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2013 DIGILAW 367 (MP)

Arpit Heights v. Indore Development Authority

2013-03-18

J.K.MAHESHWARI, Shantanu Kemkar

body2013
ORDER Kemkar, J. -- 1. This order shall govern disposal of Writ Appeal No.568/2012 (Indore Development Authority v. M/s. S.V. Constructions and another), Writ Appeal No.642/2012 (M.P. Power Transmission Co.Ltd. v. M/s. S.V. Constructions and another), Writ Petition No.9583/2012 (M/s. P.D. Agrawal Infrastructure Ltd. v. The State of M.P. and others), Writ Petition No.9584/2012 (M/s. P.D. Agrawal v. The State of M.P. and others), and Writ Petition No.10910/2012 (Himmat Singh v. The State of M.P. and others), as identical question of law is raised in all these six cases. For the convenience, facts are taken from Writ Appeal No.357/2012. 2. Feeling aggrieved by the order dated 13.7.2012 passed by the learned Single Judge of this Court in Writ Petition No.1745/2012, this intra-Court appeal has been filed by the appellant-writ petitioner. 3. The appellant-writ petitioner is a registered contractor. It carried out various construction works allotted to it and had submitted final bills to the respondent-IDA for making payment. The respondent-IDA insisted the writ petitioner to produce the Royalty Clearance Certificate. Feeling aggrieved, the aforesaid writ petition was filed. 4. The writ petitioner’s case was that in view of the clear legal position settled by various judgments of the Division Bench and the Single Bench, including the judgment in the cases of M.P. Contractors Sangh, Indore and others v. State of M.P. and another [ 1987 JLJ 743 ], M.P. Audyogik Kendra Vikas Nigam v. Abrar Construction Company and others [2005 Arb. WLJ 379 (M.P.)], Keti Construction Limited v. State of M.P. [ 2007(3) MPHT 433 (DB)], and Tomar Construction Company v. State of M.P. and others [ 2008(2) MPLJ 40 ], the respondent had no right to insist upon the petitioner for production of Royalty Clearance Certificate for making the payment of its bills. 5. Before the writ Court, the respondent had placed reliance on clause 7.21 of the contract entered into between the parties authorizing them for such insistence. 6. The writ Court, considering the condition incorporated in clause 7.21 of the contract, dismissed the writ petition by observing that once a specific condition was in existence in the agreement executed between the parties, the parties are certainly required to abide by the terms and conditions agreed between them. Aggrieved, the appellant-writ petitioner has filed this appeal. 7. 6. The writ Court, considering the condition incorporated in clause 7.21 of the contract, dismissed the writ petition by observing that once a specific condition was in existence in the agreement executed between the parties, the parties are certainly required to abide by the terms and conditions agreed between them. Aggrieved, the appellant-writ petitioner has filed this appeal. 7. We have considered the submissions made by the learned counsel for the parties and have also considered the judgments on which reliance has been placed. 8. In the present case, following condition was in the agreement : “7.21 The Contractor shall have to furnish a Royalty Clearance Certificate from the District Collector before final bill.” 9. We find that in the case of Keti Construction Limited (supra), Division Bench taking into consideration the order passed by the learned Single Judge in the case of Prestige G.S. Sole v. M.P. Rural Road Development [2004(4) MPLJ 175], in which similar was the clause (clause No.6.2.1) in the agreement, did not approve insistence of production of Royalty Clearance Certificate. Relevant paragraph of the order passed by the Division Bench in the case of Keti Construction (supra), reads thus : “13. In the second Division Bench, reliance was placed on M.P. Contractors Sangh, Indore (supra). In the case of Prestige G.S. Sole (supra), learned Single Judge of this Court after referring to the M.P. Mines and Minerals (Development and Regulation) Act and M.P. Minor Minerals Rules, 1996, specially rule 30 held in paragraphs 7, 10, 11 and 13 : 7. Considering the aforesaid, there is no reason why the impugned action in this case be also not held to be illegal. Even though, in the present case the agreement contains certain stipulation in clause 6.2 as referred to in paragraph 4, but even this condition stipulates that all dues, taxes, royalty etc. levied on the contractor’s work shall be payable by the contractor. This condition only stipulates that taxes, dues and royalties are to be paid by the contractor. As far as payment of royalty is concerned, liability can be imposed upon the contractor only if the contractor himself is extracting the mineral and using it for the construction work as the incident for payment of royalty arises at the place where the mineral is extracted and not thereafter. xxx xxx xxx 10. I am afraid, the aforesaid submission is misconceived. xxx xxx xxx 10. I am afraid, the aforesaid submission is misconceived. Section 9 of the Mines and Minerals (Development and Regulation) Act contains the statutory provision with regard to liability for payment of royalty. Similarly, the M.P. Minor Mineral Rules, 1996 also contemplates various provisions incorporated in the quarry lease in accordance with rule 30, wherein detailed procedure is contemplated for payment of royalty and others dues. Chapter 9 of the M.P. Minor Mineral Rules contemplates a detailed procedure for assessment and recovery of royalty. A combined reading of the aforesaid statutory provisions clearly indicates that the statute has imposed strict condition for recovery of royalty from the mine owners. Clause 6.2 and clause 6.2.1 of the agreement read as under : 6.2 Taxes. -- All dues regarding taxes, including the sales-tax, other duties, royalty etc. levied on the contractors works by Government and local or private individuals will be payable by the contractor. The authority will grant certificate for the quantities actually used on the work but will not entertain any claim on this account. 