Sanjeev Kumar vs State Of U.P. And Another
2016 Latest Caselaw 7332 ALL

HIGH COURT OF JUDICATURE AT ALLAHABAD
 
 

AFR
 
 
 
Reserved on: 21.11.2016/28.11.2016
 
Delivered on: 01.12.2016
 
Court No. - 21
 

 
Case:- WRIT PETITION No.21010 of 2016
 
Petitioner :- Sanjeev Kumar
 
Respondent :- State Of U.P. And Another
 
Counsel for Petitioner :- Anshul Kumar Singhal,Vinod Kumar Agarwal
 
Counsel for Respondent :- C.S.C.
 
with
 
Case:- WRIT PETITION No.9256 of 2016
 
Petitioner :- Om Veer Singh
 
Respondent :- State Of U.P. And Another
 
Counsel for Petitioner :- Rakesh Pande
 
Counsel for Respondent :- C.S.C.
 
and
 
Case:- WRIT PETITION No.20022 of 2016
 
Petitioner :- M/S Ganesh Brick Feild And 4 Ors.
 
Respondent :- State Of U.P. And 2 Ors.
 
Counsel for Petitioner :- Virendra Singh Chauhan
 
Counsel for Respondent :- C.S.C.
 
as well as
 
Case :- WRIT - C No. - 54324 of 2016
 
Petitioner :- Vikram Singh Rana And 2 Others
 
Respondent :- State Of U.P. And Another
 
Counsel for Petitioner :- Neeraj Kumar,Ashish Kumar
 
Counsel for Respondent :- C.S.C.
 

 
Hon'ble V.K. Shukla,J.

Hon'ble Mahesh Chandra Tripathi,J.

(Oral : V.K. Shukla, J.)

In all the abovemetioned Writ Petitions in question, as common question of law has been engaging the attention of this Court, the matters are being decided collectively and Writ Petition No.21010 of 2016 is being treated to be leading case.

In this bunch of Writ Petition, petitioners, who are Brick Kiln owners, are assailing the validity of notification dated 19.01.2016 wherein First Schedule to Rules 1963 has been amended by means of 37th Amendment dated 19.01.2016, doubling the rate of royalty for 'Brick Earth' from Rs.27/- to Rs.54/- on per thousand bricks produced as well as the validity of Government Order dated 20.01.2016 wherein under the settlement scheme, the brick kiln owners have been asked to pay additional 20% of the royalty where "palothan mitti" (baluyi mitti) is also used in the manufacturing of bricks.

Mines and Minerals (Development and Regulation) Act, 1957 (hereinafter called the 'Act') is an Act enacted by Parliament to provide for development and regulation of mines and minerals under the control of the Union. Under the aforementioned Act in question, Section 3 (a) defines "Minerals" and Section 3(d) defines "mining operation" as an operation undertaken for the purpose of winning any mineral. Section 3(e) defines "minor minerals". Section 4 proceeds to make a mention that mining operations to be under licence or lease. Section 9 deals with royalties in respect of mining leases and Section 15 authorizes the State Government to make Rules in respect of minor minerals.

The first proviso of section 15 (3) of the MMDR Act provides that the State Government shall not enhance the rate of royalty of any Minor Mineral for more than once during any period of 3 years.

In exercise of authority conferred under Section 15 of the Act, 1957, the State Government has framed Rules in the State of U.P. known as "U.P. Minor Minerals (Concession) Rules, 1963".

Rule 2(7) of the U.P. Minor Mineral (Concession) Rules 1963 (hereinafter referred to as '1963 Rules') defines minor minerals and ordinary clay is included in the definition of minor minerals Rule 2 (7-a) defines pit's mouth value as the sale price of minor mineral at the pit head or at the point of production. Rule 3 provides that mining operation in any area within the State cannot be undertaken except in accordance with the terms and conditions of a mining lease or mining permit granted under the 1963 Rules. Explanation to the said rule 3 inserted vide amendment dated 23.12.2012 and 22.10.2014 i.e. the 35th and 37th amendment rules, however provides that for the purposes of this rule, manual digging or manual extraction of ordinary clay, ordinary earth for making bricks and pottery shall not be treated as mining operation provided the pits created by such digging or extraction should not be deeper than two meters. For ready reference Rule 3 as amended till date is quoted as under:-

"3. Mining operations to be under a mining lease or mining permit:- (1) No person shall undertake any mining operations in any area within the State of any minor mineral to which these rules are applicable except under and in accordance with the terms and conditions of a mining lease or mining permit granted under these rules.

