Supreme Court Condemns Routine Grant of Interim Orders by High Courts, Emphasizes Protection of Public Revenue

In landmark judgment in Assistant Collector of Central Excise v. Dunlop India Ltd., the Supreme Court deprecates the practice of granting non-speaking, ex parte interim reliefs under Article 226, cautioning courts against undermining public interest and statutory remedies.

The Supreme Court of India, in a significant judgment delivered on November 30, 1984, in the case of Assistant Collector of Central Excise, Chandan Nagar, West Bengal v. Dunlop India Ltd., has strongly reprimanded the tendency among some High Courts to grant interim orders on mere requests without adequate consideration of public interest and statutory alternatives. The bench comprising Justices O. Chinnappa Reddy, A. P. Sen, and E. S. Venkataramiah, emphasized that such orders—often non-speaking and ex parte—pose a grave risk to the administration of justice and public welfare.

The case arose when Dunlop India Ltd., a manufacturer of tyres and rubber products, sought an interim order from the Calcutta High Court restraining central excise authorities from levying certain excise duties, claiming exemption under a government notification. The High Court granted interim relief allowing Dunlop to avail of exemption benefits amounting to Rs. 2.93 crores on furnishing a bank guarantee. The Central Excise Department challenged this order through an appeal.

The Supreme Court, while hearing the appeal, vacated the interim orders granted by the Calcutta High Court. The Court observed that granting such large-scale interim reliefs in matters involving public revenue, on the basis of a prima facie case alone, was unsustainable. It stressed that governments cannot operate on bank guarantees alone; liquid cash is essential for running governmental functions and public services. The Court reiterated the need for courts to carefully balance the convenience and injury to the parties while giving due regard to the public interest before granting interim relief.

Drawing on precedents such as Samarias Trading Co. Pvt. Ltd v. S. Samuel, Siliguri Municipality v. Amalendu Das, Titaghur Paper Mills Co. Ltd. v. State of Orissa, and Union of India v. Oswal Woollen Mills Ltd., the Supreme Court reiterated that Article 226 writ jurisdiction is an extraordinary remedy meant for exceptional circumstances and not a tool to bypass statutory remedies. The Court decried the widespread practice of filing writ petitions in distant courts to delay proceedings and obtain interim reliefs, which often leads to administrative paralysis and jeopardizes public revenue and services.

Justice Chinnappa Reddy underscored the serious ramifications of indiscriminate interim orders, citing examples where essential civic services, transport permits, excise collections, and welfare legislations have been disrupted due to such orders. The Court called for prudence, discretion, and circumspection, emphasizing that interim relief should only be granted when there is a clear balance of convenience in favor of the applicant and no likelihood of prejudice to the public interest.

The judgment also highlighted the hierarchical nature of the Indian judicial system, underscoring that lower courts and High Courts must loyally adhere to the law declared by the Supreme Court under Article 141 of the Constitution.

The appeal by the Assistant Collector of Central Excise was allowed with costs, and the Supreme Court’s decision serves as a stern reminder to High Courts to exercise caution and judicial discipline in granting interim orders, especially in cases involving public revenue and administration.

Statutory provisions

Article 141 of the Constitution of India, Article 144 of the Constitution of India, Article 226 of the Constitution of India, Central Excise Rules, 1944 (Rule 8(1)), Central Excise and Salt Act, 1944, Evidence Act, 1872 Sections 56 and 57

Assistant Collector of Central Excise, Chandan Nagar, W.B. v. Dunlop India Ltd., (SC) : Law Finder Doc Id # 90176