Madhya Pradesh High Court
Prestigious vs M.P. Rural Road Development on 15 July, 2004
Equivalent citations: AIR2005MP55, AIR 2005 MADHYA PRADESH 55
Author: Rajendra Menon
Bench: Rajendra Menon
ORDER Rajendra Menon, J.
1. As common questions are involved, the order in this petition shall govern the disposal of writ petitions No. 8541/03, 8571/03, 8622/03, 8652/03, 8734/03, 8740/03, 8962/03, 9041/03, 39/04, 461/04, 645/2004 and 1196/2004.
2. Petitioners in all these petitions are establishments carrying out activities of construction work for various departments of the State Government or the authorities, who are arrayed as respondents in this petition. Petitioners have been granted contract in accordance with the tenders submitted by them.
3. According to the petitioners, for the purpose of executing the work of construction awarded to them petitioners are required to use certain minor minerals like sand, holders, gitti etc. which they have purchased them from the suppliers of these materials and the suppliers in turn have purchased from various mine owners and quarry owners. Grievance of the petitioners are that while settling the bills of the petitioners respondents are insisting upon production of No Objection Certificate from the mining department to show that royalty on the material has been paid as a condition precedent for finalisation of the bills. Inviting my attention to Section 9 of the Mines and Minerals (Development and Regulation) Act, 1957, it was argued that the incidence for payment of royalty arises the moment mineral is extracted. Royalty is to be paid by the mining lease holder and the mineral extracted cannot be removed from the mine area or the quarry area, as the case may be, without payment of royalty. Instead of taking action for recovery of royalty at the place where the mineral is extracted, insisting upon production of No Objection Certificate from the petitioners, it is said to be illegal. In support of their contention, petitioners rely on a judgment rendered by a Division Bench of this Court in the case of M.P. Contractors' Sangh Indore v. State of Madhya Pradesh (1987 Jab LJ 743) : (AIR 1987 Madh Pra 74).
4. Refuting the aforesaid respondents have contended that as they have reasons to believe that royalty in accordance with the statutory provision has not been paid, they have stipulated a condition in all the agreements wherein petitioners are required to show that all taxes, royalties and other dues have been cleared, Inviting my attention to Clause 6.2 of the tender document filed in writ petition No. 8449/2003 it was submitted by Shri J. D. Suryavanshi that in view of the aforesaid, the petitioners have to establish that royalty has been paid and, therefore, this being a condition in the agreement, for use of materials like Gitti, Murram and B.T. and other materials petitioners have to establish that royalty has been paid. According to the respondents, there is no illegality in claiming such No Objection Certificate and the petitions are liable to be dismissed.
5. Having heard the learned counsel for the parties and on perusal of the judgment rendered by the Division Bench in the case of M.P. Contractors' Sangh (AIR 1987 Madh Pra 74) (supra), it is seen that in the said case registered society of building and contractors association had challenged certain circulars issued by the State Government to all Collectors indicating therein that before bills of the contractors are paid with regard to supply of minor minerals, the department should ensure that royalty for the same has been paid. Accordingly, Collectors started insisting upon proof of payment of royalty. This action was challenged in these petitions and the circulars issued by the State Government and consequential instructions issued by the Collectors were challenged mainly on the ground that royalty is paid the moment mineral is extracted and the petitioners, who purchase the processed mineral material from various suppliers, cannot produce any receipt or certificate as they themselves do not know from which quarry or mine the supplier has purchased the material.
6. Considering the rival submissions that were advanced before it the Division Bench in the case of M. P. Contractors' Sangh (supra) in para 13 has observed that it is the duty of the Government to protect its property and see that no theft of minor minerals is committed nor the same is removed without payment of royalty. It has been observed in para 13 as under :--
"It is the duty of the Government to protect its property and see that no theft of minor minerals is committed nor such minor minerals are royalty. It is the duty of the State Government to keep adequate staff at every quarry so that an effective control and check could be put up and the leakage could be avoided.
This cannot be a valid argument that because the Government is not able to put up an effective check or control, for which they are alone responsible, the building contractors should produce the royalty paid receipts before their bills are cleared for payment at least in these cases where the minor minerals are supplied by such contractors through petty contractors or other merchants."
