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2002 DIGILAW 759 (PAT)

Ramesh Pd. Verma v. State Of Bihar

2002-07-17

AFTAB ALAM

body2002
Judgment 1. These four writ petitions arise from similar facts and circumstances and the petitioners in all the cases seek identical reliefs. These cases were, therefore, heard together and are being disposed of by this common judgment and order. 2. There is a single petitioner in each of the three writ petitions being CWJC Nos. 1254, 2072 and 3648 of 2002. The three petitioners hold leases granted under the Bihar Minor Mineral Concession Rules for different areas in the Pandoi river basin falling in the district of West Champaran. Pandoi river flows from Nepal and passes through the district of West Champaran in this country. Under the leases granted to the petitioners they take out stone pieces from the river-bed which are perennially washed down from the higher reaches of the river. 3. The fourth case of this batch, CWJC No. 4911 of 2002 has been filed at the instance of eight petitioners. Each of them hold leases for extraction of stones from the hills of Bidhyan range in different villages in the district of Rohtas. All the petitioners in the four cases are aggrieved by the action of the respondent authorities in levying royalty on the stone pieces extracted by them at the higher rate of Rs. 100/- per cubic metre as provided at serial no. 2 of Schedule II to the Bihar Minor Mineral Concession Rules as amended by the notification, dated 23.3.2001 (published in the official gazette, extra ordinary, dated 24.3.2001). 4. Here a brief reference to the legal provisions would be helpful in putting the matter in its proper perspective. Section 15 of the Mines & Minerals (Regulation & Development) Act, 1957 empowers the State Government to make rules in respect of minor minerals. In exercise of that power the Bihar Minor Mineral Concession Rules, 1972 were framed on 22.6.1972. Rule 26(1)(b) provides that when a lease is granted or renewed royalty would be charged at the rates specified in Schedule II. The rates of royalty and the description of minor minerals which are subject to royalty are revised from time to time. Initially, stone chips, boulder and other building stones were classified together at serial no.1 in Schedule II and, thus, attracted royalty at the same rate. Quartzite and sandstone, (varieties of stones) were classified separately with a slightly lower rate of royalty. Initially, stone chips, boulder and other building stones were classified together at serial no.1 in Schedule II and, thus, attracted royalty at the same rate. Quartzite and sandstone, (varieties of stones) were classified separately with a slightly lower rate of royalty. This would be evident from the relevant extracts from Schedule II as it stood from time to time before being finally amended by the notification, dated 24.3.2001. Schedule II : under S.O. 1054, dated 3.8.1977 Sr. No. Name of Minerals Rate per cubic metre (in rupees) 1. Building stones including stone chips, boulder, road metal and ballast. 3.00 16. Quartzite and sandstone when used for purposes of building or for making road metal and house hold utensils. 2.50 Schedule II : under S.O. 398, dated 17.8.1991 Sr.No. Name of Minerals Rate per cubic metre (in rupees) 1. Building Stone including stone chips, boulder, road metal and ballast. 12.00 16. Quartzite and sandstone when used for purposes of building or for making road metal and house hold utensils. 10.50 Schedule II : under Notification dated 29.8.1994 Sr. No. Name of Minerals Rate per cubic metre (in rupees) 1. Gitti (stone chips), metal (boulder), Sadak Banane Ka Paththar (road metal), Gitti aur Ballast Aadi Ka Nirmaan paththar. 25.00 16. Bhawan Nirman ke Paryojnarth Ya Sadak Banane Ke Kaam Main Laya Janewaia quartzite Aur Balua Paththar 20.00 5. It is, thus, to be seen that practically from the inception of the rules till the revision of Schedule II by the notification, dated 28.9.1994, for fixing the rate of royalty, stone chips were classified together with boulders from which stone chips are produced by breaking down the boulder into smaller pieces. 6. Lately, the State Government seems to have realised that by classifying boulders and stone chips together and by levying a uniform rate of royalty both on boulders and stone chips the State suffered a heavy loss of revenue because boulder when broken out into stone chips fetched a price almost 400 times higher than the price of the boulder. In the latest revision of Schedule II therefore, care was taken to plug this loop-hole in the collection of the States revenue. The original entry of serial no. 1 was split up into two parts with a view to collect royalty at a higher rate on boulders and stone pieces from which stone chips were made. In the latest revision of Schedule II therefore, care was taken to plug this loop-hole in the collection of the States revenue. The original entry of serial no. 1 was split up into two parts with a view to collect royalty at a higher rate on boulders and stone pieces from which stone chips were made. The relevant entries in Schedule II to the Rules after being amended by the notification, dated 24.3.2001 are as follows : Sr. No. Name of Minerals Rate per cubic metre (in rupees) 1. Boulder, Gravel, Shingle. 