THE HON’BLE THE CHIEF JUSTICE SRI ANIL R. DAVE AND THE HON’BLE SRI JUSTICE C.V. NAGARJUNA REDDY WRIT APPEAL NO.31 OF 2003 Dt.08.10.2009 Between: M/s. B. Seenaiah & Company (Projects) Represented by its Director, P.S. Reddy, S/o. Late Pulla Reddy, Hyderabad … Petitioner And The Government of Andhra Pradesh Rep. by its Secretary, Industries & Commerce Department Secretariat, Hyderabad and others … Respondents THE HON’BLE THE CHIEF JUSTICE SRI ANIL R. DAVE AND THE HON’BLE SRI JUSTICE C.V. NAGARJUNA REDDY WRIT APPEAL NO.31 OF 2003 JUDGMENT: (per the Hon’ble Sri Justice C.V. Nagarjuna Reddy) This Writ Appeal arises out of order dt.11.11.2002, in Writ Petition No.2531 of 2002, whereby the learned Single Judge dismissed the Writ Petition. The appellant was entrusted with execution of a road work. In connection with the said contract, he obtained quarry leases for building stone and road metal. At the time of commencement of the contract, the procedure that was governing payment of seigniorage fee, in respect of the mineral used for execution of the work, was that the contractors should pay the seigniorage fee and obtain permits for transporting of mineral. However, during the course of execution of the work, the procedure was changed. According to the changed procedure, the seigniorage fee will be deducted from the bills of the contractors. It is an admitted fact that the appellant obtained permits upto 18.2.2000 and on account of the changed procedure, seigniorage fee, in respect of the road metal used by the appellant in execution of the work, was deducted from the bills payable to the appellant. Thereafter, the dispute arose with respect to a quanity of 11,500 cub. mts. of road metal. A notice was given by the Assistant Director of Mines and Geology, Anantapur District, respondent No.4 herein, on 24.2.2001 in this regard. The same was followed by another notice dt.10.5.2001, wherein the appellant was called upon to produce documentary evidence for the above mentioned quantity of road metal showing that the said quantity suffered seigniorage fee. In reply to the said notice, the appellant sent its letter dt.23.7.2001, wherein it was inter alia stated that the seigniorage fee for the road metal and gravel used in the said work was recovered in the appellant’s running bills from time to time in terms of G.O.Ms.No.23 dt.15.3.1999 and G.O. Ms.No.331, dt.21.6.2000 by the Executive Engineer, Roads & Buildings, Nandyal. The appellant also enclosed seigniorage fee statement. With regard to the quantity of 11,500 cub. mts., with reference to which the notices referred to above were issued, the appellant specifically stated as under: “Regarding the stock of 11500 cum of road metal is kept ready for further maintenance i.e., upto defect liability period completion” In conclusion, the appellant requested in the said letter that the penalty of Rs.22,77,000/- may be waived. Not being satisfied with the appellant’s explanation, respondent No.4 issued proceedings dt.27.12.2001, wherein the appellant was called upon to pay the seigniorage fee of Rs.3,790,500/- along with five times penalty totalling Rs.22,77,000/-. Feeling aggrieved by the said proceedings, the appellant filed Writ Petition No.2531 of 2002, which, as stated above, was dismissed by the learned Single Judge. At the hearing, Smt. N. Sobha, learned Counsel for the appellant, submitted that the learned Single Judge committed an error in dismissing the Writ Petition on the ground that the appellant failed to produce documentary proof, as envisaged in Rule 26(3) of the Andhra Pradesh Minor Mineral Concession Rules, 1966 (for short, “the Rules”). The learned Counsel submitted that the learned Single Judge failed to consider the changed procedure, according to which, the seigniorage charges are deducted from the contractors’ bills and therefore the appellant could not comply with the said Rule. Opposing the contentions of the learned Counsel for the appellant, Sri Sivaraj Srinivas, learned Government Pleader for Mines and Geology, submitted that even if Rule 26 of the Rules is not complied with in its letter, it is incumbent on the appellant to produce necessary proof to the effect that the above-mentioned quantity of 11,500 cub. mts. was in fact used in execution of the subject work and suffered seigniorage fee. The learned Government Pleader submitted that though sufficient opportunity was given to the appellant to show proof of payment of seigniorage fee, the appellant failed to submit any such proof and therefore respondent No.4 was justified in directing recovery of the value of the road metal along with the penalty as prescribed under the Rules, which were in force at the relevant time. We have carefully considered the submissions of the learned Counsel for the parties and perused the record. In the reply submitted by the appellant on 23.7.2001, which was adverted to hereinabove, it is the specific case of the appellant that the stock of 11,500 cub. mts., of road metal was kept ready for further maintenance during the defect liability period. Had it been the case of the appellant that the said stock was already utilized by that time in execution of the work, nothing would have prevented it from saying so in the said letter. Far from taking such a stand, it was the specific case of the appellant that the said road metal was still available for being used in further maintenance work during the defect liability period. However, contrary to the said stand, the appellant has taken the plea in the Writ Petition and also in the present appeal that by the time the said letter dt.23.7.2001 was written, the road metal was already used in the work and suffered levy of seigniorage fee by way of deduction from the bills. Though the learned Counsel for the appellant has placed on record the certificate stated to have been issued by the Executive Engineer, Roads and Buildings, Nandyal, along with his letter dt.14.8.2002, wherein a sum of Rs.30,50,038/- was stated to have been deducted towards seigniorage fees from out of the running bills paid to the appellant, nothing is shown from the said certificate and the statement annexed thereto that the quantity of 11,500 cub. mts. of road metal, which is the subject matter of dispute, suffered such levy. Even if the appellant’s plea that Rule 26 of the Rules could not have been complied with in its letter, in view of the changed procedure, leading to deduction of seigniorage fee from the bills of the contractors, is accepted, the appellant could not file any proof to show that the above mentioned quantity was actually used in execution of the work and suffered levy of seigniorage fee by way of deduction from the bills. Therefore, we are of the view that levy of seigniorage fee in respect of the above mentioned quantity does not suffer from any illegality. Coming to the aspect of penalty, as per the rule in force at the relevant time, the contractor was liable to pay penalty upto five times the normal seigniorage fee. The learned Counsel for the petitioner pleaded that imposition of the maximum penalty, on the facts of the present case, is iniquitous. We find merit in this contention. Under the Rule, imposition of five times penalty is the maximum that can be resorted to by the respondents. It is not the case of the respondents that the appellant has diverted the road metal on some other work. The only ground on which the demand has been made towards seigniorage fee and penalty levied is that the appellant failed to account for the road metal, which was found at the Hot Mix Plant site. Therefore, in our considered opinion, imposition of the maximum penalty of five times is too harsh, in the absence of any allegation that the appellant has sought to misuse the metal, which was meant to be used in the subject work. There is another reason for us to interfere with the quantum of penalty. As per G.O. Ms. No.104, dt.15.5.2009, the Government had itself, realizing that imposition of five times penalty is too harsh, reduced the quantity to one time. Therefore, in our opinion, interest of justice would be met, if the quantum of penalty is reduced to one time the normal seigniorage fee. Accordingly, we partly allow the Writ Appeal by reducing the penalty to one time the normal seigniorage fee. The order under appeal is accordingly set aside. The respondents are permitted to recover the normal seigniorage fee along with one time penalty from the appellant. As a sequel to disposal of the Writ Appeal, W.A.M.P. No.38 of 2003, filed by the appellant for interim relief, is disposed of as infructuous. ______________ ANIL R. DAVE, CJ ______________________ C.V. NAGARJUNA REDDY, J 08.10.2009 bnr