Provided that nothing shall affect any operations undertaken in accordance with the terms and conditions of a mining lease or permit granted under these rules.

No mining lease or mining permit shall be granted otherwise than in accordance with the provisions of these rules."

Chapter III of 1963 Rules covers the field pertaining to payment of royalty and deed rent. Rule 21 (1) provides that the holder of a mining lease granted on or after the commencement of these rules shall pay royalty in respect of any mineral removed by him from the lease area at the rates specified in the First Schedule to the Rules.

Rule 21 was also amended by adding (1-a) vide 37th Amendment dated 22.10.2014 which provided that notwithstanding anything to the contrary contained in rule 3, royalty should be payable by concerned brick-kiln owner for use of ordinary clay or ordinary earth at the rate specified in first schedule to these rules. Rule 21(2) also restricts the powers of the State Government insofar as the rate of royalty in respect of any mineral cannot be enhanced more than once during any period of three years and the royalty cannot be fixed at a rate more than 20% of the pit's mouth value, for ready reference Rule 21 of the 1963 Rules is quoted as under:-

"Chaptert-III

Payment of Royalty and Dead rent

Royalty (1). The holder of a mining lease granted on or ate rte commencement of these rules shall pay royalty in respect of any mineral removed by him from the lease area at the rates for the time being specified in the first schedule to these rules.

(i-a) Notwithstanding anything to the contrary contained in rule 3 royalty should be payable by concerned brick-kiln owner or user of ordinary clay on ordinary earth at the rate specified in First Schedule to these rules.

The State Government may, by notification in the Gazette, amend the first schedule so as to include therein or exclude there from or enhance or reduce the rate of royalty in respect of any mineral with effect from such date as may be specified in the notification.

Provided that the State Government shall not enhance the rate of royalty in respect of any mineral for more than once during any period of three years and shall not fix the royalty at the rate of more than 20 percent of the pit's mouth value.

Where the royalty is to be charged on the pit's mouth value of the mineral the State Government may assess such value at the time of grant of the lease and the rate of royalty will be mentioned in the lease deed. It shall be open to the State Government to reassess not more than once in a year the pit's mouth value if it considers that an enhancement in necessary."

Rule 68 of the Concession Rules 1963 provides the power to the State Government in the interest of Mineral Development to relax any of the provisions of the Rules, if it is of the opinion that in the interest of mineral development it is necessary to do so, by order in writing and for reasons to be recorded authorise in any case the grant of any mining lease or the working of any mine for the purposes of winning any mineral on terms and condition different from those laid down in 1963 Rules.

Prior to 37th Amendment dated 22.10.2014, the State Government was charging royalty from brick-kiln owners under a scheme framed in the year 2004 vide Government Order dated 04.12.2004. A perusal of said Government Order would show that different districts were categorized as "A" "B" & "C" and mining permit to brick-kiln owners was being given on payment of royalty as fixed by the said Government Order. The compounding scheme framed contains a fixed amount of royalty to be paid by a brick-kiln owner according to the number of payas it have. The amount of royalty is determined according to the capacity of the brick-kiln measured in number of payas.

The Government Order dated 04.12.2004 was amended vide Government Order dated 18.05.2009 and the royalty was enhanced. Royalty of Rs. 27,000/- was enhanced to Rs. 40,500/-; Rs. 21,000/- was enhanced to 31,500/- and royalty of Rs. 15,000/- was enhanced to Rs 22,500/- in category "A" "B" & "C" districts respectively for brick earth ('eet mitti') having minimum of 15 'paya' and Rs. 1800/- for addition of every per paya thereafter in all categories of districts. Again on expiry of three year, on 11.09.2013 the royalty was enhanced by adopting a uniform principle of enhancement by 50% of the last royalty and thus fixed royalty of Rs. 40,500/- for less than 15 paya in 'A' category districts was enhanced to Rs.60,750/-; royalty of 31,500/- for 'B' category districts was enhanced to Rs. .47,250/- royalty and royalty of Rs. .22,500/- for 'C' category districts was enhanced to Rs. 33,750/- for brick-kiln having minimum 15 paya and the same formula was adopted for the enhanced number of payas in all category districts. On 03.11.2014, the State Government issued a Government order providing that since the rate of royalty had been revised vide the Government Order dated 11.09.2013 therefore for the year 2013-14, the same was not being revised.

