Hindalco Industries Limited V. Union of India and State of Jharkhand

WPC/153/2007

AI Insights

The case involves M/s. Hindalco Industries Limited, the petitioner, challenging the demand of royalty on vanadium sludge, a byproduct from the processing of bauxite ore, under the Mines and Minerals (Development & Regulation) Act, 1957. The petitioner argued that the vanadium sludge, not being a mineral and arising post-processing, should not attract royalty, especially since royalty was already paid on the bauxite ore. The State of Jharkhand contended that the vanadium sludge, being sold for profit, is subject to royalty. The court set aside the interim order demanding royalty, directing the Certificate Officer to reconsider the matter.

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 813577 (HC-JHARKHAND)
• Appeal Type: Others
• Pronouncement Date: 20-12-2012
• Assessment Year: misc
• Other Referred Cases: Ichchapur Industrial Cooperative Society Ltd.-Vs.- Competent Authority, Oil & Natural Gas Commission, V.P.Pithupitchai and another-Vs.-Special Secretary to the Govt. of T.N., Hindustan Copper Limited-Vs.- State of Bihar & others, Som Datt Builders Limited -Vs.- Union of India, Banarsi Dass Chadha and Brothers-Vs.- Lt. Governor, Delhi Administration & others, National Mineral Development Corporation Ltd.-Vs.- State of M.P. and another, Central Coal Fields Ltd. - Vs.- State of Jharkhand & others
• Laws Referred To: Constitution of India, Mineral Concession Rules, 1960, Mines and Minerals (Development & Regulation) Act, 1957, Mines Act, 1952, Central Excise Tariff Act, 1985, Bihar & Orissa Public Demand Recovery Act, 1914
• Result in Favour of: Partly Allowed
• Court: HIGH COURT
• Department Lawyers: ANIL SINHA; SHAMIM AKHTAR; ARVIND MEHTA; BHUPAL PRASAD; MD FAIJUR RAHMAN
• Assessee Lawyers: DIPANKAR GUPTA; SHAHID RIZVI; ANANDA SEN; RANJAN KUMAR
• Keywords: Double Levy; Jurisdiction; Mineral; Royalty; Vanadium sludge; Certificate proceedings
• Section: 9; 226; 3(a); 69(2); 2(jj); 64(B)(2); 64(C)

Judgement Text

"1 W.P. (C) No. 153 of 2007 --- An application under Article 226 of the Constitution of India ---- M/s. Hindalco Industries Limited ...Petitioner -Versus- Union of India & others ……..Respondents. --- P R E S E N T HON’BLE MR. JUSTICE APARESH KUMAR SINGH --- For the Petitioner : M/s. Dipankar Gupta, Sr. Advocate, Shahid Rizvi, Ananda Sen and Ranjan Kumar, Advs. For the State of Jharkhand : M/s. Anil Kumar Sinha, A.G. and Shamim Akhtar, S. C. Mines, Arvind Kumar Mehta, J.C. to S.C.Mines & Bhupal Krishna Prasad, J.C. to S.C.Mines. For the Respondent no. 1 : Mr. Md. Faijur Rahman, C.G.C., U.O.I. --- C.A.V.ON. 04.10.2012 PRONOUNCED ON. 20/12/2012 Aparesh Kumar Singh, J The petitioner has sought for quashing of the entire certificate proceedings being Certificate Case no. 17 GR/2006-07 pending before respondent no. 4, the Certificate Officer (Mines), South Chhotanagpur Anchal, Doranda, Ranchi after calling for the records of the same from the concerned office of respondent no. 4. The petitioner has also challenged the order dated 18th December, 2006 being order no. 579/DDM passed by the Certificate Officer (Mines) in the said case whereby he has kept the certificate case pending while directing the petitioner to deposit 50% of the certificate amount with respondent no. 2 and further directed the petitioner to furnish a Bank Guarantee for the rest 50% of the certificate amount. The petitioner has also sought for a declaration that in view of the Mineral Concession Rules, 1960 and the Mines and Minerals (Development & Regulation) Act, 1957, (hereinafter referred as MMDR Act, 1957), he is not liable to pay royalty on vanadium sludge which comes out as impurities while processing Alumina at their plaint at Renukoot, Uttar Pradesh. Consequently, the petitioner has also sought for a direction holding the entire certificate proceeding as illegal and without jurisdiction. The brief facts of the case as stated on behalf of the petitioner are being stated hereunder: The petitioner, M/s. Hindalco Industries Ltd. holds mining leases in the district of Gumla, Lohardaga and Latehar in the State 2 of Jharkhand for mining Bauxite. Bauxite Ore is found 2 to 6 meters below the thick soil and after removing the overburden it is mined in run of mine condition (ROM) and is recovered. According to the petitioner, he pays full royalty on the mined Bauxite to the State of Jharkhand at the rate prescribed under M.M.D.R., Act, 1957. The entire Bauxite Ore in ROM condition after payment of appropriate royalty is transported by the petitioner to its processing plant at Renukoot Sonebhadra (U.P.). As per Indian Bureau Mines, the major chemical constituent of mineral Bauxite is AL203 (Alumina) and other chemical constituents are compounds of silicon, iron and titanium. There are other small quantities of chemical compounds called contaminants which includes V205 (vanadium pentoxide), amongst many other contaminants of which the presence of vanadium pentoxide is less than 1%. At the alumina plant of the petitioner in Renukoot, Bauxite Ore is processed by a process known as “Bayer's Process”. It is stated that in the first stage in the said process some chemicals are separated in the form of “red mud”. At the next stage alumina is extracted leaving behind impurities in sludge form small quantities of V205 “vanadium pentoxide” or sludge of vanadium pentoxide” which in common parlance is referred to as vanadium sludge or sludge of vanadium. Therefore, according to the petitioner, vanadium sludge comes into an existence for the first time at the Hindalco Processing plant at Renukoot as a waste product containing impurities and is not mined as such. The petitioner has relied upon a report of the Jawaharlal Nehru Aluminum Research Development and Designs Centre, an Autonomous Body under Ministry of Mines, Government of India, that vanadium sludge is not a mineral. The said vanadium sludge is then sold by Hindalco. It is the case of the petitioner that in the year 2002 the respondents authorities of the State of Jharkhand demanded royalty on vanadium sludge. The same was challenged before the Allahabad High Court which stayed the demand on payment of 50% and a Bank Guarantee of the balance 50% which the petitioner complied under protest. Subsequently, further interim demands were also raised and complied under protest. It is stated that the petitioner itself furnished information regarding quantities of vanadium sludge produced and sold by Hindalco and the sale price thereof on being asked by the respondent authorities. 