Equitable interest on delayed sale consideration where a compulsory purchase order stalls completion of a property transaction.

When completion of an agreed property sale is stalled by a Chapter XX-C compulsory purchase order and a stay of that order, equity may justify interest on the unpaid purchase price if the vendor did not obstruct the transaction. Because the ultimate fate of the statutory purchase remained uncertain, immediate payment of the balance could not be compelled, but the seller was left without the sale proceeds during the period of restraint. The commentary notes that interest may be awarded for the delay, with the applicable rate differing depending on whether the Government purchase ultimately stands or the sale to the buyer is completed.

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Issues: Whether, in the circumstances of a property transaction stalled by an order under Chapter XX-C of the Income-tax Act, 1961 and a stay of that order, the vendor was entitled to interest on the unpaid purchase price.

Analysis: The agreement to sell had been entered into, part consideration had already been paid, and the vendor had not attempted to delay or defeat the statutory purchase or obstruct completion of the sale. Because the ultimate fate of the compulsory purchase order was uncertain, immediate payment of the balance could not be directed. However, the Court recognised that the vendor was left without the sale proceeds while the transaction remained blocked by orders of court and statutory authorities. In such a situation, equity could justify payment of interest, the appropriate rate depending on which eventuality occurred.

Conclusion: The vendor was held entitled to interest on the purchase price in either eventuality, with the rate fixed at 15% per annum if the Government purchase stood and 20% per annum if the sale to the buyer was completed.

Final Conclusion: The impugned interim order was modified to grant equitable monetary relief to the vendor by directing interest on the delayed sale consideration, while leaving the substantive outcome of the statutory purchase proceedings open.

Ratio Decidendi: Where completion of an agreed sale is prevented by a compulsory purchase order under Chapter XX-C and the seller has not obstructed the transaction, equity may justify an award of interest on the unpaid consideration for the period of delay caused by the statutory order and court restraint.

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