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2020 DIGILAW 1237 (ALL)

Dilip Singh Contractor v. State Of U. P.

2020-10-15

MUNISHWAR NATH BHANDARI, PIYUSH AGRAWAL

body2020
JUDGMENT : 1. We have heard Shri Ashok Khare, learned Senior Counsel assisted by Shri Siddharth Khare, counsel appearing for the petitioner; and Shri Pradeep Kumar Tripathi, learned Standing Counsel appearing for the State - respondents. 2. By this writ petition, a challenge has been made to the Government Order dated 15.10.2015 and the order of the Engineer-in-Chief (Development & Head of Department), Public Works Department dated 26.08.2019. 3. It is stated that the petitioner is "A" class Contractor, executing work of Public Works Department, apart from others. He is using the minerals for execution of contract work. It is after compliance of the provisions of Uttar Pradesh Minor Minerals (Concession) Rules, 1963 (hereinafter referred to as, 'the Rules of 1963'). He may be subjected to deduction of royalty six times to the amount of royalty pursuant to the Government Order of 15.10.2015. The direction has been given therein to deduct the amount of royalty to the extent of five times to the royalty amount in case it is found that the mineral has been used without a valid transit pass on Form MM-11. The deduction amount to be from the bills of the Contractor. 4. The counsel for the petitioner states that in case a Contractor fails to produce required documents to prove payment of royalty, it cannot suffer with payment of royalty apart from an amount five times to the royalty in absence of any provision under the Rules. Thus, the order dated 15.10.2015 and the consequential order of Engineer-in-Chief are illegal, thus deserve to be set aside. 5. The writ petition has been contested by the side opposite. It is submitted that the issue raised in this writ petition is not open for debate having been decided by this Court in the case of Ayodhya Prasad Mishra Vs. State of U.P. & Others [reported in 2016 (11) ADJ 607 (DB)]. Therein, the same circular was challenged. The writ petition, therein, was dismissed, though with certain clarifications. A reference of the judgment of the Apex Court in the case of State of Rajasthan & Another Vs. Deep Jyoti Company & Another [ (2016) 6 SCC 120 ] has also been given to show that similar circulars were not interfered by the Apex Court. 6. Clarifying the fact, it is submitted that anyone using the mineral is under an obligation to see that it is royalty paid. Deep Jyoti Company & Another [ (2016) 6 SCC 120 ] has also been given to show that similar circulars were not interfered by the Apex Court. 6. Clarifying the fact, it is submitted that anyone using the mineral is under an obligation to see that it is royalty paid. The obligation for payment of royalty is on the lease-holder and whenever mineral is transported, it should be under the valid transit permit on the required form and thereupon only, the mineral can be used by the Contractor. In case of default in making the payment of royalty and thereby, valid transit pass could not obtain by the transporter yet mineral is used by the Contractor, he is made liable to payment of royalty to the extent of five times by way of deduction in the bills. The five times to the royalty is nothing but the value of the mineral used without the payment of royalty amount. The deduction, to the extent of five times, is only to recover the value of mineral used without the payment of royalty amount, as it is the property of the Government, but can be used, subject to payment of royalty. 7. The basis of five times royalty is in reference to section 21(5) of the Mines & Minerals (Development & Regulation) Act, 1957, has been given and for ready reference, the said provision is quoted hereunder:- “Section 21. Penalties:- (5) Whenever any person raises, without any lawful authority, any mineral from any land, the State Government may recover from such person the mineral so raised, or, where such mineral has already been disposed of, the price thereof, and may also recover from such person, rent, royalty or tax, as the case may be, for the period during which the land was occupied by such person without any lawful authority.] [(6) Notwithstanding anything contained in the Code of Criminal Procedure, 1973 (2 of 1974), an offence under sub-section (1) shall be cognizable.” 8. The Government has taken five times to the royalty to be the price of the mineral. 9. In view of the above, this Court may not cause interference in the impugned circular and otherwise, the petitioner is one who has come with premature writ petition having not suffered any deduction, till date. The Government has taken five times to the royalty to be the price of the mineral. 9. In view of the above, this Court may not cause interference in the impugned circular and otherwise, the petitioner is one who has come with premature writ petition having not suffered any deduction, till date. Thus, it seems to be a writ petition in anticipation to evade the royalty and to safeguard the consequences. The prayer is, accordingly, to dismiss it with appropriate clarifications. 10. We have considered the rival submissions of the parties and perused the record. 11. A challenge to Government Order dated 15.10.2015 has been made and it is more specifically to no. 3 of the said order. It is quoted hereunder for a ready reference:- ¼3½ ;fn lkoZtfud fuekZ.k dk;kZsa esa dk;Znk;h laLFkk ls lacfU/kr Bsdsnkj }kjk fdlh Hkh mi[kfut dk Á;ksx fcuk oS/k vfHkogu Ái= ¼,e0,e0&11½ ds fd;k tkrk gS] rc Á;qDr mi[kfut dh jk;YVh ds lkFk&lkFk [kfut ewY; ¼lkekU;r% jk;YVh dk iakp xquk½ dh dVkSrh Bsdsnkj ds fcy ls djrs gq, fu/kkZfjr ys[kk 'kh"kZd^^0853&vykSg^^ [kuu rFkk /kkrqdeZ m|ksx&102 [kfut fj;kjr 'kqYd fdjk;k vkSj LoRo 'kqYd esa tek djk fy;k tk; rFkk Vªstjh pkyku dh ,d Áfr ftykf/kdkjh dks Hkst nh tk;A 12. The para aforesaid is applicable only when a Contractor fails to show use of mineral after its transportation through transit pass under Form MM-11, and not otherwise. The para, quoted above, has no application in those cases where required documents to prove payment of royalty and valid transportation thereupon has been shown. 