Authorities Not Expected To Grant Quarrying Lease To A Person From Whom Amounts Are Due To Govt : Kerala High Court

The Kerala High Court has observed that the authorities are not expected to grant or renew a quarrying lease to a person from whom amounts are due to the government, even if there is no express prohibition in the rules against such grant or renewal.

A single bench of Justice PB Suresh Kumar also urged the Government to consider appropriate amendments to the Rules to avoid grant of quarrying lease to persons owing money to the government.

Even if the recovery of money is stayed by interim orders of the court, the competent authority must insist on payment of the entire dues while granting renewal or a fresh grant of a quarrying lease.

"...even if there is no interdiction in the Rules to renew an existing quarrying lease or grant a fresh quarrying lease in favour of a person from whom amounts are due to the Government and even if realisation of the dues is interdicted by way of interim orders of the court, the competent authority is not expected to make such grants without insisting payment of the entire dues for the purpose of granting renewal or a fresh grant. It is for the Government to take appropriate measures to prevent such occurrence in future, if necessary, by introducing appropriate amendments to the Rules", the bench observed

The bench made this significant observation in the case Plakkattu Granite Industries(P) Ltd v State of Kerala.

The petitioner had filed a writ petition in the High Court challenging a demand notice issued by the Director of Mining and Geology calling upon the petitioner to pay a sum of Rs.5.68 crores towards price, royalty and other dues in respect of the granite stones quarried by the petitioner unauthorisedly beyond the limits of the land over which they secured the quarrying lease.

The Court observed that it will not be justified in interfering with the demand notice by exercising powers under Article 226 of the Constitution.

The first demand notice was issued against the petitioner in 2000, by the District Geologist for the recovery of Rs 5.68 Crores. That demand notice was ultimately set aside on the ground that the Geologist had no jurisdiction to issue the same. Subsequently, in 2012, the Director of Mining and Geology issued a demand notice for the very same amount of Rs 5.68 crores.  In 2019, the Tahsildar issued recovery notice under the Revenue Recovery Act with respect to the demand made by the Director of Mining and Geology. This led the petitioner to approach the High Court.

The Court expressed surprise at the fact that no steps were taken for the recovery of an amount of such a magnitude until 2018.

"...even while steps are being taken by all other Government Departments for realisation of even paltry sums by recourse to proceedings under the Revenue Recovery Act, steps have not been taken by the officials concerned in the Mining and Geology Department for realisation of the hefty sum of Rs.5,68,58,560/- due from the petitioner in terms of Ext.P6 notice till February 2018. Abstinence from initiating steps for realisation of amounts of such a magnitude, according to me, would not be possible without the involvement of the concerned officers in the Department", the judgment said.

Natural resources constitute public property

The judgment further observed that  natural resources constitute public property, and the State is empowered to distribute the same only by ensuring that the distribution is not detrimental to public interest. Reference was made to the decisions in State (NCT of Delhi) v. Sanjay, (2014) 9 SCC 772 and Kasturi Lal Lakshmi Reddy, Represented by its Partner Kasturi Lal, Jammu and Ors. v. State of Jammu and Kashmir and Ors., (1980) 3 SCR 1338 in this regard.

"It is trite that while distributing the natural resources, the Government must act as a prudent businessman and where the State is simply selling a produce, the State must endeavour to obtain the highest price. No part of the natural resources can be dissipated for private exploitation. Each bit of natural resource expended must bring back a reciprocal consideration to the State. Whenever Government or the authorities get less than the full value of the asset, the country is being cheated [See Natural Resources Allocation, In re, Special Reference No.1 of 2012, (2012) 10 SCC 1].

I do not think that a prudent business man would grant a quarrying lease to a person from whom substantial amounts running to several crores are due to him, without realizing the dues. As noted, when sizable amounts running to several crores of rupees are due from the petitioner, the officers concerned of the Department have granted a fresh quarrying lease to the petitioner without insisting settlement of the dues to the Government, that too, without the concurrence of the State Government", the Court said.

The Court further directed that a copy of the judgment be forwarded to the Chief Secretary of the State Government.

Click here to read/download the judgment