IN THE HIGH COURT OF JUDICATURE, ANDHRA PRADESH AT HYDERABAD THE HON'BLE SRI JUSTICE SANJAY KUMAR WRIT PETITION NO:11653 OF 2007 DATED:5.8.2010 Between: M/s Maruthi Stone Crushers, rep., by its Proprietrix. .....PETITIONER AND 1. Assistant Director of Mines & Geology, Ananthapur and another. .....RESPONDENTS This Court made the following : THE HON'BLE SRI JUSTICE SANJAY KUMAR WRIT PETITION NO:11653 OF 2007 ORDER: The petitioner, a Stone Crusher Unit, challenges the demand notice dated 26.4.2007 issued by the Assistant Director of Mines & Geology, Ananthapur, respondent No.1 calling upon the petitioner-unit to pay a sum of Rs.4,30,604/- towards the normal seigniorage fee and penalty under Rule 26(3)(ii) of the A.P. Minor Mineral Concession Rules, 1966. The petitioner-unit was addressed notice dated 19.8.2006 by the Regional Vigilance and Enforcement Officer, Kurnool, stating that during the inspection and verification of its records, certain stocks of minor minerals were noticed in its premises and it was requested to produce documentary evidence in support of payment of seigniorage fee in respect thereof. The petitioner-unit responded by its explanation, dated nil, which was sent by speed post and also by ‘registered post with acknowledgement due’ to the Regional Vigilance and Enforcement Officer, Kurnool. A copy of the acknowledgement card is filed in evidence of service of the explanation upon the authority. In the said explanation, the petitioner-unit disputed the existence of the stocks of minor minerals detailed in the notice dated 19.8.2006 and requested physical verification of its unit to ascertain the truth. The Assistant Director of Mines and Geology, Ananthapur, by letter dated 7.9.2006 informed the petitioner-unit that the Regional Vigilance and Enforcement Officer, Kurnool, would be inspecting its premises on 11.9.2006, requesting the proprietrix of the petitioner-unit to be present with connected records on the said date or to depute any authorized person to be available at the time of inspection. However, without carrying out such inspection, it appears that the Assistant Director of Mines and Geology, Ananthapur, once again issued notice dated 1.11.2006 adverting to the earlier inspection by the Regional Vigilance and Enforcement Officer, Kurnool in August, 2006 and stated that in spite of service of notice the petitioner-unit had failed to respond to the same. The authority therefore called upon the petitioner-unit to submit its explanation as to why action should not be taken for recovery of normal seigniorage fee along with five times penalty. The petitioner-unit submitted its explanation dated nil referring to the communication dated 7.9.2006 pointing out that no inspection took place pursuant thereto. The petitioner-unit denied liability for payment of seigniorage fee. Thereupon, the impugned demand notice dated 26.4.2007 came to be issued by the Assistant Director of Mines and Geology, Ananthapur. It is interesting to note that no reference is made in the impugned notice to the petitioner-unit’s first explanation submitted in response to the notice dated 19.8.2006 addressed by the Regional Vigilance and Enforcement Officer, Kurnool. As pointed out hereinbefore, this explanation was served upon the authority as is evidenced by the acknowledgement card, forming part of the record. Referring to the petitioner-unit’s subsequent explanation submitted in response to the notice dated 1.11.2006, the authority states that the petitioner-unit failed to submit any evidence for the quantities of the minor minerals shown in the notice. Stating so, the authority confirmed the liability of the petitioner to pay seigniorage fee in respect of the quantities of the minor mineral, road metal, and called upon the petitioner-unit to pay the amount of normal seigniorage fee along with five times penalty adding upto Rs.4,30,604/-, within fifteen days. This Court by interim order dated 11.6.2007 granted stay of all further proceedings pursuant to the demand notice dated 26.4.2007 for a period of four weeks. This order was thereafter extended by four more weeks on 10.7.2007 and until further orders by order dated 10.8.2007. No counter-affidavit has been filed by the respondents. Sri N. Ranga Reddy, learned Counsel for the petitioner-unit, stated that once the petitioner-unit disputed the very existence of the stocks of the minor minerals detailed in the notice dated 19.8.2006, there was no question of the petitioner-unit producing documentary evidence of payment of seigniorage fee in respect thereof. The learned Counsel pointed out that in spite of proposing an inspection of the petitioner-unit once again under letter dated 7.9.2006, such inspection did not take place and unilaterally, the authorities pinned the liability for payment of seigniorage fee along with the penalty upon the petitioner-unit. He placed reliance upon the judgment of this Court i n Gade Jogi Reddy Vs. Commissioner, Survey, Settlement and Land Records, A.P., Hyderabad[1] in support of his plea that the petitioner-unit was denied a proper opportunity. The sequence of events detailed hereinbefore clearly demonstrate that the respondent-authorities proceeded to finalize the issue of the petitioner’s liability in respect of payment of seigniorage fee without first ascertaining the actual quantity of the minor mineral stocked on its premises. Once the petitioner-unit denied the existence of the stocks detailed in the notice dated 19.8.2006, it was incumbent upon the respondent-authorities to cause re-verification which they, in fact, intended to do under the letter dated 7.9.2006. However, for reasons best known to them, the said re-verification did not occur. Further, the petitioner’s first explanation received under proof of acknowledgement card has been completely ignored by the respondent-authorities. No reference whatsoever is made to the said explanation in the impugned demand notice. In that view of the matter, this Court is of the opinion that the petitioner was denied a proper opportunity in the matter resulting in violation of the principles of natural justice. Reference may be made to the observations of this Court in Gade Jogi Reddy, which are as hereunder: “Insofar as order dated 5.2.1994 is concerned I find that the appellate authority did advert to the petitioner’s plea of violation of the rules of natural justice but brushed aside the same by observing that a notice had been served on the appellant on 27.6.1989 and arguments of his advocate were heard by the District Registrar and as such he is not entitled to complain of the violation of rule of audi alteram partem. In my opinion, the reason assigned by the appellate authority for rejecting the petitioner’s plea of violation of natural justice by the District Registrar is legally untenable. What the appellate authority was required to consider was whether or not copy of the report prepared by District Vigilance and Enforcement Officer was made available to the petitioner and whether he was given opportunity to controvert the finding recorded therein. Unfortunately, the appellate authority misdirected itself and presumed that rules of natural justice will be deemed to have been complied with because the petitioner had been noticed and he was represented by an advocate.” Thus, mere participation of the petitioner in the process, by itself, would not be sufficient compliance with the rule of ‘audi alteram partem’. When the authorities turned a deaf ear to the petitioner’s explanation and went about the exercise unilaterally, there is undoubtedly a violation of the norm. In the light of the facts and circumstances aforestated, the demand made against the petitioner-unit under the notice dated 26.4.2007 is legally unsustainable. The impugned demand notice is accordingly set aside. The writ petition is allowed. There shall be no order as to costs. _____________________ Justice Sanjay Kumar Dated:5.8.2010 Nn. THE HON'BLE SRI JUSTICE SANJAY KUMAR WRIT PETITION NO:11653 OF 2007 5th August, 2010 [1] 2006(5) ALD 126