Gauhati High Court
Dipayan Paul And Chanchal Paul Jv And Anr vs The State Of Assam And 3 Ors on 8 February, 2019
Equivalent citations: AIRONLINE 2019 GAU 51
Author: Kalyan Rai Surana
Bench: Kalyan Rai Surana
Page No.# 1/16
GAHC010102502018
THE GAUHATI HIGH COURT
(HIGH COURT OF ASSAM, NAGALAND, MIZORAM AND ARUNACHAL PRADESH)
Case No. : WP(C) 3137/2018
1:DIPAYAN PAUL AND CHANCHAL PAUL JV AND ANR.
A JOINT VENTURE FIRM REPRESENTED BBY ITS LEAD PARTNER, SHRI
DIPAYAN PAUL, AGED ABOUT 50 YEARS, HAVING ITS OFFICE AT OLD
HOSPITAL ROAD, HAILAKANDI, ASSAM 788151
2: SHRI CHANCHAL PAUL
S/O LATE PRAFULLA CHANDRA PAUL
PARTNER OF PETITIONER NO. 1
DIPAYAN PAUL AND CHANCHAL PAUL JV
R/O ASHRAM ROAD
HAILAKANDI
PIN 78151
ASSAM
VERSUS
1:THE STATE OF ASSAM AND 3 ORS.
REPRESENTED BY THE COMMISSIONER AND SECY. TO GOVT. OF ASSAM,
PWD (ROADS), DISPUR, GUWAHATI 781006
2:THE CHIEF ENGINEER
PWD
(NH WORKS)
ASSAM
CHANDMARI
GUWAHATI 781003
3:THE EXECUTIVE ENGINEER
PWD
KARIMGANJ NH DIVISION
KARIMGANJ
PIN 788710
DIST. KARIMGANJ
Page No.# 2/16
ASSAM.
4:THE SUPERINTENDENT OF POLICE
BUREAU OF INVESTIGATION (EO)
ASSAM
SRIMANTAPUR
GUWAHATI-3
Advocate for the Petitioner : MR B D DAS
Advocate for the Respondent : GA, ASSAM
Linked Case : WP(C) 5688/2018 1:SIMPLEX INFRASTRUCTURES LTD.
A PRIVATE LIMITED COMPANY REGISTERED UNDER THE COMPANIES ACT 1956 HAVING ITS REGISTERED OFFICE AT SIMPLEX HOUSE 27 SHAKESPEARE SARANI KOLKATA- 700017 WEST BENGAL AND REGIONAL OFFICE AT BETKUCHI P.O. SAWKUCHI GUWAHATI - 781040 DIST. KAMRUP (M) ASSAM REP. BY ITS VICE PRESIDENT SHRI ASHISH BASU AGED ABOUT 60 YEARS S/O LATE JAGABANDHU BASU R/O 12/1 NELLI SENGUPTA SARANI P.S. NEW MARKET P.O. KOLKATA -700087 WEST BENGAL.
VERSUS 1:THE STATE OF ASSAM AND 4 ORS.
REP. BY THE COMMISSIONER AND SECRETARY TO THE GOVT. OF ASSAM Page No.# 3/16 PWD (ROADS NH DIVISION) DISPUR GUWAHATI- 781006.
2:THE CHIEF ENGINEER PWD (NH WORKS) ASSAM CHANDMARI GUWAHATI- 781003.
3:THE EXECUTIVE ENGINEER PWD NH DIVISION SILCHAR P.O. SILCHAR- 788001 DIST. CACHAR ASSAM.
4:THE ADDL. DIRECTOR GENERAL OF POLICE BUREAU OF INVESTIGATION (EO) ASSAM SRIMANTAPUR GUWAHATI- 781032 DIST. KAMRUP (M) ASSAM 5:THE SUPERINTENDENT OF POLICE BUREAU OF INVESTIGATION (EO) ASSAM SRIMANTAPUR GUWAHATI- 781032 DIST. KAMRUP (M) ASSAM.
