ORDER : 1. In both these writ petitions, a common issue namely with regard to validity of revised demands made by Senior Geologist, Department of Mines and Geology, arise for consideration. Therefore, both these petitions were heard analogously and are being decided by these common order. For the facility of reference, facts from W.P. No. 2188/2017 are being referred to. 2. The petitioner was granted a quarry lese for extraction of ordinary building stone on 19.07.2013 for a period of five years in respect of land bearing Sy. No. 106/A-1 to the extent of 10 acres. 3. The Senior Geologist, Department of Mines and Geology, Haveri, issued an annual audit report in respect of Nellibeedu Quarrying Lease No. 93 for the period till 31.03.2015. It was found in the report that a quantity of 2,28,010 metric tonnes of ordinary building stone was quarried and 1,71,084 metric tonnes was consumed during the said period. According to the audit report, the petitioner has removed 51200 metric tonnes of ordinary building stone from the quarry lease area on payment of royalty of Rs. 30,71,980/-. Thereafter, notice was issued to the petitioner asking it to deposit a sum of Rs. 71,93,060/- towards royalty. 4. The Additional Chief Secretary, Government of Karnataka, issued oral instructions on 10.03.2016 to levy and collect royalty at four times i.e. Rs. 2,87,72,200/- on the grounds that (i) advance royalty has not been paid, (ii) mineral dispatch certificates have not been obtained and (iii) terms and conditions of Quarrying Lease Deed Book has been violated. Thereafter, orders dated 23.06.2016 and 24.11.2016 were passed by the Senior Geologist demanding four times the royalty amount i.e. a sum of Rs. 2,87,72,200/- for having transported 1,19,884 metric tonnes of ordinary building stone from Neelibeedu Quarrying Lease. The aforesaid order has been challenged in W.P. No. 2188/2017. 5. By another order dated 24.11.2016 passed by Senior Geologist, five times the amount of royalty, i.e. Rs. 7,73,56,724/- for extraction of ordinary building stone as on 31.03.2015 from Bingaapur Quarrying Lease, was demanded. In W.P. No. 2189/2017, the said order is assailed. 6. Learned counsel for the petitioner submitted that admittedly the petitioner has transported the mineral for a period prior to 12.08.2016. 7,73,56,724/- for extraction of ordinary building stone as on 31.03.2015 from Bingaapur Quarrying Lease, was demanded. In W.P. No. 2189/2017, the said order is assailed. 6. Learned counsel for the petitioner submitted that admittedly the petitioner has transported the mineral for a period prior to 12.08.2016. It is further submitted that, the provision incorporating the levy of penalty five times the royalty has been incorporated in Karnataka Minor Mineral Concession Rules, 1994 (hereinafter referred to as ‘the Rules’ for short) on 12.08.2016 and the said provision does not have a retrospective operation. It is also submitted that at the relevant time, there was no provision in the Rules authorizing the levy five times the amount of royalty. It is urged that under clause (4) of the lease agreement, the respondents have no authority to levy the penalty five times the royalty amount which is not provided in the Rules. It is contended that, levy of penalty is per se without any authority of law. It is also urged that issue involved in these writ petitions has been answered in favour of the petitioner by two division benches of this Court vide orders dated 02.07.2019 and 04.09.2021 in W.P. No. 27184/2019 and in W.P. No. 15589/2021. Reference has also been made to decisions of Hon'ble Supreme Court in Kerala SEB vs. Kurien E. Kalathil, (2000) 6 SCC 293 , State of Bihar vs. Jain Plastics and Chemicals Ltd. (2002) 1 SCC 216 and National Highways Authority of India vs. Ganga Enterprises, (2003) 7 SCC 410 . 7. On the other hand, learned Additional Government Advocate submitted that under Section 21(5) of the Minor minerals (Development and Regulation) Act, 1957, the respondents had the authority to recover the value of the mineral. It is further submitted that the market value of the mineral could be recovered under Rule 44(3) of the Mineral Concession Rules, 1994. It is also submitted that division bench decision of this court will not apply to the fact situation of the case. Learned Additional Government Advocate has invited the attention of this court to the impugned order and has pointed out that the penalty has been imposed under Clause 4 of Part V of the agreement. It is urged that a penalty can be levied under Section 74 of the Indian Contract Act, 1872. Learned Additional Government Advocate has invited the attention of this court to the impugned order and has pointed out that the penalty has been imposed under Clause 4 of Part V of the agreement. It is urged that a penalty can be levied under Section 74 of the Indian Contract Act, 1872. In support of aforesaid submissions reliance has been placed on decisions of Hon'ble Supreme Court in Fatehchand vs. Balkishan Das, AIR 1963 SC 1405 , Maula Bax vs. Union of India, (1969) 2 SCC 554 and Oil And Natural Gas Corporation Ltd. vs. Saw Pipes Ltd. (2003) 5 SCC 705 . 