Chief Executive Officer and Vice Chairman Gujarat Maritime Board Vs Asiatic Steel Industries Ltd And Ors.

The Supreme Court heard an appeal from the Gujarat Maritime Board (the Board) regarding a dispute with Asiatic Steel Industries Ltd. Asiatic Steel had bid for and been allotted a plot for ship-breaking but later abandoned the contract due to difficulties with the site. They sought a refund of their payment with interest, which the High Court had granted. The Supreme Court's judgement addresses whether the Board is liable to pay interest on the refunded amount.

IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO. 3807 OF 2020
(Arising out of SLP (C) NO(S). 28244 OF 2015)

CHIEF EXECUTIVE OFFICER AND
VICE CHAIRMAN GUJARAT MARITIME
BOARD ...APPELLANT(S)

VERSUS

ASIATIC STEEL INDUSTRIES LTD AND ORS. ...RESPONDENT(S)

J U D G M E N T

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 08.11.1994 to 19.05.1998. The brief facts that arise for consideration are as follows.

2. The Board issued a tender notice 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 ₹ 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.

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 ₹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- hereafter referred to as “Ganpatrai”). 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.

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