M/S. Mineral Enterprises Ltd., v. the New Mangalore Port Trust

Karnataka HC14 Dec 2023WP/1927/2016

Case brief

AI extract

What is this about?

The court examined a writ petition challenging demand notices for differential licence fees and service tax. The petitioner alleged surrendering part of the licensed area. The court found that the respondents took possession of the surrendered portion by allotting it to third parties. The petition was allowed in part.

What did the court decide?

Demand notice for 8988 sq. mtrs set aside; respondent entitled to differential licence fee for 1916 sq. mtrs.

M/S. Mineral Enterprises Ltd., Vs the New Mangalore Port Trust — Corruption | Karnataka HC (2023)

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IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 14^TH DAY OF DECEMBER, 2023

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BEFORE

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THE HON’BLE MR. JUSTICE R.NATARAJ

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WRIT PETITION NO.1927 OF 2016 (GM-RES)

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BETWEEN:

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M/S. MINERAL ENTERPRISES LTD., A COMPANY REGISTERED UNDER THE COMPANYS ACT, REPRESENTED BY ITS AUTHORIZED SIGNATORY, MR. ASHWIN PAUL, S/O. LT. COL. WILLIAM PAUL, AGED ABOUT 46 YEARS, OCCU: DIRECTOR, NO.3^RD FLOOR, WEST WING, KHANIJ BHAVAN, NO.49, RACE COURSE ROAD, BANGALORE-560 001.

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...PETITIONER

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(BY SRI. ADITYA NARAYAN, ADVOCATE)

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AND:

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1 . THE NEW MANGALORE PORT TRUST, REPRESENTED BY ITS CHAIRMAN, PANAMBUR, MANGALORE-10.

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2 . THE TRAFFIC MANAGER NEW MANGALORE PORT TRUST, PANAMBUR, MANGALORE-10.

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3 . THE DEPUTY TRAFFIC MANAGER (C) NEW MANGALORE PORT TRUST, PANAMBUR, MANGALORE - 10.

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…RESPONDENTS

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(BY SRI. SUBRAMANYA R., ADVOCATE)

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THIS WRIT PETITION IS FILED UNDER ARTICLES 226 AND 227 OF THE CONSTITUTION OF INDIA PRAYING TO QUASH THE DEMAND NOTICE ISSUED BY THE RESPONDENT NO.1 VIDE LETTER NO.FIN/GEN/2015, DATED 31.03.2015 THE COPY OF WHICH AS SERVED ON THE PETITIONER IS PRODUCED AT ANNEXURE-H DEMANDING THE PETITONER TO PAY SUM OF RS.3,32,27,506/- AND ETC.

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THIS PETITION HAVING BEEN HEARD AND RESERVED FOR ORDER ON 21.09.2023 AND COMING ON FOR PRONOUNCEMENT OF ORDER THIS DAY, THE COURT MADE THE FOLLOWING:-

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ORDER

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The petitioner has challenged a demand made by respondent No.1 in bearing No.FIN/GEN/2015 dated 31.03.2015 by which, a sum of Rs.3,32,27,506/- was demanded by respondent No.1 as the difference in licence fee and service tax. The petitioner has also sought for a writ in the nature of certiorari to quash the demand notice dated 16.09.2015 by which, respondent No.2 rejected the objections filed by the petitioner and reiterated the demand. The petitioner has also challenged a demand notice dated 13.11.2015 issued by respondent No.3 demanding a sum of Rs.3,30,54,353/-.

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The facts in brief are that the petitioner was allotted 11,238 sq. mtrs. of paved area and 9000 sq. mtrs. of unpaved area inside the wharf for stacking iron ore fines/lumps in terms of an order of allotment dated 20.02.2004. The petitioner surrendered 2250 sq. mtrs. of paved area in terms of its letter dated 08.04.2004 and retained 8988 sq. mtrs. of paved area. Later, the petitioner surrendered 9000 sq. mtrs. of unpaved area in terms of its letter dated 29.08.2011. Thus, what remained with the petitioner was 8988 sq. mtrs. of paved area, where the petitioner had erected a godown. In view of the ban imposed by the State Government against movement of iron ore from the mine head to the Port, the petitioner decided to surrender 7072 sq. mtrs. out of 8988 sq. mtrs. and consequently, addressed a letter dated 19.09.2011 requesting respondent No.1 to take out possession of 7072 sq. mtrs. with immediate effect. However, it permitted respondent No.1 to utilize the "godown" until further intimation. In response to this, respondent No.1 belatedly replied on 21.12.2011 and considered the request for

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surrendering portion of the paved area subject to the following conditions:

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(i) The vacant portion of the overflow shed constructed by the petitioner would be taken over by the Port and will be re-allotted to the other agencies on temporary basis and collect charges as per the scale of rates.

