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TMI Blog2020 (11) TMI 790X X X X Extracts X X X X X X X X Extracts X X X X ..... on 02.08.1994 for allotment of plots at Sosiya (near Bhavnagar, Gujarat) for ship-breaking of "very large crude carriers/ultra large crude carriers" (VLCC/ULCC). Asiatic Steel made the highest bid, which was accepted and confirmed by the Board on 08.11.1994, for Rs. 3, 61, 20,000/- (hereafter the "Principal"). Asiatic Steel was allotted Plot V-10. The bid payment was made on 22.03.1995 in foreign currency, to the tune of $1,153,000, while the earnest money deposit of Rs. 5,00,000/- was paid on 08.11.1994. 3. On 23.02.1995, Asiatic Steel and other allottees approached the Board citing difficulties in commencing commercial operations, on account of the connectivity to the plots and the existence of rocks inhibiting beaching of ships on the plot for the purpose of ship-breaking. Through a letter dated 19.05.1998, Asiatic steel intimated the Board that it wished to abandon the contract and demanded that the payment be refunded (an amount of $1,153,000), with interest at 10% per annum from the date of remittance. The Board, through a notice dated 19.05.1998, stated that an amount of Rs. 3, 61, 20,000/- would be refunded, but without interest. The Board also clarified that the re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of interest was to be. 7. The High Court held that the Board never claimed that it suffered any damage or loss due to Asiatic Steel"s termination of the contract. The reasoning of the impugned judgment was that hence, the Board was under a liability to compensate or pay reasonable interest for the period during which the money was retained by it. The High Court took into consideration that Indusind was a Singaporean company, and that the rate of interest was lower in developed countries. Accordingly, the rate of interest was altered to 6% p.a., for the period during which the money was enjoyed by the Board. The Board was directed to (i) refund the earnest money of Rs. 5,00,000/- with interest at 10% p.a., in accordance with the resolution of 17.12.2014; and (ii) pay interest of 6% on the Principal from 08.11.1994 to 19.05.1998. This interest amount works out to Rs. 76,47,544/-. The Board is, hence, aggrieved by the impugned judgment. Arguments Advanced 8. It was contended on behalf of the Board that the subject matter of the present dispute was a contract. To determine whether the Board had to pay compensation for any benefit received under the contract, it was imperative that b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bandon the project and seek a refund. It was submitted that Asiatic Steel incurred heavy losses on account of interest costs from the date of remittance, as well as losses on account of depreciation of the rupee over a period of three years. 11. When the Board failed to make the refund or discharge its duties, Asiatic Steel filed a petition before the High Court. A civil suit claiming damages was also preferred at the City Civil Court, Ahmedabad, which was unconditionally withdrawn, after seeking permission from the High Court, which was granted through the order dated 26.02.2002. 12. The learned counsel submitted that on account of the Board"s failure to remove the rocks, Asiatic Steel could not take possession of the plot, and therefore, that interest is due from the date of deposit till the date of payment. It was argued that the very fact that the Board agreed to refund the premium and the earnest money shows their acceptance that they have been unable to provide the promised plots. It was further submitted that all the other allottees had been paid interest on the amounts deposited by them. It was urged that the Board enjoyed the Principal amount from 08.11.1994 to 19.05.199 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r deposits with interest, pursuant to orders dated 14.08.1996 and 08.07.2002 respectively. 17. With this court"s permission, Asiatic Steel filed copies of RTI queries which had sought specific information with regard to (i) amount paid to similarly placed bidders/plot holders during settlement with the Board; (ii) whether interest was paid to the bidders/plot holders along with the principal, and from what date this was paid; and (iii) the percentage of interest paid along with principal. 18. A response to the RTI query was received on 20.02.2020, in respect of the bidders for plots V-7, V-8 and V-9. The bidder for V-7 was paid an interest at 12%, amounting to Rs. 22,80,743/-, for the period from 23.03.1995 - 30.11.1995. The bidder for V-8 was paid interest at 12%, amounting to Rs. 3,55,068/-, for the period from 27.03.1995 - 30.11.1995. The bidder for V-9 was paid interest at 9% amounting to Rs. 2,12,500/-, for the period from 23.03.1995 - 30.11.1995. 19. It was urged that in accordance with tender conditions, the primary obligation to provide a suitable plot for ship breaking was that of the Board. Counsel for Asiatic Steel submitted that the "as is where is" clause cannot be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... equired to be removed along plots V-6 to V-10, which hinder the beaching of ships. The Board agreed to prepare an estimate and invite tenders for the removal of these rocks. 26. The record shows that the notice inviting tenders issued by the Board expressly stated in para 14 that: "14. The tenderer may inspect the site at his own cost and shall be deemed to have acquainted himself, fully with all the site conditions. 