Supreme Court Orders Refund for Undelivered Sand Block: Popatrao Vyankatrao Patil vs. The State of Maharashtra (2020)

Date of the Judgment: February 14, 2020
Citation: 2020 INSC 138
Judges: S.A. Bobde, CJI., B.R. Gavai, J., Surya Kant, J.
Can a citizen be denied a refund for a government contract when the government fails to deliver the contracted goods? The Supreme Court of India recently addressed this question in a case concerning a sand block auction. The Court ruled that the State must refund the full amount with interest when it fails to provide possession of the auctioned sand block. This judgment emphasizes the State’s duty to act fairly and reasonably in its dealings with citizens. The bench was composed of Chief Justice S.A. Bobde and Justices B.R. Gavai and Surya Kant.

Case Background

In 2012, the District Collector of Satara issued a public auction notice for sand blocks in the Krishna River. Popatrao Vyankatrao Patil, the appellant, submitted a bid for sand excavation at Gat No. 956A, Plot No. 2 in Rethare Khurd village, Taluka Karad. The agreed quantity was 8500 brass, and his bid of Rs. 59,75,000 was the highest.

On January 3, 2012, the appellant deposited Rs. 15,00,000 as one-fourth of the auction amount. On January 16, 2012, he deposited the remaining Rs. 44,83,500. He also paid Rs. 1,19,500 for environmental costs and Rs. 1,23,085 for income tax, totaling Rs. 62,26,085.

However, villagers opposed the excavation because the sand block was near a school. Despite paying the full amount, the appellant was not given possession of the sand block. He then requested a refund from the Revenue Minister of Maharashtra. The Collector, Satara, sought a report from the Tehsildar, Karad, on June 11, 2012.

On June 15, 2012, the Circle Officer, Kale, recorded the appellant’s statement and prepared a Panchnama, confirming that the appellant was never given possession and no excavation had occurred. The Tehsildar, Karad, submitted a detailed report on August 9, 2012, and the Sub-Divisional Officer, Karad, submitted a similar report on September 4, 2012, both confirming the facts.

The file was reportedly lost, and despite the appellant not receiving possession or excavating any sand, the refund was not processed. The State Government rejected the refund request on March 25, 2014. After further representations were ignored, the appellant filed Writ Petition No. 8708 of 2017 in the High Court, which was dismissed on the grounds that it involved questions of fact.

Timeline

Course of Proceedings

The High Court of Judicature at Bombay declined to entertain the writ petition filed by the appellant, stating that it involved disputed questions of fact. The High Court did not delve into the merits of the case and dismissed the petition.

Legal Framework

The Supreme Court referred to Article 226 of the Constitution of India, which grants High Courts the power to issue writs. The Court clarified that while High Courts may be hesitant to entertain petitions involving disputed questions of fact, this is a rule of self-restraint, not an absolute bar.

The Court cited the case of ABL International Ltd. & Anr. vs. Export Credit Guarantee Corpn. of India Ltd. & Ors. [(2004) 3 SCC 553], which held that a writ petition is maintainable even if it involves disputed questions of fact, especially when the action of the State is arbitrary and unreasonable, violating Article 14 of the Constitution.

Arguments

Appellant’s Submissions:

• The appellant argued that he was the highest bidder and had deposited the entire auction amount.
• He contended that he was not given possession of the sand block and could not excavate any sand due to the villagers’ opposition.
• He submitted that the reports from the Circle Officer, Tehsildar, and Sub-Divisional Officer all confirmed that he was not given possession and no excavation was done.
• The appellant asserted that the denial of the refund was arbitrary and unreasonable, especially since the authorities themselves failed to provide the sand block.

Respondents’ Submissions:

• The respondents, primarily the State of Maharashtra and its officials, did not effectively argue against the facts presented by the appellant.
• The State did not dispute that the appellant had paid the full amount but was not given possession of the sand block.
• The State’s primary defense was that the matter involved disputed questions of fact, which should not be addressed in a writ petition.
• The State did not provide any substantial reasoning for denying the refund, other than the file being misplaced.

Issues Framed by the Supreme Court

The Supreme Court did not explicitly frame issues in a separate section. However, the core issue was:

• Whether the High Court was justified in refusing to entertain the writ petition on the ground that it involved disputed questions of fact, and whether the State was justified in denying the refund to the appellant.