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(ii) The petitioner should execute a bank guarantee equivalent to penal rental charges as per the TAMP approved rates. The validity of the bank guarantee shall be extended till the surrendering of the entire plot and settlement of the issue.

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(iii) The port will not be held responsible for the cargo stacked by the petitioner in the balance area under the covered shed.

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(iv) The petitioner shall not claim any payment for the usage of the shed by the Port.

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Soon thereafter, respondent No.1 allotted 7072 sq. mtrs. of the surrendered paved area in favour of M/s Aspin Wall Logistics on 26.12.2011 with effect from 26.12.2011 to 25.01.2012 against receipt of a licence fee of Rs.2,04,381/-. This area was again licenced to M/s

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Aspin Wall Logistics for a month from 26.01.2012 to 24.02.2012 against receipt of Rs.2,05,064/-. Again the allotment of the godown to M/s Aspin Wall Logistics was renewed from 26.05.2012 till 24.06.2012 and licence fee of Rs.2,08,483/- was collected. Later on 05.11.2013, respondent No.2 allotted 1241 sq. mtrs. to M/s. Falcon Impex Corporation for two months commencing from 03.11.2013 to 01.01.2014 and collected a sum of Rs.1,71,456.92. In the meanwhile, the Board of trustees of respondent No.1 at a meeting held on 27.08.2013 decided to purchase the shed constructed by the petitioner in 7072 sq. mtrs. at a cost of Rs.2,00,00,000/-. At the said meeting, it was decided to collect penal charges upto 4 times until the balance iron ore fines was shifted to the common plot and to obtain an indemnity bond for the differential amount before shifting the cargo to the common plot, till the proposal was approved by the Ministry. Consequently, the Board resolved that the petitioner was liable to pay Rs.4,97,04,498/- as the penal licence fee as on 31.10.2013 and after deducting the value

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of the shed, required the petitioner to pay a sum of Rs.2,97,04,498/-. Following this, the respondent No.1 addressed a letter dated 31.03.2015 stating that the Tariff Authority for Major Port (for short 'TAMP') had issued a notification dated 03.07.2014 revising the lease rent from 20.02.2012 and therefore, called upon the petitioner to remit the differential licence fee and service tax amounting to Rs.3,32,27,506/-. The petitioner replied to this letter and claimed that an extent of 7072 sq. mtrs. was surrendered on 19.09.2011 and that the renewal of the licence in respect of surrendered area was not sought for. It also contended that subsequent to the surrender, the surrendered area of 7072 sq. mtrs. was allotted to M/s. Aspin Wall Logistics and M/s. Falcon Impex Corporation. The respondent No.2 however, overruled the objections of the petitioner and called upon the petitioner to pay the applicable differential licence fee for the entire extent of 8988 sq. mtrs. as demanded. This was followed by another communication dated 13.11.2015 provisionally demanding

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a sum of Rs.3,30,54,353/- being the differential licence fee.

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Being aggrieved by the same, the petitioner has filed this writ petition.

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The respondents have contested the petition by filing a detailed objections. They admitted that the petitioner had surrendered 2250 sq. mtrs. out of 11,238 sq. mtrs of paved area on 08.04.2004 and 9000 sq. mtrs of unpaved area on 29.08.2011. They claimed that the petitioner had put up a temporary open shed with steel structure measuring 130 mtr x 55 mtr with the permission of respondent No.1 in the wharf for its use. They contended that though the petitioner allegedly surrendered 7072 sq. mtrs. of paved area on 19.09.2011, the same was not accepted by respondent No.1 as per Clause 9 of the letter of allotment, which read as follows:-

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"9. The land shall be surrendered to the port in vacant condition at the time of termination/expiry of licence period."

