Excavation Of Ordinary Earth For Construction Of Building Purposes Would Not Attract Levy Of Royalty And Penalty Under The Provisions Of The MLR Code, 1966: Bombay High Court

The Petitioners have challenged two show cause notices, both dated 29.01.2021, hearing notice dated 30.06.2021, two final notices, both dated 23.08.2021 issued by the Tahasildar, Shahapur, demanding payment of royalty and penalty of Rs.1,07,12,000/- and Rs. 5,71,35,104/- and order dated 21.10.2021 calling upon the Petitioners to deposit an amount of Rs.1,09,18,000/- under the provisions of Section 48(7) of the MLR Code, 1966. The Respondent No.2 has issued the impugned notices and passed the impugned order against the Petitioners for extraction of minor minerals unauthorisedly.

In 2013, Petitioners desired to develop their property for residential purpose and submitted the proposal and building plans to the Collector - Thane. The Collector - Thane forwarded the proposal to the Town Planning Department, Thane for approval. On 16.04.2013, the Deputy Director of Town Planning, Thane approved the building plans submitted by the Petitioners and granted permission for construction of residential buildings on the said property. The Petitioners registered their project of development on the said property under the Real Estate (Regulation and Development), Act and have obtained all necessary permissions in accordance with law. On 29.01.2021, the Tahasildar, Shahapur issued show cause notice for unauthorised excavation of 1030 brass of minor minerals on the property without seeking prior permission from the Competent Authority. Petitioners were called upon to submit their explanation alongwith documentary evidence within 7 days as to why the Petitioners were not liable to pay an amount of Rs. 1,07,12,000/- towards royalty and penalty for the unauthorised excavation, failing which necessary steps would be taken under the provisions of Section 48(7) of the MLR Code, 1966. On the same date i.e. 29.01.2021 the Tahasildar, Shahapur issued an identical show cause notice as to why for the same reasons the Petitioners were not liable to pay an amount of Rs. 5,71,35,104/- towards royalty and penalty for the unauthorised excavation, failing which necessary steps would be taken under the provisions of Section 48(7) of the MLR Code, 1966.

Petitioners filed two separate replies stating that all necessary permissions had been obtained for carrying out development on the said property and in the process of development extraction of minor minerals was done while laying the foundation of the buildings and the extracted minor minerals were utilized on the said property for filling up the excavated portions after completing the foundation of the buildings and hence in view of the provisions under the amended Rule 46 of the Maharashtra Minor Mineral Extraction (Development and Regulation) (Amendment) Rules, 2015 ("the said Rules"), no royalty was payable by the Petitioners.

Regardless, on 21.10.2021, the Tahasildar, Shahapur issued an order rejecting the replies filed by the Petitioners and directed them to deposit a sum of Rs.1,09,18,000/- within 7 days towards royalty and penalty for unauthorised excavation of 1030 brass of minor minerals. The Petitioners initiated writ proceedings and relied upon the following judgments in support of the Petitioners' case; i. Promoters and Builders Association of Pune Vs. State of Maharashtra., (2015) 12 SCC 736; ii. Judgment and order dated 09.12.2021 in the case of P.S.C. Pacific Vs. The State of Maharashtra and Ors., Writ Petition No.7390 of 2010, passed by this Bench.

The bench noted that on 11.05.2015, the State Government notified an amendment to the Maharashtra Minor Mineral Extraction (Development and Regulation) (Amendment) Rules, 2015 by introducing a proviso to Rule 46(a)(i), inter alia, providing that no royalty shall be required to be paid on earth which is extracted while developing a plot of land and if utilized on the very same plot for land levelling or any work in the process of development of such plot. The bench observed that in the present case the excavated material has been used by the Petitioners for the purposes of filling up and levelling; digging of the earth is inbuilt in the course of building operations; the activity so undertaken, therefore, cannot be characterized as one of excavation of minor minerals as contemplated under the Mines and Minerals (Development and Regulation) Act, 1957.

The bench referred to the case of BGR Energy System Ltd, Khaparkheda Vs. Tahsildar, Saoner, 2018(1) Mh.L.J. 332, wherein the Petitioner had challenged the order of the Tahsildar directing the Petitioner to pay royalty and penalty for illegal excavation of earth while executing the work of construction of a thermal power project at Khaparkheda. This Court after following the decision in the case of Promoters and Builders Association of Pune (supra), quashed and set aside the order of the Tahsildar holding, inter alia, that use of the excavated earth to fill up the dug pits and any construction of the project did not fall within the ambit of the Notification dated 03.02.2000 and thus, the Tahsildar could not have passed the order under Section 48(7) of the MLR Code, 1966.

While quashing the impugned notices and order, the bench stated that "Respondents have merely proceeded on the premise that the very excavation of ordinary earth by the Petitioners is subject to levy of royalty dehors the use for which it was put to. However, in view of the ratio of the judgment of the Supreme Court in the case of Promoters and Builders Association of Pune (supra) and followed by us in the case of P.S.C. Pacific V/s. State of Maharashtra (supra), we are not inclined to accept the submissions made on behalf of the Respondent(s)."

Case Title: M/s. Royale Urbanspace and Ors. v. State of Maharashtra and Anr.

Citation: 2022 LiveLaw (Bom) 77