STATE OF RAJASTHAN & ANR.versusJ.K. SYNTHETICS LTD. & ANR.

                    [2011] 10 S.C.R. 993


              STATE OF RAJASTHAN & ANR.                            A
                               v.
               J.K. SYNTHETICS LTD. & ANR.
               (Civil Appeal No. 4927 of 2011)
                         JULY 4, 2011
                                                                   B
    [R.V. RAVEENDRAN, P. SATHASIVAM AND A.K.
                  PATNAIK, JJ.]

      Minerals Concession Rules, 1960 - Rule 64-A - Mines
and Minerals (Development and Regulation) Act, 1957 - s. 9 C
and Second Schedule - Royalty in respect of mining lease
- Levy of interest on arrears of royalty - State Government
issued notices demanding interest from respondents-lessees
@ 24% p.a. - Respondents filed writ petitions- Single Judge
of High Court upheld the demand for interest only to an extent D
of 12% p.a. - State Government filed intra-court appeals -
Division Bench of High Court held that the order of the Single
Judge was a consent order, being based on an admission!
concession by the Advocate General, and therefore, it was not
open for the State Government to challenge the order of the E
 Single Judge -Held: From the order of the Single Judge, it
 is clear that the only submission of the Advocate General
 before the Single Judge was that the State Government was
entitled to interest@ 18% p.a. - The observation in the order
 that as per the trend of Supreme Court, the State Government F
should get interest at least@ 12% p.a. on delayed payments,
 as awarded in the Supreme Court decision in South Eastern
 Coalfields, was an observation of the Single Judge, and not
 a concession by the Advocate General - The order of the
Single Judge was thus not based on consent or concession, G
but made on merits following the Supreme Court decision in
South Eastern Coalfields - It was therefore open for the State
 Government to challenge the order of the Single Judge if it
was of the view that it was entitled to get a higher rate of interest
                              993                                  H
      994      SUPREME COURT REPORTS                 [2011] 10 S.C.R.


 A - Code of Civil Procedure, 1908 - Concession of Advocate/
      party.

            Minerals Concession Rules, 1960 - Rule 64-A - Royalty
      in respect of mining lease - Notification increasing the rate
 8    of royalty - Respondents-lessees filed writ petition
      challenging the same - High Court issued interim orders
      directing the State Government not to take coercive steps to
      recover royalty at the increased rate - Writ petitions ultimately
      dismissed - State Government issued demand notices
 C    calling upon respondents to pay interest on the difference in
      royalty which had been withheld on account of the interim
      orders and which were belatedly paid, after rejection of the writ
      petitions - Justification - Held: Whenever there is an interim
      order of stay in regard to any revision in rate or tariff, unless
      the order granting interim stay or the final order dismissing
 D    the writ petition specifies otherwise, on the dismissal of the writ
      petition or vacation of the interim order, the beneficiary of the
      interim order shall have to pay interest on the amount withheld
      or not paid by virtue of the interim order - Where the statute
      or contract specifies the rate of interest, usually interest will
 E    have to be paid at such rate - Even where there is no statutory
      or contractual provision for payment of interest, the court will
      have to direct the payment of interest at a reasonable rate,
      by way of restitution, while vacating the order of interim stay,
      or dismissing the writ petition, unless there are special
 F    reasons for not doing so - Any other interpretation would
      encourage unscrupulous debtors to file writ petitions
      challenging the revision in tariffs/rates and make attempts to
      obtain interim orders of stay - If the obligation to make .
      restitution by paying appropriate interest on the withheld
 G    amount is not strictly enforced, the loser will end up. with a
      financial benefit by resorting to unjust litigation and winner will
      end up as the loser financially for no fault of his - Code of
      Civil Procedure, 1908 - s. 144 - Principle of restitution - Mines
      and Minerals (Development and Regulation) Act, 1957 - s.9
· H   and Second Schedule.
STATE OF RAJASTHAN & ANR. v. J.K. SYNTHETICS 995
                LTD. & ANR.

      Minerals Concession Rules, 1960 - Rules 64-A, 31 and           A
27 - Royalty in respect of mining lease - Rule 64A providing
for levy of interest on arrears of royalty - Word "may" in Rule
64A - Interpretation of - Whether Rule 64-A vests any
discretion in the State Government to charge interest at a rate
less than 24% p.a. in appropriate or deserving cases - Held:         B
Word 'may' is used in Rule 64-A not in the context of giving
discretion in regard to rate of interest to be charged, but to
give an option or choice to the State Government as to
whether it should determine the lease, or charge interest at
24% p.a., or do both - Therefore, where the lease is not             c
determined as a consequence of the default, the State will
have to charge interest at 24% p.a. on the outstanding amount
- There is no discretion in the state government to charge
interest at any lesser rate - The intention of Rule 64A is to
discourage practices that may be detrimental to recovery of
                                                                     0
revenue, by providing for a higher rate of interest - If a lesser
rate of interest is provided under the Rules, it may lead to
unscrupulous lessees indulging in delaying tactics - Where
 the statute or contract prescribed a specific rate of interest,
 the court should normally adopt such rate while awarding
 interest, except where the court proposes to award a higher.        E
 or lower rate of interest, for special and exceptional reasons
- On facts, the respondents-lessees had filed writ petitions
 before the Single Judge of the High Court challenging the
 notification increasing the rate of royalty and in case of one
 of the respondents, there was a categorical direction of the writ   F
 court while granting interim stay that in the event of failure in
 the writ petition, it will have to pay interest@ 18% p.a. - That
 was a condition of interim order and though in the writ petitions
 of other respondents, there was no such condition regarding
 interest while granting the stay, but it is possible that the       G
 respondents thought, by reason of the fact that there was no
 condition for payment of interest while granting stay, they may
 not be required to pay the statutory rate of interest - More
 importantly, the Advocate General appearing for the State had
made a submission before the Single Judge that state                 H
    996     SUPREME COURT REPORTS                [2011) 10 S.C.R.


A government was entitled to interest only@ 18% p.a. - Though
  the respondent in the last case contended that the Lease
  Deed in its case provided that any royalty not paid within
  prescribed time shall be paid with simple interest@ 10% p.a.
  and therefore the interest on any arrears cannot be more than
B 10% p.a. in its case, but it is clear that the lease was governed
  by the Minerals and Concessions Rules and any term in the
  lease deed prescribing a lesser rate of interest, shall have to
  yield to Rule 64-A as the rule will prevail over the terms of
  the lease - In the peculiar and special circumstances, from
c the date of the notification to the date of dismissal of the
  respective writ petitions, the rate of interest shall be 18% p.a.
  on the arrears of royalty etc. and from the date of dismissal
  of the writ petitions tiff date of payment, the rate of interest
  shall be 24% p.a. - Mines and Minerals (Development and
  Regulation) Act, 1957 - s.9 and Second Schedule.
0
       The first respondent in each of the instant appeals
  is or was .the holder of a mining lease for limestone.
  Section 9 of the Mines and Minerals (Development and
  Regulation) Act, 1957 deals with Royalties in respect of
E 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 specified in the Second Schedule to the Act, in
  respect of that mineral. Sub-section (3) thereof empowers
F 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. By notification, the Central
G 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
H royalty for limestone was increased from Rs.10/- per
STATE OF RAJASTHAN & ANR. v. J.K. SYNTHETICS 997
                LTD. & ANR.

tonne to Rs.25/- per tonne.                                     A
     The respective first respondent in the instant appeals
(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     8
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           C
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      D
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.

