State of Meghalaya and others v. Meghalaya Contractors Association and another
2001-05-19
D.BISWAS, J.N.SARMA
body2001
DigiLaw.ai
Judgement BISWAS, J. :- This Writ Appeal by the State of Meghalaya and others has been preferred against the judgment and order dated 2-7-1999 passed in Civil Rule No. 217 (SH) of 1997 by the learned single Judge. 2. We have heard Mr. N. N. Lahiri, the learned Advocate General of the State of Meghalaya and Mr. D.P. Chaliha, the learned senior counsel for the respondents. 3. The respondent Association, namely, the Meghalaya Contractors Association filed the aforestated Civil Rule before the Shillong Bench of this Court for issue of a writ of mandamus directing the respondents not to realize royalty from the members of the petitioner Association on forest produce as per schedule of rates prescribed under the Meghalaya Forest Regulation (Application and Amendment) Act, 1973. 4. The members of the petitioner Association are registered contractors with the Public Works Department,Government of Meghalaya and in execution of the contractual works they consume a huge quantity of building materials procured from Government approved Quarries and mines as specified in the tender papers. Their case is that they are consumers and users of the minor minerals and not the dealers thereof. Hence, realization of royalty from the bills submitted by them after execution of the contractual works is illegal, arbitrary and without any basis. A direction was therefore, sought to prevent the respondents from realizing the royalty. 5. The respondents contended that the law provides for collection of royalty by the State, and, particularly, because of the undertaking given by the members of the petitioner Association while signing the contract documents no direction as prayed for could be given by this Court. 6. The judgment under challenge indicates that the learned single Judge held that the collection of royalty by the State is illegal and unwarranted by law. On this finding the State Government has been restrained from deducting the royalty on use of minor minarals from the bills of the contractors. 7. Mr. N.N. Lahiri, the learned Advocate General, State of Meghalaya submitted that the Tender Notice clearly and unambiguously provides for recovery of royalty from the contractors bills and the contractors themselves signed contract documents agreeing to the deduction of royalty. Therefore, Mr. Lahiri submits that the contractors cannot claim exemption from payment of royalty as per schedule of rates incorporated in the tender documents.
Therefore, Mr. Lahiri submits that the contractors cannot claim exemption from payment of royalty as per schedule of rates incorporated in the tender documents. Clause 5 of the Tender Notice reads as follows :- "Royalty for the collection of stone, gravel, shingles and sand will have to be paid by the contractors and the same will be recovered from the contractors bill as per rates at Annexure-III." Annexure-III reads as follows :- "Forest royalty of materials. (i) Sand @ Rs.20.00 (Rupees twenty) only per cu.m. (ii) Stone gravel etc. @ Rs.40.00 (Rupees forty) per cu.m. (iii) Square stones @ Rs.48.00 (Rupees forty eight) only per cu. m. (iv) Clay and earth @ Rs.16.00 (Rupees sixteen) only per cu. m. plus 7% Sales tax and 1% surcharge on Sales tax and 15% Income-tax will be applicable on the above rates. Sd/- (K.T. Rinjah) Addl. Chief Engineer (Central Zone) P.W.D. (Rds), Meghalaya, Shillong." 8. Besides, the certificates issued by the contractors indicate that they have agreed to execute the construction works as per terms and conditions detailed in the tender papers with provision for recovery as per Annexures-II and III. Annexure-II relates to materials other than the forest products. Annexure-III quoted above clearly indicate that the contractors bound themselves by an undertaking that royalty as per Government schedule would be deducted/recovered from the bills to be submitted by them. 9. The controversy at hand therefore, has to be resolved as per terms and conditions of the contract executed by the parties. In support of the contention that it is the terms and conditions of the contract which will hold the field. We may refer to a decision of the Supreme Court in Har Shankar v. The Deputy Excise and Taxation Commissioner, AIR 1975 SC 1121 : (1975 Tax LR 1589). The relevant concept is quoted below :- "15. Learned counsel for the respondents raised a preliminary objection to the maintainability of the writ petition filed by the appellants and to the grant of reliefs claimed by them. He contends that such of the appellants who offered their bids in the auctions did so with a full knowledge of the terms and conditions attaching to the auctions and they cannot, by their writ petitions, be permitted to wriggle out of the contractual obligations arising out of the acceptance of their bids. This objection is well founded and must be accepted.
This objection is well founded and must be accepted. The powers of the Financial Commissioner to grant liquor licences by auction and to collect licence fees through the medium of auctions cannot by writ petitions be questioned by those who, had their venture succeeded, would have relied upon those very powers to found a legal claim. Reciprocal rights and obligations arising out of contract do not depend for their enforceability upon whether a contracting party finds it prudent to abide by the terms of the contract. By such a test no contract could ever have a binding force." 10. A Division Bench of this Court in Woodcrafts Assam v. The Chief Conservator of Forests, Assam, Shillong; AIR 1971 Assam and Nagaland 92 dismissed the writ petition filed by the petitioner on the ground that duty or obligation calling upon the public servant out of a contract entered into by him as such public servant cannot be enforced by the Machinery of a writ under Article 226 of the Constitution. The Court further held that the revision of rate/royalty by the State should be in conformity with the terms and conditions of the agreement. 11. Our attention has been drawn to another decision of the Supreme Court in The Divisional Forest Officer v. Bishwanath Tea Co. Ltd., AIR 1981 SC 1368 . The Supreme Court held as follows :- "To clear the ground let it be stated that obligation to pay royalty for timber cut and felled and removed is prescribed by the relevant regulations. The validity of rgulations is not challenged. Therefore, the demand for royalty is supported by law. What the respondent claims is an exception that in view of a certain term in the indenture of lease, to wit, Clause 2, the appellant is not entitled to demand and collect royalty from the respondent. This is nothing but enforcement of a term of a contract of lease. Hence, the question whether such contractual obligation can be enforced by the High Court in its writ jurisdiction.". 12. From the decisions quoted above it follows that a writ can be issued where there is executive action unsupported by law. But, where law provides for realization of royalty, an exception can be carved out only in terms and conditions of the contract.
12. From the decisions quoted above it follows that a writ can be issued where there is executive action unsupported by law. But, where law provides for realization of royalty, an exception can be carved out only in terms and conditions of the contract. In the instant case, demand for royalty by the State of Meghalaya is as per schedule notified under the Meghalaya Forest Regulation (application and Amendment) Act, 1973 and the demand is within the ambit of the terms and conditions of the contract executed by the State and the contractors. That being the position, no prohibitory orders could be passed to the appellant State restraining from realizing the royalty by way of deduction from the contractors bills. 13. Mr. Chaliha, the learned senior counsel, however, submitted that the contractors in the instant case have collected stones/gravels from private/Govt. quarries on payment of royalty and, therefore, they cannot be directed to pay the same again. 14. In the facts and circumstances of the case, we allow the appeal and set aside the impugned judgment and order dated 2-7-99 passed by the learned single Judge in Civil Rule No. 217 (SH) of 1997. However, we would like to further provide that before deduction of the royalty from the bills of the contractors they should be given an opportunity to show that they have already paid the royalty at the time of purchase from the dealers/quarry owners and on such proof, no deduction shall be made. No order as to costs. Appeal allowed.