Telangana High Court
M/S. Srinivasa Granites vs The State Of Telangana on 9 January, 2024
Author: Nagesh Bheemapaka
Bench: Nagesh Bheemapaka
1
THE HON'BLE SRI JUSTICE NAGESH BHEEMAPAKA
W.P.Nos.2806, 2808, 2809, 2834, 2900, 2938, 2912 3072, 3082, 3093,
3098, 3103, 3509, 3514, 3518, 3522, 3558, 3560, 3562, 3636, 3712, 3720,
5070, 5071, 5082, 5091, 5134, 5854, 6134, 17331, 23216, 23371, 23866,
24262, 24603, 25252, 26009, 26013, 26202, 26284, 28904 of 2023
COMMON ORDER:
The issue raised in these writ petitions being common and the relief
sought being identical, they are taken up together, heard and are being
disposed of by this common order. For convenience, the averments in
W.P.No.2806 of 2023 are being taken.
Invoking the jurisdiction of this Court under Article 226 of the
Constitution of India, the petitioner in W.P.No.2806 of 2023 seeks to set
aside both the Show Cause Notice No.1501/Vig-KNR/2013-14/OD/169/1
dated 18.04.2022, and the Demand Notice No.1501/Vig-KNR/2013-
14/OD/161/1 dated 28.12.2022, issued by 3rd respondent, by declaring
them as illegal and arbitrary and against the principles of natural justice,
and also direct the respondents not to collect the alleged deviated
Seignorage Fee on the basis of the weight of the blocks and on the basis of
the Railway Transit receipts or on the weight of the blocks which are not
available and also direct the respondents not to take steps to collect the 2
Seignorage Fees on the basis of Appraisal Report No.60 (268/NR1/2013)
dated 29.05.2013.
Brief facts of the case are that the petitioner-M/s Sri Balaji Granites,
rep. by its Proprietor G. Vijaya Laxmi, is a proprietary unit dealing with
quarrying granite in Karimnagar District. The 4th respondent has granted
lease rights to the petitioner-Unit for quarrying granite in Sy.No.556/ABDE
of Nagulamalyala Village of Kothapally Mandal. The licenses are subsisting
for all queries and the petitioner is continuing quarrying operations as per
the Rules and Regulations under Telangana State Minor Mineral
Concession Rules, 1966 (for short, TSMMC Rules). The petitioner has never
defaulted in payment of Seigniorage Fee and the respondents have never
issued any Memo or charged penalty to the petitioner-Firm. While so, the
3rd respondent issued a Show Cause Notice No.1501/Vig-KNR/2013-
14/OD/169/1 dated 18.04.2022 to the petitioner-unit alleging that vide
appraisal report No.60(268/NR-I/2013) dated 29.05.2013, the Vigilance
and Enforcement Department requested the Government to issue suitable
instructions to take necessary action against certain agencies including
M/s Swetha Agencies, Karimnagar Railway Stock Yard, Karimnagar District
for transportation of Granite blocks through Railways by recording lesser 3
measurements against the actual measurements resulting in calculation of
lesser volume and less payment of Seigniorage Fee during the period
2008-2011. In turn the Government has issued Memo
No.9884/M.II(1)/2013-1 dated 20.07.2013 to comply with the
recommendations in appraisal report. As follow up, the 3rd respondent has
been issuing Show Cause Notices and Demand Notices, and in the Show
Cause Notice dated 18.04.2022, it was alleged that M/s Swetha Agencies
has transported a quantity of 3,55,554 cubic meters of rough granite
blocks without valid permits. It was also stated in the Show Cause Notice
that a Writ Petition PIL No.183 of 2018 was filed before this Court wherein
directions were issued to the Director of Mines and Geology to submit the
Status/Action Taken Report No.60 (268/KNR-I/2013) dated 29.05.2013 of
Vigilance & Enforcement Department. It was also alleged in the Show
Cause Notice dated 18.04.2022 that the technical staff have verified the
Railway consignment-wise receipts, transit forms and details submitted by
M/s Swetha Agenices and noticed that they have submitted 5123
duplicate transit forms in which 154 duplicate transit forms belong to
Quarry Lease held by M/s Sri Balaji Granites in Survey No.556/ABDE
Nagulamalyala Village, KothapallyMandal, Karimnagar District, and found
differential quantity of 469.371 CBM (as per Railways weight) without any 4
valid documentary evidence submitted by the agency and a demand
notice dated 13.08.2021 was issued to the said effect. It is also alleged
that after verification of remaining 46435 bills submitted by the agency
was taken up, the respondents alleged to have found variation in the
quantity. It was alleged that to M/s Sri Balaji Granites have transported
672 Granite blocks for a quantity of 4939.515 CBM (as per Railways
weight) without any valid documents in proof of having paid Seigniorage
fee as per documentary evidence submitted by the agency.
