Jharkhand High Court
Prahlad Das Mohta vs The State Of Jharkhand on 2 March, 2022
Author: Rajesh Shankar
Bench: Rajesh Shankar
1
IN THE HIGH COURT OF JHARKHAND AT RANCHI
W.P. (C) No.5639 of 2019
With
W.P.(C) No.5608 of 2019 With W.P.(C) No.5609 of
2019 With W.P.(C) No.5644 of 2019 With W.P.(C)
No.5645 of 2019 With W.P.(C) No.1727 of 2020 With
W.P.(C) No.1743 of 2020 With W.P.(C) No.1752 of
2020 With W.P.(C) No.1821 of 2020 With W.P.(C)
No.1831 of 2020 With W.P.(C) No.1837 of 2020 With
W.P.(C) No.1851 of 2020 With W.P.(C) No.2020 of
2020 With W.P.(C) No.2023 of 2020 With W.P.(C)
No.2026 of 2020 With W.P.(C) No.2844 of 2020 With
W.P.(C) No.2845 of 2020 With W.P.(C) No.2855 of
2020 With W.P.(C) No.2856 of 2020 With W.P.(C)
No.2861 of 2020 With W.P.(C) No.2865 of 2020 With
W.P.(C) No.2879 of 2020 With W.P.(C) No.2916 of
2020 With W.P.(C) No.2917 of 2020 With W.P.(C)
No.2930 of 2020 With W.P.(C) No.2951 of 2020 With
W.P.(C) No.72 of 2021 With W.P.(C) No.74 of 2021
With W.P.(C) No.82 of 2021 With W.P.(C) No.90 of
2021
-----
Prahlad Das Mohta .......... Petitioner.
[In W.P.(C) No.5639/2019]
M/s. ARS Bricks .......... Petitioner.
[In W.P.(C) No.5608/2019]
M/s. Don Bricks .......... Petitioner.
[In W.P.(C) No.5609/2019]
Nice Bricks .......... Petitioner.
[In W.P.(C) No.5644/2019]
Sai Ita .......... Petitioner.
[In W.P.(C) No.5645/2019]
Smt. Devki Devi .......... Petitioner.
[In W.P.(C) No.1727/2020]
Pramod Tripathy .......... Petitioner.
[In W.P.(C) No.1743/2020]
Anant Nath Singh .......... Petitioner.
[In W.P.(C) No.1752/2020]
Ashok Kumar Jha .......... Petitioner.
[In W.P.(C) No.1821/2020]
Jagdamba Prasad .......... Petitioner.
[In W.P.(C) No.1831/2020]
Jagarnath Mahto .......... Petitioner.
[In W.P.(C) No.1837/2020]
Satish Kumar Singh .......... Petitioner.
[In W.P.(C) No.1851/2020]
Niranjan Kumar Choudhary .......... Petitioner.
[In W.P.(C) No.2020/2020]
Murlidhar Choudhary .......... Petitioner.
[In W.P.(C) No.2023/2020]
Birendra Prasad .......... Petitioner.
[In W.P.(C) No.2026/2020]
Shree Dhirendra Prasad Choudhary .......... Petitioner.
[In W.P.(C) No.2844/2020]
Md. Zakir Quraishi .......... Petitioner.
[In W.P.(C) No.2845/2020]
Kanhaiya Singh Kushwaha .......... Petitioner.
[In W.P.(C) No.2855/2020]
Shatrughan Mahato .......... Petitioner.
[In W.P.(C) No.2856/2020]
Atikur Rahman .......... Petitioner.
[In W.P.(C) No.2861/2020]
Bijay Biswas .......... Petitioner.
[In W.P.(C) No.2865/2020]
2
Prantik Dixit @ Prantik Dixchit .......... Petitioner.
[In W.P.(C) No.2879/2020]
Harelal Mandal .......... Petitioner.
[In W.P.(C) No.2916/2020]
Ankit Singh .......... Petitioner.
[In W.P.(C) No.2917/2020]
Kailash Pati Singh .......... Petitioner.
[In W.P.(C) No.2930/2020]
Santosh Hembrom @ Hembram .......... Petitioner.
[In W.P.(C) No.2951/2020]
Chandra Bhansh Yadav .......... Petitioner.
[In W.P.(C) No.72/2021]
Chandra Bhansh Yadav .......... Petitioner.
[In W.P.(C) No.74/2021]
Chandra Bhansh Yadav .......... Petitioner.
[In W.P.(C) No.82/2021]
Chandra Bhansh Yadav .......... Petitioner.
[In W.P.(C) No.90/2021]
-Versus-
1. The State of Jharkhand
2. District Mining Officer, West Singhbhum at Chaibasa.
.......... Respondents.
[In W.P.(C) Nos.5639, 5608, 5609, 5644 & 5645/2019]
1. The State of Jharkhand
2. District Mining Officer, Dhanbad.
.......... Respondents.
