MANU/MP/0226/2016

Equivalent Citation: AIR2016MP137, 2016(2)MPLJ704, 2016(4)RC R(C ivil)64

IN THE HIGH COURT OF MADHYA PRADESH (JABALPUR BENCH)

W.P. Nos. 4547, 6977, 7029, 7108, 7370, 7398, 7496, 7517, 7581 and 7733 of 2016
Decided On: 10.05.2016
Appellants: Phaloudi Constructions and Infrastructure Pvt. Ltd.
Vs.
Respondent: State of M.P.
Hon'ble Judges/Coram:
A.M. Khanwilkar, C.J., Rajendra Menon and Sanjay Yadav, JJ.
Counsels:
For Appellant/Petitioner/Plaintiff: Vivek Dalai, Rohit Gupta and Qasim Ali
For Respondents/Defendant: P.K. Kaurav, Additional Advocate General and Amit Seth,
Government Advocate
Overruled/Reversed by:
Pankaj Kumar Rai vs. State of M.P. and Ors. MANU/MP/0887/2017
Case Note:
Mines and Minerals - No Dues Certificate - Issuance thereof - Present
reference placed before present Bench to adjudicate issue pertaining to
need of issuance of No Dues Certificate in respect of sand procured from
open market - Whether there was need of issuance of No Dues Certificate -
Held, contractors engaged in Government and Semi-Government
organizations, using minor minerals for civil work purchased from open
market must be regulated by dispensation - Petitioner should either furnish
bills of purchase of minerals from authorised dealer or affidavit disclosing
source from where Petitioner purchased minerals, which were used in
construction work - Respondents Authorities if were satisfied with bills
produced by Petitioner may process bills - In case Petitioner was unable to
produce bills for purchase of minerals or royalty receipt in this regard,
Respondents Authorities should insist Petitioner to file affidavit - If
Petitioner fails to produce bills/affidavit Petitioner may represent his case
to Concerned Authority showing his inability to produce bills - Reference
answered. [28]
ORDER
Sanjay Yadav, J.
BACKGROUND
1 . Writ Petition No. 4547/2016 is concerned with the challenge to Third Proviso to
sub-rule (1) of Rule 68 of the Madhya Pradesh Minor Mineral Rules, 1996 (hereinafter
referred to as '1996 Rules') and the consequential relief of direction against the
respondents to release the amount of royalty withheld by the respondents. The need
to challenge the validity has arisen because the matter involving similar relief filed
before the Indore Bench and Gwalior Bench are being dismissed without following
the dispensation specified in M/s. Chandrama Construction Company v. M.P. Rajya

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Krishi Vipanan Sangh, W.P. No. 1361/2009 decided on 22-4-2009, though the same
was followed by the Division Bench at the Principal Seat (Jabalpur). This led the
Bench hearing the matter to admit the petition on 29-3-2016. An interim relief was
granted in similar terms as per the dispensation specified by the Division Bench at
the Principal Seat (Jabalpur) in the case of M/s. Trishul Construction v. State of M.P.,
Writ Petition No. 9834/2015 decided on 26-8-2015, adopting the dispensation
specified in M/s. Chandrama Construction Company (supra). It was also directed by
the Division Bench that the Benches at Indore and Gwalior, being coordinate
Benches, must follow the same dispensation keeping in mind the dictum of the
Supreme Court in the case of Bir Bajrang Kumar v. State of Bihar,
MANU/SC/0455/1985 : AIR 1987 SC 1345. Later, an application for review and recall
of order dated 29-3-2016 came to be filed by the State of Madhya Pradesh vide I.A.
No. 5280/2016, stating in paragraphs 4 and 5:
"4. The answering respondents submit that coordinate Benches of this
Hon'ble Court at Indore and Gwalior have been pleased to dismiss the writ
petition of similar nature in view of amendment inserted by way of proviso to
Rule 68 which has come into force vide gazette notification dated 23-3-2013
and have therefore justly distinguished the proposition as laid down in the
case of M/s. Chandrama Constructions Company on account of alteration in
the position of law after 23-3-2015. The coordinate Hon'ble Division Benches
of Indore as well as Gwalior have assigned reasons for distinguishing and
not following terms laid down in the case of M/s. Chandrama Constructions
on the basis of material alteration in the position of law as earlier there was
only executive instructions or necessitating submission of No Dues Certificate
from the Mining Department but now since there is a statutory requirement,
the principles laid down in Chandrama Constructions case no longer hold the
field since 23-3-2013. Copies of this Hon'ble Court are collectively marked as
Annexure RP/1.
5. The answering respondents submit that since during the course of hearing
on 29-3-2016, an oral submission was made on behalf of counsel for the
petitioner. However, at the relevant time, for want of knowledge, the
aforesaid judgments of the Indore Bench and Gwalior Bench of this Hon'ble
Court could not be brought to the notice of this Hon'ble Court and the same
has led to passing of the direction as contained in the order-dated 29-3-2016
and the situation of passing of conflicting orders by the coordinate Benches
of this Hon'ble Court has arisen, which deserves to be resolved at the
earliest."
The application led the Division Bench pass an order on 30-4-2016, raising doubt
over the opinion formulated by the coordinate Bench. It was expressed:
"Both the decisions, no doubt, refer to the 3rd proviso to Rule 68. In the
present petition, however, said 3rd proviso to Rule 68 itself has been
challenged being invalid. In this petition, it is the case of the petitioner that
although he is engaged in canal works, road works, infrastructure
development, drain works and project works; and for which purpose
procures sand from open market, therefore, it is unnecessary to produce No
Dues Certificate as stipulated under the 3rd proviso. Thus, invoking that
proviso will be unnecessary and irrational requirement. In that, there is no
provision in the entire Rules of 1996, that obligates the concerned
Department of the State to issue such No Dues Certificate in respect of sand
procured from the open market. No Dues Certificate by its very nature would
be in respect of sand used in the construction activity which has been