It is submitted that in all the notices the petitioner is directed to
show cause why the alleged deviated normal Seigniorage fee with 5 times
penalty cannot be collected. Admittedly the alleged deviation in
transported blocks said to have found when the railway weight is
converted into volume but there is no deviation in the number of blocks.
In all the notices there is reference of earlier demand notices dated
13.08.2021. The petitioner has challenged the earlier demand notices in
separate Revision Cases before the Government. Likewise several other
quarry companies from Karimnagar District have also filed Revision cases
in respect of demand notices issued by the 3rd respondent against them.
When the Revisions are dismissed directing the petitioner and other
quarry companies to pay normal Seigniorage Fee with one time penatlty, 5
they have also paid such amounts in the interest of smooth running of the
companies and to avoid disputes with the officials or the Government. The
petitioner and other companies paid normal Seigniorage fee under
compulsion and coercion as the respondents have stopped issuing fresh
permits. Taking undue advantage of the weakness of the quarry
companies, the respondents are again and again issuing Show Cause
Notices on the pretext of Appraisal Report. The petitioner addressed a
letter on 16.12.2022 to the 3rd respondent seeking time to file reply and
also requesting to furnish information. Without conceding the request of
the petitioner, the 3rd respondent has issued Demand Notice dated
28.12.2022 wherein the contents of the Show Cause notice were
reproduced and normal Seigniorage Fee alleged to have arrived by
converting weight into volume is charged with 5 times penalty.
Heard the learned counsel for the petitioner, and the learned
Additional Advocate General for the respondents-State.
Learned counsel for the petitioner contends that converting weight
of granite block into volume is not provided in TSMMC Rules, 1966 and
unless the Rules are amended to collect the Seigniorage fee by converting
into volume, the action of respondents to collect Seigniorage fee by 6
converting weight into volume is illegal. It is also submitted that
Seigniorage Fee is paid for lesser measurements than actual
measurements based on mathematical calculation is not tenable in the
absence of granite block at dispute for physical verification. It is submitted
that the process for determining and calculating specific gravity is
incorrect and violates Rules 10 and 34 of TSMMC Rules, 1966. It is also
submitted that Schedule-I of Rule 10 of TSMMC Rules, 1966 clearly
provides for levying Seigniorage Fee on the basis of volume rather than
weight with regard to granite appropriate for cutting and polishing, and
the Schedule-I under Rule 10 deals with Seigniorage Fee. Serial No.17 of
Schedule-I prescribes the rates of Seigniorage Fee on granite blocks will be
levied on cubic meters only.
It is submitted that every year Mineral Revenue Assessment will be
done by the Additional Director of Mines and Geology which reveals
actual number of transported blocks or their volume. Further, the Joint
Director also verifies the Mineral Revenue Assessment for every 4 years,
and as such the illegal transportation cannot be alleged against the the
transporting agencies or granite quarry companies. 7
It is submitted that the allegation in Appraisal Report that transport
agencies indulged in illegal transportation of rough granite blocks is not
tenable for the reason that as on the date of transportation of blocks, the
granites were numbered and dimensions were checked by the technical
staff of Assistant Director of Mines and Geology and also counter checked
during inspection by technical staff as per guidelines issued by Director of
Mines and Geology.