[In W.P.(C) Nos.1727, 1743, 1752, 1821, 1831, 1837, 1851, 2020, 2023 & 2026/2020]
1. The State of Jharkhand
2. District Mining Officer, Dhanbad.
3. Mining Inspector, Dhanbad.
.......... Respondents.
[In W.P.(C) Nos.2844, 2845, 2855 & 2856/2020]
1. The State of Jharkhand
2. District Mining Officer, Seraikella Kharsawan.
3. Member Secretary, Jharkhand Pollution Control Board, Ranchi.
.......... Respondents.
[In W.P.(C) Nos.2861 & 2879/2020]
1. The State of Jharkhand
2. District Mining Officer, Seraikella Kharsawan.
.......... Respondents.
[In W.P.(C) Nos.2865, 2916, 2917, 2930 & 2951/2020 and W.P.(C) Nos. 72, 74, 82 & 90/ 2021]
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CORAM : HON'BLE MR. JUSTICE RAJESH SHANKAR
-----
For the Petitioner(s) : Mr. Shankar Lal Agarwal, Advocate For the State : M/s. Rajiv Ranjan, A.G., Mohan Kumar Dubey, A.C. to A.G. & Deepak Kumar Dubey, A.C. to A.A.G.II
-----
Order No.09 Date: 02.03.2022
1. This case is taken up through video conferencing.
2. The present batch of writ petitions have been preferred for quashing the demand notices issued against the petitioners, whereby penalty has been levied against them, alleging that they were running brick kilns without obtaining no objection certificate/licence from the concerned district mining office. The petitioners have also sought 3 direction to the respondents to refund the amount paid by them under Rule 2 of the Mines and Minerals (Contribution to District Mineral Foundation) Rules, 2015.
3. The impugned notices and the mode of calculation of penalty in the respective writ petitions are reproduced herein below for ready reference:-
Case No. District Impugned letters Mode of calculation of penalty W.P.(C) No. West Singhbhum, Letter No. 834/M dated Pathai @ Per 1000 5639 of 2019 Chaibasa 05.09.2019 MP/Rs.500/-
W.P.(C) No. West Singhbhum, Letter No. 835/M dated Pathai @ Per 1000 5608 of 2019 Chaibasa 05.09.2019 MP/Rs.500/-
W.P.(C) No. West Singhbhum, Letter No. 831/M dated Pathai @ Per 1000 5609 of 2019 Chaibasa 05.09.2019 MP/Rs.500/-
W.P.(C) No. West Singhbhum, Letter No. 837/M dated Pathai @ Per 1000 5644 of 2019 Chaibasa 05.09.2019 MP/Rs.500/-
W.P.(C) No. West Singhbhum, Letter No. 830/M dated Pathai @ Per 1000 5645 of 2019 Chaibasa 05.09.2019 MP/Rs.500/-
W.P.(C) No. 72 Seraikella Kharsawan Letter No. 429/M dated Pathai @ Per 1000
of 2021 24.08.2020 MP/Rs.500/-
W.P.(C) No. 74 Seraikella Kharsawan Letter No. 427/M dated Pathai @ Per 1000
of 2021 24.08.2020 MP/Rs.500/-
W.P.(C) No. 82 Seraikella Kharsawan Letter No. 426/M dated Pathai @ Per 1000
of 2021 24.08.2020 MP/Rs.500/-
W.P.(C) No. 90 Seraikella Kharsawan Letter No. 428/M dated Pathai @ Per 1000
of 2021 24.08.2020 MP/Rs.500/-
W.P.(C) No. Seraikella Kharsawan Letter No. 441/M dated Pathai @ Per 1000
2879 of 2020 24.08.2020 MP/Rs.500/-
W.P.(C) No. Dhanbad Memo No. 1061 dated 400 bricks=1M3 brick earth
1821 of 2020 18.07.2019 & Memo Market Price @ Rs.70/Cubic
No. 783 dated Meter & Royalty @ Rs.30/-
16.05.2020 Per Cu. Meter Total Rs.100/-
Per Cu Meter
W.P.(C) No. Dhanbad Memo No. 626 dated Only amount to be paid is
1831 of 2020 22.04.2020 mentioned
W.P.(C) No. Dhanbad Memo No. 1021 dated Only amount to be paid is
1837 of 2020 17.06.2020 mentioned
W.P.(C) No. Dhanbad Memo No. 1721 dated 400 bricks=1M3 brick earth
1851 of 2020 21.11.2019 & Memo Market Price @ Rs.70/Cubic
No. 681 dated Meter & Royalty @ Rs.30/-
27.04.2020 Per Cu. Meter Total Rs.100/-
Per Cu Meter
W.P.(C) No. Dhanbad Memo No. 1071 dated 400 bricks=1M3 brick earth
2020 of 2020 18.07.2019 & Memo Market Price @ Rs.70/Cubic
No. 838 dated Meter & Royalty @ Rs.30/-
27.05.2020 Per Cu. Meter Total Rs.100/-
Per Cu Meter
W.P.(C) No. Dhanbad Memo No. 119 dated 400 bricks=1M3 brick earth
2023 of 2020 24.01.2020 & Memo Market Price @ Rs.70/Cubic
No. 598 dated Meter & Royalty @ Rs.30/-
17.04.2020 Per Cu. Meter Total Rs.100/-
Per Cu Meter
W.P.(C) No. Dhanbad Memo No. 1036 dated 400 bricks=1M3 brick earth
2026 of 2020 16.07.2019 & Letter No. Market Price @ Rs.70/Cubic
708 dated 20.05.2020 Meter & Royalty @ Rs.30/-
Per Cu. Meter Total Rs.100/-
Per Cu Meter
W.P.(C) No. Dhanbad Memo No. 1070/M 400 bricks=1M3 brick earth
2844 of 2020 dated 18.07.2019 & Market Price @ Rs.70/Cubic
Memo No. 854/M dated Meter & Royalty @ Rs.30/-
30.05.2020 Per Cu. Meter Total Rs.100/-
Per Cu Meter
W.P.(C) No. Dhanbad Memo No. 816/M dated Only amount to be paid is
