Summary
In the Unitech home-buyers proceedings, the Court-confirmed sale of 26 acres of Unitech's land at Bangalore for Rs. 172.08 crores was followed, on the Justice Dhingra Committee's report based only on a 2018 memorandum of understanding, by orders paying Rs. 56.11 crores and Rs. 41.96 crores of the proceeds to two private individuals. Unitech's new management applied for recovery, asserting that Unitech was the absolute owner. The Supreme Court held that the payments had been directed without any adjudication of the recipients' seriously disputed entitlement, an obvious error of the Court; applying restitution and the maxim that an act of the Court shall prejudice no one, as explained in Indore Development Authority v. Manoharlal, it directed redeposit with 9 per cent interest within four weeks, with liberty to seek adjudication of their claims.
Issues
- Whether amounts paid out of the sale proceeds of a company's land to third parties under the Court's earlier orders, on the basis of a committee report founded on a memorandum of understanding and without any adjudication of their entitlement, can be ordered to be returned on the principle of restitution.
Provisions considered
- Section 144, Code of Civil Procedure, 1908Statutory recognition, not the source, of the principle of restitution; the Court has inherent jurisdiction to order restitution to do complete justice and to ensure that no party gains an advantage from an order of the Court that is later found unsustainable. (¶¶ 5.1, 5.2, 6)
Held
- The direction to pay Rs. 56.11 crores and Rs. 41.96 crores to the two individuals rested solely on the Justice Dhingra Committee's report, which itself rested on a memorandum of understanding dated 02.01.2018, without any adjudication by the Committee or the Court of the competing claims of Unitech, the purchaser and the recipients; given the serious dispute over entitlement, this was an obvious error on the part of the Court that must be corrected on the principle of restitution. (¶¶ 3, 3.1, 5)
- Following Indore Development Authority v. Manoharlal and South Eastern Coalfields, restitution is founded on doing complete justice; the act of the Court shall prejudice no one, and any undeserved advantage gained by a party through the Court's order must be neutralised. The recipients are therefore directed to return the amounts with 9 per cent interest from the date of receipt, with liberty to seek adjudication of any right to share in the sale proceeds. (¶¶ 5.1, 5.2, 6, 7)
Result
Application disposed of; Shri Naresh Kempanna and Col. Mohinder Khaira directed to return and deposit with the Registry within four weeks the sums of Rs. 56.11 crores and Rs. 41.96 crores respectively paid to them from the sale proceeds of the Kadiganahalli land, with 9 per cent interest from the date of receipt, with liberty to move appropriate applications for adjudication of their claims to any share of the proceeds; impleadment application also disposed of.