APHC010510682014 IN THE HIGH COURT OF ANDHRA PRADESH AT AMARAVATI (Special Original Jurisdiction) [3310] FRIDAY ,THE TWENTY FOURTH DAY OF JANUARY TWO THOUSAND AND TWENTY FIVE PRESENT THE HONOURABLE DR JUSTICE K MANMADHA RAO WRIT PETITION NO: 8629/2014 Between: M/s. Kmc Constructions Ltd.,hyderabad. ...PETITIONER AND The State Of A P Mines Hyd 3 Otrs and Others ...RESPONDENT(S) Counsel for the Petitioner: 1. KIRTHI TEJA KONDAVEETI Counsel for the Respondent(S): 1. GP FOR MINES AND GEOLOGY The Court made the following Order: The Writ Petition is filed under Article 226 of the Constitution of India, seeking the following relief: “…..to issue a writ order or direction more so one in the nature of mandamus declaring the impugned Memo No.1345/M.II(1)/2014-2, dt.25-02-2014 of the 1st Respondent passed in the Revision Application dt. 15-01-2014 of the Petitioner company as illegal, arbitrary, violative of the provisions of the Mines and Minerals (Development & Regulation) Act, 1957 and the Rules made there under apart from being violative of the law laid down by this Hon’ble Court vide judgement dt.22-02-2013 passed in 2 W.P.Nos.3813 of 2013 and batch and consequently direct the Respondents not to include the Gravel/Earth obtained from road way excavation to the tune of 21,74,970 Cu.M…,.” 2. Brief facts of the case are that the petitioner is a company incorporated under the Companies Act, 1956. In pursuance of the commercial goals as laid out in the Memorandum and Articles of Association, the petitioner company is an EPC Contractor to M/s.Rayalaseema Expressway Private Limited, which has been executing the work of four laning of Kadapa- Kurnool section of National Highway No.18 from the existing 167.750 KM to 356.502 KM in the state of A.P. under N.H.D.P.Phase-II on build, operate and transfer (BOT) Toll basis. During the month of Januray 2013, the Regional Vigilance and Enforcement Office officials of Kurnool district have collected the entire consumption particulars of Road Metal, Gravel and Sand of our ongoing project work of NH-18 from NHAI authorities. The Regional Vigilance and Enforcement Officials vide Rc.No.1/d/2013, dated 12.03.2013 requested the petitioner company to produce the documentary evidence in token proof of payment of seigniorage fee on the consumed quantities. Accordingly, the petitioner submitted all the details through Lr.No.REPL/SPV/36/Vigilance/ 3176, dated 21.03.2013. The National Highway Authority of India vide letter dated 04.04.2013 informed that the petitioner company has consumed 53,63,540 Cu.M of Gravel for construction of embankment and sub-grade from borrow pits and the petitioner company has consumed 21,74,970 Cu.M 3 of Gravel for construction of embankment from roadway excavation materials. The Regional Vigilance and Enforcement Officials without verifying that the project is ongoing project, which is yet to be completed informed the office of 4th respondent that the petitioner company has already consumed certain quantities of mining minerals based on which the 4th respondent has issued Show-Cause Notice No.3722/VG/2013, dated 08.08.2013. The petitioner company submitted reply letter to the 4th respondent dated 04.09.2013 by Registered Post with Acknowledgment Due stating that the alleged quantities of consumption of minor minerals is more theoretical than practical. But without taking note of the reply, the 4th respondent has issued the Demand Notice vide No.3722/VG/2013, dated 29.11.2013 for payment of Rs.82,70,44,080/- towards normal seigniorage fee plus five times penalty for having consumed the Mineral-Gravel and Road Metal on the said project. Challenging the same, the petitioner company filed a statutory Revision Application dated 15.01.2014 under Rule 35/35-A of A.P.Minor Mineral Concession Rules, 1966 before the 1st respondent. The 1st respondent after hearing the petitioner company passed final orders vide Memo No.1345/M.II(1)/2014-2, dated 25.02.2014 waiving the five times penalty. Aggrieved by the same, the present writ petition has been filed. 3. Though the writ petition is filed in the year 2014, the respondents have not filed any counter till date. 4 4. Heard learned counsel for the petitioner and Ms.P.Sudeepthi, learned Assistant Government Pleader for Mines and Geology, for the respondents. 5. On hearing, learned counsel for the petitioner while reiterating the contents urged in the writ petition, submits that, the petitioner company has consumed 75,38,510 Cu.M of Gravel out of which the material excavated from borrow pits is liable for payment of seigniorage fee and the material excavated from the existing road used for the purpose of levelling is not liable for payment of seigniorage fee as per the latest judgment of this Court in W.P.No.3813 of 2012 and batch, dated 22.02.2013. He further submits that the 1st respondent failed to take into consideration the settled law i.e., Judgment dated 22.02.2013 passed in W.P.No.3813 of 2012 and batch, wherein this Court held that the Earth/Gravel used for the purpose of levelling cannot be subject to payment of seigniorage fee, if it is used at the very same site as it does not amount