    Ultimately, the several writ petitions filed by the
contesting respondents were dismissed. As                  a E
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.                          ,
                                                                F
     Rule 64-A of the Minerals Concession Rules, 1960
provides for levy of interest on arrears of royalty and
other dues. The State of Rajasthan issued demand
notices to the contesting respondents calling upon them
to pay interest at the rate of 24% per annum under Rule         G
64-A of the Rules, on the difference in royalty which had
been withheld on account of the interim orders obtained
by them and which were belatedly paid, after rejection of
their writ petitions.
                                                                H
    998      SUPREME COURT REPORTS            [2011] 10 S.C.R.


A      The contesting respondents at this stage again filed
  a second round of writ petitions challenging the notices
  demanding interest, contending that they were not liable
  to pay interest. They submitted before the Single Judge
  that the claim for interest at 24% per annum was harsh,
B excessive and inequitable. The Single Judge upheld the
  demand for interest only to an extent of 12% per annum
  and set aside the demand for the interest at the higher rate
  of 24% per annum; with a condition that if interest at 12%
  per annum on the delayed payments was not paid within
c three months, the respective writ petitioners shall be liable
  to pay interest at 24% per annum. The contesting
  respondents purportedly paid the interest at the rate of
  12% per annum on the delayed payments, within three
  months period. The State government filed intra-court
  appeals challenging the order of the Single Judge. A
0
  Division Bench of the High Court upheld the order of the
  Single Judge holding that it was based on an admission/
  concession by the Advocate General and therefore, the
  order did not call for interference.

E      In the instant appeals filed by the State Government,
  the following questions arose for consideration: (i)
  Whether the A.dvocate General appearing for the State
  had consented to award of interest at 12% per annum;
  (ii) Whether when the High Court grants an interim stay
F of a demand for payment of money, in a writ petition
  challenging the levy which is ultimately dismissed,
  without any specific direction for payment of interest, the
  respondent can claim interest on the amount due for the
  period covered by the interim order; (iii) Whether Rule 64-
G A vests any discretion in the state government to charge
  interest at a rate less than 24% per annum in appropriate
  or deserving cases and (iv) Whether the rate of interest
  awarded at 12% per annum requires to be increased.

          Partly allowing the appeals, the Court
H
STATE OF RAJASTHAN & ANR. v. J.K. SYNTHETICS 999
                LTD. & ANR.

    HELD:                                                        A
Re : Question (i)
     1.1. From the order of the Single Judge, it is clear that
the only submission of the Advocate General before the
Single Judge was .that the State Government was entitled         B
to interest at the rate of 18% per annum. The further
observation in the order that as per the trend of Supreme
Court decision, the state government should get interest
at least at the rate of 12% per annum on the delayed
payments, as awarded in the decision in South Eastern            C
Coalfields, was an observation of the Single Judge, and
not a concession by the Advocate General. The
subsequent para of the order of the Single Judge makes
it clear beyond doubt that the order was not on consent
or concession, but was made. on merits following the             D
decision of this Court in South Eastern Coalfields.
Therefore, the assumption by the Division Bench of the
High Court that the Advocate General had made a
concession and the order of the Single Judge was a
consent order and therefore, it was not open for the State       E
Government to challenge the order of the Single Judge,
was erroneous. The order of the Division Bench cannot
therefore be sustained. [Para 12) [1011-E-H; 1012-A]

     1.2. Even if it is assumed that the Advocate General
had submitted that "looking to the present trend of the          F
decision of Supreme Court", Government should at least
get interest at the rate 12% per annum on the delayed
payment of difference in royalty amount as had been
awarded in South Eastern Coalfields, that would neither be
an admission nor a concession that the state government          G
is entitled to interest only at the rate of 12% per annum
in regard to the rate of interest. It would be nothing more
than a statement made with reference to the decision in
South Eastern Coalfields and such a statement would not
come in the way of order being challenged if the state           H
    1000    SUPREME COURT REPORTS             . [2011] 10 S.C.R.


A government is of the view that it is entitled to get a higher
  rate of interest. [Para 13) [1012-B-D)

      . South Eastern Coalfields Ltd. vs. State of M.P. 2003 (8)
    SCC 648: 2003 (4) Suppl. SCR 651 - referred to.
B Re : Question (ii)

         2. The question regarding liability to pay interest for
    the period of stay when the stay is ultimately vacated is
    no longer res integra. In view of the earlier decisions of
c   this Court, it is evident that whenever there is an interim
    order of stay in regard to any revision in rate or tariff,
    unless the order granting interim stay or the final order
    dismissing the writ petition specifies otherwise, on the
    dismissal of the writ petition or vacation of the interim
0   order, the beneficiary of the interim order shall have to
    pay interest on the amount withheld or not paid by virtue
    of the interim order. Where the statute or contract
    specifies the rate of interest, usually interest will have to
    be paid at such rate. Even where there is no statutory or
    contractual provision for payment of interest, the court
E   will have to direct the payment of interest at a reasonable
    rate, by way of restitution, while vacating the order of
    interim stay, or dismissing the writ petition, unless there
    are special reasons for not doing so. Any other
1   interpretation would encourage unscrupulous debtors to
F   file writ petitions challenging the revision in tariffs/rates
    and make attempts to obtain interim orders of stay. If the
    obligation to make restitution by paying appropriate
    interest on the withheld amount is not strictly enforced,
    the loser will end up with a financial benefit by resorting
G   to unjust litigation and winner will end up as the loser
    financially for no fault of his. [Paras 14, 17) [1013-B; 1016-
    C-F)

      Kanoria Chemicals and Industries Ltd. vs. UP State
H Electricity Board 1997 (5) SCC 772: 1997 (2) SCR 844;
STATE OF RAJASTHAN & ANR. v. J.K. SYNTHETICS 1001
                LTD. & ANR.

