M/S Bhagwan Stone Works, through Its Authorized Signatory / Partner Namely Bhagwan Bhagat, Vs the State of Jharkhand, Represented through the Secretary, Department of Mines and Geology

2025:JHHC:19132-DB

IN THE HIGH COURT OF JHARKHAND AT RANCHI W.P. (C) No. 322 of 2025

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M/s Bhagwan Stone Works, having its Administrative Office at Ratanpur (near Durga Mandir), Barharwa, Sahibganj, Jharkhand, through its Authorized Signatory/Partner, namely, Bhagwan Bhagat, son of Late Jagarnath Bhagat, R/o Barharwa, P.O. & P.S.-Barharwa, District-Sahibganj, Jharkhand

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… … Petitioner

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Versus

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The State of Jharkhand, represented through the Secretary, Department of Mines and Geology, Government of Jharkhand, Ranchi

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The Deputy Commissioner, Sahibganj

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District Mining Officer, Sahibganj

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…. … Respondents

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CORAM: HON’BLE THE CHIEF JUSTICE HON'BLE MR. JUSTICE RAJESH SHANKAR

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--- For the Petitioner : Mr. Indrajit Sinha, Advocate Ms. Sneh Singh, Advocate Mr. Ankit Vishal, Advocate Ms. Puja Agarwal, Advocate For the Respondents : Mr. Ashutosh Anand, A.A.G.-III ---

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Reserved on 09.07.2025 Pronounced on 15.07 . 2025 Per : Rajesh Shankar, J. :

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The present writ petition has been preferred for quashing and setting aside the demand notice as contained in Memo No. 1325/M dated 30.12.2023 issued by the Deputy Commissioner, Sahibganj (respondent no. 2) whereby the petitioner has been directed to deposit penalty of Rs.534,84,16,970/- within seven days from the date of receipt of the said notice which has been quantified for purported illegal mining of 140747815 Cubic Feet stones.

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The factual background of the case as stated in the writ petition is that the petitioner was initially a firm having mining lease over three mining blocks (adjacently placed to each other). It has also a plot of land measuring an area of about 5.2 acres situated at Mouza-Borna,

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P.S.-Ranga, District-Sahibganj allotted for operating a crusher. The petitioner firm was converted into a partnership firm in the year 2014. Moreover, the validity period of one of the mining lease blocks situated at Mouza-Borna, P.S.-Ranga, District-Sahibganj measuring an area of 3.50 acres expired in the year 2021 and the rest two mining lease blocks are still functional.

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A joint survey team constituted by and under the Enforcement Directorate carried out inspection/survey of the mines situated in and around Sahibganj district to inquire into the purported illegal mining activities being undertaken in the area.

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In pursuance of the direction dated 23.08.2022 issued by the National Green Tribunal (NGT), the petitioner wrote a letter to the Circle Officer, Patna (Sahibganj) for measurement and demarcation of the mining lease blocks allotted to it. In response to the said notice, the Circle Officer, Patna (Sahibganj) inspected the lease blocks allotted to the petitioner on 13.10.2022 and submitted his inspection report to the Sub- Divisional Officer, Rajmahal vide Memo No. 593/R, Patna (Sahibganj) dated 09.11.2022 stating that the petitioner-firm was carrying out mining operation within its leasehold area over two mining lease blocks measuring area of 7.15 acres and 5.98 acres.

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The Regional Officer of the Jharkhand State Pollution Control Board, Dumka issued letter No. 249 dated 17.01.2023 to the petitioner stating that verification with respect to the environmental issue of its mining blocks by the concerned Circle Officer was necessitated and direction was accordingly given to the petitioner to get its mining

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blocks measured and verified by the concerned Circle Officer and thereafter to inform the said officer.