50.00 2. Boulder, Gravel, Shingle which is used for making chips. 100.00 9. Quartzite and sandstone when used for purposes of building or for making road metal and household utensils. 40.00 7. It may be noted here that in the notification, dated 24.3.2001 by which Schedule II was last revised, there was a note at the bottom of the notification stating as follows : In respect of minerals mentioned in serial nos. 1 and 2, the identified areas of the said minerals shall be notified separately, as per rules. 8. Later on, committees of experts were constituted for making a survey of the different parts of the State. The respective committees in their reports found that the stone pieces extracted from the Pandoi river basin in the district of West Champaran and the stones extracted from the hills of Bidhyan range in the district of Rohtas were used for making stone chips. On the basis of the findings of the expert committees, a notification was issued on 26.12.2001 holding and declaring that the boulder, gravel and shingle found in the district of Rohtas and Bettiah (West Champaran) were fit and suitable for making stone chips and would, therefore, attract the levy of royalty at the rate of Rs. 100/- per cubic metre as provided in serial 2 of Schedule II as amended by notification, dated 24.3.2001. 9. Following the notification, the petitioners were given demands at the higher rate of royalty with effect from 1.4.2001. The petitioners in CWJC Nos. 1254 and 2072 of 2002 took the matter, unsuccessfully, in appeal and have come to this Court on the rejection of their respective appeals. The petitioners in the other two writ petitions have directly come to this Court challenging the demand/ notices issued for payment of royalty at the higher rate with effect from 1.4.2002. 10. 1254 and 2072 of 2002 took the matter, unsuccessfully, in appeal and have come to this Court on the rejection of their respective appeals. The petitioners in the other two writ petitions have directly come to this Court challenging the demand/ notices issued for payment of royalty at the higher rate with effect from 1.4.2002. 10. In the three cases from the Pandol river basin, West Champaran, the leading arguments were made by Mr. Naveen Sinha, Advocate. In the fourth case, Mr. Abhay Kumar Singh, learned Senior counsel appearing for the petitioners made the arguments. 11. Before proceeding to examine the submissions made by Mr. Sinha, it would be useful to take note of one or two basic facts of the case. Before the last amendment of Schedule II, the lessees from West Champaran, Bettiah were paying royalty on the stone pieces extracted from the Pandoi river bed @ Rs. 25/- per cubic metre under serial no. 1 of the Schedule with the following entry : "1. Gitti (stone chips),, metal 25.00 (boulder), Sadak Banane Kaa Pathar (Road Metal) Gitti Aur Ballast Aadi Ka Nirman Paththar. They were not paying royalty at the slightly lower rate of Rs. 20/- per cubic metre leviable on quartzite and sand stone when used for purposes of building or for making road at serial no. 16. 12. Further, according to the petitioners, the stone pieces extracted from the river bed is not used by them for making chips. The lessees sell the stones extracted from the river bed directly to different parties without subjecting those stone pieces to any kind of process whatsoever. But at the same time it is undeniable that the purchasers from the lessees use the stone pieces extracted from the river beds for making chips. 13. Relying upon the petitioners assertion that they did not use the stone pieces extracted from the river bed for making chips and sold those stones directly to different persons, Mr. Naveen Sinha strongly contended that the test for the applicability of the entry at serial no. 2 of Schedule II can only be whether the extracted stone pieces in the form of boulders, gravels and shingles were being used by the lessee himself for making chips. 14. In reply Mr. Naveen Sinha strongly contended that the test for the applicability of the entry at serial no. 2 of Schedule II can only be whether the extracted stone pieces in the form of boulders, gravels and shingles were being used by the lessee himself for making chips. 