Rajasthan Housing Board vs. Krishna Kumari 2005 (13) SCC       A
151; Nav Bharat Ferro Allays Ltd vs. Transmission
Corporation of Andhra Pradesh Ltd 2011 (1) SCC 216: 2010
(14) SCR 900 and South Eastern Coalfields Ltd. vs. State of
M.P. 2003 (8) SCC 648: 2003 (4) Suppl. SCR 651 - relied
on.                                                            B

Re : Question (iii)

     3.1. The contesting respondents contended that Rule
64A provides that the state government "may" charge
simple interest at the rate of 24% per annum; that this        C
being an enabling provision, there is no 'mandate' or
compulsion to charge interest at 24% per annum; and
that therefore, the state government has the discretion to
charge interest at a rate lesser than 24% in appropriate
deserving cases. However, a careful reading of the Rules       D
makes it clear that no such discretion is given to the state
government in regard to rate of interest. This will be
evident from a combined reading of Rules 31 and 27 and
the terms of the statutory form of lease deed (Form K),
with Rule 64A. Rule 31 provides that where, an order has       E
been made for the grant of a mining lease, a lease deed
in Form K (or in a form as near thereto as circumstances
of each case may require), shall be executed. Rule 27
specifies that every mining lease shall be subject to the
conditions mentioned therein. Clause (5) of Rule 27 refers     F
to determination. The above provision is accordingly
incorporated in clause (2) of Part IX of the standard form
of lease (Form K). [Paras 18, 19] [1016-G-H; 1017-D-E;
1018-A-B]

    3.2. The rate of interest at 24% was substituted in        G
clause (3) of Part VI of the standard form of lease, by the
very same amendment which substituted the said
percentage in Rule 64A namely, GSR 129 (E) dated
20.2.1991. The words "may charge simple interest" in
Rule 64A should be read in the context of the words            H
    1002   SUPREME COURT REPORTS              [2011] 10 S.C.R.


A "without prejudice to the provisions of the Act or any
  other Rule in these Rules". Rule 45(iv) requires the lease
  deed to contain a condition that if there is any default in
  the payment of royalty, the lessor without prejudice to
  any proceeding that may be taken against the lessee,
B determine the lease. Therefore, the word "may" used with
  reference to the words "charge simple interest at the rate
  of 24% per annum" when read with the words "without
  prejudice to the provisions contained in the Act or any
  other Rule", occurring in Rule 64A, make it clear that
c whenever rent/royalty/fee becomes due, the lessor has
  several options by way of remedy. The lessor may
  determine the lease, if the breach is not rectified, even
  after sixty days' notice to rectify the breach. Alternatively,
  instead of determining the lease, the rule gives the choice
  to charge interest at 24% per annum on the amounts due.
0
  The third alternative for the state government is to
  determine the lease and also charge interest at 24% per
  annum on the outstanding dues. The word 'may' is used
  in Rule 64-A not in the context of giving discretion in
E regard to rate of interest to be charged, but to give an
  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. Therefore, 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
F outstanding amount. If Rule 64A is to be interpreted as
  giving any discretion, that too unguided discretion, to the
  authorities to charge any rate of interest, as it would result
  in misuse and abuse. In this view of the matter, the
  contentions urged by the parties as to whether the ·word
G "may" should be read as "must" or "shall", and, if so, in
  what circumstances, do not arise for consideration at all.
  [Para 20] [1018-C-H; 1019-A-B]

     3.3. There is also other material in the Rules itself to
H show that the rate of interest mentioned in Rule 64A was
STATE OF RAJASTHAN & ANR. v. J.K. SYNTHETICS1003
                LTD. & ANR.

not intended to be flexible and that the rate of interest       A
mentioned therein has to be applied in all cases of non-
payment/default. When Rule 64A was amended by
notification dated 20.2.1991, increasing the rate of interest
to 24% per annum, clause (3) of Part IV of the standard
form of lease (Form K) was also amended increasing the          B
rate of interest payable on all dues as 24% per annum.
Clause (3) of Part VI of Form K makes it clear that the rate
of interest should be 24% per annum and there is no
discretion in the state government to charge interest at
any lesser rate. [Para 21] [1019-B-F] .                         c
     3.4. It is true that annual interest at 24% per annum
appears to be marginally higher than the standard market
lending rate of interest. But it is not penal in nature.
Revenue from mining constitutes one of the major
sources of non-tax revenue of the State Governments.            D
Mining lessees are expected to pay the mining dues
promptly and without default. If a lesser rate of interest
is provided under the Rules, it may lead to unscrupulous
lessees indulging in delaying tactics. The intention of
Rule 64A is to discourage practices that may be                 E
detrimental to recovery of revenue, by providing for a
higher rate of interest. Hence, once the State Government
chooses not to take the path of determining the lease,
charging of interest at 24% is mandatory and leaves no
discretion in the State Government in regard to rate of         F
interest. [Para 22] [1019-G-H; 1020-A-B]

Re : Question (iv)

    4.1. Where the statute or contract prescribed a
specific rate of interest, the court should normally adopt      G
such rate while awarding interest, except where the court
proposes to award a higher or lower rate of interest, for
special and exceptional reasons. [Para 27] [1023-G]

    4.2. In. the instant case, in the case of one of the        H
   1004    SUPREME COURT REPORTS               [2011] 10 S.C.R.


A contesting respondents (J. K. Udaipur Udyog Ltd.), there
    was a categorical direction while granting interim stay
    that in the event of failure in the writ petition the writ
    petitioner will have to pay interest at the rate of 18% per
    annum. That was a condition of interim order and
B therefore, it is possible that the parties bona fide
    proceeded on the basis that interest will be only 18% per
    annum. In the writ petitions of other contesting
    respondents, there was no such condition regarding
    interest while granting the stay. But it is possible that the
c contesting respondents thought, by reason of the fact
    that there was no condition for payment of interest while
    granting stay, they may not be required to pay the
    statutory rate of interest. More importantly, th~ Advocate
    General appearing for the State had made a submission
    before the Single Judge that state government was
0
    entitled to interest only at the rate of 18% per annum. In
    the peculiar and specia!".~ircumstances of these cases,
    this Court is of the view that the appellants will be entitled
    to interest at 18% per annum in respect of royalty that
    became due between 17.2.1992 and the date of dismissal
E of their respective writ petitions. For the period
    subsequent to the dismissal of the writ petitions, the
    contesting respondents will be liable to pay interest on
    the said amount, at the rate of 24% per annum till date of
    payment. [Para 28) (1024-A-E]
F
         4.3. As regards the contention of contesting
    respondent in the last case (Shree Cement) that clause
    Vl(iii) of the Lease Deed in its case provided that any
    royalty which was not paid within the prescribed time
G shall be paid with simple interest at the rate of 10% per
    annum and therefore the interest on any arrears cannot
    be more than 10% per annum in its case, it is clear that
    the lease is governed by the Minerals and Concessions
  · Rules 1960 and execution of the lease deed was itself is ·
H in compliance with one of the requirement of the rules,
STATE.OF RAJASTHAN & ANR. v. J.K. SYNTHETICS1005
                LTD. & ANR.

namely Rule 31. Once Rule 64A was amended by                    A
notification dated 20.2.1991 increasing the rate of interest
to 24% per annum, any term in the lease deed prescribing
a lesser rate of interest, shall have to yield to Rule 64-A
from that date as the rule will prevail over the terms of the
lease. [Para 29] [1024-F-H; 1025-A-B]                           B

    South Eastern Coalfields Ltd. vs. State of M.P. 2003 (8)
SCC 648: 2003 (4) Suppl. SCR 651 and Saurashtra Cement
and Chemical Industries Ltd. vs. Union of India 2001 (1) SCC
91: 2000 (4) Suppl. SCR 44 - distinguished.
                                                                c
     Kanoria Chemicals and Industries Ltd. vs. UP State
Electricity Board 1997 (5) SCC 772: 1997 (2) SCR 844 -
relied on.

