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Jaiprakash Associates Ltd. v/s State of Uttaranchal

    WP 822 Of 2002
    Decided On, 06 November 2006
    At, High Court of Uttaranchal
    By, THE HONOURABLE MR. JUSTICE P. C. VERMA & THE HONOURABLE MR. JUSTICE DHARAM VEER
    For the Appearing Parties: V.K. Kohli, I.P. Kohli, K.P. Upadhyaya, Advocates.


Judgment Text
DHARAM VEER, J.

(1.) By means of this writ petition, the petitioner has prayed for writ of certiorari quashing the demand letter No. 212/Mines/2002 dated 1-11-2002 issued by respondent demanding a sum of Rs. 7,14,835.00 on account of royalty and penalty being illegal, void and inoperative as the provisions of Mines and Minerals (Regulation and Development) Act, 1957 and U. P. Minor Mineral (Concession) Rules, 1963 are not applicable to the petitioner since the petitioner is not carrying out any mining operations.

(2.) Brief facts of the case according to the petitioner are that petitioner had purchased a property known as WHYTBANK Castle Estate, the Bridge, Outhouses, Cottages and Servant quarters etc. having an area of about 9 acres through Registered Sale Deed dated 4-1-1991 which is duly registered in the Office of sub-registrar, Mussoorie. Distt. Dehradun. After the purchase of the said property, the petitioner demolished the existing construction and constructed a Hotel after getting the plan sanctioned which is now known by the name of Jay Pee Residency Manor and the boulders etc. gained during the course of digging the foundation for the building, the same were again used in filling work. Thereafter, the District Magistrate had called for certain information regarding digging/excavation done by petitioner for construction of Five Star Hotel and the said information was supplied through letter dated 1-8-1994. The petitioner informed the D.M. concerned that about 4,800 cu.m. usable stones were salvaged from the excavation. Thereafter, there had not been any response to the letter till 20-5-1996 when District Magistrate's letter was received asking for royalty of Rs. 7,13,835/- and penalty of Rs. 1,000/- failing which the petitioner was threatened a suit would be filed in the Court. The petitioner replied the said letter through letter dated 28-5-1996 and submitted that the provisions of the U.P. Minor Mineral (Concession) Rules. 1963 (hereinafter will be referred to as the Rules) are not attracted in the case of the petitioner. The petitioner by means of the said letter also requested for personal hearing for representation of the case. Subsequently, after the formation of State of Uttaranchal, on 16-8-2002, a demand was again made from the office of District Magistrate. Dehradun for depositing the amount in question. The petitioner vide his letters dated 20-8-2002 and 2-9-2002 submitted that the demand is illegal and unjustified and attention of the authorities was drawn to the different provisions of Mines and Minerals (Regulation and Development) Act, 1957 (hereinafter will be referred to as the Act). Thereafter, the petitioner received a letter from the office of District Magistrate fixing 4-9-2002 for hearing the matter and on the said date the representative of the petitioner appeared and matter was heard and the same was fixed for orders. Thereafter, through letter dated 1-11-2002, the petitioner was intimated that the objections raised by him through letters dated 20-8-2002 and 2-9-2002 were rejected and demand was made to deposit an amount of Rs. 7,13,835/- towards royalty and Rs. 1,000/- as penalty within a week failing which a threat was given for recovery of the same as arrears of Land Revenue. It has been alleged by the petitioner that the District Magistrate concerned has overlooked the definition of Mining Operations and has also overlooked the fact that the petitioner was not involved in the mining operations and hence the letter dated 1-11-2002 has been challenged on the ground of illegality and arbitrariness and hence it has been alleged that the same is not binding upon the petitioner and as such is liable to be dismissed.

