JSA successfully advised and represented Yamuna Expressway Industrial Development Authority (“YEIDA”) in proceedings before the Hon’ble High Court of Allahabad (“HC“) in writ proceedings challenging levy of interest on additional amounts demanded by YEIDA from its allottees towards cost of land. Relying on the principles of restitution, res judicata, and ‘interest in equity’, the HC dismissed the writ petitions and held that interest would be payable to YEIDA, even if it was not stipulated in the terms of allotment.
YEIDA’s principal demand of additional compensation (~USD 677 million) was earlier upheld by the Hon’ble Supreme Court (“SC“) in YEIDA v. Shakuntla(“Shakuntla – I“; reported as 2022 SCC OnLine SC 655), with the SC reasoning that the demand was in public interest and, thus, overrode private contracts. After the pronouncement of Shakuntla – I, the petitioners again approached the HC, this time contesting their liability towards interest on the amount of additional compensation. The petitioners argued that the levy of interest was supported neither by contract nor by law.
Agreeing with the submissions of YEIDA, the HC observed that the petitioners failed to pay additional compensation, despite the crystallisation of that liability in Shakuntla – I. Applying the doctrine of restitution, the HC held that the petitioners are liable to pay the interest for the entire period during which litigation challenging additional compensation remained pending. Further, it observed that the interest amount deserves to be paid as compensation for the period during which payment of YEIDA’s lawful dues were withheld.
The HC also applied the principle of ‘interest in equity’ and reiterated that interest would be payable to YEIDA in equity, even if not provided for under contract.
On the point of res judicata, the HC held that it was not open for the petitioners to challenge the levy of interest on additional compensation since they never raised this issue in their challenge to the principal demand, which culminated into the Shakuntla – I decision of the SC. The HC held that the petitioners cannot split their claims and vex YEIDA twice by first challenging the principal demand and, thereafter, separately challenging the levy of interest on it.
Our Disputes Team Comprised Lead Partner – Amar Gupta, Senior Associates – Aniket Aggarwal, Pranav Tanwar and Zain Maqbool and Associate – Abhay Pratap Singh.
Amar is amongst the founding members of JSA’s Disputes Practice. He has in past served as the Practice Chair and a member of the Firm’s Executive Committee.