    State of Madhya Pradesh vs. Mahalaxmi Fabric Mills Ltd.     D
1995 Supp (1) SCC 642 - referred to.
'Conclusion

     5. The rate of interest is modified in each case as
under: (i) from 17.2.1992 to the date of dismissal of the       E
respective writ petition (challenging the notification dated
17.2.1992), the rate of interest shall be 18% per annum on
the arrears of royalty etc.; and (ii) from the date of
dismissal of the writ petition till date of payment, the rate
of interest shall be 24% per annum. [Para 30] [1025-C-D]        F
                     Case Law Reference:
  2003 (4) Suppl. SCR 651     Referred to.· Paras 12, 13
  1997 (2) SCR 844            Relied on.    Paras 15, 27
  2005 (13) sec 151           Relied on.      Para 15           G
  2010 (14) SCR 900           Relied on.      Para 15
  2003 (4) Suppl. SCR 651     Relied on.     Para 16
 2003 (4) Suppl. SCR 651      Distinguished. Para 25
 1995 Supp (1) sec 642        Referred to.    Para 26           H
    1006    SUPREME COURT REPORTS                 [2011] 10· S.C.R.


A    2000 (4) Suppl. SCR 44         Distinguished. Para 26

        CIVIL APPELLATE JURISDICTION : Civil Appeal No.
    4927 of 2011.

         From the Judgment & Order dated 14.11.2006 of the High
B   Court of Judicature for Rajasthan at Jodhpur in S.B. Civil Writ
    Petition No. 4267 of 1997.

                                 WITH

C C.A. Nos. 4928, 4929, 4931, 4930 & 4932 of 2011.

        Harish Salve, Soli J. Sorabjee, V. Shekhar, Dr. Manish
    Singhvi, AAG, D.K. Devesh, Sahil S. Chauhan, Milind Kumar,
    R. Gopalakrishnan, U.A. Rana, Devina Sehgal (for Mis Gagrat
    & Co.), Praveen Kumar, K.V. Mohan for the appearing parties.
D
        The Judgment of the Court was delivered by

        R.V.RAVEENDRAN, J. 1. Leave granted.

         2. In these appeals by special leave, the appellants
E   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.
F
        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.
G 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
H
STATE OF RAJASTHAN & ANR. v. J.K. SYNTHETICS1007
      LTD. & ANR. [R.V. RAVEENDRAN, J.]

amend the Second Schedule so as to enhance the rates at                 A
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                8
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.
                                                                        c
      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         D
(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         E
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 wn"t petitioner ultimately failed
in the writ petition, the difference amount due from the writ           F
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,          G
were dismissed in the year 1996 following the decision of this
Court in State of Madhya Pradesh vs. Maha/axmi 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           H
    1008      SUPREME COURT REPORTS                      [2011] 10 S.C.R.


A 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
8
    royalty and other dues and the sanie 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
C        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
D        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 Rajasthan issued the following demand
E notices to the contesting respondents calling upon them to pay
  interest at the rate of 24% per annum under Rule 64-A of the
  Rules, on the difference in royalty which had been withheld on
  account of the interim orders obtained by them and which were
  belatedly paid, after rejection of their writ petitions :

F s. Name of Lessee               Writ Petition      Interest    Date of
    No                            Number (where      Demanded Demand
                                  stay was obtained) (in Rupees)

    1. J. K. Synthetic ltd        WP No. 572111992.   6,9!!.54,031   6.11.1997

    2. Birla Corporation Ltd.     WP No. 6008/1992    5,99,81,784 24.7.1997
G
    3. J. K. Udaipur Udyog ltd.   WP No. 3871/1993    1, 12,76,364 12.3.1997

    4. J. K. Synthetic ltd        WP No. 5300/1992.   20,04,474      24.7.1997

    5. J. K. Corporation Ltd      WP No. 5202/1992.   1,83,10,418 4.11.1996

    6. Shree Cement Ltd.          WP No. 5004/1992    2,91,89,622 21.1.1997
H
 STATE OF RAJASTHAN & ANR. v. J.K. SYNTHETICS1009
       LTD. & ANR. [R.V. RAVEENDRAN, J.]

       9. The contesting respondents at this stage again filed a A
 second round of writ petitions challenging the notices
 demanding interest, contending that they were not liable to pay
 interest. They also challenged the validity of Rule 64-A of the
  Rules. During the pendency of those petitions, this Court in
  South Eastern Coalfields Ltd. vs. State of M.P. - 2003 (8) B
 SCC 648, upheld the validity of Rule 64A. On the peculiar facts
  of that case which were noticed in para 30 of the said judgment,
 this Court held that it will not interfere, in exercise of the
 jurisdiction under Article 136 of the Constitution of India, the
 discretion exercised by the High Court in reducing the rate of c
  interest from 24% per annum to 12% per annum making it clear
 that the same shall not however be treated as precedent in any
 other case. "After the said decision, what remained to be
 considered in the writ petitions filed by the contesting
 respondent was the rate of interest. The contesting respondents D
 as writ petitioners submitted before the learned Single Judge
 that the claim for interest at 24% per annum was harsh,
·excessive and inequitable, and interest should not be charged
 at a rate higher than 9% per annum. They relied upon the
  decision of this court in Saurashtra Cement and Chemical E
 Industries Ltd., vs. Union of .Jndia - 2001 (1) SCC 91, where
 this court had reduced the rate of interest on unpaid royalty
 imposed by the High Court (18% per annum) to 9% per annum.
 The learned Single Judge allowed the writ petitions of the six
 contesting respondents in part, by common order dated
  11.8.2005. He noted that the Advocate General had submitted F
 that the State Government was entitled to interest at 18% per
 annum. The learned Single Judge noted that the trend of
 directions by the Supreme Court showed that State should get
 interest at least at the rate of 12% per annum on the delayed
 payments. Consequently, he upheld the demand for interest only G
 to an extent of 12% per annJ.Jm and set aside the demand for
 the interest at the higher rate of 24% per annum, with a
 condition that if interest at 12% per -annum on the delayed
 payments was not paid within three months, the respective writ
                                                                H
    1010    SUPREME COURT REPORTS                  [2011] 10 S.C.R..


A   petitioners shall be liable to pay interest at 24% per annum. It
    is stated by the contesting respondents that all of them have
    paid the interest at .the rate of 12% per annum on the delayed
    payments, within three months period. Be that as it may.

