*THE HONOURABLE SRI JUSTICE A.GOPAL REDDY and THE HONOURABLE SRI JUSTICE SAMUDRALA GOVINDARAJULU + W.P.Nos.12302/2006,11764/2004, 17056/2006, 17057/2006 and 18160/2006 % 31-12-2009 WP NO.112302/2006 # M/s. Pokarna Limited, represented by its General Manager (Quarrying Operations) Sanjay Daga, Secunderabad. ..Petitioner Vs. $1.The Government of Andhra Pradesh, represented by its Principal Secretary, Municipal Administration & Urban Development Department, Secretariat Buildings, Hyderabad and others. ..Respondents ! Counsel for the petitioner : Mr. Pannala Srinivas ^ Counsel for R-1,R-3 tp R-9 : Mr. A.Satya Prasad, Addl.Advoicate General Counsel for the 2nd respondent: Mr. G. Vishweswar Reddy Counsel for the 10th respondent: Mr. A.Rajaasekhar Reddy, Addl. Solicitor General of India < Gist: >Head Note ? [1] AIR 1964 SC 1284 2. AIR 1970 SC 1436 3. AIR 1990 AP 314 4. (2004) 6 SCC 281 5. (1979) 3 SCC 106 6. (2004) 10 SCC 201 7. (1990) 1 SCC 12 8. 1992(1) ALT 64 9. (2000) 10 SCC 104 10. (1969) 1 WEEKLY LAW REPORTS 746 11. 1996(4) ALT 334 12. (1991) Supp.(1) 430 13. (1980) 1 SCC 416 THE HONOURABLE SRI JUSTICE A.GOPAL REDDY AND THEHONOURABLE SRI JUSTICE SAMUDRALA GOVINDARAJULU W.P.Nos.12302/2006,11764/2004, 17056/2006, 17057/2006 and 18160/2006 Dt. 31-12-2009 W.P.No.12302/2006 M/s. Pokarna Limited, represented by its General Manager (Quarrying Operations) Sanjay Daga, Secunderabad. ..Petitioner V 1. The Government of Andhra Pradesh, represented by its Principal Secretary, Municipal Administration & Urban Development Department, Secretariat Buildings, Hyderabad and others. ..Respondents THE HONOURABLE SRI JUSTICE A.GOPAL REDDY AND THEHONOURABLE SRI JUSTICE SAMUDRALA GOVINDARAJULU W.P.Nos.12302/2006,11764/2004, 17056/2006, 17057/2006 and 18160/2006 COMMON ORDER (per the Honourable Sri Justice A.Gopal Redy) In this batch of writ petitions, the legislative competence of the State Legislature in enacting Section 2(e) of the Andhra Pradesh Urban Areas (Development) Act, 1975 (for short “the Urban Area Development Act”) including mining operations within the expression of “development” is challenged as ultra vires, unconstitutional and beyond the competence of the State Legislature. The relevant facts, shorn of details, necessary for disposal of all these writ petitions are as under: M/s. Pokarna Ltd., Secunderabad--Petitioner in WP No.12302/2006 was granted a quarry lease for a minor mineral, colour granite, over an extent of Ac.4-90 cents in S.No.960 of Madikonda village, Hanumakonda Mandal, Warangal District vide proceedings No.14812/K5/95 dt. 26-8-1996 of the fourth respondent- Director of Mines & Geology, Hyderabad for a period of 15 years on petitioner executing a lease deed before the sixth respondent-Assistant Director of Mines & Geology, Warangal in Form-G. The Assistant Director issued work order proceedings No.2639/Q/96 dt.4-9-1996 limiting the lease period from 4-9-1996 to 20-4-2010 as the pattadar’s consent was up to 20-4-2010. While so, the second respondent- Kakatiya Urban Development Authority, represented by its Vice- Chairman, Warangal (for short “KUDA”) published an advertisement calling upon the lease-holders of minor-mineral to seek no objection certificate from KUDA on payment of usual charges. On issuing such advertisement, the petitioner and other companies by way of application dt. 23-2-1998 requested the Government of Andhra Pradesh to exclude its quarry lease area along with other surrounding quarry lease areas from development area under Section 13 (2) (a) of the Urban Area Development Act and to declare the same as “mining zone”. On the said representation, the first respondent by its letter dt.10-9-2001 indicated certain guidelines. Thereafter, KUDA issued proceedings No.C1/505/2003 dt. 16-6-2003 permitting six quarry lease owners to continue mining operations declaring the said quarry lease as “temporary mining area” subject to certain conditions. KUDA by notice dt. 10-11-2003 directed the petitioner to pay a sum of Rs.9,62,765/- towards application fee as per resolution passed by it and development charges for change of land use. The petitioner while registering its protest deposited Rs.3,08,365/- on 28-11-2003 with a request to issue permission without insisting any further