FACTS OF THE CASE

Necessary facts which led to filing of the appeal arising out of SLP (C)
Nos.33894 of 2011 are as follows:-Respondent-Deep Jyoti Company, a partnership
firm registered as ‘A’ class contractor with various departments of Government of
Rajasthan was awarded contract for construction of link road. On 06.10.2008, the
Mines(Group-2) Department, Government of Rajasthan issued a Circular being
No.P13(6)Khan/Group-2/80- Part dated 06.10.2008, concerning collection of royalty
from the contractors involved in construction work using mineral masonry stone, grit,
boulder, river sand, kankar, murrum, ordinary sand (excluding brick earth) in
government department, autonomous bodies, government undertaking.

As per circular dated 06.10.2008, before starting the work, the respondents had to
obtain a short term permit (STP) from the concerned Mining Engineer by paying a
requisite short term permit fees and the cost of rawanna book for the minerals which
were being used as raw material for the work. Clause (5) of the circular deals with
the deduction of royalty at the rates provided in the circular from the bills of the
contractors. Clause (7) of the said circular provided that if the contractor had
purchased the royalty paid mineral from a leaseholder then he can get refund of the
same by submitting due receipts/rawanna issued by the lessee within a period of
thirty days. Clauses (2), (3), (5) and (7) of the said circular dated 06.10.2008, which
are relevant read as under:- “2. Before commencing the work the contractor shall get
a permit from the concerned Mining Engineer/Assistant Mining Engineer office by
applying in Scheduled Proforma and enclosing an affidavit duly notary certified with
requisite short term permit fees and the cost of rawanna book according to the
quantity of mineral specified in G-Schedule.

Contractor shall produce the certified copy of the above permit to the concerned
department alongwith the first bill, otherwise construction department should not
make payment of the bill and if by any construction department the payment for the
first bill or any other bill is made without getting certified copy of short time permit,
the said department shall be liable to deposit the cost of the mineral.

The concerned construction department shall deduct the royalty depending on the
type of construction in the following manner from the bills of the contractor and shall
pay through cheque to the concerned Mining Engineer/Assistant Mining Engineer or

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get adjusted through auditor general and the details shall be informed within 15
days.

If any contractor purchases royalty paid mineral from a lease holder and he wants
the refund of royalty, then he has to submit an application to the concerned Mining
Engineer/Assistant Mining Engineer office alongwith rawanas issued by the lease
holder, receipts of RCC/ERCC contractors and copy of bill within 30 days of the
completion of the construction work. The refund of those rawannas which is desired
shall be issued on the name of the concerned construction department contractor.
No assessment shall be required if refund application is not make.”

Respondent-Deep Jyoti Company filed Writ Petition No.1309 of 2009 before the High
Court, challenging the legality of the said circular dated 06.10.2008 and prayed for
restraining the authorities from implementing the said circular. Learned Single Judge
dismissed the writ petition, holding that the condition imposed by the circular dated
06.10.2008 was a reasonable restriction and in public interest. Aggrieved thereof, the
respondent preferred appeal before the Division Bench of the High Court. By the
impugned order, Division Bench quashed the circular dated 06.10.2008 and allowed
the appeal holding that the contractor cannot be compelled to obtain short term
permit for conducting mining operations and also cannot be asked to pay royalty
from the bills payable and then seek for refund of the same. Relying upon M/s Deep
Jyoti Company’s case, the High Court dismissed Special Appeal No.753 of 2012 by
order dated 14.01.2013. These appeals challenge the correctness of the impugned
orders.

ISSUES

1.Whether the appeal petition is sustainable ?

2. whether the circular is valid or not.?

3.Whether the entire initiation of proceedings and implementation over the circular is
was a nullity?

4.Whether compensation allotted was according with the provisions of law?.

5.Whether the act of sate is in resonance with natural and legal justice?

