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IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 26TH DAY OF JULY, 2022 PRESENT
THE HON’BLE MR. ALOK ARADHE ACTING CHIEF JUSTICE
AND
THE HON’BLE MR. JUSTICE S.VISHWAJITH SHETTY
WRIT PETITION NO.17404/2021(GM-MM-S)
BETWEEN:
SMT. GEETHA SRINIVASULU LEGAL REPRESENTATIVE OF LATE MR. S.V. SRINIVASULU HAVING HER OFFICE AT OLD INCOME TAX OFFICE BUILIDNG NEAR SAHAKARI KALYANA MANTAPA N.C. COLONY, HOSAPETE - 583 203. ...PETITIONER
(BY SRI ADITYA NARAYAN, ADV)
AND:
THE STATE OF KARNATAKA
DEPARTMENT OF COMMERCE
AND INDSUTRY, VIDHANA SOUDHA
BANGALORE - 560 001
REP BY THE PRINCIPAL SECRETARY.
DEPARTMENT OF MINES AND
GEOLOGY
NO 49, KHANIJA BHAVAN
RACE COURSE ROAD
BENGALURU - 560 001
REPRESENTED BY ITS DIRECTOR.
THE DEPUTY DIRECTOR
DEPARTMENT OF MINES AND
GEOLOGY
3RD FLOOR, PERWEZ PLAZA
COLLEGE ROAD
HOSAPETE - 583 201. ...RESPONDENTS
(BY SRI S.S. MAHENDRA, A.G.A FOR R-1 & R-2)
THIS WRIT PETITION IS FILED UNDER ARTICLES 226 AND 227 OF THE CONSTITUTION OF INDIA, PRAYING TO QUASHING THE IMPUGNED ORDER OF THE R-3 DATED 10.08.2021 BEARING NO.DMG/DDH/SQL/2021-22/2133 (ANNEURE-A) AS ILLEGAL, ARBITRARY AND VIOLATIVE OF THE PETITIONERS FUNDAMENTAL RIGHTS, ETC.
THIS PETITION COMING ON FOR PRELIMINARY HEARING THIS DAY, ACTING CHIEF JUSTICE MADE THE FOLLOWING:
O R D E R
Heard the arguments of learned counsel for the petitioner and the learned Additional Government Advocate for respondent Nos.1 and 2.
The petitioner in this writ petition seeks quashment of the order dated 10.08.2021 issued by the Deputy Director of Department of Mines and Geology, Hospet. In addition, the petitioner seeks a declaration that demand for payment of interest on differential royalty raised vide the impugned order dated 10.08.2021 is illegal. The petitioner also seeks a direction to the respondents to reconcile their accounts to re-calculate royalty on the basis of
the rates published, by the Indian Bureau of Mines, in the relevant period and not to retrospectively apply its subsequent rates. In order to appreciate the grievance of the petitioner, few facts need to be mentioned, which are stated herebelow:
The petitioner is granted mining lease for extracting of Iron Ore in respect of an area measuring 60.23 Hectares. A demand notice dated 28.03.2018 was issued to the petitioner by which a sum of `86,88,180/- was demanded on account of royalty due for the year 2011-12 along with interest thereon.
The aforesaid demand notice was challenged in a writ petition viz., W.P.No.31726/2018, which was disposed of by a Division Bench of this Court by an order dated 13.08.2018. By the said order, it was directed that the demand notice shall be treated as "show cause notice" and fresh orders shall be passed after affording an opportunity to file reply to the petitioner.
The petitioner thereupon filed a representation on 12.09.2018. However, while the proceedings were pending, demand notices dated 22.07.2019 and 21.08.2019 were issued again. Thereafter, order dated 10.08.2021 was issued by the Deputy Director of the Department of Mines and Geology, by which the demand earlier made, was upheld. In the aforesaid factual background, this writ petition has been filed.
Learned Counsel for the petitioner submits that the impugned demand is passed, based on retrospective operation of Rule 64D of the Mineral Concession Rules, 1960 ('the Rules' for brevity) and the same has been passed in contravention of the directions contained in the order dated 06.10.2016 passed by the Division Bench of this Court in W.P.No.36984/2016. It is further submitted that the instant petition raised a question of law with regard to retrospective application of Rule 64-D of the Rules, which is no longer res-integra. Therefore, the
petitioner need not be relegated to the alternative remedy of filing a revision under Section 30 of the Mines and Minerals (Development and Regulation) Act, 1957 ('the Act' for brevity).
