Telangana High Court
Medical Council Of India, New Delhi And ... vs Treasurer, M/S. Church Of South India ... on 12 December, 2023
THE HON'BLE THE CHIEF JUSTICE ALOK ARADHE
AND
THE HON'BLE SHRI JUSTICE ANIL KUMAR JUKANTI
WRIT APPEAL No. 540 of 2016
JUDGMENT:
(per the Hon'ble Shri Justice Anil Kumar Jukanti)
This intra court appeal is filed challenging the order dated
28.04.2016 passed by the learned Single Judge in Writ Petition
No.3543 of 2016.
2. Heard Ms. Gorantla Sri Ranga Pujitha, learned counsel for
the appellants and Mr. Vedula Venkataramana, learned Senior
Counsel representing Mr. A. Srinivas, counsel for the
respondents.
3. The brief facts leading to filing of this appeal are as
follows:
The 1st appellant is a statutory authority constituted under
the Medical Council of India Act, 1956. The 1st respondent is a
charitable non-profit organization. The organization obtained
permission from the 1st appellant and obtained Essentiality
Certificate from erstwhile State of Andhra Pradesh and set up the
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2nd respondent-college in Nizamabad. The 2nd respondent
admitted the first batch of students in the year 2003-04. However,
in view of deficiencies, permission was not granted to admit
students for the academic years 2004-05, 2005-06 and 2006-07.
3.1 At the time of establishment of 2nd respondent-College, 1st
respondent had furnished a Bank Guarantee bearing No.194/2005
(for short 'the Bank Guarantee') through Federal Bank Limited,
Hyderabad, for Rs.7,00,00,000/- in favour of the 1st appellant.
The same was meant to be utilized by the State Government in
the event the students of the 2nd respondent-College were diverted
to Government Institutions at a later point of time to augment
infrastructural facilities in the Government Colleges.
3.2 The then State Government cancelled the essentiality
certificate of the 2nd respondent-College vide G.O.Ms.No.333
Health, Medical and Family Welfare (G.1) Department, dated
06.10.2007 and requested the Government of India to invoke the
Bank Guarantee of Rs.7,00,00,000/- provided by 1st respondent.
Aggrieved by the same, the respondents herein filed
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W.P.No.1336 of 2008. During the pendency of the said Writ
Petition, the Bank Guarantee together with subsequent interest
was encashed by the Government of India and the proceeds
thereof were transferred to the 1st appellant. The said Writ
Petition was allowed on 02.02.2011 with the following direction
with respect to the Bank Guarantee:
"In so far as the Bank Guarantee furnished by the
second petitioner College, which has already been
invoked by the MCI is concerned, the same shall be
refunded by the MCI on the petitioners furnished a
fresh Bank Guarantee."
3.3 The respondents furnished a fresh Bank Guarantee on
20.04.2015 and claimed refund of amount of Rs.7,00,00,000/-
from the 1st appellant on 20.08.2015. The 1st appellant
refunded/returned the said amount to the 1st respondent by RTGS
transfer. Interest accrued on this amount till the end of February,
2019 was Rs.3,92,00,000/-. W.P.No.3543 of 2016 was filed by
the respondents herein contending that the appellants have
utilized the proceeds of the Bank Guarantee amount of
Rs.7,00,00,000/-from 18.02.2008 to 20.08.2015 as well as
accumulated interest which is more than Rs.4,00,00,000/-,
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without any authority in law. In spite of the representations to
refund the interest, the appellants have not done so. The learned
Single Judge, vide order, dated 28.04.2016, allowed the
W.P.No.3543 of 2016 and directed the 1st appellant to refund to
the respondents herein the entire interest received by the 1st
appellant from the Federal Bank Limited on the principal amount
of Rs.7,00,00,000/- from 18.02.2008 till 20.08.2015 including the
period from 02.02.2011 till 20.04.2015 within one month. It is
against this order, the present Writ Appeal is preferred.
4. Learned counsel for the appellants submits that
W.P.No.3543 of 2016 was filed by the respondents herein
seeking to declare the action of the appellants in returning only
the principal amount of the encashment of bank guarantee No.194
of 2005 without returning the accumulated interest thereon as
arbitrary and illegal.
4.1. Writ Petition No.1336 of 2008 filed by the respondents
herein was allowed by the learned Single Judge of erstwhile High
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Court of Andhra Pradesh vide order dated 02.02.2011. Learned
Single Judge held in the said order as follows:
"Insofar as the bank guarantee furnished by the Second Petitioner
College, which has already been invoked by the MCI is concerned, the
same shall be refunded by the MCI on the petitioners furnishing a fresh
bank guarantee."
4.2 It is contended that the respondents furnished a fresh bank
guarantee as per the directions only on 20.04.2015. Having
waited for four years in furnishing the bank guarantee, now, the
respondents cannot claim for interest on the bank guarantee from
the appellants, more so, when there is a delay in furnishing such
bank guarantee.
