SCA/787/1992 1/37 JUDGMENT IN THE HIGH COURT OF GUJARAT AT AHMEDABAD SPECIAL CIVIL APPLICATION No. 787 of 1992 With CIVIL APPLICATION No. 14233 of 2006 In SPECIAL CIVIL APPLICATION No. 787 of 1992 For Approval and Signature: HONOURABLE MR.JUSTICE R.S.GARG ========================================================= 1 Whether Reporters of Local Papers may be allowed to see the judgment ? 2 To be referred to the Reporter or not ? 3 Whether their Lordships wish to see the fair copy of the judgment ? 4 Whether this case involves a substantial question of law as to the interpretation of the constitution of India, 1950 or any order made thereunder ? 5 Whether it is to be circulated to the civil judge ? ========================================================= NATIONAL BUILDERS - Petitioner(s) Versus STATE OF GUJARAT & 3 - Respondent(s) ========================================================= Appearance : MR SB VAKIL, Sr.Advocate with MR AS VAKIL for Petitioner MR LR PUJARI, AGP for Respondent(s) : 1, 4, NANAVATI ASSOCIATES for Respondent(s) : 2, MR PR NANAVATI for Respondent(s) : 3, ========================================================= CORAM : HONOURABLE MR.JUSTICE R.S.GARG Date : 15/01/2007 COMMON ORAL JUDGMENT SCA/787/1992 2/37 JUDGMENT 1. Present writ application has been filed by National Builders, a partnership firm, which is carrying on business of construction etc. The petition originally filed as on 20.11.91 prayed for the following reliefs:- “[A] to command the Government of Gujarat to refund to the petitioners the amount of Rs.62,98,231/- recovered from the petitioners as royalty on minor minerals excavated and removed by the the petitioners from the land bearing survey nos. 4 and 5 of village Nani Khavadi District Jamnagar with interest at 21% per annum from the respective dates of recoveries of the amounts till payment. [B] to restrain pending the hearing and final disposal of this petition the Government of Gujarat, its officers and servants including the 4th respondent from demanding or recovering from the petitioners any amount of royalty on any minor mineral excavated and removed by the petitioners from the lands bearing survey nos. 4 and 5 of village Nani Khavadi, District Jamnagar or any amount of interest or any delayed payment on the royalty amount of Rs. 62,98,231/- or any part thereof or any other SCA/787/1992 3/37 JUDGMENT amount of royalty in respect of the said minor minerals.” 2. From the prayers made in the original petition, it would clearly appear that the petitioner was seeking refund of Rs.62,98,231/- which was recovered by the State Government as royalty on minor minerals excavated by the petitioner from the land bearing surveys no. 4 and 5 of village Nani Khavadi, District-Jamnagar and to restrain the Government of Gujarat, its officers etc., from demanding or recovering from the petitioner any amount of royalty on any minor mineral. 3. I am required to refer to these prayers, because, during course of the hearing, the petitioner, through its learned counsel had filed an application, proposing certain amendments, whereunder now the petitioner submits that in view of the proposed amendment [Civil Application No. 14233 of 2006], the petitioner be granted reliefs against “the respondents”. 4. Short facts necessary for proper disposal of the matter are that the petitioner, a registered SCA/787/1992 4/37 JUDGMENT firm, carrying on business in partnership as Civil Engineers and Building Contractors, entered into an agreement with the respondent no.2 – Gujarat State Fertilizers Company Ltd., [“GSFC” for short] to construct 3.6 kilometer long approach bund or jetty for the Liquid Cargo Berth at Sikka near Jamnagar. It is to be noted that the respondent no.3 – Gujarat Maritime Board wanted to construct the above said approach bund or jetty and they had issued a contract in favour of the respondent no.2- GSFC, the said GSFC, in its turn, appointed the petitioner as their sub-contractor. On 9.1.86, GSFC wrote a letter to the petitioner firm accepting the offer of the petitioner for executing the work as GSFC's sub-contractor for sum of Rs.5,25,53,200/-. 