w w w . L a w y e r S e r v i c e s . i n

Southern Rocks & Minerals Private Limited, Rep. by its Managing Director P. Rama Rao v/s The Government of Andhra Pradesh Industries & Commerce (Mines-II) Department, Represented by the Special Chief Secretary & Others

    W.P. Nos. 10994, 10996 & 11006 of 2021
    Decided On, 23 August 2021
    At, High Court of Andhra Pradesh
    For the Petitioner: T. Sreedhar, Advocate. For the Respondents: Additional Advocate General.

Judgment Text
Common Order:

1. The Petitioner company holds three leases for black galaxy granites in respect of (i) 2.729 hectares in S.No.21/11 to 13, 25P, 26, 27/P & 28/P (concerning to W.P.No.10994/2021) (ii) 2.223 hectares in S.No.988/2 (concerning to W.P.No.10996/2021) and (iii) 2.356 hectares in S.No.60/P, 101/1P, 102/P (concerning to W.P.No.11006/2021) of R.L.Puram Village of Chimakurthy Mandal, Prakasam District. All the leases are for 20 years and last till 2028-32. In all the three writ petitions, the petitioner challenges the show cause notice, consequential demand notice and quarry lease determination order passed by the 2nd respondent/Director of Mines & Geology.

2. The petitioner’s case succinctly is thus:

(a) The petitioner pleads that due to political rivalry the Mining Officers at the behest of the Government, are harassing the petitioner every now and then. In that process, show cause notices Nos.3304740/Vg/2020-3 dated 19.02.2020; 3304740/Vg/2020-4 dated 19.02.2020; and 3304740/Vg/2020-27 dated 20.02.2020 were initially issued by the Additional Director of Mines & Geology in respect of all the three leasehold mines on the allegation that during the alleged inspections dated 31.07.2019 and 20.08.2019 conducted in the presence of petitioner’s Mines Managers, some violations were found. No prior notice was issued to the petitioner calling for its presence at the time of alleged inspection and no documents and papers that were referred in the show cause notices were supplied to the petitioner. No field survey was conducted in the presence of the officials of the petitioner and no clarifications were sought for before issuing show cause notices. Since principles of natural justice and procedural norms were totally violated, the petitioner filed three writ petition Nos.6987, 6995 and 6996 of 2020 before this Court to set aside the three show cause notices. Those writ petitions were allowed on 13.03.2020 relying upon the common order in W.P.No.4894/2020 & batch wherein it was held except the Director of Mines & Geology, the Additional Director has no statutory power to issue show cause notices. Thus, while setting aside the show cause notices, this Court granted liberty to the authorities to issue fresh show cause notices to petitioner through proper authority by enclosing all the relevant documents, in which case the petitioner will have right to submit its explanation by taking all the factual and legal pleas which are available to it.

(b) Consequent to the above order dated 13.03.2020, the 2nd respondent, who is the Director of Mines & Geology, issued show cause notices Nos.3304740/Vg/2020-3 dated 17.03.2020 (relating to W.P.No.10994/2021) No.3304740/Vg/2020-4 dated 18.03.2020 (relating to W.P.No.10996/2021) and No.3304740/Vg/2020-27 dated 18.03.2020 (relating to W.P.No.11006/2021) to the petitioner. Since all the relevant documents which were relied upon to issue show cause notices were not served on petitioner in compliance of the direction contained in common order dated 13.03.2020 of this Court, and also due to COVID-19 pandemic and consequential lockdown and non-availability of staff, the petitioner sought for time as well as relevant documents to enable it to submit explanation to the aforesaid three show cause notices. In that regard, some letter correspondence took place between the petitioner and office of 2nd respondent. The 2nd respondent furnished only some documents and without waiting for the explanation of the petitioner, issued demand notices Nos.3304740/Vg/2020-3, 3304740/Vg/2020-4 and 3304740/Vg/2020-27 dated 31.07.2020. Aggrieved, the petitioner filed W.P.Nos.14298, 14303 & 14401 of 2020 challenging the demand notices dated 31.07.2020. The respondents appeared and sought time for filing counter. When the matter stood thus, instead of filing counters, the respondents illegally and in a posthaste manner issued quarry lease determination orders dated 20.08.2020 vide proceedings Nos.3304740/Vg/2020-3, 3304740/Vg/2020-4 and 3304740/Vg/2020-27. The petitioner therefore withdrew W.P.Nos.14298, 14303 and 14401 of 2020 on 25.08.2020 with a liberty to file fresh writ petitions questioning the demand notices and consequent lease determination orders. Writ petitions were closed giving liberty to the petitioner.

(c) Thereafter, the petitioner filed W.P.Nos.15103, 15104 & 15112 of 2020 challenging the above demand notices and consequential lease determination orders of the 2nd respondent. After elaborate hearing, those writ petitions were allowed on 27.08.2020 setting aside the demand notices dated 31.07.2020 and quarry lease determination orders dated 20.08.2020. In the said order, this Court directed the respondents to furnish the documents required by the petitioner to enable him to submit explanations against the show cause notices and to proceed further as per law. Subsequently the 2nd respondent furnished some documents vide his letter dated 14.10.2020. However, due to severe ill-health of the Managing Director of the petitioner company, letters dated 04.11.2020, 06.11.2020, 05.12.2020 and 21.12.2020 were addressed by the petitioner requesting 2nd respondent for some more time to submit detailed explanation. Ultimately the petitioner could submit its explanation to 2nd respondent on 04.01.2021 requesting for personal hearing. Thereafter the petitioner again vide letter dated 17.04.2021, requested the 2nd respondent for according personal hearing and for conducting a re-survey.

(d) The petitioner’s further submission is that the respondent authorities harassed him not only by issuing show cause notices, demand notices and quarry lease determination orders which he had successfully challenged in a court of law, but also they refused to issue despatch permits to transport the excavated granite slabs to the customers of the petitioner. In that context also the petitioner made a legal fight by filing writ petitions and obtaining orders. He was also constrained to file contempt case when the respondent authorities failed to comply with the concerned orders of this Court.

