1. SYED ZAHID HUSSAIN, J.--- The petitioner holds five mining leases for coal with effect from 7-12-1995.
2. The rates of royalty were amended/enhanced vide Notification dated 1-9-1996. On examination of accounts of the petitioner it was observed that the royalty was being paid on old rates i,e, prior to 1- 9-1996. On 25-5-1999 and 1-6-1999 notices were issued to the petitioner to clear the outstanding dues. The royalty amount was deposited immediately, however, the petitioner protested the imposition of penalty vide letter dated 9-6-1999, and requested for waiver thereof. An appeal was then filed which was rejected on 10-10-2001. Application for recalling of that order was also dismissed by the appellate authority on 28-8-2002. Against that , W.P. No,18370 of 2002 was filed which was accepted on 7-12-2004 directing the appellate authority to decide the appeal afresh in accordance with law. Order dated 28-5-2005 was then passed by respondent No,1 which has been assailed through this petition.
2. Report and para wise comments have been received. The learned counsel have been heard.
3. Since the dues stand cleared, the only dispute now is with regard to the imposition and recovery of penalty amount. It may be observed that penalty at the rate of 5% was charged. This was purportedly under rule 52(2) of the Punjab Mining Concession Rules, 1986. The appellate authority has dealt with this aspect in the impugned order observing that:-- "Government enhanced the royalty rates from Rs,15 to Rs,25 per ton on 1-9-1996 which was notified and published in official Gazette of the Government of Punjab on 9-10-1996 but the Directorate did not inform the lessee about the enhanced rates which is confirmed by the Licensing Authority. It has been noticed that neither the directorate reconciled accounts of the Company for a period of three years starting from July, 1996 nor the lessee took any pain in this regard. It is also observed that the Chairman of M/s. Makerwal Collieries (Pvt.) Ltd. Held few other leases in Punjab where for they paid royalty as per notification-dated 1-9-1996. Therefore, it is presumed that the revised rates were in the knowledge of the Chairman of the Company " In the concluding part of the order it was further observed that:-- "It is, however, good to note that when the additional demand along with penalty was raised against the company and they were called upon to pay it, the Company had not only paid the difference of royalty but also cleared the amount of penalty inflicted under protest, after which they had taken the legal course of filing appeals and then invoking the constitutional jurisdiction of the learned High Court. Under these circumstances, imposition of heavy amount of penalty at the rate of 5% per month does not look to be justified and the Company deserves some leniency because of their overall conduct and also delayed notice of less payment by the departmental authorities. The plea of the Company is partly accepted and one half of the total penalty inflicted is waived" (Portions underlined by me).
3. ' It is thus evident that the good conduct of the petitioner was though taken note of by respondent but the penalty was still imposed at the reduced rate. Admittedly the petitioner had been paying the royalty at the old rate. The department also did not object to the same nor reminded the petitioner about difference of rates and payment. The justification for imposition of penalty is thus to be seen in this context. Sub-rule (2) of R.52 which deals with this aspect reads as follows:-- "(2) In case of non-payment of rent and royalty dues within the grace period of two months, a penalty at the rate of 5 per cent of the outstanding dues for the delay of every month or part thereof will be charged from the date the payment became due."
4. The plain reading of this clause shows that the penalty is chargeable for "Non-payment of rent and royalty dues". This was not the case of 'non-payment'. Admittedly the petitioner had been making payment but at the old rates. The contributory conduct of the Department also assumes relevance as it had continued accepting the payment at the old rates and when the accounts were reconciled and differential was conveyed to the petitioner, the same was paid. "Penalty" as ordinarily understood is chargeable as punishment for default. It involves the idea of punishment.
5. At pages 390 and 391 of Corpus Juris Secondum of Volume 70 this subject has been dealt as follows:-- "One who seeks to recover a penalty imposed by statute must bring his case clearly within the terms of the statute. Every presumption is against one seeking to enforce a statutory penalty, and all questions of doubt must be resolved in favour of those from whom the penalty is sought".
6. Further "Courts are loath to impose statutory penalties and refrain from so doing where there is evidence of party's complete good faith and substantial effort to perform his obligations in expeditious, proper, and equitable manner.--French v. Detroit Fire and Martine Ins. Col., La. App., 38 So. 2d 165."
7. Had the petitioner been adamant in non-payment of the differential amount perhaps he could be saddled with the element of obstinacy and default but as observed in the impugned order itself he had not only paid the difference of royalty dues but also the amount of penalty under protest and then challenged the imposition thereof. The mere fact that some of the Directors being lessees of other mining leases were aware of the increase in the rate of royalty could not be made basis for burdening the petitioner with the penalty. Keeping in view the conduct of the petitioner, respondent No,1 himself reduced the penalty from 5 per cent. I am, however, of the view that the circumstances mentioned above did not warrant the imposition of the penalty at all. Reference to Messrs Poineer Cement Ltd. v. Secretary, Industries and Mineral Development Department, Lahore and others 2004 SCM R 576 is inapt as the vires of rule permitting the Government to increase royalty is not in question in the instant case. In the present case the petitioner acted in good faith and had paid the dues immediately on intimation and was thus not liable to penalty.
8. ' The petition is accordingly accepted. No order as to costs.