charges. KUDA by its letter dt. 30-1-2006 called upon the petitioner to pay the balance amount of Rs.6,54,400/-. The petitioner paid Rs.3,54,400/- on 11-5-2006 by way of pay order No.010701 dt. 10-5- 2006. For not paying the balance of development charges as demanded through notice dt. 10-1-2003, KUDA by proceedings No.C1/505/03 dt. 27-5-2006 cancelled NOC/temporary permission issued by proceedings dt. 16-6-2003. Questioning the demand notice dt. 10-11-2003 for payment of application fee and development charges to a tune of Rs.9,62,765/- and cancellation of No objection Certificate by KUDA vide its proceedings No.C1/505/03 dt. 27-5-2006, the above writ petition came to be filed. M/s. Imperial Granites Private Limited, Siddartha Nagar, Kajipet, Warangal—Petitioner in WP No.11764/2004 was granted quarry lease in respect of colour granite, a minor mineral, in S.Nos.907, 908, 909/AB, 1001 and 1002/1 of Madikonda village, Hanumakonda Mandal, Warangal District by the Director of Mines & Geology, Hyderabad. The Assistant Director of Mines & Geology, Warangal by proceedings dt. 19-10-1993 accorded sanction to continue quarrying operations over an extent of Ac.9-00 cents in S.No.1002/1 of Madikonda village for a period of 15 years with effect from 8-7-1992 to 7-7-2007. Further, the Assistant Director of Mines and Geology, Warangal, by proceedings dt. 11-10- 1994 accorded sanction to work over an extent of 6.350 hectares in S.No.907, 908, 1001/A and 1001/B of patta land and S.No.1002/1 of Government Land of Madikonda Village for a period of 15 years from 11-10-1994 to 10-10-2009. Further, the Deputy Director of Mines and Geology, Warangal by proceedings dt. 30-12-1993 accorded sanction to the petitioner to work over an extent of 1.980 hectares in S.No.909/B of Madikonda village for a period of 15 years from 7-4- 1994 to 6-4-2009. KUDA issued a notice in RC No.C1/505/2003 dt.31- 10-2003 calling upon the petitioner to pay an amount of Rs.58,05,480/- in favour of Vice-Chairman, KUDA, Warangal through DD drawn from any nationalized bank within 15 days from the date of receipt of the notice, failing which, necessary action will be initiated against the said quarry operations made in the site as per the provisions of the Urban Area Development Act. Questioning the said notice, the above writ petition came to be filed. M/s. G.B.R. Minerals Private Ltd., Chennai—Petitioner in W.P.No.17056/2006 was granted a quarry lease on 17-2-2005 for colour granite, a minor mineral, in S.No.947 of Uppugallu village, Zafargadh Mandal, Warangal District over an extent of 2.25 hectares vide proceedings No.5057/R2-2/2004 dt. 17-2-2005 of the Director of Mines and Geology, Hyderabad. The petitioner was served with a notice in RC No.C-2/1265/97/998 dt. 20-7-2006 of KUDA stating that the petitioner is continuing the mining operations without prior permission as required under Sections 13 and 14 of the Urban Area Development Act and the petitioner was called upon to submit an application along with a fee of Rs.2,67,000/- within seven days from the date of receipt of the notice. Questioning the same, the above writ petition came to be filed. M/s. Imperial Granites Private Limited, Siddarthanagar, Kazipet-Petitioner in WP No.17057/2006 was granted quarry lease on 30-3-2001 for colour granite over an extent of 18.26 acres in S.No.111 of Kothapally village, Hanumakonda Mandal, Warangal District by proceedings No.22634/R7-1/2001 dt. 30-3-2001 issued by the Director of Mines and Geology, Hyderabad. The petitioner was served with a notice in RC No.C-2/1265/97 dt. 20-7-2006 stating that the petitioner is continuing the quarrying operations without permission as required as per the provisions of the Urban Area Development Act and the petitioner was called upon to submit an application along with a fee of Rs.6,93,000/-. Questioning the same, the above writ petition came to be filed. M/s. Mettu Rama Swamy Labour Contact Co-operative Society Ltd., Madikonda village, Hanumkonda Mandal, Warangal District—Petitioner in WP No.18160/2006 obtained licence for extracting colour granite over an extent of 1.23 hectares in S.No.905 and 1002/1 of Madikonda Village, Hanamkonda Mandal, Warangal District by proceedings No.2458/02 dt. 18-2-2002 issued by the