P. S. Sahay, J.

1. The application is for quashing the order dated 7th january, 1977 passed by the District Mining Officer, Jamshedpur, as contained in Annexure 3, under the provisions of the Bihar Minor Mineral Concession rules, 1972 (hereinafter refered to as Concession Rules ). By the aforesaid order, a dem nd of Rs.21, 94, 280.65 has been made for the period 2nd February 1963 to 31st December 1975, over and above a cess to the tune of Rs 89, 116.27 p. for the period 1st April 1975 to 31 December 1675.

2. In order to appreciate the points raised in this application it is necessary to state some facts. The petitioner-Company were incorporated urder the Companies Act, 1913. For their works and Township at Jamshedpur. Contractors were employed for the construction of the Township on a lump sum basis, and they used to bring their own materials, such as, sand, bricks, stone boulders, stone chips, etc. . and payment was made to them in respect of entire job, and thus they were free to bring the materials from anywhere they liked and the petitioners were not concerned with the source of supply. A notice was served by respondent no.1 by Memo no.2796/m dated 22nd november, 1676 under the Concession Rules to furnish figures of minor minerals supplied and used by the petiticner-Company and also to show cause why assessment of royalty should not be made under rule 26 (4) of the concession Rules on the figures available to the Department for various documents for the last five years and the figures taken from the traffic survey conducted by a team of Mining of Inspectors of office. A copy of the letter has been filed along with the application and marked as Annexure 1. The petitioners by their letter dated 2nd December, 1976 prayed for two months time in order to file their show cause and they were directed to pay one-third of the demand, that is, Rs.10,00000/- towards the royalty and Rs.30,000/-towards the cess on or before 31 st December, 1976. The petitioner-Company filed their show cause of 23rd December, 1976 denying their liability completely. A copy of the letter has been filed and marked Anuexure 2, in which it was specifically stated that the supply of minor minerals had been made by the contractors, and if any royalty or cess was payable, it was by the contractors themselves and not by the petitioners who were net liable in any way under the Concession Rules. A specific prayer was also made that before proceding further in the matter, personal hearing in this regard may be granted to the petitioners so that the entire matter may be made clear before the authority concerned. Respondent no.1, however, rejected the show cause filed by the petitioners, and by his order dated 7.1.77 confirmed the demand and directed the petitioners to make payment within ten days of the receipt of the aforesaid order, failing which Certificate Case will be started agaiust them. A copy of the aforesaid letter is Annexure 3. Being aggrieved by the aforesaid order the petitioners have moved this Court under Article 226 of the Constitution of India.

3. Counter-affidavit and reply thereto and supplementary affidavit have also been filed in this case. In the counter-affidavit filed on behalf of the state, it has been submitted that the order passed by respondent no.1 was perfectly valid and justified, and the aforesaid order was passed after reasonable opportunity had been given to the petitioner-Company to show cause and they had only cenled their liability. It has also been stated in their affidavit that the petitioner-Company has been benefited by getting minor minerals at cheaper rate for their Township the thus they were liable to pay royalty under rule 26 (4) of the Concession Rules. It has aiso been asserted that respondent no.1 was competent to make assessment under the provisions of the Concession rules, though at the time of argument a different stand was taken on behalf of the State that respondent no.1 had no power to make assessment