M/S. Grinding Mills and Others Vs. State of Rajasthan and Another - Court Judgment

Heard on the question of admission.

Petitioners have questioned vires of Rule 5(6) of the Rajasthan Minerals (Prevention of Illegal Mining, Transpiration and Storage) Rules, 2007 (hereinafter referred to as 'the Rules of 2007').

Petitioners have submitted that petitioners are Small Scale Industries dealing in processing of minerals in Industrial Area/RIICO Area or Trading of minerals at Beawar, District Ajmer. Petitioners are registered as SSI Units with the District Industries Centre, Ajmer/Beawar. Petitioners purchased raw mineral from mining operators, who have been granted lease's of mines. The raw minerals felspar, quartz and other mineral are supplied / sold to the petitioners along with 'Rawanna' i.e. a form of permit certifying the mineral taken out from the mines leased by the Department of Mines and Geology and payment of royalty on the mineral. In turn, the raw mineral felspar, quartz and other mineral are processed/converted into powder by grinding and supplied/sold in the open market/to other industries in the State of Rajasthan or other States in India. Thus, the 'Rawanna' is withheld /kept by the petitioners and the raw mineral is converted into powder i.e. the finished goods and the same is sold/supplied to other prospective purchasers, units or industries. Petitioners have referred Section 4 of the Mines and Minerals (Development and Regulation) Act, 1957 (hereinafter referred to as 'the Act of 1957'), according to which, no person shall transport or store or cause to be transported or stored any mineral otherwise than in accordance with the provisions of this Act and the Rules made there-under. As per Section 4(3) of the Act of 1957, any State Government may, after prior consultation with the Central Government and in accordance with the Rules under Section 18, undertake reconnaissance, prospecting or mining operations with respect to any mineral specified in the First Schedule in any area within that State which is not already held under any reconnaissance permit, prospecting licence or mining lease. In exercise of the powers conferred under Section 23-C of the Act of 1957, State Government made the Rules namely; Rajasthan Minerals (Prevention of Illegal Mining, Transpiration and Storage) Rules, 2007. Rule 5(6) of the Rules of 2007, which has been questioned, provides that every person who transports the minerals shall carry Transit Pass or Rawanna or Royalty Receipt, as the case may be, with the vehicle and shall produce the same on demand to in charge of check post or authorized officer.

Petitioners have questioned the vires of the aforesaid Rule on the ground that it violates the mandate of Article 19(1)(g) of the Constitution of India, which provides protection to practise any profession, or to carry on any occupation, trade or business. It has further submitted that Article 304(b) of the Constitution of India has not been complied with as assent of the President of India has not been obtained, which is necessary for any enactment relating to the field of interstate trade or commerce. The said Rule has the effect of invading of freedom of free trade, interstate trade also and it is beyond the power of the State to impose a restriction without compliance of the provisions of Article 304(b) of the Constitution.

In the return filed by the respondents, it is contended that every purchaser of the mineral from a legal lease-holder has to have a Rawanna from the lease-holder. The assertion of the petitioners that it is not feasible/practicable for each truck to carry Transit pass, Rawanna or Royalty Receipt, as the case may be, cannot be countenanced. Rule cannot be said to be ultra-vires in any manner. It does not impose any restriction. Notice has been issued in accordance with the provisions of the Rules of 2007 as there was violation of Rule 3. The condition No.2, carrying Transit Pass, Rawanna or Royalty Receipt, cannot be said to be an unreasonable restriction on the freedom of trade. The petitioners are not entitled for any relief whatsoever. The petition may be dismissed.

A rejoinder has also been filed by the petitioners reiterating the facts mentioned in the writ petition and it is submitted that respondents have ignored the proviso to the Rule 4(1) of the Rules, 2007, which deals with the procedure for registration.

