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Friday, July 11, 2014

Payment of interest on the refund of amount after cancellation of auction sale -Apex court held that But for the reasons mentioned by the High Court the sale has been cancelled. It has been ordered to refund amount in favour of the auction purchaser-appellant(s). We find no reason as to why on equitable grounds the appellants should not get interest on the said amount. Taking into consideration the aforesaid factor while working out equities, it would, therefore, be appropriate to direct the State to pay interest at the rate of 6% on the amount to be refunded as per the High Court’s order with effect from 27th April, 2001 and 3rd September, 2001, the day, the High Court passed the impugned order. The concerned respondents are directed accordingly.= STATE OF U.P. & ORS. … APPELLANTS VERSUS M/S. JASWANT SUGAR MILLS LTD. & ORS.ETC. … RESPONDENTS = 2014 – June. Part -http://judis.nic.in/supremecourt/filename=41730

 Payment of interest on the refund of amount after cancellation of auction sale -Apex court held that  But  for  the  reasons mentioned by the High Court  the  sale  has  been  cancelled.  It  has  been ordered to refund amount in favour of  the  auction  purchaser-appellant(s). We find no reason as to why on equitable grounds the appellants  should  not get interest on the said amount. Taking  into  consideration  the  aforesaid factor while working out equities, it would, therefore,  be  appropriate  to direct the State to pay interest at the rate of  6%  on  the  amount  to  be refunded as per the High Court’s order with effect  from  27th  April,  2001 and 3rd September, 2001, the day, the High Court passed the impugned  order. The concerned respondents are directed accordingly.=

A piece of land of the Company was put  to  auction  for  recovery  of
dues of the Company. It was challenged by  the  Company  by  filing  a  writ
petition. The High  Court  by  impugned  judgment  dated  27th  April,  2001
cancelled the auction sale and  allowed  the  writ  petition.  In  a  review
application preferred by auction purchaser, the High Court  by  order  dated
3rd September, 2001 directed the respondents to refund  the  amount  to  the
auction purchasers.   
The Company was in heavy arrears  as  on  3rd  January,  1977  to  the
extent of  Rs.1.14  crores.  Accordingly,  the  District  Collector,  Meerut
appointed a Receiver under Section 286-A of  U.P.  Zamindari  Abolition  and
Land Reforms  Act,(hereinafter  referred  to  as  the  “Zamindari  Abolition
Act”).
5.    Subsequently, the Company was acquired by the State on  28th  October,
1984 as per provisions of the  U.P.  State  Sugar  Undertakings  Acquisition
Act, 1971 (hereinafter referred to  as  the  “Acquisition  Act,  1971”),  as
amended in the year 1984, free from all encumbrances and the said  Unit  was
vested with the U.P. State Sugar Corporation  (hereinafter  referred  to  as
the “Corporation”).=

The  writ  petitions

were disposed of by the learned Single Judge of Allahabad High  Court  by  a
common judgment dated 1st March, 2011. By the said judgment, the High  Court
directed the State Government to pay the Company  the  compensation  on  the
basis of the compromise reached between the State Government and the  tenure
holder  Company  for  acquisition  of  their  land  by  Meerut   Development
Authority.
 It is also directed that out of compensation paid by  the  Meerut
Development Authority (about Rs.4.33 crores) an  amount  of  Rs.1.62  crores
shall be deducted and the remaining amount shall be  paid  to  the  Company.
The State has been given liberty to  realize  the  said  amount  from  those
authorities to whom it was wrongly paid by  the  previous  Collector,  Tulsi
Gaur, under his order dated  20th  February,  1992. =

 No interest on refund of auction amount after cancellation of sale =
We have heard the parties only on the limited question as to  why  the
amount which has been directed to be refunded  to  the  auction  purchasers-
appellants herein should not bear reasonable interest.
42.   In a situation like in the  present  case,  one  cannot  hold  of  any
statute entitling the auction purchasers to  claim  interest,  in  case  the
auction got cancelled or set aside by the Court  of  law.
Counsel  for  the
parties also could not refer any  of  the  clauses  of  auction  prescribing
interest on refund of amount in case of cancellation  of  auction  or  sale.
The question arises as to whether in such a situation an  auction  purchaser
can claim interest on equitable ground.