14. In reply Mr. Ashok Kumar Singh, Special P.P., Department of Mines submitted that whether or not the lessee himself used the stone pieces for making chips was completely immaterial and what was relevant for the applicability of entry no. 2 was whether or not the stone pieces were fit to be used for making stone chips. In the case of the petitioners, both from West Champaran and from Rohtas the expert committee had found that not only the stones extracted by them were fit to be used for making but those stones were in fact being used for making chips. 15. Mr. Naveen Sinha countered by submitting that the test of applicability suggested by the State would pre-suppose that there were at least some kinds of stones (boulders, gravels or shingles) which could not be used for making stone chips. For, in case all stone pieces could be used for making chips (which according to him, was the case) then the classification between entries 1 and 2 would become meaningless. 16. Mr. Ashok Kumar Singh submitted that that was exactly the position. Stones occurred in nature in a vast variety of chemical and physical forms. There are kinds of stones which are soft or not sufficiently hard due to their chemical composition (a higher content of silica.) or there are kinds of stones which on account of long exposure to weather conditions got eroded, corroded or cracked-up or suffered similar metamorphic changes. If those kinds of stones are tried to be broken down into smaller chips, those would crumble into a powdery form and produce stone dust. Hence, those varieties of stones cannot be used for making chips or making chips from those stones would prove to be economically highly non-viable. The relevant statements are in sub paras (ii) and (iv) of para 18 of the counter affidavit. 17. I find substance in the stand taken by the State and it appears indisputable to me that the applicability of entry no. The relevant statements are in sub paras (ii) and (iv) of para 18 of the counter affidavit. 17. I find substance in the stand taken by the State and it appears indisputable to me that the applicability of entry no. 2 of Schedule II must depend upon whether or not the stone pieces, boulders, gravels and shingles were fit and suitable for being used for making stone chips. The test whether the lessee was himself making chips from the boulders, gravels, shingles extracted by him as suggested by Mr. Sinha would be not only contrary to the basic principle of royalty but would also lead to arbitrary consequences. Arbitrary, because stones being extracted from the same river bed by two lessees working side by side might attract different rates of royalty in case one of the lessees sold the stones extracted by him directly to a third party while the other lessee used the stones for making chips and sold the extracted stones in the form of chips. Mr. Sinhas proposition would also be contrary to the basic principle of royalty because royalty is a charge on the minor mineral itself and not on its user or on the person extracting it. 18. I have, therefore, no hesitation in holding that ail stone pieces, boulders, gravels and shingles which may be used for making chips either by the lessee himself or by subsequent purchaser would be covered by the entry at serial no. 2 of Schedule II. 19. Mr. Naveen Sinha next submitted, and in this submission he was joined by Mr. Abhay Kumar Singh, learned Senior counsel appearing for the Rohtas lessees that the stones extracted by the petitioners either from the Pandoi river bed or from the hills of the Bidyan range in the district of Rohtas were quartzite and sandstones and, therefore, those stone pieces will not fall under serial no. 2 but would attract a much lower rate of royalty at Rs. 40/- per cubic metre in terms of serial 9 which reads as follows : "Quartzite and sandstone when used for purposes of building or for making road metal and house hold utensils." 20. Mr. Singh stated that in the case of his clients the mining lease was itself for sandstone. He further stated that before the impugned demand was issued under entry no. Mr. Singh stated that in the case of his clients the mining lease was itself for sandstone. He further stated that before the impugned demand was issued under entry no. 2 of Schedule II as amended by the notification dated 24.3.2001, the Rohtas lessees were actually paying royalty at the lower rate for quartzite/sandstones in terms of entry no. 16 which is now brought at serial no. 9 in the current schedule II. 21. In support of the assertion that stones extracted by the petitioners were quartzite and sandstone reliance was also placed on the reports of the expert committees. It is indeed true that in the expert-Committees reports for the districts of West Champaran and Rohtas, it was found that the stones found in the Pandoi river basin