Delayed royalty and enhanced mineral price payments can attract compensatory interest under the lease and restitution framework.

Delayed royalty attracted interest under the mining lease framework because Rule 64A of the Mineral Concession Rules and Form K of the lease expressly provided for simple interest, supported by the rule-making power in the 1957 Act; the liability was treated as both statutory and contractual. Enhanced royalty also carried interest from purchasers or consumers, as it formed part of the price structure and interest was recoverable as compensation and on restitution where interim restraint orders had delayed payment; the reduced rate fixed at 12% per annum was left undisturbed.

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Issues: (i) Whether the coalfields were liable to pay interest to the State Government on delayed payment of royalty under the mining lease and the Mineral Concession Rules. (ii) Whether the consumers or purchasers were liable to pay interest to the coalfields for delayed payment of the enhanced royalty, including for the period during which interim restraint orders operated.

Issue (i): Whether the coalfields were liable to pay interest to the State Government on delayed payment of royalty under the mining lease and the Mineral Concession Rules.

Analysis: The mining leases were governed by the Mines and Minerals (Regulation and Development) Act, 1957 and the Mineral Concession Rules, 1960. Rule 64A of the Rules expressly provided for simple interest at the prescribed rate on delayed payment of royalty and the lease deed in Form K incorporated a corresponding term. The authority to prescribe such a term was traced to Section 13(2)(i) of the Act, which empowered rules regarding the fixing and collection of royalty and other charges. The liability was therefore both statutory and contractual, and the contention that interest could arise only from an express provision in the parent Act was rejected.

Conclusion: The coalfields were held liable to pay interest to the State Government.

Issue (ii): Whether the consumers or purchasers were liable to pay interest to the coalfields for delayed payment of the enhanced royalty, including for the period during which interim restraint orders operated.

Analysis: The enhanced royalty formed part of the price structure of the mineral supplied by the coalfields, and the principle reflected in Section 61 of the Sale of Goods Act, 1930 supported recovery of interest by way of compensation in the absence of a contrary contract or legal bar. The Court also relied on the equitable principle that a party retaining money that ought to have been paid cannot unjustly benefit from the delay. For the period covered by interim restraint orders, restitution was held applicable: when the final decision went against the party protected by interim relief, the benefit obtained during that period had to be neutralised by compensatory interest. The rate fixed by the High Court at 12% per annum, instead of 24% per annum, was not interfered with in the Court's discretionary jurisdiction.

Conclusion: The consumers or purchasers were held liable to pay interest to the coalfields for both periods, and the reduced rate of 12% per annum was sustained.

Final Conclusion: The governing legal position was that delayed payment of royalty-related amounts carried interest under the statutory lease framework, and interim court protection did not extinguish the compensatory obligation arising on restitution.

Ratio Decidendi: Where the statutory rule-making power authorises interest on delayed royalty and the lease deed adopts that condition, the lessee is bound to pay interest; similarly, a party who retains money during the operation of an interim order and later fails on the merits is liable in restitution to compensate the other side for the period of deprivation.

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