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2015 DIGILAW 724 (JHR)

Tata Steel Limited v. Union of India

2015-06-26

P.P.BHATT, VIRENDER SINGH

body2015
ORDER : Virender Singh, J. All these three petitions involving common questions of law are taken on board together for their consideration. 2. We have already heard Mr. Singhvi, learned Senior Advocate appearing for the petitioner and Mr. Ajit Kumar Sinha, learned Senior Counsel appearing for the State of Jharkhand on the last occasion at length on admission and in the interim relief matter, whereby stay of execution of the impugned demand notices is asked for. 3. The petitioner, Tata Steel Ltd., has prayed for the following reliefs : - (i) An appropriate writ, order or direction declaring Rules 64-B and 64-C of the Mineral Concession Rules, 1960 as unconstitutional and ultra vires Section 9 of the Mines and Mineral (Development & Regulation) Act, 1957; (ii) An appropriate writ, order or direction declaring Rules 64-B and 64-C of the Mineral Concession Rules, 1960 as ultra vires Section 13 of the Mines and Mineral (Development & Regulation) Act, 1957; (iii) An appropriate writ, order or direction declaring Rules 64-B and 64-C of the Mineral Concession Rules, 1960 as discriminatory and in violation of Article 14 of the Constitution of India for creating artificial classification not based on any intelligible differentia by providing differential treatment in levy of royalty between coal put through a washing process within the leased area and coal put through a washing process outside the leased area; (iv) A further writ, order or direction declaring that charging of royalty on “processed mineral” as contemplated by Rule 64-B of the Mineral Concession Rules, 1960 is beyond the ambit and purview of Section 9 of the Mines and Minerals (Development & Regulation) Act, 1957 and ultra vires and unenforceable; (v) A further Writ, order or direction declaring that charging of royalty on “sale of processed mineral” as contemplated by Rule 64-C of the Mineral Concession Rules, 1960 is beyond the ambit and purview of Section 9 of the Mines and Minerals (Development & Regulation) Act, 1957 and ultra vires and unenforceable; (vi) In the alternative to prayer (iv) and (v), an appropriate writ, order or direction declaring that, in any event, Rules 64-B and 64-C of the Mineral Concession Rules, 1960 inserted by the Central Government, Ministry of Mines have no applicability to hydrocarbons such as coal and lignite; 4. Further prayer made herein is for quashing of the impugned demand contained in letter No.70 dated 22nd January, 2015 issued by respondent District Mining Officer, Ramgarh for an amount of Rs.121,29,59,749.85 and demand as contained in letter No.98 dated 30th January, 2015 for an amount of Rs.200,40,93,162.62 (relating to W.P.(C) No.2176 of 2015) in respect of dispatch of washed coal for the period 2009-13 and 2013-14 respectively from the West Bokaro Colliery and quashing of demand as contained in letter No.97 dated 30.01.2015 for an amount of Rs.25,71,24,320.08 in respect of dispatch of tailings for the period May 2013 to March 2014 from the West Bokaro Colliery. 5. It needs to be mentioned here that in the supplementary affidavit filed by the petitioner on 22nd of May, 2015 after these petitions were heard at length on 19th May, 2015, petitioner has admitted in para 10 of the said affidavit in terms of an undertaking that it has paid the balance amount of royalty in four installments on 30.07.2014, 28.08.2014, 29.09.2014 and 31.10.2014. This amount relates to W.P.(C) No. 2184 of 2015 and W.P.(C) No.2185 of 2015. It appears that the petitioner has paid this amount under protest which has been raised pursuant to the earlier demand notices issued in terms of Rule 64-B and 64-C of Mineral Concession Rules 1960. In these circumstances, admittedly, the interim relief as sought for in these two petitions does not survive any more. THE BRIEF FACTS 6. Petitioner is a company incorporated under the Companies Act and is a mining lessee having two captive collieries West Bokaro Colliery in the district of Ramgarh and Jharia Group of Collieries in the district of Dhanbad. It has also set up washeries within its mining leasehold areas. 7. Prior to 1984, the petitioner was paying royalty on washed coal, but in the year 1984, the Department of Mines, State of Bihar decided that petitioner was liable to pay royalty on raw coal and raised a demand for the same, aggrieved thereof, the petitioner knocked at the door of the Writ Court through the medium of writ petition [C.W.J.C. No. 1 of 1984] which was decided on 07.08.1990 holding that the petitioner was liable to pay royalty on the weightage of the washed coal for the leased area. 8. 8. Subsequently, the Hon’ble Supreme Court in the case of State of Orissa versus M/s. Steel Authority of India Ltd. reported in (1998) 6 SCC 476 while interpreting the Mines and Minerals (Development & Regulation) Act, 1957 (hereinafter to be referred to as MMDR Act) in respect of mineral ‘dolomite’ held that the entire mineral extracted is exigible (eligible) to levy of royalty and the royalty cannot be levied on the quantity of mineral obtained after processing. 