B      10. The state government filed intra-court appeals
  challenging the order of the learned Single Judge. A Division
  Bench of the High Court has dismissed those appeals by the
  impugned orders dated 14.11.2009, 13.11.2006, 13.11.2006,
  13.3.2007, 14.11.2006 and 4.11.2009, on the ground that the
C order of the learned Single Judge was based on an admission/
  concession by the learned Advocate General and therefore, the
  order did not call for interference. The said orders are
  challenged in these appeals by special leave by the state
  government.

D        11. On the contentions raised, the following questions arise
    for consideration :

        (i) Whether the Advocate Gene-al appearing for the State
    had consented to award of interest at 12% per annum?
E        (ii) When the High Court grants an interim stay of a
    demand for payment of money, in a writ petition challenging the
    levy which is ultimately dismissed, without any specific direction
    for payment of interest, whether the respondent can claim
    interest on the amount due for the period covered by the interim
F   order?

        (iii) Whether Rule 64-A vests any discretion in the state
    government to charge interest at a rate less than 24% per
    annum in appropriate or deserving cases?
G       (iv) Whether the rate of interest awarded at 12% per annum
    requires to be increased?

    Re : Question (i)

H        12. The first question is whether the order of the learned
 STATE OF RAJASTHAN & ANR. v. J.K. SYNTHETICS1011
       LTD. & ANR. [R.V. RAVEENDRAN, J.]
 Single Judge is based on any consent and whether the learned A
.Advocate General appearing for the state had conceded that
 the state government is entitled to interest at only 12% per
 annum. We extract below the relevant portion of the order of
 the learned Single Judge, where there is a reference to the
 submission made of the learned Advocate General :            B
    "On the other hand, the learned Advocate General submits
    that the state government is entitled for the rate of interest
    @ 18% per annum but even looking to the present trend
    of Hon'ble Supreme Court, Government must at least get
    interest @12% per annum on the delayed payment of the C
    difference royalty amount as has been awarded by the
    Hon'ble Supreme Court in South Easter Coalfields case
    (supra).
      Having heard the learned (counsel) for the parties, I am of D
      the view that in the facts and circumstances of the present
      case, the demand of interest@ 12% per annum would
      meet the ends of justice in the light of the Apex Court
      judgement in South Eastern Coalfields case (supra)."
                                                                   E
The only submission of the Advocate General before the
learned Single Judge was that the State Government was
entitled to interest at the rate of 18% per annum. The further
observation that as per the trend of Supreme Court decision,
the state government should get interest at least at the rate of
                                                                  ·F
12% per annum on the delayed payments, as awarded in the
decision in South Eastern Coalfields, is an observation of the
learned Single Judge, and not a concession by the learned
Advocate General. Further, subsequent para of the order of the
learned Single Judge makes it clear beyond doubt that the
order was not on consent or concession, but is made on merits G
following the decision of this Court in South Eastern Coalfields.
Therefore, the assumption by the Division Bench of the High
Court that the learned Advocate General had made a
concession and the order of the learned Single Judge was a
                                                                   H
    1012     SUPREME COURT REPORTS                  [2011] 10 S.C.R.


A   consent order and therefore, it was not open for the State
    Government to challenge the order of the learned Single Judge,
    is obviously erroneous. The order of the Division Bench cannot
    therefore be sustained.

B         13. Even if it is assumed that the learned Advocate
    General had submitted that "looking to the present trend of the
    decision of Supreme Court", Government should at least get
    interest at the rate 12% per annum on the delayed payment of
    difference in royalty amount as had been awarded in South
    Eastern Coalfields, that would neither be an admission nor a
C   concession that the state government is entitled to interest only
    at the rate of 12% per annum in regard to the rate of interest.
    It would be nothing more than a statement made with reference
    to the decision in South Eastern Coalfields and such a
    statement would not come in the way of order being challenged
D   if the state government is of the view that it is entitled to get a
    higher rate of interest.

    Re : Question (ii)

E         14. The contesting respondents filed the second round of
    writ petitions before the High Court challenging the demand for
    interest and the validity of Rule 64A, on two grounds·: that Rule
    64-A was invalid; that the rate of interest was excessive. The
    learned Single Judge negatived the first contention in view of
    the decision of this South Eastern Coalfields. He however
F   accepted the second contention and restricted the rate of
    interest to 12% per annum. The contesting respondents have
    not challenged the order of the High Court holding that they are
    liable to pay interest at 12% per annum. They have in fact paid
    the interest at such rate. Before us, one of the contentions urged
G   to resist the claim of the State for increase in the rate of
    interest, is with reference to the fundamental question about the
    liability itself. It was submitted that they were not liable to pay
    interest on the increase in royalty amount, in view of their
    challenge to the increase and order of interim stay of the High
H   Court. It was submitted by the contesting respondents, that even
 STATE OF RAJASTHAN & ANR. v. J.K. SYNTHETICS 1013
       LTD. & ANR. [R.V. RAVEENDRAN, J.]

if the writ petitions challenging the notification dated 17.2.1992      A
revising the royalty rate were ultimately dismissed, in the
absence of any specific direction by the High Court to pay
interest on the difference in royalty amount, they were not liable
to pay any interest during the period of operation of stay. This
question is no longer res integra. We may refer to the decisions        B
of this Court that have categorically laid down about the liability
to pay interest for the period of stay when the stay is ultimately
vacated.

     15. In Kanoria Chemicals and Industries Ltd. vs. UP
State Electricity Board - 1997 (5) SCC 772, this Court held             C
that grant of stay of a notification revising the electricity charges
does not have the effect of relieving the consumer of its
obligation to pay interest (or late payment surcharge) on the
amount withheld by them by reason of the interim stay, if and
when the writ petitions are dismissed ultimately. The said              D
principle was based on the following reasoning :
     "Holding otherwise would mean that even though the
     Electricity Board, which was the respondent in the writ
     petitions succeeded therein, is yet deprived of the late E
     payment surcharge which is due to it under the tariff rules/
     regulations. It would be a case where the Board suffers
     prejudice on account of the orders of the court and for
     no fault of its. It succeeds in the writ petition and yet loses.
     The consumer files the writ petition, obtains stay of F
     operation of the Notification revising the rates and fails
     in his attack upon the validity of the Notification and yet
     he is relieved of the obligation to pay the late payment
     surcharge for the period of stay, which he is liable to pay
     according to the statutory terms and conditions of supply G
     - which terms and conditions indeed form part of the
     contract of supply entered into by him with the Board. We
     do not think that any such unfair and inequitable
     proposition can be sustained in law ...... .
     It is equally well settled that an order of stay granted           H
     1014 SUPREME COURT REPORTS                    [2011] 10 S.C.R.


