APHC010026122021

IN THE HIGH COURT OF ANDHRA PRADESH

AT AMARAVATI

W.P.No.1839 of 2021 along with

W.A.Nos.164, 171 & 238 of 2021; W.A.Nos.1058,

1061, 1062, 1063, 1064, 1065 & 1066 of 2022

Bench

Sr.Nos:-

123 - 133

[3581]

(1) W.P.No.1839 of 2021:

M/s. Anjani Stone Crusher … Petitioner

Vs.

The State of Andhra Pradesh and others … Respondents

(2) W.A.No.164 of 2021:

The State of Andhra Pradesh and others … Appellants

Vs.

M/s. JMB Rocks … Respondent

(3) W.A.No.171 of 2021:

The State of Andhra Pradesh and others … Appellants

Vs.

M/s. Sri Durga Bhavani Granites … Respondent

(4) W.A.No.238 of 2021:

The State of Andhra Pradesh and others … Appellants

Vs.

M/s. Salasr Granites … Respondent

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W.P.No.1839 of 2021 & batch

(5) W.A.No.1058 of 2022:

The State of Andhra Pradesh and others … Appellants

Vs.

M/s. Soma Patel ASI JV … Respondent

(6) W.A.Nos.1061 & (8) 1063 of 2022:

The State of Andhra Pradesh and others … Appellants

Vs.

M/s. GSR Stone Crushers … Respondent

(7) W.A.Nos.1062 & (10) 1065 of 2022:

The State of Andhra Pradesh and others … Appellants

Vs.

Mr. P. Venkateswara Rao … Respondent

(9) W.A.Nos.1064 & (11) 1066 of 2022:

The State of Andhra Pradesh and others … Appellants

Vs.

M/s. VVR Crushers and Constructions … Respondent

**********

Reserved for orders on : 10.07.2026

Pronounced on : 29.07.2026

Whether only operative part :

of the judgment is pronounced

or whether full judgment is

pronounced

Full

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W.P.No.1839 of 2021 & batch

CORAM : THE CHIEF JUSTICE LISA GILL

SRI JUSTICE RAVI CHEEMALAPATI

Present:

Advocates for Appellants : Mr. D. Srinivas, Advocate General, A.P.

GP for Mines and Geology

Advocates for Respondents : Mr. Hari Sreedhar for sole respondent in

W.A.Nos.1058, 1061, 1062, 1063, 1064,

1065 & 1066 of 2022; and

petitioner in W.P.No.1839 of 2021

Mr. K. S. Naveen for sole respondent in

W.A.Nos.164, 171 & 238 of 2021

Mr. P. Veera Reddy, Sr. Counsel, for

Intervener in W.A.No.1063 of 2022

LISA GILL, CJ.

Above said Writ Petition and all Writ Appeals were taken up together for

hearing and adjudication, at request and with consent of learned counsel for

parties because all matters primarily revolve around interpretation of Rule

26(3)(ii) and Rule 34(1) of the Andhra Pradesh Minor Mineral Concession

Rules, 1966 (for short „APMMC Rules‟).

2. W.P.No.1839 of 2021 has been filed for setting aside

amendments made to APMMC Rules, particularly Rule 26, by

G.O.Ms.No.35, dated 01.07.2020 on the ground of being contrary to

Section 21(2) and Section 22 of the Mines and Minerals (Development and

Regulation) Act, 1957, (for short „MMDR Act‟).

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W.P.No.1839 of 2021 & batch

3. W.A.Nos.164, 171 & 238 of 2021 arise out of common order

dated 06.10.2020, passed in W.P.Nos.8356, 8361 & 8366 of 2020, whereas

W.A.Nos.1058, 1061, 1062, 1063, 1064, 1065 & 1066 of 2022 arise out of

common order dated 30.09.2022, passed in W.P.Nos.8390 of 2018; 12334,

27815, 27952, 27903, 28372 & 12950 of 2021.

4. The questions which arise for consideration before this Court in

W.P.No.1839 of 2021 and as would be impacting the decision in all the other

writ appeals are:

(i) Whether punitive action under Rules 26 and 34 of

APMMC Rules, 1966, for illegal mining, transportation and

storage of minor minerals can be taken by authorized officer,

being an executive authority under the APMMC Rules, 1966, or

whether such action can be taken solely by a Court of

competent jurisdiction under Sections 21, 22 and 23A of MMDR

Act?

(ii) Whether amendments to Rule 26 and Rule 34 of

APMMC Rules, 1966, through G.O.Ms.No.35, dated

01.07.2020, are ultra vires the parent Act/provisions, hence,

liable to be set aside?

5. Brief facts necessary for adjudication of this matter are that

W.A.Nos.164, 171 and 238 of 2021 arise from W.P.No.8356 of 2020 (M/s.

JMB Rocks Vs. The State of Andhra Pradesh & others), W.P.No.8361 of 2020

5

W.P.No.1839 of 2021 & batch

(M/s. Sri Durga Bhavani Granites Vs. The State of Andhra Pradesh & others)

and W.P.No.8366 of 2020 (M/s. Salasr Granites Vs. The State of Andhra

Pradesh & others) respectively. Writ petitioners therein, all challenged show

cause notices of even date i.e. 15.04.2020, whereby action was sought to be

taken against them for realization of normal seigniorage fee, market value and

penalty, the amounts of which were detailed in said notices in terms of Rule

26(3)(ii) of APMMC Rules for violations as committed by them. Issue raised in

these writ petitions was that, as per Rule 26(3) of APMMC Rules as amended

in 2016, unaccounted consumption or possession of minerals without proof of

payment of revenue was made a penal offense, thus, this sort of levy/ penalty

cannot be imposed by an officer of the department but only by a Court of

competent jurisdiction after proper trial. It was further urged that show cause

notice issued on the basis of estimation found on electricity consumption

charges was an unscientific method of assessing alleged quality of minor

minerals for which fee was allegedly not deposited. Vires of the Rules was not

under challenge as such, while ground raised was that such action is without

jurisdiction.

6. Learned Single Judge on considering the facts and

circumstances concluded on 06.10.2020 that Rule 26(3)(ii) as amended in

2016 also provided for imprisonment for a term which may extend to two years

or with fine which may extend to Rupees Five Lakhs along with market value

of the mineral and seigniorage fee, or both, therefore, such punishment can

only and solely be imposed by a Court of competent jurisdiction.

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W.P.No.1839 of 2021 & batch

7. It was observed that unamended Rule did not provide for

imprisonment, therefore, officials may earlier have been authorized to

levy penalty, but with amendment in the rule in 2016 which also prescribed for

punishment of imprisonment upto two years or fine etc.; such penal provisions

have to be strictly construed and that power to impose such punishment of

imprisonment along with other penalties is exercisable solely by a Court of

competent jurisdiction.

8. In respect to estimation of amounts in question based on

electricity consumption charge was concerned, it was held that a proper

method should be evolved by authorities to meet emerging situations. Such a

method should have a scientific rational basis along with statutory backing.

9. Objection of the State to maintainability of writ petition challenging

a mere show cause notice was negated on the premise that show cause

notice was issued by an official who did not have jurisdiction to issue the

same. W.P.Nos.8356, 8361 & 8366 of 2020 were accordingly allowed by

learned Single Judge vide order dated 06.10.2020.

10. As noted earlier, W.A.Nos.1058, 1061, 1062, 1063, 1064, 1065 &

1066 of 2022 arise out of common order dated 30.09.2022, passed in

W.P.Nos.8390 of 2018; 12334, 27815, 27952, 27903, 28372 & 12950 of 2021.

