The main legal point established in the judgment is that the Railways were justified in withholding the amount of royalty until the Royalty Clearance Certificate was received, and the clauses in the agreement were in line with the relevant rules.

( 1 ) HEARD the parties for final disposal.

( 2 ) ACCORDING to the petitioner, the Railways-respondents cannot recover royalty charges from the running or final bill or from the security deposit, and they cannot withhold payment of final bill/release of security deposit for want of Royalty Clearance certificate inasmuch as petitioner is merely purchasing and supplying stone ballasts. Petitioner has further prayed to declare clause 5 and clause 6 of the agreement on the ground that they are unenforceable as opposed to public policy and violative of Article 14 of the Constitution.

( 3 ) ON 29-3-2005, petitioner entered into an agreement with the respondents for supply of stone ballasts. Clauses 5 and 6 of the agreement reads as follows:-

"5. Royalty charges, at the rate prescribed from time to time, will be recovered from the contractors each and every on account bill and final bill of supply for the supplied ballast at the rate notified by the concerned state Govt. (Mining Authorities) and will be kept under deposit with Railway. The royalty charges so recovered will be refunded back to the contractor after submission of the royalty clearance certificate by the contractor to the Engineer. 6. The Railway reserves the right to remit the royalty amount, recovered from the contractor, to the concerned State Govt. (Mining Authorities) if the contractor fails to submit the royalty clearance certificate. "

Relevant portion of clause 16 reads as follows:-"16. The Tender conditions offered by Gita enterprises/asansol are furnished below along with the Rlys. remarks.

Sr. No.

Tenders condition

Railways remark

2

Regarding royalty. We are purchasing the ballast from the quarry owners, having Mining lease and royalty paid by them. We shall submit the purchase bills in Xerox as a proof of payment of royalty for at the time and before passing of final bill. Hence no deduction should be made from our on account or final bills or from our securities towards royalty.

Accepted. As evidence of proof any of the following documents to be submitted,

a. Royalty Clearance Certificate,

b. M and N. Form

c. Purchase bill in original, failing which royalty will be deducted as per rates of the State. Govt.

In any case Royalty Clearance Certificate is required to be submitted before payment of final bill and release of security ? deposit.

( 4 ) THE questions involved in this writ petition is whether the Railways can withhold the amount of royalty shown in the bills, until the Royalty Clearance Certificate is received; and whether clauses 5 and 6 of the agreement are unenforceable.

( 5 ) RULE 40 (10) of the Bihar Minor Mineral Concession Rules, 1972 ( BMMC Rules for short) reads as follows:-

"40. Penalty for unauthorized extraction and removal of minor minerals. . . . . . . . . . . (10)- To prevent evasion of royalty it is provided that works contractor shall purchase the minerals from lessee/permit holder and authorized dealers only and no Works Department shall receive the bill which the works contractors submit to recover cost etc. of mineral used by them in completion of the woks of the Works Department under any agreement from the works contractor if the said bill is not accompanied by an affidavit in Form m with particulars in Form n of these rules along with a photo copy of the said affidavit and particulars. It shall be the duty of the officer who receives or on whose behalf the said bill is received to send the copy of the affidavit and particulars to the District Mining Officer/assistant Mining Officer within whose jurisdiction the mineral was allegedly purchased, for verification. If contents of the said affidavit on verification by the concerned district Mining Officer/assistant Mining Officer is found to be false either wholly or partly it shall be presumed that the concerned mineral was obtained by illegal mining and in that event the said District Mining Officer/assistant mining Officer shall take action as prescribed in these rules agai