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PROVISION OF LAW

Section 28 of The Registration Act, 1908

Place for registering documents relating to land.—Save as in this Part otherwise

provided, every document mentioned in section 17, sub-section (l), clauses

(a) , (b), (c) [, (d) and (e), section 17, sub-section (2), insofar as such document
affects immovable property,] and section 18, clauses (a), (b) 2[(c) and (cc),] shall be
presented for registration in the office of a Sub-Registrar within whose sub-district
the whole or some portion of the property to which such document relates is situate.
State Amendments Andhra Pradesh: In section 28, for the expression “clauses (a),
(b), (c), (d) and (e) of section 17, sub-section 2”, the expression “clauses (a), (b), (c),
(d), (e), (f) and (g) of section 17, sub-section (2)”, and for expression “clauses (a),
(b), (c) and (cc)” the expression “clauses (a), (b) and (cc)” shall be substituted. [Vide
Andhra Pradesh Act 4 of 1999, sec. 5]. Bihar: Substitute section 28 as under: “28.
Place for registering documents relating to land.—Save as in this part otherwise
provided every document mentioned in clauses (a), (b), (c), (d) and (e) of sub-
section (1) and sub-section (2) of section 17 insofar as such documents affect
immovable property and in clauses (a), (b), (c) and (cc) of section 18 shall be
presented for registration in the office of the Sub-Registrar within whose sub-district
or district the whole of the property to which such document relates is situated in the
State of Bihar.” [Vide Bihar Act 6 of 1991, sec. 3 (w.e.f. 8-8-1991)]. Gujarat:
Amendment is the same as that of Maharashtra. [Vide Act 11 of 1960, sec. 87;
Gujarat A.L.O., 1960 (w.e.f. 1-7-1961]. Maharashtra:

(i) In section 28 for the letters, brackets and word “(b) and (c)” substitute the
brackets, letters and word “(b), (c), (cc) and (ee)”. [Vide Bombay Acts 14 of 1939,
sec. 4; 14 of 1947, read with 35 of 1958, sec. 2 (w.e.f. 28-4-1958) and 6 of 1960,
sec. 43 (w.e.f. 1-1-1961)].

(ii) For brackets, letters, word and figure “(ee) and (eee)”, brackets, letters and words
“and (ee)” shall be substituted. [Vide Maharashtra Act 20 of 1971, sec. 58 (w.e.f. 15-
6-1972)]. Pondicherry: Section 28 shall be substituted as under: “28. Place for
registering documents relating to land.—Save as in this Part otherwise provided,—

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(a) every document mentioned in clauses (a), (b), (c), (d) and (e) of sub-section (1)
and sub-section (2) of section 17, in so far as such document affects immovable
property and in clauses (a), (b), (c) and (cc) of section 18 shall be presented for
registration in the office of a Sub-Registrar within whose sub-district the whole or
some portion of the property to which such document relates is situate in the Union
Territory of Pondicherry; and

(b) any document registered outside the Union Territory of Pondicherry in

contravention of the provisions of clause (a) shall be deemed to be null and void.”
[Vide Pondicherry Act 5 of 1999 (w.e.f. 4-5-1999)]. Uttar Pradesh:

(1) In section 28, omit the words, figures and letters “sub-section (1), clauses (a), (b),
(c), (d) and (e), section 17, sub-section (2)”. For the words “section 18, clauses (a),
(b), (c) and (cc)”, substitute “every document mentioned in section 18, clause (c)”.
[Vide Uttar Pradesh Act 19 of 1981, sec. 8 (w.r.e.f. 1-8-1981)].

(2) (i) The words “or some portion” shall be omitted.

(ii) The following proviso to be inserted, namely:— “Provided that the document of
award, exchange, gift, mortgage, partition, settlement and trust insofar as such
document affects immovable property shall be presented for registration in the office
of a Sub-Registrar within whose sub-district the whole or major portion or half-portion
of the property to which such document relates is situate.” [Vide Uttar Pradesh Act
27 of 1994, sec. 3]. Comments The burden of proving that the property is situate
within the jurisdiction in which a document relating thereto registered is on the
person relying on such document; Mohd. Khaja v. Monappa, AIR 1953 Hyd 280.

Section 83 of The Registration Act, 1908

Registering officers may commence prosecutions.—

(1) A prosecution for any offence under this Act coming to the knowledge of a
registering officer in his official capacity may be commenced by or with the
permission of the Inspector-General, 67 [***] the Registrar or the Sub-Registrar, in
whose territories, district or sub-district, as the case may be, the offence has been
committed.

