STATE OF RAJASTHAN & ANR. versus M/S. DEEP JYOTI COMPANY & ANR.

Citation: [2016] 2 S.C.R. 1 · Decided: 26-02-2016 · Supreme Court of India · Bench: T.S. THAKUR · Disposal: Appeal(s) allowed

Judgment (excerpt)

f20161 2 S.C.R. I 
STATE OF RAJASTHAN & ANR. 
v. 
MIS. DEEP JYOTI COMPANY & ANR. 
(Civil Appeal No. 1854 of2016 etc.) 
FEBRUARY 26, 2016 
[T. S. THAKUR, CJI, A. K. SIKRI AND 
R. BANUMATHI, JJ.) 
Mines and Minerals - Circular dated 06.10.2008 providing 
for deduction of royalty from Government contractors using minor 
minerals in Government work - Before starling the work the 
contractor required to obtain short term permit for the minerals 
used in the work - Circular challenged - Single Judge of High 
Court upheld the validity of the Circular - Division Bench of High 
Court quashed the Circular - On appeal, held: It is duty of the 
Government to ensure that only royalty paid minerals are used in 
the work - The purpose which is sought to be achieved viz. non-
royalty paid mineral is not used in the execution of the Government 
work - Thus, the Circular cannot be treated as unreasonable or 
arbitrary - Circular No.P 13(6)Khan!Group-2/80-Part dated 
06. 10. 2008. 
Allowing the appeals, the Court 
HELD: 1. The minor minerals removed from the quarries, 
admittedly are the property of the Government and the same 
cannot be removed and used without payment of royalty. It is 
therefore the duty of the Government to ensure that only royalty 
paid minerals are used in the work. The purpose of short-term 
permit is to ensure that the material and minerals etc. used by 
the contractor in the construction work arc royalty paid. It only 
means that such material is purchased by the contractor from the 
market which is legally mined and on which due royalty is paid. 
In other words, the objective is to see that illegally mined mineral/ 
material is not purchased by the contractor and used in the 
construction work which is awarded by the Government. Not only 
it is a laudable object, such a stipulation is inserted in order to 
check illegal mining which has assumed serious proportions in 
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SUPREME COURT REPORTS 
[2016) 2 S.C.R. 
the recent past. Otherwise, the respondents do not stand to 
loose anything inasmuch as the moment evidence is produced to 
the effect that royalty was paid on the minerals by the leaseholder 
which was used in the construction, the construction contractor 
like the respondents would be refunded the royalty so paid by it 
in terms of circular dated 06.10.2008. In terms of clauses (5) and 
(7) of the said circular, the contractor has to pay royalty at the 
rates specified in the circular depending upon the nature of work 
and on production of bills showing payment of royalty, the 
contractor can get refund of royalty. There is, thus, no financial 
burden on the respondents of any nature. The purpose which is 
sought to be achieved, viz., non-royalty paid mineral (which would 
naturally be illegally mined mineral) is not used in the execution 
of the Government work and it cannot be treated as unreasonable 
or arbitrary. There is a complete justification for providing such 
a provision. [Paras 10 and 11) [6-G-H; 7-A-D] 
2. The clauses stipulating deduction of royalty payable to 
the mineral department at the rates stipulated in the circular 
cannot be said to be a levy. The circular only provides the 
procedure for payment of royalty for the minerals used by the 
contractors who have been given the works contract by the 
Government department. The High Court did not keep in view 
the object of the circular and erred in quashing the impugned 
circular. [Para 12] [7-H; 8-B] 
CIVIL APPELLATE JURISDICTION : Civil Appeal No. 1854 
of2016. 
From the Judgment and Order dated 17.0i.2011 in D.B. Civil 
Special Appeal No. 369 of2009 passed by the fiigh Court of Judicature 
for Rajasthan at Jodhpur 
WITH 
C.A.N0.18550F2016 
Shiv Mangal Sharma. AAG. Ankit Shah, Adhirey Singh, Punet 
Parihar,Anjali Choudhari, Ms. Ruchi Kohli, Kunal Narayan. Lalitendu 
Mahapatra, Mil ind Kumar, Manish Singhvi, B.D. Thanvi, H.D. Thanvi, 
Rishi Matoliya, Mukul Kumar, Ms. Aruna Gupta, Ms. Nandini Gupta, 
Ad vs. for the appearing parties. 
· STATE OF RAJASTHAN v. M/S. DEEP JYOTI COMPANY 
The Judgment of the Court was delivered by 
R. BANUMATHI, J. I. Leave granted. 
2. These appeals assail the order of Division Bench of the High 
Court ofRajasthan at Jodhpur allowing Special Appeal No.369 of2009 
dated 17.01.2011 filed by the respondent thereby quashing the circular 
dated 06. I 0.2008 which provided for deduction ofroyalty payable to the 
mining department from the bills of the contractors w

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