Karnataka High Court
M/S. Mineral Enterprises Ltd vs The New Mangalore Port Trust on 14 December, 2023
1
IN THE HIGH COURT OF KARNATAKA AT BENGALURU
DATED THIS THE 14TH DAY OF DECEMBER, 2023
BEFORE
THE HON'BLE MR. JUSTICE R.NATARAJ
WRIT PETITION NO.1927 OF 2016 (GM-RES)
BETWEEN:
M/S. MINERAL ENTERPRISES LTD.,
A COMPANY REGISTERED UNDER
THE COMPANYS ACT,
REPRESENTED BY ITS
AUTHORIZED SIGNATORY,
MR. ASHWIN PAUL,
S/O. LT. COL. WILLIAM PAUL,
AGED ABOUT 46 YEARS,
OCCU: DIRECTOR,
NO.3RD FLOOR, WEST WING, KHANIJ BHAVAN,
NO.49, RACE COURSE ROAD,
BANGALORE-560 001.
...PETITIONER
(BY SRI. ADITYA NARAYAN, ADVOCATE)
AND:
1 . THE NEW MANGALORE PORT TRUST,
REPRESENTED BY ITS CHAIRMAN,
PANAMBUR, MANGALORE-10.
2 . THE TRAFFIC MANAGER
NEW MANGALORE PORT TRUST,
PANAMBUR, MANGALORE-10.
3 . THE DEPUTY TRAFFIC MANAGER (C)
NEW MANGALORE PORT TRUST,
PANAMBUR, MANGALORE - 10.
...RESPONDENTS
(BY SRI. SUBRAMANYA R., ADVOCATE)
2
THIS WRIT PETITION IS FILED UNDER ARTICLES 226
AND 227 OF THE CONSTITUTION OF INDIA PRAYING TO QUASH
THE DEMAND NOTICE ISSUED BY THE RESPONDENT NO.1 VIDE
LETTER NO.FIN/GEN/2015, DATED 31.03.2015 THE COPY OF
WHICH AS SERVED ON THE PETITIONER IS PRODUCED AT
ANNEXURE-H DEMANDING THE PETITONER TO PAY SUM OF
RS.3,32,27,506/- AND ETC.
THIS PETITION HAVING BEEN HEARD AND RESERVED
FOR ORDER ON 21.09.2023 AND COMING ON FOR
PRONOUNCEMENT OF ORDER THIS DAY, THE COURT MADE THE
FOLLOWING:-
ORDER
The petitioner has challenged a demand made by
respondent No.1 in bearing No.FIN/GEN/2015 dated
31.03.2015 by which, a sum of Rs.3,32,27,506/- was
demanded by respondent No.1 as the difference in licence
fee and service tax. The petitioner has also sought for a
writ in the nature of certiorari to quash the demand notice
dated 16.09.2015 by which, respondent No.2 rejected the
objections filed by the petitioner and reiterated the
demand. The petitioner has also challenged a demand
notice dated 13.11.2015 issued by respondent No.3
demanding a sum of Rs.3,30,54,353/-.
2. The facts in brief are that the petitioner was
allotted 11,238 sq. mtrs. of paved area and 9000 sq. mtrs.
of unpaved area inside the wharf for stacking iron ore
fines/lumps in terms of an order of allotment dated
20.02.2004. The petitioner surrendered 2250 sq. mtrs. of
paved area in terms of its letter dated 08.04.2004 and
retained 8988 sq. mtrs. of paved area. Later, the petitioner
surrendered 9000 sq. mtrs. of unpaved area in terms of its
letter dated 29.08.2011. Thus, what remained with the
petitioner was 8988 sq. mtrs. of paved area, where the
petitioner had erected a godown. In view of the ban
imposed by the State Government against movement of
iron ore from the mine head to the Port, the petitioner
decided to surrender 7072 sq. mtrs. out of 8988 sq. mtrs.
and consequently, addressed a letter dated 19.09.2011
requesting respondent No.1 to take out possession of 7072
sq. mtrs. with immediate effect. However, it permitted
respondent No.1 to utilize the "godown" until further
intimation. In response to this, respondent No.1 belatedly
replied on 21.12.2011 and considered the request for
surrendering portion of the paved area subject to the
following conditions:
(i) The vacant portion of the overflow shed
constructed by the petitioner would be taken
over by the Port and will be re-allotted to the
other agencies on temporary basis and collect
charges as per the scale of rates.
(ii) The petitioner should execute a bank
guarantee equivalent to penal rental charges
as per the TAMP approved rates. The validity of
the bank guarantee shall be extended till the
surrendering of the entire plot and settlement
of the issue.