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(2) Offences punishable under this Act shall be triable by any Court or officer
exercising powers not less than those of a Magistrate of the second class. State
Amendments Goa, Daman and Diu: In section 83, for sub-section (1), substitute the
following:— “(1) No prosecution for any offence under this Act shall be commenced
save by or with the permission of the Inspector-General or any officer empowered in
this behalf by the Government.” [Vide Goa Act 2 of 1968, sec. 3]. Tamil Nadu: In
section 83, in sub-section (2), for the word “Offences”, the words, figures and letter
“Save as provided in section 80G, offences” shall be substituted. [Vide Tamil Nadu
Act 38 of 1987, sec. 3 (w.e.f. 1-1-1988)]. West Bengal: In sub-section (2), for the
word “Offences”, substitute the words, figure and letter “Save as provided in section
80F, offences”. [Vide Bengal Act 5 of 1942, sec. 11 (w.e.f. 1-11-1943)].

Section 58 of The Registration Act, 1908

Particulars to be endorsed on documents admitted to registration.—(l) On every

document admitted to registration, other than a copy of a decree or order, or a copy
sent to a registering officer under section 89, there shall be endorsed from time to
time the following particulars, namely:—

(a) the signature and addition of every person admitting the execution of the
document, and, if such execution has been admitted by the representative, assign or
agent of any person, the signature and addition of such representative, assign or
agent;

(b) the signature and addition of every person examined in reference to such
document under any of the provisions of this Act; and

(c) any payment of money or delivery of goods made in the presence of the
registering officer in reference to the execution of the document, and any admission
of receipt of consideration, in whole or in part, made in his presence in reference to
such execution.

(2) If any person admitting the execution of a document refuses to endorse the
same, the registering officer shall nevertheless register it, but shall at the same time
endorse a note of such refusal. State Amendments Tamil Nadu: In section 58,—

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(i) in sub-section (1), after item (a), the following item shall be inserted, namely:—
“(aa) in the case of a document for sale of property, the signature and addition of
every person admitting the claim under such document, and, if such claim has been
admitted by the representative, assign or agent of any person, the signature and
addition of such representative, assign or agent;”;

(ii) in sub-section (2), after the expression “execution of a document”, the expression
“and in the case of a document for sale of property, any person admitting the
execution of such document, or any person admitting the claim under that document”
shall be inserted. [Vide Tamil Nadu Act 28 of 2000].

Section 63 of The Registration Act, 1908

Power to administer oaths and record of substance of statements.—

(1) Every registering officer may, at his discretion, administer an oath to any person
examined by him under the provisions of this Act.

(2) Every such officer may also at his discretion record a note of the substance of the
statement made by each such person, and such statement shall be read over, or (if
made in a language with which such person is not acquainted) interpreted to him in a
language with which he is acquainted, and, if he admits the correctness of such note,
it shall be signed by the registering officer.

(3) Every such note so signed shall be admissible for the purpose of proving that the
statements therein recorded were made by the persons and under the
circumstances therein stated.

Section 66 of The Registration Act, 1908

Procedure after registration of documents relating to land.—

(1) On registering any non-testamentary document relating to immovable property,

the Registrar shall forward a memorandum of such document to each Sub-Registrar
subordinate to himself in whose sub-district any part of the property is situate.

(2) The Registrar shall also forward a copy of such document, together with a copy
of the map or plan (if any) mentioned in section 21, to every other Registrar in whose
district any part of such property is situate.

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(3) Such Registrar on receiving any such copy shall file it in his Book No. 1, and shall
also send a memorandum of the copy to each of the Sub-Registrars subordinate to
him within whose sub-district any part of the property is situate.

(4) Every Sub-Registrar receiving any memorandum under this section shall file it in
his Book No. 1.

