Galib And 7 Others vs State Of U P And 2 Others
2018 Latest Caselaw 2784 ALL

HIGH COURT OF JUDICATURE AT ALLAHABAD
 
 

A.F.R.
 
Chief Justice's Court
 

 
Case :- WRIT - C No. - 32530 of 2018
 

 
Petitioner :- Galib And 7 Others
 
Respondent :- State Of U P And 2 Others
 
Counsel for Petitioner :- Vivek Dhaka
 
Counsel for Respondent :- C.S.C.
 

 
Hon'ble Dilip B. Bhosale,Chief Justice
 
Hon'ble Yashwant Varma,J.

Heard Mr. Vivek Dhaka for the petitioners and Mr. P.K. Tripathi, learned Standing Counsel for the respondents.

The sole legal question which stands raised in the instant writ petition is with respect to the liability of the petitioners to pay royalty on excavation of ordinary earth, which according to them was used for the purposes of levelling an agricultural plot. Since there was no dispute on essential facts, learned counsel for the parties consented for the disposal of this writ petition without exchange of affidavits.

The petitioners seek quashing of the order dated 25 April 2018 passed by the Commissioner affirming a decision of the Additional District Magistrate dated 17 May 2017. The Commissioner exercising appellate powers conferred by Rule 77 of the U.P. Minor Mineral (Concession) Rules, 19631 has principally upheld the view taken by the Additional District Magistrate as embodied in his order aforementioned that the petitioners were liable to pay royalty having extracted ordinary earth without the requisite permissions or permits.

The petitioners are co-sharers of khasra No. 480 which is utilised for agricultural operations. For the purposes of irrigating this field, the petitioners are stated to have constructed a channel which was linked to the main irrigation canal. It is asserted that since the plot in question was low-lying and since problems were faced in irrigating the same, they excavated the plot by removing the top soil and sought to raise the height of the plot in question. As per the petitioners, the top soil which was excavated, was neither transported out of their agricultural field nor was it put to any commercial use. According to them, it was utilised solely for the purposes of levelling the agricultural plot and raising its height so as to facilitate uniform irrigation of the agricultural plot in question.

On 1 December 2016, the District Magistrate acting upon a report submitted to him issued a show cause notice calling upon the petitioners to explain why they be not held liable to pay royalty on the total quantity of ordinary earth which was excavated. Ultimately, an order was passed on 17 May 2017 holding the petitioners liable to pay Rs.4,97,500/- as royalty on the total quantity of ordinary earth so extracted. Aggrieved by the aforesaid order, the petitioners instituted a statutory appeal before the Commissioner, which came to be dismissed on 10 January 2018 on the ground of having been preferred with delay. The order of the Commissioner dated 10 January 2018 was quashed by this Court on 19 March 2018 while allowing Writ-C No. 10017 of 2018 and remanding the matter to the Commissioner with a direction to decide the appeal on merits. Pursuant to the order of remand, the Commissioner undertook a hearing of the appeal and has ultimately passed the order impugned. The Commissioner in terms of the impugned order, it is relevant to note, has affirmed the decision rendered by the Additional District Magistrate on 17 May 2017 in part. While upholding the levy of royalty, the Commissioner has chosen to reduce the penalty from Rs. 25,000/- to Rs. 5000/-.

Assailing these orders, learned counsel for the petitioners has submitted that the levy of royalty was clearly unjustified since the ordinary earth which was excavated, was redeployed on the same plot of land and was not shown to have been sold or transferred for commercial gains. It was contended that the mere excavation of ordinary earth for the purposes of levelling the agricultural field could not be said to fall within the ambit of the expression "mining operations" as defined in Rule 2(5) of the 1963 Rules.

Countering the said submissions, the learned Standing Counsel contends that the demand of royalty cannot be held to be illegal merely because the excavated minor mineral was not sold or transferred for commercial gains. According to the learned Standing Counsel, since what the petitioners excavated was a minor mineral, the same could not have been undertaken without the requisite permits having been obtained under Rule 3 and the payment of royalty under Rule 21.

While the rival submissions have revolved upon the expression "mining operations" as employed under the 1963 Rules and the contention that since ordinary earth was not used for commercial gain, they were not liable for payment of royalty, the authorities below appear to have framed their decision oblivious of a more fundamental issue.

The expression "minor mineral" under the Mines and Minerals (Regulation and Development) Act, 19572 has been defined under Section 3 (e) as under.

"3. (e) "minor minerals" means building stores, gravel, ordinary clay, ordinary sand other than sand used for prescribed purposes and any other mineral which the Central Government may, by notification in the Official Gazette, declare to be a minor mineral."

