Full Judgment Text
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REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO. _2417__OF 2022
(Arising out of S.L.P. (CIVIL) NO.15330 OF 2019)
STATE OF U.P. THR. SECRETARY
AND ORS. … APPELLANT(S)
VERSUS
PREM CHOPRA …RESPONDENT(S)
O R D E R
S. ABDUL NAZEER, J.
Leave granted.
(2) This appeal is directed against the order dated 10.05.2018
passed by the High Court of Judicature at Allahabad (Lucknow
Bench) in Misc. Single No. 2582 of 2003 whereby the High Court
has set aside the demand made by the appellants for a sum of
Rs.10,08,210.51 towards interest on arrears of excise revenue.
(3) Brief facts necessary for disposal of this case are as under:
Signature Not Verified
Digitally signed by
Anita Malhotra
Date: 2022.04.07
16:41:04 IST
Reason:
On 14.03.2002, the Government of Uttar Pradesh declared the
Excise Policy for the year 200203. On the basis of the Excise
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Policy and under the provisions of U.P. Excise (Settlement of
License for Retail Sale of Country Liquor) Rules, 2002 (for short ‘the
Rules’), the District Magistrate/Collector, Lakhimpur Kheri issued
an advertisement for the settlement of the excise shops for the year
200203.
(4) The respondent submitted an application in the prescribed
form for grant of license for the retail sale of country liquor shop,
Mohammadi No.1, Lakhimpur Kheri. A license was granted to the
respondents for the year 200203 (from 01.04.2002 to 31.03.2003)
for an annual license fee of Rs.29,52,000/.
(5) In the month of December 2002, the respondent submitted an
application for surrendering the excise shop/license.
(6) As per the terms and conditions of the settlement, the
respondent was liable to pay license fee for the shop for the
aforesaid period i.e. from 01.04.2002 to 31.03.2003. The
respondent had lifted quota of Rs.20,35,212/ by the month ending
31.12.2002.
(7) The appellants vide notice dated 06.01.2003 apprised to the
respondent that the application filed by him for surrender of excise
shop can be entertained only after deposit of balance of
Rs.9,16,788/ towards license fee. On 25.01.2003 the appellants
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again issued notice to the respondent to pay the outstanding license
fee amounting to Rs.9,16,788/ within a week.
(8) The respondent preferred Writ Petition No.855 (MB) of 2003
wherein the High Court directed the respondent to file an appeal
before the Additional Commissioner Excise (Licensing and
Industrial Development) U.P. Accordingly, the respondent filed an
appeal on 19.02.2003 before the Excise Commissioner, U.P.,
Allahabad. Subsequently on 08.03.2003, the license of the
respondent was cancelled. The Excise Commissioner, while
dismissing the appeal vide order dated 23.04.2003, held that under
Rule 19 and Section 36 of the U.P. Excise Act, 1910 (for short, ‘the
Act’), the respondent is liable to pay entire dues. The revision filed
by the respondent was also dismissed by the Secretary, Excise
Department by order dated 18.07.2003.
(9) After cancellation of the license, the District Excise Officer
recalculated the total amount due against the respondent and
adjusted the amount of security of Rs.2,95,200/ out of total
amount of Rs.9,38,762/ and found the respondent was still liable
to pay Rs.6,43,562/ to the Department.
(10) Aggrieved by the order dated 18.07.2003, the respondent filed
the writ petition, Misc. Single No.2582 of 2003, before the High
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Court of Judicature at Allahabad (Lucknow Bench). The High
Court, vide order dated 01.08.2003, stayed the said recovery
proceedings subject to deposit of Rs.2,75,000/ by the respondent
before the District Excise Officer.
(11) The appellants filed counter affidavit in the writ petition on
13.02.2004. On 21.12.2015, the writ petition was dismissed by the
High Court for nonprosecution. In the year 2017, the respondent
deposited the remaining amount of Rs.3,68,562/ with the
Department. Thus, the amount which was due in 2003 was paid in
the year 2017 but the respondent failed to make payment of
interest to the Department. The order dated 21.12.2015 was
recalled by the High Court on 19.01.2018.
