Patna High Court
Shivshankar Kaushik Infrastructure Pvt. LimitedversusThe State of Bihar
- Decided
- Disposal
- ALLOWED
- Bench
- SANDEEP KUMAR
Holding
The Court held that the penalty order was void as it was passed without a show‑cause notice or hearing, violating the principles of natural justice, and therefore quashed the order and remitted the matter for fresh consideration.
Summary
Shivshankar Kaushik Infrastructure Pvt. Ltd. was awarded a sand‑ghat contract by Bihar State Mining Corporation Ltd. and began mining. The Managing Director later issued a notice levying a penalty of Rs.96,97,705 for allegedly excavating sand beyond the permitted area, without issuing a show‑cause notice or hearing the petitioner. The petitioner deposited the amount under threat of non‑issuance of e‑transit challans and filed a writ petition challenging the penalty on grounds of lack of jurisdiction, violation of Rule 30(1) and Rule 56(2) of the Bihar Minerals Rules, 2019, and breach of natural‑justice principles. The Court examined the inspection report, the absence of any notice or opportunity to be heard, and relevant Supreme Court precedents on audi alteram partem. It held that the penalty was imposed without a fair procedure and thus violated natural justice. Consequently, the Court quashed the penalty order, directed the respondents to reconsider the matter afresh with a proper hearing, and allowed the writ petition.
Issues considered
- The penalty imposed under Rule 30(1) and Rule 56(2) of the Bihar Minerals (Concession, Prevention of Illegal Mining, Transportation & Storage) Rules, 2019 is valid without a show‑cause notice and hearing.
- The Managing Director of Bihar State Mining Corporation Ltd. is a competent authority to levy the penalty.
- The amount of penalty levied is lawful and proportionate under the applicable rules.
- The failure to provide a show‑cause notice and hearing violates the principles of natural justice (audi alteram partem).
- Whether the impugned penalty order should be quashed and the petitioner entitled to a refund.
Subjects
- natural justice
- audi alteram partem
- penalty
- mining regulations
- Bihar Minerals Rules 2019
- administrative law
- quashing order
- show-cause notice
- environmental clearance
- sand mining
Judgment
IN THE HIGH COURT OF JUDICATURE AT PATNA
Civil Writ Jurisdiction Case No.17683 of 2023
======================================================
Shivshankar Kaushik Infrastructure Pvt. Limited a Company registered Under
the Companies Act, having its retistered Office at C/o Manoj Kumar Singh,
Kshatriya Colony, Ramnagar Andar Dhala, Siwan-841226, through its
authorised Signatory Shashi Kapoor Prasad, aged about 30 Years (Male), Son
of Raj Kumar Prasad, Resident of Village Tari, Tanri, P.S. Raghunathpur,
District Siwan 841509.
... ... Petitioner
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 District Magistrate, Bhojpur.
4. The Mineral Development Officer, Bhojpur.
5. Bihar State Mining Corporation Limited, through its Managing Director,
Room NO. 164, Vikas Bhawan, (New Secretariate), Bailey Road, Patna
800015.
6. The Managing Director, Bihar State Mining Corporation Limited, Room
NO. 164, Vikas Bhawan, (New Secretariate), Bailey Road, Patna 800015.
... ... Respondents
======================================================
Appearance :
For the Petitioner : Mr. Suraj Samdarshi, Advocate
Mr. Avinash Shekhar
For the State : Mr. Pramendra Kumar Singh, A.C. to G.A.-10
For the BSMC Ltd. : Mr. Ranjeet Kumar Pandey, Advocate
Mr. Rajesh Kumar, Advocate
For the Mines : Mr. Naresh Dikshit, Spl. P.P.
Ms. Shruti Singh, Advocate
======================================================
CORAM: HONOURABLE MR. JUSTICE SANDEEP KUMAR
C.A.V. JUDGMENT
Date : 27-01-2026
By way of this writ petition, the petitioner has
prayed for the following reliefs:-
i. To issue an appropriate writ, order or
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direction in the nature of certiorarı for
quashing the notice contained letter no.
