Mandatory compliance with mining regulation rules is essential for processing payment in construction contracts.

1. This writ application is directed against the letter No. 964 (Confidential) dated 27-7-2004 purported to have been issued by respondent No. 2, Deputy Commissioner East Singhbhum, Jamshedpur on the basis of which respondent No. 4 Treasury Officer, Jamshedpur stopped payment of cheque issued by respondent No. 3 Executive Engineer, Road Construction Division, Jamshedpur for a sum of Rs. 2,62,51,869/- and also for issuance of appropriate direction upon the respondents to pay the aforesaid amount under the aforesaid cheque.

2. Pursuant to the tender notice invited for construction of Four Lane road in Adityapur Kandra Road, petitioner being lowest bidder was awarded with the aforesaid construction work which commenced with effect from January, 2004. Petitioner said to have completed substantial portion of work and the Road Construction Department on being satisfied with the work executed by the petitioner passed the bill submitted by the petitioner and a cheque of Rs. 2,62,51,869/- was issued on 24-7-2004. Petitioner's case is that it submitted bill for Rs. 2,84,04,659/- and the same was passed by the Department after deducting Sales Tax, Income Tax, Royalty and Security deposit. When the aforesaid cheque was presented before the Treasury Officer, Jamshedpur for clearance of payment the Treasury Officer refused to make payment on the ground that the Deputy Commissioner vide impugned letter dated 27-7-2004 directed to withhold payment on the ground that clearance certificate with regard to royalty to be submitted first by the petitioner thereafter payment would be done.

3. Mr. Kalyan Roy, learned counsel for the petitioner assailed the impugned order as being illegal and wholly without jurisdiction. Learned counsel submitted that the department has already deducted a sum of Rs. 2,28,198/- and after deducting the aforesaid amount of Sales Tax, Income Tax and security deposit as also the royalty, Cheque of Rs. 2,62,51,869/- was issued. Learned counsel submitted that the aforesaid amount was released only after the amount was duly sanctioned by the State of Jharkhand and the petitioner has completed part of the work successfully and with the fullest satisfaction of the department. Learned counsel further submitted that compliance of Section 40(10) of the Bihar Minor Mineral Concession Rules, 1972 is not required because respondents have already deducted substantial amount towards royalty.

4. On the other hand Mr. M. K. Laik, learned Sr. Standing Counsel submitted that compliance of Rule 40(10) of the said Rules is mandatory and admittedly petitioner has not filed necessary affidavits as required in the aforesaid Rules and therefore the Deputy Commissioner rightly directed to withhold payment.

5. It has not been disputed by the respondents that royalty has been deducted from the aforementioned bill which is evident from the counter affidavit filed by the Mining Officer. However, it is stated in the affidavit that the Road Construction Department has issued a cheque in favour of the petitioner without complying with the Rules provided under Rule 40(10) of the Bihar Minor Mineral Concession Rules 1972. For better appreciation of the controversy in this case and to answer the issue raised by the parties, it would be proper to consider Rule 40(10) of the said Rules. The relevant sub-Rule 10 of Rule 40 is quoted here in below :
"To prevent evasion of royalty it is provided that works contractor shall purchase the minerals from lessee/permit holder and authorized dealers only and no Works Department shall receive the bill which the works contractors submit to recover cost etc. of mineral used by them in completion of the works of the Works Department under any ag