The first schedule to 1963 Rules has been amended by 37th amendment dated 19 January 2016 wherein it has been provided that rate of royalty for mud used in manufacture of brick royalty is enhanced from 27/- per thousand bricks to Rs.54/- per thousand bricks produced. The earlier rate of Rs.27/- per thousand bricks had been fixed by means of 34th amendment dated 02.11.2012. Based on the same under compounding scheme for ensuring payment of royalty, Government Order dated 11.09.2013 was issued. Said royalty amount to be paid has now been revised by the impugned amendment dated 19.01.2016, and at this juncture petitioners are before this Court wherein the State has also come forward justifying its action and thereafter the matter has been taken up for final hearing and disposal.

Counsel representing the petitioners submitted with vehemence before us, in one voice, that in the present case the royalty in question has been arbitrarily increased without there being any lawful justification and without there being any material before the State Government to enhance royalty to such an extent i.e. just the double and in view of this, there is total misuse of authority and further 'Palothan/Baluyi Mitti' has wrongly been subjected to royalty, which is not permissible in law as it is not at all notified in the First Schedule.

The said arguments in question have been countered by learned Standing Counsel by submitting that the action that has been so taken for revising the royalty is strictly in consonance with the provisions as are contained under Rule 21 of Rules 1963 and as far as 'Palothani Mitti' is concerned, rightful demand has been made in respect of the same at the point of time when scheme is to be implemented and given effect to and petitioners are free to opt the said scheme and are further free not to opt the same and carry out activity as per Chapter VI of 1963 Rules by obtaining permits.

At the very outset, we proceed to consider the arguments that have been so advanced and what we find from the record in question is that Rule 21 has been amended by adding Rule (1-a) that provides that notwithstanding anything to the contrary in Rule 3, royalty should be payable by concerned brick kiln owner for use of ordinary clay or ordinary earth at the rate specified in first schedule to these rules. Rule 21 of the Rules 1963 restricts the power of the State Government insofar as the rate of royalty, in respect of any mineral, is concerned, as the same cannot be enhanced more than once during the period of three years and the royalty cannot be fixed at a rate more than 20% of the pit's mouth value.

Petitioners are contending before us that the said guiding principle, as has been provided for in the Rules 1963, has not at all been adhered to and arbitrarily, the royalty rates have been doubled.

The factual situation that has so emerged before us is to the effect that last fixation of royalty was done in the year 2012 by means of 34th Amendment dated 02.11.2012 wherein the rate of royalty was fixed as Rs.27/- on the manufacturing of each thousand brick and now the First Schedule to Rule 1963 has been amended by 37th Amendment dated 19.01.2016 enhancing the royalty after expiry of three years w.e.f. 11.09.2013 from Rs.27/- per thousand brick to Rs.54/- per thousand brick. In the present case, this much is accepted position that the enhancement in rate of royalty is being done after the statutory prescribed period i.e. after 3 years.

The entire emphasis of petitioners is that it has been arbitrarily done without there being any material in support of the same. The impression that has been gathered by petitioners is totally incorrect for the simple reason that in the present case what we find that from the various districts, reports have been called for in order to find out as to what is the market value of clay that is being used for manufacturing of brick. The Authorities, in their turn, have found that as far as unbaked bricks are concerned, they do not find place in the market and as such in the market, prima facie, their pit's mouth value is not available and in maximum cases the clay in question is purchased by farmers and in the market, the clay in question is sold @ Rs.600/- per trolley and each trolley contains three to four cubic meters of clay and price of one cubic meter of clay is Rs.150/- and as per Rule 21 of 1963 Rules, the royalty amount cannot be more than 20% than the royalty of pit's mouth value, in the said direction, calculation has been made and it has been found that for manufacturing 1000 bricks, two cubic meters of clay would be required and for ordinary clay the fixed royalty is Rs.30/- and as two cubic meters of clay would be consumed, royalty would come to Rs.60/- and accordingly, in the said direction taking liberal view it has been fixed as Rs.54/- per thousand bricks produced.

