Judgment · High Court · 2009

#3. It is contended by Mr. Goswami, learned counsel appearing for the petiti oner that such deduction made by the department is unauthorized as the petitione r had obtained the concerned minerals i.e., stones, sands and gravels from the open market and it is confirmed by the supplier that the payment received from t he contractor is at a rate which includes components of forest royalty, sales ta x, income tax etc. Mr. Goswami has referred to the provisions of the Mines and Minerals (De velopment & Regulation) Act, 1957 (hereinafter referred to as the (cid:28)Mines Act (cid:29)) t o contend that stones and gravels are minor minerals and under section 9 of the Mines Act it is for the Mining lease holder to make payment of royalty for such minor minerals. The learned counsel also refers to the provisions of the Assam Minor Min eral Concessions Rules, 1994 (hereinafter referred to as the (cid:28)Mineral Rules (cid:29)) to contend that under Rule 16 (a), it is responsibility of the Mining lessee to pa y forest royalty on minor mineral/minerals and neither under the provisions of M ines Act or under the Mineral Rules, there is any obligation on a contractor to make payment of royalty and therefore recovery of royalty by way of deduction fr om the running Bills of the contractor by the PWD is unauthorized by law.

#4. Mr. Choudhury, learned departmental counsel on the other hand submits th at the deduction from the contractors running bills is supported by the Finance Department Memorandum dated 17.6.2000, whereby it is indicated that when forest produce are used for construction works of the Government Departments, the execu ting authority is to pay royalty to the Government for collecting such materials and to prevent pilferage of forest produce used in any construction activity, i t has been decided that no Bill of a contractor will be paid by the executing au thority unless it is certified by the Forest Department that the forest produce so utilized, have been collected from legal source after due payment of royalty and without such a certificate, the contractor’s Bills may be passed, only after deduction of the amount due as royalty, which after deduction should be deposit ed in Government Account.

#5. The petitioner has made available the general conditions of contract wit h the writ petition which are considered by him to relevant for this adjudicatio n. Although there could be other clauses of the contract apart from the ones in the documents furnished by the petitioner, no additional documents have been bro ught on record by the department. It is provided under Clause 41.1 of the general conditions of contract t hat the rates quoted by the contractor shall be deemed to be inclusive of, inter alia royalties. Under Clause 31.1 it is provided that payments may be adjusted for deduc tion for, inter alia, taxes at source and other recoveries in terms of the contr act. In Clause 7.2 it is indicated that the contractor shall not be required to obtain any consent from the employer, to purchase materials used in the contr act.

#6. Notwithstanding the aforesaid terms noticed in the contract conditions, learned counsel appearing for the departments contends that as per the existing procedure, a contractor is required to apply to executing agency for issuance of forest permit from the nearest forest division, for the quantity of minor miner al materials required for execution of the work and thereafter the executing age ncy in turn would request the forest division to issue forest permit for lifting minor mineral materials directly from the Government quarry on recovery of fore st royalty. But in the instant case the petitioner did not apply for issuance of such permit and therefore from the Bills submitted by the contractor, it could not be ascertained as to whether the suppliers from whom the petitioner procured the minor minerals is a genuine lessee and that he had paid royalty to the Gove rnment for the materials so collected. Therefore Mr. Choudhury contends that roy alty is deemed to be not paid and accordingly deduction is justified.

#7. Having regard to the above contention made by the departmental counsel, I find that it was not specified as one of the contract conditions that it was i ncumbent on the contractor to apply to the executing agency i.e., PWD for issuan ce of forest permit from the nearest forest division for procuring the materials used in the contract. It was also not specified that such materials are to be p rocured from a particular Government source or a particular Government lessee. I t is also not incorporated as part of the tender condition that if the petitione r is unable to produce a certificate showing use of forest produce on which roya lty has been collected, his Bills to the extend of royalty payable would be dedu cted at source. Under these circumstances it is difficult for this Court to acce pt that the action taken by the authority is in accordance with law.

#8. If such obligation would have been incorporated as one of the contract c ondition that the contractor has to secure his supply from a particular Governme nt quarry and then if he would acted contrary to such requirement, the departmen t may would have been justified in deducting amounts on account of royalty, from the running Bills of the contractor. But in the absence of such clause in the c ontract, the action seems to be unauthorized.

#9. It must also borne in mind that even in cases where supplies are secured from a forest approved lessee, there can be no guarantee that the materials use d by the contractor were royalty paid materials, as even approved forest contrac tor may supply materials on which royalty has not been paid. 10 Therefore in my view it was firstly necessary for the department to inco rporate appropriate conditions in the contract to bind the contractor that he ha s to procure his forest material requirement from a specific source and on his f ailure to procure materials from such source, there could have been an adverse p resumption drawn against the contractor. Secondly, the conditions incorporated in the Memorandum issued by the Fi nance Department on 17.6.2000 should have also been specifically incorporated as one of the contract conditions, as the contract in question was awarded in the year 2005 i.e. 5 years after the Circular of the Finance Department. Not having incorporated the requirement insisted upon by the Finance Department as a contra ct condition, would disentitle the PWD from realizing royalty on forest produces , which really is a burden of either the Forest Department or the Mines and Mine rals Department. The action against the contractor is initiated by the department on the 11. basis of presumption and surmises as there is no absolute certainty that no roya lty is paid on the materials used by the contractor. No opportunity was afforded to the contractor before such adverse assumption was made by the department, to order deduction of amounts from the running Bill of the contractor. If royalty had actually been paid on the materials used by the contractor, deduction of fur ther amount as forest royalty, would amount to double charging of royalty, which cannot be permissible in law. In any case revenue recovery cannot be permitted by presuming facts without statutory support. Having regard the fact that under the provisions of Mines Act and the Mi 12. neral Rules, it is the responsibility of Mining lessee to make payment of forest royalty and it is not the obligation to be discharged by the contractor, in the absence of specific provision incorporated in the contract, I am of the conside red opinion that the impugned action of the respondents to deduct amounts toward s forest royalty from the running Bill of the petitioner is not at all justified . Accordingly it is ordered that the Bills of the contractor be paid without ins isting on such deduction for the subject contract.

#13. As a consequence of this order, department would take necessary steps to pay to the petitioner his due amount without deducting any amount as royalty pa yment. The deduction of Rs.8,66,864/- already made, will be paid to the contract or within 6 weeks from the date of receipt of this Court’s order.

#14. The petition is allowed accordingly.