Interest on delayed payment is not a penalty but an equitable right, and should be calculated from the date of rejection of the writ petition.

ORDER

1. Leave granted.

2. This appeal arises from the order passed by the High Court of Karnataka dated 19th January 2023 in Review Petition No. 521 of 2022 preferred by the original petitioners i.e. respondents herein by which the High Court disposed of the Review Petition holding as under:-

“This petition has been filed seeking review of the judgment dated 28.10.2021 passed by this Court in W.P.No.1583/2017 by which the writ petition preferred by the petitioner has been dismissed.

2. Learned counsel for the petitioner, while inviting the attention of this Court to affidavits of both the Directors of petitioner No.1- Company, submitted that they undertake to withdraw the challenge to the sale which has already been conducted by respondent No. 1. It is therefore, submitted that excess amount which has been released by the Bank by sale of property of petitioner amounting to Rs.1,11,90,354.32p. which is admittedly lying in deposit with the respondent-Bank be refunded to the petitioner.

3. Learned counsel for the respondent - Bank has opposed the submission made by the learned counsel for the petitioner.

4. We have considered the submissions made on both sides and have perused the record. Taking into account the fact that the entire amount of dues has been recovered by the respondent No.1 - Bank from the petitioner and an amount of Rs.1,11,90,354.32p. is lying in deposit with the respondent No.1-Bank, we see no justification as to why the amount should be illegally retained by the respondent No.1- Bank without any authority. The respondent No.1-Bank is therefore directed to refund the amount of Rs.1,11,90,354.32p. along with applicable interest w.e.f. 20.09.2010 within a period of one week.

Accordingly, the review petition is disposed of.”

3. Thus, it appears that the respondents herein were the original borrowers. As they defaulted in the repayment of the loan amount, proceedings were instituted under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 by the appellant bank.

4. The property upon which charge was created, was put to auction. On the date of the auction, the amount due and payable by the original borrowers was to the tune of Rs.1,11,90,354.32 paisa (Rupees One crore eleven lakhs ninety thousand three hundred fifty four and thirty two paise only). In the auction proceedings the bank was able to fetch an amount of Rs. Two crore and Seventeen lakh.

5. It appears that the legality and validity of the auction proceedings was challenged before the Debt Recovery Tribunal (for short ‘DRT’). DRT rejected the challenge. The matter went in appeal before the Debts Recovery Appellate Tribunal (for short “DRAT”). The DRAT directed the original borrowers to make a pre-deposit of a particular amount. The amount was not deposited.

6. In such circumstances, the borrowers went before the High Court by filing a Writ Petition. The Writ Petition also came to be rejected.

7. Later, a review application came to be filed by the borrowers before the High Court which led to the passing by the impugned order.

7. Later, a review application came to be filed by the borrowers before the High Court which led to the passing by the impugned order.

9. The appellant bank being aggrieved with the impugned order passed by the High Court is here before this Court with the present appeal.

10. We enquired with the learned counsel appearing for the appellant bank whether the amount of Rs.1,11,90,354.32 paise (Rupees One crore eleven lakhs ninety thousand three hundred fifty four and thirty two paise only), as directed by the High Court, has been refunded to the original borrowers or not?

11. In reply to the aforesaid, our attention was drawn to annexure P-19 which is a letter dated 24th February 2023 addressed by the bank to the borrower company which reads thus:-

“Karnataka Bank Ltd.

OVERSEAS BRANCH

Branch : Bangaluru-Overseas

Manandi Plaza, # 3, St. Mark's Road, Bangalore -560 001

Dist : Bengaluru Urban, Kamataka

Phone :