Once such material was on record before the Authority concerned, then to say that there has been non application of mind or that the royalty has been arbitrarily enhanced and is excessive, cannot be accepted by us. Apex Court in the case of Quary Owners Association vs. State of Bihar 2000 (8) SCC 655 has ruled that State Government while acting as a delegatee under Section 15(1) of the Act is not confined to fix the royalty/deed rent within the peripheral ambit of Entry 54 of Schedule II of the Act. Niether D.K. Trivedi (supra) has said so, nor it can be construed to be so. The State Government has acted within the ambit of power delegated to it and such delegation is with sufficient guidelines and check in view of Preamble, Objects and Reasons and various provisions of the Act. The challenge that has been made qua fixation of royalty under 37th Amendment accordingly is of no avail.

After answering the first issue, we proceed to consider the next issue as to whether 'palothan mitti' (baluyi mitti) which is also used in the manufacture of bricks would attract additional 20% on the royalty to be paid by brick kiln owner and specially in the backdrop when such rate is not there in the First Schedule.

Samadhan Yojana has been brought into force in exercise of authority conferred upon the State Government under Rule 68 of Rules 1963 and royalty has been revised based on notification dated 19.01.2016 under Rule 21 of Rules 1963 and on the basis of scheme so formulated, to deposit royalty under Samadhan Yojana 2015-16, the Government Order dated 20.01.2016 has been issued by the State Government. Validity of aforementioned Government Order in principle of formulating such a scheme has not been challenged before us and the limited challenge to the said Government Order is in reference of use of 'palothni mitti' inviting 20% additional royalty.

Once royalty in question has been fixed strictly in accordance with law and Samadhan Yojana 2015-16 is there providing for additional royalty of 20% where 'palothni mitti' is being used for manufacture of bricks and letter dated 07.10.2015 would go to show that as far as 'palothini mitti' is concerned, 60% of the same is sand and 40% of the same is ordinary clay. Before us it is not at all case of the petitioners that 'palothni mitti' is not at all being used in the manufacture of brick by them. This fact has also not been disputed before us that 'palothni mitti' comprises 60% sand and 40% of ordinary clay. The inevitable conclusion is that 'palothni mitti' is amalgam of two different minor mineral and percentage of composition of minor mineral i.e. of sand and ordinary clay is a known fact. It is true that 'palothni mitti' in itself has not been mentioned in the First Schedule to the Rules. Apex Court in the case of Tata Steel Ltd. vs. Union of India 2015(6) SCC 193 has taken the view that, though royalty may hava a definite connotation, the rate of royalty, its method of computation and final levy are different from mineral to mineral. Issue of computation of royalty on minerals is rather complex and it is best left to the experts in the field and it cannot be painted with broad brush.

Under the First Schedule of 1963 Rules, royalty is leviable both on ordinary clay as well as on sand. Royalty, in all eventuality, has to be paid in respect of minor mineral removed. One cannot take a stand that though they are using 'palothni mitti', royalty would not be paid on the same as royalty for 'palothni mitti' is not provided for in the First Schedule. Royalty cannot be permitted to be escaped and with this object in mind once royalty has been provided of the ordinary clay as well as sand under the First Schedule, and thereafter based on the average of its composition royalty has been worked out and said determination is more than 20% of the royalty fixed for brick earth and accordingly the scheme in question has been formulated providing for additional 20% royalty where 'palothni mitti' is being used for manufacturing of bricks. In this background the challenge made to Clause (2) of Government Order dated 20.01.2016 in reference of use of 'palothni mitti' attracting royalty of additional 20% on the royalty to be paid by the brick kiln owner, is unsustainable in the facts of the case.

Moreover we also make it clear that in reference of brick kiln owners, the scheme in question has been specifically framed, providing them opportunity to opt for the scheme. Opting the scheme is also optional as is clearly reflected from Clause 7 of Government Order, that clearly provides that if one does not opt for the scheme, then after taking environmental clearance certificate for carrying out mining activity, will have to take mining permit as is provided under Chapter VI of 1963 Rules.

Consequently, challenge made sans merit, in view of this, present Writ Petition and all the connected Writ Petitions are dismissed.

No order as to cost.

Order Date :-01.12.2016

A. Pandey