The 1963 Rules in one sense do not independently define minor minerals, except to prescribe that the said expression would include building stones, gravel, ordinary clay, ordinary sand and any other mineral, which the Central Government has declared under Section 3(e) of the 1957 Act. Ordinary earth came to be notified as a minor mineral in terms of a Notification issued by the Union Government on 3 February 2000. The said notification reads thus:

"NOTIFICATION

GSR 95 (E).- In exercise of the powers conferred by clause (e) of Section 3 of the Mines and Minerals (Development and Regulation) Act, 1957 (67 of 1957), the Central Government hereby declares the 'ordinary earth' used for filling or levelling purposes in construction of embankments, roads, railways, buildings to be a minor mineral in addition to the minerals already declared as minor minerals hereinbefore under the said clause.

(F. No. 7/5/99-M. VI)

sd/-

(S.P. Gupta)

Joint Secretary to the Government of India"

On a careful consideration of the terms of the Notification aforesaid, it is evident that ordinary earth, per se, has not been declared to be a minor mineral. It is only when ordinary earth is utilised for filling or levelling purposes in the construction of embankments, roads, railways or buildings that it qualifies to be a minor mineral. It is, thus, evident from the terms of the Notification dated 3 February 2000 that the end use of ordinary earth is the determinative factor to evaluate whether a person can be held to have excavated a minor mineral. If the excavated ordinary earth is neither utilised nor used for any of the purposes specifically mentioned in the Notification dated 3 February 2000, it would not qualify as a minor mineral and, therefore, the levy of royalty would clearly be unjustified.

This position has been succinctly explained by the Supreme Court in Promoters and Builders Association of Pune Vs. State of Maharashtra3 as follows.

"14. Though Section 2(1)(j) of the Mines Act, 1952 which defines 'mine' and the expression "mining operations" appearing in Section 3(d) of the 1957 Act may contemplate a somewhat elaborate process of extraction of a mineral, in view of the Notification dated 3.2.2000, insofar as ordinary earth is concerned, a simple process of excavation may also amount to a mining operation in any given situation. However, as seen, the operation of the said notification has an inbuilt restriction. It is ordinary earth used only for the purposes enumerated therein, namely, filling or levelling purposes in construction of embankments, roads, railways and buildings which alone is a minor mineral. Excavation of ordinary earth for uses not contemplated in the aforesaid notification, therefore, would not amount to a mining activity so as to attract the wrath of the provisions of either the Code or the 1957 Act.

15. As use can only follow extraction or excavation it is the purpose of the excavation that has to be seen. The liability under Section 48(7) for excavation of ordinary earth would, therefore, truly depend on a determination of the use/purpose for which the excavated earth had been put to. An excavation undertaken to lay the foundation of a building would not, ordinarily, carry the intention to use the excavated earth for the purpose of filling up or levelling. A blanket determination of liability merely because ordinary earth was dug up, therefore, would not be justified; what would be required is a more precise determination of the end use of the excavated earth; a finding on the correctness of the stand of the builders that the extracted earth was not used commercially but was redeployed in the building operations. If the determination was to return a finding in favour of the claim made by the builders, obviously, the Notification dated 3.2.2000 would have no application; the excavated earth would not be a specie of minor mineral under Section 3(e) of the 1957 Act read with the Notification dated 3.2.2000."

Dealing with a similar question and upon noticing the decision of the Supreme Court in Promoters and Builders Association of Pune, a Division Bench of our Court in R.G. Infra City (P) Ltd. Thru. Authorized Signatory Vs. State of U.P. & Ors.4 held as under:-

"As we have noted above, the definition of the expression 'Mining Operations' in Rule 2 (5) of the Rules refers to operations which are undertaken for the purpose of winning any minor minerals. The purpose of the operation is hence what is significant.

In the present case, it is sought to be urged on behalf of the petitioner that the purpose of the operation is not winning of any minor minerals and that the entire quantity of soil which is excavated would be used only for the construction of the building. This, in our view, is evidently a factual matter which must primarily be determined by the Collector/ District Magistrate, Lucknow. The petitioner has, as a matter of fact, already moved the Collector in a representation dated 8 January 2015."

