JUDGMENT : Heard the learned counsel appearing for the petitioner and the learned Additional Government Advocate for the respondents. The parties were put to notice that the petition will be heard and disposed of finally. Accordingly, the petition is taken up for Final Hearing. 2. The petitioner was granted a quarrying lease which has been subsequently renewed up to the year 2023. By this petition filed under Article 226 of the Constitution of India, after amendment of the petition, the petitioner has challenged the notices of demand at Annexures-J and K as well as Annexures-L and M. We have perused the said documents. 3. Annexure-J is a demand notice dated 30th March, 2017 in respect of Royalty payable for the year 2015-16. It is based only on the audit of the accounts pertaining to quarrying leases for the year 2015-16. The demand is for arrears of Royalty, interest as well as penalty in terms of sub-rule (5) of Rule 43 of the Karnataka Minor Mineral Concession Rules, 1994 (for short, “the said Rules”). Annexure-K is a demand notice in respect of Royalty for the year 2016-17. It is again based on an audit of the accounts pertaining to quarrying leases for the year 2016-17 wherein a demand is made for arrears of Royalty, interest and penalty under sub-rule (5) of Rule 43 of the said Rules. 4. Annexure-L is in fact a show-cause notice and not a demand. It is based on a drone survey report dated 27th December, 2018. It discloses the cumulative quantity of sub-mining excavated from the date of grant of quarrying lease up to the date when the drone survey was conducted. It is alleged in the notice that there is a mining activity carried out outside the area of the lease and the quantity excavated outside the area is 41,293 MT (Metric Tonne). The notice alleges that Royalty has not been paid on the quantity of 53,897 MT excavated by the petitioner. The petitioner was called upon to show cause as to why he should not be directed to pay Royalty. Time of thirty days was given in that regard to submit an explanation. 5. Annexure-M is in fact an order which records that the petitioner has failed to pay the amount as indicated in the order dated 27th December, 2018 (Annexure-L). The petitioner was called upon to show cause as to why he should not be directed to pay Royalty. Time of thirty days was given in that regard to submit an explanation. 5. Annexure-M is in fact an order which records that the petitioner has failed to pay the amount as indicated in the order dated 27th December, 2018 (Annexure-L). By the said order, the petitioner was called upon to stop further activities of quarrying with immediate effect, as an order has been passed cancelling the quarrying lease of building stone granted to the petitioner. The order is based on the allegation that an arrears amounting to Rs.5,89,70,739/-have not been paid by the petitioner. 6. Thus, we find that the notices at Annexures-L and K are based on the audit and the demand is for arrears of Royalty, interest and penalty for two distinct financial years. Obviously the demand of arrears of Royalty made therein will be covered by the notice dated 27th December, 2018. However, before making a demand of penalty, a show-cause notice ought to have been served to the petitioner giving him an opportunity to show cause as to why the penalty as proposed should not be imposed. However, that has not been done. Before making a demand for penalty, the elementary principles of natural justice required that the petitioner should have been heard in the matter. 7. Now coming to the show-cause notice dated 27th December, 2018, it is not even the case of the petitioner made out in the writ petition that he had replied to the show-cause notice. The show-cause notice dated 27th December, 2018 granted thirty days’ time to the petitioner to reply and ultimately, an order has been passed on 5th March, 2019, long after the lapse of the expiry of the period of thirty days. There is no averment even in the amended petition that any reply was given by the petitioner to the show-cause notice. The learned counsel appearing for the petitioner submits that though the petitioner tried to submit the documents, the fourth respondent did not accept it. We have perused the writ petition and in particular, paragraph 15 relied upon by the learned counsel for the petitioner. The learned counsel appearing for the petitioner submits that though the petitioner tried to submit the documents, the fourth respondent did not accept it. We have perused the writ petition and in particular, paragraph 15 relied upon by the learned counsel for the petitioner. There is a bald averment in the said paragraph that after the receipt of the notice/order dated 27th December, 2018 (Annexure-L), the petitioner had approached the fourth respondent and produced all the documents. It is stated that the fourth respondent informed the petitioner that the documents were available on record and therefore, he refused to accept the documents. The petitioner has not mentioned the date on which he visited the office of the fourth respondent to submit the documents. He has not disclosed the list of documents which were attempted to be submitted. In the absence of any particulars, the bald averments made in paragraph 15 of the amended petition cannot be accepted as true. Moreover, even according to the case of the petitioner, a reply was not submitted to the notice dated 27th December, 2018. By the said notice, the petitioner was called upon to submit the documents for reconciliation. He was specifically informed that on his failure to explain within