STATE OF U.P. THR. SECRETARY AND ORS.versusPREM CHOPRA

990            SUPREME COURT
                         [2022]REPORTS
                                2 S.C.R. 990               [2022] 2 S.C.R.


A              STATE OF U.P. THR. SECRETARY AND ORS.
                                        v.
                                PREM CHOPRA
                         (Civil Appeal No. 2417 of 2022)
B                              MARCH 25, 2022
             [S. ABDUL NAZEER AND VIKRAM NATH, JJ.]
             Interim order: Interim order of stay – Effect of – Held:
      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
C
      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 and
      interim order comes to an end – In such a situation, it is the duty of
D     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 the interim order would have to
      pay interest on the amount withheld or not paid by virtue of the
E
      interim order – On facts, as regards the liability of the respondent
      to pay interest for the period during which recovery of license fee
      was stayed by the High Court and eventually the writ petition was
      dismissed, the High Court erred in holding that the respondent was
      not liable to pay interest on arrears of excise revenue due to the
F     protection given under the interim order – Thus, the order passed
      by the High Court set aside –U.P. Excise Act, 1910 – U.P. Excise
      (Settlement of License for Retail Sale of Country Liquor) Rules,
      2002.
            Shree Chamundi Mopeds Ltd. V. Church of South India
G           Trust Association CSI CINOD Secretariat, Madras
            (1992) 3 SCC 1 : [1992] (2) SCR 999; Kanoria
            Chemicals and Industries Ltd. and Others v. U.P. State
            Electricity Board and Others (1997) 5 SCC 772 : [1997]
            (2) SCR 844; Rajasthan Housing Board and Others v.
            Krishna Kumari (2005) 13 SCC 151; South Eastern
H
                                       990
  STATE OF U.P. THR. SECRETARY AND ORS. v. PREM CHOPRA                   991


      Coalfields Ltd. V. State of M.P. and Others (2003) 8               A
      SCC 648 : [2003] (4) Suppl. SCR 651; Nava Bharat
      Ferro Alloys Limited v. Transmission Corporation of
      Andhra Pradesh Limited and Another (2011) 1 SCC
      216 : [2010] (14) SCR 900; State of Rajasthan and
      Another v. J.K. Synthetics Limited and Another (2011)
                                                                         B
      12 SCC 518 : [2011] (10) SCR 993 – referred to.
                       Case Law Reference
[1992] (2) SCR 999              referred to                Para 18
[1997] (2) SCR 844              referred to                Para 19
                                                                         C
(2005) 13 SCC 151               referred to                Para 20
[2003] (4) Suppl. SCR 651       referred to                Para 21
[2010] (14) SCR 900             referred to                Para 22
[2011] (10) SCR 993             referred to                Para 23       D
      CIVIL APPELLATE JURISDICTION: Civil Appeal No. 2417
of 2022.
       From the Judgment and Order dated 10.05.2018 of the High Court
of Judicature at Allahabad, Lucknow Bench at Lucknow in Misc. Single
No.2582 of 2003.                                                         E

      Samar Vijay Singh, Amit Ojha, Vipin Singh Bansal, Advs. for the
Appellants.
      Ashok Kumar Singh, Ms. Pragya Singh, Akshay Singh, Shantwanu
Singh, Advs. for the Respondent.                                         F
      The Order of the Court was passed by
      S. ABDUL NAZEER, J.
      (1) Leave granted.
       (2) This appeal is directed against the order dated 10.05.2018    G
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.
                                                                         H
992            SUPREME COURT REPORTS                           [2022] 2 S.C.R.


A           (3) Brief facts necessary for disposal of this case are as under:
             On 14.03.2002, the Government of Uttar Pradesh declared the
      Excise Policy for the year 2002-03. On the basis of the Excise 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
B     Magistrate/Collector, Lakhimpur Kheri issued an advertisement for the
      settlement of the excise shops for the year 2002-03.
             (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
C     the year 2002-03 (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.
D           (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
E     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 again issued notice to the
      respondent to pay the outstanding license fee amounting to Rs.9,16,788/
      - within a week.
F           (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.
G     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.
H
  STATE OF U.P. THR. SECRETARY AND ORS. v. PREM CHOPRA                         993
                    [S. ABDUL NAZEER, J.]

       (9) After cancellation of the license, the District Excise Officer      A
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            B
filed the writ petition, Misc. Single No.2582 of 2003, before the High
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.
                                                                               C
      (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 non-prosecution. 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
                                                                               D
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
                                                                               E
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 2002-03. He did not pay the          F
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             G
dismissed for non-prosecution. 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
                                                                               H
994               SUPREME COURT REPORTS                          [2022] 2 S.C.R.