360 dated 03.03.2023 issued by the
Respondent Managing Director, Bihar
State Mining Corporation Limited
whereby and whereunder a penalty of
Rs.96,97,705/- has been levied upon the
petitioner for allegedly excavating 90060
cubic feet sand from beyond the
permissible environment clearance area;
ii. Consequent to grant of relief no (i) above,
this Hon'ble Court may issue further
appropriate writ, order or direction in the
nature of mandamus commanding the
Respondents to refund the penalty amount
of Rs.96,97,705/- deposited by the
petitioner on 03.03.2023.
iii. This Hon'ble Court may further
adjudicate and hold that Respondent
Managing Director is not the competent
authority to levy penalty upon a settlee
under Rule 30(1) of the 2019 Rules.
iv. This Hon'ble Court may further
adjudicate and hold that penalty cannot
be levied upon a valid settee under Rule
56(2) of the 2019 Rules.
v. This Hon'ble Court may further
adjudicate and hold that letter no. 360
dated 03.03.2023 issued by the
Respondent Managing Director is bad in
the eyes of law since the same has been
issued in glaring violation of the
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principles of natural justice as the
petitioner has not been afforded any show
cause notice whatsoever to controvert the
allegations upon which the penalty has
been levied.
vi. This Hon'ble Court may further
adjudicate and hold that the levy of
penalty contained in letter no.360 dated
03.03.2023 is in gross violation of the
maxim audi alteram partem as the
petitioner has been condemned unheard
without an opportunity to defend the
charges against it.
vii. This Hon'ble Court may further
adjudicate and hold that the imposition of
penalty upon the petitioner is in violation
of the 2019 Rules?”
2. It is the case of the petitioner that the
respondent - Bihar State Mining Corporation Limited had
published a notice inviting e-auction for selection of sub-
contractors for operation of sand ghats in the district of Bhojpur.
The petitioner had participated in the said tender process and
being the highest bidder, he was awarded Khangaon (Bahiyara)
sand ghat after quoting an amount of Rs.5,53,41,610/-.
Thereafter, the petitioner had deposited the requisite amount and
accordingly, work order was issued in his favour.
3. It is the case of the petitioner that an
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agreement was also executed between the petitioner and the
respondent- Bihar State Mining Corporation Limited which was
registered on 27.06.2022. Thereafter, the petitioner started
carrying out the mining activities, but all of a sudden the
Managing Director of the Bihar State Mining Corporation
Limited issued the impugned letter dated 03.03.2023, whereby a
penalty of Rs.96,97,705/- was levied upon the petitioner for
excavating the sand beyond the permissible mining area and the
petitioner was directed to deposit the penalty amount within 24
hours.
4. According to the petitioner, he had deposited
the penalty amount under compulsion and threat of restriction
on generation of e-transit challans.
5. It has been submitted by learned counsel for
the petitioner that the impugned order of penalty dated
03.03.2023 indicates that on 24.02.2023 and 25.02.2023
inspection was conducted and it was found that the signboard
and boundary wall were not erected and the sand was found to
have been excavated outside the permissible area, however,
neither the petitioner was intimated about any inspection nor the
alleged inspection was conducted in his presence. It has further
been submitted that neither show-cause notice was issued to the
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petitioner nor any inspection report was provided to him before
imposing the penalty.
6. It is the categorical submission of learned
counsel for the petitioner that the petitioner has not excavated
the sand beyond the permissible area and the imposition of
penalty of such a huge amount is completely illegal and in
violation of the principles of natural justice as the same has been
passed without issuance of any show-cause notice to the
petitioner and without affording an opportunity to rebut the
allegation.
7. In support of this submission, learned
counsel for the petitioner has placed reliance on decisions dated
09.05.2023 passed by a coordinate Bench of this Court passed in
C.W.J.C. No.3400 of 2023 titled as M/s. Uma Associates vs.
