The institution of litigation cannot be permitted to confer any advantage on a party by delayed action of courts – Supreme Court

SUPREME COURT OF INDIA

The Supreme Court has propounded a new doctrine laying down eight cardinal principles for the judiciary in order to prevent unscrupulous litigants from misusing the legal process and turning it into a “fruitful industry.” “Litigation should not be permitted to turn into a fruitful industry so that the unscrupulous litigants are encouraged to invoke the jurisdiction of the court,” a Bench comprising Justices Dalveer Bhandari and HL Dattu said in a 158-page verdict while penning the 7th principle. According to the 5th and 6th principles, no litigant should be allowed to derive benefit from the mere pendency of a case in a court of law and no party can take any benefit of his own wrongs. “The institution of litigation cannot be permitted to confer any advantage on a party by delayed action of courts,” reads the last principle of the doctrine.

“While adjudicating, the courts must keep the following principles in view,” the Bench said at the outset of its doctrine theory and went on to outline them. The first and the foremost principle: “It is the bounden duty and obligation of the court to neutralise any unjust enrichment and undeserved gain made by any party by invoking the jurisdiction of the court.”

The second principle is about interim relief and the need for preventing its misuse. “When a party applies and gets a stay or injunction from the court, it is always at the risk and responsibility of the party applying. An order of stay cannot be presumed to be conferment of additional right upon the litigating party.” Unscrupulous litigants should be prevented from taking undue advantage by invoking the jurisdiction of courts, reads principle No. 3.The next one is about the dangers of showing leniency to persons in wrongful possession. Such persons should not only be removed from the places of wrongful possession “as early as possible but also be compelled to pay for wrongful use” by way of fine, penalty and cost. “Any leniency would seriously affect the credibility of the judicial system,” warns the Supreme Court.

The apex court has come out with the guidelines while imposing a cost of Rs 10 lakh on a chemical industry that successfully stayed away from implementing its verdict for 15 years by filing some interlocutory application (IA) or the other. The industrial unit, along with others, had polluted the soil and ground water of Bichhri village in Udaipur district of Rajasthan.

The Bench comprising Justices Dalveer Bhandari and HL Dattu dealt with the subject in detail while delivering judgement in the case Indian Council for Enviro Legal Action vs Union of India. The Bench stated :  

We would also like to discuss the concept of Finality of the Judgment passed by the Apex Court.

The maxim `interest Republicae ut sit finis litium’ says that it is for the public good that there be an end of litigation after a long hierarchy of appeals. At some stage, it is   necessary to put a quietus. It is rare that in an adversarial system, despite the judges of the highest court doing their best, one or more parties may remain unsatisfied with the most correct decision. Opening door for a further appeal could be opening a flood gate which will cause more wrongs in the society at large at the cost of rights.

It should be presumed that every proceeding has gone through infiltration several times before the decision of the Apex Court. In the instant case, even after final judgment of this court, the review petition was also dismissed. Thereafter, even the curative petition has also been dismissed in this case. The controversy between the parties must come to an end at some stage and the judgment of this court must be permitted to acquire finality. It would hardly be proper to permit the parties to file application after application endlessly. In a country governed by the rule of law, finality of the judgment is absolutely imperative and great sanctity is attached to the finality of the judgment. Permitting the parties to reopen the concluded judgments of this court by filing repeated interlocutory applications is clearly an abuse of the process of law and would have far reaching adverse impact on the administration of justice.

In Manganese Ore (India) Ltd. v. The Regional Assistant Commissioner of Sales Tax, Jabalpur (1976) 4 SCC 124 this court held that the doctrine of stare decisis is a very valuable principle of precedent which cannot be departed from unless there are extraordinary or special reasons to do so.

In Green View Tea & Industries v. Collector, Golaghat and Another (2002) 1 SCC 109 this court reiterated the view that finality of the order of the apex court of the country should not lightly be unsettled.

A three-Judge Bench of this court in M/s Northern India Caterers (India) Ltd. v. Lt. Governor of Delhi (1980) 2 SCC 167 held that a party is not entitled to seek a review of this court’s judgment merely for the purpose of rehearing and for a fresh decision of the case. Departure from the normal principle that the court’s judgment is final would be justified   only when compelling our substantial circumstances make it necessary to do so. Such circumstances may be that a material statutory provision was not drawn to the court’s attention at the original hearing or a manifest wrong has been done.

In Union of India & Another v. Raghubir Singh (Dead) by L.Rs. [1989] INSC 192; (1989) 2 SCC 754, this Court held that the plea for reconsideration is not to be entertained merely because the petitioner chooses to reagitate the points concluded by the earlier decision in Sub-committee on Judicial Accountability.

In Mohd. Aslam v. Union of India & Others (1996) 2 SCC 749, the Court considered the earlier decisions and held that the writ petition under article 32 of the Constitution assailing the correctness of a decision of the Supreme Court on merits or claiming reconsideration is not maintainable.

In Khoday Distilleries Ltd. and Another v. Registrar General, Supreme Court of India [1995] INSC 792; (1996) 3 SCC 114, the   Court held the reconsideration of the final decision of the Supreme Court after review petition is dismissed by way of writ petition under article 32 of the Constitution cannot be sustained.

In Gurbachan Singh & Another v. Union of India & Another [1996] INSC 230; (1996) 3 SCC 117, the Court held that the judgment order of this court passed under Article 136 is not amenable to judicial review under Article 32 of the Constitution.

Similar view was taken in Babu Singh Bains and others v. Union of India and Others (1996) 6 SCC 565, a three-Judge bench of this Court held that a writ petition under Article 32 of the Constitution against the order under Article 136 of the Constitution is not maintainable.

Another three-Judge bench of this Court in P. Ashokan v. Union of India & Another (1998) 3 SCC 56, relying upon the earlier cases held that the challenge to the correctness of a decision on merits after it has become final cannot be questioned by invoking Article 32 of the Constitution. In the  instant case the petitioner wants to reopen the case by filing the interlocutory application.

In Ajit Kumar Barat v. Secretary, Indian Tea Association & Others (2001) 5 SCC 42, the Court placed reliance on the judgment of a nine-judge Bench in Naresh Shridhar Mirajkar v. State of Maharashtra and another [1966] INSC 64; AIR 1967 SC 1 and the Court observed as under:

“It is difficult to see how this decision can be pressed into service by Mr. Setalvad in support of the argument that a judicial order passed by this Court was held to be subject to the writ jurisdiction of this Court itself…. In view of this decision in Mirajkar case it must be taken as concluded that judicial proceedings in this Court are not subject to the writ jurisdiction thereof.”

The Court in the said case observed that having regards to the facts and circumstances of the case, this is not a fit case to be entertained to exercise jurisdiction under Article 32 of the Constitution.

In Mr. “X” v. Hospital “Z” (2000)9 SCC 439, this Court held thus:

“Writ petition under Article 32 of the Constitution against the judgment already passed by this Court cannot be entertained. Learned counsel for the petitioner stated that prayer (a) which seeks overruling or setting aside of the judgment already passed in Mr X v. Hospital Z may be deleted. This prayer shall accordingly be deleted. So also, the other prayers which indirectly concern the correctness of the judgment already passed shall stand deleted. Learned counsel for the petitioner stated that the petition may not be treated as a petition under Article 32 of the Constitution but may be treated as an application for clarification/directions in the case already decided by this Court, viz., Mr X v. Hospital Z (CA No. 4641 of 1998).”