13. The question for our consideration is as to whether such a condition can be imposed by the Public Works Department when, according to the petitioner, not provided under the Rules, and for that, Rules 57 & 58 of the Rules of 1963 have been referred. The aforesaid issue needs to be decided in reference to the earlier judgment of this Court as well as the Apex Court. The Government Order dated 15.10.2015 was subject matter of the writ petition in the case of Ayodhya Prasad Mishra (supra). Paragraphs 26 to 29 make a discussion on the issue and for ready reference, they are quoted hereunder:- “26. The purpose of issuance of impugned Government Order is just and valid and has been issued in public interest. The Government Order dated 15.10.2015 was subject matter of the writ petition in the case of Ayodhya Prasad Mishra (supra). Paragraphs 26 to 29 make a discussion on the issue and for ready reference, they are quoted hereunder:- “26. The purpose of issuance of impugned Government Order is just and valid and has been issued in public interest. The Government Order has been issued to ensure that royalty is paid and that the royalty paid material is used for construction work in the government department. Such intention is laudable. The requirement of Form MM-11/Form-C is a proof that royalty has been paid and the material is purchased from an authorized source either from a holder of a mining lease or from a licence storage holder. The Government Order imposing such conditions is required only for the purpose of undertaking of that work, which is awarded by the Government and its department, for which purpose, the conditions imposed in the Government Order is fair and reasonable and is not arbitrary. The purpose is to ensure that no mineral is excavated/transported and used without payment of royalty. The purpose of providing Form MM-11/Form-C is to ensure that the material and minerals etc. used by the contractors in the construction works, are royalty paid. It only indicates that such material, which is purchased by the contractors, is legally mined on which royalty has been paid. The object behind the issuance of the Government Order is to see that illegally mined material is not purchased by the contractors and used in the construction works, which is awarded by the Government and its department. This, in our view, is a laudable object and such a stipulation contained in the Government Order is to check the illegal mining. Consequently, the Government Order dated 15th of October 2015 directing further that if mineral is not purchased from a valid source and without production of From MM-11, the cost of material to the extent of five times royalty would become payable by the contractors. This imposition is in terms of Section 21 (5) of the Act of 1957. The said provision clearly indicates that where any person raise without any lawful authority, any mineral from any land, then such person would be liable to pay not only the royalty but also the price thereof. This imposition is in terms of Section 21 (5) of the Act of 1957. The said provision clearly indicates that where any person raise without any lawful authority, any mineral from any land, then such person would be liable to pay not only the royalty but also the price thereof. The word 'raise' means 'move' and therefore, if any person moves any mineral without a valid Form MM-11 or Form-C in which case the person would not only be liable to pay royalty but would also be liable to pay the price of the material. In the instant case, by the Government Order, the price of the material is equivalent to five times the royalty, which is not arbitrary. 27. The submission of the learned counsel for the petitioners that they are purchasing raw-material from the stone crushers, who are purchasing the same from the holders of a mining lease/mining permit through From MM-11 and that these stone crushers cannot further issue any Form MM-11 to the petitioners is misconceived inasmuch as the stone crushers are liable to take a licence for storage of minerals under the Rules of 2002. Once the stone crushers obtain a licence for storage of minerals, they would be obliged to issue Form-C under Rule 5 of the Rules of 2002 after obtaining necessary book of transit pass from the appropriate authority under Rule 4. 28. We find that a similar circular was issued by the State of Rajsthan for deduction of royalty from the bills of contractors, who were using minerals without submitting proof of the fact that royalty was paid on such minerals. The said circular was held to be a valid circular issued in public interest by the Supreme Court in State of Rajsthan and another Vs. Deep Jyoti Company and another reported in (2016) 6 SCC 120 . In paragraph 11, the Supreme Court held as under:- "11. The minor minerals removed from the quarries, admittedly are the property of the Government and the same cannot be removed and used without payment of royalty. Deep Jyoti Company and another reported in (2016) 6 SCC 120 . In paragraph 11, the Supreme Court held as under:- "11. The minor minerals removed from the quarries, admittedly are the property of the Government and the same cannot be removed and used without payment of royalty. It is, therefore, the duty of the Government to ensure that only royalty paid minerals are used in the work and the purpose of issuing such Circular was to avoid pilferage/leakage of revenue because royalty can be very conveniently evaded by the contractors either by not purchasing the material from the mining leaseholders or obtaining it from unauthorised excavators. In case, if the contractor purchases the material from unauthorised person who has not paid royalty, there would be loss to the public exchequer and the circular was issued to check evasion or loss to the public exchequer. Such condition cannot be said to be unreasonable and arbitrary and therefore, no prejudice could be said to have been caused to the contractors." 