Telangana High Court
M/S Pallavimaagcjv, vs The Union Of India, Ministry Of ... on 3 June, 2024
Author: Surepalli Nanda
Bench: Surepalli Nanda
IN THE HIGH COURT OF TELANGANA AT HYDERABAD
W.P.No.12675 OF 2017
Between:
M/s. Pallavi-Maa-GC-(JV)
... Petitioner
And
The Union of India & others
... Respondents
JUDGMENT PRONOUNCED ON: 03.06.2024
THE HON'BLE MRS JUSTICE SUREPALLI NANDA
1. Whether Reporters of Local newspapers : Yes
may be allowed to see the Judgment?
2. Whether the copies of judgment may be : Yes
marked to Law Reporters/Journals?
3. Whether Their Lordships wish to : Yes
see the fair copy of the Judgment?
__________________
SUREPALLI NANDA, J
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THE HON'BLE MRS JUSTICE SUREPALLI NANDA
W.P.No.12675 OF 2017
% 03.06.2024
Between:
# M/s. Pallavi-Maa-GC-(JV)
... Petitioner
And
$ The Union of India & others
... Respondents
< Gist:
> Head Note:
! Counsel for the Petitioner : Mr.C.Hanumantha Rao
^ Counsel for Respondents : Mr.P.Bhaskar, Ld.S.C.for
R1 to R5
G.P. for Mines and Geology,
for R6.
? Cases Referred:
--
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THE HON'BLE MRS. JUSTICE SUREPALLI NANDA
W.P. No.12675 OF 2017
ORDER:
Heard Mr.C.Hanumantha Rao, learned counsel
appearing on behalf of the petitioner, Mr.P.Bhaskar, learned
Standing Counsel appearing on behalf of respondent Nos.1
to 5 and learned Government Pleader for Mines and Geology
appearing on behalf of respondent No.6.
PRAYER:
2. The petitioner approached the court seeking prayer as
under:
"...to issue writ order or direction especially one in the Nature
of Writ of Mandamus declaring the action of the respondents
in deducting @ 30% towards District Mineral Foundation Fees
and 2% State Mineral Exploration Trust, in total deducting
32% on the seigniorage charges from the running bills
payable to the petitioner is illegal, arbitrary and violative of
the Article 19(1)(g) of the Constitution of India and
consequently direct the respondents not to deduct 30%
towards District Mineral Foundation Fees and 2% State
Mineral Exploration Trust, in total deducting 32% on the
seigniorage charges from the petitioner or in the alternative it
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is prayed that this Hon'ble Court may be pleased to direct the
Respondents to reimburse the amount deducted towards
Mineral Development Fund at 30% of the seigniorage charges
and also 2% of the seigniorage charges towards State Mineral
Exploration Trust and pass..."
3. PERUSED THE RECORD:
A) Counter affidavit filed by the respondents, in
particular, the relevant paras 3, 4, 5, 6, 7, 8, 9 and 10, read
as under:
"3. I submit that the seigniorage charges, if increased, will
be recovered from the contractors "on account" and "final
bills" and remitted to state government. However, the
reimbursement of the increased seignorage to the contractor
will be applicable only in respect of condition 19(3)(a) of the
agreement i.e., for seinorage charges and not for condition
19.4 of the agreement which is applicable to all other taxes,
duties, levies etc., except for seigniorage charges. The
clauses mentioned about seignorage charges in the
agreement are reproduced below.
Clause no.19.1 of the agreement condition.
