- 1 - HC-KAR NC: 2025:KHC-D:11032 WP No. 102544 of 2025 IN THE HIGH COURT OF KARNATAKA,AT DHARWAD DATED THIS THE 29TH DAY OF AUGUST, 2025 BEFORE THE HON'BLE MR. JUSTICE SURAJ GOVINDARAJ WRIT PETITION NO. 102544 OF 2025 (GM-RES) BETWEEN: SRI ASHOK B. NELLUR S/O. BHEEMAPPA NELLUR, AGED ABOUT 49 YEARS, KPWD CLASS-I CONTRACTOR, NO.23, SHRIRAM NAGAR, RANIBENNUR, HAVERI DISTRICT 581115 …PETITIONER (BY SMT. BUSHRA S. WAREMANI, SRI. DILEEP KUMAR M.V. AND SRI. M.M. GUFRAN., ADVOCATES) AND: 1. STATE OF KARNATAKA, DEPARTMENT OF MAJOR IRRIGATION, REPRESENTED 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, KNNL, UPPER TUNGA PROJECT DIVISION , SAGARA ROAD, AT POST SHIVAMOGGA – 577 201. …RESPONDENTS (BY SRI. SHARAD V. MAGADUM., AGA FOR R1; SRI. SHIVARAJ BELLAKKI., ADVOCATE FOR R2 & R3) THIS WRIT PETITION IS FILED UNDER ARTICLES 226 AND 227 OF THE CONSTITUTION OF INDIA PRAYING TO ISSUE WRIT IN THE NATURE OF MANDAMUS DIRECTING THE RESPONDENTS TO DEDUCT ONLY THE CHARGES OF ROYALTY AND NOT TO IMPOSE AND NOT TO Digitally signed by GIRIJA A. BYAHATTI Location: High Court of Karnataka, Dharwad Bench, Dharwad - 2 - HC-KAR NC: 2025:KHC-D:11032 WP No. 102544 of 2025 DEDUCT FIVE TIMES OF PENALTY ON THE ROYALTY AMOUNT FROM THE BILLS OF THE PETITIONER IN PURSUANT TO WORK ORDER AT ANNEXURE-A DATED 01-08-2024 AND ETC. THIS WRIT PETITION, COMING ON FOR PRELIMINARY HEARING IN ‘B’ GROUP, THIS DAY ORDER WAS MADE THEREIN AS UNDER: ORAL ORDER (PER: THE HON'BLE MR. JUSTICE SURAJ GOVINDARAJ) 1. The Petitioner is before this Court seeking for the following reliefs: a. Issue a writ in the nature of mandamus directing the respondents to deduct only the charges of royalty and not to impose and not to deduct Five times of penalty on the royalty amount from the bills of the petitioner in pursuant to Work Order at Annexure-A dated: 01.08.2024. b. Issue order directing the respondents to refund the penalty amount which was already deducted from the bills of the petitioner with 18 percent of interest in pursuant to Work Order at Annexure-A dated 01.08.2024. c. To issue any other writ orders or directions as this Hon’ble Court deems fit to grant in the facts and circumstances of this case in the ends of justice and equity. 2. The Petitioner is aggrieved by the imposition of five times penalty on the royalty amount on the minerals used during the contract work engaged in by the Petitioner with Respondent No.2. - 3 - HC-KAR NC: 2025:KHC-D:11032 WP No. 102544 of 2025 3. The submission of Ms.B.S.Waremani, learned counsel for the Petitioner is that it is only the royalty amount, which is required to be paid by the Petitioner, and not the penalty amount and in this regard, she relies upon the decision of the Co-ordinate Bench of this Court dated 12.11.2020 in W.P.No.10331/2020 wherein the Coordinate Bench had categorically held that the contractors who enter into agreement with State Government departments cannot be subsequently saddled with penalties under the Minor Mineral Concession Rules because they are not lessees. In that background, she submits that the Writ Petition is required to be allowed and reliefs sought for be granted. 4. Sri.Shivaraj Bellakki, learned counsel for Respondents No.2 and 3 would submit that the levy of penalty is being made on the basis of the circular issued by the - 4 - HC-KAR NC: 2025:KHC-D:11032 WP No. 102544 of 2025 State, and no fault can be found with Respondent No.2 in that regard. 5. Heard Smt.Bushra S.Waremani, learned counsel for the Petitioner, Sri.Sharad V.Magadum, learned AGA for Respondent No.1 and Sri.Shivaraj Bellakki, learned counsel for Respondents No.2 and 3 and perused papers. 6. The reference of the circular made by Respondent No.3 is the one which has been dealt with by the Coordinate Bench of this Court in the case of G.O.Raju and others vs. State of Karnataka and others1 and has been categorically held that a contractor cannot be made liable to make payment of penalty amounts and thus, Respondents No.2 and 3 could not have once again relied on the very same circular to deduct or impose penalty on the bills raised 1 W.P.No.10331/2020 - 5 - HC-KAR NC: 2025:KHC-D:11032 WP No. 102544 of 2025 by the Petitioner. In that background, I pass the following: ORDER i) The Writ Petition is allowed. ii) A mandamus is issued directing Respondents to deduct only the royalty and not to deduct five times penalty on the royalty amount from the bills of the Petitioner, pursuant to the work order at Annexure-A dated 1.8.2024. If any penalty has been deducted, Respondents No.2 and 3 are directed to refund the said amounts along with the interest at the rate of 9% p.m., which refund shall be made within a period of eight weeks from the date of receipt of copy of this order. Sd/- (SURAJ GOVINDARAJ) JUDGE PRS List No.: 1 Sl No.: 94