9. After the aforesaid decision of Apex Court, the petitioner made representation dated 23.09.1998 to the District Mining Officer, Hazaribagh to the effect that the petitioner was liable to pay royalty on raw coal with effect from 10.08.1998, i.e., the date of judgment of Hon’ble Supreme Court in SAIL’s case supra, but, the same was rejected by the District Mining Officer, Hazaribagh vide order dated 27.09.1998 stating that the issues between the parties have already been settled in C.W.J.C. No. 1 of 1984(R). The petitioner, thereafter, challenged the said decision in a writ being C.W.J.C. No. 3040 of 1998(R), which was dismissed on 08.03.2002 holding that the petitioner was liable to pay royalty on the weightage of washed coal in terms of the judgment rendered in C.W.J.C. No.01 of 1984(R), aggrieved thereof, the petitioner filed Letters Patent Appeal being L.P.A. No.117 of 2000, which was allowed on 23.07.2002 holding that the decision rendered by Apex Court in the case of SAIL (supra) is binding upon the parties and as such, the petitioner was liable to pay royalty on the coal extracted. However, the prayer for refund of excess royalty was refused. The petitioner, being aggrieved of that part of the order dated 23.07.2002, whereby the prayer for refund of excess royalty was refused, filed an appeal before the Hon’ble Supreme Court being S.L.P.(C) No. 21613 of 2000 [Civil Appeal No. 303 of 2004]. The State also filed an appeal being Civil Appeal No.307 of 2004 against the order dated 23.07.2002. 10. Subsequent to the decision of Hon’ble Supreme Court in SAIL’s case (supra), in exercise of power under Section 13 of the MMDR Act, vide Notification GSR No. 743(E) dated 25.09.2000, the Ministry of Mines inserted Rule 64-B and Rule 64-C in Mineral Concession Rules 1960 (hereinafter to be referred to as MCR 1960). 11. 10. Subsequent to the decision of Hon’ble Supreme Court in SAIL’s case (supra), in exercise of power under Section 13 of the MMDR Act, vide Notification GSR No. 743(E) dated 25.09.2000, the Ministry of Mines inserted Rule 64-B and Rule 64-C in Mineral Concession Rules 1960 (hereinafter to be referred to as MCR 1960). 11. Rule 64-B of MCR 1960 deals with charging of royalty in the case of minerals subject to processing and Rule 64-C of MCR 1960 deals with the royalty on tailings or rejects. The petitioner challenged various demand notices issued to him subsequently in W.P.(C) No. 2995 of 2008, 2999 of 2008, 1504 of 2009 and 1505 of 2009 asserting that it had been paying royalty on entire quantity of ROM Coal, thus, payment of royalty as per demands, now made, would amount to double payment of royalty. The said issue was decided by this Court vide judgment dated 12.03.2014 holding that the petitioner was liable to pay royalty on processed mineral/clean coal/ steel grade and other grades of coal, which is removed from the leased area of the petitioner to its own steel plants at Jamshedpur as per Section 9 read with the Second Schedule of MMDR Act read with Rule 64B-(1) of MCR 1960. It was further held that the petitioner is liable to pay royalty on the middlings, tailings, rejects, de-shale, which are partly used in the petitioner’s Captive Power Plants as fuel and partly sold to the consumers as per Section 9 read with Second Schedule of MMDR Act read with proviso to Rule 64 of MCR. 12. The petitioner, being aggrieved of the said order, filed S.L.P.(C) No. 8972 – 8973 of 2014 [Civil Appeal Nos. 2938 – 2939 of 2015] and S.L.P. No. 9016 – 9017 of 2014 [Civil Appeal Nos. 2940 – 2941 of 2015]. All these appeals were decided by the Hon’ble Supreme Court vide judgment dated 17.03.2015 holding that in view of insertion of Rule 64-B and Rule 64-C on 25.09.2000 in the Mineral Concession Rules, 1960, the levy of royalty on coal has now been dispensed from the pit head to the stage of removal of coal whether unprocessed or ROM Coal or whether beneficiated coal. It was further held that since the constitutional validity or vires of Rule 64-B and Rule 64-C of MCR 1960 have not been adjudicated upon by Supreme Court, it would be open to Tata Steel either to revive those appeals limited to the question or to challenge the constitutionality and vires of these Rules through a separate challenge. 13. Pursuant to the liberty granted to the petitioner, it filed applications before the Hon’ble Supreme Court to revive the aforesaid civil appeals or alternatively remand the Civil Appeals to the High Court for fresh adjudication limited to the question of vires or the validity of Rule 64-B and Rule 64-C of the MCR 1960. The said applications were disposed of by the Supreme Court vide order dated 08.05.2015 whereby prayer for revival of the appeals was rejected, but the petitioner was given liberty to file a separate petition before this Court, if it so desires to question the vires and validity of Rule 64-B and Rule 64-C of MCR 1960 in accordance with law. 14. Hence, these petitions. 