Excavation Rules| Royalty Payable Only For Quantum Of Earth Removed, Not For Redeployed: Bombay HC Grants Relief To IKEA

The Bombay High Court has observed that where the earth extracted when developing a plot of land is utilised on the very same plot of land for levelling or any work in the process of development of the land, no royalty would be payable.

In that context, the Bench of Justice BP Colabawalla and Justice Somasekhar Sundaresan observed that, "A party developing a plot of land would have to estimate and reassess the quantum that may be required for redeployment and the quantum required to be removed. For the quantum redeployed, no royalty, and therefore, no authorisation would be required. For the quantum removed, royalty would be payable and permission for removal would be required."

Senior Counsel Milind Sathe, along with others, appeared for the petitioners, while Addl. GP AI Patel and AGP MS Bane appeared for the respondents.

IKEA India Private Limited filed a petition challenging royalty charges and penalties imposed by the Maharashtra government for earth excavation during the development of land leased for an IKEA Store. The dispute revolved around the alleged unauthorized excavation of 5532 brass of earth, amounting to a total of Rs. 5,77,96,338.

The petitioner obtained permission for excavation but faced allegations of unauthorized excavation. Despite the explanations provided, penalties were imposed. The petitioner sought to quash show cause notices, penalty orders, and recovery-related communications and actions.

The Court observed that because of Rule 46(1) of the Extraction Rules, the State ought to have dealt with the vital element of the quantum of redeployment to assess what the charge of royalty should be. In that context, it was further said that, "Abandoning this due process, Respondent No.3 has simply indulged in a mathematical computation of the difference between the Circle Officer’s report and the permissions for removal obtained until the date of the report, rejecting approval for removal after that date. The State ought to have considered whether there was even a plausible rationale to any developer holding on to excavated earth in the course of development of land until the project nears completion so that the developer can finally decide what quantum of excavated earth would need to be removed, and therefore, what quantum of removal should be visited with royalty, and permission for removal."

Consequently, the impugned order was quashed and set aside.

Appearances:

Petitioners: Senior Counsel Milind Sathe, Counsels Bhushan Deshmukh, Bhakti Mehta

Respondents: Addl. GP AI Patel, AGP MS Bane

Cause Title: IKEA India Private Limited & Anr. vs State of Maharashtra & Ors.

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