# M/s V.K. Packaging Industries v. Tax Recovery Officer and others

- **Citation:** (2004) 1 ILRA 239
- **Court:** High Court of Judicature at Allahabad
- **Decided:** 2004-01-12
- **Case number:** Civil Misc. Writ Petition No. 178 of 2003
- **Bench:** M. Katju, Umeshwar Pandey
- **Source:** https://unisonlegal.in/judgment/allahabad-high-court/m-s-v-k-packaging-industries-v-tax-recovery-officer-and-others-40331
- **Pages:** 8

## Headnote

Income Tax Act-Ss. 226 (3), 143 (3)-
demand
Notice
S.
226
(3)-ValidityDoctrine of merger-Assessment order dt.
15.3.2000 on basis of which impugned
demand notice was issued merged into
order of CIT (Appeals)-Whose order in
turn merged into order of Income Tax
Appellate Tribunal-ITAT set aside order
of
CIT
(Appeals)
on
ground
that
assessing officer as well as CIT (Appeals)
had not given copies of accounts of third
parties-Hence issue of demand notice in
pursuance
of
assessment
order
dt.
15.3.2000
and
realization
of
sum
thereunder held, illegal-Petitioner, held,
entitled to restitution of amount of tax
realized under assessment order dt.
15.3.2000.

Held: Paras 27,28,29 & 31

In
these
circumstances
we
fail
to
understand how any demand could be
issued against the petitioner and how
any sum could have been realized from
the petitioner in pursuance of the
assessment order dated 15.3.2000 when
the
said
assessment
order
dated
15.3.2000 has in fact ceased to exist.
Merely
because
the
Tribunal
has
http://www.allahabadhighcourt.nic.in
240 INDIAN LAW REPORTS ALLAHABAD SERIES [2004
remanded
the
matter
to
the
CIT
(Appeals) it does not follow that the
assessment order dated 15.3.2000 has
revived. Consequently we are of the
opinion that the impugned notice under
Section 226 (3) of the Income Tax Act
was wholly illegal as there was be no
valid demand against the petitioner.

In our opinion the petitioner is entitled
to restitution in respect of any amount of
tax
realized
in
pursuance
of
the
assessment order dated 15.3.2000. It is
well settled that when a decree or order
is set aside or modified in appeal it is the
duty of the Court to grant restitution.

On the facts and circumstances of the
case we quash the notice under Section
226 (3) and the recovery made in
pursuance of the impugned notice under
226 (3) of the Income Tax Act. Any
amount realized from the petitioner in
pursuance of the notice under Section
226 (3) and the assessment order dated
15.3.2000 shall be refunded to him
forthwith with interest at 12% per
annum from the date of realization to
the date of refund. The refund must be
made within a month from the date of
production of copy of this order before
the authority concerned.

Before parting with the case we would
like to state that we cannot appreciate
this
practice
of
the
Income
Tax
Department
of
hurriedly
passing
assessment orders shortly before the
limitation period is about to expire and
justifying this practice by saying that
there was shortage of time and hence it
was impossible
to
verify
the facts
properly, and hence the additions were
being made. It is of common knowledge
that when the limitation for making an
assessment is about to expire (usually
on 31st March) there is a sudden rush
and
scramble
to
complete
the
assessments.
If
this
practice
is
countenanced the citizens of the country
will be put to great harassment as
exorbitant demands can be made against
them merely by saying that there was
shortage of time and hence additions
were being made for this reason without
verifying the facts correctly. It is the
duty of the department to make a correct
assessment
and
not
to
make
an
excessive assessment merely on the
ground of shortage of time.
Case law discussed:
(1983) 143 ITR 765
(2001) 250 ITR 193
(2001) 162 Taxation 649
84 ITR 222
AIR 2000 SC 2587
1967 ALJ 1054
AIR 2003 SC 4482
AIR 1985 SC 39

## Text

1 All] M/s V.K. Packaging Industries V. Tax Recovery Officer and others 239
present on that date and that the medical
certificates were of the year 1999. The
fact whether defendant's counsel was
informed was denied in the affidavit
supporting
the
delay
condonation
application. There was no reason to
disbelieve the medical certificates. The
fact that the officer looking after the case
had suffered a heart attack and could not
pursue the matter, was not denied. In the
circumstances, I find that both the Trial
Court as well as the Appellate Court
committed gross error in law, in rejecting
the restoration application. The plaintiff,
however, must have incurred expenses in
execution proceedings, and that in the
facts and circumstances, I find that costs
of Rs.10,000/- will serve the interest of
justice.