Assistant Director of Mines and Geology, Warangal or a period of two years from 18-2-2002 to 17-2-2004. As the petitioner could not carry on any activity, the Assistant Director of Mines and Geology, Warangal vide proceedings No.593/Q/04 dt. 6-10-2005 granted mining lease for a period of 20 years valid till 5-10-2025 over an extent of 1.23 hectares in S.No.905 and 1002/1. The petitioner was served with a notice by KUDA on 5-12-2005, wherein the petitioner was called upon to pay a sum of Rs.5,97,550/- towards processing fee and development charges for issuing no objection certificate for quarry lease, followed by final notice dt. 30-1-2006. The petitioner made a representation to the second and third respondents, namely, Government of Andhra Pradesh, represented by its Secretary, Mines and Geology, Hyderabad and KUDA stating that the petitioner is not in a position to pay the said amount. Whereupon, KUDA by proceedings No.C1/505/03 dt.27-5-2006 cancelled NOC/temporary permission. Questioning the same, the above writ petition came to be filed. In all the writ petitions except WP No.12302/2006, this court stayed the proceedings on condition of the petitioner depositing 50% of the demanded amount/balance of the demanded amount. The plea taken by the petitioners in all the writ petitions is that Arts.245 and 246 of the Constitution of India deal with the powers of Parliament and Legislature of the State to deal with respective matters contained in List I, II and III of the Seventh Schedule to the Constitution. The Parliament by virtue of powers conferred under Entry 54 of List I enacted Mines and Minerals (Development & Regulation) Act, 1957 (for short “MMRD Act”). Under Section 15 of the MMRD Act, the State Governments are empowered to make rules in respect of a minor mineral. By virtue of Sec.15 of the MMRD Act, the Government of Andhra Pradesh framed the A.P. Minor Mineral Concession Rules, 1966 (for short “the Minor Mineral Concession Rules”). Pursuant to which, the petitioners were granted mining leases subject to payment of royalty, dead rent and other charges as laid down under the Minor Mineral Concessions Rules. There is no room left for the State Legislature to legislate under Entry 23 of List II levying development charges for mining operations within the urban area development. Therefore, Sec.2 (e) of the Urban Area Development Act authorizing the KUDA to levy development fee under Section 27 of the Urban Area Development Act in respect of the areas where mining operations are carried on is arbitrary, illegal and beyond the competence of the State Legislature and ultra vires to the MMRD Act and the same is liable to be quashed. Opposing the writ petitions, in WP No.11764/2004 the Joint Director (Town Planning) Municipal Administration and Urban Development Department, Government of A.P., Hyderabad on behalf of the first respondent filed a counter-affidavit stating that KUDA issued no objection permitting M/s. Coromandal Agencies to utilize the land in S.No.1002/1 of Madikonda village for quarrying the stone for the remaining lease period subject to certain conditions through proceedings No.C3/699/85/1336 dt. 3-8-1986. Earlier M/s. Coromandal Agencies have operated the quarry under the permission of KUDA over an extent of 9 acres, but the petitioner in WP No.11764/2004 after acquiring additional land to an extent of 21 acres in S.Nos.907, 908, 1001/A and B and 1002 of Madikonda village filed the writ petition by inventing false grounds. In fact, the Assistant Director of Mines and Geology has to permit the lease holder to quarry after prior no objection certificate from the Competent Authority ie., KUDA, which is competent to issue no objection certificate according to land use and zoning regulations of Notified Master Plan sanctioned vide G.O.Msd.No.910, Municipal Administration, dt. 25-11-1971 and G.OP.Ms.No.364, Municipal Administration, dt. 4-6-1977 read with Sections 13 and 14 of the Urban Area Development Act, where the quarry is falling within the jurisdiction of “Development Area” as declared by the Government in G.O.Ms.No.1177, Municipal Administration, dt. 6-11-1981. The Government of Andhra Pradesh has declared the Warangal city and its vicinity area covering 171 villages