3 The present cause of action arose on account of a demand of royalty in the year 2006 on vanadium sludge at the rate of 10%, calculated as a residuary item in the Second Schedule to 1957 Act amounting to Rs. 48,48,245.00 with interest. It is stated on behalf of the petitioner that the Respondents-State has also categorically stated in its counter affidavit that the demand was raised on vanadium sludge extracted and sold at the processing plant of Hindalco at Renukoot in U.P. which is also evident from the demand made. The petitioner in the aforesaid background has raised the contention in the present writ application that the respondents are not entitled to raise demand of royalty on vanadium sludge, which is obtained after processing of Bauxite and recovery of alumina. Learned Senior Counsel for the petitioner, Mr. Dipankar Gupta has relied upon the provisions of the M.M.D.R Act, 1957 as also the provisions of Mines Act, 1952, to explain the concept of royalty and the meaning of the definition of mineral. As per the petitioner, royalty is charged under Section 9 of the Act, 1957 on minerals, which is quoted hereunder: “Section 9: Royalties in respect of mining leases.- (1) The holder of a mining lease granted before the commencement of this Act shall, notwithstanding anything contained in the instrument of lease or in any law in force at such commencement, pay royalty in respect of any [mineral removed or consumed by him or by his agent, manager, employee, contractor or sub-lessee] from the leased area after such commencement, at the rate for the time being specified in the Second Schedule in respect of that mineral.” “Section 9(2): The holder of a mining lease granted on or after the commencement of this Act shall pay royalty in respect of any mineral removed or consumed by him or by his agent, manager, employee, contractor or sub- lessee from the leased area at the rate for the time being specified in the Second Schedule in respect of that mineral.” The petitioner also relies upon Section 9(2) in view of the fact that the lease of the petitioner was granted after commencement of 1957 Act. By referring to the provisions of Section 9, it is submitted that royalty is to be charged upon any mineral removed or consumed from the leased area as per the rates prescribed in the Second Schedule of the Act, which is chargeable only on mineral. It is submitted that all items in the Second Schedule are minerals either in metal form or ore form. It is further submitted that even in order to fall under the residuary Item no. 51 the substance has to be mineral, if the material is not mineral then no royalty can be levied on the same. In order to substantiate the aforesaid contention, learned counsel for the petitioner submits that vanadium sludge is not a mineral and royalty cannot be charged on the 4 same. For the aforesaid purpose, learned counsel for the petitioner has relied upon the provisions of Mines Act, 1952. Section 2(jj), which is being quoted hereunder: “Section 2(jj): “minerals” means all substances which can be obtained from the earth by mining, digging, drilling, dredging, hydraulicing, quarrying or by any other operation and includes mineral oils (which in turn include natural gas and petroleum)” Section 3(a) of 1957 Act, provides that “mineral” includes all minerals except mineral oil. It is further submitted that the definition of mineral as provided in the Mines Act, 1950 which is a cognate Act will apply to the definition of minerals in 1957 Act as it is an inclusive definition. It is further submitted that mineral is a substance which is obtained from the earth and has been judicially interpreted. Learned counsel for the petitioner has relied upon the judgments rendered by Hon’ble Supreme Court of India in the case of Ichchapur Industrial Cooperative Society Ltd.-Vs.- Competent Authority, Oil & Natural Gas Commission and another reported in 1997(2) SCC 42 Para 20 and in the case of V.P.Pithupitchai and another-Vs.-Special Secretary to the Govt. of T.N. reported in 2003(9) SCC 534 Paras 10 and 11 thereof. According to the petitioner, since mineral is a substance which is obtained from the earth by mining and they are found on or in the earth crust and forms part thereof, vanadium sludge is not a mineral since it does not form portion of earth's crust and cannot be recovered by a process of mining, as such no royalty can be imposed thereupon and the demands are illegal and bad. The second limb of the petitioner’s argument is that since royalty has been paid to the Respondent-State of Jharkhand on the entire Bauxite Ore mined before removal to Renukoot in U.P., the levy of royalty on the residuary material after processing of Bauxite will amount to double levy. In support of the aforesaid contention, it is also submitted that since vanadium sludge is obtained as residuary mixture of impurities and contaminants after processing at Renukoot in the petitioner’s company in U.P. beyond the leased hold area, the respondents authorities of the State of Jharkhand cannot demand royalty on the vanadium sludge, as the petitioner has been paying royalty on the entire ROM Bauxite, which means on all the constituents of Bauxite. Any levy on constituents of Bauxite will amount to double levy on the same mineral. It is further submitted that 5 since the constituents/contaminants of the ROM Bauxite Ore are separated at a plant outside the leased area at Renukoot in U.P. it is legally impermissible to demand royalty on such constituents such as vanadium sludge. Therefore, according to the petitioner, the demand on a part when the whole has already been subject to levy is unsustainable in law. The third ground to assail the demand of royalty in the impugned certificate proceedings are that the impugned levies are contrary to the express provisions of Rule 64(B)(2) of the Minerals Concession Rules, 1960. Rule 64(B)(2) is being quoted hereunder: “Rule 64(B) (2): Charging of royalty in case of minerals subjected to processing.