APHC010848742017 IN THE HIGH COURT OF ANDHRA PRADESH WEDNESDAY, TWO THOUSAND AND TWENTY FIVE THE HONOURABLE SRI JUSTICE NYAPATHY VIJAY WRIT PETITION NO: 37103 OF 2017 Between: M/s Indian Hume Pipe Co., Ltd., GVMC Rep., by Commissioner and Others Counsel for the Petitioner: 1 . SHIREEN SETHNA BARIA Counsel for the Respondent(S): 1 . GP FOR MINES AND GEOLOGY (AP) 2 . A.S.C. BOSE, STANDING COUNSEL FOR GVMC 3 . GP-MUNCIPAL ADMN AND URBAN DEV(AP) 4 . GP FOR MEDICAL HEALTH FW(AP) The Court made the following: IN THE HIGH COURT OF ANDHRA PRADESH AT AMARAVATI (Special Original Jurisdiction) WEDNESDAY, THE NINTH DAY OF JULY TWO THOUSAND AND TWENTY FIVE PRESENT THE HONOURABLE SRI JUSTICE NYAPATHY VIJAY WRIT PETITION NO: 37103 OF 2017 M/s Indian Hume Pipe Co., Ltd., ... AND GVMC Rep., by Commissioner and Others Counsel for the Petitioner: SHIREEN SETHNA BARIA Counsel for the Respondent(S): GP FOR MINES AND GEOLOGY (AP) STANDING COUNSEL FOR GVMC MUNCIPAL ADMN AND URBAN DEV(AP) GP FOR MEDICAL HEALTH FW(AP) The Court made the following: IN THE HIGH COURT OF ANDHRA PRADESH [3460] THE HONOURABLE SRI JUSTICE NYAPATHY VIJAY ... PETITIONER ...RESPONDENT(S) 2 THE HONOURABLE SRI JUSTICE NYAPATHY VIJAY WRIT PETITION NO: 37103 OF 2017 ORDER: 1. The present Writ Petition is filed questioning the action of the Respondents in recovering seigniorage charges from the Petitioner’s bills for the earth work excavation of the trenches and refilling the same after laying pipelines and proposing to recover the balance from the final bill payable as a consequence of the impugned letter dated 03.08.2017 as illegal and arbitrary. Consequently, directing the Respondents to refund Rs. 15,32,475/- recovered is contrary to the terms of the contract towards seigniorage. 2. The facts leading to the filing Writ Petition are as follows:- The Petitioner is a Company incorporated under the Indian Companies Act, 1913, and doing business in the execution of works, contracts. In pursuance of a bid issued for JNNURM- Replacement of Thatipudi Pipeline, an agreement was entered into between the Petitioner and Respondent No.1 on 31.03.2007. As per the agreement, the Petitioner was required to execute the works for the replacement of the pipeline from: 3 (i) Thatipudi Reservoir to the existing water Treatment Plant at Krishnapatnam and from Balancing Reservoir at Uttarapalli to Vepagunta with 900 mm dia Bar wrapped Steel Cylindrical Pipes, (ii) Vepagunta to Baji Junction with 800 mm dia BWSC pipes and (iii) Baji junction to Town Service Reservoir with 700 mm dia Bar Wrapped Steel Cylindrical Pipes under Greater Visakhapatnam Water Supply Improvement Scheme (JNNURM), package-1. 3. Further, as per Clause 95 of the agreement, seigniorage charges are recoverable from the bills of the contractor based on the theoretical requirement of the materials. As per Clause 41 of the contract, the recovery of seigniorage charges would be governed by G.O.Ms. No.331, dated 21.06.2000 and G.O.Ms. No. 466, dated 24.08.2000. The nature of the work involved initially excavating earth/ soil for pipeline trenching. After laying the pipeline, the trenches were filled with soil and set aside during the excavation process. 4 4. While so, the Respondent No.1 effected recovery of seigniorage charges from the Petitioner’s bills raised in reference to the pipeline trenching work. The Petitioner then filed W.P.No.12552 of 2011 and the same was disposed of on 20.01.2017 following the similar order of this Court, dated 12.07.2016, in W.P.No.25481 of 2011 and batch, and giving liberty to the Petitioner to represent the Respondent Authorities to refund of amounts said to have been recovered from the pending bills on account of seigniorage fee and directing the Respondent Authorities to pass appropriate orders within eight weeks. 5. Pursuant thereto, the Respondent No.1 passed an order dated vide Rc.No.594/1/2017-18/E.E (WSP-I), 03.08.2017 stating that as per agreement Clause 95.1 Seigniorage charges will be recovered as per rules from the work bills of the contract” and recovered of Rs.15,32,475/- towards the seigniorage charges and remaining balance amount Rs. 18,15,386.58/- is to be recovered from the contractor’s final bill. Hence, the present Writ Petition came to be filed. 5 6. The Respondents 1 to 3 filed Counter-Affidavit, emphasizing Clause 95.1, which enables the Respondent Authorities to levy a seigniorage fee at Rs.20/- for a cubic meter of gravel. Therefore, the recovery cannot be faulted. 7. Sri C. Raghu, learned senior counsel for the Petitioner, would contend that though the contract provides for the levy of a seigniorage fee, but levy could be imposed only when the contractor excavates the mineral for his personal use. It is further contended that in case the mineral which is extracted is not used for personal requirements of the petitioner, as the excavated earth was used to fill the trenches. Therefore, in the absence of any plea in the Counter-Affidavit or impugned order stating that the Petitioner has utilized the mineral for his personal benefit, the levy of seigniorage fee cannot be imposed. 8. Learned Standing Counsel for the Respondent Corporation Sri A.S.C. Bose, would contend that there is an Arbitration clause in the contract and hence, the present Writ Petition is not maintainable. The alternative contention is that even if the arbitration clause is not applicable, the dispute in the present case arises out of a contract and hence, the writ petition cannot be maintained. It is further contended that as the Petitioner had agreed to the contractual 6 clause about the levy of seigniorage fee, cannot now turn around and contend that the levy of seigniorage fee cannot be sustained. Learned Standing Counsel further contends that the levy aligns with the contract and cannot be faulted. 