In a more recent decision rendered by a Division Bench of the Bombay High Court in BGR Energy System Ltd., Khaparkheda Vs. Tehsildar, Saoner & Ors.5, the principles enunciated by the Supreme Court in the decision aforementioned was again held to apply with the Court reiterating the settled position that it is the end use of ordinary earth alone, which would determine the liability to pay royalty. The following observations as entered in the decision of the Bombay High Court in BGR Energy System Ltd., being apposite, are extracted herein below:-

"It is apparent from a reading of the notification of the Central Government dated 3.2.2000 that ordinary earth used for filling or levelling purposes in construction of embankments, roads, railways, buildings, etc. is to be considered as a minor mineral in addition to the minerals already declared as such, under the provisions of section 3(e) of the Act. The notification dated 03.02.2000 only includes the ordinary earth used for the purposes mentioned in the notification to be a minor mineral and the ordinary earth that is used for any purpose other than the ones mentioned in the notification is not to be considered as a minor mineral. It is not the case of the respondent-Tahsildar or the State Government that the petitioner had utilized the earth for filling or levelling purposes in construction of embankments, roads, railways, buildings, etc. In the instant case just like the appellant in the case before the Hon'ble Supreme Court, earth was dug for the purpose of laying a foundation of the building and the earth so excavated or dug up was redeployed in the building itself at a particular stage of the construction. In the instant case also, the petitioner had excavated the earth while digging the pits for laying the foundation of the building for the thermal project and the earth so excavated was utilized by the petitioner in the building itself, i.e. for refilling the dug up pits after the foundation was laid. The Tahsildar has not disputed that the petitioner has utilized the earth excavated from the site for refilling the pits that were dug up for the purpose of laying the foundation of the building for the thermal project. In the case before the Hon'ble Supreme Court, since the earth excavated for the purpose of laying the foundation of the building was deployed in the building itself, just like in the present case, the Hon'ble Supreme Court held that the earth so excavated would not fall within the term 'minor mineral'. It was observed by the Hon'ble Supreme Court that where the excavated earth was utilized for the purpose like the one in this case, the notification, dated 3.2.2000 would have no application as the excavated earth in such a case would not be a species of minor mineral under Section 3(e) of the Mines and Minerals (Development and Regulation) Act. As per the Hon'ble Supreme Court, the end use of the earth that is excavated for laying the foundation or for any other purpose, would determine whether the excavated earth could be brought within the fold of the term 'minor mineral'. If the excavated earth is not used for filling or levelling in construction of embankments, roads, railways, buildings, etc., the said earth would not be a 'minor mineral' within the definition of the term under Section 3(e) of the Mines and Minerals (Development and Regulation) Act. It is apparent from the impugned order that the Tahsildar has not imposed the penalty on the petitioner for excavating any mineral other than the earth and the same is passed due to the excavation of the earth to the extent of 144318 Brass. Since the earth excavated by the petitioner cannot be brought within the fold of the term 'minor mineral', the Tahsildar could not have passed the impugned order under section 48(7) of the Maharashtra Land Revenue Code as it could not be said that the petitioner had excavated 'minor mineral' without seeking the requisite permission."

On an overall consideration of the principles which can be culled out from the decisions referred to above, it is manifest that ordinary earth is liable to be treated as a minor mineral only if it is utilised in any one of the functions which are enumerated in the Notification dated 3 February 2000. The mere extraction of ordinary earth for a purpose other than those enumerated in the said notification would not render it liable to be treated as a minor mineral.

As we read the orders impugned in the instant writ petition, we note that neither of the two authorities have considered the matter from this angle. No findings have been returned either by the Additional District Magistrate or by the Commissioner in appeal that the ordinary earth excavated by the petitioners was in fact, used for filling or levelling purposes in the construction of an embankment, road, railway or building. In the absence of any factual finding recorded in this respect, in our considered view the levy of royalty is clearly rendered unsustainable.

We also find that neither of the two authorities have dealt with the contention of the petitioners that the ordinary earth which was excavated was used solely for the purposes of raising the level of the agricultural field. It appears to have been the consistent stand of the petitioners that no element of commercial exploitation was present or attached to the excavation of ordinary earth. This contention of the petitioners has also neither been noticed nor considered by the statutory authorities. We, therefore, find ourselves unable to sustain the impugned orders on this score also.

It was not disputed before us that the original demand for royalty rests upon two reports dated 9 November 2016 and 17 April 2017. It is on this material alone that the Additional District Magistrate proceeded to impose penalty and create a liability towards royalty upon the petitioners. The liability of the petitioners would therefore be liable to be adjudged on the basis of this material as well as other evidence that already forms part of the record. In that view of the matter, the learned Standing Counsel submitted that the ends of justice would merit the matter being remitted to the Commissioner, who may consequently be commanded to decide the appeal of the petitioners afresh bearing in mind what has been held by us with respect to the legal position which must govern.

We, accordingly, allow the instant writ petition and set aside the orders dated 17 May 2017 passed by Additional District Magistrate (Finance & Revenue), Hapur and 25 April 2018 passed by the Commissioner, Meerut Zone, Meerut in Appeal No. 459 of 2018. The Commissioner, the third respondent herein, shall in consequence proceed to decide the appeal afresh bearing in mind the observations entered herein above and with due notice to the petitioners.

 
Order Date :- 25.9.2018
 
VKS
 
 (Yashwant Varma, J)       (Dilip B Bhosale, CJ)