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Supreme Court of India
R.V. RAVEENDRAN & A.K. PATNAIK
State of Rajasthan & Another
Versus
J.K. Synthetics Ltd. & Another
CIVIL APPEAL NO. 4927 OF 2011 [Arising out of SLP [C] No.15621/2007] WITH C.A. No. 4928 of 2011 (Arising out of SLP [C] No.15259/2007); C.A. No. 4929 of 2011 (Arising out of SLP [C] No.15260/2007); C.A. No. 4931 of 2011 (Arising out of SLP [C] No.15407/2007); C.A. No. 4930 of 2011 (Arising out of SLP [C] No.15873/2007), and C.A. No. 4932 of 2011 (Arising out of SLP [C] No.6417/2010).
Decided on: 04-07-2011
1995 Supp (1) SCC 642 – Referred
(b) Code of Civil Procedure, 1908 – Section 144 – Doctrine of merger – Interim order of stay in regard to any revision in rate or tariff – Vacation of stay without specific order barring levy of interest – On vacation of interim order, beneficiary shall have to pay interest on the amount withheld or not paid by virtue of the interim order. (Para 17)
(1997) 5 SCC 772; (2005) 13 SCC 151; (2011) 1SCC 216; (2003) 8 SCC 648 – Relied upon
(c) Minerals and Concessions Rules 1960 – Rule 64A r/w clause (3) of Part VI of Form K – Use of word `may’ – Not in the context of giving discretion in regard to rate of interest to be charged – It is to give option or choice to the State Government as to whether it should determine the lease, or charge interest at 24% per annum, or do both – Where the lease is not determined as a consequence of the default, the State will have to charge interest at 24% per annum on the outstanding amount. (Para 21, 22)
(d) Minerals and Concessions Rules 1960 – Rule 64A – Rate of interest – Statutorily prescribed at 24 % – In one case High Court grating stay on condition that on failure, interest would be paid @18% – In other cases Advocate General making statement that State would be entitled to 18% interest – Held, interest will be payable @18% for the period of stay and @24% thereafter. (Para 28)
(1997) 5 SCC 772 – Relied upon
(2003) 8 SCC 648; (2001) 1 SCC 91 – Distinguished
1995 Supp (1) SCC 642 – Referred
(e) Minerals and Concessions Rules 1960 – Rule 64A – In one case lease deed executed in terms of rule 31 specifying interest @10% – Contention that interest on any arrears cannot be more than 10% rejected – Terms of lease deed cannot override amended provision of rule 64A providing for interest @24%. (Para 29)
Facts of the case:
State of Rajasthan demanded interest @24% on delayed payment of royalty from the respondents.
The High Court set aside the demand and held that interest shall be chargeable @ 12% per annum.
Finding of the Court:
State government has no discretion to demand less than 24% interest.
Result:
Appeal allowed.
Judgment :-
R.V. RAVEENDRAN, J.
1. Leave granted.
2. In these appeals by special leave, the appellants challenge the orders of the Division Bench of the Rajasthan High Court, dismissing its appeals against a common order of the learned Single Judge, restricting the interest on arrears of royalty to 12% per annum, instead of 24% per annum demanded by the State of Rajasthan.
3. The first respondent in each of these appeals is or was the holder of a mining lease for limestone. Section 9 of the Mines and Minerals (Development and Regulation) Act, 1957 (`Act' for short) deals with Royalties in respect of mining leases. Sub-section (2) thereof requires the holder of a mining lease to pay royalty in respect of any mineral removed or consumed by him from the leased area at the rate for the time being specified in the Second Schedule to the Act, in respect of that mineral. Sub- section (3) thereof empowers the Central Government, by notification published in the official gazette, to amend the Second Schedule so as to enhance the rates at which royalty shall be payable in respect of any mineral with effect from such date as may be specified in the notification.
4. By notification dated 5.5.1987, the Central Government had amended the Second Schedule to the Act and increased the royalty in respect of (limestone) from Rs.4.50 per tonne to Rs.10 per tonne. By a subsequent notification dated 17.2.1992, the Second Schedule to the Act was again amended and the rate or royalty for limestone was increased from Rs.10/- per tonne to Rs.25/- per tonne.
5. The respective first respondent in these appeals (together referred to the `contesting respondents') filed writ petitions challenging the constitutional validity of section 9(3) of the Act and the notification dated 17.2.1992 increasing the rate of royalty from Rs.10 to Rs.25 per tonne. In all the cases (except in the case of J. K. Udaipur Udyog Ltd), the High Court issued interim orders directing the state government not to take coercive steps to recover royalty at the rate of Rs.25 per metric tonne in pursuance of notification dated 17.2.1992, subject to the writ petitioners paying royalty at the rate of Rs.10 per MT and furnishing bank guarantee for the difference of Rs.15 per MT. In the case of J. K. Udaipur Udyog Ltd, the High Court made an interim order as in the other cases, with an additional condition that in case the said writ petitioner ultimately failed in the writ petition, the difference amount due from the writ petitioner shall be recovered with interest at the rate of 18% per annum.
6. Ultimately, the several writ petitions filed by the contesting respondents challenging the section 9(3) of the Act and the notification dated 17.2.1992 increasing the royalty, were dismissed in the year 1996 following the decision of this Court in State of Madhya Pradesh vs. Mahalaxmi Fabric Mills Ltd.,- 1995 Supp (1) SCC 642, wherein this Court had upheld the validity of section 9(3) of the Act and the notification revising the rate of royalty. As a consequence of such dismissal, each of the contesting respondents claims to have paid the difference in royalty (that is at the rate of Rs.15/- per MT) in the years 1996-1997.
7. Rule 64-A of the Minerals Concession Rules, 1960 (`Rules' for short) provides for levy of interest on arrears of royalty and other dues and the same is extracted below :
“64-A. The State Government may, without prejudice to the provisions contained in the Act or any other rule in these rules, charge simple interest at the rate of 24% per annum on any rent, royalty or fee, other than the fee payable under sub-rule (1) of Rule 54, or other sum due to that government under the Act or these rules or under the terms and conditions of any prospecting licence or mining lease from the sixtieth day of the expiry of the date fixed by that government for payment of such royalty, rent, fee or other sum and until payment of such royalty, rent, fee or other sum is made.”
8. The State of
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