2845 of 2020 22.05.2020 mentioned
W.P.(C) No. Dhanbad Memo No. 1314/M 400 bricks=1M3 brick earth
2855 of 2020 dated 06.09.2019 & Market Price @ Rs.70/Cubic
Memo No. 892/M dated Meter & Royalty @ Rs.30/-
04.06.2020
4
Per Cu. Meter Total Rs.100/-
Per Cu Meter
W.P.(C) No. Dhanbad Memo No. 1128/M Only amount to be paid is
2856 of 2020 dated 08.07.2020 mentioned
W.P.(C) NO. Dhanbad Memo No. 1072 dated 400 bricks=1M3 brick earth
1727 of 2020 18.07.2019 Market Price @ Rs.70/Cubic
Meter & Royalty @ Rs.30/-
Per Cu. Meter Total Rs.100/-
Per Cu Meter
W.P.(C) NO. Dhanbad Memo No. 1113 dated 400 bricks=1M3 brick earth
1743 of 2020 22.07.2019 and Letter Market Price @ Rs.70/Cubic
No. 691 dated Meter & Royalty @ Rs.30/-
30.04.2020 Per Cu. Meter Total Rs.100/-
Per Cu Meter
W.P.(C) No. Dhanbad Memo No. 1219 dated 400 bricks=1M3 brick earth
1752 of 2020 10.08.2019 Market Price @ Rs.70/Cubic
Meter & Royalty @ Rs.30/-
Per Cu. Meter Total Rs.100/-
Per Cu Meter
W.P.(C) No. Seraikella, Letter No. 442/M dated Pathai @ Per 1000
2861 of 2020 Kharsawan 24.08.2020 MP/Rs.500/-
W.P.(C) No. Seraikella, Letter No. 422/M dated Pathai @ Per 1000
2865 of 2020 Kharsawan 24.08.2020 MP/Rs.500/-
W.P.(C) No. Seraikella, Letter No. 447/M dated Pathai @ Per 1000
2916 of 2020 Kharsawan 24.08.2020 & Letter No. MP/Rs.500/-
419/M dated
24.08.2020
W.P.(C) No. Seraikella, Letter No. 457/M dated Pathai @ Per 1000
2917 of 2020 Kharsawan 24.08.2020 MP/Rs.500/-
W.P.(C) No. Seraikella, Letter No. 440/M dated Pathai @ Per 1000
2930 of 2020 Kharsawan 24.08.2020 MP/Rs.500/-
W.P.(C) No. Seraikella, Letter No. 449/M dated Pathai @ Per 1000
2951 of 2020 Kharsawan 24.08.2020 MP/Rs.500/-
4. The learned counsel for the petitioners submits that the demand notices have been issued without any prior notice or providing opportunity of hearing to the petitioners as also without initiating any proceeding for assessment to determine advance royalty under Rule 30 of the Jharkhand Minor and Mineral Concession Rules, 2004 (hereinafter to be referred as 'the Rules, 2004'). It is further submitted that the District Mining Officers (DMOs) of the concerned districts did not ascertain as to whether the brick kiln owners were required to obtain any environmental clearance (EC)/permit/consent to operate (CTO) and in a mechanical manner demanded penalty which is in violation of the principles of natural justice. It is also submitted that in view of rule 66 of Rules, 2004 the Deputy Commissioner has power to fix the price of any mineral on the report of the competent officer, considering several factors mentioned under the said rule. However, in the present case, the rate of penalty for using the brick earth has been fixed by DMOs of the concerned districts on the basis of audit objection which is beyond their competence. Moreover, inconsistent parameters have been taken by the DMOs for fixing penalty of minerals in different districts without adopting any fixed criteria. In fact, no environment clearance/consent to operate is required for permit holders, rather the said requirement is essential only for mining lease 5 holders. There is distinction between rules 30 and 31 regarding grant of permit in respect of brick kilns. Rule 30 specifically speaks of the brick kilns falling under Schedule 3 attached with Rules, 2004 in which there is no requirement for grant of permit, rather such brick kiln owners are required to pay a consolidated amount per kiln per year to the State Government as royalty for manufacturing fixed number of bricks, the rate of which is determined area wise and can be revised by the State Government once in every three years, whereas requirement of permit is essential under Rule 31 for the minerals (brick earth) coming under Schedule II of the Rules, 2004. It is further submitted that though rule 65 of the Rules, 2004 provides for filing an appeal, if any person is dissatisfied with any order passed by the competent authority in exercise of power conferred under the said Rules. However, in the case in hand, there is no order passed by the DMOs of the concerned districts, rather they have straightway issued demand notices. Thus, the respondents cannot raise an objection with respect to maintainability of the writ petition on the ground that the petitioners have alternative remedy of filing appeal under section 65 of the Rules, 2004.