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The petitioner submitted the verification and demarcation report along with map in connection with the said mining blocks to the Regional Officer, Jharkhand State Pollution Board, Dumka which was received in his office on 18.01.2023. Thereafter, two show cause notices were issued to the petitioner vide Memo Nos. 121/M and 122/M both dated 11.02.2023 by the respondent no. 2 with respect to the mining plots situated at Mouza-Borna having area of 5.98 acres and 7.15 acres respectively referring to the report of the Enforcement Directorate regarding issues of illegal mining activities being allegedly undertaken by the petitioner primarily on Forest Land/Government Land/Raiyati Land without having valid mining lease as well as referring the letter dated 12.10.2022 issued by the Ministry of Environment Forest and Climate Change, Government of India.

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The petitioner filed reply to the aforesaid show cause notices vide separate letters both dated 20.03.2023 denying the allegation of illegal mining activities. However, the respondent no. 2 vide letter as contained in Memo No. 848/M directed the petitioner to file another reply within 15 (fifteen) days clearly addressing the discrepancies indicated in the mining figures with respect to production and transportation of minerals. The petitioner was also directed to get a Differential Global Positioning System (DGPS) Survey done by one of the recognized and empanelled organizations mentioned in the letter and to submit a report thereof.

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The petitioner engaged M/S Vision Earth Consultancy, Ashok Nagar, Ranchi, an organization recognized and empanelled by the Department of Mines and Geology, Government of Jharkhand. The mining plots of the petitioner-firm were surveyed and demarcated on 08.11.2023 and reports were prepared accordingly which reflected that the petitioner-firm was engaged in mining activities within the allotted mining leasehold area. The said DGPS Survey reports along with the reports of the Circle Officer, Patna (Sahibganj) were duly submitted before the concerned authorities for their consideration. However, the respondent no. 2 issued the demand notice against the petitioner-firm as contained in Memo No. 1325/M dated 30.12.2023 directing it to deposit penalty of Rs.534,84,16,970/- within seven days from the date of receipt of the said notice for purported illegal mining of 140747815 Cubic Feet of stone failing which certificate proceeding would be initiated against it for realization of the same.

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Learned counsel for the petitioner submits that the respondent no. 2 in the impugned demand notice has alleged violation of the provisions of section 21 (5) of the Mines & Minerals (Development & Regulation) Act, 1957, Rule 54 of the Jharkhand Minor Mineral Concession Rules, 2004 and Clauses 2, 5 & 10 of Part VII of the Lease Deed, however, none of the said provisions empowers the respondent no. 2 to pass an order imposing penalty upon the petitioner for alleged unlawful mining operations carried out by it beyond its leasehold area.

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It is further submitted that learned Division Bench of this Court in

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the case of M/s Rajhans Refractories Private Limited Vs. The State of Jharkhand & Ors. along with other analogous matters reported in 2025 SCC OnLine Jhar 1469 has held that the power conferred under section 21 (5) of the MMDR Act, 1957 cannot be exercised by any officer of the State Government, unless there is a valid delegation of power in terms of section 26 (2) of the said Act.

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It is also submitted that subsequent to the decision rendered in the case of M/s Rajhans Refractories Private Limited (supra) , the State of Jharkhand issued a notification on 06.05.2025 exercising powers conferred under section 26 (2) of the MMDR Act, 1957 on perusal of which it would be evident that the Deputy Commissioner has not been delegated with the power to pass an order in terms of section 21(5) of the Act, 1957. Therefore, exercising power by the respondent no. 2 purportedly under section 21(5) Act, 1957 is without any authority and thus liable to be set aside.

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It is also submitted that rule 54(6) of the Rules, 2004 provides for imposition of penalty for carrying out illegal mining operation. Perusal of the said provision would manifest that an order imposing fine upon an accused can only be passed by a court of competent jurisdiction. Moreover, the second para of Rule 54 (6) of the Rules, 2004 also cannot be pressed into service by the respondents to derive power and jurisdiction to impose fine for an act of unlawful mining. The power of the State Government is limited to realise rent, royalty for illegal occupation of the land and does not empower it, to realise any amount as fine towards the price of mineral alleged to

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have been unlawfully extracted.

