The Andhra Pradesh High Court has upheld the statutory validity of Rules 26 and 34 of the Andhra Pradesh Minor Mineral Concession Rules, 1966, holding that authorised departmental officials are competent to recover monetary penalties, seigniorage charges and the market value of minerals in cases involving illegal mining, transportation or storage.
A Division Bench comprising Chief Justice Lisa Gill and Justice Ravi Cheemalapati held that the power vested in departmental authorities under the APMMC Rules does not run contrary to the Mines and Minerals (Development and Regulation) Act, 1957. The Bench accordingly rejected challenges questioning the competence of executive authorities to impose such financial liabilities without the matter first being adjudicated by a criminal court.
The Court was dealing with a batch of writ petitions and writ appeals arising from proceedings concerning unauthorised quarrying, possession of minor minerals without proof of payment of mineral revenue and transportation of minerals without valid e-transit permits.
At the heart of the dispute was the scope of Rule 26 of the APMMC Rules, particularly following its amendment through G.O.Ms.No.35 dated July 1, 2020. The respondents had contended that the Rules could not confer upon departmental officers a power to impose penalties where the governing MMDR Act contemplated prosecution before a competent court.
The challenge also referred to the 2016 amendment to Rule 26(3)(ii), which prescribed imprisonment of up to two years or a fine extending to ₹5 lakh for specified violations. According to the petitioners, the presence of imprisonment as a possible consequence demonstrated that the power to impose punishment necessarily belonged to a criminal court.
The Division Bench, however, drew a distinction between the financial consequences that may be recovered administratively under the Rules and the imposition of imprisonment. It held that departmental authorities could recover the applicable penalty, seigniorage fee and market value of the mineral in accordance with the Rules. Where imprisonment is sought as a consequence, the matter would have to be placed before a competent criminal court through the prescribed procedure.
The Court noted that the APMMC Rules derive their statutory foundation from Section 15 of the MMDR Act, which empowers State Governments to frame rules concerning minor minerals. Section 23C further enables States to formulate rules for preventing illegal mining, transportation and storage of minerals.
Rejecting the contention that the expression “penalty” necessarily confines the power to a judicial forum, the Bench held that the regulatory framework must be construed in a manner that gives effect to its preventive and deterrent purpose. According to the Court, accepting an interpretation under which departmental authorities could not recover monetary liabilities would effectively dilute the statutory mechanism intended to curb illegal mineral activity.
The Bench also found no inconsistency between the MMDR Act and the APMMC Rules and held that the petitioners had failed to demonstrate that Rules 26 and 34 were ultra vires the parent legislation.
At the same time, the Court underscored that the exercise of departmental power is subject to the safeguards prescribed by law. Any monetary demand must be imposed strictly in accordance with the applicable Rules and only after the affected party has been afforded an adequate opportunity of hearing.
The Court consequently upheld the amendment to Rule 26(3), allowed the State’s connected writ appeals and set aside the orders passed by the Single Judge which had earlier invalidated the departmental action.
The Bench, however, left the individual factual disputes open, directing the competent authorities to examine the appeals and other proceedings in accordance with law.
The ruling in M/s Anjani Stone Crusher v. State of Andhra Pradesh & Others thus clarifies the distinction between administrative recovery of statutory monetary liabilities arising from illegal mineral activity and criminal punishment, particularly imprisonment, which remains within the jurisdiction of a competent criminal court.
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