Authority: Supreme Court of India, Civil Appellate Jurisdiction

Order Date: 01 September 2026

Case Overview

  • Parties: Appellant – M/s Gem Granites; Respondents – State of Tamil Nadu and others.
  • Background: The lease deed for quarrying black granite was executed on 08‑02‑1999 (original proceedings issued on 11‑05‑1998). The deed required payment of a one‑time bid amount of Rs 19,00,000 and, during the lease term, land revenue, cess, area assessment, and either seigniorage fee or dead rent, whichever is higher, with interest for late payment as prescribed in the Tamil Nadu Minor Mineral Concession Rules, 1959.
  • Dispute: The appellant contested whether the lessee must pay a seigniorage fee or dead rent and the mode of interest calculation. The challenge failed, making the lessee liable for the seigniorage fee.
  • Demand: On 26‑08‑2011, the respondents demanded Rs 13,22,65,646 as interest at 24% per annum for delayed payment of the seigniorage fee. The appellant filed Writ Petition No. 21191/2011, which the High Court dismissed on 15‑09‑2011. The dismissal was affirmed by the High Court in Writ Appeal No. 2427/2011.
  • Civil Appeal: The appellant argued that Rule 36(B) uses the word “may,” implying discretion to reduce the 24% interest to a reasonable 18% under Article 142 of the Constitution. The respondents contended that the lease deed and Rule 36(B) prescribe a statutory 24% interest with no discretion.
  • Legal Provisions Cited:
  • Clause 5(a) of the lease deed: obliges payment of seigniorage or dead rent with interest for late payment as prescribed in the Rules.
  • Rule 36(B) of the Tamil Nadu Minor Mineral Concession Rules, 1959: authorises the district collector (or designated officer) to charge simple interest at 24% per annum on any rent, royalty, fee or other sum due, from the 60th day after the due date, and provides for recovery under the Tamil Nadu Revenue Recovery Act, 1864.
  • Court’s Reasoning: The Court observed that the delay was due to the appellant’s unsuccessful challenge to the lease terms. The lease deed expressly stipulates the interest rate, and Rule 36(B) authorises a 24% rate without discretion. The Court also referenced the judgment in State of Rajasthan & Anr vs J.K. Synthetics Ltd. & Anr (2011) 12 SCC 518 as controlling authority.

Final Outcome

  • The three‑judge bench dismissed the civil appeal, upholding the demand for 24% interest on the seigniorage fee.
  • No order as to costs was made.
  • Any pending applications were ordered disposed of.

Topics: Mining Lease Dispute, Statutory Interest on Seigniorage, Supreme Court Judgment