IN THE HIGH COURT OF JUDICATURE, ANDHRA PRADESH AT HYDERABAD (Special Original Jurisdiction) FRIDAY, THE FOURTEENTH DAY OF MARCH TWO THOUSAND AND EIGHT PRESENT THE HON'BLE MR JUSTICE GODA RAGHURAM WRIT PETITION NO : 5604 of 2002 Between: D.Nagabushana Reddy S/o Late D. Venkata Reddy Itikalapally Village & Post Ananthapur Rural Mandal, Ananthapur Dist. ..... PETITIONER AND 1 Govt of A.P. Rep BY Its Asst.Director of Mines & Geology Dept. of Mines & Geology, Ananthapur. 2 The Director of Mines & Geology 8th Floor, B.R.K.R. Bhavan, Tank Bund Road, Hyderabad. 3 Govt of A.P. Rep By Its Secretary to Govt (Projects) Irrigation & Command Area Development (PW.COD) Dept., Secretariat, Hyderabad. .....RESPONDENTS Petition under Article 226 of the constitution of India praying that in the circumstances stated in the Affidavit filed herein the High Court will be pleased to issue Writ of Mandamus or any other appropriate writ or direction declaring the order of the 1st Respondent passed in No.285/VIG/2001 dt.27.12.2001 as illegal arbitrary & contrary to G.O.Ms.No.23 dt.5.3.1999. Counsel for the Petitioner: MR.O.MANOHER REDDY Counsel for the Respondent No. 1 &2 : GP FOR INDUSTRIES & COMMERCE. Counsel for the Respondent No.3: GP FOR IRRIGATION AND COMMAND AREA DEVELOPMENT. The Court made the following: Oral Order: Heard Sri Chakravarthy, Advocate representing Sri O. Manohar Reddy, learned counsel for the petitioner; learned Government Pleader for Industries and Commerce for respondent Nos.1 and 2 and the learned Assistant Government Pleader for Irrigation and Command Area Development for respondent No.3. It would appear that the petitioner has become the victim of misleading information on the legal position on account of ill-conceived, incompetent and wholly inadequately informed Government Order issued by the third respondent in G.O.Ms.No. 23 Irrigation & Command Area Development (PW: COD) Department dated 05-03- 1999 (for short ‘the G.O.’). The relevant facts: (a) The writ petition assails the order of the first respondent bearing reference No.285/Vig/2001 dated 27-12-2001 whereby the petitioner is called upon to remit the seigniorage fee liability and five times penalty, in all an amount of Rs. 3,96,000-00. (b) The first respondent’s order dated 27-12-2001 states that the Regional Vigilance and Enforcement Officer, Kurnool of the first respondent on 24-11-2000; 25-11-2000; 04-12-2000 and 05-12-2000 had inspected the premises of Hot Mixing Plants (for short ‘H.M.Ps.’) in Anantapur district and noticed certain stocks of different sizes of Road metal at the premises of various H.M.Ps., in the district. The first respondent thereupon directed all the H.M.Ps. owners to produce documentary evidence disclosing the payment of seigniorage fee. The owners of H.M.Ps. however did not submit the transit forms issued by the first respondent- department in verification/proof of payment of seigniorage fee. Some of the owners of H.M.Ps. responded to the notices issued by the first respondent stating that the entire metal produced from the HMPs is being utilized for the Government works only and that as per the orders in the G.O., the concerned Government departments at the time of finalization of their bills would deduct the seigniorage fee. On account of such an order of the State Government, the owners of H.M.Ps stated that they are unable to produce the transit forms issued by the Mines and Geology Department and requested dropping of further action. As the responses were not satisfactory, the orders similar to the impugned order have been issued to several owners of H.M.Ps. The impugned order has been issued to the petitioner. (c) The petitioner is a Road contractor operating in Andhra Pradesh. He is executing certain public roads in Ananthapur district and as required under the contractual terms thereof, has H.M.P within a radius of 50 kilo meters from the place of execution of the road works. The road metal for employment in the execution of the roadwork is extracted from the mines nearby and used exclusively for the execution of the roads as part of the contract with the State Government. (d) The third respondent issued an executive order in purported exercise of powers under Article 162 of the Constitution of India being G.O. Paragraph No. 6 (v) of the G.O. reads as follows: “The Contractors will no longer be required from now onwards to produce clearance certificate from the Mines Department and seigniorage charges will be deducted by the concerned works department from the bills of the Contractors for the materials used on the work only.” As per the peroration in paragraph No.6 of the G.O. these orders have been issued by the State Government after careful consideration of the recommendations of a Cabinet-Sub-Committee and in partial modification of the orders issued in