- (1) In case processing of run-of-mine is carried out within the leased area, then, royalty shall be chargeable on the processed mineral removed from the leased area. 2. In case run-of-mine mineral is removed from the leased area to a processing plant which is located outside the leased area, then, royalty shall be chargeable on the unprocessed run-of-mine mineral and not on the processed product.” It is submitted in support of the aforesaid ground that it is the admitted position in the present case that ROM Bauxite is removed from the leased area in Jharkhand to a processing plant located outside the leased area i.e. in U.P. and vanadium sludge is a constituent of the processed product. Therefore, as per Rule 64(B)(2) royalty cannot be charged on the vanadium sludge as such the demand of royalty is bad and illegal. Learned senior counsel for the petitioner in support of his challenge to the impugned proceedings also submitted that vanadium sludge is a product classified under the heading “Allied and chemical industries” of the Central Excise Tariff Act, 1985 and is not a mineral and as such royalty cannot be levied. As per the petitioner, under Chapter 28 of the Central Excise Tariff Act, the Central Excise Board has clarified that vanadium sludge is classifiable under the Heading no. 2841.90 of the said Act as Salt of Oxometallic or Peroxometallic Acid. Learned counsel for the petitioner in support of the aforesaid contention submitted that vanadium sludge cannot be termed as a mineral because it is a complex salt of sodium vandate, sodium phosphate, sodium fluoro-vanadate etc. and part of the oxalate. Relying upon the expert opinion of the Jawaharlal Nehru Aluminum Research Development and Designs Centre, Ministry of Mines, it is submitted that Bauxite is not the natural ore mineral for vanadium. As such vanadium sludge is a manufactured product and excise duty is paid on it and therefore no demand of royalty can be raised on vanadium sludge. 6 Learned counsel for the petitioner has also submitted that such raising of demand of royalty may lead to various inconsistencies such as when Bauxite Ore is sold by the petitioner on ROM condition to a purchaser, who takes it away to processing plant outside the State. In such circumstances no royalty can be levied on the purchaser. However, since the Bauxite Ore contains several chemicals and contanimus, it is inconceivable that royalty can be levied on all other components separately. Learned Advocate General appearing on behalf of the State of Jharkhand has raised serous objection to the challenge to the certificate proceedings by the petitioner. Learned Advocate General has submitted that the present case is covered by the decision of the Hon’ble Patna High Court in the case of Hindustan Copper Limited-Vs.- State of Bihar & others in C.W.J.C. No. 2727 of 1996 (R). It is submitted that in the said case, several other minerals like gold, silver, nickel, solenium and tellurium were extracted along with copper by the petitioner-M/s. Hindustan Copper Limited from the leased area granted to it. Hindustan Copper Ltd. had challenged the levy of royalty on mineral such as solenium and tellurium in the aforesaid case before the Patna High Court. The Division Bench of the Patna High Court rejected the contention of the said company that no royalty can be demanded on the aforesaid minerals on the ground that they are independent minerals and no license of mining is granted to extract them independently. It was held that the said Company was paying royalty on gold, silver and nickel, which were extracted with copper as per Second Schedule of the M.M.D.R Act and/or all other minerals, which were not specified in the said Schedule are covered under Item no. 52 residuary item. Therefore, the demand of royalty of solenium and tellurium has to be sustained. In the instant case, according to the learned counsel for the State the royalty is being charged on the vanadium under the residuary Clause of Item no. 52 at the rate of 10% although subsequently in the year 2009 by virtue of an amendment to the Second Schedule Vanadium has been independently included as a mineral at Entry 47. According to the learned counsel for the Respondents-State under the definition of Section 3(a) of the Act, 1957 minerals includes all minerals except minerals oils and under Rule 69(2) of Mineral Concessions Rules, 1960 Vanadium has been declared to be a associate mineral. It is the contention of the Respondents-State that the petitioner has categorically 7 admitted in its statements made in reply that vanadium sludge is obtained during processing of Bauxite for extraction of aluminum and sold by the petitioner. Learned counsel for the Respondents-State, therefore, submits that the petitioner has himself admitted that vanadium sludge is being sold for profit and as such anything which is extracted from the earth for profit is subject to payment of demand of royalty to the owner of the lease i.e. the Sate. Learned counsel for the respondent has relied upon the definition of mineral as given in Stroud's Judicial Dictionary in support of the aforesaid contention. Learned Advocate General has relied upon the judgment delivered by Hon'ble Supreme Court of India in the case of Som Datt Builders Limited -Vs.