Case: Panyam Cements &amp; Mineral Industries Ltd Vs. Union Of India

of the limestone. Any further expenditure in transporting the limestone from the ‘pit head’ so defined, to the appellants’ factory was not so includible. In other words, the case made out by the respondents by the amendment to the written statement was rejected. An amount of Rs. 2,50,571.61p. was held to be due to the appellant by way of refund. Interest @ 12% per annum was also granted on the decreed amount from 27.4.1972 till realisation. The appellate Court upheld the reasoning of the Trial Court on 23rd January 1987 and came to the conclusion that the trial Court’s finding that the appellant had paid an excess amount of Rs. 2,50,571.61 p. was correct. No appeal has been preferred from the decision of the appellate Court by the respondents. The only question, therefore, is whether the appellant’s further claim for a refund of the balance of Rs. 16,08,308.02p. is permissible. 8. The appellant’s claim is founded on the definition of the word ‘pit’s head’ used in proviso (a) to Section 9(3) of the Act. According to the appellant, the word ‘pit’ had been wrongly construed by the Trial and High Courts not only by giving it the same meaning as ‘mine’ but also by importing the definition of the word ‘mine’ in the Mines Act, 1952 to define the word ‘pit-head’ in the 1957 Act. According to the appellant, ‘pit’ means the actual physical opening and the ‘pits head’ means the mouth of this opening. Therefore, according to the appellant, for the purposes of proviso (a) to Section 9(3) of the Act, the sale price of the mineral was to be ascertained with reference to the ‘pits head’ so defined and the royalty calculated on such sale price.9. Learned counsel for the respondents on the other hand has supported the reasoning of the Courts below. Both, the trial court as well a the High Court went into the question of the sale price of the limestone quarried by the appellant in the leased area in elaborate detail, an exercise which, as it now turns out was really futile. 10. On 23rd November, 1993, this Court in Saurashtra Cement and Chemicals Industries Ltd. vs. Union of India and Another’ (1994(1) SCC 226), disposed of an appeal from a decision of the Gujarat High Court which had, unlike the Andhra Pradesh High Court in WP No. 3276 of 1970, held that the 1970 Notification was not contrary to clause (a) of the proviso to sub-section (3) of Section 9 of the Act. In that case also the appellant was a manufacturer of cement and held a mining lease for excavating limestone like the appellant before us. The limestone mined was not sold but consumed in its own factory. The Union of India filed an affidavit before this Court showing the manner in which the royalty for limestone was fixed at Rs. 1.25 per tonne by the 1970 notification. It was stated that the restriction of 20% of the sale price of the mineral at the pit’s head was worked out by taking the average sale price of the minerals at the pit’s head for the entire country and the fixation of royalty by taking sale price of each unit in the country was not visualised by clause (a) nor was it practicable. This was accepted by this Court by saying. "Payment of royalty under sub-section (1) is in respect of mineral removal from area but fixation under clause (a) of proviso to sub-section (3) is related to mineral and not to area leased or the unit. It did not admittedly exceed 20% of the sale price of the mineral at the pit’s head if the average sale price of the mineral for the entire country is taken into account. From the provisions extracted earlier it is apparent that the law does not require that fixation of royalty should be unitwise. In fact it could not be as demonstrated in the counter- affidavit. It cannot therefore, be said that the notification issued by the Government were violative of the proviso". 11. Therefore, both in law and as matter of fact the fixation of Rs. 1.25 per tonne by the 1970 Notification was held to be valid and in accordance with proviso (a) of Section 9(3) of the Act. The view of Saurashtra Chemical is in keeping with subsequent observations of this Court in State of M.P. vs. Mahalaxmi Fabric Mills Ltd. (1995 (Supp.) 1 SCC 642) that: "The purpose of the Union control envisaged by Entry 54 and the MMRD Act, 1957, is to provide for proper development of mines and mineral areas and also to bring about a uniformity all over the country in regard to the minerals specified in Schedule I in the matter of royalties and, consequently, prices". (p.663) 12. Strictly speaking, therefore, since the substratum of the appellant’s claim in the suit was the High Court’s decision in WP 3276 of 1970, and since that decision is clearly not good law in view of the decision in Saurashtra Chemicals, the suit is liable to be dismissed. However, since the respondents had not impugned either the decision in WP 3276 of 1970 nor the decision of the High Court partly directing the appellants suit, we cannot follow what would otherwise have been the legal course. However, having regard to the decision of this Court in Saurashtra Chemicals (supra) the appellant’s submission that the words ‘pits head’ in proviso (a) of Section 9(3) of the Act must be construed to mean the mouth of a particular excavation in a particular leased area is entirely unacceptable. When this Court has allowed the calculation of royalty on limestone on the basis of a national average pit head sale price, the decision of the Trial Court and High Court to reject the appellant’s plea that the ‘sale price’ at the pit head must mean the price of limestone at the opening of each excavation within the leased area cannot be held to be erroneous.

Decision (1 = appeal accepted, 0 = rejected): 0

Explanation:
0[ds]12. Strictly speaking, therefore, since the substratum of theclaim in the suit was the Highdecision in WP 3276 of 1970, and since that decision is clearly not good law in view of the decision in Saurashtra Chemicals, the suit is liable to be dismissed. However, since the respondents had not impugned either the decision in WP 3276 of 1970 nor the decision of the High Court partly directing the appellants suit, we cannot follow what would otherwise have been the legal course. However, having regard to the decision of this Court in Saurashtra Chemicals (supra) thesubmission that the words ‘pitsin proviso (a) of Section 9(3) of the Act must be construed to mean the mouth of a particular excavation in a particular leased area is entirely unacceptable. When this Court has allowed the calculation of royalty on limestone on the basis of a national average pit head sale price, the decision of the Trial Court and High Court to reject theplea that the ‘saleat the pit head must mean the price of limestone at the opening of each excavation within the leased area cannot be held to be erroneous.Therefore, both in law and as matter of fact the fixation of Rs. 1.25 per tonne by the 1970 Notification was held to be valid and in accordance with proviso (a) of Section 9(3) of the Act.