(12) Further, on 10.01.2018, the Department issued notice to the
respondent for payment of Rs.10,08,210.51 due towards interest.
On 10.05.2018 the High Court passed the impugned order holding
that the demand of Rs. 10,08,210.51 towards interest was not
justified as the respondent was under the protection of an interim
order.
(13) Learned counsel for the appellants submits that as per the
terms and conditions of the settlement, the respondent was liable to
pay the license fee for the shop for the year 200203. He did not
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pay the license fee from January 2003 to March 2003. He went on
challenging the demand made by the Department for payment of
balance of license fee and remained unsuccessful in his challenge.
Finally, he filed the writ petition before the High Court i.e. Misc.
Single No.2582 of 2003 wherein an interim order was granted. On
account of this order, the appellants were restrained from collecting
license fee. The writ petition was dismissed for nonprosecution.
The respondent had deposited the remaining license fee in the year
2017 but failed to pay the interest to the Department. It is argued
that when the writ petition was dismissed, the respondent ought to
have paid the interest accrued on the license fee. It is further
argued that the High Court was not justified in denying interest on
the ground that the appellant had the protection of an interim order
granted by the court.
(14) On the other hand, learned counsel for the respondent
submitted that the High Court had restrained the appellants from
recovering the license fee by an interim order. The respondent has
paid the license fee in the year 2017. Therefore, the appellants are
not justified in demanding interest for the period during which a
stay on recovery of license fee was granted by the High Court.
(15) Having regard to the contentions urged, the question which
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falls for consideration is whether the respondent is liable to pay
interest for the period during which recovery of license fee under
Section 36 of the Act was stayed by the High Court and eventually
when the writ petition was dismissed.
(16) Section 38A of the Act specifically provides for payment of
interest on arrears of excise revenue which is as under:
“ 38A. Interest on arrears of excise revenue –
(1) Where any excise revenue has not been paid
within three months from the date on which it
become payable, interest at such rate not
exceeding twentyfour per cent per annum , as
may be prescribed, shall be payable from the date
such excise revenue becomes payable till the date
of actual payment:
Provided that until a higher rate is prescribed,
the rate of interest will be eighteen per cent per
annum .”
(17) It is not disputed that the respondent was liable to pay license
fee under Section 36 of the Act for the year 200203, even on
surrender of the license. The High Court had granted an interim
order restraining the appellants from recovery of the license fee for
three months, subject to the respondent depositing a sum of
Rs.2,75,000/ within a period of six weeks. Admittedly, the writ
petition was dismissed on 21.12.2015 for nonprosecution, which
was restored later.
(18) When the interim order was in force, the recovery of license fee
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was temporarily suspended. The restraint was only against the
Department not to recover the license fee. There was no prohibition
for the respondent to deposit the balance of license fee. It is to be
stated here that the High Court has not quashed the demand of
license fee made by the appellants. There is a difference between
stay of operation of an order and quashing of an order which has
been explained by this Court in Shree Chamundi Mopeds Ltd. V.
Church of South India Trust Association CSI CINOD
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Secretariat, Madras as under:
“While considering the effect of an interim order
staying the operation of the order under challenge, a
distinction has to be made between quashing of an
order and stay of operation of an order. Quashing of
an order results in the restoration of the position as
it stood on the date of the passing of the order
which has been quashed. The stay of operation of
an order does not, however, lead to such a result. It
only means that the order which has been stayed
would not be operative from the date of the passing
of the stay order and it does not mean that the said
order has been wiped out from existence.”
