Gujarat HC Sends Land Claimant’s Second Claim for Compound Interest on Temporary-Acquisition Compensation Back for Fresh Decision

The Reference Court’s award in a temporary-acquisition matter stated that the claimant was entitled to compensation with interest at 12% per annum.

In the first execution proceeding, the claimant calculated simple interest, and ONGC paid the amount claimed.

The claimant later filed a second execution proceeding seeking the balance on the basis of compounded interest.

ONGC objected, arguing that compounded interest was not awarded and that interest was not payable in a temporary-acquisition case.

The Executing Court rejected the objection, prompting ONGC’s petition under Article 226/227.

Section 47 of the Code of Civil Procedure requires the Executing Court to determine questions arising between the parties to the suit and relating to the execution, discharge, or satisfaction of the decree; the Court treated the challenge to the Reference Court’s authority to award interest as an issue for the Executing Court to consider

The judgment also noted the asserted principle that interest is not payable on compensation for temporary acquisition, but did not finally determine its application or cite supporting authority

The High Court found that the award did not clearly state that compounded interest was granted, notwithstanding the Executing Court’s reading of its operative portion.

It also noted that the claimant had sought and received simple interest in the first execution proceeding, and that the Reference Court had given no reasons for awarding 12% interest.

Because the objection raised a potentially jurisdictional question concerning the award of interest, the Executing Court had to decide it under Section 47 CPC.

The High Court declined to resolve that question itself and remitted it for fresh consideration after hearing the parties.

The High Court quashed the Executing Court’s order dated 31 March 2023 and remanded the objection for fresh decision in accordance with law.

The parties were permitted to file additional objections and replies; the Executing Court was directed not to be influenced by the High Court’s observations.

No order as to costs was made.