(e) Be that it may, without considering the elaborate explanation dated 04.01.2021 submitted by the petitioner, the 2nd respondent issued demand notices and consequential lease determination proceedings in respect of all the three leases, which act of 2nd respondent is illegal, violative of the provisions of the Mines and Mineral (Development & Regulation) Act, 1957 (for short, ‘the MMDR Act, 1957’) and the A.P. Minor Mineral Concession Rules, 1966 (for short, ‘the APMMC Rules, 1966’) and also devoid of principles of natural justice. Hence, the writ petitions.

3. The respondents filed counters opposing the writ petitions inter alia contending thus:

(a) As per the procedure, the inspection of quarry lease was conducted on 31.07.2019 and 20.8.2019. Thereafter show cause notice vide No.3304740/Vg/2020-3 dated 17.03.2020 was issued and after receiving the reply dated 04.01.2021, it was construed that the petitioner has committed certain deviations and evaded seigniorage fee and other taxes payable to the State and therefore a demand notice No.3304740/Vg/2020-3 dated 19.04.2021 was issued and on failure of the petitioner to pay the demanded amounts, the subject lease determination proceedings No.3304740/Vg/2020- 3 dated 31.05.2021 was passed.

(b) The technical staff of Department of Mines & Geology and Vigilance & Enforcement have conducted inspection of the petitioner’s leasehold mines on (i) 26.07.2019 in the presence of Sri M.Jayarami Reddy, Mines Manager of petitioner company in respect of 2.729 hectares in S.No.21/11 to 13, 25P, 26, 27/P & 28/P (concerning to W.P.No.10994/2021) (ii) 26.07.2019 in the presence of Sri M.Jayarami Reddy, Mines Manager of petitioner company in respect of 2.223 hectares in S.No.988/2 (concerning to W.P.No.10996/2021) and (iii) 07.08.2019 in the presence of Sri B.V.Rami Reddy, Mines Manager of petitioner company in respect of 2.356 hectares in S.No.60/P, 101/1P, 102/P (concerning to W.P.No.11006/2021) of R.L.Puram Village of Chimakurthy Mandal, Prakasam District, who are qualified persons and well acquainted with the procedure of extraction of Granite and aware of Rules and Regulations of Mines Acts. After identification of breaches committed by the petitioner, show cause notice dated 17.03.2020 was issued. The petitioner dragged on the matter and submitted explanation on 04.01.2021 and again dragged on the proceedings of personal hearing. It is submitted that no statutory provisions under the APMMC Rules, 1966 facilitate the personal hearing before issue of demand notice or determination order. However, the petitioner was given ample opportunity in the shape of show cause notice under the principles of natural justice, though there was no explicit provision in that regard. Such hearing is provided only under Rule 35 before disposing the appeal by the Director and under Rule 35A before disposing the revision by the Government. Thus, the principle of Audi Alteram Partem was scrupulously followed.

(c) The explanation dated 04.01.2021 submitted by petitioner was scrupulously examined. The petitioner submitted a report prepared by one of the PQPs engaged by him, wherein it is reported that recovery factor was 5% having regard to the rock formation and other factors. As such the petitioner have arrived the saleable granite as 211 cbm and tried to establish a very minimum differential quantity, for which despatch permits were obtained. Whereas according to the approved mining scheme No.320/MS/OGL/2014 dated 16.05.2014 which was also prepared by one of the PQPs engaged by the petitioner, the recovery percentage is detailed as below:


2014-15 to 2017-18 : 15%

2018-19 : 30%

2019-20 : 15%


2009-10 to 2013-14 : 25%

2014-15 to 2018-19 : 10%

2019-20 to 2023-24 : 15%

But the recovery percentage of abutting quarry leases is as follows:

M/s. Madhucon Granite Ltd., : 25%

M/s. Pokarna Ltd. : 20%


2014-15 to 2018-19 : 20%

2019-20 to 2023-24 : 20%

(d) As per Rule 16(1) of Granite Conservation and Development Rules, 1999 (for short, ‘the Rules, 1999’), no person shall commence mining operations except in accordance with the mining plan approved which is a statutory document. A provision is made under Rule 18(2) of the said Rules that reviewed submission can be made for the next five years by the leaseholder. The petitioner ought to have brought the modifications through a revised mining scheme. He did not do so. It is an afterthought of the petitioner that the recovery is only 5%. However, it is established from the workings of other adjacent existing leases that the recovery is 20%. Further, the petitioner failed to furnish the statistics as to how much rock mass was removed since inception and during the period considered in the demand notice. Sans the said crucial information, the petitioner cannot justify the assumed recovery of 5%.

(e) As per Rule 41(1)(b) of the Rules, 1999, it is the statutory obligation of the petitioner to submit details of opening stock, production, cumulative production, closing stock, waste generation, despatches of waste and rejects etc. in Form G (which are reproduced in the counter). The statutory return is designed to assess the quantum of over burden/waste generated since inception of the quarry/during the particular year vis--vis the quantum of saleable granite yielded since inception/during particular year and in turn to assess the percentage of recovery. The petitioner never bothered to disclose the said information and filed Form G without necessary information as extracted in the counter. Thus, it is established that the petitioner never bothered to disclose accurate and correct activity and kept Government in dark.

(f) The petitioner’s contention that he was conducting mining operations in accordance with the lease deed executed and relevant laws is denied since it is established that the petitioner violated the conditions of approved mining plan which is a statutory document.

