M/S. Nagarjuna Construction Co. Ltd vs Govt. Of A.P. & Ors

2. Writ Petitions were filed by the appellants before the Andhra Pradesh High Court praying for quashing the order passed by the State Government in Memorandum No.8817/M.II(1)/2001-6, dated 4.2.2002 and the consequent demand notice issued by the Director of Mines and Geology and the proceedings of the Deputy Director, Mines and Geology. The appellant in each case is engaged in the business of construction, engineering and civil works. In each case the appellant had participated in the tenders invited by the Bharat Heavy Electricals Ltd. (in short `BHEL') for the purpose of executing their part of the contract which is with NTPC for levelling and grading. BHEL had awarded the contract to the appellant- company for execution of the work. According to the appellant, the material required for the purpose of execution of the contract in terms of the specifications prescribed under the contract is earth, morrum gravel and mixture of these or any other material approved by the BHEL. The appellant had obtained rights for excavation of good earth from the ryots of patta lands in the vicinity as well as from the quarry lease holders. Each appellant was supplying the materials from the source in which they obtained right of excavation of materials. Huge quantity of these materials was supplied under the contract. The Assistant Director of Mines and Geology required 2 BHEL to show cause as to why action should not be initiated to realize a sum of money towards seigniorage fee which includes five times penalty over and above the normal seigniorage fee. The Assistant Director required BHEL to produce documentary evidence, if any, with regard to the source from where the materials had been procured alongwith the permits issued by the Department. BHEL filed a detailed reply disputing the liability in the matter. It was indicated that the requisite application for allotment of quarries and other formalities were to be done directly by the sub contractors concerned. The agencies have been paying the seigniorage fee directly to the Department of Mines and Geology. In between meeting was held between the agencies and Department of Mines and Geology, BHEL and the contractors. Detailed minutes were drawn up according to which the Director of Mines and Geology expressed that type of filling materials may have to be decided by the Department of Mines and not by the contractors themselves.

4. The Assistant Director, Mines and Geology again sent demand notice. The Deputy Director of Mines and Geology raised demand notice directing the appellant to pay a higher sum being the balance of seigniorage fee after giving credit to the fees already paid. At this stage the appellant submitted detailed representation to the Secretary (Mines), Industries and Commerce Department, Government of Andhra Pradesh inter-alia highlighting various contradictory notices issued by the Assistant Director and the Deputy Director. The Government of Andhra Pradesh in exercise of suo motu revisional jurisdiction under Rule 35-A of the Andhra Pradesh Minor Mineral Concession Rules, 1966 (in short the `Andhra Pradesh Rules') set aside the revised demand issued by the Deputy Director confirming the original demand and the appellant was directed to pay the balance amount. Writ Petition was filed before the High Court challenging the revisional order. The High Court by its order dated 20.7.2001 allowed the writ petition at the admission stage holding that the order of the State Government is misconceived and unsustainable on account of having been issued without any notice to the affected persons. However, leave was 4 granted to the Government to initiate fresh proceedings if so desired and if so permitted by law after giving notice and opportunity to the appropriate parties. Notices were issued to all the sub- contractors and after hearing the parties the order impugned before the High Court was passed. Again challenge was made before the High Court.

17. So far as the question of penalty is concerned, it was held that though mens rea is an essential ingredient but the fatual position left no manner of doubt that the appellant was not acting bona fide. The High Court did not also attach importance to the stand taken by the Department in the earlier writ petitions. Accordingly, all the writ petitions were dismissed.

29. Looked at from any angle the judgment of the High Court is unsustainable.

32. The conclusions regarding absence of prejudice are, therefore, not sustainable.

34. The expressions "natural justice" and "legal justice" do not present a water-tight classification. It is the substance of justice which is to be secured by both, and whenever legal justice fails to achieve this solemn purpose, natural justice is called in aid of legal justice. Natural justice relieves legal justice from unnecessary technicality, grammatical pedantry or logical prevarication. It supplies the omissions of a formulated law. As Lord Buckmaster said, no form or procedure should ever be permitted to exclude the presentation of a litigants' defence.

says God, "where art thou has thou not eaten of the tree whereof I commanded thee that though should not eat".

42. We, therefore, set aside the impugned order of the High Court. The matter is remitted to the State Government to re-consider the matter after 28 supplying to the appellants copies of reports/inspection notes on which the Department case rests. It shall also consider the effect of the concession made by the Department in the earlier rounds of proceedings before the High Court.

43. The appeals are allowed but without any order as to costs.