An interim order is designed to protect rights while a dispute remains pending. But what happens when benefits granted under such an interim arrangement are claimed even after the final judgment has removed the very legal foundation on which that arrangement rested?
The Supreme Court addressed this important question in Government of India & Anr. v. Sri Devraj Urs Medical College, 2026 INSC 799, decided on 4 August 2026 by a Bench comprising Justice Dipankar Datta and Justice Sheel Nagu. The appeal arose from orders of the Karnataka High Court directing continuation of payments under a subvention scheme that had originated from an interim order passed in the long-running T.M.A. Pai Foundation litigation.
The Court ultimately held that the subvention scheme could not continue generating annual payment obligations after the eleven-judge Bench decision in T.M.A. Pai Foundation v. State of Karnataka had declared the underlying Unni Krishnan scheme unconstitutional.
The judgment carries significance beyond educational institutions. It reinforces an important procedural principle: an interim arrangement remains subordinate to the final adjudication and cannot ordinarily be converted into a continuing substantive entitlement after its legal foundation disappears.
How an Interim Order Created the Subvention Scheme
The controversy has its roots in the regulation of admissions and fees in professional educational institutions. During the pendency of the T.M.A. Pai Foundation proceedings, the Supreme Court passed an interim order dated 11 August 1995. Pursuant to that order, a subvention scheme was introduced with the objective of addressing concerns relating to capitation fees while ensuring that merit remained an important consideration in admission to professional courses.
The scheme became effective from the academic year 1995-96. Under it, the Central Government was required to extend a subvention amount to eligible colleges.
The amount was ₹5,000 per annum per student, excluding NRI students. The scheme contemplated payment until completion of the course or for five years, whichever occurred earlier. Importantly, however, these directions were expressly made subject to the final outcome of the T.M.A. Pai Foundation proceedings.
This qualification ultimately became crucial. The interim arrangement was never operating independently of the pending litigation. Its continued legal existence was tied to what the larger Bench would ultimately decide.
The Constitutional Turning Point in T.M.A. Pai Foundation
The interim order that gave rise to the subvention scheme also referred the larger questions surrounding professional education to a larger Bench. This eventually resulted in the constitution of the eleven-judge Bench in T.M.A. Pai Foundation.
On 31 October 2002, the eleven-judge Bench delivered its final judgment. One of the questions before it concerned the correctness of the scheme framed in Unni Krishnan, J.P. v. State of Andhra Pradesh.
The Supreme Court answered that question by holding that the scheme framed in Unni Krishnan and the direction imposing it were unconstitutional, except insofar as the judgment recognised primary education as a fundamental right. At the same time, the Court preserved the principle that educational institutions could neither charge capitation fees nor engage in profiteering, while permitting reasonable surplus for expansion and improvement of facilities.
This final declaration fundamentally altered the legal landscape. The question that subsequently arose was whether payments flowing from the earlier interim arrangement could nevertheless continue for students admitted while that arrangement was still operating.
Why the Medical College Approached the Karnataka High Court
After the final judgment in T.M.A. Pai Foundation, the Government stopped the subvention payment. A communication dated 13 May 2005 denied payment of the subvention amount for the academic year 2002-03 onwards.
Sri Devraj Urs Medical College challenged the decision before the Karnataka High Court. The Single Judge accepted the college’s case to a substantial extent. The Government’s communication was quashed and a writ of mandamus was issued directing the Government of India to make payment in terms of the 11 August 1995 interim order for students admitted latest in the academic year 2002-03, for five years or until completion of their course, whichever was earlier.
However, the college was held not entitled to subvention for students admitted during 2003-04 and thereafter because of the final eleven-judge Bench judgment delivered on 31 October 2002.
The Division Bench upheld the Single Judge’s decision, leading the Government to approach the Supreme Court.
The High Court’s Reasoning: Had a Vested Right Already Arisen?
At the heart of the High Court’s approach was the proposition that students admitted during the operation of the interim scheme had already entered the system under that arrangement.
The Single Judge considered that actions taken pursuant to the interim order stood protected and that a vested right had arisen in favour of the colleges to receive subvention payments.
Accordingly, the final T.M.A. Pai Foundation judgment could not, according to this reasoning, retrospectively take away that right.
