- 1 - NC: 2025:KHC-D:2299 WP No. 100583 of 2025 IN THE HIGH COURT OF KARNATAKA, DHARWAD BENCH DATED THIS THE 6TH DAY OF FEBRUARY, 2025 BEFORE THE HON'BLE MR. JUSTICE M.NAGAPRASANNA WRIT PETITION NO.100583 OF 2025 (GM-RES) BETWEEN: R. G. GANGOL S/O. NAGAPPA GANGOL, AGE: 59 YEARS, OCCU: PWD CLASS 1 CONTRACTOR R/O: ANU SADANA, OLD MAGOD ROAD, ISHWAR NAGAR, RANEBENNUR, AT PO. TALUK RANEBENNUR, DIST: HAVERI – 581 115. …PETITIONER (BY SRI BASAVARAJAIAH N., 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 FLOUR, AMBEDKAR VEEDHI, BENGALURU – 560 001. 3. EXECUTIVE ENGINEER, KARNATAKA NEERAVARI NIGAMA LTD., UPPER TUNGA PROJECT DIVISION , MAGOD ROAD, RANEBENNUR, AT PO. RANEBENNUR, DIST: HAVERI – 581 115. …RESPONDENTS (BY SRI SHARD V. MAGADUM, AGA FOR R1 AND R2) Digitally signed by VISHAL NINGAPPA PATTIHAL Location: High Court of Karnataka, Dharwad Bench, Dharwad - 2 - NC: 2025:KHC-D:2299 WP No. 100583 of 2025 THIS WRIT PETITION IS FILED UNDER ARTICLES 226 AND 227 OF THE CONSTITUTION OF INDIA, PRAYING 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 ANNEXURE-D DATED 27.09.2022 AND ETC., THIS WRIT PETITION, COMING ON FOR PRELIMINARY HEARING, THIS DAY, ORDER WAS MADE THEREIN AS UNDER: ORAL ORDER (PER: THE HON'BLE MR. JUSTICE M.NAGAPRASANNA) 1. The learned counsel Shri Basavarajaiah N. appearing for the petitioner submits that the issue in the lis stands covered by the judgment rendered by the Coordinate Bench in W.P. No.10331/2020 disposed on 12th November 2020. 2. The learned AGA, Sri. Sharad V. Magadum would not dispute the position of law as laid down by the Coordinate Bench, in the aforesaid judgment. 3. The Coordinate Bench has held as follows: “Petitioners are Class-I Contractors of PWD Departments. 2. Shri. Basavarajaiah, learned Advocate for - 3 - NC: 2025:KHC-D:2299 WP No. 100583 of 2025 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). 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 - 4 - NC: 2025:KHC-D:2299 WP No. 100583 of 2025 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 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 - 5 - NC: 2025:KHC-D:2299 WP No. 100583 of 2025 deduction in excess is impermissible in law. Petition is accordingly disposed of.” 4. In the light of the aforesaid submission, which is in unison, the writ petition stands disposed in the aforesaid manner. Sd/- (M.NAGAPRASANNA) JUDGE VNP/CT-ASC List No.: 1 Sl No.: 38