Dated the 10th July, 2000

Subject: Note for Committee of Secretaries regarding amendment of the Fifth Schedule to the Constitution of India in the light of the Samata Judgement

1. Mines and Minerals (Development & Regulation) Act 1957 (hereinafter referred to as the Act) has been framed by the Central government under Entry 54 of the Union List, List-I of the Seventh Schedule to the Constitution. Mineral concessions like prospecting
licenses, mining leases are granted in accordance with the provisions of the Act by the respective State Governments. The State Governments can also make local amendments to the Act. Andhra Pradesh Government had amended the Act on 7th August 1991 by inserting a new Section 11(5) to the Act which provides that no prospecting license or mining lease shall be granted in the Scheduled areas of Andhra Pradesh to any person
who is not a member of the scheduled tribes. (As per the Act this restriction is not applicable to a State or Central Government undertaking). Andhra Pradesh had also notified the Andhra Pradesh Scheduled Area Transfer Regulation, 1959 (hereinafter referred to as the 1959 Regulations) to regulate the transfer of land in the scheduled areas of Andhra Pradesh.

2. The Supreme Court in a majority decision dated 11.7.97 disposed of Civil Appeal Nos.4601 and 4602/97 filed by Samata, a non-government organisation (NGO, working in the East Godavari district of Andhra Pradesh) [Reported in 1997 (4) SCALE Page 746 - hereinafter referred to as the Samata judgement]. The Union of India was not a party in the Samata case nor was any State Government other than the Government of Andhra Pradesh. However directions have been given to the Union Government as well as other State Governments in the case (para 129, 130, 131 of the Judgement appended as Annexure-1).

3. In the majority decision of the Supreme Court in the Samata case (JJs Ramaswamy and Saghir Ahmed forming the majority and Justice Pattanaik dissenting), it has been held that, a. In the Andhra Pradesh Scheduled Area Transfer Regulation, 1959 'person' includes the State Government; and 'transfer of immovable property' includes 'the prospecting licenses and mining lease'; b. All transfers of land belonging to the State
Government at any time in the past or present in "scheduled area of Andhra Pradesh" to non-tribals, and of mining leases/prospecting licenses whensoever, granted by the State Government in such areas to non-tribals were absolutely void and impermissible and
c. All mining operations in the scheduled areas of Andhra Pradesh by industrialists may be stopped forthwith.

4. The Supreme Court has also directed that similar Acts in other States do not totally prohibit grant of mining leases of the land in the scheduled areas, action would be initiated by the State Government for similar enactments. Implications of the Supreme Court Ruling in the Samata Case:

(a) In the State of Andhra Pradesh

5. The directive of the Supreme Court that all industries, be they natural or juristic persons, to stop forthwith operations within the scheduled areas, except where the lease has been granted to the State undertaking has far reaching consequences. In the light of the judgement, it will be impermissible for the State Government of Andhra Pradesh to transfer land to non-tribals and all lands held by industries in tribal areas will also be illegal. This implies that not only all mineral based industries, which draw their miner ales requirements from mining leases held in tribal areas, such as cement industry and all other industries that are located in the scheduled areas of Andhra Pradesh will have to be shut down.

6. The judgement further implies that large mineral resources including Bauxite and limestone in the State of Andhra Pradesh may never be exploited because mining leases in these areas cannot be given any one other than the tribals. Similarly no major industrial
investment may never take place in the scheduled areas of Andhra Pradesh as the State Government will not be able to transfer even its own land to any one other than tribals for setting up industries. Andhra Pradesh has the second largest deposits of Bauxite in the
country, which lies largely in the scheduled areas. Similarly, large resources of limestone are also available in the scheduled areas. Exploitation of these mineral resources require investment of thousands of crores of rupees and unless major Indian subsidiaries of foreign corporate bodies are allowed to take up mining operations in scheduled areas, these mineral resource may not be exploited for the economic growth of the State.

(b) Implications for other States:

7. Besides Andhra Pradesh, scheduled areas have been notified in the States of Himachal Pradesh, Gujarat, Madhya Pradesh, Bihar, Orissa, Rajasthan and Maharashtra. The Samata Judgement may have similar effect on these States in the years to come.

8. It may be noted that Regulations are framed under the Fifth Schedule to the Constitution, essentially to prevent the exploitation of tribals by non-tribals and alienation of agricultural land of tribals being passed on to non-tribals. It could never have been the
intention of the framers of the Constitution that no economic activity should take place in the scheduled areas or that the tribals should always remain isolated from the main stream of society. Apparently, the interpretation given by the Supreme Court in the Samata Judgement will bring to halt all industrial activities including mining operations in the
scheduled areas in Andhra Pradesh and later in other States which in turn will hamper the economic activities in the scheduled areas in the country.