This led to the conclusion that students admitted during the academic year 2002-03 and earlier would continue attracting subvention payments throughout the five-year course, even though some of those annual payments would become due after 31 October 2002.
The Supreme Court, however, found a fundamental difficulty with this approach.
The Key Question Before the Supreme Court
The Court formulated two questions:
- Whether the final eleven-judge Bench decision in T.M.A. Pai Foundation required interference with the judgments of the Single Judge and Division Bench of the Karnataka High Court; and
- Whether the Government of India and Government of Karnataka were entitled to relief.
Resolving these questions required the Court to examine the nature of the subvention obligation itself.
Was the Government’s liability fixed once a student was admitted?
Or did a separate payment obligation arise each year?
The distinction proved decisive.
Annual Payment Is Not a Five-Year Vested Entitlement
The Supreme Court emphasised that the subvention scheme did not require the Government to make a single lump-sum payment covering the entire course. Instead, the Central Government’s obligation was annual.
This meant that although the scheme referred to payments continuing until completion of the course or five years, the entire five-year amount did not become payable or vested at the moment of admission. A fresh obligation to make payment arose annually.
Therefore, once the scheme itself ceased to survive after the final T.M.A. Pai Foundation judgment, the Government could not be compelled to continue making annual payments on the theory that admission during the subsistence of the interim arrangement had created an irrevocable five-year entitlement.
The Supreme Court held:
“the schemes or executive instructions, particularly the subvention scheme, died its own death on 31.10.2002”
The Court further explained that because payment was annual rather than a lump-sum obligation for the whole course, it was impermissible to direct payment for the entire five-year period after the scheme had been declared unconstitutional.
Can an Interim Order Survive a Contrary Final Judgment?
The judgment demonstrates why the character of an interim order matters. An interim order operates during the pendency of litigation. It may preserve the status quo, regulate conduct, protect a party against immediate prejudice, or establish a temporary arrangement until the court finally determines the parties’ rights.
But such an order does not ordinarily stand on the same footing as the final adjudication. That principle became particularly strong in the present case because the subvention arrangement itself had been expressly made subject to the final outcome of the eleven-judge Bench proceedings.
Once the final judgment removed the foundation of the scheme, the temporary arrangement could not continue indefinitely as though the final judgment had never been delivered.
The significance of the ruling therefore lies not merely in the fact that an interim scheme ended, but in why future benefits under that scheme could not be enforced.
The right asserted by the college depended on continuing annual obligations. Those obligations had not all crystallised before the final judgment.
The Question of Prospective and Retrospective Application
An important part of the dispute concerned whether T.M.A. Pai Foundation was prospective in its application. The Karnataka High Court had relied upon a clarificatory Supreme Court decision dated 1 April 2003 in State of Karnataka v. T.M.A. Pai Foundation.
The Single Judge understood that order as indicating that the final judgment operated prospectively and therefore did not disturb rights already arising under the interim arrangement.
The Supreme Court disagreed with this reading. The clarificatory order had directed that pending matters be reconsidered by the respective High Courts in accordance with the law declared in T.M.A. Pai Foundation. It also stated that statutory enactments, orders, schemes and regulations would have to be brought into conformity with the Constitution Bench decision.
The Supreme Court found that the clarificatory order did not expressly declare the eleven-judge Bench ruling to be prospective.
Supreme Court Decisions Are Retrospective Unless Otherwise Stated
The Court then relied upon P.V. George v. State of Kerala, (2007) 3 SCC 557, for the principle that where a Supreme Court decision does not expressly provide for prospective application, the law declared by the Court operates retrospectively.
The judgment quoted the principle:
“The law declared by a Court will have a retrospective effect if not otherwise stated to be so specifically.”
Thus, prospectivity could not simply be inferred from the fact that existing arrangements had previously operated under the interim regime.
At the same time, the Court carefully examined paragraph 393 of T.M.A. Pai Foundation and the 1 April 2003 clarification.
Its conclusion was more nuanced than saying that everything preceding 31 October 2002 automatically stood erased.
The Court held that the intention was to accord prospective treatment to statutory provisions that stipulated something contrary to the ratio of T.M.A. Pai Foundation. But the position of the subvention scheme was different because it was a scheme or executive arrangement born from the interim order itself.
Accordingly, the subvention scheme ceased to operate on 31 October 2002.
