Equitable interest under Article 226 may be awarded on unlawful retention of duty, but only after a reasonable administrative period.

Money retained by the State without authority of law may attract interest as equitable compensation under Article 226, even after later refund, because the issue is deprivation of use of money rather than statutory entitlement alone. The reference to the Interest Act, 1978 was treated as illustrative, not exhaustive. However, where the department refunds the amount without forcing litigation, a reasonable administrative period may be allowed before interest starts to run. Interest was therefore confined to the expiry of four months from each payment, at 12% per annum thereafter until repayment.

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Issues: Whether interest could be awarded under Article 226 on customs duty amounts retained without authority of law and subsequently refunded by the department; and whether such interest should run from the date of payment or only after allowing a reasonable time for administrative examination of the refund claim.

Analysis: The amount had been recovered and retained without authority of law, and the fact that the department later refunded it did not by itself eliminate the question of compensation for deprivation of use of money. Interest, in such a case, is not a matter of statutory entitlement alone but may be granted in the exercise of discretionary jurisdiction under Article 226 to achieve an equitable result. The reference to Sections 3 and 4 of the Interest Act, 1978 was only illustrative of situations where interest alone may be claimed. At the same time, where the department itself grants refund without forcing litigation, a reasonable period must be allowed to scrutinise the claim before compensation begins to run.

Conclusion: Interest was held payable in writ jurisdiction, but the Court restricted its commencement to the expiry of four months from each payment, leaving the rate at 12% per annum thereafter until repayment.

Final Conclusion: The appeal succeeded only to the limited extent of postponing the start of interest for four months from each payment, and was otherwise dismissed.

Ratio Decidendi: Where money is retained by the State without authority of law, the writ court may award interest as equitable compensation under Article 226, but it may also allow a reasonable period for administrative consideration before interest begins to accrue.

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