STATE OF RAJASTHAN & ORS.versusM/S. DEV GANGA ENTERPRISES

                         [2009) 16 (ADDL.) S.C.R. 269


                       STATE OF RAJASTHAN & ORS.                         A
                                       v.
                      MIS. DEV GANGA ENTERPRISES
                       (Civil Appeal No. 8152 of 2009)
                            DECEMBER 08, 2009
                                                                         B
          [R.V. RAVEENDRAN AND K.S. RADHAKRISHNAN, JJ.]
              Mines and Minerals:

                Rajasthan Minor Mineral Concession Rules, 1986 - r.
          3(xxi), (xiii-a), 32, 35(g)(iii), 37 and 61 - Excess Royalty   c
          Collection Contract between State Government and contractor
          - Delayed payment of instalments by contractor - Demand
          of interest by State Government - Entitlement to interest free
          grace period of 15 days from the date when amount becomes
          due u/r. 61 to contractor- Held: r. 61 refers to dues in regard 0
          to dead rent, royalty, quarry licence fee and royalty collection
     \    contract amounts - Excess Royalty Collection Contract
'·        Amount, which relate to contracts given to contractors to
          collect royalty in excess of annual dead rent on behalf of
          Government from holders of mining leases, are not covered E
         by r.61 - Thus, contractor not entitled to grace period of 15
          days u/r.61 - Demand for interest for delayed payment of
         instalments without applying grace period of 15 days ulr. 61
         justified.
              'Excess Royalty Collection Contract' and 'Royalty          F
         Collection Contract' - Difference between - Explained.

              Respondents-contractor entered into an 'Excess
         Royalty Collection Contract' with the appellants-State
         Government. Respondents were to pay annual fixed
         amount in instalments, the first instalment on or before        G
         the signing of the agreement and the balance in advance
         upto the 10th day of the month. They delayed in paying
         the instalments. Appellant raised a dem::.nd for interest for
         delay in payment of instalments. Respondent paid said
                                     269                                 H
   270    SUPREME COURT REPORTS (2009] 16 (ADDL.) S.C.R.


A amount under protest and filed a suit for setting aside the   >
  said demand and sought adjustment of the amounl Trial
  court dismissed the suit. High Court allowed the appeal
  holding that respondent was entitled to a grace period of
  15 days u/r. 61 of Rajasthan Minor Mineral Concession
B Rules, 1986, after 10th day of month when amount fell
  due. Hence, the present appeal.
         Allowing the appeal, the Court
       HELD: 1.1. The procedures for auction/tender in          ·"
c regard to Royalty Collection Contracts and Excess
  Royalty Collection Contracts are the same. The form of
  contract for both types of contracts is the same. Under
  both types of contract, the government gives contracts
  to collect royalty i!'! regard to particular areas in
0 consideration of payment of a fixed amount annually. But
  these factors do not lead to an inference that the Royalty
  Collection Contracts arP same as Excess Royalty               '
                                                                (



  Collection Contract. It is clear from their definitions in
  clauses (xxi) and (xiii-a) of Rule 3 of the Rajasthan Minor
E Mineral Concession Rules, 1986 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
F 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 ca~not be equated with a Royalty
  Collection Contract. Rule 61 clearly sets out the nature
G 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
H royalty collection contract amount. 'Royalty Collection
                                                                     -·
        STATE OF RAJASTHAN & ORS. v. DEV GANGA             271
                     ENTERPRISES
      Contract' was a concept that was conceived and             A
      contemplated in the Rules as originally framed. [Para 8]
      [276-F-H; 277-A-C]
           1.2. 'Excess Royalty Collection Contract' was a new
      concept introduced by amendment dated 12.8.1994 by
                                                                  8
      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 C
      27 .3.2003, 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, D
      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 E
      Collection Contracts', even though it may be available in
      regard to the four categories of dues referred to therein.
      [Para 8] [277 -C-G]
            1.3. A wrong or untenable subsequent claim by the F
      government cannot justify a wrong interpretation of Rule
      61. The wording of Rule 61 is clear and unambiguous.
      The State has categorically contended that Rule 61 is
      inapplicable, as the said rule does not refer to 'Excess
      Royalty Collection Contracts'. If the State Government G
      wrongly applied Rule 61 to demand higher rate of
      inter:est in regard to any subsequent period, it is open
      to the contractor to contend therein that Rule 61 is
      inapplicable to Excess Royalty Col!"<:tion Contracts.
      [Para 9) [278-C-D]
                                                                 H

·--
    272 SUPREME COURT REPORTS [2009] 16 (ADDL.) S.C.R.


