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2024 Supreme(Telangana) 292
IN THE HIGH COURT FOR THE STATE OF TELANGANA AT HYDERABAD
SUREPALLI NANDA, J.
M/s. Pallavi-Maa-GC-(JV) - Petitioner
Versus
The Union of India & Others - Respondents
W.P.No.12675 Of 2017
Decided On : 03-06-2024
For the Petitioner: Mr. C. Hanumantha Rao
For the Respondents: Mr. P. Bhaskar, Ld. S.C., G.P. for Mines and Geology.
IMPORTANT POINT
Contractual obligations limit liability for additional charges imposed after the agreement date, protecting the contractor's rights under Article 19(1)(g).
Headnote:
Fees - Writ of Mandamus - Article 19(1)(g) - The court interpreted the agreement clauses regarding seigniorage charges and additional levies, concluding that the petitioner should not bear costs imposed after the tender submission date.
Fact of the Case:
The petitioner, a contractor, challenged the deduction of 32% from their bills for District Mineral Foundation Fees and State Mineral Exploration Trust, arguing it violated their agreement and constitutional rights.
Finding of the Court:
The court found that the deductions were not permissible as they were imposed after the tender submission date, and the petitioner was not liable for additional charges not included in the original agreement.
Issues: Whether the deductions for District Mineral Foundation Fees and State Mineral Exploration Trust from the petitioner's bills were lawful under the terms of the agreement and constitutional provisions.
Ratio Decidendi: The court held that the petitioner could not be held liable for additional charges imposed after the tender submission date, as per the agreement's clauses regarding seigniorage charges.
Result: The writ petition was allowed, directing reimbursement of the deducted amounts.
ORDER :
(Surepalli Nanda, J.) :
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 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 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.
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