9. Heard the respective counsel. 10. The case primarily revolves around Clause 95 of the Contract and the same is extracted below: 95. Seigniorage charges: 95.1 Seigniorage charges will be recovered as per rules from the work bills of the contract or based on the theoretical requirement materials at the following rates. S.No. Material Seigniorage 1. Sand Rs. 36.00/ cum 2. Metal Rs. 45.00/ cum 3. R.R.Stone for masonry Rs. 45.00/cum 4. Revetment stone Rs. 45.00/cum 5. C.R.S.Stone Rs. 45.00/ cum 6. Gravel Rs. 20.00/cum 11. The seigniorage fee/charges under the Andhra Pradesh Minor Mineral Concession Rules, 1966, are levied only when the mineral is despatched or consumed by the person excavating the land. Rule 10 of the Andhra Pradesh Minor Mineral Concession Rules, 1966, refers to when the seignorage fee would be levied. Rule 10(1) is 7 extracted below to understand the purport of the seignorage fee rather than the entire Rule 10, as that would suffice for this case. “Rule 10. Seigniorage fee or dead rent:– (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. 12. As per the above Rule, the Seignorage fee is levied only when there is despatch or consumption of the minor mineral. As per the scheme of MMDR Act, 1957, and the A.P.Minor Mineral Concession Rules,1966, the State alone is entitled to the Seignorage fee, and clause 95 referred above is to be understood as a charge only when the minor minerals therein are despatched or consumed by the petitioner for personal usage. 13. In the Counter-Affidavit by Respondent Corporation, there are no allegations against the Petitioner that the earth which was excavated while trenching was despatched or consumed for personal use by the Petitioner. In the absence of such an allegation, merely on account of the contractual Clause, the seigniorage fee cannot be levied. 8 14. As regards the plea of learned Standing Counsel for the Respondent/ Corporation that there is an Arbitration Clause is provided under Clause 73 of the Agreement, the same is not of relevance for this case as the amounts retained by the Respondent corporation are beyond the values mentioned therein. The Clause 73 of the Contract extracted below: “73. Arbitration : In case of any dispute of difference between the parties to the contract either during the progress or after the completion of the works or after the determination, abandonment, or breach of the contract, as to the interpretation of the contract, or as to any matter or thing arising there under except as to the matters left to the sole discretion of the Executive Engineer under clauses 20, 22, 27 (C) 29, 36, 37 and 40 of the preliminary specification or as to the withholding by the Executive Engineer of payment of any bill to which the contractor may claim to be entitled, then either party shall forthwith give to the other notice of such dispute or differences, and such dispute or difference shall be and is hereby referred to the arbitration of the Superintending Engineer, GVMC of the nominated circle and Superintending Engineer of Public Health Engineering Department mentioned in the “Articles of agreement” (hereinafter called the “Arbitrator”) for claims Rs. 10,000/- and for Rs. 10,000/- to Rs. 50,000/- in value and the award of such Arbitrator shall be final and 9 binding on the parties unless contested by either party in a court of law. The arbitrators proceedings will be conducted in accordance with the provisions of the Arbitration Act, 1948 as amended from time to time. The arbitrator shall invariably give a speaking award.” 15. In a similar scenario, the Hon’ble Supreme Court in NSSO v. Champa Properties Ltd., (2009) 14 SCC 451 held that a writ petition can be maintained when the arbitration clause does not cover the dispute urged. Paragraph 16 thereof is extracted below; “16. The relief sought in the writ petition thus did not relate to, nor arise from, the contract of lease (the three lease agreements containing the arbitration agreement) but allegedly arose out of the OM dated 13- 6-1985 and related official memoranda issued by the Government of India. The subject matter of those official memoranda was not subject to any provision for arbitration. The arbitration clauses in the lease agreements dated 11-4-1989, 10-5-1990 and 29-4- 1991, therefore, did not cover or govern the issue raised in the writ petition. Therefore, the arbitration clause in the three lease agreements would not come in the way of the writ petition being entertained.” 16. Therefore, the plea taken by learned Standing Counsel for the Respondent/ Corporation that the matter should be referred to Arbitration cannot be sustained. 10 17. As regards the alternative plea regarding maintainability of the Writ Petition, as the dispute urged is a contractual dispute. Normally, courts do decline to interfere in contractual disputes in writ petitions filed under Article 226 of the constitution. However, in cases where there is no dispute of facts, relegating the parties to civil court is a futile exercise, and in such cases, the Writ Petition can be maintained. 18. In view of the above, the retention of the amounts of the Petitioner towards seigniorage charges cannot be sustained. Accordingly, the Writ Petition is allowed with the following directions; (i) The impugned letter dated 03.08.2017 issued by the Respondent Corporation is hereby set aside. (ii) The Respondent Corporation shall pay amounts withheld towards the seignorage fee with interest @ of 9% from the date due till actual payment to the petitioner. (iii) No order as to costs. 19. As a sequel, miscellaneous applications pending, if any, shall stand closed. __________________ NYAPATHY VIJAY, J Date: 09.07.2025 KK 11 THE HONOURABLE SRI JUSTICE NYAPATHY VIJAY WRIT PETITION NO: 37103 OF 2017 Date: 09.07.2025 KK