Advocate for the Petitioner : MR B D DAS Advocate for the Respondent : GA ASSAM Linked Case : WP(C) 8179/2018 Page No.# 4/16 1:M/S. SANWAR MAL KHETAWAT TARUN RAM PHUKAN ROAD P.O. HAIBARGAON- 782002 DIST- NAGAON ASSAM REP. BY ITS PARTNER SHRI SANJAY KUMAR KHETAWAT AGED ABOUT 57 YEARS S/O- SRI SANWAR MALL KHETAWAT R/O- T.R.PHUKAN ROAD P.O. HAIBARGAON- 782002 DIST- NAGAON ASSAM VERSUS 1:THE STATE OF ASSAM AND 2 ORS.
REP. BY THE COMM. AND SECY. TO GOVT. OF ASSAM P.W.D. (ROADS) DISPUR GHY-6 2:THE CHIEF ENGINEER PWRD (ARIASP AND RIDF) CUM PROJECT DIRECTOR WORLD BANK AIDED PROJECTS ARRTI CAMPUS FATASIL AMBARI GHY- 25 DIST- KAMRUP (M) ASSAM 3:THE EXECUTIVE ENGINEER PWD (R) NAGAON STATE ROAD DIVISION NAGAON DIST- NAGAON ASSAM Advocate for the Petitioner : MR B D DAS Advocate for the Respondent : GA ASSAM Linked Case : WP(C) 3765/2018 1:DIPAYAN PAUL AND CHANCHAL PAUL JV AND ANR. A JOINT VENTURE FIRM REP. BY ITS LEAD PARTNER Page No.# 5/16 SHRI DIPAYAN PAUL AGED ABOUT 50 YEARS HAVING ITS OFFICE AT OLD HOSPITAL ROAD HAILAKADI ASSAM PIN - 788151.
2: SHRI CHANCHAL PAUL S/OLT. PRAFULLA CHANDRA PAUL PARTNER OF PETITIONER NO. 1 DIPYAN PAUL AND CHANCHAL PAUL JV RESIDENT OF ASHRAM ROAD HAILAKANDI PIN - 788151 ASSAM VERSUS 1:THE STATE OF ASSAM AND 4 ORS.
REP. BY THE COMMISSIONER AND SECRETARY TOT HE GOVT. OF ASSAM PWD (ROADS) DISPUR GUWAHATI- 781006.
2:THE CHIEF ENGINEER PWD (NH WORKS) ASSAM CHANDMARI GUWAHATI - 781003.
3:THE EXECUTIVE ENGINEER PWD KARIMGANJ NH DIVISION KARIMGANJ- 788710 DIST. KARIMGANJ ASSAM 4:THE SUPERINTENDENT OF POLICE BUREAU OF INVESTIGATION (EO) ASSAM SRIMANTAPUR GUWAHATI -32.
5:THE REGIONAL OFFICER Page No.# 6/16 MINISTRY OF ROADS TRANSPORT AND HIGHWAYS RAJGARH ROAD GUWAHATI - 781003.
Advocate for the Petitioner : MR B D DAS Advocate for the Respondent : GA ASSAM Linked Case : WP(C) 3759/2018 1:DIPAYAN PAUL AND CHANCHAL PAUL JV AND ANR. A JOINT VENTURE FIRM REP. BY ITS LEAD PARTNER DIPAYAN PAUL HAVING ITS OFFICE AT OLD HOSPITAL ROAD HAILAKANDI ASSAM PIN- 788151 2: CHANCHAL PAUL S/O- LATE PRAFULLA CHANDRA PAUL PARTNER PETITIONER NO.1 DIPAYAN PAUL AND CHANCHAL PAUL JV R/O- ASHRAM ROAD HAILAKANDI PIN- 788151 ASSAM VERSUS 1:THE STATE OF ASSAM AND 3 ORS.
REP. BY THE COMMISSIONER AND SECRETARY TO GOVT OF ASSAM PWD ROADS DISPUR GUWAHATI- 781006 2:THE CHIEF ENGINEER PWD (NH WORKS) ASSAM CHANDMARI GUWAHATI- 781003 3:THE EXECUTIVE ENGINEER PWD KARIMGANJ N H DIVISION KARIMGANJ- 788710 DIST- KARIMGANJ Page No.# 7/16 ASSAM 4:THE SUPERINTENDENT OF POLICE BUREAU OF INVESTIGATION(EO) ASSAM SRIMANTAPUR GUWAHATI- 32 Advocate for the Petitioner : MR B D DAS Advocate for the Respondent : GA ASSAM BEFORE HON'BLE MR. JUSTICE KALYAN RAI SURANA Advocates for the petitioners : Mr. B.D. Das, Dr. A. Saraf, Senior Adv(s).
