Interest on sanctioned rebate accrues from wrongful appropriation until actual payment under the Ranbaxy Laboratories principle.

Interest was payable on a sanctioned rebate amount that had been wrongly appropriated earlier, because the rebate claim had already attained finality and the withholding was unsustainable. Applying the principle in Ranbaxy Laboratories Ltd., interest accrues from the date after expiry of the prescribed period until the date of refund or payment where the amount remains unpaid after becoming due. The appellants were therefore entitled to interest from the date of appropriation until actual payment.

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Issues: Whether the appellants were entitled to interest on the sanctioned rebate amount from the date of appropriation till the date of actual payment.

Analysis: The rebate claim had already attained finality and the earlier appropriation was held to be erroneous. In such circumstances, the denial of interest on the amount withheld was unsustainable. The issue was covered by the principle applied by the Supreme Court in Ranbaxy Laboratories Ltd., under which interest becomes payable from the date after expiry of the prescribed period until the date of refund payment.

Conclusion: The appellants were entitled to interest from the date of appropriation till the date of actual payment.

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