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It is further submitted that so far as the power to impose fine for unlawful mining operation under rule 54 (6) of the Rules, 2004 is concerned, the said power is undoubtedly conferred to a court by another logical and interpretative reason i.e. if the rule making authority in its own wisdom thought it proper to make unlawful transportation of mineral as punishable offence, it cannot be understood that it would not make unlawful mineral extraction as punishable offence. Though the language used in rule 54(6) is a bit ambiguous, but the ambiguity cannot be permitted to lead to absurdity or conferment of power to an authority, who is otherwise not competent to do so. It is well settled that any interpretation which leads to an absurdity must be avoided.

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Learned counsel for the petitioner refers to a judgment of the Hon'ble Supreme Court rendered in the case of Nathi Devi vs. Radha Devi Gupta reported in (2005) 2 SCC 271 wherein it has been held that the interpretive function of a court is to discover the true legislative intent and in case of any ambiguity, the court must look at the statute in entirety and consider the appropriateness of its meaning in a particular context by avoiding absurdity, inconsistency or unreasonableness which may render the statute unconstitutional.

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It is further argued that the power to levy penalty in the nature of compensation for raising any mineral without any lawful authority is a field occupied by the parent Act i.e., M.M.D.R. Act, 1957 in terms with section 21(5) thereof. Hence, once the field is occupied by the parent Act, the State Government cannot make another provision by

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way of delegated legislation as it would be clearly inconsistent to the parliamentary statute.

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It is also submitted that this Court in the case of Hindalco Industries Limited Vs. The State of Jharkhand & Ors. (W.P.(C) no. 2604 of 2021) has held that the power conferred under rule 54(5) of the Rules, 2004 can only be exercised by a competent court to impose a fine/penalty for illegal transportation of minerals. Keeping in view the ratio laid down in case of Hindalco Industries Limited (supra) and also having regard to the scheme of Rule 54 of the Rules, 2004, it is beyond any cavil that Sub Rule (6) of Rule 54 of Rules, 2004 being similar to that of Sub Rule (5) of Rule 54 of the Rules, 2004 must be held to have conferred power to the Courts when a duly framed complaint containing allegations of unlawful extraction of minerals is brought before it.

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It is further contended that rule 54 of the Rules, 2004 is a penal provision and it does not deal with any civil action. Therefore, the executive is denuded of its power to impose any fine/penalty upon a person on the allegation that the mineral has been raised in an unlawful manner unless the same is exercised in terms with section 21(5) of the Act, 1957.

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It is also submitted that the impugned demand notice has been issued in a mechanical manner without any independent application of mind to the facts, submissions and records placed before the authority. The notice merely reproduces the statutory provisions without disclosing any reasoned finding.

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It is further submitted that the quantification of the mined material

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2025:JHHC:19132-DB

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as done in the impugned demand notice is wholly arbitrary and lacks any legal justification. No scientific assessment, satellite imagery or volumetric measurement substantiating the alleged quantity has been provided to the petitioner and in the absence of any such objective methodology, the determination of the quantity is speculative and violative of the principles of natural justice.

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It is contended that the imposition of penalty by computing the value of the alleged illegally extracted minor mineral is without any cogent material or factual basis. Moreover, no evidence has been furnished to show as to how the penalty was determined.

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It is lastly submitted that the impugned demand notice has been issued without taking into account the preliminary reply submitted by the petitioner, thereby violating the fundamental principles of natural justice and fair play.

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Per contra, learned counsel for the respondents submits that the impugned demand notice as contained in letter no. 1325/M dated 30.12.2023 was issued in due compliance of the principles of natural justice as the same needs no interference of this court.

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It is further submitted that an inspection was conducted between the period 25.07.2022 to 29.07.2022 by the joint survey team constituted by and under the Enforcement Directorate to inquire about the illegal mining activities within Sahibganj district. During the said inspection it was found that the petitioner was indulged in mining activities beyond the mining leasehold area and as such show cause notices were issued to it. Thereafter, considering its reply to the show cause notices, the respondent no. 2 issued the impugned

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demand notice for which he was competent.