Shri S.K.Saksena, counsel appearing on behalf of the petitioners, submitted that Rule 5(6) imposes unreasonable restriction on the freedom of trade as envisaged under Article 19(1)(g) of the Constitution of India. Freedom of interstate trade or commerce is going to be affected by the condition of carrying of Transit Pass or Rawanna/Royalty Receipts etc., as Rawanna Receipts are being issued for purchase of mineral in huge quantity for the purposes of grinding by the SSI Units and thereafter finished product is sold to so many purchasers as such it is not possible to carry Rawanna or Royalty Receipts at the time of transport of the goods. Thus, he has submitted that the condition of carrying Transit Pass, which has been imposed, was also unwarranted. The assent of the President has not been obtained, which was necessary in view of the provisions contained in Article 304(b) of the Constitution of India inasmuch as the said Rule imposes restriction on the freedom of interstate trade, commerce and intercourse within that State, hence, the Rule be declared as ultra-vires.

Shri Shashikant Saini, counsel appearing on behalf of respondents has submitted that it cannot be said to be a restriction on the freedom of trade. It is a regulatory measure.

Rule 5(6) of the Rules of 2007 is quoted below :

“Every person who transports the minerals shall carry Transit Pass or Rawanna or Royalty Receipt, as the case may be, with the vehicle and shall produce the same on demand to in charge of check post or authorized officer”.

A bare perusal of the Rule makes it clear that while mineral is transported, a person, who is transporting the mineral, shall carry Transit Pass or Rawanna or Royalty Receipt. It may be true that Rawanna is issued by the lease-holder to purchaser. In turn after finishing/grinding, it may be in turn sold in different quantities to subsequent purchasers. In case it may not be possible to possess the Rawanna Receipts, however, we find that under Rule 5(6) of the Rules of 2007, there is alternative requirement that either of the three documents i.e. Transit Pass/ Rawanna /Royalty Receipt shall be carried when the mineral is transported. It is not in dispute that petitioner is deemed to be registered for the purpose of issuance of Transit Pass and Transit Pass can be issued to the petitioners is rightly admitted by the learned counsel appearing on behalf of the petitioners. Thus, Transit Pass can be carried by the person, who has subsequently purchased from petitioners. In our opinion, condition of Transit Pass or Rawanna or Royalty Receipt by any stretch of imagination cannot be said to be a restriction imposed upon the freedom of interstate trade, commerce within the State. In our opinion, it is a regulatory measure so as to ensure that there is no illegal carrying of the minerals and so as to prevent illegal mining and evasion of payment of Royalty. Transport can be done by way of Transit Pass or Rawanna or Royalty Receipt, as the case may be either of document can be possessed. The Rule 5(6) of the Rules of 2007 cannot be said to be imposing any restriction upon the freedom of trade. Thus, the submission raised by learned counsel appearing on behalf of the petitioners that it is not possible to carry the Transit pass or Rawanna or Royalty Receipt by purchaser, who has purchased the small quantity is devoid of substance, such a purchaser can carry Transit Pass. Thus, Rule cannot be said to be unworkable, as submitted by learned counsel appearing on behalf of petitioners. It can be given full effect to and is wholesome regulatory measure, such provisions are to be found in enactments dealing with the minerals, forest produce etc. It is in order to check the illegal mining and to ensure that royalty has been paid.

In Sodhi Transport Company and Anr. V/s The State of UP (1983 52 STC 440 All), the Allahabad High Court has considered the provisions of Section 28-B of the UP Sales Tax Act requiring the driver or other person in charge of such vehicle shall obtain in the prescribed manner a transit pass from the officer in charge of the first-check post or barrier after his entry into the State and deliver it to the officer-in charge of the last check-post or barrier before his exit from the State, failing which it shall be presumed that the goods carried thereby have been sold within the State by the owner or person in charge of the vehicle and Rule 87 of the UP Sales Tax Rules which provides that in order to obtain a pass under Section 28-B, driver or other person in charge of vehicle is to submit application in triplicate on Form XXXIV and as per sub rule (3) of Rule 87, the driver or other person in-charge of the vehicle or vessel shall stop his vehicle at such Exit Check-Post, surrender the duplicate copy of the pass and allow the officer-in-charge of the check-post to inspect the documents, consignments and goods in order to ensure that the consignments being taken out of the State are the same for which pass had been obtained. It has been held by the Allahabad High Court that these provisions aimed at checking evasion of tax are part of the incidental or ancillary powers to the power of taxation. There is no arbitrariness, unreasonableness or excessiveness in the measure adopted. The provisions cannot be said to be violative of Articles 19(1)(g) and 301 of the Constitution of India and they do not create any impediment, restriction or prohibition to carry on business or trade or exercise of right to trade, commerce or intercourse throughout the territory of India. They have only to observe the formality of obtaining the transit pass and carrying necessary documents with them pertaining to the goods transported by the vehicles. These measures are only regulatory in character. Neither Section 28-B nor Rule 87 place any such restriction on the movement of goods. They are neither discriminatory nor arbitrary or unreasonable and are not violative of Articles 14, 19(1)(g) of the Constitution. The difficulty projected by the petitioners are more imaginary than real. Section 28B and Rule 87 are machinery provisions.