ARGUMENT BY APPELLANT

Learned counsel for the appellants Mr. Shiv Mangal Sharma, Additional Advocate
General submitted that the circular dated 06.10.2008 merely provides the procedure
for payment of royalty by the contractors who have been given the works contract by
the department of government and that the said condition was imposed by the State
Government in public interest. It was contended that the High Court erred in not
noticing clause (7) of the circular dated 06.10.2008 which takes care of the situation
that the contractor can get refund of the royalty deducted from his bills by the
department if the contractor satisfies by producing necessary bills showing that he
used royalty paid mineral in execution of the contract.

The circular dated 06.10.2008 came to be issued by the State Government which
provides the procedure for payment of royalty by the contractors who have been
given the works contract by department of government. According to the appellants,
the said circular was issued in order to ensure the payment of royalty and that the
royalty paid mineral is used for construction work.

As noticed earlier, clause (2) of the circular provides that before starting the work,
the contractor was to obtain short term permit and rawanna book and contractor was
also required to submit an affidavit to that effect that he had obtained the short term
permit for mining the required mineral and rawanna book. Clause (3) of the said
circular provides that if the contractor fails to produce copy of the short term permit,
the works department will withhold the payment of bills.

Clause (3) of the said circular further provided that in case, the government
department which allots the work to the contractor makes the payment of contract
bills without obtaining the copy of short term permit and rawanna book, then the

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works department shall be liable to deposit the cost of the mineral. Thus in terms of
clauses (2) and (3), it is incumbent upon the works contractor to obtain short term
permit before starting the work.

ARGUMENT BY RESPONDENT

learned counsel for the respondent Mr. Manish Singhvi contended that the High
Court rightly quashed the circular dated 06.10.2008 as the State cannot compel a
work contractor to obtain short term permit and also to pay royalty in advance and
then claim refund of the royalty as the same is unreasonable and arbitrary

Learned counsel for the respondents contended that the royalty can be levied in
respect of the mineral removed or consumed from lease areas at the rates
prescribed in Mines and Mineral (Development and Regulation) Act 1957 and any
such levy can only be by a legislation and not by any circular and the impugned
circular dated 06.10.2008 which is in the nature of levy of royalty was rightly quashed
by the High Court and the impugned orders warrant no interference.

The clauses stipulating deduction of royalty payable to the mineral department at the
rates stipulated in the circular cannot be said to be a levy. As noticed earlier, the
circular stipulates that the royalty is deducted at the rates prescribed in the circular,
on production of bills by the contractor to the mining department showing that they
had purchased the royalty paid mineral from the leaseholder and thus it only
provides the procedure for collection of royalty.

The circular only provides the procedure for payment of royalty for the minerals used
by the contractors who have been given the works contract by the government
department. The High Court did not keep in view the object of the circular and erred
in quashing the impugned circular

.DECISION OF COURT

The impugned orders of the High Court in Special Appeals No.369 of 2009 and 753
of 2012 are set aside and these appeals are allowed. Consequently the Writ
Petitions filed by the respondents herein stand dismissed. The parties are to bear
their respective costs.

REASON FOR THE DECISION

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In so far as the contention that in terms of the circular there is compulsion to obtain
short term permit, in our view, as such there is no such compulsion. It is only to
ensure that no mineral is excavated and used without payment of royalty. The
purpose of short-term permit is to ensure that the material and minerals etc. used by
the contractor in the construction work are royalty paid. It only means that such
material is purchased by the contractor from the market which is legally mined and
on which due royalty is paid. In other words, the objective is to see that illegally
mined mineral/material is not purchased by the contractor and used in the
construction work which is awarded by the Government.

Not only it is a laudable object, such a stipulation is inserted in order to check illegal
mining which unfortunately has assumed serious proportions in the recent past.
Otherwise, the respondents herein do not stand to loose anything inasmuch as the
moment evidence is produced to the effect that royalty was paid on the minerals by
the leaseholder which was used in the construction, the construction contractor like
the respondents would be refunded the royalty so paid by it in terms of circular dated
06.10.2008. In terms of clauses (5) and (7) of the said circular, the contractor has to
pay royalty at the rates specified in the circular depending upon the nature of work
and on production of bills showing payment of royalty, the contractor can get refund
of royalty.

