Case Note & Summary
The petitioner, Associated Cement Companies Limited, filed a writ petition challenging a communication dated 16/18.4.1996 from the respondents demanding interest at the rate of 24% per annum on delayed payment of royalty on coal under Rule 64-A of the Mineral Concession Rules, 1960. Initially, the petitioner also challenged the validity of Rule 64-A, but during the pendency of the petition, the Supreme Court declared the rule constitutionally valid, so that challenge no longer survived. The petitioner argued that while the respondents are entitled to impose interest at 24% per annum, that is the upper limit, and they have discretion to impose a lower rate depending on the circumstances. The petitioner relied on the Supreme Court judgment in South Eastern Coalfields Ltd. v. State of M.P. (AIR 2003 SC 4482). The respondents did not contest this proposition. The court accepted the petitioner's contention and held that the respondents have discretion to impose interest at a rate lower than 24% per annum. The court directed the respondents to reconsider the matter and pass a fresh order regarding the rate of interest, taking into account the facts and circumstances of the case. The writ petition was disposed of accordingly.
Headnote
A) Mineral Law - Royalty - Interest on Delayed Payment - Rule 64-A of the Mineral Concession Rules, 1960 - The petitioner challenged a communication demanding interest at 24% per annum on delayed royalty payment. The court held that Rule 64-A prescribes the maximum rate of interest, not a mandatory rate, and the respondents have discretion to impose a lower rate depending on the facts of the case. Reliance was placed on South Eastern Coalfields Ltd. v. State of M.P. (AIR 2003 SC 4482). (Paras 2-5)
Issue of Consideration
Whether the respondents are bound to impose the maximum rate of interest at 24% per annum under Rule 64-A of the Mineral Concession Rules, 1960 for delayed payment of royalty, or whether they have discretion to impose a lower rate.
Final Decision
Writ petition disposed of. Respondents directed to reconsider the matter and pass a fresh order regarding rate of interest, taking into account facts and circumstances of the case.
Law Points
- Interest on delayed royalty
- Rule 64-A Mineral Concession Rules 1960
- Maximum rate not mandatory
- Discretion to impose lower interest
- South Eastern Coalfields Ltd. v. State of M.P.