(g) The Department awarded a transparent and lessee friendly online system for issue of despatch permits without consuming much time. The leaseholders shall abide by law and disclose the actual production from time to time. The strength of technical staff of department is very meager to regulate production and movement of every granite black. The petitioner was not treated differently by the Department of Mines & Geology. It is a fact that almost all the existing leases were inspected and it took two monthstime and every lease holder was aware of the said fact. The Mines Managers of the respective quarries were present and in the petitioner’s case, Sri M.Jayarami Reddy has attended and confirmed the conduct of inspection through his written statement dated 31.07.2019 and hence, the contention otherwise of the petitioner is far from truth. The demand notice dated 19.04.2021 issued by the 2nd respondent was well within the frame work of APMMC Rules, 1966 read with Rules, 1999.

(h) It is reiterated that the detailed inspection of quarry leases to identify violations and to reconcile the permitted quantities with the actual physical excavation to arrive the evaded quantities of minerals is a regular and routine process in the Mines Department. In terms of the same, inspection was conducted and show cause notice, demand notice and determination order were issued. The inspection was conducted in the presence of the petitioner’s Mines Managers. The measurements of the worked pits of the subject quarry lease have been captured with ETS instrument and the geo references meant to carry the quarry operations for the period 2014-15 to 2018-19 in the approved mining scheme were considered as bench mark to arrive the quantity of rock mass excavated by the lease holder for the last five years and accordingly, it was arrived as 10845 cum. Thus, the survey and inspection were carried in a most systematic manner. The references quoted by the petitioner are executive instructions which do not override statutory provisions of exercising powers under Rule 26(3) of the APMMC Rules, 1966. It is submitted that quite good teams of surveyors and technical staff have been drafted from all over the State who have successfully completed survey and inspection atleast in five leaseholds a day or two including that of the petitioner. Thus, the contention of the petitioner that blind mass inspection and survey has been conducted in as many mines as possible in a day is incorrect. The show cause notice and demand notice were issued in accordance with APMMC Rules, 1966 and Rules, 1999. As the petitioner failed to substantiate the reasons for breach, determination proceedings were issued. There are no merits in the writ petitions and they may be dismissed.

4. Heard Sri T. Sreedhar, learned counsel for the petitioner and learned Additional Advocate General representing respondents.

5. The main plank of argument on which the petitioner’s case shores upon is that since the petitioner belongs to rival political party, he is put to all sorts of harassment and intimidation by the Mining bureaucrats at the behest of persons at the helm of affairs and in that process, the lease hold premises of the petitioner concern were allegedly inspected without prior intimation/notice and in the absence of the petitioner, a make believable inspection was conducted in the mining pits without resorting to scientific survey and thereafter show cause notices were issued at the first instance, through an unauthorized officer and when the petitioner challenged the same in writ petitions, this Court quashed the show cause notices and directed the Mining Authorities to issue fresh show cause notices only through authorized officers. Thereafter, show cause notices were issued but without furnishing the documents and records relied upon by the authorities to arrive at the violations allegedly committed by petitioner. It is further argued that when the petitioner was groping in dark for want of relevant documents, respondent authorities concluded that there was no explanation and issued consequential demand notice and quarry lease determination orders. Petitioner, therefore, was constrained to file W.P.Nos.15103, 15104 & 15112 of 2020 questioning the vindictive acts of the respondents in issuing lease determination orders. Writ petitions were ultimately allowed and this Court directed the respondents to furnish the necessary documents to enable the petitioner to submit explanation against the show cause notices and then to proceed further as per law. Thus, it was only after Court’s direction the 2nd respondent furnished some documents and ultimately the petitioner submitted its detailed explanation on 04.01.2021 and requested for personal hearing. However, without considering the detailed explanation of the petitioner and without affording a personal hearing the 2nd respondent issued demand notices and also consequential lease determination proceedings in respect of all the three leases.

Learned counsel argued in vehemence that all the aforesaid acts of the respondent authorities were in utter disdain to the principles of natural justice on one hand and in total violation of provisions of MMDR Act, 1957 and APMMC Rules, 1966 and the guidelines rendered by the Government by way of Circulars.

In expatiation he would submit, in Circular Memo No.40454/R3- 1/2011, dated 28.02.2012 certain guidelines were issued to the authorities to be followed for conducting enquiries and inspections into illegal mining / quarry of minerals etc. One of the guidelines is that prior intimation has to be given to the lease holders who purportedly involved in the illegal activity to be present at the time of enquiry. Learned counsel argued that in the instant case, before inspection of the mining pits the authorities have not issued prior notice to the petitioner inviting its presence. At the time of inspection petitioner’s mines Managers Sri N. Jayaram Reddy and Sri B.V. Rami Reddy, who had no knowledge in survey and other procedures were incidentally present. Practically no survey was conducted except making a general observation by the inspection authorities. Even the report prepared at the spot was also not furnished to the Managers. Had prior notice was issued to the petitioner, he would have been present along with the technical persons to explain the authorities about the actual extent of excavation and extraction of the mineral. Hence, the principles of natural justice were grossly violated.

Severely remonstrating the differential quantity of granite claimed to be arrived at each lease premises by the respondents, learned counsel argued that the said recovery has no technical basis as the same was obtained on the basis of recovery of adjacent mines. On the other hand the experienced Geologist and RQR mines surveyor engaged by the petitioner has, upon taking into consideration the geological quarry deposit, fractures, joints, shearing, stated that recovery percentage could be only 5%. The quarry was surveyed by deploying ETS instrument to capture the working levels of pits, benches, ramp ways etc. The petitioner has annexed expert’s report to his explanation dated 04.01.2021. The RQP’s report is matching with the on ground granite quarried and despatched by the petitioner and also matching with despatch permits obtained. In spite of the aforesaid facts, learned counsel pointed out, the report was not considered in right perspective by the respondents. The assumed recovery percentages were based on Mining Plan/Scheme and some other unscientific methods. The Sub Committee under Granite Development Council, Ministry of Mines, Government of India has clearly stated that mining plans and schemes cannot be considered for obtaining recovery percentage of mineral quantity. They only serve the purpose as future projectile but not for arriving proven accurate data. Therefore, show cause notices and consequent demand notices and determination proceedings are bereft of truth as they have no technical backing.

