IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 28TH DAY OF NOVEMBER, 2019 PRESENT THE HON’BLE MR ABHAY S. OKA, CHIEF JUSTICE AND THE HON’BLE MR JUSTICE MOHAMMAD NAWAZ WRIT PETITION NO. 13252 OF 2019 (GM-MMS) Between:
M/S. S.R. Stones Crusher, Office at No.441, 2nd Cross, 3rd Stage, 3rd Block, Basaveshwaranagar, Bengaluru-560 079.
Represented by its authorized signatory, Shri. Shivaraj S/o. Late Ramanna, Aged about 52 years. . . . Petitioner (By Shri. Ganapati Bhat Vajralli, Advocate) And:
1. The State of Karnataka, Reppresented by its Chief Secretary, Vidhana Soudha, Dr. B.R. Ambedkar Veedhi, Bengaluru – 560 001.
2. The Principal Secretary, Department of Mines and Geology, Vidhana Soudha, Dr. B.R. Ambedkar Veedhi, Bengaluru – 560 001.
3. The Director, Department of Mines and Geology (Mines), Kanija Bhavan, Race Course Road, Bengaluru -560 001.
4. The Deputy Director/ Senior Geologist, Department of Mines and Geology (Mines), Vishveshwaraiah Tower, 13th Floor, Dr. B.R. Ambedkar Veedhi, Bengaluru Urban District, Bengaluru – 560 001. . . . Respondents (By Shri. V.G. Bhanuprakash, Additional Government Advocate for respondents 1 to 4) This writ petition is filed under Articles 226 & 227 of the Constitution of India, praying to quash the notice dated 21.02.2019 bearing No.HI.Bhu.V/GA.BHU.E/BNG/2018-19/4348 and notice dated 09.07.2019 bearing No.HIBHUV/GABHUE/ BENAJI/2019-20/282 issued by the 4th respondent vide Annexure-S and Annexure-U respectively.
This writ petition having heard and reserved for order, coming on for pronouncement of Order/Judgment, this day, Chief Justice pronounced the following:
ORDER One Smt. Savithramma was granted a quarrying lease for building stones for a period of five years from 24th July, 2010. On the application made by said Smt. Savithramma, the lease was transferred in the name of the petitioner firm, of which, the said original lessee continued to be one of the partners. By virtue of the provisions of Rule 8A of the Karnataka Minor Mineral Concession Rules, 1994 (for short, ‘the said Rules of 1994’), the lease was extended for a period of twenty years from the date of original grant.
2. Prior to transfer of lease in the name of the petitioner’s firm, the original lessee Smt. Savithramma had lodged complaints on 23rd December 2013 and 20th February, 2015. The complaints were with a request to carry out joint measurement of the property subject matter of quarrying lease. There was another complaint on 20th February 2015 made by the said Smt. Savithramma to the Deputy Director-cum-Senior Geologist (Minerals), the Department of Mines and Geology. The complaint was against several un-known people alleging that they were unauthorizedly extracting minerals in the area subject matter of the lease granted to her. On 21st July, 2017, even the petitioner submitted an application to the 4th respondent, requesting him to conduct a survey and demarcation of the property subject matter of lease and certain amount was deposited for facilitating demarcation of the boundaries to the land subject matter of the lease. On 22nd September, 2018 the said Smt. Savithramma made one more complaint to the 4th respondent regarding illegal extraction of minerals by one Shri. Kenchappa.
3. According to case of the petitioner, the 4th respondent after investigation, caught hold of said Shri. Kenchappa who accepted that he had extracted building material to the extent of 1,00,000 Metric tons without prior permission of the petitioner and the 4th respondent. Reliance is placed on an undertaking allegedly signed by said Shri. Kenchappa in which, he stated that he had paid a sum of Rs.15,00,000/- towards royalty for having extracted quantity of 1,00,000/- Metric tons and that he further agreed to pay an amount of Rs.45,00,000/-. The petitioner is relying upon the notices issued by the respondents at Annexures-Q to Q5, demanding royalty for the years 2010-11 to 2015-16. According to the petitioner, the entire amount payable as per the said notices was paid and despite such payment, on 18th December 2018, a notice was served on the petitioner by the Senior Geologist alleging that the total accumulated quantity of minerals excavated from the date of grant of quarrying lease up to the date on which Drone survey was conducted was to the tune of 3,31,993 metric tons and as per the annual audit of the account up to the date of Drone survey, the petitioner had paid royalty on the quantity of only 56,668 Metric tons. The petitioner was called upon to submit a reply as to why the royalty on quantity of 2,88,465 Metric tons should not be recovered.
