FAO(OS) 168/2009 & CM No.1497/09 in FAO(OS) 448/2008 Page 1 * IN THE HIGH COURT OF DELHI AT NEW DELHI + FAO (OS) No. 168/2009 & CM 1497/2009 in FAO(OS) 448/2008 Reserved on : May 26, 2009 Date of decision : July 03, 2009 1. FAO (OS) No. 168/2009 DTC ...Appellant Through: Ms. Avnish Ahlawat, Advocate. VERSUS M/s INTERNATIONAL AVENUES ....Respondents Through: Mr. A.S.Chandioke, Sr. Advocate with Mr. Maniktala, Mr. Alok Tripathi, Advocates. 2. CM 1497/2009 in FAO(OS) 448/2008 DTC ...Appellant Through: Ms. Avnish Ahlawat, Advocate. VERSUS M/s INTERNATIONAL AVENUES ....Respondents Through: Mr. A.S.Chandioke, Sr. Advocate with Mr. Maniktala, Mr. Alok Tripathi, Advocates. CORAM: HON’BLE MR. JUSTICE MUKUL MUDGAL HON’BLE MR. JUSTICE VALMIKI J.MEHTA 1. Whether the Reporters of local papers may be allowed to see the judgment? No. FAO(OS) 168/2009 & CM No.1497/09 in FAO(OS) 448/2008 Page 2 2. To be referred to the Reporter or not? Yes 3. Whether the judgment should be reported in the Digest? Yes. % JUDGMENT VALMIKI J.MEHTA, J. 1. By this common order two proceedings are being decided. The first one is FAO(OS) 168/2009 and the second is CM 1497/2009 in FAO(OS) 448/2008. FAO(OS) 168/2009 has been filed against the order dt 2.3.2009 whereby the respondent herein was allowed, without notice to the appellant herein, to withdraw the OMP 452/2008 which was filed before the learned Single Judge of this court by the respondent under Section 9 of the Arbitration and Conciliation Act,1996 and without any directions for restitution of the benefit derived by the respondent under the exparte injunction order dt 29.8.08 passed in favour of the respondent. CM 1497/09 seeks revival of the appeal being FAO(OS) 448/08 and which FAO(OS) 448/2008 was filed by the appellant against the grant of the ex parte injunction order dated 29.8.2008 and which was not pressed after the orders were reserved by the learned Single Judge on the application of the appellant under Order 39 Rule 4 CPC. 2. Both these appellate proceedings arise out of and relate to the original OMP 452/2008 filed by the respondent before the learned Single Judge of this court in the original side. In the OMP 452/2008, the respondent prayed FAO(OS) 168/2009 & CM No.1497/09 in FAO(OS) 448/2008 Page 3 for the relief of injunction for restraining the appellant herein from interfering in any manner in the display of commercial advertisements of the respondent on the Bus Queue Shelters (BQSs) and Time Keeping Booths (TKBs) displayed by the respondent in the four zones of Delhi namely Shahdara (N) 1, Shahdara (S)- 1 and West Zone-II and the Rohini Zone. The respondent is an advertising agency engaged in the business of outdoor publicity on the sites allotted by various government agencies including the appellant. The respondent was a successful bidder with respect to the said zones and was granted the sole rights to display the advertisements on the BQSs and TKBs of the appellant for a period of 3 years from 16.9.2005 so far as the Shahdara and the West Zone is concerned, and from 27.12.2005 with respect to Rohini Zone. There were various other earlier disputes between the respondent and the appellant which had earlier also resulted in filing of OMPs by the respondent in this court being OMP 465/2005, 466/2006 and OMP 353/2008. OMP 353/2008 and in which the respondent had failed to secure any interim relief was dismissed as withdrawn on 6.8.2008, just 20 days before the subject OMP 452/2008 was filed. 3. The respondent in OMP 452/2008 alleged certain breaches on behalf of the appellant herein, inter alia, pertaining to missing/non-existing shelters, entitlement to its claims seeking adjustment for alleged excess amount paid, seeking adjustment of the security amount lying deposited with the FAO(OS) 168/2009 & CM No.1497/09 in FAO(OS) 448/2008 Page 4 appellant. Since the appellant had threatened to terminate the contract on account of breaches by the respondent No.1 in payment of the licence fee, this resulted in filing of the OMP 452/2008 on 28.8.2008. As already stated, an OMP 353/2008, was dismissed as withdrawn barely around a fortnight before the filing of the OMP 452/2008. 