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The respondents contended that a demand notice was issued by respondent No.1 on 31.03.2015 calling upon the petitioner to pay differential licence fee for the period upto 13.12.2013, which amounted to a sum of Rs.3,32,27,506/- as the petitioner was in possession of 8988 sq. mtrs. as the shed was not removed. They contended that though the petitioner represented that it had surrendered 7072 sq. mtrs. on 19.09.2011, respondent No.1 refused to accept the request of the petitioner. The respondents claimed that they never accepted the surrender of 7072 sq. mtrs. of land as the steel structure put up by the petitioner remained and was not removed by it. They contended that the letter dated 21.12.2011 addressed by respondent No.1 was conditional but the petitioner did not either accept or reject the conditions. Therefore, there was no valid surrender and respondent No.1 did not accept the surrender. They contended that the proposal for sale of the covered steel shed was made by the petitioner vide letter dated 07.02.2012 and this letter indicated beyond doubt that the

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plot was not vacated by the petitioner but it continued to occupy the same. They claimed that the offer of the petitioner to sell the covered steel shed was considered by respondent No.1 after a proper valuation by an expert and approval by the Port Trust Board. Accordingly, the entire plot of 8988 sq. mts. along with the covered steel shed was taken over by respondent No.1 on 13.12.2013 after shifting the Iron Ore Fines belonging to the petitioner. They claimed that due to severe space constraint in the Port, respondent No.1 exercised its option to request the petitioner vide letter dated 21.12.2011 with the following specific conditions:-

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(i) Vacant portion of the Over Flow Shed constructed by M/s Mineral Enterprises Ltd., will be taken over by the Port and will be reallotted to the other agencies on temporary basis and collect charges as per Scale of Rates.

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(ii) M/s Mineral Enterprises Ltd., has to execute the Bank Guarantee equivalent to penal rental charges as per TAMP approved rates. The validity of the Bank Guarantee shall be extended

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till the surrendering of the entire plot and settlement of issue.

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(iii) NMPT will not be held responsible for the cargo stacked by M/s Mineral Enterprises Ltd., in the balance area under covered shed.

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(iv) M/s Minerals Enterprises Ltd., should not claim any payment for the usage of shed by the Port; and thereafter the cargo was stored without cancelling the allotment of the original allottee i.e., M/s Mineral Enterprise Ltd.,

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The respondents contended that during the

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period 19.09.2011 and 13.12.2013, respondent No.1 had allotted the plot to others only for four months approximately that too, on temporary basis as mentioned supra. The respondents contended that the petitioner was therefore, bound to pay the differential licence fee as per the notification issued by TAMP. They contended that even though the petitioner did not seek for renewal of the licence in respect of 8988 sq. mtrs., but it neither surrendered nor vacated the plot by removing the steel structure. They therefore, contended that the petitioner is bound to pay the differential licence fee as demanded.

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The learned counsel for the petitioner reiterated the contentions, as stated above and contended that the steel shed put up by the petitioner was beneficial to respondent No.1 as it prevented damage to the goods stored therein. He submitted that it is the respondents, who were to pay to the petitioner for using the steel shed. He contends that negotiations were on between the petitioner and respondents for taking over the steel shed also and therefore, the petitioner did not remove it at the time of surrendering 7072 sq. mtrs. of paved area. The learned counsel for the petitioner contended that when respondent No.1 had rented out 7072 sq. mtrs. to M/s Aspin Wall Logistics and M/s. Falcon Impex Corporation, it was specifically stated that the area was vacant and therefore, he contended that the respondents cannot claim that the petitioner did not surrender 7072 sq. mtrs.

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Per contra, the learned counsel for the respondents submitted that the petitioner had enclosed 8988 sq. mtrs. by steel structure and if it wanted to

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surrender, then it had to remove the steel structure as provided under Clause 9 of the letter of allotment mentioned supra. He contended that though the petitioner informed the respondents that it would surrender 7072 sq. mtrs., of paved area yet, the petitioner did not agree to the conditions mentioned by the respondents to take over the possession. He therefore, contended that so long as the steel structure belonging to the petitioner remained in the paved area, the petitioner should be deemed to be in possession of 8988 sq. mtrs., and in view of the notification issued by the TAMP, the petitioner is liable to pay the differential licence fee as demanded.

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In reply, the learned counsel for the petitioner submitted that when once the respondents have granted licence to M/s Aspin Wall Logistics and M/s Falcon Impex Corporation to occupy the surrendered portion of 7072 sq. mtrs., there is no question of respondents now claiming that it was a temporary arrangement. In this regard, he relied upon the judgment of the Delhi High Court in the

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case of H.S. Bedi vs. National Highway Authority of India [2015 (151) DRJ 248].

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I have considered the submissions made by

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the learned counsel for the petitioner and the learned counsel for the respondents.

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The only short issue that arises for

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consideration in this petition is,

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"Whether the petitioner had surrendered 7072 sq. mtrs., of paved area to respondents on 19.09.2011?"