15. At the very outset Mr. Ajit Kumar Sinha, learned Senior Advocate along with Mr. Ajit Kumar (learned Senior Advocate and Additional Advocate General) representing the respondent-State joined issue vis-à-vis the maintainability of these writ petitions on the ground that in case Tata Steel Ltd. versus State of Jharkhand & Others reported in (2014) 3 JCR 163 , this Court, vide judgment/order dated 12.03.2014 has already decided that Rule 64-B and Rule 64-C of MCR 1960 are not ultra vires the Constitution of India and MMDR Act, 1957, as such the petitioner’s writ applications are barred by res-judicata. Mr. Sinha further submitted that an appeal filed against the judgment/order dated 12th March, 2014, the Hon’ble Apex Court, by order dated 17th March, 2015 declined to accept the interpretation given by the petitioner and gave a concurrent finding that in view of insertion of Rule 64-B and Rule 64-C on 25.09.2000 in MCR, 1960, the levy of royalty on coal has now been dispensed from the pit head to the stage of removal of coal. Therefore, according to Mr. Sinha, there appears to be no ground, much less valid ground for questioning the vires or validity of Rule 64-B and Rule 64-C of MCR 1960, as such the petitions on hand merit dismissal outrightly. 16. On the other hand, Dr. Therefore, according to Mr. Sinha, there appears to be no ground, much less valid ground for questioning the vires or validity of Rule 64-B and Rule 64-C of MCR 1960, as such the petitions on hand merit dismissal outrightly. 16. On the other hand, Dr. Abhishek Manu Singhvi, appearing for the petitioner, by referring to paragraphs 81 and 97 of Tata Steel Case (supra), submitted that in view of liberty granted by the Hon’ble Apex Court, the present writ petitions have been filed challenging the vires of Rule 64-B and Rule 64-C of MCR, 1960. Learned Senior Counsel further referred to para 77 of the judgment of the Apex Court and submitted that the Supreme Court has also opined that Rule 64-B of MCR 1960 is silent about removal of mineral from the mine/pit head, but which is not removed from the boundaries of the leased area. 17. Paragraphs 77, 81 and 87 of the judgment of Hon’ble Supreme Court in the case of Tata Steel (supra) are quoted hereinbelow for ready reference:- 77. A plain reading of Rule 64-B of the MCR, with which we are presently concerned, clearly suggests that the leased areas mentioned therein has reference to the boundaries of the leased area given to the lease holder. Sub-rule (1) provides that if the ROM minerals is processed within the boundaries of that leased area, then royalty will be chargeable on the processed mineral removed from the boundaries of the leased area. However, if the ROM mineral is removed without processing from the boundaries of the leased area then in terms of Sub-rule (2) royalty will be chargeable on the unprocessed ROM mineral. Rule 64-B of the MCR is silent about removal of a mineral from the mine/pit head but which is not removed from the boundaries of the leased area. This is a clear pointer that royalty is to be paid be paid by the lease holder only on removal of the mineral from the boundaries of the leased area. Rule 64-B of the MCR is silent about removal of a mineral from the mine/pit head but which is not removed from the boundaries of the leased area. This is a clear pointer that royalty is to be paid be paid by the lease holder only on removal of the mineral from the boundaries of the leased area. This simplification and clarification takes care of some of the different and difficult situations that we have referred to above, namely, the stage of charging royalty on coal at the pit-head or post-beneficiation, the stage of charging royalty on iron ore at the pit-head or post-beneficiation, the stage of charging royalty on dolomite and limestone at the pit-head or after the removal of waste and foreign matter and of course the stage of charging royalty on other minerals such as copper, gold, lead and zinc amongst others. 81. We may mention that learned counsel for Tata Steel had reserved his right to challenge the constitutionality of Rule 64-B and Rule 64-C of the MCR should his interpretation of the law be not accepted, namely that royalty on coal is chargeable on the extracted tonnage at the pit-head. Since we have not accepted this interpretation post the insertion of Rule 64-B and Rule 64-C in the MCR, we leave it open to Tata Steel to challenge the constitutionality of these rules either by reviving these appeals to this limited extent or by initiating fresh proceeding. 87. ……………….. The constitutional validity or the vires of Rule 64-B and Rule 64-C of the Mineral Concession Rules has not been adjudicated upon. It is open to Tata Steel either to revive these appeals limited to this question or to challenge the constitutionality and vires of these rules through a separate challenge.” 