4. OMP 452/2008 came up before the court for admission on 29.8.2008 and on which date the learned Single Judge of this court by an ex parte order directed that the appellant herein shall remain restrained from removing commercial advertisements of the respondent from the Bus Queue Shelters and the Time Keeping Booths in the four zones already mentioned. It may be noted that the order of injunction was not conditional upon payment of licence fee by the respondent during the operation of the restraint orders, i.e., the respondent was allowed the benefit of display advertisements on the BQSs and TKBs and earning revenue therefrom without fulfilfilling its corresponding contractual obligation for payment of the licence fee with respect to the BQSs and TKBs. Being aggrieved by the ex parte order dated 29.8.2008, the appellant preferred FAO(OS) 448/2008 in this court. Before filing the appeal on 22.10.2008, the appellant had preferred an application under Order 39 Rule 4 CPC for vacation of the ex parte injunction vide its I.A 1178/2008 and which application came before the learned Single Judge on 24.9.2008. No interim orders were granted and simply notice was issued in the said I.A for 16.10.2008 FAO(OS) 168/2009 & CM No.1497/09 in FAO(OS) 448/2008 Page 5 and even on 16.10.2008, the matter was not heard on account of the reply of the respondent herein being not on record and the matter was adjourned to 19.11.2008. The FAO (OS) 448/2008 filed against the ex parte order dated 29.8.2008 was firstly listed on 10.11.2008 and ultimately disposed of by this court by its order dated 26.11.2008 recording that arguments have been concluded before the learned Single Judge in the appellant‘s application under Order 39 Rule 4 CPC. Liberty was however given to the appellant to take recourse to whatever legal remedies which were available to it. 5. After the orders were reserved by the learned Single Judge in OMP 452/2008 on 24.11.2008, no orders however came to be passed, and then the OMP 452/2008 was suo moto listed by the learned Single Judge on 2.3.2009 for directions. OMP 452/2008 was dismissed as withdrawn as a statement was made by the respondent that the petitioner (respondent herein) desired to withdraw the petition, firstly, as the contract in question has come to an end on 31.3.2008 (sic 27.12.2009) and the petitioner had removed himself from the site and secondly, a Dispute Settlement Committee has been constituted by the respondent (appellant herein). 6. The appellant thereafter filed the FAO(OS) 168/2009 seeking quashing of the order dated 2.3.2009 whereby the respondent herein was allowed to withdraw OMP 452/2009 without passing any directions of FAO(OS) 168/2009 & CM No.1497/09 in FAO(OS) 448/2008 Page 6 restitution that the respondent shall pay licence fee for the period for which it had used the sites for advertisements pursuant to the ex parte injunction order dated 29.8.2008. 7. We, are therefore, called upon to decide the following aspects : - (i) Whether a petitioner who has obtained ex parte orders and enjoyed the benefit thereof can be permitted to withdraw his petition without directions for performance of his contractual obligations and restitution of the benefit which the petitioner has received pursuant to interim orders in his petition; (ii) Whether compensation can be granted by this court or in other words can the court order restitution of the benefit received under interim orders in a petition which has been voluntarily withdrawn by the petitioner; (iii) Whether the appellant is entitled to file and seek orders in CM 1497/2009 although the main appeal was disposed of vide order dated 26.11.2008? 8. The principle of law is well established that where proceedings filed by any person have come to an end whether by withdrawal or by the same being dismissed then such person is bound to restitute the benefit which he has received under interim orders which he was successful in seeking during the pendency of the proceedings. This principle is unexceptionable because FAO(OS) 168/2009 & CM No.1497/09 in FAO(OS) 448/2008 Page 7 otherwise a person would simply take benefit of interim orders and thereafter not pursue either the interim proceedings or the final proceedings till its conclusion because the same may go against him and consequently he may prefer to quietly withdraw the proceedings and pocket the benefit derived out of interim orders which he had obtained in his favour. In fact, even if, proceedings are not withdrawn but are ultimately unsuccessful i.e., the same are dismissed, even then the principle of restitution will govern the parties. 9. The legal provision dealing with restitution is contained in Section 144 of the Code of Civil Procedure, 1908 and the same reads as under:- 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. FAO(OS) 168/2009 & CM No.1497/09 in FAO(OS) 448/2008 Page 8 (2) No suit shall be instituted for the purpose of obtaining any restitution or other relief which could be obtained by application under sub-section (1). 