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 procured from mining operation by the concerned Contractor himself as per
the terms and conditions of Trade Quarry or Quarry Lease granted to him.
The regime of Chandrama's case, on the other hand, applies to sand
procured from open market and used by the Contractor for such projects.
This aspect has been completely glossed over in the two decisions which are
pressed into service by the State.
If this contention is accepted, the logic applied in the aforesaid two decisions
may not stand the test of judicial scrutiny. For which reason, with utmost
humility at our command, prima facie, we are inclined to differ with the
opinion of the Coordinate Bench. Therefore, we deem it appropriate to refer
the matter to Full Bench for an authoritative pronouncement on the sweep of
3rd proviso below Rule 68(1) of the Rules of 1996.
Accordingly, these matters may be placed before the Chief Justice for
constituting a larger Bench.
Counsel appearing for both parties submit that they are willing to proceed
with the hearing at the earliest keeping in mind the larger public interest and
in particular the interest of the State revenue; and also to avoid multiplicity
of such petitions, being a recurring question.
As a result, the matters may be listed for hearing on 3-5-2016 at 2.30 p.m.,
before the appropriate Bench to be constituted by the Chief Justice, subject
to further orders to be passed by the Chief Justice on the administrative
side."
2. This is how the matter is before this Full Bench.
CARDINAL ISSUE
3 . The issue, which we are concerned with, was first taken note of by a Division
Bench of this Court in M.P. Contractors Sangh, Indore v. State of Madhya Pradesh,
MANU/MP/0021/1987 : 1987 JLJ 743 : AIR 1987 MP 74, which expressed:--
"13. Admittedly, the minor minerals removed from the quarries is the
property of the Government. It is also not in dispute that such minor
minerals excavated from the quarries cannot be removed therefrom without
payment of royalty. The quarries also undisputedly belong to the
Government. Therefore, it is the duty of the Government to protect its
property and see that no theft of minor minerals is committed nor such minor
minerals are removed therefrom without payment of royalty.... As a matter of
fact the concerned Department in order to have an effective check should
keep adequate staff and in fact call upon the quarry holder to pay royalty
after the minor minerals are excavated and before they are removed from
that place. But, in our opinion, this cannot be a valid argument that because
the Government is not able to put up an effective check or control, for which
they are alone responsible, the building contractors should produce the
royalty paid receipts before their bills are cleared for payment at least in
those cases where the minor minerals are supplied by such contractors
through petty contractors or other merchants. It is for the Government to
engage more staff and see that no such thefts are committed, though it also
cannot be and was not disputed that it is the duty of every citizen to help the
Government in its laudable efforts. But, in our opinion, merely because the
Government is not in a position to check such thefts, a doubt cannot be cast