Learned counsel lamented that the petitioner should have been accorded a personal hearing to explain various technical aspects with the help of technical experts and also the report submitted by the RQP to convince the respondent authorities that the recovery figures mentioned in the inspection reports have no factual relevancy. However, by not affording personal hearing, the respondent authorities committed fragrant violation of principles of natural justice.

Nextly, he argued that the demand notice and lease determination proceedings are bereft of valid reasons and hence liable to be set aside. He also argued that since the principles of natural justice are a casualty in this case, the petitioner can rightly canvas the injustice meted out to it in the writ proceedings rather than choosing an alternative remedy of filing revision before the Government. He relied upon following decisions expounding the principles of natural justice, particularly audi alteram partem and the exigency to follow the same by the adjudicatory authorities:

(1) Vallabhbhai ChanabhaiAhirv. Union of India (2019) 15 SCC 2)

(2) BA Continuum India Pvt. Ltd. Vs. Union of India (2021 SCC Online Bom 322)

(3) Bansal Flexipack Pvt Ltd.v. State of Telangana (2020 SCC OnLine TS 766)

(4) Rajesh Agarwal v. Reserve Bank of India (2020 SCC OnLine TS 2021 = (2021) 1 ALT 454 (DB), (2021) 2 ALD 290, AIR 2021 TS 50)

Finally, he argued that show cause notices were issued with pre-determined and biased attitude as the language used therein attributes guilt of petitioner and determination of authorities to punish even before petitioner submits its explanation.

6. In oppugnation, severely fulminating the petitioner’s argument that he was witch-hunted since he belongs to rival party, learned Additional Advocate General (for short “AAG”) would argue that the respondent authorities have, as an integral part of their duty, conducted inspections of the petitioner’s three subject leases in between 26.07.2019 and 20.08.2019 to identify any possible violations as they normally do in the mines of petitioner’s ilk, in the presence of Sri M. Jayaram Reddy and Sri B.V. Rami Reddy the mines managers of petitioner who are qualified and well acquainted with the procedure of extraction of granite and aware of rules and regulations of mining acts. The inspection and survey were conducted by a team of expert officials and surveyors. By employing ETS instrument, they took measurements of worked pits in the vicinity of the three lease hold mines and arrived at the volume of total rock mass excavated by the petitioner during the period 2014-15 to 2018-19 by taking the average recovery from the aggregate recovery in the aforesaid years and also basing on the recovery from the mines in the vicinity. Further, having found that the quantity of saleable granite extracted was far higher than the quantity for which despatch permits were obtained, the officials have fixed the normal seigniorage fee and penalty in respect of three lease premises of the petitioner and accordingly, issued show cause notices and consequential demand notices and lease determination proceedings. In that process, the recovery percentage shown by the petitioner for his mines was rejected as it being woefully very low. The percentage of recovery given by the expert engaged by the petitioner was also rejected because it was far lower than the projected recovery mentioned in the mines plan submitted at the inception by the petitioner.

Learned AAG vehemently argued that due procedure was meticulously followed inasmuch as, the inspection and survey were conducted in the presence of the Mines Managers of the petitioner through qualified surveyors and with the aid of ETS instrument for which no objection was raised by the managers. He further argued, neither MMDR Act nor Rule 26(3)(i) of APMMC Rules, 1966 nor Granite Conservation and Development Rules, 1999 specified that prior notice/intimation should be issued to a lessee before embarking upon the inspection. He would argue that the Circular Memo No.40454/R3-1/2011, dated 28.02.2012 relied upon by the petitioner to canvass that prior intimation should be given before inspection, has no application to the present case. The guidelines contained in the said memo were issued for conducting enquiries and inspections with regard to “illegal mining operations”. As the present inspection relates to legally held mines, the petitioner cannot clamour that principles of natural justice were violated.

Nextly, while refuting the allegation that show cause notices were issued with pre-determined and biased attitude, learned AAG argued that as per guidelines issued by Hon’ble Apex Court, a show cause notice must invariably contain the allegations leveled against a person and consequential statutory penal action proposed to be taken so as to enable him to meet those allegations and submit his explanation. In this regard, he placed reliance on the following decisions:

5. Gorkha Security Services v. Government (NCT of Delhi) (2014 (9) SCC 105)

6. UMC Technologies Private Limited v. Food Corporation of India (2021 (2) SCC 551)

Nextly, confuting the contention of the petitioner, learned AAG would argue that personal hearing is not a conferred right in every case but a generous act of discretion by adjudicatory authority, particularly when the relevant statute is silent about affording personal hearing and when already the case of the petitioner in his written representation was fully considered and answered by the authority. He placed reliance on the following decisions:

7. Andhra Cements Ltd. v. Government of Andhra Pradesh (2000 (1) ALD 388 = 2000 SCC OnLine AP 5 = 2000 (1) ALT 266)

8. Patel Engineering Limited v. Union of India (2012 (11) SCC 257)

9. Union of India v. Jyoti Prakash Mitter (1971 (1) SCC 396)

10. Madhya Pradesh Industries Ltd v. Union of India (AIR 1966 SC 671)

Finally, he argued that since alternative remedy of revision under Rule 35(a) of APMMC Rules, 1966 is provided against the impugned proceedings, the writ petition is not maintainable. He thus prayed to dismiss the writ petition.

7. I gave my anxious consideration to the above elaborate arguments. The points that emerge for consideration are

1) Whether prior intimation/notice is essential before a joint team of officers comprising Vigilance and Enforcement and Mines and Geology embark upon inspection of leasehold mines of the petitioner?

2) Whether show cause notices issued by the 2nd respondent manifest the pre-determined and biased attitude of the authorities to somehow proscribe and punish the petitioner?

3) Whether the principles of natural justice were infracted by the 2nd respondent by denying personal hearing to the petitioner?

