Case: CHIEF EXECUTIVE OFFICER AND VICE CHAIRMAN GUJARAT MARITIME BOARD Vs. ASIATIC STEEL INDUSTRIES LTD AND ORS

for small and trivial matters, people and sometimes the Central and the State Governments and their instrumentalities like banks, nationalised or private, come to courts may be due to ego clash or to save the officers skin. The judicial system is overburdened which naturally causes delay in adjudication of disputes. Mediation Centres opened in various parts of our country have, to some extent, eased the burden of the courts but we are still in the tunnel and the light is far away. On more than one occasion, this Court has reminded the Central Government, the State Governments and other instrumentalities as well as to the various banking institutions to take earnest efforts to resolve the disputes at their end. At times, some give-and-take attitude should be adopted or both will sink. Unless serious questions of law of general importance arise for consideration or a question which affects a large number of persons or the stakes are very high, the courts jurisdiction cannot be invoked for resolution of small and trivial matters. We are really disturbed by the manner in which those types of matters are being brought to courts even at the level of the Supreme Court of India and this case falls in that category. 39. In State of A.P. v. Pioneer Builders (2006) 12 SCC 119 this Court referred to the 27th Report of the Law Commission on the Code of Civil Procedure, and held as follows: 14. From a bare reading of sub-section (1) of Section 80, it is plain that subject to what is provided in sub-section (2) thereof, no suit can be filed against the Government or a public officer unless requisite notice under the said provision has been served on such Government or public officer, as the case may be. It is well settled that before the amendment of Section 80 the provisions of unamended Section 80 admitted of no implications and exceptions whatsoever and are express, explicit and mandatory. The section imposes a statutory and unqualified obligation 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 as it is a matter of common experience that hardly any matter is settled by the Government or the public officer concerned by making use of the opportunity afforded by the said provisions. In most of the cases, notice given under Section 80 remains unanswered. In its 14th Report (reiterated in the 27th and 54th Reports), the Law Commission, while noting that the provisions of this section had worked a great hardship in a large number of cases where immediate relief by way of injunction against the Government or a public officer was necessary in the interests of justice, had recommended omission of the Section. However, the Joint Committee of Parliament, to which the Amendment Bill, 1974 was referred, did not agree with the Law Commission and recommended retention of Section 80 with necessary modifications/relaxations. 16. Thus, in conformity therewith, by the Code of Civil Procedure (Amendment) Act, 1976 the existing Section 80 was renumbered as Section 80(1) and sub-sections (2) and (3) were inserted with effect from 1-2-1977. Sub-section (2) carved out an exception to the mandatory rule that no suit can be filed against the Government or a public officer unless two months notice has been served on such Government or public officer. The provision mitigates the rigours of sub-section (1) and empowers the court to allow a person to institute a suit without serving any notice under subsection (1) in case it finds that the suit is for the purpose of obtaining an urgent and immediate relief against the Government or a public officer. But, the court cannot grant relief under the sub-section unless a reasonable opportunity is given to the Government or public officer to show cause in respect of the relief prayed for. The proviso to the said sub-section enjoins that in case the court is of the opinion that no urgent and immediate relief should be granted, it shall return the plaint for presentation to it after complying with the requirements of sub-section (1). Sub-section (3), though not relevant for the present case, seeks to bring in the rule of substantial compliance and tends to relax the rigour of sub-section (1). 40. In this case, 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. 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.

