The Andhra Pradesh High Court has upheld the authority of departmental officials to levy monetary penalties, seigniorage fee and other charges for illegal mining, transportation and storage of minor minerals under Rules 26 and 34 of Andhra Pradesh Minor Mineral Concession Rules, without a criminal trial.

The Court, however, clarified that such imposition must comply with the applicable provisions and follow a proper opportunity of hearing to the affected person.

The APMMC Rules, 1966 are framed under the Mines and Minerals (Development and Regulation (MMDR Act), 1957. The power to frame these Rules flows from Section 15 of the MMDR Act, which enables the State Government to make rules in respect of minor minerals. Section 23C specifically enables it to frame rules for preventing illegal mining, transportation and storage of minerals.

In particular, Rules 26 and 34 of the APMMC Rules provide for penalties and other monetary liabilities for specified violations, including unauthorised quarrying, possession of minerals without proof of payment of mineral revenue and transportation without a valid e-transit permit.

A Division Bench of Chief Justice Lisa Gill and Justice Ravi Cheemalapati considered, in a batch of writ petitions and appeals, whether monetary penalties under Rules 26 and 34 could be imposed by authorised departmental officers or only by a competent criminal court under the MMDR Act.

The could upheld the vires of Rules 26 and 34 of APMMC Rules holding that the petitoners were unable to show as to how the rules were are ultra vires the Mines and Minerals (Development and Regulation) Act, 1957.

The Court observed:

“Thus, impugned order dated 30.09.2022 is also liable to be set aside, keeping in view the discussion in foregoing paras upholding validity of Rule 26 of APMMC Rules, 1966. There is no contradiction or inconsistency between the MMDR Act, 1957, and APMMC Rules, 1966. Such conclusion has been incorrectly arrived at by learned Single Bench. Such an interpretation, in fact, places a premium upon the wrong doers who may be able to get away with impunity despite violations as may have been committed by them.

Power to impose penalty, seigniorage fee, market value of the mineral is clearly within the purview of the departmental official as specified. It is only the aspect of imposition of imprisonment if so stipulated by the department that necessary steps would have to be taken for filing of the complaint before a Court of competent jurisdiction for necessary action. It is a settled position that Court should attempt to harmonize the provision in a given factual matrix by lending such interpretation that the provision itself does not become a dead letter or a useless one, rather it upholds the legislative intent to take necessary steps for prevention of illegal mining, transportation and storage of minerals.”

The issue arose from appeals filed by the State of Andhra Pradesh against a common order passed by a Single Judge Bench of the High Court in proceedings concerning illegal mining and unauthorised possession or consumption of minor minerals under the APMMC Rules.

Specifically, the proceedings involved challenges to show-cause notices issued under the amended Rule 26, as amended by G.O.Ms.No.35 dated 01.07.2020 and demand notices that had already been confirmed by the competent authority and upheld by the appellate authority.

The respondents in the writ appeals argued that the 2016 amendment to Rule 26(3)(ii), which introduced imprisonment of up to two years or a fine of up to Rs.5 lakh, meant that such punishment could only be imposed by a competent Court.

A separate petition challenged the 2020 amendment to Rule 26 on the ground that the punitive measures prescribed therein were beyond the scope of the MMDR Act, particularly Sections 21 and 27, and contrary to Section 22.

The Single Judge allowed the petitions, holding that the APMMC Rules could not contradict the MMDR Act and that penalties contemplated under the Act could be imposed only by a competent Court, not the Assistant Director of Mines.

The State thereafter carried the matter in appeal before the Division Bench contending that the MMDR Act empowered it to frame rules for preventing illegal mining, transportation and storage of minor minerals.

Rejecting the petitioners' contention, the Bench held that Rule 26 is a deterrent measure aimed at preventing illegal mining, transportation and storage of minerals. It found no merit in the contention that merely because the Rules use the word “penalty”, the same can be imposed only by a criminal Court.

The Court noted that the proceedings in the cases before it concerned recovery of normal seigniorage fee, market value of the mineral and penalty, and did not involve any move by the department to impose imprisonment.

The Bench accordingly held that the petitioners had failed to establish that Rules 26 and 34 were ultra vires the MMDR Act and rejected the challenge to the amendments introduced through G.O.Ms.No.35 dated July 1, 2020.

At the same time, the Court clarified that monetary penalties and seigniorage fee may be imposed by executive officers only in strict accordance with the Rules and after providing the affected person a proper opportunity of hearing.

The Court accordingly upheld the amendment to Rule 26(3), dismissed the challenge to its validity and allowed the connected writ appeals. It also set aside the orders passed by the Single Judge in the connected writ petitions.

The Court left the individual factual issues open, directing the authorities to consider appeals filed within the prescribed period in accordance with law.

Case Title: M/s. Anjani Stone Crusher v. The State of Andhra Pradesh & Others & connected matters

Case Nos.: W.P.No.1839 of 2021 along with W.A.Nos.164, 171 & 238 of 2021 and W.A.Nos.1058, 1061, 1062, 1063, 1064, 1065 & 1066 of 2022

Counsel for Appellants: Mr. D. Srinivas, Advocate General, A.P.; GP for Mines and Geology

Counsel for Respondents: Mr. Hari Sreedhar; Mr. K.S. Naveen

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