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2017 DIGILAW 34 (MAN)

KORES (INDIA) LIMITED v. STATE OF MANIPUR

2017-12-14

KH.NOBIN SINGH

body2017
JUDGMENT : KH. NOBIN SINGH, J. 1. Heard Shri Th. Khagemba, the learned counsel appearing for the petitioner company; Smt. Th. Sobhana, the learned Government Advocate appearing for the respondent Nos.1 and 2 and Shri A. Mohendro, the learned counsel appearing for the respondent No. 3, the Chief Engineer, Minor Irrigation. 2. By the instant writ petition, the petitioner company has prayed for issuing a writ of Mandamus or any other appropriate writ or order or direction to the respondents directing them to release an amount of Rs. 4,84,913/- (Rupees four lakhs eighty four thousand nine hundred and thirteen) only to the petitioner with interest at the rate of Rs. 18% per annum. 3. The relevant facts as stated in the petition which are relevant for purpose of deciding the issue involved herein, are that the petitioner is a reputed company producing carbon paper in the name of the company as well as other various items including Rig machine. In pursuance of a purchase order dated 18.09.1991 of the Department of Minor Irrigation, Government of Manipur, the petitioner company supplied Rig machines to it for a total amount of Rs. 27,55,002.55/- (Rupees twenty seven lakhs fifty five thousand two and fifty five paise) out of which a sum of Rs. 22,70,089.55/- (Rupees twenty two lakhs seventy thousand eighty nine and fifty five paise) had been paid with the result that a balance of Rs. 4,84,913/- (Rupees four lakhs eighty four thousand nine hundred and thirteen) remain unpaid. On account of the non-release of the said balance amount, the Sales Tax Assessment for the year 1991-92 was pending before the Assessing Authority and a last chance was given by it to the petitioner company to collect Form-C/D from the State respondents. Despite repeated request being made by the Area Manager of the petitioner company, the said balance amount was not released by the State respondents. Having no alternative, the Area Manager of the petitioner company informed the Department of Minor Irrigation that in case it failed to pay the said amount, the petitioner company would be under compulsion to charge interest at the rate permissible by the Bank and due to inaction on the part of the respondents, the petitioner company was compelled to file the instant writ petition. 4. 4. On 16.06.2004 when the matter was listed for consideration, the Hon'ble Gauhati High Court was pleased to issue notice to the respondents and since Mr. Jalaluddin, the then learned Government Advocate accepted notice on behalf of the respondents, no formal notice was called for. Thereafter, the matter came to be listed before the court several times as is evident from the proceedings and sometime in the year 2010, an affidavit-in-opposition on behalf of the respondents was filed, to which a rejoinder affidavit was filed on behalf of the petitioner company. 5. Admittedly, during the pendency of the present writ petition, the principal amount was paid by the State Government vide Demand Draft dated 29.03.2013 and on 19.05.2015 when the matter came up for consideration, it was submitted by the learned Government Advocate that since the principal amount had been paid, the writ petition was liable to be dismissed to which Shri Th. Khagemba, the learned counsel appearing for the petitioner company submitted that since the principal amount was received under protest without prejudice to the rights of the petitioner company, the petitioner company could still continue to claim interest on the principal amount and accordingly, an affidavit incorporating therein the subsequent events came to be filed on behalf of the petitioner company. 6. On 20.04.2017 when the matter was being considered by this court, a query was put to the learned counsel appearing for the respondent No.3 as to whether the State respondents would be ready to pay some amount towards interest so that the same could be considered by the petitioner company for the purpose of resolving the issue involved herein without the petition being decided by this court on merit. After various adjournments being obtained, the learned counsel appearing for the respondent No.3 ultimately produced a letter dated 14.11.2017 addressed to him by the Deputy Secretary (MI), Government of Manipur informing that the Department agreed to pay a sum of Rs. 2,00,000/- (Rupees two lakhs) towards the interest of the principal amount. However, Shri Th. Khagemba, the learned counsel appearing for the petitioner company submitted on instruction that the petitioner company did not accede to accept the proposal and desired that the writ petition be disposed of by this court on merit. 7. 2,00,000/- (Rupees two lakhs) towards the interest of the principal amount. However, Shri Th. Khagemba, the learned counsel appearing for the petitioner company submitted on instruction that the petitioner company did not accede to accept the proposal and desired that the writ petition be disposed of by this court on merit. 