IN THE HIGH COURT OF JUDICATURE, ANDHRA PRADESH AT HYDERABAD (Special Original Jurisdiction) FRIDAY, THE FOURTEENTH DAY OF NOVEMBER TWO THOUSAND AND EIGHT PRESENT THE HON'BLE MR JUSTICE RAMESH RANGANATHAN WRIT PETITION NO : 14049 of 2001 Between: M/s C. Eswar Reddy & Co., Rep. by its Partner Sri K. Ramakrishna Reddy S/o K. Pulla Reddy S.R.Nagar, Hyderabad, R/o Dhone, Kurnool District. ..... PETITIONER AND 1 The Assistant Director, Mines and Geology Kurnool District. 2 The Executive Engineer, N.H. Division, Kurnool District. 3 The Superintendenting Engineering, R&B NH Circle, Ananthapur. 4 The Executive Engineer, R&B Kurnool. 5 The Executive Engineer, Panchayath Raj Division, Kurnool. .....RESPONDENT(S) 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 to issue a Writ Order or direction more particularly one in the nature of Writ of Mandamus declaring the action of the Respondent 2-5 in deducting the seigniorage charges for the road metal used by the petitioner for the work awarded to him from the bills as illegal, irregualr, arbitrary, uncontitutional, unjustiﬁed, unreasonable and unsustainable and direct the Respondent 2-5 not to deduct the seigniorage fee for the metal used from the billes of the Petitioner (Contractor) on the petitioner producing documentary evidence namely the transit forms from the mining Department indicating that the mineral is alread subjected to seigniorage fee and grant such other order or orders as this Hon'ble Court deems fit. Counsel for the Petitioner:MR.P.VEERA REDDY Counsel for the Respondent No.: GP FOR ROADS & BUILDINGS The Court made the following : THE HON'BLE SRI JUSTICE RAMESH RANGANATHAN WRIT PETITION NO.14049 OF 2001 ORDER: This Writ Petition is ﬁled to declare the action of respondents 2 to 5 in deducting seigniorage charges for the road metal used by the petitioner, for the works awarded to him, from the bills as arbitrary, illegal and for a consequential direction to respondents 2 to 5 not to deduct the seigniorage fee, for the metal used, from the bills of the petitioner- contractor on the petitioner producing documentary evidence namely the transit forms from the Mining Department indicating that the mineral was already subjected to seigniorage fee. The petitioner ﬁrm is a special class contractor. It was awarded two contracts of road works namely (1) special repairs to riding surface from K.Ms 288/0 to 298/0 of Chittoor-Kurnool road NH-18 vide agreement No.14/2000- 2001 dated 20.10.2000 and (2) improvements to riding quality from K.M.280/0 to 293/0 of Hyderabad – Bangalore Section road of NH-7 by the 2nd and 3rd respondents. The 4th respondent had awarded the contract work of improvements to road from R.S.Rangapuram to Tavasikonda via Gutupalli. Similar works are said to have been awarded by the 5th respondent also. For all these works the petitioner was required to use road metal which is a minor mineral, and is subjected to seigniorage fee by the Mining Department for the mineral extracted and lifted from the quarry. The petitioner is a holder of a mining lease for road metal in Survey No.271/A&B, Sudepalli Village, Veldurthy Mandal, Kurnool District, which was granted by the 1st respondent. The petitioner contends that they had to pay advance seigniorage fee to the Mining Department under the rules for the mineral extracted and transported, that it is only after such payment did the 1st respondent issue transit forms to the petitioner to enable them to dispatch the mineral extracted, that the Government, in G.O.Ms.No.23 dated 5.3.1999, had prescribed a revised tender procedure for all public works, that, para 6 (V) of the said G.O provided that contractors would no longer be required to produce a clearance certiﬁcate from the Mining Department for the seigniorage fee which would be deducted by the concerned works departments from the bills of the contractors for the material used on the works and that, basing thereon, the respondents were insisting for deduction of seigniorage fee from the bills which had already been subjected to payment by the Mining Department. It is further stated that, thereupon, a letter was submitted to the 1st respondent informing them regarding the G.O and a request was made to permit the petitioners to lift the mineral without payment of seigniorage fee, that the 1st respondent, vide letter dated 20.11.2000, had informed the 4th respondent that the petitioners were regularly paying advance seigniorage fees for taking permits and transit forms for transporting the mineral and that the Engineering Department could treat transit forms produced by them as sufficient evidence in token of payment of seigniorage fees. The petitioner would contend that, despite such intimation, respondents 2 and 3 continued to deduct seigniorage charges from the bills and, while the 1st respondent had requested the Director of Mines and Geology to address a letter to the Chief Engineer for issuing necessary orders, the other respondents had continued to deduct seigniorage charges from the petitioner’s bills virtually collecting seigniorage charges twice for the Government. The petitioner would contend that the action of the respondents in collecting seigniorage fees on the mineral transported twice, once by the Mining Department, and the second time by respondents 2 to 5 from the work bills, was illegal, irregular and unreasonable, that the said mineral could not be subjected to payment of seigniorage charges, prescribed under the Mineral Concession Rules, twice, that the authority prescribed under the Mineral Concession Rules was empowered to collect seigniorage charges which was exclusively within his domain and, while such was the position, deduction of the same seigniorage charges by respondents 2 to 5 was irregular, unjustiﬁed and unwarranted. According to the