1. The petitioner herein was assigned different works in the harbour project of the new Tuticorin Port for which purpose, under an agreement, it was required to quarry stones and use the same in the work. Since it was found to have quarried in patta lands, it was subjected to seigniorage fee as contemplated under the Tamil Nadu Minor Mineral Concession Rules, 1959. The Collector of Tirunelveli, third respondent herein, in his proceedings, ordered for the realisation of the said fee from the petitioner and imposed penalty for the alleged unauthorised quarrying by it. The petitioner preferred appeal to the Director of Industries and Commerce, Madras, the second respondent herein, who reduced the penalties for the quantity of stones allegedly removed without permission during 1971-72, 1973-74 and 1975-76, but affirmed the Collector's order as to the fee to be realised from the petitioner. The petitioner preferred appeals to the Government. The Government has disposed of the appeals by affirming the order of the Collector and the Director of Industries and Commerce as to the fees and set aside the order of the Director of Industries and Commerce as to the fees in so far as penalties are concerned and restored the Collector's order in this behalf. The petitioner hasinvoked the writ jurisdiction of this Court against the Government Order.
2. The petitioner has pleaded its case throughout saying that the quarrying by it was for a bona fide public purpose as required by all concerned including the Port Trust and it is entitled and eligible for exemption from payment of seigniorage fee for quarrying in patta land under Rule 18 and in poramboke land under Rule 7 of the Tamil Nadu Minor Concession Rules, 1959. There is some controversy whether the lands which the petitioner exploited for quarrying were all patta lands and/or poramboke lands and/or some patta lands and some poramboke lands and it is asserted before me that there has been one patta land and the other, poramboke land. It is conceded before me that any enquiry into this will require a glance to the facts of the case and a determination whether, on the facts of this case, in the event of any force found in this controversy, the case should be remanded to the concerned authorities. Since I am not inclined, which I shall soon demonstrate, to remand the case for any further examination of the facts by any of the lower authorities, I intend to proceed to examine the contentions of the parties on the basis of the case pleaded on behalf of the respondent that the case of the petitioner is covered by Rule 7 of the Tamil Nadu Minor Mineral Concession Rules, 1959.
3. The relevant rules contemplate when quarrying is carried on under a permit, for the imposition, assessment and realisation of a fee called seigniorage fee and Rule 7 read as follow :
'Quarrying for public purposes :---
Quarrying from unreserved waste lands including poramboke other than bunds of drinking water ponds or tanks may be allowed free of charge in the case of Department of Government of India and the State Government, Panchayat Union Councils, Panchayats and M unicipalities or contractors in their employ, provided firstly, that the products removed are required and used solely for bona fide public purposes and not for sale or commercial profits and secondlythat the quarrying shall be subject to the previous permission of the Revenue Divisional Officer being obtained and to the general conditions already prescribed by the Collector, Contractors in the employ of Panchayat Union Councils, Panchayats and Municipalities shall be given a concession only if the Engineers and Assistant Engineers, or the Commissioners concerned certify that the metal is required for a public purpose and shall state that it is required for bona fide public purposes and not for sale or commercial profit. In emergent cases, a certificate issued by a supervisor of the Highways Department or a supervisor of Panchayats may be accepted provisionally, but in such cases, a further certificate shall be produced from the Assistant Engineer or the Executive Authority of the Panchayat confirming that the supervisor's certificate as soon as possible afterwards. In the case of Panchayats, free permits to contractors shall be granted on the stretch of the certificates issued by the executive authorities of Panchayats countersigned by the District Panchayat Officers. If the Revenue Divisional Officer, consider that in any case, special conditions should be imposed, he shall report the case to the Collector for orders. With the same restriction, the privilege of free removal may be allowed to other public bodies subject to the further proviso that the operations shall be conducted under the supervision of their establishment and not by contractors in their employ. The officer concerned while granting certificate shall also certify that the metal is required for a public purpose and shall state that purpose and the quantity of metal required. In all other cases seigniorage fee of (at) the rates specified in Appendix II to these rules shall be charged. These provisions shall also apply to the removal of sand from riverbeds. The Collector is empowered to close any quarry or reserve it for any particular department of Government or local bodies or prohibit or regulate quarrying in any way and may require as a condition of quarrying that the land shall afterwards be restored to a state fit for cultivation. Where a local body desires that the exclusive right of quarrying in anysuch land should be reserved for it, the landshall be leased to the local body concerned subject to the payment of ordinary assessment. Such leases which shall be in the form set out in Appendix III to these rules, may be granted by the Collector unless they infringe the general condition laid down in Government of India (Finance and Commerce Department) : Resolution No. 933, Extraordinary, dated 20th February 1984. The relevant limitations laid down in the said resolutions are as follows :--
(1) If the lease is granted for more than five years, it shall be accompanied by an unconditional power of revocation by the Government at any time during such period on the expiry of six months notice to that effect and it shall not impose on the public revenue an annual liability to damages in excess of Rs. 5,000/ -.
