IN THE HIGH COURT OF JUDICATURE, ANDHRA PRADESH AT HYDERABAD (Special Original Jurisdiction) THURSDAY, THE ELEVENTH DAY OF SEPTEMBER TWO THOUSAND AND EIGHT PRESENT THE HON'BLE SRI JUSTICE P.V.SANJAY KUMAR WRIT PETITION No.15036 of 2001 Between: M/s R.R.Stones Pvt Ltd., No.3-5-874/4, Rep by its MD., Sri S.Divakar Reddy R/o Subba Reddy, aged 45 yrs, 1st floor, Hyderguda, Hyd. ..... PETITIONER AND 1 The Asst Director of Mines & Geology, Chittoor Dist. 2 The Director of Mines & Geology, A.P., Hyd . 3 The Director General (Vigilence & Enforcement Dept.,) E.O., Personal Secretary to Govt, General Admn., dept., Secretariat, Hyd. .....RESPONDENTS Petition under Article 226 of the constitution of India praying that in the circumstances stated in the Aﬃdavit ﬁled herein the High Court will be pleased to issue a writ of mandamus or any other appropriate writ, order or direction, declaring the action of the respondents in directing the petitioner to pay a sum of Rs 2,20,000/- towards seigniorage fee & penality on the alleged ground that the petitioner company unauthorisedly quarried for about 6 months during the period from 1997 to 1999 in Sy.No.184 of Muddanapalli Village, Santhipuram Mandal, Chittoor Dist & quarried 500 M.T. during the said period as illegal, arbitrary, discrimantory, malaﬁde & violative of prl of natural justice & consequently set aside the letter No.3573/o/2000 dt18-9-2000 of the R1 Counsel for the Petitioner: Mr.BALAJI for MR.M.CHANDRASEKHAR REDDY Counsel for the Respondents: GP FOR INDUSTRIES AND COMMERCE The Court made the following : THE HON'BLE SRI JUSTICE P.V.SANJAY KUMAR WRIT PETITION No.15036 of 2001 ORDER: This Writ Petition is ﬁled challenging the Proceedings of the Assistant Director of Mines and Geology, Chittoor, the ﬁrst Respondent in the Writ Petition, bearing Letter No.3573/Q/2000, dated 18.09.2000, whereby the ﬁrst Respondent called upon the Petitioner to pay a sum of Rs.2,20,000/- towards the seigniorage fee and penalty payable in respect of the illegal quarrying operations said to have been conducted by the Petitioner in Survey No.184 of Muddanapalle Village, Santhipuram Mandal, Chittoor District. The facts, as reﬂected in the aﬃdavit ﬁled in support of the Writ Petition, demonstrate that the case has a long and chequered history. It appears that the Petitioner made an application on 16.09.1997 for grant of a quarry lease over an extent of 10 hectares in Survey No.184 of Muddanapalle Village for quarrying granite cubes and kerbs for the purpose of export. It seems that prior to the application of the Petitioner, one M/s.Evershine Granite Quarries, Kuppam made an application on 14.07.1987 for grant of a quarry lease in respect of an extent of 10 acres in the same survey number. Similarly, one Sri D.Gopinath, claiming to be the President of M/s.Lakshmi Venkateswara Quarry Workers Labour Contract Cooperative Society, Lakshmipuram Village, Kuppam Mandal, is also said to have made an application on 25.09.1996 for grant of a quarry lease in respect of an extent of 20 acres in the self same survey number for quarrying road metal and building stone. M/s.Evershine Granite Quarries is said to have been granted a lease over an extent of ﬁve acres in Survey No.184 of Muddanapalle Village for quarrying granite cubes and kerbs. But the Petitioner herein and Sri D.Gopinath, representing M/s.Lakshmi Venkateswara Quarry Workers Labour Contract Cooperative Society, Lakshmipuram Village, Kuppam Mandal seem to have been engaged in a furious tussle for grant of a quarry lease in their individual favour. Suﬃce it to state that this struggle between the Petitioner and M/s.Lakshmi Venkateswara Quarry Workers Labour Contract Cooperative Society reached this Court in Writ Petition No.7245 of 1998 and this Court directed the authorities concerned to consider the application of the Petitioner under Rule 12(5) of the A.P.Minor Mineral Concession Rules, 1966 (hereinafter referred to as ‘the Rules’), within a period of four weeks from the date of receipt of the said Order. It appears that the authorities, in pursuance of the said Order, raised certain objections with regard to the application submitted by the Petitioner and called upon it to ﬁle a fresh application. The said action was challenged by the Petitioner in W.P.No.10282 of 1999, which was said to be pending at the time of ﬁling of the present Writ Petition. While the matter stood thus, in so far as the issue of grant of a lease to the Petitioner is concerned, it appears that basing upon the complaint said to have been made by Sri D.Gopinath, the authorities conducted an enquiry with regard to the alleged illegal quarrying operations made by the Petitioner in Survey No.184 of Muddanapalle Village between 1997 and 1999. It is stated that basing on the said inspection and enquiry, the impugned proceedings