(19) Following the said decision, this Court in Kanoria Chemicals
and Industries Ltd. and Others v. U.P. State Electricity Board
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and Others , has held that an order of stay which is granted during
the pendency of a writ petition/suit or other proceeding comes to an
1 (1992) 3 SCC 1
2 (1997) 5 SCC 772
8
end with the dismissal of the substantive proceedings and it is the
duty of the court in such cases to put the parties in the same
position that they would have been in but for the interim order of
the court. In that case, this Court rejected the contention that
when the operation of the notification itself was stayed, no
surcharge could be demanded upon the amount withheld. It was
held thus:
“11. …. Holding otherwise would mean that even
though the Electricity Board, who was the respon
dent in the writ petitions succeeded therein, yet de
prived of the late payment surcharge which was due
to it under the tariff rules/regulations. It would be a
case where the Board suffers prejudice on account
of the orders of the court and for no fault of its. It
succeeds in the writ petition and yet loses. The con
sumer files the writ petition, obtains stay of opera
tion of the notification revising the rates and fails in
his attack upon the validity of the notification and
yet he is relieved of the obligation to pay the late
payment surcharge for the period of stay, which he
is liable to pay according to the statutory terms and
conditions of supply — which terms and conditions
indeed form part of the contract of supply entered
into by him with the Board. We do not think that
any such unfair and inequitable proposition can be
sustained in law.
xxx xxx xxx
It is equally well settled that an order of stay granted
pending disposal of a writ petition/suit or other pro
ceeding, comes to an end with the dismissal of the
substantive proceeding and that it is the duty of the
court in such a case to put the parties in the same
position they would have been but for the interim or
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ders of the court . Any other view would result in the
act or order of the court prejudicing a party (Board
in this case) for no fault of its and would also mean
rewarding a writ petitioner in spite of his failure. We
do not think that any such unjust consequence can
be countenanced by the courts. As a matter of fact,
the contention of the consumers herein, extended
logically should mean that even the enhanced rates
are also not payable for the period covered by the
order of stay because the operation of the very noti
fication revising/enhancing the tariff rates was
stayed. Mercifully, no such argument was urged by
the appellants. It is ununderstandable how the en
hanced rates can be said to be payable but not the
late payment surcharge thereon, when both the en
hancement and the late payment surcharge are pro
vided by the same notification — the operation of
which was stayed.”
(20) In
Rajasthan Housing Board and Others v. Krishna
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Kumari , this Court observed that Order 39 of the Civil Procedure
Code, 1908 provides for grant of temporary injunction at the risk
and responsibility of the person who obtains it and, if ultimately
case is decided against such person, he would be liable to pay
interest on the arrears of any amount due which had been stayed
by the injunction order. The legal maxim actus curiae neminem
gravabit, which means that an act of the Court shall prejudice no
man, becomes applicable in such a case.
(21) In
South Eastern Coalfields Ltd. V. State of M.P. and
4
Others , the writ petitioner therein had argued that interest
3 (2005) 13 SCC 151
4 (2003) 8 SCC 648
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accrued due to nonpayment of enhanced amount of royalty was
protected by a judicial order of an interim nature and, therefore,
merely because the writ was finally dismissed, the writ petitioner
should not be held liable for payment of interest so long as money
was withheld under the protective umbrella of the injunction order.
This submission was rejected by this Court by holding as under:
“The principle of restitution has been statutorily
recognized in Section 144 of the Code of Civil Proce
dure, 1908. Section 144 CPC speaks not only of a
decree being varied, reversed, set aside or modified
but also includes an order on a par with a decree.
The scope of the provision is wide enough so as to
include therein almost all the kinds of variation, re
versal, setting aside or modification of a decree or
order. The interim order passed by the court merges
into a final decision. The validity of an interim or
der, passed in favour of a party, stands reversed in
the event of a final decision going against the party
successful at the interim stage. Unless otherwise or
dered by the court, the successful party at the end
would be justified with all expediency in demanding
compensation and being placed in the same situa
tion in which it would have been if the interim order
would not have been passed against it. The success
ful party can demand ( a ) the delivery of benefit
earned by the opposite party under the interim or
der of the court, or ( b ) to make restitution for what
it has lost; and it is the duty of the court to do so
unless it feels that in the facts and on the circum
stances of the case, the restitution far from meeting
the ends of justice, would rather defeat the same.