5. The learned Advocate General appearing for the respondents submits that during scrutiny of brick kiln registers and files, the brick kilns of the petitioners were found running without permit during brick session 2016-17 to 2017-18. The operation of the brick kilns was, therefore, in violation of rules 4, 30, 31 & 32 of the Rules, 2004 for which penalty as prescribed under rule 54(8) of the Rules, 2004 was applicable on the number of bricks manufactured by the owners of brick kilns as "Pathai" in the said brick kilns were started without permission of the competent authority. It is further submitted that the present writ petitions are not maintainable, since the petitioners have alternative/ efficacious remedy available by filing appeal against the impugned demand notices before the concerned Deputy Director of Mines as per rule 65 of the Rules, 2004. The demands raised against the petitioners were not deposited within stipulated period of one month, hence the respondents had no other option but to file certificate cases against the brick kiln owners to realize the demands with interest. It is also submitted that some of the similarly situated brick kiln owners have already made payment of the penalty without raising any protest. In fact, before operating brick kilns in a particular brick season, the 6 petitioners were bound to deposit consolidated royalty and to obtain permits by making appropriate application in terms with rule 30 of the Rules, 2004, moreover they were also required to submit environmental clearance and CTO obtained from SEIAA and the Pollution Control Board, respectively, but the petitioners, without obtaining the permit under the Rules, 2004 as well as other required statutory clearances, operated the brick kilns which is illegal being contrary to rule 4 of the Rules, 2004. It is further submitted that as per rules 2(5) and 2(11) of Rules, 2004 as amended time to time, the DMO is fully competent to act in compliance of rule 54 of Rules, 2004.
6. Heard the learned counsel for the parties and perused the materials available on record. The petitioners are aggrieved with imposition of penalty for running brick kilns during the relevant period without obtaining permits for the same.
7. Primary argument of the learned counsel for the petitioners is that the impugned notices imposing penalty have been issued in violation of the principles of natural justice since no opportunity of hearing was granted to the petitioners before issuing such notices.
8. Before coming to the merit of the cases, it would be appropriate to refer few judgments of the Hon'ble Supreme Court, wherein the requirement of observance of the principles of natural justice in the matter of levying penalty has been explained.
9. In the case of Kesar Enterprises Limited Vs. State of Uttar Pradesh & Others, reported in (2011) 13 SCC 733, the Hon'ble Supreme Court has held as under:-
"24. Rules of "natural justice" are not embodied rules. The phrase "natural justice" is also not capable of a precise definition. The underlying principle of natural justice, evolved under the common law, is to check arbitrary exercise of power by the State or its functionaries. Therefore, the principle implies a duty to act fairly i.e. fair play in action.
25. As observed by this Court in A.K. Kraipak v. Union of India [(1969) 2 SCC 262] the aim of rules of natural justice is to secure justice or to put it negatively to prevent miscarriage of justice. These rules can operate only in areas not covered by any law validly made. They do not supplant the law but supplement it. (Also see ITO v. Madnani Engg. Works Ltd. [(1979) 2 SCC 455] )
26. In Swadeshi Cotton Mills v. Union of India [(1981) 1 SCC 664] R.S. Sarkaria, J., speaking for the majority in a three-Judge Bench, lucidly explained the meaning and scope of the concept of "natural justice".
Referring to a catena of decisions, His Lordship observed thus: (SCC p.
