Premium Granites v State of Tamil Nadu (1994)

This is not a labour case on its facts — it concerns granite quarry leases — but it is cited in labour law for a proposition that recurs whenever a statute gives Government power to act "in the public interest": that expression is not vague. It is "a word of definite concept", and a discretion bounded by it, and by a duty to record reasons, is not unguided power offending Art. 14.

The case also teaches three general points: guidelines need not be spelt out in the provision itself but may be gathered from the setting of the Act and the rules; a power of relaxation or exemption is not invalid merely because it departs from the general rule; and it is not for courts to judge whether a public policy is wise.

Rule 39 of the Tamil Nadu Minor Mineral Concession Rules, made under s. 15 of the MMRD Act, provided that, notwithstanding anything in the rules, the State Government, if of opinion that "in the interest of mineral development and in the public interest" it was necessary, might by order and for reasons to be recorded grant or renew a lease or permission to quarry, or allow working of a quarry, on terms different from those laid down in the rules.

It was introduced against a history of frequent policy changes on quarrying black granite in Government lands. Rule 8(C), inserted in 1977, confined such quarrying to Government agencies; it was later amended to allow leases to persons with industries, and in 1992 amended again to confine leases to Government companies and companies holding letters of commitment. Persons who had set up industries under the earlier rules were left ineligible. Rule 39 was the State's answer to that hardship.

Durai Raju Naidu, whose quarry lease had expired and who feared that Rule 39 would be used to grant it to someone else, challenged the rule in the Madras High Court. He argued that the State could not frame such a rule under s. 15, and that the rule conferred arbitrary, unguided power offending Art. 14 because the expression "public purpose and interest of mineral development" was vague. The Division Bench rejected the first ground but accepted the second and declared Rule 39 unconstitutional. It also set aside leases granted under Rule 39 in writ petitions by other parties. Premium Granites and others appealed.

1. Does Rule 39 confer unguided and uncanalised power, so as to offend Art. 14? Are "mineral development" and "public interest" vague expressions?
2. Must Rule 39 be read down so that it only permits varying the terms and conditions of a lease, and not relaxation of policy provisions such as Rule 8(C)?
3. What was the fate of the leases set aside only because Rule 39 had been struck down?

The appeals were allowed. The High Court's decision was set aside and Rule 39 declared legal and valid. No order as to costs.

"Mineral development" and "public interest" are not vague

The Court held that "mineral development is not a vague expression and the MMRD Act and the rules framed under it, clearly furnish the scope and purport of the word" — scientific exploitation of minerals without waste being part of it. On public interest: "The expression "public interest" finds place in the Constitution and in many enactments which have since been noted and considered by this Court in various decisions. The said expression is, therefore, a word of definite concept."

It accepted too "that the guidelines need not be expressly found in the impugned provisions but such guidelines can be gathered from the setting of the Act and the rules framed thereunder", relying among others on Workmen of Meenakshi Mills Ltd.

The discretion is structured, not arbitrary

The power under Rule 39 "cannot be made arbitrarily, capriciously and on subjective satisfaction of the authority concerned but the same is to be exercised within the parameters of "mineral development" and "in public interest" which as aforesaid, are not vague and indefinite concepts." Following the Constitution Bench in Meenakshi Mills, the requirement of recording reasons itself excludes chances of arbitrariness, and judicial review is an adequate safeguard even without an appeal.

The Court accepted the observation in Delhi Transport Corpn against leaving matters to discretion where they can be covered by rule, but added that "it is not always feasible and practical to lay down such exhaustive written guidelines which can cover all contingencies." It concluded: "We are, therefore, unable to hold that Rule 39 is per se obnoxious and having contained unbridled, unguided and uncanalised discretionary power offends Article 14 of the Constitution."

Relaxation provisions and policy

The Court refused to read Rule 39 down. Rule 8(C) does not hold a supreme position; it is subject to the other rules. A provision of relaxation or exemption is valid if it "basically and intrinsically does not violate the purpose of the statute rendering it unworkable but it is consistent with the purpose of the statute". Considerations of foreign exchange and export through scientific quarrying, polishing and sizing of granite were not alien to mineral development in the public interest.

On policy: "It is not the domain of the court to embark upon unchartered ocean of public policy in an exercise to consider as to whether a particular public policy is wise or a better public policy can be evolved." The Court intervenes only when a policy is said to infringe fundamental or statutory rights.

Relying on Ramana Dayaram Shetty v International Airport Authority, the Court held that a provision empowering departure from a prescribed norm is not per se discriminatory; whether a departure in a given case rests on an irrational, unreasonable or discriminatory principle must be demonstrated in court.

The leases

The High Court's orders cancelling leases only because Rule 39 had been declared invalid were also set aside. But the Court made clear that "whether the exercise of power under Rule 39 in a given case has been properly made or not can always be questioned", and the High Court could decide that on merits.

"Public interest" is an expression of definite concept, and "mineral development" takes its content from the MMRD Act and the rules; a power to relax the rules exercisable only in the interest of mineral development and in the public interest, for reasons recorded in writing, is not unguided or uncanalised and does not offend Art. 14. Guidelines for a discretionary power may be gathered from the setting of the Act and the rules. A relaxation or exemption provision consistent with the purpose of the statute is valid, though each individual exercise of it remains open to challenge.

• Direct question: Is the expression "public interest" too vague to guide the exercise of statutory power? Cite Premium Granites: it is a word of definite concept, and guidelines can be drawn from the scheme of the statute.
• Problem question: a labour statute lets Government exempt an establishment "in the public interest". Argue validity from Premium Granites — definite concept, reasons recorded, judicial review available — while noting that a particular exemption can still be attacked as arbitrary.
• Link: cited in Orissa Textile and Steel Ltd v State of Orissa (2002) as being to the same effect — that the expression is of a definite concept with nothing vague about it.