Settlee entitled to proportionate royalty remission for mining preclusion caused by State actions or extraneous factors.

The Petitioner, a proprietorship firm, was the highest bidder in an e-auction for a sand mining lease (Block No. 3A, Rohtas) and executed a settlement deed on 26.11.2024 for a five-year period

The Petitioner paid the annual royalty but encountered several disruptions: suspension of e-challans due to delayed installment payments (despite paying penalty interest), traffic restrictions due to the Kumbh Mela, and mining bans during VIP movements and festivals

Consequently, the Petitioner could only excavate 7,85,429.28 MT against a capped limit of 10,23,163.30 MT

The Petitioner sought a proportionate refund of royalty for the un-utilized quantity or an extension of the lease, alleging that the State’s retention of the full amount constituted unjust enrichment

1. Whether a mining settlee is entitled to a proportionate refund or remission of royalty for periods during which mining operations were precluded for reasons not attributable to the settlee

2. Whether the State can retain the full settlement amount when the petitioner is prevented from exercising contractual rights due to administrative restrictions or State actions

The Court applied the principle that the State cannot unjustly enrich itself by saddling a settlee with royalty for periods of legal or physical disability not caused by the settlee

It relied on the Supreme Court precedent in Jai Durga Finvest (P) Ltd. v. State of Haryana, which held that a contractor is not bound to pay the full contract amount if acts of omission or commission by authorities prevent mining

The Court further applied the doctrine from Chitra v. State of Kerala, establishing that a licensee is entitled to remission of fees if precluded from transacting business due to factors extraneous to them

Rule 51(4) of the Bihar Minerals Rules, 2019, regarding royalty on extracted minerals

The Court reasoned that while the settlement amount is often paid in advance, it presupposes that the concession holder has an "effective right and opportunity" to work the site

The Court found that if a settlee is prevented from mining due to State-imposed restrictions (e.g., traffic bans for Kumbh Mela, VIP movements, or administrative suspension of e-challans beyond statutory penalties), the State cannot equitably retain the consideration for the period of preclusion

The Court observed that the Petitioner had already paid the 24% interest for delayed installments as per Rule 29(B)(4), making the further disabling of e-challans an excessive consequence

Connecting the facts to Jai Durga Finvest, the Court determined that the inability to utilize the full capping limit was not entirely attributable to the Petitioner, thus necessitating a factual review of the preclusion period

The Court directed the Petitioner to file a representation before the respondent authorities for a calculated refund of the proportional royalty for the preclusion period. The Respondents are ordered to pass a reasoned and speaking order within eight weeks, affording the Petitioner a hearing and adhering to the principles laid down in Jai Durga Finvest