In support of counsel's submission, reliance has been placed on the decision of the Supreme Court in Sandur Manganese and Iron Ores Limited -vs- State of Karnataka and Others-(2010) 13 SCC 1.
On the other hand, learned Additional Government Advocate has submitted that there is a statutory alternative remedy available to the petitioner. Therefore, the petitioner deserves to be relegated to the alternative remedy. It is also submitted that the order dated 10.08.2021 has been passed on the basis of the rates published by the Indian Bureau of Mines, in accordance with Rule 64D of the Rules.
It is further submitted that the question of retrospective application of Rule 64D of the Rules does not arise. It is pointed out that the amount has been demanded for the period of 2011-12 and the interest accrued upto 31.03.2017, has been included in the demand notice.
We have considered the submissions made on both sides and have perused the records.
The relevant extract of Rule 64D of the Rules reads as under:
"64 D. Manner of payment of royalty on minerals on ad valorem basis:
(1) Every mine owner, his agent, manager, employee, contractor or sub- lessee shall compute the amount of royalty on minerals where such royalty is charged on ad valorem basis as follows:
(i) for all non-atomic and non fuel minerals sold in the domestic market or consumed in captive plants or exported by the mine owners (other
than bauxite and laterite despatched for use in alumina and metallurgical industries, copper, lead, zinc, tin, nickel, gold, silver and minerals specified under Atomic Energy Act), the State-wise sale prices for different minerals as published by Indian Bureau of Mines shall be the sale price for computation of royalty in respect of any mineral produced any time during a month in any mine in that State, and the royalty shall be computed as per the formula given below:
Royalty = Sale price of mineral(grade wise and State-wise) published by IBM X Rate of royalty (in percentage) X Total quantity of mineral grade produced/ dispatched:
Provided that if for a particular mineral, the information for a State for a particular month is not published by the Indian Bureau of Mines, the latest information available for that mineral in the State shall be referred, failing which the latest information for All India for the mineral shall be referred."
A Division Bench of this Court by order dated 06.10.2016 passed in W.P.No.36984/2016 (GM-MM- S) has held as under: "2. In computing the calculation, he shall not rely on the retrospective publications. In the event it is found that excess amount has been paid, the authorities shall refund the same to the petitioner, in accordance with law."
It is not in dispute that the aforesaid order passed by the Division Bench of this Court has attained finality and binds the parties.
Thus, it is evident that the respondents, for the purposes of raising a demand under Rule 64D of the Rules, cannot rely on retrospective publications. In the instant case, the relevant extract of the order dated 10.08.2021 reads as under:
"For the reasons explained in the proposal, I, K.A.Mahaveera, Deputy Director, Department of Mines and Geology, Hospet while exercising the
powers conferred by the Director, Department of mines and Geology, Bangalore, this is to inform that there is no provision to waiver royalty/interest as sought by you in written statement/documents and the calculation made during the Annual Accounts Inspection by the Deputy Director, Department of Mines and Geology, Hospet is in purview of the terms mentioned in Lease Contract Agreement and as per Rules framed under M.M.D.R. Act and thus the Demand Letter No.DMG/DDH/SQL/2017- 18/2019, dated: 28.03.2018 has been ordered for consideration."
From a perusal of the aforesaid order, it is evident that the Deputy Director has taken a view that the average price has been subsequently published by the Indian Bureau of Mines. Hence, we find that the impugned order has been passed in contravention of the directions issued by the Division Bench of this Court in W.P.No.36984/2016 vide order dated 06.10.2016 and accordingly, the pure question
of law arises for consideration in this writ petition. Therefore, in the aforesaid peculiar facts of the case, we are not inclined to relegate the petitioner to avail of the alternative remedy under Section 30 of the Act.
For the aforementioned reasons, the impugned order dated 10.08.2021 passed by the Deputy Director of Department of Mines and Geology, Hospet, is hereby quashed. However, liberty is reserved to respondent No.3 to raise a demand in accordance with Rule 64D of the Rules and in accordance with the directions contained in the order dated 06.10.2016 passed in W.P.No.36984/2016.
Accordingly, the writ petition is disposed of.
Sd/- ACTING CHIEF JUSTICE
Sd/- JUDGE KNM/-