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REPORTABLE

IN THE SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION

CIVIL APPEAL  NO.     10717               OF 2014 (Arising out of S.L.P. (C) NO. 33002 of 2010)

Promoters and Builders Association of Pune      ...    Appellant

Versus

The State of Maharashtra & Ors.                   ...  Respondents

 WITH    

   Civil Appeal No. 10718 of 2014 (Arising out of SLP(C ) No.34306 of 2010)

Civil Appeal No. 10716 of 2014 (Arising out of SLP (C ) No.4571 of 2011)

Civil Appeal No. 10715 of 2014 (Arising out of SLP(C) No.13828 of 2011)

J U D G M E N T RANJAN GOGOI, J.

1. Leave granted in all the special leave petitions.  

2. The appellant in the first batch of appeals before us is  

an Association representing individual builders of the State  

of Maharashtra who carry out construction activities in the

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normal  course  of  business.  The  Association  and  also  the  

individual  builders  are  aggrieved  by  the  judgment  of  the  

Bombay High Court dated 8.10.2010, inter alia, holding that  

“excavation  activity  even  for  the  purposes  of  laying  

foundation  of  the  building  would  still  attract  rigours  of  

Section 48(7) of the Revenue Code”.  Under the aforesaid  

provision of the Code extraction of minerals by any person  

without assignment of any right by the State Government  

makes such person liable to penalty, as prescribed.

3. The Nuclear  Power Corporation,  the second appellant  

before  us  is  a  Government  Company  engaged  in  the  

construction,  maintenance and operation of nuclear power  

station in India.  It is aggrieved by the fact that though an  

issue  similar  to  the  one  raised  by  the  builders  had  been  

raised  by  it  before  the  High  Court  the  writ  proceeding  

instituted  by  the  Corporation  has  been  dismissed  on  the  

ground that statutory remedy under the Maharashtra Land  

Revenue Code, 1966 (hereinafter referred to as ‘the Code’)  

had not been resorted to by the Corporation.

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4. The relevant facts may, at the outset, be alluded to.

In  the  first  set  of  appeals,  digging  of  earth  for  the  

purpose of laying of foundation of a building is an integral  

part of the building activities undertaken by the appellants.  

According to the appellant-builders, the earth excavated or  

dug up is  redeployed in  the  building itself  at  a  particular  

stage of  the construction.  On the  basis  that  such  activity  

amounts to mining of a “minor mineral” i.e. ordinary earth  

and  that  the  same  is  without  due  permission/lease  or  

assignment of the right to do so, the respondent authorities  

have invoked the power under Section 48(7) of the Code to  

levy penalty by the order(s) impugned before the High Court.  

The challenge having resulted in  the  findings of  the  High  

Court, as extracted above, the present appeals have been  

filed by the Association of the Builders and also by some of  

the builders themselves.   

5. The  facts  in  the  appeal  filed  by  Nuclear  Power  

Corporation  of  India  Limited  are  largely  similar.   In  

consonance with its objects, the Corporation in whose favour

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the grant of land was made had carried out digging activities  

for  the purpose of widening of the water channel  through  

which sea water  is  drawn for  the purposes of  cooling the  

nuclear  plant  in  the  Tarapur  Atomic  Power  Station.   The  

Corporation categorically denies any commercial use of the  

extracted earth.

6. On behalf  of  the  appellants  it  is  pointed  out  that  to  

attract  Section 48(7)  of  the Code,  the activity  undertaken  

has to be unlawful.  The building operations undertaken by  

the appellant-builders are pursuant to a final development  

plan  sanctioned  under  Section  31  of  the  Maharashtra  

Regional and Town Planning Act, 1966 (hereinafter for short  

‘the MRTP Act’).  In this regard the attention of the Court has  

also  been  drawn  to  the  provisions  of  Section  2(7)  of  the  

MRTP Act which define “development” to mean “carrying out  

of buildings,  engineering,  mining or other operations in or  

over or under,  land ……..”.   It  is also pointed out that by  

Notification dated 3.2.2000 issued under Section 3(e) of the  

Mines and Minerals (Development and Regulation) Act, 1957

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(hereinafter  for  short  referred  to  as  ‘the  Act  of  1957’)  

ordinary earth has been declared to be a minor mineral but  

only  if  it  is  used  for  filling  or  levelling  purposes  in  

construction of embankments, roads, railways, buildings etc.  