Payment of Interest on Rental compensation if any delay occurred , 
in the absence of any contract to pay interest =

In State of Maharashtra and others vs. Maimuma Banu and  others,  (2003)
7 SCC 448, the question arose as to whether interest was payable  on  rental
compensation. In the said case, Government resolution provided  for  payment
of rental compensation expeditiously  but  no  provision  was  made  to  pay
interest in case of delayed payment. This Court in the said case held:

“10. The crucial  question  is  whether  there  can  be  any  direction  for
interest on rental compensation once it is held that  the  same  has  to  be
paid within the time frame,  notwithstanding  the  fact  that  there  is  no
statutory obligation.

11. It is not in dispute that in certain cases payments  have  already  been
made. Though the inevitable  conclusion  is  that  the  High  Court  is  not
justified in directing grant of interest on the logic of various  provisions
contained in the Act, yet there is an element of equity  in  favour  of  the
landowners.
 It is, however, seen that the writ applications were filed  long
after the possession was taken. This factor cannot be lost  sight  of  while
working out the  equities.  It  would,  therefore,  be  appropriate  if  the
appellants pay interest @ 6% from 1-4-2000 till amounts  payable  as  rental
compensation are paid to the landowners concerned. This direction shall  not
apply to those cases where the payments have already been made prior to 1-4-
2000. Appeals are allowed to the extent indicated  without  any  stipulation
of costs.”

44.   In the present case, we find that there was no  mis-representation  on
the part of the auction purchasers; they deposited the total auction  amount
within the time stipulated. It has not been in dispute  that  the  title  of
the land  was  also  transferred  in  their  favour.  But  for  the  reasons
mentioned by the High Court  the  sale  has  been  cancelled.  It  has  been
ordered to refund amount in favour of  the  auction  purchaser-appellant(s).
We find no reason as to why on equitable grounds the appellants  should  not
get interest on the said amount. 
Taking  into  consideration  the  aforesaid
factor while working out equities, it would, therefore,  be  appropriate  to
direct the State to pay interest at the rate of  6%  on  the  amount  to  be
refunded as per the High Court’s order with effect  from  27th  April,  2001
and 3rd September, 2001, the day, the High Court passed the impugned  order.
The concerned respondents are directed accordingly.

2014 – June. Part -http://judis.nic.in/supremecourt/filename=41730


                                                                 REPORTABLE

                        IN THE SUPREME COURT OF INDIA

                        CIVIL APPELLATE JURISDICTION

                     CIVIL APPEAL NOS. 6169-6171 OF 2013

STATE OF U.P. & ORS.                         … APPELLANTS

                                   VERSUS

M/S. JASWANT SUGAR MILLS LTD. & ORS.ETC.     … RESPONDENTS

WITH
CIVIL APPEAL NOs.6172-6174 OF 2013,
CIVIL APPEAL NO. 7122 OF 2003
CIVIL APPEAL NOs.7123-7124 OF 2003
CIVIL APPEAL NO. 7125 OF 2003
CIVIL APPEAL NOs.7126-7129 OF 2003


                               J U D G M E N T


Sudhansu Jyoti Mukhopadhaya, J.