29. In the light of the aforesaid, reliance placed by the petitioners of the decision of the Division Bench of this Court in Abhimanyu Singh and others (supra) is misconceived. The contention that the Division Bench held that the payment of royalty to the extent of five times is illegal, is misconceived. The Division Bench had only noted the submission of the petitioner and held that there was no illegality in the Government Order and that it would be the responsibility on the part of the contractors to ensure that minerals are purchased through the authorized mining lease holder/suppliers on which royalty has been paid. The Division Bench also held that the petitioner of that writ petition should ensure that the royalty has been paid and copy of the Form MM-11 should be provided, failing which, they would have to pay the penalty. The Government Order dated 15th October 2015 only provides for obtaining Form MM-11. We are of the opinion that if a contractor purchases royalty paid minor minerals from a licence holder for storage of minerals against Form-C, the same should be accepted by the authority as an evidence showing the payment of royalty.” 14. In the paras quoted above, the Division Bench did not accept the same issue, as raised herein. It in reference to the same Government Order and the grounds. In the paras quoted above, the Division Bench did not accept the same issue, as raised herein. It in reference to the same Government Order and the grounds. A reference of the judgment of the Division Bench of this Court in the case of Abhimanyu Singh & Others Vs. State of U.P. & Others (Writ C No. 1510 of 2016, decided on 14.03.2016) has also been given. The circular under challenge was taken to be in public interest and basically, to ensure that royalty paid mineral is used by the Contractor. 15. In view of the above, we are not convinced with the argument in reference to the Rules of 1963. The condition imposed by the respondents is in public interest, thus we do not find any illegality therein. The similar condition regarding recovery of the amount from the bills imposed by the State of Rajasthan was held to be valid by the Apex Court in the case of Deep Jyoti Company & Another (supra). Therein, challenge to the order for deduction of amount was accepted by the High Court, but on an appeal, the judgment of the High Court was reversed by the Apex Court. The relevant paras 8 to 12 are quoted hereunder for a ready reference:- “8. The circular dated 06.10.2008 came to be issued by the State Government which provides the procedure for payment of royalty by the contractors who have been given the works contract by department of government. According to the appellants, the said circular was issued in order to ensure the payment of royalty and that the royalty paid mineral is used for construction work. As noticed earlier, clause (2) of the circular provides that before starting the work, the contractor was to obtain short term permit and rawanna book and contractor was also required to submit an affidavit to that effect that he had obtained the short term permit for mining the required mineral and rawanna book. Clause (3) of the said circular provides that if the contractor fails to produce copy of the short term permit, the works department will withhold the payment of bills. Clause (3) of the said circular provides that if the contractor fails to produce copy of the short term permit, the works department will withhold the payment of bills. Clause (3) of the said circular further provided that in case, the government department which allots the work to the contractor makes the payment of contract bills without obtaining the copy of short term permit and rawanna book, then the works department shall be liable to deposit the cost of the mineral. Thus in terms of clauses (2) and (3), it is incumbent upon the works contractor to obtain short term permit before starting the work. 9. Some of the fundamental aspects, while dealing with the validity of the aforesaid circular dated 06.10.2008, need to be kept in mind. The said circular which mandates the contractors to obtain short-term permit fess is meant for those contractors who are registered as ‘A’ class contractors with various departments of Government of Rajasthan. Such registration qualifies them to bid for and obtain Government contracts, which are construction contracts. The circular dated 06.10.2008 imposing the conditions, thus, is required only for the purpose of undertaking that work which is awarded by the Government/Government Departments etc. Otherwise, there is no such requirement or obligation on the part of contractors while doing any other private work. It is trite that for awarding Government work, it can impose and stipulate conditions, eligibility criteria as well as terms and conditions on which the contract would be executed. If any person wants to bid for or undertake the work, such persons has to fulfill those conditions. The only limitation is that conditions so imposed should meet the test of fairness and reasonableness and such conditions should not be arbitrary or contrary to any law. The question, therefore, is as to whether imposition of the condition to obtain short-term permit as provided in circular dated 06.10.2008 is reasonable and not arbitrary. 