Gram Panchayat vs State of Andhra Pradesh and Others

A.S. Bhate, J.—The petitioner-Gram Panchayat has challenged the G.O.Ms. No. 44, Panchayat Raj and Rural Development (Pts-III) Department, dated 24-1-1989. By the said order the Government of Andhra Pradesh has directed that the seigniorage fee in respect of minerals from the concerned Gram Panchayat jurisdiction be distributed or apportioned between the Gram Panchayat concerned and the Mandal Praja Parishad at the ratio of 60:40. The petitioner-Gram Panchayat says that the major income of the Gram Panchayat, Madduru is from seigniorage only. Income from lifting of sand was about Rs. 60,000/- every year by way of seigniorage. Further, there is no other major source of income for the Gram Panchayat as there is no industry and very little income from property tax. Most of the houses belong to poor persons, who are exempted from paying property tax. The Gram Panchayat was getting 100% seigniorage fee prior to the issuance of the impugned G.O.Ms. The implementation of the impugned G.O.Ms, will deprive the petitioner of its major source of income. Section 79 of the A.P. Gram Panchayats Act, 1964 (hereinafter referred to as the ''Act'') is relied upon by the petitioner for its contention that it has a statutory right for claiming the whole seigniorage fee without any apportionment or sharing. It is therefore, contended that the Government has acted unjustly and in violation of the provisions of the Act in issuing the impugned G.O.Ms. The petitioner has therefore, prayed that the impugned G.O.Ms, be quashed and position which existed prior to the issuance of the impugned G.O.Ms, be restored so as to enable the petitioner-Gram Panchayat to receive all the seigniorage income.

Interim directions were given on 20-6-1989 ordering Status quo as it existed on the date of passing of the order.

We have given our careful consideration to the submissions made by the learned Counsel on behalf of the petitioner. The petitioner has relied on the provision of Section 79 of the Act. Section 79 so far as is relevant for our purpose is as follows:-

"Section 79 (1): All moneys received by the Gram Panchayat shall constitute a fund called the ''Gram Panchayat Fund'' and shall be applied and disposed of in accordance with the provisions of this Act and other laws: Provided that the Gram Panchayat shall credit, subject to such rules as may be prescribed, the proceeds of any tax or fee levied under this Act, to a special fund earmarked for the purpose of financing any specific public improvement. A separate account shall be kept of the receipts into and the expenditure from such special fund.

(2) Subject to the provisions of Sub-section (1) the receipts which shall be credited to the Gram Panchayat fund shall include-

.......... .......... .......... .......... .......... .......... .......... .......... .......... (xvi) the seigniorage fees collected by the Government every year from persons permitted to quarry in the village for materials (including minor minerals) other than major minerals;

.......... .......... .........."

The argument of the learned Counsel for the petitioner is that in view of this provision, it is clear that the State is bound to pay and the petitioner is entitled to the whole of the seigniorage fee collected by the Government every year. In our view, the contention is based on some misconception. Section 79 of the Act does not refer to any entitlement of the Gram Panchayat. What Section 79 says is about the creation of a fund named ''Gram Panchayat Fund'' in which all receipts of the Gram Panchayat are to be deposited. Sub-section (2) states that subject to provisions of Sub-section (1), the receipts including those referred to in Clause (i) to (xxiv) are to be credited in the Gram Panchayat fund. The learned Advocate for the petitioner argues that the effect of Clause (xvi) is that all the seigniorage fee collected by the Government every year from the persons concerned has to be credited to the Gram Panchayat Fund. We are unable to accept this contention. In the first place the word ''all'' is not present in Clause (xvi). Secondly, as has been pointed out earlier, Section 79 only deals with the creation of a particular fund in which the receipts are to be credited by the Gram Panchayat. Whatever is due to and received by the Gram Panchayat is to be credited in the Gram Panchayat Fund and in no other fund. That is the effect of the said provision. The Act nowhere says that the Gram Panchayat has any right to claim the whole of seigniorage fee in respect of minerals lifted from the Gram Panchayat area. No provision of any other Act or Rule has been brought to our notice which would enable the petitioner to contend that the Gram Panchayat has a right to claim any seigniorage fee much less the whole of it. There is no provision under any law as it existed at the time of filing of the writ petition to enable the petitioner to make a claim over the seigniorage fee. It cannot be disputed that the seigniorage fee is collected under the Rules framed in exercise of power conferred by Section 15(1) of the Mines and Minerals (Regulation and Development) Act, 1957. The rules have been framed by the A.P. Government by the name of "A.P. Minor Mineral Concession Rules, 1966". Under Rule 10 of these rules, the State is entitled to charge seigniorage fee or dead rent on all mines and minerals including sand. It is thus clear that it is the State which is entitled to collect seigniorage fee. The seigniorage fee is clearly revenue belonging to the State Government in the first place. It is for the State Government to allocate this seigniorage fee among the concerned local bodies. That is a matter of State policy. Section 79 of the Act nowhere says that the seigniorage fee so collected by the State shall be allocated to any particular local body wholly or in any proportion. This being the true legal position, it is in the wisdom of the State Government that it decides, taking into consideration all the relevant factors, as to how the allocation should be made to the various local bodies. The petitioner cannot make any grievance.

In fact, it has been pointed out by the learned Counsel for the respondents that subsequently the ratio of allocation has been changed and by G.O.Ms. No. 335, Panchayat Raj, Rural Development & Relief (Pts. III) Department, dated 6-8-1986. The Gram Panchayat, the Mandal Praja Parishad and the Zilla Parishad have been given the seigniorage in proportion of 37.5 : 37.5 : 25 respectively. In our view the proper remedy for the petitioner is to make a representation in respect of the proportion fixed by the State Government and if the State Government is satisfied about the contention raised, it may decide the same, taking into consideration all the relevant circumstances.

Fortunately, the Gram Panchayats would hereafter be able to make a rightful claim on basis of provisions incorporated in the Constitution of India under Part-IX. The said provisions have been incorporated by amendment in 1992 and which came into force from 20th April, 1993. Article 243-1 mandates the Governor of State to constitute a Finance Commission, within one year from the commencement of the said part of the Constitution; for making recommendation to the Governor about the principles governing the distribution between the States and the Panchayats of the net proceeds of the taxes and duties, tolls and fees leviable by the State which may be divided between them. Article 243-H gives power to the Legislature of a State to make law for assigning panchayats such taxes, duties, tolls and fees levied and collected by the State Government for such purposes and subject to certain conditions and limits as may be specified in the law. The Gram Panchayats would therefore, be entitled to make a rightful claim on the basis of these provisions of the Constitution hereafter. However, as the position stood at the time of filing of the writ petition, the Gram Panchayats had no constitutional or statutory right to claim any particular apportionment or part of the seigniorage fee. In this view of the matter, we are inclined to hold that the writ petition is devoid of merit. The writ petition is therefore, dismissed subject to the above observations. However, in the circumstances, no order as to costs.