Case Background
The case arose out of sand mining operations in Bhojpur district, Bihar. Bihar State Mining Corporation Limited (BSMC) published a notice inviting e-auction for selection of sub-contractors to operate sand ghats in the district.
The petitioner company participated in this tender process and, being the highest bidder, was awarded Khangaon (Bahiyara) sand ghat. It had quoted an amount of Rs.5,53,41,610/-. After depositing the requisite amount, a work order was issued in its favour.
An agreement between the petitioner and BSMC was executed and registered on 27.06.2022. On this basis, the petitioner started mining activities at the allotted sand ghat.
According to the petitioner, the operations were continuing when, all of a sudden, the Managing Director of BSMC issued letter no. 360 dated 03.03.2023. By this letter, a penalty of Rs.96,97,705/- was imposed on the allegation that the petitioner had excavated 90060 cubic feet of sand beyond the permissible mining area. The petitioner was directed to deposit this amount within 24 hours.
The petitioner states that it deposited the amount on 03.03.2023 itself, under compulsion and under the threat of restriction on generation of e-transit challans, which are necessary for transporting sand.
What the Court Examined and Decided
The writ petition before the Patna High Court challenged this penalty and sought several connected reliefs. The petitioner asked for quashing of letter no. 360 dated 03.03.2023, a direction for refund of the deposited penalty amount, and declarations regarding the competence of the Managing Director and the applicability of certain rules under the Bihar Minerals (Concession, Prevention of Illegal Mining, Transportation & Storage) Rules, 2019 (2019 Rules).
The main plank of the petitioner’s case was violation of natural justice. The petitioner argued that the penalty was imposed without:
- any prior show-cause notice,
- any opportunity of hearing, or
- any supply of the inspection or enquiry report on which the penalty was based.
The petitioner’s counsel pointed out that the impugned order itself stated that inspections were conducted on 24.02.2023 and 25.02.2023, during which it was allegedly found that no signboard or boundary wall was erected and sand had been excavated outside the permissible area. However, the petitioner said it was never informed about any inspection and that no inspection took place in its presence.
The petitioner categorically denied excavating sand beyond the permissible area. It said that imposing such a huge penalty without giving it a chance to contest the allegations was illegal and hit by the principles of natural justice.
In support, the petitioner relied upon earlier decisions of the Patna High Court:
- decision dated 09.05.2023 in C.W.J.C. No.3400 of 2023, M/s. Uma Associates vs. State of Bihar and Ors.,
- judgment dated 01.08.2025 in C.W.J.C. No.17442 of 2023, M/s. Shri Vijay Kumar Singh vs. The State of Bihar and Ors., and
- judgment dated 01.08.2024 in C.W.J.C. No.9091 of 2023, Maa Bhawani Traders vs. The State of Bihar & Ors.
The petitioner also referred to Rule 20, Rule 30 and Rule 56 of the 2019 Rules. It argued that these rules did not provide for recovery of price of mineral as compensation in the manner done, and that even otherwise, Rule 30 allowed only a penalty of Rs.1,00,000/- for the first violation by a settlee. On this basis, it said the penalty of nearly Rs. 97 lakh was beyond the rules and unsustainable.
On the other side, counsel for BSMC (respondent nos. 5 and 6) defended the penalty. They submitted that, on the order of the Director, Mines and Geology Department, a special investigating team was constituted to inspect sand ghats and detect illegal mining, transportation and storage of minerals in Bhojpur. During this inspection, the team allegedly found that the petitioner’s sand ghat had no signboard and that mining was taking place outside the permissible area.
On the basis of this inspection, conducted under Rule 59 of the 2019 Rules, authorities concluded that the petitioner had illegally extracted 90060 CFT of sand beyond the allotted area. They said the penalty of Rs.96,97,705/- was imposed under Rule 56(2) of the 2019 Rules.
The respondents further argued that the petitioner deposited the penalty amount on the same day the demand was raised, without protest. According to the respondents, this showed that the petitioner had admitted its fault and accepted the penalty. They also tried to distinguish the earlier Patna High Court judgments cited by the petitioner.
Regarding the decision in M/s. Shri Vijay Kumar Singh, they stated that an appeal (L.P.A. No. 887 of 2025) had been filed against it before a Division Bench, suggesting that the legal position was not final. As for M/s. Uma Associates and Maa Bhawani Traders, they argued that the facts were different. In Uma Associates, the settlee had not deposited the penalty amount at all. In Maa Bhawani Traders, the penalty was deposited under protest. In contrast, here the petitioner deposited the amount without protest, on the same day, and filed the writ only after more than nine months and after completing the contract.
Justice Sandeep Kumar considered these rival contentions. The Court focused on the core question: whether the penalty could stand when it had been imposed without any notice or hearing.
The Court noted that there was nothing on record to show that:
- any show-cause notice had been issued before the penalty order,
- the petitioner had been given an opportunity to be heard, or
- the enquiry or inspection report had been supplied to the petitioner.
The Court also recorded that the petitioner was given only 24 hours to deposit the huge penalty amount. In the Court’s view, such a penalty could lawfully be imposed only after a proper enquiry conducted in the presence of the petitioner, which was clearly absent.
To underline the importance of natural justice, the Court relied upon the recent judgment of the Hon’ble Supreme Court in Krishnadatt Awasthy v. State of M.P. & Ors., reported as (2025) 7 SCC 545. The Court extracted paragraphs 43 to 48 of that judgment.
