The government is duty-bound to make the refund within a reasonable period from the date of termination and can award interest on equitable grounds.

The State Government in exercise of it's powers under the provisions of Section 4-A (2) of the Mines and Minerals (Regulation & Development) Act, 1957 terminated the lease that had been granted to the petitioner. The lease was for mining rough stones.

2. Rule 36-E of the Tamil Nadu Mines and Minerals Concession Rules requires the Government to refund the proportionate lease amount in cases of premature termination. That Rule reads as under:

"36-E Refund of lease amount, etc., in certain cases:

Where the State Government have made premature termination of a quarrying lease or permit under the provisions of sub-section (2) of Section 4-A of the Act, the District Collector or the District Forest Officer, as the case may be, shall fix the amount of proportionate lease amount or seigniorage fee, etc., that may be refunded to the quarrying lessee or permit holder for the unexpired portion of the lease or permit period with the approval of the State Government and make the refund to the person concerned within a reasonable period after the premature termination of the quarrying lease or permit."

3. The termination was with effect from 31.05.1999 against which an appeal was preferred by the petitioner which came to be dismissed on 11.10.1999. Payment however was not made till two years after that date. The petitioner came to this Court with this writ petition in which an interim order was made on 26.09.2001 directing immediate payment. Counsel is unable to state the date on which the payment was actually made. He says that payment has been made some time after 26.09.2001.

4. Rule 36-E of the Rules does not contemplate any application being made by the lease holder for the refund of the proportionate amount. The Government is duty bound to make that refund within a reasonable period from the date of termination. The lease amount had been collected from the lessee prior to the commencement of the year. The petitioner had paid the lease amount for the whole year on 22.03.1999. The Government does not have power under Rule 36-E to retain the money belonging to the lessee even after depriving him of the benefits of lease for the period for which the rental had been collected.

5. The long delay that has occurred in this case cannot be regarded as reasonable. The Government has taken over two years to effect refund. Counsel for the petitioner contends that on account of such delay, the petitioner is entitled to interest at such rate as the Court may determine. Counsel for the Government submits that Rule 36-E does not stipulate any interest and therefore the Government is not liable to pay any interest.

6. Counsel for the petitioner submits, relying on the decisions of the apex Court in the case of Sovintorg (India) Ltd. vs. State Bank of India, (1999) 6 SCC 406 and Ghaziabad Development Authority vs. Union of India, (2000) 6 SCC 113, that even in cases where statutory provisions or the terms of contract had not provided for payment of interest, it is open to the Court to award interest on equitable grounds. The two decisions relied upon by counsel support that submission.

7. In the first of the two cases relied on, the apex Court upheld the order of National Consumer Disputes Redressal Commission wherein interest was awarded in circumstance where there was no statutory provision providing for such payment nor was there any contract providing for payment of such interest. In that case the bank had collected the proceeds of the cheque but had not deposited the same in the account of the customer for a period of over seven years. The Court referred to an earlier decision of the Supreme Court in the case of Satinder Singh vs. Umrao Singh, AIR 1961 SC 908, wherein the Court had held that "The power to award interest on equitable grounds or under any other provision of the law is expressly saved by the proviso to Section 1 of the Interest Act, 1839."

8. In the case of Ghaziabad, (2000) 6 SCC 113, the Court reiterated that interest can be