HC asks state to refund royalty paid by Metro 3 infra firm

Dogus-Soma, a joint venture between Turkish construction firm Dogus Insaat Ve Ticaret AS and Hyderabad-based Soma Enterprise Ltd, was responsible for excavating and constructing underground metro stations and tunnels for the Aqua Line

Mumbai: The Bombay High Court has directed the Maharashtra government to refund the ₹8.2 crore royalty paid by a company that carried out the underground excavation work for five metro stations of the Aqua Line, observing that the state was not entitled to the amount.

Mumbai, India. Sep 24, 2024: First look at newly constructed Metro Line 3, also known as the Aqua Line, ahead of the inauguration of Mumbai's first underground Metro. Mumbai, India. Sep 24, 2024. (Photo by Raju Shinde/HT Photo) (Hindustan Times)

A division bench of justices Bharati Dangre and Manjusha Deshpande on March 12 asked the state government to refund the amount to Dogus-Soma, a joint venture between Turkish construction firm Dogus Insaat Ve Ticaret AS and Hyderabad-based Soma Enterprise Ltd, in 12 weeks. If it failed to do so, the state would have to pay an interest of 12% per annum on the amount, the court said.

“Merely because the petitioner has now deposited the royalty, definitely, the state cannot enrich itself, unless and until it is entitled to recover the amount of royalty,” the bench said.

Dogus-Soma had bagged the contract to design and construct five underground Metro 3 (Aqua Line) stations at Mumbai Central, Mahalaxmi, Science Museum, Acharya Atre Chowk, and Worli, and associated tunnels. The Mumbai Metro Rail Corporation Limited (MMRCL), a joint venture between the Maharashtra government and the Centre, had accepted Dogus-Soma’s bid in July 2016.

However, a dispute arose after the company claimed that it had paid a royalty for “mining”. The company filed a petition in the high court, arguing that it should not be charged the royalty as it did not use the earth excavated during the construction of the underground metro stations for commercial purposes. The company said it had paid the royalty to MMRCL under protest to “avoid any practical difficulties” and to ensure that its work is not stopped or delayed.

In its petition, Dogus-Soma claimed that under its contract with MMRCL, the company was responsible for excavating and constructing underground metro stations and tunnels. It was expected to conduct a detailed geological investigation of the areas in which these metro stations and tunnels were to be constructed, the company told the court.

The contract stipulated specific conditions for the excavation and instructions for depositing excess material at a muck-disposal site in Daphode, Thane, the petition said. Dogus-Soma stated that it did not commercially utilise the excavated material, nor did it earn any revenue from it.

Dogus-Soma first sought a refund of the royalty amount from the additional collector in August 2017. The company contended that the excavation carried out in the execution of the metro project was not liable to royalty under the Mines and Minerals (Development and Regulation) Act (MMDRA), 1957, or any other laws governing mining.

The Maharashtra government, however, argued that the company had paid the royalty without any demand from the state, and was now seeking a refund as an “afterthought”. It said that the contract was executed between Dogus-Soma and MMRCL, but since the company sought permission to excavate from the additional collector, it was liable for payment of royalty.

However, the court agreed with the petitioner, saying, “We fail to understand on what basis the respondent No. 3 (additional collector) can recover royalty on this excavated material as it is not excavated by the petitioner/contractor for commercial exploitation, but it is in due course of execution of work allotted to it by the Metro Rail Corporation…”