Conduct Of Public Bodies Have To Be Fair And Not Arbitrary

SUMMARY

• In Chief Executive Officer and Vice Chairman Gujarat Maritime Board vs Asiatic Steel Industries Ltd and Ors. in Civil Appeal No. 3807 of 2020 (Arising out of SLP (C) NO(S). 28244 of 2015) delivered on November 24, 2020 SC has equally, frankly and freely observed that the conduct of a public body charged to uphold the rule of law, has to be fair and not arbitrary.

• The Apex Court observed so while dismissing Gujarat Maritime Board’s appeal against the High Court judgment which allowed the writ petition filed by "Asiatic Steel" Court seeking refund of contract consideration of Rs 3,61,20,000/- paid by them to the Board.

• Justice S Ravindra Bhat delivered this noteworthy judgment for himself and Justice Indira Banerjee sets the ball rolling by first and foremost observing in para 1 that, "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").

• In the year 1994, Asiatic Steel was allotted a plot for ship-breaking of "very large crude carriers/ultra large crude carriers‟ as it became the highest bidder.

• 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 Rs 5,00,000/- was paid on 08.11.1994.

• 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 regarding which some issues related to refund and calculation of rate of interest raised before court.

• The Supreme Court observed that, the conduct of a public body charged to uphold the rule of law, has to be fair and not arbitrary.

SUPREME COURT'S POINT OF VIEW

• The court observed thus while dismissing Gujarat Maritime Board's appeal against the High Court judgment which allowed the writ petition filed by "Asiatic Steel" Court seeking refund of contract consideration of Rs 3,61,20,000/- paid by them to the Board.

• While upholding the High Court judgment, the bench comprising Justices Indira Banerjee and S. Ravindra Bhat observed that the Board's conduct or indifference in regard to the refund sough 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.

• Court also observed "In this court's considered view, 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 Asiatic Steel, such justification has not been highlighted ever."

• On the other hand, it was also noticed that its conduct reveals that it wished that the parties should approach the court, before it took a decision. This behaviour 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.

• The bench referred to the Supreme Court observation in Gramin Bank v. Khazan, in which the court reminded the Central Government, the State Governments and other instrumentalities to take earnest efforts to resolve the disputes at their end.

• The court, dismissing its appeal, observed: "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."

• In conclusion, the bottom line of this key judgement is that conduct of public bodies has to be fair. It should not be arbitrary. Also, citizens should not be forced to approach the courts. Very rightly so!