- Union of India reported in (2010) 1 SCC 311 paragraphs 5 to 12 and 23 and the judgment in the case of M/s. Banarsi Dass Chadha and Brothers-Vs.- Lt. Governor, Delhi Administration & others reported in 1978(4) SCC page 11. Based upon the aforesaid decision of the Hon'ble Supreme Court of India, it is submitted that word “Mineral” has no definite meaning but has a variety of meanings depending upon the context of its use. It is further submitted that the term “mineral” has been judicially construed many a time in widest possible amplitude and sometimes accorded its narrow meaning. Its precise meaning in a given case has to be fixed with respect to the particular context. The word “Mineral” has not been circumscribed by a precise scientific definition; it is not a definite term. In judicial interpretation of the expression mineral variety of tests and principles have been propounded; their application has not been uniform. Paragraph 23 of the opinion of the Apex Court in the case of Som Dutt Builders Ltd., which has been relied upon by the learned Advocate General is being quoted hereinbelow: Paragraph 23 : A survey of various decisions referred to hereinabove would show that there is wide divergence of meanings attributable to the word “mineral” and that in judicial interpretation of the expression “mineral” variety of tests and principles have been propounded; their application, however, has not been uniform. Insofar as dictionary meaning of the word “mineral” is concerned, it has never been held to be determinative and conclusive. The word 'mineral' has not been circumscribed by a precise scientific definition; it is not a definite term. The proposition that the minerals must always be subsoil and that there can be no minerals on the surface of the earth has also not found favour in judicial interpretation of the word “mineral”. The term “mineral” has been judicially construed many a time in widest possible amplitude and sometimes accorded a narrow meaning. Pithily said, its precise meaning in a given case has to be fixed with reference to the particular context.” 8 In support of the aforesaid contention learned counsel for the State therefore submits that since vanadium sludge is being sold for profit after extraction of Bauxite Ore by the petitioner, it is liable to pay royalty on the same. Learned counsel for the State has relied upon the provisions of Rule 64(C) of the Mineral Concession Rules to submit that the vanadium sludge is in the nature of tailing/rejects obtained from the leased area and sold for consumption. Therefore, they shall be liable for payment of royalty. Rules 64( C) is also being quoted hereunder: Rule 64(C) : Royalty on tailings or rejects.- On removal of tailings or rejects from the leased area for dumping and not for sale or consumption, outside leased area such tailings or rejects shall not be liable for payment of royalty. Provided that in case so dumped tailings or rejects are used for sale or consumption on any later date after the date of such dumping, then, such tailings or rejects shall be liable for payment of royalty.” Learned counsel for the Respondents-State has also relied on the report of the National Metallurgical Laboratory which is Annexure-B and the report of the Indian Bureau of Mines Annexure-G to the I.A. No. 265 of 2011 and submitted that these experts reports categorically point out that vanadium is present in Bauxite and can also be recovered from the vanadium sludge from red mud during production of alumina. The report of the Indian Bureau of Mines, Government of India also shows that significant quantities on vanadium have been found in Bauxite Ore and production of vanadium sludge was reported by different alumina plants including that of the petitioner-Hindalco with 18.2.% V205. The production of vanadium sludge has been shown in the form of a chart from the petitioner's Unit at Renukoot apart from other than companies shown in the said chart. Learned counsel for the State therefore submits that vanadium sludge thus produced is being sold for profit by the petitioner's Unit and is covered under the expanded definition of mineral as refered to hereinabove. The petitioner cannot escape the demand of royalty on such vanadium sludge, which forms part of the Bauxite Ore extracted from the mines under the lease hold area allotted to the petitioner within the State of Jharkhand. Learned counsel for the Respondents-State, therefore, submits that in the matter of expert opinion the courts would not readily interfere. Learned counsel for the Respondents-State has also vehemently submitted that the petitioner has straightaway come before this Court under Article 226 of the Constitution of India against an interim order passed in a 9 certificate proceeding by passing the alternative remedy available to it under Bihar & Orissa Public Demand Recovery Act, 1914. It is further submitted that the petitioner has full opportunity to raise all such points of law and facts in support of his contention before the Certificate Officer under Section 9 of the B.P.D.R Act, 1914 now adopted by Jharkhand by raising his objection. It is further submitted that the certificate proceeding has not yet been concluded and thereafter also the petitioner has a remedy of appeal under section 60 of the said Act, 1914. In similar circumstances, the Hon'ble Supreme Court of India in the case of Central Coal Fields Ltd. - Vs.