10. The writ petition is allowed. The
impugned orders dated 1.3.2002 passed
by
Civil
Judge
(Junior
Division)
Saharanpur in Misc. Case No.4A/2000
and order dated 29.4.2002 passed by
District Judge, Saharanpur in the Misc.
Civil Appeal No.39/2002 are set aside.
The
petitioner's
application
for
condonation of delay and setting aside the
ex parte decree stand allowed, subject to
payment of exemplary cost of Rs.10,000/-
to be paid by the defendants corporation
to the plaintiffs by depositing in trial court
within six weeks from delivering of this
judgment. In case the cost are not
deposited in trial court with the time
fixed, the ex parte decree passed against
petitioner
shall
stand
revived.
The
plaintiff shall be entitled to withdraw the
costs.
---------
ORIGINAL JURISDICTION
CIVIL SIDE
DATED: ALLAHABAD 12.01.2004

BEFORE
THE HON'BLE M. KATJU, J.
THE HON'BLE UMESHWAR PANDEY, J.

Civil Misc. Writ Petition No. 178 of 2003

M/s V.K. Packaging Industries ...Petitioner
Versus
Tax Recovery Officer and others

 ...Respondents

Counsel for the Petitioner:
Sri Govind Saran

Counsel for the Respondents:
Sri Bharat Ji Agarwal

Income Tax Act-Ss. 226 (3), 143 (3)-
demand
Notice
S.
226
(3)-ValidityDoctrine of merger-Assessment order dt.
15.3.2000 on basis of which impugned
demand notice was issued merged into
order of CIT (Appeals)-Whose order in
turn merged into order of Income Tax
Appellate Tribunal-ITAT set aside order
of
CIT
(Appeals)
on
ground
that
assessing officer as well as CIT (Appeals)
had not given copies of accounts of third
parties-Hence issue of demand notice in
pursuance
of
assessment
order
dt.
15.3.2000
and
realization
of
sum
thereunder held, illegal-Petitioner, held,
entitled to restitution of amount of tax
realized under assessment order dt.
15.3.2000.

Held: Paras 27,28,29 & 31

In
these
circumstances
we
fail
to
understand how any demand could be
issued against the petitioner and how
any sum could have been realized from
the petitioner in pursuance of the
assessment order dated 15.3.2000 when
the
said
assessment
order
dated
15.3.2000 has in fact ceased to exist.
Merely
because
the
Tribunal
has
http://www.allahabadhighcourt.nic.in
240 INDIAN LAW REPORTS ALLAHABAD SERIES [2004
remanded
the
matter
to
the
CIT
(Appeals) it does not follow that the
assessment order dated 15.3.2000 has
revived. Consequently we are of the
opinion that the impugned notice under
Section 226 (3) of the Income Tax Act
was wholly illegal as there was be no
valid demand against the petitioner.

In our opinion the petitioner is entitled
to restitution in respect of any amount of
tax
realized
in
pursuance
of
the
assessment order dated 15.3.2000. It is
well settled that when a decree or order
is set aside or modified in appeal it is the
duty of the Court to grant restitution.

On the facts and circumstances of the
case we quash the notice under Section
226 (3) and the recovery made in
pursuance of the impugned notice under
226 (3) of the Income Tax Act. Any
amount realized from the petitioner in
pursuance of the notice under Section
226 (3) and the assessment order dated
15.3.2000 shall be refunded to him
forthwith with interest at 12% per
annum from the date of realization to
the date of refund. The refund must be
made within a month from the date of
production of copy of this order before
the authority concerned.