      In these appeals  the  dispute  relates  to  payment  of  compensation
pursuant to acquisition of land of respondent-M/s. Jaswant Sugar Mills  Ltd.
(hereinafter referred to as the “Company”) and auction of part of  the  land
of the Company. There being cross-claims, all of these  appeals  were  heard
together for determination by a common judgment.
2.    The Company  preferred  two  writ  petitions  challenging  the  orders
passed by the District Magistrate/Collector, Meerut  and  Board  of  Revenue
dated 18th December, 1995 and 3rd August, 1996 respectively.  The  aforesaid
orders were also challenged by the  State  Government.  The  writ  petitions
were disposed of by the learned Single Judge of Allahabad High  Court  by  a
common judgment dated 1st March, 2011. By the said judgment, the High  Court
directed the State Government to pay the Company  the  compensation  on  the
basis of the compromise reached between the State Government and the  tenure
holder  Company  for  acquisition  of  their  land  by  Meerut   Development
Authority. It is also directed that out of compensation paid by  the  Meerut
Development Authority (about Rs.4.33 crores) an  amount  of  Rs.1.62  crores
shall be deducted and the remaining amount shall be  paid  to  the  Company.
The State has been given liberty to  realize  the  said  amount  from  those
authorities to whom it was wrongly paid by  the  previous  Collector,  Tulsi
Gaur, under his order dated  20th  February,  1992.  The  impugned  judgment
dated 1st March, 2011 has been challenged by  the  State  of  U.P.  in  C.A.
Nos.6169-6171 of 2013 (State of U.P. & ors. Vs.  M/s.  Jaswant  Sugar  Mills
Ltd. & Ors.etc.), as also by M/s. Jaswant Sugar  Mills  Ltd.  in  C.A.  Nos.
6172-6174  of  2013  &  Ors.  (M/s.  Jaswant  Sugar  Mills   Ltd.   vs   The
Colletor/District Magistrate & Ors.).
3.    A piece of land of the Company was put  to  auction  for  recovery  of
dues of the Company. It was challenged by  the  Company  by  filing  a  writ
petition. The High  Court  by  impugned  judgment  dated  27th  April,  2001
cancelled the auction sale and  allowed  the  writ  petition.  In  a  review
application preferred by auction purchaser, the High Court  by  order  dated
3rd September, 2001 directed the respondents to refund  the  amount  to  the
auction purchasers. The aforesaid judgment and orders  are  under  challenge
in C.A. Nos.7122 of 2003, 7123-7124 of 2003, 7125 of 2003 and  7126-7129  of
2003.

      C.A.Nos.6169-6171 of 2013 and C.A.Nos.6172-6174 of 2013.

4.          For determination of the issue involved  in  C.A.  Nos.6169-6171
of 2013 and C.A. Nos. 6172-6174 of  2013,  it  is  desirable  to  refer  the
relevant factual matrix of the case which is as follows:
      The proprietors of  respondent  Company,  namely  M/s.  Jaswant  Sugar
Mills Ltd. had six business units as under:
M/s. Jaswant Sugar Mills.
Meerut Straw Board Mills.
Pootha Farm.
Northern India Paper Mills.
Bindal Vanaspati Ghee Mills.
Meduwala Open Pan Sugar, Bijnor.

      The Company was in heavy arrears  as  on  3rd  January,  1977  to  the
extent of  Rs.1.14  crores.  Accordingly,  the  District  Collector,  Meerut
appointed a Receiver under Section 286-A of  U.P.  Zamindari  Abolition  and
Land Reforms  Act,(hereinafter  referred  to  as  the  “Zamindari  Abolition