A       pending disposal of a writ petition/suit or other proceeding
        comes to an end with the dismissal of the substantive
        proceeding and that it is the duty of the court in such a
        case to put the parties in the same position they would
        have been but for the interim orders of the court. Any other
B       view would result in the act or order of the court prejudicing
        a party (Board in this case) for no fault of its and would
        also mean rewarding a writ petitioner in spite of his failure.
        We do not think that any such unjust consequence can be
        countenanced by the courts. As a matter of fact, the
c       contention of the consumers herein, extended logically
        should mean that even the enhanced rates are also not
        payable for the period covered by the order of stay
        because the operation of the very notification revi~ing/
        enhancing the tariff rates was stayed. Mercifully, no such
        argument was urged by the appellants. It is
D
        ununderstandable how the enhanced rates can be said to
        be payable but not the late payment surcharge thereon,
        when both the enhancement and the late payment
        surcharge are provided by the same Notification - the
        operation of which was stayed."
E
                                               (emphasis supplied)

    The above principles have been followed and reiterated by this
    Court in Rajasthan Housing Board vs. Krishna Kumari - 2005
F   (13) SCC 151 and Nav Bharat Ferro Allays Ltd .vs.
    Transmission Corporation of Andhra Pradesh Ltd - 2011 (1)
    sec 216.
       16. The same question was considered by this Court,
  when examining the constitutional validity of Rule 64-A in South
G Eastern Coalfields. This Court held that Rule 64-A providing
  for payment of interest at the rate of 24% per annum, was valid.
  In that case also, it was contended before this Court that non-
  payment of the increased amount of royalty was protected by
  the interim orders of the High Court and therefore, they should
H not be held liable for payment of interest so long as the money
STATE OF RAJASTHAN & ANR. v. J.K. SYNTHETICS1015
      LTD. & ANR. [R.V. RAVEENDRAN, J.]

was withheld under the protective umbrella of the interim orders.    A
It was further contended that merely because the writ petition
was finally dismissed, it does not follow that the interim order
becomes vitiated or erroneous, as it may still be a perfectly
justified interim order. It was further argued that as they had
shown their bona fides by paying the difference in royalty           B
immediately after the validity of the notification dated 17.2.1992
was upheld, they could not be made liable to pay interest. All
these contentions were rejected by this Court on the ground that
the principle of restitution was a complete answer to the said
submissions. This Court held :                                       c
     'The principle of restitution has been statutorily recognized
     in Section 144 of the Code of Civil Procedure, 1908. ·
     Section 144 of the CPC speaks not only of a decree being
     varied, reversed, set aside or modified but also includes
     an order on par with a decree. The scope of the provision D
     is wide enough so as to include therein almost all the kinds
     of variation, reversal, setting aside or modification of a
     decree or order. The interim order passed by the Court
     merges into a final decision. The validity of an interim
     order, passed in favour of a party, stands reversed in the E
     event of final decision going against the party successful
     at the interim stage. Unless otherwise ordered by the Court,
     the successful party at the end would be justified with all
     expediency in demanding compensation and being placed
     in the same situation in which it would have been if the F
     interim order would not have been passed against it. The
     successful party can demand (a) the delivery of benefit
     earned by the opposite party under the interim order of the
     court, or (b) to make restitution for what it has lost; and it
     is the duty of the court to do so unless it feels that in the G
     facts and on the circumstances of the case, the restitution
     would far from meeting the ends of justice, would rather
     defeat the same. Undoing the effect of an interim order by
     resorting to principles of restitution is an obligation of the
     party, who has gained by the interim order of the Court, H
    1016     SUPREME COURT REPORTS                  [2011] 10 S.C.R.


A        so as to wipe out the· effect of the interim order passed
         which, in view of the reasoning adopted by the court at the
         stage of final decision, the court earlier would not or ought
         not to have passed. There is nothing, wrong in an effort
         being made to restore the parties to the same position in
B        which they would have been if the interim order would not
         have existed."

          17. It is therefore evident that whenever there is an interim
    order of stay in regard to any revision in rate or tariff, unless
C   the order granting interim stay or the final order dismissing the
    writ petition specifies otherwise, on the dismissal of the writ
    petition or vacation of the interim order, the beneficiary of the
    interim order shall have to pay interest on the amount withheld
    or not paid by virtue of the interim order. Where the statute or
    contract specifies the rate of interest, usually interest will have
D   to be paid at such rate. Even where there is no statutory or
    contractual provision for payment of interest, the court will have
    to direct the payment of interest at a reasonable rate, by way
    of restitution, while vacating the order of interim stay, or
    dismissing the writ petition, unless there are special reasons
E   for not doing so. Any other interpretation would encourage
    unscrupulous debtors to file writ petitions challenging the
    revision in tariffs/rates and make attempts to obtain interim
    orders of stay. If the obligation to make restitution by paying
    appropriate interest on the withheld amount is not strictly
F   enforced, the loser will end up with a financial benefit by
    resorting to unjust litigation and winner will end up as the loser
    financially for no fault of his. Be that as it may.

    Re : Question (iii)

G      18. The contesting respondents contended that Rule 64A
  provides that the state government "may'' charge simple interest
  at the rate of 24% per annum; that this being an enabling
  provision, there is no 'mandate' or compulsion to charge
  interest at 24% per annum; and that therefore, the state
H government has the discretion to charge interest at a rate lesser
STATE OF RAJASTHAN & ANR. v. J.K. SYNTHETICS1017
      LTD. & ANR. [R.V. RAVEENDRAN, J.]

than 24% in appropriate deserving cases. It is submitted that          A
if the legislative intent was to provide for interest at the rate of
24% per annum in all cases of delayed payment of royalty/rent/
fees without exception, the rule would have been differently
worded, and read as follows: ''wherever any rent, royalty or fee
or other sum due to the government under the Act or the rules          B
or under any prospecting licence or mining lease, is not paid
 by the due date, the lessee or licensee shall pay interest on
the delayed payment at the rate of 24%. per annum". It is
submitted by the respondents that the word "may" used in the
 Rule, should be read as vesting a discretion in the government        c
to charge interest or not to charge interest, and if interest is to
 be charged, at any rate not exceeding 24% per annum.

     19. A careful reading of the Rules makes it clear that no
such discretion is given to the state government in regard to
rate of interest. This will be evident from a combined reading         D
of Rules 31 and 27 and the terms of the statutory form of lease
deed (Form K), with Rule 64A. Rule 31 provides that where,
an order has been made for the grant of a mining lease, a
lease deed in Form K (or in a form as near thereto as
circumstances of each case may require), shall be executed.            E
Rule 27 specifies that every mining lease shall be subject to
the conditions mentioned therein. Clause (5) of Rule 27 refers
to determination :

     "(5). If the lessee makes any default in the payment of           F
     royalty as required under section 9 or payment of dead rent
     as required under section 9A or commits a breach of any
     of the conditions specified in sub-rules (1), (2) and (3),
     except the condition referred to in clause (f) of sub-rule (1),
     the state government shall give notice to the lessee              G
     requiring him to pay the royalty or dead rent or remedy the
     breach, as the case may be, within sixty days from the date
     of the receipt of the notice and if the royalty or dead rent
     is not paid or the breach is not remedied within the said
     period, the state government may, without prejudice to any        H
    1018     SUPREME COURT REPORTS                   [2011] 10 S.C.R.