Treatment of the Issue by the Court

The following table demonstrates how the Court decided the issues:

Authorities

The Supreme Court considered the following authorities:

Cases:

• ABL International Ltd. & Anr. vs. Export Credit Guarantee Corpn. of India Ltd. & Ors. [(2004) 3 SCC 553] – Supreme Court of India. This case was used to establish that a writ petition is maintainable even if it involves disputed questions of fact, especially when the action of the State is arbitrary and unreasonable.
• Urban Improvement Trust, Bikaner vs. Mohan Lal [(2010) 1 SCC 512] – Supreme Court of India. This case was cited to emphasize that the State should act as a model litigant and not rely on technical pleas to defeat legitimate claims of citizens.
• Dilbagh Rai Jarry vs. Union of India [(1974) 3 SCC 554] – Supreme Court of India. This case was cited to reinforce the principle that the State should meet honest claims and not score technical points.
• Madras Port Trust vs. Hymanshu International [(1979) 4 SCC 176] – Supreme Court of India. This case was used to highlight that governments and public authorities should not rely on technical pleas to defeat legitimate claims.
• Bhag Singh vs. UT of Chandigarh [(1985) 3 SCC 737] – Supreme Court of India. This case was used to further emphasize that the State should do what is fair and just to the citizen.

Judgment

The Supreme Court allowed the appeal, setting aside the High Court’s order. The Court directed the respondents to refund the entire amount received from the appellant, along with interest at 6% per annum from the date of the first refund request until the date of realization.

How each authority was viewed by the Court?

✓ ABL International Ltd. & Anr. vs. Export Credit Guarantee Corpn. of India Ltd. [(2004) 3 SCC 553]*: The Court followed this authority to justify entertaining the writ petition despite the presence of some factual disputes, as the State’s action was found to be arbitrary.

✓ Urban Improvement Trust, Bikaner vs. Mohan Lal [(2010) 1 SCC 512]*: The Court followed this authority to reinforce the principle that the State should act as a model litigant and not use technicalities to deny rightful claims.

✓ Dilbagh Rai Jarry vs. Union of India [(1974) 3 SCC 554]*: The Court followed this authority to support the idea that the State should meet honest claims and not rely on technicalities.

✓ Madras Port Trust vs. Hymanshu International [(1979) 4 SCC 176]*: The Court used this authority to emphasize that public authorities should not rely on technical pleas to defeat legitimate claims of citizens.

✓ Bhag Singh vs. UT of Chandigarh [(1985) 3 SCC 737]*: The Court used this authority to further emphasize that the State should do what is fair and just to the citizen.

What weighed in the mind of the Court?

The Supreme Court was primarily influenced by the undisputed facts that the appellant had paid the full auction amount but was not given possession of the sand block. The Court emphasized the State’s duty to act fairly and reasonably, highlighting that the denial of the refund was arbitrary and unreasonable. The Court also stressed that the State should be a model litigant and not rely on technicalities to avoid its obligations.

The Court’s reasoning was based on the following:

• The undisputed fact that the appellant had deposited the full amount but was not given possession of the sand block.
• The reports from various government officials confirming that no possession was given and no excavation was done.
• The principle that the State should act as a model litigant and not rely on technical pleas to defeat legitimate claims.
• The arbitrary and unreasonable nature of denying the refund when the State itself had failed to fulfill its part of the agreement.

The Court did not discuss any alternative interpretations or minority opinions. The decision was unanimous.

The Supreme Court stated, “It is undisputed, that the appellant was the highest bidder for the sand block in question. The appellant has deposited an amount of Rs.62,26,085/-.”

The Supreme Court also observed, “The action of the respondents, in denying the refund of the amount of the appellant, when the respondents themselves had failed to give possession of the sand block and as a result of which the appellant could not excavate the sand, would smack of arbitrariness.”

Further, the Court noted, “This Court, has time and again held, that the State should act as a model litigant.”

Key Takeaways

• The State must act fairly and reasonably in its dealings with citizens.
• A citizen is entitled to a refund when the State fails to deliver on a contract, especially when the citizen has fulfilled their obligations.
• The State should not rely on technicalities to avoid its obligations and should act as a model litigant.
• Writ petitions are maintainable even if they involve disputed questions of fact, especially when the action of the State is arbitrary and unreasonable.

Directions

The Supreme Court directed the respondents to refund the entire amount received from the appellant along with interest at the rate of 6% per annum from the date on which the appellant made the first request for refund till the date of realization.

Development of Law

The ratio decidendi of this case is that the State must refund the full amount with interest when it fails to provide possession of an auctioned sand block, reinforcing the principle that the State must act fairly and reasonably and not rely on technicalities to deny legitimate claims. This case does not change any previous position of law, but rather reaffirms existing principles.

Conclusion

In conclusion, the Supreme Court’s judgment in Popatrao Vyankatrao Patil vs. The State of Maharashtra (2020) underscores the State’s responsibility to act fairly and reasonably in its dealings with citizens. The Court held that the State must refund the full amount with interest when it fails to provide possession of an auctioned sand block, reinforcing the principle that the State must act as a model litigant and not rely on technicalities to deny legitimate claims.