The Supreme Court of India has held that any amount of money which has been received and kept without a legal right to do so, bears interest, and that the government should compensate people for the use of their money. The Delhi government has been ordered to pay the interest on the refund of ₹28.1 lakh to a couple who had lost their e-stamp paper, which they had bought in 2016 to purchase a house and use for other purposes. The ruling was given in February this year, by a bench of justices JB Pardiwala and R Mahadevan. This was after the court directed the Delhi government to compensate the man with a disability, Pradeep Kumar, with interest on the refund of the ₹7.42 lakh he paid to buy a handicapped friendly vehicle, which was faulty. The judgment clarifies that even in the absence of an express statutory provision for paying interest on refunds, the state and its departments must reimburse the money of the real owner together with the interest on the period of the money’s detention. This principle of restitution also continues to uphold the concept that individuals should not suffer the consequences of delayed refunds that are the government’s fault. The case was on former National Commission for Women chairperson and lawyer Poornima Advani and her husband Shailesh K Hathi, who bought an e-stamp paper for ₹28.1 lakh in 2016 to use for a property transaction in Delhi. However, due to delay in finalising our loan, our sale deed was also postponed and our broker told us that the stamp paper is lost. Our view is that this decision could have a broader impact, especially in connection with late refunds of amounts paid to government agencies, including tax authorities. Adv. Abhishek Gupta called the decision “a watershed decision” and said it will most probably be used in future taxation and government-related disputes. The Supreme Court in this case applied the doctrine of restitution to award interest without a provision of law for the same, which is a very useful tool in interpreting similar legislations that have no provision for interest. In this case, the court determined that the Delhi government should pay an interest of ₹4.35 lakh on the principal of ₹28.1 lakh and that it should be paid within two months.
Supreme Court Orders Delhi Government Pay Interest on Wrongly-Kept Money