In Sodhi Transport Co.and ors. V/s State of UP and ors.[(1986) 2 SCC 486)], the Apex Court has also considered the validity of the aforesaid provisions of Section 28-B and Rule 87 and upheld the validity of the said provisions holding held that the decision of the High Court upholding the constitutionality of Section 28-B of the Act and Rule 87 of the Rules does not call for any interference. The Apex Court has further held that on failure of driver or other person in charge of vehicle carrying the goods to deliver the transit pass to officer in charge of check-post or barrier before his exit from the State, “it shall be presumed” that goods sold within State, it raises a rebuttal presumption. Sections 28, 28-B and Rule 87 are only machinery provisions and not charging provisions.

In State of Bihar and ors. V/s Harihar Prasad Debuka and ors. [(1989) 2 SCC 192], the Apex Court held that there is no direct and immediate restriction of interstate trade, commerce or intercourse as a result of the requirement to fill up and carry the Forms. In other words, the continuity of the transport will not be obstructed or interrupted. Stoppage of the transporting vehicle for the purpose of obtaining and filling in the appropriate Form would, in our opinion, not amount to interruption but only a stoppage. A mere stoppage of the movement of the vehicle will not have any direct or immediate effect on the trade. The checking of documents or the filling in and submission of Forms and returns, detour to a public weighbridge and the like may be an inconvenience and unless they are shown to be unreasonable and not in public interest, the court may apply the maxim 'de minimis non curat lex'. A stoppage of the vehicle for roadside repair, for taking petrol, for allowing the driver to take rest or his meals would not naturally amount to interruptions of trade, commerce and intercourse. Public interest also will not allow transit regulations and allied measures to be violated, thwarted or evaded through the channel of interstate trade, commerce and intercourse, unless of course the measures are shown to be unreasonable. In this view of the matter, this case would squarely be covered by the decision in the case of Sodhi Trasnprt Co.(supra). The Apex Court in the case of Harihar Prasad (supra) further held that regulatory or compensatory measure cannot be regarded as violative of the freedom. Such measures may be of diverse nature or various kinds such as traffic regulation, making of declarations and filing of returns within reasonable limits. Such measures cannot be challenged as interfering with the freedom guaranteed by Article 301 unless they are shown to be colourable measures to restrict the free flow of trade, commerce and intercourse.      In the instant case, by the impugned Rule 5(6), person who transports the minerals shall carry Transit Pass or Rawanna or Royalty Receipt, as the case may be, with the vehicle and shall produce the same on demand to in charge of check post or authorized officer and such rule does not in any manner put restriction of inter-state trade or commerce. The provision also does not cause any impediment or obstruction or hindrance in the free flow of transport. We find no arbitrariness or unreasonableness in the impugned Rule 5(6), rather it appears to have been framed to ensure checking of illegal mining and payment of royalty. Mere asking to carry on Transit Pass or Rawana or Royalty Receipt and to produce the same on demand appear to be regulatory measure in character, which cannot in any way infringe the right or freedom of interstate, trade or commerce. The Rule in question does not suffer from the vice of arbitrariness nor there is colourable exercise of power nor it can be regarded as violative of Articles 19(1)(g) and 301 of the Constitution of India.

Coming to the submission raised by learned counsel for petitioners with respect to applicability of Article 304(b), it cannot be said to be attracted as it can not be said that Rule 5(6) of the Rules of 2007 imposes any restriction on the freedom of interstate trade or commerce. It is simplicitor a regulatory measure, hence, it was not necessary to obtain assent of the President. Thus, we find no ground so as to interfere.

Resultantly, the writ petition, being devoid of merits, is dismissed. Stay application is also dismissed.