What is the meaning of Royalty Collection Contract

Rajasthan Minor Mineral Concession Rules, 1986 –Rule 3(xiii-a) defines ‘Excess Royalty Collection Contract’ thus:

Excess Royalty Collection Contract” means a contract for specified mineral(s) and area given to collect royalty in excess of annual dead rent, on behalf of the Government from the holder of mining lease (s) under the contract whereunder the contractor shall pay a fixed amount annually to the Government as per terms of the contract.

‘Royalty Collection Contract’ is defined in Clause (xxi) of Rule 3 as follows:

Royalty Collection Contract” means a contract for the specific mineral or minerals given to collect royalty [with or without permit fee as the case may be] on behalf of the Government from the quarry licensees and short term permit holders who excavate minor minerals from the lands specified under the contract whereunder the contractor undertakes to pay fixed amount annually to the Government save as exempted under Rule 58;

Rule 32 provides that the Government may grant by auction or tender, Royalty Collection Contract/Excess Royalty Collection Contract, in regard to such area and such mineral as the Director may by general or special order direct, for a maximum period of two years. Sub rule (3) of Rule 32 provides that the amount to be paid annually by the contractor to the Government shall be determined in auction or by tender to be submitted for acceptance by the authority competent to grant the contract. Rule 34 regulates the procedure for auctions and Rule 35 regulates the procedure for calling tenders. Rule 34 (g)(iii) and Rule 35 (g)(iii) provide that where the oral bid/tender exceeds Rs. 10 lakhs it shall be recovered in 12 monthly installments and the first installment shall be deposited before the execution of the agreement and the remaining amount shall be deposited in 11 equal monthly installments by the 10th of each month in advance. Rule 37(2) provides where the bid/tender for Royalty Collection Contract/Excess Royalty Collection Contract has been accepted by the competent authority the bidder/tenderer shall execute an agreement in Form No. 10 within a period of one month from the date of the order accepting the bid/tender and that the terms and conditions included in the notification issued under Rule 34 or 35 shall be treated as a part of the agreement. Form No. 10 is a common form for agreement for collection of royalty or excess royalty. The Rules also contain a rule (Rule 61) relating to rate of interest which reads thus:

Interest at the rate of 12% shall be charged on all dues in respect of dead rent, royalty, quarry license fee and royalty collection contract amounts after 15 days from the date of it becomes due [Note: ‘12%’ amended as ‘15%’ by Notification dated 18.12.2004].

It is no doubt true that the procedures for auction/tender in regard to Royalty Collection Contracts and Excess Royalty Collection Contracts are the same. It is also true that the form of contract for both types of contracts is the same. It is also true that under both types of contract, the government gives contracts to collect royalty in regard to particular areas in consideration of payment of a fixed amount annually. But these factors do not lead to an inference that the Royalty Collection Contracts are same as Excess Royalty Collection Contract. It is clear from their definitions in Clauses (xxi) and (xiii-a) of Rule 3 that they are conceptually different. Royalty Collection Contracts refer to contracts given to the contractors to collect royalty on behalf of the Government from quarry licensees and short term license holders who excavate minor minerals. On the other hand, Excess Royalty Collection Contracts refer to contracts given to contractors to collect royalty in excess of annual dead rent on behalf of the Government from the holders of mining leases. Therefore an Excess Royalty Collection Contract cannot be equated with a Royalty Collection Contract. Rule 61 clearly sets out the nature of dues in regard to which it will apply. It specifically refers to dues in regard to “dead rent, royalty, quarry license fee and royalty collection contract amounts”.

‘Excess Royalty Collection Contract Amount’ is neither a dead rent, nor royalty nor quarry license fee nor a royalty collection contract amount. ‘Royalty Collection Contract’ was a concept that was conceived and contemplated in the Rules as originally framed. On the other hand, ‘Excess Royalty Collection Contract’ was a new concept introduced by amendment dated 12.8.1994 by inserting a new definition under Clause (xiii-a) of Rule 3. After the said amendment in 1994 introducing the concept of ‘Excess Royalty Collection Contract’, Rules 32, 34, 35 and 37 were amended by inserting ‘Excess Royalty Collection Contract’ wherever the words ‘Royalty Collection Contract’ occurred by amendment dated 27.3.2003, thereby emphasising that the two were different. But significantly such an insertion was not made in Rule 61. If the intention was to apply the provisions of Rule 61 even in regard to Excess Royalty Collection Contracts, then Rule 61 also would have been amended, when Rules 32, 34, 35 and 37 were amended, to include ‘Excess Royalty Collection Contracts’.

In the absence of any reference of ‘Excess Royalty Collection Contract Amount’ in Rule 61, it is evident that the 15 days interest holiday is not available in regard to ‘Excess Royalty Collection Contracts’, even though it may be available in regard to the four categories of dues referred to therein.