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2026 Supreme(Online)(AP) 15912
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
For the Respondents: GP for Roads & Buildings, GP for Finance & Planning, GP for Mines and Geology
A contractor is not liable for penalties regarding sand permits if they can prove that seigniorage charges were already deducted from their bills by the executing government department.
Headnote:The petitioner filed a writ petition under Article 226 of the Constitution of India challenging the recovery of seigniorage charges on sand along with a one-time penalty from bills pertaining to agreement No. 39/2008-09. The recovery was initiated because permits for sand issued by the Mines Department were not produced. The court examined whether the contractor is liable for such penalties when the executing department has already made deductions. The primary issue was whether a contractor or the government department is responsible for verifying if sand permits were obtained by lessees. The court relied on the ratio decidendi from W.P.No.1426 of 2012, which established that a contractor cannot be fastened with the duty to verify such permits, and if proof is provided that seigniorage charges were collected via deductions from bills, no penalty shall be levied. Accordingly, the writ petition is disposed of, directing that no penalty shall be levied if the petitioner provides proof that seigniorage charges were deducted from their bills by the concerned departments; otherwise, the respondents are entitled to recover the charges and penalty as per G.O.Ms.No.84.
| Table of Content |
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| 1. petition challenging the recovery of seigniorage penalties from contract bills. (Para 1 , 2) |
| 2. contractors are not liable for permit verification if charges were deducted from bills. (Para 3 , 4 , 5) |
| 3. conditional waiver of penalty based on proof of bill deductions. (Para 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:
1. 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 t
