TMI Blog2020 (11) TMI 790X X X X Extracts X X X X X X X X Extracts X X X X ..... money deposit, was deposited on 24.03.1995. Therefore, the impugned judgment erred in directing payment of interest on the entire amount from 08.11.1994; instead, the direction to pay interest on ₹ 3,61,20,000/- shall operate with effect from 22.03.1995 to 19.05.1998. The appeal allowed in part. - CIVIL APPEAL NO. 3807 OF 2020 (Arising out of SLP (C) NO(S). 28244 OF 2015) - - - Dated:- 24-11-2020 - INDIRA BANERJEE And S. RAVINDRA BHAT, JJ. For the Petitioner : Mr. Gursharan H. Virk, Adv.Mr. Nakul Mohta, Adv.Mr. Simranjit H. Virk, Adv.Ms. Misha Rohatgi Mohta, AOR For the Respondent : Mr. Milind Kumar, AORMr. Shishir Deshpande, AOR JUDGMENT S. RAVINDRA BHAT , J. 1. Leave granted. With consent, the appeal was heard. This appeal is directed against a judgment of the High Court of Gujarat dated 24.07.2015. The respondent (hereafter Asiatic Steel ) had filed a writ petition before the High Court seeking refund of contract consideration of ₹ 3,61,20,000/- paid by them to the appellant (hereafter the Board ). The High Court allowed the writ petition, in view of its earlier interim order, and directed the Board to pay interest for the period from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r respondents. The Board made this deposit, as directed by the court. 5. On 17.09.2014, the High Court determined that the following issues survived to be determined: (a) Whether interest on payment should be calculated from 24.03.1995 to 15.04.2002, or from 19.05.1998; (b) Whether the earnest money of ₹ 5,00,000 should be refunded; (c) Whether interest should be calculated at 10% p.a. or 12% p.a. 6. The Board resolved, through a resolution dated 17.12.2014, to refund the earnest money deposit with interest of 10% calculated from 19.05.1998. On account of this development, the High Court examined the issue of quantification of interest, and held that so far as the amount that had already been refunded with interest at 10% was concerned, no grievance could be raised by Asiatic Steel, as it had initially claimed an interest of 10%, in the letter to the Board dated 19.05.1998. In the case of the refund already made of the Principal and the earnest money deposit, it was held that Asiatic Steel was not justified in claiming more than 10% interest. Neither party raised any grievance against the High Court s interim order dated 26.02.2002 fixing the interest at 10%. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ovided an undertaking of their satisfaction of the site, in the contract entered into between the parties. They then went on to abandon the contract on grounds of the site being rocky/ unsuitable for their commercial activities. 10. Counsel for Asiatic Steel, on the other hand, submitted that the Board took about 4 years to take action on its promise to create surrounding infrastructure and clear the rocks as well as the rocky island near plot V-10, which made it unviable for Asiatic Steel to commence business. The Board had agreed, through its board meeting on 23.03.1995, to develop infrastructure and remove the rocks; Asiatic Steel once again appraised the Board of the importance of removing the rocks, through a letter dated 26.04.1996. Asiatic Steel even stated that it could take up the task of removing the rocks, if the Board so desired. The request for removal of the rocks and the rocky formation near plot V-10 was repeated through another letter dated 22.05.1996. The other successful bidders for plots V-6 to V-9 also raised similar issues, and approached the courts for relief. Asiatic Steel did not join those bidders, and sought to deal with the matter amicably. Counsel su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ium. The first objection on record was immediately after payment of the earnest money deposit after the allotment of the plot on 08.11.1994, through letter dated 23.02.1995. The payment of the premium was made on 22.03.1995. It was argued that no time period under the lease, was consumed for any activity whatsoever on the plot, and Asiatic Steel did not derive any benefit at all. It was categorically acknowledged and admitted in board meetings and letters that the plot was unusable and the contract was to be mutually abandoned. Considering that the Board agreed to refund the amount with interest, it was argued, that the consequence was that the money should be returned with interest from the date when it was enjoyed by the Board. 15. Asiatic Steel urged that the limited issue to be determined by this court is that of interest payment from when the remittance was made, i.e., 22.03.1995 to 19.05.1998, when the contract was abandoned. Finally, they submitted that this amount works out to ₹ 1,32,44,729/- (at 10% interest p.a.), ₹ 1,06,95,783/- (at 8% interest p.a.), and ₹ 81,46,837 (at 6% interest p.a.). 16. It was further submitted that the successful bidders o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0.11.1995. Asiatic Steel did not take possession. 22. It was urged that the present case is a contractual dispute where, without breach being proved against the Board, interest was ordered as a compensatory measure , that too under writ jurisdiction. Analysis 23. The Guidelines for Permission to Utilize Ship breaking Plots at Sosiya provided that permission shall be granted for a period of ten years from the date of issue of the permission letter, after which, the permission shall cease. The conditions applicable for grant of permission are provided under Clause 13; Clause 13(d) mandates that plot charges be paid in advance, before issuance of the permission letter, and plot charges for the next year are to be paid before the commencement of the relevant year. 24. Asiatic Steel was the highest bidder in an auction for five shipbreaking plots, held on 08.11.1994. The Board received payment of the earnest money deposit of ₹ 5,00,000/- on this day. Plot V-10 was allotted to Respondent No. 1 (Asiatic Steel Industries Ltd.). M/s Ganpatrai were the Indian shareholders of Asiatic Steel, while M/s Industeel was a foreign shareholder based in Singapore. The upset prem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ments of Rs. 25 lakhs. The