The Bombay High Court last Thursday, quashed and set aside an order by the Tahsildar, Thane imposing a penalty of Rs.1.47 crores and Royalty of Rs.49.18 lakhs aggregating to Rs. 1.96 crores on an Infrastructure Company that was the successful bidder for a project to build an underground sewerage pipeline network in Thane.

Division bench of Justice BP Colabawalla and Justice Somasekhar Sundaresan observed that once Earth is excavated to implement public works projects that entails re-filling the same plot of land in the course of the development work, that would not entail payment of royalty under the Maharashtra Land Revenue Code, 1961.

However, the bench also noted that if there is any evidence of commercial exploitation of any part of such excavated earth, whether by way of sale in the market or sale for building and construction on some other land, such component of excavated earth would constitute a “minor mineral” and the provisions of the MLRC would apply accordingly.

Case Background

A contract for laying pipelines was awarded to the petitioner in February 2009. Under this contract, the petitioner was required to dig and excavate the earth; store the excavated earth in a designated spot; lay reinforced concrete pipes for carrying the sewerage; thereafter refill the land with the excavated earth; and dump the excess soil in a location designated by the TMC.

In 2011, one of the respondents in the case filed an application under the Right to Information Act, 2005 seeking information about the earth excavated by the petitioner and thereafter made complaints about alleged violation of the provisions of the MLRC on account of non-payment of royalty for excavation of “minor minerals” (allegedly the earth removed for purposes of laying the sewerage pipeline);

Eventually, on October 13, 2011, the Circle Officer of Thane issued a notice to the petitioner stating that approximately 21,222 brass of earth was excavated without authority, and consequently asked the petitioner to show cause as to why proceedings under Section 48(7) of the MLRC must not be initiated. (A “brass” is a unit of measure for volume of mineral excavated – essentially, 100 cubic feet constitutes 1 “brass”).

Although, in October the petitioner wrote to the revenue officials asserting that it was merely implementing a public works project, and that the excavated earth was being used for refilling the trenches. The letter also stated that the estimation of the earth excavated appeared to be erroneous. Even still, in November, 2011, the Tahsildar, Thane, passed an order imposing the penalty on the petitioner along with royalty payable for the earth excavated.

Judgment

At the very outset, the bench examined Section 48(7) of MLRC and a recent judgment of the Supreme Court in Promoters and Builders Association of Pune vs. State of Maharashtra. Court noted that in the said case, the position of the Nuclear Power Corporation resembles that of the petitioners in this case-

“NPC dug the earth to repair and widen a water channel whereas the Petitioner dug the earth to lay a portion of sewerage pipeline network in Thane. The need for digging up the earth in order to lay the pipeline and to use the very same excavated earth to refill the very same land after laying the pipeline was also set out in the tender document, based on which the Petitioner acted as a contractor for the sewerage network project. The Petitioner was meant to dispose of the excess soil at a designated spot instructed by the TMC. There is no evidence of the Petitioner having put the excavated earth to commercial use.”

While allowing the writ petition, the Court noted that the onus of bringing home a charge of commercial usage of excavated earth in order to charge royalty would be on the revenue officials alleging such usage. A prima facie case to show commercial use of excavated earth in the course of implementing public work projects would need to be brought to bear by the authorities alleging such commercial use of excavated earth.

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