# Union of India and others v. Smt Mithauli Devi

- **Citation:** (2007) 2 ILRA 559
- **Court:** High Court of Judicature at Allahabad
- **Decided:** 2007-06-11
- **Bench:** Dr. B.S. Chauhan, Sudhir Agarwal
- **Source:** https://unisonlegal.in/judgment/allahabad-high-court/union-of-india-and-others-v-smt-mithauli-devi-40936
- **Pages:** 4

## Headnote

Constitution of India-Art. 226-Payment
of Interest-amount withheld illegally-the
affected person to be compensatedpayment of interest is neither penality
nor punitive action but a compensation
for deprivation of principal amount be
awarded on equitable ground.

Held: Para 18

Thus, the law can be summarised that
the interest, being compensatory in
nature, should be awarded if it is
provided in the contract/agreement, or
the statutory provisions provide for it. It
may also be awarded on equitable
ground,
provided
the
facts
and
circumstances of the case justify it and
the law does not prohibit it.
Case law discussed:
AIR 1997 SC-3559
1998 (3) SCC-376
AIR 1938 P.C.-67
AIR 1961 SC-908
AIR 1975 SC-1303
560 INDIAN LAW REPORTS ALLAHABAD SERIES [2007
AIR 1987 SC-2257
AIR 1999 SC-3027
AIR 1999 SC-2963
1994 (2) SCC-240

## Text

2 All] Union of India and others V. Smt. Mithauli Devi
559
10. As such it is clear that an order
of compulsory retirement cannot be
imposed as a punitive measure or as a
short cut measure to avoid departmental
enquiry. The same can be passed for valid
reasons after taking into account the
confidential records which may include
uncommunicated
entries
also.
The
purpose of the same is to chop off the
dead wood but cannot be done without
having due regard to the entire service
record of the officer.

11. In the present case it is not
denied by the respondents that the
confidential reports of the petitioner
contained entries of good, very good and
excellent. It has also not been denied that
the petitioner is physically fit to discharge
duties as Sub Inspector of Police. The fact
that the petitioner has already been
exonerated in the vigilance enquiry is also
not denied. As such, passing of the
impugned order of compulsory retirement
of
the
petitioner
in
the
aforesaid
circumstances is nothing but an act which
suffers from perversity, as it is clear that
the said order has been passed on
extraneous considerations and not on the
basis of the relevant service record and
other material on perusal of which a
rational
mind
may
conceivably
be
satisfied that compulsory retirement of the
officer concerned was necessary in public
interest.

12. Accordingly, for the foregoing
reasons, the impugned order by which the
petitioner has been compulsorily retired,
deserves to be set aside.

13. This writ petition, thus, stands
allowed. The impugned order dated
7.2.2002 passed by Deputy Inspector
General
of
Police,
Bareilly
Range,
Bareilly, Respondent no.2 is quashed. The
petitioner
shall
be
entitled
to
all
consequential benefits. No order as to
cost.
---------
ORIGINAL JURISDICTION
CIVIL SIDE
DATED: ALLAHABAD 11.06.2007

BEFORE
THE HON'BLE DR. B.S. CHAUHAN, J.
THE HON'BLE SUDHIR AGARWAL, J.

Civil Misc. Writ Petition No. 26910 Of
2007

Union of India and others ...Petitioners
Versus
Smt Mithauli Devi
...Respondent

Counsel for the Petitioner:
Sri Piyush Mishra

Counsel for the Respondent:

Constitution of India-Art. 226-Payment
of Interest-amount withheld illegally-the
affected person to be compensatedpayment of interest is neither penality
nor punitive action but a compensation
for deprivation of principal amount be
awarded on equitable ground.

Held: Para 18

Thus, the law can be summarised that
the interest, being compensatory in
nature, should be awarded if it is
provided in the contract/agreement, or
the statutory provisions provide for it. It
may also be awarded on equitable
ground,
provided
the
facts
and
circumstances of the case justify it and
the law does not prohibit it.
Case law discussed:
AIR 1997 SC-3559
1998 (3) SCC-376
AIR 1938 P.C.-67
AIR 1961 SC-908
AIR 1975 SC-1303
560 INDIAN LAW REPORTS ALLAHABAD SERIES [2007
AIR 1987 SC-2257
AIR 1999 SC-3027
AIR 1999 SC-2963
1994 (2) SCC-240

(Delivered by Hon'ble Dr. B.S. Chauhan, J.)