In Triveniben v. State of Gujarat (1989)1 SCC 678 speaking for himself and other three learned Judges of the Constitution Bench through Oza, J., reiterated the same principle. The court observed: (SCC p. 697, para 22) “…It is well settled now that a judgment of court can never be challenged under Articles 14 or 21 and therefore the judgment of the court awarding the sentence of death is not open to challenge as violating Article 14 or Article 21 as has been laid down by this Court in Naresh Shridhar Mirajkar (supra) and also in A.R. Antulay v. R.S. Nayak, the only jurisdiction which could be sought to be exercised by a prisoner for infringement of his rights can be to challenge the subsequent events after the final judicial verdict is pronounced and it is because of this that on the ground of long or  104 inordinate delay a condemned prisoner could approach this Court and that is what has consistently been held by this Court. But it will not be open to this Court in exercise of jurisdiction under Article 32 to go behind or to examine the final verdict reached by a competent court convicting and sentencing the condemned prisoner and even while considering the circumstances in order to reach a conclusion as to whether the inordinate delay coupled with subsequent circumstances could be held to be sufficient for coming to a conclusion that execution of the sentence of death will not be just and proper….”

In Rupa Ashok Hurra (supra), this Court observed thus:

… when reconsideration of a judgment of this Court is sought the finality attached both to the law declared as well as to the decision made in the case, is normally brought under challenge. It is, therefore, relevant to note that so much was the value attached to the precedent of the highest court that in The London Street Tramways Co. Ltd. v. London County Council [1898] UKHL 1; (1898 AC 375) the House of Lords laid down that its decision upon a question of law was conclusive and would bind the House in subsequent cases and that an erroneous decision could be set right only by an Act of Parliament.

… … …

…This Court will not sit as a court of appeal from its own decisions, nor will it entertain applications to review on the ground only that one of the parties in the case conceives himself to be aggrieved by the decision. It would in our opinion be intolerable and most prejudicial to the public   interest if cases once decided by the Court could be reopened and reheard:

“There is a salutary maxim which ought to be observed by all courts of last resort — interest reipublicae ut sit finis litium. (It concerns the State that there be an end of lawsuits. It is in the interest of the State that there should be an end of lawsuits.) Its strict observance may occasionally entail hardship upon individual litigants, but the mischief arising from that source must be small in comparison with the great mischief which would necessarily result from doubt being thrown upon the finality of the decisions of such a tribunal as this.”

“…When this Court decides questions of law, its decisions are, under Article 141, binding on all courts within the territory of India, and so, it must be the constant endeavour and concern of this Court to introduce and maintain an element of certainty and continuity in the interpretation of law in the country. Frequent exercise by this Court of its power to review its earlier decisions on the ground that the view pressed before it later appears to the Court to be more reasonable, may incidentally tend to make law uncertain and introduce confusion which must be consistently avoided. That is not to say that if on a subsequent occasion, the Court is satisfied that its earlier decision was clearly erroneous, it should hesitate to correct the error; but before a previous decision is pronounced to be plainly erroneous, the Court must be satisfied with a fair amount of unanimity amongst its members that a revision of the said view is fully justified. It is not possible or desirable, and in any case it would be inexpedient to lay down   any principles which should govern the approach of the Court in dealing with the question of reviewing and revising its earlier decisions.”

In Maganlal Chhaganlal [1974] INSC 91; (1974) 2 SCC 402 case a Bench of seven learned Judges of this Court considered, inter alia, the question: whether a judgment of the Supreme Court in Northern India Caterers case [1967] INSC 88; (1967) 3 SCR 399 was required to be overruled. Khanna, J. observed: (SCC p. 425, para 22) “At the same time, it has to be borne in mind that certainty and continuity are essential ingredients of rule of law. Certainty in law would be considerably eroded and suffer a serious setback if the highest court of the land readily overrules the view expressed by it in earlier cases, even though that view has held the field for a number of years. In quite a number of cases which come up before this Court, two views are possible, and simply because the Court considers that the view not taken by the Court in the earlier case was a better view of the matter would not justify the overruling of the view. The law laid down by this Court is binding upon all courts in the country under Article 141 of the Constitution, and numerous cases all over the country are decided in accordance with the view taken by this Court. Many people arrange their affairs and large number of transactions also take place on the faith of the correctness of the view taken by this Court. It would create uncertainty, instability and confusion if the law propounded by this   Court on the basis of which numerous cases have been decided and many transactions have taken place is held to be not the correct law.”

The concern of this Court for rendering justice in a cause is not less important than the principle of finality of its judgment. “We are faced with competing principles — ensuring certainty and finality of a judgment of the Court of last resort and dispensing justice on reconsideration of a judgment on the ground that it is vitiated being in violation of the principles of natural justice or giving scope for apprehension of bias due to a Judge who participated in the decision-making process not disclosing his links with a party to the case, or on account of abuse of the process of the court. Such a judgment, far from ensuring finality, will always remain under the cloud of uncertainty. Almighty alone is the dispenser of absolute justice — a concept which is not disputed but by a few. We are of the view that though Judges of the highest court do their best, subject of course to the limitation of human fallibility, yet situations may arise, in the rarest of the rare cases, which would require reconsideration of a final judgment to set right miscarriage of justice complained of. In such case it would not only be proper but also obligatory both legally and morally to rectify the error. After giving our anxious consideration to the question, we are persuaded to hold that the duty to do justice in these rarest of rare cases shall have to prevail over the policy of certainty of judgment as though it is essentially in the public interest that a final judgment of the final court in the country should not be open to challenge, yet there may be circumstances, as mentioned above, wherein declining to reconsider the judgment would be   oppressive to judicial conscience and would cause perpetuation of irremediable injustice.”

A four-judge bench of this court in Sumer v. State of U.P. (2005) 7 SCC 220 observed as under: “In Rupa Ashok Hurra (supra) while providing for the remedy of curative petition, but at the same time to prevent abuse of such remedy and filing in that garb a second review petition as a matter of course, the Constitution Bench said that except when very strong reasons exist, the court should not entertain an application seeking reconsideration of an order of this Court which has become final on dismissal of review petition. In this view, strict conditions including filing of certificate by a Senior Advocate were provided in Rupa Ashok Hurra (supra). Despite it, the apprehension of the Constitution Bench that the remedy provided may not open the flood gates for filing a second review petition has come true as is evident from filing of large number of curative petitions. It was expected that the curative petitions will be filed in exceptional and in rarest of rare case but, in practice, it has just been opposite. This Court, observing that neither it is advisable nor possible to enumerate all the grounds on which curative petition may be entertained, said that nevertheless the petitioner is entitled to relief ex debito justitiae if he establishes (1) violation of principles of natural justice in that he was not a party to the lis but the judgment adversely affected his interests or, if he was a party to the lis, he was not served with notice of the proceedings and the matter proceeded as if he had notice, and (2) where in the proceedings a learned Judge failed to disclose his connection with  109 the subject-matter or the parties giving scope for an apprehension of bias and the judgment adversely affects the petitioner. To restrict filing of the curative petitions only in genuine cases, Rupa Ashok Hurra (supra) provided that the curative petition shall contain a certification by a Senior Advocate with regard to the fulfilment of all the requirements provided in the judgment. Unfortunately, in most of the cases, the certification is casual without fulfilling the requirements of the judgment.”

In Sita Ram Bhandar Society, New Delhi v. Lieutenant Governor, Government of NCT, Delhi & Others (2009)10 SCC 501, this Court held thus:

” We must also observe that the petitioner has been able to frustrate the acquisition and development of the land right from 1980 onwards by taking recourse to one litigation after the other. The record reveals that all the suits/writ petitions, etc. that had been filed had failed. Undoubtedly, every citizen has a right to utilise all legal means which are open to him in a bid to vindicate and protect his rights, but if the court comes to the conclusion that the pleas raised are frivolous and meant to frustrate and delay an acquisition which is in public interest, deterrent action is called for. This is precisely the situation in the present matter.