Act”).
5.    Subsequently, the Company was acquired by the State on  28th  October,
1984 as per provisions of the  U.P.  State  Sugar  Undertakings  Acquisition
Act, 1971 (hereinafter referred to  as  the  “Acquisition  Act,  1971”),  as
amended in the year 1984, free from all encumbrances and the said  Unit  was
vested with the U.P. State Sugar Corporation  (hereinafter  referred  to  as
the “Corporation”).
6.    Since, the Company was in arrears to the  extent  of  Rs.1.29  crores,
the District Collector, Meerut by order dated 28th November, 1984,  attached
all the remaining five constituent units except the Sugar Mill. The  General
Manger of the  aforesaid  Sugar  unit  was  appointed  as  a  Receiver  with
reference to all the aforesaid remaining five  units.  In  between  1977  to
1984, for  smooth  functioning  of  the  Sugar  Mill,  payment  of  dues  to
sugarcane grower, repairing  of  machinery  etc.,  on  the  request  of  the
Receiver, the State  Government  granted  loan  of  Rs.6.13  crores  to  the
Company, and was to be recovered as the arrears of Land Revenue  along  with
interest.
7.    The District Collector, Meerut taking into consideration the  dues  to
the extent of Rs.1.62 crores as on 24th October, 1990 were  to  be  paid  by
the Company, extended the tenure of the Receiver till  further  orders.  The
order of the extension of tenure of the Receiver was challenged by  the  ex-
proprietors of the Company in a Writ Petition  No.18496/1991.  Subsequently,
the Receiver was withdrawn on  18th  December,  1995,  therefore,  the  writ
petition was also withdrawn.
8.    Pursuant to “Uttar Pradesh imposition  of  Ceiling  of  Land  Holdings
Act” (hereinafter referred to as the “Ceiling Act”), land admeasuring  723.3
bigha belonging to the Company was declared  surplus.  Against  the  same  a
Writ Petition No.3905/1987 was preferred by the Company.
9.     During  the  pendency  of  the  aforesaid  writ  petition  the  State
Government issued a Notification dated 14th August,  1987  under  Section  4
read with Section 17(4) of the Land Acquisition Act,  1894  for  the  Meerut
Development  Authority.  It  was  followed  by  a  Notification  dated   4th
September, 1987 issued u/s 6 of the Acquisition Act. The  said  Notification
included the land of M/s Pootha Farm, a constituent unit of the Company.  In
the said case compensation amount of Rs.4.33 crores was awarded  by  Special
Land Acquisition Officer vide award dated 22nd February, 1990.
10. The District Collector, Meerut, pursuant to a report of  the  Tehsildar,
ordered to pay the compensation amount after adjustment  of  different  dues
payable by the Company.
11.   Pursuant to a Court’s order, the District Collector, Meerut  passed  a
speaking order dated 20th February, 1992 showing the details of  adjustments
to be made out of compensation amount  of  Rs.4.34  crores  payable  by  the
Company, as detailed below:
                 1.Labour Dues and others  Rs.1,39,72,300.83
                 2.Sales Tax                  Rs.  40,18,401.00
                 3.Payments towards Loan      Rs.2,54,04,080.57
                             -----------------
                                      Total                Rs.4,33,94,783.40
       =================