and the hills of the Bidhyan range were quartzite and sandstones but that alone would not put the stone pieces extracted by the petitioners under serial no. 9 of Schedule II. 22. Quartzite is a metamorphic rock consisting primarily of quartz grains. (crystalline silica, SiO2) formed by the recrystallization of sand stone by thermal or regional metamorphism and sandstone is a sedimentary rock composed of sandsized grains in a matrix of clay or silt. Quartz forms about 65% of the detrital fraction of the average sand stone, and feldspars about 10 to 15%. (See Collins Dictionary of Geology, 1990). On account of the higher content of silica quartzite and sandstone are, relatively speaking not as hard as Dolerite, Basalt, and Phyllite, the other three kinds of rocks normally found in this State. But that is not to say that quartzite or sandstones are of an uniform kind and no variety of quartzite or sandstone can be used for making stone chips. The report for West Champaran found that though the stone pieces in the Pandoi river basin were quartzite and sandstone, those were in fact being used for making chips. Similarly, the report from Rohtas indicated that the upper layers of the rocks (mostly sandstone) due to long exposure to weather conditions were no longer suitable for making chips but the rocks in the lower layers were sufficiently hard for being broken into stone chips and were in fact being used for making chips. 23. Similarly, the report from Rohtas indicated that the upper layers of the rocks (mostly sandstone) due to long exposure to weather conditions were no longer suitable for making chips but the rocks in the lower layers were sufficiently hard for being broken into stone chips and were in fact being used for making chips. 23. The entry at serial 9 of Schedule II, thus, obviously relates to the inferior variety of quartzite and sandstone which due to their softness cannot be used for making stone chips and are mainly used for other building purposes such as making of the floor or for road metal or household utensils. It is to be noted that such of the stones which can be used for making chips are covered by the entry at serial 2 and the stones from the Pandoi river basin in West Champaran and the hills of Rohtas were found by the expert committee as being used for making chips. 24. It needs to be recalled here that it is now settled by the Supreme Court that all building materials are not of the same kind and it is permissible for the authorities to classify the different varieties of building stones for the purpose of levying royalty at different rates. See D.K. Trivedi V/s. State of Gujrat, A.I.R. 1986 SC 1323 [Paras 66 and 76 (14)]. 25. Further in Quarry Owners Association V/s. State of Bihar, (2000) 8 SCC 655 (Para 34) : 2000(4) PLJR (SC) 131 it was observed that in view of the special nature of royalty "it would be too harsh to insist for a strict interpretation with reference to minerals while considering the guide-lines to a delegatee who is also the owner of its minerals". In the light of the foregoing, I am completely unable to see how can be stone pieces extracted by the petitioners fall under entry 9 and not under entry 2 of Schedule II. 26. Mr. Sinha next submitted that Entry No. 2 in the Schedule-ll related to boulder, gravel and shingle. In the light of the foregoing, I am completely unable to see how can be stone pieces extracted by the petitioners fall under entry 9 and not under entry 2 of Schedule II. 26. Mr. Sinha next submitted that Entry No. 2 in the Schedule-ll related to boulder, gravel and shingle. These were well defined terms : Boulder was separated rock, rounded in form, having a diameter greater than 256 mm: Gravel was defined as an unconsolidated accumulation consisting of particles larger than sand (diameter greater than 2 mm), i.e. Granules, pebbles, cobbles, boulders or any combination of these and shingle was defined as beach gravel which is coarser than ordinary gravel, especially if consisting of flat or flattish pebbles and cobbles. 27. Mr. Sinha submitted that the stone pieces extracted from the Pandoi river basin where neither boulder nor gravel nor shingle; those stone pieces were in the form of pebbles and, therefore, the stone pieces extracted from the Pandoi river bed would not be covered by Entry 2 regardless of the fact that those were used for making stone chips. 28. I am unable to accept the submission. In the first place the terms used in Entry 2 are not to be followed with any geological precision. In Entry 2 the emphasis is not on the physical shape of the stone pieces (boulder, gravel, shingle). Entry 2 is carved out of the previous consolidated Entry no. 1 with the intent to charge a higher rate of royalty on stone pieces from which stone chips can be made and the emphasis, therefore, is on the fitness and suitability of the stone for being used for making stone chips Further, even if a pedantic view is to be taken, gravel which is defined as unconsolidated equivalent of a conglomerate clearly takes pebbles also within a definition. 