Miner can't be penalised for govt fault

The Supreme Court last week ruled that if the government could not comply with its obligations of a mining lease, the mining company should not be burdened with forfeiture of deposit and payment of interest.

It allowed Jai Durga Finvest Pvt Ltd's appeal against the Punjab and Haryana High Court's judgment and asked the high court to reconsider its order against the mining company.

There was an auction for the mining operation in Haryana and the company was the highest bidder.

Its bid was accepted and an agreement was signed between the company and the state government. Payment of compensation for the land owners was one of the terms of the contract.

When the company approached the land owners, they did not settle for the compensation amount. The firm asked the state to get the amount of compensation determined by the district collector. But there was no response.

Though the company could not extract minerals because of the non-co-operation of authorities, they terminated the contract for not fully paying the contracted amount.

They also demanded the alleged balance amount with an interest at the rate of 24 per cent. After depositing the amount, the company moved the high court.

It partly allowed the plea but ruled that since the company entered into the contract voluntarily, it should abide by its terms. The company then moved the Supreme Court.

The apex court allowed the appeal and held that the high court was wrong. It said: "As the high court has merely proceeded on the basis that the company had entered into the contract with its eyes wide open, the same would not mean that it was bound to pay the contract amount, get its security amount forfeited, as also pay interest at the rate of 24 per cent, although it could not carry out the mining operation in terms of the agreement."