FCI to pay Mawana for supply damage: HC

The Delhi High Court has asked the Food Corporation of India to pay Mawana Sugar Ltd Rs 52.99 lakh plus interest at the rate of 10 per cent per annum on account of deductions made by FCI allegedly for short supply or wet/damaged supply of levy sugar.

While upholding the single judge's decision recently, the division bench comprising Chief Justice Markendeya Katju and Justice Madan B Lokur directed the release of Rs 52.99 lakh deposited by the FCI in the registry of the court in favour of Mawana Sugar "without prejudice to the rights and contentions to calculate the correct amount required to be paid in respect of levy of sugar supplied to the FCI."

It further said the amount must be paid to the sugar mill with interest at the rate of 10 per cent per annum from the date when it became payable within two months from the date of this judgement.

While pulling up the FCI for filing an appeal only after initiation of the contempt proceedings by the sugar mill, the court said the amount deposited by the FCI in the registry was much less than what it was required to pay under the impugned order.

According to the judges, interest is compensatory in character and can be recovered for withholding the payment of any due and payable amount.

"It is different from penalty and is tantamount to compensation as the person entitled for recovery has been deprived of the right to use the said amount."

Mawana Sugar, formerly known as Siel India Ltd, along with other sugar mills had challenged the FCI's right to make deductions for the short supply or wet/damaged supply of levy sugar from amounts to be paid in their subsequent bills.

These disputed amounts related to almost a period of 15 years before the deductions in the subsequent bills.

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FINE SLAPPED

FCI to pay Rs 52.99 lakh plus interest at the rate of 10 per cent per annum

Interest is compensatory in character and can be recovered for withholding the payment of any due and payable amount according to judges

Mawana Sugar , had challenged Food Corporation of India's right to make deductions for the short supply or wet/damaged supply of levy sugar from amounts to be paid in their subsequent bills

Disputes relate to a period of almost 15 years