(3.) A counter affidavit has been filed on behalf of respondent in which it has been stated that the petitioner while constructing his Hotel did unauthorized mining operation namely digging of rocks and excavating the lime stones mineral and the petitioner also used compressor machines etc. for doing the aforesaid operation. It has been stated that the petitioner has filed the petition on the conception that such operations are not covered by the provisions of the Act and the Rules, however, the said conception is denied by the respondents. It has been stated that the limestones and boulders etc. are all come within the definition of Minor Mineral as envisaged under Section 3-E of the Act and under the definition as envisaged in Rule 2 (7) of the Rules, 1963. It has also been stated that the land wherein the petitioner constructed the Hotel building is limestone zone and there are huge deposits of lime stones in the form of rocks. The petitioner for the purpose of construction of Hotel building did digging, drilling, winning minor minerals of the said land and converted the same to its use unauthorizedly and the petitioner also disposed of the minor minerals of the said area and hence the activities done by the petitioner are in utter disregard of Rules, 1963. It has also been stated that on receiving the complaint about illegal mining operation undertaken by the petitioner, the Naib Tehsildar was ordered to make inspection and to give his report and the inspection of the site was made and it was found that the petitioner was doing the mining operation by using the compressor machine and by drilling the area. The Naib Tehsildar immediately ordered to stop the illegal mining and to give undertaking that the petitioner shall not restart illegal mining but the officials of the petitioner refused to discontinue the operation. The Naib Tehsildar also challenged the vehicle of the petitioner illegally taking out the minor minerals from the site and the said vehicle was taken into custody by the concerned Police Station. It has also been stated in the counter affidavit that the demand raised by the respondent vide letter dated 1-11-2002 is in accordance with the provisions of relevant provisions of law and rules. The letter is neither illegal nor arbitrary and it is the duty of the petitioner to pay immediately the amount of royalty and penalty which was being demanded from him since 1996. It has also been stated that the demand of Rs. 7,13,835/- raised by the respondent is based on the joint inspection reporting regarding inspection of the site of Hotel building construction or, 12-9- 1993 by the Geologist and Surveyor of Directorate of Geology and Mining, Dehradun and by the Tehsildar and Naib Tahsildar, Khanij, Dehradun and as such it cannot be said that the demand is arbitrary. Accordingly, it has been stated that petition of the petitioner is not legally maintainable and the same is liable to be dismissed with costs and the grounds taken by the petitioner from I to XIX are all misconceived and not legally maintainable.

(4.) The petitioner in reply to the contents of counter affidavit filed by respondent, also filed a rejoinder affidavit stating therein that it is incorrect to say that at the time of excavation for construction, the rate of royalty was Rs. 45 per cubic meter. It has been stated that the petitioner had not done any illegal mining by excavating the limestone while constructing the Hotel building. The petitioner merely for the purpose of construction excavated the land. The petitioner has also denied the fact that he did excavation of lime stone of 17,625 cubic meter and it has been stated that total usable stone salvaged from the excavation were only 4800 cubic meter as was initiated to the respondent. The petitioner has also taken the support of Division Bench of Allahabad High Court in the case of M/s. Sharma and Co. v. State of U. P., reported in 1979, AWC, page 473, and hence it has been stated that the petitioner is not liable to pay any royalty.

(5.) We have heard learned counsel for the parties and perused the entire material available on record.

(6.) Rule 3 of the Rules, 1963 provides that no mining operation are to take place except and in accordance with the terms and conditions of mining lease or mining permit granted under the Rules. The provisions for demand of royalty is contained in Rule 21 of the Rules, 1963. The contention of learned counsel for the petitioner is that the petitioner has merely dug the foundation for construction of hotel and he has used the boulders which he gained after excavation of the foundation and hence neither Rule 3 nor Rule 21 is attracted. Learned counsel for the petitioner invited our attention on the words 'mining operation' used in Rule 3 of the Rules, 1963. The words 'mining operation' have been defined in sub-rule (5) of Rule 2 of the Rules which provides that "Mining operations' means any operations undertaken for the purpose of winning any minor mineral".