- State of Jharkhand & others reported in 2005(7) SCC 492 upheld the decision of the learned Single Jude and Division Bench of this Court whereby the Appellant-Central Coal Fields Ltd. had been directed to invoke the remedy of appeal under the Act, 1914, in a case where the Appellant- Central Coal Fields Ltd had challenged the certificate proceedings for realization of surface rent by the Respondents- State. Learned Advocate General for the respondents state has relied upon para 10 of the said judgment in support of his contention wherein the Hon'ble Supreme Court has upheld the observation of the Division Bench of this Court that powers of the Appellate Authority under the Bihar & Orissa Public Demand Recovery Act, 1914 are very wide and the appellant may raise all contentions including contention as to the jurisdiction of the State Government and/or its officers in initiating certificate proceedings against the Company. It is submitted on behalf of the Respondents-State that the petitioner should be relegated to alternative remedy available under the P.D.R Act, 1914 as it is avoiding the payment of huge amount of royalty which are under realization and subject to interim stay by this Court since the year 2007. learned counsel for the Respondents-State submits that in such circumstances the state had preferred Interlocutory Application for vacation of the stay earlier granted to the petitioner in the instant case. Learned Senior Counsel appearing on behalf of the petitioner, in his reply, has refuted the contention of the Respondents-State. Learned counsel for the petitioner submits that the reliance of the State upon Rule 64(C) is wholly misplaced and in the present case Rule 64(b) (2) of the Mineral Concession Rules 1960 are squarely applicable. In support of his contention he has also relied upon the judgment of Hon'ble Supreme Court in the case of National Mineral Development Corporation Ltd.-Vs.- State of M.P. and another reported in (2004) 6 SC 281, wherein the meaning and 10 definition of tailing and rejects have been dealt with. It is further contended that under provisions of Rule 64(C) tailings are part of ore that are regarded too poor to be treated further and “rejects” have also similar connotation being part of the ore. These substances still were minerals although of poor quality and if disposed of later will attract levy of royalty. For the applicability of Rule 64 (C) the materials have to be dumped as not for sale which is not the case here. Learned counsel for the petitioner has also distinguished the decision of the Hon'ble Patna High Court rendered in the case of Hindustan Copper Ltd. -Vs.- State of Bihar (Supra) by submitting that in the said case the minerals solenium and tellurium were mined as minerals along with copper whereas in the present case vanadium sludge is not a mineral and has not been mined along with Bauxite Ore. It is submitted that in the said circumstances, the Hon'ble Patna High Court held that the Petitioner-Hindustan Copper was liable to pay demand of royalty on such independent minerals extracted in addition to copper in a case where the company had paid royalty on Gold, Silver, Nickel, but refused to pay royalty on solenium and tellurium, which were also minerals. In reference to the reliance of the State on Rule 69 of the Minerals Concession Rules and Item no. 47 of the Second Schedule, it is contended that vanadium is a mineral or associated mineral, learned counsel for the petitioner categorically submits that the argument is wholly misplaced as there is no doubt that vanadium is a mineral. However, the issue in the present writ application is whether royalty is payable on vanadium sludge. According to the petitioner, the reference of associated minerals under Rule 69(ii) is also misplaced as the concept of associated mineral is in different contexts of the extent of allotment of area under Section 6 of the MMDR Act, 1957, wherein rule 6(a) clearly says that enumerated minerals mentioned in Rule shall be the group of associated minerals for the purpose of section 6 of the 1957 Act. Section 6 of 1957 act limits the maximum area for which prospecting license or a mining lease may be granted in respect of any minerals or prescribed group of associated minerals. The vanadium sludge is not at all associated with mineral bauxite and such contention is totally irrelevant. The petitioner's counsel also submitted that reliance upon the judgment in the case of Som Datt Builders Limited -Vs.- Union of India reported in (2010) 1 SCC 311 and in the case of V.P.Pithupitchai and another-Vs.-Special Secretary to the Govt. of T.N.reported in 2003(9) 11 SCC 534 by the respondents are wholly misplaced as these cases turn on the interpretation of the minor minerals defined in Section 3(e) of 1957 Act and the powers of the Central Government in relation thereto. It is submitted on behalf of the counsel for the petitioner that reliance upon the test report of National Metallurgical Laboratory and Indian Mineral Year Book 2003 published by the Indian Bureau of Mines does not help in setting to rest the issues involved in the present case as the test report shows V205 contained in the Bauxite Ore is less than 1% as has already submitted by the petitioner, on the basis of the report of the Jawaharlal Nehru Aluminum Research Development and Design Centre (Annexure-1 to the writ application.). The issue involved in the present writ application is whether vanadium sludge, is subject to royalty and not vanadium. Lastly senior counsel for the petitioner has also contested the stand of the Respondent State in relation to the plea of alternative remedy available being available to the petitioner in the said certificate proceeding under PDR Act, 1914 itself by relying upon the judgments in the case of L. Hirday Narain-Vs.