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Bileshwar Khan Udyog Khedut Shahakari Mandali Ltd. And Others v. Union Of India And Another
Factual and Procedural Background
The appellants—co-operative sugar factories in Gujarat—challenged (a) the Sugar Price Determination Order, 1972 and (b) the Levy Sugar Supply (Control) Order, 1972, both issued on 15-6-1972. The impugned orders required the sale of levy sugar at a controlled price of Rs 124.59 per quintal. By writ petitions filed in the Gujarat High Court, the appellants also sought interim relief restraining enforcement of these prices. On 31-7-1972 the High Court admitted the petitions and granted an interim order permitting sales at Rs 150 per quintal; the stay was made absolute on 29-8-1972.
When the petitions were taken up in March 1973, counsel for the sugar factories stated they had become infructuous, leading to dismissal with costs. In 1976 Parliament enacted the Levy Sugar Price Equalisation Fund Act (“the Act”), providing for recovery of excess realisations obtained under interim judicial orders. Relying on the Act, the Union of India asked the High Court to direct the appellants to remit the difference between Rs 124.59 and Rs 150 per quintal, with interest. The High Court ordered repayment of the differential and interest at 12½ % per annum for sales made between 31-7-1972 and 12-3-1973.
The appellants obtained special leave to appeal to the Supreme Court, limited solely to the question of liability to pay interest; leave was refused on the principal amount of excess realisation.
Legal Issues Presented
- Whether the sums collected by the appellants under the High Court’s interim orders constitute “excess realisation” within Section 2(b)(ii) of the Levy Sugar Price Equalisation Fund Act, 1976.
- Whether the appellants’ liability is governed by Section 3(3) of the Act (which mandates interest) or by Sections 3(4) and 3(5) (which concern cases where interim orders are still in force after commencement of the Act).
Arguments of the Parties
Appellants' Arguments
- The amounts ordered to be refunded were not “excess realisation” under Section 2(b)(ii) because the interim orders had never been “set aside” by an appellate or higher court; they merely lapsed on dismissal of the petitions.
- Their situation was governed by Sections 3(4) and 3(5) of the Act, not Section 3(3); consequently, interest should not be levied.
Table of Precedents Cited
| Precedent | Rule or Principle Cited For | Application by the Court |
|---|---|---|
| Anakapalle Coop. Agricultural & Industrial Society Ltd. v. Union of India (1977) 4 SCC 130; AIR 1977 SC 2041 | Sections 3(4) & 3(5) of the Levy Sugar Price Equalisation Fund Act are inapplicable where the interim order had already ceased before the Act commenced. | Relied upon to reject the appellants’ contention that their case falls under Sections 3(4) and 3(5); the Court held Section 3(3) (imposing interest) applies. |
Court's Reasoning and Analysis
First Issue – Meaning of “excess realisation”: The Court held that dismissal of a writ petition automatically discharges any interim order, rendering it “non-existent and inoperative.” The statutory phrase “set aside” in Section 2(b)(ii) encompasses such automatic discharge. Therefore, sums collected under the lapsed interim orders squarely constitute “excess realisation.”
Second Issue – Applicability of Section 3(3): Because the interim orders had ended before the Act commenced, Sections 3(4) and 3(5) were inapplicable. Consistent with the Supreme Court’s ruling in Anakapalle, Section 3(3)—which mandates payment of interest on excess realisation—governs the case. Further, special leave had been refused on the principal refund, precluding re-litigation of that aspect. Consequently, the appellants are statutorily liable for interest at 12½ % per annum.
Holding and Implications
APPEALS DISMISSED. The Supreme Court affirmed the High Court’s direction that the appellants pay interest at 12½ % per annum on the excess realisation credited to the Levy Sugar Price Equalisation Fund.
Implications: The decision obliges the concerned sugar factories to remit statutory interest in addition to the principal differential, reinforcing the mandatory nature of Section 3(3) of the 1976 Act when interim pricing orders have expired before the Act’s commencement. The ruling applies existing precedent rather than creating new doctrine.
V.N Khare, J.— The appellants in these appeals are cooperative sugar factories engaged in the business of manufacture of sugar in the State of Gujarat. On 15-6-1972, the respondent issued an order known as the Sugar Price Determination Order and on the same day, the Levy Sugar Supply (Control) Order, 1972 was issued under which the sugar manufacturers were required to sell sugar to the Union Government, the State Government or their nominees at the controlled price of Rs 124.59 per quintal for D Grade sugar. The appellants challenged the aforesaid Sugar Price Determination Order and Levy Control Order by means of separate petitions before the Gujarat High Court. In the writ petition, there was a prayer for interim relief also. The interim prayer as contained in the writ petition reads as follows:
“That pending the hearing of the petition, your Lordships will be 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 the Union Government or to their nominees at a price of Rs 150 per quintal.”
2. The High Court by an order dated 31-7-1972 admitted the writ petition and granted interim order as prayed for in the writ petition. Subsequently on 29-8-1972, the stay order was made absolute. Sometime in March 1973, the writ petition came up for hearing and on that day, the counsel for the appellant stated before the Court that by the lapse of time, the writ petition was rendered infructuous. Consequently, the writ petition was dismissed with costs. After dismissal of the aforesaid writ petition, Parliament passed an Act known as the 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 on the basis of interim orders issued by the courts. After the Act came into force, the 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 the interim order granted 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 31-7-1972 to 12-3-1973. The High Court further directed that the appellants shall credit to the Fund interest at the rate of 12½% per annum on the excess realisation made by them. It is against this order, the appellants came to this Court by means of special leave petitions.
3. 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 amounts which they were called upon to refund the excess realisation 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 12½% per annum on all the excess realisation made by them on the basis of interim orders obtained by them.
4. Learned counsel appearing for the appellants raised two arguments. 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 Sections 3(4) and (5) of the Act.
5. Coming to the first argument, the contention of the appellants' counsel is that since the interim orders passed by the High Court on the basis of which the appellants made excess realisation having not been 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 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 automatically stood discharged. The ordinary meaning of the words “set 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 the High Court dismissed the writ petition, the interim order passed therein became non-existent and inoperative. 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 come to an end and has become inoperative. We, therefore, reject the first argument of learned counsel for the appellant.
6. So far as the second argument is concerned, we have held hereinbefore that the interim orders passed in the writ petitions came to an end on dismissal of the writ petition before the Act came into force, and under such circumstances, Sections 3(4) and (5) can have no application in the appellants' case. The Supreme Court in Anakapalle Coop. Agricultural & Industrial Society Ltd. v. Union of India (1977) 4 SCC 130, AIR 1977 SC 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 has already come to an end as a result of termination of final proceedings before 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-section (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.
7. For all the reasons stated above, we do not find any merit in the appeals. The appeals are dismissed with no order as to costs.
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