      The District Collector in the said order  dated  20th  February,  1992
concluded that after such adjustment the following dues  were  still  to  be
paid by the Company.

Payments towards loan       Rs.3,59,83,381.43
Income Tax                        Rs.  79,14,781.00
Levy Price(Central Govt)    Rs.  38,64,000.00
House Tax                         Rs.   6,23,605.49
Railway Dues                      Rs.   2,54,570.40
Cane Commissioner                 Rs.  45,11,400.00
Provident Fund                    Rs.  55,25,769.59
Labour Dues                 Rs.      44,856.60
E.S.I.                            Rs.     72,624.00
10.Labour Dues(other units)       Rs.  20,73,704.78
11.Purchase Tax                   Rs.   1,05,518.69
                                      -----------------
                       Total      Rs. 6,09,74,211.98
                                      =================”

12.   The State Government filed the deduction  statement  for  recovery  of
the dues before  the  prescribed  authority  constituted  under  U.P.  Sugar
Undertaking (Acquisition)  Act,  1971.  However,  the  aforesaid  claim  was
rejected by the prescribed authority by order dated  4th  October,  1994  in
Claim No.13 of 1999.
13.   Against  the  said  order  dated  4th  October,  1994  passed  by  the
prescribed  authority,  the  appellant  filed  Appeal  No.1/95  before   the
Appellate Tribunal.  By  order  dated  12th  October,  1995,  the  Appellate
Tribunal directed the appellant to file a fresh deduction claim  before  the
prescribed authority.
14.   The Company  moved  an  application  before  the  District  Collector,
Meerut stating therein that  as  on  date  there  are  no  arrears/liability
payable by the Company, therefore, requested to remove the Receiver.
15.   The District Collector, Meerut by order  dated  18th  December,  1995,
allowed the case  No.30/1995  with  observation  that  as  on  the  date  no
recovery  certificate  was  pending  against   the   Company.   Hence,   the
appointment of  Receiver  was  terminated  with  immediate  effect.  It  was
further ordered that a detailed list of the assets be  prepared  and  signed
by both the parties and the assets be transferred to the Company.  An  order
was passed to appoint a Chartered Accountant to complete the  audit  of  the
accounts.
16.   As the order  dated  18th  December,  1995,  passed  by  the  District
Collector, Meerut is silent about the amount payable to the Company, the Ex-
Proprietor of the Company  moved an application before  the  Chairman  Board
of Revenue and requested to refund the compensation amount to the Company.
17.   The Company filed a Writ Petition No.10220/1996 before High Court  for
modification of the order of  the  District  Collector,  Meerut  dated  18th
December, 1995.
18.   During the pendency of the said case, the Chairman, Board of  Revenue,
by order dated 3rd August, 1996 directed that out of  the  total  amount  of
Rs.4.33 crores received as compensation from Meerut  Development  Authority,
after deduction  of  a  sum  of  Rs.1.62  crores  along  with  interest  and
collection charges the balance amount shall be refunded to the Company.
19.   Against the aforesaid order dated  3rd  August,  1996  passed  by  the
Chairman, Board of Revenue, the Company filed  Writ  Petition  No.31378/1996
on the ground that there is no dues payable by  the  Company.  In  the  said
case the U.P.  State  Sugar  Corporation  Ltd.  filed  a  counter  affidavit
refuting such stand taken by the Company.
20.   A separate counter affidavit was filed by the Deputy Secretary,  Sugar
and Cane Development,  Lucknow,  giving  details  of  dues  payable  by  the
Company as detailed by the District Collector, Meerut  by  his  order  dated
18th December, 1995.
21.   The High Court initially passed an interim order on  17th  July,  1997
as under:
“Considering the facts and the circumstances of the  case,  the  respondents
are directed to pay to M/s Jaswant Sugar Mills Ltd., Meerut  the  amount  of
compensation money amounting to Rs.4,33,94,783.40 after deducting a  sum  of
Rs.1,62,02,402.20 + interest and collection charges within a period  of  two
months from today. Payments so made shall be subject to  final  decision  of
the Writ Petition.”

22.   Against the interim  order,  the  appellant-State  filed  the  Special
Appeals.
23.   By judgment and order dated 7th July, 2010 passed  in  Special  Appeal
Nos.5179-80/2010, the High Court quashed the interim order dated 17th  July,
1997 passed by the learned Single Judge. It was ordered to  dispose  of  the
writ petition expeditiously.
24.   In the meantime, the District  Collector  by  its  notice  dated  22nd
August, 2005, directed the  Company  to  refund  certain  amount.  The  said
notice was also challenged by the Company.
25.   The High Court  by  judgment  and  order  dated  23rd  February,  2011
quashed the notice dated 22nd August, 2005 with direction to  the  appellant
to pay the compensation amount to the Company.  However,  it  was  clarified
that if the land, which have been acquired finally,  does  not  fall  within
the ceiling limit of the Company, then it will be  open  for  the  State  to
recover it after the finalisation of the ceiling proceedings,  as  per  law.
Subsequently, impugned common judgment and order dated 1st March,  2011  was
passed  in  Writ  Petition  No.31378/1996,  etc.,   with   observation   and
directions as referred to above.
26.   The grievance of the appellant-State is  that  the  High  Court  while
passing the impugned order has not noticed the  liability  incurred  by  the
undertaking and the loan paid to the Company. According  to  the  appellant,
the aforesaid issue has not been decided.
27.   On the other hand,  learned  counsel  for  the  respondents  made  the
following submissions:
(i)   No amount, whatsoever, is due  and  payable  by  the  Company  to  the
State. Till date, there has not been a single determination/adjudication  by
any Court/Authority of any dues against the Company nor is there  any  claim
pending before any Authority or before any Court, on date. Furthermore,  the
State has  not  been  able  to  produce  any  recovery  certificate  of  any
department showing any dues against the Company.
(ii)  The Collector has no power to  adjudicate  the  dues  under  the  U.P.
Zamindari Abolition and Land Revenue Act and is merely a recovery  agent  to
recover sums payable as arrears of land revenue, upon  receipt  of  a  valid
Recovery Certificate.