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Heard the learned counsel for the parties and perused the materials available on record.

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Learned counsel for the petitioner has primarily argued that the respondent no. 2 had no jurisdiction to issue the impugned demand notice. In support of the said contention, reliance has been placed on a judgment of the Division Bench of this Court rendered in the case of Rajhans Refractories Private Limited (Supra.) wherein the demand notices issued by the District Mining Officer under section 21(5) of the Act, 1957 has been quashed being without jurisdiction.

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Section 21(5) of the Act, 1957 empowers the State Government to recover unlawfully raised mineral or its price along with rent, royalty, or tax for the period of unauthorized occupation of the land from which the said mineral has been extracted from those persons who are involved in act of illegal mining. Section 26(2) of the Act, 1957 empowers the State Government to delegate its power exercisable under the said Act to subordinate officers or authorities by issuing notification in the official gazette specifying therein the powers and conditions in relation to the matters concerning mining and minerals.

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Learned counsel for the respondents has placed before this Court a copy of notification issued by the Department of Mines and Geology, Government of Jharkhand vide Memo No. 1072/M dated 06.05.2025 in exercise of the power conferred under section 26(2) of the Act, 1957. By virtue of the said notification, delegation has been made to

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the Director, Mines and Additional Director, Mines to exercise the powers conferred under section 21(3), 21(4) and 21(5) of the Act, 1957 throughout the State of Jharkhand whereas the Deputy Director, Mines and District/Assistant Mining Officer have been authorised to exercise the said powers within their territorial jurisdiction.

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Thus, at the time of issuance of the impugned demand notice i.e, on 30.12.2023, no such delegation of power was made by the State Government. Otherwise also, vide notification dated 06.05.2025, the respondent no. 2 has not been delegated the power conferred under section 21(3), 21(4) and 21(5) of the Act, 1957.

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Moreover, on bare perusal of the rule 54(6) of the Rules, 2004 it would be evident that the same provides for realization of the penalty equivalent to double the price of extracted minor mineral from a person who is accused of extracting the same without having valid mining lease. It further empowers the State Government to take action for realization of rent, royalty or tax for the period of occupation of the land without the permission of lawful authority. Section 21(5) also empowers the State Government to recover rent, royalty or tax from the person who has raises, without any lawful authority, any mineral from any land.

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Thus, though rule 54(6) of the Rules, 2004 as well as section 21(5) of the Act, 1957 empowers the State Government to realize rent, royalty or tax, however both the provisions are silent about the authority by whom the penalty is to be recovered.

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In the case of Hindalco Industries (Supra) , the issue fell for

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consideration of this Court as to whether the District Mining Officer has jurisdiction to impose penalty under Section 54(5) of the Rules, 2004. In the said case, this Court while referring various provisions of the Act, 1957 as well as the Rules, 2004, quashed the order of penalty passed by the District Mining Officer under Section 54(5) of the Rules, 2004 observing as under:-

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“16. Section 21 of the Act, 1957 provides for the penalties to be imposed upon the person who contravenes the provisions of sub-section (1) or subsection (1-A) of section 4. In view of section 21(6) of the said Act, the offence has been made cognizable.

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17. Further, section 22 of the Act, 1957 provides that the court shall take cognizance of the offence punishable under the Act, 1957 or any rules made thereunder upon complaint in writing made by a person authorized in this behalf by the Central Government or State Government.

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18. The word ‘Court’ has not been defined in the Act, 1957, however the word “Special Court” has been defined in Section 3(hc) of the said Act as a Court of Session designated as Special Court under sub-section (1) of section 30-B. Section 30-B of the Act, 1957 provides for constitution of Special Courts for the purposes of providing speedy trial of offences for contravention of the provisions of sub-section (1) or sub-section (1-A) of section 4 of the said Act.