4. After receipt of the notice from the respondent No.4, the petitioner raised a dispute in writing about the manner in which Drone survey was conducted and he referred to the complaints filed by Smt. Savithramma, the original grantee of the lease and pointed out that Shri. Kenchappa who had excavated the minerals unauthorizedly, had agreed to pay royalty on the quantity of 1,50,000 metric tons, but he was directed by the Department to pay the royalty only on the quantity of 1,00,000 metric tons. It was pointed out that the person against whom Smt. Savithramma had lodged a complaint, no legal action was taken. On 21st February, 2019, a notice was issued to the petitioner alleging that the petitioner had transported building stones and black stones unauthorizedly from the leased area and therefore, he has violated several provisions of the said Rules of 1994. It was further alleged that sub-rule (4) of Rule 44 of the said Rules of 1994 is attracted and therefore, the petitioner was liable to pay the penalty equal to five times of royalty payable on the quantity of 2,28,564 Metric tons of mineral dispatched or transported amounting to Rs.6,85,39,500/-.
5. During the pendency of the writ petition, on 9th July 2019, a notice captioned as ‘final notice’ was served upon the petitioner calling upon the petitioner to pay the amount as per the earlier demand and informing him that the failure to do so will amount to violation of Rule 36 of the said Rules of 1994 and an action for termination of lease in accordance with Rule 39 of the said Rules of 1994 will be taken.
6. The first prayer in the amended writ petition is for quashing the notice dated 21st February, 2019. The second prayer is for quashing the subsequent final notice dated 9th July 2019. On 16th April, 2019, an interim order was passed staying the impugned demand notice issued by the 4th respondent, subject to petitioner depositing 50% of the amount so demanded as per the impugned notice dated 21st February 2019. Though an application was made by the petitioner for modification of the said interim order, no order has been passed thereon.
7. The learned counsel appearing for the petitioner firstly pointed out that the notices were issued to the petitioner at Annexures-Q to Q5 demanding royalty and other charges, based on the audit reports. The said notices were issued for the period from 2010-11 to 2015-16. He submitted that the amounts were paid as per the said notices and therefore, the notice dated 18th December 2018 demanding arrears of royalty for the period starting from the date of quarrying lease could not have been issued. He submitted that to the said notice, the petitioner had submitted his reply, objecting to the Drone survey report and pointing out that Shri. Kenchappa had made an unauthorized excavation of minerals in the area subject matter of lease, for which, he is ready to pay the royalty. In the reply, it was pointed out that several complaints were made by Smt. Savithramma, the original lessee, complaining about the illegal excavation by the third parties, but no action was taken by the authorities. He further submitted that while conducting the survey, the guidelines issued by the Apex Court in the case of Samaj Parivartana Samudaya and others –vs- State of Karnataka and others1 have not been followed. He also relied upon the decision of the Apex Court in the case of Karnataka Rare Earth and others –vs- The Senior Geologist, department of Mines and Geology and others2. It was submitted that Drone survey is permissible under the said Rules of 1994. He pointed that Rule 44 of the said Rules of 1994 has been amended with effect from 12th August 2016 and hence, the penalty levied even for the period prior to 12th August 2016 is in violation of the said Rules of 1994.
8. The learned Additional Government Advocate tendered across the Bar a report of the Drone survey conducted by S.M.
1 AIR 2013 SC 3217 2 AIR 2004 SC 2915 Associates. It is pointed out that the survey was conducted by using combination of DGPS and Drone/Unmanned Aerial Vehicles Technology. He submitted that the manner in which the Drone survey has been carried out has been set out in the report. Relying upon the guidelines issued by the Government of India, Ministry of Mines dated 1st November 2016 to the Principal Secretaries of all the State Governments, he urged that use of Unmanned Aerial Vehicles (Drones) in the mining sector has been recognized and accepted by the Central Government. He also relied upon the note of the Ministry of Mines, Government of India on the application of Drone in mining and submitted that there is no reason for the petitioner or for this Court to disbelieve the Drone survey report, as it indicates the total excavated area and the total excavation carried out in the leased area and hence, no interference is called for.
9. We have considered the submissions. The first issue for consideration is about the non-payment of royalty payable on the excavated minerals to the extent of 2,88,465 Metric tons. The notice dated 18th December 2018 is on the basis of the Drone survey report of October 2018. From the additional documents placed on record, it appears that by a letter dated 16th January 2019, while dealing with the notice dated 18th December 2018, the petitioner had objected to the Drone survey and had relied upon the admission of Shri. Kenchappa of having illegally excavated quantity of 1,50,000 Metric tons of minerals. After issuance of notice dated 21st February 2019, another letter was submitted by the petitioner on 2nd May, 2019, objecting to the Drone survey report and requested the authorities to withdraw the said report.
