Jharkhand High Court
M/S.Hindalco Industries Ltd. vs Union Of India & Ors. on 20 December, 2012
Equivalent citations: AIR 2013 JHARKHAND 81
Author: Aparesh Kumar Singh
Bench: Aparesh Kumar Singh
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W.P. (C) No. 153 of 2007
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An application under Article 226 of the Constitution of India
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M/s. Hindalco Industries Limited ...Petitioner
-Versus-
Union of India & others ........Respondents.
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PRESENT
HON'BLE MR. JUSTICE APARESH KUMAR SINGH
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For the Petitioner : M/s. Dipankar Gupta, Sr. Advocate,
Shahid Rizvi, Ananda Sen and Ranjan
Kumar, Advs.
For the State of Jharkhand : M/s. Anil Kumar Sinha, A.G. and
Shamim Akhtar, S. C. Mines,
Arvind Kumar Mehta, J.C. to S.C.Mines
& Bhupal Krishna Prasad, J.C. to
S.C.Mines.
For the Respondent no. 1 : Mr. Md. Faijur Rahman, C.G.C., U.O.I.
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C.A.V.ON. 04.10.2012 PRONOUNCED ON. 20/12/2012
Aparesh Kumar Singh, J The petitioner has sought for quashing of the entire
certificate proceedings being Certificate Case no. 17 GR/2006-07 pending
before respondent no. 4, the Certificate Officer (Mines), South
Chhotanagpur Anchal, Doranda, Ranchi after calling for the records of the
same from the concerned office of respondent no. 4. The petitioner has also
challenged the order dated 18th December, 2006 being order no. 579/DDM
passed by the Certificate Officer (Mines) in the said case whereby he has
kept the certificate case pending while directing the petitioner to deposit
50% of the certificate amount with respondent no. 2 and further directed the
petitioner to furnish a Bank Guarantee for the rest 50% of the certificate
amount.
The petitioner has also sought for a declaration that in view of the
Mineral Concession Rules, 1960 and the Mines and Minerals (Development
& Regulation) Act, 1957, (hereinafter referred as MMDR Act, 1957), he is
not liable to pay royalty on vanadium sludge which comes out as impurities
while processing Alumina at their plaint at Renukoot, Uttar Pradesh.
Consequently, the petitioner has also sought for a direction holding the
entire certificate proceeding as illegal and without jurisdiction.
The brief facts of the case as stated on behalf of the petitioner are
being stated hereunder: The petitioner, M/s. Hindalco Industries Ltd. holds
mining leases in the district of Gumla, Lohardaga and Latehar in the State
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of Jharkhand for mining Bauxite. Bauxite Ore is found 2 to 6 meters below
the thick soil and after removing the overburden it is mined in run of mine
condition (ROM) and is recovered. According to the petitioner, he pays full
royalty on the mined Bauxite to the State of Jharkhand at the rate prescribed
under M.M.D.R., Act, 1957. The entire Bauxite Ore in ROM condition
after payment of appropriate royalty is transported by the petitioner to its
processing plant at Renukoot Sonebhadra (U.P.). As per Indian Bureau
Mines, the major chemical constituent of mineral Bauxite is AL203
(Alumina) and other chemical constituents are compounds of silicon, iron
and titanium. There are other small quantities of chemical compounds
called contaminants which includes V205 (vanadium pentoxide), amongst
many other contaminants of which the presence of vanadium pentoxide is
less than 1%.
At the alumina plant of the petitioner in Renukoot, Bauxite Ore is
processed by a process known as "Bayer's Process". It is stated that in the
first stage in the said process some chemicals are separated in the form of
"red mud". At the next stage alumina is extracted leaving behind impurities
in sludge form small quantities of V205 "vanadium pentoxide" or sludge of
vanadium pentoxide" which in common parlance is referred to as vanadium
sludge or sludge of vanadium. Therefore, according to the petitioner,
vanadium sludge comes into an existence for the first time at the Hindalco
Processing plant at Renukoot as a waste product containing impurities and
is not mined as such. The petitioner has relied upon a report of the
Jawaharlal Nehru Aluminum Research Development and Designs Centre,
an Autonomous Body under Ministry of Mines, Government of India, that
vanadium sludge is not a mineral. The said vanadium sludge is then sold
by Hindalco.
It is the case of the petitioner that in the year 2002 the respondents
authorities of the State of Jharkhand demanded royalty on vanadium sludge.
The same was challenged before the Allahabad High Court which stayed
the demand on payment of 50% and a Bank Guarantee of the balance 50%
which the petitioner complied under protest. Subsequently, further interim
demands were also raised and complied under protest. It is stated that the
petitioner itself furnished information regarding quantities of vanadium
sludge produced and sold by Hindalco and the sale price thereof on being
asked by the respondent authorities.
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The present cause of action arose on account of a demand of royalty
in the year 2006 on vanadium sludge at the rate of 10%, calculated as a
residuary item in the Second Schedule to 1957 Act amounting to Rs.
