Case Note & Summary
The dispute arose from the respondent's license for retail sale of country liquor in Uttar Pradesh for the year 2002-03. The respondent applied for surrender in December 2002 but was liable for the full annual license fee. The appellants demanded balance payment, and after cancellation of the license, the respondent challenged the demand through writ proceedings. The High Court granted an interim stay on recovery subject to partial deposit. The writ petition was dismissed for non-prosecution in 2015, later restored, and the respondent paid the principal license fee in 2017 but not interest. The appellants demanded interest under Section 38A of the U.P. Excise Act, 1910, but the High Court denied it, citing the interim stay. The core legal issue was whether interest was payable despite the stay. The appellants argued that the stay did not exempt interest, and the respondent contended that the stay precluded interest demand. The Court analyzed Section 38A, which mandates interest on arrears of excise revenue not paid within three months. It distinguished between stay and quashing of orders, noting that a stay only suspends operation temporarily without nullifying the underlying obligation. Citing precedents like Shree Chamundi Mopeds Ltd. and Kanoria Chemicals, the Court held that interim stays end with dismissal of substantive proceedings, and parties must be restored to their pre-stay positions. It emphasized the legal maxim actus curiae neminem gravabit to prevent prejudice to the appellants. The Court concluded that the respondent was liable for interest under Section 38A, as the stay did not affect this statutory liability, and set aside the High Court's order denying interest.
Headnote
A) Excise Law - Interest on Arrears - Section 38A U.P. Excise Act, 1910 - The respondent was liable to pay license fee under Section 36 for the excise year 2002-03, and Section 38A mandates interest on arrears not paid within three months from due date. The High Court had granted an interim stay on recovery, but the stay did not quash the demand or exempt interest. Held that the respondent remained liable to pay interest under Section 38A despite the stay, as the stay only suspended recovery temporarily and did not wipe out the obligation. (Paras 15-18) B) Civil Procedure - Interim Orders - Effect of Stay - Order 39 Code of Civil Procedure, 1908 - The High Court stayed recovery of license fee subject to deposit of Rs.2,75,000, but the writ petition was later dismissed for non-prosecution. Following precedents, the Court held that an interim stay ends with dismissal of substantive proceedings, and the court must restore parties to the position they would have been in but for the stay. The respondent, having obtained stay, was responsible for consequences, including interest on arrears. (Paras 19-20) C) Legal Maxims - Actus Curiae Neminem Gravabit - Application in Interest Claims - The legal maxim 'actus curiae neminem gravabit' (an act of the court shall prejudice no man) applies where a party benefits from an interim order. The appellants were prejudiced by the stay as they could not recover license fee and interest. Held that denying interest would unfairly reward the respondent for obtaining stay and failing in writ petition, contravening the maxim. (Para 20)
Issue of Consideration
Whether the respondent is liable to pay interest for the period during which recovery of license fee under Section 36 of the U.P. Excise Act, 1910 was stayed by the High Court and eventually when the writ petition was dismissed.
Final Decision
The Supreme Court allowed the appeal, set aside the impugned order of the High Court dated 10.05.2018, and held that the respondent is liable to pay interest under Section 38A of the U.P. Excise Act, 1910.
Law Points
- Interest on arrears of excise revenue is payable under statutory provisions despite interim stay on recovery
- distinction between stay and quashing of orders
- duty of court to restore parties to pre-stay position upon dismissal of substantive proceedings
- applicability of legal maxim actus curiae neminem gravabit
