Royalty in an assignment deed may be treated as consideration when the instrument shows a private payment obligation.

A mining rights assignment deed described periodic payments as "royalty," but the instrument was construed by substance rather than label. The payments were treated as part of the consideration for the transfer because the deed showed a private payment obligation, not a sovereign or State royalty. The analysis also noted that registration endorsement did not establish that the stated cash amount was the whole consideration. Section 54 of the Transfer of Property Act was applied to reflect that a sale may be for price paid, promised, or partly paid and partly promised.

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Issues: Whether the amount described as "royalty" in the mining rights assignment deed was in substance part of the consideration payable for the transfer, or was an inapplicable claim to sovereign royalty.

Analysis: The deed had to be construed on its own terms and by its substance, not by the label used for the payments. The arrangement showed that the parties used the word "royalty" loosely to denote periodic payments undertaken by the transferee in addition to the initial cash and share consideration. The document did not indicate any sovereign or State prerogative in favour of the assignor, and the registration endorsement did not establish that Rs. 30,000 was the entire consideration. On the proper construction of the deed, the stipulated payments formed part of the consideration for the assignment. Section 54 of the Transfer of Property Act was applied to recognise that a sale may be for price paid, promised, or partly paid and partly promised.

Conclusion: The stipulated payments were not true royalty in the legal sense but part of the consideration payable under the assignment deed, and the claim of the appellants succeeded.

Ratio Decidendi: A contractual payment described as royalty will be treated according to its substance and the surrounding terms of the instrument, and may be enforced as part of the consideration where the deed shows a private payment obligation rather than a sovereign royalty.

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