In some of these petitions, challenge was to notices issued under Rule 26 as

amended vide G.O.Ms.No.35, dated 01.07.2020, whereby provision for

imposition of imprisonment was removed therefrom, and in other, petitioners

7

W.P.No.1839 of 2021 & batch

challenged the demand notices, confirmed by competent authority; upheld by

appellate authority.

11. Learned Single Bench vide impugned order dated 30.09.2022,

while referring to earlier order dated 06.10.2020, passed in W.P.Nos.8356,

8361 & 8366 of 2020, allowed W.P.Nos.8390 of 2018; 12334, 27815, 27952,

27903, 28372 & 12950 of 2021 on the same analogy while further adding that

the Rules cannot go beyond the principal Act or be inconsistent with principal

Act; MMDR Act contemplates levy of penalty, under the Act and APMMC

Rules, to be decided by Court, while APMMC Rules name Assistant Director

of Mines as authority for this purpose. It was concluded that there was a clear

contradiction and inconsistence between MMDR Act and APMMC Rules,

therefore, Rule 26 has to give way. Objection by the State, that such a

conclusion should not have been arrived at, in view of no challenge to Rule

26, was negated.

12. W.A.No.1058 of 2022 arises out of W.P.No.12950 of 2021

(M/s. Soma Patel ASI (JV) Vs. The State of Andhra Pradesh & others),

whereby petitioner challenges demand notice dated 03.05.2021.

13. W.A.Nos.1061 & 1063 of 2022 arise out of W.P.Nos.12334 of

2021; 8390 of 2018 (both titled M/s. GSR Stone Crushers Vs. The State of

Andhra Pradesh & others) respectively. Lessee/ writ petitioner in both these

writ petitions is the same as is the subject matter of Lease.

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W.P.No.1839 of 2021 & batch

14. W.P.No.8390 of 2018 (subject matter of W.A.No.1063 of 2022)

was filed by writ petitioner therein challenging show cause notice dated

20.01.2018 issued by Assistant Director of Mines, Srikakulam. Subsequent to

reply filed by said petitioner, demand notice dated 19.02.2018 was issued

which was challenged by petitioner by way of W.P.No.8390 of 2018. During

pendency of said writ petition, action was again initiated against petitioner on

basis of information furnished by Vigilance and Enforcement Department;

another show cause notice dated 09.04.2021 and demand notice dated

22.04.2021 issued by Assistant Director of Mines, Srikakulam, were then

challenged by same petitioner vide W.P.No.12334 of 2021 (subject matter of

W.A.No.1061 of 2022).

15. W.A.Nos.1062 and 1065 of 2022 arise out of W.P.Nos.27952 &

27815 of 2021 (both titled Mr. P. Venkateswara Rao Vs. The State of Andhra

Pradesh & others) respectively. Lessee in both these writ petitions is the

same and challenge is to demand notices of even date i.e. 10.11.2020.

16. W.P.Nos.27815 of 2021 and 27952 of 2021 (subject matter of

W.A.Nos.1065 and 1062 of 2022) were filed by same petitioner, who earlier

filed W.P.No.15863 of 2020 challenging demand notice dated 07.08.2020

under Rule 26(3)(ii). This Court in W.P.No.15863 of 2020 remanded the

matter to Assistant Director of Mines, Vishakhapatnam, to re-conduct entire

exercise after affording complete information to petitioner. Subsequently,

demand notice was again issued which was subjected to challenge by said

9

W.P.No.1839 of 2021 & batch

petitioner by way of W.P.No.25176 of 2020, which was dismissed on the

ground that petitioner had an efficacious alternate remedy of appeal.

W.A.No.64 of 2021 challenging said decision was dismissed. Petitioner

therein then filed an appeal before authorities, which was dismissed on

21.09.2021, which was then challenged vide W.P.No.27952 of 2021. Said

petitioner, in W.P.No.27815 of 2021, had earlier challenged show cause

notice dated 14.07.2020 issued on the basis of an inspection report submitted

by Vigilance and Enforcement Department by way of W.P.No.15888 of 2020,

wherein matter was remanded to Assistant Director of Mines, to furnish

complete documents, pursuant to which a demand notice was again issued on

10.11.2020, the same being challenged by way of W.P.No.25190 of 2020,

which was dismissed on basis of availability of efficacious alternate remedy.

W.A.No.70 of 2021 filed against this order was dismissed and petitioner

ultimately filed an appeal before Assistant Director of Mines and Geology

against said demand notice, which was dismissed on 21.09.2021, leading to

filing of W.P.No.27815 of 2021.

17. W.A.Nos.1064 & 1066 of 2022 arise out of W.P.Nos.28372 &

27903 of 2021 (both titled M/s. VVR Crushers and Constructions Vs. The

State of Andhra Pradesh & others) respectively, challenging demand notice

of even date i.e. 10.11.2020.

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W.P.No.1839 of 2021 & batch

18. Details of all writ appeals as mentioned above are reproduced

in the tabular form as under:

S.No. Writ Appeals Writ Petitions

Demand Notice/

Show Cause

Notice

Rule under

which Notice

was issued

1.

W.A.No.164

of 2021

W.P.No.8356 of 2020

(M/s. JMB Rocks

Vs.The State of

Andhra Pradesh &

others)

Show Cause Notice

dated 15.04.2020

- 2.

W.A.No.171

of 2021

W.P.No.8361 of 2020

(M/s. Sri Durga

Bhavani Granites Vs.

The State of Andhra

Pradesh & others)

3.

W.A.No.238

of 2021

W.P.No.8366 of 2020

(M/s. Salasr Granites

Vs. The State of

Andhra Pradesh &

others)

4.

W.A.No.1058

of 2022

W.P.No.12950 of 2021

(M/s. Soma Patel ASI

(JV) Vs. The State of

Andhra Pradesh &

another)

Demand Notice

dated 03.05.2021

Impugned

demand notice

was issued as per

Amended Rule

26(1) & 34(1) of

APMMC Rules,

1966, vide

G.O.Ms.No.35,

dated 01.07.2020

.

W.A.Nos.1061

& 1063 of

2022

W.P.Nos.12334 of

2021; and 8390 of

2018

(M/s. GSR Stone

Crushers Vs. The

State of Andhra

Pradesh & another)

Demand Notices

dated 22.04.2021

and 19.02.2018

respectively

Impugned

demand notice

dated 22.04.2021

was issued as per

Amended Rule

26(1) and 34(1) of

APMMC Rules,

1966, vide

G.O.Ms.No.35,

dated 01.07.2020

and

Impugned

demand notice

dated 19.02.2018

was issued as per

Amended Rule

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W.P.No.1839 of 2021 & batch

26(3) of APMMC

Rules, 1966

6.

W.A.Nos.1062

& 1065 of

2022

W.P.Nos.27952 &

27815 of 2021

(Mr. P. Venkateswara

Rao Vs. The State of

Andhra Pradesh &

others)

Demand Notices

dated 10.11.2020

Impugned

demand notices

were issued as

per Amended

Rule 26 r/w 34(1)

of APMMC Rules,

1966, vide

G.O.Ms.No.35,

dated 01.07.2020

7.

W.A.Nos.1064

& 1066 of

2022

W.P.Nos.28372 &

27903 of 2021

(M/s. VVR Crushers

and Constructions Vs.