"Seigniorage charges/fee for consumption of earth, moorum,
sand and other minerals in works execution as fixed by the
state government from where the minerals are drawn and
payable to them as revised from time to time during currency
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of contract will be recovered by the Railway from the
contractors, in "on account" and "final bills" and remitted to
the State government, unless exemption obtained to the
contrary or proof of payment of seigniorage charges
submitted as indicated below:
Clause No. 19.3(a) of the agreement condition
"For any subsequent increase or decrease in the rates of
seigniorage charges, reimbursement / recovery will be effect
to/from the contractor as per the following provisions.
a) For increase in the rates of seigniorage charges after the
last date of submission of tender the increased amount will be
recovered by the Railway from the contractors, in "on
account" and "final bills" and remitted to the State Govt., on
receipt of state Govt.'s order to that effect. However, the
Railway shall reimburse the additional liability to the
contractor, provided that the work executed falls in the
original completion period of the work or in the extended
period granted on administrative grounds i.e., under clause
17-A (i), (ii) or (iii) of IRSGCC.
Clause No.19.4 No additional amount will be paid or claim
entertained on this account by the Railway. Contractor shall
not have any claim whatsoever as a result of the increase in
the rates of all other taxes, duties, octroi or any form of
levies etc., even if incurred on the supply/use of minerals
indicated above.
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Hence DFM, MERIT are to be treated as levies which comes
under 19.4 and are to be borne by the contractor.
4. It is submit that the petitioner entered into agreement
to deduct seigniorage charges as per the rate prevailing on
the date of submitting tenders, i.e., on 14.09.2015, the
liability with respect to other taxes, duties, levies etc., as per
condition 19.4 of the agreement still persists upon the
contractor.
5. I submit that the proceedings vide W.Con.Dy.CPM/
WCSP/NDKD-KHT dt.30.11.2016 was issued based on
Assistant Director of Mines and Geology/Guntur letter
No.846/DFM/2016 dated 10-11-2016, as per the proceedings,
30% on seigniorage fees will be deducted from contractor's
on account and final bills for payment towards District mineral
foundation (DMF) However, the reimbursement to the
contractor with respect to recovered DMF fees is not
applicable as per condition 19.4 of the agreement. It is to
state that the additional 30% charged as DMF is not the
seignorage charges.
6. I submit that the petitioner entered into agreement
with the Railways in which the condition 19.4 of the
agreement specifically states that all other taxes, levies,
duties etc., are to be borne by the contractor and will be
recovered from on account and final bills and will not be
reimbursed in future. It is to state that the Railways has no
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obligation to pay DMF (30% on seinorage, fees) which is in
the nature of levies as per condition 19.4 of the agreement.
7. I submit that the DMF fees so recovered falls under
condition 19.4 of the agreement which has agreed upon by
the contractor for recovering from running bills without any
question of reimbursement. As such, recovery is not illegal
and arbitrary and as per the law of the land. The same is
applicable to MERIT which is 2% of seignorage fees deduction
from running bills with respect of state mineral exploration
fund. Hence DFM & MERIT which comes under clause No.19.4
of the agreement.
8. I submit that the Deduction of 30% of seinorage fees
towards DMF and 2% of seinorage fees towards State Mineral
Exploration Trust is not illegal as the contractor has agreed
for recovering any other taxes, fees, duties levies etc., as per
condition 19.4 of the agreement.
9. I submit that it is to submit that the DMF @30% is
being deducted on the basis of State of AP framed DMF rules
and the liability of the payment is upon the contractor who
has agreed for the same while entering into agreement. As
such, agreeing for reimbursement is violative of condition
19.4 of the agreement and a loss to Public exchequer.
10. I further submit that from the language employed in
the GOs, this amount as directed to be recovered is only a
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contribution towards DMF and SMETF and the contribution is
quantified based on the seigniorage fee. Hence, the said 30%
or 2% to be recovered on seigniorage, per se, is not part of
seigniorage fee, but it is only an additional amount imposed
by the State Government on the Contractors."
B) Interim order of this Court dated 11.04.2017
passed in W.P.M.P.No.15758 of 2017 in W.P.No.12675 of
2017, observed as under:
"Any deduction of the amount towards district mineral
fund and state mineral exploration trust fund on the
seigniorage charges from the running bills of the petitioner
shall be subject to further orders in the writ petition."
