Supreme Court Upholds Order Protecting Compensation & TDS Refund with Bank Account Restrictions

The Supreme Court reinstated the Single Judge's order, emphasizing the protection of the entire compensation amount, including the TDS refund. The respondents were directed not to operate bank accounts without securing a specified amount and were restricted from withdrawing a fixed deposit without court permission. The Court highlighted that utilizing the refund without permission violated the order and modified the Division Bench's decision, emphasizing the need to safeguard the compensation amount.

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Issues Involved:
1. Violation of the order dated 23.02.2011 regarding the deposit of compensation money.
2. Legitimacy of the respondents' utilization of the Income-Tax refund.
3. Interference by the Division Bench with the Single Judge's order restricting the operation of bank accounts.

Detailed Analysis:

1. Violation of the order dated 23.02.2011 regarding the deposit of compensation money:
The appellants contended that the compensation paid by the National Highway Authority of India (NHAI) for the acquisition of the company's land should have been deposited with the High Court as per the order dated 23.02.2011. The NHAI issued a cheque of Rs. 94.16 crores to the Registrar of the High Court after deducting Rs. 10,55,60,331/- as Tax Deducted at Source (TDS). The respondents claimed and received a refund of the TDS amount from the Income-Tax Department and utilized it for various purposes. The appellants alleged this was a violation of the order, which mandated the entire compensation amount to be protected by the court.

2. Legitimacy of the respondents' utilization of the Income-Tax refund:
The Single Judge found prima facie evidence of deliberate violation of the order dated 23.02.2011 by the respondents, who received and utilized the TDS refund without court permission. The court noted that the refund was part of the compensation intended to be protected. The respondents argued that the direction to deposit the amount was given to the NHAI, not to them, and hence they did not violate the order by using the refund. However, the Single Judge issued a Rule and directed the respondents to secure the amount of Rs. 10,55,60,331/-.

3. Interference by the Division Bench with the Single Judge's order restricting the operation of bank accounts:
The Division Bench vacated the Single Judge's order that restrained the respondents from operating the company's bank accounts without securing the TDS amount. The Division Bench reasoned that the company, with a significant turnover and employing 4000 workers, could not operate without access to its bank accounts. The Bench found no specific order restraining the company from using the Income-Tax refund. However, the Division Bench did not interfere with the Rule issued in the contempt proceedings.

Supreme Court's Judgment:
The Supreme Court examined whether the Division Bench was justified in interfering with the Single Judge's order. It emphasized that the order dated 23.02.2011 aimed to protect the entire compensation amount, including the TDS component. The court highlighted that the respondents should not have utilized the refund without court permission, as it was part of the compensation meant to be protected. The Supreme Court found the Division Bench's interference inappropriate and reinstated the Single Judge's order with modifications. The respondents were directed not to operate the bank accounts without securing Rs. 8,32,60,331/- and were restricted from withdrawing the fixed deposit of Rs. 2,23,00,000/- without the High Court's leave.

Conclusion:
The Supreme Court allowed the appeals, emphasizing the need to protect the entire compensation amount, including the TDS refund, and directed the respondents to secure the specified amount before operating the bank accounts. The observations made were specific to this order and would not affect the contempt proceedings' merits.

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