- Income Tax Officer, Barelilly reported in AIR 1971 SC 33 para 12 and in the case of Whirlpool Corporation Vs. Registrar of Trade Marks Mumbai and others reported in AIR 1999 SC 22 Paras 20 and 21 by Hon'ble Supreme Court of India. I have heard learned counsel for the parties at length. The petitioner herein has come before this Court for quashing of the interim order dated 18th December, 2006, passed by the Certificate Officer (Mines), whereby the petitioner has been directed to deposit 50% of the certificate amount with respondent no.2 and further directed it to furnish a Bank Guarantee for the rest 50% of the certificate amount while keeping the certificate case pending. The petitioner has also sought quashing of the entire certificate proceeding in Certificate Case No. 17 GR/2006-7, pending before respondent no. 4. He has also sought for a declaration i.e. it is not liable to pay royalty on Vanadium Sludge. The petitioner while seeking the aforesaid reliefs has raised a number of grounds stating that he pays royalty on the entire amount of Bauxite Ore extracted in (ROM) condition from the mines located to the State of Jharkhand. After the Bauxite Ore is transported to its processing plant at Renukoot Sonebhadra (U.P.) while processing Bauxite Ore through a process known as “Bayer's Process”, alumina is extracted. Vanadium Sludge is left behind as impurity, which is not a mineral as per the report of Jawaharlal Nehru Aluminum Research 12 Development & Designs Centre. According to the petitioner, Vanadium Sludge not being a mineral, is not subject to payment of royalty. The respondents have, however, chosen to levy royalty on the Vanadium Sludge sold by Hindalco Industries Ltd. The State of Jharkhand had earlier also demanded royalty on Vanadium Sludge, which was challenged before the Allahabad High Court and an interim order was passed, by which the demand was stayed on payment of 50% and a Bank Guarantee of the balance 50% which the petitioner has complied under protest. The petitioner has relied upon the provisions of the M.M.D.R Act, 1957, specifically Section 9 and the Second Schedule attached thereto and tried to substantiate its contention that Vanadium Sludge contains small quantities of Vanadium Pentoxide, which is not a mineral and therefore not subject to royalty. The petitioner has also relied upon the judgments rendered by Hon'ble Supreme Court of India in the case of Ichchapur Industrial Cooperative Society Ltd. -Vs.- Competent Authority, Oil & Natural Gas Commission and another reported in 1997(2) SCC 42 and in the case of V.P.Pithupitchai and another reported in 2003(9) SCC 534 in support of his contention. The petitioner has also relied upon the provisions of Rule 64(b)(2) of the Mineral Concession Rules, 1960, to submit that when run-of-mine (ROM) mineral is removed from the leased area to a processing plant outside the leased area, then, royalty shall be chargeable on the unprocessed run-of-mine mineral and not on the processed product. According to the petitioner, Vanadium Sludge has been treated to be an excisable item under the Central Excise Tariff Act, 1985, and, therefore, it being a manufactured product, no payment of royalty can be raised on it. Based upon these and other submissions, the petitioner challenged the certificate proceeding and the interim order passed therein as illegal and wholly without jurisdiction. More over according to him, as the petitioner cannot be made to pay double levy on the entire Bauxite Ore over which royalty has been earlier charged and paid. The Respondents-State has strongly contested the aforesaid grounds as per their submissions which have already been recorded hereinabove. As per their contentions, the definition of mineral as judicially construed is in the widest possible amplitude and sometimes accorded its narrow meanings which in each case has to be fixed with reference to a particular context. According to the State, issues like the present one have also been 13 considered in a Division Bench Judgment of the Patna High Court in the case of Hindustan Copper Limited-Vs.- State of Bihar and others, where the lessee-petitioner was held to be liable to pay royalty on minerals which were extracted apart from copper, for which only the lease was granted. According to them, the National Metallurgical Laboratory and the report of the Indian Bureau of Mines categorically point out that Vanadium is present in Bauxite and can also be recovered from Vanadium Sludge from red mud during production of alumina relying upon wide meaning of mineral attached to it. It is their submission that when Vanadium Sludge is being sold for profit after extraction of Bauxite Ore, it is liable to pay royalty on same. Even otherwise, it is the contention of the State that when the Vanadium Sludge is sold for consumption, it is subjected to payment of royalty under Rule 64(C). In the matter of report of experts, this Court should be sloth to interfere in these issues. As per the State whether vanadium sludge is a mineral or not depends upon report of experts determined on issues of fact and this court should not entertain the same in extra ordinary jurisdiction. It is the strong contention of the Respondents- State that the petitioner in any case has come before this Court against an interim order passed in certificate proceeding by avoiding the alternative remedy available to it under the Bihar & Orissa Public Demand Recovery Act, 1914, now adopted by Jharkhand. The petitioner has full opportunity to raise all the points of law and fact in support of his contention before the Certificate Officer under the provisions of the said Act through his objection and thereafter he has further remedy of appeal under Section 60 of the Act, 1914. Learned counsel for the Respondents-State submits that in such circumstances the Hon'ble Supreme Court of the India in the case of Central Coal Fields Ltd. (Supra) relegated the appellants Central Coal Fields Ltd. to invoke the forum of appeal under the Act of 1914. As such the writ petition is not maintainable under Article 226 of the Constitution of India, the petitioner having avoided the alternative remedy available to it. Admittedly, the Certificate Case No. 17 GR/06-07 is pending before the Certificate Officer (Mines) South Chhotanagpur Anchal,Doranda, Ranchi, respondent no. 4. The petitioner has appeared there and filed a detailed objection, which is contained as Annexure-13 to the present writ application. The petitioner has raised all the grounds as has been raised 14 herein involving questions of fact as well of law in his objection filed under Section 9 of the Act of 1914 before the Certificate officer. The petitioner has while doing so also sought opportunity to produce evidence oral as well as documentary before the certificate officer in support of his contention while objecting to the realization of the demand of royalty levied on vanadium sludge as aforesaid. However, it appears that the Certificate Officer has without dealing with the objection straightaway issued the order dated 18th December, 2006 (Annexure-15), directing the petitioner to deposit 50% amount of royalty and furnish a Bank Guarantee for rest of 50% of the demand. The interim order passed by the Certificate Officer without considering the objection filed by it, is not in accordance with law under P.D.R Act, 1914. It appears that in similar circumstances, in the case of Central Coal Fields Ltd. -Vs.-State of Jharkhand and others reported in 2005(7) SCC 492, the appellant-Central Coal Fields Ltd. had come initially challenging the interim order passed by the Circle Officer directing the appellant-Company to deposit the demand for realization of surface rent by the Respondents- State of Jharkhand. The said demand was challenged on behalf of the appellant-C.C.L on the ground that the State Government had no jurisdiction to do so as under Section 10 of the Coal Bearing Areas (Acquisition and Development) Act, 1957. The land as well as the rights over the land stood vested in the Central Government and the State Government had no right, title or interest in the land or rights over such land and no proceeding for recovery of rent could be effected nor any charge could be levied by the State Government from the appellants. In such circumstances, in the first round of litigation, the interim order passed by the Certificate Officer was set aside by the learned Single Judge and the Certificate Officer was directed to dispose of the objection filed by the Company by passing an appropriate order, in accordance with law. The Certificate Officer, however, rejected the objection and held the company liable to pay rent. The said Appellant-Company aggrieved by the said order preferred a writ petition being CWJC No. 2535 of 2000. The said writ petition was dismissed by the learned Single Judge by observing that it was not disputed that the order had been passed by the Certificate Officer against which the Appellant-Company could file an appeal under the Bihar & Orissa Public Demand Recovery Act, 1914. The Company thereafter filed a Letters Patent Appeal against the order passed by the learned Single 15 Judge, which was also dismissed upholding the order of the learned Single Judge and the Division Bench also observed that under Section 60 of Public Demand Recovery Act, 1914, the right of appeal was unfettered and the jurisdiction of appellate forum is plenary and unbound. The Appellant- CCL challenged the same before the Hon'ble Supreme Court in Civil Appeal no. 5151 of 2005 and another analogous cases. The contention of the appellant company was that Division Bench of the High Court could not have dismissed the Letters Patent Appeal on the ground of alternative remedy as a question of jurisdiction had been raised, which went to the root of the proceeding and ought to have been decided by the High Court. In those circumstances, the Hon'ble Supreme Court of India upheld the decision of the learned Single Judge as well as Division Bench by holding that it cannot be said that the learned Single Judge and the Division Bench had committed an error of law in dismissing the petitions and appeals by allowing the appellant to avail the alternative remedy of filing an appeal. The Hon'ble Supreme Court further observed that the powers of the Appellate Authority under the Bihar & Orissa Public Demand and Recovery Act, 1914 are very wide and the appellant may raise all contentions including the contention as to the jurisdiction of the State Government and/or its officer in initiating certificate proceedings against the Company. In that view of the matter, the Appellant-Company was granted liberty to approach the Appellate Authority by filing appeals under P.D.R Act, 1914. Relevant paragraphs 10 & 11 of the opinion of Hon'ble Supreme Court of India as delivered by Hon'ble C.K.Thakker, J. reported in (2005) 7 SCC 492, are quoted hereinbelow: “Para 10: Having heard the learned counsel for the parties, in our opinion, the appeals deserve to be disposed of by making certain observations. It is no doubt true that according to the appellant Company the certificate proceedings could not have been initiated under the Bihar and Orissa Public Demands Recovery Act, 1914, in view of the provisions of the Coal Bearing Areas (Acquisition and Development) Act, 1957, the Mines and Minerals (Regulation and Development) Act, 1957 and also the Coking Coal Mines (Nationalization) Act, 1972. But it also cannot be overlooked that the action has been taken under the Bihar and Orissa Public Demands Recovery Act, 1914 and the appellant Company was directed to make payment. The said order is subject to appeal under Section 60 of the said Act. A reading of the order dated 17.11.1999 passed by the Certificate Officer makes it clear that before taking the action, an opinion of the Advocate General of the State of Bihar was