4) Whether availability of alternative remedy is a bar to the writ petition?

8. Point No.1: Mines and Minerals are natural and national wealth and hence the equal distribution of the said wealth among the Nation is essential. To achieve egalitarian and socialistic form of Society, Article 39 was incorporated in the Part-IV of Directive Principles of State Policy of Constitution of India. Article 39 (B) and (C) while oppose the concentration of wealth, speak for equal distribution of material resources for common good. To achieve these avowed objects, statutory regulations became essential. Therefore, a provision has been made in Union List and State List under Schedule-VII of Constitution of India. Entry No.54 in Union List and Entry No.23 in State List create legislative fields to the Union Parliament and State Legislatures to create laws for regulation of Mines and Mineral Development in the public interest. However, State regulations are subject to the legislations made by the Parliament under Entry No.54 of List-I.

In view of this constitutional facilitation, the Union Parliament legislated Mines and Minerals (Regulation and Development) Act, 1957 whose nomenclature was later changed by virtue of amendment Act, 1999 as “Mines and Minerals (Development and Regulation) Act, 1957”. Section-2 of this Act contains declaration that it was expedient in the public interest that the Union should take under its control the regulations on Mines and Development of Minerals to the extent provided in the Act.

9. Section 3(aa) defines minerals as includes all minerals except mineral oils.

Section 3(e) defines minor minerals means building stones, gravel, ordinary clay, ordinary sand and other sand used for prescribed purposes and any other mineral which the Central Government may, by notification in the official Gazette declare to be a minor mineral.

Then Section-15 speaks about the powers of State Governments to make Rules in respect of minor minerals. It lays down that the State Government may, by notification in the official Gazette make Rules for regulating the grant of quarry leases, mineral leases or other mineral concessions in respect of minor minerals and for purposes connected therewith.

A careful scrutiny of the provisions of MMDR Act, 1957 would tell us that while Union Government regulates the mines and major minerals, State Governments regulate the mines and minor minerals. In exercise of the powers conferred by Section 15(1) of MMDR Act, 1957, the Government of Andhra Pradesh enacted the Andhra Pradesh Minor Mineral Concession Rules, 1966.

10. Be that it may, black granite is declared as a minor mineral and it was so held in the following decisions:

(1) In W.P.No.34135 of 2018 in Devaraju v. The State of Andhra Pradesh, it was observed thus:

“9) Apart from that, the counsel also placed on record the material extracts from the Indian Minerals year book, 2017 which clearly shows that Granite was declared as Minor Mineral under MMTR Act, 1957 and as such the same falls under the purview of the State Government. Once it is found that the Granite is a minor mineral, by virtue of Section 14 of Mines and Minerals D & R Act, 1957 the provisions of Sections 5 to 13 shall not apply. That being so, the argument of the learned counsel for the petitioners that granting of lease can only by way of an auction falls to ground.”

(2) In State of Tamilnaduv. Hind Stone ETC (1981 AIR 711 = 1981 SCR (2) 742, 1981 SCC (2) 205), the Hon’ble Apex Court observed that the Central Government declared by a notification that black granite was a minor mineral. In that view, in the present case, the APMMC Rules, 1966 are applicable.

11. Rule-26 of the APMMC Rules, 1966 deals with penalty for unauthorized quarrying. This rule in essence lays down that any person carries on quarrying operations or transports minor minerals in contravention of APMMC Rules, 1966, shall be punishable. Sub Rule 3(i) is important and it reads thus:

“[(3)(i) For the purpose of ascertaining the position of payment of Mineral Revenue due to the Government or for any other purpose under these rules, the person authorized under sub-rule (2) may –

a) enter and inspect any premises;

b) survey and take measurements

c) weigh, measure or take measurements of stocks of minerals;

d) examine any document, book, register or record in the possession or power of any person having the control of, or connected with any mineral including the processed mineral and place marks of identification thereon and take extracts from, or make copies of such document, book, register or record; and

e) order the production of any such document, book, register, record as is referred in Clause (d)”

Thus, Rule 26(3)(i) empowers the authorized person to enter, inspect, survey, take measurements, weigh and measure stock of minerals for ensuring the due payment of revenue to the Government. As rightly argued by the learned AAG, Rule 26 of APMMC Rules, 1966 does not specifically state that prior intimation/notice should be given to the holder of the mining premises before conducting the inspection and survey of subject mine. It is trite law that when a statute ordains that a particular act has to be performed in a particular manner, it shall be performed in that manner and not otherwise. Therefore, the petitioner cannot contend that no prior intimation/notice was given to it to ensure its presence at the time of inspection. On the other hand admittedly, the Mines Managers namely M.Jayarami Reddy and Sri B.V.Rami Reddy were summoned by joint inspection team and they were present at the time of the inspection and survey.

Then the argument of the petitioner that prior intimation should be given before inspection in view of circular memo No.40454/R3-1/2011 dated 28.02.2012 is concerned, the said argument has no much force. As rightly submitted by learned AAG, the said circular was issued by the Director of Mines & Geology to the Assistant Directors and Deputy Directors of Mines & Geology (Regular & Vigilance) in the State to follow certain guidelines while booking cases on mining/quarrying without a lease or permit. One of such guidelines is to issue intimation to the complainant as well as to the leaseholders who are purportedly involved in the illegal activity of mining/quarrying to be present at the time of enquiry. So, the guidelines in the aforesaid circular were essentially related to illegal mining. In this regard, it should be noted that the definition of “illegal mining” was given in Rule 2(ii)(a) of the Mineral Concession Rules, 1960. The said definition says that “illegal mining” means any reconnaissance or prospecting or mining operation undertaken by any person or a company in any area without holding a reconnaissance permit or a prospecting license or a mining lease as required under sub-section (1) of Section 4 of the MMDR Act, 1957. Thus, it is needless to emphasize that the Circular Memo relied upon by petitioner relates to illegal mining only. This point is answered accordingly.

