Disposed

M/S Doddannavar Brothers v. State of Karnataka

Karnataka HC17 Jun 2020WP/38914/2016

Case brief

AI extract

What is this about?

This writ petition challenged demand notices for penalty and Net Present Value (NPV) regarding forest encroachment and mining lease classification. The Court held that while the amounts were paid, the demands were invalid without prior adjudication and hearings. It directed the authorities to furnish documents, hold a personal hearing, and pass appropriate orders, including potential refunds.

What did the court decide?

Directing respondents to furnish documents regarding penalty and NPV classification, grant a personal hearing within two months, pass an appropriate order within one month, and refund amounts if deman

M/S Doddannavar Brothers Vs State of Karnataka — Environment and Pollution | Karnataka HC (2020)

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IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 17^TH DAY OF JUNE, 2020

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PRESENT

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THE HON’BLE MR.ABHAY S. OKA, CHIEF JUSTICE

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AND

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THE HON’BLE MR.JUSTICE S.VISHWAJITH SHETTY

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WRIT PETITION NO.38914 OF 2016 (GM-MM-S)

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BETWEEN:

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M/S. DODDANNAVAR BROTHERS (REGD. PARTNERSHIP FIRM) DODDANNAVAR COMPOUND NEAR FORT, BELGAUM – 590 016 REP. BY ITS GENERAL MANAGER SRI RACHAPPA M. SARADAGI

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... PETITIONER

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(BY SRI K.N.PHANEENDRA, SENIOR COUNSEL FOR SMT. VAISHALI HEGDE, ADVOCATE)

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AND:

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STATE OF KARNATAKA

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REP. BY ITS SECRETARY

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DEPARTMENT OF FORESTS, ECOLOGY AND ENVIRONMENT

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4^TH FLOOR, M.S.BUILDING

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DR.AMBEDKAR ROAD

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BANGALORE – 560 001

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THE PRINCIPAL CHIEF CONSERVATOR

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OF FORESTS

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“ARANYA BHAVAN”

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18^TH CROSS, MALLESWARAM

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BANGALORE – 560 003

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THE DEPUTY CONSERVATOR OF FORESTS BAGALKOT DIVISION BAGALKOT – 587 101

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... RESPONDENTS

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(BY SRI I.THARANATH POOJARY, AGA)

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THIS WRIT PETITION IS FILED UNDER ARTICLE 226 OF THE CONSTITUTION OF INDIA, PRAYING TO ISSUE A WRIT OF CERTIORARI OR ANY OTHER APPROPRIATE WRIT OR ORDER OR DIRECTION QUASHING THE COMMUNICATION / LETTER DATED 08/06/2016 VIDE ANNEXURE-A ISSUED BY THE 2^ND RESPONDENT & THE DEMAND NOTICE DATED 18/06/2016 VIDE ANNEXURE-B ISSUED BY THE 3^RD RESPONDENT AND ETC.

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THIS PETITION COMING ON FOR DICTATING ORDERS THIS DAY, CHIEF JUSTICE MADE THE FOLLOWING:

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ORDER

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Heard the learned Senior Counsel appearing for the petitioner and the learned Additional Government Advocate for the respondents.

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With a view to appreciate the submissions made across the Bar, brief reference to the facts will be necessary. The petitioner was granted a mining lease on 1^st March 1960 for a period of 30 years in respect of iron ore. The challenge in this petition under Article 226 of the Constitution of India is to Annexures-A, B, Q and Q4.

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As far as Annexure-A is concerned, it is a communication addressed by the Principal Chief Conservator of Forest (Head of Forest Force), Bengaluru to the Additional Chief Secretary of the Government. The said letter records that the petitioner is liable to pay penalty for encroachment in a sum of Rs.6.11 crores. It also records that the petitioner will

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have to pay Net Present Value (for short ‘NPV’) for the entire lease area of 42.43 hectares. Annexure-B is the demand notice which refers to the interim order dated 27^th April 2016 passed in W.P.No.16924/2016. It also refers to the judgment and order dated 28^th September 2012 of the Apex Court in Writ Petition No.562/2009. Annexure-B demands penalty of Rs.6.11 crores for having encroached upon 3.31 hectares of forest land.

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Annexure-Q is a demand notice demanding NPV of Rs.3,40,71,290/-. Annexure-Q4 which is the last subject matter of challenge is the communication dated 5^th July 2016 by which the contention raised by the petitioner that the mining lease area comes under Eco-Value Class-IV in the category of “open forest” was rejected and it was observed that the land subject matter of mining lease will fall in Eco-Value Class-III in the category of dense forest and that is how the demand of a sum of Rs.3,40,71,290/- was made by Annexure-Q being NPV were reiterated.