as “Development Area” for orderly development of Warangal city and its surrounding areas including Manikonda village where the subject land is located. In exercise of powers conferred under the Urban Area Development Act, KUDA issued a notice to the petitioner in WP No.11764/2004 to obtain No Objection Certificate duly paying the requisite charges as the activity being carried on by the petitioner shall be ultimately put the burden on City infrastructure facilities and arise demand for providing additional roads, transport, water supply, housing drainage etc., and impact on the environment. Since the second respondent being the statutory authority to look after the development according to the plan and secure control over the activity has to mobilize resources by collecting development charges on any development under Sec.27 of the Urban Area Development Act. On the request of the leaseholders-writ petitioners, KUDA declared Manikonda area covering an extent of 20.509 hectares as temporary mining area vide proceedings ROC No.C1/505/3 dt. 16-6-2003 to conduct mining operations. The petitioners who got approval of declaration of mining zone from the second respondent under the provisions of the Urban Area Development Act cannot question the action of the KUDA in asking the petitioners to pay the development charges. KUDA filed a separate counter contending that the Assistant Director of Mines and Geology is required to obtain NOC from KUDA as it is the competent authority to issue no objection certificate according to land use and zoning regulations as notified in the sanctioned master plan vide G.O.Ms.No.910, Municipal Administration dt.25-11-1971 and G.O.Ms.No.364, Municipal Administration dt. 4-6- 1977 and as per Sections 13 and 14 of the Urban Area Development Act. The Government of Andhra Pradesh declared the Warangal city as “development area” and its vicinity area covering 171 villages for orderly development. The petitioner in WP No.11764/2004 filed WP No.3613/98, and it is pending. The petitioners were served with notices as per the provisions of the Urban Area Development Act as they are required to obtain NOC duly paying the requisite charges for development and extraction of rock in the large scale by deploying heavy machinery which activity will ultimately put the burden on the city infrastructure facilities and arise the demand for providing additional infrastructure, roads, transport, water supply housing drainage etc., and the activity of quarrying by the petitioners will have impact on the environment. KUDA being the statutory authority to look after the development as per the plan and secure control over the activities of the petitioners and as per the provisions of the Urban Area Development Act issued notice to the leaseholders and five other companies under the provisions of the Urban Area Development Act as the area was declared as “temporary mining area” to conduct quarry operations subject to conditions envisaged under Sections 13 and 14 of the Urban Area Development Act. Basing on the request made by M/s. Astral Granites; M/s. Imperial Granites; M/s. Pokarva Granites; M/s. Reliance Granites; M/s. Vaddera Stone Workers Union and M/s. Mettu Rama Swamy Workers Co-operative Society, the Assistant Director of Mines and Geology granted permission to the above leaseholders to carry on quarry operations. They approached KUDA with a request to declare the quarry operations area as mining zone enabling them to carry on mining activity by declaring/converting the sanctioned master plan area from residential to quarrying zone. Considering the request made by the petitioners and others, KUDA declared the quarrying area into a mining zone subject to payment of conversion and development charges in the month of Julu,2003. After declaring the quarry operation area as mining zone, some of the quarrying companies paid development charges and some have not paid. KUDA issued no objection certificate to M/s. Coromandal Agencies to the extent of lease period. The petitioner shall obtain NOC renewed as per the sanction accorded earlier by it through the proceedings No.C3/699/85/1336 dt. 3-8-1986. The development charges will be levied according to the land which is taken up for development are