Public Body has to be fair and not arbitrary, cannot withheld money: Supreme Court

The SC on November 24, 2020 {CHIEF EXECUTIVE OFFICER AND VICE CHAIRMAN GUJARAT MARITIME BOARD vs. ASIATIC STEEL INDUSTRIES LTD AND ORS.} held that 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. It was held that 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. It was further held that nothing prevented the Board from deciding to refund the amount, without forcing Asiatic Steel to approach the court. 

It was observed by the Bench, comprising of Justice Indira Banerjee and Justice S. Ravindra Bhat, that the Board‟s action is entirely unacceptable. It was held that as a public body charged to uphold the rule of law, its conduct had to be fair and not arbitrary. It was held that if it had any meaningful justification for withholding the amount received from Asiatic Steel, such justification has not been highlighted ever. It was held that on the other hand, its conduct reveals that it wished that the parties should approach the court, before it took a decision. It was held that 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. 

It was held that in the opinion of the court, the Board‟s complete silence in responding to Asiatic Steel‟s 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. It was held that the Board‟s 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.

The present appeal before the SC was directed against a judgment of the High Court of Gujarat dated 24.07.2015. The respondent (“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 (“the Board”). The High Court allowed the writ petition. The appeal against the HC judgment was dismissed by the SC.