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Along with the present writ petition, W.P.No.16924/2016 filed by the present petitioner was tagged. There was a common order passed by this Court in the present writ petition

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along with W.P.No.16924/2016 on 31^st August 2016. The common order records that by the order dated 27^th April 2016 passed in W.P.No.16924/2016, the petitioner was permitted to continue with the mining operations subject to payment of necessary charges to the Government. By the order dated 31^st August 2016, the interim order dated 27^th April 2016 passed in W.P.No.16924/2016 was modified by permitting the writ petitioner to continue the mining operations subject to payment of royalty as well as forest transit pass charges and upon deposit of 25% of the demand as per Annexure-B to the present petition which is the demand for penalty.

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It appears that the State of Karnataka challenged both the orders dated 27^th April 2016 and 31^st August 2016 by filing Special Leave Petition (Civil) Diary No.9376/2018 which was disposed of by the order dated 6^th July 2018. Before that, on 30^th May 2018, an interim order was passed by the Apex Court which notes that the orders impugned in the Special Leave Petition were earlier stayed. The order dated 30^th May 2018 records the statement of the learned counsel appearing for the petitioner that 25% of the amount of Rs.6.11 crores has been already deposited and the remaining amount will be deposited within four weeks. Subject to deposit of the said amount of

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75% and subject to filing an undertaking to deposit 75% of the amount within four weeks that the petitioner was permitted to continue with the mining operations. We may note here that W.P.No.16924/2016 was disposed of as the duration of the mining lease had come to an end. There is no dispute that the petitioner paid the balance 75% of the penalty and thus, total amount of penalty mentioned in Annexures-A and B was deposited by the petitioner with the respondent subject to final out come of this petition.

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During the pendency of the petition, a demand notice dated 23^rd March 2017 was issued to the petitioner reducing the demand of NPV to 2,65,61,180/-. The said demand was reduced as while maintaining Eco-Value Class-III, the category was changed to “open forest”. The said amount of demand was paid online by the petitioner. The letter dated 27^th February 2017 addressed by the petitioner to the Chief Conservator of Forest (Head of Forest Force) records that the amount was paid under protest.

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Thus, the amount demanded by virtue of Annexures-Q and Q4 stands modified by the subsequent demand notice dated 23^rd March 2017. Now that the lease has come to an

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end, the only issue which needs to be gone into is in respect of the legality and validity of both the demands.

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The submission of the learned Senior Counsel appearing for the petitioner about the NPV is that the land subject matter of the mining lease will fall in Eco-Value Class-IV and not in Eco-Value Class-III. Various submissions are made about the legality and validity of the demand of penalty. The submission is that the penalty has been levied in respect of the same offences which are compounded earlier. Attention of the Court is invited to the First Information Report and final report of closure. It is submitted that the directions issued by the Apex Court in the case of SAMAJ PARIVARTANA SAMUDAYA AND OTHERS VS. STATE OF KARNATAKA¹ were confined to specific mining leases in Ballary, Tumakuru and Chitradurga Districts and the directions of the Apex Court were issued under Article 142 of the Constitution of India. Therefore, the submission is that the penalty could not have been levied and the second submission is that NPV is demanded by wrongly classifying the land as falling in Eco-Value Class-III.

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1( 2013) 8 SCC 154

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The learned Additional Government Advocate relied upon the directions issued by the Apex Court in the case of SAMAJ PARIVARTANA SAMUDAYA ( supra ). He submitted that by demanding the penalty, the respondents have implemented the directions issued by the Apex Court and therefore, no interference is called for. However, he submitted that as the entire amount has been paid, the petitioner can be supplied necessary documents on the basis of which hearing can be given to the petitioner. As regards the demand of NPV, the learned counsel appearing for the petitioner has relied upon the judgment and order dated 28^th March 2008 of the Apex Court in the case of T.N. GODHAVARMAN THIRUMULPAD vs. UNION OF INDIA² . He submits that Eco-Value Classes divided into three categories – “very dense”, “dense” and “open forest” have been approved by the Apex Court and even quantum of NPV fixed for these categories has been specifically approved by the Apex Court. He submitted that thus, NPV has been demanded on the basis of categorization made by the Apex Court. He pointed that a working plan approved by the Government provides for types of forests in Bagalkot division according to which the mining lease area of the petitioner will

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2 W.P.(Civil) No.202/1995

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fall in Eco-Value Class-III consisting of Tropical Dry Deciduous Forest. He would, therefore, submit that no interference is called for.

