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2026 Supreme(Online)(AP) 6447
IN THE HIGH COURT OF ANDHRA PRADESH AT AMARAVATI
Maheswara Rao Kuncheam, J
M/s. Hindustan Engineers Syndicate Engineers & – Appellant
Versus
The Government of Andhra Pradesh represented by its – Respondent
WRIT PETITION NO: 25386 OF 2010
For the Appellants/Petitioners: V V Satish, Y. Nagender
For the Respondents: GP FOR ROADS & BUILDINGS, GP FOR FINANCE & PLANNING, GP FOR MINES AND GEOLOGY
A contractor is not responsible for verifying whether sand permits were obtained by lessees; if proof is provided that seigniorage charges were already deducted from the contractor's bills, no penalty should be levied.
Headnote:The petitioner challenged the recovery of seigniorage charges and penalties on sand pertaining to a government agreement, arguing that the action was illegal and arbitrary as permits for sand were not produced. The court examined the validity of recovering such charges with a one-time penalty from the contractor's bills. The central issue was whether a contractor is responsible for verifying if sand permits were obtained by lessees from the Mines Department. The court reasoned that a contractor or the executing government department cannot be fastened with the duty to verify such permits; therefore, if proof is provided that seigniorage charges were collected via deduction from bills, no penalty shall be levied. The writ petition is disposed of, directing that no penalty shall be levied if the petitioner provides proof of seigniorage charge deductions, otherwise, the respondents are entitled to recover the charges and penalty.
| Table of Content |
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| 1. adherence to judicial precedent in cases involving identical legal questions. (Para 1 , 2 , 3) |
| 2. contractors are not liable for verifying sand permits if seigniorage charges are deducted from bills. (Para 4) |
| 3. conditional waiver of penalty based on the production of proof of deduction. (Para 5 , 6) |
Petition under Article 226 of the Constitution of India praying that in the circumstances stated in the affidavit filed therewith, the High Court may be pleased to issue a writ, order or direction more particularly one in the nature of Writ of Mandamus declaring the action of the respondents in issuing instructions to effect recover the seigniorage charges on sand with one time penalty from the bills of the petitioner pertaining to the agreement No. 39/2008-09 dated 13.5.2008 for the works executed by the petitioner where permits for sand issued by the Mines Department are not produced, as illegal, arbitrary, unjust apart from violative of Principles of Natural Justice and consequently direct the respondents not to recover seignoriage charges with penalty from the bills of the petitioner and also direct the respondents to refund the amounts already deducted towards seigniorage charges with one time penalty from the bills of the petitioner and to pass
IA NO: 1 OF 2010(WPMP 32429 OF 2010
Petition under Section 151 CPC praying that in the circumstances stated in the affidavit filed in support of the petition, the High Court may be pleased direct the respondents not to recover seignoriage charges with penalty from the bills of the petitioner pertaining to Agreement No.39/2008-2009 dated 13.5.2008 pending disposal of the Writ Petition and to pass.
The Court made the following order:
ORDER:
This Writ Petition under Article 226 of the Constitution of India is filed for the following relief:
“……..to issue a writ, order or direction more particularly one in the nature of Writ of Mandamus declaring the action of the respondents in issuing instructions to effect recover the seigniorage charges on sand with one time penalty from the bills of the petitioner pertaining to the agreement No. 39/2008-09 dated 13.5.2008 for the works executed by the petitioner where permits for sand issued by the Mines Department are not produced, as illegal, arbitrary, unjust apart from violative of Principles of Natural Justice and consequently direct the respondents not to recover seignoriage charges with penalty from the bills of the petitioner and also direct the respondents to refund the amounts already deducted towards seigniorage charges with one time penalty from the bills of the petitioner and to pass…….”
2. Heard Sri Y.Nagender, advocate representing learned counsel for the petitioner and learned Assistant Government Pleader for Mines and Geology appearing for the respondents.
3. When the matter is taken up for hearing, learned counsel for the petitioner Sri Y.Nagender. as well as learned Assistant Government Pleader for Mines and Geology jointly submitted that the identical question involved in the lis already adjudicated by the erstwhile High Court of Andhra Pradesh at Hyderabad on 29.07.2015 itself in W.P.No.1426 of 2012 and batch . The learned AGP for Mines & Geology further states that above batch of cases attained finality too.
4. At this juncture, it is apt to note dictum followed in the above batch cases is that,
“a Contractor or the Government Department, whose works are executed by the Contractor, cannot be fastened with the duty to verify whether permits for the sale of sand were obtained by the lessees from the Mines Department and that, therefore, if there is proof that the seignorage charges were collected by the agency, with whom the contractor is executing the work, by way of deduction from his bills and such proof is filed before the Assistant Director of Miens & Geology concerned, no penalty shall be levied.”
5. Keeping in view the above submissions coupled with the fact that the identical question dealt by