5. Much before that, GSFC had made a proposal to Mamlatdar, Jamnagar, for allotment of certain land for developing a storage tank for their industrial use. It was to be a captive storage tank. The Mamlatdar, Jamnagar forwarded the proposal to the Collector. The Collector, in his SCA/787/1992 5/37 JUDGMENT turn, vide his letter dated 9.4.86 [Annexure:2] informed the Mamlatdar, that possession of the land well described as surveys no. 4 and 5 of village Nani Khavadi, District-Jamnagar, be handed over to the GSFC. It is to be seen that in compliance of the order dated 9.4.86, possession of the land was given to the GSFC on 15.5.86, but much before the delivery of actual physical possession by the State to the GSFC or by GSFC to the present petitioner, excavation work started in January, 1986. Nobody knows that how such could happen, it really so happened that before possession could be handed over by the State Government to the GSFC, the GSFC exercised its power and authority over the said land and allowed the present petitioner to excavate the material. Not only this, the GSFC, for the reasons best known to it, wrote a letter dated 12.5.86 to the petitioner that they were to take maximum quantity of material from the above-referred land for construction of jetty. I will again record that possession was handed over to the GSFC on 15.5.86. Despite repeated SCA/787/1992 6/37 JUDGMENT questions during course of the arguments to Shri Nanavati, learned counsel for the GSFC that how could the GSFC issue such directions or allow the present petitioner to excavate the land of surveys no. 4 and 5 of village Nani Khavadi, neither additional affidavit was filed nor Shri Nanavati was ready to divulge true facts. However, on 12.5.86, the GSFC informed the present petitioner that maximum use of the excavated material can be made. 6. On 10.4.87, vide Annexure:4, the GSFC issued a letter to the National Builders, the present petitioner, that they were pleased to award the work of digging pond near village Nani Khavadi on the terms as mentioned in the said letter dated 10th April, 1987. Condition No.2, however, provided that quarry fees, octroi duty, royalty or any other duty and/or levies, sales tax and any other taxes which were payable or would become payable at future date shall be borne by the National Builders [the petitioner] and the GSFC would have no obligation whatsoever. It is still a mystery that prior to 10.4.87, how SCA/787/1992 7/37 JUDGMENT could the petitioner-National Builders start excavating the material from the land of surveys no. 4 and 5 of village Nani Khavadi. Neither the petitioner nor the respondent GSFC are ready and willing to unfold the mystery and remove the mist which has covered the entire dispute. 7. On 22.7.87, when the work of digging was in progress, Additional Director, Geology and Mining Department addressed a letter to the Gujarat Maritime Board, informing them that no royalty amount for the minerals used in jetty/bund was received by the State Government. It is to be seen that up to 22.7.87, the petitioner who was excavating and removing minor minerals in the process of digging a pond for construction of the storage tank did not pay any royalty etc. or price of the mineral to the State Government. On 1.9.87, vide Annexure:6, the GSFC wrote a letter to the petitioner suggesting the petitioner to make payment of the royalty etc. On 7.10.87, vide Annexure:7, respondent no.4, i.e. Director, Geology and Mining Department, informed the GSFC that the SCA/787/1992 8/37 JUDGMENT royalty amount due was to the tune of Rs. 56,36,000/-. The petitioner, however, vide Annexure:9, dated 9.11.87 disputed their liability. 8. On 19.11.87, vide Annexure:10, an agreement was made between the GSFC and the present petitioner that GSFC, employer, was desirous that the work of construction of Liquid Cargo Berth at Sikka be carried out on the terms and conditions stipulated in the tender documents issued for the above work and the National Builders/Contractor shall carry out the work. 9. It would be surprising to note that the agreement was entered into on 19th November, 1987 and much before that the petitioner had collected material from the storage tank/pond area for construction of jetty/bund. The Court inquired from the learned counsel for the petitioner so also from the learned counsel for the GSFC that how could the work of jetty/bund be commenced without entering into a formal contract/agreement, appointing the petitioner as sub-contractor or contractor, the learned SCA/787/1992 9/37 JUDGMENT counsel were not ready to reply. At this stage, it would be necessary to note that the agreement entered into between the Gujarat Maritime Board and the GSFC for construction of the jetty/bund was not produced, therefore, the Court asked the Gujarat Maritime Board and the GSFC to produce the said document. However, it has now come on the record that no formal agreement was ever executed or entered into between the Gujarat Maritime Board and the GSFC. 10.The Court also required the petitioner so also the GSFC to file a copy of the agreement which was entered into between the parties to show to the Court that on what terms the contract was given to the petitioner and whether the contract was inclusive of the price of the material to be supplied by the petitioner. Despite repeated adjournments, neither the petitioner filed the said agreement nor the GSFC was ready and willing to come out of its slumber. Reply from both the counsel was that the matter being old, they were tracing the document, but were unable to trace the same. SCA/787/1992 10/37 JUDGMENT However, it was orally agreed that the contract given by the GSFC to the petitioner was inclusive of everything which would mean that the petitioner was to provide the material and cost of such material was to be paid by the GSFC to the petitioner. 