9. The Samata judgement has raised several substantial questions of law as to the interpretations of the Constitution, which are as follows: -

(i) The Constitutional Provisions (Fifth Schedule and Article 244) empower the Governor of a State to regulate and make regulations for Scheduled areas and for Scheduled Tribes so that what rightfully belongs to the tribals cannot be taken away by any means. The
majority decision in the Samata Case has held that the granting of mining lease to non-tribals in Scheduled Area is violative of the Fifth Schedule. However, it is felt that Fifth Schedule and Article 244 cannot purport to take away the sovereign right of the government to transfer its land in any manner. Justice Pattanaik in his dissenting view has observed that "A combined reading of Article 244 and Fifth Schedule of the Constitution would indicate that there is no constitutional obligation on the Governor to make regulations prohibiting transfer of Government land in favour of a non-tribal within the Scheduled Area".

(ii) The majority decision has directed for all States where similar Acts do not totally prohibit grant of mining leases to non-tribals in Scheduled Area, mining leases in such areas can be granted by the State Government only after formation of Committee etc,
(para 129, 130). Such a direction raises fundamental interpretation issue relating to the Constitution on the applicability of a Central Act Mines and Mineral (Development & Regulation) Act, 1957 - (MMDR Act) which was enacted under the Constitutional Provisions of the Seventh Schedule of the Constitution (Entry 54 - List 1). The MMDR Act, 1957, which extends to the whole of India, empowers the State governments to
grant mining leases and the Fifth Schedule to the Constitution does not fetter the operation of the Parliamentary Law. Further, the Fifth Schedule empowers the Governor to make regulations, which he may not exercise, while the majority judgement at para 50 states that the Fifth Schedule 'enjoins' the Governor to make regulations.
(iii) The decision in the Samata case that the 1959 Regulations are retrospective in intent is a conclusion diametrically opposed to a binding decision (of September 1995) of a Bench of three Judges of the Supreme Court - Dy. Collector vs. S.Venkataramaniah 1995 (6) SCC 545.
(iv) The 1959 Regulations were made by the governor under Paragraph 5(2) of the Fifth Schedule to regulate transfer of land in the Scheduled Areas specifically mentioned in the Regulation. In the making of this Regulation, the Governor obviously did not intend to
specifically affect any of the provisions of the MMDR Act, 1957 in the Scheduled Areas in the State, much less to add to repeal or amend any of its provisions. The MMDR Act 1957, which extended to the whole of India, continued to apply to Scheduled Areas in the
State of Andhra Pradesh in so far as they related to mining leases and prospecting licenses granted by the State Government under the provisions of the MMDR Act,
1957. In making the 1959 Regulations the Governor has not purported to add, to repeal or amend any part of the word "persons" in Clause 3 of the 1959 Regulations could not possibly have meant the State Government (as the authority empowered under the MMDR Act, 1957, to grant mining leases/prospecting licenses) as this would otherwise involve an amendment of the provisions of the MMDR Act, 1957, as applicable to the Scheduled Areas.

It may be noted that Justice J.Pattanaik recorded in the minority Judgement in the Samata Case that "in my considered opinion the expression 'person' used in Section 3(1)(a) of the Regulation should have its natural meaning throughout the Section to mean a 'natural person' and it does not include the State".

10. In addition to the several substantial questions of law as to the interpretation of the Constitution narrated in the preceding paragraph, the moot question is the interpretation of para 5(2) of the Fifth Schedule to the Constitution [Appended as Annexure -
2]. While interpreting para 5(2), the Court cannot frame regulations and provide something more than what is provided in para 5(2). Every Governor has power to frame Regulations depending upon the need and for the peace and good governance of any scheduled area in his State. The majority view in the Samata case has virtually rewritten the Fifth Schedule to the Constitution by making it mandatory for the Governor to make regulation prohibiting the State Government from transferring its lands to non-tribals.

Action taken by Ministry of Mines on the Samata judgement:
11. As stated in the first paragraph, Union of India was not a party to the Samata case. State Government of Andhra Pradesh vide their letter dated 21st October 1997, informed the Ministry of Mines about the Samata judgement and requested that a review petition may be filed by the Union Government looking to the far reaching implications of the Samata judgement. The consequent review petition filed by the Central Government was dismissed by the Supreme Court on 4.2.1999. Thereafter the Central Government on the advice of the then Solicitor General, filed (i) an application for impleadment as a party respondent, (ii) application for modification of the court order dated 11.7.97 and (iii) an application for permission to file a petition for modification. These three
applications were mentioned before a two Member Bench on 3.5.1999, which acceded to the request that a three Member Bench may deal with these applications. Thereafter the matter was taken up for hearing on 4.2.2000 and the applications were dismissed by a
three Member Bench of the Supreme Court.

