Compensatory interest on delayed counsel bills upheld, with payment directions applied to outstanding dues already cleared.

Administrative delay in processing counsel's bills could not justify dilution of the existing payment direction, because scrutiny and verification were already required to operate within the CBDT time framework. The request for modification or recall was rejected, and the Court held that streamlining internal processes was the proper response to delay, not extending timelines. It also held that interest on delayed clearance was not confined to future bills: the compensatory purpose of interest required payment on outstanding dues already cleared, without a separate claim from counsel. The earlier directions were therefore affirmed, and compliance with the interest-payment regime was required.

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Issues: (i) Whether the Department's request for modification or recall of the direction requiring prompt payment of counsel's bills with interest for delay was to be accepted. (ii) Whether the directions as to payment of interest on delayed clearance of bills were prospective only, or also covered outstanding amounts already cleared.

Issue (i): Whether the Department's request for modification or recall of the direction requiring prompt payment of counsel's bills with interest for delay was to be accepted.

Analysis: The Court held that the time taken at the Zonal Accounts Officer's end formed part of the payment process and could not justify dilution of the earlier direction. It observed that the steps in scrutiny and verification had to operate within the time limits already contemplated by the CBDT instructions, and that administrative delay could be reduced by streamlining and digitising the internal process rather than by extending timelines.

Conclusion: The request for modification or recall was rejected.

Issue (ii): Whether the directions as to payment of interest on delayed clearance of bills were prospective only, or also covered outstanding amounts already cleared.

Analysis: The Court held that the rationale for interest was to compensate counsel for delay and to incentivise prompt departmental action. On that basis, the understanding that the revised guidelines would operate only prospectively was held to be untenable. The Court directed that interest be paid on delayed bills in accordance with the earlier directions, without requiring a separate claim from the counsel.

Conclusion: The directions applied to the outstanding dues as well, and interest was directed to be paid.

Final Conclusion: The Court affirmed its earlier directions, declined to alter them, and required compliance with the interest-payment regime for delayed clearance of counsel's bills.

Ratio Decidendi: Administrative instructions governing bill processing must be applied so as to prevent avoidable delay, and where payment is delayed beyond the stipulated period, compensatory interest can be enforced to ensure prompt compliance and fairness to the recipient.

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