(2) The case shall not impose on such revenue, a charge or expenditure or liability to damages in excess of one lakh of rupees.
(3) The case shall not involve the session of proprietory rights, the estimated value of which exceeds one lakh rupees'.
4. The petitioner herein has asserted that its work related to a public purpose and that it is entitled to the exemption contemplated under the above rule, but has no material to show of compliance with the condition precedent therein that it indulged in quarrying operations after obtaining permission from the Revenue Divisional Officer and followed the general conditions prescribed by the Collector.
5. A Bench of this Court in Andhra Civil Construction Company v. State of Tamil Nadu (Writ Appeal No. 216 of 1987 against W.P. No. 1091 of 1978 -- judgment dated 23-1-1987), has held that the permission of the Revenue Divisional Officer is sine qua non of the exemption under the above rule.
6. Learned counsel for the petitioner has relied upon Rule 3(5) of the Tamil Nadu Minor Mineral Concession Rules, 1959 to contend that if it is found that the quarrying was not for domestic or agricultural or other purposes, but was for public purposes, no feecould be imposed and therefore, Rule 7 will have no operation unless before imposition of the fee it is determined that the quarrying was not for public purposes, but was for commercial purposes. This argument, however, has not found favour before the Division Bench in the abovementioned case and I have good reason to express my respectful agreement with the view expressed by the Division Bench in the said judgment.
7. A works contract is a business and a commercial activity and a person engaged in such a contract work is engaged in a commercial activity. That in the course of his commercial activity, he has in fact aided and abetted the achieving of a public purpose can be shown by him alone and that he can show by bringing this fact to the notice of the Revenue Divisional Officer before the start of the quarrying operation by him and with the previous permission of the said authority alone, proceed with the quarrying operations. The conditions precedent in Rule 7 afore-quoted shall have no purpose if it is presumed in all cases of construction work in which contractors are employed by the Government and no seigniorage fee shall be realised from any such contractor.
7A. But in a short but effective return, the respondents have indicated how they have found the quarry by the petitioner in the teeth of aforementioned rules and why its quarrying operations have been treated as unauthorised. Details in this behalf as stated in the counter-affidavit need not be reproduced by me in the judgment.
8. Learned counsel for the petitioner has raised two contentions; They are:
(1) The Government order shows that it has consulted the Collector, who passed the original order and the Director of Industries and Commerce, who passed the appellate order, but has neither made the nature of the consultation known to the petitioner nor has the contents of any report or minutes of the Collector and the Director of Industries and Commerce been delivered to him to inform him about the views of the Collector and the Director of Industries and Commerce. TheGovernment Order is vitiated because it has taken extraneous matters into consideration and not disposed of the appeal on merits strictly and after taking into account the relevant facts on record and the contentions raised by the petitioner.
(2) The petitioner's appeal before the Government was against the order which visited it with adverse/civil consequences and not against the order of the Director of Industries and Commerce, under which he has reduced the penalty imposed by the Collector. There was no appeal before the Government against the Director's order under which the penalty was reduced. The Government has acted illegally in setting aside that part of the order of the Director of Industries and Commerce. In any case, according to the learned counsel for the pelitioner, the order of the Government to set aside the orders of the Director of Industries and Commerce is without affording an opportunity to the petitioner of being heard. It is invalid because one of the vital aspects of the principles of natural justice has been ignored by the Government.
