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TMI Blog2003 (10) TMI 638X X X X Extracts X X X X X X X X Extracts X X X X ..... eds held by them. 2. Sub-section (3) of Section 9 of the Act empowers the central Government to enhance or reduce the rate at which royalty shall be payable in respect of any mineral including coal w.e.f. such date as may be specified in the notification published in the official gazette in that behalf. In exercise of the power so conferred, the Union of India enhanced the royalty payable on coal to ₹ 120/- per ton from ₹ 6.50 per ton, which was the rate prevailing till then. So far as the State Government is concerned, it is entitled to collect the royalty including the enhanced royalty from the lessees, i.e. the coalfields, and the coalfields can, in law, pass-on the burden of royalty to the purchasers/consumers of coal by including the amount equivalent to royalty in the price of the coal. Coal is a controlled commodity and governed by the provisions of the Essential Commodities Act, 1956 and the Coal Control order issued thereunder. Inasmuch as the State Government took steps for recovering the royalty on coal at the enhanced rates from the lessees and the lessees in their turn proposed to enhance the rate at which the coal was supplied to the purchasers/consumer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... operation of the judgment of the High Court to remain stayed. The result of the interim stay granted by this Court was that the notification dated 1.8.1991 became operative and the enhancement in rate of royalty made thereby became operational and the enhanced royalty became recoverable. 6. It seems that at some stage of the proceedings, under orders of the court, the consumers had furnished bank guarantees for payment of differential amount of royalty in the event of their liability being uphold by the Court. On the operation of the judgment of the High Court having been stayed by the Supreme Court, the Coalfields issued notices demanding payment of differential royalty and on account of the bank guarantees being available, the differential amount of royalty was paid in full and the bank guarantees furnished by the parties were released. 7. In the year 1997 the Director, Mines and Geology, Government of Madhya Pradesh, issued letters to the Coalfields demanding payment of Interest at the rate of 24% per annum for the period for which the payment of the enhanced amount of royalty was delayed. The Coalfields in their turn raised bills on their consumers/Buyers demanding paymen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... terest. The State of Madhya Pradesh has also come up in appeal by special leave staking its claim for recovery of interest at the rate of 24% per annum in place of 12% per annum as directed by the High Court. 8. We have heard S/Shri R.F. Nariman, P.K. Jaiswal, A.K. Chitale and S. Ganesh, Senior Advocates for the consumers, S/Shri Ajit Kumar Sinha and Anip Sachethey, Advocates for the Coalfields and Shri Satish Kumar Agnihotri, Advocate for the State of Madhya Pradesh. We have also heard Shri Mukul Rohtagi, the learned Additional Solicitor General for the Union of India. 9. The questions arising for decision in this batch of appeals may, for facilitating discussion, be grouped into two, as under: (i) The liability of Coalfields to pay interest to the State Government; and (ii) The liability of the consumers/purchasers to pay interest to the Coalfields (a) for the period for which there was no restraint order on recovery passed by the Court, and (b) for the period for which the restraint order passed by the Court remained in operation. Liability of Coalfields to pay interest to the State 10. It is not disputed that the mining rights have been leased to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Mines and Minerals (Regulation and Development) Act, 1957. Part VI - Provisions relating to the rents and royalties Clause 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 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 arrear of land revenue. Rule 64A provides as under : 64A. 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 [twenty-four per cent] per annum 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 Government for payment of such royalty, rent, fee or other sum and until payment of such roya ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent. The Court chose to assign a literal meaning to the provisions of the substantive law as opposed to a liberal interpretation, and held that to empower levy of interest for delayed payment of tax there must be a substantive provision in the taxing statute. All the cases relied on by Shri S. Ganesh, the learned senior counsel, are such cases wherein the levy of interest was sought to be justified by reference to some provision made in the rules, which provision was held to be beyond the rule making power as delegated by the parent statute and the statute itself did not make a provision for payment of interest. The levy of such interest was held to be ultra vires the power of the authority levying the interest. Such is not the case before us. Here it is clear from the several provisions of the Act and the rules quoted hereinabove, no mining operation is permissible except In accordance with the terms and conditions of a mining lease and the rules made under the Act. The rules clearly provide for payment of interest. The lease deed executed by the coalfields incorporates a recital for the payment of interest. It is one of the terms and conditions of obtaining a mining lease that an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o pay interest as per the terms of mining leases incorporating the clause for payment of interest consistently with Rule 64A of the