Allowed

M/s. Sri Ganesh Mines and Minerals v. The State of Telangana

Telangana HC12 Jul 2016WP/16094/2016

Case brief

AI extract

What is this about?

This writ petition challenged a demand notice requiring penalty and royalty payment for alleged illegal mining. The court held that applying the Central Mineral Concession Rules for minor minerals was a jurisdictional error. Citing a related judgment, it set aside the notice but allowed authorities to act afresh.

What did the court decide?

Impugned demand notice set aside; authorities permitted to take appropriate action afresh in accordance with law.

M/s. Sri Ganesh Mines and Minerals Vs The… — Contract and Commercial Disputes | Telangana HC (2016)

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THE HON’BLE SRI JUSTICE C. PRAVEEN KUMAR

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WRIT PETITION NO. 16094 of 2016

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ORDER :

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The present writ petition came to be filed seeking issuance of writ of mandamus declaring the demand notice No.1449/ML/2005, dated 19.04.2016, issued by the Assistant Director of Mines and Geology, Hyderabad, as illegal and contrary to the provisions of Mines and Minerals (Development and Regulation) Act, 1957 (for short, ‘the Act of 1957’) and the Telangana State Mines and Minerals (Concession) Rules, 1966 (for short, ‘the Rules of 1966’).

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The averments in the affidavit are as under:

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The petitioner-firm was granted mining lease for Quartz and Feldspar over an extent of 4.177 hectares of land in Survey nos. 230(P), 232 (P), 233(P), 234, 235, 251(P) and 252(P) of Remeddula Village, Pangal Mandal, Mahabubnagar District, vide orders issued in G.O.MS.No.221, Industries and Commerce (Mines-I) Department, dated 08.08.2006, for a period of twenty years. Pursuant to the same, lease deed was executed and mining operations were conducted in the said area till it got submerged due to floods in the year 2010. It is averred that no mining operations are undertaken from 2010 till date. While things stood thus, one Smt.Y.Sujanamma and Sri Y.Rajeswara Rao filed complaints dated 14.05.2012 alleging illegal mining operations in Survey No.243 by the petitioner herein. Subsequently on 09.12.2013 another complaint was lodged by one Smt.Malathi Madiga (Executive Reporter), seeking a public enquiry to be conducted by an appropriate authority. Pursuant thereto a joint inspection was conducted in the said area and a panchanama was prepared on 21.06.2014, wherein it was mentioned that excavated area cannot be measured since the pit is filled with water. However,

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the Mandal Surveyor reported that the land to an extent of Ac.0.34 guntas in Survey No.243 is in possession of the petitioner-firm. Hence a letter came to be issued by the fourth respondent initiating action for illegal mining. Basing on the panchanama dated 21.06.2014 and some other reports dated 15.02.2016, a show cause notice came to be issued calling upon the petitioner to show cause as to why action should not be initiated under Section 21(5) of the Act of 1957 for recovery of royalty along with market value for illegal mining of 87,224 Metric tons of Feldspar in Survey No.243 of Remedulla Village. An explanation to the show cause notice came to be submitted on 30.03.2016 wherein the same was denied. It is averred that without considering the same, the impugned demand notice dated 19.04.2016 came to be issued demanding the petitioner to pay Rs.65,41,800/-towards seigniorage fee and Rs.6,54,18,000 i.e., ten times penalty under Rule 26 (2) of the Rules of 1966. Aggrieved by the same, the present writ petition came to be filed.

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The Assistant Director of Mines and Geology filed a counter on behalf of respondents denying the averments made in the writ petition, except to the extent admitted by him. While admitting the averments in the counter with regard to issuance of licence to the petitioner for mining of Feldspar and Quartz from July, 2010, it is stated that pursuant to complaints received, inspection was conducted wherein it was found that the petitioner has conducted illegal mining operations in area other than mining lease area over an extent of 0.34 guntas in Survey No.243 of Remadulla Village, Pangal Mandal. But however, it was admitted that the total extent could not be measured as the pit was totally water logged.

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The averments in the counter further indicate that on 15.02.2016, the authorities of the mining department along with revenue officials, with prior intimation to the petitioner over phone,

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inspected the premises in the presence of one M.Raghavender Reddy representing the petitioner-company and found the allegations to be true. The said M.Raghavender Reddy who is alleged to be present did not sign the panchanama. Hence a show cause notice came to be issued and then an impugned order came to be passed.