48,48,245.00 with interest. It is stated on behalf of the petitioner that the
Respondents-State has also categorically stated in its counter affidavit that
the demand was raised on vanadium sludge extracted and sold at the
processing plant of Hindalco at Renukoot in U.P. which is also evident
from the demand made.
The petitioner in the aforesaid background has raised the contention
in the present writ application that the respondents are not entitled to raise
demand of royalty on vanadium sludge, which is obtained after processing
of Bauxite and recovery of alumina. Learned Senior Counsel for the
petitioner, Mr. Dipankar Gupta has relied upon the provisions of the
M.M.D.R Act, 1957 as also the provisions of Mines Act, 1952, to explain
the concept of royalty and the meaning of the definition of mineral. As per
the petitioner, royalty is charged under Section 9 of the Act, 1957 on
minerals, which is quoted hereunder:
"Section 9: Royalties in respect of mining leases.- (1) The holder of a mining
lease granted before the commencement of this Act shall, notwithstanding
anything contained in the instrument of lease or in any law in force at such
commencement, pay royalty in respect of any [mineral removed or consumed
by him or by his agent, manager, employee, contractor or sub-lessee] from the
leased area after such commencement, at the rate for the time being specified
in the Second Schedule in respect of that mineral."
"Section 9(2): The holder of a mining lease granted on or after the
commencement of this Act shall pay royalty in respect of any mineral removed
or consumed by him or by his agent, manager, employee, contractor or sub-
lessee from the leased area at the rate for the time being specified in the
Second Schedule in respect of that mineral."
The petitioner also relies upon Section 9(2) in view of the fact that
the lease of the petitioner was granted after commencement of 1957 Act.
By referring to the provisions of Section 9, it is submitted that royalty is to
be charged upon any mineral removed or consumed from the leased area as
per the rates prescribed in the Second Schedule of the Act, which is
chargeable only on mineral. It is submitted that all items in the Second
Schedule are minerals either in metal form or ore form. It is further
submitted that even in order to fall under the residuary Item no. 51 the
substance has to be mineral, if the material is not mineral then no
royalty can be levied on the same. In order to substantiate the
aforesaid contention, learned counsel for the petitioner submits that
vanadium sludge is not a mineral and royalty cannot be charged on the
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same. For the aforesaid purpose, learned counsel for the petitioner has
relied upon the provisions of Mines Act, 1952. Section 2(jj), which is being
quoted hereunder:
"Section 2(jj): "minerals" means all substances which can be obtained
from the earth by mining, digging, drilling, dredging, hydraulicing,
quarrying or by any other operation and includes mineral oils (which
in turn include natural gas and petroleum)"
Section 3(a) of 1957 Act, provides that "mineral" includes all
minerals except mineral oil. It is further submitted that the definition of
mineral as provided in the Mines Act, 1950 which is a cognate Act will
apply to the definition of minerals in 1957 Act as it is an inclusive
definition. It is further submitted that mineral is a substance which is
obtained from the earth and has been judicially interpreted.
Learned counsel for the petitioner has relied upon the judgments
rendered by Hon'ble Supreme Court of India in the case of Ichchapur
Industrial Cooperative Society Ltd.-Vs.- Competent Authority, Oil &
Natural Gas Commission and another reported in 1997(2) SCC 42 Para
20 and in the case of V.P.Pithupitchai and another-Vs.-Special Secretary
to the Govt. of T.N. reported in 2003(9) SCC 534 Paras 10 and 11 thereof.
According to the petitioner, since mineral is a substance which is
obtained from the earth by mining and they are found on or in the earth
crust and forms part thereof, vanadium sludge is not a mineral since it does
not form portion of earth's crust and cannot be recovered by a process of
mining, as such no royalty can be imposed thereupon and the demands are
illegal and bad.
The second limb of the petitioner's argument is that since royalty has
been paid to the Respondent-State of Jharkhand on the entire Bauxite Ore
mined before removal to Renukoot in U.P., the levy of royalty on the
residuary material after processing of Bauxite will amount to double levy.
In support of the aforesaid contention, it is also submitted that since
vanadium sludge is obtained as residuary mixture of impurities and
contaminants after processing at Renukoot in the petitioner's company in
U.P. beyond the leased hold area, the respondents authorities of the State of
Jharkhand cannot demand royalty on the vanadium sludge, as the petitioner
has been paying royalty on the entire ROM Bauxite, which means on all
the constituents of Bauxite. Any levy on constituents of Bauxite will
amount to double levy on the same mineral. It is further submitted that
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since the constituents/contaminants of the ROM Bauxite Ore are separated
at a plant outside the leased area at Renukoot in U.P. it is legally
impermissible to demand royalty on such constituents such as vanadium
sludge. Therefore, according to the petitioner, the demand on a part when
the whole has already been subject to levy is unsustainable in law.
