Case Law Details
Chief Executive Officer and Vice Chairman Gujarat Maritime Board Vs Asiatic Steel Industries Ltd And Ors. (Supreme Court)
Conclusion: Gujarat Maritime Board was having a callous and indifferent attitude and not justified in denying interest on the refund of the deposit which was allowed to the Asiatic steel on account of delay in refund of the amount paid by it for securing contract for a piece of land for ship breaking activity. The Board’s action was 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 had not been highlighted ever. 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.
Held: The Gujarat Maritime Board issued a tender notice 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 ₹ 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 ₹5,00,000/- was paid on 08.11.1994. 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. 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 ₹3,61,20,000/- would be refunded, but without interest. The Board also clarified that the refund would be directed to the original allottee of the plot (i.e. the second respondent, i.e. M/s Ganpatrai Jaigopal). Asiatic Steel then filed a writ petition before the High Court, seeking (i) refund of USD $ 1,153,000 with interest of 12% per annum compounded quarterly, to the third respondent, M/s Industeel Investment Holdings (hereafter “Industeel”, which had made the payment originally on behalf of Asiatic Steel); and (ii) refund of earnest money of ₹5,00,000/- with interest of 12% per annum, compounded quarterly to Asiatic Steel. In this case, conduct of the Board betrays a callous and indifferent attitude, which in effect was that if Asiatic Steel 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 Asiatic Steel to approach the court. This court noted that the High Court directed payment of interest for the entire period (i.e. starting from 08.11.1994 and ending on 19.05.1998). However, it was evident that Asiatic Steel 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 19.05.1998.
FULL TEXT OF THE SUPREME COURT JUDGEMENT
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