18. Mr. Singhvi further submitted that in view of liberty granted by Hon’ble Apex Court in the order dated 17th March 2015, the petitioner filed IAs in the aforesaid appeals and the said IAs were disposed of vide order dated 03.05.2015 by making following observation in para 2 of the said order: - “We are not inclined to grant the first prayer. However, we permit the applicants to file a separate petition before the High Court, if so desire, to question the vires or the validity of Rule 64-B and 64-C of the Mineral Concession Rules, 1960 in accordance with law.” 19. Mr. However, we permit the applicants to file a separate petition before the High Court, if so desire, to question the vires or the validity of Rule 64-B and 64-C of the Mineral Concession Rules, 1960 in accordance with law.” 19. Mr. Singhvi, thus, submitted that he rather raises objection to the objection raised by Mr. Sinha, learned Senior Advocate, vis-à-vis the maintainability of these petitions, which deserve to be adjudicated upon vis-à-vis the question of vires or the validity of Rule 64-B and Rule 64-C of MCR 1960 in accordance with law in terms of the observations made by Hon’ble Supreme Court. 20. From perusal of the judgment of Hon’ble Supreme Court, it appears that while refusing to accept the interpretation given by the petitioner, liberty has been granted to it to file separate writ to this High Court, therefore, the objection raised by Mr. Sinha, learned Senior Advocate, representing State of Jharkhand, vis-à-vis the maintainability of the present writ petition, in our considered view, is not sustainable, thus, ruled out. 21. Mr. Singhvi has also prayed for stay of the impugned demand notices, submitting that the demand for royalty now made is clearly beyond a reasonable period, as has been held by the Hon’ble Supreme Court in case Government of India versus Citedal Fine Pharmaceuticals reported in (1989) 3 SCC 483 . Learned counsel submitted that if the statute does not prescribe a period of limitation, a reasonable period for effecting recovery cannot be more than one year, particularly, when in the given facts of this case, the petitioner had been carrying out its activities openly and has been filing monthly returns and paying royalty thereon regularly. According to learned Senior Counsel, the impugned demand notices are not based on any independent application of mind by the District Mining Officer, rather, based on the audit objection raised by the Office of the Principal Accountant General (Audit), Jharkhand, Ranchi. Learned Senior Counsel, thus, submitted that the impugned demand notices, now sent, for the recovery of a huge amount running into crores are not based on any other relevant factor, but, the change of the opinion, therefore, the petitioner is not liable to make payment pursuant to the said demand notices. Mr. Learned Senior Counsel, thus, submitted that the impugned demand notices, now sent, for the recovery of a huge amount running into crores are not based on any other relevant factor, but, the change of the opinion, therefore, the petitioner is not liable to make payment pursuant to the said demand notices. Mr. Singhvi, learned Senior Counsel, in order to strengthen the arguments on this count, has also drawn the attention of the Court to Demands No.70 and 98 for captive mines and Demand No.97, the calculation based on invoices. He, thus, submitted that the impugned demand notices are not incorrect, rather inherently inconsistent. 22. Mr. Singhvi further submitted that even otherwise State of Jharkhand is now levying royalty on clean washed coal, middlings, tailings and rejects during the period in dispute and this amounts to charging double royalty, especially, in view of the admitted fact that the petitioner has already paid royalty on ROM Coal during this very period. He submitted that Item 11 of Second Schedule of MMDR Act, as amended by Notification dated 01.08.2007 read with Rule 64-B and Rule 64-C of MCR 1960 is not workable for calculating the royalty on coal. All these aspects, prima facie, tilting towards the petitioner, therefore, the impugned demand notices are unsustainable in law, as such may be stayed till the final adjudication of the issue cropped up in these petitions. 23. Mr. Sinha, learned Senior Advocate appearing for the State, vehemently opposes the prayer for stay of the impugned demand notices. 24. In the light of the above submissions and looking to the facts and circumstances of the case, while considering the question regarding grant of any stay against impugned demand notices, it would be necessary to consider the proposition of law as settled by Hon’ble Apex Court while dealing with grant of stay belonging to revenue/fiscal matter of State/Union. In the case of Union Territory of Pondicherry versus P.V. Suresh, reported in (1994) 2 SCC 70 , the Hon’ble Apex Court, while dealing with interim injunction in para 15 held as follows: - “15. Before parting with the case, we feel constrained to reiterate our unhappiness about the interim injunction order made in the Mahe writ petitions. Passing of interim orders is not and cannot be a matter of course – nor a matter of charity. In the