Auction purchaser's claim to interest on refunded sale price upheld as compensation for loss of use of money.

An auction purchaser was treated as entitled to interest on the refunded sale price after the auction sale was set aside, because the claim arose only once the principal was ordered returned and the purchaser had neither obtained possession of the property nor enjoyed the use of the deposited funds. The court rejected the objection based on Order 2 Rule 2(2) CPC, treating the application as one for clarification rather than a barred fresh claim. Interest was recognised as compensation for deprivation of the use of money while the amount remained with the holder in fixed deposits.

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Issues: Entitlement of the auction purchaser to interest on the sale price refunded after the auction sale was set aside; applicability of Order 2 Rule 2(2) of the Code of Civil Procedure, 1908 and Section 34 of the Code of Civil Procedure, 1908 to bar the claim.

Analysis: The application was treated as one for clarification and not as a fresh claim barred by Order 2 Rule 2(2) of the Code of Civil Procedure, 1908, because the applicant had appeared as a respondent in the earlier proceedings and the right to claim interest arose only after the auction sale was quashed and the principal amount was directed to be refunded. The refunded money had remained in fixed deposits with the respondent-bank and the auction purchaser had neither received possession of the property nor enjoyed the use of the deposited funds. Interest was therefore treated as compensation for deprivation of the use of money, supported by the principle that interest may be awarded where money is retained and yields return to the holder.

Conclusion: The applicant was entitled to interest on the refunded auction purchase price, and the objection based on Order 2 Rule 2(2) of the Code of Civil Procedure, 1908 was rejected.

Ratio Decidendi: Where an auction sale is set aside and the purchaser has neither obtained possession nor enjoyed the money deposited, the purchaser is entitled to reasonable compensation in the form of interest on the refunded sale price for the period during which the money remained with the holder.

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