dated 18.09.2000, were issued directing the Petitioner to pay a sum of Rs.2,20,000/- towards seigniorage fee and penalty in respect of the illegal quarrying operations done by it for about six months during the years 1997 to 1999. The Petitioner challenges the said proceedings on the ground that no proper enquiry was held by giving prior Notice and an opportunity of hearing to the Petitioner. The Petitioner further stated that it submitted a representation in response to the impugned proceedings stating that it had not conducted any quarrying operations illegally. In spite of the same, the Respondent authorities are insisting upon the payment of the alleged dues under the impugned Proceedings as a condition precedent for processing the Petitioner’s application for grant of a quarry lease. The Petitioner stated that the impugned proceedings, being violative of the Principles of Natural Justice, are liable to be set aside and prayed that the Writ Petition be allowed. Respondents 1 and 2 ﬁled a counter-aﬃdavit stating to the eﬀect, insofar as the issue in this Writ Petition is concerned, that basing on the complaint made by one Sri D.Gopinath against the Petitioner, the Vigilance and Enforcement Authorities conducted a detailed enquiry in the matter and during the inspection of the site in Survey No.184 of Muddanapalle Village, it was noticed that the boulders available at the hillock in the site were unauthorisedly quarried by the Petitioner for about six months during the period from 1997 to 1999 at the rate of 4 tractors of cubes per week. It is also stated in the counter aﬃdavit that the Deputy Director of Mines & Geology, Cuddapah had intercepted a tractor carrying illegally quarried rough granite cubes and booked a case against the Petitioner and that the Petitioner had paid the seigniorage fee and the penalty levied, on 19.01.1998. Surprisingly, the Respondents claimed in the counter, that the impugned Proceedings are in the nature of a Show Cause Notice calling upon the Petitioner to submit an explanation in the matter within 15 days, failing which, action would be initiated to recover the amount of Rs.2,20,000/-. It is interesting to note that the counter-aﬃdavit also states that the Oﬃce Technical Assistant enquired into the matter with Sri D.Gopinath, on whose Petition the Vigilance and Enforcement Authorities conducted the detailed enquiry and proposed for recovery of the amount of Rs.2,20,000/-. The Technical Assistant is said to have produced the statement of Sri D.Gopinath wherein he stated that he had ﬁled a Petition against the Petitioner in the year 1995 with regard to its illegal quarrying operations and transportation. He is also said to have stated that subsequent to the seizing of the tractors by the Authorities, the illegal quarrying and transportation were stopped by the Petitioner. Heard Sri Balaji, learned counsel appearing for the Petitioner and the learned Government Pleader for Industries and Commerce appearing for the Respondents. On the facts as culled out from the pleadings afore stated and the material on record, the argument of the learned Government Pleader that the impugned proceedings should be construed to be a Show Cause Notice does not hold water. The phraseology, in the subject caption of the impugned proceedings, viz., ‘enquiry conducted’ and ‘penalty imposed’ speak against such a construction. In the last paragraph of the impugned proceedings, the Petitioner was requested to pay the penalty amount within 15 days and submit original challans. It is further stated that if it fails to pay the penalty amount action would be taken under the Rules to determine the quarry lease held by the Petitioner and also to recover the amounts due under the Revenue Recovery Act. There is no mention in the impugned proceedings that the Petitioner was called upon to submit an explanation within 15 days as has been stated in the counter- affidavit. That apart, the counter-aﬃdavit ﬁled by Respondents 1 and 2 clearly demonstrates a blatant violation of the Principles of Natural Justice in so far as the issuance of the impugned proceedings are concerned. The Respondent authorities concede that they acted upon the complaint made by Sri D.Gopinath, who is admittedly a rival applicant vis-à-vis the Petitioner, insofar as grant of a quarry lease in Survey No.184 of Muddanapalle Village is concerned. Further, the Respondent authorities also admitted that the said Sri D.Gopinath was taken into conﬁdence and he appears to have actively participated in the enquiry and inspection. In this respect, the counter-aﬃdavit seems to state that two separate enquiries were conducted, one being the enquiry conducted by the Vigilance and Enforcement Oﬃcials and the second, being the enquiry and inspection said to have been conducted by the Oﬃce Technical