11.When the Court asked the learned counsel for the petitioner and the GSFC that if the contract was inclusive of everything, then, why, free material was supplied and under what authority the GSFC could ask the petitioner to remove the material from the excavation site, learned counsel for the petitioner and the GSFC had no answer. 12.I am giving all these details to show that the petitioner and the GSFC had joined hands and were trying to take undue advantage of the situation which I shall discuss in detail in the later part of the judgment. 13. After receipt of letters from the Director, Geology and Mining Department and from the GSFC, the petitioner requested the GSFC that the amount demanded by the State Government be paid SCA/787/1992 11/37 JUDGMENT to the government under protest so that the petitioner, may later on take appropriate steps. After receiving the instructions, the GSFC paid the said amount under Chalan to the State Government. Thereafter, the amount was calculated and some more recoveries were raised, the petitioner accordingly paid the said amount. After making such payments, the petitioner raised detailed dispute before the State Government and thereafter issued a notice/notice for demand under Section 80 for refund of the money which was recovered by the State Government towards the amount of royalty and thereafter has filed the present writ application. 14.The petitioner says and submits that the petitioner being not a lease holder or quarry owner or a prospecting licensee, liability of royalty could not be thrust upon it. Its submission is that if under the instructions of the GSFC, it had removed the excavated material, then liability would be that of the GSFC. It is also the submission of the petitioner that in SCA/787/1992 12/37 JUDGMENT view of Rule-3 of the Gujarat Minor Mineral Rules, 1966 [“Rules of 1966” for short], nothing contained in the Rules shall apply to the extraction of minor minerals by Public Works Department etc. It is also the submission that Rule-21 of the Rules of 1966 provides for rate of royalty and dead rent and the same would not apply to the present case, because, the petitioner is not a quarry owner. It is also submitted that Rule-42 of the Rules of 1966 shall also not authorize the State Government and as such, the petitioner could not be held answerable to any coercive action. It was further submitted that Section-5 of the Mines and Minerals [Development and Regulation] Act, 1957 [“Act of 1957” for short] shall also not apply to the present petitioner, because, the petitioner is not quarry owner, lease owner, nor is having any prospecting license in his favour. It is further submitted that in view of Rules 67, 68, 69 and 70 of the Gujarat Land Revenue Rules, 1972, the petitioner could not be held liable to pay any royalty. SCA/787/1992 13/37 JUDGMENT 15.It was also submitted that the State Government was not entitled to recover any amount under the head of “royalty” nor GSFC could forward the amount to the State Government without registering protest for and on behalf of the petitioner. 16. It is to be noted that as no relief was claimed against the GSFC and the Gujarat Maritime Board, they did not prefer to file any counter affidavit. The State Government had filed its detailed affidavit, but when the Court required the State Government to inform the Court that why royalty only has been recovered from the petitioner and price of the mineral used has not been recovered, affidavit was filed saying that the State Government thought that recovery of the price may lead to delay the process, therefore, the State Government thought it prudent to recover royalty first, interest thereafter and any balance subsequent to it. This Court again required the State Government to give full details of what could be the price and what was the royalty. The Court required the SCA/787/1992 14/37 JUDGMENT State to inform the Court that what is yet to be recovered. 17.The State had filed its third affidavit. 