7. It has been submitted by the learned counsel appearing for the petitioner company that the interest has been claimed in the petition itself and moreover, the principal amount having been paid during the pendency thereof, there is no need of filing a separate petition claiming interest and this court can pass an appropriate order for payment of interest by way of restitution. It has further been submitted that the interest can be directed to be given under the provisions of the Sales of Goods Act, 1930; the Interest Act, 1978 and section 34 of the CPC and for no fault of the petitioner company, it cannot be made to suffer. Since the act of the respondents in not releasing the said balance amount in time is unreasonable and illegal, the petitioner company is entitled to interest thereon. Shri A. Mohendro, the learned counsel appearing for the respondent No. 3 has submitted that the balance amount could not be released due to non-commissioning of the Rig machines and that since the principal / balance amount had been paid, the question of payment of interest did not arise at all. The short question that arises for consideration by this court is as to whether the petitioner company is entitled to interest on the said amount of Rs. 4.84,913/- which had been paid during the pendency of the present writ petition. In support of his contention, the learned counsel appearing for the petitioner company has relied upon various decisions of the Hon'ble Supreme Court of which few are being referred to herein. In ABL. International Ltd. v. Export Credit Guarantees Corporation of India Ltd. (2004) 3 SCC 553 wherein the appellant filed a writ petition before the learned Single Judge for quashing the letters of repudiation issued by the first respondent. In ABL. International Ltd. v. Export Credit Guarantees Corporation of India Ltd. (2004) 3 SCC 553 wherein the appellant filed a writ petition before the learned Single Judge for quashing the letters of repudiation issued by the first respondent. The learned Single Judge after hearing the parties came to the conclusion that though the dispute between the parties arose out of a contract, the first respondent being a part of the State for the purpose of Article 12, was bound by the terms of the contract and therefore, for such non-performance, a writ was maintainable and the writ petition was accordingly allowed. In an appeal preferred by the first respondent before the Appellate Bench of the same High Court, the said bench reversed the findings of the learned Single Judge. When the matter came up before the Hon'ble Supreme Court, one of the questions that falls for their consideration, was as to whether writ petition under Article 226 of the Constitution of India is maintainable to enforce a contractual obligation of the State or its instrumentality by an aggrieved party. The Hon'ble Supreme Court held that this question is no-longer res-integra and is settled by a large number of judicial pronouncements of the Hon'ble Supreme Court. The Hon'ble Supreme court further held: "28. However, while entertaining an objection as to the maintainability of a writ petition under Article 226 of the Constitution of India, the court should bear in mind the fact that the power to issue prerogative writs under Article 226 of the Constitution is plenary in nature and is not limited by any other provisions of the Constitution. The High Court having regard to the facts of the case, has a discretion to entertain or not to entertain a writ petition. The Court has imposed upon itself certain restrictions in the exercise of this power. (See Whirlpool Corpn. v. Registrar of Trade Marks.) And this plenary right of the High Court to issue a prerogative writ will not normally be exercised by the Court to the exclusion of other available remedies unless such action of the State or its instrumentality is arbitrary and unreasonable so as to violate the constitutional mandate of Article 14 or for other valid and legitimate reasons, for which the Court thinks it necessary to exercise the said jurisdiction. 53. 53. From the above, it is clear that when an instrumentality of the State acts contrary to public good and public interest, unfairly, unjustly and unreasonably, in its contractual, constitutional or statutory obligations, it really acts contrary to the constitutional guarantee found in Article 14 of the Constitution. Thus if we apply the above principle of applicability of Article 14 to the facts of this case, then we notice that the first respondent being an instrumentality of the State and a monopoly body had to be approached by the appellants by compulsion to cover its export risk. The policy of insurance covering the risk of the appellants was issued by the first respondent after seeking all required information and after receiving huge sums of money as premium exceeding Rs. 16 lakhs. On facts we have found that the terms of the policy do not give room to any ambiguity as to the risk covered by the first respondent. We are also of the considered opinion that the liability of the first respondent under the policy arose when the default of the exporter occurred and thereafter when the Kazakhstan Government failed to fulfil its guarantee. There is no allegation that the contracts in question were obtained either by fraud or by misrepresentation. In such factual situation, we