666) "Rules of natural justice are not embodied rules. Being means to an end and not an end in themselves, it is not possible to make an exhaustive catalogue of such rules. But there are two fundamental maxims of natural justice viz. (i) audi alteram partem, and (ii) nemo judex in re sua. The audi alteram partem rule has many facets, two of them being (a) notice of the case to be met; and (b) opportunity to explain. This rule cannot be sacrificed at the altar of administrative convenience or celerity. The general principle--as distinguished from an absolute rule of uniform application-- seems to be that where a statute does not, in terms, exclude 7 this rule of prior hearing but contemplates a post-decisional hearing amounting to a full review of the original order on merits, then such a statute would be construed as excluding the audi alteram partem rule at the pre-decisional stage. Conversely if the statute conferring the power is silent with regard to the giving of a pre-decisional hearing to the person affected and the administrative decision taken by the authority involves civil consequences of a grave nature, and no full review or appeal on merits against that decision is provided, courts will be extremely reluctant to construe such a statute as excluding the duty of affording even a minimal hearing, shorn of all its formal trappings and dilatory features at the pre-decisional stage, unless, viewed pragmatically, it would paralyse the administrative process or frustrate the need for utmost promptitude. In short, this rule of fair play must not be jettisoned save in very exceptional circumstances where compulsive necessity so demands. The court must make every effort to salvage this cardinal rule to the maximum extent possible, with situational modifications. But, the core of it must, however, remain, namely, that the person affected must have reasonable opportunity of being heard and the hearing must be a genuine hearing and not an empty public relations exercise."
(emphasis added)
27. In Canara Bank v. V.K. Awasthy [(2005) 6 SCC 321] the concept, scope, history of development and significance of principles of natural justice have been discussed in extenso, with reference to earlier cases on the subject. Inter alia, observing that the principles of natural justice are those rules which have been laid down by the courts as being the minimum protection of the rights of the individual against the arbitrary procedure that may be adopted by a judicial, quasi- judicial and administrative authority while making an order affecting those rights, the Court said: (SCC p. 331, para 14) "14. Concept of natural justice has undergone a great deal of change in recent years. Rules of natural justice are not rules embodied always expressly in a statute or in rules framed thereunder. They may be implied from the nature of the duty to be performed under a statute. What particular rule of natural justice should be implied and what its context should be in a given case must depend to a great extent on the fact and circumstances of that case, the framework of the statute under which the enquiry is held."
28. The question with regard to the requirement of an opportunity of being heard in a particular case, even in the absence of provisions for such hearing, has been considered by this Court in a catena of cases. However, for the sake of brevity, we do not propose to refer to all these decisions. Reference to a recent decision of this Court in Sahara India (Firm) v. CIT [(2008) 14 SCC 151] would suffice. In that case, the question for adjudication was whether in the absence of a provision in the Income Tax Act, 1961, an opportunity of hearing was required to be given to an assessee before an order under Section 142(2-A) of the said Act, directing special audit of his accounts was passed?
29. A Bench of three Judges, speaking through one of us (D.K. Jain, J.), explaining the concept of "natural justice" and the principles governing its application, summed up the legal position as under:
(Sahara India case [(2008) 14 SCC 151] , SCC p. 163, paras 19-20) "19. Thus, it is trite that unless a statutory provision either specifically or by necessary implication excludes the application of principles of natural justice, because in that event the court would not ignore the legislative mandate, the requirement of giving reasonable opportunity of being heard before an order is made, is generally read into the provisions of a statute, particularly when the order has adverse civil consequences for the party affected. The principle will hold good irrespective of whether the power conferred on a statutory body or tribunal is administrative or quasi-judicial.
20. We may, however, hasten to add that no general rule of universal application can be laid down as to the applicability of the principle audi alteram partem, in addition to the language of the provision. Undoubtedly, there can be exceptions to the said doctrine. Therefore, we refrain from giving an exhaustive catalogue of the cases where the said principle should be applied. The question whether the principle has to be applied or not is to be considered bearing in mind the express language and the basic scheme of the provision conferring the power; the nature of the power conferred and the purpose for which the power is conferred and the final effect of the exercise of that power. It is only upon a consideration of all these matters that the question of application of the said principle can be properly determined."
30. Having considered the issue, framed in para 16, on the touchstone of the aforenoted legal principles in regard to the applicability of the principles of natural justice, we are of the opinion that keeping in view the nature, scope and consequences of direction under sub-rule (7) of 8 Rule 633 of the Excise Manual, the principles of natural justice demand that a show-cause notice should be issued and an opportunity of hearing should be afforded to the person concerned before an order under the said Rule is made, notwithstanding the fact that the said Rule does not contain any express provision for the affected party being given an opportunity of being heard.
31. Undoubtedly, action under the said Rule is a quasi-judicial function which involves due application of mind to the facts as well as to the requirements of law. Therefore, it is plain that before raising any demand and initiating any step to recover from the executant of the bond any amount by way of penalty, there has to be an adjudication as regards the breach of condition(s) of the bond or the failure to produce the discharge certificate within the time mentioned in the bond on the basis of the explanation as also the material which may be adduced by the person concerned denying the liability to pay such penalty. Moreover, the penalty amount has also to be quantified before proceedings for recovery of the amount so determined are taken.