In Krishnadatt Awasthy, the Supreme Court emphasised that:
- Opportunity of hearing is so fundamental that courts often read principles of natural justice into statutes to save them from being struck down on procedural grounds.
- Non-observance of natural justice is itself prejudice; a separate proof of prejudice is generally not required, except in limited situations where only one outcome is possible under law.
- Authorities cannot themselves assume that providing a hearing would make no difference and skip the process; the question of prejudice is for courts to consider later, not for the authority to presume.
- Natural justice is flexible, but denial of a fair hearing that causes real prejudice will vitiate the order.
Drawing from these principles, the Patna High Court reiterated the basic rule that no one should be condemned unheard. The doctrine of audi alteram partem, according to the Court, has three essentials:
- a person whose rights are likely to be adversely affected must be given a reasonable opportunity of being heard,
- the authority must follow a fair and transparent procedure, and
- the authority must apply its mind and pass a reasoned, speaking order.
Applying this to the facts, the Court held that the inspection had been conducted behind the back of the petitioner. After the inspection, neither the report was shared nor any show-cause notice was issued. The penalty was imposed without hearing the petitioner, which amounted to a complete violation of the principles of natural justice and rendered the order non est (a nullity).
The Court further found that granting only 24 hours to deposit such a large amount, coupled with the threat of stopping generation of e-challans, was arbitrary and unsustainable.
On this basis, the Patna High Court quashed and set aside the impugned letter dated 03.03.2023 imposing the penalty of Rs.96,97,705/- on the petitioner. However, the Court did not finally decide whether any penalty could or could not be imposed under the 2019 Rules. Instead, it remitted the matter back to the respondents.
The respondents have been directed to consider the matter afresh and to pass a speaking order after giving the petitioner a reasonable opportunity of hearing. With these observations and directions, the writ petition was allowed.
Why This Judgment Matters
This judgment is important for all sand ghat setteees and contractors dealing with the Mines and Geology Department and BSMC in Bihar.
The Patna High Court has made it clear that authorities cannot impose huge penalties for alleged illegal mining without first issuing a notice, supplying the material relied upon, and hearing the affected party. Even if the authority believes that the settlee has violated rules, it must follow a fair process.
The Court has also signalled that forcing a contractor to pay a massive amount within 24 hours, under threat of blocking e-challans, is arbitrary. Such tactics cannot replace a lawful enquiry.
Practically, this means that sand contractors and other mineral lessees in Bihar can question penalties that are imposed suddenly and without proper hearing. At the same time, the judgment does not protect illegal mining. It simply insists that any finding of violation must be reached through a transparent and fair procedure.
Legal Issues and Answers
- Issue: Can Bihar State Mining Corporation impose a large penalty on a sand ghat settlee for alleged illegal excavation without issuing a show-cause notice, sharing the inspection report, or granting a hearing?
Answer: No. The Patna High Court held that such a penalty order, passed without following the principles of natural justice, is illegal and non est, and must be quashed. - Issue: Does immediate deposit of the penalty amount by the settlee, under threat of stoppage of e-challans and within 24 hours, cure the defect of not giving a hearing?
Answer: No. The Court found that the petitioner paid under compulsion and that the absence of notice and hearing still rendered the order unsustainable. - Issue: What should authorities do if they still suspect illegal mining by the settlee after quashing of the penalty order?
Answer: They must conduct a proper enquiry, give reasonable opportunity of hearing, and pass a fresh, speaking order in accordance with law.
Cases Cited by the Court
- Krishnadatt Awasthy v. State of M.P. & Ors., (2025) 7 SCC 545.
- M/s. Uma Associates vs. State of Bihar and Ors., C.W.J.C. No.3400 of 2023 (decision dated 09.05.2023) – cited by the petitioner.
- M/s. Shri Vijay Kumar Singh vs. The State of Bihar and Ors., C.W.J.C. No.17442 of 2023 (judgment dated 01.08.2025) – cited by the petitioner; appeal L.P.A. No. 887 of 2025 noted by respondents.
- Maa Bhawani Traders vs. The State of Bihar & Ors., C.W.J.C. No.9091 of 2023 (judgment dated 01.08.2024) – cited by the petitioner.
Case Details
Case Number: Civil Writ Jurisdiction Case No.17683 of 2023
Case Title: Shivshankar Kaushik Infrastructure Pvt. Limited vs. The State of Bihar & Ors.
Citation: 2024(2) PLJR 503
Court: High Court of Judicature at Patna
Coram: Hon’ble Mr. Justice Sandeep Kumar
Date of Judgment: 27-01-2026
Nature of the Case: Writ petition under civil writ jurisdiction challenging imposition of penalty for alleged illegal sand mining.
Advocates:
- For the Petitioner: Mr. Suraj Samdarshi, Advocate; Mr. Avinash Shekhar
- For the State: Mr. Pramendra Kumar Singh, A.C. to G.A.-10
- For Bihar State Mining Corporation Ltd.: Mr. Ranjeet Kumar Pandey, Advocate; Mr. Rajesh Kumar, Advocate
- For the Mines: Mr. Naresh Dikshit, Spl. P.P.; Ms. Shruti Singh, Advocate
Relevant Statutory Provisions: Bihar Minerals (Concession, Prevention of Illegal Mining, Transportation & Storage) Rules, 2019 – in particular Rules 20, 30, 56 and 59 (as referred to in arguments).
Link to the Judgment: View full judgment on Patna High Court website
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