Restitutionary interest on stayed royalty: statutory rate prevails over lower contractual terms, with limited departure for special facts.

Where recovery of royalty was stayed and the challenge later failed, restitution required interest on the withheld amount for the stay period, because a party should not retain the financial benefit of an interim order that ultimately proves ineffective. Rule 64-A of the Minerals Concession Rules, 1960 was treated as prescribing the governing interest rate and not as conferring an unguided discretion to adopt a lower contractual rate. Special circumstances justified 18% per annum up to dismissal of the writ petitions, while the statutory rate of 24% per annum applied thereafter until payment.

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Issues: (i) Whether the State's counsel had conceded that interest was payable only at 12% per annum; (ii) whether, after an interim stay of recovery and subsequent dismissal of the writ petition, interest was payable on the withheld royalty for the stay period; (iii) whether Rule 64-A of the Minerals Concession Rules, 1960 vested discretion in the State Government to charge interest at less than 24% per annum; and (iv) whether the interest rate awarded by the High Court required enhancement.

Issue (i): Whether the State's counsel had conceded that interest was payable only at 12% per annum.

Analysis: The reference in the Single Judge's order to the State's stand that 18% per annum was payable did not amount to a concession restricting the State to 12% per annum. The direction was made on merits, not as a consent order. A submission referring to the then prevailing rate of interest did not prevent the State from challenging the order.

Conclusion: The State had not consented to interest being restricted to 12% per annum.

Issue (ii): Whether, after an interim stay of recovery and subsequent dismissal of the writ petition, interest was payable on the withheld royalty for the stay period.

Analysis: A party benefiting from an interim order that prevents recovery of dues cannot retain the financial advantage after its challenge fails. The principle of restitution applies, and the successful party must be restored to the position it would have occupied but for the interim order. Where payment is withheld during the currency of a stay, interest is ordinarily payable for that period on restoration of the liability.

Conclusion: Interest was payable on the withheld royalty for the period covered by the interim stay.

Issue (iii): Whether Rule 64-A of the Minerals Concession Rules, 1960 vested discretion in the State Government to charge interest at less than 24% per annum.

Analysis: Rule 64-A, read with the lease conditions and the scheme of the Rules, does not confer an unguided discretion to choose any lower rate. The word used in the rule operates in the context of the State's available remedies on default, namely to determine the lease or charge interest or adopt both measures. Once the State elects to recover interest instead of terminating the lease, the statutory rate governs. A lower contractual rate cannot prevail over the rule.

Conclusion: Rule 64-A did not confer discretion to charge interest at less than 24% per annum.

Issue (iv): Whether the interest rate awarded by the High Court required enhancement.

Analysis: The statutory rate under Rule 64-A was 24% per annum, but the peculiar facts justified a limited departure. In one case, the interim order itself had fixed 18% per annum if the writ petition failed, and in the remaining cases the State's own stand before the Single Judge supported 18% per annum. Those special circumstances justified 18% per annum up to dismissal of the writ petitions, while the statutory rate of 24% per annum applied thereafter until payment. A lesser contractual rate in one lease deed could not override the rule.

Conclusion: The rate was enhanced to 18% per annum up to dismissal of the writ petitions and 24% per annum thereafter until payment.

Final Conclusion: The appeals succeeded to the extent that the High Court's 12% per annum rate was set aside and replaced with a higher interest structure, while the statutory liability to pay interest on delayed royalty was affirmed.

Ratio Decidendi: When recovery of a statutory levy is stayed and the challenge ultimately fails, the beneficiary of the stay must ordinarily pay restitutionary interest for the period of withholding, and a statutory rule prescribing interest prevails over a lesser contractual stipulation unless the court finds special circumstances warranting a limited departure.

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