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 on the building contractors nor they could be blamed for that. If the
Government wants to adopt such a measure so far as such building
contractors are concerned, then the State Government ought to make such a
provision in the contract entered into with such building contractors or they
should make rules to that effect under the provisions of the said Act so that a
building contractor who is given such Government contract will be duty
bound to obtain the royalty paid receipt and submit the same or in such a
case they will have to purchase such minor minerals from the quarry holders
themselves directly."
THE ANALYSIS
4 . The concern expressed by the Bench addressed only one part of the issue which
was directly related to the statutory checks and balances provided under the Mines
and Minerals (Development and Regulation) Act, 1957 and the Rules and Regulations
made thereunder. The decision led the Government issue various circulars from time
to time to ensure that the contractors engaged in works contract of the Government
and semi-government establishment were using royalty paid minor minerals such as
sand, murrum, gitti etc. One such order passed by Chief Secretary, Government of
Madhya Pradesh vide No. 257/eq-l-/2002/[k-lk dated 27-8-2002, directing that each
contract agreement to provide the clause for production of the receipts indicating
payment of royalty on the minerals used by them in execution of civil work before
their final bills are paid. Paragraph 4 of the order/circular envisaged:

5 . This order/circular came to be challenged in the case of Indore Civil Works

Contractors Association v. Government of M.P., Writ Petition No. 252/2003 before
Indore Bench of this Court decided on 28-10-2003, upholding the circular, it was
held --
"7. A clause in an agreements can be struck down only when it is held to be
against the public policy i.e., against section 23 of contract Act or against
any provision of statute governing the field. In other words, the State can
not insist for insertion of any clause whose enforcement by either party to
the contract will offend any provision of law or will be violative of any public
policy, or any provision of Constitution. Such clause is incapable of being
enforced at the instance of any party and even if, it is capable of being
enforced, its enforcement will be held illegal.
8. A clause in question which is insisted upon by the State for being inserted
in the agreement is neither against any public policy nor it offends to
produce the evidence that the mineral which he has used in construction
were duty paid (i.e., royalty paid mineral). I fail to appreciate as to how and
on what basis such requirement can be held to be illegal or unreasonable so
as to quash it on the anvil of either section 23 of Contract Act or being in
violation of any law or infringing any of the fundamental rights guaranteed

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 under the Constitution.
9. The State can always insists upon their contractor that the material which
is being used by the contractors in the construction activity belonging to
State should be duty paid material and hence, evidence to that effect must be
tendered to enable the State to make the payment. If the contractor feels that
it is not possible for them to produce the tax and paid receipts for any
reason, then no body forces them to accept such work contract. In other
words, it is not a clause which can not be insisted upon by the State on any
contractor. Indeed, demanding the proof that the goods used in work
contract are tax paid good goes long way to ensure that no illegality of any
nature has been committed by any of the contracting party while undertaking
the work of the State.
...
13. In my opinion, therefore, no flaw can be found in the impugned circular
which is in the first instance issued pursuant to the observations made by
this court in the case of M.P. Contractor's Sangh (supra). Secondly, it does
not offend any provision of Constitution. Thirdly, it is issued in the larger
interest of public exchequer and its sole objective is to ensure that no
mineral is used in any construction activity of State by their contractor unless
a proof is tendered by a contractor that it is a royalty paid mineral."
6. This regime, however, took care of the possible pilferage of public money in cases
where the contractors engaged in Government and semi-government organization
and using minor minerals for civil work purchased from the quarry lease holders. It
did not cover the cases wherein the contractors, instead of purchasing the minor
minerals from the quarry lease holders, were directly purchasing it from open market
i.e. from such retailers who, in turn, had purchased it from the quarry lease holders.
To cover up such cases, Courts stepped in, to safeguard larger public interest and the
public exchequer, with interpretative justice.
7 . In M/s. Chandrama Construction Company (supra), following directions were
issued --
"(i) The State Government shall clear the bills of the petitioner submitted in
connection with execution of the contract in question without insisting upon
producing no dues certificate from the collector or any other authority with
regard to payment of royalty for the minerals consumed. However, the State
Government can insist upon production of bills with regard to purchase of
mineral and in case the bill is not available an affidavit indicating the manner
in which and the place or source from where the mineral is purchased. This
affidavit can be used by the State Government for verification and for taking
further action for clearing the bills.
(ii) Amount of royalty, if any, recovered from the bills of the petitioner, shall
be refunded to the petitioner on the petitioner filing the bill or the affidavit
as indicated hereinabove. In case petitioner is unable to produce the bill or
the affidavit as indicated hereinabove, liberty is granted to the petitioner to
represent the matter before the State Government pointing out the inability
in producing the bills or the affidavit and it would be for the State
Government to consider the representation and take such steps as may be
permissible or proper for clearing the bills in the given set of circumstances
as may be indicated by the petitioners".