8. We have considered the submissions made on both sides and have perused the record. The solitary issue, which arises for consideration in this case is with regard to authority of the Senior Geologist, Department of Mines and Geology to issue the impugned demand levying the penalty. The State Government has framed Karnataka Minor mineral Concession Rules, 1994. Rule 42 of the Rules provides for transport of minor minerals. The relevant extract of Rule 42(1) of the rules reads as under: 42. Transport of Minor Minerals: (1) No person shall transport or cause to be transported any minor mineral except under or in accordance with a Computerised Mineral Dispatch Permit in Form - MDP (1) generated in electronic form (e-permit or m-permit by the licence/lease holder or his authorized person and issued using Special Security Permit Paper (SSPP) sheet obtained from the Competent Authority or any other officer authorized by the Director. Thus, Rule 42(1) mandates that minor minerals cannot be transported, except after obtaining Mineral Despatch permit. 9. Rule 44 deals with offences, the relevant extract of Rule 44 reads as under: 44. Offences: (1) Whoever contravenes the provision of Rule 3 or sub-rule (1) of Rule 42, shall, on conviction be punished with imprisonment for term which may extend to two years or with fine five lakhs rupees per hectare of the area used to extract minerals illegally, and in case of continuing contravention with an additional fine which may extend to five hundred rupees for every day during which such contravention is continued. (2) Lease or lincensee who undertakes any quarrying operation in respect of any minor minerals “either without a licence or quarrying permit granted under these rules or in contravention of the terms and conditions of any licence or permit shall be punishable with imprisonment for a term which may extended to one year or with fine which may extended to five hundred rupees for every day during which such contravention continues after conviction for the first such contravention.” (3) If any lessee or licensee or his managers, employees, contractors, consumers or buyers dispatch or transport mineral without valid permit, such lessee or licensee shall be liable to pay a penalty equal to five times of royalty of mineral so dispatched or transported and if such dispatch or transport without valid permit happens for any subsequent times of such levy of penalty, then he shall be liable for additional levy of penalty equal to 15 times of royalty for mineral so dispatched or transported for the subsequent time also and the Competent Authority shall also order for determination of lease or licence: Provided that, no such order of determination shall be made without giving the lessee or licensee an opportunity being heard. 10. It is pertinent to note that Rule 44(4) has been inserted in the Rules with effect from 12.08.2016 and therefore, is not applicable to the fact situation of the case, as the illegal transportation of mineral pertains to the period 2014-2015. 11. Form E appended to the Rules prescribes the form of quarry lease/quarry licence. Part V of the aforesaid agreement deals with rent and royalties reserved by this lease. Clause 4 of Part V reads as under: 4. Penalty Subject to the provision of clause (3) of this part, any lessee /licensee or his agents, managers, employees, contractors, consumers or buyers contravening the above clause and transport mineral without valid permit, such persons will be liable for penalty at five times of royalty. If any lessee/licensee or his agent etc. or buyers continue to indulge in such offence the competent authority may order for determination of the lease/licence with the prior approval of the Controlling Authority. 12. The petitioner has entered into an agreement with the respondents in Form E on 17.09.2013. Thus, the agreement executed between the parties is statutory in nature. If any lessee/licensee or his agent etc. or buyers continue to indulge in such offence the competent authority may order for determination of the lease/licence with the prior approval of the Controlling Authority. 12. The petitioner has entered into an agreement with the respondents in Form E on 17.09.2013. Thus, the agreement executed between the parties is statutory in nature. Clause 4 of Part V of the lease deed provides for levy of penalty, five times the royalty. The aforesaid agreement was in existence prior to 12.08.2016 i.e. prior to insertion of Rule 44(4) in the Rules. The validity of clause 4 of part V is not under challenge in these writ petitions. 