Karnataka High Court
M/S Karnataka State vs M/S Bls Power Solution Limited on 14 June, 2024
Author: Krishna S Dixit
Bench: Krishna S Dixit
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NC: 2024:KHC:21149-DB
WA No. 634 of 2014
IN THE HIGH COURT OF KARNATAKA AT BENGALURU
DATED THIS THE 14TH DAY OF JUNE, 2024
PRESENT
THE HON'BLE MR JUSTICE KRISHNA S DIXIT
AND
THE HON'BLE MR JUSTICE RAMACHANDRA D. HUDDAR
WRIT APPEAL NO. 634 OF 2014 (GM-KSFC)
BETWEEN:
1. M/S. KARNATAKA STATE
FINANCIAL CORPORATION
HEAD OFFICE, KSFC BHAVAN
NO.1/1, THIMMAIAH ROAD
NEAR CANTONMENT RAILWAY STATION,
BANGALORE-560 052.
REPRESENTED BY
ITS MANAGING DIRECTOR
2. THE DEPUTY GENERAL MANAGER (R)
KSFC HEAD OFFICE, KSFC BHAVAN
NO.1/1, THIMMAIAH ROAD
NEAR CANTONMENT RAILWAY STATION,
BANGALORE-560 052.
...APPELLANTS
Digitally signed (BY SRI. GURURAJ JOSHI, ADVOCATE)
by SHARADA
VANI B
AND:
Location: HIGH
COURT OF
KARNATAKA M/S BLS POWER SOLUTION LIMITED
NEW NO.12 (OLD NO. 72)
I FLOOR, THATHA MUTHIAPPAN STREET
CHENNAI-600 001.
REPRESENTED BY ITS DIRECTOR
SRI. S R S PONNUSWAMY
AGED ABOUT 62 YEARS
SON OF LATE SRI. S.R SUNDRAMURTHY
...RESPONDENT
(BY SRI. BASAVARAJ TIMMANNAVAR AND
SRI. K.MALLAHARAO, ADVOCATES)
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NC: 2024:KHC:21149-DB
WA No. 634 of 2014
THIS WRIT APPEAL FILED U/S 4 OF THE KARNATAKA
HIGH COURT ACT PRAYING TO ALLOW THE WRIT APPEAL BY
SETTING ASIDE THE IMPUGNED ORDER DATED 23.01.2014
PASSED BY THE LEARNED SINGLE JUDGE IN
W.P.NO.24451/2013 (GM-KSFC).
THIS APPEAL, COMING ON FOR ORDERS, THIS DAY,
KRISHNA S DIXIT, J., DELIVERED THE FOLLOWING:
JUDGMENT
This Appeal seeks to call in question a learned Single Judge's order dated 23.01.2014 whereby the Writ Petitioner's WP.No.24451/2013 (GM-KSFC) having been favoured, the forfeiture of his earnest money and other deposits made by the appellant is set aside. Further the Appellant is directed to complete the transaction of auction subject to payment of remainder of the money. For the purpose of clarity, the operative portion of the impugned order is reproduced:
"In such circumstance, when it is held that the reserved price of rs.01,58,88,000/- is the appropriate price and since the amount of rs.01,24,88,000/- has been subsequently deposited pursuant to the order of this Court, the sum of Rs.34 Lakhs should also be accounted as part of the sale consideration and the forfeiture as made would not be justified. In that view, the communication dated 30.03.2013 impugned at Annexure-'N' is quashed. The respondents shall now accept the -3- NC: 2024:KHC:21149-DB WA No. 634 of 2014 entire amount of Rs.01,58,88,000/- as deposited by the petitioners and thereafter complete the transaction in accordance with law as expeditiously as possible."
2. Learned Panel Counsel appearing for the Appellant-Statutory Corporation has filed a Memo dated 01.04.2015 along with its Letter dated 14 & 16 January, 2015 addressed to the Respondent to the effect that, in terms of his request, the entire amount is paid back and therefore, nothing survives for consideration in the matter. The said Letter has the following text:
"Sri Mallaharao k, Advocate No.12, 3rd Floor, Ramanuja Plaza 5th Cross, Malleshwaram BANGALORE-560 003.
Dear Sir, Sub:M/s Bhagirathi Lime & Chemicals Limited. Ref: 1. Your letter dated 29.12.2014.
2. Your letter dated 4.12.2014 addressed to Sri Gururaj Joshi, Legal Advisor to KSFC.
---
With reference to the above, as directed by Hon'ble High Court, M/s BLS Power Solutions Limited had deposited Rs.124.88 lakhs to the corporation. Now that vide your above said -4- NC: 2024:KHC:21149-DB WA No. 634 of 2014 letter on behalf of M/s BSL Power Solutions Limited you have requested the Corporation to return an amount of Rs.124.88 lakhs with interest.