The appeals are, accordingly, dismissed with costs which are determined at rupees two lakhs. The respondents, shall, without further loss of time proceed against the appellant.”

This court in a recent judgment in M. Nagabhushana v. State of Karnataka and others (2011) 3 SCC 408 observed that principle of finality is passed on high principle of public policy. The court in para 13 of the said judgment observed as under:

“That principle of finality of litigation is based on high principle of public policy. In the absence of such a principle great oppression might result under the color and pretence of law inasmuch as there will be no end of litigation and a rich and malicious litigant will succeed in infinitely vexing his opponent by repetitive suits and actions. This may compel the weaker party to relinquish his right. The doctrine of res judicata has been evolved to prevent such an anarchy. That is why it is perceived that the plea of res judicata is not a technical doctrine but a fundamental principle which sustains the rule of law in ensuring finality in litigation. This principle seeks to promote honesty and a fair administration of justice and to prevent abuse in the matter of accessing court for agitating on issues which have become final between the parties.”

In order to discourage a litigation which reopens the final judgment of this court, while dismissing the petition imposed costs of rupees 10 lakhs.  We find full corroboration of this principle from the cases of other countries. We deem it appropriate to mention some of these relevant cases in the succeeding paragraphs.

ENGLAND

 The England cases have consistently taken the view that the judgments of final court must be considered final and conclusive. There must be certainty in the administration. Uncertainty can lead to injustice. Unless there are very exceptional or compelling reasons the judgment of apex courts should not be reopened.

In Regina v. Gough, [1993] UKHL 1; [1993] 1 A.C. 646, with regards to setting aside judgments due to judicial bias, the House of Lords held that there “is only one established special category and that exists where the tribunal has a pecuniary or proprietary interest in the subject matter of the proceedings as in Dimes v. Proprietors of Grand Junction Canal , (1852) 3 H.L. Cases 759. The courts should hesitate long before creating any other special category since this will   immediately create uncertainty as to what are the parameters of that category and what is the test to be applied in the case of that category.” Lord Goff of Chievely stated that “I wish to draw attention to the fact that there are certain cases in which it has been considered that the circumstances are such that they must inevitably shake public confidence in the integrity of the administration of justice if the decision is to be allowed to stand. Such cases attract the full force of Lord Hewart C.J.’s requirement that justice must not only be done but must manifestly be seen to be done. These cases arise where a person sitting in a judicial capacity has a pecuniary interest in the outcome of the proceedings. In such a case, as Blackburn J. said in Reg. v. Rand (1866) L.R. 1 Q.B. 230, 232: “any direct pecuniary interest, however small, in the subject of inquiry, does disqualify a person from acting as a judge in the matter.” The principle is expressed in the maxim that nobody may be judge in his own cause (nemo judex in sua causa)… In such a case, therefore, not only is it irrelevant that there was in fact no bias on the part of the tribunal, but there is no question of investigating, from an objective point of view, whether there was any real likelihood of bias, or any reasonable suspicion of bias, on the facts of the particular case. The nature of the interest is such that public confidence in the administration of justice requires that the decision should not stand” (p. 661).

In R v. Bow Street Metropolitan Stipendiary Magistrate, ex parte Pinochet Ugarte (No 2) (1999) 2 W.L.R.  272, the House of Lords set aside one of its earlier orders. In this case, the majority at the House of Lords had earlier ruled whether Augusto Pinochet, the former dictator of Chile, could be extradited to Spain in order to stand trial for alleged crimes against humanity and was not entitled to sovereign immunity. Amnesty International had been an intervener in this case in opposition to Pinochet. Lord Hoffman, one of the majority judges, was a director of Amnesty International Charitable Trust, an organization controlled by Amnesty International, and Lady Hoffman had been working at AI’s international secretariat since 1977. The respondent was not aware of Lord Hoffman’s relationship to AI during the initial trial. In this case, the House of Lords cited with approval the respondents’ concession acknowledging the House of Lords’ jurisdiction to review its decisions – “In principle it must be that your Lordships, as the ultimate court of appeal, have power to correct any injustice caused by an earlier order of this House. There is no relevant statutory limitation on the jurisdiction of the House in this regard and therefore its inherent jurisdiction remains unfettered.”

According to the English law, the judgment of the Apex Court can be reviewed in exceptional circumstances particularly when the judge associated with any of the organizations to be a good ground for reviewing the judgment.

In Pinochet test in Regina (Edwards) v Environment Agency and others [2010] UKSC 57, the Supreme Court of the United Kingdom overruled an earlier order of costs made by the erstwhile apex court, the House of Lords, on the grounds that the House of Lords had made a substantive error in the original adjudication. However, this appeal was lodged under Rule 53 of the The (U.K.) Supreme Court Rules, 2009, 2009 No. 1603 (L. 17). Rule 53 provides as follows:

 (1) A party who is dissatisfied with the assessment of costs made at an oral hearing may apply for that decision to be reviewed by a single Justice and any application under this rule must be made in the appropriate form and be filed within 14 days of the decision. (2) The single Justice may (without an oral hearing) affirm the decision made on the assessment or may, where it appears appropriate, refer the matter  to a panel of Justices to be decided with or without an oral hearing. (3) An application may be made under this rule only on a question of principle and not in respect of the amount allowed on any item in the claim for costs.

In this case, Lord Hope, citing the Pinochet case stated that: The Supreme Court is a creature of statute. But it has inherited all the powers that were vested in the House of Lords as the ultimate court of appeal. So it has the same powers as the House had to correct any injustice caused by an earlier order of the House or this Court… In this case it seems that, through no fault of the appellant, an injustice may have been caused by the failure of the House to address itself to the correct test in order to comply with the requirements of [certain EU] directives [at para. 35].

CANADA

The Canadian Supreme Court is of the same view that judicial bias would be a ground for reviewing the judgment. In Wewaykum Indian Band v. Canada [2003] 2 SCR 259 the court relied on Taylor Ventures Ltd. (Trustee of) v. Taylor 2005 BCCA 350 where principle of judicial bias has been summarized.

The principles stated in Roberts regarding judicial bias were neatly summarized in Taylor Ventures Ltd. (Trustee of) (supra), where Donald J.A. stated – (i) a judge’s impartiality is presumed;

(ii) a party arguing for disqualification must establish that the circumstances justify a finding that the judge must be disqualified;

(iii) the criterion of disqualification is the reasonable apprehension of bias;

(iv) the question is what would an informed, reasonable and right-minded person, viewing the matter realistically and practically, and having thought the matter through, conclude;

(iv) the test for disqualification is not satisfied unless it is proved that the informed, reasonable and right-minded person would think that it is more likely than not that the judge, whether consciously or unconsciously, would not decide fairly;

(v) the test requires demonstration of serious grounds on which to base the apprehension;

(vi) each case must be examined contextually and the inquiry is fact-specific (at para 7).

 Cases from Australia also support the proposition that a final judgment cannot ordinarily be reopened, and that such steps can be taken only in exceptional circumstances.

In State Rail Authority of New South Wales v. Codelfa Constructions Propriety Limited (1982) 150 CLR 29, the High Court of Australia observed:

“… it is a power to be exercised with great caution. There may be little difficulty in a case where the orders have not been perfected and some mistake or misprision is disclosed. But in other cases it will be a case of weighing what would otherwise be irremediable injustice against the public interest in maintaining the finality of litigation. The circumstances that will justify a rehearing must be quite exceptional. …”

In Bailey v. Marinoff [1971] HCA 49; (1971) 125 CLR 529, Judge Gibbs of the High Court of Australia observed in a dissenting opinion:

“It is a well-settled rule that once an order of a court has been passed and entered or otherwise perfected in a form which correctly expresses the intention with which it was made the court has no jurisdiction to alter it. .. ….The rule tests on the obvious principle that it is desirable that there be an end to litigation and on the view that it would be mischievous if there were jurisdiction to rehear a matter decided after a full hearing. However, the  rule is not inflexible and there are a number of exceptions to it in addition to those that depend on statutory provisions such as the slip rule found in most rules of court. Indeed, as the way in which I have already stated the rule implies, the court has the power to vary an order so as to carry out its own meaning or to make plain language which is doubtful, and that power does not depend on rules of court, but is inherent in the court….”

