Restitution under Civil Procedure Code

“Any civilized system of law is bound to provide remedies for cases of what has been called unjust enrichment or unjust benefit, that is, to prevent a man from retaining the money of, or some benefit derived from, another which it is against conscience that he should keep." [1] 

Restitution is an ancient institution which has had an established position in the history of law and justice. It has its historical origin in the middle Ages and can mainly be found in the Germanic Common laws. Oxford English Dictionary defines ‘restitution’ as “an act of restoring a thing to its proper owner". [2] The word in its etymological sense means ‘restoring to a party on the modification, variation or reversal of a decree or order, what has been lost to him in execution of decree or order of the court or in direct consequence of a decree or order’. [3] To cite Black’s Law Dictionary, the term has been defined in three senses, viz.(1) return or restoration of some specific thing to its rightful owner or status; (2) compensation for benefits derived from a wrong done to another; (3) compensation or reparation for the loss caused to another. [4] As far as Indian Code of Civil procedure is concerned, though the term “restitution" has not been defined in the Code, it has got its statutory recognition in the section 144. The Section reads as follows-

144. Application for restitution.—(1) Where and insofar as a decree or an order is varied or reversed in any appeal, revision or other proceeding or is set aside or modified in any suit instituted for the purpose, the Court which passed the decree or order shall, on the application of any party entitled to any benefit by way of restitution or otherwise, cause such restitution to be made as will, so far as may be, place the parties in the position which they would have occupied but for such decree or order or such part thereof as has been varied, reversed, set aside or modified; and, for this purpose, the Court may make any orders, including orders for the refund of costs and for the payment of interest, damages, compensation and mesne profits, which are properly consequential on such variation, reversal, setting aside or modification of the decree or order]. Explanation.—For the purposes of sub-section (1), the expression ― “Court which passed the decree or order" shall be deemed to include,— (a) where the decree or order has been varied or reversed in exercise of appellate or revisional jurisdiction, the Court of first instance; (b) where the decree or order has been set aside by a separate suit, the Court of first instance which passed such decree or order; (c) where the Court of first instance has ceased to exist or has ceased to have jurisdiction to execute it, the Court which, if the suit wherein the decree or order was passed were instituted at the time of making the application for restitution under this section, would have jurisdiction to try such suit.

Restitution is not a new concept and section 144 is merely recognition of the principle of equity and justice prevalent for a long time. The objective behind the Section 144 is that no person should be allowed to enjoy a benefit derived pursuant to an order/judgment of a court if such order/judgment is ultimately finally not sustained. The provision relating to s.144 only intends to regulate the inherent power of the court in that behalf, which the court can exercise suo motto whenever justice of the case demands so [5] . The Court in a very landmark judgement of Binayak Swain v. Ramesh Chandra Panigrahi, [6] laid down the doctrine as follows-

“The principle of the doctrine of restitution is that on the reversal of a decree, the law imposes an obligation on the party to the suit who received the benefit of the erroneous decree to make restitution to the other party for what he has lost. This obligation arises automatically on the reversal or modification of the decree and necessarily carries with it the right to restitution of all that has been done under the erroneous decree; and the Court in making restitution is bound to restore the parties, so far as they can be restored, to the same position they were in at the time when the Court by its erroneous action had displaced them from."

Throwing light on the importance of this doctrine, the Supreme Court in South Eastern Coal Fields Limited v. State of M.P. [7] said-

“Litigation may turn into a fruitful industry. Though litigation is not gambling yet there is an element of chance in any litigation. Unscrupulous litigants may feel encouraged to approach the courts, persuading the court to pass interlocutory orders favourable to them by making out a prima facie case when the issues are yet to be heard and determined on merits and if the concept of restitution is excluded from application to interim orders, then the litigant would stand to gain by swallowing the benefits yielding out of the interim order even though the battle has been lost at the end. This cannot be countenanced."