A        other proceedings that may be taken against him,
         determine the lease and forfeit the whole or part of the
         security deposit."

    The above provision is accordingly incorporated in clause (2)
8   of Part IX of the standard form of lease (Form K).

          20. The rate of interest at 24% was substituted in clause
    (3) of Part VI of the standard form of lease, by the very same
    amendment which substituted the said percentage in Rule 64A
    namely, GSR 129 (E) dated 20.2.1991. The words "may charge
C   simple interest" in Rule 64A should be read in the context of
    the words "without prejudice to the provisions of the Act or any
    other Rule in these Rules". As noticed above, Rule 45(iv)
    requires the lease deed to contain a condition that if there is
    any default in the payment of royalty, the lessor without prejudice
D   to any proceeding that may be taken against the lessee,
    determine the lease. Therefore, the word "may" used with
    reference to the words "charge simple interest at the rate of
    24% per annum" when read with the words "without prejudice
    to the provisions contained in the Act or any other Rule",
E   occurring in Rule 64A, make it clear that whenever rent/royalty/
    fee becomes due, the lessor has several options by way of
    remedy. The lessor may determine the lease, if the breach i~
    not rectified, even after sixty days' notice to rectify the breach.
    Alternatively, instead of determining the lease, the rule gives
F   the choice to charge interest at 24% per annum on the amounts
    due. The third alternative for the state government is to
    determine the lease and also charge interest at 24% per annum
    on the outstanding dues. The word 'may' is used in Rule 64-A
    not in the context of giving discretion in regard to rate of interest
    to be charged, but to give an option or choice to the State
G   Government as to whether it should determine the lease, or
    charge interest at 24% per annum, or do both. Therefore, 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. If Rule 64A is to be interpreted as giving
H
STATE OF RAJASTHAN & ANR. v. J.K. SYNTHETICS1019
      LTD. & ANR. [RV. RAVEENDRAN, J.]

any discretion, that too unguided discretion, to the authorities     A
to charge any rate of interest, as it would result in misuse and
abuse. In this view of the matter, the contentions urged by the
parties as to whether the word "may" should be read as "must"
or "shall", and, if so, in what circumstances, do not arise for
consideration at all.                                                B

      21. There is also other material in the Rules itself to show
that the rate of interest mentioned in Rule 64A was not intended
to be flexible and that the rate of interest mentioned therein has
to be applied in all cases of non-payment/default. When Rule
64A was amended by notification dated 20.2.1991, increasing          C
the rate of interest to 24% per annum, clause (3) of Part IV of
the standard form of lease (Form K) was also amended
increasing the rate of interest payable on all dues as 24% per
annum. We extract below clause (3) of Part VI of Form K for
ready reference :                                                    D

    "3. Should any rent, royalty or other sums due to the State
    Government under the terms and conditions of these
    presents be not paid by the lessee/lessees within the
    prescribed time, the same, together with simple interest         E
    due thereon at the rate of twenty four per cent per annum
    may be recovered on a certificate of such officer as may
    be specified by the State Government by general or
    special order, in the same manner as an arrears of land
    revenue."
                                                                     F'
The said clause in Form K makes it clear that the rate of interest
should be 24% per annum and there is no discretions in the
state government to charge interest at any lesser rate.

     22. It is true that annual interest at 24% per annum appears    G
to be marginally higher than the standard market lending rate
of interest. But it is not penal in nature. Revenue from mining
constitutes one of the major sources of non-tax revenue of the
State Governments. Mining lessees are expected to pay the
mining dues promptly and without default. If a lesser rate of        H
    1020    SUPREME COURT REPORTS                 [2011) 10 S.C.R.


A   interest is provided under the Rules, it may lead to unscrupulous
    lessees indulging in delaying tactics. The intention of Rule 64A
    is to discourage practices that may be detrimental to recovery
    of revenue, by providing for a higher rate of interest. Hence,
    once the State Government chooses not to take the path of
8   determining the lease, charging of interest at 24% is mandatory
    and leaves no discretion in the State Government in regard to
    rate of interest.

    Re : Question (iv)

C        23. This brings us to the last question as to what should
    be the rate of interest. We have seen that Rule 64-A
    categorically provides that where a mining lessee who is liable
    to pay rent or any other dues, fails to pay the same, the state
    government will be entitled to charge simple interest thereon
o   at 24% per annum. The validity of this rule has been upheld by
    this Court in South Eastern Coalfields. Therefore interest on
    all delayed payments should be 24% per annum.

        24. The contesting respondents submitted that even if the
  rate of interest under Rule 64-A is 24% per annum, when the
E liability (on account of increase in Royalty) is under challenge
  and the matter is pending in court and there is an interim stay
  of the increase, the liability to pay interest will be within the
  discretion of the court and court can award a lesser rate. They
  relied upon the decisions of this Court in Saurashtra Cement
F (supra) and the decision in South Eastern Coalfields, that the
  interest should not be more than 9% or 12% per annum, for the
  period when the stay was in operation.

       25. In South Eastern Coalfields which upheld the validity
G of Rule 64-A, this Court did not interfere with the decision of
  the High Court awarding interest at 12% per annum, on the
  following reasoning :

        "So far as the appeal filed by the State of Madhya Pradesh
        seeking substitution of rate of interest by 24% per annum
H
STATE OF RAJASTHAN & ANR. v. J.K. SYNTHETICS1021
     . LTD. & ANR. (R.V. RAVEENDRAN, J.]

    in place of 12% per annum as awarded by the High Court           A
    is concerned, we are not inclined to grant that relief in
    exercise of our discretionary jurisdiction under Article 136
    of the Constitution especially in view of the opinion formed
    by the High Court in the impugned decision. The litigation
    has lasted for a long period of time. Multiple commercial        B
    transactions have taken place and much time has been
    lost in between. The commercial rates of interest (including
    bank rates) have undergone substantial variations and for
    quite sometime the bank rate of interest has been below
     12%. The High Court has, therefore, rightly (and                c
     reasonably) opined that upholding entitlement to payment
    of interest at the rate of 24% per annum would be
    excessive and it would meet the ends of justice if the rate
    of interest is reduced from 24% per annum to 12% per
    annum on the facts and in the circumstances of the case.         0
    We are not inclined to interfere with that view of the High
    Court but make it clear that this concession is confined
    to the facts of this case and to the parties herein and
    shall not be construed as a precedent for overriding Rule
     64A of the Mineral Concession Rules, 1960. It is also
     clarified that the payment of dues should be cleared within     E
     six weeks from today (if not already cleared) to get the
     benefit of reduced rate of interest of 12%; failing the
     payment in six weeks from today the liability to pay interest
     @24% per annum shall stand."
                                                                     F
                                            (emphasis supplied)

Therefore, it is clear that the concession extended in that case
by permitting interest only at 12% per annum was confined to
the facts of that case and to the parties therein and is not be      G
treated as a precedent, for nullifying or overriding Rule 64-A of
the Rules.
       '
     26. In Saurashtra Cement, while dismissing the appeals
challenging the validity of the increase in. royalty following the
decision in Mahalaxmi Fabric Mills (Supra), this Court dealt         H
    1022    SUPREME COURT REPORTS                 [2011) 10 S.C.R.