The third ground to assail the demand of royalty in the impugned
certificate proceedings are that the impugned levies are contrary to the
express provisions of Rule 64(B)(2) of the Minerals Concession Rules,
1960. Rule 64(B)(2) is being quoted hereunder:
"Rule 64(B) (2): Charging of royalty in case of minerals subjected to
processing.- (1) In case processing of run-of-mine is carried out within the
leased area, then, royalty shall be chargeable on the processed mineral
removed from the leased area.
2. In case run-of-mine mineral is removed from the leased area to a processing
plant which is located outside the leased area, then, royalty shall be chargeable
on the unprocessed run-of-mine mineral and not on the processed product."
It is submitted in support of the aforesaid ground that it is the
admitted position in the present case that ROM Bauxite is removed from
the leased area in Jharkhand to a processing plant located outside the
leased area i.e. in U.P. and vanadium sludge is a constituent of the
processed product. Therefore, as per Rule 64(B)(2) royalty cannot be
charged on the vanadium sludge as such the demand of royalty is bad and
illegal.
Learned senior counsel for the petitioner in support of his challenge
to the impugned proceedings also submitted that vanadium sludge is a
product classified under the heading "Allied and chemical industries" of
the Central Excise Tariff Act, 1985 and is not a mineral and as such royalty
cannot be levied. As per the petitioner, under Chapter 28 of the Central
Excise Tariff Act, the Central Excise Board has clarified that vanadium
sludge is classifiable under the Heading no. 2841.90 of the said Act as Salt
of Oxometallic or Peroxometallic Acid. Learned counsel for the petitioner
in support of the aforesaid contention submitted that vanadium sludge
cannot be termed as a mineral because it is a complex salt of sodium
vandate, sodium phosphate, sodium fluoro-vanadate etc. and part of the
oxalate. Relying upon the expert opinion of the Jawaharlal Nehru
Aluminum Research Development and Designs Centre, Ministry of Mines,
it is submitted that Bauxite is not the natural ore mineral for vanadium. As
such vanadium sludge is a manufactured product and excise duty is paid
on it and therefore no demand of royalty can be raised on vanadium sludge.
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Learned counsel for the petitioner has also submitted that such raising of
demand of royalty may lead to various inconsistencies such as when
Bauxite Ore is sold by the petitioner on ROM condition to a purchaser,
who takes it away to processing plant outside the State. In such
circumstances no royalty can be levied on the purchaser. However, since
the Bauxite Ore contains several chemicals and contanimus, it is
inconceivable that royalty can be levied on all other components
separately.
Learned Advocate General appearing on behalf of the State of
Jharkhand has raised serous objection to the challenge to the certificate
proceedings by the petitioner. Learned Advocate General has submitted
that the present case is covered by the decision of the Hon'ble Patna High
Court in the case of Hindustan Copper Limited-Vs.- State of Bihar &
others in C.W.J.C. No. 2727 of 1996 (R). It is submitted that in the said
case, several other minerals like gold, silver, nickel, solenium and
tellurium were extracted along with copper by the petitioner-M/s.
Hindustan Copper Limited from the leased area granted to it. Hindustan
Copper Ltd. had challenged the levy of royalty on mineral such as solenium
and tellurium in the aforesaid case before the Patna High Court. The
Division Bench of the Patna High Court rejected the contention of the said
company that no royalty can be demanded on the aforesaid minerals on the
ground that they are independent minerals and no license of mining is
granted to extract them independently. It was held that the said Company
was paying royalty on gold, silver and nickel, which were extracted with
copper as per Second Schedule of the M.M.D.R Act and/or all other
minerals, which were not specified in the said Schedule are covered under
Item no. 52 residuary item. Therefore, the demand of royalty of solenium
and tellurium has to be sustained. In the instant case, according to the
learned counsel for the State the royalty is being charged on the vanadium
under the residuary Clause of Item no. 52 at the rate of 10% although
subsequently in the year 2009 by virtue of an amendment to the Second
Schedule Vanadium has been independently included as a mineral at Entry
47. According to the learned counsel for the Respondents-State under the
definition of Section 3(a) of the Act, 1957 minerals includes all minerals
except minerals oils and under Rule 69(2) of Mineral Concessions Rules,
1960 Vanadium has been declared to be a associate mineral. It is the
contention of the Respondents-State that the petitioner has categorically
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admitted in its statements made in reply that vanadium sludge is obtained
during processing of Bauxite for extraction of aluminum and sold by the
petitioner. Learned counsel for the Respondents-State, therefore, submits
that the petitioner has himself admitted that vanadium sludge is being sold
for profit and as such anything which is extracted from the earth for profit
is subject to payment of demand of royalty to the owner of the lease i.e. the
Sate.
Learned counsel for the respondent has relied upon the definition of
mineral as given in Stroud's Judicial Dictionary in support of the aforesaid
contention.
Learned Advocate General has relied upon the judgment delivered
by Hon'ble Supreme Court of India in the case of Som Datt Builders
Limited -Vs.- Union of India reported in (2010) 1 SCC 311 paragraphs 5 to
12 and 23 and the judgment in the case of M/s. Banarsi Dass Chadha and
Brothers-Vs.- Lt. Governor, Delhi Administration & others reported in
1978(4) SCC page 11.
