FERRO ALLOYS CORPN. LTD. AND ORS. ETC. ETC. vs A.P. STATE ELECTRICITY BOARD AND ORS ETC. ETC.

The Supreme Court held that the Rajasthan State Electricity Board is liable to pay interest on security deposits at the same rate as that paid by scheduled banks on fixed deposits, as per Section 4 of the Interest Act. The Court found that the condition of requiring a three-month security deposit was not arbitrary and upheld the High Court's decision that the clause regarding non-payment of interest was unreasonable. The Court clarified that the Board, holding consumer deposits, acts in a fiduciary capacity and thus has an obligation to pay interest on such deposits.