32. In our view, therefore, if the requirement of an opportunity to show cause is not read into the said Rule, an action thereunder would be open to challenge as violative of Article 14 of the Constitution of India on the ground that the power conferred on the competent authority under the provision is arbitrary."
10. In the case of Manohar S/o Manik Rao Anchule Vs. State of Maharashtra and Another, reported in (2012) 13 SCC 14, the Hon'ble Supreme Court has held as under:-
"25. Thus, the principle is clear and settled that right of hearing, even if not provided under a specific statute, the principles of natural justice shall so demand, unless by specific law, it is excluded. It is more so when exercise of authority is likely to vest the person with consequences of civil nature."
11. Further, in the case of Asha Sharma Vs. Chandigarh Administration & Others, reported in (2011) 10 SCC 86, the Hon'ble Supreme Court has held thus:-
"14. Action by the State, whether administrative or executive, has to be fair and in consonance with the statutory provisions and rules. Even if no rules are in force to govern executive action still such action, especially if it could potentially affect the rights of the parties, should be just, fair and transparent. Arbitrariness in State action, even where the rules vest discretion in an authority, has to be impermissible. The exercise of discretion, in line with principles of fairness and good governance, is an implied obligation upon the authorities, when vested with the powers to pass orders of determinative nature. The standard of fairness is also dependent upon certainty in State action, that is, the class of persons, subject to regulation by the Allotment Rules, must be able to reasonably anticipate the order for the action that the State is likely to take in a given situation. Arbitrariness and discrimination have inbuilt elements of uncertainty as the decisions of the State would then differ from person to person and from situation to situation, even if the determinative factors of the situations in question were identical. This uncertainty must be avoided."
12. In light of the aforesaid judicial pronouncements, it is clear that a prior show-cause notice granting a reasonable opportunity of being heard is an essential element of all administrative decision-making process. If the statute conferring the certain power to an authority is silent with regard to granting a pre-decisional hearing to the person affected and the administrative decision taken by the authority involves civil consequences of a grave nature, the administrative or quasi-judicial authorities are bound to observe the requirement of the principles of natural justice unless the compliance of the same is expressly excluded by any specific law.
913. One of the arguments of the learned counsel for the petitioners is that in the case in hand, the impugned demand notices have been issued to the petitioners on the basis of audit objection and no independent decision has been taken by the respondent no.2 (the DMOs of different districts) so as to determine the penalty to be levied against them. The said factual contention of the learned counsel for the petitioners has not been controverted by the respondents in the counter affidavits filed in the respective writ petitions.
14. To appreciate the contention of the learned counsel for the petitioners, it would be appropriate to refer the judgment of the Hon'ble Supreme Court rendered in the case of State of Bihar Vs. Industrial Corporation (P) Ltd. & Others reported in (2003) 11 SCC 465 , wherein it has been held as under:-
"17. The statutory authorities must act within the four corners of a statute. They could take recourse to the proceeding for levy of penalty and the recovery thereof from the respondents only in the event there existed any agreement or statutory provision therefor. Such a power did not vest in the Commissioner of Excise or the Superintendents of Excise who had issued the impugned demand notices.
18. The statutory authorities also could not have sought to levy penalty relying on or on the basis of the audit report only. They were required to apply their own independent mind for the purpose of finding out as to whether the respondents in law had committed any breach of the terms and conditions of the licence or the provisions of the 1947 or 1915 Act so as to make them liable for levy of penalty. The authorities concerned acting in terms of the statutory provisions, therefore, without any further investigation could not have acted mechanically on the audit report."
15. Further in the case of M/s Indian & Eastern Newspaper Society, New Delhi Vs. Commissioner of Income Tax, New Delhi, reported in (1979) 4 SCC 248, the Hon'ble Supreme Court has held as under:-
"11. Under that section, the audit by the Comptroller and Auditor- General is principally intended for the purposes of satisfying him with regard to the sufficiency of the rules and procedures prescribed for the purpose of securing an effective check on the assessment, collection and proper allocation of revenue. He is entitled to examine the accounts in order to ascertain whether the rules and procedures are being duly observed, and he is required, upon such examination, to submit a report. His powers in respect of the audit of income tax receipts and refunds are outlined in the Board's Circular No. 14/19/56- II dated July 28, 1960. [ Internal Audit Manual, Vol II, p 39] Para 2 of the Circular repeats the provisions of Section 16 of the Comptroller and Auditor-General (Duties, Powers and Conditions of Service) Act, 1971. And para 3 warns that "the Audit Department should not in any way substitute itself for the Revenue Authorities in the performance of their statutory duties". Para 4 declares:
"4. Audit does not consider it any part of its duty to pass in review the judgment exercised or the decision taken in individual cases by officers entrusted with those duties, but it must be recognised that an examination of such cases may be an important factor in judging the effectiveness of assessment procedure .... It is however, to forming a general judgment rather than to the detection of individual errors of assessment, etc. that the audit enquiries should be directed. The detection of individual errors is an incident rather that the object of audit."