According to the learned counsel for the appellant-builders,  

the  earth  which  is  dug  up  for  the  purposes  of  laying  of  

foundation  of  buildings  is  not  intended  for  filling  up  or  

levelling  purposes;  digging  of  the  earth  is  inbuilt  in  the  

course  of  building  operations.  The  activity  undertaken,  

therefore, cannot be characterised as one of excavation of a  

minor mineral. Additionally, the provisions of Rule 6 of the  

Maharashtra  Land  Revenue  (Restriction  on  Use  of  Land)  

Rules, 1968 (hereinafter for short ‘the Rules of 1968’) has  

been  relied  upon  to  contend  that  excavation  of  land  for  

purposes of laying of foundation for buildings do not require  

any previous permission of the Collector which is otherwise  

mandated  prior  to  use/excavation  of  land  for  any  of  the  

purposes covered by the provisions of  the Rules of  1968.  

The definition of ‘Mine’ in Section 2(j) of the Mines Act, 1952  

and  the  meaning  of  the  expression  ‘mining  operation’

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assigned by Section 3(d) of the Act of 1957 has also been  

pressed into service to contend that mere digging of earth as  

undertaken by  the  appellants  cannot  amount  to  a  mining  

activity.   The learned counsel for the appellants (builders)  

have alternatively contended that if the appellants are still to  

be held liable under the provisions of Section 48(7) of the  

Code, the aforesaid provision itself is liable to be adjudged  

as constitutionally invalid.  The Act of 1957 which is relatable  

to Entry 54 of List I comprehensively deals with all questions  

of liability on account of unauthorised/unlicensed mining and  

the  field  being  wholly  occupied  by  a  central  enactment,  

Section 48(7) of the Code is constitutionally suspect being  

relatable to Entry 23 of List II which is subject to Entry 54 of  

List I.   

7. Insofar as the appeal of the Nuclear Power Corporation  

is concerned, apart from the common grounds of challenge  

as  in  the  case  of  the  builders,  it  is  contended  that  no  

commercial exploitation of the excavated earth was involved  

in the process of repair/widening of the water channel; there

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was no sale or transfer of the excavated earth and the same  

was the incidental result of the process of repair/widening of  

the channel which is an activity in consonance with the grant  

of the land to the appellant by the State Government.  The  

said grant was made way back in the year 1964 on freehold  

basis for the purpose of establishing an atomic power station  

and for maintenance thereof.  It is further submitted that the  

very jurisdiction to levy penalty under Section 48(7) of the  

Code having  been raised  in  the  writ  petition  filed  by  the  

appellants,  the  High  Court  was  not  justified  in  refusing  

adjudication on merits.

8. In  reply,  the  State  has  contended  that  after  the  

inclusion  of  ordinary  earth  in  the  definition  of  “minor  

minerals” by Notification dated 3.2.2000 under Section 3(e)  

of  the  1957  Act,  excavation  of  ordinary  earth  without  

authorization  under  the  Act  of  1957  would  make  the  

appellants liable not only to payment of penalty under the  

Code but also for criminal prosecution under the Act of 1957.  

It  is  contended  that  mere  permission  for  construction  of

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buildings;  sanction  of  the  development  plans  or  the  

provisions of Rule 6 of the Rules of 1968 does not absolve  

the appellants from fulfilling the statutory obligations under  

the 1957 Act.  Such a contention, if accepted, according to  

the learned State counsel, would have the effect of nullifying  

the provisions of the 1957 Act insofar as one specie of minor  

mineral  i.e.  ordinary  earth  is  concerned.   As  regards  the  

challenge to the constitutional validity of Section 48(7) of the  

Code the  State  contends  that  the  penalty  imposed under  

Section 48(7) is compensatory and in the nature of a civil  

liability for the loss suffered by the State.  Consequently, the  

challenge is without any substance as the two enactments  

i.e. the Code and the Act of 1957 operate in different fields.  

The enactment of the Code is traceable to Entry 18 and 45 of  

the List II and not Entry 23 of the said List as contended on  

behalf of the appellants.   

9. We  may  proceed  to  analyse  the  issues  arising  by  

reproducing  Section  48(7)  of  the  Code  under  which  the  

impugned actions have been made.

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“48.  Government title to mines and minerals-

(7)   Any  person  who  without  lawful  authority   extracts, removes, collects, replaces, picks up or   disposes of any mineral from working or derelict   mines,  quarries,  old  dumps,  fields,  bandhas  (whether on the plea of repairing or construction   of bunds of the fields or on any other plea), nallas,   creeks, river-beds, or such other places wherever   situate, the right to which vests in,  and has not   been  assigned  by  the  State  Government,  shall,   without prejudice to any other mode of action that   may be taken against him, be liable, on the order   in  writing  of  the  Collector,  to  pay  penalty  not   exceeding a sum determined, at three times the   market  value  of  the  minerals  so  extracted,   removed,  collected,  replaced,  picked  up  or   disposed of, as the case may be.

Provided that,  if  the  sum so  determined is   less than one thousand rupees, the penalty may   be such larger sum not exceeding one thousand   rupees as the Collector may impose.”