thirty days, further action will be taken as per the Rules. The petitioner took a risk and did not submit any reply or documents, though the specific allegation in the notice was excess quantity of mining to the extent of 95,190 MT was made for which Royalty was not paid. 8. A perusal of the impugned order dated 5th March, 2019 (Annexure-M) shows that as the petitioner did not pay Royalty, a drastic order of stopping the quarrying activity on the basis of the lease has been passed. Therefore, even if the said drastic order is to be set aside, the petitioner will have to be put on terms for securing at least a part of the amount of Rs.5,89,70,739/-demanded which is payable for the year 2017-18. The reason is the petitioner has taken a risk of not replying to the show-cause notice dated 27th December, 2018. Moreover, a condition will have to be imposed that till the date of the passing of the order on the show-cause notice, the petitioner will not carry on further quarrying operations. 9. The reason is the petitioner has taken a risk of not replying to the show-cause notice dated 27th December, 2018. Moreover, a condition will have to be imposed that till the date of the passing of the order on the show-cause notice, the petitioner will not carry on further quarrying operations. 9. At this stage, the learned counsel appearing for the petitioner submits that the petitioner may be permitted to carry on quarrying activity till the show-cause notice is decided. 10. We are setting aside the impugned order at Annexure-M dated 5th March, 2019 only by way of indulgence, though the petitioner has not availed of the opportunity of giving a reply to the show-cause notice which puts the petitioner to notice that further action will be taken. Moreover, even as of today, the order dated 5th March, 2019 is operative. Therefore, till the issue is decided by passing an order on the show-cause notice, the petitioner cannot be permitted to carry on the quarrying activity. However, we propose to fix an outer limit for the concerned authority to pass an order on the show-cause notice. 11. We may note here that Annexures-L and K are in respect of the financial years 2015-16 and 2016-17 respectively. The impugned notice/order dated 5th March, 2019 (Annexure-M) refers to the arrears payable for the year 2017-18. We, therefore, propose to set aside the order dated 5th March, 2019 subject to the condition of the petitioner depositing 20% of the amount of Rs.5,89,70,739/-demanded for the year 2017-18 in Annexure-M with the respondents and subject to a further condition of the petitioner furnishing a Bank Guarantee in any nationalized bank for 5% of the amount of Rs.5,89,70,739/-. 12. Hence, we pass the following order: ORDER (i) So far as the demand notices at Annexures-L and K are concerned, as the demand is not made after following the principles of natural justice, we direct that no recovery shall be made on the basis of such demand notices. 12. Hence, we pass the following order: ORDER (i) So far as the demand notices at Annexures-L and K are concerned, as the demand is not made after following the principles of natural justice, we direct that no recovery shall be made on the basis of such demand notices. It will be open for the concerned authorities to give a show-cause notice for the said demands and after giving an opportunity of filing a reply and an opportunity of being heard, to make the demands in accordance with law; (ii) We set aside the order dated 5th March, 2019 (Annexure-M) subject to the condition of the petitioner depositing 20% of Rs.5,89,70,739/-with the fourth respondent and subject to a further condition of furnishing a Bank Guarantee of any nationalized bank of the amount equivalent to 5% of Rs.5,89,70,739/-in favour of the fourth respondent, within a period of ten weeks from today. However, till the date of passing an order on the show-cause notice, the petitioner shall not carry out quarrying operations; (iii) The petitioner is free to file a reply to the notice dated 27th December, 2018 within ten weeks from today. On compliance with both the conditions within the stipulated time of ten weeks, the appropriate authority will pass an order within six weeks from the date of making compliance of both the conditions. On compliance with both the conditions within the stipulated time of ten weeks, the appropriate authority will pass an order within six weeks from the date of making compliance of both the conditions. The order shall be passed after giving an opportunity of being heard to the petitioner; (iv) We make it clear that we have made no adjudication on the merits of the controversy; (v) In the event the fourth respondent passes an order demanding an amount which is more than the amount deposited by the petitioner and the amount provided under the Bank Guarantee, on an expiry of eight weeks from the date of communication of the order to the petitioner, the fourth respondent will be entitled to appropriate the amount equivalent to 20% of the said demand deposited by the petitioner and encash the Bank Guarantee and appropriate the amount payable thereunder towards the amount payable by the petitioner towards the demand; (vi) In case it is held that the petitioner is not liable to pay any amount or is liable to pay an amount which is less than what is deposited by the petitioner, it is obvious that the petitioner will be entitled for refund of the requisite amount and cancellation of the Bank Guarantee to the extent of the amount which is not payable by the petitioner; (vii) The petition is disposed of on the above terms.