sought by the respondent. Referring to the provisions of the Coking Coal Mines (Nationalization) Act, 1972, the Advocate General opined that such amount could be claimed by the State Government from the appellant Company. Reference was made to Sections 6 and 7 16 of the said Act and it was observed that the State Government had power to make demand of rent from the appellant Company. In view of the above position, it cannot be said that the learned Single Judge as well as the Division Bench had committed an error of law in dismissing the petitions and appeals by allowing the appellant to avail of an alternative remedy of filing appeals. Those orders, therefore, do not suffer from any infirmity. As observed by the Division Bench, the powers of the Appellate Authority under the Bihar and Orissa Public Demands Recovery Act, 1914 are very wide and the appellant may raise all contentions including the contention as to the jurisdiction of the State Government and/or its officers in initiating certificate proceedings against the Company. Regarding the earlier decision in National Coal Development Corpn. the High Court was right in observing that the contention regarding alternative remedy was neither raised nor considered nor a finding had been recorded thereon. In view of the said fact also it would be appropriate if the appellant Company is granted liberty to approach the Appellate Authority by filing appeals and the Bihar and Orissa Public Demands Recovery Act, 1914. Para 11 : Since the appellant Company had filed petitions, intra- court appeals and the appeals in this Court, it would be in the interest of justice and we direct, that if appeals under the Bihar and Orissa Public Demands Recovery Act, 1914 are filed within a period of two months from today, the Appellate Authority will entertain them without raising any objection as to limitation. The Appellate Authority will hear the parties and decide the appeals in accordance with law as expeditiously as possible preferably within three months from filing of the appeals without being influenced in any manner by the observations made by the learned Single Judge, the Division Bench or by us in the present appeals. We may clarify that we are disposing of the appeals upholding the preliminary objection of the State Government regarding availability of alternative remedy of appeals and we may not be understood to have expressed any opinion one way or the other on merits and all contentions of all parties are kept open.” The Hon'ble Supreme Court of India in the recent judgment delivered in the case of United Bank of India -Vs.-Satyawati Tondon and others reported in (2010) 8 SCC page 110, observed that where it is open to the aggrieved petitioner to obtain redress in the manner provided by a statute, the High Court will not permit entertaining a petition under Article 226 of the Constitution of India and the machinery created under statute to be passed. It also observed that in the matters of recovery of taxes, cess, fees etc. the High Court should be extremely careful, circumspect in exercise of its discretion where the petitioner can avail effective alternative remedy by filing application, appeal and revision and that the particular legislation contains a detailed mechanism for redressal of his grievance. In the instant case as already observed by Hon'ble Supreme Court in the case of Central Coal Fields Ltd. (Supra), the powers of the authorities under the Public Demands Recovery Act are very wide and it can also entertain contentions as to the jurisdiction of the State Government and its officers in initiating certificate proceeding against the company. There is no reason 17 why the petitioner should also be not relegated to invoke remedy available to him before the Certificate Officer where he has appeared already and filed detailed objection under Section 9 of the Act, 1914. The objection filed under Section 9 of the Act of 1949 is pending before the Certificate Officer. The petitioner appears to have raised all such grounds of law and facts as has been raised herein, before the Certificate Officer as would appear from a perusal of the objection petition filed under Section 9 of the Act ,which is at Annexure-13 to the writ application. The issue whether Vanadium Sludge is mineral or not is also dependant upon determination of issues of fact being contested by the rival parties. In the present case, the Certificate Officer without deciding the objection of the Petitioner-Company as under Section 9, has straightaway proceeded to pass an interim order directing it to deposit 50% of the amount and rest by way of a Bank Guarantee, which is contrary to the provisions of the P.D.R Act, 1914. The Certificate Officer has to adjudicate and determine the liability after consideration of the objection of the petitioner and the claim of the rival parties. The impugned order dated 18th December,2006, cannot be sustained in law and it is accordingly set aside. The Certificate Officer, respondent no. 4 is directed to consider the objection filed by the petitioner under Section 9 of P.D.R Act, 1914, pending before him, as expeditiously as possible without being influenced in any manner by observations made hereinabove. It is further clarified that while upholding the preliminary objection of the State Government regarding availability of alternative remedy, it may not be understood that this court has exercised any opinion one way or the other on merits and all contentions of all parties are kept open. In the facts and circumstances of the case, for the aforesaid reasons this writ petition is disposed of in the aforesaid terms. However, there shall be no order as to costs. Consequently, the I. A. No. 571 of 2011 and I.A. No. 753 of 2010 are also disposed of. (Aparesh Kumar Singh, J) Jharkhand High Court, Ranchi The 20th December, 2012 jk/NAFR "