THE HON'BLE SRI JUSTICE GODA RAGHURAM AND THE HON’BLE SRI JUSTICE P.DURGA PRASAD WRIT APPEAL No.189 of 2004 JUDGMENT: (Per the Hon’ble Sri Justice Goda Raghuram) This is a respondents’ (State’s) appeal. As is customary, the State was not impleaded in the writ petition. The appeal is directed against the judgment dated 04.12.2003 in W.P.No.27459 of 1997. Initially, the appeal is filed by the respondents in the writ petition i.e., the Assistant Director and the Director of Mines & Geology respectively. On reflection, however, the learned counsel for the writ petitioner/respondent herein has filed an application – W.P.M.P.No.883 of 2011 seeking to implead the State of Andhra Pradesh represented by the Assistant Director and the Director of Mines and Geology in lieu of the appellants, namely, the Assistant Director and the Director of Mines and Geology, in this appeal which we have ordered today. The respondent herein/writ petitioner was granted a mining lease for quarrying limestone in Acs.46.00 in Madhavaram Reserve Forest, Dhone Mandal, Kurnool District. The lease was initially granted in favour of one Mahaboob Khan in 1956 for a period of twenty years. One Rahaman Khan, the legal representative of Mahaboob Khan applied for renewal in 1975. Renewal was, however, not granted by the State on the ground that the area of Dhone and Koilkuntla Talukas of Kurnool District bore high grade limestone which are more appropriately reserved for exploitation in the public sector. Eventually, Rahaman Khan succeeded in a revision and consequent litigation, and accordingly renewal was granted, which was subsequently transferred in favour of the respondent/writ petitioner. Initially there was a uniform rate of royalty prescribed in Schedule II to the Mines and Minerals (Development and Regulation) Act, 1957 (‘1957 Act’ for brevity), for all categories of limestone. In 1992, however, by a notification issued in G.S.R.No.100(E) dated 17.02.1992, the Union of India amended Schedule II and introduced dual rates of royalty; a higher rate for limestone having silica content of 1.5% or less and a lower rate for limestone having silica content of more than 1.5 %, specified to be Grades A and B respectively. There is no dispute in this regard. The respondent/writ petitioner concedes the position that it is liable to pay royalty according to the rates in Schedule II and the quality of the limestone that is extracted under the lease granted to it. The respondent/writ petitioner was being issued dispatch permits from time to time enabling it to transport the quarried limestone and it was paying royalty hitherto on the conjoint assumption that the quality of limestone in the area leased to it was of B Grade i.e., more than 1.5% silica content. However, the Assistant Director of Mines and Geology, Kurnool, by a letter dated 11.07.1997 demanded a sum of Rs.3,36,250/- from the respondent/writ petitioner on the ground that on the basis of the samples collected, it was seen that the limestone in the respondent/writ petitioner’s leased area was of the higher Grade i.e., Grade ‘A’, containing less than 1.5% silica content. Thereafter, without adverting to the reply furnished by the respondent/writ petitioner, the Assistant Director issued a demand notice dated 23.09.1997 on the basis that the limestone was of higher Grade. Aggrieved, the respondent/writ petitioner approached this Court by way of writ petition challenging the proceedings of the Assistant Director in the letter dated 11.07.1997 and 23.09.1997 and another letter dated 27.09.1997; seeking a declaration that the Assistant Director is not the competent authority to determine the Grade of the mineral and a declaration that the procedure adopted by the Assistant Director is arbitrary and irrational. The writ petition was allowed and therefore are the respondents in appeal. By the judgment impugned in the appeal, the learned Single Judge found that the Officers of the Mines and Geology Department had adopted a singular procedure of issuing the dispatch permits and permitting carting away of the quarried mineral and were thereafter collecting samples from the available deposits in the leased area; collecting samples without notice to the lessee or furnishing any sample, which is presented for analysis by the Department for ascertaining the rate; and were unilaterally declaring the quality of the mineral as of a higher grade and raising a demand. The learned Single Judge in summation found the entire procedure adopted by the Department to be nontransparent, irrational, ad hoc and post facto, and that the said procedure was not only without any generic basis or based on rules or guidelines but also inherently arbitrary. Accordingly, the writ petition was allowed and the proceedings of the Assistant Director invalidated. The learned Single Judge further observed that neither the provisions of the 1957 Act nor the Mineral Conservation and Development Rules, 1988 (framed by the Union under the rule making powers of 1957 Act) provide for drawing of samples nor for revising royalty