Holding

The automatic discharge of interim orders upon dismissal is equivalent to a 'set aside', so Sections 3(4) and 3(5) do not apply and the appellants must pay interest on the excess realisation.

Summary

The appellants, cooperative sugar factories, were compelled by 1972 government orders to sell sugar at a controlled price of Rs.124.59 per quintal. They obtained interim injunctions from the Gujarat High Court restraining the orders, which were later made absolute, but the writ petitions were eventually dismissed as infructuous. After the enactment of the Levy Sugar Price Equalisation Fund Act, 1976, the Union of India sought recovery of the excess price realised by the factories along with interest. The High Court directed the factories to refund the price difference and pay interest at 12.5% per annum. The factories appealed, arguing that the interim orders were not "set aside" and that sections 3(4) and (5) of the Act exempted them from interest. The Supreme Court held that the automatic discharge of interim orders upon dismissal constitutes "set aside", rendering sections 3(4) and (5) inapplicable, and therefore the factories are liable to pay interest on the excess realisation. The appeals were dismissed.

Issues considered

Whether the automatic lapse of interim orders upon dismissal of a writ petition amounts to a 'set aside' under Section 2(b)(ii) of the Levy Sugar Price Equalisation Fund Act, 1976.
Whether Sections 3(4) and 3(5) of the Act apply to exempt the appellants from paying interest on the excess realisation.
Whether the appellants are liable to pay interest on the amount of excess realisation.

Subjects

excess realisationinterest liabilityset asideinterim orderLevy Sugar Price Equalisation Fund Actcontrolled pricewrit petitionrefundsugar industry regulation

Judgment

...
BILESHWAR KHAN UDYOG KHEDUT SHAHAKARI A
MANDALI LTD. ETC.
v.
UNION OF INDIA AND ANOTHER

FEBRUARY 10, 1999
B
[V.N. KHARE AND R.P. SETHI, JJ.]

Levy Sugar Price Equalisation Fund Act, 1976 : Section 2(b )(ii) and
Section 3(3), (4) & (5)-Excess realisation-Two orders requiring appellants
to sell sugar at controlled price issued--Challenged before the High Court in c
writ petition-Implementation of the said orders restrained by interim or-
ders---<:onsequently, sugar sold at more than the controlled price-Writ peti-
tion dismisse~Interim orders lapsed on dismissal-The Act came into force
subsequently-Substituted the orders requiring to sell sugar at controlled
price--Provision for refund of excess realisation on setting aside of interim D
orders of the Court-Application for refund of excess realisation allowed by
Court-Appealed against-Hel~Effect of setting aside an order or automatic
discharge consequent upon dismissal of writ petition is the same-Appellants
liable to refund excess realisation alongwith interest.
E
Words & Phrases :

'Set aside' meaning of in the context of Section 2(b )(ii) Levy Sugar
Price Equalisation Fund Ac~ 1976.
0

In June, 1972 th<! respondent issued Sugar Price Determination F
Order and the Levy (Sugar Control) Order requiring the sugar man:Jfac-
turers to sell sugar to the Union Government, State Government or their
nominees at the controlled price of Rs. 124.59 per quintal. The appellant
co-operative sugar factories challenged the abovesaid two orders before
the Gujarat High Court, by way of writ petitions. The High Court admitted G
the writ petition and issued an injunction order restraining the respon-
dents, their servants etc. from requiring the appellant to sell sugar at the
controlled price. Subsequently, the said order was made absolute. When
the writ petition came up for hearing, the High Court, on the statement of
the counsel for the appellant that by the lapse of time the writ petition had H
569
570 SUPREME COURT REPORTS [1999) 1 S.C.R.
A become infructuous dismissed the writ petition.'
After the dismissal of the writ petition, Parliament passed Levy
Sugar Price Equalisation Fund Act, 1976 with the object of making
provisions for the refund of excess realisation made by the sugar factories
on the basis of interim orders obtained from the Courts. Subsequently, the
B respondent Union of India filed applications praying for directions to the
said petitioners, to pay the price difference realised by them on account of
interim order granted by the High Court, alongwith interest. The High
Court allowed the said applications directing the appellants to pay the
difference amount alongwith interest at the rate of 12 1/2% per annum.
c
In appeal, before this Cou~ the issue involved was regarding the
liability of the appellants to pay interest on the amount called upon to pay
as excess realisation. Leave as to the appellants' liability to refund be
excess realisation was refused.
D The appellants contended that as their cases were governed by
Section 3(4) and (5) of the Act, they were not liable to pay interest on the
.amount to be refunded as excess realisation. It was also contended that as
the interim order passed by the High Court on the basis of which the
appellants made excess realisation, although automatically lapsed, had not
E been set aside by the appellate or the higher court; thus the realisation
was riot within the ambit of Section 2(b) (ii) of the Act.

