Refund of auction and compulsory purchase deposits with interest ordered after setting aside the compulsory purchase, subject to forfeiture proof.

After the compulsory purchase was set aside, the Department had no right to retain the auction deposit unless a valid forfeiture was established. As no concluded forfeiture was shown, the auction amount was to be deposited with the Registrar of the Karnataka High Court with interest at 9% from the date of payment until deposit, and the parties were left to seek disbursement orders before the High Court. The further sum deposited in the second round of compulsory purchase was also required to be refunded with interest at 9% per annum from the date of deposit until payment. Questions of inter se entitlement and forfeiture were left open for determination by the High Court or in accordance with law.

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Issues: Whether the amounts deposited pursuant to the auction sale and in the second round of compulsory purchase were liable to be retained by the Department or were required to be refunded with interest after the compulsory purchase was set aside.

Analysis: The compulsory purchase having been set aside, the Department had no entitlement to retain the sum deposited under the auction proceedings unless it could establish a valid forfeiture. As no material showed a concluded forfeiture, the amount of Rs.47,01,000 deposited pursuant to the auction was directed to be deposited with the Registrar, Karnataka High Court, together with interest at nine per cent from the date of payment till deposit, leaving the parties to seek appropriate orders on disbursement before the High Court. The Court also directed refund of the further sum of Rs.1,55,00,000 deposited in the second round of compulsory purchase, with interest at nine per cent per annum from the date of deposit till payment.

Conclusion: The Department was required to refund the deposited amounts with interest, while questions of inter se entitlement and alleged forfeiture were left open for determination by the High Court or in accordance with law.

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