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M/s. Domco Smokeless Fuels Pvt. Ltd. vs. The State of Jharkhand & Ors.

Not available · 2024 INSC 133Decided 22 Feb 2024
Not available
Justice B.R. Gavai · Justice Sandeep Mehta

Background

The appellant company had paid more than the officially notified price to lift coal consignments through an e-auction, and, like many similarly placed companies nationwide, sought a refund of the excess amount. Earlier Supreme Court orders (in related cases) had directed that such excess amounts be refunded with 12% annual interest. Despite this, and despite a Jharkhand High Court order directing refund with interest, the coal company authorities only paid a partial refund and applied a much lower bank interest rate of 3.5% instead of 12%, and left a further period's refund unpaid entirely. When the appellant filed a contempt case over this non-compliance, the High Court's Single Judge dismissed it in 2016, prompting this appeal.

Decision Breakdown

The Supreme Court allowed the appeal, holding that the Single Judge had ignored a binding 2010 Supreme Court order that had already concluded the appellant's entitlement to refund for the disputed period, and had wrongly treated an unrelated pending case (from Calcutta High Court) as a reason to withhold relief. It held that the coal company respondents had failed to faithfully comply with both the High Court's and the Supreme Court's own earlier directions to pay 12% interest, having instead unilaterally applied a lower bank rate of 3.5%. The Court directed that the appellant be paid interest at 12% per annum (adjusted for the 3.5% already paid) on the refund for the earlier period, and also be paid the still-outstanding refund with 12% interest for a later period, all within two months, warning that responsible officers would be made personally liable for the interest if not paid on time.

Lesson Learnt

When a court has already fixed the rate of interest or the terms of compliance in an earlier order, a government body or company cannot unilaterally substitute a lower rate or partial compliance and expect that to be treated as satisfying the court's direction: full compliance with the exact terms ordered is required, and officers can be held personally accountable for delay.

Official source (sci.gov.in)View Judgment (PDF)

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