1. This writ petition has been filed
against the judgment and order dated
24.11.2006,
passed
by
the
Central
Administrative
Tribunal,
Allahabad
Bench, by which the learned Tribunal has
allowed the interest on the amount
withheld unjustifiedly by the present
petitioner, Union of India for a period of 9
years.

2. Shri Piyush Mishra, learned
counsel for the petitioners has submitted
that the finding has been recorded by the
learned
Tribunal
in
the
impugned
judgment that the ex gratia payment from
July, 1995 to June, 2004, i.e., for a period
of 9 years has been withheld without any
justification. Therefore, interest on the
said amount was not payable. Learned
counsel for the petitioners has further
submitted that the amount of ex gratia
payment to the respondent was illegal, as
her deceased husband was not entitled for
pension, and therefore, the impugned
judgment and order is liable to be set
aside. It is further submitted by Shri
Mishra that though this issue has never
been agitated by the petitioner before the
Tribunal, the issue being the pure
question of law, he is entitled to agitate
the same before this Court.

3. The case represents a very sorry
state of affairs, as earlier the respondent
had approached the Tribunal for quashing
the impugned orders dated 02.08.1999
and 24.02.2003 by filing the Original
Application No. 768 of 2003, by which
she had been denied the ex gratia
payment,. The said Application was
disposed of vide judgment and order
dated 8th January, 2004. The Tribunal
while deciding the case had taken note of
the fact that during the pendency of the
Application, the payment of the ex gratia
had been directed and the said application
was disposed of with the following
directions.

"Now that the respondent has already
taken a decision to grant ex gratia
payment to the applicant in accordance
with law, Office Memorandum dated
13.05.1988, I am sure they would apply
their mind to the point of delay also and
in case it is so admissible under law, she
may be granted the interest as well at
admissible rates in accordance with law."

4. Thus, it is evident from the
aforesaid judgment and order that the
issue of grant of ex gratia payment had
been
decided
by
the
petitioners
themselves and it has not been decided by
the Tribunal. Therefore, the issue agitated
before us cannot be entertained.

5. So far as the impugned order
dated 24th November, 2006 is concerned,
admittedly, there was a delay of 9 years in
making the ex gratia payment, which the
respondent was entitled in view of the
decision
taken
by
the
petitioners
themselves. In the facts and circumstances
of the case, direction for making the
payment of interest is justified.

6. Interest is compensatory in
character and can be recovered for
withholding the payment of any amount
when it is due and payable. It is different
from
penalty
and
tantamount
to
compensation as the person entitled for
2 All] Union of India and others V. Smt. Mithauli Devi
561
recovery has been deprived of the right to
use the said amount.

7. In Associated Cement Co. Ltd.
Vs. Commercial Tax Officer, Kota &
Ors., AIR 1981 SC 1887, the Hon'ble
Apex Court held as under:-

"Interest is ordinarily claimed from
an assessee who has withheld payment of
any tax payable by him and it is always
calculated at the prescribed rate on the
basis of the actual amount of tax withheld
and the extent of delay in paying it. It may
not be wrong to say that such interest is
compensatory in character and not penal."

8. A similar view has been reiterated
in Baij Nath Gupta Vs. State of Bihar &
Ors., (1996) 10 SCC 297; S.R. Bhanrale
Vs. Union of India & Ors (1996) 10 SCC
172 ; Pratibha Processors & Ors. Vs.
Union of India & Ors., (1996) 11 SCC
101; Union of India Vs. Ujagar Lal (1996)
11 SCC 116 & Om Prakash Gargi Vs.
State of Punjab (1996) 11 SCC 399.

9. In Abati Bezbaruah Vs. Deputy
Director General, Geological Survey of
India & Anr., (2003) 3 SCC 148, the
Hon'ble Apex Court held that interest is a
compensation
for
forbearance
from
detention of money and that interest being
awarded to a party only for being kept out
of the money which ought to have been
paid to him.

10. Interest means, inter-alia, a
compensation paid by the borrower to the
lender for deprivation of the use of his
money as held by Hon'ble Apex Court in
Consolidated Coffee Ltd. Vs. Agricultural
Income Tax Officer, Madikeri & Ors.,
(2001) 1 SCC 278; and Central Bank of
India Vs. Ravindra & Ors., AIR 2002 SC
3095.

11.

