Interim Order Comes To An End With The Dismissal Of Proceedings: Supreme Court

The Supreme Court observed that a stayed order is not wiped out from the existence, unless it is quashed in the main proceedings.

Once the proceedings, wherein a stay was granted, are dismissed, any interim order granted earlier merges with the final order, the bench comprising Justices S. Abdul Nazeer and Vikram Nath observed. The interim order comes to an end with the dismissal of proceedings.

Facts of the case

Before the Allahabad High Court, the writ petitioner challenged a notice demanding the balance of license fee before the Authorities under the U.P. Excise Act, 1910. By an interim order, the High Court 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. The said writ petition was dismissed by the High Court for non­ prosecution. On 23.12.2017, he deposited the remaining amount of Rs.3,68,562/­ towards license fee but did not make payment of interest to the Department. After the writ petition was restored to file, the authority issued a notice calling upon the writ petitioner to pay Rs.10,08,210.51/­ towards interest due. The High Court held that the writ petitioner was not liable to pay interest as he was under the protection of the interim order.

In appeal, the Apex court bench noted that when the interim order was in force, the recovery of license fee was temporarily suspended and that the restraint was only against the Department not to recover the license fee and there was no prohibition for the respondent to deposit the balance of license fee.

Referring to various precedents, the bench allowed the appeal by observing thus:

"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 interim 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 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 withheld or not paid by virtue of the interim order"

Case details

State of UP vs Prem Chopra | 2022 LiveLaw (SC) 378 | CA 2417 OF 2022 | 25 March 2022

Coram: Justices S. Abdul Nazeer and Vikram Nath

Headnotes

Interim orders- A stayed order is not 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 - 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 dismissing the proceedings specifies otherwise.  (Para 24)

Summary: Appeal against Allahabad HC order holding that the writ petitioner was not liable to pay interest as he was under the protection of the interim order (though the writ petition was dismissed for non prosecution and the notice demanding interest was issued after it) - Allowed - 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 withheld or not paid by virtue of the interim order.

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