4.3 It is submitted that the learned Single Judge has failed to
appreciate the fact that Writ Petition No.1336 of 2008 was filed
only for the principal amount of the bank guarantee to be
refunded and claim for interest was never sought.
4.4 It is submitted that the present Writ Petition filed is barred
by provisions of Order II Rule 2 of CPC and the same should
have been dismissed on this ground. That the provisions of CPC
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would apply in view of Rule 24 of the Writ Proceedings
Rules, 1997.
4.5 It is also submitted that the claim is barred by law of
limitation and the learned Single Judge erred in holding that the
appellants were acting in the nature of a Trust and as per Section
10 of the Limitation Act, 1963 (for short 'the Act, 1963'), Law of
Limitation has no application to Trust and the learned Single
Judge should not have assumed that the appellants were trustees
and were holding the bank guarantee amounts in the capacity
of trustees.
4.6 It is contended that the learned Single Judge erred in not
considering the submission that the principle of constructive res
judicata is applicable as the claim for interest could have been
sought in the earlier Writ Petition i.e., W.P.No.1336 of 2008.
Filing of Writ Petition No.3543 of 2016 would amount to
constructive res judicata. For the said proposition of constructive
res judicata, the learned counsel has relied upon the paragraph
Nos.18 to 24 and 35 of the judgment of the Hon'ble Apex Court
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in Shiv Chander More and others v. Lieutenant Governor and
others 1. For the said proposition, learned counsel further relied
upon paragraph Nos.20 and 22 of the judgment of the Hon'ble
Apex Court in Forward Construction Company and others v.
Prabhat Mandal (Regd.), Andheri and others 2.
4.7 It is submitted that the appellant is an expert body, more a
regulatory body and not a Trust. Writ Petition is filed beyond
three (3) years claiming interest. There is a delay on the part of
the appellants in seeking the relief.
4.8 As the nature of the proceedings is in the form of suit for
recovery of money, the same cannot be agitated under Article 226
of the Constitution of India and that there are alternative remedies
available. For the said proposition, reliance is placed on
paragraph No.28 of the judgment of the Hon'ble Supreme Court
Union of India v. Major General Madan Lal Yadav 3.
2014 (11) SCC 744
1986 (1) SCC 100
1996 (4) SCC 127
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4.9 It is submitted that no person can claim equity or
advantage for his own mistake/wrong or delay. For the said
proposition, reliance is placed on the paragraph No.11 of the
judgment of the Hon'ble Apex Court in Assistant Commissioner
(CT) LTU, Kakinada v. M/s. Glaxo Smith Kline Consumer
Health Care Limited 4. Reliance is also placed on paragraph
No.22 of the judgment of the Hon'ble Supreme Court in Oil and
Natural Gas Corporation Limited v. Modern Construction
and Company 5.
4.10 It is submitted that the bank guarantee is utilized for the
purpose of welfare of the students, for additional infrastructure,
for additional seats etc.
5. Learned counsel for the respondents submitted that
W.P.No.1336 of 2008 was filed challenging the cancellation of
essentiality certificate issued to respondent No.1 vide
G.O.Ms.No.333, dated 06.10.2007 and requesting respondent
No.2 to invoke the bank guarantee so as to augment
2020 (36) G.S.T.L. 305
2014 (1) SCC 648
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infrastructural facilities in Government Colleges where the
students studying MBBS Final Year were shifted.
5.1 It is submitted that no students were admitted in the year
2004 and that the bank guarantee was for the purpose of
re-inspection of college only and that the appellants had utilized
the proceeds of the bank guarantee amount of Rs.7,00,00,000/-
from 08.02.2015 as well as accumulated interest, which is more
than Rs.4,00,00,000/-. No authority of law permits to appropriate
the accumulated interest on the principal amount which had been
refunded on 20.08.2015.
5.2 It is submitted that the learned Single Judge has rightly held
that the entire interest received by the appellants from Federal
Bank Limited on the principal amount from 18.02.2008 till
20.08.2015 including the period from 02.02.2011 till 20.04.2015
be refunded to the respondents within one month.
5.3 It is further contended that it is an unauthorized act on the
part of the appellants and hence, no interference is warranted as
no prejudice would be caused.
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5.4 For the proposition that the respondents are entitled to
refund and interest, the learned Senior Counsel relied upon
paragraph Nos.38 to 41 of the judgment of the Hon'ble Apex
Court in Unitech Limited and others v. Telangana State
Industrial Infrastructure Corporation and others 6. Relying
on the said judgment, it is further contended that the act of
appellants, being an instrumentality of State, is unjust and the
appellants' act is devoid of fairness.
6. In reply to the contentions made by the learned Senior
Counsel, the counsel appearing on behalf of the appellants has
argued that the judgment relied upon by the respondents' counsel
are not applicable to the present case and has distinguished the
same on facts by inviting the Courts attention to paragraph 48 of
the said judgment.