And, further:

“The authorities to which I have referred leave no doubt that a superior court has an inherent power to vary its own orders in certain cases. The limits of the power remain undefined, although the remarks of Lord Evershed already cited suggest that it is a power that a court may exercise “if, in its view, the purposes of justice require that it should do so”.

In DJL v. Central Authority [2000] HCA 17; (2000) 170 ALR 659, the High Court of Australia observed:

“…It is now recognized both in Australia and England that orders made by ultimate appellate courts may be reopened by such courts in exceptional circumstances to repair accidents and oversights which would otherwise occasion a serious injustice. In my view, this can be done although the order in question has been perfected. The reopening may be ordered after due account is taken of the reasons that support the principle of finality of litigation. The party seeking reopening bears a heavy burden to demonstrate that the   exceptional course is required “without fault on his part. …”

Lastly, in Lexcray Pty. Ltd. v. Northern Territory of Australia 2003 NTCA 11, the Court appeals of the Supreme Court of the Northern Territory expressly stated:

“…As a final court of appeal the High Court of Australia has inherent jurisdiction to vacate its orders in cases where there would otherwise be an irremediable injustice….”

American courts also follows a similar pattern. In United States of America v. Ohio Power Company 353 US 98 (1957), the U.S. Supreme Court vacated its earlier order denying a timely petition for rehearing, on the ground that “the interest in finality of litigation must yield where interests of justice would make unfair, strict application of Supreme Court’s Rules.

In Raymond G. Cahill v. The New York, New Haven and Hartford Railroad Company [1956] USSC 56; 351 US 183, the Supreme Court observed:

“…There are strong arguments for allowing a second petition for rehearing where a rigid   application of this rule would cause manifest injustice.”

FIJI

The Supreme Court of Fiji Islands incorporating Australian and British case law summarized the law applicable to review of its judgments. It has been held that the Supreme Court can review its judgments pronounced or orders made by it. The power of the appellate courts to re- open and review their orders is to be exercised with great caution.

The cases establish that the power of appellate courts to re-open and review their orders is to be exercised with great caution. The power, and the occasions for its exercise were considered in In Re Transferred Civil Servants (Ireland) Compensation (1929) AC 242, 248-52; and State Rail Authority NSW v Codelfa Construction Pty Ltd (1982) HCA 51 : [1982] HCA 51; (1982) 150 CLR 29, 38-9, 45-6, where earlier Privy Council cases are referred to. The principles were summarised   in Smith v NSW Bar Association (1992) 176 CLR 252, 265 where the High Court of Australia said:

“The power is discretionary and, although it exists up until the entry of judgment, it is one that is exercised having regard to the public interest in maintaining the finality of litigation. Thus, if reasons for judgment have been given, the power is only exercised if there is some matter calling for review … these considerations may tend against the re-opening of a case, but they are not matters which bear on the nature or the review … once the case is re-opened … the power to review a judgment … where the order has not been entered will not ordinarily be exercised to permit a general re- opening … But … once a matter has been re- opened, the nature and extent of the review must depend on the error or omission which has led to that step being taken.”

The principles were further considered in Autodesk Inc v Dyason (No 2) (1993) HCA 6 : [1993] HCA 6; (1993) 176 CLR 300, 303 where Mason CJ said:

“What must emerge, in order to enliven the exercise of the jurisdiction, is that the Court has apparently proceeded according to some misapprehension of the facts or the relevant law and this … cannot be attributed solely to the neglect of the party seeking the rehearing. The purpose of the jurisdiction is not to provide a backdoor method by which unsuccessful litigants can seek to reargue their cases.”

The ratio of these judgments is that a court of final appeal has power in truly exceptional circumstances to recall its order even after they have been entered in order to avoid irremediable injustice.

Reviewing of various cases of different jurisdictions lead to irresistible conclusion that though the judgments of the apex court can also be reviewed or recalled but it must be done in extremely exceptional circumstances where there is gross violation of principles of natural justice.

In a case where the aggrieved party filing a review or curative petition was not a party to the lis but the judgment adversely affected his interest or he was party to the lis was not served with notice of the proceedings and the matter proceeded as if he had notice. This court in State of M.P. v. Sugar Singh & Others on 9th March, 2010 passed the following order in a curative petition :

“Though there were eight accused persons, only four accused were arrayed as party respondents in the said appeals namely, Sughar, Laxman, Onkar and Ramesh. Other accused, namely,Bhoja, Raghubir, Puran and Balbir were not impleaded as  respondents in these Criminal Appeals and consequently notices were not issued to them. This Court, by judgment on 7th November, 2008 in the aforesaid Criminal Appeals, reversed the acquittal of the accused by the High Court and found them guilty of the offences punishable under Section 304 Part-II read with Section 149 of the I.P.C. and sentenced them to undergo imprisonment for a period of six years. The conviction of the accused for the offences punishable under Section 148 as also Section 326 read with the Section 149 of the I.P.C. and the sentence imposed by the Sessions Court in regard to the said offences was upheld by this Court.

We have heard learned counsel for the petitioners. The respondent State, though served with a notice through standing counsel, has not chosen to enter appearance. These Curative Petitions have been filed by accused No.2 (Raghubir) and by accused no.4 and 5 (Sughar Singh and Laxman) on the ground that acquittal of Bhoja, Raghubir, Puran and Balbir have been reversed without affording an opportunity of being heard. We see that there is serious violation of principles of natural justice as the acquittal of all the accused has been set aside even though only four of them were made respondents before this Court and the others were not heard. We are, therefore, constrained to recall the 3 judgment passed by this Court in Criminal Appeal Nos.1362- 1363 of 2004 on 7th November, 2008.

Consequently, the accused Sughar Singh, Laxman, Onkar and Ramesh, if they are in custody, are directed to be released forthwith.

In the result, these Curative Petitions are disposed of and the Criminal Appeal Nos.1362-  1363 of 2004 are restored to the file for being heard afresh with a direction that the other four accused (Bhoja, Raghubir, Puran and Balbir) be impleaded as respondents and all accused be served with fresh notices.”

In the instant case, the applicants had adequate opportunity and were heard by the court at length on number of occasions and only thereafter the writ petition was disposed of. The applicants aggrieved by the said judgment filed a review petition. This review petition was also dismissed. In the instant case even the curative petition has also been dismissed. The applicants now want to reopen this case by filing these interlocutory applications.

The applicants certainly cannot be provided an entry by back door method and permit the unsuccessful litigant to re- agitate and reargue their cases. The applicants have filed these applications merely to avoid compliance of the order of the court. The applicants have been successful in their endeavour and have not permitted the judgment delivered on 3.2.1996 to acquire finality till date. It is strange that other  respondents did not implement the final order of this court without there being any order or direction of this court. These applications being devoid of any merit deserve to be dismissed with heavy costs.

The other important principles which need elucidation are regarding unjust enrichment, restitution and compound inte rests.

Dr. Arun Mohan, Senior Advocate of this court in a recently published book with the title “Justice, Courts and Delays” analytically, lucidly while taking in view pragmatic realities elucidated concepts of unjust enrichment, restitution and compound interest.

