1973 (4) TMI 116 - SC - Indian Laws

Summary

Issues Involved:
1. Refusal to allot wagons for transportation of coal.
2. Imposition of a condition that coal must be consumed locally.
3. Frustration of contract due to actions of the Coal Commissioner.
4. Entitlement to refund of the purchase money.
5. Entitlement to interest on the refunded amount.

Detailed Analysis:

1. Refusal to Allot Wagons for Transportation of Coal:
The appellant purchased 852 tons of slack coal at a public auction, expecting to transport it to Ferozabad. Despite multiple requests, the Coal Commissioner refused to allot wagons for this purpose, stating that the coal must be consumed locally. The refusal to provide wagons was seen as a method to enforce the local consumption condition, which was not communicated at the time of the auction.

2. Imposition of a Condition that Coal Must be Consumed Locally:
The Coal Commissioner imposed a condition that the coal was to be consumed locally, which was not a part of the initial auction terms. The appellant was not informed of this condition when he bid for the coal. The Chief Engineer of the Bengal Nagpur Railway pointed out that no such condition was imposed when permission for the public auction was granted, making the Coal Commissioner's stance unreasonable and harsh.

3. Frustration of Contract Due to Actions of the Coal Commissioner:
The appellant's reasonable expectation to transport the coal to Ferozabad was thwarted by the Coal Commissioner's refusal. The contract became frustrated as the appellant was unable to fulfill the purpose of the purchase due to the refusal to allot wagons. The High Court's reasoning that the appellant was trying to enforce the contract was incorrect; the contract was frustrated due to the Coal Commissioner's actions.

4. Entitlement to Refund of the Purchase Money:
Given the frustration of the contract and the lack of coordination between government departments, the appellant was entitled to a refund of the purchase money. The Coal Commissioner and other officials had proceeded on the basis that the auction sale was to be canceled and the appellant's money refunded. The refusal to refund the money was unjustified, and the appellant was entitled to the refund.

5. Entitlement to Interest on the Refunded Amount:
The appellant was also entitled to interest on the refunded amount. The lower court's refusal to allow interest was unjustified. The Supreme Court held that the appellant should receive interest from the date of his demand or at the latest from the date of the suit, at a rate of 6 percent.

Conclusion:
The appeal was allowed, and the appellant's suit was decreed with interest at 6 percent from the date of the suit till realization. The appellant was also entitled to costs from the respondents in all three courts. The judgment highlighted the unnecessary litigation costs and interest incurred due to the officials' actions.