Patna High Court
Starnet Marketing Pvt. Ltd.versusThe State of Bihar
- Decided
- Disposal
- ALLOWED
- Bench
- SANDEEP KUMAR
Holding
The demand for additional royalty issued by the District Mining Officer is unsustainable and is quashed as it contravenes the earlier High Court direction.
Summary
Starnet Marketing Pvt. Ltd. challenged a demand for Rs 1.15 crore issued by the District Mining Officer under letter No. 502 dated 10‑06‑2019, which was based on audit objections regarding transit‑pass irregularities in 2012. The petitioner argued that the demand was unlawful because it was made solely on the audit report without an independent enquiry as required by Rule 26(b) of the Bihar Minor Mineral Concession Rules, 1972, and that the extra royalty calculation was speculative. A coordinate bench of the Patna High Court had earlier set aside the 05‑10‑2017 order and directed the Mines Commissioner to pass a fresh order after giving the petitioner a hearing. The competent authority ignored that direction and again raised the demand. The Court held that the demand contravened the earlier judicial direction and could not be sustained, quashing the letter and allowing the petition. The relief sought – a writ of certiorari to set aside the demand – was granted.
Issues considered
- Whether a demand for additional royalty can be raised solely on the basis of an audit report without an independent enquiry as mandated by Rule 26(b) of the Bihar Minor Mineral Concession Rules, 1972.
- Whether the extra royalty amount computed in the audit report, based on assumptions and extrapolation, can form a valid basis for demand.
- Whether the demand issued by the District Mining Officer violates the direction of the coordinate bench of the Patna High Court dated 16‑05‑2019.
- Whether the provisions of the Mineral Transit Pass Regulations, 1976 (Rule 5(b) and 5(f)) preclude the authorities from demanding excess royalty.
Legislation cited
- Bihar Minor Mineral Concession Rules, 1972 — s. Rule 26(b)
Subjects
- Mineral concession
- Royalty demand
- Audit report
- Certiorari
- Writ jurisdiction
- Administrative law
- Mineral transit pass
Judgment
IN THE HIGH COURT OF JUDICATURE AT PATNA
Civil Writ Jurisdiction Case No.16348 of 2019
======================================================
Starnet Marketing Pvt. Ltd. a Company incorporated under the provisions of
the Companies Act, 1956 having its office at 110 Urmila Tower, Bank More,
Dhanbad, 826001, through its Chief Executive Officer, Sadashiv Prasad
Singh, Son of Sri Maleshwar Singh, Resident of 410 Ganeshalay Apartment,
Jharudih, Near Carmel School, Matkuria, District Dhanbad, Jharkhand.
... ... Petitioner/s
Versus
1. The State of Bihar through the Principal Secretary, Mines and Geology
Department, Government of Bihar, Vikas Bhawan, Bailey Road, Patna.
2. The Principal Secretary cum Mines Commissioner, Mines and Geology
Department, Government of Bihar, Vikas Bhawan, Bailey Road, Patna.
3. The Assistant Director, Mines and Geology Department, Government of
Bihar, Vikas Bhawan, Bailey Road, Patna.
4. The District Magistrate cum Collector, Jehanabad.
5. The Competent Officer cum Mines Inspector, District Mines Office,
Jehanabad.
... ... Respondent/s
======================================================
Appearance :
For the Petitioner/s : Mr.Suraj Samdarshi, Advocate
Mr. Avinash Shekhar, Advocate
Mr. Simran Kumari, Advocate
Mr. Abhilasha Jha, Advocate
For the Respondent/s : Mr.Gyan Prakash Ojha, GA-7
For the Mines : Mr. Naresh Dixit, Spl. P.P.
Mr. Brij Bihari Tiwari, Advocate
Ms. Shruti Singh, Advocate
======================================================
CORAM: HONOURABLE MR. JUSTICE SANDEEP KUMAR
ORAL ORDER
7 06-01-2026 Heard the parties.
2. The petitioner has moved the Court for the
following reliefs:
“i) To issue an appropriate writ, order
or direction in the nature of certiorari for
quashing letter no. 502 dated 10.06.2019
(Annexure 6), whereby and where under the
Respondent No. 5 has directed the Petitioner to
deposit Rs. 1,15,24,934/-(Rupees One Crore
Patna High Court CWJC No.16348 of 2019(7) dt.06-01-2026
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Fifteen Lakhs Twenty Four Thousand Nine
Hundred Thirty Four only) in light of the
objections raised by the audit team at para 11 of
audit report no 235/13-14 with respect to transit
pass irregularities in the year 2012.
ii) This Hon'ble Court may adjudicate
and hold that merely on the basis of an audit
objection the competent authority cannot raise
any demand from a settlee without any
independent enquiry and verification at his own
end as contemplated under Rule 26 (b) of the
Bihar Minor Mineral Concession Rules, 1972.
iii) This Hon'ble Court may further
adjudicate and hold that the amount of extra
royalty computed by the office of Accountant
General at para 11 of audit report no. 235/13-14
is based upon assumptions and extrapolation
and the same cannot form the basis of any
demand without any independent verification at
the end of the competent authority.
iv) This Hon'ble Court may further
adjudicate and hold that in light of Rule 5 (b)
and 5(f) of the Mineral Transit Pass Regulations
1976, the Respondents are now precluded from
raising any demand from the petitioner for
excess royalty.”
3. Earlier the petitioner had moved this Court against
the order passed by the authorities and filed C.W.J.C. No. 17958
of 2017 which was disposed of by this Court on 16.05.2019.
4. A co-ordinate Bench of this Court had set aside the
order dated 05.10.2017 and remanded the matter back to the
Mines Commissioner to pass fresh order in accordance with law
after affording proper opportunity of hearing to the petitioner
and also looking into all the relevant documents filed on behalf
of the petitioner.
Patna High Court CWJC No.16348 of 2019(7) dt.06-01-2026
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5. Thereafter, a demand has been raised by the
Competent Authority, District Mining Office, Jehanabad.
Pertinently, the directions passed by the Co-ordinate Bench in
the aforesaid order has not been complied with inasmuch as no
proper opportunity has been given to the petitioner and no order
as directed by the aforesaid co-ordinate bench has been passed.
6. In my opinion, the Competent Authority, District
Mining Office, Jehanabad has passed an order against the order
dated 16.05.2019 passed by a co-ordinate Bench of this Court.
7. In these circumstances, in my view, the impugned
demand cannot be sustained being against the direction passed
by this Court.
8. The demand raised vide letter no. 502 dated
10.06.2019 (Annexure 6), by the Respondent no. 5 is hereby
quashed.
9. Accordingly, the application stands allowed.
(Sandeep Kumar, J)
P. Kumar
U
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