Completed Transactions and Future Obligations Are Different
The judgment should not be read as laying down that every act performed pursuant to an interim order automatically becomes invalid when the final decision takes a different view.
The real distinction is between what has already been completed and what is sought to be enforced in the future.
Suppose a temporary judicial arrangement authorises recurring annual benefits while litigation remains pending. Payments already made during that period present one question. Payments that become due after the final judgment has invalidated the underlying arrangement present another.
In the present case, the Court was dealing with the latter. The college’s claim effectively treated admission in 2002-03 as creating a vested entitlement to all subsequent annual payments for the entire course.
The Supreme Court rejected that proposition because the scheme itself contemplated payment annually. The Government had never become liable, at the moment of admission, for a single consolidated five-year amount.
Therefore, future instalments could not be insulated from the effect of the final judgment merely by describing them as consequences of an earlier admission.
Importance of Proper Pleadings in Writ Proceedings
The judgment also contains an important procedural lesson regarding pleadings. During arguments, the Supreme Court specifically asked whether the college had furnished data concerning the fees charged and expenditure incurred during the academic year 2002-03 and surrounding periods.
The answer was negative. The Court observed that it was therefore unable to determine whether the revenue generated through tuition fees and other sources was insufficient to meet the college’s expenditure.
In this context, the Court relied upon Bharat Singh v. State of Haryana, (1988) 4 SCC 534. The principle is particularly important in writ litigation: where a legal contention requires factual substantiation, the relevant facts and supporting material must be placed before the court through proper pleadings.
The Supreme Court noted that in writ proceedings, the necessary facts as well as evidence supporting those facts have to be pleaded and annexed. A party cannot ordinarily leave the factual foundation absent from its pleadings and attempt to establish the point only at the stage of arguments.
The Court consequently found itself unable to endorse the direction requiring subvention payments after the academic year 2002-03.
Why the Judgment Matters Beyond the Subvention Scheme
Although the dispute arose from funding of professional educational institutions, the reasoning has broader relevance wherever rights or benefits are claimed under interim judicial arrangements.
Three propositions emerge.
First, an interim order must be understood in the context of the litigation in which it is passed. If an arrangement is expressly made subject to the final outcome, parties cannot ordinarily detach the arrangement from that condition once the final judgment arrives.
Second, courts must examine the precise nature of the alleged vested right. A recurring payment arrangement does not necessarily create an immediate vested right to every future instalment.
Third, final adjudication must retain supremacy. Otherwise, interim relief could produce an anomalous result in which a temporary judicial arrangement continues imposing obligations even after the final judgment has held its underlying basis legally unsustainable.
That would effectively permit the interim order to prevail over the final judgment.
Supreme Court’s Final Decision
The Supreme Court partly upheld the orders of the Single Judge and Division Bench only insofar as they denied payment of the subvention amount beyond the academic year 2002-03.
However, it set aside the High Court orders to the extent that they directed payment of subvention for the entire five-year course in respect of students admitted during 2002-03.
The appeal was consequently partly allowed. The connected civil appeal arising out of SLP (C) No. 9079 of 2011 was directed to be governed mutatis mutandis by the same judgment.
Key Takeaway: Interim Protection Cannot Become a Permanent Right
Government of India v. Sri Devraj Urs Medical College provides an important clarification on the relationship between interim judicial arrangements and final adjudication.
The decisive factor was that the subvention scheme was itself a product of an interim order, was expressly subject to the final outcome of T.M.A. Pai Foundation, and imposed an annual, rather than a one-time five-year, payment obligation.
Once the final judgment declared the underlying scheme unconstitutional, the temporary arrangement could no longer generate fresh annual liabilities.
The decision therefore does not establish that every completed action under an interim order must automatically be undone. Instead, it highlights the distinction between past and concluded transactions and future or recurring obligations that have yet to accrue.
For litigants, the message is significant. Receiving a benefit under an interim order does not necessarily create a permanent substantive entitlement. The nature of the interim order, the conditions attached to it, the manner in which the benefit accrues and, above all, the final judgment will determine whether any continuing right survives.
For courts, the judgment reinforces an equally important institutional principle: interim adjudication must remain subordinate to final adjudication.
An interim order serves as a bridge while rights are being determined. Once the final judgment arrives, that bridge cannot be treated as the destination itself.