matters touching public revenue the courts ought to be more cautious. Before parting with the case, we feel constrained to reiterate our unhappiness about the interim injunction order made in the Mahe writ petitions. Passing of interim orders is not and cannot be a matter of course – nor a matter of charity. In the matters touching public revenue the courts ought to be more cautious. For better or worse, the courts have come to acquire a veto over the public exchequer. This power should be exercised with good amount of self-restraint and with a sense of responsibility. The power is coupled with accountability – accountability to the Constitution, to the laws of the land and above all to ourselves. The court must apply its mind to the facts of the case and must also envisage the implications and consequences of the order it proposes to make. This is so even at the ad interim stage when the respondent is not represented. We are sorry to say that none of these considerations appear to have been present in the mind of the learned Judge while passing the orders of injunction relating to Mahe shops. We are not happy at making these remarks but we felt compelled to say so in the circumstances. We hope and trust that no occasion would arise ever again for reiterating these remarks.” 25. It, thus, becomes very clear that the Court will be slow in granting stay in revenue matters. It is also to be kept in mind that royalty forms a vital part of fiscal regime of mine and an important mean of revenue realization for the State Government, therefore, if the stay is granted in favour of the petitioner, it would cause hardship to the respondent-State, thereby affecting the development work of the State. That apart, the facts of the present case reveal that earlier also several demand notices were raised in terms of Rule 64-B and Rule 64-C of MCR 1960 against which the petitioner filed several writ petitions and ultimately, the dispute landed before the Hon’ble Supreme Court. Our attention has also been drawn by Mr. Sinha, learned Senior Advocate to an order dated 01.08.2014 wherein the petitioner, while admitting the liability running into Rs.815.77 crore, Rs.611 crore were already paid and for remaining amount of Rs.204.77 crore, even Rs.104 crore were paid under protest. Our attention has also been drawn by Mr. Sinha, learned Senior Advocate to an order dated 01.08.2014 wherein the petitioner, while admitting the liability running into Rs.815.77 crore, Rs.611 crore were already paid and for remaining amount of Rs.204.77 crore, even Rs.104 crore were paid under protest. It was made clear in the said order that the petitioner would pay the entire balance amount in three equal installments ending on 31st October, 2014. In the Supplementary Affidavit filed on 22.05.2015, the petitioner has also admitted that in terms of the undertaking given before the Supreme Court, the balance amount of royalty in four installments has been paid. 26. Moreover, the Hon’ble Supreme Court in the concluding para of Tata Steel Case (supra) has held as under: - “Tata Steel, like TISCO is liable to pay royalty on coal with effect from 25th September, 2000 in terms of Rule 64-B and Rule 64-C of the Mineral Concession Rules. The Constitutional validity or the vires of Rule 64-B and Rule 64-C of the Mineral Concession Rules has not been adjudicated upon. It is open to Tata Steel either to revive these appeals limited to this question or to challenge the constitutionality and vires of these rules through a separate challenge.” 27. From the combined reading of the above observations, it is very clear that the petitioner is liable to pay royalty in terms of Rule 64-B and Rule 64-C of MCR 1960 unless and until the Rule is declared ultra vires for which liberty has been granted to the petitioner to challenge the same. 28. Since the petitioner has made the payment of entire amount under protest, the amount due under the earlier demand notices, which were raised in terms of Rule 64-B and Rule 64-C of MCR 1960, in our view, the petitioner shall have to pay the amount of royalty, may be under protest, pursuant to the impugned demand notices now issued. 29. For the reasons, as enumerated hereinabove, the prayer for stay of demand notices is refused. 30. The present writ petitions are admitted for hearing as the issue raised therein is debatable and requires detailed hearing. 31. The respondents are directed to file their respective counter affidavits within six weeks’ time with a copy in advance to be provided to the assisting counsel to Mr. Singhvi. Rejoinder, if any, within two weeks thereafter. 32. 30. The present writ petitions are admitted for hearing as the issue raised therein is debatable and requires detailed hearing. 31. The respondents are directed to file their respective counter affidavits within six weeks’ time with a copy in advance to be provided to the assisting counsel to Mr. Singhvi. Rejoinder, if any, within two weeks thereafter. 32. List these petitions on 24th August, 2015 for further consideration. Stay refused.