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The letter dated 19.09.2011 addressed by the petitioner to the respondents reads as follows:

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"Since the State Government's Ban on movement of Iron Ore from Mine head to NMPT is not lifted and uncertainty situation continues, we have decided to surrender 7,072 Sq. Mtrs. of paved area out of allotted 8,988 Sq. Mtrs. paved area to us and remaining 1,916 Sq. Mtrs. of paved area will be surrendered later near additional Berth.

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Please take possession of the same plot with immediate effect and arrange refund of Security Deposit.

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In case, if the State Government permits transport of Iron Ore to NMPT, we request you to consider and allot the same plot to us on our application.

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Existing Godown can be utilized by the port until intimation."

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Respondent No.2 replied to this letter on 21.12.2011 as follows:-

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"With reference to your letter No.nil dated 19.9.2011, the request for surrendering portion of area, which was allocated for developing covered shed by you, has been considered subject to the following conditions:-

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1. The vacant portion of the overflow shed constructed by M/s. MEL will be taken over by the Port and will be re-allotted to the other agencies on temporary basis and collect charges as per the Scale of Rates.

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2. M/s. MEL has to execute the Bank Guarantee equivalent to penal rental charges as per the TAMP approved rates. The validity of the Bank Guarantee shall be extended till the

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surrendering of entire plot and settlement of the issue.

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3. NMPT will not be held responsible for the cargo stacked by M/s. MEL in the balance area under the covered shed.

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4. M/s MEL should not claim any payment for the usage of shed by the Port.

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If the above conditions are acceptable, consent in this regard may please be submitted to the undersigned immediately."

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15. There is no document to indicate that the

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petitioner had either accepted or rejected the conditions mentioned in the letter dated 21.12.2011. Therefore, respondent No.1 could not have construed that the petitioner had allowed respondent No.1 to use 7072 sq.mtrs. of paved area. Nonetheless, respondent No.1 permitted M/s Aspin Wall Logistics to use 7072 sq. mtrs. for one month from 26.12.2011 to 25.01.2012 and collected a licence fee of Rs.2,04,381/-. M/s Aspin Wall Logistics was permitted to occupy the godown on 26.12.2011. The licence was again renewed from 26.01.2012 to 24.02.2012 and a licence fee of

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Rs.2,05,064/- was collected. M/s Aspin Wall Logistics vacated the godown on 24.02.2012. The godown was again licenced in favour of M/s Aspin Wall Logistics for one month from 26.05.2012 for storage of Rock Phosphate/Fertilizers and licence fee of Rs.2,08,483/- was collected. Later , the very same area was licenced in favour of M/s Falcon Impex Corporation for a period of two months from 03.11.2013 to 01.01.2014 to stack low ash breeze coke. Therefore, the respondents cannot contend that the petitioner had not cleared the godown on 19.09.2011 and/or that possession of the same could not be taken or was not taken. The existence of an overflow shed did not come in the way of the respondents to take over possession. The acts of the respondents in allotting the surrendered area to M/s Aspin Wall Logistics and M/s Falcon Impex Corporation prove beyond doubt that the respondents had taken over possession of the surrendered land. Therefore, the petitioner was not really liable to pay the differential licence fee, which came into effect from 20.02.2012 in respect of the surrendered area. As there is

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no clear evidence whether the petitioner had surrendered 1916 sq. mtrs. of covered space, the petitioner was only liable to pay the differential licence fee for 1916 sq. mtrs. from 20.02.2012 till 27.08.2013 when the Board of Trustees of respondent No.1 decided to purchase the temporary shed erected by the petitioner, apart from any due as on 19.09.2011.

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In view of the above, this petition is allowed in part. The demand notice dated 13.11.2015 issued by respondent No.3 demanding a sum of Rs.3,30,54,353/being the arrears of licence fee, penal licence fee, service tax and differential licence fee in respect of 8988 sq. mtrs., of paved area allotted to the petitioner by respondent No.1 inside the wharf of respondent No.1, is set aside. However, respondent No.1 is entitled to collect the differential licence fee and other statutory duties in respect of 1916 sq. mtrs. from 20.02.2012 till 27.08.2013 when the Board of Trustees of respondent No.1 decided to purchase the temporary shed erected by the petitioner or

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till the petitioner surrendered the possession of 1916 sq. mtrs. of paved area to respondent No.1, whichever is later. The petitioner shall also be liable to pay any licence fee/penal fee, if payable, in respect of 8988 sq. mtrs. as on 19.09.2011.

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Sd/JUDGE

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PMR

M/S. Mineral Enterprises Ltd., v. the New Mangalore Port Trust

Case brief

What is this about?

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M/S. Mineral Enterprises Ltd., v. the New Mangalore Port Trust

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