By the judgment dated 13.02.1996 this court fixed the liability but did not fix any specific amount, which was ordered to be ascertained. It was on the lines of a preliminary decree in a suit which determines the liability, but leaves the precise amount to be ascertained in further proceedings and upon the process of ascertainment being completed, a final decree for payment of the precise amount is passed.

By judgment dated 4.11.1997 this Court, accepting the ascertainment, fixed the amount. The order reads as under:

“… … …remedial measures taken on the basis of the NEERI report shall be treated as final.

We accept the proposal submitted by the Government of India for the purpose of taking remedial measures by appointing National Productivity Council as the Project Management Consultant. In our opinion the Ministry of Environment and Forests, Government of India has rightly made a demand for Rs.37.385 crores.”

The exact liability was quantified which the applicant- M/s Hindustan Agro Chemical Ltd. was under an obligation to pay. The liability to pay arose on that particular date i.e. 4.11.1997. In other words, this was in the lines of a final decree pursuant to a preliminary decree.

On that judgment being passed, the position of the applicant in Application No.44 was that of `judgment-debtor’ and the applicant became liable to pay forthwith.

Admittedly, the amount has not been paid. Instead, that payment they sought to postpone by raising various challenges in this court and in the meantime `utilised’ that   money, i.e., benefitted. As a consequence, the non-applicants (respondents-states herein) were `deprived’ of the use of that money for taking remedial measures. The challenge has now – nearly 14 years later – been finally decided against them.

The appellant they must pay the amount is one thing but should they pay only that amount or something more? If the period were a few days or months it would have been different but here it is almost 14 years have been lapsed and amount has not been paid. The questions therefore are really three:

1.Can a party who does not comply with the court order be permitted to retain the benefits of his own wrong of non-compliance?

2.Whether the successful party be not compensated by way of restitution for deprivation of its legitimate dues for more than fourteen years? and

3.Whether the court should not remove all incentives for not complying with the judgment of the court? Answering these questions will necessitate analysis of certain   concepts.

It is settled principle of law that no one can take advantage of his own wrong.

Unless courts disgorge all benefits that a party availed by obstruction or delays or non-compliance, there will always be incentive for non compliance, and parties are ingenious enough to come up with all kinds of pleas and other tactics to achieve their end because they know that in the end the benefit will remain with them.

Whatever benefits a person has had or could have had by not complying with the judgment must being disgorged and paid to the judgment creditor and not, allowed to be retained by the judgment-debtor. This is the bounden duty and obligation of the court.

In fact, it has to be looked from the position of the creditor. Unless the deprivation by reason of delay is fully restituted, the creditor as a beneficiary remains a loser to the extent of the un-restituted amount.

UNJUST ENRICHMENT

Unjust enrichment has been defined as: “A benefit obtained from another, not intended as a gift and not legally justifiable, for which the beneficiary must make restitution or recompense.” See Black’s Law Dictionary, Eighth Edition (Bryan A. Garner) at page 1573.

A claim for unjust enrichment arises where there has been an “unjust retention of a benefit to the loss of another, or the retention of money or property of another against the fundamental principles of justice or equity and good conscience.”

`Unjust enrichment’ has been defined by the court as the unjust retention of a benefit to the loss of another, or the retention of money or property of another against the fundamental principles of justice or equity and good conscience. A person is enriched if he has received a benefit, and he is unjustly enriched if retention of the benefit would be unjust. Unjust enrichment of a person occurs when he has  and retains money or benefits which in justice and equity belong to another.

Unjust enrichment is “the unjust retention of a benefit to the loss of another, or the retention of money or property of another against the fundamental principles of justice or equity and good conscience.” A defendant may be liable “even when the defendant retaining the benefit is not a wrongdoer” and “even though he may have received [it] honestly in the first instance.” (Schock v. Nash, 732 A.2d 217, 232-33 (Delaware. 1999). USA)

Unjust enrichment occurs when the defendant wrongfully secures a benefit or passively receives a benefit which would be unconscionable to retain.

In the leading case of Fibrosa v. Fairbairn, [1942] 2 All ER 122, Lord Wright stated the principle thus :

“…

.(A)ny 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. Such remedies in English law are   generically different from remedies in contract or in tort, and are now recognized to fall within a third category of the common law which has been called quasi-contract or restitution.”

Lord Denning also stated in Nelson v. Larholt, [1947] 2 All ER 751 as under:- “It is no longer appropriate, however, to draw a distinction between law and equity. Principles have now to be stated in the light of their combined effect. Nor is it necessary to canvass the niceties of the old forms of action. Remedies now depend on the substance of the right, not on whether they can be fitted into a particular frame-work. The right here is not peculiar to equity or contract or tort, but falls naturally within the important category of cases where the court orders restitution if the justice of the case so requires.”

The above principle has been accepted in India. This Court in several cases has applied the doctrine of unjust enrichment.

RESTITUTION AND COMPOUND INTEREST

American Jurisprudence 2d. Volume 66 Am Jur 2d defined Restitution as follows:  “The word `restitution’ was used in the earlier common law to denote the return or restoration of a specific thing or condition. In modern legal usage, its meaning has frequently been extended to include not only the restoration or giving back of something to its rightful owner, but also compensation, reimbursement, indemnification, or reparation for benefits derived from, or for loss or injury caused to, another. As a general principle, the obligation to do justice rests upon all persons, natural and artificial; if one obtains the money or property of others without authority, the law, independently of express contract, will compel restitution or compensation.”

While Section (‘) 3 (Unjust Enrichment) reads as under:

“The phrase “unjust enrichment” is used in law to characterize the result or effect of a failure to make restitution of, or for, property or benefits received under such circumstances as to give rise to a legal or equitable obligation to account therefor. It is a general principle, underlying various legal doctrines and remedies, that one person should not be permitted unjustly to enrich himself at the expense of another, but should be required to make restitution of or for property or benefits received, retained, or appropriated, where it is just and equitable that such restitution be made, and where such action involves no violation or frustration of law or opposition to public policy, either directly or indirectly.”

Unjust enrichment is basic to the subject of restitution, and is indeed approached as a fundamental principle thereof. They are usually linked together, and restitution is frequently based upon the theory of unjust enrichment. However, although unjust enrichment is often referred to or regarded as a ground for restitution, it is perhaps more accurate to regard it as a prerequisite, for usually there can be no restitution without unjust enrichment. It is defined as the unjust retention of a benefit to the loss of another or the retention of money or property of another against the fundamental principles of justice or equity and good conscience. A person is enriched if he has received a benefit, and he is unjustly enriched if retention of the benefit would be unjust. Unjust enrichment of a person occurs when he has and retains money or benefits which in justice and equity belong to another.

While the term `restitution’ was considered by the Supreme Court in South-Eastern Coalfields 2003 (8) SCC 648 and other cases excerpted later, the term `unjust   enrichment’ came to be considered in Sahakari Khand Udyog Mandal Ltd vs Commissioner of Central Excise & Customs ((2005) 3 SCC 738).

This Court said: “`Unjust enrichment’ means retention of a benefit by a person that is unjust or inequitable. `Unjust enrichment’ occurs when a person retains money or benefits which in justice, equity and good conscience, belong to someone else.”

The terms `unjust enrichment’ and `restitution’ are like the two shades of green – one leaning towards yellow and the other towards blue. With restitution, so long as the deprivation of the other has not been fully compensated for, injustice to that extent remains. Which label is appropriate under which circumstances would depend on the facts of the particular case before the court. The courts have wide powers to grant restitution, and more so where it relates to misuse or non-compliance with court orders.