There is, thus, no financial burden on the respondents of any nature. The purpose
which is sought to be achieved, viz., non-royalty paid mineral (which would naturally
be illegally mined mineral) is not used in the execution of the Government work and
it cannot be treated as unreasonable or arbitrary. In our view, there is a complete
justification for providing such a provision.

The minor minerals removed from the quarries, admittedly are the property of the
government and the same cannot be removed and used without payment of royalty.
It is therefore the duty of the government to ensure that only royalty paid minerals
are used in the work and the purpose of issuing such circular was to avoid
pilferage/leakage of revenue because royalty can be very conveniently evaded by
the contractors either by not purchasing the material from the mining leaseholders or
obtaining it from unauthorized excavators. In case, if the contractor purchases the
material from unauthorized person who has not paid royalty, there would be loss to

9
the public exchequer and the circular was issued to check evasion or loss to the
public exchequer. Such condition cannot be said to be unreasonable and arbitrary
and therefore no prejudice could be said to have been caused to the contractors.

PART 2

CRITICAL COMMENT

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In this case the impudent circuler was been put forwarded to ligation with respect to
the claims of the appellants. These appeals assail the order of Division Bench of the
High Court of Rajasthan at Jodhpur allowing Special Appeal No.369 of 2009 dated
17.01.2011 filed by the respondent thereby quashing the circular dated 06.10.2008
which provided for deduction of royalty payable to the mining department from the
bills of the contractors who have been given the work contract by the government
department. Relying upon the order in Special Appeal No.369 of 2009, the High
Court dismissed the Special Appeal No.753 of 2012 filed by the State.

The circular dated 06.10.2008 came to be issued by the State Government which
provides the procedure for payment of royalty by the contractors who have been
given the works contract by department of government. According to the appellants,
the said circular was issued in order to ensure the payment of royalty and that the
royalty paid mineral is used for construction work.

As noticed earlier, clause (2) of the circular provides that before starting the work,
the contractor was to obtain short term permit and rawanna book and contractor was
also required to submit an affidavit to that effect that he had obtained the short term
permit for mining the required mineral and rawanna book. Clause (3) of the said
circular provides that if the contractor fails to produce copy of the short term permit,
the works department will withhold the payment of bills. Clause (3) of the said
circular further provided that in case, the government department which allots the
work to the contractor makes the payment of contract bills without obtaining the copy
of short term permit and rawanna book, then the works department shall be liable to
deposit the cost of the mineral. Thus in terms of clauses (2) and (3), it is incumbent
upon the works contractor to obtain short term permit before starting the work.

9. Some of the fundamental aspects, while dealing with the validity of the aforesaid
circular dated 06.10.2008, need to be kept in mind. The said circular which
mandates the contractors to obtain short- term permit fess is meant for those
contractors who are registered as ‘A’ class contractors with various departments of
Government of Rajasthan. Such registration qualifies them to bid for and obtain
Government contracts, which are construction contracts.

The circular dated 06.10.2008 imposing the conditions, thus, is required only for the
purpose of undertaking that work which is awarded by the Government/Government

11
Departments etc. Otherwise, there is no such requirement or obligation on the part of
contractors while doing any other private work. It is trite that for awarding
Government work, it can impose and stipulate conditions, eligibility criteria as well as
terms and conditions on which the contract would be executed. If any person wants
to bid for or undertake the work, such persons has to fulfill those conditions. The only
limitation is that conditions so imposed should meet the test of fairness and
reasonableness and such conditions should not be arbitrary or contrary to any law.
The question, therefore, is as to whether imposition of the condition to obtain short-
term permit as provided in circular dated 06.10.2008 is reasonable and not arbitrary.

The clauses stipulating deduction of royalty payable to the mineral department at the
rates stipulated in the circular cannot be said to be a levy. As noticed earlier, the
circular stipulates that the royalty is deducted at the rates prescribed in the circular,
on production of bills by the contractor to the mining department showing that they
had purchased the royalty paid mineral from the leaseholder and thus it only
provides the procedure for collection of royalty. The circular only provides the
procedure for payment of royalty for the minerals used by the contractors who have
been given the works contract by the government department. The High Court did
not keep in view the object of the circular and erred in quashing the impugned
circular.

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