Decision (1 = appeal accepted, 0 = rejected): 0

Explanation:
0[ds]24. Asiatic Steel was the highest bidder in an auction for five shipbreaking plots, held on 08.11.1994. The Board received payment of the earnest money deposit of Rs. 5,00,000/- on this day. Plot V-10 was allotted to Respondent No. 1 (Asiatic Steel Industries Ltd.). M/s Ganpatrai were the Indian shareholders of Asiatic Steel, while M/s Industeel was a foreign shareholder based in Singapore. The upset premium was remitted by Industeel in US currency (dollars $), on 22.03.1995.25. The minutes of the meeting dated 23.02.1995 record that the shipbreakers (including Asiatic Steel herein), informed the Board that certain rocks were required 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.27. Such being the position, it was nobodys 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 Investment and Leasing Pvt. Ltd. This company had successfully bid for Plot Number V-7 and paid Rs. 2.74 crores. This company had deposited the entire amount on 23.03.1995. Upon being dissatisfied with the plot, the company filed CA 8287/1995, in proceedings under Article 226 of the Constitution of India, before the Gujarat High Court. Having regard to the observations made by the High Court, the board sanctioned refund of the entire amount along with 12% interest, by its order dated 06.05.1996. The amount paid by the Board as interest was Rs. 22.80 lakhs. The second instance relates to Svaminarayan Shipbreaking (P) Ltd, Surat, which had bid for a plot (V-8) and paid Rs. 50 lakhs in two equal instalments. This company filed proceedings before the Gujarat High Court, (i.e. CA 3122/1995). The Board, therefore decided to refund the principal along with interest at 12% per annum for two different periods, based on the deposit of the two payments of Rs. 25 lakhs. The total interest sanctioned on 08.08.1996 (and later paid) was Rs.3.55 lakhs. The last instance is of Maaz Marine (P) Ltd, Surat, which had bid for a plot (V-9) and paid the instalments. This company filed proceedings before the Gujarat High Court, (i.e. CA 3211/1995). The Board, therefore decided to refund the principal along with interest @ 9% per annum for the period, based on the deposit of the payment of Rs. 25 lakhs. The total interest sanctioned on 08.08.1996 (and later paid) was Rs. 2.12 lakhs. This amount was sanctioned by office order dated 27.03.2000, even though the Board had decided to refund earlier (on 21.03.1996, due to the court proceedings and orders); however, the amount was sanctioned later, awaiting the decision of the civil court, in an inter se dispute between the directors of Mazz Marine, (i.e. in Suit No. 1200/1997). Upon the decision in that case, the amount was released, including the interest at 9% p.a. for one year.29. The correspondence on the record reveals that the last payment towards the plot was tendered by Asiatic Steel under cover of a letter dated 22.03.1995 for an amount of US$ 1,153,000/-. The other letters placed on record are the one dated 23.04.1995, to the Board indicating that the full payment for the consideration of Rs. 3,61,20,000/- had been made towards a plot. Other than this, in the writ petition, Asiatic Steel argued 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 Boards 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.31. The contemporaneous situation, and the correspondence between Asiatic Steel 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 Asiatic Steel 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. Asiatic Steel, therefore, for reasons best known to it, approached the court for refund (which it was undoubtedly entitled) to and interest, first by filing a suit in 2001.32. In this courts opinion, the claim for interest by Asiatic Steel – and the response of the Board, on that issue, is to be judged in the light of both parties conduct and what was expected of the Board as a state instrumentality. The claim in this case is essentially a monetary one, and would ordinarily be premised upon breach of contract. Asiatic Steel, therefore, correctly approached the civil court by filing a suit (Suit No. 2961/2001) . Later, apparently it was advised to resort to proceedings under Article 226 of the Constitution of India. When its writ petition was considered, the suit was permitted to be withdrawn; the High Court directed the Board to deposit the entire principal amount, with interest at 10% per annum. (By its order dated 26.02.2002) By the final impugned judgment, that order was confirmed. In an earlier order, the court had in fact crystallized the precise issue, to be whether interest was payable from 24.03.1995 or from 19.05.1998, or whether it was payable from the latter date, till the date of deposit in court, i.e., 15.04.2002.33. 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 Boards 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 Steels 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 beachfront rocks. The Board is not forthcoming about the reasons for its inaction. It urged two defences in its reply to the writ petition: one, that the dispute was in the realm of contract and two, that even though like in other cases, the Board was prepared to consider a refund, Asiatic Steel was a joint venture company. These, in the opinion of this court are wholly insubstantial reasons.35. It is clear from the Boards conduct that it never responded to the letters written by Asiatic Steel; at least, no reply has been placed on record. Even Asiatic Steels request 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 Asiatic Steel, 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.36. In the opinion of this court, the Boards complete silence in responding to Asiatic Steels demand for refund, coupled with the absence of any material placed on record by it suggesting that the complaints had no substance leaves it vulnerable to the charge of complete arbitrariness. The Boards conduct or indifference in regard to the refund sought (in respect of which there was no meaningful argument on its part before the High Court) 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.37. In this courts considered view, the Boards 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 Asiatic Steel, 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.39. In State of A.P. v. Pioneer Builders (2006) 12 SCC 119  this Court referred to the 27th Report of the Law Commission on the Code of Civil Procedure, and held as follows:14. From a bare reading of sub-section (1) of Section 80, it is plain that subject to what is provided in sub-section (2) thereof, no suit can be filed against the Government or a public officer unless requisite notice under the said provision has been served on such Government or public officer, as the case may be. It is well settled that before the amendment of Section 80 the provisions of unamended Section 80 admitted of no implications and exceptions whatsoever and are express, explicit and mandatory. The section imposes a statutory and unqualified obligation 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 as it is a matter of common experience that hardly any matter is settled by the Government or the public officer concerned by making use of the opportunity afforded by the said provisions. In most of the cases, notice given under Section 80 remains unanswered. In its 14th Report (reiterated in the 27th and 54th Reports), the Law Commission, while noting that the provisions of this section had worked a great hardship in a large number of cases where immediate relief by way of injunction against the Government or a public officer was necessary in the interests of justice, had recommended omission of the Section. However, the Joint Committee of Parliament, to which the Amendment Bill, 1974 was referred, did not agree with the Law Commission and recommended retention of Section 80 with necessary modifications/relaxations.16. Thus, in conformity therewith, by the Code of Civil Procedure (Amendment) Act, 1976 the existing Section 80 was renumbered as Section 80(1) and sub-sections (2) and (3) were inserted with effect from 1-2-1977. Sub-section (2) carved out an exception to the mandatory rule that no suit can be filed against the Government or a public officer unless two months notice has been served on such Government or public officer. The provision mitigates the rigours of sub-section (1) and empowers the court to allow a person to institute a suit without serving any notice under subsection (1) in case it finds that the suit is for the purpose of obtaining an urgent and immediate relief against the Government or a public officer. But, the court cannot grant relief under the sub-section unless a reasonable opportunity is given to the Government or public officer to show cause in respect of the relief prayed for. The proviso to the said sub-section enjoins that in case the court is of the opinion that no urgent and immediate relief should be granted, it shall return the plaint for presentation to it after complying with the requirements of sub-section (1). Sub-section (3), though not relevant for the present case, seeks to bring in the rule of substantial compliance and tends to relax the rigour of sub-section (1).40. In this case, 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. 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.