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8 . The decision in M/s. Chandrama Construction (supra) was taken further by the
Division Bench by adding some more terms and conditions.
9. In Prashant Singh Bhadoriya v. State of M.P., Writ Petition No. 1885/2015 decided
on 2-9-2015 relying on an earlier decision in M/s. Narsingh Construction Company.
W.P. No. 4658/2012 decided on 13-4-2012 and the provisions contained in M.P.
Minerals (Prevention of Illegal Mining Transportation and Storage) Rules, 2006,
following directions were issued by the Division Bench at Gwalior:
"(1) The petitioner shall either furnish the bills of purchase of minerals from
authorised dealer or an affidavit disclosing the source from where petitioner
purchased minerals, which were used in the construction work.
(2) The respondents authorities if are satisfied with the bills produced by the
petitioner may process the bills, but in case of any doubt, respondents
authorities may insist the petitioner to file an affidavit in support of its
contention in respect of purchase of minerals from the open market by the
bills.
(3) In case the petitioner is unable to produce the W.P. No. 708/2016 bills
for the purchase of the minerals or the royalty receipt in this regard,
respondents authorities shall insist the petitioner to file an affidavit pointing
out specifically the manner in which minerals were purchased, disclosing
particulars of the person from whom the minerals were purchased. On filing
of the affidavit, the authorities shall be within their right to verify the
aforesaid facts. They can also verify the facts from the record of the Mining
Department of the concerned district.
(4) On completion of the aforesaid process, the respondents shall clear the
bills of the petitioner submitted in connection with the execution of the
works contract and the amount of royalty, if any recovered from the bills,
shall be released in favour of the petitioner.
(5) In case, the authorities are not satisfied with the contention of petitioner
or on verification, facts are not found correct then they shall pass a reasoned
order in rejecting the contention of petitioner.
(6) If the petitioner fails to produce the W.P. No. 708/2016 bills/affidavit as
indicated hereinabove, the petitioner may represent his case to the concerned
authority showing his liability to produce the bills or affidavit and it shall be
for the State Government or authority to consider the representation and
pass a suitable order in that regard within two months from the date of
receipt of the representation."
10. Similar directions were issued in M/s. Trishul Constructions v. State of Madhya
Pradesh : Writ Petition No. 9834/2015 decided on 26-8-2015.
11. Pertinently, even prior to M/s. Chandrama Construction (supra) which dwelt with
the contractors engaged in government and semi-government contract works
purchasing minor minerals from open market, there was one more case of M/s.
Tomar Construction Company v. State of Madhya Pradesh, MANU/MP/0494/2007 :
2008(2) M.P.L.J. 140 : 2008 (I) MPHT 164, wherein, one of us (Rajendra Menon, J.)
taking note of M.P. Minor Minerals Rules, 1996 and M.P. Minerals (Prevention of
Illegal Mining, Transportation and Storage) Rules, 2006, which was pressed in
service by State Government that under these Rules, the Government is entitled to
seek production of No Dues Certificate or other documents, observed:

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 "7. Even though the provisions of Rules, 2006 is not considered in the earlier
cases but on taking note of definition of 'carrier' as contained in Rule 2(c) so
also the conditions of 'licence' as contained in Rule 17 of the aforesaid rules,
it is clear that these provisions apply only to those persons who are raising
the minerals or who are transporting the minerals from the place of raising
or from one place to another place and in the absence of a transit pass being
produced, action can be taken against the persons who are found to be
transporting the minerals without proper and valid transit pass. In the facts
that have come before this Court in this petition, it is not case of the State
Government that the petitioner is transporting the minerals without proper
transit pass and therefore action is being taken, for violating the Rules, 2006.
The Rules, 2006 only prohibits transportation of minerals from place of
raising or from one lace to another without a valid transit pass. In this
petition respondents have not come out with a case that they are taking
action against the petitioner for transportation of minerals without valid
transit pass. The said rules nowhere provides for recovery of royalty from
any one who is found illegally transporting the mineral. That being so, even
the Rules, 2006 will have no effect on the present case as the present case
pertains to recovery of royalty from the petitioner even though petitioners
are not shown to be mine or quarry lease holders liable to pay royalty.
8 . The question raised by the respondents in this petition is already
considered by this Court in the case of Prestige G.S. Sole (supra), and the
Division Bench while considering this question in the case of Keti
Construction Limited (supra), has considered the same. In this regard
reference may be made to Paras 5, 9, 10, 11 and 13 of the judgment
rendered by the Division Bench in the Keti Constructions Limited (supra),
wherein all these questions are considered. Nothing in the Rules, 2006
provides for production of certificate or document for payment of royalty
from a contractor and therefore, the Rules, 2006 does not make any
difference with regard to principles already laid down by this Court in the
judgment referred to hereinabove. Therefore, it has to be held that State
Government cannot insist upon production of royalty clearance certificate or
no dues certificate for finalizing the bills of the contractors. The State
Government can insist upon proof with regard to payment of royalty and
production of no dues certificate showing payment of royalty only in case of
such contractors who have been granted mining lease or quarry lease and
who have used the minerals from such quarry or mines as raw material for
execution of the work granted by the contract agreement.
9 . However, the State Government is entitled to make an enquiry from the
contractor with regard to place from where the raw material used for
execution of the work is purchased and for the said purpose can insist upon
production of documents from the contractor with regard to purchase of
these raw material, i.e., the bills pertaining to purchase of raw material and
in case the contractor is unable to produce the bills because of passage of
time, the contractor can file affidavit indicating to the State Government the
source or place from where purchase of the raw material is made and manner
in which purchase was made. On the basis of such a affidavit, the State
Government shall clear the bill of the petitioners after due verification."
12. Thus, apparent it is from above analysis that till the decision in Prabha Exim Pvt.
Ltd. v. Public Works Department, MANU/MP/0470/2015 : AIR 2015 MP 90, the
decision in M.P. Contractor Sangh, Indore (supra) and the circulars/orders passed
thereon held the field in respect of government/semi-government contractors of

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having quarry licence or purchased minor minerals from mine operators. Whereas,
M/s. Totnar Construction (supra) or that M/s. Chandrama Construction governed such
contractors engaged in government/semi-government contractors who purchased
minor mineral from open market. The dent to this legal position, however, was
caused with the passing of orders in Prabha Exim Pvt. Ltd. (supra) and M/s. RSA
Builders and Construction; wherein, placing reliance on the amendment in M.P. Minor
Minerals Rules, 1996 vide Notification No. F-19-1-2013-XII-I published in Madhya
Pradesh Gazette dated 23-3-2013 inserting Third Proviso in sub-rule (1) of Rule 68
that -- "Provided also that quarry permit holder/contractor engaged in construction
work shall obtain certificate of no mining dues to ensure payment of royalty for the
mineral used in construction work, for the mineral excavated from quarry permit area
or used by purchasing from open market. Certificate of no mining dues shall be
issued by mining officer/officer-in-charge, mining section, after verification of
documents submitted by contractor/quarry permit holder engaged in construction
work"; it is held that with the introduction of Third Proviso to sub-rule (1) of Rule
68, the regime covered by M/s. Tomar Construction Company (supra) and M/s.
Chandrama Construction (supra) is not available.
13. Whether such a definitive conclusion can reasonably be arrived at on the anvil of
Third Proviso to sub-rule (1) of Rule 68 of 1996 Rules, is the question?
14. At the cost of repetition, we reproduce the Third Proviso to sub-rule (1) of Rule
68 of 1996 Rules:
"Provided also that quarry permit holder/contractor engaged in construction
work shall obtain certificate of no mining dues to ensure payment of royalty
for the mineral used in construction work, for the mineral excavated from
quarry permit area or used by purchasing from open market. Certificate of no
mining dues shall be issued by Mining officer/officer-in-charge mining
section, after verification of documents submitted by contractor/quarry
permit holder engaged in construction work"
15. Before dwelling on the nuances of Third Proviso, we first deal with the scope of a
proviso.
1 6 . Craies in his book Statute Law (7th Edn.) while explaining the purpose and
import of a proviso opines at page 218:
"The effect of an exception or qualifying proviso, according to the ordinary
rules of construction, is to except out of the preceding portion of the
enactment, or to qualify something enacted therein, which but for the proviso
would be within it.... The natural presumption is that, but for the proviso, the
enacting part of the section would have included the subject-matter of the
proviso."
17. Odgers in Construction of Deeds and Statutes (5th Edn.) while referring to the
scope of a proviso mentioned the following ingredients:
"317. Provisos. -- These are clauses of exception or qualification in an Act,
excepting something out of, or qualifying something in, the enactment
which, but for the proviso, would be within it."
1 8 . In Shah Bhojraj Kuverji Oil Mills v. Subbash Chandra Yograj Sinha
MANU/SC/0336/1961 : AIR 1961 SC 1596: 1962 (2) SCR 159, it has been held --
"9... As a general rule, a proviso is added to an enactment to qualify or

