Supreme Court Overturns State Decision for Violating Natural Justice, Orders Reconsideration with Full Disclosure.

The SC set aside the judgment of the Andhra Pradesh HC, finding that the principles of natural justice were violated by the State Government. The SC noted that the appellants were not provided with essential reports and inspection notes, which affected their ability to present their case. The matter was remitted to the State Government for reconsideration after ensuring the appellants receive the necessary documents. The appeals were allowed, and the SC emphasized the importance of administrative fairness, with no order as to costs.

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Issues Involved:
1. Quashing of the State Government's order and consequent demand notices.
2. Seigniorage fee and penalties imposed.
3. Alleged collusion and procedural irregularities.
4. Non-supply of inspection reports and test analysis reports.
5. Principles of natural justice and administrative fairness.

Detailed Analysis:

1. Quashing of the State Government's Order and Consequent Demand Notices:
The appellants filed writ petitions before the Andhra Pradesh High Court seeking to quash the State Government's order in Memorandum No. 8817/M.II(1)/2001-6, dated 4.2.2002, and the consequent demand notices issued by the Director of Mines and Geology and the Deputy Director, Mines and Geology. The appellants, engaged in construction and engineering, had participated in tenders by Bharat Heavy Electricals Ltd. (BHEL) for levelling and grading work. They obtained rights to excavate materials such as earth and gravel from ryots of patta lands and quarry leaseholders. The Assistant Director of Mines and Geology demanded seigniorage fees, including penalties, from BHEL, which disputed the liability, stating that the contractors were responsible for paying the fees directly to the Department of Mines and Geology.

2. Seigniorage Fee and Penalties Imposed:
The appellants contended that the seigniorage fee was levied without authority and disregarded the analyst report of the materials. They argued that the materials used were primarily earth, which was not subject to seigniorage fees. The High Court, however, rejected this argument, stating that the materials used were not merely earth but included gravel and clay, which are subject to seigniorage fees. The High Court also upheld the penalties, stating that the appellants were not acting bona fide.

3. Alleged Collusion and Procedural Irregularities:
The High Court noted allegations of collusion between the Deputy Director of Mines and Geology and the appellants. The Deputy Director was found guilty of short levy and collection of seigniorage fees and was placed under suspension. The High Court observed that the appellants failed to produce documentary evidence regarding the source of materials and did not obtain the necessary permissions for quarrying. It concluded that the appellants were playing "hide and seek" with the authorities.

4. Non-Supply of Inspection Reports and Test Analysis Reports:
The appellants argued that the inspection report was not made available to them, preventing them from filing objections. The High Court rejected this plea, stating that the appellants did not demonstrate any prejudice caused by the non-supply of the inspection notes. The High Court also dismissed the relevance of the test and analysis report from the Civil Engineering Department of Andhra University, terming it a "self-service device" by the appellants.

5. Principles of Natural Justice and Administrative Fairness:
The Supreme Court found that the principles of natural justice were disregarded by the State Government. The authorities acted on materials not supplied to the appellants, and the High Court referred to inspection notes not mentioned in the revisional order. The Court emphasized the importance of the audi alteram partem rule, stating that no one should be condemned unheard. The Court highlighted that the administrative authorities must act fairly and provide a reasonable opportunity for the affected parties to present their case.

Conclusion:
The Supreme Court set aside the High Court's judgment, stating that the basic principles of natural justice were not followed. The matter was remitted to the State Government to reconsider after supplying the appellants with copies of the reports/inspection notes and considering the effect of the Department's concession in earlier proceedings. The appeals were allowed without any order as to costs.

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