Stamp Duty Refund Interest Principle Distinguished: Calcutta HC Dismisses Plea for Interest on Rent Deposit [Read Order]

The Calcutta High Court dismissed a writ petition seeking interest on a sum of Rs. 1,70,000/- deposited with the Rent Controller as rent by a tenant. The Court distinguished the Supreme Court’s decision in Poornima Advani regarding interest on tax refunds, holding that the Rent Controller functions as a quasi-judicial authority holding money for the landlord's benefit, rather than as a tax-collecting authority.

The petitioner, Ajay Raj Agencies Pvt. Ltd., a landlord, sought a direction to the Rent Controller to release rent deposits accumulated from March 2014 to January 2025, totalling Rs. 11,13,500/-. The grievance was that despite the tenant depositing the rent, the Rent Controller failed to remit the amount to the petitioner for several years. After an earlier round of litigation in WPO 461 of 2025, the principal amount was released. The present petition was filed claiming interest at 12% per annum on the delayed payment.

Mr. Tapas Dutta, counsel for the petitioner, relied on the Supreme Court's decision in Poornima Advani vs. Government of NCT, arguing that retaining money lawfully due to a citizen without justification entitles the citizen to interest as compensation. He contended that the Rent Controller's delay in remitting the rent deprived the petitioner of the use of his legitimate funds. He further argued that the claim was not barred by constructive res judicata, as the earlier writ petition had not finally adjudicated the issue of interest.

Ms. Noelle Banerjee, counsel for the State, opposed the petition. She contended that the claim was barred by constructive res judicata since the earlier writ petition had sought interest, which was not expressly granted. She argued that the delay in releasing the funds was attributable to the petitioner's own failure to file withdrawal applications in the prescribed format under Rule 11 of the West Bengal Premises Tenancy Rules, 1999, rather than any inaction by the Rent Controller.

The Single Bench of Justice Hiranmay Bhattacharyya rejected the plea for constructive res judicata, holding that Explanation V to Section 11 of the CPC cannot be applied where there has been no actual adjudication of the rights in the earlier proceeding. However, the Court ultimately dismissed the petition on the merits.

Referring to the case, the Court distinguished the facts, noting that the Rent Controller does not collect tax, duty, or fees but merely accepts deposits on behalf of the landlord to be credited to the landlord's account. The Court observed that the West Bengal Premises Tenancy Act, 1997, requires the landlord to apply for withdrawal of rent, which triggers an adjudicatory process.

The Court found that the petitioner was aware of the deposits since March 2014 but failed to take prompt steps to withdraw the funds in accordance with the Rules. It noted that the delay was caused by the petitioner's failure to submit proper applications and necessary documents until directed by the Court in 2025.

The court dismissed the writ petition.

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