It will be wrong to assume that it is the act of the court being wrongful or a mistake or error committed by the court which attracts the applicability of the doctrine of restitution. The real test is whether on account of an act of the party persuading the court to pass an order, or an unsustainable holding by the Court, there has resulted one party gaining an advantage which it would not have otherwise earned, or the other party suffering an impoverishment which it would not have suffered but for the order of the court and the act of such party. One wide area of applicability of this doctrine is interim injunction. When at the end of the proceedings the court pronounces its judicial verdict which does not match with and countenance its own interim verdict, the Courts find nothing irrational in the parties demanding restitution. The Supreme Court in Commissioner of Income Tax v. Vinod Kumar Didwania [8] held that it is an abuse of the process of law where interim injunction is obtained and thereafter benefit is derived of the same by removing the goods of the assessee, from the godowns and then withdrawing the writ petition. The Supreme Court held that in such a case regardless of the validity of prohibitive order issued by the Income Tax Authority, the petitioner was liable to restitute the value of goods which were removed from the godowns. Similarly in DTC v. M/S International Avenues [9] , it was held that any person who withdraws proceedings without seeking adjudication of the same, or even when proceedings are dismissed, such plaintiff/applicant/petitioner is bound to restitute the benefit which it has received under interim orders of the court. A simpliciter withdrawal of proceedings without restitution of benefit cannot be granted by the court.

So far as the quantum of restitution is concerned, it depends upon the facts and circumstances of a given case and the Court may take into consideration not only what the party excluded would have made but also what the party under obligation has or might reasonably have made.

Restitution and the Scope of Section 144

The ambit of the term ‘restitution’ is very wide and Section 144 of the CPC is not exhaustive of the doctrine. The Court’s jurisdiction with regard to restitution can be exercised even when a case does not strictly fall within the ambit of Section 144. This has clearly been laid down in number of Supreme Court’s cases like Kavita Trehan v. Balsara Hygiene Products Ltd. [10] , Gangadhar v. Raghubar Dayal [11] , State Govt. of A.P. v. Manickchand Jeevraj & Co [12] . In Kavita Trehan’s case [13] the court para 16 says that “the Law of Restitution encompasses all claims founded upon the principle of unjust enrichment" be it in equity or under any law. One more widening provision is Section 151 of the CPC, under which the courts have inherent power to order restitution even when the section 144 cannot be applied. [14] There are several cases on this point. One case is Ram Rattan v. Banarsi Lal [15] in which Patna High Court set aside a sale on an application under order 21, rule 90, but ordered the judgement-debtor, mesne profits under s 151 from the decree-holder purchaser, for the period he was in possession. Another case is Prasad v. British Insulated Calendars Cables Ltd. [16] , in which the standard rent fixed under the West Bengal Premises Rent Control Act 1950, was reduced in appeal, by the Rent Controller. The Court in the present case held that a claim for restitution of the excess rent paid under the order of the controller was not maintainable under section 144. However, the court agreed that it could be sustained on general principles of restitution outside the scope of S.144. One more case on the similar lines is Rakesh Singhal v. Fifth Addl. District & Session Judge, Bulandshahr [17] . In the instant case the plaintiff, in a suit for injunction against the defendants for restraining them from interfering with the construction of a wall in a passage, wrongly obtained an ex parte interim injunction by misleading the court in as much as the sale deed, on the basis of which the plaintiff claimed ownership of the suit property was not placed before the court and the defendants were not heard before passing the order of interim injunction. The plaintiff, however, completed the construction of the wall after obtaining the decree, and then applied for the withdrawal of the suit, praying for dismissal of the injunction application, as ‘not pressed’. The Court held that the order can be passed for demolition of the wall under section 151 even if section 144 cannot be applied in this case. Jamaluddin v. Mirza Quader Baig, is another case in which the Court held that it can restore possession in exercise of its inherent powers under Section 151 of CPC and there was no necessity of filing a petition under Section 144 of CPC.