Other provisions stress that the primary function of audit in relation to assessments and refunds is the consideration whether the internal procedures are adequate and sufficient. It is not intended that the purpose of audit should go any further. Our attention has been invited 10 to certain provisions of the Internal Audit Manual more specifically defining the functions of internal audit in the Income Tax Department. While they speak of the need to check all assessments and refunds in the light of the relevant tax laws, the orders of the Commissioners of Income Tax and the instructions of the Central Board of Direct Taxes, nothing contained therein can be construed as conferring on the contents of an internal audit report the status of a declaration of law binding on the Income Tax Officer. Whether it is the internal audit party of the Income Tax Department or an audit party of the Comptroller and Auditor-General, they perform essentially administrative or executive functions and cannot be attributed the powers of judicial supervision over the quasi-judicial acts of income tax authorities. The Income Tax Act does not contemplate such power in any internal audit organisation of the Income Tax Department; it recognises it in those authorities only which are specifically authorised to exercise adjudicatory functions. Nor does Section 16 of the Comptroller and Auditor-General (Duties, Powers and Conditions of Service) Act, 1971 envisage such a power for the attainment of the objectives incorporated therein. Neither statute supports the conclusion that an audit party can pronounce on the law, and that such pronouncement amounts to "information" within the meaning of Section 147(b) of the Income Tax Act, 1961.
12. But although an audit party does not possess the power to so pronounce on the law, it nevertheless may draw the attention of the Income Tax Officer to it. Law is one thing, and its communication another. If the distinction between the source of the law and the communicator of the law is carefully maintained, the confusion which often results in applying Section 147(b) may be avoided. While the law may be enacted or laid down only by a person or body with authority in that behalf, the knowledge or awareness of the law may be communicated by anyone. No authority is required for the purpose.
13. In the present case, an internal audit party of the Income Tax Department expressed the view that the receipts from the occupation, of the conference hall and rooms did not attract Section 10 of the Act and that the assessment should have been made under Section 9. While Sections 9 and 10 can be described as law, the opinion of the audit party in regard to their application is not law. It is not a declaration by a body authorised to declare the law. That part alone of the note of an audit party which mentions the law which escaped the notice of the Income Tax Officer constitutes "information" within the meaning of Section 147(b); the part which embodies the opinion of the audit party in regard to the application or interpretation of the law cannot be taken into account by the Income Tax Officer. In every case, the Income Tax Officer must determine for himself what is the effect and consequence of the law mentioned in the audit note and whether in consequence of the law which has now come to his notice he can reasonably believe that income has escaped assessment. The basis of his belief must be the law of which he has now become aware. The opinion rendered by the audit party in regard to the law cannot, for the purpose of such belief, add to or colour the significance of such law. In short, the true evaluation of the law in its bearing on the assessment must be made directly and solely by the Income Tax Officer."
16. Thus, penalty cannot be imposed on mere audit report, rather the competent authority has to apply its own independent mind and to pass an appropriate order on the issue of levying penalty also observing the principles natural justice unless the statute specifically precludes for the same. Moreover, a reasoned order passed by the original authority also enables the superior authority to check the validity of such an order imposing penalty.
17. The learned Advocate General has contended that the petitioners have alternative/efficacious remedy of filing an appeal under rule 65 of the Rules, 2004 against the impugned demand notices and as such the present writ petitions are not maintainable.
18. The learned counsel for the petitioners has refuted the said contention of learned Advocate General and has put reliance on the judgment of the Hon'ble Supreme Court rendered in the case of M.P. State Agro 11 Industries Development Corporation Ltd. and Another Vs. Jahan Khan reported in (2007) 10 SCC 88, wherein it has been held as under:-
"12. Before parting with the case, we may also deal with the submission of learned counsel for the appellants that a remedy by way of an appeal being available to the respondent, the High Court ought not to have entertained his petition filed under Articles 226/227 of the Constitution. There is no gainsaying that in a given case, the High Court may not entertain a writ petition under Article 226 of the Constitution on the ground of availability of an alternative remedy, but the said rule cannot be said to be of universal application. The rule of exclusion of writ jurisdiction due to availability of an alternative remedy is a rule of discretion and not one of compulsion. In an appropriate case, in spite of the availability of an alternative remedy, a writ court may still exercise its discretionary jurisdiction of judicial review, in at least three contingencies, namely, (i) where the writ petition seeks enforcement of any of the fundamental rights; (ii) where there is failure of principles of natural justice; or (iii) where the orders or proceedings are wholly without jurisdiction or the vires of an Act is challenged. In these circumstances, an alternative remedy does not operate as a bar. (See Whirlpool Corpn. v. Registrar of Trade Marks [(1998) 8 SCC 1] , Harbanslal Sahnia v. Indian Oil Corpn. Ltd. [(2003) 2 SCC 107] , State of H.P. v. Gujarat Ambuja Cement Ltd. [(2005) 6 SCC 499] and Sanjana M. Wig v. Hindustan Petroleum Corpn. Ltd. [(2005) 8 SCC 242]."
