Raj cement firms to pay 24% interest as royalty due: SC

The Supreme Court has directed the six cement producers of Rajasthan to pay 24% interest to the state government as royalty due on lime stone from 1996 onwards.

The cement producers are -- JK Synthetic, Birla Corporation, JK Udaipur Udyog, JK Corporation and Shree Cement.

A three-member bench of headed by justice R V Raveendran partly allowed the plea of the state government, challenging orders of the Rajasthan high court which had set aside its direction and fixed 12% as interest rate.

"From February 17, 1992 to the date of dismissal (1996) of the respective writ petition (challenging the notification dated 17.2.1992), the rate of interest shall be 18% per annum on the arrears of royalty and from the date of dismissal of the writ petition till date of payment the rate of interest shall be 24% per annum," the bench said.

The high court had on November 14, 2009 asked the state government to take only 12% interest on the due royalty and asked the cement producers and pay it up  within three months.

This was challenged by the state government before the Supreme Court.

The dispute was on interest on royalty due between 1992 to 1996. In February 1992, the government had increased the royalty on the lime stone from Rs 10 per tone to Rs 25.

This was challenged by the cement producers before the high court, which asked the state government not to collect royalty at the new rate. The matter was ultimately decided by the Supreme Court in 1996, which dismissed the plea of the cement producers.

Later, after collecting the Rs 15 difference in royalty, the state government asked the cement firms to pay interest on the due sum at 24% per annum under the Minerals Concession Rules, 1960.

This was challenged by the producers before the high court contending that as per their lease deeds, the interest rate on the arrears on the royalty cannot be more than 10%.

Rejecting it, the Supreme court said that the Minerals Concession Rules, 1960 permits state government to impose an interest rate of 24%.

However, the apex court also gave some relief to the cement producers and said that from February 1992 when the new royalty rates were notified to 1996 when their petition was dismissed by it, they would pay only 18%. After that,
they would have to pay 24% interest.