Dismissing the appeals, this Court
•
HELD : 1.1. Ordinary meaning of the word 'set aside' is to revoke or ,
F
quash, the effect of which is to make the interim order inoperative or
non-existent. The expression 'set aside' used in Section 2(b)(ii)(i) of the of
Levy Sugar Price Equalisation Fund Act, 1976 means an interim order has
come to an end and has become inoperative. [573-D-E]

G 1.2. The effect of setting aside an order or automatic discharge
consequent upon the dismissal is the same. When the High Court dis-
missed the writ petition, the interim order passed therein became non-ex-
istent and inoperative and stood automatically discharged. Interim orders
passed in the writ petition came to an end on dismissal of the writ petition
H before the Equalisation Fund Act came into force and under such cir-
BILESHWAR KHAN UDYOG KHEDUTSHAHAKARI MANDALI LID. v. u.o.I. [V.N.KHARE,J.] 571

cumstances Section 3(4) and (5) of .the Act have no application to the A
... "' appellants' case; sub-section 3 of Section 3 of the Act which provides for
grant of interest on the excess realisation made by the appellant is ap·
plicable. Hence, the appellants are liable to pay interest. [573-D-H; 574-A]

2. Special leave against the order passed by the High Court directing
the appellants to refund the excess realisation made by them, was refused. B
Thus, it was not open to the appellants to raise this argument again. [573-H]
'-'.>

Ankepalle Co-operative Agricultural & Industrial Society Ltd. and
Another Etc. v:Union of India & others Etc., AIR (1977) S.C. 2041, relied
on. c
'
CIVIL APPELLATE JURISDICTION : Civil Appeal Nos. 1660-66
of 1981.

From the Judgment and Order dated 2.5.80 of the Gujarat High
Court in CA. Nos. 2312-2318 of 1975. D
)
M;R. Anand, Ms. A.K. Verma for M/s. JBD & Co. for the Appel-
lants.

N.N. Goswami, Mrs. Binu Tamta, P. Parmeswaran, K.S. Rana, S.N. E
Terdol for the Respondents.

The Judgment of the Court was delivered by

V.N. KHARE, J. The appellants in these appeals are Co-operative
Sugar Factories engaged in the business of manufacture of sugar in the F
';
State of Gujarat. On 15th June, 1972 the respondent issued an order known
as Sugar Price Determination Order and on the same day. The Levy (Sugar
Control) Order, 1972 was issued under which the sugar manufacturers
were required to sell sugar to the Union Government, State Government
or their nominees at the controlled price of Rs. 124.59 per quintal for G
D-Grade sugar. The appellants challenged the aforesaid Sugar Price
") Determination Order and Levy Control Order by means of separate peti·
tions before the Gujarat High Court. In the writ petition there was a prayer
for interim relief also. Interim prayer as contained in the writ petition reads
as follows: H
572 SUPREME COURT REPORTS [1999] 1 S.C.R.

A "That pending the hearing of the petition your Lordships will be
'fl
pleased to issue an interim injunction restraining the respondents >
their servants and agents and or their successors in office as the
impugned orders requiring the petitioner to supply sugar to the
State Government or Union Government or to their nominees at
a price of Rs. 150/- per quintal."
B
The High Court by an order dated 31.7.72 admitted the writ petition
•.-
and granted interim order as prayed for in the writ petition. Subsequently
on 29.8.72, the stay order was made absolute. Some time in March, 1973
the writ petition came up for hearing and on that day the counsel for the
c appellant stated before the Court that by lapse of time the writ petition
,
was rendered infructuous. Consequently the writ petition was dismissed
with cost. After dismisal of the aforesaid writ petition the Parliament
passed an Act known as Levy Sugar Price Equalisation Fund Act. 1976
(hereinafter referred to as the "Act"). One of the _objects of the act was to
make provisions for refund of excess realisation made by the sugar factories
D
on the basis of interim orders issued by the courts. After the Act came into
force, Union of India filed separate applications for issuing direction by ~