13. The relevant extract of the impugned demand notice reads as under: For the reasons stated in the preamble, on the scrutiny/examination of above stated points, Sri. A. Shivaprakasha, Building Stone Quarrying Lease Holder, resident of Hubballi is directed to pay Rs. 7,73,56,724/- (Rupees Seven Crores Seventy Three Lakhs, Fifty Six Thousand, Seven Hundred and Twenty Four Only) being Royalty at 5 times for having transported 258282 MT of Ordinary Building stones excluding 28800 MT for which advance Royalty has been paid and further transported without obtaining Mineral Disptach Permit and also without making payment of advance Royalty in terms of Rule 42 of KMMC Rules, 1994 and for having violated the terms and conditions of Quarrying Lease Deed Book, Part-V(4) as well as Circular dated 02.04.2012 issued by the Director, Department of Mines and Geology, Bengaluru. 14. Thus, while issuing the impugned demand notice, the Senior Geologist Mines and Geology Department has taken recourse to Clause 4 of Part V of the lease deed. In the instant case, the petitioner has transported the mineral without obtaining the Mineral Despatch permit and therefore, has violated Rule 42 of the Rules. The respondents have therefore, invoked Clause 4 of Part V of the lease deed and have imposed the penalty. Thus, the imposition of penalty is under a contract, which has a statutory force. It is settled in law that a penalty may be subject matter of breach of statutory duty. [See: State of U.P. and Others vs. Sukhpal Sngh Bal, (2005) 7 SCC 615 ]. The stipulation in the contract is based on principles akin to Section 74 of the Indian Contract Act, 1872. It is settled in law that a penalty may be subject matter of breach of statutory duty. [See: State of U.P. and Others vs. Sukhpal Sngh Bal, (2005) 7 SCC 615 ]. The stipulation in the contract is based on principles akin to Section 74 of the Indian Contract Act, 1872. It is also pertinent to note that the penalty is intended to compensate the State for breach of the contract. 15. So far as reliance placed by learned counsel for the petitioner on division bench decisions vide orders dated 02.07.2019 and 04.09.2021 in W.P. No. 27184/2019 and in W.P. No. 15589/2021 is concerned, it is noteworthy that issue involved in the said writ petitions was whether Rule 44(4) of the 1994 Rules could be invoked with retrospective effect. The aforesaid issue was answered in the negative and it was held that Rule 44(4) was introduced by way of an amendment with effect from 12.08.2016 and therefore, could not be invoked for making a demand for a period anterior to 12.08.2016. It is also relevant to mention that petitioners in both the said writ petitions were not lessees/licensees and Rule 44(4) of 1994 Rules can be invoked only in case of a lessee or licensee. 16. In the instant case, the petitioner as stated supra is a lessee/licensee and the power under Clause 4 of Part V of the contract, which is statutory in nature and under which petitioner is liable to pay penalty five times the amount of royalty has been invoked in the instant cases. Therefore, the aforesaid division bench decisions have no application to the facts of the instant cases. 17. Before dealing with the submission with regard to Rule 6(3) of the 1994 Rules made on behalf of the petitioner, it is relevant to take note of Rule 6(3) of the Rules, which reads as under: 6. Therefore, the aforesaid division bench decisions have no application to the facts of the instant cases. 17. Before dealing with the submission with regard to Rule 6(3) of the 1994 Rules made on behalf of the petitioner, it is relevant to take note of Rule 6(3) of the Rules, which reads as under: 6. General conditions of quarrying lease and licence: (1) xxx xxx xxx (2) xxx xxx xxx (3) In case of breach by the lessee or licence or his transferee or assignees of any of the conditions specified in these rules or in the quarrying lease deed or licence, the Competent Authority shall require by notice in writing the lessee or licence to remedy the breach within thirty days from the date of notice and if the breach is not remedied within such period the Competent Authority may levy a fine not exceeding two thousand rupees in the case of non-specified minor minerals and rupees ten thousand in case of specified minor minerals and the Competent Authority may without prejudice to any other action that may be taken against such lessee licensee, transferee or assignee determine the lease or licence after providing an opportunity of being heard. 18. Chapter VII of the Rules deals with controlling of unauthorized transportation of minor minerals. Rule 44 of the Rules, which deals with offences is contained in Chapter VII of the Rules. Chapter VII is a special provision dealing with unauthorized transportation of minor minerals and unauthorized quarrying offences and therefore, provisions of Chapter VII and Clause 4 of Part V of the agreement, which provides for levy of penalty five times the royalty in case of unauthorized transportation of minerals being the special provision would prevail over the general provision contained in Rule 6(3). Therefore, the contention that in view of Rule 6(3) of the Rules, only penalty of Rs. 10,000/- can be imposed does not deserve acceptance. 19. For the aforementioned reasons, we do not find any merit in these writ petitions. The same fail and are hereby dismissed.