Assistant. It is pertinent to note that there is no whisper in the counter-aﬃdavit that any Notice was issued to the Petitioner with regard to either of these two enquiries. On the face of it, it appears that the Respondent authorities initiated the impugned action on the basis of enquiries held behind the back of the Petitioner in violation of Rule 26 of the Rules. Rule 26 of the Rules reads as here under: “26. Penalty for unauthorized quarrying:- (1) If any person carries on quarrying operations or transports minor minerals in contravention of these rules, he shall be liable to pay as penalty such enhanced seigniorage fee together with assessments as may be imposed by an Oﬃcer nominated by the Director of Mines and Geology; (2) Whenever any person raises or transports minor minerals without any lawful authority, such minerals may be seized by an Oﬃcer nominated by the Director of Mines and Geology in this behalf in addition to the imposition of the penalty under sub-rule (1): Provided that in no case, the penalty shall exceed ten times the normal seigniorage fee and the lease or permit already granted may, at the discretion of the Deputy Director, be liable to be terminated or cancelled. (3) (i) For the purpose of ascertaining the position of payment of Mineral Revenue due to the Government or for any other purpose under these rules, the person authorized under sub-rule (2) may,- (a) enter and inspect any premises; (b) survey and take measurements; (c) weigh, measure or take measurements of stocks of minerals; (d) examine any document, book, register or record in the possession or power of any person having the control of or connected with any mineral including the processed mineral and place marks of identiﬁcation thereon and take extracts from or make copies of such document, book, register or record, and (e) order the production of any such document, book, register, record as is referred to in clause (d). (ii) if no documentary proof is produced in token of having paid the mineral revenue dues to the Government by any person who used or consumed or in possession of any mineral including the processed mineral, he shall not withstanding anything contained in sub-rule (1) be liable to pay ﬁve times or the normal Seigniorage fee as penalty in addition to normal Seigniorage fee leviable under the rules. Explanation: It shall be competent to the oﬃcer nominated by the Director of Mines and Geology to determine the question whether quarrying operations or transportation of minerals are carried or not within the meaning of this rule.” A reading of the above Rule and more speciﬁcally, the Explanation, would clearly indicate that the Respondent authorities are required to conduct an enquiry as to whether illegal quarrying operations were carried out by the party concerned or not. Such an enquiry would entail that the party concerned be given an opportunity of hearing. In the absence of such a procedure being followed, the action initiated by the authorities would not only be violative of the Statutory Rule, but also the principles of natural justice. It appears that the respondents were carried away by the fact that the Petitioner had been subjected to similar proceedings earlier and had paid the levy of seigniorage fee and penalty on 19.1.1998. However, the levy of fresh seigniorage fee and penalty for the alleged illegal quarrying operations by the Petitioner during a 6 month period in the years 1997 to 1999 required the authorities to once again comply with the statutory procedure laid down in Rule 26 of the Rules, which necessarily included an enquiry. In this regard, the respondent authorities seem to have failed miserably. The counter speaks of an inspection made by the Vigilance and Enforcement Oﬃcials wherein they noticed that the boulders at the hillock were unauthorisedly quarried by the Petitioner during a 6 month period in the past ! Further, they were also able to arrive at the precise quantity of such illegal past quarrying pegging it at four tractors of cubes per week ! Prima facie, the ﬁndings of this inspection appear to be far fetched. Be that as it may, the facts as narrated herein above, clearly demonstrate that the Petitioner was kept in the dark with regard to the proceedings initiated upon the complaint made by Sri D.Gopinath and the consequential impugned proceeding imposing the liability of Rs.2,20,000/-, being the seigniorage fee and the penalty payable thereupon, is clearly unsustainable, being in violation of Rule 26 of the Rules and the principles of natural justice. The Writ Petition is accordingly allowed, setting aside the proceedings of the Assistant Director of Mines and Geology, Chittoor in Letter No.3573/Q/2000, dated 18.09.2000. There shall be no order as to costs. ________________________ P.V.SANJAY KUMAR, J Date: 11.09.2008 va