the High Court to the writ petitioners whose writ petitions were dismissed
by the High Court to pay the difference of price between Rs. 124.59 and
Rs. 150 per quintal realised by them on account of interim order granted
E by the High Court along with interest. The High Court after hearing the
matter directed the appellants to credit to levy sugar price equalisation
fund the difference between_ the control price of Rs. 124.59 and the price
realised by them in respect of levy sugar sold by them between 31.7.72 to
12.3.73. The High Court further directed that the appellants shall credit to
F the fund interest at thi;. rate of 12- 1/2% per annum on the excess realisa-
tion made by them. It is against this order the appellants came to this Court
by means of special leave petitions.

This Court granted special leave in all the appeals limited to the
question as regards the liability of the appellants to pay interest on the
G amounts which they were called upon to refund the excess relisation
meaning thereby that leave was refused to the extent the appellants were
required to refund the excess realisation made by them. Thus the only ~

question which is before us is, as to whether the appellants are liable to
pay interest at the rate of 12-1/2% per annum on all the excess realisation
H made by them on the basis of interim orders obtained by them.
BILESHWAR KHANUDYOG KHEDUTSHAHAKARI MANDALI LTD.'· U.0.1. [V.N. KHARE,J.J 573

-
Learned counsel appearing for the appellants raised two arguments. A
"" The first argument is that the amount which the appellants were required
to refund was not an excess realisation within the meaning of the expression
"excess realisation" as contained in Section 2(b)(ii) of the Act. The second
argument is that their cases are not governed by sub-section (3) of Section
3 of the Act but are governed by Section 3(4) and (5) of the Act.
B
Coming to the first argument, the contention of the appellants coun-
sel is that since the interim orders passed by the High Court on the basis
of which the appellants made excess realisation having not set aside by the
appellate or higher court, the realisation made by the appellants would not
fall within the ambit of Section 2(b)(ii) of the Act. The contention is that c
interim orders passed in writ petitions although automatically lapsed on
dismissal of the writ petitions, but were not set aside by the Appellate or
Higher court. This contention is wholly untenable. It is not disputed that
on the dismissal of the writ petitions the interim orders passed therein were
automatically stood discharged. The ordinary meaning of the word 'set
D
aside' is to revoke or quash, the effect of which is to make the interim order
;.. inoperative or non-existent. In the present case when High Court dismissed
the writ petition the interim order passed therein became non-existent and
in-operative. The effect of setting aside an order or automatic discharge
consequent upon the dismissal of writ petition is the same. In fact the
expression 'set aside' used in Section 2(b)(ii) means the interim order has E
come to an end and has become inoperative. We, therefore, reject the first
argument of learned counsel for the appellant.

So far as the second argument is concerned, we have held herein-
before that the interim orders passed in the writ petitions came to an end F
on dismissal of the writ petition before the Act came into force, and under
)
such circumstances Section 3(4) and (5) can have no application in the
appellants' case. The Supreme Court in The Ankepa/le Co-operative
Agricultural & Industrial Society Ltd. and Another Etc. v. Union of India and
Others Etc., (1977] (4) S.C.C. 2041 has held that sub-sections (4) and (5)
of Section 3 do not apply to a case in which interim order made by a Court G
has already come to an end as a result of termination of final proceedings
'); '~fore the commencement of the Act. Moreover, the special leave against
the order passed by the High Court directing the appellants to refund the
excess realisation made by them was refused. Thus, it is not open to the
appellants to raise this argument again. Since in the present case sub-sec- H
574 SUPREME COURT REPORTS (1999] 1 S.C.R.
A tion (3) of Section 3 of the Act which provides for grant of interest on the
excess realisation made by the appellant is applicable the appellants are
liable to pay interest. We, therefore, reject the second contention of the
counsel.

For all the reasons stated above, we do not find any merit in the
B appeals. The appeals are dismissed with no order as to costs.
;-·
R.C.K. Appeals dismissed.

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