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 create an exception to what is in the enactment, and ordinarily, 'a proviso is
not interpreted as stating a general rule..."
19. In Dwarka Prasad v. Dwarka Das Saraf MANU/SC/0505/1975 : AIR 1975 SC 1758
: 1976 SCR (1) 277, it has been held --
"16. There is same validity in this submission but if, on a fair constriction,
the principal provision is clear, a proviso cannot expand or limit it.
Sometimes a proviso is engrafted by an apprehensive draftsman to remove
possible doubts, to make matters plain, to light up ambiguous edges. Here,
such is the case...
18... If the rule of construction is that prima facie a proviso should be
limited in its operation to the subject matter of the enacting clause, the stand
we have taken is sound. To expand the enacting clause, inflated by the
proviso, sins against the fundamental rule of construction that a proviso
must be considered in relation to the principal matter to which it stands as a
proviso. A proviso ordinarily is but a proviso, although the golden rule is to
read the whole section, inclusive of the proviso, in such manner that they
mutually throw light on each other and result in a harmonious construction."
20. There are catena of decisions laying down law as to scope of proviso that it
intends to take out a part of the main section for special treatment. It is not expected
to enlarge the scope of the main section. We do not intend to multiply the
authorities, except as summed up in S. Sundaram Pillai; Etc v. V.R. Pattabiraman Etc
MANU/SC/0387/1985 : AIR 1985 SC 582:--
"43... To sum up, a proviso may serve four different purposes:
(1) qualifying or excepting certain provisions from the main
enactment;
(2) it may entirely change the very concept of the intendment of the
enactment by insisting on certain mandatory conditions to be
fulfilled in order to make the enactment workable;
(3) it may be so embedded in the Act itself as to become an integral
part of the enactment and thus acquire the tenor and colour of the
substantive enactment itself; and
(4) it may be used merely to act as an optional addenda to the
enactment with the sole object of explaining the real intendment of
the statutory provision.
44. These seem to be by and large the main purport and parameters of a
proviso."
21. In the case at hand, Third Proviso to sub-rule (1) of Rule 68 of 1996 Rules, has
to be understood on the touchstone of the law as to proviso noted above.
22. Sub-rule (1) of Rule 68 of 1996 Rules stipulates --
"68. Permission for removal of minor minerals for Central and State
Governments and their undertakings. -- (i) The concerning Officer incharge,
Mining Section shall grant permission for extraction, removal and
transportation of any minor mineral for any specified quarry or land which
may be required for the works of any department and undertaking of the