Mineral Concession Rules, 1960. Liability of the consumers/purchasers to pay interest to the Coalfields : (a) (for the period for which there was no restraint order on recovery passed by the Court) 17. It cannot be denied that the sale of minerals by Coalfields to the consumers/purchasers is a sale of goods. Section 61 of the Sale of Goods, 1930 provides as under : 61. Interest by way of damages and special damages. - (1) Nothing in this Act shall affect the right of the seller or the buyer to recover interest of special damages in any case where by law interest or special damages may be recoverable, or to recover the money paid where the consideration for the payment of it has failed. (2) In the absence of a contract to the contrary, the Court may award interest at such rate as it thinks fit on the amount of the price- (a) to the seller in a suit by him for the amount of the price - from the date of the tender of the goods or from the date oh which the price was payable; (b) to the buyer in a suit by him for the refund of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gh subject, of course, to a contrary agreement (See : Chitty on Contracts, Addition 1999, Vol. II, Part 38-248, at page 712). Interest in equity has been held to be payable on a market rate even though the deed contains no mention of interest. Applicability of the rule to award interest in equity is attracted on the existence of a state of circumstances being established which justify the exercise of such equitable jurisdiction and such circumstances can be many. 21. We may refer to the decision of this Court in Executive Engineer, Dhenkanal Minor Irrigation Division, Orissa and Ors. v. N.C. Budharaj (Deceased) by Lrs. and Ors., (2001) 2 5CC 721, wherein the controversy relating to the power of an arbitrator (under the Arbitration Act 1940) to award interest for pre-reference period has been settled at rest by the Constitution Bench. The majority speaking through Doraiswamy Raju, J., has opined that the basic proposition of law that a person deprived of the use of money to which he is legitimately entitled has a right to be compensated for the deprivation by whatever name it may be called, viz., interest, compensation or damages and this proposition is unmistakable and valid; th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al therewith inasmuch as it was submitted on behalf of the consumers/purchasers that their non-payment of enhanced amount of royalty was protected by judicial orders, though of interim nature, passed by the courts, and therefore they should not be held liable for payment of interest so long as the money was withhold under the protective umbrella of the court order. Merely because the writ petitions were finally held liable to be dismissed, it cannot be urged that the interim orders passed by the Courts were erroneous. Soon on dismissal of their writ petitions, the payment of the enhanced amount of royalty which was disputed earlier was promptly cleared by the writ petitioners and, therefore, their act was bona fide. We find no merit in this submission either. 25. In our opinion, the principle of restitution takes care of this submission. The word 'restitution' in its etymological sense means restoring to a party on the modification, variation or reversal of a decree or order, what has been lost to him in execution or decree or order or the court or in direct consequence of a decree or order (See : Zafar Khan and Ors. v. Board of Revenue, U.P., and Ors., . In law, the ter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t 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, 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 which they would have been if the interim order would not have existed. 26. Section 144 of the C.P.C. is not the fountain source of restitution; it is rather a statutory recognition of a pre-existing rule of justice, equity and fair play. That is why it is often held that even away from Section 144 the Court has inherent jurisdiction to order restitution so as to do complete justice between the parties. In Jai Berham v. Kedar Nath Marwari (1922) 49 LA. 351, their Lordships of the Privy council said: It is the duty of the Court under Section 144 of the Civil Procedure Code to place the parties in the position which they would have occupied but for such decree or such part thereof as has been varied or reversed. Nor indeed does this duty or jurisdic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ountenance its own interim verdict. Whenever called upon to adjudicate, the court would act in conjunction with what is the real and substantial justice. The injury, if any, caused by the act of the court shall be undone and the gain which the party would have earned unless it was interdicted by the order of the court would be restored to or conferred on the party by suitably commanding the party liable to do so. Any opinion to the contrary would lead to unjust if not disastrous consequences. Litigation may turn into a fruitful industry. Though litigation is not gambling yet there is an element of chance in every litigation. Unscrupulous litigants may feel encouraged to approach the Courts, persuading the court to pass interlocutory orders favourable to them by making out a prima facie case when the issues are yet to be heard and determined on merits and if the concept of restitution is excluded from application to interim orders, then the litigant would stand to gain by swallowing the benefits yielding out of the interim order even though the battle has been lost at the end. This cannot be countenanced, we are, therefore, or the opinion that the successful party finally held entit ..... X X X X Extracts X X X X X X X X Extracts X X X X
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