petitioner, respondents had no power to deduct seigniorage charges from the works bills. The 1st respondent, in his counter aﬃdavit, states that as per Rule 10 of the A.P. Minor Mineral Concession Rules, 1966 the petitioner had to pay a seigniorage fee or dead rent, whichever was higher, on all minor mineral dispatched or consumed from the land at the rates speciﬁed in the 1st and 2nd schedules, that dead rent for the ﬁrst year had to be paid by the lease holders at the time of execution of lease deed and for subsequent years one month in advance and that the seigniorage fee had to be paid before the mineral was removed from the leased area. It is further stated that, as per para 6 (V) of G.O.Ms.No.23 I & CAD Department, dated 05.03.1999, the contractor is no longer required to produce clearance certiﬁcate from the Mines Department and that seigniorage charges are to be deducted from the bills of the contractors for the minerals used on the works and, since quarry leases for road metal were granted to the petitioner ﬁrm under the A.P. Minor Mineral Concession Rules, the petitioner ﬁrm had to pay dead rent or seigniorage fee whichever was higher as per the rates prescribed under Schedule I and II of the Rules. The 1st respondent would admit that the concerned executive engineers were informed that, when the contractor produced transit forms issued by the Assistant Director of Mines and Geology, Kurnool, it would be suﬃcient evidence of payment of seigniorage fee to the Government and as production of documentary evidence. In the counter aﬃdavit, ﬁled on behalf of respondents 2 to 4, it is stated that the Government, in G.O.Ms.No.23, had prescribed the revised tender procedure for all public works in the State, that para (v) of the said G.O. stipulated that contractors would no longer be required to produce clearance certiﬁcate from the Mining Department and seigniorage charges would be deducted by the concerned works department from the bills of contractors for the materials used on the works, that the 3rd respondent had called for tender for works i.e, special repairs to riding surface from K.M.288/0 to 298/0 of C.K. Road NH-18 costing Rs.188.66 lakhs etc., that, while inviting tenders, clause 14.5 was prescribed whereunder seigniorage charges were to be recovered from the contractors bills for the quantities worked out on the basis of the work done as per the theoretical requirement, as per the rates prescribed by the Mines and Geology Department communicated vide G.O.Ms.No.23 dated 05.03.1999. It is stated that the petitioner had accepted the said clause and had tendered for two works, that he had also signed an agreement concluded with the 3rd respondent in token of acceptance of the conditions stipulated therein, which included the clause for recovery of seigniorage charges on minerals, that the petitioner had not submitted any representation before the 2nd respondent seeking permission for producing transit forms issued by the Mines & Geology Department for transporting of the minerals from the quarries, that the 2nd respondent had deducted from the bills of the petitioner towards seigniorage charges on minerals used in the works as per theoretical requirements for which transit forms were not required to be produced by the petitioner as per the agreement clause and that, if the petitioner paid any amount towards seigniorage charges, it was open to him to ﬁle a claim before the 1st respondent and, as there was a clause in the agreement, the petitioner was not entitled for any relief regarding deduction of seigniorage charges, for the metal used, from the bills of the petitioner and that respondents 2 to 4 had rightly deducted the charges as per the agreement. The short question which arises for consideration in this writ petition is whether respondents 2 to 5 were entitled to deduct seigniorage fees from the bills payable to the petitioner-contractor in accordance with the agreement entered into between them. The fact that there was a clause, which empowered respondents 2 to 5, to deduct seigniorage fee from the bills is not in dispute. The petitioner’s contention, in short, is that, since he had obtained transit permit from the 1st respondent, respondents 2 to 5 were not entitled to deduct seigniorage fees from the monthly bills as he had already paid seigniorage fees to the Mining Department. This question is no longer res integra. I n L.Venkateswara Rao v. Singareni Collieries Co., Ltd.[1], a Full Bench of this Court, on considering Rule 26 (3)(ii) of the A.P. Minor Mineral Concession Rules, 1966, also noted that, apart from the statutory sanction, a contractual obligation was also cast on the petitioner- contractor under the agreement entered into between him and the respondents, that the liability on the part of the contractor to pay seigniorage fee, in respect of minor mineral used by him in the civil works, arose out of the contract entered into between the parties and, since the petitioner was a party to the agreement, he was bound thereby. In the case on hand respondents 2 to 5, in accordance with the agreement, had deducted seigniorage fee from the bills of the petitioner on the minerals used in the works as per theoretical requirements. Their action can neither be said to be arbitrary nor illegal and, as such, does not necessitate interference in proceedings under Article 226 of the Constitution of India. Suﬃce to hold that, in case the petitioner has made double payment of seigniorage fee, it is always open to him to seek refund from the 1st respondent who shall, on a proper application being made by the petitioner, consider such a request in accordance with law. Subject to the above observations, the writ petition fails and is, accordingly, dismissed. _________________ .11.2008. GS [1] 1993 (3) ALT 199 (FB)