28.   We have  heard  learned  counsel  for  the  parties  and  perused  the
records.
29.   It is not in dispute that the Company was under heavy  arrears  as  on
3rd January, 1977. Therefore, the District Collector, Meerut  appointed  the
Receiver. Subsequently, Sugar Mill of  the  Company  was  acquired  on  28th
October, 1984 under Sugar Undertakings Acquisition Act, 1971  and  the  unit
was vested with the U.P. State Sugar Corporation.
30.    Till  28th  November,  1984,  the  Company  was  the  owner  of   the
units/Sugar Mill.  It was in  arrears  to  the  extent  of  Rs.1.29  crores.
Therefore,  the  District  Collector,   Meerut   attached   remaining   five
constituent units and the General Manager of the sugar  unit  was  appointed
as a Receiver. In between 1979 and 1984, the  State  Government  extended  a
facility of loan to the extent of Rs.6.13 crores to the  Receiver  appointed
by the State Government for smooth functioning of the Sugar Mill,  including
payment of dues to sugarcane grower, repairing  of  machinery,  etc.  It  is
also not in dispute that labour and other dues were payable by  the  Company
apart from Sale Tax dues and the loan was  given  by  the  State  Government
between 1977-1984 for payment of such dues.
31.   The High Court by the impugned judgment dated 1st March, 2011,  though
noticed the aforesaid facts including the fact  that  the  Collector,  Tulsi
Gaur by order dated 20th February, 1992 held that there were dues  of  about
Rs.10.44 crores payable by the Company, part of which can be  adjusted  from
the compensation amount paid  by  the  Meerut  Development  Authority,  even
thereafter an amount of Rs.6.09 crores will remain payable by  the  Company,
but the High Court failed to address  such  issue.  The  High  Court  though
noticed that Section 8 of the  U.P.  State  Sugar  Undertakings  Acquisition
Act, 1971 empowers the prescribed authority to decide any dispute  regarding
the amount payable  to  any  person  or  authority  in  respect  of  earlier
liabilities of the undertaking, but it wrongly held  that  in  view  of  the
provisions  of  the  U.P.  Sugar  Undertakings  Acquisition  Act,  1971  any
liability incurred by the Company or loan etc. taken by the receiver is  not
payable by the Company.
32.   It is always open to the competent authority to seek recovery  of  the
amount if due from the Company or to adjust the dues.
33.   The Collector, Tulsi Gaur was not a party by  name.  The  order  dated
20th February, 1992 passed by the Collector was also  not  under  challenge,
inspite  of  the  same  the  High  Court  declared  the  order  dated   20th
February,1992 as illegal.
34.   For the reason aforesaid, the impugned order  dated  1st  March,  2011
passed by the High Court in W.P. No.10220 of 1996  etc.  cannot  be  upheld.
The same is accordingly set aside. The matter is remitted  to  the  District
Collector, Meerut to determine the liability of the Company  upto  the  date
of vesting i.e.  28th  October,  1984  after  notice  to  the  parties.  The
authority while so determining shall take into consideration  the  liability
of the Company as on 28th October, 1984,  including  labour  charges,  Sales
Tax, loan amount given by  the  State  Government  etc.  if  payable.  After
determination of liabilities and adjustment of the dues which is payable  by
the Company, if any amount is found payable to the  Company,  the  appellant
shall pay the amount within four months from the date of  determination.  On
the other hand,  if  any  amount  is  found  payable  by  the  Company,  the
Competent authority may recover the amount, in accordance with law.
C.A.No.7122 of 2003, C.A.Nos.7123-7124 of 2003 and C.A.No.7125 of 2003.

35.    For determination of the issue involved in  C.A.  Nos.7122  of  2003,
7123-7124 of 2003, 7125 of 2003  and  7126-7129  of  2003  relevant  factual
matrix of the case is as follows:
      After giving credit of Rs.4.33 crores payable by the State  Government
on account of amounts towards compensation  for  acquisition  of  land,  the
liability of the Company was determined at Rs.6.09 crores on 20th  February,
1992. A sale proclamation was accordingly issued. The land  of  the  Company
measuring 1.391 Hectares  in  village  Maliyana  was  put  to  auction.  The
appellants-M/s.  Rudra  Estate  Pvt.  Ltd.  and  another  were  the  highest
bidders. According to Auction purchasers, the entire amount was paid as  per
highest bid. Title to the land was also transferred in their favour.