12. Point No.2: This point is concerned, it should be noted that in the 3 show cause notices issued by the Department, after mentioning the violations in Paras 1 & 2, it is stated thus:

“Action will be initiated under Rule 26(I) of APMMC Rules 1966, Rule 12(5)(h)(iii) of APMMC Rules, 1966 for having excavated and transported 1,758 cum of Black Galaxy Granite without payment of Seigniorage fee in contravention to condition 5 of grant read with Rule 12(5)(h)(iii) of APPMC Rules, 1966 and under Rule 47 of Granite Conservation Development Rules, 1999 as they have conducted mining operations which is gross violation in accordance with Rule 18(2), 19(1), 31(1), 37 and 41 (a) & (b) of Granite Conservation! and Development Rules, 1999.”

Referring to above paragraph, learned counsel for petitioner argued that the phraseology in the above paragraph would indicate the predetermination of the 2nd respondent to indict and penalize the petitioner even before it submits explanation and therefore, the very show cause notices are liable to be set aside. The contents in the show cause notice when read entirely, will not permit me to accept this contention. The show cause notices would depict, after narrating the mining violations allegedly committed by the petitioner and the concomitant action sought to be initiated under relevant enactments, it is clearly mentioned at the end of the notices that the petitioner shall show cause within 15 days from the date of receipt of the notice as to why action should not be taken against him. So, from the tone and tenor of notices, one cannot infer predetermination.

In Gorkha Security Services case (5 supra) cited by AAG, the Apex court expounded the contents of a show cause notice.

21. xxx……… The fundamental purpose behind the serving of show-cause notice is to make the noticee understand the precise case set up against him which he has to meet. This would require the statement of imputations detailing out the alleged breaches and defaults he has committed, so that he gets an opportunity to rebut the same. Another requirement, according to us, is the nature of action which is proposed to be taken for such a breach. That should also be stated so that the noticee is able to point out that proposed action is not warranted in the given case, even if the defaults/ breaches complained of are not satisfactorily explained. When it comes to black listing, this requirement becomes all the more imperative, having regard to the fact that it is harshest possible action.”

22. xxx………However, it is equally important to mention as to what would be the consequence if the noticee does not satisfactorily meet the grounds on which an action is proposed. To put it otherwise, we are of the opinion that in order to fulfil the requirements of principles of natural justice, a show-cause notice should meet the following two requirements viz:

(i) The material/grounds to be stated which according to the department necessitates an action;

(ii) Particular penalty/action which is proposed to be taken. It is this second requirement which the High Court has failed to omit.

We may hasten to add that even if it is not specifically mentioned in the show-cause notice but it can clearly and safely be discerned from the reading thereof, that would be sufficient to meet this requirement.

In UMC Technologies Private Limited case (6 supra) cited by AAG, the Apex Court reiterated the same principle.

“13. At the outset, it must be noted that it is the first principle of civilised jurisprudence that a person against whom any action is sought to be taken or whose right or interests are being affected should be given a reasonable opportunity to defend himself. The basic principle of natural justice is that before adjudication starts, the authority concerned should give to the affected party a notice of the case against him so that he can defend himself. Such notice should be adequate and the grounds necessitating action and the penalty/action proposed should be mentioned specifically and unambiguously. An order travelling beyond the bounds of notice is impermissible and without jurisdiction to that extent. This Court in Nasir Ahmad v. Assistant Custodian General, Evacuee Property[(1980) 3 SCC 1] has held that it is essential for the notice to specify the particular grounds on the basis of which an action is proposed to be taken so as to enable the noticee to answer the case against him. If these conditions are not satisfied, the person cannot be said to have been granted any reasonable opportunity of being heard.”

So, I find no force in the contention of the petitioner. This point is answered accordingly.

13. Point No.3: This point is concerned, the formidable argument of petitioner’s counsel is that according to Department, there is a vast difference in the quantity of granite actually extracted by the petitioner in the 3 leased mines and the quantity for which it obtained dispatch permits and thereby, the Government lost the revenue in the form of seigniorage fee, Goods and Service Tax (GST) and Income Tax due to the concealment of quantity. The Department claimed to have arrived the actual quantity extracted by conducting survey and taking measurements with ETS instrument and also comparing the extraction with the other mines in that vicinity. Learned counsel argued that the petitioner also employed experienced geologist and RQP Mines Surveyor who, after conducting survey by deploying ETS instrument opined that the recovery percentage could be only 5% which matches with the quantity mentioned in dispatch permits. It is argued that the said report was appended to the detailed explanation dated 04.01.2021 and prayed that since the issue involved relates to a technical aspect, a personal hearing may be afforded to the petitioner to substantiate his case. However, the 2nd respondent has neither afforded a personal hearing nor given the plausible reasons for determining the lease. It is thus argued that principles of natural justice were grossly violated. This argument is refuted by learned AAG on the contention that personal hearing is not a matter of right but a discretion and on the other hand, all the points raised in the written explanation were elaborately discussed and considered and therefore, there was no violation.

14. As per Anglo Saxon jurisprudence, “natural justice” is a technical terminology for two rules viz., (i) The rule against bias (nemo iudex in causa sua which means ‘no man should be a judge in his own cause’) and (ii) The right to a fair hearing (audi alteram partem which means ‘hear the other side’). Both these rules depict the procedural fairness in judicial and quasi judicial adjudications. Due process concept which is one of the facets of the procedural fairness, owes its genesis to Magna Carta Libertatum (the great Charter of Liberties). The liberties were conceded by King John of England on 15th June 2015 owing to the revolt made by barons, peasants and church against his viset voluntasor “force and will” type of rule. As many as 63 rights which were catalogued in Magna Carta were granted by the King, of which the 39th clause reads that no free man could be imprisoned or striped of his rights or possessions without due process being legally applied. Indian law having imbibed the British jurisprudence, adopted the principles of natural justice into its administration of justice. Thus, the rule of audi alteram partem permeated into our legal system also. There is a plethora of case law as to the circumstances when this principle is required to be followed.

