of law in Maya Mathew Vs.

State of Kerala (2010) 4 SCC 498. The GCDR 1999 partake of

the nature of a special enactment when compared to KMMCR

1994 which are general inasmuch as they apply to all minor

minerals. But in addition, the GCDR 1999 are also subsequent

or later in time, and therefore its provisions must prevail over the

earlier KMMCR 1994. Our analysis respects and implements

these well entrenched principles of statutory interpretation.

11. We are now in a piquant position since the impugned

order of the Government has been quashed in the impugned

decision of the learned Single Judge but it is not the State of

Karnataka which has come up in appeal. Therefore, in the

absence of an appeal, the impugned decision would have to be

reconsidered by the Government in the light of our observations

made above. The prayer in the Appeal is for setting aside the

finding of the learned Single Judge declaring that Rule 15 of the

KMMCR 1994 has application to the ‘renewal of Quarry Lease’ in

the Order dated 23.07.2004 which, because of our analysis, we

do not find to be legally acceptable. We also do not find any

error in the impugned order of the State Government in applying

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Rule 15 of KMMCR 1994 and accordingly dismiss the Appeal, but

with no order as to the costs.

Sd/- CHIEF JUSTICE

Sd/- JUDGE

Vr/Sk/-