TaxTMI 
TaxTMI 
2003 (10) TMI 638
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.... that behalf. In exercise of the power so conferred, the Union of India enhanced the royalty payable on coal to Rs. 120/- per ton from Rs. 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/consumers, about 60 writ petitions came to be filed in the High Court of Madhya Pradesh by different consumers who were to bear the burden of enhancement ultimately. In the writ petitions, the enhancement of royalty on coal was sought to be impugned on two grounds: firstly, that Section 9(3) of the Act itself....
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....s 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 payment or similar interest from them for the period for which they had delayed the payment of amount equivalent to differential royalty to the Coalfields. At this point of time the several consumers as also the Coalfields filed several writ petitions seeking quashing of the demand raised on account of inte....
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....ocates 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 Coalfields by the State Government under the provisions of the Mines and Minerals (Development and Regulation) Act, 1957. Under Section 4 of the Act no mining operation in any area shall be undertaken except under and in accordance with the terms and conditions of a mining lease granted under the Act ....
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....bed 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 royalty, rent, fee or other sum is made. 12. It is not disputed that the Coalfields have executed lease deeds in Form 'K' wherein the abovesaid two clauses, i.e., Part V Clause 3 and Part VI Clause 3 are both incorporated. There is the statutory rule providing for payment of simple interest at ....
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....nesh, 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 any delay in payment of royalty, referable to a period beyond the sixtieth day of the expiry of the date fixed by the Government for payment of such royalty, shall carry a liability to pay simple interest calculated at the rate of 24% per annum on such amount of royalty. Rule 64A has been framed in....
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....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 price in a case of breach of the contract on the part of the seller -from the date on which the payment was made. 18. What Section 61 Incorporates is a rule of equity, Justice and sound logic. The buyer should not unduly benefit by holding the goods bought in one hand and yet retaining in the ....
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.... 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; the efficacy and binding nature of such law cannot be either diminished or whittled down. It was held that in the absence of anything in the arbitration agreement, excluding the jurisdiction of the arbitrator to award interest on the amount due under the contract, and in the absence of any other pr....
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....e 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 term 'restitution' is used in three senses; (i) return or restoration of some specific thing to its rightful owner or status; (ii) compensation for benefits derived from a wrong done to another; (iii) compensation or reparation for the loss caused to another. (See Black's Law Dictionary,....
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....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 jurisdiction arise merely under the said section. It is inherent in the general jurisdiction of the Court to act rightly and fairly according to the circumstances towards all parties involved. Cairns, L.C., said in Rodger v. Comptoir d'Escompte de Paris, (1871) L.R. 3 P.C.: "One of the first and high....
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....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 entitled to a relief assessable in terms of money at the end of the litigation, is entitled to be compensated by award of interest at a suitable reasonable rate for the period for which the interim order of the court withholding the release of money had remained in operation. 28. Once the doctrine ....