18.During course of the hearing, I have already observed that the petitioner made an application for amendment wherein it made various allegations against the GSFC. The GSFC has now filed counter affidavit and has submitted that all through, they had been asking the petitioner that it could collect the material, but it would be obliged to pay royalty etc. They also submitted that under bona fide belief they thought that the minerals excavated from the storage tank site belonged to it, therefore, they allowed the petitioner to use the said material. It was, however, submitted by them that the material, after excavation was lying scattered, therefore, the petitioner having its own transport machinery, was allowed to transport the material from the excavation site to the construction site. However, their case is that if under the law the petitioner was liable to pay royalty, then, the petitioner SCA/787/1992 15/37 JUDGMENT would be obliged to pay the royalty. 19.In response to the petitioner's submission relating to Rule-67 to Rule-70 of the Gujarat Land Revenue Rules, 1972, the State has submitted that the said Rules would not be applicable, because, pond/storage tank for captive use would not be taken to be a well for public use. It is also submitted by them that the land was given to the GSFC for developing storage tank, but the order of allotment did not authorize the GSFC to use or utilize the material or authorize anybody to take material to any other site. 20.Gujarat Maritime Board, after the application for amendment was filed has also filed its affidavit and submitted that they have nothing to do with the dispute. During course of the arguments, Shri S.B.Vakil, learned Senior Advocate informed the Court that though amendment application seeks relief against “the respondents”, the petitioner does not press his writ application against the Gujarat Maritime Board. In view of the said statement made by SCA/787/1992 16/37 JUDGMENT Shri Vakil, the petition against the Gujarat Maritime Board is dismissed. 21.It is not in dispute before me that the material excavated from the storage tank site falls within Section-3[e] of the Mines and Minerals [Development and Regulation] Act, 1957. The said definition provides that “minor minerals” means building stones, gravel, ordinary clay, ordinary sand other than sand used for prescribed purposes, and any other mineral which the Central Government may, by notification in the Official Gazette, declare to be a minor mineral. Undisputedly, in view of the definition, the material excavated would fall within the definition of “minor minerals”. The State Government, in view of Section 15 of the Act of 1957 is entitled to make rules in respect of minor minerals. Section-5 of the Act of 1957 provides for restrictions on the grant of prospecting licenses or mining leases. Section-5 to Section-13, in view of Section-14 of the Act of 1957 shall not apply to quarry leases, mining leases or other mineral SCA/787/1992 17/37 JUDGMENT concessions in respect of minor minerals. The State Government, under Section-15 has framed Gujarat Minor Mineral Rules, 1966, which cover the entire area relating to minor minerals. It is to be seen that Rule-5 of the Rules of 1966 provides that subject to the provisions of rule 3, no person shall quarry, win, remove or carry away any minor mineral, except as provided under the Rules of 1966. Rule-3 of the Rules of 1966 provides that the Gujarat Minor Mineral Rules, 1966 shall not apply in certain cases. The petitioner has placed strong reliance upon Rule— 3 to contend that as the Gujarat Maritime Board is a “State” in view of Article-12 of the Constitution of India, the GSFC being part of the State Government is also State and if the petitioner was to carry out contract work of construction of jetty/bund, then, Rule-3 would protect the petitioner. Rule-3 provides that it shall not apply to extraction of minor minerals by Public Works Department, various departments or any other departments of government, municipalities or panchayats subject to general SCA/787/1992 18/37 JUDGMENT or special orders or instructions issued by Government from time to time. Though strong reliance has been placed by the petitioner upon sub-rule[1] of Rule-3, but unfortunately, nothing has been brought on record to show or suggest that the GSFC, an independent Corporation/Govt. Company would be treated to be a department of the government nor any special or general order issued by the government has been brought on the record to show or suggest that exemption has been granted from the application of Gujarat Minor Mineral Rules, 1966 in relation to the work of Gujarat Maritime Board or GSFC. 22.Sub-rule [2] of Rule-3 of the Rules of 1966 provides that the Rules shall not apply to extraction of minor minerals by any person for bona fide purposes in accordance with the provisions of rules 67, 68, 69 and 70 of the Bombay Land Revenue Rules, 1921 or any rules corresponding to such rules. Gujarat Government has provided for the corresponding Rules. The said Rules are Rules 67, 68, 69 and 70 of SCA/787/1992 19/37 JUDGMENT Gujarat Land Revenue Rules, 1972. Rule-67 of the Rules of 1972 applies