G.O.Ms.No. 132, TR & B Department dated 11-08-1998. According to paragraph No.6 of the G.O., these orders were issued to ensure free and fair competition in award of Public Works and to bring in greater transparency in tender procedure. As is apparent from paragraph No.6 (v) of the G.O. inter alia the contractors have been facilitated a procedure of payment of seigniorage charges from the bills for the works executed by them and in respect of the materials used in the work. On the basis of this G.O., the petitioner and other owners of H.M.Ps., were lulled into a sense of unlawful complacency that they need not pay the seigniorage fee or produce the receipts evidencing payment of seigniorage fee, as seigniorage fee would be collected for the minor minerals employed/used in the execution of the road works by way of deduction from the bills payable to them for the road works executed. The Mines and Minerals (Development & Regulation) Act, 1957 (Act No.67 of 197) (for short ‘the Act’) is an enactment referable to the field of ‘Legislation’ enumerated in Entry 54 of the Union List-I in the Schedule VII of the Constitution of India which reads: “54. Regulation of mines and minerals development to the extent to which such regulation and development under the control of the Union is declared by Parliament by law to be expedient in the public interest.” Entry-23 of the State List, List-II in the Schedule VII of the Constitution of India reads: “23. Regulation of mines and mineral development subject to the provisions of List-I with respect to regulation and development under the control of the Union.”` It is the well settled and established position that in view of the enactment of the Act by the Parliament and in view of the declaration as to the expediency of the public interest in the Union control spelt out in Section 2 of the Act, the State legislative competence in Entry-23 of List-II is eclipsed, vide Baijnath Kedia vs. State of Bihar1; State of Orissa vs. M/s. Tulloch and Co.,2; and Rampur Coal Co., Ltd., v. State of Orissa3. Where the State has, thus been denuded of legislative competence on account of the paramount occupation of the field by the Union legislation in exercise of the legislative power referable to the field of ‘Legislation’ under Entry-54 of List-I, it is axiomatic that the complementary executive power under Article 162 of the Constitution of India is equally eclipsed. The State is thus denuded of any residuary or supplemental executive competence under Article 162 of the Constitution of India. Section 15 of the Act grants ‘power to the State Government, by notification in the Official Gazette, to make rules regulating the grant of quarry leases, mining leases or other mineral concessions in respect of minor minerals and for purposes connected therewith.’ In the light of the mandated constitutional federal discipline, it is elementary that the power of the State Government under Section 15 of the Act is a power, which is traceable to the legislative grant under the Act. It is not a sui generis State power either -- Legislative or Executive. The State while exercising the power under Section 15 of the Act and to make rules as enabled thereunder, exercises a delegated power. It has no power of its own in view of the plenary eclipse by the provisions of the Act. This is the position settled and by binding declarations of law under Article 141 of the Constitution of India, long prior to the executive exercise by the third respondent as reflected in the G.O. In exercise of powers available under Section 15 of the Act, the State of Andhra Pradesh has promulgated the Andhra Pradesh Minor Mineral Concession Rules, 1966 in G.O.Ms.No. 1172 Industries (B-1) Department Dated 04-09-1967 (for short ‘the Rules’). These Rules have been amended from time to time. The initial issue of these Rules and the amendments made thereto from time to time are however and have always been in exercise of the delegated power under Section 15 of the Act. There is no other genesis for exercise of power by the State in this area. Section 15 (1A) (g) of the Act enables Rules to be made by the State Government inter alia for fixing and collection of rent, royalty, fees, dead rent, fines or other charges. It is an equally well established position that in respect of ‘major minerals’ the appropriate Government collects ‘royalty’ for the extraction of such mineral by private agencies or individuals and when it comes to minor minerals, ‘royalties’ are called ‘seigniorage fee’. Both ‘royalty’ and ‘seigniorage fee’ are tax payable to the State. This also a settled legal position that admits of no disputation. Rule 34 of the Rules enjoins that no minor mineral shall be despatched from any of the leased areas without a valid permit issued by the Assistant Director concerned or