We may add that restitution and unjust enrichment, along with an overlap, have to be viewed with reference to the   two stages, i.e., pre-suit and post-suit. In the former case, it becomes a substantive law (or common law) right that the court will consider; but in the latter case, when the parties are before the court and any act/omission, or simply passage of time, results in deprivation of one, or unjust enrichment of the other, the jurisdiction of the court to levelise and do justice is independent and must be readily wielded, otherwise it will be allowing the Court’s own process, along with time delay, to do injustice.

For this second stage (post-suit), the need for restitution in relation to court proceedings, gives full jurisdiction to the court, to pass appropriate orders that levelise. Only the court has to levelise and not go further into the realm of penalty which will be a separate area for consideration altogether.

This view of law as propounded by the author Graham Virgo in his celebrated book on “The Principle of Law of Restitution” has been accepted by a later decision of the House of Lords (now the UK Supreme Court) reported as  Sempra Metals Ltd (formerly Metallgesellschaft Limited) v Her Majesty’s Commissioners of Inland Revenue and Another [2007] UKHL 34 = [2007] UKHL 34; [2007] 3 WLR 354 = [2008] 1 AC 561 = [2007] UKHL 34; [2007] All ER (D) 294.

In similar strain, across the Altantic Ocean, a nine judge Bench of the Supreme Court of Canada in Bank of America Canada vs Mutual Trust Co. [2002] 2 SCR 601 = 2002 SCC 43 (both Canadian Reports) took the view :

“There seems in principle no reason why compound interest should not be awarded. Had prompt recompense been made at the date of the wrong the plaintiff should have had a capital sum to invest; the plaintiff would have received interest on it at regular intervals and would have invested those sums also. By the same token the defendant will have had the benefit of compound interest. Although not historically available, compound interest is well suited to compensate a plaintiff for the interval between when damages initially arise and when they are finally paid.”

This view seems to be correct and in consonance with the principles of equity and justice.

 Another way of looking at it is suppose the judgment- debtor had borrowed the money from the nationalised bank as a clean loan and paid the money into this court. What would be the bank’s demand.

In other words, if payment of an amount equivalent of what the ledger account in the nationalised bank on a clean load would have shown as a debit balance today is not paid and something less than that is paid, that differential or shortfall is what there has been : (1) failure to restitute; (2) unfair gain by the non-complier; and (3) provided the incentive to obstruct or delay payment.

Unless this differential is paid, justice has not been done to the creditor. It only encourages non-compliance and litigation. Even if no benefit had been retained or availed even then, to do justice, the debtor must pay the money. In other words, it is this is not only disgorging all the benefits but making the creditor whole i.e. ordering restitution in full and not dependent on what he might have made or benefitted is what justice requires.

LEGAL POSITION UNDER THE CODE OF CIVIL PROCEDURE

One reason the law has not developed on this is because of the wording of Section 34 of the Code of Civil Procedure which still proceeds on the basis of simple interest. In fact, it is this difference which prompts much of our commercial litigation because the debtor feels – calculates and assesses – that to cause litigation and then to contest with obstructions and delays will be beneficial because the court is empowered to allow only simple interest. A case for law reform on this is a separate issue.

In the point under consideration, which does not arise from a suit for recovery under the Code of Civil Procedure, the inherent powers in the court and the principles of justice and equity are each sufficient to enable an order directing payment of compound interest. The power to order compound interest as part of restitution cannot be disputed, otherwise there can never be restitution.

PRECEDENTS ON EXERCISE OF POWERS BY THE COURT TOMAKE THE BENEFICIARY WHOLE – RESTITUTION

This court in Grindlays Bank Limited vs Income Tax Officer, Calcutta [1980] INSC 3; (1980) 2 SCC 191 observed as under :- “…When passing such orders the High Court draws on its inherent power to make all such orders as are necessary for doing complete justice between the parties. The interests of justice require that any undeserved or unfair advantage gained by a party invoking the jurisdiction of the court, by the mere circumstance that it has initiated a proceeding in the court, must be neutralised. The simple fact of the institution of litigation by itself should not be permitted to confer an advantage on the party responsible for it. …”

In Ram Krishna Verma and Others vs State of U.P. and Others [1992] INSC 99; (1992) 2 SCC 620 this court observed as under :- “The 50 operators including the appellants/ private operators have been running their stage carriages by blatant abuse of the process of the court by delaying the hearing as directed in Jeevan Nath Bahl’s case and the High Court earlier thereto. As a fact, on the expiry of the initial period of grant after Sept. 29, 1959 they lost the right to obtain renewal or to ply their vehicles, as this Court declared the scheme to be operative. However, by sheer abuse of the process of law they are continuing to ply their vehicles pending hearing of the objections. This Court in Grindlays Bank Ltd. vs Income-tax  Officer – [1990] 2 SCC 191 held that the High Court while exercising its power under Article 226 the interest of justice requires that any undeserved or unfair advantage gained by a party invoking the jurisdiction of the court must be neutralised. It was further held that the institution of the litigation by it should not be permitted to confer an unfair advantage on the party responsible for it. In the light of that law and in view of the power under Article 142(1) of the Constitution this Court, while exercising its jurisdiction would do complete justice and neutralise the unfair advantage gained by the 50 operators including the appellants in dragging the litigation to run the stage carriages on the approved route or area or portion thereof and forfeited their right to hearing of the objections filed by them to the draft scheme dated Feb. 26, 1959. …”

This court in Kavita Trehan vs Balsara Hygiene Products [1994] INSC 353; (1994) 5 SCC 380 observed as under :- “The jurisdiction to make restitution is inherent in every court and will be exercised whenever the justice of the case demands. It will be exercised under inherent powers where the case did not strictly fall within the ambit of Section 144. Section 144 opens with the words “Where and in so far 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 instant case may not strictly fall within the terms of Section 144; but the aggrieved party in such a case can appeal to the larger and general powers of restitution inherent in every court.”

This court in Marshall Sons & Co. (I) Ltd. v. Sahi Oretrans (P) Ltd. and Another (1999) 2 SCC 325 observed as under :- “From the narration of the facts, though it appears to us, prima facie, that a decree in favour of the appellant is not being executed for some reason or the other, we do not think it proper at this stage to direct the respondent to deliver the possession to the appellant since the suit filed by the respondent is still pending. It is true that proceedings are dragged for a long time on one count or the other and on occasion become highly technical accompanied by unending prolixity, at every stage providing a legal trap to the unwary. Because of the delay unscrupulous parties to the proceedings take undue advantage and person who is in wrongful possession draws delight in delay in disposal of the cases by taking undue advantage of procedural complications. It is also known fact that after obtaining a decree for possession of immovable property, its execution takes long time. In such a situation for protecting the interest of judgment creditor, it is necessary to pass appropriate order so that reasonable mesne profit which may be equivalent to the market rent is paid by a person who is holding over the property. In appropriate cases, Court may appoint Receiver and direct the person who is holding over the property to act as an agent of the Receiver with a direction to deposit the royalty amount fixed by the Receiver or pass such other order which may meet the interest of justice. This may prevent further injury to the plaintiff in whose favour decree is passed and to  protect the property including further alienation.”

In Padmawati vs Harijan Sewak Sangh – CM (Main) No.449 of 2002 decided by the Delhi high Court on 6.11.2008, the court held as under:- “The case at hand shows that frivolous defences and frivolous litigation is a calculated venture involving no risks situation. You have only to engage professionals to prolong the litigation so as to deprive the rights of a person and enjoy the fruits of illegalities. I consider that in such cases where Court finds that using the Courts as a tool, a litigant has perpetuated illegalities or has perpetuated an illegal possession, the Court must impose costs on such litigants which should be equal to the benefits derived by the litigant and harm and deprivation suffered by the rightful person so as to check the frivolous litigation and prevent the people from reaping a rich harvest of illegal acts through the Court. One of the aims of every judicial system has to be to discourage unjust enrichment using Courts as a tool. The costs imposed by the Courts must in all cases should be the real costs equal to deprivation suffered by the rightful person.”