: Mr. H.K. Sarma, Ms. R. Deka, : Mr. P. Boruah.
Advocates for the respondents : Mr. D. Mozumder, Senior Advocate, : Additional Advocate General, Assam, : Mr. S. Biswas, Mr. M.R. Adhikari, : Govt. Advocates.
Date of hearing : 05.02.2019.
Date of judgment : 08.02.2019.
JUDGMENT AND ORDER
(C.A.V.)
As common questions of fact and law arise for decision in this bunch of 5 (five) writ petitions, with the consent of both sides the matter has been heard analogously.
2) Heard Mr. B.D. Das, learned senior counsel assisted by Mr. H.K. Sarma and Ms. R. Deka, learned counsel for the petitioners in WP(C) 3137/2018, WP(C) 3759/2018, Page No.# 8/16 WP(C) 3765/2018 and WP(C) 8179/2018. Also heard Dr. A. Saraf, the learned senior counsel assisted by Mr. P. Boruah, learned counsel for the petitioner in WP(C) 5688/2018. Also heard Mr. D. Mozumder, learned Additional Advocate General for the State of Assam, assisted by Mr. S. Biswas, learned State counsel.
3) The issue arising for decision in the present case is - Whether the Public Works Department, Assam is entitled to deduct the component of "forest royalty" payable to the State Forest Department on account of removal or consumption or utilizing "earth" for the allotted contract works at the time of releasing the payment of outstanding bills of such contractors engaged by the Department?
4) The learned senior counsel for the petitioner in WP(C) 3137/2018 has submitted that in the said case, the invitation for bid was issued on 11.11.2008 and award of contract, a contract agreement was signed between the petitioner No. 1 and the competent authority of the PWD on 05.12.2018 and accordingly, the entire awarded work was completed on 24.03.2014. However, at the time of processing the bills for payment, on 01.07.2017 and 18.07.2017, the petitioners were directed to furnish proof of royalty paid for utilization of earth in the contract work and thereafter, vide letter dated 31.10.2017, a royalty amount of Rs.91,78,896/- was demanded from the petitioners for 3,05,963.22 M 3 quantity of soil (earth) at the rate of Rs.30/- per cum of earth with further imposition of monopoly at the rate of 30%. Thereafter, by the letter on 19.03.2018, the Executive Engineer, PWD had informed the petitioners that on their failure to pay the royalty amount, such money would be recovered from ongoing different works and from security money.
5) Similar demands against forest royalty were made from the petitioners in WP(C) 3759/2018 to the extent of Rs.1,04,80,380/- by further informing the petitioners that on failure to pay such royalty amount, deduction of such payment would be made from the security deposit and from the next bill for the ongoing project.
6) In connection with WP(C) 3765/2018, against the demand for payment of Page No.# 9/16 forest royalty to the extent of Rs.2,82,50,412/-, the PWD authorities had withheld a sum of Rs.1,19,17,312/- from the running account bill dated 07.12.2017 of the petitioner.
7) Similarly in WP(C) 8179/2018, the petitioners have projected that they had come to know from the Memorandum of Payment dated 09.10.2018 that out of the bill amount of Rs.2,93,04,094/- payable to the petitioners, a sum of Rs.96,08,943/- was deducted against the payment of forest royalty for use of earth in the contract work.
8) In WP(C) 5688/2018, it is projected that the authorities had accepted the offer made by the petitioner on 27.02.2010 and accordingly, the petitioners were issued notice dated 15.02.2011 to proceed with the work. Thereafter, by letter dated 19.03.2018 issued by the Additional Director General of Police, Bureau of Investigation (E&O), Assam the petitioner was directed to deposit a total forest royalty of Rs.8,73,27,033/-.