9. The Government's power, it is conceded, is one to determine whether the Collector and the Director of Industries and Commerce had correctly ordered the imposition of seigniorage fee and the penalty upon the petitioner. When a statutory power is conferred upon some authority or the Government and the authority or the Government, in that capacity, decides a dispute of a claim made by one party under the statute, which claim is opposed by another party, it acts quasi-judicially. If a statutory authority is given the power to do any act, which will prejudicially affect the subject, then although there are no two parties apart from the authority and the contest is between the authority proposing to do the act and the subject opposing it, the final determination of the authority is yet a quasi-judicial act if its act is likely to visit the subject with civil consequences. The Government acting under the statutes, does not act as an authority superior to a subordinate executive in its administrative capacity. The Government will have no administrative control over the proceedingsbefore the Collector or the Director of Industries and Commerce unless the law empowers. Since the law empowers to sit in appeal or revision against the order of another statutory authority, the appellate or the revisional authority exercising such statutory power has to act within such limitation of law as are applied to any authority required to act quasi-judicially. Viewed in that sense, the Collector and the Director of Industries and Commerce, whose orders were before the Government, were such statutory authorities, who had completed their functions and the Government as a statutory authority was required to examine the correctness or otherwise of the orders passed by them. There is always, however, one caution which the statutory authorities are required to exercise, they have to act in their discretion unaffected by any extraneous consideration, whether it comes from above or comes otherwise from any other source.
10. In Purtabpur Co. v. Cane Commissioner, Bihar, : 2SCR807 , this aspect has been highlighted in a case where the Cane Commissioner and the Government were conferred concurrent powers under the Sugarcane (Control) Order by the Central Government. The Cane Commissioner, however, obeyed the directions of the Chief Minister and accordingly ordered reservation of the cane area in favour of sugar mills. The Supreme Court has said (at page 1901) :
'In the matter of exercise of the power under Rule 6(1), the State Government and the Cane Commissioner are concurrent authorities. Their jurisdiction is co-ordinate. There was some controversy before us whether a Cane Commissioner who had reserved an area for a sugar factory for a particular period can alter, amend or modify the area reserved in the middle of the period fixed ..... We have earlier seen that theCane Commissioner was definitely of the view that the reservation made in favour of the appellant should not be disturbed but the Chief Minister did not agree with that view. It is clear from the documents before us that the Chief Minister directed the Cane Commissioner to divide the reserved area into'twoportions and allot one portion to the 5th respondent. In pursuance of that direction, the Cane Commissioner prepared two lists 'Ka' and 'Kha'-- under the orders of the Chief Minister, the villages contained in list 'Ka' were allotted to the appellant and in list 'Kha' to the 5th respondent. The Cane Commissioner merely carried out the orders of the Chief Minister. It is true that the impugned orders were issued in the name of the Cane Commissioner. He merely obeyed the directions issued to him by the Chief Minister. We are unable to agree with the contention of Shri Chagla that though the Cane Commissioner was initially of the view that the reservation made in favour of the appellant should not be disturbed, he changed his opinion after discussion with the Chief Minister. From the material before us, the only conclusion possible is that the Chief Minister imposed his opinion on the Cane Commissioner. The power exercisable by the Cane Commissioner under cl. 6(1) is a statutory power. He alone could have exercised that power. While exercising that power he cannot abdicate his responsibility in favour of anyone -- not even in favour of the State Government or the Chief Minister. It was not proper for the Chief Minister to have interfered with the function of the Cane Commissioner. In this case what has happened is that the power of the Cane Commissioner has been exercised by the Chief Minister an authority not recognised by cl. (6) read with cl. (11) but the responsibility for making those orders was asked to be taken by the Cane Commissioner'.
11. Where a duty to determine a question is conferred on an authority which state their reasons for the decision, and the reasons which they state show that they have taken into account matters which they ought not to have taken into account or that they have failed to take matters into account which they ought to have taken into account, the decision so rendered by them is hit by malice in law, the malice in legal sense, whether it is done so knowingly or unknowingly or whether it is done so intentionally or without any inten-tion. The principles in this behalf are stated in the judgments of the Courts in England suchas in the case of Shearer v. Shields, (1914) AC 803 and Pilling v. Abergele Urban District Council, (1950) 1 KB 636, and reiterated by the Supreme Court in S. R. Venkataraman v. Union of India, : (1979)ILLJ25SC .