We approve the findings of the High Court of Delhi in the aforementioned case.

The Court also stated: “Before parting with this case,  we consider it necessary to observe that one of the main reasons for over-flowing of court dockets is the frivolous litigation in which the Courts are engaged by the litigants and which is dragged as long as possible. Even if these litigants ultimately loose the lis, they become the real victors and have the last laugh. This class of people who perpetuate illegal acts by obtaining stays and injunctions from the Courts must be made to pay the sufferer not only the entire illegal gains made by them as costs to the person deprived of his right and also must be burdened with exemplary costs. Faith of people in judiciary can only be sustained if the persons on the right side of the law do not feel that even if they keep fighting for justice in the Court and ultimately win, they would turn out to be a fool since winning a case after 20 or 30 years would make wrongdoer as real gainer, who had reaped the benefits for all those years. Thus, it becomes the duty of the Courts to see that such wrongdoers are discouraged at every step and even if they succeed in prolonging the litigation due to their money power, ultimately they must suffer the costs of all these  144 years long litigation. Despite settled legal positions, the obvious wrong doers, use one after another tier of judicial review mechanism as a gamble, knowing fully well that dice is always loaded in their favour, since even if they lose, the time gained is the real gain. This situation must be redeemed by the Courts.”

Against this judgment, Special Leave to Appeal (Civil) No 29197/2008 was preferred to the this Court. The Court passed the following order:

“We have heard learned counsel appearing for the parties. We find no ground to interfere with the well-considered judgment passed by the High Court. The Special Leave Petition is, accordingly, dismissed.”

Interest on interest

This court in Alok Shanker Pandey vs Union of India & Others (2007) 3 SCC 545 observed as under:- “We are of the opinion that there is no hard and fast rule about how much interest should be granted and it all depends on the facts and circumstances of the each case. We are of the  opinion that the grant of interest of 12% per annum is appropriate in the facts of this particular case. However, we are also of the opinion that since interest was not granted to the appellant along with the principal amount the respondent should then in addition to the interest at the rate of 12% per annum also pay to appellant interest at the same rate on the aforesaid interest from the date of payment of instalments by the appellant to the respondent till the date of refund on this amount, and the entire amount mentioned above must be paid to the appellant within two months from the date of this judgment.

It may be mentioned that there is misconception about interest. Interest is not a penalty or punishment at all, but it is the normal accretion on capital.”

Compound Interest

To do complete justice, prevent wrongs, remove incentive for wrongdoing or delay, and to implement in practical terms the concepts of Time Value of Money, restitution and unjust enrichment noted above – or to simply levelise – a convenient approach is calculating interest. But here interest has to be calculated on compound basis – and not simple – for the latter leaves much uncalled for benefits in the hands of the wrongdoer.

Further, a related concept of inflation is also to be kept in mind and the concept of compound interest takes into account, by reason of prevailing rates, both these factors, i.e., use of the money and the inflationary trends, as the market forces and predictions work out.

Some of our statute law provide only for simple interest and not compound interest. In those situations, the courts are helpless and it is a matter of law reform which the Law Commission must take note and more so, because the serious effect it has on administration of justice. However, the power of the court to order compound interest by way of restitution is not fettered in any way. We request the Law Commission to consider and recommend necessary amendments in relevant laws.

`Compound interest’ is defined in Black’s Law Dictionary, Eighth Edition (Bryan A. Garner) at page 830 as `Interest paid on both the principal and the previously accumulated interest.’ It is a method of arriving at a figure   which nears the time value of money submitted under Head-2 earlier.

As noted, compound interest is a norm for all commercial transactions.

Graham Virgo in his important book on `The Principles of the Law of Restitution” at pp26-27 has stated and relevant portion is reproduced as under:

“In Westdeutsche Landesbank Girozentrale v London Borough Council [1996] UKHL 12; 1996 A.C. 669 the issue for the House of Lords was whether compound interest was available in respect of all restitutionary claims. By a majority it was decided that, since the jurisdiction to award compound interest was equitable, compound interest could only be awarded in respect of equitable restitutionary claims. Consequently, where the claim was for money had and received the claimant could only obtain simple interest because this was a common law claim. The majority supported their conclusion by reference to a number of different arguments. In particular, they asserted that, since Parliament had decided in 1981 that simple interest should be awarded on claims at common law, it was not for the House of Lords to award compound interest in respect of such claims. But the Supreme Court Act 1981 does not specifically exclude the award of compound interest in respect of common law claims. Rather, it recognizes that the court can award simple interest for such claims. The equitable  148 jurisdiction to award compound interest is still available in appropriate cases.

In two very strong dissenting judgments, Lords Goff and Woolf rejected the argument of the majority. They asserted that, since the policy of the law of restitution was to remove benefits from the defendant, compound interest should be available in respect of all restitutionary claims, regardless of whether they arise at law or in equity. This argument can be illustrated by the following example. In the straightforward case where the claimant pays money to the defendant by mistake and defendant is liable to repay that money, the liability arises from the moment the money is received by the defendant, who has the use of it and so should pay the claimant for the value of that benefit. This was accepted by all the judges in the case. The difficulty relates to the valuation of this benefit. If the defendant was to borrow an equivalent amount of money from a financial institution, he or she would be liable to pay compound interest to that institution. It follows that the defendant has saved that amount of money and so this is the value of the benefit which the defendant should restore to the claimant, in addition to the value of the money which the defendant received in the first place. If it could be shown that, had the defendant borrowed the equivalent amount of money, the institution would only have paid simple interest, it would be appropriate for the interest awarded to the claimant to be simple rather than compound. Usually, however, the interest awarded in commercial transactions will be compound interest.”

 In Marshall sons and company (I) Limited v. Sahi Oretrans (P) Limited and another (1999) 2 SCC 325 this court in para 4 of the judgment observed as under:

“…It is true that proceedings are dragged for a long time on one count or the other and, on occasion, become highly technical accompanied by unending prolixity at every stage providing a legal trap to the unwary. Because of the delay, unscrupulous parties to the proceedings take undue advantage and a person who is in wrongful possession draws delight in delay in disposal of the cases by taking undue advantage of procedural complications. It is also a known fact that after obtaining a decree for possession of immovable property, its execution takes a long time. In such a situation, for protecting the interest of the judgment-creditor, it is necessary to pass appropriate orders so that reasonable mesne profit which may be equivalent to the market rent is paid by a person who is holding over the property. In appropriate cases, the court may appoint a Receiver and direct the person who is holding over the property to act as an agent of the Receiver with a direction to deposit the royalty amount fixed by the Receiver or pass such other order which may meet the interest of justice. This may prevent further injury to the plaintiff in whose favour the decree is passed and to protect the property including further alienation. …”

In Ouseph Mathai and others v. M. Abdul Khadir (2002) 1 SCC 319 this court reiterated the legal position that   the stay granted by the court does not confer a right upon a party and it is granted always subject to the final result of the matter in the court and at the risk and costs of the party obtaining the stay. After the dismissal, of the lis, the party concerned is relegated to the position which existed prior to the filing of the petition in the court which had granted the stay. Grant of stay does not automatically amount to extension of a statutory protection. 210. This court in South Eastern Coalfields Limited v. State of M.P. and others (2003) 8 SCC 648 on examining the principle of restitution in para 26 of the judgment observed as under:

“In our opinion, the principle of restitution takes care of this submission. The word “restitution” 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 (see Zafar Khan v. Board of Revenue, U.P – (1984) Supp SCC 505) In law, the term “restitution” is used in three senses: (i) return or restoration of some specific thing to its rightful owner or status; (ii) compensation for benefits derived from a wrong done to another; and (iii) compensation or reparation for the loss caused to another.”