an Officer authorized by him in this behalf and that contravention of this Rule shall result in forfeiture of the Security Deposit and levy of normal seigniorage fee along with five times penalty by the said Assistant Director or the Officer authorized by him. Sub-rule (2) of Rule 34 of the Rules enjoins that the application for ‘despatch permit under Sub-Rule (1) shall be made by the lessee to the Assistant Director concerned in Form-K by duly enclosing challans towards advance payment of seigniorage fee for the proposed quantity to be despatched at least ten (10) days before proposed date of despatch of the mineral and the permit (transit permit) shall be issued by the competent authority in Form-L. From the clear phraseology of Rule 34 of the Rules, the position is apparent that no minor mineral shall be released from the leased area without advance payment of seigniorage fee in respect of the quantity to be transported and cannot be transported without a valid despatch permit issued by the specified competent authority. It is also a settled principle of administrative law that no executive instructions or executive orders could be issued in transgression of statutory rules. Neither by its express language, any compelling implication or the nature of the power available, has the third respondent any manner of power, authority or jurisdiction, to dilute, subvert or avoid the trajectory of Rule 34 of the Rules. Rule 34 clearly enjoins an obligation as to payment of the seigniorage fee as a condition precedent for transporting a minor mineral outside the leased premises and also provides a sanction for the violation of Rule namely a penalty in addition to the seigniorage fee payable, of five (5) times the fee. Construed on its true and fair terms and read in conjunction with the sanction for violation, the conclusion is inescapable that Rule 34 of the Rules is ‘mandatory’. The petitioner therefore cannot avoid the obligation to conform to Rule 34. It is also clear from the facts on record that the petitioner had stacked a quantity of minor mineral viz., ‘road metal’ at the sites of HMP and he admittedly carted the minor mineral from the leased areas. The petitioner does not dispute the liability to pay the seigniorage fee. In the absence of any such disputation, the payment must be in accordance with the mandate of Rule 34 of the Rules. The facts on the record disclose that no such payment of seigniorage fee was made. The impugned order issued by the first respondent is therefore valid and proper and is not liable to be interfered with. However this is not entirely dispositive of the issue. The petitioner was misled and enticed into a false sense of complacency by the wholly vagrant and mindless executive exercise of power of the third respondent by way of the G.O. Paragraph No. 6 (v) of G.O. conveyed to the petitioner a clear impression that the seigniorage fee need not be paid in advance of removing the minor mineral from the leased premises, but could be later deducted from out of the bills payable by the State to the petitioner and other contractors employing material which is chargeable to seigniorage fee. The petitioner’s misfortune is in implicitly believing in the viability, validity and rationality of a Government order instead of verifying for himself the legal position obtaining under the provisions of the Rules. The position is well established by the legal maxim Ignorantia Legis Non Excusat and the petitioner is no exception to this principle. However since the third respondent had issued the G.O. which clearly had the propensity of misleading the petitioner as to the obligation under the provisions of Rule 34 of the Rules, it is but appropriate that the third respondent must at least to a measure compensate the petitioner--a citizen, for the injury suffered on account of the misleading orders issued in G.O. In the aforesaid circumstances while declining grant of the relief as prayed for in the writ petition viz., the invalidation of first respondent’s order bearing reference No. 285/VIG/2001 dated 27-12-2001, this Court considers it appropriate to dispose of the writ petition directing payment by the third respondent to the petitioner, of an amount of Rs.10,000- 00 (Rupees ten thousands only), towards costs. This Court places on record that paragraph No.6 (v) of the G.O. insofar as it asserts that seigniorage fee will be deducted by the concerned works department from the bills of the contractors for the materials used on the work is incompetent and in transgression of provisions of Rule 34 of the Rules. The writ petition is disposed of as above. ____________________ GODA RAGHURAM, J Dated: 14-03-2008 pvks Nb:- Furnish c.c. in one week. B/o pvks/* 1 AIR 1970 SC 1436 = (1970) 1 SCJj 913 2 AIR 1964 SC 1284 = 30 Cut.LT 80. 3 AIR 1961 SC 459