to case of removal of earth, stone, etc., by villagers for their own use without fee, but with the permission of the revenue patel. Present is not a case where villagers or village people had removed earth or stone etc., for their own use. 23.Rule-68 provides that with the previous permission of the Mamlatdar in writing for building, well etc., stone, kankar, sand, murum or other material may be removed by any person for purpose of building a well or for his domestic or agricultural purposes but not for sale or personal gain. Present again is not a case where material excavated from site/bund of the storage tank was removed for personal use or for construction of or building a well. 24.Rule-69 provides that in any case where excavation of the soil is likely to damage or destroy any valuable building or any land required for any special or public purpose or any boundary mark, the previous sanction of the Mamlatdar to any such removal shall be required. SCA/787/1992 20/37 JUDGMENT Rule-69[1] does not provide for any exemption. Similarly, Rule-69[2] would also not apply to the present case. Rule-69[3] is in relation to trade or making bricks, tiles etc., by a potter. Present again is not a case of a potter who had removed earth or other material for construction of tiles, bricks etc. 25.Rule-70 on which strong emphasis had been laid by the learned counsel for the petitioner says that any person may, with the sanction of the revenue patel take free of all charge from village tanks as much earth, stone, kankar, sand, murum or other material as he requires provided that no stone shall be removed that may have fallen from the banks of built tanks, and that no excavation shall be made within 5 meters of the embankment of any such tank. It is submitted that the storage tank was for common village people and the petitioner, under the circumstances, was entitled to remove earth, stone etc. from the said bund/village tank. The GSFC nowhere says that the land allotted to them was for public purpose even when the State SCA/787/1992 21/37 JUDGMENT Government has come out with its straight case that the land was given to the GSFC for their captive use for construction of storage tank for industrial purposes. If that be so, the tank cannot be taken to be a village tank and Rule-70 would not apply. 26.Sub-rule [3] of Rule 3 of Rules of 1966 provides that the rules would not apply to the storage for wining of minor minerals on the surface by chipping of outcrops by a geologist's hammer without involving any disturbance of the soil by digging of pits, trenches or otherwise. Present is not a case which could fall under Rule-3[3]. It is further submitted that sub- rule[4] of Rule-3 may cover the case, because, the Rules would not apply to digging of wells for water and foundation for buildings and disposal of the minor mineral extracted thereof. It is submitted with vehemence that tank/pond would stand on equal footing to a well, because, both provide source of water and both are artificial source of providing water. It is submitted that if the tank is taken to be a SCA/787/1992 22/37 JUDGMENT pond , then, the petitioner, who was digging a pond would be entitled to dispose of the minor minerals extracted from the said pond. I am surprised to hear this argument. Even a villager knows difference between the tank/pond and a well. A pond is a place where water collects either through natural rain flow or by collection. A pond/storage tank may have a kachcha bed or may have a pakka bed for storage of water, but a well is the natural source of water though well in itself is not a natural construction. In the well, water percolates from the natural stream running underground and then, the same provides water. A well is smaller in area, while the pond or storage tank does have a very large expanse and in no way can be compared with well. In the opinion of this Court, digging of the well cannot be compared with pond/construction of storage tank and under such circumstances, sub-rule-[4] of Rule-3 would also not apply. 27.Sub-rule[5] of Rule-3 would also not apply to the case, because, present is not a case of SCA/787/1992 23/37 JUDGMENT removal of minerals from the agricultural field for betterment of the agricultural land by the occupant himself. 28.In view of the aforesaid discussion, Rule-3 of Rules of 1966 would not provide any protection or solace to the petitioner. Once Rule-3 does not apply, Rule-5 would apply with its full force and would make it clear that no person shall quarry, win, remove or carry away any minor mineral except as provided under the Rules of 1966. 29.It is also to be seen that Rule-27 of the Rules of 1966 provides that quarry lease cannot be granted by a party to anyone else, because, the same shall be subject to the restriction