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We have considered the submissions. Firstly, as far as challenge to the demand of penalty is concerned, it is true that the State Government has relied upon the order passed by the Apex Court in the case of SAMAJ PARIVARTANA SAMUDAYA . The basis for demand of penalty is the alleged encroachment made by the petitioner to an extent of 3.31 hectares on forest land outside the leased area. A perusal of the decision of the Apex Court in the case of SAMAJ PARIVARTANA SAMUDAYA shows that the mining lease subject matter of the petition was not the subject matter of the said case before the Apex Court. As far as the encroachment is concerned, there is nothing placed on record to show that after hearing the petitioner, an adjudication was made on the issue of the extent of the encroachment and the amount of penalty payable. Before demanding penalty on the footing that the petitioner has encroached upon a forest land, an opportunity of being heard was not granted to the petitioner and therefore, the demand is not consistent with the principles of natural justice. Though it is claimed in the statement of objections by the State

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Government that encroachment was determined on the basis of a survey carried out, still the petitioner was required to be heard on the survey report. Therefore, the State Government ought to have complied with the principles of natural justice before claiming penalty. Now, that the petitioner has paid the penalty amount subject to the outcome of the petition, post decisional hearing will have to be granted to the petitioner. If it is ultimately found that the petitioner is not liable to pay any penalty or the petitioner is liable to pay lesser amount, the State Government will have to pay necessary refund.

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Now, we come to the second demand about NPV. We have perused the order dated 28^th August 2008 in the case of T.N. GODHAVARMAN passed by the Apex Court. It is true that the categorization made into six Eco-Value Classes was approved by the Apex Court. The rates proposed for these six classes and in particular, in three sub-classes in each class under the heading “very dense forest”, “dense forest” and “open forest” were specifically approved by the Apex Court. Therefore, as far as NPV is concerned, the only dispute which can be raised is about the Eco-Value Class of the land subject matter of the lease and whether the land falls within the

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category of “very dense”, “dense” or “open forest”.

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During the pendency of the petition, one issue has been resolved in the sense that by the demand notice dated 23^rd March 2017, the State Government accepted that the sub-class of the land of the petitioner is open forest. Now, the only dispute which survives is about the Eco-Value Class. The contention of the respondents is that the experts have examined and classified the forest areas into various EcoValue classes and the mining lease land subject matter of this petition which is in Bagalkot district falls in Eco-Value Class-III.

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The petitioner cannot have any quarrel about the division

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of the lands into six Eco-Value Classes and division of each class into three sub-classes as well as the fixation of rates under the order dated 28^th March 2008. However, he is entitled to urge that his land falls in a particular Eco-Value Class which in this case according to the petitioner is Eco-Value Class-IV. In our view, before demanding NPV, after supplying to the petitioner material on which the respondents were relying upon, the petitioner ought to have been heard on the issue of EcoValue Class and an adjudication ought to have been made on the question in which the Eco-Value Class the land subject matter of mining lease will fall.

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Now that the reduced demand amount in terms of the notice dated 27^th March 2017 has been deposited by the petitioner under protest, the petitioner will have to be granted hearing.

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Accordingly, we pass the following order:

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(i) We direct the respondents to furnish all the documents in support of the demand of penalty under Annexure-B to the petition;

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(ii) We also direct the respondents to supply all the documents on the basis of which classification of the land subject matter of mining lease has been made as Eco-Value Class-III;

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(iii) The documents shall be furnished to the petitioner within a period of 15 days from the date on which this order is web hosted;

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(iv) Within a period of two months from the date on

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which the order is web hosted, the concerned authorities of the respondents shall give an opportunity of being personally heard to the petitioner and an opportunity to produce the

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documents in relation to both the demands of penalty and NPV;

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(v) Appropriate order shall be passed by the concerned authorities within a period of one month from the date on which the petitioner is heard;

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(vi) In the event it is found that the petitioner is not liable to pay any penalty or is liable to pay penalty which is lesser than what is demanded, refund of the requisite amount shall be made to the petitioner within a period of one month from the date of passing the order;

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(vii) In the event it is found that the subject land will have to be classified as Eco-Value Class-IV as contended by the petitioner, necessary refund of NPV paid by the petitioner shall be made to the petitioner within a period of one month from the date of passing the order;

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