THE HON'BLE SRI JUSTICE K.C. BHANU WRIT PETITION No.9968 of 2011 ORDER: This writ petition is ﬁled seeking a writ of mandamus declaring the action of the third respondent in issuing Memo No.CE(P)/MBNR/MGKLIS/Gen/2035, dated 20.01.2011, as illegal, arbitrary and violative of the provisions of the Mines and Minerals (Development & Regulation) Act, 1957 and the Rules made thereunder, apart from being contrary to G.O.Ms.No.23, Irrigation & Command Area Development (PW:COD) Department, dated 05.03.1999 and also the terms and conditions of the Contractual Agreement dated 20.03.2005 entered into by the petitioner ﬁrm with the respondents and consequently direct the respondents to refund/adjust an amount of Rs.5,50,000/- deducted/withheld in R.A.Bill No.59 towards cost of the rock spoils, which are extracted and kept aside in the process of implementation of the public work and not used in the work. 2. The brief facts that are necessary for disposal of the writ petition may be stated as follows: The petitioner is a joint venture of three companies incorporated under the Companies Act, 1956 and involved in the business of taking up and execution of civil contracts. In pursuance of its commercials goals, the petitioner ﬁrm was awarded the contract MGKLIS by the oﬃce of the Superintendent Engineer, Mahabubnagar. Accordingly, the petitioner ﬁrm entered into an elaborate written contractual agreement dated 20.03.2005 for Rs.201.40 Crores with the oﬃcial respondents. As per G.O.Ms.No.23, Irrigation & Command Area Development (PO:CWD) Department, dated 05.03.1999, the oﬃcial respondents are legally entitled to deduct/collect seigniorage fee charges from the bills of the Contractors with regard to the minerals used in the work from time to time. While so, the third respondent vide the impugned Memo dated 20.01.2011 has instructed the fourth respondent to initiate action for recovery of the cost of rock spoil immediately as per the agreement conditions/norms. Pursuant to the said memo, the petitioner ﬁrm represented to the ﬁfth respondent on 15.02.2011 informing that there is no masonry and revetment items in the work to utilise the rock spoil; that the rock spoil available is in big size boulders and not useful in shape and it is spread through out the canal length for 80 KMs and therefore, they have taken a Stone Quarry from Mines and Geology Department on lease basis and erected the Crusher for preparation of the metal. It is further stated that they have not utilised any rock spoil in the work. The grievance of the petitioner is that the ﬁfth respondent addressed letter dated 15.02.2011 to the fourth respondent informing the true facts submitted by the petitioner. In spite of the same, the respondents have deducted/withheld an amount of Rs.5,50,000/- towards cost of excavated rock spoil of 10,000 Cu.M @ Rs.55/- per Cu.M in R.A.Bill No.59. Hence, this writ petition. 3. The fourth respondent ﬁled a detailed counter- aﬃdavit denying the petition averments and stating that the petitioner was awarded the work “Investigation, Design, Estimation and Construction of a) earth work excavation, forming embankment, construction of CM & CD works, b) Achampet Branch canal from Gudipallygattu Balancing Reservoir, c) Distributory Network System along with ﬁeld channels for irrigating an ayacut of 90,000 acres including construction of regulators and surplus arrangements for Kalwakurthy Lift Irrigation Scheme under Package 30 in Mahabubnagar District vide agreement dated 20.03.2005; that G.O.Ms.No.23, dated 05.03.1999 speaks about recovery of seigniorage charges from the contractor’s bills for the materials used in the work only; that the third respondent vide Memo dated 20.01.2011 has instructed his subordinates to initiate necessary action for recovery of the cost of the rock spoil (stone excavated from the canal) as per the agreement conditions and that even though the petitioner through their representation dated 08.09.2010 stated that there is no masonry and revetment items in the work to utilise the rock spoil in the work and that the rock spoil available is in big size boulders and not useful in shape and it is spread through out the canal length for 80 KMs and therefore, they have taken a Stone Quarry from Mines and Geology Department on lease basis and erected the Crusher for preparation of the metal, they failed to show any evidence that they had used the material only from the leased quarry. Therefore, there is nothing wrong in deducting Rs.5,50,000/- towards the cost of rock spoil in Running Account Bill No.59 of the petitioner. It is further stated that the recovery of seigniorage charges is based on the theoretical calculations done as per Clause 104 of other General Conditions of Contract Agreement and the same is recoverable irrespective of the petitioner using the rock spoil or not from its own quarry or the rock spoil excavated from the canal of the respondents, whereas deduction of amount @ Rs.55/- per Cu.M is towards the cost of the rock spoil used by the petitioner as per Clause 25 of Bill of Quantities of Part – A of Volume I of EPC contractual agreement for using the rock spoil of the respondents and that the petitioner failed to provide any evidence that they have used rock only from the leased quarry. 4. Learned counsel for the petitioner contended that the respondents without there being any justiﬁcation withheld/deducted an amount of Rs.5,50,000/- in R.A.Bill No.59 towards the cost of excavated rock spoil and therefore, he prays to direct the respondents to refund the said amount to the petitioner. 5. On the other hand, the learned Assistant Government Pleader for Irrigation & Command Area Development, on instructions of the Executive Engineer, MGKLIS Divn.2, Nagarkurnool, stated that the Contractor has not utilised the rock spoil as per the records available in the office. 6. It is not in dispute before this Court that an amount of Rs.5,50,000/- was withheld/deducted in R.A. Bill No.59 of the petitioner towards the cost of rock spoils, which are extracted. The parties are bound by the contractual agreement dated 20.03.2005 entered into by the petitioner ﬁrm with the respondents. Admittedly, the contractor has not so far utilised the rock spoil as per the records available in the oﬃce of the ﬁfth respondent. As per Clause 25 Part A Volume I of Agreement, the Contractor is permitted to use rock spoil for construction purpose. In case, the rock spoil is used, the amount can be withheld by deducting from the bill. But, the contention of the Government that recovery has been proposed irrespective of using the rock spoil or not by the contractor for the construction purpose, cannot be accepted since the same is contrary to the terms and conditions of the Contractual Agreement. Admittedly, the petitioner has not utilised the rock spoil, and therefore, the question of deducting/withholding the amount towards utilisation of rock spoil does not arise. 7. Hence, the writ petition is allowed directing the respondents to refund the amount of Rs.5,50,000/- deducted/withheld in R.A.Bill No.59 to the petitioner. However, this order will not preclude the respondents from withholding the amount towards cost of rock spoil, in future, in terms of the Contractual Agreement, if the petitioner utilises the rock spoil in the project. There shall be no order as to costs. K.C. BHANU, J Date: 02.12.2011 Note: Issue CC in one week. B/o. va