9) The learned senior counsel for the petitioners have submitted that the issue relating to the validity of the demand for forest royalty had been already settled by this Court by virtue of decision rendered in the case of State of Assam and Ors. Vs. Muslim Ali (Md.), 2013 (2) GLT 945, wherein the Division Bench of this Court had held that no appropriation of money from the contractual dues was permissible unless backed by statutory provision or by provision contained in the contract agreement binding the parties to the contract and it was also held that in the absence thereof, such deduction was unauthorized and accordingly, by upholding the judgment passed by the learned Single Judge, the said writ appeal was dismissed. It is submitted that while adjudicating the said case, this Court had the occasion to deal with the provisions of Mines and Minerals (Regulation and Development) Act, 1957, the Assam Minor Mineral Concessions Rules, 1994 and Office Memorandum dated 17.06.2000 issued by the Finance Department, Government of Assam. By the said memorandum, the executing authority was debarred from making payment of any bills in connection with construction works of Government Departments or Government Undertakings using forest produce unless the Forest Department certifies that the forest produce that was utilized were Page No.# 10/16 collected form legal source and necessary royalty/price due to the Government had been paid, further providing that in cases where such certificates were not furnished, the bills may be passed only after deduction of the amount due as royalty, which would be deposited in the Government account.
10) In another decision rendered in the case of Trinayan Associates (M/s.) and Anr. Vs. State of Assam, (2017) 5 GLR 301: 2017 (2) GLT 859, this Court had held that the bills of the contractor therein were deducted without any authority of law and it was held that the petitioners were liable to be refunded such amount deducted by the PWD. The relevant paragraph 15 to 17 are reproduced below:-
"15. In the event, the said amount had already deposited with the Forest Department, the respondent PWD shall take steps to bring it back from the Forest Department and refund it to the petitioner contractors. Accordingly, the deduction of royalty that is proposed to be made from the bills of the contractors in WP(C) No. 933/2017 and WP(C) No. 862/2017 shall not be deducted by the respondent authorities.
16. However, Mr. T.C. Chutia, learned Addl. Senior Govt. Advocate expressed an apprehension that the PWD is not in a position to know as to from which source the contractors have procured their minor mineral which they have used for construction work under the department, and in such a situation it is difficult for the respondent PWD to arrive at a conclusion as to whether the required royalty had been paid or not. In order to mitigate such gri8evance, it would be sufficient it henceforth, the respective contractors while submitting their bills would also produce a document/voucher from the concerned source from which such minor mineral or forest produces are being procured. On the document being produced, the respondent PWD, if so advised, can get it verified from the Forest Department as to the authenticity and legality of the source. Such a requirement would also satisfy the requirement of the provision of the Office Memorandum dated 17.06.2000, which requires the contractors to produce the documents in order to enable the authorities to verity its authenticity of the source.
17. But, however, as provided by this Court in Muslim Ali's case (Supra), the same has to be made a part of the terms and conditions of the agreements that the department would like to enter with the respective contractors. Upon such terms and conditions specifically providing for such Page No.# 11/16 document, if incorporated in the agreement, thenceforth, the contractors would e required to provide the relevant purchase voucher of the source from which the minor mineral materials had been produced."
11) The learned senior counsel for the petitioners have also submitted that in the contract agreements, there is a clause providing that rates quoted by the contractor was to be deemed to inclusive of the sales and other taxes that the contractor will have to pay for the performance of the contract and the employer would perform such duties in regard to the deduction of such taxes at source as per applicable law. In this regard it is submitted that it is too well settled in the case of State of West Bengal Vs. Kesoram Industries Ltd., (2004) 10 SCC 201, that royalty was not a tax. Hence, it is submitted that the officials of the PWD, Assam had no power and authority to demand payment of forest royalty either by applying the provisions of Mines and Minerals (Regulation and Development) Act, 1957 or under Assam Mines and Mineral Concessions Rules, 1994 (since repealed) or under the Assam Mines and Mineral Concession Rules, 2013. It is further submitted that under Rule 2(e) of the erstwhile 1994 Rules and the present 2003 Rules in force, the "competent authority" is the Director of Geology & Mining, Assam in respect of Mines and Minerals as listed in Schedule-X and the Principal Chief Conservator of forest and Head of Forest Force, Assam in respect of Mines and Minerals listed in Schedule-Y unless otherwise specified by any Government notification. It is also specifically submitted that the contract agreement with the PWD does not provide for saddling the contractor with any liability to pay forest royalty and, as such, by referring to the provisions of the erstwhile 1994 Rules and the existing 2013 Rules, it is submitted that the liability to pay forest royalty could be upon the owner of the private patta land but there could be no liability on the petitioners.