19. In the case of Whirlpool Corporation Vs. Registrar of Trade Marks & Others reported in (1998) 8 SCC 1, the Hon'ble Supreme Court has held as under:-
"14. The power to issue prerogative writs under Article 226 of the Constitution is plenary in nature and is not limited by any other provision of the Constitution. This power can be exercised by the High Court not only for issuing writs in the nature of habeas corpus, mandamus, prohibition, quo warranto and certiorari for the enforcement of any of the Fundamental Rights contained in Part III of the Constitution but also for "any other purpose".
15. Under Article 226 of the Constitution, the High Court, having regard to the facts of the case, has a discretion to entertain or not to entertain a writ petition. But the High Court has imposed upon itself certain restrictions one of which is that if an effective and efficacious remedy is available, the High Court would not normally exercise its jurisdiction. But the alternative remedy has been consistently held by this Court not to operate as a bar in at least three contingencies, namely, where the writ petition has been filed for the enforcement of any of the Fundamental Rights or where there has been a violation of the principle of natural justice or where the order or proceedings are wholly without jurisdiction or the vires of an Act is challenged. There is a plethora of case-law on this point but to cut down this circle of forensic whirlpool, we would rely on some old decisions of the evolutionary era of the constitutional law as they still hold the field."
20. Thus, the availability of alternative remedy is a rule of discretion and not one of compulsion and a writ court may still exercise its discretionary jurisdiction of judicial review when the writ petitioner seeks enforcement of any of the fundamental rights or there is failure in observing the principles of natural justice or the orders or proceedings are wholly without jurisdiction or the vires of a statute is challenged.
21. In the case in hand, the petitioners have claimed violation of the principles of natural justice by the respondent no.2 while issuing the impugned letters levying penalty upon them. The facts of the cases suggest that the respondent no.2 (DMOs of different districts) have 12 not afforded opportunity of hearing to the petitioners, rather have issued demand of penalty on the basis of the audit objection raised by the office of the Principal Accountant General (Audit), Jharkhand, Ranchi.
22. That apart, section 65 of the Rules, 2004 provides for filing of an appeal by aggrieved person against any order passed by the competent authority in exercise of power given under the Rules, 2004. In the case in hand there is no such order passed by the DMOs of different districts, rather they have raised demand of penalty by issuing impugned notices to the petitioners. Thus, this Court finds substance in the argument of the learned counsel for the petitioners that the appeal against the impugned notices could not have been filed under section 65 of the Rules, 2004, since the same cannot be terms as orders passed in exercise of power conferred under the Rules, 2004. This Court is of the view that the respondent authorities by not passing appropriate orders have deprived the petitioners of preferring respective appeals and under such circumstance, they cannot be left remediless.
23. Now the question before this court is as to whether non-compliance of the principles of natural justice has caused prejudice to the interest of the petitioners or even after compliance of the principles of natural justice, the situation would have remained unchanged.
24. The claim of the petitioners is that the respondents have not taken any fixed criterion for determining the quantum of penalty, rather they have adopted different method in different districts while levying the same, which shows that they have no uniform method for determining penalty and hence it amounts to arbitrariness on their part. The other claim of the petitioners is that the environmental clearance/consent to operate is not required for operating brick kiln. It has further been claimed by the petitioners that there is no requirement of even obtaining permit for a brick kiln as special provision has been made for the said purpose under rule 30 of the Rules, 2004, which only requires payment of consolidated royalty per kiln per year to the State Government for manufacturing fixed number of bricks in a specified area.
25. The points of law raised by the petitioners are of such nature which would certainly require consideration of the competent authorities. Thus, this Court is of the considered view that the District Mining 13 Officers of different districts were required to provide opportunity of hearing to the petitioners and thereafter to pass appropriate orders deciding all legal questions raised by them. The petitioners have, therefore, suffered serious prejudice by not affording opportunity of hearing to them.
26. In view of the aforesaid discussions, the impugned letters/memos issued to the petitioners, as detailed in paragraph no.3 of this order, are hereby quashed and set aside. Consequently, the certificate cases filed against the petitioner(s) of W.P.(C) Nos.5639, 5608, 5609, 5644 & 5645 of 2019 for realization of the impugned demand also stand quashed. The matter is remanded to the concerned District Mining Officers to pass appropriate orders in accordance with law after providing due opportunity of hearing to the petitioners.
27. These writ petitions are, accordingly, disposed of.
28. Pending I.As. in respective writ petitions are also disposed of.
(Rajesh Shankar, J.) Sanjay/