CHIEF EXECUTIVE OFFICER AND VICE CHAIRMAN GUJARAT MARITIME BOARD versus ASIATIC STEEL INDUSTRIES LTD AND ORS.

Citation: [2020] 10 S.C.R. 375 · Decided: 24-11-2020 · Supreme Court of India · Bench: INDIRA BANERJEE · Disposal: Dismissed

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Judgment (excerpt)

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CHIEF EXECUTIVE OFFICER AND VICE CHAIRMAN
GUJARAT MARITIME BOARD
v.
ASIATIC STEEL INDUSTRIES LTD AND ORS.
(Civil Appeal No. 3807 of 2020)
NOVEMBER 24, 2020
[INDIRA BANERJEE AND S. RAVINDRA BHAT, JJ.]
Interest:
Contract for shipbreaking – By Maritime Board – To the
respondent-Company – Earnest money deposited on 08.11.1994 –
Upset premium paid on 22.03.1995 – Awardee of contract
(respondent No. 1) sought refund of contract amount @ 10% interest
per annum from the date of remittance – Board agreed for the refund
but without interest – Writ petition by the awardee seeking refund
with interest @ 12% per annum – High Court allowed the petition
directing the Board to pay interest @ 10% on earnest money and @
6% on the principal amount from 08.11.1994 to 19.5.1998 – Appeal
to Supreme Court – Held: Since respondent No. 1 had paid only
earnest money on 08.11.1994 and rest of the amount was paid later
– Therefore, interest on the entire amount is directed to be paid from
22.3.1995 (not from 08.11.1999) to 19.5.1998.
Dismissing the appeal, the Court
HELD: 1. The contemporaneous situation, and the
correspondence between respondent No. 1 and the Board after
the entire amount was deposited, reveals that other concerns
approached the court seeking refund of their principal amounts,
with interest, which forced the Board to take a decision and
comply. The final decision by respondent No. 1 demanding refund
was later, in May, 1998. In the meanwhile, 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. Respondent No. 1, therefore, for reasons
best known to it, approached the court for refund and interest,
first by filing a suit in 2001. [Para 31][386-D-F]
[2020] 10 S.C.R. 375
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SUPREME COURT REPORTS
[2020] 10 S.C.R.
2. It is clear from the Board’s conduct that it never
responded to the letters written by respondent No. 1 at least, no
reply has been placed on record. Even request of respondent
No. 1 for permission to carry-out the necessary clearance work
at the cost of the board, was not responded to - either positively
or negatively. Further, whenever any bidder approached the court
complaining that the plot allotted was unusable, the Board decided,
mostly contemporaneously, to refund the amount, even with
interest. In the case of respondent No. 1, however, when the
demand was 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.
[Para 35][387-G-H; 388-A]
3. The conduct of the Board betrays a callous and indifferent
attitude, which in effect is that if respondent No. 1 wished for its
money to be returned, it had to approach the court. This was
despite its knowledge that at least three other identically placed
entities had asked for return of money and, upon approaching
the court, were refunded the amounts given by them promptly.
In view of these facts, nothing prevented the Board from deciding
to refund the amount, without forcing respondent No. 1 to
approach the court. [Para 40][391-F-G]
4. 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 respondent No. 1, such
justification has not been highlighted ever. On the other hand,
its conduct reveals that it wished that the parties should approach
the court, before it took a decision. This behavior of deliberate
inaction to force a citizen or a commercial concern to approach
the court, rather than take a decision, justified on the anvil of
reason (in the present case, a decision to refund) means that the
Board acted in a discriminatory manner. [Para 37][388-D-E]
5. The High Court had directed payment of interest for the
entire period (i.e. starting from 08.11.1994 and ending on
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19.05.1998). However, it is evident that respondent No. 1 had
not paid the entire amount on 08.11.1994; in fact the sum of
$1,153,000 /- i.e. the principal consideration, excluding the
earnest 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

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