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State of Gujarat through Principal Secretary v. Jayeshbhai Kanjibhai Kalathiya

Civil Appeal · 2019 INSC 297Decided 1 Mar 2019
Civil Appeal No. 1 of 0373
Justice A.K. Sikri · Justice S. Abdul Nazeer · Justice M.R. Shah

Background

Gujarat allowed private parties to mine and process ordinary river sand (a "minor mineral") under State-granted leases, and some of these operators sold their processed sand to builders in other States such as Maharashtra. In 2010, the Gujarat Government passed a resolution and then amended its mining rules (inserting Rule 44-BB, later Rule 71) to completely prohibit the movement of sand beyond Gujarat's borders, making such transport a punishable offence even with a valid royalty pass. Affected leaseholders and traders challenged this ban in the Gujarat High Court, which struck down the rule as going beyond the State's rule-making powers and as violating the constitutional guarantee of free trade and commerce between States (Article 301). The State of Gujarat appealed to the Supreme Court, while similar bans upheld by the Andhra Pradesh and Madras High Courts formed part of the broader dispute.

Decision Breakdown

The Supreme Court held that while the Mines and Minerals (Development and Regulation) Act, 1957 empowers State Governments to make rules regulating mining, transport and storage of minor minerals (to prevent illegal mining, for instance), this delegated power cannot be stretched into a total prohibition on taking a lawfully mined, legal commodity across State borders: that would directly offend the freedom of trade, commerce and intercourse throughout India guaranteed by Article 301. The Court reasoned that restrictions on inter-State movement of goods can only be justified under Article 304 through a validly enacted law of the State Legislature (not subordinate rules) and only on specific constitutional grounds such as a genuine scarcity of the resource, which Gujarat had not established here, since nothing stopped it from capping how much sand could be excavated rather than banning its onward sale outside the State. The Court affirmed the Gujarat High Court's view, disapproved the contrary view taken by the Andhra Pradesh and Madras High Courts, and dismissed the State's appeals.

Lesson Learnt

A State cannot use subordinate mining rules to completely cut off the sale of a legally extracted natural resource to buyers in other States: blanket export bans of this kind infringe the constitutional right to free trade across India and must instead be enacted, if at all, as a properly justified State law meeting the strict conditions of Article 304.

Official source (sci.gov.in)View Judgment (PDF)

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