Excavation of soil for construction activity does not constitute mining and does not attract seigniorage fee liability under Rule 26 of the A.P. Minor Mineral Concession Rules, 1966.

JUDGMENT

R Raghunandan Rao, J. - M/S. Hinduja National Power Corporation Limited (HNPCL), for the purpose of establishing a coal based thermal power project at Devada Village, Pedagantyada Mandal, Visakhapatnam District, had appointed M/s. Bharat Heavy Electricals Limited as their EPC contractor. M/s. Bharat Heavy Electricals Limited, in turn, appointed the petitioner as a sub-contractor for carrying out civil contracts of levelling/grading and clearing of bushes for making the ground even and suitable for future construction.

2. In pursuance of this contract, the petitioner commenced excavation of soil and sand for spreading out the same to make the ground even for the purpose of construction of thermal power project. It appears that a vigilance team of the Mining Department had inspected the site and on the basis of certain statements said to have been made by the representatives of the petitioner, forwarded a report dated 11.03.2011 to the Assistant Director of Mines and Geology. On the basis of the said report, the Assistant Director, Mines and Geology issued a show cause notice dated 14.03.2011 calling upon the petitioner to show cause why the petitioner should not be required to pay an amount of R.2,42,00,000/- towards seigniorage fee and 10 times penalty for the quantity of soil excavated in the site. A detailed reply dated 05.04.2011 was submitted by the petitioner-company. However, the 3rd respondent-the Assistant Director of Mines and Geology had issued a demand notice dated 18.04.2011 conforming the demand of Rs.2,42,00,000/- under Rule 26 of A.P. Minor Mineral Concession Rules, 1966. Aggrieved by the same, the petitioner had filed an appeal before the 2nd respondent challenging the demand notice dated 11.04.2011. This appeal was dismissed by the 2nd respondent vide proceedings No.20829/VSP/VG/R1/2011, dated 09.10.2018. Aggrieved by the said proceedings, dated 09.10.2018, the petitioner has filed the present writ petition.

3. Even while these proceedings were pending the Government of A.P., had issued G.O.Ms.No.139, dated 12.11.2013 exempting the payment of seigniorage fees where the soil is extracted under mining activity for the purposes of construction activities.

4. It is also necessary to note that in a parallel proceeding the principal agency, viz., M/s. Hinduja National Power Corporation Limited had also been called upon by the officials of the Mining Department to obtain necessary licences and permissions for undertaking mining operations in the land. Aggrieved by the same, M/s. Hinduja National Power Corporation Limited had approached this Court by way of W.P.No.9533 of 2011, which was initially dismissed on 15.11.2012. Later a review petition was filed and on the basis of the said review petition, the writ petition was allowed on 29.11.2016. In the order dated 29.11.2016, a learned Single Judge of this Court had considered the nature of the activity being carried out by the petitioner on behalf of M/s. Hinduja National Power Corporation Limited. After hearing both sides on the issue, the learned Single Judge considered the plea of the 3rd respondent, in the counter affidavit filed by him, that M/s. Hinduja National Power Corporation Limited is using mineral dug/excavated to fill and level other parts of the land, and as such, is consuming the minor mineral for commercial activity and would be liable to pay seigniorage fee or dead rent. The learned Single Judge relying upon the judgment of this Court in Indian Hume Pipe Company Limited, Mumbai v. State of Andhra Pradesh and ors., (2013) 4 ALD 490 had negatived the said contentions.

5. The petitioner has assailed the impugned order dated 09.10.2018 on various grounds including the contention that the order was passed by the primary authority and appellate authority without considering the objections of the petitioner; that the appellate authority failed to see that the activity of the petitioner-company did not amount to mining of minerals and as such no seig