THE HON’BLE SRI JUSTICE C.V.NAGARJUNA REDDY WRIT PETITION NO.17762 OF 2007 Dated 18th June, 2010 Between: B.Ramesh Reddy and another …Petitioners And The Director of Mines and Geology and two others …Respondents Counsel for the petitioners : Sri M.V.S.Suresh Kumar Counsel for the respondents: AGP for Mines and Geology The Court made the following ORDER: This writ petition is filed for a Mandamus to set aside proceedings No.10354/MDK/AH/07 dated 30.05.2007 issued by respondent No.1. I have heard Sri M.V.S.Suresh Kumar, learned counsel for the petitioners, and learned Assistant Government Pleader for Mines and Geology appearing for the respondents. The petitioners, who claim to be lessees over 15,625.49 square yards of land in Survey No.192/B (old), 192/C (new) situated at Zaheerabad Village and Mandal, Medak District under two registered sale deeds dated 13.08.2001, constructed godowns on the said land and leased out the same to the Andhra Pradesh State Warehousing Corporation under agreement dated 28.08.2001. In the third week of July, 2005, respondent No.2 issued notice to the petitioners wherein he has, inter alia, informed that the petitioners’ godowns were inspected by the Vigilance Department after notice and that the petitioners failed to produce documentary evidence showing payment of seigniorage fee and royalty on the mineral used for construction of godowns. A sum of Rs.4,69,134/- was quantified as seigniorage fee and royalty and a sum of Rs.23,45,670/- was proposed as penalty at five times the normal seigniorage fee. Thus, a total sum of Rs.28,14,804/- was demanded from the petitioners. The petitioners offered their explanation to the said notice. Respondent No.2 raised a demand for the abovementioned sum, by his order dated 04.08.2005, which was challenged by the petitioners in Writ Petition No.18837 of 2005. The said writ petition was disposed of by this Court permitting the petitioners to file an appeal before the appellate authority i.e. respondent No.1. The petitioners thereupon filed W.A.No.1710 of 2005. The Division Bench, by order dated 04.10.2005, allowed the writ appeal, quashed the demand notice and permitted respondent No.2 to serve a fresh notice and pass appropriate orders thereafter. Accordingly, respondent No.3 issued notice dated 09.03.2006 to the petitioners, to which the latter submitted their explanation on 02.04.2006 and additional explanation dated 16.04.2006. After considering the said explanations and the material submitted by the petitioners, respondent No.2 passed order dated 06.12.2006 rejecting the petitioners’ explanation and confirming the demand. The petitioners, aggrieved thereby, filed an appeal under Rule 35 of the Andhra Pradesh Minor Mineral Concession Rules, 1966 (for short “the Rules”) before respondent No.1. The said appeal having been dismissed, by order dated 30.05.2007 passed by respondent No.1, the petitioners filed the present writ petition. This Court, by order dated 23.07.2007, while admitting the writ petition, granted interim suspension of the impugned demand. Counter-affidavit along with vacate stay petition has been filed by the respondents. At the hearing, Sri M.V.S.Suresh Kumar, learned counsel for the petitioners, contended that the appellate authority-respondent No.1 has not properly considered the petitioners’ appeal on merits. He submitted that the petitioners are neither professional contractors nor dealers dealing in supply of mineral and that therefore, they are not liable for payment of seigniorage fee or royalty. In support of his contention, the learned counsel placed reliance on the Full Bench Judgment of this Court in L.Venkateswara Rao and others vs. M/s Singareni Collieries Company Limited[1]. The learned counsel further submitted that even if the petitioners are found liable to pay seigniorage fee, payment of penalty at 5 times the normal seigniorage fee is wholly arbitrary. The learned Assistant Government Pleader for Mines and Geology sought to justify the impugned demand with reference to Rule 26 of the Rules. I have carefully considered the respective submissions of the learned counsel for the parties and perused the record. As regards the first contention of the learned counsel for the petitioners that his clients are not liable for payment of seigniorage fee, this aspect, in my opinion is no longer res integra. Even the Full Bench in its judgment, relied upon by the learned counsel (supra), observed that normally if a user or consumer produces a genuine bill from a lessee of a quarry, who raised minor minerals, or an authorised dealer of minor minerals, in token of purchase of such minor minerals, it shall be considered to be sufficient proof of payment of seigniorage fee due to the Government. From these observations, I am of the opinion that even a consumer who utilised the mineral is liable to show proof of payment of seigniorage fee or royalty as the case may be and in the absence of such proof being shown, the respondents are entitled to recover such seigniorage fee or royalty. Therefore, I do not find merit in the first contention of the learned counsel for the petitioners. As regards the second contention of the learned counsel, under Rule 26(3)(ii) of the Rules, as it stood at the relevant time, if no documentary proof is produced in token of having paid the mineral revenue due to the Government by any person who used or consumed or in possession of any mineral including the processed mineral, he shall be liable to pay penalty at five times the normal seigniorage fee in addition to the normal seigniorage fee leviable under the Rules. At the hearing, it is brought to the notice of the Court that this Rule has been recently amended under G.O.Ms.No.104 dated 15.05.2009, by which the quantum of penalty has been brought down from five times to one time the normal seigniorage fee. Taking into consideration the fact that the petitioners are not regular dealers or contractors dealing in the exploitation of minerals and that the minerals were used for the purpose of construction of godowns for themselves, I am of the opinion that imposition of penalty at five times the normal seigniorage fee is too harsh on the petitioners creating onerous liability on them. Instead, interests of justice would be best served if the quantum of penalty is reduced to one time in tune with the amended Rule though the amended Rule in strict sense has no retrospective operation. The learned counsel for the petitioners has fairly submitted that his clients are agreeable for payment of the reduced penalty. He further submitted that his clients may be given reasonable time for payment of the amounts. Accordingly, the writ petition is partly allowed. The impugned order passed by respondent No.2 and confirmed in appeal by respondent No.1 is partly set aside to the extent of imposing penalty on the petitioners at five times the normal seigniorage fee. The petitioners are directed to pay the normal seigniorage fee and penalty at one time the normal seigniorage fee. They are permitted to pay this amount within a period of four months in two equal instalments commencing from today. If they commit default in making such payment, the respondents shall be free to initiate appropriate action for recovery. C.V.NAGARJUNA REDDY, J Dated 18th June, 2010 vrn [1] 1993 (3) ALT 199 (FB)