An interim order staying the recovery of dues does not absolve the beneficiary from the obligation to pay interest on those dues once the order is lifted; the principle of restitution mandates that the beneficiary must compensate for amounts withheld.

ORDER

S. ABDUL NAZEER, J.

Leave granted.

2. This appeal is directed against the order dated 10.05.2018 passed by the High Court of Judicature at Allahabad (Lucknow Bench) in Misc. Single No. 2582 of 2003 whereby the High Court has set aside the demand made by the appellants for a sum of Rs. 10,08,210.51 towards interest on arrears of excise revenue.

3. Brief facts necessary for disposal of this case are as under:

On 14.03.2002, the Government of Uttar Pradesh declared the Excise Policy for the year 2002-2003. On the basis of the Excise Policy and under the provisions of U.P. Excise (Settlement of License for Retail Sale of Country Liquor) Rules, 2002 (for short ‘the Rules’), the District Magistrate/Collector, Lakhimpur Kheri issued an advertisement for the settlement of the excise shops for the year 2002-2003.

4. The respondent submitted an application in the prescribed form for grant of license for the retail sale of country liquor shop, Mohammadi No. 1, Lakhimpur Kheri. A license was granted to the respondents for the year 2002-2003 (from 01.04.2002 to 31.03.2003) for an annual license fee of Rs. 29,52,000/-.

5. In the month of December 2002, the respondent submitted an application for surrendering the excise shop/license.

6. As per the terms and conditions of the settlement, the respondent was liable to pay license fee for the shop for the aforesaid period i.e. from 01.04.2002 to 31.03.2003. The respondent had lifted quota of Rs. 20,35,212/- by the month ending 31.12.2002.

7. The appellants vide notice dated 06.01.2003 apprised to the respondent that the application filed by him for surrender of excise shop can be entertained only after deposit of balance of Rs. 9,16,788/- towards license fee. On 25.01.2003 the appellants again issued notice to the respondent to pay the outstanding license fee amounting to Rs. 9,16,788/- within a week.

8. The respondent preferred Writ Petition No. 855 (MB) of 2003 wherein the High Court directed the respondent to file an appeal before the Additional Commissioner Excise (Licensing and Industrial Development) U.P. Accordingly, the respondent filed an appeal on 19.02.2003 before the Excise Commissioner, U.P., Allahabad. Subsequently on 08.03.2003, the license of the respondent was cancelled. The Excise Commissioner, while dismissing the appeal vide order dated 23.04.2003, held that under Rule 19 and Section 36 of the U.P. Excise Act, 1910 (for short, ‘the Act’), the respondent is liable to pay entire dues. The revision filed by the respondent was also dismissed by the Secretary, Excise Department by order dated 18.07.2003.

9. After cancellation of the license, the District Excise Officer recalculated the total amount due against the respondent and adjusted the amount of security of Rs. 2,95,200/- out of total amount of Rs. 9,38,762/- and found the respondent was still liable to pay Rs. 6,43,562/- to the Department.

10. Aggrieved by the order dated 18.07.2003, the respondent filed the writ petition, Misc. Single No. 2582 of 2003, before the High Court of Judicature at Allahabad (Lucknow Bench). The High Court, vide order dated 01.08.2003, stayed the said recovery proceedings subject to deposit of Rs. 2,75,000/- by the respondent before the District Excise Officer.

11. The appellants filed counter affidavit in the writ petition on 13.02.2004. On 21.12.2015, the writ petition was dismissed by the High Court for non-prosecution. In the year 2017, the respondent deposited the remaining amount of Rs. 3,68,562/- with the Department. Thus, the amount which was due in 2003 was paid in the year 2017 but the respondent failed to make payment of interest to the Department. The order dated 21.12.2015 was recalled by the High Court on 19.01.2018.

12. Further, on 10.01.2018, the Department issued notice to the respondent for payment of Rs. 10,08,210.51 due towards interest. On 10.05.2018 the High Court passed the impugned order holding that the demand of Rs. 10,08,210.51 towards interest was not justified as the respond