Levy Of Additional Compensation Noble: Allahabad HC Upholds Levy Of Penal Interest On Unpaid Additional Compensation During Pending Litigation

The Allahabad High Court has upheld the levy of penal interest by the Yamuna Expressway Industrial Development Authority on additional compensation which was not paid by the petitioner during the pendency of litigation.The Court held that “The interest acts as compensation for the period during which the petitioner was unjustly enriched by withholding the lawful dues owed to YEIDA. Interest on the additional compensation can be claimed by YEIDA as part of equitable restitution, given that the petitioner benefited from the interim relief granted during the litigation. The Principle of restitution is founded on the ideal of complete justice, entitling the successful party to compensation, including interest, for the period it was deprived of its lawful dues.”The bench comprising Justice Mahesh Chandra Tripathi and Justice Anish Kumar Gupta said that the object behind imposing additional compensation is “very noble and laudable and it has a larger public purpose to achieve by not burdening the court with repeated proceedings.”It was held that once the Government order which provided the levy of additional compensation and penal interest in case of default of payment had been upheld by the Supreme Court in Yamuna Expressway Industrial Development Authority etc. v. Shakuntala Education and Welfare Society & Ors, the petitioner could not challenge the levy of interest which was provided for the Government order.Factual BackgroundThe land was acquired by the State Government in District Gautam Budh Nagar for public purposes. Yamuna Expressway Industrial Development Authority (YEIDA) allotted land in favour of various persons/ companies/ societies. Petitioner is one such society which was allotted 50 acres of land on Yamuna Expressway, Gautam Budh Nagar. A lease for instituted for 90 years and eventually Galgotias University was constructed over the plot. Large-scale acquisitions were made in the State and lands were handed over to New Okhla Industrial Development Authority (NOIDA) and Greater Noida Industrial Development Authority(GNIDA) for development. Farmers whose lands were acquired approached the High Court seeking additional compensation for their lands, which was granted in Gajraj v. State of U.P. at the rate of 64.7% and was later affirmed by the Supreme Court in Savitri Devi v. State of Uttar Pradesh. Since the orders were passed only with respect to land under NOIDA and GNIDA, the farmers whose land fell under YEIDA also demanded similar treatment. In 2013, the Chaudhary Committee recommended that an additional amount of 64.7% be paid to the farmers as “no litigation incentive” by YEIDA and a proportional amount be recovered from the allottees. A Government Order was issued in 2014 directing YEIDA to make payments, which was approved in the 51st Board meeting of YEIDA. Consequently, YEIDA issued notices to allottees, including petitioners, demanding additional compensation at the rate of 600/sqm. It was stated that the entire additional compensation is to be paid in 4 installments else interest will be levied. The notices were challenged before the High Court and were quashed including the Government Order of 2014. However, the decision of the Allahabad High Court was overturned by the Supreme Court in appeals filed by YEIDA in Yamuna Expressway Industrial Development Authority etc. v. Shakuntla Education and Welfare Society & Ors. Subsequently, YEIDA issued fresh notices to the petitioner including liability of interest due to default in payments while litigation was pending. These notices were again challenged before the High Court on grounds that 64.7% of compensation demanded from the allottees was in excess of what was actually paid by YEIDA and the levy of interest on additional compensation had no statutory force. It was also argued that YEIDA was being unjustly enriched by the demands being raised against the allotees. High Court VerdictIn Yamuna Expressway Industrial Development Authority etc. v. Shakuntala Education and Welfare Society & Ors, the Supreme Court had upheld the policy decision of the State Government in the public interest as the acquisitions were never challenged, and due to the stay orders in various writ petitions, residential projects were being stalled. The bench headed by Justice Tripathi held that once the Government Order and subsequent board meeting of YEIDA, imposing additional compensation as well as interest and penalty upon non-payment of additional compensation within the stipulated time, had been upheld by the Supreme Court, YEIDA was bound to enforce the policy. “We also find that the petitioner's attempt to contest the additional compensation and the associated levy of interest through repeated litigation is to be seen in the light of these constitutional provisions. Moreover, once the Supreme Court had validated the Government Order in question as well as the Board Resolution in question, therefore, the duty is cast upon YEIDA to enforce the Government Order in...

Levy Of Additional Compensation Noble: Allahabad HC Upholds Levy Of Penal Interest On Unpaid Additional Compensation During Pending Litigation

Upasna Agrawal

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Levy Of Additional Compensation Noble: Allahabad HC Upholds Levy Of Penal Interest On Unpaid Additional Compensation During Pending Litigation

Upasna Agrawal

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