B.V.Subba Reddy Constructions v. Govt. of A.P.

Counsel for the Petitioner: MR.P.VINAYAKA SWAMY Counsel for the Respondents: GP FOR IRRIGATION & COMMAND AREA DEVELOPMENT WRIT PETITION NO.4993 of 2005 Between: M/s.Maytas Infra Private Ltd., rep., by its GPA Holder P.Janardhana Rao, S/o Mandhad Naidu, H.No.6-3-1186/5/A/IIIrd Floor, Amagh Plaza, Begumpet, Hyderabad. ..... PETITIONER AND 1 Govt. of A.P. rep.by its Secretary, Irrigation & C.A.D/ (P.W) Department, Secretariat buildings, Hyderabad. 2 The Superintending Engineer, Nettam Padu Lakwakurthy Lift Irrigation Scheme Circle, Mahaboobnagar, Mahaboobnagar District. 3 The Executive Engineer, NKLI, Division, No.II, Nagar Kurnool, Mahaboobnagar District. .....RESPONDENTS Petition under Article 226 of the constitution of India praying that in the circumstances stated in the Affidavit filed herein the High Court may be pleased to issue writ or order or direction more particularly one in the nature of writ of mandamus declaring the action of the 3rd respondent in not considering the petitioner application/representation dt.16-1-2005 for reimbursement of excess seigniorage charges over and above the rates stipulated in the agreements as illegal & arbitrary, in respect of the works relating to 1.

KLI Scheme-Formation of earth dam of Jonnala Boguda Balancing reservoir from km.0.000 to km.0.450 including EWE & FE of gravity canal from km.7.000 to 8.000 of lift irrigation scheme, Mahaboobnagar, LS Agrt. No.1/NKLISI/2003-04 dt.4-12-2003 2.KLI Scheme-Formation of earth dam of Jonnala Boguda Balancing Reservoir from km.0.850 to km.1.250 including EME & FE of gravity canal from km.9.000 to 10.000 of lift irrigation Scheme, Mahaboobnagar, LS Agrt. No.2/NKLISI/2003-04, dt.4-12-2003 3.KLI Scheme-Formation of earth dam of Jonnala Boguda balancing Reservoir from km.1.250 to km.1.700 including EME & FE of gravity canal from km.10.000 to 11.000 of lift irrigation scheme, Mahaboobnagar LS Agrt. No.3/NKLISI/2003-04, dt.4-12-2003. Counsel for the Petitioner: MR.P.VINAYAKA SWAMY Counsel for the Respondent No.: GP FOR IRRIGATION & COMMAND AREA DEVELOPMENT WRIT PETITION No.5153 of 2005 Between: M/s. R. Subba Raju Railway & Special Class Contractors, rep by Managing Partner, R. Subba Raju, S/o Late Satyanarayana Murthy, R/o 79-2-1, Prasanthi Estates, Tilak Road, Rajahmundry, East Godavari District AND 1 The Government of Andhra Pradesh rep by Secretary, Irrigation & CAD (PW) Department, Secrtariat, Hyderabad.

2 The Superintendent Engineer, BLIP Circle, Pebbair, Mahabubnagar District. 3 The Superintendent Engineer, T.T.P.R. Circle, Vizianagaram, Vizianagaram District. 4 The Executive Engineer, Peddagedda Project Division, Salur, Vizianagaram District. 5 The Executive Engineer, Execution Division No.2, Pebbair, Mahabubnagar District. ..... PETITIONER Petition under Article 226 of the constitution of India praying that in the circumstances stated in the Affidavit filed herein the High Court may be pleased to issue an order or a direction or a Writ more particularly a Writ in the nature of mandamus declaring the action of the respondents in not considering the petitioner's case for reimbursement of excess seigniorage charges over and above the rates stipulated in the agreements as illegal and arbitrary in respect of the works of the agreements in agreement No.21/ELIP/2004-05 relating to the BLIP Lift-II Yenukunta balancing Reservoir-formation of earth dam from KM ).00 to KM 1.475 including construction of Head Regulator at Km. .....RESPONDENTS