two purposes/use ie., main and appurtenant land and ancillary activities such as parking of vehicles, dumping yards, free planting, storages etc.,, which is mandatory to the petitioner to provide all the facilities on the site. The petitioner in WP No.11764/2004 filed a reply-affidavit stating that M/s. Coromandal Agencies has already paid development charges in respect of S.No.1002/1 in respect of Ac.9-00 cents of Madikonda village, collecting once again the development charges on the same land does not arise on the basis that there is a change in the lease. The development charges, if any, could be levied on hectare basis and not square meter basis as per Sec.28 (2) (a) of the Urban Area Development Act. Sri Pannala Srinivas, learned counsel for the petitioner in WP No.12302/2006 contended that Sec.2 of the MMRD Act has not left any area to State Legislature to deal with mining area and levy of any charges for such mining operations. Under Section 15 of the MMRD Act, power is conferred on the State Governments for framing rules, and once in exercise of the said power, the State Government framed Minor Mineral Concession rules, 1996 levying charges under Rules 9 and 12 and further levying development charges by KUDA is without authority and development authority should be prohibited from levying such charges. Pursuant to the demand notice dt. 10-11- 2003, the petitioner deposited a sum of Rs.3,08,365 on 6-12-2003 and further deposited a sum of Rs.3,54,400/- on 11-5-2006 without prejudice to their rights that they are not liable to pay the development charges as demanded. Sri M. V. Suresh Kumar, learned counsel for the petitioners in the remaining writ petitions contended that the impugned notice dt. 31- 10-2003 (in W.P.No.11764/2004) issued by KUDA demanding payment of development charges including process fee for issue of NOC is without any power or authority. Assuming Sec. 2(e) of the Urban Area Act is valid, notice dt. 31-10-2003 is not valid because without prior notice KUDA cannot demand the amount mentioned in the notice. Though the lease was granted in the year 1993, levying development charges by taking the value of the land in the year 2003 is arbitrary and illegal. Under Sec.28 of the Urban Area Development Act, development charges shall be determined on the proposed use of land at the rate prescribed per hectare for that area, whereas demand made by KUDA shows that it was determined on square metre basis, which is per se illegal. Since the petitioner in WP No.11764/2004 obtained mining lease over an extent of 6.350 hectares in S.No.907, 908, 1001/A and 1001/B of patta land and S.No.1002/1 of Government Land in Madikonda village, no development charges shall be levied on the land vested in or under the control or possession of the Central or the State Government or of any local locality as per sub-section(4) of Section 27 of the Urban Area Development Act. Though notice dt. 17-5-1984 development charges were already levied and M/s. Coromandal Agencies, Madras was called upon to pay the same and same has been paid by it, and the lease was transferred in the name of the petitioner, therefore, again subjecting the petitioner to pay the development charge, if any, is only for area covered by mining operations but not the entire land leased out. He further contended that calling upon the petitioners in WP Nos.17056/2006 and 17057/2006 to submit applications along with process fee for operating quarry operations does not arise as the Government has not agreed to notify it as mining zone. He further contended that in the impugned proceedings dt. 27-5-2006 issued to the petitioner in W.P.No.18160/2006, a reference is made to the proceedings dt. 16-6-2003 and the same has not been communicated to the petitioner at any time and in spite of the specific plea taken by the petitioners that it was not served on the petitioner, the same has not been denied by the respondents in their counter also, therefore, issuance of the proceedings dt. 27-5-2006 is violation of principles of natural justice and the same is liable to be set-aside. In support of the contentions advanced by both the counsel, strong reliance was placed on the following judgments: 1. STATE OF ORISSA V. M.A. TULLOCH & CO.