A with a case, where the High Court had granted interim stay of
  the notification regarding increase in royalty but however while
  vacating the interim order and discharging the rule, had
  directed the payment of interest at 18% per annum. Pattan.aik
  J., (as he then was) in the last line of his order reduced the rate
B of interest to 9% per annum without assigning any specific
  reason, except observing that 18% was unreasonable. In his
  concurring judgment, Banerjee J., observed as under:

        "The imposition of 18% interest with yearly rests cannot in
        our view find support in the contextual facts since the
c       validity of the legislation itself is in question before this
        Court. The payment of interest being in the discretion of
        the court, we, therefore, do not wish to interfere with the
        award of interest, as such though the rate at which it has
        been awarded needs some modification in the contextual
D       facts and as such we direct that the rate of interest be 9%
        simple interest and not as directed by the High Court."

                                               (emphasis supplied)

E A careful reading of the said judgment shows that while
  deciding the issue of interest, this Court had overlooked Rule
  64-A which is a statutory provision entitling the government to
  claim interest at 24% per annum. This Court apparently
  proceeded on the basis that there was no statutory or
  contractual provision for the payment of interest, and therefore,
F question of interest was wholly within the discretion of the court.
  Therefore, the said decision may not also be of any assistance.

       27. We find that the decision in Kanoria Chemicals
  (supra) throws considerable light on the logic behind court's
G discretion in awarding interest in such cases. That case, as
  noticed earlier, dealt with increase in electricity charges. The
  relevant provision specifically provided that in regard to delayed
  payments of the bills, the consumer shall pay additional charge
  per day of seven paisa per hundred rupees on the unpaid
H amount of the bill, which works out to 25.55% per annum. This
STATE OF RAJASTHAN & ANR. v. J.K. SYNTHETICS 1023
      LTD. & ANR. [R.V. RAVEENDRAN, J.]

Court reduced the same to 18% per annum on the following              A
reasoning:

     "Sri Vaidyanathan then contended that the rate of "late
     payment surcharge" provided by clause 7(b) is really penal
     in nature inasmuch as it works out to 25.5 per cent per
     annum. The learned counsel also submitted that the
                                                                      8
     petitioners understood the decision in Adoni Ginning as
     relieving them of their obligation to pay interest for the
     period covered by the interim order and that since they
     were acting bona fide they should not be mulcted with such
     high rate of interest. We cannot agree that the rate of late     C
     payment surcharge provided by clause 7(b) is penal, but
     having regard to the particular facts and circumstances
     of this case and having regard to the fact that petitioners
     could possibly have understood the decision in Adoni
     Ginning as relieving them of their obligation to pay             D
     interest/late payment surcharge for the period of stay, we
     reduce the rate of late payment surcharge payable under
     clause 7(b) to eighteen per cent. But this direction is
     confined only to the period covered by the stay orders in
     writ petitions filed challenging the notification dated          E
     21.4.1990 and limited to 1.3.1993 the date on which those
     writ petitions were dismissed."

                                            (emphasis supplied)

Therefore, whenever there is a challenge to a levy or challenge       F
to an increase in the tariff or rates, and an order of interim stay
of recovery is made in the said writ proceedings and the writ
petition is ultimately rejected, the court should invariably award
interest by way of restitution. Where the statute or contract
prescribed a specific rate of interest, the court should normally     G
adopt such rate while awarding interest, except where the court
proposes to award a higher or lower rate of interest, for special
and exceptional reasons.

    28. Let us consider whether there are any special or              H
    1024     SUPREME COURT REPORTS                   [2011) 10 S.C.R.

A exceptional circumstances for reducing the statutory interest in
  this case. In the case of one of the contesting respondents (J.
  K. Udaipur Udyog Ltd.), there was a categorical direction while
  granting interim stay that in the event of failure in the writ petition
  the writ petitioner will have to pay interest at the rate of 18%
8 per annum. That was a condition of interim order and therefore,
  it is possible that the parties bona fide proceeded on the basis
  that interest will be only 18% per annum. In the writ petitions of
  other contesting respondents, there was no such condition
  regarding interest while granting the stay. But as pointed out
C in Kanoria Chemicals, it is possible that the contesting
  respondents thought, by reason of the fact that there was no
  condition for payment of interest while granting stay, they may
  not be required to pay the statutory rate of interest. More
  importantly, the learned Advocate General appearing for the
  State had made a submission before the learned Single Judge
D that state government was entitled to interest only at the rate
  of 18% per annum. In the peculiar and special circumstances
  of these cases, we are of the view that the appellants will be
  entitled to interest at 18% per annum in respect of royalty that
  became due between 17.2.1992 and ::ie date of dismissal of
E their respective writ petitions. For the period subsequent to the
  dismissal of the writ petitions, the.contesting respondents will
  be liable to pay interest on the said amount, at the rate of 24%
  per annum till date of payment.

F        29. The contesting respondent in the last case (Shree
  Cement) raised an additional contention. It was submitted that
  clause Vl(iii) of the Lease Deed in its case provided that any
  royalty which was not paid within the prescribed time shall be
  paid with simple interest at the rate of 10% per annum. It is
G therefore contended that the interest on any arrears cannot be
  more than 10% per annum in its case. The lease is governed
  by the Minerals and Concessions Rules 1960 and execution
  of the lease deed is itself is in compliance with one of the
  requirement of the rules, namely Rule 31. Once Rule 64A was
H amended by notification dated 20.2.1991 increasing the rate
STATE OF RAJASTHAN & ANR. v. J.K. SYNTHETICS1025
      LTD. & ANR. [R.V. RAVEENDRAN, J.]

 of interest to 24% per annum, any term in the lease deed             A
·prescribing a lesser rate of interest, shall have to yield to Rule
 64-A from that date as the rule will prevail over the terms of the
 lease. This position is evident. from the decision in South-
 Eastern Coalfields also.
                                                                      B
Conclusion

   . 30. In view of the above, we allow these appeals in part
and modify the rate of interest in each case as under :

     (i) from 17.2.1992 to the date of dismissal of the respective    C
     writ petition (challenging the notification dated 17.2.1992),
     the rate of interest shall be 18% per annum on the arrears
     of royalty etc.; and

     (ii) from the date of dismissal of the writ petition till date
                                                                      0
     of payment, the rate of interest shall be 24% per annum.

8.8.B.                                   Appeals partly allowed.