INDERJEET SINGH SIAL versus M/S. KARAM CHAND THAPAR

Citation: [1995] SUPP. 4 S.C.R. 53 · Decided: 25-09-1995 · Supreme Court of India · Bench: M.M. PUNCHHI · Disposal: Appeal(s) allowed

Judgment (excerpt)

INDER.JEET SINGH SIAL 
v. 
M/S. KARAM CHAND THAPAR 
SEPTEMBER 25, 1995 
[M.M. PUNCHHl AND SU.JATA Y. MANOHAR, .I.I.[ 
Contract-lnte1pretation of deed assigning mining light.1~W1tether the 
word "royalty" was used to de.\·c1ibe pay111ent as pa1t of consideration and not 
in the sense of State's share in the nzineral-Held, yes; the tt-·ord ivas used in 
a loose sense and n1ea11t to cover consideration due for future pay-
ments-Tram/er of Propeity Act, 1882 S.54. 
U'ords & Phrases: 'Consideration', 'Royalty'-Meaning of 
A 
B 
c 
TI1e predecessor-in-interest of the appellants, PS, obtained a mining D 
lease from the Government of Central Provinces in 1938. He received 
permission from the government to assign his rights in the lease and 
prospecting licence in favour of the respondent. The government secured 
for itself payment of royalty from PS upto a date and thereafter from the 
respimdent. In the deed of assignment in 1939, the respondents undertook 
to pay "royalty" as part of the consideration for the assignn1ent over and 
above the royalty payable to the government. 
These payments were suddenly stopped after twenty years leading to 
E 
the a1ipellants filing a suit for recovery of the sums due. The respondents 
resisted the suit contending that the deed postulated pa)ment of royalty F 
as kno\.\'Il to the n1ining \Vorld as heing representative of the State's share 
in the mineral for righ!s conferred and not payable to any individual. The 
earlier payments were termed as a mistake. The trial court negatived this 
contention and decreed the suit holding that the so-called royalty as used 
in the deed was merely a periodic payment. 
The High Court reversed the finding on the ground that the deed 
having been drafted by la>1yers, the word "royalty" had to be understood 
in the \vay it \.\as by those in the 1nining business and that a distinction 
had to be kept between "royalty" and "consideration" with the former not 
G 
forming part of the latter. 
H 
53 
54 
SUPREME COURT REPORTS (1995]SUPP. 4 S.C.R. 
A 
Allowing the appeal, this Court 
B 
c 
HELD : 1.1. In its primary and natural sense "royalty", in the legal 
world, is known as the equivalent or translation ofjura regalia or jura regia. 
Royal rights and prerogatives of a sovereign are covered thereunder. In its 
secondary sense the word "royalty" would signify, as in ruining leases, that 
part of the reddendum, variable though, payable in cash or kind, for rights 
and privileges obtained. It is found in the clause of the deed by which the 
grantor reserves something to himself out of that which he grants. It may 
even be a clause reserving rent in a lease, whereby the lessor reserves 
something for himself out of that which he grants. [55-B] 
1.2. In the instant case, the word "royalty" in the deed was used in a 
loose sense so as to convey liability to make periodic payments to the 
assignor for the period during which the lease would subsist. It really 
meant to cover an important item of the consideration due for future 
payments. S.54 of the Transfer of Property Act clearly postulates that sale 
D is a transfer of ownership in exchange for a price paid or promised to be 
paid or part paid and part promised. In either situation title to the 
property would get transferred. [61-B, HJ 
E 
F 
G 
1.3. When in the deed the words "consideration" and "royalty" have 
been employed to convey a meaning, the same has been used in the plaint 
to convey the same meaning as originally conceived of by the contracting 
parties. [62-D] 
CIVIL APPELLATE JURISDICTION : Civil Appeal No. 778 of 
1978. 
From the Judgment and Order dated 30.8.76 of the Madhya Pradesh 
High Court in F.A. No. 29 of 1971. 
S. K. Bhattacharya, (Sarwa Mitter) for Mitter & Mitter Co. for the 
Appellants. 
O.P. Malhotra, Ms. Meera Mathur and Ms. Hirachandani, for .IBD 
& Co. for the Respondents. 
The Judgment of the Court was delivered by 
H 
PUNCHHI, J. We are required in this appeal to ascribe a meaning 
• 
LS. SAIL v. K.C. THAPAR [PUNCHH!.J.) 
55 
to the word "royalty" figuring in a deed of assignment of mining rights A 
between two beings, both devoid of regalia. 
In its primary and natural sense !!royalty", in the legal \VOrld, is known 
as the equivalent or translation of jura regalia or jura regia. Royal rights 
and prerogatives of a sov~reign are covered thereunder. In its secondary 
sense the word "royally" would signify, as in mining leases, that part of the 
reddendum, variable though, payab

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