Before parting with the case we would
like to state that we cannot appreciate
this
practice
of
the
Income
Tax
Department
of
hurriedly
passing
assessment orders shortly before the
limitation period is about to expire and
justifying this practice by saying that
there was shortage of time and hence it
was impossible
to
verify
the facts
properly, and hence the additions were
being made. It is of common knowledge
that when the limitation for making an
assessment is about to expire (usually
on 31st March) there is a sudden rush
and
scramble
to
complete
the
assessments.
If
this
practice
is
countenanced the citizens of the country
will be put to great harassment as
exorbitant demands can be made against
them merely by saying that there was
shortage of time and hence additions
were being made for this reason without
verifying the facts correctly. It is the
duty of the department to make a correct
assessment
and
not
to
make
an
excessive assessment merely on the
ground of shortage of time.
Case law discussed:
(1983) 143 ITR 765
(2001) 250 ITR 193
(2001) 162 Taxation 649
84 ITR 222
AIR 2000 SC 2587
1967 ALJ 1054
AIR 2003 SC 4482
AIR 1985 SC 39

(Delivered by Hon'ble M. Katju, J.)

1. This writ petition has been filed
for a writ of certiorari to quash the
impugned notice under Section 226 (3) of
the Income Tax Act vide Annexure-5 to
the writ petition. The petitioner has also
prayed for a mandamus directing the
respondent no. 1 to refund the amount
recovered under the notice under Section
226 (3) with interest. The petitioner has
also prayed for a direction to respondent
no. 1 to refund Rs. 75,000/- deposited by
the petitioner with interest and has also
prayed that respondent no. 3 be directed
to decide the appeal of the petitioner on
merits expeditiously.

2. Heard learned counsel for the
parties.

3. The petitioner is a registered
partnership firm which is doing the
business of manufacture of Corrugated
boxes/Card Board boxes. The relevant
A.Y is 1997-98 and in this year the
petitioner filed a return on 31.10.1997
disclosing income of Rs. 27,374.28 paise.
The petitioner has alleged that it has
maintained regular and proper books of
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1 All] M/s V.K. Packaging Industries V. Tax Recovery Officer and others 241
account in the ordinary and regular course
of business.

4. The petitioner appeared before the
Assessing Officer/Income Tax Officer
ward no. 5, Allahabad and the Assessing
Officer by his order dated 15.3.2000
determined the petitioner's income at
Rs.7,40,750/-.
True
copy
of
the
assessment order dated 15.3.2000 is
Annexure-1 to the writ petition. This
assessment was made under Section
143(3) of the Income Tax Act.

5. It is alleged in para 7 of the
petition that during the course of the
hearing the Assessing Officer issued
notices under Section 133 (6) of the
Income Tax Act to M/s Shiv Datt and
Sons, M/s K. Lal and Company and M/s
Shakumbhari Pulp and Paper Mills Ltd.,
apart from other parties. It is alleged that
these notices were issued only for
obtaining copies of accounts of the
petitioner's firm from the books of the
above
three
respective
parties
in
compliance to the notices under Section
133(6) of the Act. The parties sent copies
of the accounts to the Assessing Officer,
and on the basis of those copies of
accounts additions were made in the
hands of the petitioner on the allegation
that there are differences in the accounts.
Those differences were added in the
hands of the petitioner as undisclosed
income. The major additions were of Rs.
4,25,000 and Rs. 50,080. The addition of
Rs. 4,25,000 was made on the allegation
that payment of the said amount was
made by M/s Shakumbari Paper & Pulp
Mills, but no entries were recorded in the
petitioner's books, though the entries
were recorded in the books of Shakumbari
Paper & Pulp Mills. The other additions
were also on similar ground.

6. It is alleged in para 8 of the
petition that the copies of the said
accounts of the aforesaid three parties
were not supplied to the petitioner, nor
were the parties summoned, nor were the
books examined, and instead the additions
were made simply on the basis of these
copies of the accounts. In fact the
Assessing Officer himself admitted in the
assessment order dated 15.3.2000 in para
6 that due to shortage of time it was
impossible to verify the facts properly and
hence the additions were made.