Undoing the effect of an interim order by resorting
to principles of restitution is an obligation of the
party, who has gained by the interim order of the
court, so as to wipe out the effect of the interim or
der passed which, in view of the reasoning adopted
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by the court at the stage of final decision, the court
earlier would not or ought not to have passed. There
is nothing wrong in an effort being made to restore
the parties to the same position in which they would
have been if the interim order would not have ex
isted.”
(22) In Nava Bharat Ferro Alloys Limited v. Transmission Cor
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poration of Andhra Pradesh Limited and Another , the appellant
therein had challenged the revised tariff rates imposed by the re
spondent therein and obtained an interim order of stay against col
lection of the disputed amounts. The High Court subsequently up
held upward revision of tariff. Thereafter, the respondent therein
raised a demand for additional charges/interest on outstanding
amounts from the date of tariff revision and the High Court upheld
such demand holding that there was no subsisting relief once the
demand was upheld. This Court further held that the principle of
restitution entitles the successful party to be restored back to the
position it would hold had there been no order/judgment adverse to
it. The appellant therein had obtained only an adinterim order of
stay against enforcement of tariffs. A party who fails in the main
proceedings cannot take benefit from the interim order issued dur
ing the pendency of such proceedings. Therefore, it was held in
that case that the amount became recoverable from the appellant
5 (2011) 1 SCC 216
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therein no sooner the judgment of the High Court was reversed and
the revision of tariffs was upheld.
(23) In State of Rajasthan and Another v. J.K. Synthetics Lim
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, the interest for the period of which recovery of
ited and Another
royalty was to be paid under Section 9(2) of the Mines and Minerals
(Development and Regulation) Act, 1957 remained stayed under the
interim orders of the court. However, eventually the writ petition
was dismissed. This Court held that whenever there is an interim
order of stay in regard to any revision in rate or tariff, unless the or
der granting interim stay or the final order dismissing the writ peti
tion specifies otherwise, on the dismissal of the writ petition or va
cation of the interim order, the beneficiary of the interim order shall
have to pay interest on the amount withheld or not paid by virtue of
the interim order. It was held thus:
“23. It is therefore evident that whenever there is an
interim order of stay in regard to any revision in
rate or tariff, unless the order granting interim stay
or the final order dismissing the writ petition speci
fies otherwise, on the dismissal of the writ petition
or vacation of the interim order, the beneficiary of
the interim order shall have to pay interest on the
amount withheld or not paid by virtue of the interim
order. Where the statute or contract specifies the
rate of interest, usually interest will have to be paid
at such rate. Even where there is no statutory or
contractual provision for payment of interest, the
court will have to direct the payment of interest at a
6 (2011) 12 SCC 518
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reasonable rate, by way of restitution, while vacat
ing the order of interim stay, or dismissing the writ
petition, unless there are special reasons for not do
ing so. Any other interpretation would encourage
unscrupulous debtors to file writ petitions challeng
ing the revision in tariffs/rates and make attempts
to obtain interim orders of stay. If the obligation to
make restitution by paying appropriate interest on
the withheld amount is not strictly enforced, the
loser will end up with a financial benefit by resort
ing to unjust litigation and the winner will end up
as the loser financially for no fault of his. Be that as
it may.”
(24) From the above discussion, it is clear that imposition of a stay
on the operation of an order means that the order which has been
stayed would not be operative from the date of passing of the stay
order. However, it does not mean that the stayed order is wiped out
from the existence, unless it is quashed. Once the proceedings,
wherein a stay was granted, are dismissed, any interim order
granted earlier merges with the final order. In other words, the in
terim order comes to an end with the dismissal of the proceedings.