(iii) The port will not be held responsible for the
cargo stacked by the petitioner in the balance
area under the covered shed.
(iv) The petitioner shall not claim any payment for
the usage of the shed by the Port.
3. Soon thereafter, respondent No.1 allotted 7072
sq. mtrs. of the surrendered paved area in favour of M/s
Aspin Wall Logistics on 26.12.2011 with effect from
26.12.2011 to 25.01.2012 against receipt of a licence fee
of Rs.2,04,381/-. This area was again licenced to M/s
Aspin Wall Logistics for a month from 26.01.2012 to
24.02.2012 against receipt of Rs.2,05,064/-. Again the
allotment of the godown to M/s Aspin Wall Logistics was
renewed from 26.05.2012 till 24.06.2012 and licence fee
of Rs.2,08,483/- was collected. Later on 05.11.2013,
respondent No.2 allotted 1241 sq. mtrs. to M/s. Falcon
Impex Corporation for two months commencing from
03.11.2013 to 01.01.2014 and collected a sum of
Rs.1,71,456.92. In the meanwhile, the Board of trustees
of respondent No.1 at a meeting held on 27.08.2013
decided to purchase the shed constructed by the petitioner
in 7072 sq. mtrs. at a cost of Rs.2,00,00,000/-. At the
said meeting, it was decided to collect penal charges upto
4 times until the balance iron ore fines was shifted to the
common plot and to obtain an indemnity bond for the
differential amount before shifting the cargo to the
common plot, till the proposal was approved by the
Ministry. Consequently, the Board resolved that the
petitioner was liable to pay Rs.4,97,04,498/- as the penal
licence fee as on 31.10.2013 and after deducting the value
of the shed, required the petitioner to pay a sum of
Rs.2,97,04,498/-. Following this, the respondent No.1
addressed a letter dated 31.03.2015 stating that the Tariff
Authority for Major Port (for short 'TAMP') had issued a
notification dated 03.07.2014 revising the lease rent from
20.02.2012 and therefore, called upon the petitioner to
remit the differential licence fee and service tax amounting
to Rs.3,32,27,506/-. The petitioner replied to this letter
and claimed that an extent of 7072 sq. mtrs. was
surrendered on 19.09.2011 and that the renewal of the
licence in respect of surrendered area was not sought for.
It also contended that subsequent to the surrender, the
surrendered area of 7072 sq. mtrs. was allotted to M/s.
Aspin Wall Logistics and M/s. Falcon Impex Corporation.
The respondent No.2 however, overruled the objections of
the petitioner and called upon the petitioner to pay the
applicable differential licence fee for the entire extent of
8988 sq. mtrs. as demanded. This was followed by another
communication dated 13.11.2015 provisionally demanding
a sum of Rs.3,30,54,353/- being the differential licence
fee.
4. Being aggrieved by the same, the petitioner
has filed this writ petition.
5. The respondents have contested the petition
by filing a detailed objections. They admitted that the
petitioner had surrendered 2250 sq. mtrs. out of 11,238
sq. mtrs of paved area on 08.04.2004 and 9000 sq. mtrs
of unpaved area on 29.08.2011. They claimed that the
petitioner had put up a temporary open shed with steel
structure measuring 130 mtr x 55 mtr with the permission
of respondent No.1 in the wharf for its use. They
contended that though the petitioner allegedly surrendered
7072 sq. mtrs. of paved area on 19.09.2011, the same
was not accepted by respondent No.1 as per Clause 9 of
the letter of allotment, which read as follows:-
"9. The land shall be surrendered to
the port in vacant condition at the time of
termination/expiry of licence period."
6. The respondents contended that a demand
notice was issued by respondent No.1 on 31.03.2015
calling upon the petitioner to pay differential licence fee for
the period upto 13.12.2013, which amounted to a sum of
Rs.3,32,27,506/- as the petitioner was in possession of
8988 sq. mtrs. as the shed was not removed. They
contended that though the petitioner represented that it
had surrendered 7072 sq. mtrs. on 19.09.2011,
respondent No.1 refused to accept the request of the
petitioner. The respondents claimed that they never
accepted the surrender of 7072 sq. mtrs. of land as the
steel structure put up by the petitioner remained and was
not removed by it. They contended that the letter dated
21.12.2011 addressed by respondent No.1 was conditional
but the petitioner did not either accept or reject the
conditions. Therefore, there was no valid surrender and
respondent No.1 did not accept the surrender. They
contended that the proposal for sale of the covered steel
shed was made by the petitioner vide letter dated
07.02.2012 and this letter indicated beyond doubt that the
plot was not vacated by the petitioner but it continued to
occupy the same. They claimed that the offer of the
petitioner to sell the covered steel shed was considered by
respondent No.1 after a proper valuation by an expert and
approval by the Port Trust Board. Accordingly, the entire
plot of 8988 sq. mts. along with the covered steel shed
was taken over by respondent No.1 on 13.12.2013 after
shifting the Iron Ore Fines belonging to the petitioner.