Interim orders of this Court dated 11.04.2017 passed
in WPMP No.15758 of 2017 in W.P.No.12675 of 2017
referred to above are in force as on date.
4. The case of the petitioner in brief as per the averments
made by the petitioner in the affidavit filed by the petitioner
in support of the present writ petition, is as under:
i) The petitioner is a partnership firm operating under the
name and style "M/s Pallavi-Maa-GC-(JV)" and in pursuance of
tender notificationNo.24/CAO/C/SC/2015 dated 06.08.2015 issued
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by the 3rd respondent inviting sealed tenders for execution of work
'Nadikudi - Srikalahasti New BG line Project-Piduguralla -
Rampicherla Section - Earthwork in embankment and cutting
including construction of Minor bridges and other miscellaneous
works from Ch.4500 to Ch.21300 in Reach-1 between Piduguralla
(New) and Rampicherla (Pro) stations, the petitioner submitted its
sealed tender on 14.09.2015 at 11.00 AM and tenders were opened
on 14.09.2015 at 11:30 AM and finalized on 03.02.2016. The
petitioner being the lowest tenderer, is declared as successful
bidder. Thereafter, the Railway Department issued Letter of
Acceptance dated 15.02.2016.
ii) The petitioner entered into agreement of works dated
28-04-2016 with the 2nd respondent for performance of work
'Nadikudi - Srikalahasti New BG line Project-Piduguralla -
Rampicherla Section - Earthwork in embankment and cutting
including construction of Minor bridges and other miscellaneous
works from Ch.4500 to Ch.21300 in Reach-1 between Piduguralla
(New) and Rampicherla (Pro) stations (Two packet system) and the
petitioner deposited earnest deposit of Rs.24,40,000/- by way of
bankers chequeNo.348636 dated 11.09.2015 drawn on SBH,
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Vanasthalipuram Branch. The balance security deposit of
Rs.2,22,92,270/- will be recovered from the running bills at the
rate of 10% till the balance security deposit amount is fully
recovered.
iii) As per the agreement the security deposit shall be
released only after the expiry of the maintenance period and after
passing the final bill based on "No Claim Certificate". The petitioner
also submitted performance guarantee in the form of bank
guarantee No.86431PEBG160012 dated 14.03.2016 for
Rs.2,47,50,000/- issued by Bank of India, Dilsukhnagar Branch
which is valid upto 13th May, 2017.
iv) It is the case of the petitioner that, as per the
agreement the work should be completed within 12 months and
later on, the date of completion of work is extended from
16.02.2017 to 31.10.2017 by the 3rd respondent by executing
subsidiary agreement dated 28.02.2017 and the bank guarantees
were also extended up to 13.05.2018.
v) While this stood thus, the 3rdrespondent issued
proceedings in W.Con.Dy.CPM/WCSP/NDKD-KHT dated 30.11.2016
stating that the State Government of Andhra Pradesh issued rules
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for establishment of District Mineral Foundation in terms of
amended Mines and Minerals Regulation and Development Act and
framed rules named as District Mineral Foundation Rules, 2016,
and according to the said rules, Mining lease, Prospecting Licence
or Quarry Lease Holders shall pay the DFM equivalent to 30% of
the seigniorage charges paid to the State Government.
vi) It is the case of the petitioner that, subsequent to
issuance of above said proceedings, the petitioner was informed
that in view of the introduction of District Mineral Foundation Rules,
2016, they will deduct30% of the seigniorage charges in addition to
seigniorage from the petitioner from its running bills and the
3rdrespondent stated that the said charges might not be
reimbursed.
vii) It is the specific case of the petitioner that, the
condition No.19(3)(a) contemplates that if there is increase in the
seigniorage fees, the same will be recovered from the running bills,
however the excess amount which is recovered will be reimbursed
at a later point of time. Thus, when the seigniorage charges were
agreed to be reimbursed, the proposed DMF @ 30% on the
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seigniorage charges also should be reimbursed, otherwise the same
would lead to miscarriage of justice.