The State of Andhra

Pradesh & others)

Demand Notices

dated 10.11.2020

Impugned

demand notices

were issued as

per Amended

Rule 34(1) of

APMMC Rules,

1966, vide

G.O.Ms.No.37,

dated 14.03.2016

and

G.O.Ms.No.35,

dated 01.07.2020

respectively

19. W.P.No.1839 of 2021 has been filed for declaring amendments

made to APMMC Rules, 1966, by way of G.O.Ms.No.35, dated 01.07.2020,

to the extent of providing punitive measures in excess of what has been

stated in Sections 21 & 27 and contrary to Section 22 of MMDR Act, as

ultra vires.

20. Principal question that has been raised in the writ petition and

writ appeals by writ petitioners therein (respondents in writ appeals) is

that jurisdiction to levy penalty for unauthorized mining or other violations of

the Act cannot be conferred upon an executive authority as has been done

under the APMMC Rules and such action can be taken solely by a Court of

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W.P.No.1839 of 2021 & batch

competent jurisdiction. Vires of Rules 26 & 34 to that extent has been

challenged in W.P.No.1839 of 2021 while proceedings under said Rules

(amended on 01.07.2020 and under the unamended Rules as well) were

under challenge in the writ petitions leading to writ appeals in question

without vires of Rules being called in question.

Submissions on behalf of writ petitioner in W.P.No.1839 of 2021 and

respondents in writ appeals/ writ petitioners before learned Single

Bench:

21. As vires of the Rules as above are under challenge, arguments

on behalf of writ petitioner in W.P.No.1839 of 2021 and respondents in writ

appeals i.e. writ petitioners before learned Single Bench are being noted

first. The latter are referred to as writ petitioners/respondents. It was

vehemently argued that provision of imposition of penalty and

imprisonment, by officials of the department, as was the case vide

amendment carried out in March 2016, is not permissible in terms of

Section 21 of MMDR Act. Whenever any penalty has to be imposed under

the Rules, it can be imposed only on conviction by Court of competent

jurisdiction, upon a complaint filed by a person authorized in that

behalf, either by the Central or State Government.

22. It was urged that first and foremost respondent State does not

have any power to provide penalty beyond what is provided under Section

21 of MMDR Act, and moreover, procedure contrary to provisions of

the parent Act cannot be promulgated under the Rules. The rules, it is

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W.P.No.1839 of 2021 & batch

submitted, cannot travel beyond the enabling statute or be inconsistent

therewith.

23. It was further submitted that use of the word „offence‟ in proviso

to Rule 34 is indicative of criminal nature of penalty, therefore, even if the

provision of imposition of imprisonment, as was present after the

amendment carried out in March 2016, has been subsequently done away

with vide amendment carried out on 01.07.2020, it is clearly penal in

nature and thus cannot be imposed without a proper trial before a Court of

competent jurisdiction. In case of any violation, State, it was contended,

can only impose a seigniorage fee, which cannot be by way of penalty or of

such an amount that it becomes penal in nature. State, at best, can recover

the price of mineral illegally removed/transported.

24. It was further argued that once there is a clear-cut conflict

between the substantive Act and Rules, the former has to prevail,

therefore, the offending rule should be struck down. The State, it was

submitted, has no power to impose penalties as have been prescribed in

Rule 26(1) and Rule 34 of APMMC Rules, 1966, to be exacted by officials

of the Department, as the same is beyond permissible statutory limits.

25. Reliance was placed upon judgments of Hon‟ble the Supreme

Court in Mineral Area Development Authority and another Vs. Steel

Authority of India and another, (2024) 10 SCC 1; State of Meghalaya

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W.P.No.1839 of 2021 & batch

Vs. All Dimasa Students Union and others, (2019) 8 SCC 177; and

Naresh Chandra Agarwal Vs. Institute of Chartered Accountants of

India and others, 2024 SCC OnLine SC 114. Learned counsel for writ

petitioners before learned Single Bench, while supporting the said

arguments, urged that learned Single Bench has correctly passed

impugned orders dated 06.10.2020 & 30.09.2022 as notices issued to writ

petitioners are beyond jurisdiction of the issuing authority. Thus, their writ

petitions were correctly entertained and allowed. No argument was

addressed on the individual facts of any particular case.

26. It was thus prayed that W.P.No.1839 of 2021 be allowed and

W.A.Nos.164, 171 & 238 of 2021; 1058, 1061, 1062, 1063, 1064, 1065 &

1066 of 2022 filed by the State be dismissed.

Submissions on behalf of the State/Department of Mines and Geology

i.e. respondents in writ petitions and appellants in all writ appeals:

27. Learned Advocate General representing the State in

W.P.No.1839 of 2021 and appellants in above mentioned writ appeals, with

equal vehemence argued that impugned orders dated 06.10.2020 and

30.09.2022 passed by learned Single Bench should be set aside, thereby

allowing all the writ appeals, and that W.P.No.1839 of 2021 be dismissed

being devoid of any merit.

28. It is submitted that the State is well within its power to

promulgate the Rules as are challenged before this Court. It was

15

W.P.No.1839 of 2021 & batch

contended that provisions of the Act i.e. Section 15, Section 21 and Section

23C clearly confer power upon the State to promulgate the Rules as has

been done. It was denied that penalty cannot be imposed or recovered by

officials of the department and that such action could be taken only by a

Court of competent jurisdiction. It was argued that said provisions are a

deterrent measure and have thus to be understood in said context.

29. Learned Advocate General further submitted that learned

Single Bench while passing orders dated 06.10.2020 and 30.09.2022 has

not considered the controversy in its correct perspective and has wrongly

and incorrectly allowed the writ petitions. It was contended that validity of

Rules in question had not even been challenged by writ petitioners therein.

Therefore, there is a fundamental flaw in the impugned orders.

30. Learned Single Bench in impugned order dated 30.09.2022

has in fact recorded that writ petitioners are not disputing power of the

State to levy fines and penalties, but had contended that such levy of

penalty can be carried out only by a Court of competent criminal

jurisdiction. Reliance was placed upon judgments of Hon‟ble the Supreme

Court in Karnataka Rare Earth Vs. Senior Geologists, Department of

Mines, (2004) 2 SCC 783; State of U.P. Vs. Sukhpal Singh Bal, (2005) 7

SCC 615; and a Full Bench of this High Court in L. Venkateswara Rao

and others Vs. M/s. Singareni Collieries Company Ltd, 1993 SCC

OnLine AP 451.

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W.P.No.1839 of 2021 & batch

31. In respect to impugned order dated 06.10.2020 in

W.A.Nos.164, 171 & 238 of 2021, learned Advocate General submitted that

as per Rule 26(3)(ii) as amended on 14.03.2016, the aspect of penalty can

be clearly distinguished from the imposition of imprisonment. Insofar as

penalty, seigniorage fee etc. is concerned, the same can be levied and

exacted by officials of the department. It was only imposition of

imprisonment which would fall in the domain of Courts exercising criminal

jurisdiction.

32. It was thus prayed that W.P.No.1839 of 2021 be dismissed and

abovementioned writ appeals be allowed, thereby setting aside impugned

orders dated 06.10.2020 and 30.09.2022, consequently dismissing writ

petitions throughout.

Analysis & Conclusion:

33. We heard learned counsel for parties at length and have

perused the files with their able assistance.

34. At the outset, it is necessary to refer to some of the provisions

of MMDR Act, 1957. Section 4 of MMDR Act provides that prospecting or

mining operations cannot be undertaken except under a license or lease.

