State of Haryana & Ors. v. M/s Jai Durgaa Finvest P. Ltd

Judgment

[2026] 8 S.C.R. 88 : 2026 INSC 678 State of Haryana & Ors. v. M/s Jai Durgaa Finvest P. Ltd. (Civil Appeal No(s). 3145-3146 of 2012) 13 July 2026 [Surya Kant, CJI and V. Mohana,* J.] Issue for Consideration Whether the amount of security deposit given by the Respondent- contractor will carry interest despite there being a contract to the contrary between the Appellant and the Respondent. Headnotes† Mines & Minerals (Regulation and Development) Act, 1957 – The Punjab Minor Minerals Concession Rules, 1964 – An auction notice was given for the extraction of Yamuna sand from Bega Murthal Sand Zone – Respondent firm was the highest bidder – The bid was accepted by the Appellant – On 30.11.1998, a contract was executed between the parties in terms of the Form-L – As per the said contract the Respondent was to deposit the contract money in advance to the Government on a monthly basis – Respondent defaulted in their installment – The contract was terminated – The Respondent took up the matter in appeal before the Appellate Authority – The Appellate Authority ordered that the department shall raise the demand of contract money and up to date interest and the contractor shall deposit the demanded security – Then there were various rounds of litigation before the High Court and the Supreme Court – Now, finally the only issue that arises in these appeals is whether the security money deposited by the contractor will carry interest once the contract is determined: Held: Clause 19 is a valid binding term of the agreement – The two limbs of the Clause 19 have to be read together, and they are interdependent – While the first portion states that “it shall not carry any interest” and second portion of the same clause reads that “shall be refunded to the contractor within three months from the date of expiry or sooner determination of the contract” – The correct * Author [2026] 8 S.C.R.

89 interpretation of this Clause would mean the Respondent’s deposit will earn no interest and it will be returned to the Respondent within three months of the contract coming to an end or within three months of the termination of the contract – On a proper reading of the Clause 19 it is clear that the Appellant cannot retain the money which is interest free, in perpetuity – Once the contract is determined then it is the obligation upon the State to refund the security deposit within the period prescribed in the agreement – If the State retains the security deposit beyond three months the Respondent-contractor is entitled for interest which is very clear from a proper reading of Clause 19 – Therefore, since the contract has been determined on 09.03.2000 and the period of three months expired on 09.06.2000, the Respondent is entitled to interest for the period commencing from the expiry of three months from the determination of the contract that is from 09.06.2000 till the date on which the security was so adjusted or appropriated towards the dues payable by the Respondent to the Appellant. [Paras 27, 28, 29] Mines & Minerals (Regulation and Development) Act, 1957 – The Punjab Minor Minerals Concession Rules, 1964 – An auction notice was given for the extraction of Yamuna sand from Bega Murthal Sand Zone – Respondent firm was the highest bidder – The bid was accepted by the Appellant – On 30.11.1998, a contract was executed between the parties in terms of the Form-L – As per the said contract the Respondent was to deposit the contract money in advance to the Government on a monthly basis – Respondent defaulted in their installment – On 09.03.2000, after affording due opportunity to the Respondent and after perusing the reply, the contract was terminated by the Director of Mines and Geology – Whether the order of termination of the contract suffer from any illegality: Held: The Respondent was fully aware of the statutory Rules and Form as per the terms of which there are certain conditions to be fulfilled and failure thereof will entail certain consequences – Likewise, the Respondent was also aware that the security deposited will not carry any interest and it will be refunded within three months from the date of the expiry of the contract or sooner determination of the contract – When the Respondent signed the contract/agreement on 30.11.1998 as prescribed under Form-L, State of Haryana & Ors. v.

M/s Jai Durgaa Finvest P. Ltd. 90 [2026] 8 S.C.R. it was conscious of all the clauses, especially Clause 19 which prescribed that the security deposited will not carry any interest – The order of termination of the contract was effected due to the failure of the Respondent in abiding by the conditions as stipulated in the agreement – Though the Appellant had served a notice on the Respondent calling upon them to make the payment of monthly installment failing which contract would be cancelled, Respondent did not abide by the same and took excuses for not carrying out the obligation – It has been found by the courts below that the order of termination of the contract does not suffer from any illegality particularly when the Respondent failed to respond even to the notice of termination – This aspect has attained finality, especially in view of order dated 08.05.2009 passed by a coordinate bench of this Court in SLP(C) Nos.9761-9762 of 2009. [Paras 25, 26] Case Law Cited Venkataraman Krishnamurthy and Another v.

Lodha Crown Buildmart Private Limited (2024) 4 SCC 230 – relied on.