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 Central (Government of State Government. Such permission shall only be
granted to either the concerned department authority or its authorised
contractor on furnishing proof of award of contract.
(ii) Notwithstanding anything contained in clause (i) above, in case of roads
under construction or to be constructed under the Prime Minister Rural Road
Scheme, the permits of murrum shall be given by the General Manager,
Madhya Pradesh Rural Road Development Authority to the authorised
contractor and prior to issuing of such permit, no objection from Mining
Revenue and Forest Department shall be obtained by them and copy of the
permit issued shall be endorsed to these departments and the General
Manager, Madhya Pradesh Rural Road Development Authority shall obtain
Transit Pass Book in advance from office of the Collector and he shall issue
the transit pass to contractor and shall furnish information regarding transit
pass issued to the contractors and quantity of the minor mineral excavated in
every three months to the concerned Collector and shall ensure payment of
royalty on the basis of quantity of minor mineral excavated and the amount
of royalty shall be deposited by the General Manager, Madhya Pradesh Rural
Road Development Authority every year on 30th June, 30th September, 31st
December and 31st March in the receipt head prescribed in sub-rule (3) of
rule 10."
2 3 . Provisions contained in Rule 68 of 1996 Rules are in addition to stipulations
contained in Chapter II of these Rules whereunder, sub-rule (1) of Rule 4 provides
that "no person shall undertake any mining operation in area except under and in
accordance with the terms and conditions of a trade quarry or quarry lease granted
under these Rules". Sub-rule (2) of Rule 4 provides for that "no trade quarry or
quarry lease shall be granted other than in accordance with the provisions of 1996
Rules". In addition thereof, concerning Officer incharge, Mining is authorized to grant
permission for extraction, removal and transportation of any minor minerals from any
specified quarry or land which may be required for the works of any department on
undertaking of the Central Government or State Government. However, such
permission is restricted to either the concerned department authority or its authorised
contractor, in which case the contractor will have to furnish the proof of award of
contract. Clause (ii) of sub-rule (1) of Rule 68 of 1996 Rules carves out an exception
to clause (i) when a road is under construction or to be constructed under the Prime
Minister Rural Road Scheme or other Govt. department, different procedure is carved
out.
CONCLUSION
24. Thus, whether it is under clause (i) or clause (ii) of sub-rule (1) of Rule 68 of
1996 Rules, the fact remains that the same relates to contractor engaged in
Government work of the nature stipulated therein and are given permission for
extraction, removal and transportation of any minor mineral and not the contractors
who though engaged in the work of any department and undertaking but purchases
the minor mineral from open market. This aspect gets clarified from the definition of
"Contractor" as contained under clause (xvi-b) of Rule 2 of 1996 Rules, which means
a person who holds a "trade quarry". Accordingly, quarry permit holder/contractor
engaged in construction as find mention in Third Proviso is the contractor, who has
been so permitted under clause (i) and (ii), as the case may be. Though this proviso
contains an expression "or used by purchasing from open market"; however, since no
such class of contractor engaged in work of any department and undertaking, who is
not authorised under clause (i) or (ii) of sub-rule (1) of Rule 68, completes such
work by purchasing minor mineral from open market, is created under these clauses,