Based upon the aforesaid decision of the Hon'ble Supreme Court of
India, it is submitted that word "Mineral" has no definite meaning but has a
variety of meanings depending upon the context of its use.
It is further submitted that the term "mineral" has been judicially
construed many a time in widest possible amplitude and sometimes
accorded its narrow meaning. Its precise meaning in a given case has to be
fixed with respect to the particular context. The word "Mineral" has not
been circumscribed by a precise scientific definition; it is not a definite
term. In judicial interpretation of the expression mineral variety of tests
and principles have been propounded; their application has not been
uniform. Paragraph 23 of the opinion of the Apex Court in the case of Som
Dutt Builders Ltd., which has been relied upon by the learned Advocate
General is being quoted hereinbelow:
Paragraph 23 : A survey of various decisions referred to hereinabove would
show that there is wide divergence of meanings attributable to the word
"mineral" and that in judicial interpretation of the expression "mineral"
variety of tests and principles have been propounded; their application,
however, has not been uniform. Insofar as dictionary meaning of the word
"mineral" is concerned, it has never been held to be determinative and
conclusive. The word 'mineral' has not been circumscribed by a precise
scientific definition; it is not a definite term. The proposition that the minerals
must always be subsoil and that there can be no minerals on the surface of the
earth has also not found favour in judicial interpretation of the word
"mineral". The term "mineral" has been judicially construed many a time in
widest possible amplitude and sometimes accorded a narrow meaning. Pithily
said, its precise meaning in a given case has to be fixed with reference to the
particular context."
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In support of the aforesaid contention learned counsel for the State
therefore submits that since vanadium sludge is being sold for profit after
extraction of Bauxite Ore by the petitioner, it is liable to pay royalty on the
same.
Learned counsel for the State has relied upon the provisions of Rule
64(C) of the Mineral Concession Rules to submit that the vanadium sludge
is in the nature of tailing/rejects obtained from the leased area and sold for
consumption. Therefore, they shall be liable for payment of royalty. Rules
64( C) is also being quoted hereunder:
Rule 64(C) : Royalty on tailings or rejects.- On removal of tailings or rejects
from the leased area for dumping and not for sale or consumption, outside
leased area such tailings or rejects shall not be liable for payment of royalty.
Provided that in case so dumped tailings or rejects are used for sale or
consumption on any later date after the date of such dumping, then, such
tailings or rejects shall be liable for payment of royalty."
Learned counsel for the Respondents-State has also relied on the
report of the National Metallurgical Laboratory which is Annexure-B and
the report of the Indian Bureau of Mines Annexure-G to the I.A. No. 265 of
2011 and submitted that these experts reports categorically point out that
vanadium is present in Bauxite and can also be recovered from the
vanadium sludge from red mud during production of alumina. The report
of the Indian Bureau of Mines, Government of India also shows that
significant quantities on vanadium have been found in Bauxite Ore and
production of vanadium sludge was reported by different alumina plants
including that of the petitioner-Hindalco with 18.2.% V205. The production
of vanadium sludge has been shown in the form of a chart from the
petitioner's Unit at Renukoot apart from other than companies shown in the
said chart.
Learned counsel for the State therefore submits that vanadium
sludge thus produced is being sold for profit by the petitioner's Unit and is
covered under the expanded definition of mineral as refered to hereinabove.
The petitioner cannot escape the demand of royalty on such vanadium
sludge, which forms part of the Bauxite Ore extracted from the mines under
the lease hold area allotted to the petitioner within the State of Jharkhand.
Learned counsel for the Respondents-State, therefore, submits that in the
matter of expert opinion the courts would not readily interfere.
Learned counsel for the Respondents-State has also vehemently
submitted that the petitioner has straightaway come before this Court under
Article 226 of the Constitution of India against an interim order passed in a
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certificate proceeding by passing the alternative remedy available to it
under Bihar & Orissa Public Demand Recovery Act, 1914. It is further
submitted that the petitioner has full opportunity to raise all such points of
law and facts in support of his contention before the Certificate Officer
under Section 9 of the B.P.D.R Act, 1914 now adopted by Jharkhand by
raising his objection. It is further submitted that the certificate proceeding
has not yet been concluded and thereafter also the petitioner has a remedy
of appeal under section 60 of the said Act, 1914. In similar circumstances,
the Hon'ble Supreme Court of India in the case of Central Coal Fields Ltd. -
Vs.- State of Jharkhand & others reported in 2005(7) SCC 492 upheld the
decision of the learned Single Jude and Division Bench of this Court
whereby the Appellant-Central Coal Fields Ltd. had been directed to invoke
the remedy of appeal under the Act, 1914, in a case where the Appellant-
Central Coal Fields Ltd had challenged the certificate proceedings for
realization of surface rent by the Respondents- State. Learned Advocate
General for the respondents state has relied upon para 10 of the said
judgment in support of his contention wherein the Hon'ble Supreme Court
has upheld the observation of the Division Bench of this Court that powers
of the Appellate Authority under the Bihar & Orissa Public Demand
Recovery Act, 1914 are very wide and the appellant may raise all
contentions including contention as to the jurisdiction of the State
Government and/or its officers in initiating certificate proceedings against
the Company. It is submitted on behalf of the Respondents-State that the
petitioner should be relegated to alternative remedy available under the
P.D.R Act, 1914 as it is avoiding the payment of huge amount of royalty
which are under realization and subject to interim stay by this Court since
the year 2007. learned counsel for the Respondents-State submits that in
such circumstances the state had preferred Interlocutory Application for
vacation of the stay earlier granted to the petitioner in the instant case.