(7.) The contention of the learned counsel for the petitioner is that the excavation from the foundation for raising building in the land owned by the petitioner does not amount any mining operation. In the definition of mining operation stated above, it has specifically been provided that intention should be for the purpose of winning minor minerals. Here, the intention was not for winning any minor minerals and it was for digging the foundation for construction of hotel building. Ld. counsel for the petitioner further contended that Rule 3 of the Rules, 1963 applied only in case where mining lease is granted by the State Government and the lessee carries mining operation for the purpose of winning any minor minerals. He also submitted that so far as Rule 57 of the Rules, 1963 is concerned, that relates to penalty merely for unauthorised mining by contravening the provisions of Rule 3 of the Rules. 1963. As per Rule 21 of the Rules, the royalty is payable only by the holder of mining lease granted by the Government in respect of any minerals removed from the leased area at the rates as fixed by the State Government. It was submitted on behalf of ld. counsel for the petitioner that neither the petitioner holds any mining lease or mining permit nor he has removed any materials, hence the provisions for payment of royalty are not attracted. In support of his case, he placed reliance in the case of M/s. Sharma and Company v. State of U. P., reported in 1979 AWC Page 473, in which it was held that under Rule 21, it is the holder of the mining lease who has been made liable to pay the royalty in respect of the minerals removed from the leased area. Ld. counsel for the petitioner also submitted that the facts and circumstances of the above cited case are fully applicable to the facts and circumstances of the present case and submitted that since the petitioner does not hold any mining lease, hence there is no question of extraction of any minerals and removal of the same. He further submitted that digging of the foundation of his own property and using of the boulders which were extracted while digging of the foundation neither amounts to mining operation as has been stated in Rule 3 of the Rules nor the royalty is payable by him under Rule 21 of the Rules in which it is clearly written that only the holder of mining lease has been made liable to pay the royalty in respect of minerals removed from the leased area.

(8.) On the other hand, ld. standing counsel for the State/respondent submitted that while constructing the hotel building the petitioner did mining operation namely digging of rocks and excavation of the lime stone minerals and the petitioner also used compressor machines for digging the aforesaid operation. He further submitted that limestone and boulders are all comes within the definition of Section 3 of the Act. In support of his case, he placed reliance in the judgment given by Hon'ble Apex Court in the case of Bhagwan Das v. State of U. P., reported in AIR 1976 SC at Page 1393 and submitted that the facts and circumstances of the present case are squarely covered by the facts and circumstances of the above cited case.

(9.) Sub-rule (5) of Rule 2 of the Rules, Rule 3 of the Rules which provides for mining operations to be under a mining lease or mining permit and Rule 21 of the Rules which provides for Royalty are relevant in the present case and for the sake of convenience, they are reproduced as under :-

2(5) " 'Mining operations' means any operations undertaken for the purpose of winning any minor mineral". 3. Mining operations to be under a mining lease or mining permit - (1) No person shall undertake any mining operations in any area within the State of any minor mineral to which this rules are applicable except under and in accordance with the terms and conditions of a mining lease or mining permit granted under these rules : Provided that nothing shall affect any mining operations undertaken in accordance with the terms and conditions of a mining lease or permit duly granted before the commencement of these rules. (2) No mining lease or mining permit shall be granted otherwise than in accordance with the provisions of these rules. 21, Royalty (1) The holder of a mining lease granted on or after the commencement of these rules shall pay royalty in respect of any mineral removed by him from the leased area at the rates for the time being specified in the First Schedule to these rules. (2) The State Government, may, by notification, in the Gazette amend the First Schedule so as to include therein or exclude therefrom or enhance or reduce the rate of royalty in respect of any mineral with effect from such date as may be specified in the notification : Provided that the State Government shall not enhance the rate of royalty in respect of any mineral for more than once during any period of three years and shall not fix the royalty at the rate of more than 20 per cent of the pit's mouth values. (3) Where the royalty is to be charged on the pit's mouth' value of the mineral of the State Government may assess such value at the time of the grant of the lease and at the rate of royalty will be mentioned in the lease deed. It shall be open to the State Government to re-assess not more than once in a year the pit's mouth value, if it considers that an enhancement is necessary.

