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.
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.
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.