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Learned counsel for the petitioner mainly submits that the procedure adopted by the fourth respondent in demanding the petitioner to pay royalty and also the penalty is illegal and improper. According to him, Quartz and Feldspar minerals which were originally treated as Major minerals are now declared as minor minerals by the Government of India and as such the impugned demand notice issued under Rules of 1966 is illegal and improper. The Government Pleader for Mines and Geology strenuously refuted the same contending that since the said mineral was declared as a minor mineral, the authorities were forced to issue notice under Rules demanding payment of amount.

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As seen from the record, the show cause notice was issued on 11.03.2016 by the Assistant Director of Mines and Geology, Mahabubnagar, calling upon the petitioner to show cause within 15 days from the date of receipt of the notice as to why action should not be initiated under Rules 21 (5) of Mines and Minerals Development and Regulation Act, 1957 for payment of royalty along with penalty for excavation of 87,224 metric tones of feldspar. An explanation came to be submitted on 30.03.2016.

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After considering the explanation given by the petitioner, the impugned demand notice came to be issued on 19.04.2016, which reads as under:

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“In view of the above, M/s.Sri Ganesh Mines and Minerals, Prop. Sri B.Janga Reddy is hereby directed to pay Rs.65,41,800.00 towards seigniorage fee and

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Rs.6,54,18,000/- towards ten times penalty under Rule 26(2) of APMMC Rules, 1966 for 87,224 Metric Tons of feldspar illegally mined and transported from other than mining lease area in Suvey No.243 of Remadulla Village, Pangal Mandal of Mahabubnagar District. Failing which necessary action will be initiated for recovery of above demand as per rules.”

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A reading of the impugned order clearly indicate that the petitioner herein was directed to pay a sum of Rs.65,41,800/- towards seigniorage fee and Rs.6,54,18,000/- towards ten times the penalty under Rule 26(2) of the AP. Mines and Minerals Concession Rules 1966, for illegally mining Feldspar and transporting it.

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From the above, it is clear that though the show cause notice was issued under 21(5) of Act 1957, the demand notice for payment came to be passed under A.P.Mines and Minerals Concession Rules, 1966. It is not in dispute that both the minerals were de-notified as major minerals under notification dated 10.12.2015 issued by the Ministry of Government of India and became minor minerals from the said date. It is also not in dispute that the law applicable to both the minerals varies so long as they are classified as major minerals, which is governed by the Mineral Concession Rules, 1960, but after de-notification, it would be governed by the State Legislation, the Andhra Pradesh Minor Mineral Concession Rules, 1966.

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An identical issue came up for consideration before this Court in W.P.No.539 of 2016, wherein a learned Single Judge of this Court observed as under:

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“The show cause notice issued to the petitioner, which forms the basis for the impugned demand notice, is dated 10.12.2015. The fact remains that the status of the mineral underwent the afore-stated change even before the issuance of the show cause notice. Notwithstanding the same, the authority continued to apply the Mineral Concession Rules, 1960, to the case.

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This is unsustainable as the said legislation no longer had application after de-notification of the mineral. The impugned demand notice therefore suffers on the ground of this jurisdictional defect and is accordingly set aside. This order shall however not preclude the authorities from taking appropriate action afresh in accordance with law.”

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It may be true that the statute provides for a revision against the demand notice, but when the order which is passed is contrary to the basic principles of law viz. show cause notice being issued under central enactment but the demand notice being issued under the State enactment thereby denying the petitioner in making an affective representation to the final show-cause notice.

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Therefore, the impugned demand notice suffers on the ground of jurisdiction and the impugned order is accordingly set aside. However, this order shall not preclude the authorities from taking appropriate action afresh, in accordance with law.

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Accordingly, the Writ Petition is allowed.

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Miscellaneous petitions, pending, if any, shall stand closed in the light of this final order. No costs.

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_________________________ JUSTICE C. PRAVEEN KUMAR

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12.07.2016 vhb

M/s. Sri Ganesh Mines and Minerals v. The State of Telangana

Case brief

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M/s. Sri Ganesh Mines and Minerals v. The State of Telangana

Case brief

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