10. The object of Section 144 is that no person can be allowed to retain a benefit derived pursuant to an order/judgment of a court if such order/judgment is ultimately finally not sustained. This provision and the principles of restitution contained therein have been extensively discussed by the Hon‘ble Supreme Court in its judgment reported as Kavita Trehan Vs. Balsara Hygiene Products Limited, 1994 (5) SCC 380. In fact, the Hon‘ble Supreme Court has laid down that the provision of Section 144 is not exhaustive of the doctrine of restitution and which principle is much larger then as contained in Section 144 CPC. The relevant paras of this judgment are as under : - “16. The Law of Restitution encompasses all claims founded upon the principle of unjust enrichment. ‗Restitutionary claims are to be found in equity as well as at law‘. Restitutionary law has many branches. The law of quasi-contract is ―that part of restitution which stems from the common indebitatus counts for money had and received and for money paid, and from quantum meruit and quantum valebant claims‖. [See The Law of Restitution — Goff & Jones, 4th Edn., page 3.] Halsbury’s Laws of England, 4th Edn., page 434 states : ―Common Law. Any civilised 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 recognised to fall within a third category of the common law which has been called quasi-contract or restitution. For historical reasons, quasi-contract has traditionally been treated as part of, or together with, the law of contract. Yet independently, equity FAO(OS) 168/2009 & CM No.1497/09 in FAO(OS) 448/2008 Page 9 has also developed principles which are aimed at providing a remedy for unjustifiable enrichment. It may be that today these two strands are in the process of being woven into a single topic in the law, which may be termed ‗restitution‘.‖ 20. In Binayak Swain v. Ramesh Chandra Panigrahi5, this Court stated the principle thus : (SCR p. 27) ―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.‖ 21. Section 144 CPC incorporates only a part of the general law of restitution. It is not exhaustive. (See Gangadhar v. Raghubar Dayal6 and State Govt. of A.P. v. Manickchand Jeevraj & Co.7 22. 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 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 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.‖ (Emphasis added) 11. The Hon‘ble Supreme Court in the decision reported as South Eastern Coal Fields Limited Vs. State of M.P. 2003 (8) SCC 648 has further reiterated this principal of restitution and in fact, has said that this flows from the fact that an act of the court should do no harm to a litigant. The relevant paras of this judgment are reproduced below. FAO(OS) 168/2009 & CM No.1497/09 in FAO(OS) 448/2008 Page 10 “25. On the principle which we have upheld just hereinabove, it would not have been necessary to enter into this aspect of the issue, however, it becomes necessary to deal therewith inasmuch as it was submitted on behalf of the consumers/purchasers that their non-payment of enhanced amount of royalty was protected by judicial orders, though of an interim nature, passed by the courts, and therefore, they should not be held liable for payment of interest so long as the money was withheld under the protective umbrella of the court order. Merely because the writ petitions were finally held liable to be dismissed, it cannot be urged that the interim orders passed by the courts were erroneous. Soon on dismissal of their writ petitions, the payment of the enhanced amount of royalty which was disputed earlier was promptly cleared by the writ petitioners and, therefore, their act was bona fide. We find no merit in this submission either. 26. 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.10) 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. (See Black’s Law Dictionary, 7th Edn., p. 1315). The Law of Contracts by John D. Calamari & Joseph M. Perillo has been quoted by Black to say that ―restitution‖ is an ambiguous term, sometimes referring to the disgorging of something which has been taken and at times referring to compensation for injury done: ―Often, the result under either meaning of the term would be the same. ... Unjust impoverishment as well as unjust enrichment is a ground for restitution. If the defendant is guilty of a non-tortious misrepresentation, the measure of recovery is not rigid but, as in other cases of restitution, such factors as relative fault, the agreed-upon risks, and the fairness of alternative risk allocations not agreed upon and not attributable to the fault of either party need to be weighed.‖ The principle of restitution has been statutorily recognized in Section 144 of the Code of Civil Procedure, 1908. 