7. Against the assessment order the
petitioner filed an appeal before the C.I.T.
(Appeals). The appellate authority fixed
the hearing on various dates, but it is
alleged that copies of the accounts were
not supplied to the petitioner despite
repeated requests in writing as well as
orally. Copy of the application filed by
the
petitioner
before
the
appellate
authority praying for supplying of these
documents is Annexure-2 to the petition.
The petitioner stated before the Assessing
Officer as well as the C.I.T. (Appeals)
that
the
records
were
misplaced
somewhere by the Chartered Accountant
and therefore the petitioner was helpless
in conducting the appeal. However the
C.I.T. (Appeals) decided the appeal by the
ex-parte order dated 30.4.2002. True copy
of the said order is Annexure-3 to the writ
petition.

8. Thereafter a second appeal was
filed by the petitioner before the Tribunal
on 28.5.2002 which was decided on
30.12.2002 vide annexure 4. The Tribunal
by its order dated 30.12.2002 set aside the
order of the C.I.T. (Appeals) and
remanded the matter back to the C.I.T.
(Appeals) with certain directions as stated
in para 5 of this order. The main direction
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242 INDIAN LAW REPORTS ALLAHABAD SERIES [2004
of the Tribunal was that the party should
be provided copies with the accounts of
the third parties and the matter should be
decided after considering each and every
ground taken by the petitioner. True copy
of the order of the Tribunal dated
30.12.2002 is Annexure-4 to the petition.
The appeal is now pending before the
C.I.T. (Appeals)

9. In the meantime the respondent
no. 1, the Tax Recovery Officer, issued
notices under Section 226 (3) for
realization of the demand assessed by the
Assessing Officer. True copy of this
notice issued to various parties is
Annexure-5 to the writ petition.

10. It is alleged in para 15 of the
petition that due to the notice under
Section 226 (3) issued to Saraiya
Distillery Limited, Gorakhpur by the
respondent no. 1 the Saraiya Distillery
Ltd., Gorakhpur has deducted Rs. two
lacs from the account of the petitioner and
has deposited the same with the Income
Tax Department vide Annexure-6 to the
petition. The Saraiya Distillery Ltd. has
also withheld the payment which is due to
the petitioner on supply of the packaging
materials to them on the ground of notice
under Section 226 (3). Thus huge amount
of the petitioner has been detained by
Saraiya Distillery Ltd, Gorakhpur because
of the notice under Section 226 (3) of the
Income Tax Act which is said to have
adversely affected the business of the
petitioner.

11. It is alleged in para 16 of the
petition that the petitioner had already
deposited Rs. 75,000/- with the Income
Tax Department on account of the
demand for A.Y. 1997-98. Copy of three
challans of deposits of Rs. 75,000/- is
Annexure-7. During the pendency of the
appeal the petitioner gave an application
to the Tax Recovery Officer requesting to
revoke the order passed under Section 226
(3). The petitioner deposited Rs.75,000/-
in three instalments.

12. However, the T.R.O. has again
initiated proceeding under Section 226 (3)
and consequently on receiving the notice
the Saraiya Distillery Ltd., Gorakhpur had
deducted Rs. two lacs from the account of
the petitioner and has deposited the same
with the Income Tax Department.

13. It is alleged in para 18 of the
petition that due to illegal proceedings
under Section 226 (3) initiated by the
T.R.O. the petitioner is facing great
hardship as it will not get the payment for
its supply of packaging materials from its
customers. These customers are taking the
supply of package materials for running
the business. The petitioner needs the
money for the supply for keeping its
regular turnover of the business. It is
alleged that since the incoming of the
money for the supplied materials has been
stopped due to notice under Section 226
(3) of the Income Tax Act the petitioner is
in great financial crisis and is on the verge
of closure.

