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of <h1>Supreme Court: Pay interest on arrears despite interim order. Restitution principle upheld.</h1> <h3>THE STATE OF UTTAR PRADESH THROUGH SECRETARY & ORS. Versus PREM CHOPRA</h3> THE STATE OF UTTAR PRADESH THROUGH SECRETARY & ORS. Versus PREM CHOPRA - TMI Issues Involved:1. Liability to pay interest on arrears of excise revenue.2. Effect of interim orders on the accrual of interest.3. Application of principles of restitution.Issue-wise Detailed Analysis:1. Liability to Pay Interest on Arrears of Excise Revenue:The Supreme Court addressed whether the respondent was liable to pay interest on the arrears of excise revenue. Section 38A of the U.P. Excise Act, 1910, mandates that interest at a rate not exceeding twenty-four percent per annum is payable on excise revenue arrears if not paid within three months from the due date. The respondent was liable to pay the license fee for the year 2002-03, even after surrendering the license. Despite the interim order from the High Court, which stayed the recovery of the license fee, the respondent was still obligated to pay the interest on the arrears.2. Effect of Interim Orders on the Accrual of Interest:The Supreme Court discussed the legal implications of interim orders, emphasizing that a stay on the operation of an order does not mean that the order is wiped out from existence. The interim order temporarily suspends the enforcement of the order but does not annul it. The Court referenced several precedents, including Shree Chamundi Mopeds Ltd. v. Church of South India Trust Association and Kanoria Chemicals and Industries Ltd. v. U.P. State Electricity Board, to illustrate that once the interim order is vacated or the main proceedings are dismissed, the beneficiary of the interim order must pay the accrued interest. The Court concluded that the High Court erred in holding that the respondent was not liable to pay interest due to the interim order.3. Application of Principles of Restitution:The principle of restitution was a key consideration in this case. The Court held that the successful party, upon the dismissal of the main proceedings, must be restored to the position they would have been in if the interim order had not been granted. This principle ensures that the party who benefited from the interim order does not gain an unfair advantage. The Court cited South Eastern Coalfields Ltd. v. State of M.P. and Others and State of Rajasthan v. J.K. Synthetics Limited to support this view, emphasizing that interest must be paid on amounts withheld or unpaid due to an interim order.Conclusion:The Supreme Court allowed the appeal, setting aside the High Court's order that had exempted the respondent from paying interest on the arrears of the license fee. The Court directed that the respondent was liable to pay the interest as per Section 38A of the U.P. Excise Act, 1910. Additionally, the respondent was permitted to apply under the onetime settlement scheme 2021 for any concessions on interest dues, with the relevant authority instructed to consider the application in accordance with the law. No costs were imposed.
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