0.125, Kothakota Mandal, Mahabubnagar District and also formation of Earth dam from 96-25 to 5000 m including construction of Head sluice of Peddagedda Reservoir project near Kesali Village of Pachipenta Mandal in Vizianagaram District and agreement No. PA&SE/TTPRC/1/2004-05 dated 21-4-2004. Counsel for the Petitioner: MR.P.PRATAP REDDY Counsel for the Respondent No.: GP FOR IRRIGATION & COMMAND AREA DEVELOPMENT WRIT PETITION NO.6085 of 2005 Between: M/s. Pallavi Constructions, Rep. by its Managing Partner P. Chandrasekhar Reddy, R/o. Sai Pragathi Apartments, Himayathnagar, Hyderabad. AND ..... PETITIONER 1 The Government of Andhra Pradesh, Rep. by its Secretary, Irrigation & CAD (PW) Department, Secretariat Buildings, Hyderabad. 2 The Superintending Engineer, SLBC, Circle -II, G.V. Gudem, Nalgonda. 3 The Superintending Engineer, AMRP Circle -II, G.V. Gudem, Nalgonda. 4 The Executive Engineer, Division - V, Nalgonda, Nalgonda district. 5 The Executive Engineer, Division - I, Nalgonda, Nalgonda district. .....RESPONDENTS Petition under Article 226 of the constitution of India praying that in the circumstances stated in the Affidavit filed herein the High Court may be pleased to issue an order or a direction or a Writ more particularly a Writ in the nature of Mandamus declaring the action of the respondents in not considering the Petitioner's case for reimbursement of excess seigniorage charges over and above the rates stipulated in the agreements as illegal and arbitrary in respect of the works of the agreements in Agreement No.6SE/2004-05, dated 8-10-2004 and Agreement No.6/2002-2003, dated 30-12-2002 relating to the AMR P- EWE & FE from KM 2.075 to KM 3.000 of D-32 including construction of CM & CD works at G.V.Gudem, Nalgonda District. Counsel for the Petitioner: MR.P.PRATAP REDDY Counsel for the Respondents: GP FOR IRRIGATION & COMMAND AREA DEVELOPMENT WRIT PETITION No.6289 of 2005 Between: M/s.Deepika Constructions, rep.by its Managing Partner, K.Upender Reddy, S/o.Sri Narsimha Reddy, R/o.MLA Colony, Banjara Hills, Hyderabad. AND ..... PETITIONER

The Government of Andhra Pradesh, rep.by its Secretary, Irrigation & CAD (PW) Department, Secretariat Buildings, Hyderabad. 2 The Superintendent Engineer, SRSP Stage-II, Chintagattu, Hanamkonda, Warangal District. 3 The Executive Engineer, Division-IV, Suryapet, Nalgonda District. .....RESPONDENTS Petition under Article 226 of the constitution of India praying that in the circumstances stated in the Affidavit filed herein the High Court may be pleased to issue an order or a direction or a writ more particularly a writ in the nature of mandamus declaring the action of the respondents in not considering the petitioner's case for reimbursement of excess seigniorage charges over and above the rates stipulated in the agreements as illegal and arbitrary in respect of the works of the agreements in Agreement No.7/2004-05, dated 11-5-2004 and Agreement No.8/2004-05, dated 11-5-2004 relating to the SRSP-EWE & FE from KM 2.00 to KM 3.00 of DBM-71 including construction of CM & CD works at Chintagattu, Hanamkonda, Warangal District.

26.16 Seigniorage charges: Seigniorage charges will be recovered from the work bills of the contractor, based on the theoretical requirements of materials at the following rates. S.No. 1.2.3. 4.5.6. SandMetalRR stone for Material Seigniorage Rs.30.00/cum. Rs.33.00/cum. Rs.33.00/cum. Rs.33.00/cum. Rs.33.00/cum. Rs.13.00/cum. masonryRevetment stoneC.R.S.stoneGarvelly The rates are liable to be revised and amended from time to time by the State Government, by notification in the “Andhra Pradesh Gazette”. If the revised seigniorage fee is more than the above mentioned, the recovery from the contractor’s bills is as per revised rates. The petitioner, there is no dispute; commenced the work and thereafter the Government of Andhra Pradesh, in Industries & Commerce Department in exercise of their powers under sub-section (1) of Section 15 of the Act amended A.P. Minor Minerals Concession Rules, 1966 (for short, the Rules) (in G.O.Ms.No.1172, dt.4.9.1967). By reason of the said amendment in schedules I and II under Rule 10 of the Rules, new rates of seigniorage fee are prescribed and substituted. The rates of seigniorage fee were enhanced. Be it also noted that as per G.O.Ms.No.217, dt.29.9.2004, the enhanced rates came into force with effect from 1.10.2004. After coming into force of the amendment to the A.P.Minor Minerals Concession Rules with effect from