total interest sanctioned on 08.08.1996 (and later paid) was Rs. 3.55 lakhs. The last instance is of Maaz Marine (P) Ltd, Surat, which had bid for a plot (V-9) and paid the instalments. This company filed proceedings before the Gujarat High Court, (i.e. CA 3211/1995). The Board, therefore decided to refund the principal along with interest @ 9% per annum for the period, based on the deposit of the payment of Rs. 25 lakhs. The total interest sanctioned on 08.08.1996 (and later paid) was ₹ 2.12 lakhs. This amount was sanctioned by office order dated 27.03.2000, even though the Board had decided to refund earlier (on 21.03.1996, due to the court proceedings and orders); however, the amount was sanctioned later, awaiting the decision of the civil court, in an inter se dispute between the directors of Mazz Marine, (i.e. in Suit No. 1200/1997). Upon the decision in that case, the amount was released, including the interest at 9% p.a. for one year. 29. The correspondence on the record reveals that the last payment towards the plot was tendered by Asiatic Steel under cover of a letter dated 22.03.1995 for an amount of US$ 1,153,000/-. The other letter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hile, the other concerns, which had bid successfully for three plots had approached the court (in 1995) and the Board had decided to refund the amounts with one years interest. Asiatic Steel, therefore, for reasons best known to it, approached the court for refund (which it was undoubtedly entitled) to and interest, first by filing a suit in 2001. 32. In this court s opinion, the claim for interest by Asiatic Steel and the response of the Board, on that issue, is to be judged in the light of both parties conduct and what was expected of the Board as a state instrumentality. The claim in this case is essentially a monetary one, and would ordinarily be premised upon breach of contract. Asiatic Steel, therefore, correctly approached the civil court by filing a suit- Suit No. 2961/2001 . Later, apparently it was advised to resort to proceedings under Article 226 of the Constitution of India. When its writ petition was considered, the suit was permitted to be withdrawn; the High Court directed the Board to deposit the entire principal amount, with interest at 10% per annum.- By its order dated 26.02.2002 By the final impugned judgment, that order was confirmed. In an earlier o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... made for refund on 19.05.1998, the Board did not act, forcing the company to approach the court, firstly through a civil suit which was later withdrawn, and then in a writ petition. 36. In the opinion of this court, the Board s complete silence in responding to Asiatic Steel s demand for refund, coupled with the absence of any material placed on record by it suggesting that the complaints had no substance leaves it vulnerable to the charge of complete arbitrariness. The Board s conduct or indifference in regard to the refund sought (in respect of which there was no meaningful argument on its part before the High Court) can be only on the premise that it wished the parties to approach the court, till a decision could be taken to refund the amounts received by it. 37. In this court s considered view, the Board s action is entirely unacceptable. As a public body charged to uphold the rule of law, its conduct had to be fair and not arbitrary. If it had any meaningful justification for withholding the amount received from Asiatic Steel, such justification has not been highlighted ever. On the other hand, its conduct reveals that it wished that the parties should approach the cour ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s reminded the Central Government, the State Governments and other instrumentalities as well as to the various banking institutions to take earnest efforts to resolve the disputes at their end. At times, some give-and-take attitude should be adopted or both will sink. Unless serious questions of law of general importance arise for consideration or a question which affects a large number of persons or the stakes are very high, the courts' jurisdiction cannot be invoked for resolution of small and trivial matters. We are really disturbed by the manner in which those types of matters are being brought to courts even at the level of the Supreme Court of India and this case falls in that category. 39. In State of A.P. v. Pioneer Builders (2006) 12 SCC 119 this Court referred to the 27th Report of the Law Commission on the Code of Civil Procedure, and held as follows: 14. From a bare reading of sub-section (1) of Section 80, it is plain that subject to what is provided in sub-section (2) thereof, no suit can be filed against the Government or a public officer unless requisite notice under the said provision has been served on such Government or public officer, as the case ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion 80 was renumbered as Section 80(1) and sub-sections (2) and (3) were inserted with effect from 1-2-1977. Sub-section (2) carved out an exception to the mandatory rule that no suit can be filed against the Government or a public officer unless two months' notice has been served on such Government or public officer. The provision mitigates the rigours of sub-section (1) and empowers the court to allow a person to institute a suit without serving any notice under sub-section (1) in case it finds that the suit is for the purpose of obtaining an urgent and immediate relief against the Government or a public officer. But, the court cannot grant relief under the sub-section unless a reasonable opportunity is given to the Government or public officer to show cause in respect of the relief prayed for. The proviso to the said sub-section enjoins that in case the court is of the opinion that no urgent and immediate relief should be granted, it shall return the plaint for presentation to it after complying with the requirements of sub-section (1). Sub-section (3), though not relevant for the present case, seeks to bring in the rule of substantial compliance and tends to relax the rigou ..... X X X X Extracts X X X X X X X X Extracts X X X X
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