2006 (11) TMI 353 - SC - Companies Law

Whether the appellant was liable to implement the order of the appellant-Board dated 19-4-1994? - Direction was further given to issue consequential orders on the basis of decision taken on 12-4-1994 and 30-4-1994 to make necessary payments as expeditiously as possible Held that - Appeal dismissed. The High Court s view that the decision taken on 30-4-1994 has to be given effect to cannot be faulted. As rightly submitted by learned counsel for the respondents non-confirmation of minutes does not have any effect on the decision taken at the earlier meeting. Pursuant to the orders passed by this Court, Rs. 500 lakhs have been paid to the respondents and Rs. 300 lakhs have been deposited pursuant to the order dated 2-5-2006. The amount has been deposited with the Registry of this Court to be invested in fixed deposit. Let this amount be released to the respondents with interest accrued thereon. The respondents shall be entitled to interest at the rate of 7.5 per cent from the date of Division Bench s judgment, i.e., 15-12-1998 after adjustment of the amounts paid and the interest elements so far as relatable to the payment. The balance amount shall be paid within a period of three months from today.

Summary

Issues Involved:
1. Legality of the Kerala High Court's judgment requiring the appellant to implement the order dated 19-4-1994.
2. Extension of time for completion of work and its implications.
3. Claims for compensation by HCC.
4. Formation and recommendations of the ad hoc committee.
5. Non-confirmation of minutes and its legal effect.
6. Payment of interest on delayed payments.

Issue-wise Detailed Analysis:

1. Legality of Kerala High Court's Judgment:
The Supreme Court examined the legality of the Kerala High Court's decision mandating the appellant to implement the order dated 19-4-1994. The High Court directed the issuance of consequential orders based on decisions taken on 12-4-1994 and 30-4-1994, and to make necessary payments expeditiously. The decision to cancel the earlier order on 19-4-1994, based on a meeting held on 25-1-1997 and communicated on 29-3-1997, was set aside by the High Court.

2. Extension of Time for Completion of Work:
The contract between KSEB and HCC for constructing a power tunnel was initially set to be completed by 26-10-1989. Due to delays, KSEB extended the completion time to 30-6-1992, subject to existing terms and conditions. The delays, aggregating to 47 months, were beyond HCC's control and covered under "Expected Risks" as defined in clause 8 of the contract.

3. Claims for Compensation by HCC:
HCC raised claims for compensation due to delays, which included:
- Compensation for infructuous overheads and fixed expenses: Rs. 283.80 lakhs.
- Extra incidence of equipment charges: Rs. 255.63 lakhs.
- Cost of financing: Rs. 639.25 lakhs.
- Interest on delayed payments: Rs. 56.21 lakhs.
- Extra items: Rs. 160.01 lakhs.
- Pending claims and extra items: Rs. 293.18 lakhs.
The total claim amounted to Rs. 1688.08 lakhs.

4. Formation and Recommendations of the Ad Hoc Committee:
KSEB constituted an ad hoc committee on 2-3-1993 to review HCC's claims. The committee recommended an interim release of Rs. 250 lakhs and later suggested a payment of Rs. 808.26 lakhs against HCC's aggregate claim. The committee's conclusions were based on the delays being beyond HCC's control, KSEB's continued application of contract provisions during the extended period, and HCC's right to claim compensation under clause 18 "force majeure" of the contract.

5. Non-confirmation of Minutes and its Legal Effect:
The Supreme Court emphasized that non-confirmation of minutes does not invalidate decisions taken in previous meetings. The High Court correctly noted that the decision taken on 30-4-1994 remained effective despite the minutes not being confirmed in the subsequent meeting on 30-5-1994. The Supreme Court referenced legal principles, including those from "Shackleton on the Law and Practice of Meetings" and the case "Chetkar Jha v. Viswanath Prasad Verma," to support this view.

6. Payment of Interest on Delayed Payments:
The Supreme Court ordered that Rs. 500 lakhs paid to the respondents and Rs. 300 lakhs deposited with the Court's Registry be released to the respondents with accrued interest. Additionally, the respondents were entitled to interest at a rate of 7.5% from the date of the Division Bench's judgment (15-12-1998) after adjusting amounts paid and interest elements. The balance amount was to be paid within three months.

Conclusion:
The Supreme Court dismissed the appeals with modifications, affirming the High Court's decision that the non-confirmation of minutes did not affect the earlier decision, and ordered the payment of the remaining balance with interest. No order as to costs was made.