 The court in para 28 of the aforesaid judgment very carefully mentioned that the litigation should not turn into a fruitful industry and observed as under:

“… … …Litigation may turn into a fruitful industry. Though litigation is not gambling yet there is an element of chance in every 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. We are, therefore, of the opinion that the successful party finally held entitled to a relief assessable in terms of money at the end of the litigation, is entitled to be compensated by award of interest at a suitable reasonable rate for the period for which the interim order of the court withholding the release of money had remained in operation.”

The court in the aforesaid judgment also observed that once the doctrine of restitution is attracted, the interest is often a normal relief given in restitution. Such interest is not controlled by the provisions of the Interest Act of 1839 or 1978.

 In a relatively recent judgment of this court in Amarjeet Singh and others v. Devi Ratan and others (2010) 1 SCC 417 the court in para 17 of the judgment observed as under:

“No litigant can derive any benefit from mere pendency of case in a court of law, as the interim order always merges in the final order to be passed in the case and if the writ petition is ultimately dismissed, the interim order stands nullified automatically. A party cannot be allowed to take any benefit of its own wrongs by getting an interim order and thereafter blame the court. The fact that the writ is found, ultimately, devoid of any merit, shows that a frivolous writ petition had been filed. The maxim actus curiae neminem gravabit, which means that the act of the court shall prejudice no one, becomes applicable in such a case. In such a fact situation the court is under an obligation to undo the wrong done to a party by the act of the court. Thus, any undeserved or unfair advantage gained by a party invoking the jurisdiction of the court must be neutralised, as the institution of litigation cannot be permitted to confer any advantage on a suitor from delayed action by the act of the court. … …”

In another recent judgment of this court in Kalabharati Advertising v. Hemant Vimalnath Narichania and others (2010) 9 SCC 437 this court in para 15 observed as under:

 “No litigant can derive any benefit from the mere pendency of a case in a court of law, as the interim order always merges into the final order to be passed in the case and if the case is ultimately dismissed, the interim order stands nullified automatically. A party cannot be allowed to take any benefit of his own wrongs by getting an interim order and thereafter blame the court. The fact that the case is found, ultimately, devoid of any merit, or the party withdrew the writ petition, shows that a frivolous writ petition had been filed. The maxim actus curiae neminem gravabit, which means that the act of the court shall prejudice no one, becomes applicable in such a case. In such a situation the court is under an obligation to undo the wrong done to a party by the act of the court. Thus, any undeserved or unfair advantage gained by a party invoking the jurisdiction of the court must be neutralised, as the institution of litigation cannot be permitted to confer any advantage on a party by the delayed action of the court.”

In consonance with the concept of restitution, it was observed that courts should be careful and pass an order neutralizing the effect of all consequential orders passed in pursuance of the interim orders passed by the court. Such express directions may be necessary to check the rising trend among the litigants to secure the relief as an interim measure and then avoid adjudication on merits.

In consonance with the principle of equity, justice and good conscience judges should ensure that the legal process is not abused by the litigants in any manner. The court should never permit a litigant to perpetuate illegality by abusing the legal process. It is the bounden duty of the court to ensure that dishonesty and any attempt to abuse the legal process must be effectively curbed and the court must ensure that there is no wrongful, unauthorized or unjust gain for anyone by the abuse of the process of the court. One way to curb this tendency is to impose realistic costs, which the respondent or the defendant has in fact incurred in order to defend himself in the legal proceedings. The courts would be fully justified even imposing punitive costs where legal process has been abused. No one should be permitted to use the judicial process for earning undeserved gains or unjust profits. The court must effectively discourage fraudulent, unscrupulous and dishonest litigation.

The court’s constant endeavour must be to ensure that everyone gets just and fair treatment. The court while  rendering justice must adopt a pragmatic approach and in appropriate cases realistic costs and compensation be ordered in order to discourage dishonest litigation. The object and true meaning of the concept of restitution cannot be achieved or accomplished unless the courts adopt a pragmatic approach in dealing with the cases.

This court in a very recent case Ramrameshwari Devi and Others v. Nirmala Devi and Others 2011(6) Scale 677 had an occasion to deal with similar questions of law regarding imposition of realistic costs and restitution. One of us (Bhandari, J.) was the author of the judgment. It was observed in that case as under:

“While imposing costs we have to take into consideration pragmatic realities and be realistic what the defendants or the respondents had to actually incur in contesting the litigation before different courts. We have to also broadly take into consideration the prevalent fee structure of the lawyers and other miscellaneous expenses which have to be incurred towards drafting and filing of the counter affidavit, miscellaneous charges towards typing, photocopying, court fee etc. The other factor which should not be forgotten while imposing costs is for how long the defendants or respondents were compelled to contest and  156 defend the litigation in various courts. The appellants in the instant case have harassed the respondents to the hilt for four decades in a totally frivolous and dishonest litigation in various courts. The appellants have also wasted judicial time of the various courts for the last 40 years.”

We reiterate that the finality of the judgment of the Apex Court has great sanctity and unless there are extremely compelling or exceptional circumstances, the judgments of the Apex Court should not be disturbed particularly in a case where review and curative petitions have already been dismissed.

This Court has consistently taken the view that the judgments delivered by this Court while exercising its jurisdiction under Article 136 of the Constitution cannot be reopened in a writ petition filed under Article 32 of the Constitution. In view of this legal position, how can a final judgment of this Court be reopened by merely filing interlocutory applications where all possible legal remedies have been fully exhausted? When we revert to the facts of this case, it becomes abundantly clear that this Court delivered   final judgment in this case way back in 1996. The said judgment has not been permitted to acquire finality because the respondent Nos. 4 to 8 had filed multiple interlocutory applications and has ensured non-compliance of the judgment of this Court.

On consideration of pleadings and relevant judgments of the various courts, following irresistible conclusion emerge:

i) The judgment of the Apex Court has great sanctity and unless there are extremely compelling, overriding and exceptional circumstances, the judgment of the Apex Court should not be disturbed particularly in a case where review and curative petitions have already been dismissed

ii) The exception to this general rule is where in the proceedings the concerned judge failed to disclose the connection with the subject matter or the parties giving scope of an apprehension of bias and the judgment adversely affected the petitioner.

iii) The other exception to the rule is the circumstances incorporated in the review or curative petition are such that they must inevitably shake public confidence in the integrity of the administration of justice if the judgment or order is allowed to stand.

These categories are illustrative and not exhaustive but only in such extremely exceptional circumstances the order can be recalled in order to avoid irremedial injustice.

The other aspect which has been dealt with in great details is to neutralize any unjust enrichment and undeserved gain made by the litigants. While adjudicating, the courts must keep the following principles in view.

1. It is the bounden duty and obligation of the court to neutralize any unjust enrichment and undeserved gain made by any party by invoking the jurisdiction of the court.

2. When a party applies and gets a stay or injunction from the court, it is always at the risk and responsibility of the party applying. An order of stay cannot be presumed to be conferment of additional right upon the litigating party.

3. Unscrupulous litigants be prevented from taking undue advantage by invoking jurisdiction of the Court.

4. A person in wrongful possession should not only be removed from that place as early as possible but be compelled to pay for wrongful use of that premises fine, penalty and costs. Any leniency would seriously affect the credibility of the judicial system.

5. No litigant can derive benefit from the mere pendency of a case in a court of law.

6. A party cannot be allowed to take any benefit of his own wrongs.

7. Litigation should not be permitted to turn into a fruitful industry so that the unscrupulous litigants are encouraged to invoke the jurisdiction of the court.

8. The institution of litigation cannot be permitted to confer any advantage on a party by delayed action of courts.

 

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