(10.) Rule 3 of the Rules, 1963 specifies that no mining operation are to take place except under and in accordance with the terms and conditions of the mining lease or mining permit granted under the Rules. The provisions for demand of royalty are contained in Rule 21 of the Rules, 1963. In this case, the petitioner has merely dug the foundation for construction of hotel and he has used the boulders which he gained after excavation of the foundation. The petitioner has purchased the property aforementioned through a registered sale deed and after purchase of the said property, the petitioner demolished the existing construction for construction of hotel after getting the necessary plan sanctioned. For the purpose of construction of hotel, usable items such as boulders etc. excavated during the course of digging of foundation were used for filling work. In the definition of the mining operations provided in sub-rule (5) of Rule 2 of the Rules, 1963, it is provided that intention should be for the purpose of winning minor minerals. Here the intention was not for winning any minor minerals and it was for digging the foundation for construction of hotel building. As per Rule 3 of Rules, 1963, it applies only in case where the mining lease is granted by the State Government and the lessee carries mining operation for the purpose of winning any minor minerals.

(11.) Rule 3 of the Rules, 1963 provides that the holder of a mining lease granted on or after the commencement of these rules shall pay royalty in respect of any mineral removed by him from the leased area at the rates for the time being specified to these rules. It means the royalty is payable only by the holder of a mining lease granted by the Government in respect of any mineral removed by him from the leased area at the rates as fixed by the State Government. The petitioner in support of the case also produced the judgment given by the Division Bench of Allahabad High Court in the case of M/s. Sharma and Co. v. State of U. P., reported in 1979 AWC Page 473. The facts and circumstances of the said case are fully applicable to the facts and circumstances of the case in hand. In paragraphs 10 and 11 of the said judgment, it has been held as under :- 10. Coming now to the appeal filed by the State Government which is aggrieved by acceptance of the third submission made by the petitioner we agree with the learned single Judge that the State Government derives its authority to recover royalty in respect of extraction of minor minerals under the provision of the Rule 21 of the U. P. Minor Mineral (Concession) Rules, 1963 which runs thus :-

21. Royalty- (1) The holder of a mining lease granted on or after the commencement of these rules shall pay royalty in respect of any mineral removed by him from the leased area at the rates for the time being specified in the First Schedule to these rules. (2) ..................." 11. Under this rule it is the holder of the mining lease who has been made liable to pay royalty in respect of the minerals removed from the leased area. Admittedly the petitioners did not hold any mining lease and as such they are not liable to pay royalty in respect of mineral extracted by him. It may be that the petitioners, having extracted the mineral in contravention of the provisions of the U. P. Minor Mineral (concession) Rules, rendered themselves liable for some other action but they are not liable to pay any royalty in respect of the brick earth extracted by them otherwise than under a mining lease.

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12.) On the other hand, ld. standing counsel for the State cited a judgment given by Hon'ble Apex Court in the case of Bhagwan Das v. State of U. P. reported in AIR 1976 SC at Page 1393. The facts and circumstances of the case cited by ld. standing counsel are not applicable to the facts and circumstances of the present case as the ratio of the said judgment and the law point involved in the said case are not involved in the present case, hence the judgment cited by ld. standing counsel is not applicable in this case. (13.) After perusing the aforesaid facts and circumstances of the present case, we are satisfied and come to the conclusion that as per Rule 21 of the Rules, 1963, the petitioner is not liable to pay the royalty of the boulder which he has excavated from his own property which the petitioner has purchased through registered sale deed and the demand made by the respondents for the royalty and penalty is against the provisions of Rule 21 of the Rules. Thus, the demand raised by the respondents and penalty thereof is liable to be quashed. (14.) Digging of the foundation of his own property and using of the boulders which were excavated while digging of the foundation neither amounts to mining operation as has been stated in Rule 3 and Rule 2(5) of the Rules nor the royalty is payable by him under Rule 21 of the Rules in which it is clearly written that only the holder of mining lease has been made liable to pay the royalty in respect of minerals removed from the leased area. (15.) Hence, the demand made by the District Magistrate vide order dated 1/11/2002 is illegal and against the provisions of Rule 21 of the Rules, 1963. The demand letter dated 1/11/2002 is liable to be quashed and is accordingly hereby quashed. The writ petition is allowed. The amount deposited by the petitioner in this Court in pursuance to the interim order dated 1/4/2003 shall be refunded to the petitioner. No order as to costs.