1.10.2004, it appears, the Engineers of Roads and Buildings Department insisted that the contractor should pay the enhanced seigniorage fee as per G.O.Ms.No.217, dt.29.9.2004 and also made attempts to deduct the enhanced seigniorage fee over and above the earlier rates from the bills submitted by the contractors. On this cause of action, all the writ petitions were filed. In all other writ petitions, but for the difference in the dates of execution of the agreement and the dates for completion of the work, the facts are similar. In all the cases, petitioners entered into contracts prior to coming into force of G.O.Ms.No.217, dt.29.9.2004 and all the works are to be completed after 1.10.2004 and therefore they were also advised to pay enhanced rates of seigniorage fee. In all the writ petitions respondents have filed counter affidavits. A reference may be made to the counter affidavit filed by third respondent in W.P.No.6868 of 2005.

It is stated that as per the agreement seigniorage charges will be recovered as per the rules from the work of the contract or based on technical requirement of materials, and as per clause 26.16 the rates of seigniorage charges are liable to be revised as and when they are amended by the State Government in the A.P.Gazette. If the rates are revised and seigniorage fee is more than what is mentioned in the agreement, recovery has to be made from the bills submitted by the contractor. The petitioner agreed to condition No.26.16 and hence there is no illegality in collecting the enhanced rates of seigniorage fee as per G.O.Ms.No.217, dt.29.9.2004. The Writ Petition is also opposed on the ground of maintainability and suggesting that grievance is redressable only in Civil Court. A reference is also made to an unreported judgment of Division Bench of this Court in R.M.C.Constructions Ltd. V. The Engineer in Chief (unreported judgment in W.P.No.26040 of 2001, dt.3.3.2003; hereafter called, RMC Constructions case) contending that the point raised herein is squarely covered by the Division Bench judgment just referred to.

Learned counsel for the petitioners, M/s.P.Vinayaka Swamy, P.Pratap Reddy and Rajagopallavan Tayi made the following submissions. The amendment under Section 15(1) of the Act vide G.O.Ms.No.217, dt.29.9.2004 being prospective with effect from 1.10.2004, the enhanced rates of seigniorage fee cannot be collected from the contractors. Clause 26.16 is a vague clause and therefore cannot be enforced. Alternatively, as the work is estimated by taking into consideration the rates of seigniorage fee as they existed prior to coming into force of G.O.Ms.No.217, dt.29.9.2004 the liability to pay enhanced seigniorage fee is not on the contractor, and therefore enhanced rates cannot be collected or deducted from the bills submitted by the contractors. Alternatively, they also submit that even if clause 26.16 enables the Government to collect enhanced rates of seigniorage fee in respect of work completed prior to 1.10.2004, the Government is not entitled to deduct or collect the enhanced seigniorage fee, prior to coming into force of G.O.Ms.No.217.

Learned Government Pleader for Irrigation Department, Ms.Vedavathi, at the out set, does not dispute that as per G.O.Ms.No.217, dt.29.9.2004 respondents are entitled to collect enhanced rates of seigniorage fee in respect of work or in respect of material extracted and used in the work after 1.10.2004. Therefore, this point need not detain this Court any longer. If there is any stray case where the respondents insisted upon the contractors to pay enhanced rates of seigniorage fee for the work completed from the date of contract till 30.9.2004, the respondents shall have to initiate steps for refunding or adjusting said amount in the other bills. The core question is two-fold. Whether the Government can press into service clause 26.16 and whether Government can deduct the enhanced seigniorage fee as per G.O.Ms.No.217, dt.29.9.2004 from the bills submitted by the petitioners. Though there is feeble attempt on the part of the learned counsel for the petitioners, the question is squarely covered by unreported judgment of the Division Bench of this Court in RMC Constructions case (supra).

In RMC Constructions case (supra), the contractor was liable to pay seigniorage charges at the rate of 25% C MT . When the contract was in currency, the Government enhanced the rates of seigniorage fee by issuing notification vide G.O.Ms.No.331, dt. 21.6.2000. The action of the Government was impugned in the Writ Petition inter alia on the ground that G.O.Ms.No.331, dt.21.6.2000 being prospective in nature, the same cannot be applied to the contract entered into by the contractor prior to coming into force of the amendment. Reliance was also placed on the terms of the contract. The Division Bench did not agree with the submission. It was held that the State is entitled to collect seigniorage fee on the minerals extracted and removed from the land and therefore, the rates applicable on the date of extraction of minerals is prevalent rate which has to be paid by the contractor. It is apposite to excerpt the following. …In our considered opinion, the submission that levy and collection of the seigniorage charges at the rate of Rs.33/- per CMT would amount to giving retrospective operation to the amended Rules is misconceived.

