Court sets aside Permanent Lok Adalat's award and directs payment of 6% interest on refund amount of Rs.6,13,800 from 2011 to 2022 to M/s Sangrur Cold Storage
In a significant ruling delivered on 1st September 2026, the Punjab and Haryana High Court, presided over by Justice Tribhuvan Dahiya, ordered the Punjab State Power Corporation Limited (PSPCL) to pay interest on amounts wrongfully recovered from M/s Sangrur Cold Storage. The Court set aside the earlier award passed by the Permanent Lok Adalat (Public Utility Services), Sangrur, which had dismissed the petitioner's claim for interest on the refunded amount.
The dispute arose from PSPCL's wrongful recovery of additional electricity charges from the petitioner's electricity connection (No. S46MS460073P) under the LS category. The Corporation had charged an extra 3% supply units from April 2011 to March 2017. Despite repeated objections by the petitioner through letters and reminders between 2014 and 2020, the Corporation admitted its mistake only after a legal notice in April 2021 and refunded Rs.6,13,800 in April 2022.
However, the petitioner claimed that the Corporation had utilized the wrongfully recovered money without justification and was entitled to interest on this amount from the date of wrongful recovery until the refund. The Permanent Lok Adalat had dismissed the petitioner's application under Section 22-C of the Legal Services Authorities Act, 1987, reasoning that the petitioner had waived the right to claim interest by not raising the issue initially and that the claim was barred by limitation laws. It also invoked Order II Rule 2 of the Code of Civil Procedure (CPC), holding that the petitioner's prior representations did not amount to instituting proceedings.
Rejecting the Permanent Lok Adalat's conclusions, the High Court held that the cause of action for claiming interest only arose upon the refund of the money on 5th April 2022, and not earlier. The Court clarified that mere representations made seeking refund do not constitute the institution of proceedings under CPC, and therefore, the provisions of Order II Rule 2 CPC were not applicable. Further, the Court found the claim was not barred by limitation as the petitioner filed the application promptly after the refund.
The Court ordered PSPCL to pay interest at the rate of 6% per annum on the refunded amount of Rs.6,13,800 from May 2011 until the refund date (5th April 2022). The interest amount is to be paid within four weeks of receiving a certified copy of the order.
This judgment reinforces the principle that a wrongfully recovered amount must be refunded with interest, especially when the Corporation has admitted the mistake and utilized the funds for its purposes. It also clarifies the legal position on the accrual of cause of action for interest claims and the non-applicability of certain procedural provisions in such refund claims.
Bottom Line:
Corporation wrongfully recovering money and utilizing it for its purposes - Petitioner entitled to interest on refunded amount - Cause of action for claiming interest accrues upon refund of the amount.
Statutory provision(s):
Legal Services Authorities Act, 1987 Section 22-C, Code of Civil Procedure, 1908 Order II Rule 2