15. In Vallabhbhai Chanabhai Ahir case (1 supra) cited by petitioner, the Apex Court observed that Section 20(d) of Railways Act, 1989 is a mandatory provision which confers substantial valuable right on the land owners to object to the proposed acquisition before they are forcibly divested of their right, title and interest in the land by an expropriatory legislation. Hence, an order under Section 20 D (2) cannot be passed prior to the personal hearing.

Thus, in the above decision it was cautioned by the Apex Court that when it is a matter of divestment of a right, title and interest in a property, concerned owner or person in occupation must be heard.

16. In BA Continuum India Pvt. Ltd. case (2 supra) cited by petitioner, the High Court of Bombay having observed that while Rule 92 of CGST Rules postulates an opportunity of being heard, the concerned authority, however, did not afford personal hearing before rejecting the request for refund of Input Tax Credit, set aside the impugned order and remanded the matter for fresh consideration.

Thus, from above it is clear that when statute or rules ordain for personal hearing, it must be obliged.

17. In Bansal Flexipack Pvt. Ltd. case (3 supra) cited by petitioner, a learned Judge of High Court of Telangana having observed that the Commercial Tax Officer without affording a personal hearing to the petitioner who claimed that he correctly furnished the returns and not liable to pay any tax for the year 2015-16, passed the adverse Assessment Order, set aside the same and remitted the matter back.

18. In Swadeshi Cotton Mills v. Union of India (1981 (1) SCC 664 = MANU/SC/0048/1981), it was observed thus:

“25. But two fundamental maxims of natural justice have now become deeply and indelibly ingrained in the common consciousness of mankind, as pre-eminently necessary to ensure that the law is applied impartially, objectively and fairly. Described in the form of latin tags these twin principles are: (i) audi alteram partem and (ii) nemo judex in re sua. For the purpose of the question posed above, we are primarily concerned with the first. This principle was well-recognised even in the ancient world. Seneca, the philosopher, is said to have referred in Medea that it is unjust to reach decision without a full hearing. In Maneka Gandhi's case MANU/SC/0133/1978 : [1978] 2 SCR 621 Bhagwati, J. emphasised that audi alteram partem is a highly effective rule devised by the Courts to ensure that a statutory authority arrives at a just decision and it is calculated to act as a healthy check on the abuse or misuse of power. Hence its reach should not be narrowed and its applicability circumscribed.”

19. In Mohinder Singh Gill v. Chief Election Commissioner, New Delhi (MANU/SC/0209/1977 = 1978(2)SCR 272), Justice V.R.Krishna Iyer observed thus:

“Subject to certain necessary limitations natural justice is now a brooding omnipresence although varying in its play. Its essence is good conscience in a given situation; nothing more-but nothing less.”

20. In A.K. Kraipak v. Union of India [MANU/SC/0427/1969 = 1970 (1) SCR 457), it was observed thus:

“19. The aim of the rules of natural justice is to secure justice or to put it negatively to prevent miscarriage of justice. These rules can operate only in areas not covered by any law validly made. In other words they do not supplant the law of the land but supplement it. The concept of natural justice has undergone a great deal of change in recent years. In the past it was thought that it included just two rules namely (1) no one shall be a judge in his own case (Nemo debet esse judex propria causa) and (2) no decision shall be given against a party without affording him a reasonable hearing (audi alteram partem). Very soon thereafter a third rule was envisaged and that is that quasi-judicial enquiries must be held in good faith, without bias and not arbitrarily or unreasonably. But in the course of years many more subsidiary rules came to be added to the rules of natural justice. Till very recently it was the opinion of the courts that unless the authority concerned was required by the law under which it functioned to act judicially there was no room for the application of the rules of natural justice. The validity of that limitation is now questioned. If the purpose of the rules of natural justice is to prevent miscarriage of justice one fails to see why those rules should be made inapplicable to administrative enquiries… xxxx..”

21. In Rajesh Agarwal case (4 supra) cited by petitioner, one of the issues before the Division Bench of Telangana High Court was whether principles of natural justice (audi alteram partem) should be read into the Master circular issued under Section 35A of Banking Regulation Act by Reserve Bank of India as master directions on fraud. Referring to various decisions on principles of natural justice, the DB summed up them thus:

(i) Principles of natural justice have brooding omnipresence

(ii) Although the principles are not codified, nonetheless they are applicable both administrative and quasi judicial decisions

(iii) They do not supplant the law but merely supplement the law.

(iv) Unless expressly ousted by legislation or by circular, invariably they have to be read into the provisions of law especially where a decision, administrative or otherwise would have civil consequence.

(v) In order to see whether principles of natural justice are impliedly ousted or not, certain factors would have to be kept in mind namely the language and basic scheme of the provision conferring the power, the nature of the power, purpose for which it is conferred and the effect of the exercise of the power.

(vi) Principles of natural justice may be impliedly ousted in case of urgency when their implementation would obstruct the taking of appropriate action.

22. Learned AAG also referred some decisions.

In Andhra Cements Ltd. Case (7 supra) cited by learned AAG, the petitioner challenged a rejection of application for grant of prospecting license for limestone. One of the contentions in the writ petition against the impugned order was that no personal hearing was afforded by the 1st respondent. In that context, Sri Justice B.Sudershan Reddy, Judge, High Court of Andhra Pradesh (as his Lordship was then) elaborately discussed various decisions on the aspect whether oral / personal hearing was required in the given case. One of the important decisions was Mc Innes v. Onslow – Fan, 1978 (1) WLR 1520], wherein, cases were classified into three categories for the purpose of observance of principles of natural justice.