are of the opinion, the facts of this case do not and should not inhibit the High Court or this Court from granting the relief sought for by the petitioner. In Alok Shanker Pandey v. Union of India & ors. (2007) 3 SCC 545 wherein the appellant applied for a flat under the "Indira Puram Housing Scheme" in the year 1994 and a reservation letter dated 30.03.1994 was received by him and accordingly, he started paying instalments as demanded. After having paid the instalments, nothing was heard from the respondent's side for almost five years and therefore, the appellant was left with no alternative but to demand his amount paid along with interest amount at the rate of Rs. 21% per annum. The amount was refunded without interest. The appellant sought compensation from the respondent by filling an application under Section 12-B of the Monopolies and Restrictive Trade Practice, Act, 1969 and the Commission directed the respondent to pay 12% per annum interest on the instalments from the dates of the payment till the date of refund. 21% per annum. The amount was refunded without interest. The appellant sought compensation from the respondent by filling an application under Section 12-B of the Monopolies and Restrictive Trade Practice, Act, 1969 and the Commission directed the respondent to pay 12% per annum interest on the instalments from the dates of the payment till the date of refund. In an appeal filed before the Hon'ble Supreme Court, it held: "8. We are of the opinion that there is no hard-and-fast rule about how much interest should be granted and it all depends on the facts and circumstances of each case. We are of the opinion that the grant of interest of 12% per annum is appropriate in the facts of this particular case. However, we are also of the opinion that since interest was not granted to the appellant along with the principal amount, the respondent should then in addition to the interest at the rate of 12% per annum also pay to the appellant interest at the same rate on the aforesaid interest from the date of payment of instalments by the appellant to the respondent till the date of refund of this amount, and the entire amount mentioned above must be paid to the appellant within two months from the date of this judgment. 9. It may be mentioned that there is misconception about interest. Interest is not a penalty or punishment at all, but it is the normal accretion on capital. For example if A had to pay B a certain amount, say 10 years ago, but he offers that amount to him today, then he has pocketed the interest on the principal amount. Had A paid that amount to B 10 years ago, B would have invested that amount somewhere and earned interest thereon, but instead of that A has kept that amount with himself and earned interest on it for this period. Hence, equity demands that A should not only pay back the principal amount but also the interest thereon to B. In Food Corpn. of India v. SEIL Ltd., (2008) 3 SCC 440 the Hon'ble Supreme Court held - "24. The High Court, in an appropriate case, may grant such relief to which the writ petitioner would be entitled to in law as well as in equity. 25. We do not, thus, find any substance in the contention of Mr. of India v. SEIL Ltd., (2008) 3 SCC 440 the Hon'ble Supreme Court held - "24. The High Court, in an appropriate case, may grant such relief to which the writ petitioner would be entitled to in law as well as in equity. 25. We do not, thus, find any substance in the contention of Mr. Sharan that while exercising its review jurisdiction, no interest on the principal sum could have been directed to be granted by the High Court. A writ court exercises its power of review under Article 226 of the Constitution of India itself. While exercising the said jurisdiction, it not only acts as a court of law but also as a court of equity. A clear error or omission on the part of the court to consider a justifiable claim on its part would be subject to review; amongst others on the principle of actus curiae neminem gravabit (an act of the court shall prejudice none). We appreciate the manner in which the learned Judge accepted his mistake and granted relief to the respondents." In Karnataka State Forest Industries Corpn. v. Indian Rocks, (2009) 1 SCC 150 , the Hon'ble Supreme Court held - "38. Although ordinarily a superior court in exercise of its writ jurisdiction would not enforce the terms of a contract qua contract, it is trite that when an action of the State is arbitrary or discriminatory and, thus, violative of Article 14 of the Constitution of India, a writ petition would be maintainable. (See ABL International Ltd. v. Export Credit Guarantee Corpn. of India Ltd.) 39. There cannot be any doubt whatsoever that a writ of mandamus can be issued only when there exists a legal right in the writ petition and a corresponding legal duty on the part of the State, but then if any action on the part of the State is wholly unfair or arbitrary, the superior courts are not powerless. Reliance placed by Mr. Divan on G.J. Fernandez v. State of Mysore is not apposite. In that case itself it was held: (AIR p. 1757, para 12) "12. Thus under Article 162, the State Government can take executive action in all matters in which the legislature of the State can pass laws. Reliance placed by Mr. Divan on G.J. Fernandez v. State of Mysore is not apposite. In that case itself it was held: (AIR p. 1757, para 12) "12. Thus under Article 162, the State Government can take executive action in all matters in which the legislature of the State can pass laws. But Article 162 itself does not confer any rule-making power on the State Government in that behalf." G.J. Fernandez was considered in ABL International Ltd. In Vijay Industries v. NATL Technologies Ltd., (2009) 3 SCC 527 , the Hon'ble Supreme Court held - "45. This brings us to the question as to why an interest is payable. An interest is inter alia payable by way of restitution. 