State of Bihar and Ors.; the judgment dated 01.08.2025 passed
in C.W.J.C. No.17442 of 2023 titled as M/s. Shri Vijay Kumar
Singh vs. The State of Bihar and Ors. and the judgment dated
01.08.2024 passed in C.W.J.C. No.9091 of 2023 titled as Maa
Bhawani Traders vs. The State of Bihar & Ors.
8. Adverting to Rule 20 and 56 of the Bihar
Minerals (Concession, Prevention of Illegal Mining,
Transportation & Storage) Rules, 2019, learned counsel for the
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petitioner submits that there is no provision in the aforesaid
Rules, regarding recovery of price of mineral for illegal
excavation as a compensation. Further, Rule-30 specifically
provides that for the first time violation, a penalty of
Rs.1,00,000/- can be imposed upon the setttlee, however, even
assuming that the allegation against the petitioner is true then
also the aforesaid imposition of penalty is totally illegal and not
sustainable.
9. Per contra, learned counsel for the
answering respondent nos.5 and 6 has submitted that in light of
the order of the Director, Mines and Geology Department, a
special investigating team was constituted to carry out
inspection of sand ghats, illegal mining, transportation and
storage of minerals in the District of Bhojpur and in the said
inspection, it was found that the sand ghat which has been
allotted to the petitioner had no signboard and mining was being
done outside the permissible area, thereby making the petitioner
liable for penalty. On the basis of the aforesaid inspection, the
penalty of Rs.96,97,705/- was imposed upon the petitioner for
illegally extracting 90060 CFT of sand beyond permissible area
allotted to the petitioner under Rule 56(2) of the Rules, 2019. It
has also been submitted that the above mentioned inspection
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was done under Rule 59 of Rules, 2019.
10. The learned counsel for the answering
respondent nos. 5 and 6 has argued that since the petitioner had
deposited the amount of penalty on the very same day i.e. on
03.03.2023, the same clearly shows admission on the part of the
petitioner regarding illegal mining activity carried out by him
beyond the permitted area.
11. So far as the decision dated 01.08.2025
passed in the case of M/s. Shri Vijay Kumar Singh (supra),
which has been relied upon by learned counsel for the petitioner
is concerned, it has been submitted that against the aforesaid
decision, the Bihar State Mining Corporation Ltd. has preferred
an appeal being L.P.A. No. 887 of 2025 before the Division
Bench of this Court.
12. It has further been submitted that the
decision in M/s. Uma Associates (supra) and Maa Bhawani
Trader (supra) are not applicable since the facts of the present
case is different from the facts of both the cases. In the case of
M/s. Uma Associates (supra), the petitioner therein had
challenged the order of penalty without depositing the same and
in Maa Bhawani Traders (supra), the penalty amount was
deposited under protest. However, in the present case the
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petitioner deposited the penalty amount without any protest on
the same day of demand, which shows that the petitioner
accepted the penalty and after about more than 9 months and
even after completing the contract, he filed the present writ
petition.
13. I have considered the submissions of the
parties and perused the materials available on record.
14. In this case, the central argument of the
learned counsel for the petitioner is that the impugned penalty
order has been passed in complete contravention of the
principles of natural justice as no show-cause notice was issued
to the petitioner before imposing the penalty and even no
opportunity of hearing was afforded to him.
15. I find substance in the submission of learned
counsel for the petitioner that before passing the impugned
order of penalty neither show-cause notice was issued to the
petitioner nor he has been heard and further the enquiry report
has also not been supplied to the petitioner. Even the learned
counsel for the answering respondents is not in a position to
show anything from the records indicating that before passing
the impugned order either the show-cause notice was issued to
the petitioner or that he has been heard. Further, the respondents
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had provided only 24 hours time to deposit the penalty amount.
In my opinion, the penalty could have been imposed upon the
petitioner only after a proper inquiry conducted in his presence,
which is absent in the present case.
16. Recently, the Hon’ble Supreme Court in the
case of Krishnadatt Awasthy v. State of M.P. & Ors., reported
as (2025) 7 SCC 545 has emphasized on the imperativeness of
principles of natural justice, particularly, before an
administrative authority acting in a quasi judicial function and
has held as under:-
“43. The opportunity of hearing is considered so
fundamental to any civilised legal system that
the courts have read the principles of natural
justice into an enactment to save it from being
declared unconstitutional on procedural
grounds [Olga Tellis v. Bombay Municipal
Corpn., (1985) 3 SCC 545] .