In Sujit Pal v. Prabir Kumar Sun, the Court invoked its inherent power to grant temporary mandatory injunction by directing the police to restore possession when the plaintiff in a suit for permanent injunction and declaration of tenancy was forcibly dispossessed in violation of the interim injunction. Also, in a case where X sued Y to establish his right to a fund in court, and Y was allowed to draw the money on giving an undertaking to the court to repay it if X succeeded in the suit, and Y succeeded in establishing his title; it was held that though the undertaking given by Y did not provide for the payment of interest, the court had inherent power to order Y to repay the money with interest. [18] Again in Priya Brata Maity v. State of West Bengal [19] , where a landlord, with a blatant disregard to material fact and provisions of WB Municipal Act, succeeded in getting an order to demolish premises with the help of police and the chairman of the local corporation, the Court held that the it can direct restitution of tenant by directing landlord and municipality to reconstruct the building, if necessary, and put the tenant in original possession.

Extending the scope and applicability of the section 144, the Allahabad High Court in Jogendra Nath Singh v. Hira Shahu [20] held that a case for restitution would fall within the purview of section 144, even when the decree is set aside in a separate suit, or where the court itself sets aside its own ex parte decree. [21] The view has now been firmly affirmed by the 1976 Amendment Act which declared it in the clear terms that the restitution can be availed in cases where a decree is set aside or modified in another subsequent suit filed in another court for that purpose. On the similar lines, in cases like Ankamma v. Basavapunniah [22] , Choudhry Hari Ram v. Pooran Singh [23] and Harihar Sao v. Bhagwan Das [24] , various High Courts held that section 144 will apply even when the decree or order is reversed. Furthermore Section 144 CPC speaks not only of a decree being varied, reversed, set aside or modified but also includes an order on a par with a decree. The scope of the provision is wide enough so as to include therein almost all the kinds of variation, reversal, setting aside or modification of a decree or order.

Despite having such a wide ambit, the doctrine has also got some limitations. For example, laying down an important principle, the Court in Montharampallipadipura Attakoya v. Neelathupura Kunhiseethikoya Thangal [25] held that the recourse to the principle of restitution will be of no avail as against a party to the suit who get the property otherwise than under the decree or the order of the court. Therefore, the cases where the petitioner gets the possession of the property under executive order, its restitution cannot be ordered. Secondly, when it is impossible to restore the aggrieved party to the earlier position or undo the effect of a wrong order, the court can choose to not disturb its earlier order.

Conclusion

The doctrine of restitution as envisaged under the CPC is an enabling provision in consonance with the principles of equity and justice. Section 144 together with section 151 covers almost all such cases and ensure that a person should not be allowed to enjoy a benefit derived pursuant to an order/judgment of a court if such order/judgment is ultimately finally not sustained. In such cases, it is generally the aggrieved party who ask the court to grant order of restitution. But, the he Court can also suo motto give an order of restitution whenever it thinks fit in the interest of justice. For example, in Jamaluddin v. Mirza Quader Baig, the Court held that it can restore possession in exercise of its inherent powers under Section 151 of CPC and there was no necessity of filing a petition under Section 144 of CPC. There is no dearth of cases where the court agreed to apply general principles of restitution even outside the scope of S.144. Extending the scope and applicability of the section 144, the Allahabad High Court in Jogendra Nath Singh v. Hira Shahu [26] held that a case for restitution would fall within the purview of section 144, even when the decree is set aside in a separate suit, or where the court itself sets aside its own ex parte decree. [27] The scope of the provision is wide enough so as to include therein almost all the kinds of variation, reversal, setting aside or modification of a decree or order. Section 144 tries to restore the aggrieved party in the original position as far as possible. But, wherever it is impossible to restore the aggrieved party to the earlier position or undo the effect of a wrong order, the court can simply choose to not disturb its earlier order.