ALLAHABAD HIGH COURT: SECTION 3(3) OF INTEREST ACT, 1978 INTEREST PAYABLE ONLY ON PRINCIPAL SUM NOT ON INTEREST AWARDED BY COURT

The Allahabad High Court in the case Uttar Pradesh Avas Evam Vikas Parishad And Another v. State Consumer Disputes Redressal Commission And 2 Others observed and has held that under Section 3(3) of The Interest Act, 1978 interest cannot be imposed on interest award, it is only payable on the principal sum.

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The counsel, Advocate Bal Mukund appearing for respondent no. 3 applied for registration in MIG 45/75 type house under Dev Prayagam Scheme of U.P. Awas Evam Vikas Parishad, Allahabad Rs 20,000 was deposited as registration amount. Thereafter, he won the lottery draw and allotment letter was issued to him with a condition that Rs.1,92,956/- must be deposited upto 31.08.2005 and remaining amount of Rs.2,63,300/- along with interest at the rate of 13% was to be deposited in 120 monthly instalments.

The court observed that a no objection was given to him for bank loan, after which Rs.4,52,325/- were deposited with the petitioner-Parishad. When respondent applied by for execution of sale deed and delivery of possession, the same was denied on grounds that final costing of the house was not done.