44. It has been argued before us that if the failure to
provide hearing does not cause prejudice,
observing the principle of natural justice may
not be necessary. In this context, a three-Judge
Bench of this Court in S.L. Kapoor v. Jagmohan
[S.L. Kapoor v. Jagmohan, (1980) 4 SCC 379]
speaking through Chinappa Reddy, J.
considered such arguments to be “pernicious”
and held that “[t]he non-observance of natural
justice is itself prejudice to any man and proof
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of prejudice independently of proof of denial of
natural justice is unnecessary”. The Supreme
Court, however, has drawn out an exception
where “on the admitted or indisputable facts
only one conclusion is possible, and under the
law only one penalty is permissible, then the
Court may not compel the observance of natural
justice” [Swadeshi Cotton Mills v. Union of
India, (1981) 1 SCC 664 : (1981) 51 Comp Cas
210; Aligarh Muslim University v. Mansoor Ali
Khan, (2000) 7 SCC 529 : 2000 SCC (L&S)
965].
45. Professor I.P. Massey [I.P. Massey,
Administrative Law (8th Edn., 2012).] has
commented on this shift as under:
“Before the decision of the highest Court
in S.L. Kapoor v. Jagmohan [S.L. Kapoor
v. Jagmohan, (1980) 4 SCC 379], the
rule was that the principles of natural
justice shall apply only when an
administrative action has caused some
prejudice to the person, meaning thereby
that he must have suffered some “civil
consequences”. Therefore, the person
had to show something extra in order to
prove “prejudice” or civil consequences.
This approach had stultified the growth
of administrative law within an area of
highly practical significance. It is
gratifying that in Jagmohan [S.L. Kapoor
v. Jagmohan, (1980) 4 SCC 379] , the
Court took a bold step in holding that a
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separate showing of prejudice is not
necessary. The non-observance of
natural justice is in itself prejudice
caused. However, merely because facts
are admitted or are undisputable it does
not follow that the principles of natural
justice need not be observed.”
46. In State Bank of Patiala v. S.K. Sharma [State
Bank of Patiala v. S.K. Sharma, (1996) 3 SCC
364 : 1996 SCC (L&S) 717], the Supreme Court
observed that where an enquiry is not convened
by any statutory provision and the only
obligation of the administrative authority is to
observe the principles of natural justice, the
court/tribunal should make a distinction
between a total violation of the rule of fair
hearing and violation of the facet of that rule. In
other words, a distinction must be made
between “no opportunity” or “no adequate
opportunity”. In the case of the former, the
order passed would undoubtedly be invalid and
the authority may be asked to conduct
proceedings afresh according to the rule of fair
hearing. But in the latter case, the effect of
violation of a facet of the rule of fair hearing
has to be examined from the standpoint of
prejudice.
47. In Dharampal Satyapal Ltd. v. CCE
[Dharampal Satyapal Ltd. v. CCE, (2015) 8
SCC 519 : (2015) 33 GSTR 1], this Court dealt
with the prejudice question as under: (SCC p.
540, para 42)
Patna High Court CWJC No.17683 of 2023 dt.27-01-2026
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“42. So far so good. However, an important
question posed by Mr Sorabjee is as to
whether it is open to the authority, which
has to take a decision, to dispense with
the requirement of the principles of
natural justice on the ground that
affording such an opportunity will not
make any difference? To put it otherwise,
can the administrative authority dispense
with the requirement of issuing notice by
itself deciding that no prejudice will be
caused to the person against whom the
action is contemplated? Answer has to
be in the negative. It is not permissible
for the authority to jump over the
compliance of the principles of natural
justice on the ground that even if
hearing had been provided it would
have served no useful purpose. The
opportunity of hearing will serve the
purpose or not has to be considered at a
later stage and such things cannot be
presumed by the authority. This was so
held by the English Court way back in
the year 1943 in General Medical
Council v. Spackman [1943 AC 627
(HL)]. This Court also spoke in the same
language in Board of High School &
Intermediate Education, U.P. v. Chitra
Srivastava [Board of High School &
Intermediate Education, U.P. v. Chitra
Srivastava, (1970) 1 SCC 121] ….”