14. It is alleged that the demand
under Section 226 (3) is illegal and is
based
on
illegal
assessment.
The
Assessing Officer has himself stated in
the assessment order that due to shortage
of time it was impossible to verify the
facts properly and therefore he made
major additions. He has also stated that
the difference of Rs. 4,25,000/- which has
been stated to have been paid by the
assessee to other parties could not be
verified due to shortage of time.
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1 All] M/s V.K. Packaging Industries V. Tax Recovery Officer and others 243

15. For the same assessment year a
notice under Section 148 of the Income
Tax Act was issued by the ITO Ward No.
5 Allahabad. The petitioner gave a letter
to the Joint Commissioner of Income Tax,
Allahabad requesting him to withdraw the
demand against the petitioner for A.Y.
1997-98. In that letter the petitioner stated
that when a notice is issued under Section
148 then the order dated 15.3.2000 should
remain under abeyance and hence the
demand should be withdrawn. True copy
of
the
letter
dated
22.10.2001
is
Annexure-8 to the writ petition.

16. The petitioner relied on the
decision of this Court reported in Saran
Engineering Co. Ltd. v. CIT, (1983) 143
ITR p. 765 in which it was observed:

"Once reassessment proceedings are
started the earlier order ceased to exist,
and the ITO starts the assessment
proceedings a fresh."

The ratio of this decision has been
affirmed by the Supreme Court in I.T.O.
v. K.L. Srihari (2001) 250 ITR 193.

On the basis of the said decision it is
alleged in para 22 of the petition that
since notice under Section 148 has been
issued
the
assessment
order
dated
15.3.2000 has become non existent, and
hence the Income Tax Department cannot
make any demand on the basis of the
assessment order dated 15.3.2002. True
copy of the notice under Section 148 is
Annexure-9 to the writ petition.

17. It is alleged in para 23 of the
petition that Saraiya Distillery Ltd.,
Gorakhpur has deducted Rs. 2 lacs from
the petitioner's account on the basis of the
illegal notice under Section 226 (3) and
has also detained other payments from the
petitioner
for
supplying
packaging
material on the basis of illegal notices
under Section 226 (3) of the Income Tax
Act which is adversely affecting the
business of the petitioner.

18. A counter affidavit has been
filed on behalf of the respondents and we
have perused the same.

19. It is alleged in para 8 of the
counter
affidavit
that
the
original
assessment order is good and effective till
it is substituted by a reassessment order.
Mere issuance of notice under Section
148 does not effect the validity of the
original assessment order.

20. It is alleged in para 9 of the
counter affidavit that the respondent no. 1
has rightly issued the notice under Section
226 (3) as no stay order has been passed
by the CIT (Appeals) in the appeal
pending before it.

21. In para 10 of the counter
affidavit it is alleged that the petitioner
was duly supplied the relevant documents
as required by him on 2.9.2002.

A rejoinder affidavit has also been
filed.

22. In para 4 thereof it is stated that
there is no statutory provision for filing an
appeal/objection against the impugned
order of the C.I.T. (Appeals), and hence
there is no alternative remedy.

23. Learned counsel for the
petitioner has relied on the decision of
this Court in Kanhaiya Lal v. CIT (2001)
162 Taxation 649 and the decision of the
Punjab and Haryana High Court in
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244 INDIAN LAW REPORTS ALLAHABAD SERIES [2004
Chiranjit Steel Rolling Mills v. CIT 84
ITR 222 for the proposition that where the
copies of the third party's account are not
supplied to the petitioner the assessment
order is illegal.

24. Learned counsel for the
petitioner has also submitted that the
petitioner filed a stay application along
with his appeal but there was no CIT
(Appeals) for hearing the appeal for a
long time. The financial condition of the
petitioner was bad and the firm has
become sick, and hence it was wholly
arbitrary and
illegal
to
attach
the
petitioner property.

25. From the facts mentioned above
it appears that the assessment order dated
15.3.2000
(Annexure-1
to
the
writ
petition) on the basis of which the
impugned notice under Section 226 (3)
was issued merged into the order of the
CIT (Appeals) dated 30.4.2002, copy of
which is Annexure-3 to the writ petition,
and the aforesaid order of the CIT
(Appeals) in turn merged into the order of
the Income Tax Appellate Tribunal dated
30.12.2002, copy of which is Annexure-4
to the writ petition. A perusal of the order
of the Tribunal dated 30.12.2002 shows
that the Tribunal has set-aside the order of
the CIT (Appeals) on the ground that the
Assessing Officer as well as the CIT
(Appeals) had not given copies of the
accounts of the third party to the
petitioner.