46. In Clariant International Ltd. v. SEBI this Court held: (SCC pp. 538-39, para 25) "25. A direction in terms of Regulation 44 which was in the interest of securities market indisputably would have caused civil or evil consequences on the defaulters. Clause (i) of Regulation 44, however, does not provide for any penal consequence. It provides for only civil consequences. By reason of the said provision, the power of the Board to issue directions is sought to be restricted to pay the amount of consideration together with interest at a rate not less than the interest payable by banks on fixed deposits. Both the Board and the Tribunal have proceeded on the basis that the interest is to be paid with a view to recompense the shareholders and not by way of penalty or damages. Such a direction, therefore, was for the purpose of protecting the interest of investors and not 'in the interest of the securities market'. The transactions in the market are not thereby affected one way or the other. The Board, as noticed hereinbefore, has a discretion in the matter and, thus, it may or may not issue such a direction. The shareholders do not have any say in the matter. As a necessary concomitant, they have no legal right." 47. Yet again, this Court in Alok Shanker Pandey v. Union of India has held that interest is payable by way of accretion on capital. 48. The question came up for consideration in Venkatadri Appa Row v. Parthasarathi Appa Row wherein it was held : (IA p. 153) "... There is a debt due that carries interest. Yet again, this Court in Alok Shanker Pandey v. Union of India has held that interest is payable by way of accretion on capital. 48. The question came up for consideration in Venkatadri Appa Row v. Parthasarathi Appa Row wherein it was held : (IA p. 153) "... There is a debt due that carries interest. There are moneys that are received without a definite appropriation on the one side or on the other, and the rule which is well established in ordinary cases is that in those circumstances the money is first applied in payment of interest and then when that is satisfied in payment of the capital. That rule is referred to by Rigby, L.J. in Parr's Banking Co. v. Yates in these words: (QB p. 466) '... The defendant's counsel relied on the old rule that does, no doubt, apply to many cases, namely, that, where both principal and interest are due, the sums paid on account must be applied first to interest. That rule, where it is applicable, is only common justice. To apply the sums paid to principal where interest has accrued upon the debt, and is not paid, would be depriving the creditor of the benefit to which he is entitled under his contract....' " The said decision has been followed by this Court in Meghraj v. Bayabai (SCC pp. 276-77, para 5) and a Constitution Bench of this Court in Gurpreet Singh v. Union of India (SCC p. 470, para 19). 49. In Alok Shanker Pandey v. Union of India this Court held: (SCC p. 547, para 8) "8. We are of the opinion that there is no hard-and-fast rule about how much interest should be granted and it all depends on the facts and circumstances of each case. We are of the opinion that the grant of interest of 12% per annum is appropriate in the facts of this particular case. We are of the opinion that there is no hard-and-fast rule about how much interest should be granted and it all depends on the facts and circumstances of each case. We are of the opinion that the grant of interest of 12% per annum is appropriate in the facts of this particular case. However, we are also of the opinion that since interest was not granted to the appellant along with the principal amount, the respondent should then in addition to the interest at the rate of 12% per annum also pay to the appellant interest at the same rate on the aforesaid interest from the date of payment of instalments by the appellant to the respondent till the date of refund of this amount, and the entire amount mentioned above must be paid to the appellant within two months from the date of this judgment." 50. Interest is also payable in terms of the provisions of section 61(2)(a) of the Sale of Goods Act. Interest may be held to be payable in terms of section 3 of the Interest Act, 1978 as also in terms of Sections 5 and 6 of the Interest on Delayed Payments to Small Scale and Ancillary Industrial Undertakings Act, 1993." 