In such a situation, it is the duty of the Court to put the parties in
the same position they would have been but for the interim order of
the court, unless the order granting interim stay or final order dis
missing the proceedings specifies otherwise. On the dismissal of
the proceedings or vacation of the interim order, the beneficiary of
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the interim order shall have to pay interest on the amount withheld
or not paid by virtue of the interim order.
(25) Coming to the facts of the present case, the respondent was
not successful in his challenge to the notice dated 06.01.2003 de
manding the balance of license fee before the Authorities under the
Act. Therefore, he filed the writ petition bearing Misc. Single
No.2582 of 2003 before the High Court wherein the High Court, by
an interim order, stayed the recovery of the monthly instalment of
license fee for the months January 2003 to March 2003, subject to
deposit of Rs.2,75,000/ within a period of six weeks before the Dis
trict Excise Officer. It is not disputed that this amount of
Rs.2,75,000/ was deposited by the respondent. The said writ peti
tion was dismissed by the High Court for nonprosecution vide Or
der dated 21.12.2015. On 23.12.2017, the respondent deposited
the remaining amount of Rs.3,68,562/ towards license fee.
However, the respondent did not make payment of interest to the
Department. The writ petition was restored on 19.01.2018. In the
meantime, the appellants issued a notice calling upon the
respondent to pay Rs.10,08,210.51/ towards interest due. The
High Court held that the respondent was not liable to pay interest
as he was under the protection of the interim order. Given the
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settled position of law, in our view the High Court has erred in
holding that the respondent was not liable to pay interest due to the
protection given under the interim order.
(26) In the result, the appeal succeeds and it is accordingly al
lowed. The order of the High Court dated 10.05.2018 in Misc. Single
No. 2582 of 2003 is set aside.
(27) At this stage, learned counsel for the respondent submits that
the respondent may be permitted to make an application under
onetime settlement scheme 2021 wherein certain concessions have
been made for payment of interest dues. The submission of the
learned counsel is accepted and the respondent is permitted to
make an application in terms of the said scheme within a period of
eight weeks from today. We make it clear that if such an
application is filed by the respondent, the authority concerned is
directed to consider the same in accordance with law. No costs.
……………..………………J.
(S. ABDUL NAZEER)
………………...................J.
(VIKRAM NATH)
New Delhi
March 25, 2022.
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ITEM NO.33 Court 7 (Video Conferencing) SECTION XI
S U P R E M E C O U R T O F I N D I A
RECORD OF PROCEEDINGS
Petition(s) for Special Leave to Appeal (C) No(s). 15330/2019
(Arising out of impugned final judgment and order dated 10-05-2018
in MS No. 2582/2003 passed by the High Court of Judicature at
Allahabad, Lucknow Bench)
THE STATE OF UTTAR PRADESH THROUGH SECRETARY & ORS.Petitioner(s)
VERSUS
PREM CHOPRA Respondent(s)
Date : 25-03-2022 This petition was called on for hearing today.
CORAM :
HON'BLE MR. JUSTICE S. ABDUL NAZEER
HON'BLE MR. JUSTICE VIKRAM NATH
For Petitioner(s) Mr. Samar Vijay Singh, AOR
Mr. Amit Ojha, Adv.
Mr. Vipin singh Bansal, Adv.
For Respondent(s) Mr. Ashok Kumar Singh, AOR
Ms. Pragya Singh, Adv.
Mr. Akshay Singh, Adv.
Mr. Shantwanu Singh, Adv.
UPON hearing the counsel the Court made the following
O R D E R
Leave granted.
The appeal is allowed in terms of the signed reportable order.
Pending applications, if any, also stand disposed of.
(NEELAM GULATI) (ANJU KAPOOR)
ASTT. REGISTRAR-cum-PS COURT MASTER (NSH)
(Signed reportable order is placed on the file)