26. Thus under the doctrine of
merger the orders of the Assessing Officer
dated 15.3.2000 and the CIT (Appeals)
dated 30.4.2002 have both merged into
the
order
of
the
Tribunal
dated
30.12.2002. Hence the orders of the
Assessing Officer dated 15.3.2000 and the
CIT (Appeals) dated 30.4.2002 ceased to
exist after the order of the Tribunal dated
30.12.2002.

In Kunhayammed v. State of Kerala,
AIR 2000 SC 2587 (vide para 12) the
Supreme Court observed:-

"Once
the
superior
Court
has
disposed of the lis before it either waywhether the decree or order under appeal
is set aside or modified or simply
confirmed, it is the decree or order of the
superior Court, tribunal or authority
which is the final, binding and operative
decree or order wherein merges the decree
or order passed by the Court, tribunal or
the authority below."

Similarly, in Raj Singh v. Board of
Revenue, 1967 ALJ 1054 this Court
observed:-

"It is well settled that the decree of
the trial Court merges in that of the
appellate Court. The effect of merger is
that in the eye of law it dies a civil death.
The trial Court's decree loses its identity."

27. In these circumstances we fail to
understand how any demand could be
issued against the petitioner and how any
sum could have been realized from the
petitioner in pursuance of the assessment
order dated 15.3.2000 when the said
assessment order dated 15.3.2000 has in
fact ceased to exist. Merely because the
Tribunal has remanded the matter to the
CIT (Appeals) it does not follow that the
assessment order dated 15.3.2000 has
revived. Consequently we are of the
opinion that the impugned notice under
Section 226 (3) of the Income Tax Act
was wholly illegal as there was be no
valid demand against the petitioner.
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1 All] M/s V.K. Packaging Industries V. Tax Recovery Officer and others 245

28. In our opinion the petitioner is
entitled to restitution in respect of any
amount of tax realized in pursuance of the
assessment order dated 15.3.2000. It is
well settled that when a decree or order is
set aside or modified in appeal it is the
duty of the Court to grant restitution.

In South Eastern Coalfields Ltd. v.
State of M.P., AIR 2003 S.C. 4482 the
Supreme Court observed:-

"The
word
'restitution'
in
its
etymological sense means restoring to a
party on the modification, variation or
reversal of a decree or order, what has
been lost to him in execution of decree or
order
of
the
Court
or
in
direct
consequence of a decree or order (See
Zafar Khan & Ors. V. Board of Revenue,
U.P. & Ors. AIR 1985 SC 39).

The Principle of restitution has been
statutorily recognized in S. 144 of the
Code of Civil Procedure, 1908. Section
144 of the C.P.C. speaks not only of a
decree being varied, reversed, set aside or
modified but also includes an order on par
with a decree. The scope of the provision
is wide enough so as to include therein
almost all the kinds of variation, reversal,
setting aside or modification of a decree
or order. The interim order passed by the
Court merges into a final decision. The
validity of an interim order, passed in
favour of a party, stands reversed in the
event of final decision going against the
party successful at the interim stage.
Unless otherwise ordered by the Court,
the successful party at the end would be
justified
with
all
expediency
in
demanding
compensation
and
being
placed in the same situation in which it
would have been if the interim order
would not have been passed against it."

29. On the facts and circumstances
of the case we quash the notice under
Section 226 (3) and the recovery made in
pursuance of the impugned notice under
226 (3) of the Income Tax Act. Any
amount realized from the petitioner in
pursuance of the notice under Section 226
(3) and the assessment order dated
15.3.2000 shall be refunded to him
forthwith with interest at 12% per annum
from the date of realization to the date of
refund. The refund must be made within a
month from the date of production of
copy of this order before the authority
concerned.

We hope and trust that the appeal
pending before the CIT (Appeals) in
pursuance of the remand order of the
Tribunal will be decided expeditiously by
the said authority.

