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State is no ordinary party trying to win a case against one of its own citizens by hook or by crook

The number of litigations in our country is increasing and the Central and the State Governments and their instrumentalities like banks, come to courts may be due to ego clash or to save the officers’ skin. The judicial system is overburdened which naturally causes a delay in the adjudication of disputes.

The Supreme Court has dismissed the appeal by Gujarat Maritime Board on the conduct of the Board betrays a callous and indifferent attitude, which in effect is that if Asiatic Steel wished for its money to be returned, it had to approach the court in case of the Chief Executive Officer and Vice-Chairman Gujarat Maritime Board vs Asiatic Steel Industries ltd and ors, Civil Appeal No. 3807 OF 2020 by the bench comprising of Justice Indira Banerjee and Justice S. Ravindra Bhat.

The facts of the case are Gujarat Maritime Board issued a tender notice for allotment of plots at Sosiya for ship-breaking of very large crude carriers/ultra-large crude carriers. Asiatic Steel made the highest bid, which was accepted and confirmed by the Board. Later, 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, Asiatic steel intimated the Board that it wished to abandon the contract and demanded that the payment be refunded 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 Rs3, 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.

Asiatic Steel then filed a writ petition before the High Court, seeking a refund.

Through an interim order dated 26.02.2002, the Board was directed to:
  1. 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
  2. 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.
In the opinion of this court, the Board’s conduct or indifference in regard to the refund sought 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. 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. This behavior of deliberate inaction to force a citizen or a commercial concern to approach the court, rather than make a decision, justified on the anvil of reason means that the Board acted in a discriminatory manner.

Relying on Dilbagh Rai Jarry v. Union of India, this court had quoted:
“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.”

Thus, the Court dismissed the appeal as the conduct of the Board to not settle an issue was callous and indifferent.

Written By: Prime Legal Law Firm
Off Address: 39/2, 2nd floor, K G Road, Bengaluru, Karnataka-560001
Phone no: +9986386002, Email: [email protected]

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