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. The interim order passed by the court merges into a final decision. The validity of an interim order, passed in favour of a party, stands reversed in the event of a final decision going against the party successful at the interim stage. Unless otherwise ordered by the court, the successful party at the end would be justified with all expediency in demanding compensation and being placed in the same situation in which it would have been if the interim order would not have been passed against it. The successful party can demand (a) the delivery of benefit earned by the opposite party under the interim order of the court, or (b) to make restitution for what it has lost; and it is the duty of the court to do so unless it feels that in the facts and on the circumstances of the case, the restitution far from meeting the ends of justice, would rather defeat the same. Undoing the effect of an interim order by resorting to principles of restitution is an obligation of the party, who has gained by the interim order of the court, so as to wipe out the effect of the interim order passed which, in view of the reasoning adopted by the court at the FAO(OS) 168/2009 & CM No.1497/09 in FAO(OS) 448/2008 Page 11 stage of final decision, the court earlier would not or ought not to have passed. There is nothing wrong in an effort being made to restore the parties to the same position in which they would have been if the interim order would not have existed. 27. Section 144 CPC is not the fountain source of restitution, it is rather a statutory recognition of a pre-existing rule of justice, equity and fair play. That is why it is often held that even away from Section 144 the court has inherent jurisdiction to order restitution so as to do complete justice between the parties. In Jai Berham v. Kedar Nath Marwari11 Their Lordships of the Privy Council said: (AIR p. 271) ―It is the duty of the court under Section 144 of the Civil Procedure Code to ‗place the parties in the position which they would have occupied, but for such decree or such part thereof as has been varied or reversed‘. Nor indeed does this duty or jurisdiction arise merely under the said section. It is inherent in the general jurisdiction of the court to act rightly and fairly according to the circumstances towards all parties involved.‖ Cairns, L.C. said in Rodger v. Comptoir D’Escompte de Paris12: (ER p. 125) ―[O]ne of the first and highest duties of all courts is to take care that the act of the court does no injury to any of the suitors, and when the expression, ‗the act of the court‘ is used, it does not mean merely the act of the primary court, or of any intermediate court of appeal, but the act of the court as a whole, from the lowest court which entertains jurisdiction over the matter up to the highest court which finally disposes of the case.‖ This is also on the principle that a wrong order should not be perpetuated by keeping it alive and respecting it (A. Arunagiri Nadar v. S.P. Rathinasami13). In the exercise of such inherent power the courts have applied the principles of restitution to myriad situations not strictly falling within the terms of Section 144. 28. That no one shall suffer by an act of the court is not a rule confined to an erroneous act of the court; the ―act of the court‖ embraces within its sweep all such acts as to which the court may form an opinion in any legal proceedings that the court would not have so acted had it been correctly apprised of the facts and the law. The factor attracting applicability of restitution is not the act of the court being wrongful or a mistake or error committed by the court; the test is whether on account of an act of the party persuading the court to pass an order held at the end as not sustainable, has resulted in one party gaining an advantage which it would not have otherwise earned, or the other party has suffered an impoverishment which it would not have suffered but for the order of the court and the act of such party. The quantum of restitution, depending on the facts and circumstances of a given case, 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. There is nothing wrong in the parties demanding being placed in the same position in which they would have been had the court not intervened by its interim order when at the end of the proceedings the court pronounces its judicial verdict which does not match with and countenance its own interim verdict. Whenever called upon to adjudicate, the court would act in conjunction with what is real and substantial justice. The injury, if any, caused by the act of the court shall be undone and the gain which the party would have earned unless it was interdicted by the FAO(OS) 168/2009 & CM No.1497/09 in FAO(OS) 448/2008 Page 12 order of the court would be restored to or conferred on the party by suitably commanding the party liable to do so. Any opinion to the contrary would lead to unjust if not disastrous consequences. 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