Section 4 reads as under:

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W.P.No.1839 of 2021 & batch

“4. Prospecting or mining operations to be under license or lease -

(1) No person shall undertake any reconnaissance, prospecting or

mining operations in any area, except under and in accordance with the

terms and conditions of a reconnaissance permit or of a prospecting

licence or of a exploration licence or, as the case may be, of a mining

lease, granted under this Act and the rules made thereunder:

Provided that nothing in this sub-section shall affect any prospecting

or mining operations undertaken in any area in accordance with terms and

conditions of a prospecting licence or of a exploration licence, mining lease

granted before the commencement of this Act which is in force at such

commencement:

Provided further that nothing in this sub-section shall apply to any

prospecting operations undertaken by the Geological Survey of India, the

Indian Bureau of Mines, the Atomic Minerals Directorate for Exploration

and Research of the Department of Atomic Energy of the Central

Government, the Directorates of Mining and Geology of any State

Government (by whatever name called), and the Mineral Exploration

Corporation Limited., a Government company within the meaning of clause

(45) of section 2 of the Companies Act, 2013, and any other entities

including private entities that may be notified for this purpose, subject to

such conditions as may be specified by the Central Government.

Provided also that nothing in this sub-section shall apply to any

mining lease (whether called mining lease mining concession or by any

other name) in force immediately before the commencement of this Act in

the Union territory of Goa, Daman and Diu.

(1A) No person shall transport or store or cause to be transported or

stored any mineral otherwise than in accordance with the provisions of this

Act and the rules made thereunder.

(2) No mineral concession shall be granted otherwise than in

accordance with the provisions of this Act and the rules made thereunder.

(3) Any State Government may, after prior consultation with the

Central Government and in accordance with the rule made under section

18, undertake reconnaissance, prospecting or mining operations with

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W.P.No.1839 of 2021 & batch

respect to any mineral specified in the First Schedule in any area within

that State which is not already held under any mineral concession.‖

35. Section 13 of MMDR Act deals with power of Central

Government to make rules in respect of minerals and for purposes

connected therewith; and Section 13A deals with power of Central

Government to make rules for grant of prospecting licences or mining

leases in respect of territorial waters or continental shelf of India.

36. Section 14 of MMDR Act provides that Sections 5 to 13 shall

not apply to quarry leases, mining leases or other mineral concessions in

respect of minor minerals, and reads as under:

―14. Sections 5 to 13 not to apply to minor minerals –

The provisions of sections 5 to 13 (inclusive) shall not apply

to quarry leases, mining leases or other mineral concessions in respect of

minor minerals.‖

37. Section 15 of the Act, which provides power of State

Governments to make rules in respect of minor minerals, reads as under:

―15. Power of State Governments to make rules in respect of

minor minerals -

(1) The State Government may, by notification in the Official

Gazette, make rules for regulating the grant of 3 quarry leases, mining

leases or other mineral concessions in respect of minor minerals and for

purposes connected therewith.

(1A) In particular and without prejudice to the generality of the

foregoing power, such rules may provide for all or any of the following

matters, namely:―

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W.P.No.1839 of 2021 & batch

(a) the person by whom and the manner in which, applications for

quarry leases, mining leases or other mineral concessions may be made

and the fees to be paid therefor;

(b) the time within which, and the form in which, acknowledgement

of the receipt of any such applications may be sent;

(c) the matters which may be considered where applications in

respect of the same land are received within the same day;

(d) the terms on which, and the conditions subject to which and the

authority by which quarry leases, mining leases or other mineral

concessions may be granted or renewed;

(e) the procedure for obtaining quarry leases, mining leases or other

mineral concessions;

(f) the facilities to be afforded by holders of quarry leases, mining

leases or other mineral concessions to persons deputed by the

Government for the purpose of undertaking research or training in matters

relating to mining operations;

(g) the fixing and collection of rent, royalty, fees, dead rent, fines or

other charges and the time within which and the manner in which these

shall be payable;

(h) the manner in which rights of third parties may be protected

(whether by way of payment of compensation or otherwise) in cases where

any such party is prejudicially affected by reason of any prospecting or

mining operations;

(i) the manner in which rehabilitation of flora and other vegetation

such as trees, shrubs and the like destroyed by reason of any quarrying or

mining operations shall be made in the same area or in any other area

selected by the State Government (whether by way of reimbursement of

the cost of rehabilitation or otherwise) by the person holding the quarrying

or mining lease;

(j) the manner in which and the conditions subject to which, a quarry

lease, mining lease or other mineral concession may be transferred;

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W.P.No.1839 of 2021 & batch

(k) the construction, maintenance and use of roads, power

transmission lines, tramways, railways, serial ropeways, pipelines and the

making of passage for water for mining purposes on any land comprised in

a quarry or mining lease or other mineral concession;

(l) the form of registers to be maintained under this Act;

(m) the reports and statements to be submitted by holders of quarry

or mining leases or other mineral concessions and the authority to which

such reports and statements shall be submitted;

(n) the period within which and the manner in which and the

authority to which applications for revision of any order passed by any

authority under these rules may be made, the fees to be paid therefore,

and the powers of the revisional authority; and

(o) any other matter which is to be, or may be, prescribed.

(2) Until rules are made under sub-section (1), any rules made by a

State Government regulating the grant of quarry leases, mining leases or

other mineral concessions in respect of minor minerals which are in force

immediately before the commencement of this Act shall continue in force.

(3) The holder of a mining lease or any other mineral concession

granted under any rule made under sub-section (1) shall pay royalty or

dead rent, whichever is more in respect of minor minerals removed or

consumed by him or by his agent, manager, employee, contractor or sub-

lessee at the rate prescribed for the time being in the rules framed by the

State Government in respect of minor minerals:

Provided that the State Government shall not enhance the rate of

royalty or dead rent in respect of any minor mineral for more than once

during any period of three years.

(4) Without prejudice to sub-sections (1), (2) and sub-section (3),

the State Government may, by notification, make rules for regulating the

provisions of this Act for the following, namely:―

(a) the manner in which the District Mineral Foundation shall work

for the interest and benefit of persons and areas affected by mining under

sub-section (2) of section 9B;

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(b) the composition and functions of the District Mineral Foundation

under sub-section (3) of section 9B; and

(c) the amount of payment to be made to the District Mineral

Foundation by concession holders of minor minerals under section 15A.‖

38. Section 21 of MMDR Act provides for penalties for violation of

Section 4(1) and Section 4(1A) and reads as under:

“21. Penalties –

(1) Whoever contravenes the provisions of sub-section (1) or sub-

section (1A) of section 4 shall be punishable with imprisonment for a term

which may extend to five years and with fine which may extend to five lakh

rupees per hectare of the area.

(2) Any rule made under any provision of this Act may provide that

any contravention thereof shall be punishable with imprisonment for a term

which may extend to two years or with fine which may extend to five lakh

rupees, or with both, and in the case of a continuing contravention, with

additional fine which may extend to fifty thousand rupees for every day

during which such contravention continues after conviction for the first such

contravention.

(3) Where any person trespasses into any land in contravention of

the provisions of sub-section (1) of section 4, such trespasser may be

served with an order of eviction by the State Government or any authority

authorised in this behalf by that Government and the State Government or

such authorised authority may, if necessary, obtain the help of the police to

evict the trespasser from the land.

(4) Whenever any person raises, transports or causes to be raised

or transported, without any lawful authority, any mineral from any land, and,

for that purpose, uses any tool, equipment, vehicle or any other thing, such

mineral tool, equipment, vehicle or any other thing shall be liable to be

seized by an officer or authority specially empowered in this behalf.

(4A) Any mineral, tool, equipment, vehicle or any other thing seized

under sub-section (4), shall be liable to be confiscated by an order of the

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court competent to take cognizance of the offence under sub-section (1)

and shall be disposed of in accordance with the directions of such court.