30. The petition is allowed. No order
as to costs.

31. Before parting with the case we
would like to state that we cannot
appreciate this practice of the Income Tax
Department
of
hurriedly
passing
assessment orders shortly before the
limitation period is about to expire and
justifying this practice by saying that
there was shortage of time and hence it
was impossible to verify the facts
properly, and hence the additions were
being made. It is of common knowledge
that when the limitation for making an
assessment is about to expire (usually on
31st March) there is a sudden rush and
scramble to complete the assessments. If
this practice is countenanced the citizens
of the country will be put to great
harassment as exorbitant demands can be
made against them merely by saying that
there was shortage of time and hence
http://www.allahabadhighcourt.nic.in
246 INDIAN LAW REPORTS ALLAHABAD SERIES [2004
additions were being made for this reason
without verifying the facts correctly. It is
the duty of the department to make a
correct assessment and not to make an
excessive assessment merely on the
ground of shortage of time.

32. No doubt the department has to
assess and collect the correct tax, but for
this purpose it should devise and set up a
rational scheme in accordance with law. It
should certainly not make assessments
hurriedly merely by saying that there is
shortage of time, (as often happens), thus
putting the citizens to great harassment.
---------
ORIGINAL JURISDICTION
CIVIL SIDE
DATED: ALLAHABAD 27.01.2004

BEFORE
THE HON'BLE M. KATJU, J.
THE HON'BLE MRS. POONAM SRIVASTAVA, J.

Civil Misc. Writ Petition No. 30048 of 2001

Ram Pal @ Rampa

...Petitioner
Versus
State of U.P. and others ...Respondents

Counsel for the Petitioner:
Sri Ramesh Upadhyaya
Sri M.P. Yadav

Counsel for the Respondents:
Sri V. Pratap
Sri A. Mishra
Sri C.B. Singh
S.C.

U.P. Minor Minerals (Concession) Rules
1963-Rr. 9, 9-A and 23-Grant of mining
lease on preferential basis-Validity-Rule
9-A-declared ultra vires-S. 15 of MMRD
Act by Full Bench-ban imposed by State
Government in grant of lease-By virtue
of Government Order dated 13.6.2001
lease ban in renewal of lease granted
prior to 27.3.2001 lifted-Clause (3) of
G.O. permitted renewal of leases of even
those lease holders who were granted
leases on preferential basis-Renewal of
lease granted to respondent no. 4-Writ
challenging G.O. dated 13.2.2001 and
Order
dated
25.4.2001
passed
by
concerned authority Respondent No. 4 in
his Counter Affidavit claimed his renewal
only on basis of order of status quo of
Apex Court, whereas Division Bench in
Katwaru's case has clarified position-As
such respondent no. 4 has no right to
continue lease on basis of Order dated
25.4.2001-Held, State Government still
has power to grant mining lease under
Rule 9 and 23-Therefore, Order dated
25.4.2001 and renewal of lease on basis
of G.O. dated 13.6.2001 in favour of such
persons who were granted mining lease
on preferential basis under R. 9-A
quashed.

Held: Paras 10 & 11

A perusal of the counter affidavit filed by
Ganga Dayal, respondent no. 4 will show
that he claimed his renewal only on the
basis of the order of status- quo of the
Apex Court, whereas the Division Bench
in the case of Katwaru (Supra) has
clearly clarified the position and as such
the contesting respondent has no right
to continue the lease on the basis of
order dated 25.4.2001. The order has not
been defended by the Standing Counsel
in his counter affidavit. The only stand
taken in paragraph 2 of the counter
affidavit is relating to the Government
orders
dated
30.3.2001/4.4.2001
whereby all the District Magistrates were
stopped from granting mining lease.

The provisions of Rule 9 and Rule 23 of
the Rules of 1963 are still available to
the State Government to grant mining
lease as and when it is necessary. In the
circumstances,
the
orders
dated
25.4.2001 and the renewal of the lease
on the basis of Government Circular
dated 13.6.2001 in favour of such
persons who were granted mining lease
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