IMPORTANT POINT
According to the principle of restitution, when on account of an act of the party, persuading the Court to pass an order, which at the end is held as not sustainable, has resulted in one party gaining advantage which it would not have otherwise earned, then the successful party finally held entitled to a relief, is entitled to be compensated in the same manner in which the parties would have been if the interim order of the Court would not have been passed.

Headnote:Mines and Minerals (Development & Regulation) Act, 1957-Section 21(5)-Karnataka Minor Mineral Concession Rules, 1969-Rules, 3 and 3A-Grant of leases for quarrying granites in Government land, contrary to prohibition contained in Rule 3A-Challenged by filing public interest litigation-Writ petitions allowed quashing all the grants-Appeals filed by lessees-Interim order passed by Court directing that renewals or existing grants in favour of appellants would continue till further orders of the Court-Appellants in whose favour interim orders were issued were granted transport permits also-Appellants case that they operated quarries and transported several granite blocks on basis of order passed by this Court-They had exported granite blocks-Quarrying having taken place during pendency of appeal-Dismissal of appeals-State of Karnataka issued an order calling upon appellants to pay price of granite blocks calculated at minimum rate per unit volume of minor mineral-Order challenged-Appellants case that their act of quarrying granite stones and exporting the same was accompanied by payment of royalty and it was a bona fide act-Whether appellants could be held liable for payment of price of granite blocks-(Yes).
       Held : The provision as to recovery of price is in the nature of recovering the compensation and not penalty so also the power of the State Government to recover rent, royalty or tax in respect of any mineral raised without any lawful authority can also not be called a penal action. The underlying principle of sub-Section (5) is that a person acting without any lawful authority must not find himself placed in a position more advantageous than a person raising minerals with lawful authority. (Para 7)
       It is true that by the interim orders passed by this Court the appellants were allowed during the pendency of the earlier appeals to operate under the mining leases, whether freshly granted or renewed and to effectuate the interim orders the authorities were also directed to issue transports permits. Admittedly, the transport permits were obtained by the appellants after the dismissal of their appeals. The appellants claim that both the parties were ignorant of the dismissal of the appeals when the transport permits were issued and the granite blocks were exported. It is difficult to accept the plea of the appellants that the dismissal of the appeals was not in their knowledge inasmuch as the judgments must have been pronounced in an open Court and their counsel at Delhi must have gathered the knowledge thereof. In any case the appellants cannot be heard taking shelter behind there own convenient ignorance. In our opinion, whether they had the knowledge of the judgment or not and whether the transport permits were obtained by the appellants before the dismissal of the appeals during which the interim orders were in operation or after the dismissal of the appeals when the interim orders had ceased to operate would not make any difference. For the purposes of the law it is enough that the appellants have enjoyed the benefit under the interim orders of the Court which have stood vacated with the dismissal of their appeals. It is also noteworthy that this Court had not, in the earlier appeals, directed the judgment of the High Court to remain stayed in its entirety and this is an additional fact or which tells adversely on the appellants. (Para 9)
       In the facts of this case, in spite of the judgment of the High Court, if the appellants would not have persuaded this Court to pass the interim orders, they would not have been entitled to operate the mining leases and to raise and remove and dispose of the minerals extracted. But for the interim orders passed by this Court, there is no difference between the appellants and any person raising, without any lawful authority, any mineral from any land, attracting applicability of sub-section (5) of Section 21. As the appellants have lost from the Court they cannot be allowed to retain the benefit earned by them under the interim orders of the Court. The High Court has rightly held the appellants liable to be placed in the same position in which they would have been if this Court would not have protected them by issuing interim orders. All that the State Government is demanding from the appellants is the price of the minor minerals. Rent, royalty or tax has already been recovered by the State Government and, therefore, there is no demand under that Head. No penal proceedings, much less any criminal proceedings, have been initiated against the appellants. It is absolutely incorrect to contend that the appellants are being asked to pay any penalty or are being subjected to any penal action. It is not the case of the appellants that they are being asked to pay a price more than what they have realised from the exports or that the price appointed by the respondent State is in any manner arbitrary or unreasonable. (Para 11)

JUDGMENT

R.C. Lahoti, J.-The grant of 203 leases for quarrying granites in government land under Rule 3 of the Karnataka Minor Mineral Concession Rules 1969, contrary to the prohibition contained in Rule 3A, was challenged in the Karnataka High Court in public interest litigation. The writ petitions were allowed by the learned single Judge and all the grants were quashed. Writ appeals were dismissed by a Division Bench of the High Court. The unsuccessful lessees came up to this Court and by judgment dated January 18, 1996 [Alankar Granites Industries & Ors. vs. P.G.R. Scindia, MLA & Ors., (1996) 7 SCC 416] this Court directed the appeals to be dismissed by holding that the grants of leases were made against the prohibition contained in Rule 3A and were rightly held by the High Court to be invalid.

2. The appellants before us were holding two quarry leases and were amongst the appellants in this Court in the appeals by special leave referred to hereinabove. On 19.11.1993, by an interim order, the Court directed that the renewals or existing grants in favour of the appellants would continue till the next date of hearing. On 21.11.1993, the Court modified the previous order by extending its operation to continue till further orders of the Court . The appellants brought to the notice of the Court that in spite of the previous interim order the appellants were not issued transport permits with the result that the renewal or grant of leases was of no avail to them as they were not able to remove the minerals quarried by them. In the opinion of the Court such action of the respondents resulted in frustrating the interim orders. It was clarified that the appellants in whose favour interim orders were granted, should be granted transport permits also by the appropriate authority on payment of royalty and complying with the rules. On 18.1.1996, the appeals came to be dismissed as already stated.

3. According to the appellants they had operated the quarries and transported several granite blocks on the strength of the order passed by this Court. They had paid the prescribed royalty and exported the granite blocks. The quarrying had taken place during the pendency of the appeals and the export had taken place on 24.1.1996 as the dismissal of the appeals on 18.1.1996 at Delhi did not come to the notice of the appellants or the authorities of the State at Karnataka until after the granite blocks had already been exported. On 14/15.2.1996, the State of Karnataka issued an order calling upon the appellants to pay the price of the granite blocks calculated at the minimum rate per unit volume of minor mineral. The appellants filed writ petitions in the High Court laying challenge to the impugned action of the respondents proposing to recover the price of the granite blocks which were already exported. The writ petitions were dismissed. Feeling aggrieved the appellants have filed these appeals by special leave.

4. The substance of the plea, forcefully urged by the learned counsel for the appellants and highlighted from very many angles, is that the act of the appellants in quarrying the granite stones and exporting the same was accompanied by payment of royalty and issuance of transport permits by the authorities of the State and though done under the interim orders of this Court was nevertheless a lawful and bona fide act. The mining leases in favour of the appellants ought to be held to be valid, in spite having been invalidated by the High Court, in view of the interim orders passed by this Court. The appellants cannot be held liable for payment of price of the granite blocks. The demand of price of the granite blocks is a demand in the nature of penalty and hence cannot be sustained. Reliance is placed by the learned counsel on the decision of this Court in Hindustan Steel vs. State of Orissa, (1970) 1 SCR 753 and Consolidated Coffee vs. Agricultural Income Tax Office, (2001) 1 SCC 278.

5. Having heard Shri K.V. Vishwanathan, the learned counsel

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2004 Supreme(SC) 90

Cases Referred (5)