(5) Whenever any person raises, without any lawful authority, any

mineral from any land, the State Government may recover from such

person the mineral so raised, or, where such mineral has already been

disposed of, the price thereof, and may also recover from such person,

rent, royalty or tax, as the case may be, for the period during which the land

was occupied by such person without any lawful authority.

(6) Notwithstanding anything contained in the Code of Criminal

Procedure, 1973, an offence under sub-section (1) shall be cognizable.

Explanation — On and from the date of commencement of the

Mines and Minerals (Development and Regulation) Amendment Act, 2021

(16 of 2021), the expression ―raising, transporting or causing to raise or

transport any mineral without any lawful authority‖ occurring in this section,

shall mean raising, transporting or causing to raise or transport any mineral

by a person without prospecting licence, mining lease or composite licence,

exploration licence or in contravention of the rules made under section

23C.‖

39. Section 23C of MMDR Act which confers power upon State

Government to make rules for preventing illegal mining, transportation and

storage of minerals, reads as under:

“23C. Power of State Government to make rules for preventing illegal

mining, transportation and storage of minerals –

(1) The State Government may, by notification in the Official

Gazette, make rules for preventing illegal mining, transportation and

storage of minerals and for the purposes connected therewith.

(2) In particular and without prejudice to the generality of the

foregoing power, such rules may provide for all or any of the following

matters, namely:―

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W.P.No.1839 of 2021 & batch

(a) establishment of check-posts for checking of minerals under

transit;

(b) establishment of weigh-bridges to measure the quantity of

mineral being transported;

(c) regulation of mineral being transported from the area granted

under a prospecting licence or a mining lease or a quarrying licence or a

permit, in whatever name the permission to excavate minerals, has been

given;

(d) inspection, checking and search of minerals at the place of

excavation or storage or during transit;

(e) maintenance of registers and forms for the purposes of these

rules;

(f) the period within which and the authority to which applications for

revision of any order passed by any authority be preferred under any rule

made under this section and the fees to be paid therefor and powers of

such authority for disposing of such applications; and

(g) any other matter which is required to be, or may be, prescribed

for the purpose of prevention of illegal mining, transportation and storage of

minerals.

(3) Notwithstanding anything contained in section 30, the Central

Government shall have no power to revise any order passed by a State

Government or any of its authorised officers or any authority under the

rules made under sub-sections (1) and (2).

40. In exercise of power under Sections 15 and 23C of MMDR Act,

respondent State promulgated the Andhra Pradesh Minor Mineral

Concession Rules, 1966. Said Rules provide for penalty, seigniorage fee

etc. for violation of conditions of licence or any other violation under the

Act. It is to be noted that various amendments had been carried out in Rule

26, the relevant in present case being the amendments made vide

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G.O.Ms.No.37, dated 14.03.2016 and subsequently vide G.O.Ms.No.35,

dated 01.07.2020.

41. A comparative table of Rule 26 as it stood before amendment

carried out on 14.03.2016; after amendment carried out vide

G.O.Ms.No.37, dated 14.03.2016 and after the amendment vide

G.O.Ms.No.35, dated 01.07.2020 is reproduced as hereunder:

S.No.

Provisions before

amendment dated

14.03.2016

Provisions after amendment

vide G.O.Ms.No.37,

dt. 14.03.2016

Provisions after amendment

vide G.O.Ms.No.35,

dt. 01.07.2020

1. 26. Penalty for unauthorized

quarrying:

(1): If any person carries on

quarrying operations or

transports minor minerals in

contravention of these rules,

he shall be liable to pay as

penalty, such enhanced

seigniorage fee together with

assessments as may be

imposed by an Officer

nominated by the Director of

Mines & Geology.

26. Penalty for unauthorized

quarrying:

(1): If any person carries on

quarrying operations or

transports minor minerals in

contravention of these rules,

he shall be punishable with

imprisonment for a term

which may extend to two

years or with fine which may

extend to Rs. Five Lakhs

along with the Market Value

of the mineral and

Seigniorage Fee prevalent at

that time or both and the

lease or permit if any already

granted may, at the discretion

of the officer authorized in this

behalf, be liable to be

terminated or cancelled.

26. Penalty for unauthorized

quarrying:

(1): If any holder of mineral

concession carries on

quarrying operations and

transports minor minerals by

going beyond or encroaching

outside the leased area or in

any area without holding a

mineral concession in

contravention of these rules,

the holder of such mineral

concession shall be liable to

pay ten times of Normal

Seigniorage fee as penalty in

addition to the normal

Seigniorage fee along with

DMF and MERIT amounts on

the assessed quantities by the

Asst. Director of Mines &

Geology or the officer

authorized in this behalf by the

Director of Mines & Geology.

The Asst. Director of Mines &

Geology concerned may issue

order for suspension of

quarrying operations till

realization of the penalty in

addition to the normal

Seigniorage fee along with

DMF and MERIT amounts on

the assessed quantities. Any

repeated offence, shall result

in termination of the lease after

being given a reasonable

opportunity to submit an

explanation to the holder of

mineral concession.

2 Rule 26 (2): Whenever any

person raises or transports

minor minerals without any

Rule 26 (2): Whenever any

person raises or transports

minor minerals without any

Rule 26 (2): Whenever any

person raises, transports or

causes to be raised or

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W.P.No.1839 of 2021 & batch

lawful authority, any minor

minerals from any area not

granted under a mineral

concession and for that

purpose, use any tool

equipment, vehicle or any

other thing, such mineral, tool,

equipment, vehicle or any

other thing shall be liable to be

seized by an Officer

nominated by the Director of

Mines & Geology in this behalf

in addition to the imposition of

the penalty under sub-rule(1):

Provided that in no

case, the penalty shall exceed

ten times the normal

seigniorage fee and the lease

or permit already granted may,

at the discretion of Deputy

Director, be liable to be

terminated or cancelled.

lawful authority, such minerals

may be seized by an officer

nominated by the Director of

Mines & Geology in this behalf

in addition that he shall be

punishable with

imprisonment for a term

which may extend to two

years or with fine which may

extend to Rs. Five Lakhs

along with double the Market

Value of the mineral or both.

In case of continuous offence,

an additional fine of Rs.5000/-

per day till the offence is

rectified.

transported without any lawful

authority, any minor minerals

from any area not granted

under a mineral concession

and for that purpose, use any

tool, equipment, vehicle or any

other thing, such mineral, tool,

equipment, vehicle or any

other thing shall be liable to be

seized by the Asst. Director of

Mines & Geology or the officer

authorized in this behalf by the

Director of Mines & Geology

and the person involved in

such illegal quarrying and

transportation of such mineral

shall be liable to pay ten

times of Normal Seigniorage

fee as penalty in addition to the

normal Seigniorage fee along

with DMF and MERIT amounts

on the assessed quantities by

the Asst. Director of Mines &

Geology or the officer

authorized in this behalf by the

Director of Mines & Geology.

On realization of the above

said penalty in addition to the

normal Seigniorage fee along

with DMF and MERIT

amounts, Asst. Director of

Mines & Geology concerned

may release the quantity of

mineral, tool, equipment,

vehicle or any other thing

seized.

Any failure to pay the

demanded amount within the

stipulated time, the authorised

officer shall:

a. dispose the mineral in

open auction by following due

procedure;

b. confiscate the machinery,

tool, equipment, vehicle or any

other thing by following due

procedure and seek

permission to dispose such

confiscated things against the

demanded amount.