They claimed that due to severe space constraint in the
Port, respondent No.1 exercised its option to request the
petitioner vide letter dated 21.12.2011 with the following
specific conditions:-
(i) Vacant portion of the Over Flow
Shed constructed by M/s Mineral Enterprises Ltd.,
will be taken over by the Port and will be re-
allotted to the other agencies on temporary basis
and collect charges as per Scale of Rates.
(ii) M/s Mineral Enterprises Ltd., has to
execute the Bank Guarantee equivalent to penal
rental charges as per TAMP approved rates. The
validity of the Bank Guarantee shall be extended
till the surrendering of the entire plot and
settlement of issue.
(iii) NMPT will not be held responsible for
the cargo stacked by M/s Mineral Enterprises Ltd.,
in the balance area under covered shed.
(iv) M/s Minerals Enterprises Ltd., should
not claim any payment for the usage of shed by
the Port; and thereafter the cargo was stored
without cancelling the allotment of the original
allottee i.e., M/s Mineral Enterprise Ltd.,
7. The respondents contended that during the
period 19.09.2011 and 13.12.2013, respondent No.1 had
allotted the plot to others only for four months
approximately that too, on temporary basis as mentioned
supra. The respondents contended that the petitioner was
therefore, bound to pay the differential licence fee as per
the notification issued by TAMP. They contended that even
though the petitioner did not seek for renewal of the
licence in respect of 8988 sq. mtrs., but it neither
surrendered nor vacated the plot by removing the steel
structure. They therefore, contended that the petitioner is
bound to pay the differential licence fee as demanded.
8. The learned counsel for the petitioner
reiterated the contentions, as stated above and contended
that the steel shed put up by the petitioner was beneficial
to respondent No.1 as it prevented damage to the goods
stored therein. He submitted that it is the respondents,
who were to pay to the petitioner for using the steel shed.
He contends that negotiations were on between the
petitioner and respondents for taking over the steel shed
also and therefore, the petitioner did not remove it at the
time of surrendering 7072 sq. mtrs. of paved area. The
learned counsel for the petitioner contended that when
respondent No.1 had rented out 7072 sq. mtrs. to M/s
Aspin Wall Logistics and M/s. Falcon Impex Corporation, it
was specifically stated that the area was vacant and
therefore, he contended that the respondents cannot claim
that the petitioner did not surrender 7072 sq. mtrs.
9. Per contra, the learned counsel for the
respondents submitted that the petitioner had enclosed
8988 sq. mtrs. by steel structure and if it wanted to
surrender, then it had to remove the steel structure as
provided under Clause 9 of the letter of allotment
mentioned supra. He contended that though the petitioner
informed the respondents that it would surrender 7072 sq.
mtrs., of paved area yet, the petitioner did not agree to
the conditions mentioned by the respondents to take over
the possession. He therefore, contended that so long as
the steel structure belonging to the petitioner remained in
the paved area, the petitioner should be deemed to be in
possession of 8988 sq. mtrs., and in view of the
notification issued by the TAMP, the petitioner is liable to
pay the differential licence fee as demanded.
10. In reply, the learned counsel for the petitioner
submitted that when once the respondents have granted
licence to M/s Aspin Wall Logistics and M/s Falcon Impex
Corporation to occupy the surrendered portion of 7072 sq.
mtrs., there is no question of respondents now claiming
that it was a temporary arrangement. In this regard, he
relied upon the judgment of the Delhi High Court in the
case of H.S. Bedi vs. National Highway Authority of
India [2015 (151) DRJ 248].
11. I have considered the submissions made by
the learned counsel for the petitioner and the learned
counsel for the respondents.
12. The only short issue that arises for
consideration in this petition is,
"Whether the petitioner had surrendered
7072 sq. mtrs., of paved area to respondents on
19.09.2011?"