15. Tenderer shall be deemed to have read and understood the guidelines at Annexure one and the terms and conditions at annexure to." 27. Such being the position, it was nobody"s case that Asiatic Steel was unaware about the site conditions. This is particularly important because it was willing to commit a substantial amount in foreign exchange for the plot which it bid for and was eventually granted. Likewise, the requisite undertaking too was furnished on its behalf. It is in this background of circumstances, that the claim for interest for the period in question requires examination. 28. The record relied upon by Asiatic Steel is in the form of three office orders issued by the Board. The first office order is dated 06.05.1996. This order relates to Nyankaran ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rgued that it made efforts several times to ask the board to clear the beachfront rocks to make the plot functional. It was also argued that three other entities which had bid for and secured different plots were dissatisfied by the Board"s inaction and had approached the High Court. As a result, the High Court passed orders which led to refund of the amounts deposited by those concerns, with some interest. On the record, the minutes of a discussion presided over by the Chief Minister of the state regarding outstanding amounts of premium payable by plot holders in the shipbreaking yard, dated 29.04.1998, would show that the state authorities were pressing for payment of overdue premium instalments. It is after these events, that Asiatic Steel claimed refund of the amount through a letter dated 19.05.1998. In that letter, Asiatic Steel stated as follows: "..there were 4 other successful bidders for plots V- 6 to V-9. These 4 bidders similarly complained of non-availability of basic infrastructure. They subsequently approached the High Court of Gujarat for interim relief and for directions to GMB to develop basic infrastructure and to remove rocks in front of lots V-6 to V-9. They ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Two important aspects need to be noticed at this stage: first, on the one hand, that Asiatic Steel was aware of the condition of the plot, at an early stage, when it bid for it. In this regard, its conduct is to be judged in the light of the Board"s inaction in regard to the unfitness of the allotted site, as in the case of the other concerns. Two, Asiatic Steel was no better and no worse than the other plot lessees, who demanded refund of their amounts. The difference between them, and Asiatic Steel was that the latter chose to demand refund on 19.05.1998. Asiatic Steel"s final letter discloses its awareness that the other concerns approached the court earlier, but that it waited as it wished to have the issue resolved amicably, rather than moving the court for relief. 34. In the opinion of this court, that fact that Asiatic Steel and other concerns bid for the plots knowing the state they were in, cannot be disputed. However, the conduct of all the successful bidders consistently suggests that they expected that the plots would be given in usable condition, within reasonable time. Clearly, the Board could not and most certainly did not rectify the conditions by removing the bea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat the Board acted in a discriminatory manner. 38. Long ago, in Dilbagh Rai Jarry v. Union of India (1974) 3 SCC 554 this court had quoted from a decision of the Kerala High Court, approvingly- P.P. Abubacker v. Union of India, AIR 1972 Ker 103: "25. ... But it must be remembered that the State is no ordinary party trying to win a case against one of its own citizens by hook or by crook; for the State's interest is to meet honest claims, vindicate a substantial defence and never to score a technical point or overreach a weaker party to avoid a just liability or secure an unfair advantage, simply because legal devices provide such an opportunity. The State is a virtuous litigant and looks with unconcern on immoral forensic successes so that if on the merits the case is weak, Government shows a willingness to settle the dispute regardless of prestige and other lesser motivations which move private parties to fight in court. The layout on litigation costs and executive time by the State and its agencies is so staggering these days because of the large amount of litigation in which it is involved that a positive and wholesome policy of cutting back on the volume of law su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion upon the court and in the absence of compliance with Section 80, the suit is not maintainable. (See Bhagchand Dagadusa v. Secy. of State for India in Council [Bhagchand Dagadusa v. Secy. of State for India in Council, 1927 SCC OnLine PC 48 : (1926-27) 54 IA 338 : AIR 1927 PC 176] ; Sawai Singhai Nirmal Chand v. Union of India [Sawai Singhai Nirmal Chand v. Union of India, (1966) 1 SCR 986 : AIR 1966 SC 1068] and Bihari Chowdhary v. State of Bihar [Bihari Chowdhary v. State of Bihar, (1984) 2 SCC 627] .) The service of notice under Section 80 is, thus, a condition precedent for the institution of a suit against the Government or a public officer. The legislative intent of the Section is to give the Government sufficient notice of the suit, which is proposed to be filed against it so that it may reconsider the decision and decide for itself whether the claim made could be accepted or not. As observed in Bihari Chowdhary [Bihari Chowdhary v. State of Bihar, (1984) 2 SCC 627], the object of the Section is the advancement of justice and the securing of public good by avoidance of unnecessary litigation. 15. It seems that the provision did not achieve the desired results inasmuch ..... X X X X Extracts X X X X X X X X Extracts X X X X
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