- 1 - NC: 2025:KHC:13699 WP No. 7865 of 2025 IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 1ST DAY OF APRIL, 2025 BEFORE THE HON'BLE MR JUSTICE M.NAGAPRASANNA WRIT PETITION NO. 7865 OF 2025 (GM-RES) BETWEEN: YELLAPPA L. BALUNDAGI S/O LACHHAPPA BALUNDAGI AGED ABOUT 41 YEARS CLASS 1.CONTRACTOR R/O HALEGODDANAKOPPA PO. HOSAGODDANAKOPPA TALUK SHIKARIPURA DISTRICT: SHIVAMOGGA - 577427. …PETITIONER (BY SRI NEGAWADI BASAVARAJAIAH, ADVOCATE) AND: 1. STATE OF KARNATAKA DEPARTMENT OF MAJOR IRRIGATION REP. BY ITS PRINCIPAL SECRETARY VIKAS SOUDHA, BENGALURU – 560 001. 2. THE MANAGING DIRECTOR KARNATAKA NEERAVARI NIGAMA LTD., COFFEE BOARD, 4TH FLOOR AMBEDKAR VEEDHI, BENGALURU – 560 001. 3. EXECUTIVE ENGINEER KARNATAKA NEERAVARI NIGAMA LTD., DRP. DIVISION, SHIKARIPURA NEAR BUS STAND, AT. PO. SHIKARIPURA Digitally signed by NAGAVENI Location: High Court of Karnataka - 2 - NC: 2025:KHC:13699 WP No. 7865 of 2025 DISTRICT: SHIVAMOGGA – 577427. …RESPONDENTS (BY SRI SHAMANTH NAIK, HCGP FOR R1; SRI K.S.BHEEMAIAH, ADVOCATE FOR R2 AND R3) THIS W.P. IS FILED UNDER ARTICLES 226 AND 227 OF THE CONSTITUTION OF INDIA PRAYING TO DIRECT THE RESPONDENTS NOT TO DEDUCT FIVE TIMES OF PENALTY ON THE ROYALTY AMOUNT FROM THE BILLS OF THE PETITIONER AS PER ANNX-D. THIS PETITION, COMING ON FOR PRELIMINARY HEARING, THIS DAY, ORDER WAS MADE THEREIN AS UNDER: CORAM: HON'BLE MR JUSTICE M.NAGAPRASANNA ORAL ORDER The petitioner is before this Court, seeking for the following prayer: "i). To issue the writ in the nature of Mandamus directing the respondents not to deduct five times of penalty on the royalty amount, from the bills of the petitioner as per Anne-D. ii) To issue any other writ orders or directions as this Hon'ble court deems fit in the circumstances of this case in the interest of justice. iii) To grant the cost of these petitions in the interest of justice. 2. Heard Sri Negawadi Basavarajaiah, learned counsel appearing for the petitioner, Sri Shamanth Naik, learned High Court Government Pleader appearing for respondent No.1 and - 3 - NC: 2025:KHC:13699 WP No. 7865 of 2025 Sri K.S.Bheemaiah, learned counsel for respondent Nos.2 and 3. 3. The learned counsel appearing for the petitioner would submit that the issue in the lis stands covered by the judgment rendered by a co-ordinate bench in the case of G.O.RAJU & Others Vs. THE STATE OF KARNATAKA & Others1, wherein, it is held as follows: "Petitioners are Class-I Contractors of PWD Departments. 2. Shri. Basavarajaiah, learned Advocate for petitioners submitted that in the tenders notified by the Government in the Karnataka Public Procurement portal, it is stated in Clause 20 thereof, that the royalty charges shall be deducted as per the prevailing Government Order. He submitted that petitioners have agreed to this term. 3. He further submitted that as per the original contract, PWD Department can deduct the amount equivalent to the royalty payable on the material used by the Contractors and the primary onus is upon the person who extracts minerals, to pay the royalty. In order to complete the Civil works, petitioners have purchased granite, jellies and other materials which attract royalty. They have no objection for deduction of applicable royalty. However, petitioners cannot be loaded with penalty because petitioners are not lease holders under the Karnataka Minor Mineral Concession Rules, 1994 ('KMMC Rules' for short). 1 W.P.No.38068/2015 disposed on 09.09.2015 - 4 - NC: 2025:KHC:13699 WP No. 7865 of 2025 4. Smt. Niloufer Akbar, learned AGA argued opposing the petition and contended that imposition of penalty is based on the Circulars issued from time to time and the communication dated 17.07.2020 issued by the Director of Mines, Minor Irrigation Department. 5. I have carefully considered rival contentions and perused the records. 6. It is not in dispute that the mineral can be extracted by such lease holders who enter into a lease agreement under the KMMC Rules. Petitioners have purchased different quantities of such mineral for construction and Civil works. The agreement which the PWD Department, as a wing of the Government, has entered with the Contractors stipulates that the Department shall deduct the amount equivalent to royalty payable on the mineral. One Department of the State having entered into contract containing certain covenants binding the parties inter se, it would be incongruous for the other Department of the Government namely Mineral Department to issue such Circulars over- riding the terms agreed between the Government and the private parties. 7. It is argued on behalf of the State that whenever mineral is extracted, the lessee is liable to pay the royalty and collect 'Mineral Dispatch Permit'. If 'Mineral Dispatch Permits' are not produced, State Government will have the power to impose penalty. There is no quarrel with this proposition. But at the same time, it is to be noted that State is equipped with all paraphernalia to check illegal quarrying, if any. The clause to collect the amount equivalent to royalty appears to have been incorporated keeping in view the ground reality. In the circumstances, the Contractors who enter into agreements with the State Government Departments cannot be subsequently saddled with - 5 - NC: 2025:KHC:13699 WP No. 7865 of 2025 penalties under the Minor Mineral Concession Rules because they are not lessees. 8. Learned Advocate for petitioner has filed a Memo dated 01.10.2020 annexing a communication dated 29.09.2020 by the Assistant Engineer of Minor Irrigation and Ground Water Development Department, Davangere to produce 'Mineral Dispatch Permits' and if the Contractors were to fail to produce the same, royalty equivalent to five times shall be deducted. 9. In the circumstances, this writ petition merits consideration. Hence, the following: ORDER (a) PWD Department is granted liberty to deduct the royalty amount as agreed in Clause 20 of the Agreement vide Annexure-A. (b) It is made clear that any deduction in excess is impermissible in law. Petition is accordingly disposed of." In the light of the issue standing covered by afore-quoted judgment and the facts being undisputed, the petition stands disposed on the same terms. Sd/- (M.NAGAPRASANNA) JUDGE NVJ List No.: 1 Sl No.: 101 CT:SS