It is submitted by drawing attention of this Court of Para 5(v) of the
Memo No.13300/M.II(1)/2011-1 of Industries & Commerce(Mines.II)
Department dated 17.09.2011, that when Granite Entrepreneurs
requested the Government to collect Seigniorage Fee on the weight of
block, the said request was rejected by Government vide the said memo;
and that the recommendations of Vigilance and Enforcement Department
in the appraisal report to levy the Seigniorage Fee on the basis of weight
of the granite block is not implemented by the Department of Mines and
Geology.
It is submitted that the Vigilance and Enforcement Department
ought not to have adopted the method of conversion of weight into
volume in Appraisal Report, having observed that in memo 8
No.675/PPC2/97 dated 2.06.2000 there was condition that "no granite
block shall be dispatched unless it is previously numbered an dimensions
marked by technical staff of the Assistant Director of Mines and Geology",
and though as per Circular Memo No.675/P1/97 dated 18.03.2006 issued
by Director of Mines and Geology, the above condition was deleted, still
the responsibility was imposed on the officers to verify the stock by way of
test checking and block measurements on regular interval. The
responsibility was placed on the officers for counter checking the
measurements.
It is further submitted that reading of proviso to Rule 12(5)(h)(iii) of
TSMMC Rules, 1966, makes it clear that Granite is dispatched not
accompanied by transit forms, the lessee is liable to pay 5 times of Normal
Seigniorage Fee as penalty. Further Rule 26(3)(ii) of the TSMMC Rules
makes it clear that the said Rule is applicable only when the blocks are
available and the Seignorage Fee is found to be not paid. The entire
Appraisal Report shows that variation in the volume of the blocks based
on weightage of the blocks only as shown by the Railways but not on the
actual available blocks, and without blocks on the basis of the transit
forms and on the basis of the weightage in the Railway receipts, the 9
volume cannot be decided accurately; and further it is settled law that the
power under Rule 26(3)(ii) shall be exercised within a reasonable period
and not after a decade of dispatching of blocks, the impugned Show Cause
notices cannot be sustained.
Learned counsel has also drawn attention to Government Memo
No.2548/M.I(2)/2011 dated 21.07.2011 regarding the guidelines issued to
prevent illegal Mining and Transportation of minerals, wherein as per
Condition(h) and (i) of Guideline-4, the Assistant Director of Mines and
Geology shall maintain a register of details of Minerals transported. It is
also contended that memo dated 21.07.2011 makes it clear that mineral
shall be measured in MT/M3 for the purpose of collection of Railway
freight charges.
Learned counsel further contends that in PIL No.183/2018, the
Director of Mines and Geology has filed an Affidavit on 09.11.2018 stating
that Appraisal Report of the Vigilance and Enforcement Department is
based on the presumption only; and this Court passed Docket Order on
29.11.2018 "let further action taken by the Department be placed on
record by next date of hearing"; and then the Director of Mines & Geology
has filed a report in the form of Affidavit dated 13.01.2020 narrating that 10
several Show Cause notices and Demand notices were issued to 22 Quarry
Lease Holders and also reiterated that the report of Vigilance &
Enforcement Department is based on presumption.
It is finally contended that the impugned notices are barred by
limitation and that though it is appropriate to file reply to the Show Cause
notice and Revision Case against the Demand notice, the exercise is futile
and further the availability of an alternative remedy is not a bar to file the
present writ petition.
Sri T. RajanikanthReddy, learned Additional Advocate General, while
justifying the action of the respondent authorities, submits that the High
Court cannot entertain a petition under Article 226 of the Constitution if
an effective alternative remedy is available to the aggrieved person.
Learned Additional Advocate General draws attention to the judgment of
the Hon' ble Supreme Court in M/S. South Indian Bank Ltd. & Ors. V
Naveen Mathew Philip 1
"43. Unfortunately, the High Court overlooked the settled law that
the High Court will ordinarily not entertain a petition under Article
226 of the Constitution if an effective remedy is available to the
1 2023 SCC Online SC 435 11
aggrievd person and that this rule applies with greater rigour in
matters involving recovery of taxes, cess, fes, other types of public
money and the dues of banks and other financial institutions. In our
view, while dealing with the petitions involving challenge to the
action taken for recovery of the public dues, etc., the High Court
must keep in mind that the legislations enacted by the Parliament
and State Legislatures enacted by Parliament and State Legislatures
for recovery of such dues are a code unto themselves inasmuch as
they not only contain comprehensive procedure for recovery fo the
dues but also envisage constitution of quasi judicial ..............."