6.2.1 Payment of contractors final bill shall not be released till ‘no dues’ certificate from Collector relating to the payment of royalty is submitted by the contractor.” 11. As far as clause 6.2 is concerned, as already indicated hereinabove it only imposes a liability on the contractor providing for payment of all sales-tax and other dues like royalty. Clause 6.2.1, which contemplates production of no dues certificate from the Collector with regard to payment of royalty, is clearly contrary to the statutory provisions because the Collector can issue certificate with regard to payment of royalty only if the royalty is payable by the contractor. If the contractor has purchased the material from a supplier and the supplier has purchased the material from the mine owner, who has extracted the mineral from a place which is not known to the contractor, the contractor cannot be expected to run from pillar to post finding out of source of extraction and the mineral consumed by him and then produce the certificate. This condition seems to be impracticable and inconsistent to the statutory provision. This condition seems to be impracticable and inconsistent to the statutory provision. Considering this provision in the backdrop of the observation made by the Division Bench in para 13 in the case of M.P. Contractors Sangh (supra), I am of the considered view that the aforesaid conditions cannot be enforced in the manner as it is being done. 12. xxx xxx xxx 13. Accordingly, petitions are allowed. Respondents are directed not to insist upon production of certificate of proof with regard to payment of royalty for minor minerals which are employed by the petitioners-contractors in execution of the work awarded to them. It is held that the respondents are not entitled to deduct any amount towards royalty from the running bills from the petitioners.” (Emphasis supplied by us) 14. In the case at hand, learned Single Judge in paragraphs 13 and 14 has expressed the opinion as under : “13. The aforesaid decisions have turned on the facts of each case and in the case of M.P. Contractors Sangh, Indore and others v. State of M.P. and others (supra), power to make an enquiry with respect to whether the material was royalty paid or not has not been denied or ousted. There may be a case where contractor has himself excavated the sand, murrum or gitti. The aforesaid condition as reflected in the circular aims at ensuring that the payment of royalty is not evaded and is to prevent illegal mining. However, at the same time in case purchase has been made from petty contractors or traders, contractor may not be in a position to place on record the proof of the fact that royalty was in fact paid, but at the same time when required as to the source of material used it is clear that the contractors is required to disclose it and to support it also with available documents, then a decision has to be taken by the Collector before issuing NOC with respect to royalty. In the instant case, two years period have passed, thereafter the demand has been made, hence, it is submitted by the petitioner’s counsel that it may be that the petitioner may not have retained the vouchers etc. of purchase, but, that is not submitted in reply submitted by the petitioner to the Collector. In the instant case, two years period have passed, thereafter the demand has been made, hence, it is submitted by the petitioner’s counsel that it may be that the petitioner may not have retained the vouchers etc. of purchase, but, that is not submitted in reply submitted by the petitioner to the Collector. In the circumstances, as Collector has to conduct an enquiry into this aspect and at the same time has to consider the ratio of decisions referred to above and apply the ratio on the facts of the instant case which may be found, petitioner is free to file detailed representation within a period of three weeks, same shall be considered by the Collector, it is open to the petitioner to file documents if any which may be available with him then. Let a considered decision be taken duly considering all the aspects by the Collector within a period of two months. 14. The submission raised by petitioner’s counsel that there was no such clause in the agreement so as to necessitate the proof of royalty. In my opinion, when any material is used by the contractor whether it is illegally procured or it is royalty paid or not can be looked into by the respondents. However, there cannot be any straitjacket formula to come to conclusion whether royalty was paid or not, it is necessary for the Collector to make an enquiry from other sources as well in the given set of facts of particular case. 15. In our considered opinion, learned Single Judge should have followed the decisions which hold the field since the facts are absolutely the same. Quite apart from the above, there is no clause in the contract that Royalty Clearance Certificate shall be produced by the contractor. Another aspect also cannot be lost sight of. The certificate was demanded after expiry of two years. In view of the law enunciated in the absence of any stipulation in the contract or any requirement by law and the demand made after expiration of period of two years the decision to withhold the amount is unsustainable.” 