STATE OF GUJARAT Vs. DHRANGADHRA CHEMICAL WORKS LIMITED

JUDGEMENT

(1.) These two appeals have been filed by the State of Gujarat on the strength of a certificate granted by the, High Court of Gujarat under Article 133(l)(c) of the Constitution of India as it stood prior to the Amendment of 1972.

(2.) Dhrangadhra was a princely State in Kathiawar region ruled by a Maharaja, until April, 1948, when pursuant to covenant entered into by the Maharaja with the Government of India it became merged in the newly formed State of Saurashtra.

(3.) On January 29,1937, an agreement had been entered into between the Dhrangadhra Chemical Works Ltd., (hereinafter called the 'defendant company') and the Maharaja of Dhrangadbra whereunder the defendant company purchased from the Goverment of Maharaja, Shree Shakti Alkiali Works in Dhrangadhra and the Salt Works at Kuda with exclusive rights to manufacture salt at the Kuda Works on certain conditions. That agreement was subsequently modified as per the Minutes of the meeting of the Board of Directors of the defendant company recorded on April 5, 1953. After the merger of the Dhrangadhra State in the State of Saurashtra, the aforesaid agreement was by an agreement dated January 4,1950 entered into between the defendant company and the Government of Saurashtra. It is that agreement alone that we are concerned with in these appeals. Under that agreement, the defendant company agreed to pay to the Government of Saurashtra royalty at the rate of Rs. 0-2-3 (2 annas, 3 pies) per Bengal Maund on the total quantity of salt sold by them every year. The payment of royalty was to be made as and when delivery was given by the defendant company to the purchaser. Under clause (3) of the said agreement the defendant company agreed to manufacture a minimum quantity of at least 50,000 tons of salt every year in addition to the quantity required by the defendant company for consumption in their Alkali factory. Clause (5) of the agreement provided for the payment of a minimum royalty, equivalent to an amount chargeable on the minimum quantity to be manufactured by the defendant company in accordance with clause (3).