6.1 The learned counsel submitted that the scheme for
obtaining permission from the Central Government to establish a
medical college (Clause-II sub-clause 7) provides for
2021 SCC OnLine SC 99
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performance of two bank guarantees from a schedule commercial
bank valid for 5 years in favour of the Medical Council of India
for purposes enumerated and that there is no undue enrichment by
the Medical Council of India.
7. Heard the rival submissions made by both the counsels.
Perused the order of the learned Single Judge, the material papers
annexed and the scheme for obtaining the permission of the
Central Government for establishing Medical College. The facts
with respect to cancellation of essentiality certificate, utilization
of bank guarantee and the interest thereon and the delay in
submitting a fresh bank guarantee are not in dispute. The fresh
bank guarantee was given on 20.04.2015 pursuant to directions in
W.P.No.1336 of 2008 by an order, dated 02.02.2011. The
learned Single Judge has framed 6 issues for consideration which
are as follows:
"a) Does the 1st respondent stand in a position of
a trustee?
b) If so, is a trustee entitled to withhold the
interest on the amount received by him in law?
c) Whether the claim of the petitioners for
recovery of interest on the amount of Rs.7.00
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crores paid to the 1st respondent is barred by the
plea of limitation?
d) Whether the bar of Order 2 Rule 2 CPC can be
invoked by the respondents to deny the claim for
interest made by the petitioners in this Writ
Petition on the ground that such a claim was not
made by the petitioners in W.P.No.1336 of 2008?
e) Whether the Writ Petition filed for recovery of
interest on the amount of Rs.7.00 crores paid to
the 1st respondent should be dismissed since the
petitioners have an alternative remedy of civil
suit?
f) Whether the petitioners are entitled to the
interest for the period from 18.02.2008, the date
when the proceeds of the Bank Guarantee were
received by the 1st respondent till the principal
amount of Rs.7.00 crores was refunded to the
petitioners by 1st respondent on 20.08.2015 and
whether petitioners should be denied interest for
the period 02.02.2011, the date when
W.P.No.1336 of 2008 was allowed till fresh Bank
Guarantee was given by petitioners on 20.04.2015
pursuant to the order in the said Writ Petition?"
7.1 The learned Single Judge has elaborately discussed each
issue framed and has arrived at the conclusions point wise by
discussing factual aspects and legal positions. The conclusions
arrived at by the learned Single Judge in a nutshell are that the
appellants were in a position of a trustee for the money received,
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that the appellants being trustees at law are liable for interest for
having encashed, that the claim for interest is not barred by time
in view of Section 10 of the Act, 1963, that the bar of Order II
Rule 2 of Code of Civil Procedure, 1908 is not application for a
writ under Article 226 of Constitution of India, that a Writ
Petition for a relief of monetary claim is maintainable and this is
a fit case for granting relief for refund of interest and that the
respondents are entitled for interest.
7.2 The only question which arises for consideration is this
appeal is with respect to the period of entitlement of interest.
It is not in dispute that 2nd respondent-College submitted a bank
guarantee of Rs.7,00,00,000/- on 29.04.2003 for a period of 5
years and this bank guarantee expired on 29.04.2008. But in the
month of February, 2008, the said Bank Guarantee issued by the
2nd respondent-College was invoked by the Medical Council of
India at the behest of the Government of Andhra Pradesh on
18.02.2008.
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7.3 However, a Writ Petition vide W.P.No.1336 of 2008 was
filed before this Court and the learned Single Judge of this Court
vide order, dated 02.02.2011, directed that invoked bank
guarantee amount should be refunded to the respondents herein
subject to the condition that the respondents herein should submit
a fresh bank guarantee. The order of the learned Single Judge
does not record any payment of interest to the respondents. As
per the directions of the learned Single Judge, a fresh bank
guarantee was submitted on 20.04.2015. The amount of bank
guarantee was admittedly refunded on 20.08.2015.
7.4 It is trite to state that once a bank guarantee is in place,
interest would accrue on the said bank guarantee. It is also trite
to state that such sum of interest which has been accrued on the
bank guarantee during the period 02.02.2011 to 20.08.2015 i.e.,
from the date of order in W.P.No.1336 of 2008 till the date of
refund of bank guarantee is liable to be refunded to the
respondents as they are entitled to interest for the period i.e., from
02.02.2011 to 20.08.2015 on the amount of bank guarantee. We
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modify the order of the learned Single Judge with respect to
payment of interest for the period as indicated above.
8. Accordingly, the Writ Appeal is disposed of. No order as
to costs.
Miscellaneous applications, if any pending, shall stand
closed. There shall be no order as to costs.
________________________
ALOK ARADHE, CJ
________________________
ANIL KUMAR JUKANTI, J
Date:12th DECMBER, 2023.
Kvni/KRR
CJ & JAK, J
THE HON'BLE THE CHIEF JUSTICE ALOK ARADHE
AND
THE HON'BLE SHRI JUSTICE ANIL KUMAR JUKANTI
Date:12.12.2023
Kvni/KRR