10. Another aspect also cannot be lost sight of. The certificate was demanded after expiry of two years. In view of the law enunciated in the absence of any stipulation in the contract or any requirement by law and the demand made after expiration of period of two years the decision to withhold the amount is unsustainable.” 10. Thereafter, in the case of Tomar Construction Company (supra), learned Single Judge, after considering the judgments passed in the cases of M.P. Contractors Sangh, Indore (supra), Prestige G.S. Sole (supra), and Keti Construction (supra), taking note of all aspects of the matter and to safeguard the interest of the State also, disposed of the writ petition by issuing the following directions : “The State Government shall clear the bills of the petitioner submitted in connection with execution of the contract in question without insisting upon producing no dues certificate from the Collector or any other authority with regard to payment of royalty for the minerals consumed. However, the State Government can insist upon production of bills with regards to purchase of mineral and in case the bill is not available, an affidavit indicating the manner in which and the place or source from where the mineral is purchased. This affidavit can be used by the State Government for verification and for taking further action for clearing the bills. Amount of royalty, if any, recovered from the bills of the petitioner, shall be refunded to the petitioner on the petitioner filing the bill or the affidavit as indicated hereinabove. In case petitioner is unable to produce the bill or the affidavit as indicated hereinabove, liberty is granted to the petitioner to represent the matter before the State Government pointing out the inability in producing the bills or the affidavit and it would be for the State Government to consider the representation and take such steps as may be permissible or proper for clearing the bills in the given set of circumstances as may be indicated the petitioners.” 11. In view of the aforesaid legal position, in our considered view, the learned Single Judge has committed error in dismissing the writ petition on the basis of the aforesaid clause which runs contrary to the statutory provisions because the Collector can issue certificate with regard to payment of royalty only, if the royalty is payable by the contractor. In view of the aforesaid legal position, in our considered view, the learned Single Judge has committed error in dismissing the writ petition on the basis of the aforesaid clause which runs contrary to the statutory provisions because the Collector can issue certificate with regard to payment of royalty only, if the royalty is payable by the contractor. If the contractor has purchased the material from a supplier and the supplier has purchased the material from the mine owner, who has extracted the mineral from a place which is not known to the contractor, the contractor cannot be expected to run from pillar to post finding out of source of extraction and the mineral consumed by him and then produce the certificate. This condition seems to be impracticable and inconsistent to the statutory provision. 12. Having regard to the aforesaid, we allow this writ appeal by setting aside the order passed by the learned Single Judge and dispose of the writ appeal by issuing the following directions, akin to the directions issued in the case of Tomar Construction Company (supra), which will safeguard and take care of the interest of the petitioner as also of the respondents : (1) The State Government/Indore Development Authority/competent authority of the respondent shall clear the bills of the petitioner submitted in connection with execution of the contract in question without insisting upon producing no dues certificate from the Collector or any other authority with regard to payment of royalty for the minerals consumed. However, the State Government/Indore Development Authority/competent authority of the respondent can insist upon production of bills with regards to purchase of mineral and in case the bill is not available, an affidavit indicating the manner in which and the place or source from where the mineral is purchased. This affidavit can be used by the State Government/Indore Development Authority/competent authority of the respondent for verification and for taking further action for clearing the bills. (2) Amount of royalty, if any, recovered from the bills of the petitioner, shall be refunded to the petitioner on the petitioner filing the bill or the affidavit as indicated hereinabove. This affidavit can be used by the State Government/Indore Development Authority/competent authority of the respondent for verification and for taking further action for clearing the bills. (2) Amount of royalty, if any, recovered from the bills of the petitioner, shall be refunded to the petitioner on the petitioner filing the bill or the affidavit as indicated hereinabove. In case petitioner is unable to produce the bill or the affidavit as indicated hereinabove, liberty is granted to the petitioner to represent the matter before the State Government/Indore Development Authority/competent authority of the respondent pointing out the inability in producing the bills or the affidavit and it would be for the State Government/Indore Development Authority/competent authority of the respondent to consider the representation and take such steps as may be permissible or proper for clearing the bills in the given set of circumstances as may be indicated by the petitioner. 13. No orders as to costs. ............