2001 Supreme(SC) 1340

2001(5) Supreme 683
SUPREME COURT OF INDIA
(From Gujarat High Court)
B.N. Kirpal and N. Santosh Hegde, JJ.
O.N.G.C. & Anr. -Appellants
versus
Asson. of Natural Gas Consuming Inds. & Ors. -Respondents
IA. Nos. 190-200 in Civil Appeal Nos. 8530-8540 of 1983
Decided on 26-7-2001
Counsel for the Parties :
For the Appearing Parties : K.N. Raval and Mukul Rohtagi, Additional Solicitor Generals, B. Sen, M.L. Varma, R.F. Nariman, Mahendra Anand, Sr. Advocates, Shahid Rizvi, K. R. Sasiprabhu, Manish Garg, C. Mukhopadhya, Rakesh K. Sharma, Mrs. Manik Karanjawala, Ms. Pratibha Jain, Arun K. Sharma, Ms. Vandana Sharma, Ms. Vishwa Pal Singh, Nagendra Singh, Vinay Kumar Garg, Sushil Kumar Jain, Shri. Narain, Sandeep Narain, Rajan Narain, Ms. B. Vijaya Lakshmi Menon, Sunil Dogra and Ms. Manu Nair, Advocates.

IMPORTANT POINT
Where as a result of interim order of Supreme Court, payment is not made but subsequently after the case is disposed of money is required to be paid then the recipient would be entitled to changed interest by way of restitution.

Headnote:Payment of interest by respondents to appellants subsequent to appeal with regard to fixation of price of natural gas having been decided by this Court-Price paid at a lower rate under interim orders-Final order fixing higher price-Payment made-Whether interest be paid on it according to original contract which had expired and for renewal of which appeal was filed ? (Yes, both under expired contract and under doctrine of restitution)-Payment of interest in instalments-Allowed subject to undertaking and other terms.

       Held : In our opinion, the O.N.G.C. is entitled to claim interest from the respondents for the delayed payment of the principal amount. It is true that the contracts between the parties came to an end on 31st March, 1979. Thereafter the gas would have been supplied only if a fresh written contract had been entered into which was not done. The respondents, however, chose to approach the High Court and by order dated 30th March, 1979 the Court permitted the respondents herein to pay on the same terms "as at present" and O.N.G.C. was required to continue to supply the gas. The effect of this clearly was that except with regard to the amount of price which was payable, which was in dispute, the rest of the terms of the agreements which had been entered into between the parties were impliedly continued. It is for this reason that in the order dated 30th March, 1979 the expression used is on the same terms "as at present". In a sense, by an order of the Court, the contracts continued or were renewed. (Para 11)

       Even if this be not so, there can be little doubt that on the principle of restitution the O.N.G.C. is entitled to be compensated. It is now well-settled by series of decisions of this Court that where as a result of interim orders of this Court, payment is not made but subsequently after the case is disposed of money is required to be paid then the recipient would be entitled to charge interest by way of restitution. (Para 12)

       After referring to case law held : From the aforesaid decisions, it is clear that even if in the main judgment on 4th May, 1990 no direction was given with regard to the payment of interest, the O.N.G.C. cannot be deprived of its right to claim restitution. The said decision upheld the price which was charged by the O.N.G.C. and did not give any specific direction requiring payment of the principal amount or the interest to be paid. Merely because this was not done, does not mean that the right of O.N.G.C. to get the money due to it had come to an end. The clear implication of the disposal of the appeals would be that the interim orders which had prohibited the O.N.G.C. from realising any sum in addition to the one fixed by the interim order came to an end and the O.N.G.C. would thereafter claim the money due to it. O.N.G.C. was under an obligation by virtue of the interim orders to comply with the terms of the earlier contracts and to supply gas in the manner provided thereunder. This part of the contract was performed by the O.N.G.C. who thus became entitled to recover from the industries the price which had originally been charged by them. For the late payment of the amount, the contract in Clause 5 had contemplated payment of interest at the rate and the manner specified therein. This would be, in our opinion, a correct measure in determining the quantum of restitution. For the aforesaid reasons, we allow these applications and hold that the O.N.G.C. is entitled to claim interest from the respondents at the rate specified in clause 5 of the erstwhile agreements but the cases of respondents - Sarabhai Common Services and Alembic Chemicals Ltd. (now known as - "Alembic Ltd.") are dealt with separately and are adjourned by eight weeks. (Paras 13 and 13A)

       Held further : It is evident that by now the amount payable by the respondents has become quite large. Mr. B. Sen in all his fairness submits that as was done by the interim order of 6th April, 1993 with regard to payment of the balance sum of principal amount, in the case of interest also this Court may, similarly, permit the payment of interest within a period of five years. We, therefore, hold that if within two months from today undertakings are furnished by the Managing Directors of the respondent-Companies that the amount of interest claimed by the O.N.G.C. would be paid in instalments, the said industries would be entitled to pay interest in 60 monthly instalments. The instalments would commence one month after the undertaking is so furnished. In such an event there will be no further interest on the amount payable, but in the case of any two defaults the whole amount due would become immediately payable. The payments should be made by the 10th day of every calendar month. If no such undertaking is given within a period of two months from today. O.N.G.C. would be entitled to recover the entire amount due and payable as determined by this order and till payment is received the defaulter would be liable to pay interest upon it at the rate specified in the aforesaid clause 5. The amount payable as of today will be intimated by the O.N.G.C. to the industries within two weeks from today. In case there is no dispute with regard to the calculation of the amount demanded the respondents would be at liberty to approach this Court within two weeks of the demand so raised. Securities shall continue till the entire payment is made. I.As. are allowed. (Paras 14, 15 &16)