As we have observed hereinabove, the liability to pay the seigniorage fee specified is with reference to the extraction and removal of the minor minerals from the land for the purpose of consumption in any work whatsoever by the consumer. The State shall be entitled to levy and collect such seigniorage fee on the minor minerals extracted and removed from the land in accordance with the prevalent rates specified under the Rules as on that date of removal or extraction of the minor minerals. That is precisely what has happened in the instant case. The terms and conditions of agreement entered into by and between the parties or such similar arrangement if any made amongst the parties shall have no bearing upon the operation of the statute or statutory Rules as the case may be. The date on which the petitioner entered into an agreement with the respondents is totally irrelevant in our considered opinion for the purposes of levy and collection of the seigniorage fee in accordance with the rates specified under the Rules issued and amended from time to time.

A reading of the dicta, as above, would show that even in the absence of covenant/clause in the contract like clause 26.16 it is permissible for the Government to collect the enhanced rates of seigniorage fee. In this case, clause 26.16 obliges the contractor to pay the seigniorage charges as amended by the State from time to time and also empowers the employer to recover the revised rates of seigniorage fee from the bills of the contractor. It is admitted case of all the petitioners that they entered contracts with the Government and such contract includes clause 26.16 which empowers the State to recover the enhanced seigniorage fee from the bills. Reading clause 26.16, this Court is not able to countenance the submission of the learned counsel for the petitioners that it is vague. Clause 26.16 speaks of revised rates of seigniorage fee and publication of amendment in the gazette. The seigniorage fee can be prescribed by the State only in exercise of their powers under Section 15(1) of the Act by duly amending schedule I to A.P.Minor Minerals Concession Rules. In that view of the matter, there is neither vagueness nor confusion in clause

26.16 of agreement. Said clause certainly refers to the revision of seigniorage fee as per the provisions of the Act duly amending A.P.Minor Minerals Concession Rules. Thus, the case of the respondents in seeking to recover enhanced rates of seigniorage fee with effect from 1.10.2004 does not suffer from any vice of illegality. However, as already observed, the Government is entitled to recover enhanced rates of seigniorage fee only with effect from 1.10.2004 that too on the minerals extracted by the contractors after 1.10.2004. The Writ Petitions, with the above observations, are accordingly dismissed.

23.6.2005 (V.V.S.RAO, J) ______________ YS To

The Secretary, Irrigation & C.A.D/ (P.W) Department, Government of A.P., Secretariat buildings, Hyderabad. The Superintending Engineer, Nettam Padu Lakwakurthy Lift Irrigation Scheme Circle, Mahaboobnagar, Mahaboobnagar District. The Executive Engineer, NKLI, Division, No.II, Nagar Kurnool, Mahaboobnagar District. The Superintendent Engineer, BLIP Circle, Pebbair, Mahabubnagar District. The Superintendent Engineer, T.T.P.R. Circle, Vizianagaram, Vizianagaram District. The Executive Engineer, Peddagedda Project Division, Salur, Vizianagaram District. The Executive Engineer, Execution Division No.2, Pebbair, Mahabubnagar District. The Superintending Engineer, SLBC, Circle -II, G.V. Gudem, Nalgonda. The Superintending Engineer, AMRP Circle -II, G.V. Gudem, Nalgonda.

The Executive Engineer, Division - V, Nalgonda, Nalgonda district.

The Executive Engineer, Division - I, Nalgonda, Nalgonda district.

The Superintendent Engineer, SRSP Stage-II, Chintagattu, Hanamkonda, Warangal District.

The Executive Engineer, Division-IV, Suryapet, Nalgonda District.

The Superintending Engineer, I&CAD, Irrigation Circle, Nirmal, Adilabad District.

The Executive Engineer, Suddavagu project, Bainsa, Adilabad District.

The Superintendent Engineer, Irrigation Circle, Visakhapatnam.

The Executive Engineer, Irrigation Circle, Visakhapatnam.

The Supreintendent Enginer, I & CADD Medium - Irrigation Projects Circle, Bellampally, Adilabad.

The Executive Engineer, Medium Irrigation Projects - Circle, Bellampally, Adilabad.

Two CCs to the Government Pleader for Irrigation and Command Area Development, High Court Buildings, Hyderabad. (OUT)

Two C.D. Copies.