to mining as per the provisions of the Mines and Minerals (Development & Regulation) Act, 1957 and the Rules made there under. He further submits that the 1st respondent failed to take into consideration the recent G.O.Ms.no.139, Industries and Commerce (Mines-II) Department, dated 12.11.2013, wherein the State Government has clearly stated that the Government hereby exempt seigniorage fee for levelling of land for agriculture/civil purposes which is other than mining purpose. He 5 further submits that the sacred legal principle of ‘audi alteram partem’ not only includes notice but also fair hearing, but the petitioner was not given any such opportunity of hearing before issuance of demand notice. Therefore, learned counsel requests this Court to pass appropriate orders. 6. Per Contra, learned Assistant Government Pleader vehemently opposed for grant of any relief in the present writ petition and prayed to dismiss the same. 7. Perused the record. 8. On a perusal of the material on record, this Court observed that, the National Highway Authority of India vide letter dated 04.04.2013 addressed to the Regional Vigilance and Enforcement Office, Kurnool was informed that the petitioner company has consumed excess quantity of 21,74,970 Cu.M of Gravel for construction of embankment from roadway excavation materials. 9. It is the contention of the learned counsel for the petitioner that the quantity used for construction of embankment from roadways excavation material is not liable for payment of seigniorage fee as per the Judgment of this Court dated 22.02.2013 passed in W.P.No.3813 of 2012 and batch. 10. As seen from the Judgment of this Court dated 22.02.2013 passed in W.P.No.3813 of 2012 and batch, this Court observed that, taking 6 into account the provisions of the relevant enactments and the Rules made thereunder, it becomes clear that the necessity or obligation to pay the seigniorage fee had arisen, if only the mineral is removed from any particular area. Mere digging of earth for a purpose, not connected with the mining activity cannot result in obligation to pay the seginiorage fee or dead rent. 11. This Court further observed that, the 1st respondent vide Memo No.1345/M.II(1)/2014-2, dated 25.02.2014 disposed off the revision application filed by the petitioner, waiving off the penalty raised in the demand notice No.3722/VG/2013, dated 29.11.2013 and directed to pay the Normal Seigniorage fee within thirty (30) days from the date of receipt of order, if not paid already. 12. It is pertinent to mention here that, as per Rule 10(3)(b) of the Andhra Pradesh Minor Mineral Concession Rules, 1966 reads as follows: 1) When a quarry lease is granted under these rules, the seigniorage fee or dead rent whichever is higher, shall be charged on all minor minerals despatched or consumed from the land at the rate specified in Schedule I and Schedule II as the case may be. 2) When quarry lease is granted, the assessment on the land together with the seigniorage fee or dead rent, whichever is higher, shall also be charged. 3) When the quarry lease is granted :- a) the dead rent for the 1st year shall be paid by the lessee at the time of execution of lease deed and for the subsequent years, every year in advance. b) the seigniorage fee shall be paid before the mineral is removed from the leased area. 7 13. Having regard to the facts and circumstances of the case and on considering the submissions of both the learned counsels, it appears that, strict construction of the rule would lead to a conclusion that the seigniorage fee can be levied only when a quarry lease is granted and mineral is extracted from it. In other words seigniorage fee cannot be levied, in case the mineral is extracted from an area, which is not leased or the person is not a lessee. This would lead to an absurd situation, wherein a lessee becomes liable to pay the fee, but not the one, who undertakes such activity, without valid lease. In the instant case, the petitioner company has consumed 53,63,540 Cu.M of gravel for construction of embankment and sub-grade from borrow pits and consumed 21,74,970 Cu.M of gravel for construction of embankment from roadway excavation materials. Hence, this Court is of the opinion that, the respondents can levy a seigniorage fee only if the mineral is removed from a specified area. Mere digging of earth, which is not connected with mining activity, cannot result in an obligation to pay the seigniorage fee or dead rent. Therefore, this Court is inclined to allow the writ petition, declaring the impugned Memo No.1345/M.II(1)/2014-2, dated 25.02.2014 issued by the 1st respondent as illegal and arbitrary. 14. Accordingly, the Writ Petition is allowed. The petitioner is permitted to pay the normal seigniorage fee for 53,63,540 cubic meters(Cu.M) of gravel consumed for construction of embankment and sub-grade from 8 borrow pits within a period of thirty (30) days from the date of receipt of a copy of this order, if not paid already. No costs. 15. As a sequel, miscellaneous applications pending, if any, shall stand closed. __________________________ Dr. K. MANMADHA RAO, J Date : 24-01-2025 BMS