10. In so far as the contention that in terms of the circular there is compulsion to obtain short term permit, in our view, as such there is no such compulsion. It is only to ensure that no mineral is excavated and used without payment of royalty. The purpose of short-term permit is to ensure that the material and minerals etc. used by the contractor in the construction work are royalty paid. It is only to ensure that no mineral is excavated and used without payment of royalty. The purpose of short-term permit is to ensure that the material and minerals etc. used by the contractor in the construction work are royalty paid. It only means that such material is purchased by the contractor from the market which is legally mined and on which due royalty is paid. In other words, the objective is to see that illegally mined mineral/material is not purchased by the contractor and used in the construction work which is awarded by the Government. Not only it is a laudable object, such a stipulation is inserted in order to check illegal mining which unfortunately has assumed serious proportions in the recent past. Otherwise, the respondents herein do not stand to loose anything inasmuch as the moment evidence is produced to the effect that royalty was paid on the minerals by the leaseholder which was used in the construction, the construction contractor like the respondents would be refunded the royalty so paid by it in terms of circular dated 06.10.2008. In terms of clauses (5) and (7) of the said circular, the contractor has to pay royalty at the rates specified in the circular depending upon the nature of work and on production of bills showing payment of royalty, the contractor can get refund of royalty. There is, thus, no financial burden on the respondents of any nature. The purpose which is sought to be achieved, viz., non-royalty paid mineral (which would naturally be illegally mined mineral) is not used in the execution of the Government work and it cannot be treated as unreasonable or arbitrary. In our view, there is a complete justification for providing such a provision. 11. The minor minerals removed from the quarries, admittedly are the property of the government and the same cannot be removed and used without payment of royalty. It is therefore the duty of the government to ensure that only royalty paid minerals are used in the work and the purpose of issuing such circular was to avoid pilferage/leakage of revenue because royalty can be very conveniently evaded by the contractors either by not purchasing the material from the mining leaseholders or obtaining it from unauthorized excavators. It is therefore the duty of the government to ensure that only royalty paid minerals are used in the work and the purpose of issuing such circular was to avoid pilferage/leakage of revenue because royalty can be very conveniently evaded by the contractors either by not purchasing the material from the mining leaseholders or obtaining it from unauthorized excavators. In case, if the contractor purchases the material from unauthorized person who has not paid royalty, there would be loss to the public exchequer and the circular was issued to check evasion or loss to the public exchequer. Such condition cannot be said to be unreasonable and arbitrary and therefore no prejudice could be said to have been caused to the contractors. 12. Learned counsel for the respondents contended that the royalty can be levied in respect of the mineral removed or consumed from lease areas at the rates prescribed in Mines and Mineral (Development and Regulation) Act 1957 and any such levy can only be by a legislation and not by any circular and the impugned circular dated 06.10.2008 which is in the nature of levy of royalty was rightly quashed by the High Court and the impugned orders warrant no interference. The clauses stipulating deduction of royalty payable to the mineral department at the rates stipulated in the circular cannot be said to be a levy. As noticed earlier, the circular stipulates that the royalty is deducted at the rates prescribed in the circular, on production of bills by the contractor to the mining department showing that they had purchased the royalty paid mineral from the leaseholder and thus it only provides the procedure for collection of royalty. The circular only provides the procedure for payment of royalty for the minerals used by the contractors who have been given the works contract by the government department. The High Court did not keep in view the object of the circular and erred in quashing the impugned circular. ” 16. Learned counsel for the side opposite has, otherwise, made it clear as to why deduction, to the extent of five times of the royalty amount, has been made. It is taken to be price of the mineral used without payment of royalty. ” 16. Learned counsel for the side opposite has, otherwise, made it clear as to why deduction, to the extent of five times of the royalty amount, has been made. It is taken to be price of the mineral used without payment of royalty. The circular has been issued for justifiable purposes and otherwise, petitioner could not show reasons to justify delay in challenge to the order issued in the year 2015, as for that, petition has been filed in the year 2020. It more so, when the petitioner is an “A” class Contractor undertaking the work of the Department regularly. 17. For all the reasons given above, the writ petition fails and is dismissed.