After examining the issue in detail we are now refunding / returning an amount of Rs.124.88 lakhs cheque bearing No.054410 dated 14.1.2015 for Rs.124.88 lakhs drawn in favour of M/s BLS Power Solutions Limited.
You have requested for return of the amount along with interest. As the matter is pending before the Hon'ble High Court of Karnataka, the amount so paid was not utilised by the Corporation. Hence, we cannot consider payment of interest.
Kindly acknowledge the receipt of the same. Thanking you, Yours faithfully, Asst. Gen. Manager(R) Encl: As above"
3. Learned counsel appearing for the Respondent- auction buyer submits that he had sent the Legal Notices for refund of the money with interest inasmuch as, the same was laying with the appellant-Corporation for long and therefore, the interest needs to be paid by the corporation at the current commercial rate. -5-
NC: 2024:KHC:21149-DB WA No. 634 of 2014
4. Having heard the learned counsel for the parties and having perused the Appeal papers, we are inclined to grant a limited indulgence in the matter inasmuch as, the intended transaction has not been accomplished and its accomplishment as such in terms of impugned order is not warranted in the altered fact matrix of the case namely the Writ Petitioner, who is the Respondent herein has in January, 2015 itself withdrawn the entire money which he had paid to the appellant-Corporation itself. Therefore, the impugned order of the learned Single Judge has become infructuous, and now has no efficacy.
5. The above being said, a huge sum of Rs.1,24,88,000/- was laying with the Appellant- Corporation, which has been refunded to the Writ Petitioner in the terms of his Legal Notices, which specifically demanded interest for the retention period. The Appellant admittedly refunded the money sans any interest and this was done without the leave of Court when the matter was very much pending here. Propriety -6- NC: 2024:KHC:21149-DB WA No. 634 of 2014 required that the Appellant should have taken the concurrence of Court for doing that. Nor there is any plausible explanation for not adopting the said procedure. The offer of the Respondent to get the money back was conditional in the sense that he had sought for interest on the amount. When there is a conditional offer, either it has to be accepted as it is or it was not to be. For this, we find support from Anson's Law of Contract, 26th Edition Page 52. This view also gains support from the Apex Court decision in JAWAHAR LAL BURMAN vs. UNION OF INDIA, AIR 1962 SC 378. Obviously, the condition subject to which the respondent wanted to take his money back, was not complied with. This is the first wrong attributable to the Appellant-Corporation.
6. The second wrong which the Appellant- Corporation has committed is that, in all fairness it ought to have deposited in some bank Respondent's money so that it could earn interest and that whosoever emerges victorious, to him it could be handed. When asked as to -7- NC: 2024:KHC:21149-DB WA No. 634 of 2014 why this course was not adopted by the Appellant, its Pane Counsel is not in a position to offer any plausible explanation. Appellant is not an agricultural labourer nor an illiterate for retaining such a huge money of a citizen without making due investment thereof. It is a statutory Corporation established under the provisions of the State Financial Corporations Act, 1951 and in its actions it is advised by high functionaries and experts. Added, while refunding the amount without interest during the pendency of Appeal, it has not taken permission of the court. These cumulative wrongs give rise to a right of interest availing to the Respondent - auction buyer. His counsel is right in contending that a person who unjustifiably retains the money of another is liable to pay interest thereon at a reasonable rate, if not commercial rate. This view gains support from the text & context of Section 3 of the Interest Act, 1978. Since we have not been shown that the Respondent had brought this money by borrowing from others, we cannot award interest at commercial rates. We also do not agree with the -8- NC: 2024:KHC:21149-DB WA No. 634 of 2014 submission of Panel Counsel for the Appellant that Section 34 of CPC, 1908 which prescribes 6% per annum interest should be the guiding yardstick. Both the Appellant and the Respondent stand on the extremes and that the Court has to workout a Golden Balance. In our considered view, the Appellant is liable to pay interest at the rate of 9% per annum during the period it had retained money of the respondent. In the light of RUBI (CHANDRA) DUTTA vs. UNITED INDIA INSURANCE COMPANY LTD., (2011) 11 SCC 269.
In the above circumstances, this appeal is partly allowed. The impugned order of the learned Single Judge is set at naught. A Writ of Mandamus issues to the appellant/Corporation to pay interest at the rate of 9% per annum during the retention period of money. This payment is to be made to the respondent within a period of two months. Delay if brooked, the interest rate stands substituted by a higher rate, i.e., 12% per annum from the beginning.
-9-NC: 2024:KHC:21149-DB WA No. 634 of 2014 It is open to the corporation to recover the interest component from the erring officials in accordance with law.
Costs reluctantly made easy.
Sd/-
JUDGE Sd/-
JUDGE Bsv/cbc List No.: 1 Sl No.: 5