STATE OF GUJARAT vs DHRANGADHRA CHEMICAL WORKS LTD.

The Supreme Court interpreted the agreement between Dhangadhra Chemical Works Ltd. and the Government of Saurashtra regarding royalty payments for salt production under Article 229 of the Constitution of India. The Court held that the respondent company was liable to pay minimum royalty on 50,000 tons for years where production fell short, while for years exceeding this minimum, royalty was only applicable on the quantity sold. The Court affirmed the trial court's decree in favor of the State of Bombay for Rs. 2,66,462-0-9, dismissing the respondent's claims of vagueness in the agreement clauses.