12. As several substantial questions of law as to the interpretation of the Constitution have been raised by the Samata Judgement, a request was made to the Attorney General through the Legal Affairs Department to refer the matter to a Constitutional bench of Supreme Court under article 145 of the Constitution or in the alternate advice as to whether the Fifth Schedule to the Constitution of India can be amended to counter the adverse effects of the Samata Judgement.

Opinion of the Attorney General:

13. Attorney General has given his opinion on the queries posed to him and has advised that it would be futile to move any further application for review of the Samata Judgement of any part of it. Attorney General has opined that - "The fact of the matter is that the majority judgement of the Supreme Court in the Samata case is the law of
the land and holds the field. It is not feasible to move an application before the Supreme Court in Vacuo for reference to a Constitutional bench of the Supreme Court. Such an application can be made if another matter involving the same question is either pending
before the Supreme court or is brought up before the Supreme Court, the Supreme Court, if it is satisfied that its previous Judgement requires reconsideration, may grant the request for reference to a Constitutional Bench. In view of the previous order of the Supreme Court dated 4.2.1999 by which review petition was dismissed on merits, it may be difficult to persuade the Supreme Court to adopt this course. However, an effort can be made in that direction but only in the form and manner that I have indicated".

14. As regards the alternate suggestion, the Attorney General is of the view that the Fifth Schedule to the Constitution of India can be amended to counter the adverse effect of the Samata judgement. His opinion on this query is as follows: "The other course open to parliament is to effect necessary amendments so as to overcome the said Supreme Court Judgement by removing the legal basis of the said Judgement. Such a course of action is legally permissible. In this connection, attention is invited to the Supreme court judgement in Prithvi Cotton reported in 1970 (1) SCR 338. The Constitutional amendment will have to be in conformity with Article 368 of the Constitution. Such an amendment would not involve any question of the basic structure."

15. The opinion expressed by the Attorney General has been concurred by the Department of Legal Affairs and the Minister for Law and Justice. In the light of the
opinion of the Attorney General, the Fifth Schedule to the Constitution can be amended.

16. It is learnt that recently the Andhra Pradesh Tribal Advisory Council has resolved to request the Andhra Pradesh Government to amend the 1959 Regulations to facilitate mining by private parties in tribal areas and as per newspaper reports, Andhra Pradesh Government is requesting the Centre to amend the 1959 Regulations.

17. Samata judgement will have adverse effect not only on mining sector but on all other non-agricultural activities specially industrial activity and will impact the economic development throughout the country. It may be noted that situation of tribals differ in different States. Individual tribal or group of tribals may not have and normally do not have necessary infrastructure to systematically and scientifically exploit the mineral resources and other resources for the socio-economic development of the State in general and tribals in particular. Mining activity being temporary can never be understood to be
deprivation of all rights of tribals. Minerals vest in the States and surface rights vest in the owner, be it the State or a tribal. A balance has to be struck between exploitation of mineral resources and advances of technology keeping in mind ecology and environment
on one hand and development of the tribals on the other hand. Participation of the tribals in these activities where mineral resources are found will encourage them to think of economic development. Mere provision of land without any other help will not in
any way advance their status, socially or economically. Tribals must be made to slowly get into the national mainstream. Keeping the tribals in isolation perpetually without bringing them in the mainstream, by putting a break to the development of the minerals reserves in tribal areas perhaps may be misplaced. It is essential that tribals are encouraged to take active part in non-agricultural activities including mining and any enactment which restrict this may be harmful to the interest of the tribals.

18. The impasse created by the Samata judgement can perhaps be resolved only through an amendment of the Fifth Schedule to the Constitution as opined by Attorney General. One way could be to add the following explanation after paragraph 5(2) in the
Fifth Schedule: -

"Explanation: The regulations framed under paragraph 5(2) shall not prohibit or restrict the transfer of land by members of the schedule tribe to the Government or allotment by Government of its land to a non-tribal for undertaking any non-agricultural operations including reconnaissance or prospecting or mining operations under the provisions of MMDR Act 1957"

19. It may be noted that as per para 7 of the Fifth Schedule, Parliament may from time to time by law amend the Fifth Schedule and that no such law shall be deemed to be an amendment to the Constitution for the purpose of Article 368 which means that Fifth Schedule can be amended by a simple majority in the two houses of the Parliament.

20. Committee of Secretaries may like to consider the implications of the judgement and trace a view on future course of action to counter its adverse effects.

Joint Secretary to the Government of India

                                                                            Telephone No : 3384886

Communities Command Over Natural Resources