(i) Forfeiture cases : where the decision of concerned authority takes away some existing right or position. For instance, member of organization is expelled or license is revoked

(ii) Application cases : where the decision merely will refuse to grant the applicant the right or position that he seeks such as membership of the organization or license to do certain acts

(iii) Expectation cases : (intermediate category) which differs from application cases in the sense that the applicant has some legitimate expectation from what has already happened. For instance, the applicant seeks for renewal of license.

It was observed that since in forfeiture cases there is a threat to take something away for some reason, in such cases, there is a right to be heard in answer to the charges. On the other hand, in application cases, nothing is being taken away, so no requirement of an opportunity of being heard. The intermediate category i.e., expectation cases are concerned, some of them may be akin to the forfeiture cases and require personal hearing.

Summing up all the decisions learned Judge observed thus:

“50. Oral hearing is not an integral part of hearing, unless the circumstances or so exceptional that without oral hearing a person cannot put up an effective defence. The rule of audi alteram partem does not require full judicialisation in every case. An opportunity of being heard does not necessarily mean an opportunity of oral hearing is to be provided. It depends upon the nature of inquiry and the nature of right involved in a given case. An order or decision which may have the tendency to adversely effect the liberty to property rights may have to be preceded by a notice and oral hearing. In most of the cases where property rights or liberties are not involved, the type of hearing may depend upon variety of factors - whether oral hearing is necessary in such cases to large extent depend upon the view of the Tribunal or adjudicatory body. Oral hearing may not be necessary where there is no adjudication as such. Oral hearin

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g as such may be necessary in cases where the decision takes away some existing right or possession.” In Patel Engineering Limited case (8 supra) cited by learned AAG, the Apex Court observed that there is no inviolable rule that a personal hearing of the affected party must precede every decision of the State. In Union of India v. Jyoti Prakash Mitter (9 supra) cited by learned AAG, the Apex Court observed that the matter of deciding the age of a Judge of High Court, it is not incumbent on the President of India to give the respondent a personal hearing as Article 217 (3) does not guarantee the same. In Madhya Pradesh Industries Limited case (10 supra) cited by learned AAG, the Apex Court was dealing with an appeal filed against the order of the Maharashtra Government rejecting the petitioner’s application for mining lease. One of the arguments against the impugned order was that no personal hearing was accorded to the petitioner. In that context, the Apex Court while recognizing the need to follow the principles of natural justice, moreso in view of Rule 55 envisaging the same, however, held that the said opportunity need not be necessarily by personal hearing and it can be also by written representation. It further observed that whether the said opportunity should be by written representation or by personal hearing depends upon the facts of each case and ordinarily it is in the discretion of the Tribunal. 23. Thus, with the jurisprudence gained from the above decisions, in my view, few more points can be added to the points already deduced by the Division Bench of Telangana High Court in Rajesh Agarwal’s case (4 supra) cited by petitioner. (i) In all forfeiture cases involving loss of liberty or property rights, invariably the order or decision shall be preceded by a notice and oral hearing. (ii) In application cases and intermediary cases, oral hearing is a matter of discretion depending on the circumstances of the case 24. Coming to the case on hand, admittedly the petitioner in his explanation dated 04.01.2021while enclosing his geological experts report in Annexure-1, sought for personal hearing to make an effective presentation along with its experts. Petitioner also requested for a joint resurvey of leased areas by the Surveyors of the Department as well as the expert surveyors of the petitioner. The 2nd respondent did not afford a personal hearing. In this context, Rule 12(5)(h)(xii) of APMMC Rules, 1966 according to which the lease determination proceedings were issued, would read that for breach of any covenant or conditions contained in the grant, the Director may after giving an opportunity to the defaulter, determine the license or lease and take possession of the premises and forfeit the security deposit. Therefore, this Rule explicitly ordains that the Director must afford an opportunity to the defaulter before passing the order. The phrase “opportunity to the defaulter” must be understood as issuing notice, inviting explanation and also affording personal hearing because by virtue of the impugned order the petitioner loses his leasehold rights in the three leasehold premises which otherwise will last for some more years. Therefore, it is a case of forfeiture and hence, in my considered view, the 2nd respondent is obligated to grant personal hearing to the petitioner. For another reason also he is required to grant personal hearing. Admittedly, the issue whether petitioner extracted particular quantity of granite and concealed major extent is a technical issue depending on scientific survey with electronic devices. The petitioner has come out with his own survey report as against the Departmental survey report. In that view, it is exigent upon the 2nd respondent to afford a personal hearing to the petitioner to present his case with the aid of his experts to challenge the report submitted by the Joint Inspection Group. In the impugned lease determination proceedings, except recording that the Department officials submitted inspection report finding excess recovery and thereby the petitioner’s survey details were not considered, the 2nd respondent did not give any reason as to the correctness or otherwise of petitioner’s report. It otherwise amounts to non-consideration of petitioner’s report without any plausible reason. Therefore, I hold that the 2nd respondent has grossly violated the principles of natural justice. This point is answered accordingly. 25. Point No.4: Since there is a violation of principles of natural justice, this Court can entertain the writ petitions without driving the petitioner to seek alternative remedy in view of the principle laid down by the Hon’ble Apex Court in Whirlpool Corporation v. Registrar of Trade Marks, Mumbai [(1998) 8 SCC 1], wherein it was held that in the contingencies of enforcement of fundamental rights or where there was a violation of principles of natural justice or where the order or proceedings were wholly without jurisdiction or the vires of an act is challenged, the High Court can exercise the writ jurisdiction. 26. Accordingly, these Writ Petitions are allowed by setting aside the impugned demand notices and quarry lease determination orders issued by 2nd respondent with a direction to consider the detailed explanation dated 04.01.2021 submitted by the petitioner against the show cause notices and after affording a personal hearing to the petitioner and its technical experts, pass an appropriate order in accordance with the governing law and Rules expeditiously. No costs. As a sequel, interlocutory applications, if any pending, shall stand closed.