10. Some submissions were made about the legality of the survey carried out by use of a Drone. The report of S.M. Associates, Survey and Civil Engineering Consultants shows that the survey was conducted by using the combination of DGPS and Drone/Unmanned Aerial Vehicles Technology. The letter addressed by the Ministry of Mines, the Government of India dated 1st November 2016 to all the Principal Secretaries of all the State Governments shows that the use of Unmanned Aerial Vehicles (Drones) technology has been recognized by the Union Government. The ‘Note on Application of Drone in Mining’ prepared by the Ministry of Mines, the Government of India clearly records that Unmanned Aerial Vehicle known as Drone is useful in many ways as set out in the said note. The learned counsel appearing for the petitioner pointed out that in the said note, it is mentioned that in certain cases, the accuracy is only about 75% - 80%.
11. The respondents-authorities have used combination of the said Unmanned Aerial Vehicle (Drone) technology and DGPS for coming to the conclusion regarding the total quantity of the minerals excavated by the petitioner from the land subject matter of lease. The technology used is a modern technology and its use in the area of mining has been recognized and recommended by the Ministry of Mines, the Government of India by addressing a letter dated 1st November 2016. The said Rules of 1994 do not specifically lay down the methods of survey. Therefore, in absence of any prohibition, the use of Drone Survey cannot be per se faulted with. Its accuracy will have to be tested depending upon the facts of the case. However, the petitioner was entitled to raise an objection to the correctness of the data obtained by the respondents by the use of the said technology. Though the petitioner has objected to it by writing two letters, the 4th respondent has not considered the same while issuing the impugned notices.
12. However, going by the stand taken by the petitioner as well as the original lessee who has complained about unauthorized excavation from the leased area by the third parties, it is an admitted fact that there was an unauthorized excavation from the lease area. But, the question remains as to who made the same. In this regard, the petitioner relied upon the undertaking given by Shri. Kenchappa, a photo copy of which is produced as Annexure-P. The said undertaking is on a non-judicial e-stamp paper procured and purchased in the name of the petitioner. The first party in the said document is described as the petitioner inasmuch as, the first page records that the affidavit/declaration is made by one Shri. Shivaraj, the managing partner of the petitioner. However, at the end of the document, it bears the alleged signature of Shri. K. Kenchappa. If the said undertaking is perused, the name of Shri. K. Kenchappa appears at several places in the undertaking and if really it was his undertaking, his name would not have appeared and wherever his name appears, he would have mentioned it in the first person. The document records that said K. Kenchappa accepted that quantity of 2,00,000 Metric tons of minerals was excavated by him and has transported the same. It also records that the petitioner is required to pay an amount of Rs.30,00,000/- out of which, Rs.10,00,000/- was paid and the remaining amount of Rs.20,00,000/- will be paid in three equal installments.
13. Though we are not expressing any final opinion on the said document and on the question whether it is signed by the petitioner or by the said Shri. K. Kenchappa, it does appear from the said document that certain quantity of mineral was excavated and transported for which, royalty was not paid. Thus, there has been an unauthorized excavation from the land subject matter of lease. But, for deciding whether the petitioner has done it, this Court is of the considered view that it is a fit case to remand the matter for fresh consideration. But we are inclined to pass an order of remand subject to petitioner complying with the interim order dated 16th April 2019 passed by this Court, if not already complied. The reason for this is that even according to the case of the petitioner, there was an excavation of certain quantity of mineral from the land subject matter of the lease, for which, royalty was not paid.
14. Now, coming to the aspect of the payment of penalty assessed by the 4th respondent in the impugned notice dated 21st February 2019 (Annexure-S), under which, an amount at the rate of five times the royalty payable has been levied by way of penalty. Therefore, it is necessary to advert to the provisions of Rule 44 of the said Rules of 1994 which reads thus:
“44. Offences – (1) Any person who contravenes the provisions of sub-rule (1) of Rule 42 shall, on conviction be punished with imprisonment for a term which may extend to two years or with fine which may extend to rupees five lakh or with both, and in the case of a continuing contravention with an additional fine which may extend to five hundred rupees for every day during which such contravention continues after first such contravention.
(2) Any person who undertakes any quarrying operation in respect of any minor mineral either without a licence or quarrying permit granted under these rules or in contravention of the terms and conditions of any licence or permit shall be punishable with imprisonment for a term which may extend to one year or with fine which may extend to fifty thousand rupees or with both and in case of a continuing contravention with an additional fine which may extend to five hundred rupees for every day during which such contravention continues after conviction for the first such contravention.
(3) Any person who undertakes any quarrying operation in respect of the minor mineral without a licence or lease is liable to pay a penalty equal to five times of royalty.