[1] 2. BAIJNATH V. STATE OF BIHAR[2] Sri M.V. Suresh Kumar further relied on the judgment of this court in K.C.P. LTD., V. GOVERNMENT OF A.P.[3] Per contra, Sri A.Satya Prasad, learned Additional Advocate General contended that the Urban Area Development Act and MMRD Act operate in different fields. Sections 2(e), 5, 16, 27 and 29 of the Urban Area Development Act for levying development charges are nothing to do with exploiting mines. Section 2 of the MMRD Act deals with regulation of mines and the development of minerals to the extent provided under the Act. Section 3 ( c ) of the MMRD Act defines “mining lease”, to mean a lease granted for the purpose of undertaking mining operations, and includes a sub-lease granted for such purpose, whereas “mining operations” under Section 3 (d) means any operation undertaken for the purpose of winning any mineral. Section 4 of the MMRD Act restricts on undertaking prospecting and mining operations except under and in accordance with the terms and conditions of the licence. Under Section 9 of MMRD Act, the holder of a mining lease under an obligation to pay royalty in respect of any mineral removed or consumed by him particularly from the leased area. Quality of mineral is the basis fro collecting royalty as held by the Supreme Court in NATIONAL MINERAL DEVELOPMENT CORPORATION LTD V. STATE OF M.P[4]. There is no encroachment in the field occupied by the Central legislation by levying development charges for the land use. For the said proposition, he placed reliance on the following judgments: 1. SHRI TARKESHWAR SIO THAKUR JIU V. DAR DASS DEY AND CO[5] 2. STATE OF W.B. V. KESORAM INDUSTRIES LTD[6] 3. INDIA CEMENTS LTD V. STATE OF T.N[7] He further placed reliance on the following judgments of this court and the Apex Court. 1. CASKEN TEA INDUSTRIES LIMIED V. HYDERABAD URBAN DEVELOPMENT AUTHORITY[8] 2. BANDHUA MUKTI MORCHA V. UNION OF INDIA[9] 3. COLESHILL INVESTMENT V. MIN.OF HOUSING (H.L.(E.))[10] He further contended that “development” as defined under Sec. 2(e) of the Urban Area Development Act is derived from the European statutes, is uniform in all the State Governments under the Urban Area Development Act, and the provisions were upheld by the Supreme Court, therefore, challenge to the constitutional validity must fail. In reply, it was contended by Sri Pannala Srinivas that there is no need to obtain NOC from the local authority ie., KUDA for levying development charges as per Granite Conservation and Development Ruels,1999, framed in exercise of powers conferred under Section 18 of the MMRD Act and it was considered by this court i n MAHABALESWARAPPA AND SONS, BELLARY V. COMMISSIONER OF LAND REVENUE, GOVERNMENT OF A.P. HYDERABAD[11], which exclusively deals with levy of charges, therefore, KUDA cannot levy development charges. Whereas Sri M.V. Suresh Kumar contended that KUDA has to justify imposition of development charges on the basis of quid pro, namely, rendering any service for mining operations. Once there is no necessity to comply with the provisions of the Urban Area Development Act, levying development charges is not at all warranted and if reasonable charges are demanded on hectare basis, the petitioners are agreeable to pay the same and levying development charges on square metre basis is highly arbitrary and illegal. Since no specific orders are required for change of land use in the case of quarry operations, levying development charges cannot be justified, therefore payment of process fee does not arise in the case of the petitioners in WP Nos.17056 and 17057 of 2006 as the Government has not agreed to change the land use. In the wake of submissions, we shall now consider the submissions in the light of relevant statutory provisions under the Urban Area Development Act, which govern the issue involved in all these writ petitions. “2(e) 'development' with its grammatical variations means the carrying out of all or any of the works contemplated in a master plan or zonal development plan referred to in this Act, and the carrying out of building, engineering, mining or other operations in, on, over or under land, or the making of any material change in any building or land and includes re-development: Provided that for the purposes of this Act,