M/S. Prasad And Company Projects ... vs The State Of Andhra Pradesh,
2022 Latest Caselaw 1197 AP

    THE HON'BLE SRI JUSTICE R.RAGHUNANDAN RAO
              WRIT PETITION No.4410 of 2022
ORDER:-

     M/s.Hinduja Power Corporation Limited had appointed

the 4th respondent as their EPC contractor for constructing and

operationalisation of a coal based thermal power project at

Devada Village, Pedagantyada Mandal, Visakhapatnam District.

Thereafter, the 4th respondent had selected the petitioner as

EPC Sub- contractor for Civil Structural and Architectural

Working involved in the said projects. Thereafter, the petitioner

had completed the entire work awarded to him. After verification

of accounts and completion of verification of measurement

books, the petitioner had sought return of the bank guarantees

for Rs.22,85,14,612/- given to the respondent.

2. It appears that while the contract was being

executed, the department of Mines and Geology took the view

that the excavation and extraction of soil and other activities

being carried out in the execution of the said contract would

amount to mining and consequently seigniorage fee should have

been paid on the material extracted. The department on the

basis of this view, also contended that penalty needs to be paid

as the seigniorage fee had not been paid. On this basis, a

demand for seigniorage fee of Rs.10,64,50,668/- and a demand

for penalty amount of Rs.106,45,06,680/- had been raised

against the 4th respondent. Aggrieved by this demand, the 4th

respondent had filed an appeal dated 25.06.2014 before the 2nd

respondent which is still pending.

3. The 4th respondent refused the requests of the

petitioners dated 13.07.2020 and 27.02.2020 for return of the

bank guarantees on the ground that the appeal filed by the 4 th

respondent against the demands made by the department of

Mines and Geology are still pending.

4. In the meanwhile, M/s.Hinduja Power Corporation,

as the primary employer, had filed W.P.No.9533 of 2011

challenging the said demand before the erstwhile High Court of

Andhra Pradesh. This writ petition was disposed of by an order

dated 29.11.2016 by the erstwhile High Court of Judicature at

Hyderabad for the State of Telangana and the State of Andhra

Pradesh holding that the activity undertaken by the primary

employer, M/s.Hinduja Power Corporation does not come under

the definition of mining and as such, no seigniorage fee would

be payable. This order has not been challenged and as such has

become final.

5. The writ petitioner, in the present writ petition

contends that in view of the directions of the erstwhile High

Court of Judicature at Hyderabad for the State of Telangana and

the State of Andhra Pradesh, which has become final, there

would be no further liability on the 4th respondent and the

disposal of the appeal is only a formality. The petitioner

contends that in such circumstances, the refusal of the 4th

respondent, to release the bank guarantees is arbitrary and

necessary directions need to be issued to the 4th respondent.

6. The petitioner also submits that the 4th respondent

had earlier sought to encash bank guarantees and

W.P.No.13241 of 2020 had been filed before the High Court of

Telangana challenging the said action. It appears that the

Hon'ble High Court of Telangana, by an order dated 19.08.2020

had directed the parties to maintain status quo and writ petition

is pending adjudication.

7. The petitioner has approached this Court, by way of

the present writ petition seeking various directions including a

direction to the respondents to dispose of the appeal of the 4th

respondent dated 25.06.2014 and for a declaration that the 4 th

respondent is not liable to pay seigniorage charges and penalty.

A further direction is sought to the 2nd respondent to dispose of

the appeal of the 4th respondent within a period of four weeks.

8. The learned Government Pleader would submit that

the present writ petition is not maintainable as it is only the 4th

respondent, who would be aggrieved by the alleged inaction of

the 2nd respondent, in not disposing of the appeal filed in the

year 2014. He would further submit that the prayers in the writ

petition cannot be granted in as much as the petitioner is not

affected by the alleged delay in disposal of the appeal.

9. Heard Sri Vimal Varma Vasi Reddy learned counsel,

appearing for the petitioner and the learned Government Pleader

for Mines and Geology.

10. While it is true that the petitioner cannot complain

of any direct violation of its rights or any direct liability being

attached to the petitioner on account of the delay in the disposal

of the appeal, it has to be seen that this is a very peculiar case

where the fortunes of the petitioner are linked to the disposal of

the appeal. In these circumstances, it cannot be said that the

petitioner cannot maintain the present writ petition.

11. While the erstwhile High Court of Judicature at

Hyderabad for the State of Telangana and the State of Andhra

Pradesh had allowed the earlier W.P.No.9533 of 2011 declaring

that no seigniorage fee can be collected from M/s.Hinduja Power

Corporation, the applicability of the said Judgment to the

demand raised against the 4th respondent is a matter which has

to be decided in the appeal filed by the 4th respondent. It would

not be appropriate for this Court to intervene in the pending

appeal. However, pendency of the appeal for the last eight years

is also a factor which has to be taken into consideration. The

inordinate delay in disposal of the appeal filed in 2014, would

definitely affect the petitioner as the disposal of the appeal has

been linked by the 4th respondent to the release of the bank

guarantees of the petitioner.

12. In the circumstances, this writ petition is disposed

of with a direction to the 2nd respondent to pass orders in the

appeal filed by the 4th respondent at the earliest and preferably

within a period of one month from the date of receipt of this

order. There shall be no order as to costs.

Miscellaneous petitions, pending if any, in this Writ

Petition shall stand closed.

___________________________________ JUSTICE R.RAGHUNANDAN RAO Date : 02-03-2022 RJS

THE HON'BLE SRI JUSTICE R.RAGHUNANDAN RAO

WRIT PETITION No.4410 of 2022

Date : 02-03-2022

RJS