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 we decline to accept the contentions on behalf of the respondent that Third Proviso
creates a substantive class of contractors engaged in works of Govt. department and
undertaking. In view whereof, the regime of M/s. Tomar Construction Company
(supra) and M/s. Chandrama Construction Company (supra) does not get obliterated,
even with insertion of Third Proviso to sub-rule (1) of Rule 68 of 1996 Rules.
25. Even if for the sake of argument if the contentions of State Government Counsel
is accepted that the contractor, which find mentions in Third Proviso, would include
the contractor engaged in work of Government department and undertaking who
purchase minor minerals from open market to complete such work, no provision in
the Act of 1956 or the Rules and Regulations made thereunder including the Rules of
1996 and 2006 has been commended at, having control over such retails traders
operating in open market. There being no such provision regulating open market it is
beyond comprehension that, the Mining Officer/Officer-in-Charge, Mining Sector will
have any document available with him for verification. On the contrary, the discretion
given to the Competent Authority vide orders in M/s. Tomar Constructions (supra),
M/s. Chandrama Construction, Prashant Singh Bhadoriya (supra) and M/s. Trishul
Construction (supra) to shift the onus on the contractor engaged in the works of the
Government and undertaking who claims refund of royalty on the ground of having
purchased from the open market to establish the source. In case if he fails, the
Government not only can deny the refund; simultaneously, can take action against
such contractor under law, as in such cases, it can legally be inferred that the minor
mineral is obtained through illegal source. These powers would be in addition to the
statutory powers.
26. Considered thus, we are of the view that the opinion expressed by the Division
Bench at Indore in Prabha Exim Pvt. Ltd. (supra) and the Division Bench at Gwalior in
M/s. RSA Builders and Construction, W.P. No. 1547/2016 that the decisions in M/s.
Narsingh Construction Company v. State of M.P., W.P No. 4658/2012 decided on 13-
4-2012 and M/s. Chandrama Construction Company v. M.P. Rajya Krishi Vipran
Sangh, W.P No. 1361/2009 and M.P. Contractors Sangh, Indore v. State of M.P.
MANU/MP/0021/1987 : 1987 JL J 743, M.P. Audhyogik Kendra Vikas Nigam v. Abrar
Construction Company and ors., MANU/MP/0027/2005 : 2005 Arb WL J 379 (MP), Keti
Construction Ltd. v. State of M.P., MANU/MP/0181/2007 : 2007 (3) MPHP 433 (DB) :
AIR 2007 (NOC) 2586 (MP) and Tomar Construction Company v. State of M.P.,
MANU/MP/0494/2007 : 2008 (2) MPL J 40, have lost their binding force, is not a
correct view. On the contrary, on interpreting the Third Proviso to sub-rule (1) of
Rule 68 read with the definition of 'Contractor' under Rule 2(xvi-b) with the
substantive provisions, we are of the view that whereas the Third Proviso would
govern the class of contractors, which find mention in clause (i) or/and (ii), as the
case may be, of sub-rule (1) of Rule 68 and the rest of the contractors engaged in
the work of the government and undertaking who purchase minor minerals from open
market be governed by the decisions in M/s. Narsingh Construction Company v. State
of M.P., W.P No. 4658/2012 decided on 13-4-2012 and M/s. Chondroma Construction
Company v. M.P. Rajya Krishi Vipran Sangh, W.P No. 1361/2009 and M.P. Contractors
Sangh, Indore v. State of M.P. MANU/MP/0021/1987 : 1987 JL J 743, M.P. Audhyogik
Kendra Vikas Nigam v. Abrar Construction Company and ors., MANU/MP/0027/2005 :
2005 Arb WL J 379 (MP), Keti Construction Ltd. v. State of M.P., MANU/MP/0181/2007
: 2007 (3) MPHT 433 (DB) : AIR 2007 (NOC) 2586 (MP) and Tomar Construction
Company v. State of M.P. MANU/MP/0494/2007 : 2008 (2) MPLJ 40
27. Since the decisions in Prabha Exim Pvt. Ltd. (supra) and M/s. RSA Builders and
Construction (supra) do not lay down correct law, they are overruled.
28. We are of the considered opinion that the contractors engaged in Government

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 and Semi-Government organizations, using minor minerals for civil work purchased
from the open market must be regulated by the dispensation envisaged in this
decision and would be obliged to follow the terms delineated hereunder:--
"(1) The petitioner shall either furnish the bills of purchase of minerals from
authorised dealer or an affidavit disclosing the source from where petitioner
purchased minerals, which were used in the construction work.
(2) The respondents authorities if are satisfied with the bills produced by the
petitioner may process the bills, but in case of any doubt, respondents
authorities may insist the petitioner to file an affidavit in support of its
contention in respect of purchase of minerals from the open market by the
bills.
(3) In case the petitioner is unable to produce the bills for the purchase of
the minerals or the royalty receipt in this regard, respondents authorities
shall insist the petitioner to file an affidavit pointing out specifically the
manner in which minerals were purchased, disclosing particulars of the
person from whom the minerals were purchased. On filing of the affidavit,
the authorities shall be within their right to verify the aforesaid facts. They
can also verify the facts from the record of the Mining Department of the
concerned district.
(4) On completion of the aforesaid process, the respondents shall clear the
bills of the petitioner submitted in connection with the execution of the
works contract and the amount of royalty, if any recovered from the bills,
shall be released in favour of the petitioner.
(5) In case, the authorities are not satisfied with the contention of petitioner
or on verification, facts are not found correct then they shall pass a reasoned
order in rejecting the contention of petitioner.
(6) If the petitioner fails to produce the bills/affidavit as indicated
hereinabove, the petitioner may represent his case to the concerned authority
showing his inability to produce the bills or affidavit and it shall be for the
State Government or authority to consider the representation and pass a
suitable order in that regard within two months from the date of receipt of
the representation.
(7) or any such "additional" terms as may be directed by the Court in the
given case or from time to time."
Having answered the reference, let these writ petitions be placed before appropriate
Division Bench for its consideration and orders.
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