10. A plain reading of the aforesaid provision would make it  

clear  that  the  quintessence  of  the  provision  contained  in  

Section 48(7) is extraction/removal of any mineral vested in  

the  State  without  lawful  authority  or  without  a  lawful  

assignment by the State.

11. What is a mineral is not defined either under the MRTP  

Act or the Code.  The said expression is however defined by

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Section 2(j)  of  the Mines Act,  1952 and Section 3(a) read  

with Section 3(e) of the Act of 1957.  As mining activities and  

operations are regulated by the provisions of the Act of 1957  

it  is  the definition contained in the said Act which will  be  

more relevant for the present.  Section 3(a) and Section 3(e)  

is in the following terms:

“Section  3.—In  this  Act,  unless  the  context  otherwise requires,—

(a) “minerals”  includes  all  minerals  except  mineral oils:

(b) xxxxx xxxx xxxxx (c) xxxxx xxxx xxxxx (d) xxxxx xxxx xxxxx

(e) “minor minerals” means building stones,  gravel, ordinary clay, ordinary sand other  than sand used for prescribed purposes,  and any other mineral which the Central  Government  may,  by  notification  in  the  Official  Gazette,  declare  to  be  a  minor  mineral;”

12. Ordinary  earth  has  been bought  within  the  fold  of  a  

Minor  Mineral  by  Notification  of  3.2.2000  issued  under  

Section 3(e) of the Act of 1957. The said Notification is in the  

following terms:

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                “NOTIFICATION

       GSR  (E)  –  In  exercise  of  the  powers  conferred  by  Clause  (e)  of  Section  3  of  the  Mines  and  Minerals  (Development  and  Regulation) Act 1957 (67 of 1957), the Central  Government  hereby  declares  the  ‘ordinary  earth’  used for  filling  or  levelling  purposes  in  construction of embankments,  roads,  railways,  buildings to be a minor mineral in addition to  the minerals already declared as minor minerals  hereinbefore under the said clause.    

(F.No.7/5/99-M.VI)   Sd/-

     (S.P.Gupta) Joint Secretary to the Government of India”

(emphasis supplied)

13. It  is,  therefore,  clear  that  “ordinary  earth”  used  for  

filling or levelling purposes in construction of embankments,  

roads, railways, buildings is deemed to be a minor mineral.  

It is not in dispute that in the present appeals excavation of  

ordinary earth had been undertaken by the appellants either  

for  laying  foundation  of  buildings  or  for  the  purpose  of  

widening of the channel to bring adequate quantity of sea  

water  for  the  purpose  of  cooling  the  nuclear  plant.   The  

construction  of  buildings  is  in  terms  of  a  sanctioned  

development  plan  under  the  MRTP  Act  whereas  the

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excavation/widening of the channel to bring sea water is in  

furtherance of the object of the grant of the land in favour of  

the  Nuclear  Power  Corporation.   The  appellant-builders  

contend that there is no commercial exploitation of the dug  

up  earth  inasmuch  as  the  same  is  redeployed  in  the  

construction activity itself.  In the case of the Nuclear Power  

Corporation it  is  the specific  case of  the  Corporation that  

extract of earth is a consequence of the use of the land for  

the  purposes  of  the  grant  thereof  and  that  there  is  no  

commercial exploitation of the excavated earth inasmuch as  

“the soil being excavated for “Intake Channel” was not sent  

outside or sold to anybody for commercial gain”.   

14. None  of  the  provisions contained  in  the  MRTP  Act  

referred to above or the provisions of Rule 6 of the Rules of  

1968 would have a material bearing in judging the validity of  

the  impugned  actions  inasmuch  as  none  of  the  said  

provisions  can  obviate  the  necessity  of  a  mining  

license/permission  under  the  Act  of  1957  if  the  same  is  

required to regulate the activities undertaken in the present

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case by the appellants.   It will, therefore, not be necessary  

to delve into the arguments raised on the aforesaid score.  

Suffice  it  would  be  to  say  that  unless  the  excavation  

undertaken  by  the  appellant-builders  is  for  any  of  the  

purposes contemplated by the Notification dated 3.2.2000  

the liability of such builders to penalty under Section 48(7) of  

the Code would be in serious doubt.   

15. Though  Section  2(j)  of  the  Mines  Act,  1952  which  

defines  ‘Mine’  and  the  expression  “mining  operations”  

appearing  in  Section  3(d)  of  the  Act  of  1957  may  

contemplate a somewhat elaborate process of extraction of  

a mineral, in view of the Notification dated 3.2.2000, insofar  

as  ordinary  earth  is  concerned,  a  simple  process  of  

excavation may also amount to a mining operation in any  

given situation.  However, as seen, the operation of the said  

Notification has an inbuilt restriction.   It is ordinary earth  

used  only  for  the  purposes  enumerated  therein,  namely,  

filling  or  levelling  purposes  in  construction  of  an  

embankment, road, railways and buildings which alone is a

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minor  mineral.  Excavation  of  ordinary  earth  for  uses  not  

contemplated in the aforesaid Notification, therefore, would  

not amount to a mining activity so as to attract the wrath of  

the provisions of either the Code or the Act of 1957.   