Learned Senior Counsel appearing on behalf of the petitioner, in his
reply, has refuted the contention of the Respondents-State. Learned
counsel for the petitioner submits that the reliance of the State upon Rule
64(C) is wholly misplaced and in the present case Rule 64(b) (2) of the
Mineral Concession Rules 1960 are squarely applicable. In support of his
contention he has also relied upon the judgment of Hon'ble Supreme Court
in the case of National Mineral Development Corporation Ltd.-Vs.- State
of M.P. and another reported in (2004) 6 SC 281, wherein the meaning and
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definition of tailing and rejects have been dealt with. It is further contended
that under provisions of Rule 64(C) tailings are part of ore that are regarded
too poor to be treated further and "rejects" have also similar connotation
being part of the ore. These substances still were minerals although of
poor quality and if disposed of later will attract levy of royalty. For the
applicability of Rule 64 (C) the materials have to be dumped as not for sale
which is not the case here. Learned counsel for the petitioner has also
distinguished the decision of the Hon'ble Patna High Court rendered in the
case of Hindustan Copper Ltd. -Vs.- State of Bihar (Supra) by submitting
that in the said case the minerals solenium and tellurium were mined as
minerals along with copper whereas in the present case vanadium sludge is
not a mineral and has not been mined along with Bauxite Ore. It is
submitted that in the said circumstances, the Hon'ble Patna High Court held
that the Petitioner-Hindustan Copper was liable to pay demand of royalty
on such independent minerals extracted in addition to copper in a case
where the company had paid royalty on Gold, Silver, Nickel, but refused to
pay royalty on solenium and tellurium, which were also minerals.
In reference to the reliance of the State on Rule 69 of the Minerals
Concession Rules and Item no. 47 of the Second Schedule, it is contended
that vanadium is a mineral or associated mineral, learned counsel for the
petitioner categorically submits that the argument is wholly misplaced as
there is no doubt that vanadium is a mineral. However, the issue in the
present writ application is whether royalty is payable on vanadium sludge.
According to the petitioner, the reference of associated minerals under
Rule 69(ii) is also misplaced as the concept of associated mineral is in
different contexts of the extent of allotment of area under Section 6 of the
MMDR Act, 1957, wherein rule 6(a) clearly says that enumerated minerals
mentioned in Rule shall be the group of associated minerals for the purpose
of section 6 of the 1957 Act. Section 6 of 1957 act limits the maximum
area for which prospecting license or a mining lease may be granted in
respect of any minerals or prescribed group of associated minerals. The
vanadium sludge is not at all associated with mineral bauxite and such
contention is totally irrelevant.
The petitioner's counsel also submitted that reliance upon the
judgment in the case of Som Datt Builders Limited -Vs.- Union of India
reported in (2010) 1 SCC 311 and in the case of V.P.Pithupitchai and
another-Vs.-Special Secretary to the Govt. of T.N.reported in 2003(9)
11
SCC 534 by the respondents are wholly misplaced as these cases turn on
the interpretation of the minor minerals defined in Section 3(e) of 1957
Act and the powers of the Central Government in relation thereto. It is
submitted on behalf of the counsel for the petitioner that reliance upon the
test report of National Metallurgical Laboratory and Indian Mineral Year
Book 2003 published by the Indian Bureau of Mines does not help in
setting to rest the issues involved in the present case as the test report
shows V205 contained in the Bauxite Ore is less than 1% as has already
submitted by the petitioner, on the basis of the report of the Jawaharlal
Nehru Aluminum Research Development and Design Centre (Annexure-1
to the writ application.). The issue involved in the present writ application
is whether vanadium sludge, is subject to royalty and not vanadium.
Lastly senior counsel for the petitioner has also contested the stand
of the Respondent State in relation to the plea of alternative remedy
available being available to the petitioner in the said certificate proceeding
under PDR Act, 1914 itself by relying upon the judgments in the case of L.
Hirday Narain-Vs.- Income Tax Officer, Barelilly reported in AIR 1971
SC 33 para 12 and in the case of Whirlpool Corporation Vs. Registrar of
Trade Marks Mumbai and others reported in AIR 1999 SC 22 Paras 20
and 21 by Hon'ble Supreme Court of India.
