IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 18TH DAY OF MARCH, 2019 PRESENT THE HON’BLE MR. L. NARAYANA SWAMY ACTING CHIEF JUSTICE AND THE HON’BLE MR.JUSTICE P.S. DINESH KUMAR WRIT PETITION NO.6979 OF 2017 (GM-MM-S) BETWEEN:
M/S. BMM ISPAT LTD.
A COMPANY REGISTERED UNDER THE COMPANIES ACT, 1956 OFFICE AT NO.101, 1ST FLOOR “PRIDE ELITE”, NO.10, MUSEUM ROAD BENGALURU – 560 001.
REP. BY ITS GENERAL MANAGER-PR MR. SILAS NERALLA ... PETITIONER (BY SRI K. DHIRAJ KUMAR, ADVOCATE) AND:
1. THE DIRECTOR OF MINES & GEOLOGY DEPARTMENT OF MINES AND GEOLOGY KHANIJA BHAVAN, RACE COURSE ROAD BANGALORE – 560 001.
2. THE MONITORING COMMITTEE REPRESENTED BY ITS FINANCE MANAGER KHANIJA BHAVAN, RACE COURSE ROAD BANGALORE – 560 001.
... RESPONDENTS (BY SRI VIKRAM HUILGOL, HCGP FOR R1 SRI M. KESHAVA REDDY, ADVOCATE FOR R2) ---
THIS WRIT PETITION IS FILED UNDER ARTICLE 226 OF THE CONSTITUTION OF INDIA PRAYING TO QUASH THE ORDER PASSED BY THE R-1 DATED 25.01.2017 (31.01.2017) REJECTING THE REPRESENTATION OF THE PETITIONER TO REFUND THE DIFFERENTIAL ROYALTY AMOUNT OF RS.1,98,35,144/- VIDE ANNEXURE-M AND ETC.
THIS PETITION COMING ON FOR PRELIMINARY HEARING IN ‘B’ GROUP THIS DAY, P.S. DINESH KUMAR J., MADE THE FOLLOWING:
ORDER Petitioner purchased iron ore from the Central Monitoring Committee appointed by the Hon’ble Supreme Court of India. By an amendment to sub-Section (3) of Section 9 of the Act, the Second Schedule in the Mines and Minerals (Development and Regulation) Act, 1957 (the ‘Act’ for short) was substituted with effect from 01.09.2014, whereby royalty payable on iron ore was increased from 10% to 15% on ad valorem basis. Petitioner purchased various quantities of mineral prior to 01.09.2014 and made payment to the Monitoring Committee. It appears he removed a portion of the mineral purchased by him after 01.09.2014. In respect of such portion of mineral, the Monitoring Committee computed royalty at the rate of 15% on the premise that with effect from 01.09.2014, the applicable royalty was 15%. The amount equivalent to 5% of royalty was appropriated by the Monitoring Committee from petitioner’s security deposit. Petitioner approached the Monitoring Committee seeking refund of 5% of the royalty amount. The Monitoring Committee informed the petitioner that the amount was transferred to the Director of Mines and Geology. Feeling aggrieved, petitioner filed W.P.No.57901/2016. By order dated 29.11.2016, this Court directed the petitioner to approach the Director, Department of Mines and Geology. By order dated 31.01.2017, the Director of Mines and Geology held petitioner’s application dated 07.12.2016 as not maintainable in the light of Section 9 of the Act. Hence, this writ petition.
2. Shri K. Dhiraj Kumar, learned advocate for the petitioner submitted that after acceptance of the bid, petitioner tendered value of the mineral together with 10% royalty and also deposited Rs.50/- per tonne as contingency deposit. The transactions pursuant to e-auction and tendering of amount by petitioner to the Monitoring Committee were completed prior to 01.09.2014. He argued that the Monitoring Committee is not justified in seeking royalty more than 10% which it had already collected.
3. Shri M. Keshava Reddy, learned advocate appearing for the Monitoring Committee, adverting to one of the acceptance letters, submitted that Rs.50/- per tonne was collected as security deposit and it was made clear that the same was collected to meet variation in royalty or other taxes which may arise in future. He also drew the attention of this Court to the terms of e-auction. Adverting to paragraph No.9 of the terms of e-auction, he argued that the petitioner is required to pay royalty as on the date of removing the mineral in terms of Section 9(2) of the Act. In substance, he submitted that the date on which the mineral was removed is relevant. Therefore, the Monitoring Committee was justified in collecting royalty at 15% instead of 10%.
4. Shri Vikram Huilgol, learned HCGP contended that the subject matter is one of e-auction and therefore, jurisdiction to consider any grievance vests with the Hon’ble Supreme Court of India. He further submitted that the position of auction purchaser is that of a lease holder and therefore, Section 9(2) of the Act is applicable.
5. We have carefully considered the rival contentions and perused the records.
6. It is not in dispute that by notification dated 01.09.2014, the Central Government brought amendment to sub-Section (3) of Section 9 of the Act, whereby royalty payable on iron ore was increased from 10% to 15%. It is also not in dispute that petitioner had submitted his bid to purchase iron ore. Petitioner’s bids were accepted prior to 01.09.2014. As per e-auction conditions, petitioner has tendered entire value of iron ore and royalty at 10% applicable as on the date prior to 01.09.2014.
7. The contention of Shri Keshava Reddy that, Rs.50/- per tonne of iron ore collected to meet variation in royalty and other taxes if any, which may arise in future is sufficient circumstance to show that petitioner had agreed to pay royalty at increased tariff, must fail because as on the date on which the bids were accepted and amount was paid by petitioner to the Monitoring Committee, the amendment had not come into force.
8. The parties were ad idem so far as sale of iron ore to petitioner at the price offered by him and accepted by the Monitoring Committee together with 10% royalty is concerned. It is not in dispute that petitioner participated in the auction and bid for iron ore mineral which was already extracted. Petitioner has paid the entire value of the iron ore purchased in auction and the royalty payable thereon. The only act remained was to transport the iron ore from the stock yard. Admittedly, there was no time limit prescribed to do so. However, in the interregnum, the rate of royalty has increased from 10% to 15%.
9. In the facts and circumstances of this case recorded hereinabove, in our considered view, any attempt to impose royalty more than what was applicable as on the date of acceptance of bid would be unjust.
10. In the circumstances, the order dated 25.01.2017/31.01.2017 (Annexure-M) holding that petitioner’s application is not maintainable under Section 9 of the Act is unsustainable in law. Hence, this writ petition merits consideration and it is accordingly allowed.
The order dated 25.01.2017/31.01.2017 (Annexure-M) is set aside.
The matter is remitted to the Director, Department of Mines and Geology to consider petitioner’s request in the light of the aforesaid observations.
Compliance in four weeks.
Sd/-
ACTING CHIEF JUSTICE Sd/- JUDGE ca