P.V.G. RAJU GARU versus STATE OF ANDHRA PRADESH

Citation: [1990] 1 S.C.R. 134 · Decided: 24-01-1990 · Supreme Court of India · Bench: SABYASACHI MUKHERJI · Disposal: Dismissed

Judgment (excerpt)

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P.V.G. RAJU GARU 
v. 
STATE OF ANDHRA PRADESH 
JANUARY 24, 1990 
[SABYASACHI MUKHARJI, CJ, P.B. SAWANT AND 
K. JAYACHANDRA REDDY, JJ.) 
Andhra Pradesh (Andhra Area) Estates (Abolition and Conver-
sion into Ryotwari) Act, 1948: Section 45(3)-Compensation paid on 
abolition of Estate-En_dowmen[ created by Estate for maintenance of 
hospital-Government taking over hospital-Liability of Estate to pay 
the endowed amounts from out of compensation-Whether includes 
interest-Payment of interest-Whether all sharers liable to contribute. 
Under the provisions of the Andhra Pradesh (Andhra Area) 
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Estates (Abolitimumd Conversion into Ryotwari) Act, 1948, (the Act), 
the Government took over a hospital which was run by a Zamindar of 
an impartible estate. After the take-over, the Government made appli-
cations before the Estafo Abolition Tribunal claiming recovery of cer-
tain amounts which were endowed to the hospital hy the erstwhile ruler, 
from out of the compensation paid on the abolition of the estate. Claims 
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for interest and priority over other creditors were also made. 
In the first of such applications, the Tribunal allowed the amount 
claimed without specific reference to interest but rejected the claim for 
priority. In the subsequent proceedings, the Tribunal rejected the claim 
for interest as also priority and held that in the earlier proceeding also, 
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it has disallowed the claim for interest. 
Aggrieved against the Tribunal's orders, Government preferred 
appeals before the High Court. The High Court took the view that while 
allowing the claim the Tribunal bad not only allowed the claim for 
principal but also interest thereon, and ordered payment of interest as 
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claimed. 
These appeals are against the High Court's orders and the appel-
lant contended that there was no provision in the Act for payment of 
interest; that the expression 'amount' claimed before the Tribunal 
should be construed to mean the principal amount only; that the subse-
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quent claims for interest were barred by resjudicata; that it would be 
134 
P .V.G. RAJU v. STATE OF A.P. 
135 
inequitable to claim interest on the amounts endowed since no interest 
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was paid on compensation; that while the compensation was shared by 
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others also, the appellant cannot be singled out to pay the interest. 
Dismissing the appeals, this Court, 
HELD: 1.1 The High Court was right in holding that the Tri-
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bunal by its order of 15.12.62 had allowed the claim for interest. Under 
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the scheme of the Act Itself, the Tribunal was required to apportion the 
amounts according to the priorities depending upon the amount of com-
pensation deposited at the time of giving of the direction in question. It 
was, therefore, only to be expected that the Tribunal would first give 
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directions with regard to the payment of principal amounts and defer c 
the payment of interest to a future date. That is exactly what the Tri-
bunal had done in the present case and, hence, in the second set of 
applications made by the Governm_ent, the Government had not only 
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claimed the balance of the principal amounts but also interest thereon • 
Thus, the issue with regard to the claim for interest in the subsequent 
applications was not barred by resjudicata. [141B-C, D]. 
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1.2 All that the Tribunal had done was to direct the Estate to pay 
the amounts in question to the Government together with interest at the 
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admitted rate, which interest was in any case payable towar~s the 
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endowment objects. Under the Act, the Tribunal had, among other 
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things, to determine the liability of the Estate. The endowment amounts 
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together with the interest admittedly accruing thereon formed the .total 
liability of the Estate. The interest, further was a recurring one and the 
objects of the endowment were to be financed from out o,f the said 
interest. When the Tribunal directed the payment of interest together 
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With the principal ammint, it did nothing more than direct the Estate to 
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honour its liability. [ 14 lF -G] 
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2. Whether or not interest was paid on compensation due to the 
Estate, it has nothing to do with the Estate's liability towards the 
endowments. The interest directed to be paid by the Tribunal was 
not interest over and above the endowed amounts. It is the prin-
cipal amount together with the interest accruing thereon which con-
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stituted the total endowed amounts at the time of abolition of the 
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Esta

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