I have heard learned counsel for the parties at length. The petitioner
herein has come before this Court for quashing of the interim order dated
18th December, 2006, passed by the Certificate Officer (Mines), whereby
the petitioner has been directed to deposit 50% of the certificate amount
with respondent no.2 and further directed it to furnish a Bank Guarantee for
the rest 50% of the certificate amount while keeping the certificate case
pending. The petitioner has also sought quashing of the entire certificate
proceeding in Certificate Case No. 17 GR/2006-7, pending before
respondent no. 4. He has also sought for a declaration i.e. it is not liable to
pay royalty on Vanadium Sludge. The petitioner while seeking the
aforesaid reliefs has raised a number of grounds stating that he pays royalty
on the entire amount of Bauxite Ore extracted in (ROM) condition from the
mines located to the State of Jharkhand. After the Bauxite Ore is
transported to its processing plant at Renukoot Sonebhadra (U.P.) while
processing Bauxite Ore through a process known as "Bayer's Process",
alumina is extracted. Vanadium Sludge is left behind as impurity, which is
not a mineral as per the report of Jawaharlal Nehru Aluminum Research
12
Development & Designs Centre. According to the petitioner, Vanadium
Sludge not being a mineral, is not subject to payment of royalty.
The respondents have, however, chosen to levy royalty on the
Vanadium Sludge sold by Hindalco Industries Ltd. The State of Jharkhand
had earlier also demanded royalty on Vanadium Sludge, which was
challenged before the Allahabad High Court and an interim order was
passed, by which the demand was stayed on payment of 50% and a Bank
Guarantee of the balance 50% which the petitioner has complied under
protest.
The petitioner has relied upon the provisions of the M.M.D.R Act,
1957, specifically Section 9 and the Second Schedule attached thereto and
tried to substantiate its contention that Vanadium Sludge contains small
quantities of Vanadium Pentoxide, which is not a mineral and therefore not
subject to royalty. The petitioner has also relied upon the judgments
rendered by Hon'ble Supreme Court of India in the case of Ichchapur
Industrial Cooperative Society Ltd. -Vs.- Competent Authority, Oil &
Natural Gas Commission and another reported in 1997(2) SCC 42 and in
the case of V.P.Pithupitchai and another reported in 2003(9) SCC 534 in
support of his contention. The petitioner has also relied upon the provisions
of Rule 64(b)(2) of the Mineral Concession Rules, 1960, to submit that
when run-of-mine (ROM) mineral is removed from the leased area to a
processing plant outside the leased area, then, royalty shall be chargeable
on the unprocessed run-of-mine mineral and not on the processed product.
According to the petitioner, Vanadium Sludge has been treated to be
an excisable item under the Central Excise Tariff Act, 1985, and, therefore,
it being a manufactured product, no payment of royalty can be raised on it.
Based upon these and other submissions, the petitioner challenged the
certificate proceeding and the interim order passed therein as illegal and
wholly without jurisdiction. More over according to him, as the petitioner
cannot be made to pay double levy on the entire Bauxite Ore over which
royalty has been earlier charged and paid.
The Respondents-State has strongly contested the aforesaid grounds
as per their submissions which have already been recorded hereinabove.
As per their contentions, the definition of mineral as judicially construed is
in the widest possible amplitude and sometimes accorded its narrow
meanings which in each case has to be fixed with reference to a particular
context. According to the State, issues like the present one have also been
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considered in a Division Bench Judgment of the Patna High Court in the
case of Hindustan Copper Limited-Vs.- State of Bihar and others, where
the lessee-petitioner was held to be liable to pay royalty on minerals which
were extracted apart from copper, for which only the lease was granted.
According to them, the National Metallurgical Laboratory and the report of
the Indian Bureau of Mines categorically point out that Vanadium is
present in Bauxite and can also be recovered from Vanadium Sludge from
red mud during production of alumina relying upon wide meaning of
mineral attached to it. It is their submission that when Vanadium Sludge is
being sold for profit after extraction of Bauxite Ore, it is liable to pay
royalty on same. Even otherwise, it is the contention of the State that when
the Vanadium Sludge is sold for consumption, it is subjected to payment of
royalty under Rule 64(C). In the matter of report of experts, this Court
should be sloth to interfere in these issues. As per the State whether
vanadium sludge is a mineral or not depends upon report of experts
determined on issues of fact and this court should not entertain the same in
extra ordinary jurisdiction. It is the strong contention of the Respondents-
State that the petitioner in any case has come before this Court against an
interim order passed in certificate proceeding by avoiding the alternative
remedy available to it under the Bihar & Orissa Public Demand Recovery
Act, 1914, now adopted by Jharkhand. The petitioner has full opportunity
to raise all the points of law and fact in support of his contention before the
Certificate Officer under the provisions of the said Act through his
objection and thereafter he has further remedy of appeal under Section 60
of the Act, 1914.