Patna High Court CWJC No.17683 of 2023 dt.27-01-2026
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48. In a more recent decision in State of U.P. v
Sudhir Kumar Singh [State of U.P. v. Sudhir
Kumar Singh, (2021) 19 SCC 706] , the position
of law was summarised as under: (SCC pp. 748-
49, para 42)
“42. …42.1. Natural justice is a flexible tool
in the hands of the judiciary to reach out
in fit cases to remedy injustice. The
breach of the audi alteram partem rule
cannot by itself, without more, lead to the
conclusion that prejudice is thereby
caused.
42.2. Where procedural and/or
substantive provisions of law embody the
principles of natural justice, their
infraction per se does not lead to
invalidity of the orders passed. Here
again, prejudice must be caused to the
litigant, except in the case of a
mandatory provision of law which is
conceived not only in individual interest,
but also in public interest.
42.3. No prejudice is caused to the
person complaining of the breach of
natural justice where such person does
not dispute the case against him or it.
This can happen by reason of estoppel,
acquiescence, waiver and by way of non-
challenge or non-denial or admission of
facts, in cases in which the Court finds
on facts that no real prejudice can
therefore be said to have been caused to
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the person complaining of the breach of
natural justice.
42.4. In cases where facts can be stated
to be admitted or indisputable, and only
one conclusion is possible, the Court
does not pass futile orders of setting
aside or remand when there is, in fact, no
prejudice caused. This conclusion must
be drawn by the Court on an appraisal of
the facts of a case, and not by the
authority who denies natural justice to a
person.
42.5. The “prejudice” exception must be
more than a mere apprehension or even a
reasonable suspicion of a litigant. It
should exist as a matter of fact, or be
based upon a definite inference of
likelihood of prejudice flowing from the
non-observance of natural justice.”
(emphasis supplied).
17. It is a cardinal principle of law that no one
should be condemned before being heard, which is also an
integral part of the principles of natural justice. Considering the
aforesaid decision of the Hon’ble Supreme Court in the case of
Krishnadatt Awasthy (supra), it is clear that the principles of
nature justice must be adhered to strictly. The doctrine of audi
alteram partem has three basic essentials. Firstly, a person
against whom an order is required to be passed or whose rights
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are likely to be affected adversely, must be granted a reasonable
opportunity of being heard. Secondly, the authority concerned
should provide a fair and transparent procedure and lastly, the
authority concerned must apply its mind and dispose of the
matter by a reasoned and speaking order.
18. In the present case, it appears from the
records that the inspection was conducted behind the back of the
petitioner and after inspection the petitioner was neither
provided the inspection report nor show-cause was issued to
him, and the impugned order imposing penalty has also been
passed without hearing the petitioner, which is in complete
violation of principles of natural justice and therefore non est.
Moreover, the respondent authorities had provided merely 24
hours’ time to deposit the penalty amount and the petitioner
under the threat of non-generation of his e-challans had
deposited the aforesaid penalty amount. The action of the
respondent authorities in grating only 24 hours time to deposit
the huge penalty amount imposed upon the petitioner is totally
arbitrary and therefore, unsustainable.
19. In view of the aforesaid discussions, the
impugned letter dated 03.03.2023 imposing penalty upon the
petitioner is hereby quashed and set aside. The matter is
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remitted to the respondents to consider the matter afresh and
pass a speaking order after giving a reasonable opportunity of
hearing to the petitioner.
20. With the aforesaid observations and
directions, the writ petition stands allowed.
(Sandeep Kumar, J)
pawan/-
AFR/NAFR N.A.F.R.
CAV DATE 22.12.2025
Uploading Date 27.01.2026
Transmission Date
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