12) Per contra, the learned Additional Advocate General for the State has submitted that the item "earth" is a "minor mineral" under the 2013 Rules and by referring to Rule 27 thereof, it is submitted that even the land owner of a patta land was required to have a permit for lifting ordinary earth and therefore, it is submitted in anybody who had utilized earth for the project work was required to establish that such "earth" was procured on Page No.# 12/16 payment of due forest royalty. It is submitted that as the State had the power to realize royalty, by way of Office Memorandum dated 17.06.2000, issued by the Finance Department, Government of Assam, the State was justified in issuing a direction for debarring any payment to be made in respect of any bills of the contractors, if any forest produce was utilized for the contract work and this was to ensure that the "forest produce" should be collected from a legitimate and legal source and that the requisite royalty was paid to the State Government so as to ensure that there was no loss to the public exchequer. Referring to the huge quantity of "earth" used by the present petitioners, it is submitted that in these five cases, almost Rs.20.00 Crore was due to the State as forest royalty, which was admittedly not paid by the petitioners. By referring to the huge forest royalty that has remained unpaid to the State, it is submitted that the State has, in the greater public interest, taken appropriate measures to ensure correction of full forest royalty and in the said connection, it was submitted that if the power of the State to appropriate the forest royalty from the bills of the erring contractors is curtailed, it would lead to a huge revenue loss, which would be detrimental to public interest. It is also submitted that only in IA(C) No. 108/2009 arising out of WP(C) 5688/2018, the entire contract agreement was annexed, but in the other writ petitions, the entire contract agreement had not been annexed and therefore, it is submitted that there is no material before this Court by which it can be held that there were no clauses in the contract agreement requiring the petitioners to pay royalty as pre-condition for utilizing "earth" in the contract work.
13) Having heard both the learned senior counsel for the petitioners and the learned Additional Advocate General of the State of Assam, this Court has perused the materials available on record. It is seen that the Assam Mines and Mineral Concession Rules, 2013 was notified on 16.03.2013. On a reading of the 1994 Rules, it appears that " earth" is not included in the list of "minor minerals" either in Schedule 'X' or Schedule 'Y' appended the aforesaid 1994 Rules. However, on a perusal of the 2013 Rules, it is seen that as on 16.03.2013, the date when the 2013 Rules was brought into force, there is no entry of "earth" in the list of "minor minerals" as defined under Section 3(e) of the Mines and Minerals (Development and Regulation) Act, 1957. There is an entry of "ordinary earth" in Schedule 'Y' Page No.# 13/16 at Sl. No. 15. Reference is made to the provisions of Rule 8(6), 26(6) and 27(4) of the Rules, in the First Schedule and "ordinary earth" is under entry 24 of the First Schedule, but no rate of royalty has been prescribed therein. It appears from the notification No. PEM.83-2009/PT- VII-A/39 dated 17.06.2015, which is annexed as Annexure-7 to the affidavit- in- opposition filed by the Superintendent of Police, Bureau of Investigation (E&O), Assam in WP(C) No. 3765/2018 that the rate of royalty for "ordinary earth" was notified to be Rs.30/- per cum. Therefore, as the rate of royalty for "ordinary earth" came to be notified vide notification dated 17.06.2015, the State has not been able to justify the demand for royalty in respect of contracts which had not only been executed much prior to the issuance of aforesaid notification dated 17.06.2015, but the works were also wholly or partly done prior to the date of the said notification.
14) The learned Additional AG for the State had referred to the provisions of Rule 27(4) of 2013 Rules to justify levy, demand and realization of forest royalty from the petitioners, which reads as follows:-
"27(4).- The royalty shall be charged on lump-sum basis on the basis of quantity/ volume of the earth for which the permit is applied/ granted as per the rates prescribed in the First Schedule. The payment of royalty in these cases shall be made in advance for the complete financial year or part thereof."