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19. Rules, 2004 has been framed in exercise of the power conferred under section 15 of the Act, 1957. Rule 54(5) of the Rules, 2004 provides that if any driver of a vehicle while transporting minor mineral fails to produce the transportation challan in Form ‘M’ or Form ‘D’ prescribed under Rules, 2004 before the competent officer or Director of Mines or Additional Director of Mines or Deputy Director of Mines or District/Assistant Mining Officer or Collector or any officer authorized by the Collector/State Government or refuses to get inspected it, then he shall be punishable with imprisonment of either description for a term which may extend to one year or with fine equal to twice the value of mineral or both. In case of failure to produce a

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valid transportation challan for the second or third time, the additional penalty shall be Rs. 50,000/- to 1,00,000/- respectively. It is further provided that if the investigating officer finds illegal transportation, the vehicle will be seized along with the minerals and will be kept safe in any government establishment or in the local police station premises. The vehicle can be released along with minerals after the illegal transporter submits the penalty fee and a bond paper to the effect that he will appear when the court issues a notice, but this information will be given to the concerned judicial Magistrate for taking action against the illegal transporter as per rules.

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20. Thus, rule 54(5) of the Rules, 2004 is the penal provision which provides for imposition of punishment of one year or with fine equal to twice the value of mineral or both when it is found that minor 2025:JHHC:18180-DB 8 mineral is being transported without any transportation challan in Form ‘M’ or Form ‘D’ prescribed under the Rules, 2004.

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21. The Act, 1957 is the parent Act whereas the Rules, 2004 is a delegated legislation. Delegated legislation should be interpreted and applied harmoniously with its parent Act. Delegated legislation, which is created under the authority of the parent Act, should not contradict or exceed the scope of that parent Act. It is a principle of legal interpretation and constitutional law to ensure that a delegated legislation remains within the boundaries set by the legislature.

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22. On conjoint perusal of the aforesaid provisions of the Act, 1957 as well as the Rules, 2004, we are of the view that the respondent no.4 was required to make complaint before the concerned Judicial Magistrate or before the Special Court, if any, constituted under section 30-B of the Act, 1957 who is empowered to take cognizance in the matter for imposing penalty under rule 54(5) of the Rules, 2004.”

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In the present case also, we are of the view that the penalty equivalent to double the price of minor mineral extracted by a person who is an accused of extracting the same without having valid mining lease as stipulated under rule 54(6) of the Rules, 2004,

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is to be recovered by making a complaint before the concerned Judicial Magistrate or before the Special Court, if any, constituted under Section 30-B of the Act, 1957 which is empowered to take cognizance in the matter, for imposing penalty under rule 54(6) of the Rules, 2004.

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It is well settled that if a law provides that an action should be taken in a specific manner, it implies that it must be done in that way, and any other method is not permitted. This is to ensure that the intent of the law is duly followed and the actions taken are legally sound.

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It is thus held that the impugned demand notice issued by the respondent no. 2 is without jurisdiction.

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For the reasons as aforesaid, the demand notice as contained in Memo No. 1325/M dated 30.12.2023 issued by the respondent no. 2 to the petitioner is hereby quashed. The respondents are however at liberty to demand and collect penalty from the petitioner in accordance with law. All other points including the factual issues raised by the petitioner in the writ petition are left open to be decided by the competent court of law, if the situation so arises.

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The writ petition is, accordingly, allowed.

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Pending application(s), if any, also stands disposed of accordingly.

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(M.S. Ramachandra Rao, C.J.)

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(Rajesh Shankar, J.)

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A.F.R.

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Vikas/

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M/S Bhagwan Stone Works, through Its Authorized Signatory / Partner Namely Bhagwan Bhagat, v. the State of Jharkhand, Represented through the Secretary, Department of Mines and Geology

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M/S Bhagwan Stone Works, through Its Authorized Signatory / Partner Namely Bhagwan Bhagat, v. the State of Jharkhand, Represented through the Secretary, Department of Mines and Geology

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