Therefore, collection of DMF @ 30% on the seigniorage
charges from the running bills payable to the petitioner without any
assurance of repayment/reimbursement, is illegal and arbitrary.
Hence, this Writ Petition.
DISCUSSION AND CONCLUSION:
5. Clause no.19.1 of the agreement condition, is extracted
hereunder:
"Seigniorage charges/fee for consumption of earth, moorum,
sand and other minerals in works execution as fixed by the
state government from where the minerals are drawn and
payable to them as revised from time to time during currency
of contract will be recovered by the Railway from the
contractors, in "on account" and "final bills" and remitted to
the State government, unless exemption obtained to the
contrary or proof of payment of seigniorage charges
submitted as indicated below:
Clause No. 19.3(a) of the agreement condition is
extracted hereunder:
"For any subsequent increase or decrease in the rates of
seigniorage charges, reimbursement / recovery will be
effected to/from the contractor as per the following
provisions.
a) For increase in the rates of seigniorage charges after the
last date of submission of tender the increased amount will be
recovered by the Railway from the contractors, in "on
account" and "final bills" and remitted to the State Govt., on
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receipt of state Govt.'s order to that effect. However, the
Railway shall reimburse the additional liability to the
contractor, provided that the work executed falls in the
original completion period of the work or in the extended
period granted on administrative grounds i.e., under clause
17-A (i), (ii) or (iii) of IRSGCC.
Clause No.19.4: No additional amount will be paid or claim
entertained on this account by the Railway. Contractor shall
not have any claim whatsoever as a result of the increase in
the rates of all other taxes, duties, or any form of levies etc.,
even if incurred on the supply/use of minerals indicated
above."
6. On perusal of clause 19, 19.1, 19.3 (a), 19.4 of the
Agreement it is evident that as per condition No.19 of the
Agreement, the Department is entitled to deduct Seigniorage
Charges per cubic meter as per the rate prevailing on the date of
the bid. However, condition 19(3) (a) of the Agreement indicates
that if there is any increase of rates of seigniorage charges after
the last date of submission of tender, the enhanced amount will be
recovered by the respondents from the contractors "on account"
and "final bills" and remit to State Government on receipt of the
State Government's order to that effect. However, the Railway
Authorities shall reimburse the additional liability to the contractor
i.e., difference between seigniorage as on the date of bid and
enhanced seigniorage charges. Therefore, it is clear that the
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petitioner is not liable for any additional burden or additional
payment on the minerals consumed on the ground of change of
policy of the state Government increasing the seigniorage charges.
A bare perusal of the record indicates that the petitioner entered
into agreement for completion of the earthwork subject to only
deduction of seigniorage charges as per the rate prevailing on the
date of submitting tenders i.e., 14.09.2015. Therefore, this Court
opines that no other liability can be cast upon the petitioner on any
ground.
7. This court on perusal of the record and on perusal of Clause
19, 19.1 of the Agreement condition about Seignorage charges in
the Agreement, Clause No.19.3 (a) of the Agreement condition and
clause No.19.4 opines that the petitioner cannot be burdened by
the Railway Authorities for payment of DMF @30% which came into
existence after opening of tenders therefore it is the duty of the
Railway to reimburse the same. This Court opines that petitioner
cannot be burdened with additional taxes if any levied subsequent
to the date of opening/negotiations of the tenders and hence the
said amounts deducted shall be reimbursed to the contractor.
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8. The pleas put forth by the learned counsel appearing on
behalf of the respondents are untenable and hence rejected.
9. Taking into consideration:
(I) The aforesaid facts and circumstances of the
case,
(II) Duly considering the condition 19.3(a) of the
Agreement
(III) The writ petition is allowed as prayed for.
However, there shall be no order as to costs.
Miscellaneous petitions, if any, pending in this Writ Petition,
shall stand closed.
___________________
SUREPALLI NANDA, J
Date: 03.06.2024
Note : L.R. Copy to be marked.
B/o.Yvkr