16. As use can only follow extraction or excavation it is the  

purpose of the excavation that has to be seen.  The liability  

under Section 48(7) for excavation of ordinary earth would,  

therefore,  truly  depend  on  a  determination  of  the  

use/purpose for which the excavated earth had been put to.  

An excavation undertaken to lay the foundation of a building  

would  not,  ordinarily,  carry  the  intention  to  use  the  

excavated earth for the purpose of filling up or levelling. A  

blanket  determination  of  liability  merely  because ordinary  

earth was dug up,  therefore,  would  not  be justified;  what  

would be required is  a more precise determination of  the  

end use of the excavated earth; a finding on the correctness  

of the stand of the builders that the extracted earth was not  

used  commercially  but  was  redeployed  in  the  building  

operations. If  the determination was to return a finding in

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favour  of  the  claim made  by  the  builders,  obviously,  the  

Notification dated 3.2.2000 would have no application; the  

excavated  earth  would  not  be  a  specie  of  minor  mineral  

under  Section  3(e)  of  the  Act  of  1957  read  with  the  

Notification dated 3.2.2000.

17. Insofar  as  the  appeal  filed  by  the  Nuclear  Power  

Corporation  is  concerned,  the  purpose  of  excavation,  ex  

facie, being relatable to the purpose of the grant of the land  

to the Corporation by the State Government, the extraction  

of ordinary earth was clearly not for the purposes spelt out  

by  the  said  Notification  dated  03.02.2000.   The  process  

undertaken by the Corporation is to further the objects of the  

grant in the course of which the excavation of earth is but  

coincidental.  In this regard we must notice with approval the  

following  views  expressed  by  the  Bombay  High  Court  in  

Rashtriya Chemicals and Fertilizers Limited  Vs. State  

of  Maharashtra  and  Others1 while  dealing  with  a  

somewhat similar question.

1  AIR 1993 Bombay 144

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14. If  it  were  a  mere  question  of  Mines  and   Minerals Act, 1957 covering the removal of earth,   there  cannot  be  possibly  any  doubt  whatever,   now,  in  view of  the  very  wide  definition  of  the   term  contained  in  the  enactment  itself,  and  as   interpreted by the authoritative pronouncements   of  the  Supreme  Court.   As  noted  earlier,  the   question involved in the present case is not to be   determined  with  reference  to  the  Central   enactment but with reference  to the clauses in   the grant and the provisions in the Code.  When it   is noted that the Company was given the land for   the  purpose  of  erecting  massive  structures  as   needed  in  setting  up  a  chemical  factory  of  the   designs  and  dimensions  of  the  company,  the   context would certainly rule out a reservation for   the State Government of the earth that is found in   the land.  That will very much defeat the purpose   of  the  grant  itself.   Every  use  of  the  sod,  or   piercing of the land with a pick-axe, would, in that   eventuality,  require  sanction  of  the  authorities.   The interpretation so placed, would frustrate the   intention of the grant and lead to patently absurd   results.    To  equate  the  earth  removed  in  the  process of digging a foundation, or otherwise, as a   mineral  product,  in  that  context,  would  be  a   murder  of  an  alien  but  lovely  language.   The   reading of  the entire grant,  would certainly  rule   out a proposition equating every pebble or particle   of  soil  in  the  granted  land  as  partaking  the   character of a mineral product.  In the light of the   above conclusion, I am clearly of the view that the   orders of the authorities, are vitiated by errors of   law apparent on the face of the record.  They are   liable to be quashed.  I do so.”

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18. For the aforesaid reasons all the appeals are allowed,  

however,  with  the  direction  that  in  the  cases  of  the  

appellant-builders the respondent-State will be at liberty to  

proceed  further  in  accordance  with  the  observations  

contained in this order if it is so advised. So far as the appeal  

of  the  Nuclear  Power  Corporation  is  concerned  the  writ  

petition is allowed and the orders impugned before the High  

Court are set aside and quashed. In view of our conclusions  

above, we do not consider it necessary to go into the larger  

question raised i.e. the constitutionality of the provision of  

Section  48(7)  of  the  Code  which  issue  is  left  open  for  

decision in an appropriate case.   

..........………………………J. [RANJAN GOGOI]

…..........……………………J. [R.K. AGRAWAL]

NEW DELHI, DECEMBER 03, 2014.

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