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Andhra Pradesh High Court
Judges : A.LAKSHMANA RAO, P.L.N.SHARMA, P.VENKATRAMA REDDY
L.Venkateswara Rao - Appellant
Versus
Singareni Collieries Company Ltd. - Respondent
Decided On : 06-25-93
MINES AND MINERALS - SEIGNIORAGE FEE - COLLECTION FROM USER OR CONSUMER - VALIDITY OF RULE 26 (3) (II) OF ANDHRA PRADESH MINOR MINERAL CONCESSION RULES, 1966 - WHETHER ULTRA VIRES THE POWERS OF THE STATE GOVERNMENT - WHETHER ARBITRARY OR UNREASONABLE - CONTRACTUAL OBLIGATION OF THE CONTRACTORS TO PRODUCE DOCUMENTARY PROOF OF PAYMENT OF SEIGNIORAGE FEE - VALIDITY OF CLAUSE (7) OF THE AGREEMENT - WHETHER OPPRESSIVE OR UNCONSCIONABLE - WHETHER VIOLATIVE OF ARTICLE 265 OF THE CONSTITUTION OF INDIA.
Fact of the Case:
The petitioners, contractors who have undertaken civil works for the respondent company, Singareni Collieries Company Limited, challenged the action of the respondent company in deducting seigniorage fee from their bills for the minor minerals used in the execution of the works. The respondent company had incorporated a clause in the agreement with the contractors, requiring them to produce documentary evidence of payment of seigniorage fee to the State Government. The petitioners contended that the respondent company was not authorized to collect seigniorage fee, that Rule 26 (3) (ii) of the Andhra Pradesh Minor Mineral Concession Rules, 1966, authorizing the collection of penalty from the user or consumer of minor minerals was ultra vires the powers of the State Government, and that Clause (7) of the agreement was unconscionable, arbitrary, and violative of Article 265 of the Constitution of India.
Finding of the Court:
The Court held that Rule 26 (3) (ii) of the Andhra Pradesh Minor Mineral Concession Rules, 1966, was not ultra vires the powers of the State Government and was not arbitrary or unreasonable. The Court also held that Clause (7) of the agreement was not oppressive or unconscionable and was not violative of Article 265 of the Constitution of India. The Court further held that the contractors were bound by the terms of the agreements entered into by them with the respondent company and in case they did not produce documentary proof in token of payment of seigniorage fee in respect of the minerals used by them in the execution of civil works entrusted to them by the respondent company, the respondent company was entitled to recover the seigniorage fee in respect of the minor minerals consumed by it, from the bills payable to the contractors and pay it to the State Government.
Issues: 1. Whether Rule 26 (3) (ii) of the Andhra Pradesh Minor Mineral Concession Rules, 1966, is ultra vires the powers of the State Government? 2. Whether Rule 26 (3) (ii) of the Andhra Pradesh Minor Mineral Concession Rules, 1966, is arbitrary or unreasonable? 3. Whether Clause (7) of the agreement between the petitioners and the respondent company is oppressive or unconscionable? 4. Whether Clause (7) of the agreement between the petitioners and the respondent company is violative of Article 265 of the Constitution of India?
Ratio Decidendi: 1. The power to levy and collect seigniorage fee under the rules is conferred on the authorities mentioned therein and the respondent company is neither one such authority nor an agent of any such authority to collect seigniorage fee. Therefore, collection of seigniorage fee from the petitioners by the respondent company is illegal and improper. 2. The insertion of clause (7) in the agreement is the result of unconscionable bargain between two parties who are unequals and that the clause itself is arbitrary, opposed to public policy and unconscionable. 3. The State Government has the competence to make rules fixing the seigniorage fee in respect minor minerals, levying fines and providing for their collection. 4. It is within the competence of the State government to make a rule providing for the levy and collection of penalty from an user or consumer of minor minerals in case he fails to produce documentary proof in token of having paid the mineral revenue due to the government in respect of such mineral used or consumed.
Final Decision: The writ petitions were dismissed. However, there was no order as to costs.
( 1 ) THE petitioners in all these writ petitions are contractors who have undertaken to execute works of civil nature entrusted to them by the Singareni Collieries company Limited (hereinafter referred to as the respondent company )- The execution of the work is governed by he terms and conditions incorporated in a written agreement entered into by the respondent company with each one of the contractors. It is stated that till the year 1983 the respondent company was holding lease hold rights for the excavation of minor minerals such as building stone, lime-kankar, sand etc. , from specified quarries. The contractors have been using the minor minerals excavated from the quarries in respect of which, lease-hold rights have been granted in favour of the respondent company by the mines Department under the Andhra Pradesh Minor Mineral Concession rules, 1966, in the execution of the works entrusted to them. As regards the payment of seigniorage fee on the minor minerals excavated by the contractors, a specific clause in the form of Clause (8) had been incorporated in the agreement entered into by the respondent company with the contractors. Clause. 8: For metal, uncoursed rubblestone and coursed rubble stone etc. , royalty charges will be recovered at the following rate if the material is quarried from the Company s quarries. However, the recovery will be effected as per the rules of the government from time to time. (a) Metal: Rs. 2-19 including cess per Cu. m. (Gross) (b) Rough Stone: Rs. 1-25 including cess per Cu. m. (Gross) (c) Sand : Rs. 1-25 including cess per Cu. m. (Gross) (d) Murrain: Rs. 0-43 including cess per Cu. m. (Gross)
( 2 ) HOWEVER, from the year 1984, the respondent company did not obtain any quarry lease from the Mines Department for the excavation of minor minerals. Consequently, the contractors were asked to obtain minor minerals used in the execution of works, for themselves. As regards the payment of seigniorage fee, the following clause in the form of clause No. 7 had been incorporated in the agreement entered into by the respondent company with each one of the contractors. Clause No. 7 "the Singareni Collieries Company Limited do not have any quarry leases for Stone/metal/sand etc. It is the contractor s responsibility to get necessary permits direct from the Government and procure the materials of good quality as approved by the Department. The contractors have to produce documentary evidence for having paid the Royalty charges to the Government, as otherwise, the royalty charges will be recovered from the bills and paid to the Governments per the royalty rates prescribed by the Government, from time to time. The current rates are as below: metal. . @ Rs. 2. 19 including cess per Cu. m (gross) stone. . @rs. 1. 25 including cess per Cu. m (gross) sand. . @rs. 1. 25 including cess per Cu. m (gross) murram @rs. 0. 43 including cess per Cu. m (gross) lime @ Rs. 2. 19 including cess per Cu. m (gross) kankar bricks. . @rs. 3. 75 including cess for l000 Nos. (gross)
( 3 ) WHEN the petitioners failed to produce documentary evidence of having paid the seigniorage fee to the State Government for the minor minerals used by them in the execution of the work, the respondent company deducted the seigniorage fee payable by them, from the bills. Aggrieved by the action of the respondent company, the contractors have filed these writ petitions. All the petitioners except those in Writ Petition No. 3568 of 1992 have sought for an appropriate writ declaring that the respondents"have no authority of law to collect seigniorage fee on the minor minerals used by the petitioners herein for the purpose of civil works undertaken by the petitioners under the respondents as the minerals are not quarries from the mines owned by the first respondent and the proceedings issued by the second respondent authorising the collection of the said seigniorage fee are null and void as the same violated the fundamental righ
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