3. Rule 26 (3):

(i) For the purpose of

ascertaining the position of

payment of Mineral Revenue

due to the Government or for

any other purpose under these

rules, the person authorized

under sub-rule(2) may-

Rule 26 (3):

(i) For the purpose of

ascertaining the position of

payment of Mineral Revenue

due to the Government or for

any other purpose under these

rules, the person authorised

under sub-rule (2) may-

Rule 26 (3):

(i) For the purpose of

ascertaining the position of

payment of Mineral Revenue

due to the Government or for

any other purpose under these

rules, the person authorised

under sub-rule (2) may-

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W.P.No.1839 of 2021 & batch

(a) enter and inspect any

mineral;

(b) survey and take

measurements;

(c) weigh, measure or take

measurements of stocks of

minerals;

(d) examine any document,

book, register or record in the

possession or power of any

person having the control of,

or connected with any mineral

including the processed

mineral and place marks of

identification thereon and take

extracts from, or make copies

of such document, book,

register or record; and

(e) order the production of

any such document, book,

register, record as is referred

in Clause (d).

(ii) If no documentary proof is

produced in token of having

paid the mineral revenue due

to the Government by any

person who used or consumed

or in possession of any

mineral, including the

processed mineral, he shall

notwithstanding anything

contained in sub-rule (1) be

liable to pay one time of

normal seigniorage fee as

penalty in addition to normal

seigniorage fee leviable under

``````rules.

(a) enter and inspect any

premises,

(b) survey and take

measurements;

(c) weigh, measure or take

measurements of stocks of

minerals;

(d) examine any document,

book, register or record in the

possession or power of any

person having the control of,

or connected with any mineral

including the processed

mineral and place marks of

identification thereon and take

extracts from, or make copies

of such docume nt, book,

register or record; and

(e) order the production of

any such document, book,

register, record as is referred

in Clause (d).

(ii) If no documentary proof is

produced in token of having

paid the mineral revenue due

to the Govt., by any person

who used or consumed or in

possession of any mineral

including the processed

mineral, he shall be

punishable with

imprisonment for a term

which may extend to two

years or with fine which may

extend to Rs. Five lakhs

along with the Market Value

of the mine ral and

Seigniorage Fee prevalent at

that time or both and the

lease or permit if any already

granted may, at the discretion

of the officer authorized in this

behalf, be liable to be

terminated or cancelled.

(iii) if the Driver or person in-

charge of the vehicle fails to

produce a valid permit issued

by the concerned Asst.

Director of Mines & Geology or

an officer authorized by the

Director of Mines & Geology,

the officer in-charge of the

check post or barrier or during

the interception of the

movement of the vehicle, may

require the Driver or the owner

or person in-charge of the

vehicle to pay penalty equal to

Market Value of the Mineral

along with Seigniorage Fee

prevalent at that time.

(a) enter and inspect any

premises,

(b) survey and take

measurements;

(c) weigh, measure or take

measurements of stocks of

minerals;

(d) examine any document,

book, register or record in the

possession or power of any

person having the control of, or

connected with any mineral

including the processed

mineral and place marks of

identification thereon and take

extracts from, or make copies

of such document, book,

register or record; and

(e) order the production of

any such document, book,

register, record as is referred

in Clause (d).

(ii) If no documentary proof is

produced in token of having

paid the mineral revenue due

to the Govt., by any person

who used or consumed or in

possession of any mineral

including the processed

mineral, such person shall be

liable to pay five times of

Normal Seigniorage as penalty

in addition to the normal

Seigniorage fee along with

DMF and MERIT amounts for

the said quantity.

(iii) If the Driver or owner of the

vehicle fails to produce a valid

e-transit permit issued by the

concerned Asst. Director of

Mines & Geology or an officer

authorized by the Director of

Mines & Geology, the officer in

charge of the check post or

barrier or during the

interception of the movement

of the vehicle, may require the

Driver or the owner of the

vehicle to pay Five times of the

normal Seigniorage fee as

penalty in addition to the

Normal Seigniorage fee along

with DMF and MERIT amounts

for the quantity not covered

under the e-transit permit.

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4. Rule 26 (4): The applicant/

applicant company convicted

for an offence relating to

unauthorized mining/ quarrying

of minor minerals shall be

debarred/ disqualified for

getting new Quarry Lease or

renewal of the existing Quarry

Lease for a period of ten

years.

— —

42. A comparative table of Rule 34, as it stood prior to amendment

vide G.O.Ms.No.35 dated 01.07.2020, and thereafter, is reproduced as

under:

Provisions prior to amendment vide

G.O.Ms.No.35 dated 01.07.2020

Provisions after amendment vide G.O.Ms.No.35

dated 01.07.2020

Rule 34 (1):

No minor mineral shall be dispatched from any of

the leased areas without a valid permit issued by the

Asst. Director of Mines & Geology concerned or any

officer authorized in this behalf by the Director of

Mines & Geology.

Provided that any misuse of the transit forms

without paying Seigniorage Fee and not

accompanied by the transit forms used by the Asst.

Director of Mines & Geology, concerned or an officer

authorised in this behalf by the Director of Mines &

Geology and any other contravention, the lessee

shall be punished with imprisonment for a term which

may extend to two years or with a fine equal to

Market Value of the mineral and Seigniorage Fee

prevalent at that time or both. In case of continuous

offence, an additional fine of Rs.500/- per day shall

be levied till the offence is rectified and the lease or

permit if any already granted may, at the discretion of

the officer authorized in this behalf, be liable to be

terminated or cancelled and the Security Deposit

paid by the lessee will be forfeited.

Rule 34 (1):

No minor mineral shall be dispatched from any

of the leased areas or area granted under a

mineral concession without a valid e-transit permit

issued by the Asst. Director of Mines & Geology

concerned or any officer authorized in this behalf

by the Director of Mines & Geology.

The lessee shall furnish the details of quantity

of minor minerals except Granite, Marble and 31

minor minerals mentioned at Sl. Nos. 18 to 48 in

the Schedule-l of rule 10 dispatched and place of

consignment to the Asst. Director of Mines &

Geology concerned immediately after the dispatch

of material. However, the lessee is required to

obtain the e-transit forms in advance for

transportation of minor minerals and shall render

the account to the Asst. Director concerned once

in a month. No second consignment of e-transit

forms shall be issued unless the lessee has

submitted the previous account of consignment of

e-transit forms;

Provided that any misuse of e-transit forms,

dispatch and transportation of any minor mineral

except Granite, Marble and 31 minor minerals

mentioned at Sl.Nos.18 to 48 in the Schedule-l of

rule 10 without paying Seigniorage fee and any

other contravention, shall result in levy of five

times of the normal Seigniorage fee as penalty for

the first time offence and ten times of normal

Seigniorage fee as penalty for the second time

offence in addition to the Normal Seigniorage fee

along with DMF and MERIT amounts for the

evaded quantity by the Asst. Director of Mines &

Geology or the officer authorized in this behalf by

the Director of Mines & Geology. Any subsequent

offence shall result in termination of the lease after

the holder of mineral concession submits an

explanation.

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W.P.No.1839 of 2021 & batch

43. It is thus apparent that Section 4 of MMDR Act provides that

excavation and transportation of minerals has to be carried out strictly in

accordance with terms of lease and permits granted by the Centre/

State and any infraction in this regard is visited with penalties as are

provided under Section 21 of the Act and Rules as may be framed

thereunder. In respect to minor minerals, the State is empowered to frame

necessary rules.

44. It was argued by learned counsel for writ petitioner that Entry 54