Learned counsel for the Respondents-State submits that in such
circumstances the Hon'ble Supreme Court of the India in the case of
Central Coal Fields Ltd. (Supra) relegated the appellants Central Coal
Fields Ltd. to invoke the forum of appeal under the Act of 1914. As such
the writ petition is not maintainable under Article 226 of the Constitution
of India, the petitioner having avoided the alternative remedy available to
it.
Admittedly, the Certificate Case No. 17 GR/06-07 is pending before
the Certificate Officer (Mines) South Chhotanagpur Anchal,Doranda,
Ranchi, respondent no. 4. The petitioner has appeared there and filed a
detailed objection, which is contained as Annexure-13 to the present writ
application. The petitioner has raised all the grounds as has been raised
14
herein involving questions of fact as well of law in his objection filed under
Section 9 of the Act of 1914 before the Certificate officer. The petitioner
has while doing so also sought opportunity to produce evidence oral as
well as documentary before the certificate officer in support of his
contention while objecting to the realization of the demand of royalty
levied on vanadium sludge as aforesaid.
However, it appears that the Certificate Officer has without dealing
with the objection straightaway issued the order dated 18th December,
2006 (Annexure-15), directing the petitioner to deposit 50% amount of
royalty and furnish a Bank Guarantee for rest of 50% of the demand. The
interim order passed by the Certificate Officer without considering the
objection filed by it, is not in accordance with law under P.D.R Act, 1914.
It appears that in similar circumstances, in the case of Central Coal Fields
Ltd. -Vs.-State of Jharkhand and others reported in 2005(7) SCC 492, the
appellant-Central Coal Fields Ltd. had come initially challenging the
interim order passed by the Circle Officer directing the appellant-Company
to deposit the demand for realization of surface rent by the Respondents-
State of Jharkhand. The said demand was challenged on behalf of the
appellant-C.C.L on the ground that the State Government had no
jurisdiction to do so as under Section 10 of the Coal Bearing Areas
(Acquisition and Development) Act, 1957. The land as well as the rights
over the land stood vested in the Central Government and the State
Government had no right, title or interest in the land or rights over such
land and no proceeding for recovery of rent could be effected nor any
charge could be levied by the State Government from the appellants. In
such circumstances, in the first round of litigation, the interim order passed
by the Certificate Officer was set aside by the learned Single Judge and the
Certificate Officer was directed to dispose of the objection filed by the
Company by passing an appropriate order, in accordance with law. The
Certificate Officer, however, rejected the objection and held the company
liable to pay rent. The said Appellant-Company aggrieved by the said
order preferred a writ petition being CWJC No. 2535 of 2000. The said
writ petition was dismissed by the learned Single Judge by observing that it
was not disputed that the order had been passed by the Certificate Officer
against which the Appellant-Company could file an appeal under the Bihar
& Orissa Public Demand Recovery Act, 1914. The Company thereafter
filed a Letters Patent Appeal against the order passed by the learned Single
15
Judge, which was also dismissed upholding the order of the learned Single
Judge and the Division Bench also observed that under Section 60 of
Public Demand Recovery Act, 1914, the right of appeal was unfettered and
the jurisdiction of appellate forum is plenary and unbound. The Appellant-
CCL challenged the same before the Hon'ble Supreme Court in Civil
Appeal no. 5151 of 2005 and another analogous cases. The contention of
the appellant company was that Division Bench of the High Court could
not have dismissed the Letters Patent Appeal on the ground of alternative
remedy as a question of jurisdiction had been raised, which went to the root
of the proceeding and ought to have been decided by the High Court. In
those circumstances, the Hon'ble Supreme Court of India upheld the
decision of the learned Single Judge as well as Division Bench by holding
that it cannot be said that the learned Single Judge and the Division Bench
had committed an error of law in dismissing the petitions and appeals by
allowing the appellant to avail the alternative remedy of filing an appeal.
The Hon'ble Supreme Court further observed that the powers of the
Appellate Authority under the Bihar & Orissa Public Demand and
Recovery Act, 1914 are very wide and the appellant may raise all
contentions including the contention as to the jurisdiction of the State
Government and/or its officer in initiating certificate proceedings against
the Company.
