PROMOTERS & BUILDERS ASSN.OF PUNE Vs STATE OF MAHARASHTRA .
Bench: RANJAN GOGOI,R.K. AGRAWAL
Case number: C.A. No.-010717-010717 / 2014
Diary number: 37171 / 2010
Advocates: NIRNIMESH DUBE Vs
ASHA GOPALAN NAIR
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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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