It is further contended that the Hon'ble Supreme Court, while
dealing with an appeal filed under Section 17 of the SARFAESI Act, made
the following observations:
"16. When a statute prescribes a particular mode, anttempt to circumvent shall not be encouraged by a writ court. A litigant cannot avoid the noncompliance of approaching the Tribunal which requires the prescription of fees and use the constitutional remedy as an alternative.
17. We shall reiterate the position of law regarding the interference of the High Courts in matters pertaining to the SARFAESI Act by quoting a few of the earlier decisions of this Court wherein the said 12
practice has been deprecated while requesting the High Courts not to entertain cases.
18. While doing so, we are conscious of the fact that the powers conferred under Article 226 of the Constitution of India are rather wide but are required to be exercised only in extraordinary circumstances in matters pertaining to proceedings and adjudicatory scheme qua a statute, more so in commercial matters involving a lender and a borrower, when the legislature has provided for a specific mechanism for appropriate redressal.
45. It is true that rule of exhaustion of alternative remedy is a rule of discretion and not one of compulsion, but it is difficult to fathom any reason why the High Court should entertain a petition filed under Article 226 of the Constitution and pass interim order ignoring the fact that petitioner can avail effective alternative remedy by filing application, appeal, revision etc., and the particular legislation contains a detailed mechanism for redressal of his grievance."
55. It is a matter of serious concern that despite repeated pronouncement of this Court, the High Courts continue to ignore the availability of statutory remedies under the DRT Act and the SARFAESI Act and exercise jurisdiction under Article 226 for passing orders which have serious adverse impact on the right of banks and other financial institutions to recover their dues. We hope and trust that in future the High Courts will exercise their discretion in such matters with greater caution, care and circumspection." 13
Having considered the contentions of learned counsel for the
petitioner, and the learned Additional Advocate General, this Court is of
the view that even according to the learned counsel for the petitioner,
there are internal remedies against the impugned action by the
respondents, and they are not availed by the petitioner before this Court.
Further, the dictum of the Hon'ble Supreme Court in the judgments
supra lay down that the powers of the High Court under Article 226 of the
Constitution of India, though wide in nature, cannot be exercised when an
effective alternative remedy is available to the aggrieved person, and
when the legislature has provided for a specific mechanism for
appropriate redressal of the grievance.
Having regard to the same, this Court deems it appropriate to
dispose of the writ petition by relegating the petitioner to the respondent
authorities for availing the alternative remedies available under law.
At this juncture, learned counsel for the petitioner requests this
Court may be pleased to protect the interest of the petitioner as regards
the limitation aspect.
14
In view of the said request regarding limitation, this Court directs
that if the petitioner files appropriate application/s against the impugned
Show Cause notices and Demand notices, within a period of 3 weeks from
the date of receipt of a copy of this order, the period occasioned before
this Court in pursuing this writ petition shall be discounted while
calculating the limitation.
Accordingly, these writ petitions are disposed of. No costs.
Interlocutory applications, if any pending in these writ petitions, shall also
stand disposed of in consequence.
Before parting with this case, this Court must place on record its
appreciation for the perseverance and hard work put in by the learned
Additional Advocate General Sri T. Rajanikanth Reddy, in his endeavor to
protect the interest of the State.
____________________________ (JUSTICE NAGESH BHEEMAPAKA) 09th January, 2024 ksm 15
THE HON'BLE SRI JUSTICE NAGESH BHEEMAPAKA
W.P.Nos.2806, 2808, 2809, 2834, 2900, 2938, 2912 3072, 3082, 3093, 3098, 3103, 3509, 3514, 3518, 3522, 3558, 3560, 3562, 3636, 3712, 3720, 5070, 5071, 5082, 5091, 5134, 5854, 6134, 17331, 23216, 23371, 23866, 24262, 24603, 25252, 26009, 26013, 26202, 26284, 28904 of 2023
09th January, 2024
ksm
