Section 3(3) Interest Act | Interest Is Payable On Principal Sum And Not On Interest Part Of The Award: Allahabad HC
|The Allahabad High Court observed that under Section 3(3) of the Interest Act, 1978 interest is payable on the principal sum and not on the interest part of the award.
The Court was hearing a Writ Petition seeking issuance of Writ to quash the impugned order passed by respondent no.1 and respondent no.2. It also sought directions to the respondents not to attach or seize the petitioners' bank account in connection with the impugned orders.
The bench of Justice Chandra Kumar Rai perused Section 3(3) of the Interest Act, 1978 and observed, “it is fully demonstrated that interest is payable on the principal sum and not on the interest part of the award.”
Advocate Nipun Singh appeared for the Appellant and Advocate Bal Mukund appeared for the Respondent.
Brief Facts-
In the present case, respondent No. 3 was allotted a house under the Dev Prayagam Scheme after which he deposited a certain amount with the authorities and sought possession, but it was informed that due to incomplete costing, the sale deed and possession were delayed. Respondent No. 3 requested a refund, which was issued. The Court ordered 15% interest after he filed a complaint seeking 18% interest. The Court issued a recovery certificate while dismissing Petitioner’s Appeal. Further revisions by the Petitioner were also dismissed, including by the National Consumer Disputes Redressal Commission in 2021.
The Court said, “the Consumer Forum has already ordered for interest at the rate of 15% from the date of deposit till the date of final payment, as such further order for interest on interest by issuing recovery certificate against the petitioner is wholly illegal.”
The Court relied on the decision in D. Khosla and Company v. Union of India (2024) where according to the Court SC has held, “interest is payable on the principal sum adjudged and not in the interest part of the award.”
Accordingly, the Court set aside the impugned orders.
The Court allowed the Writ Petition.
Cause Title: Uttar Pradesh Avas Evam Vikas Parishad And Another v. State Consumer Disputes Redressal Commission And 2 Others