13. The letter dated 19.09.2011 addressed by the
petitioner to the respondents reads as follows:
"Since the State Government's Ban on
movement of Iron Ore from Mine head to NMPT is
not lifted and uncertainty situation continues, we
have decided to surrender 7,072 Sq. Mtrs. of
paved area out of allotted 8,988 Sq. Mtrs. paved
area to us and remaining 1,916 Sq. Mtrs. of
paved area will be surrendered later near
additional Berth.
Please take possession of the same plot
with immediate effect and arrange refund of
Security Deposit.
In case, if the State Government permits
transport of Iron Ore to NMPT, we request you to
consider and allot the same plot to us on our
application.
Existing Godown can be utilized by the port
until intimation."
14. Respondent No.2 replied to this letter on
21.12.2011 as follows:-
"With reference to your letter No.nil dated
19.9.2011, the request for surrendering portion of
area, which was allocated for developing covered
shed by you, has been considered subject to the
following conditions:-
1. The vacant portion of the overflow
shed constructed by M/s. MEL will be taken over
by the Port and will be re-allotted to the other
agencies on temporary basis and collect charges
as per the Scale of Rates.
2. M/s. MEL has to execute the Bank
Guarantee equivalent to penal rental charges as
per the TAMP approved rates. The validity of
the Bank Guarantee shall be extended till the
surrendering of entire plot and settlement of the
issue.
3. NMPT will not be held responsible for
the cargo stacked by M/s. MEL in the balance
area under the covered shed.
4. M/s MEL should not claim any
payment for the usage of shed by the Port.
If the above conditions are acceptable, consent in
this regard may please be submitted to the
undersigned immediately."
15. There is no document to indicate that the
petitioner had either accepted or rejected the conditions
mentioned in the letter dated 21.12.2011. Therefore,
respondent No.1 could not have construed that the
petitioner had allowed respondent No.1 to use 7072
sq.mtrs. of paved area. Nonetheless, respondent No.1
permitted M/s Aspin Wall Logistics to use 7072 sq. mtrs.
for one month from 26.12.2011 to 25.01.2012 and
collected a licence fee of Rs.2,04,381/-. M/s Aspin Wall
Logistics was permitted to occupy the godown on
26.12.2011. The licence was again renewed from
26.01.2012 to 24.02.2012 and a licence fee of
Rs.2,05,064/- was collected. M/s Aspin Wall Logistics
vacated the godown on 24.02.2012. The godown was
again licenced in favour of M/s Aspin Wall Logistics for one
month from 26.05.2012 for storage of Rock
Phosphate/Fertilizers and licence fee of Rs.2,08,483/- was
collected. Later, the very same area was licenced in
favour of M/s Falcon Impex Corporation for a period of two
months from 03.11.2013 to 01.01.2014 to stack low ash
breeze coke. Therefore, the respondents cannot contend
that the petitioner had not cleared the godown on
19.09.2011 and/or that possession of the same could not
be taken or was not taken. The existence of an overflow
shed did not come in the way of the respondents to take
over possession. The acts of the respondents in allotting
the surrendered area to M/s Aspin Wall Logistics and M/s
Falcon Impex Corporation prove beyond doubt that the
respondents had taken over possession of the surrendered
land. Therefore, the petitioner was not really liable to pay
the differential licence fee, which came into effect from
20.02.2012 in respect of the surrendered area. As there is
no clear evidence whether the petitioner had surrendered
1916 sq. mtrs. of covered space, the petitioner was only
liable to pay the differential licence fee for 1916 sq. mtrs.
from 20.02.2012 till 27.08.2013 when the Board of
Trustees of respondent No.1 decided to purchase the
temporary shed erected by the petitioner, apart from any
due as on 19.09.2011.
16. In view of the above, this petition is allowed
in part. The demand notice dated 13.11.2015 issued by
respondent No.3 demanding a sum of Rs.3,30,54,353/-
being the arrears of licence fee, penal licence fee, service
tax and differential licence fee in respect of 8988 sq. mtrs.,
of paved area allotted to the petitioner by respondent No.1
inside the wharf of respondent No.1, is set aside.
However, respondent No.1 is entitled to collect the
differential licence fee and other statutory duties in respect
of 1916 sq. mtrs. from 20.02.2012 till 27.08.2013 when
the Board of Trustees of respondent No.1 decided to
purchase the temporary shed erected by the petitioner or
till the petitioner surrendered the possession of 1916 sq.
mtrs. of paved area to respondent No.1, whichever is later.
The petitioner shall also be liable to pay any licence
fee/penal fee, if payable, in respect of 8988 sq. mtrs. as
on 19.09.2011.
Sd/-
JUDGE
PMR
