1992 (2) TMI 376 - SC - Indian Laws

Summary

Issues:
1. Entitlement of the Government to collect royalty for minerals extracted from Government quarry.
2. Whether the grant of the right to extract minerals constitutes a lease or a license.
3. Liability of the contractors to pay royalty as per the contract terms.
4. Interpretation of relevant provisions of the Karnataka Minor Minerals Concessions Rules 1969 and the contract terms.

Analysis:
1. The appeals involved a common question of law regarding the Government's entitlement to collect royalty for minerals extracted from the Government quarry. The contractors contested the demand for royalty under Rule 19 of the Karnataka Minor Minerals Concessions Rules 1969. The High Court initially ruled in favor of the contractors, issuing a mandamus against collecting royalty. The State filed appeals challenging this decision.

2. The issue of whether the grant of the right to extract minerals constitutes a lease or a license was central to the case. The contractors argued that there was no lease executed as per the Rules, and therefore, they were not liable to pay royalty. The Supreme Court analyzed the definition of lease under Section 105 of the Transfer of Property Act, emphasizing the right to enjoy immovable property and the right to extract minerals as part of mining operations.

3. The liability of the contractors to pay royalty was determined based on the terms of the contract. The Court highlighted that the contractors were granted permission to extract minerals from Government quarries and use them for the works, making them liable to pay royalty as specified in the contract terms. The Court clarified that the contractors' liability to pay royalty arose from the contract itself.

4. The Court interpreted the relevant provisions of the Karnataka Minor Minerals Concessions Rules 1969 and the contract terms to establish the contractors' obligation to pay royalty. The Court emphasized that the rules specified the procedure for entering into a mining lease, but the question of royalty payment was to be considered based on the contract terms. The Court concluded that the contractors were indeed liable to pay royalty as per the contract terms, dismissing the writ petitions and allowing the appeals.

This detailed analysis of the judgment provides a comprehensive overview of the legal issues involved, the arguments presented by the parties, and the Supreme Court's decision based on the interpretation of relevant laws and contract terms.