State of
Rajasthan & Ors. Vs. M/S Dev Ganga Enterprises [2009] INSC 1792 (8 December
2009)
Judgment
IN THE
SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION CIVIL APPEAL NO. 8152 OF
2009 (Arising out of SLP [C] No.27219 of 2008] State of Rajasthan & Ors.
... Appellants Dev Ganga Enterprises ... Respondent
R. V.
RAVEENDRAN J.
1.
Leave granted. Heard learned counsel.
2.
The question that arises for consideration is where the State
Government enters into an `Excess Royalty Collection Contract' under Rule 32 of
the Rajasthan Minor Mineral Concession Rules, 1986 (`Rules' for short), whether
a contractor is entitled to a grace period of 15 days (from the date when the
amount becomes due) for paying the dues without interest under Rule 61 of the
said Rules.
3.
The respondents entered into an `Excess Royalty Collection
Contract' with the State of Rajasthan, agreeing to pay a fixed amount of
Rs.36.52 crores per annum in consideration of the State granting them a 2
contract to collect from mining lease holders excavating and removing marble
from the mines of such leaseholders, excess royalty on marble, in regard to the
mining leases within the revenue boundaries of Tehsil Rajsamand, Kumbhalgarh,
Amet and Railmangra of Distt. Rajsamand, during the period 19.7.2003 to
31.3.2005. The contract required the contractor to pay the annual fixed amount
in installments, that is, the first installment on or before the signing of the
agreement and the balance in eleven monthly installments, payable in advance
upto the 10th day of the month. Sub-clause (11) of clause 2 of the agreement
provided as follows:
"The
Contractor shall pay the installments of contract money according to the
stipulations laid down in the contract, and if any amount is not paid on due
date it shall be collected as an arrears of land revenue and an interest @ 12%
will be charged irrespective of any other action being taken for cancellation
of contract or imposition of penalty under relevant rules."
4.
The annual amount payable by the respondents was increased to Rs.
42,32,36,000/- per annum on account of revision in rates of royalty.
On the
ground that there was delay on the part of the respondents, in paying the installments,
the department raised a demand for interest of Rs.18,46,899/-, by its letter
dated 30.12.2004. The respondent paid the said amount under protest on
22.1.2005 and filed a suit on 24.1.2005 for setting aside the said demand and
seeking a mandatory injunction to adjust the amount recovered from them as
interest, towards their future dues. The trial court dismissed the suit vide
judgment and decree dated 3 29.3.2006. However the High Court allowed the
appeal filed by the respondent by judgment dated 27.2.2008 holding that the
respondent was entitled to a grace period of 15 days under Rule 61 of the
Rules, after the tenth day of the `month' when the amount fell due. This meant
that in a contract which commenced on 19.7.2003, if the installment was due in
terms of the agreement on 29.7.2003 (that is 10th day of the month commencing
from 19.7.2003), the contractor who commits default cannot be charged interest
if the payment was made on or before 13.8.2003 and that interest could be
charged on delayed payments only from 14.8.2003.
The said
judgment is challenged in this appeal by special leave. The appellants
contended that only the first ten days of the contract month were interest
free, and the contractor was not entitled to any further interest free period
of 15 days.
5.
A reference to the relevant Rules is necessary to consider the
tenability of appellant's contention. Rule 3(xiii-a) defines `Excess Royalty
Collection Contract' thus:
"Excess
Royalty Collection Contract" means a contract for specified mineral(s) and
area given to collect royalty in excess of annual dead rent, on behalf of the Government
from the holder of mining lease (s) under the contract whereunder the
contractor shall pay a fixed amount annually to the Government as per terms of
the contract."
`Royalty
Collection Contract' is defined in clause (xxi) of Rule 3 as follows:
"Royalty
Collection Contract" means a contract for the specific mineral or minerals
given to collect royalty [with or without permit 4 fee as the case may be] on
behalf of the Government from the quarry licensees and short term permit
holders who excavate minor minerals from the lands specified under the contract
whereunder the contractor undertakes to pay fixed amount annually to the
Government save as exempted under rule 58;"
Rule 32
provides that the Government may grant by auction or tender, Royalty Collection
Contract/Excess Royalty Collection Contract, in regard to such area and such
mineral as the Director may by general or special order direct, for a maximum
period of two years. Sub rule (3) of Rule 32 provides that the amount to be
paid annually by the contractor to the Government shall be determined in
auction or by tender to be submitted for acceptance by the authority competent
to grant the contract.
Rule 34
regulates the procedure for auctions and Rule 35 regulates the procedure for
calling tenders. Rule 34 (g)(iii) and Rule 35 (g)(iii) provide that where the
oral bid/tender exceeds Rs.10 lakhs it shall be recovered in 12 monthly installments
and the first installment shall be deposited before the execution of the
agreement and the remaining amount shall be deposited in 11 equal monthly installments
by the 10th of each month in advance. Rule 37(2) provides where the bid/tender
for Royalty Collection Contract/Excess Royalty Collection Contract has been
accepted by the competent authority the bidder/tenderer shall execute an
agreement in Form No.10 within a period of one month from the date of the order
accepting the bid/tender and that the terms and conditions included in the
notification issued under Rule 34 or 35 shall be treated as 5 a part of the agreement.
Form No.10 is a common form for agreement for collection of royalty or excess
royalty. The Rules also contain a rule (Rule 61) relating to rate of interest
which reads thus:
"Interest
at the rate of 12% shall be charged on all dues in respect of dead rent,
royalty, quarry licence fee and royalty collection contract amounts after 15
days from the date of it becomes due"
[Note:
`12%' amended as `15%' by Notification dated 18.12.2004].
6.