12. In Institute of Chartered Accountants of India v. L. K. Ratna, : 164ITR1(SC) , the Supreme Court has indicated that the members who had decided to impose a penalty as a Committee of the Council of Chartered Accountants, were not entitled to sit at the meeting of the Council when it considered whether their action should be approved or not. The Supreme Court has in that judgment indicated that their presence was likely to influence the decision of the Council and the nature of the functions discharged by the Council in rendering its finding was quasi-judicial, their presence at the meeting of the Council would be inconsistent with the fundamental principle that justice must not only be done but must also appear to be done.
13. On a strict thus (sic) extension of the said principles, it may not always be possible to reject the contention of the petitioner that the Government order in consultation with the Collector and the Director of Industries and Commerce is vitiated as the Government obtained extraneous information and allowed its discretion to be vifiated by such materials that they obtained from the Collector and the Director of Industries and Commerce. In the case on hand, however, the extent of the influence of the consultation is not clear and it is possible to say that the consultation was limited to making enquiry as to whether there was any material which the Collector and/or the Director of Industries and Commerce had taken into consideration and/or had omitted to take into consideration. Therefore, it may not be possible to set aside all that is done by the Government. It may be a mere pretention of the petitioner that it has suggested that the Government's decision was influenced by extraneous informations which the Collector and the Director of Industries and Commerce provided to it.
14. The instant case in my opinion is one in which it will not be correct to take the standthat the Government's discretion was influenced by the extraneous informations it received from the Collector and/or the Director of Industries and Commerce. There is no material before me to reject altogether the stand taken by the learned counsel, who has represented the respondents that it was only a consultation as to the records of the proceeding and nothing more than that and if such consultations are forbidden, the Government may not get full information and may not be able to do justice.
15. The condonation of the Govern-, ment's mistake in consulting the Collector and the Director of Industries and Commerce, however, cannot justify the order under which it has set aside the order of the Director of Industries and Commerce and restore the order of the Collector, thus restoring the imposition of penalty by the Collector upon the petitioner, which was reduced by the Director of Industries and Commerce. This part of the Government Order reads as follows :
'As they find no reason for reduction in the penalty levied the Government set aside the orders of Director of Industries and Commerce mentioned in Items I to III in para 2 above and restore and sustain the orders of the Collector of Tirunelveli in Items I to III in para 1 above direct that the penalty mentioned therein be collected from Tvl. Andhra Civil Construction Company in respect of the case mentioned in Item 4 in paras 1 and 2 also is hereby rejected'.
16. The Government was considering the petitioner's appeal against that part of the order of the Director of Industries and Commerce, which had gone against the petitioner. There was no appeal before the Government against that part of the order of the Director of Industries and Commerce under which some relief had been granted to the petitioner. If the Government suo motu intended to examine the correctness or otherwise of that part of the order of the Director of Industries and Commerce, it could do so soon after calling upon the petitioner to show cause/and after affording to the petitioner opportunity of being heardagainst that part of the order. No such notice was ever issued by the Government to the petitioner and no opportunity of being heard was afforded to the petitioner in this behalf. The order in this part is bad, also for the reason that the Government Order has conveyed that Government had found no reason for reduction in the penalty, but why the Government had so found and why the Government did not accept the objections of the petitioner as to the imposition of the penalty, which objection the Director of Industries and Commerce had found tenable, and what are the reasons for the Government to say that the reduction in penalty levied by the Collector by the Director of Industries and Commerce was not justified are not made known. In other words, this part of the order of the Government is not a speaking order. It is an order, which gives the impression of the fiat of a person who can say yes when he thinks he should say yes and can say no when he thinks he should say so. That part of the Government order is patently bad for the reason of violation of all norms that are applied to quasi-judicial authorities. The Government has in that part violated the principies of natural justice, which must inform every quasi-judicial proceeding. To conclude, there is no infirmity in the Government Order under which it has affirmed the order of the Director of Industries and Commerce, but it is bad in law in that part under which the Government has set aside the order of the Director of Industries and Commerce.
16A. In the result, the petition is allowed to the extent indicated above. The Government Order in that part under which it has set aside the order of the Director of Industries and Commerce is quashed.
17. As a result of the above, the order of the Director of Industries and Commerce, as contained in proceedings No. 6328E3/75 dated 1-6-1976 is restored. On the facts and circumstances of this case, however, there shall be no order as to costs.
18. Order accordingly.