A pari passu charge-holder is entitled to reasonable interest on sale proceeds wrongfully withheld.

The petitioner and the Bihar State Financial Corporation (BSFC) had pari passu charges over the assets of Katihar Jute Mills Ltd.

After the borrower defaulted, BSFC received an aggregate of Rs. 2.30 crore from the purchaser of the secured assets but did not remit the petitioner’s proportionate share.

In an earlier writ proceeding, the High Court directed BSFC to pay the petitioner’s 59.36% share of the collections, subject to specified deductions and final quantification in a pending money suit.

BSFC paid Rs. 1,32,57,224 in September 2016, but no interest.

In the present proceeding, the petitioner sought interest for the period its share was withheld, as well as reimbursement of a claimed pro-rata share of expenses.

1. Whether the petitioner could pursue a claim for interest in a subsequent writ proceeding when the earlier proceeding directed payment of its principal share but did not decide the interest claim.

2. Whether the petitioner was entitled to interest on its withheld share of the sale proceeds, notwithstanding the pending money suit.

The Court relied on the distinction between the relief sought in the earlier proceeding—release of the principal share—and the present claim for interest, which the earlier judgment had neither adjudicated nor rejected.

It also applied the principle that, in the circumstances of this case, a party whose admitted proportionate entitlement to sale proceeds was withheld may be entitled to reasonable interest for the period of withholding.

The earlier judgment had recognized the petitioner’s pari passu charge and directed payment subject to deductions, final quantification in the money suit, and refund of any excess.

The Court found that the earlier writ proceeding concerned payment of the petitioner’s principal share and did not determine the separate claim for interest; therefore, payment of the principal did not bar the present claim.

Because BSFC had withheld the petitioner’s proportionate share until September 2016, the Court held that reasonable interest could not be denied merely because the principal was later paid.

The pending money suit did not preclude the interest claim, which remained subject to the earlier judgment’s terms, including repayment of any excess ultimately found due.

The Court did not specify the applicable rate or precisely determine the interest period; it directed BSFC to compute and pay interest legally payable.

The judgment does not separately determine the petitioner’s claimed reimbursement of expenses.