In
Secretary,
Irrigation
Department, Government of Orissa &
Ors. Vs. G.C. Roy, AIR 1992 SC 732, the
Constitution Bench of the Hon'ble Apex
Court observed that a person deprived of
use of money to which he is legitimately
entitled as of right, to be compensated for
the deprivation, call it by any name. It
may be called interest, compensation or
damages.

12. The payment of interest can be
awarded by application of the statutory
provisions as held by the Supreme court
in Mafatlal Industries Ltd. Vs. Union of
India & Ors., (1997) 5 SCC 536; Kuil
Fireworks Industries Vs. Collector of
Central Excise & Anr., AIR 1997 SC
3559; and GTC Industries Ltd. Vs. Union
of India & Ors., (1998) 3 SCC 376.

13. Interest may also be awarded on
equitable grounds. (Vide Bengal Nagpur
Railway Co. Ltd. Vs. Ruttanji Ramji &
Ors., AIR 1938 PC 67; Satinder Singh Vs.
Umrao Singh & Anr., AIR 1961 SC 908;
Laxmichand Vs. Indore Improvement
Trust, AIR 1975 SC 1303; D.P. Gupta Vs.
Union of India & Ors., AIR 1987 SC
2257; United India Insurance Vs. Ajmer
Singh Cottan & General Mills & Ors.,
AIR 1999 SC 3027; and Sovintorg (India)
Ltd. Vs. State Bank of India, AIR 1999
SC 2963).

14. That payment of interest is
obligatory on the part of that party
responsible for withholding the amount
legally due to another party is crystallized
as law by the Apex Court in the case of
Union
of
India
Vs.
Justice
S.S.
562 INDIAN LAW REPORTS ALLAHABAD SERIES [2007
Sandhawalia (1994) 2 SCC 240, as
already cited above.

15. When rules are silent about
payment of interest, whether an individual
is entitled to grant to interest on equity
basis? Answer to this question is available
in Union of India Vs. J.K. Goel (Dr) 1995
Supp (3) SCC 161.

16. In J.K. Synthetics Ltd. Vs.
Commercial Taxes Officer, AIR 1994 SC
2393, the Constitution Bench of the
Hon'ble Apex Court overruled its earlier
judgment in Associated Cement Ltd.
(supra) on certain points but observed as
under:-

"Therefore, any provision made in a
Statute for charging or levying interest on
delayed payment of tax must be construed
as a substantive law and not adjectival
law."

17. In Union of India & Ors. Vs.
Upper Ganges Sugar Industries Ltd.,
(2005) 1 SCC 750, after considering
various aspects of interest, the Court held
that the interest can be granted on the
grounds of equity or in view of the
statutory requirement but where the
amount has not been withheld without any
justification, the equity would not apply.
The Court held that in absence of any
provision in the contract or any statutory
provision and not justifying on equity, the
interest should not be awarded.

18.

Thus,
the
law
can
be
summarised that the interest, being
compensatory
in
nature,
should
be
awarded
if it is
provided
in the
contract/agreement,
or
the
statutory
provisions provide for it. It may also be
awarded on equitable ground, provided
the facts and circumstances of the case
justify it and the law does not prohibit it.

19. If the instant case is examined in
the aforesaid settled legal propositions,
the case does not present special features
warranting any interference with the
impugned judgment and order of the
learned Tribunal.

20. Petition is totally misconceived
and accordingly dismissed.
---------
ORIGINAL JURISDICTION
CIVIL SIDE
DATED: ALLAHABAD 18.05.2007

BEFORE
THE HON'BLE V.M. SAHAI, J.
THE HON'BLE SABHAJEET YADAV, J.

Civil Misc. Writ Petition No. 12656 of 1999

Shyam Narain Tewari
...Petitioner
Versus
State of U.P. and others ...Respondents

Counsel for the Petitioner:
Sri Ashok Khare
Sri Mahendra Bahadur Singh

Counsel for the Respondents:
Sri M.A. Qadeer
Sri Niraj Upadhyaya
Sri Pushpendra Singh
S.C.

(A) U.P. Public Services (Reservation of
Physically Handicapped Dependents of
Freedoms Fighters of Ex-Servicemen)
Amendment Act 1997-Reservation for
Physically Handicapped persons-Post of
Child
Development
Project
Officer
advertised on 31.12.97-providing 2%
reservation-while
amendment
Act
become effective from 31.7.97-petitioner
and one Mr. Anil Kumar secured 599
marks under P.H. Quota Mr. Anil Kumar