In that view of the matter, the Appellant-Company was granted
liberty to approach the Appellate Authority by filing appeals under P.D.R
Act, 1914. Relevant paragraphs 10 & 11 of the opinion of Hon'ble
Supreme Court of India as delivered by Hon'ble C.K.Thakker, J. reported
in (2005) 7 SCC 492, are quoted hereinbelow:
"Para 10: Having heard the learned counsel for the parties, in
our opinion, the appeals deserve to be disposed of by making certain
observations. It is no doubt true that according to the appellant
Company the certificate proceedings could not have been initiated under
the Bihar and Orissa Public Demands Recovery Act, 1914, in view of the
provisions of the Coal Bearing Areas (Acquisition and Development)
Act, 1957, the Mines and Minerals (Regulation and Development) Act,
1957 and also the Coking Coal Mines (Nationalization) Act, 1972. But
it also cannot be overlooked that the action has been taken under the
Bihar and Orissa Public Demands Recovery Act, 1914 and the appellant
Company was directed to make payment. The said order is subject to
appeal under Section 60 of the said Act. A reading of the order dated
17.11.1999passed by the Certificate Officer makes it clear that before taking the action, an opinion of the Advocate General of the State of Bihar was sought by the respondent. Referring to the provisions of the Coking Coal Mines (Nationalization) Act, 1972, the Advocate General opined that such amount could be claimed by the State Government from the appellant Company. Reference was made to Sections 6 and 7 16 of the said Act and it was observed that the State Government had power to make demand of rent from the appellant Company. In view of the above position, it cannot be said that the learned Single Judge as well as the Division Bench had committed an error of law in dismissing the petitions and appeals by allowing the appellant to avail of an alternative remedy of filing appeals. Those orders, therefore, do not suffer from any infirmity. As observed by the Division Bench, the powers of the Appellate Authority under the Bihar and Orissa Public Demands Recovery Act, 1914 are very wide and the appellant may raise all contentions including the contention as to the jurisdiction of the State Government and/or its officers in initiating certificate proceedings against the Company. Regarding the earlier decision in National Coal Development Corpn. the High Court was right in observing that the contention regarding alternative remedy was neither raised nor considered nor a finding had been recorded thereon. In view of the said fact also it would be appropriate if the appellant Company is granted liberty to approach the Appellate Authority by filing appeals and the Bihar and Orissa Public Demands Recovery Act, 1914.
Para 11 : Since the appellant Company had filed petitions, intra- court appeals and the appeals in this Court, it would be in the interest of justice and we direct, that if appeals under the Bihar and Orissa Public Demands Recovery Act, 1914 are filed within a period of two months from today, the Appellate Authority will entertain them without raising any objection as to limitation. The Appellate Authority will hear the parties and decide the appeals in accordance with law as expeditiously as possible preferably within three months from filing of the appeals without being influenced in any manner by the observations made by the learned Single Judge, the Division Bench or by us in the present appeals. We may clarify that we are disposing of the appeals upholding the preliminary objection of the State Government regarding availability of alternative remedy of appeals and we may not be understood to have expressed any opinion one way or the other on merits and all contentions of all parties are kept open."
The Hon'ble Supreme Court of India in the recent judgment delivered in the case of United Bank of India -Vs.-Satyawati Tondon and others reported in (2010) 8 SCC page 110, observed that where it is open to the aggrieved petitioner to obtain redress in the manner provided by a statute, the High Court will not permit entertaining a petition under Article 226 of the Constitution of India and the machinery created under statute to be passed. It also observed that in the matters of recovery of taxes, cess, fees etc. the High Court should be extremely careful, circumspect in exercise of its discretion where the petitioner can avail effective alternative remedy by filing application, appeal and revision and that the particular legislation contains a detailed mechanism for redressal of his grievance. In the instant case as already observed by Hon'ble Supreme Court in the case of Central Coal Fields Ltd. (Supra), the powers of the authorities under the Public Demands Recovery Act are very wide and it can also entertain contentions as to the jurisdiction of the State Government and its officers in initiating certificate proceeding against the company. There is no reason 17 why the petitioner should also be not relegated to invoke remedy available to him before the Certificate Officer where he has appeared already and filed detailed objection under Section 9 of the Act, 1914.
The objection filed under Section 9 of the Act of 1949 is pending before the Certificate Officer. The petitioner appears to have raised all such grounds of law and facts as has been raised herein, before the Certificate Officer as would appear from a perusal of the objection petition filed under Section 9 of the Act ,which is at Annexure-13 to the writ application. The issue whether Vanadium Sludge is mineral or not is also dependant upon determination of issues of fact being contested by the rival parties.
In the present case, the Certificate Officer without deciding the objection of the Petitioner-Company as under Section 9, has straightaway proceeded to pass an interim order directing it to deposit 50% of the amount and rest by way of a Bank Guarantee, which is contrary to the provisions of the P.D.R Act, 1914. The Certificate Officer has to adjudicate and determine the liability after consideration of the objection of the petitioner and the claim of the rival parties. The impugned order dated 18th December,2006, cannot be sustained in law and it is accordingly set aside. The Certificate Officer, respondent no. 4 is directed to consider the objection filed by the petitioner under Section 9 of P.D.R Act, 1914, pending before him, as expeditiously as possible without being influenced in any manner by observations made hereinabove. It is further clarified that while upholding the preliminary objection of the State Government regarding availability of alternative remedy, it may not be understood that this court has exercised any opinion one way or the other on merits and all contentions of all parties are kept open. In the facts and circumstances of the case, for the aforesaid reasons this writ petition is disposed of in the aforesaid terms. However, there shall be no order as to costs.
Consequently, the I. A. No. 571 of 2011 and I.A. No. 753 of 2010 are also disposed of.
(Aparesh Kumar Singh, J) Jharkhand High Court, Ranchi The 20th December, 2012 jk/NAFR