A     1.4. The judgment of the High Court is set aside and
                                                                           -~
  the decision of the trial court is restored. The demand for
  interest at 12% per annum in respect of the delayed
  payment of instalments relating to 'Excess Royalty
  Collection Contract', without applying the grace period of
B 15 days under Rule 61 of the Rules is upheld. [Para 10]
  [278-E-F]
        CIVIL APPELLATE JURISDICTION : Civil Appeal No.
    8152 of 2009.

c       From the Judgment & Order dated 27.2.2008 of the High
    Court of Judicature for Rajasthan at Jodhpur in S.B. Civil First
    Appeal No. 403 of 2006.
        Abhishek Gupta, K. Gupta, Milind Kumar for the
    Appellants.
D
        Pallav Shishodia, Dharmendra Kumar SinhcJ, Subodh K.
    Pathan for the Respondent.
                                                                       '
                                                                       I


        The Judgment of the Court was delivered by
      R. V. RAVEENDRAN J. 1. Leave granted. Heard learned
E 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
F 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 inter~t
  under Rule 61 of the said Rules.
        3. The respondents entered into an 'Excess Royalty
G 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 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
H mining leases within the revenue boundaries of Tehsil
            STATE OF RAJASTHAN & ORS. v. DEV GANGA                     273
                ENTERPRISES [R.V. RAVEENDRAN, J.]
~
         Rajsamand, Kumbhalgarh, Arnet and Railmangra of Distt.                A
         Rajsamand, during the period 19.7.2003 to 31.3.2005. The
         contract required the contractor to pay the annual fixed amount
         in instalments, that is, the first instalment on or before the
         signing of the agreement and the balance in eleven monthly
         instalments, payable in advance upto the 1oth day of the month.       8
         Sub-clause (11) of clause 2 of the agreement provided as
         follows:
1'
              "The Contractor shall pay the instalments of contract money
              according to :he stipulations laid down in the contract, and
              if any amount is not paid on due date it shall be collected
                                                                               c
              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."
                                                                               D
    '\        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
                                                                               E
         respondents, in paying the instalments, 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
    A    aside the said demand and seeking a mandatory injunction to
                                                                               F
         adjust the amount recovered from them as interest, towards
         their future dues. The trial court dismissed the suit vide judgment
         and decree dated 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         G
         day of the 'month' when the amount fell due. This meant that in
-I       a contract which commenced on 19.7.2003, if the instalment
         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         H
    274    SUPREME COURT REPORTS [2009] 16 (ADDL.) S.C.R.

                                                                            ;,.
A 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
8 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:
c         "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
D         annually to the Government as per terms of the contract.•

    'Royalty Collection Contract' is defined in clause (xxi) of Rule
                                                                        '
                                                                        I



    3 as follows:

          "Royalty Collection Contract" means a contract for the
E         specific mineral or minerals given to collect royalty [with
          or without permit 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        A


F         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 ContracUExcess Royalty Collection
G 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
H
                STATE OF RAJASTHAN & ORS. v. DEV GANGA                   275
                   ENTERPRISES [R.V. RAVEENDRAN, J:]
-¥            Rule 34 regulates the procedure for auctions and Rule 35 A
              regulates the procedure for calling tenders. Rule 34 (g)(iii) and
            . Rule 35 (g)(iii) provide that where the oral bid/tender exceeds
              Rs.1 Olakhs it shall be recovered in 12 monthly instalments and
              the first instalment shall be deposited before the execution of
              the agreement and the remaining amount shall be deposited B
              in 11 equal monthly instalments by the 1oth 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
                                                                                c
              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 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:     D
     ~
                 "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"                                                 E
                 [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 instalments shall be paid by 1oth F
            of each month in advance, and if the contract commences as
            in this case on 19.7.2003, the first instalment 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 G
            contractor is not entitk J 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 al! dues in respect of dead
            rent, royalty, quarry licence fee and royalty collection contract H
       276   SUPREME COURT REPORTS [2009] 16 (ADDL.) S.C.R.


A amounts after 15 days from the date of it becomes aue. 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
8 Rule 61, but not 'Excess Royalty Collection Contract'. Therefore,
  it is contended that the 15 days grace period mentioned in Rule
  61, will be inapplicable to amounts due in regard to Excess
  Royalty Collection Contract.

,...     7. On the ather hand the respondents submit that Rules 34
oJ(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
D 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
E 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
F 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
G inference that the Royalty Collection Contracts are same as
  Excess Royalty 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
H
        STATE OF RAJASTHAN & ORS. v. DEV GANGA                   277
            ENTERPRISES [R.V. RAVEENDRAN, J.]
       of the Government from quarry licensees and short term A
       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 B
       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 c
       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 0
'\    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, thereby emphasising that the two E
     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 F
     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 G
     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;        H
    278    SUPREME COURT REPORTS (2009) 16 (ADDL.) S.C.R.


A 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 instalments subsequent to
  18.12.2004, the appellants demanded payment of interest at
B 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 untenable subsequent
c 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
0
   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
E of the High Court, restore the decision of the trial court and
  uphold the demand for interest at 12% per annum in resp~::t
  of the delayed payment of instalments relating to 'Excess
  Royalty Collection Contract', without applying the grace period
  of 15 days under Rule 61 of the Rules.
F
    N.J.                                           Appeal allowed.