A     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
B     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
      falls for consideration is whether the respondent is liable to pay interest
C     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 38-A of the Act specifically provides for payment of
      interest on arrears of excise revenue which is as under:
D           “38-A. 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 twenty-four per cent per annum,
                    as may be prescribed, shall be payable from the date such
E                   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
F
      fee under Section 36 of the Act for the year 2002-03, 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
G     non-prosecution, which was restored later.
             (18) When the interim order was in force, the recovery of license
      fee 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
H     here that the High Court has not quashed the demand of license fee
     STATE OF U.P. THR. SECRETARY AND ORS. v. PREM CHOPRA                           995
                       [S. ABDUL NAZEER, J.]

made by the appellants. There is a difference between stay of operation             A
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 Secretariat, Madras1 as under:
         “While considering the effect of an interim order staying the
         operation of the order under challenge, a distinction has to be            B
         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          C
         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
and Others,2 has held that an order of stay which is granted during the             D
pendency of a writ petition/suit or other proceeding comes to an 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      E
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 respondent in the writ petitions
         succeeded therein, yet deprived of the late payment surcharge              F
         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 consumer files the writ petition, obtains stay of
         operation of the notification revising the rates and fails in his attack
         upon the validity of the notification and yet he is relieved of the        G
         obligation to pay the late payment surcharge for the period of
         stay, which he is liable to pay according to the statutory terms and

1
    (1992) 3 SCC 1
2
    (1997) 5 SCC 772                                                                H
996               SUPREME COURT REPORTS                          [2022] 2 S.C.R.


A              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
B              It is equally well settled that an order of stay granted pending
               disposal of a writ petition/suit or other proceeding, 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
C              orders 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
D              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 notification revising/enhancing the tariff rates was
               stayed. Mercifully, no such argument was urged by the appellants.
               It is ununderstandable how the enhanced rates can be said to be
E              payable but not the late payment surcharge thereon, when both
               the enhancement and the late payment surcharge are provided by
               the same notification — the operation of which was stayed.”
             (20) In Rajasthan Housing Board and Others v. Krishna
      Kumari,3 this Court observed that Order 39 of the Civil Procedure Code,
F     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.
G
            (21) In South Eastern Coalfields Ltd. V. State of M.P. and
      Others,4 the writ petitioner therein had argued that interest accrued
      due to non-payment of enhanced amount of royalty was protected by a

      3
          (2005) 13 SCC 151
      4
H         (2003) 8 SCC 648
     STATE OF U.P. THR. SECRETARY AND ORS. v. PREM CHOPRA                          997
                       [S. ABDUL NAZEER, J.]

judicial order of an interim nature and, therefore, merely because the             A
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          B
         Section 144 of the Code of Civil Procedure, 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, reversal, setting aside or
         modification of a decree or order. The interim order passed by            C
         the court merges into a final decision. The validity of an interim
         order, 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 ordered by the court, the successful party
         at the end would be justified with all expediency in demanding            D
         compensation and being placed in the same situation in which it
         would have been if the interim order would not have been passed
         against it. The successful party can demand (a) the delivery of
         benefit earned by the opposite party under the interim order 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   E
         the circumstances 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 order passed       F
         which, in view of the reasoning adopted 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 existed.”
                                                                                   G
       (22) In Nava Bharat Ferro Alloys Limited v. Transmission
Corporation of Andhra Pradesh Limited and Another,5 the appellant
therein had challenged the revised tariff rates imposed by the respondent
therein and obtained an interim order of stay against collection of the

5
    (2011) 1 SCC 216                                                               H
998               SUPREME COURT REPORTS                            [2022] 2 S.C.R.


A     disputed amounts. The High Court subsequently upheld 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
B
      back to the position it would hold had there been no order/judgment
      adverse to it. The appellant therein had obtained only an ad-interim order
      of stay against enforcement of tariffs. A party who fails in the main
      proceedings cannot take benefit from the interim order issued during the
      pendency of such proceedings. Therefore, it was held in that case that
C     the amount became recoverable from the appellant 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
      Limited and Another,6 the interest for the period of which recovery of
D     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 order granting
      interim stay or the final order dismissing the writ petition specifies
E     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. It was
      held thus:
               “23. It is therefore evident that whenever there is an interim order
F              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
               specifies 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
G              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 reasonable rate, by way of restitution, while vacating the order

H     6
          (2011) 12 SCC 518
  STATE OF U.P. THR. SECRETARY AND ORS. v. PREM CHOPRA                          999
                    [S. ABDUL NAZEER, J.]

      of interim stay, or dismissing the writ petition, unless there are        A
      special reasons for not doing so. Any other interpretation would
      encourage unscrupulous debtors to file writ petitions challenging
      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,
                                                                                B
      the loser will end up with a financial benefit by resorting 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
                                                                                C
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 interim order comes to an end
with the dismissal of the proceedings. In such a situation, it is the duty of   D
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 dismissing the proceedings specifies otherwise. On
the dismissal of the proceedings or vacation of the interim order, the
beneficiary of the interim order shall have to pay interest on the amount
                                                                                E
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 demanding
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
                                                                                F
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 District Excise Officer. It is not disputed that
this amount of Rs.2,75,000/- was deposited by the respondent. The said
writ petition was dismissed by the High Court for non-prosecution vide          G
Order 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/-
                                                                                H
1000                SUPREME COURT REPORTS                         [2022] 2 S.C.R.


 A     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 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.
 B           (26) In the result, the appeal succeeds and it is accordingly allowed.
       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 one-time
 C     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
 D     costs.


       Nidhi Jain                                                     Appeal allowed.



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