The appellants contend that having regard to Rule 35 (g)(iii) and
37, the 11 monthly installments shall be paid by 10th of each month in advance,
and if the contract commences as in this case on 19.7.2003, the first installment
shall be paid within 10 days from the 19th July, that is, by 29th July. It is
contended that except the said grace period of 10 days given under the Rules
and under the terms of the contract, the contractor is not entitled to any
further interest-free grace period. It is pointed out that Rule 61, which is a
general provision regarding rate of interest, clearly states that the interest
provided therein shall be charged on all dues in respect of dead rent, royalty,
quarry licence fee and royalty collection contract amounts after 15 days from
the date of it becomes due. It is pointed out that `Excess Royalty Collection
Contract Amount' is not included in the items in regard to which the 15 days
grace period is made available. It is further pointed out that there is a
specific mention of `Royalty Collection Contract Amount' in Rule 61, but not `Excess
Royalty Collection Contract'. Therefore, it is contended that the 15 days 6
grace period mentioned in Rule 61, will be inapplicable to amounts due in
regard to Excess Royalty Collection Contract.
7.
On the other hand the respondents submit that Rules 34 (g)(iii),
35(g)(iii) and 37(2) deal with both Royalty Collection Contracts and Excess
Royalty Collection Contracts together, treating them in an identical manner.
Even Form No.10 is common and identical for agreements for collection of
royalty and excess royalty. It is contended that Rule 61 is a general provision
relating to interest in regard to all amounts due under the Rules and is
therefore applicable to all contracts entered under the Rules; and that the
mandatory provision in Rule 61 that interest shall be chargeable only after 15
days from the date when it becomes due, clearly means that all amounts due and
payable under the Rules will enjoy the benefit of 15 days interest free period.
8.
We have carefully considered the contentions. It is no doubt true
that the procedures for auction/tender in regard to Royalty Collection
Contracts and Excess Royalty Collection Contracts are the same. It is also true
that the form of contract for both types of contracts is the same. It is also
true that under both types of contract, the government gives contracts to
collect royalty in regard to particular areas in consideration of payment of a
fixed amount annually. But these factors do not lead to an inference that the
Royalty Collection Contracts are same as Excess Royalty 7 Collection Contract.
It is clear from their definitions in clauses (xxi) and (xiii-a) of Rule 3 that
they are conceptually different. Royalty Collection Contracts refer to
contracts given to the contractors to collect royalty on behalf of the
Government from quarry licensees and short term licence holders who excavate
minor minerals. On the other hand, Excess Royalty Collection Contracts refer to
contracts given to contractors to collect royalty in excess of annual dead rent
on behalf of the Government from the holders of mining leases. Therefore an
Excess Royalty Collection Contract cannot be equated with a Royalty Collection
Contract. Rule 61 clearly sets out the nature of dues in regard to which it
will apply. It specifically refers to dues in regard to "dead rent,
royalty, quarry licence fee and royalty collection contract amounts".
`Excess Royalty Collection Contract Amount' is neither a dead rent, nor royalty
nor quarry licence fee nor a royalty collection contract amount. `Royalty
Collection Contract' was a concept that was conceived and contemplated in the
Rules as originally framed. On the other hand, `Excess Royalty Collection
Contract' was a new concept introduced by amendment dated 12.8.1994 by
inserting a new definition under clause (xiii-a) of Rule 3.
After the
said amendment in 1994 introducing the concept of `Excess Royalty Collection
Contract', Rules 32, 34, 35 and 37 were amended by inserting `Excess Royalty
Collection Contract' wherever the words 'Royalty Collection Contract' occurred
by amendment dated 27.3.2003, 8 thereby emphasising that the two were
different. But significantly such an insertion was not made in Rule 61. If the
intention was to apply the provisions of Rule 61 even in regard to Excess
Royalty Collection Contracts, then Rule 61 also would have been amended, when
Rules 32, 34, 35 and 37 were amended, to include `Excess Royalty Collection
Contracts'. In the absence of any reference of `Excess Royalty Collection
Contract Amount' in Rule 61, it is evident that the 15 days interest holiday is
not available in regard to `Excess Royalty Collection Contracts', even though
it may be available in regard to the four categories of dues referred to
therein.
9.
The respondent next submitted that under the contract the rate of
interest was 12% per annum; that originally the rate of interest specified
under Rule 61 was also 12% per annum; that the rate of interest under Rule 61
was increased from 12% to 15% per annum by amendment dated 18.12.2004; and that
on the basis of the said amendment of Rule 61, when there was some delay in
payment of installments subsequent to 18.12.2004, the appellants demanded
payment of interest at the rate of 15% per annum relying upon Rule 61. It is
contended that the said action clearly demonstrated that even according to the
appellants, Rule 61 was applicable in regard to the Extra Royalty Collection
Contracts. We are not concerned with such subsequent dispute. Further a wrong
or 9 untenable subsequent claim by the government cannot justify a wrong interpretation
of Rule 61. The wording of Rule 61 is clear and unambiguous. The State has
categorically contended before us that Rule 61 is inapplicable, as the said
rule does not refer to `Excess Royalty Collection Contracts'. If the State
Government wrongly applied Rule 61 to demand higher rate of interest in regard
to any subsequent period, it is open to the contractor to contend therein that
Rule 61 is inapplicable to Excess Royalty Collection Contracts.
10.
We, therefore allow this appeal, set aside the judgment of the
High Court, restore the decision of the trial court and uphold the demand for
interest at 12% per annum in respect of the delayed payment of installments
relating to `Excess Royalty Collection Contract', without applying the grace
period of 15 days under Rule 61 of the Rules.
.............................J. (R V Raveendran)
............................J.
New Delhi;
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