15) The above quoted provisions of Rule 27(4) of the 2013 Rules, can under no stretch of imagination be read as a provision enabling the State to demand or realize forest royalty from the end user of "earth", unless the State can justify that the petitioners herein are the permit holders. Moreover, from a reading of the aforesaid Rule 27(4), it appears that Rule 24 provides for permits for extraction of ordinary clay/ earth and there is nothing on record to suggest that the petitioners can be deemed to be permit holders either under the 1994 Rules or under 2013 Rules merely by utilizing "earth" in the contract work allotted to them.
Page No.# 14/16
16) In these cases, the State has also not been able to show that the under the various contract agreements between PWD and the petitioners, there existed any clause authorizing to PWD authorities to realize forest royalty on behalf of the forest department. In this case, the PWD as well as the Forest Department of the State of Assam are arrayed as parties and, as such, nothing had prevented the State to produce relevant contract agreements executed between the PWD and the petitioners in order to demonstrate that the petitioners had withheld portions of contract agreement to conceal the existence of clause in the agreement which empowered the PWD to realize forest royalty from the bills and security deposit payable to the petitioners.
17) The learned Additional Advocate General for the State had referred to the OM dated 17.06.2000 to project that the State had the power to realize forest royalty from the bills and other money payable to the petitioners. In the said connection, it is seen that this Court, in the case of Md. Muslim Ali (supra), had already dealt with the said Office Memorandum of the Finance Department dated 17.06.2000 as well as the then applicable 1994 Rules to hold that the said Office Memorandum would have no binding force on the contractor unless and the authorities had no power to appropriate money from the contractual dues was permissible un this back by or by express provisions contended in the contract agreement binding the parties to contract. The said view was reiterated in the decision rendered in the case of M/s. Trinayan Associates (supra), wherein it was further held that under the provisions of Mines and Minerals (Regulation and Development) Act, and Rules framed there under, it was the responsibility of the mining lessee to make payment of forest royalty and it is not the obligation to be discharged by the contractor.
18) Moreover, there is nothing on record to show that the "competent authority' prescribed in 1994 Rules and 2013 Rules had raised any demand for payment of royalty in respect of "minor minerals" on the petitioners herein, on the ground that they were permit holders.
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19) While it is seen that the learned Additional Advocate General for the State of Assam has left no stone unturned to impress upon this Court that there was huge loss of forest royalty, but it is appalling to note that despite the decision rendered by this Court in the case of Md. Muslim Ali (supra) and M/s. Trinayan Associates (supra), the concerned authorities of the State has not yet woken up from its deep slumber so as to make any effort to give effect to the liberty granted by this Court in the said cases, wherein it was provided that it would be open for the State to make provisions in the Contract Agreement authorizing the concerned Govt. departments and enterprises to insist on its contractors to produce proof of forest royalty paid, to disclose source of procuring forest produce further authorizing such departments or enterprises to deduct forest royalty demanded by the competent authority.
20) Therefore, this Court finds no material to disagree with the submissions made by both the learned senior counsel for the petitioners that the present case is squarely covered by the decision of this Court rendered in the case of Md. Muslim Ali (supra) and M/s. Trinayan Associates (supra) and accordingly, by following the ratio laid down in the said cases, this Court is considered opinion that the demand for forest royalty made against the petitioner in all these 5 (five) writ petitions are not sustainable.
21) Consequently, the demand raised against the petitioners in WP(C) 3137/2018, WP(C) 3759/2018, WP(C) 3765/2018, WP(C) 5688/2018 and WP(C) 8179/2018 by the Public Works Department of the State of Assam for payment of forest royalty is held to be without power, jurisdiction or authority. Hence, as a fall out, the petitioners are held to be entitled to refund of any recovery that had already been made by the State PWD from the petitioners herein towards payment of "forest royalty" and, as such, it is provided that in the event the State PWD had deposited the amount realized from the petitioners against forest royalty to the Forest Department, the State PWD shall take steps to bring such money back from the Forest Department and refund it to the petitioners. Accordingly, the deductions proposed to be made by the State PWD from the petitioners in WP(C) 3137/2018, WP(C) 3759/2018, WP(C) 3765/2018, WP(C) 5688/2018 and WP(C) 8179/2018, shall not be deducted by the respondent authorities.
Page No.# 16/16 JUDGE Comparing Assistant