7. Considering the aforesaid, there is no reason why the impugned action in this case be also not held to be illegal. Even though, in the present case the agreement contains certain stipulation in Clause 6.2 as referred to in para 4, but even this condition stipulates that all dues, taxes, royalty etc. levied on the contractor's work shall be payable by the contractor. This condition only stipulates that taxes, dues and royalties are to be paid by the contractor. As far as payment of royalty is concerned, liability can be imposed upon the contractor only if the contractor himself is extracting the mineral and using it for the construction work as the incidence for payment of royalty arises at the place where the mineral is extracted and not thereafter.
8. During the course of hearing, Shri J. D. Suryavanshi, learned counsel appearing for some of the respondents, submitted that in the case of M.P. Contractors' Sangh (AIR 1987 Madh Pra 74) (supra) the main reason for allowing the petition was because there was no such stipulation in the agreement or contract and in that case arguments of the contractors were that without any stipulation in the agreement or contract of work the action was challenged.
9. It was submitted by Shri Surayavanshi by referring to Clause 6.2 and Clause 6.2.1 of the agreement, filed as Annexure R/1 in Writ Petition No. 8449/2003, that as the condition is stipulated in the agreement, the present case is clearly distinguishable.
10. I am afraid, the aforesaid submission is misconceived. Section 9 of the Mines and Minerals (Development and Regulation) Act contains the statutory provision with regard to liability for payment of royalty. Similarly, the M.P. Minor Mineral Rules, 1996 also contemplates various provisions incorporated in the quarry lease in accordance with Rule 30, wherein detailed procedure is contemplated for payment of royalty and other dues. Chapter 9 of the M.P. Minor Mineral Rules contemplates a detailed procedure for assessment and recovery of royalty. A combined reading of the aforesaid statutory provisions clearly indicates that the statute has imposed strict condition for recovery of royalty from the mine owners. Clause 6.2 and Clause 6.2.1 of the agreement: read as under :--
"6.2 TAXES -- All dues regarding taxes, including the sales tax, other duties, royalty etc. levied on the contractor's works by Government and local or private individuals will be payable by the contractor. The Authority will grant certificate for the quantities actually used on the work but will not entertain any claim on this account.
6.2.1 Payment of contractor's final bill shall not be released till 'no dues' certificate from Collector relating to the payment: of royalty is submitted by the contractor."
11. As far as Clause 6.2 is concerned, as already indicated hereinabove it only imposes a liability on the contractor providing for payment of all sales-tax and other dues like royalty. Clause 6.2.1, which contemplates production of 110 dues certificate from the Collector with regard to payment of royalty, is clearly contrary to the statutory provisions because the Collector can issue certificate with regard to payment of royalty only if the royalty is payable by the contractor. If the contractor has purchased the material from a supplier and the supplier has purchased the material from the mine owner, who has extracted the mineral from a place which is not known to the contractor, the contractor cannot be expected to run from pillar to post finding out the source of extraction and the mineral consumed by him and then produce the certificate. This condition seems to be impracticable and inconsistent to the statutory provision. Considering this provision in the backdrop of the observations made by the Division Bench in para 13 in the case of M. P. Contractors' Sangh (supra), I am of the considered view that the aforesaid condition cannot be enforced in the manner as it is being done.
12. In view of the above and keeping in view the provisions of Section 9 of the Mines and Minerals (Development and Regulation) Act, 1957 and in view of the law laid down by the Division Bench in the case of M. P. Contractors' Sangh (AIR 1987 Madh Pra 74) (supra), the stipulation contained in the order issued by the authorities in this regard for production of proof with regard to payment of royalty is unsustainable.
13. Accordingly, petitions are allowed. Respondents are directed not to insist upon production of certificate of proof with regard to payment of royalty for minor minerals which are employed by the petitioners-contractors in execution of the work awarded to them. It is held that the respondents are not entitled to deduct any amount towards royalty from the running bills from the petitioners.
14. Petitions stand allowed and disposed of with the aforesaid.