of List I i.e. Union List (VII Schedule) of Constitution of India provides for

regulation of mines and mineral development to the extent such regulation

and development under control of the Union is declared by Parliament by law

to be expedient in the public interest; and as per Entry 23 in List II, regulation

of mines and mineral development can be carried out by the State subject to

provisions of List I, thus, any rules promulgated by the State have to be in

consonance with the main statute.

45. It was argued that Section 21(2) of MMDR Act indicates intention

of the Parliament inasmuch as Section 21(2) takes within its fold the Rules

made by State Government under Sections 15 and 23C. Source of power

derived by the State Government in making amendments to Rules 26 and 34,

even as per G.O.Ms.No.35 dated 01.07.2020 is stated to be Sections

15(1), 21(2), 22, 23C of MMDR Act. Violation of Section 4(1) and 4(1A) of

MMDR Act i.e. raising and transportation of mineral without obtaining any

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W.P.No.1839 of 2021 & batch

permit or license or lease attracts criminal liability under Section 21(1) and civil

liability under Section 21(5). It is to be noted that, at the outset, a feeble

attempt was made on behalf of writ petitioners in respect to legislative

incompetence of the State to promulgate the Rule, the argument was then

modulated to the effect that the State cannot promulgate rules which are

opposed to or not in consonance with the parent statute.

46. In our considered opinion, there is no merit in the arguments

raised on behalf of writ petitioners. There is no quarrel with the submission

that rules promulgated under a statute have to be in consonance with

provision thereof. Section 15 of MMDR Act confers power upon State

Governments to make rules in respect of minor minerals; Section 23C

specifically confers power upon State Governments to promulgate rules for

preventing illegal mining, transportation and storage of minerals and for

purposes connected therewith; Section 23C(g) specifically states that rules

can be promulgated by the State for any other purpose, which is required to

be or may be prescribed for the purpose of illegal mining, transportation and

storage of minerals; Section 23C(3) specifically provides that notwithstanding

anything contained in Section 30, Central Government shall have no power to

revise any order passed by a State Government or any of its authorized

officers or any authority under the Rules made under sub-sections (1) and (2)

thereof.

47. It is undeniable that Rule 26 is a deterrent measure aimed

at preventing illegal mining, transportation and storage of minerals. Mere use

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W.P.No.1839 of 2021 & batch

of the word „Penalty‟ in Rule 26 by itself is not indicative of the mode through

which such penalty should be imposed i.e. only by process of a Criminal Court

as is urged by writ petitioners. Hon‟ble the Supreme Court in the case

of Karnataka Rare Earth has held that marginal note of Section 21 of MMDR

Act i.e. „Penalties‟ creates a wrong impression. It was held as under:

―7. .... A reading of Section 21 shows that it deals with a variety of

situations. Sub-Sections (1), (2), (4), (4A) and (6) are in the realm of criminal

law. Sub-Section (3) empowers the State Government or any authority

authorized in this behalf to summarily evict a trespasser. Sub-Section (5)

empowers the State Government to recover rent, royalty or tax from the

person who has raised the mineral from any land without any lawful authority

and also empowers the State Government to recover the price thereof where

such mineral has already been disposed of inasmuch as the same would not

be available for seizure and confiscation. The provision as to recovery of price

is in the nature of recovering the compensation and not penalty so also the

power of the State Government to recover rent, royalty or tax in respect of any

mineral raised without any lawful authority can also not be called a penal

action. The underlying principle of sub-Section (5) is that a person acting

without any lawful authority must not find himself placed in a position more

advantageous than a person raising minerals with lawful authority.

8. The correct principles of law applicable to the facts of the

present case emanating from equity, and statutorily embodied in sub-Section

(5) of Section 21 abovesaid, are to be found dealt with extensively in a recent

decision of this Court in South Eastern Coalfields Ltd. Vs. State of M.P. & Ors.

(2003) 8 SCC 648.‖

48. At this stage, gainful reference can be made to

judgment rendered by a Full Bench of this Court in the case of L.

Venkateshwara Rao and others, wherein prayer was for striking down Rule

26(3) of APMMC Rules as introduced by G.O.Ms.No.243 dated 08.05.1986

being ultra vires of Section 15(1) and 24(1) of MMDR Act besides being

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W.P.No.1839 of 2021 & batch

violative of Article 14, 19, 21, 254, 256, 265 and 300A of Constitution of India.

It was held in said case as under:

―54. We do not see any force in the contention of the learned Counsel.

Under the provisions of the Act and the Rules, unauthorised mining of

minerals whether they be minor minerals or other minerals, is strictly

prohibited. The object is to check illicit quarrying of minor minerals. To achieve

that object, the State Government made rules providing for the levy and

collection of penalty in addition to the normal seigniorage fee in respect of

minor minerals unauthorisedly raised. It is not correct that the provisions of the

Act and the Mineral Concession Rules, 1960 contemplate levy on and

collection of royalty from only the lessees or licence holders. As is evident

from Sub-section (5) of Section 21, royalty can be recovered from any person

who unauthorisedly carries on mining operations apart from recovering the

mineral raised by such person or where such mineral has already been

disposed of, the price thereof. There can be no doubt that the State

Government has the competence to make rules fixing the seigniorage fee in

respect minor minerals, levying fines and providing for their collection.

Seigniorage fee is the fee chargeable on the minor minerals despatched or

consumed from any land. Rule 26 (3) (ii) of the rules prescribes the method

and manner of the levy of normal seigniorage fee and its collection from the

user or consumer together with penalty in case such user or consumer fails to

produce documentary proof in token of having paid the seigniorage fee in

respect of the minor minerals used or consumed.‖

49. It was further held by Full Bench that it is not impermissible for

the legislature to leave it to the Executive to determine details of levy and

collection of fees and penalty. Relevant para is reproduced as under:

―56. In case the user or consumer fails to produce proof of payment of

seigniorage fee in respect of minor minerals used or consumed by him, Rule

26(3)(ii) authorises the levy of penalty on such consumer or user. This

provision is intended to check illicit quarrying of minor minerals and to prevent

evasion of mineral revenue due to the Government. The learned counsel for

the respondent company has drawn our attention to Rule 209-A of the Central

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Excise Rules which authorises levy of penalty in addition to the excise duty on

any person who acquires possession of goods, to submit that the excise duty

and penalty can be levied on and recovered from any person other than the

producer or manufacturer. It is not impermissible for the legislature to leave it

to the executive to determine the details of levy and collection of fees and

penalty including the selection of persons on whom it can be levied and the

rates at which it can be charged, as observed by the Supreme Court in

Gwalior Rayon Mills v. Assistant Commissioner of Sales Tax. The Legislature

can confer power upon another authority to make subordinate or ancillary

legislation. In view of the provisions of Section 15 of the Act, it is within the

competence of the State Government to make a rule providing for the levy and

collection of penalty from an user or consumer of minor minerals in case he

fails to produce documentary proof in token of having paid the mineral

revenue due to the Government in respect of such mineral used or

consumed.‖

50. It was categorically held that Rule 26 is within limits of statutory

power conferred upon State Government.

51. Reference was made by learned counsel for writ petitioner to

judgment of Hon‟ble the Supreme Court in Mineral Area

Development Authority to buttress the argument that as long as lessee was