36.   The Company being aggrieved preferred  a  Civil  Misc.  Writ  Petition
No.16451  of  1999  before  the  High  Court  of  Judicature  at   Allahabad
challenging the sale proclamation dated 28th March, 1992, order  dated  30th
May, 1992 passed by Sub-Divisional Magistrate, Meerut  confirming  the  sale
of the properties owned by the Company and the order dated 5th  April,  1999
passed by the Commissioner, Meerut Division, Meerut whereby  the  objections
filed by the Company under  Rule  285-1  of  the  Rules  framed  under  U.P.
Zamindari Abolition and Land Reforms Act (hereinafter  referred  to  as  the
“Land Reforms Act”) was rejected. The said writ petition was allowed by  the
learned Single Judge by the impugned judgment and order  dated  27th  April,
2001 with following observations:

      “For the facts and reasons stated above, this  petition  succeeds  and
is hereby allowed. The order dated  05.04.1999  (annexure-23),  order  dated
30.05.1992 (Annexure-7), sale proclamation dated 28.3.1992 (Annexure-2)  are
hereby quashed and the respondents are directed to restore back  status  quo
ante as on before the auction sale  dated  28.04.1992  was  held,  within  a
period of two weeks from  the  date  a  certified  copy  of  this  order  is
communicated to the competent authority.”



37.   M/s. Rudra Estate Pvt. Ltd.  being  aggrieved  by  the  said  judgment
preferred review application under Order XLVII Rule 1 CPC for review of  the
judgment and order dated 27th April, 2001 passed  by  the  High  Court.  The
review application was disposed of by an order  dated  3rd  September,  2001
with the following observations:

      “In view of the aforesaid facts and circumstances, in my  opinion,  it
will meet the  ends  of  justice  if  I  grant  three  months  time  to  the
respondent no.2 and 3 to refund  the  amount  in  question  to  the  auction
purchasers/application, during this time the said  amount  shall  positively
be paid to them. It is ordered accordingly.”



      Another application was filed by M/s. Rudra  Estate  Pvt.  Ltd.  under
Order XIVII Rule 1 CPC for review of the order dated  3rd  September,  2001.
The said review application was dismissed by  the  impugned  judgment  dated
15th March, 2002.

38.   The aforesaid orders have been challenged  in  C.A.  No.7122  of  2003
(M/s. Rudra Estate Pvt. Ltd. & Anr. vs. M/s.  Jaswant  Sugar  Mills  Ltd.  &
Ors.), C.A. Nos. 7123-7124 of 2003, C.A.  No.7125  of  2003  (Shri  Munindra
Singh & Anr. vs. M/s. Jaswant Sugar Mills Ltd. & Ors.)  and  C.A.  Nos.7126-
7129 of 2003 (Commissioner, Meerut Division, Meerut vs.  M/s  Jaswant  Sugar
Mills Ltd.).

      On 30th October, 2002 C.A. No.7122 of 2003  preferred  by  M/s.  Rudra
Estate Pvt. Ltd. was taken up and this Court passed the following order:

      “Delay condoned.

      Out of the 3 special leave petitions, the only special leave  petition
which we find worth being entertained,  after  hearing  the  learned  senior
counsel for the petitioners, is as against the order dated 15.3.2002.  Issue
notice to respondents No.2 to 4 only limited to the question as to  why  the
amount directed to be refunded to the petitioner should not bear  reasonable
interest. Dasti service in addition is permitted.

      The other two special leave petitions are dismissed.”



      On 24th January, 2003, C.A. Nos. 7123-24 of  2003  preferred  by  Shri
Munindra Singh & Anr. were taken up and  this  Court  passed  the  following
order:

      “Delay condoned .

      Permission to file the Special Leave Petition is granted.

      After  hearing  the  learned  counsel  for  the  petitioners,  we  are
satisfied that no fault can be found with the impugned judgment of the  High
Court so far as the setting aside of the sale is concerned.

      The learned counsel for the petitioners invites our attention  to  the
Order dated 20.10.2002 (page  94C  of  the  Paper  Book).  Issue  notice  to
respondent nos.1 to 4 limited to the question as to  why  the  amount  which
will be directed to be refunded to the petitioners  herein  consequent  upon
the sale having been set aside should not bear reasonable interest.

