Compensation recipients must refund the amount with SBI fixed-deposit interest if rival title claims succeed.

The appellants challenged the judgment dated 25 August 2023 passed in C.W.J.C. No. 16994 of 2009 concerning compensation arising from Land Acquisition Case No. 11 of 2006–07.

During the appeal, the appellants stated that they had already received the compensation amount and expressed their willingness to furnish an indemnity bond before the District Magistrate, Bhojpur at Ara, undertaking to refund the amount if First Appeal No. 193 of 2019, filed by respondent No. 1 in relation to probate proceedings, was allowed in his favour.

The appellants further stated that First Appeal No. 777 of 1977, arising from proceedings connected with an order under Section 145 of the Code of Criminal Procedure and dismissed for default, would not be restored by them.

Respondent No. 1 sought clarification that any refund should include interest, particularly because the learned Single Judge had directed that the compensation amount be kept in a fixed deposit.

Whether the appellants could retain the compensation amount subject to furnishing an indemnity bond securing its refund if First Appeal No. 193 of 2019 was allowed in favour of respondent No. 1.

Whether the refund of compensation should include interest, and if so, at what rate and from what date.

Whether any further direction was required concerning First Appeal No. 777 of 1977, which had been dismissed for default.

The Court applied the principle that parties may, with their express consent, resolve the subject matter of an appeal through enforceable undertakings and consequential directions of the Court.

It further applied the compensatory principle that where money is required to be refunded after an adverse determination, the refund may include reasonable interest to preserve the value of the amount and compensate for its use.

Accordingly, the Court adopted the rate equivalent to the State Bank of India’s fixed-deposit rate, calculated from the date of the impugned judgment, 25 August 2023.

The appellants’ receipt of compensation created a potential obligation to restore the amount if respondent No. 1 succeeded in First Appeal No. 193 of 2019.

Since the appellants consented to securing that obligation through an indemnity bond, the Court accepted the proposed arrangement instead of requiring the compensation to remain blocked.

To address respondent No. 1’s concern regarding the loss of interest, the Court directed that any refund must include interest at a rate equivalent to the State Bank of India’s fixed-deposit rate from 25 August 2023, the date of the Single Judge’s judgment.

The Court also recorded the appellants’ statement that they would not seek restoration of First Appeal No. 777 of 1977.

If the appellants had received the compensation, they were directed to furnish an indemnity bond before the District Magistrate, Bhojpur at Ara, undertaking that, if First Appeal No. 193 of 2019 was allowed in favour of respondent No. 1, they would refund the entire compensation amount along with interest at the State Bank of India fixed-deposit rate, calculated from 25 August 2023.

The indemnity bond was required to be furnished within four weeks from the date of the judgment.