holding a valid license permit/ lease, such penal measures cannot be imposed

upon them. Such argument is clearly devoid of any merit. The said judgment

does not, in any manner, come to aid of writ petitioner on this aspect. In fact,

in said judgment as per majority view, it has been held that List II Entry 50

does not constitute an exception to the position of law laid down in M.P.V.

Sundararamier and Co. and others Vs. The State of A.P. and another,

1958 SCC OnLine SC 22, and that though Parliament can impose

any limitations on the legislative field created by that Entry under a law relating

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W.P.No.1839 of 2021 & batch

to mineral development, no such limitation had been imposed as under the

MMDR Act. Hon‟ble the Supreme Court in the case of All Dimasa Students

Union was dealing with appeals which were filed challenging various orders

passed by National Green Tribunal, wherein several directions had been

issued with measures to be taken to check and combat unregulated coal

mining in tribal areas of State of Meghalaya. There is no quarrel that the Rules

promulgated under the statute cannot be beyond the parameters laid down in

the Act. However, in the present case, learned counsel for writ petitioner

was unable to point out any such infraction.

52. In our considered opinion, there is no merit whatsoever in the

argument that such penalties, Seigniorage fee, DMF and MERIT amounts

cannot be imposed by executive officers and can be levied only by a Court of

competent jurisdiction.

53. As noted in foregoing paras, object of these provisions is to check

illicit quarrying, transportation and storage of minor minerals. Section 15 of

MMDR Act empowers the State to promulgate rules in respect of minor

minerals as has been reproduced in foregoing paras. Section 23C especially

empowers State Government to make rules for preventing illegal mining,

transportation and storage of minerals. It is provided in Section 23(C)(2)(g)

that in particular and without prejudice to generality of the power, such rules

may provide for any other matter which is required to be or may be prescribed

for purpose of prevention of illegal mining, transportation and storage of

minerals.

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54. It is pertinent to note that illegal mining is a malaise, with which

Society has been plagued. Human greed, leading to rampant, unashamed and

unabashed environmental degradation, has led to disastrous results, which

now stare us in the face. Imposition of monetary penalty, seigniorage fee etc.,

as above by the authorized officer in the given factual matrix does not bring

the Rules in violation of or in excess of the parent statute.

55. Learned counsel for writ petitioners were unable to point out any

ground whatsoever, which would compel us to conclude that the said

provisions in Rules 26 and 34 of APMMC Rules are ultra vires the parent Act.

56. Thus, challenge to amendments made to Rules 26 and 34 of

APMMC Rules, 1966, through G.O.Ms.No.35 dated 01.07.2020 fails.

57. Thus, impugned order dated 30.09.2022 is also liable to be set

aside, keeping in view the discussion in foregoing paras upholding validity of

Rule 26 of APMMC Rules, 1966. There is no contradiction or inconsistency

between the MMDR Act, 1957, and APMMC Rules, 1966. Such conclusion

has been incorrectly arrived at by learned Single Bench. Such an

interpretation, in fact, places a premium upon the wrong doers who may be

able to get away with impunity despite violations as may have been committed

by them.

58. W.A.Nos.164, 171 and 238 of 2021, decided by impugned order

dated 06.10.2020, are the ones wherein learned Single Bench had set aside

demand notice(s) on the premise that the rule as amended on 14.03.2016

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W.P.No.1839 of 2021 & batch

also provided for imprisonment for a term which may extend to two years or

with fine which may extend to Rupees Five Lakhs along with market value of

mineral and seigniorage fee. Therefore, such penalty could not be imposed by

the departmental officials but was within the sole purview of a Court of

competent jurisdiction. Learned Single Bench in its order dated 06.10.2020

has in fact specifically observed that “the old rule may have authorized the

officials to levy penalty but in this Court's opinion the new rule by prescribing

punishment of imprisonment upto two years or with fine and market value of

the mineral etc., or both has taken this power out of the purview of the 3

rd

respondent and the like”.

59. It is a matter of record that, in all these three cases, proceedings

were initiated against the writ petitioners for realization of normal seigniorage

fee, market value of mineral and penalty. There is no move on the part of the

department by way of said proceedings to impose any imprisonment etc.

60. It is a settled position that unless and until a provision is made out

to be manifestly arbitrary or illegal, its validity shall be presumed. Moreover, in

the present case, it is essential to have a harmonious interpretation and

construction of this provision as it stood after the amendment in March

2016 till 01.07.2020. Power to impose penalty, seigniorage fee, market value

of the mineral is clearly within the purview of the departmental official as

specified. It is only the aspect of imposition of imprisonment if so stipulated by

the department that necessary steps would have to be taken for filing of the

complaint before a Court of competent jurisdiction for necessary action. It is a

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W.P.No.1839 of 2021 & batch

settled position that Court should attempt to harmonize the provision in a

given factual matrix by lending such interpretation that the provision itself does

not become a dead letter or a useless one, rather it upholds the legislative

intent to take necessary steps for prevention of illegal mining, transportation

and storage of minerals.

61. In all fairness, we note another argument raised by learned

counsel for writ petitioner, though only to be rejected, viz. that by way

of issuance of G.O.Ms.No.100 dated 26.06.2025, the existing heading of Rule

26 has been changed to “recovery of mineral for unauthorized

quarrying” which indicates that State itself was of the view that penalty cannot

be imposed and exacted by the Director of Mines or any other officer as may

be specified. Such substitution of heading does not, in any manner, come to

aid of the writ petitioner. This argument is accordingly rejected being devoid of

any merit.

62. Impugned order dated 06.10.2020 is also unsustainable in view of

discussion in foregoing paras.

63. Thus provision of imposition of monetary penalties, Seigniorage

fee, etc. for illegal mining, transportation and storage, etc., of minor minerals

and its imposition by the executive officers is valid. However, such imposition

has to be in strict accordance with provisions as laid down after providing

proper opportunity to stakeholder/affected person. It bears reiteration that no

arguments had been addressed on individual facts of any of the cases. No

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W.P.No.1839 of 2021 & batch

argument was raised that the penalties imposed as upheld by appellate

authorities are incorrect. Insofar as W.A.Nos.1058, 1061, 1062, 1063, 1064,

1065 & 1066 of 2022 are concerned, wherein it is only the demand notice(s)

which had been challenged, appeals, if any, are filed by said lessees within a

period of 15 days, be entertained by authorities in accordance with law.

64. Keeping in view facts and circumstances as above, amendment

of Rule 26(3) vide G.O.Ms.No.35 dated 01.07.2020 is upheld. W.P.No.1839 of

2021 is accordingly dismissed. Impugned orders dated 06.10.2020 and

30.09.2022 passed in W.P.Nos.8356, 8361 and 8366 of 2020; and

W.P.Nos.8390 of 2018, 12950, 12334, 27952, 28372, 27815 & 27903 of 2021

respectively are set aside and the writ petitions dismissed. W.A.Nos.164, 171

& 238 of 2021; 1058, 1061, 1062, 1063, 1064, 1065 & 1066 of 2022 are

accordingly allowed. No costs.

Consequently, connected miscellaneous applications, if any, shall stand

disposed of.

Photocopy of this order be placed on files of connected cases.

LISA GILL, CJ

Date: 29.07.2026 RAVI CHEEMALAPATI, J

kbs

Uploaded on : 29.07.2026

Whether the order is Speaking/Reasoned : Yes

Whether the order is Reportable : Yes

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65

HON’BLE MRS. JUSTICE LISA GILL, CHIEF JUSTICE

&

HON’BLE MR. JUSTICE RAVI CHEEMALAPATI

W.P.No.1839 of 2021 along with

W.A.Nos.164, 171 & 238 of 2021;

W.A.Nos.1058, 1061, 1062, 1063, 1064,

1065 & 1066 of 2022

Dt: 29.07.2026

kbs