      Tag with SLP(C)No.21540/2002.”



39.    As against the  said  order  C.A.  Nos.  7126-29/2003  (Commissioner,
Meerut Division, Meerut & Ors. Vs. M/s. Jaswant Sugar Mills Ltd.) have  been
preferred by  the Commissioner, Meerut Division, Meerut. The said  case  was
also tagged with the aforesaid appeals.

40.   In view of the fact that this Court vide order dated 27th April,  2003
in C.A. Nos. 7123-7124 of 2003 held that this Court  is  satisfied  that  no
fault can be found with the impugned judgment of the High Court  so  far  as
the setting aside of the sale is concerned, we dismiss the appeals,  so  far
it relates to cancellation of auction sale.

41.   We have heard the parties only on the limited question as to  why  the
amount which has been directed to be refunded  to  the  auction  purchasers-
appellants herein should not bear reasonable interest.
42.   In a situation like in the  present  case,  one  cannot  hold  of  any
statute entitling the auction purchasers to  claim  interest,  in  case  the
auction got cancelled or set aside by the Court  of  law.  Counsel  for  the
parties also could not refer any  of  the  clauses  of  auction  prescribing
interest on refund of amount in case of cancellation  of  auction  or  sale.
The question arises as to whether in such a situation an  auction  purchaser
can claim interest on equitable ground.
43. In State of Maharashtra and others vs. Maimuma Banu and  others,  (2003)
7 SCC 448, the question arose as to whether interest was payable  on  rental
compensation. In the said case, Government resolution provided  for  payment
of rental compensation expeditiously  but  no  provision  was  made  to  pay
interest in case of delayed payment. This Court in the said case held:

“10. The crucial  question  is  whether  there  can  be  any  direction  for
interest on rental compensation once it is held that  the  same  has  to  be
paid within the time frame,  notwithstanding  the  fact  that  there  is  no
statutory obligation.

11. It is not in dispute that in certain cases payments  have  already  been
made. Though the inevitable  conclusion  is  that  the  High  Court  is  not
justified in directing grant of interest on the logic of various  provisions
contained in the Act, yet there is an element of equity  in  favour  of  the
landowners. It is, however, seen that the writ applications were filed  long
after the possession was taken. This factor cannot be lost  sight  of  while
working out the  equities.  It  would,  therefore,  be  appropriate  if  the
appellants pay interest @ 6% from 1-4-2000 till amounts  payable  as  rental
compensation are paid to the landowners concerned. This direction shall  not
apply to those cases where the payments have already been made prior to 1-4-
2000. Appeals are allowed to the extent indicated  without  any  stipulation
of costs.”

44.   In the present case, we find that there was no  mis-representation  on
the part of the auction purchasers; they deposited the total auction  amount
within the time stipulated. It has not been in dispute  that  the  title  of
the land  was  also  transferred  in  their  favour.  But  for  the  reasons
mentioned by the High Court  the  sale  has  been  cancelled.  It  has  been
ordered to refund amount in favour of  the  auction  purchaser-appellant(s).
We find no reason as to why on equitable grounds the appellants  should  not
get interest on the said amount. Taking  into  consideration  the  aforesaid
factor while working out equities, it would, therefore,  be  appropriate  to
direct the State to pay interest at the rate of  6%  on  the  amount  to  be
refunded as per the High Court’s order with effect  from  27th  April,  2001
and 3rd September, 2001, the day, the High Court passed the impugned  order.
The concerned respondents are directed accordingly.
45.   C.A. Nos. 6169-6171 of 2013, C.A. Nos. 6172-6174 of 2013,  C.A.No.7122
of 2003, C.A.Nos.7123-7124 of 2003,  C.A.No.7125  of  2003  are  allowed  in
terms of the directions as above. The appeals  (C.A.Nos.7126-7129  of  2003)
filed by the Commissioner, Meerut are dismissed. No costs.

                                              ……………………………………………………………………….J.
                                      (SUDHANSU JYOTI MUKHOPADHAYA)



                                              ……………………………………………………………………….J.
                                            (KURIAN JOSEPH)

NEW DELHI,
JUNE 30, 2014.


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