M/S Nirman Engineers And … vs The State Of Karnataka By Its … on 4 June, 2009

1

IN THE HIGH COURT OF KARNATAKA AT BANGALORE
DATED THIS THE 4"' DAY OF JUNE 2009

PRESENT

THE HON'BLE MR. 9.0. DINAKARAN, CHIEF Jus'r1_oE

AND

THE Hcm'sLE MRJUSTICE V.G. sABHAH»1Tj~..  

Between :

M/s. Nirman Engineers & Contractors, V .,
Represented by its Managing Partner,  
B. Kishor Kumar Hegde, ' 
S/o.iate Kushal Hegde,

Age: 44 years,  
Occ: Contractor, A  '
R/at. No. 973, Ist f|oo_r,.--. _  V     
45**"cross, NearE.S.I. Hqspitai,  f  " 

3"' block, Rajajinaga'r","  
Bangaiore «~ 560 03.9. -j__  '

_v V ...Petitioner
  {By Sri"Na-geraja N Naidu, Advocate)

And;' T

  1. Thefitate 'ieagrnataika, by its Director,

Department. ~of_f\{i..ines & Geology,
Kanija Bi*:a\kan,'Race Course road,

1.  _f3A.NGALo'RE_ "- 01.

 Se(_:i'etary, State of Karnataka,

_C_or'nn'ierCe & Industries Department, W
. §:"" )E7fl'¥

' 'Tij-.._M.s.;Bundsng, 3  g
, 1' BANGALORE -~ 01. 

wan PETITION mg. 6928 or :>;oo:s,(4,ipre.I.imina'r=yihearinglt  there'

Court delivered the foilowingw

3 UKD'~G___M__rE hi 1* A

(Delivered by Pp. peinaiimn, 

The    registered civil contractor
carrying on civil'worksVV_.oaf1tvh§*Qoilernment Department and Local
Bodies.  -is contendedhvthat  the purpose of execution of civil
v}orks,yVtiie{' p.etiti'o.nerxiwswréciuired to purchase building materials

frorn_then'pri'v.ate%'jsources. It is further contended that the

it,tpetitioner_Vdoe.sinotjlown any quarry and that he is not iiable to

"--«i.-l'pav"any royalty to the respondents. However, the respondents

it"--V.Vare"'tiyed.uc'ting royalty from the bills of the petitioner without

 of law. Hence, this writ petition praying not to deduct



the royalty from the bills of the petitioner in respect of the
materials procured by him from private sources for execution of

the civil contract works.

2. In simiiar matters, this Court in G.V. 

omens v. STATE or KARNATAKA AND oT.HgE~--as?.'tiyi:nliygwrit 'A 

Petitions No. 31384-31266 of 1994 dispioseclélojflon

1994 has laid down the principles_4reiating"~to 

royaity by the contractors. The same"i'i'a:re extra'ct.eAdr hjereunderz

(a) Where providing theiimateriafil i'suiéjected_ to royalty)
is the responslbi'lit_y[o.f the; contractor" and the
Departm.er;=t_V pro vldesi the contrjactorlhpj with specified

;';,vorro'i_l1i"'lvf;>,3_-reasyghp extraction of the required
cc.nstruct'ion'Trnateriai,njtite contractor will be liable
to pay" royalty'.:charges for the material (minor

is ' mineral)'-.eXtracted from such areas, irrespective of
 mlfhgether .th'e'contract is a item rate contract or a
  lun?p'«sum_ contract. Hence deduction of royalty
 such cases will be legal. For this purpose
 no.n¥e.§§ecution of mining lease is not relevant, as

it the liability to pay royalty arises on account of the
contractor extracting material from a Government

 land, for use in the work. 
' it  MW...
gm _,,,,.-----~'



(b)

( C)

(0')

4

Where under the contract the responsibility to

supply the material (minor minerals) is that of the'-

Department/employer and the

required to provide only the labour and sen./ice'   -I~ 
execution of any work involving useV__of...such
material, and the unit rate does"-not  
cost of material, there is "no   

contractor to pay any royalty. H_'l'his willvxbeelvthe  3

position even if the contractor if. . requireld to
transport the material from 'outside the" work site,
so long as the un'it4_ra--te  only"t'o_r.labour or service

and doeslnot include the cost or ma--ter.lai.__

Where the"..e:(;ij.ntractor uses. Ama_terialf'purchased in
open,  that n'iaterial_ purchased from
private. esoiirces iilfe.  holders or private
= _:tl:-ere  liability on the

co_nt'ract'or vto:'paye»a4ny__royalty charges.

In cases. coveredgiby paras (b) and (c) the

g: ' Departmenetllcannot recover or deduct any royalty

 fifom 'thee billsvvof' the contractor and if so deducted,

 the= Department will be bound to refund any

  ainou_nt~3$o"'deducted or collected to the contractor.

Subject to the above, collection of royalty by the

Department or refund thereof by the Department

V u will be governed by the terms of contract.

 

contractor f "is.    



(f) Nothing stated above shall be construed as a
direction for refund in regard to any particular
contract. The Department or authority concerned
shall decided in each case, whether royalty is to 
deducted or if any royalty is already deddctefiw;fl41'i,,.,ii,

whether it should be refunded, keeping in    

above principles and terms of the contrac.tJ'V_'4_: V  '

3. The said decision has beer}: upheld 

Bench of this Court in the case of»'O.i_=FICE.V_f)F TI-§*E:v'l'

or DEPARTMENT OF MINES \'i'A:r~Iou éeaigdevvj v. M.
MOHAIVIMED HAJE!.=. in Wrif:'---liif-pee§:l my asollcfzooe disposed of
on 25"' September, 2006.   2 l h V' V

4. FoI'Eow.!.rjig_Vtheyj'ud"grjj'entlof'ttiVis Court rendered in Writ
Appeai No.83o sf 2looh6'sI'lspossc.i:¢.t on 25"' September', 2005 this

writ petitioynvis also dispo-sed_ off No order as to costs.

 .....  

Chief Justice

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