8. It is not in dispute that Article 226 of the Constitution of the India provides that the every High Court shall have the power to issue to any person or authority including any Government directions, orders or writs for the enforcement of any of the fundamental rights or any legal right conferred under a statute. The power conferred on the High Court is wide and expansive and the Constitution does not place any fetter on the exercise of the extraordinary jurisdiction. From the decisions referred to hereinabove and relied upon by the learned counsel appearing for the petitioner company also, it is absolutely clear that the power to issue prerogative writs under Article 226 of the Constitution is plenary in nature and is not limited by any other provisions of the Constitution. The High Court shall not ordinarily exercise its writ jurisdiction for enforcement of the terms of the contract but when an action of the State is arbitrary or discriminatory and, thus, violative of Article 14 of the Constitution of India, a writ petition would be maintainable. The High Court shall not ordinarily exercise its writ jurisdiction for enforcement of the terms of the contract but when an action of the State is arbitrary or discriminatory and, thus, violative of Article 14 of the Constitution of India, a writ petition would be maintainable. While exercising its jurisdiction, the High Court not only acts as a court of law but also as a court of equity The High Court, in an appropriate case, may grant such relief to which the writ petitioner would be entitled to in law as well as in equity. In the present case, the petitioner company supplied Rig machines on the basis of the purchase order dated 18.09.1991 of the Department of Minor Irrigation, Government of Manipur and after having paid a large amount, a sum of Rs. 4,84,913/- remain unpaid. On perusal of the correspondences which are placed on record, it is seen that despite repeated requests being made by the petitioner company, the said amount was not released and the only reason given in the letter dated 19.05.1995 addressed to the petitioner company by the Executive Engineer (MI), Government of Manipur was that the amount could not be paid due to paucity of fund and the same be released only when the sufficient fund was available. Accordingly, in the month of May, 1996 the Executive Engineer (MI) requested the Addl. Chief Engineer (MI), Government of Manipur to initiate process for refund of the said amount, who in turn, requested the Commissioner (MI), Government of Manipur to do the needful. Being aggrieved by the inaction on the part of the respondents, the instant writ petition was filed on 15.06.2004 claiming the said amount with interest thereon and as has been stated hereinabove, the said amount without interest was paid only in the year, 2013 while the petition was pending for consideration by this Court. The fact that the said amount was actually paid later on by the respondents during the pendency of the writ petition, may be, after a long time shows that the respondents admitted the liability. Considering the facts as aforesaid, this court is of the view that the petitioner company is entitled to interest on the said amount for the simple reason that the petitioner company has been denied the right, for so long, to use the amount. Considering the facts as aforesaid, this court is of the view that the petitioner company is entitled to interest on the said amount for the simple reason that the petitioner company has been denied the right, for so long, to use the amount. The corollary issue is as to how much interest be granted in favour of the petitioner company. In this regard, it may be noted that the Hon'ble Supreme Court in Alok Shanker pandey case (supra) has held that there is no hard and fast rule about how much interest should be granted and it all depends on the facts and circumstances of each case and in other words, it is the sole discretion of the High Court to pass appropriate order keeping in mind the facts and circumstances of each case. In the present case, there is no special circumstance which may warrant the grant of a higher rate interest. Similarly, the length of time will not be a ground for granting higher rate of interest. But one aspect which needs to be kept in view is that there are many cases in which this court has directed for payment of interest at the rate of Rs. 9% per annum on the amount paid, after a long time, towards compensation on account of extra-judicial killing; arrears of wages, pension and pensionary benefits, etc. Therefore, in order to maintain uniformity in respect of the grant of interest and keeping in mind the fact that a suit is not being tried herein, this court is of the view that the ends of justice will be met if the respondents are directed to pay the same interest on the said amount. 9. For the reasons stated hereinabove, the instant writ petition is allowed, to the extent indicated above, confining towards the payment of interest only, with the direction that the respondents shall pay the petitioner company an interest at the rate of Rs. 9% per annum on the said amount of Rs. 4,84,913/- (Rupees four lakhs eighty-four thousand nine hundred thirteen) only from the date of filing the writ petition till the date of payment. In view of the above facts and circumstances, there shall be no order as to costs.