on the basis of analysis of the samples so drawn. The learned Government Pleader for Industries and Commerce would strenuously contend that these observations of the learned Single Judge are overbroad and hamper the jurisdiction of the State even to engender a rational template of procedure for ascertaining the quality of limestone, for the purposes of levying the appropriate rate of royalty as per Schedule II of 1957 Act, in the context of the fact that Schedule II provides for dual rates of royalty for the major mineral limestone, having regard to its quality qua the silica content. It requires to be noticed that the learned Government Pleader though reluctantly, concedes the position that the Department has not engendered as yet a rational raft of rules, guidelines or procedures for drawing of samples for the purpose of ascertaining its quality for levying the appropriate rate of royalty, given the dual rates of royalty prescribed in Schedule II to 1957 Act. On the admitted factual scenario, it would appear that the respondent/writ petitioner was quarrying limestone in the area leased to it; and the mined mineral would be stored in several heaps in the leased area. Thereafter, the respondent/writ petitioner would apply for dispatch permits, specifying the quantities for which dispatch permits are sought. The Department does not obtain any samples before issuing the permits. Dispatch permits are issued without ascertaining the quality of the limestone whether it is of Grade ‘A’ or Grade ‘B’. On the basis of such dispatch permits, the writ petitioner carts away the mineral. Thereafter, the Department, as in this case, randomly draws samples from the several heaps of the mineral lying in the leased premises and sends the samples so collected for analysis. As it is apparent from the first letter of the Assistant Director of Mines and Geology dated 11.07.1997, there is no uniform basis for collection of samples either. The table set out in the said letter of the Assistant Director discloses that seven samples were collected in respect of dispatch permit issued for 5050 MTs of the mineral; nine samples for 4,250 MTs; and eight samples each for 3550, 5000 and 1450 MTs. At what rate or sample size samples are drawn; on what basis and following what ascertainable procedure or protocol, is an aspect that has not been demonstrated before this Court and is left for divination and speculation. Suffice it to record that in the absence of any procedure evolved for collection of samples and analysis for the purpose of ascertaining the quality of mineral limestone, the appellants/respondents in the writ petition cannot legitimately proceed to draw samples from the stored mineral and after issue of dispatch permits and the transport of the mineral from the leased area. This is the finding of the learned Single Judge with which we find ourselves in agreement. The observation in the judgment under appeal that the appellants/respondents are not entitled to draw samples in the absence of any provision specifically empowering them would only mean that they are obligated to evolve a transparent policy of rules, guidelines or instructions for the purpose of collecting samples duly sensitizing the lessee at the time of collection; and for analysis of the samples so collected with due safeguards for any error or abuse in the process. The provision referred to by the learned Single Judge does not necessarily mean a legislative or statutory provision. The appellants/respondents are entitled to generate a rational and transparent policy for collecting samples and for analysis of the quality of limestone for the purpose of levying royalty. Since under the scheme of dual royalty policy in Schedule II and consistent with the right of the State to collect such royalty, the State has an inherent right to generate are appropriate template of procedures to enable the effective collection of royalty depending upon the quality of the mineral, though the learned Single Judge has used an expression in the judgment that the appellants/respondents are not entitled to draw the samples inter alia for revising the royalty on the basis of the analysis of such samples, we find, as the learned Government Pleader has pointed out that in this case no revision of royalty as such is involved and what was involved is ascertainment of the quality of the mineral for the purpose of assessing the appropriate rate of royalty and since the procedure followed for ascertaining the quality of mineral was essentially and inherently defective and irrational, the learned Single Judge has rightly quashed the proceedings issued by the Assistant Director, we find no error in the conclusion recorded in the judgment under appeal. On the analysis above; in the facts and circumstances of the case and in the light of the observations hereinabove, this Court finds no reason to interfere with the judgment under appeal. The Writ Appeal is accordingly dismissed. No costs. ___________________ GODA RAGHURAM, J ________________ P.DURGA PRASAD, J 15th June, 2011 GHN