Governmental fund delays do not defeat entitlement to 15% interest on confiscated sale proceeds until payment.

The petitioner’s food grains were seized and confiscated in connection with a criminal case. After his acquittal was upheld by the appellate court, he filed CWJC No. 16462 of 2013 seeking refund of the sale proceeds of the confiscated food grains with interest.

The High Court disposed of that petition on 29 March 2016, permitting him to approach the Collector and directing the Collector to consider the claim in light of Gulab Chand Prasad v. State of Bihar, while also requiring the matter to be decided within two months.

Pursuant to that order, the petitioner approached the District Magistrate. The Collector directed payment of approximately ₹4,25,113/₹4,25,114 towards the principal sale proceeds. However, interest was calculated at only ₹2,18,064 for the period from 10 October 2003 to 5 June 2018, effectively amounting to approximately 3.5% per annum rather than 15% per annum.

The respondents stated that payment of interest had been delayed because the requisite Government funds had not been allocated, although several communications had been sent to the Food and Consumer Protection Department.

By a supplementary counter-affidavit, the respondents stated that the principal amount had been made available for payment, but the interest amount remained unpaid for want of fund allocation.

Whether the petitioner was entitled to interest on the sale proceeds of the confiscated food grains at the rate of 15% per annum in accordance with the earlier order of the High Court and the decision in Gulab Chand Prasad?

Whether the respondents could restrict the interest calculation to 5 June 2018 or avoid payment on the ground that funds had not been allocated by the concerned Government Department?

The Court applied the principle laid down in Gulab Chand Prasad v. State of Bihar & Others, 2010 (2) PLJR 316, that where a person whose property has been confiscated is acquitted in the criminal case and the acquittal is upheld in appeal, he is entitled to refund of the sale proceeds together with interest, assessed in that case at 15% per annum.

It further applied the binding direction in the petitioner’s earlier writ proceeding, CWJC No. 16462 of 2013, requiring the Collector to consider the claim in accordance with Gulab Chand Prasad.

The Court also applied the principle that administrative delay or inter-departmental correspondence concerning allocation of funds cannot defeat or postpone a legally recognised monetary entitlement.

The respondents admitted the petitioner’s acquittal and had accepted his entitlement to the principal sale proceeds. However, the Collector’s calculation of interest at approximately 3.5% per annum did not comply with the earlier High Court direction to consider and follow Gulab Chand Prasad, which recognised interest at 15% per annum.

The Court found no justification for limiting the interest period to 5 June 2018, particularly because the amount had not yet been paid and the delay was attributable to the Government’s internal process of fund allocation.

Since the petitioner could not be deprived of the benefit of the Court’s order due to administrative inaction, the interest had to be recalculated at 15% per annum and paid up to the date of actual payment.

The District Magistrate was directed to correspond with the higher authorities for allocation of the necessary funds, and the entire interest amount was directed to be paid to the petitioner within four months from receipt of the judgment.