(4) If any lessee or licensee or his managers, employees, contractors, consumers or buyers dispatch or transport mineral without valid permit, such lessee or licensee shall be liable to pay a penalty equal to five times of royalty of mineral so dispatched or transported and if such dispatch or transport without valid permit happens for any subsequent times of such levy of penalty, then he shall be liable for additional levy of penalty equal to 15 times of royalty for mineral so dispatched or transported for the subsequent time also and the Competent Authority shall also order for determination of lease or licence.
Provided that, no such order of determination shall be made without giving the lessee or licensee an opportunity of being heard.
(5) When the offender is not known or cannot be found, the Court competent, may, if he finds, that an offence has been committed, order the property in respect of which the offence has been committed to be forfeited to the State Government together with mineral, tools, equipment, vehicles or any other thing used in committing the offence and taken charge of by the authorized Officer, or to be made over to the person whom the Court competent deems to be entitled to the same:
Provided that no such order shall be made until the expiration of thirty days from the date of seizing the property, or without hearing the person, if any, claiming”.
Thus, the penalty is payable under sub-rule (3) for carrying out quarrying operation in respect of the minor minerals without a licence or lease. Prior to 12th August 2016, the penalty payable under sub-rule (3) was rupees five thousand or the value of the mineral, whichever is higher. By the amendment of 12th August 2016, a provision was made to levy the penalty equal to fifteen times the royalty, which was reduced to five times of royalty with effect from 16th November 2017. Sub-rule (4) of Rule 44 of the said Rules of 1994 provides for imposing penalty where the minerals are transported or dispatched without a valid permit. In such cases, with effect from 18th November 2017, the penalty payable is equal to five times the royalty payable on the minerals transported or dispatched. Prior to 18th November 2017, penalty payable was equal to fifteen times the royalty payable. Therefore, assuming that the penalty is payable by the petitioner, the rate of penalty payable will be depend upon the period for which the illegality was committed and the penalty will have to be imposed at the rates prevailing at that particular point of time.
15. On perusal of the impugned notice dated 21st February 2019 (Annexure-S), it is revealed that the objections raised by the petitioner to the manner in which the survey conducted were not considered by respondents. The contention of the petitioner that complaints were already made by Smt. Savithramma, the original lessee, regarding illegal excavation of the minerals by the third parties was not considered. That is apparent from the impugned notice dated 21st February 2019. Therefore, by setting aside the impugned notices, a direction will have to be issued to the 4th respondent to pass a fresh order after affording the petitioner an opportunity of being heard and after considering all the objections and documents produced by the petitioner.
16. As pointed out earlier, on 16th April 2019, an interim order was passed staying the demand notice dated 21st February 2019 issued by the 4th respondent subject to petitioner depositing 50% of the amount mentioned in the said demand notice. As we have found that admittedly there has been an unauthorized excavation from the lease area, till a fresh order is passed, the petitioner must comply with the said interim order passed by this Court by depositing the amount in terms of the interim order, if not already deposited. The impugned demand notice could not be implemented due to the interim order and, therefore, after having taken advantage of the same, the petitioner will have to comply with the condition incorporated in the said order. It is needless to say that such deposit shall be subject to final orders that may be passed by the authorities and in the event it is held that no amount is payable by the petitioner or it is held that the amount payable by the petitioner is less than the amount so deposited in terms of the interim order, the petitioner shall be entitled for refund of the same. Hence, we pass the following Order:
i) The impugned demand notice bearing No.SG/DMG/BUD/2018-19/4348 dated 21st February 2019 and the final demand notice bearing No.SG/DMG/BUD/2019-20/282 dated 9th July 2019 issued by the 4th respondent (Annexure-S and U respectively) are hereby quashed and set aside, subject to petitioner complying with the condition incorporated in the interim order dated 16th April 2019 by depositing the requisite amount with the State Government within a period of eight weeks from today;
ii) It is made clear that if the compliance of condition imposed in the interim order dated 16th April 2019 is not made, the impugned demand notices shall stand restored;
iii) In the event, the compliance is already made before this order or compliance is hereafter made in terms of this order, the concerned respondent shall pass a fresh order on the basis of the notice SG/DMG/BUD/2017-18/3096 dated 18th December 2018, after considering the written objections, the documents produced by the petitioner and after affording the petitioner an opportunity of being heard;
iv) A fresh order shall be passed within a period of three months from the date on which the compliance of the interim order is made. If compliance is already made by the petitioner during the pendency of this writ petition, a fresh order as aforesaid shall be passed within a period of three months from today;
v) The deposit of the amount made by the petitioner in terms of the interim order dated 16th April, 2019 passed by this Court, shall be subject to final order which may be passed by the respondents and the petitioner will be entitled to refund as per the observations made in the last paragraph of this Judgment and order;
vi) The writ petition is allowed in part with the above terms.
Sd/- CHIEF JUSTICE Sd/- JUDGE Vr