29. Mr. Sinha lastly submitted that though notification dated 24.3.2001 by which Schedule II was amended was made effective from 1.4.2001, Entries 1 and 2 of the amended schedule could only become operative after areas were identified where minerals as enumerated in Entries 1 and 2 respectively were found, as stipulated in the note at the bottom of the notification. The notification by which areas were identified was issued on 26.12.2001. In any event, therefore, the demand for royalty at the higher rate under Entry no. The notification by which areas were identified was issued on 26.12.2001. In any event, therefore, the demand for royalty at the higher rate under Entry no. 2 could not be raised from a date prior to 26.12.2001 and the demand for royalty at the higher rate from 1.4.2001 was quite illegal and unsustainable. 30. I see no substance in the submission. The higher rate of royalty was fixed by notification, dated 24.3.2001 effective from 1.4.2001. The respondent authorities further decided to identify the regions of the State the stones found where could be used for making chips or were unfit for making chips. This was on the analogy of fixing the value of land in different parts of the State for the purpose of registration fee or making a scheme for levying entertainment tax on consolidated basis on cinema halls or the scheme framed by the Patna Municipal Corporation for making assessment of holdings for levying Municipal taxes. The object was only to avoid any malpractices or corruption at the lower levels if the question whether the stones extracted by individual lessees were fit and suitable for making chips were to be left in the hands of the subordinate staff of the department. 31. In these circumstances once the areas were identified by the notification dated 26.12.2001 the demand would relate back from the date the charge of royalty was fixed at the higher rate i.e. 1.4.2001. I, therefore, see no infirmity in the impugned demands being raised w.e.f. 1.4.2001. 32. Mr. Abhay Kumar Singh, learned Sr. Counsel appearing for the Rohtas lessees made a complaint that the petitioners were not given an opportunity of hearing before the rate of royalty was hiked up. Learned counsel stated that the steep rise in the rate of royalty will very adversely affect the lessees of this State. The retail price of stone chips produced in this State was bound to go very high and in a highly competitive market that would make the retail sale of the stone chips of this State very difficult in comparison to stone chips coming from the neighbouring States where royalty was not so high. In the matter of revision of the schedule to the Minor Mineral Concession Rules, Mr. Singh sought to introduce the principles of natural justice and the concept of reasonable return to the lessee. In the matter of revision of the schedule to the Minor Mineral Concession Rules, Mr. Singh sought to introduce the principles of natural justice and the concept of reasonable return to the lessee. In support of the submissions he referred to rule 48 of the Rules and relied upon the decisions of the Supreme Court in Quarry Owners Association V/s. State of Bihar & Ors., (2000) 8 SCC 655 : 2000(4) PLJR (SC) 131; State of U.P. and others V/s. Renu Sagar Power Company and Ors., (1998) 4 SCC 58 and Shri Malaprabha Coop. Sugar Factory Limited V/s. Union of India and another, (1994) 1 SCC 648 . 33. Rule 48 lays down the modality of fixation of price (and not of royalty) of minerals. It, therefore, does not seem to have any applicability to the issues under consideration in these cases. 34. The decision in Renu Sagar Power Company was under the U.P Electricity Duty Act and the decision in Malaprabha was under the Essential Commodities Act. I see no application of those two decisions on the issue of revision of rates of royalty under rule 26 (i)(b) of the Minor Mineral Concession Rules. In the Supreme Court decision in Quarry Owners Association, I see nothing to justify the demand for an opportunity of hearing before an amendment in schedule II revising the rates of royalty. 35. It may be noted here that Mr. Singhs submission, based on the principle of natural justice is fully answered by another decision of the Supreme Court in D.K.Trivedi and Sons V/s. State of Gujrat and others, A.I.R. 1986 SC 1323 [Paras 51 and 76 (8)]. 36. For the reasons discussed above, I see no merit or substance in any of these writ petitions. These writ petitions are accordingly dismissed but with no order as to costs.