INDIAN COUNCIL FOR ENVIRO-LEGAL ACTION v. UNION OF INDIA & OTHERS IA N0.36 AND IA N0.44

And, further: rl

INDIAN COUNCIL FOR ENVIRO-LEGAL ACTION v. 253 UNION OF INDIA & ORS. [DALVEER BHANDARI, J.] ... ,,,. -.f

"The authorities to which I have referred leave no A 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 1 exercise "if, in its view, the purposes of justice require that B ~ it should do so".

146Copy pinpoint146. In DJL v. Central Authority (2000) 170 ALR 659, the High Court of Australia observed:

" ... It is now recognized both in Australia and c 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 D 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. . .. " E

147Copy pinpoint147. 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 F Australia has inherent jurisdiction to vacate its orders in cases where there would otherwise be an irremediable injustice .... n

} ... - 148. American courts also follows a similar pattern. In G 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 .vould make unfair, strict application of Supreme Court's Rules. H

254 SUPREME COURT REPORTS [2011] 9 S.C.R.

149Copy pinpoint149. In Raymond G. Cahill v. The New York, New Haven and Hartford Railroad Company 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 B would cause manifest injustice."

150Copy pinpoint150. The Supreme Court of Fiji Islands incorporating c 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.

151Copy pinpoint151. 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 E Authority NSW v Code/fa Construction Pty Ltd (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: F • • "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

INDIAN COUNCIL FOR ENVIRO-LEGAL ACTION v. 255 "" ... ~ UNION OF INDIA & ORS. [DALVEER BHANDARI, J.]. general re-opening ... But ... once a matter has been re- A . opened, the nature and extent of th ..~ review must depend on the error or omission which has led to that step being taken." ·, 152.. The principles were further considered in Autodesk B Inc v Dyason (No 2) (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 c 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." D

153: 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. E

154. 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 II ... ' in extremely exceptional circumstances where there is gross· F I

'1 violation of principles of natural justice.

155. 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 G proceeded as if he had notice. This court in State of M.P. v. Sugar Singh & Others on 9th March, 201 Opassed the following order in a curative petition : "Though there were eight accused persons, only four accused were arrayed as party respondents in the said H

256 SUPREME COURT REPORTS [2011] 9 S.C.R.

~ ..... A 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 B 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 l.P.C. and sentenced them to undergo imprisonment for a period of six years. The conviction of c 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. D 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, E 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

F 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, G 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

INDIAN COUNCIL FOR ENVIRO-LEGAL ACTION v. 257 .., . • UNION OF INDIA & ORS. [DALVEER BHANDARI, J.] Balbir) be impleaded as respondents and all accused be served with fresh notices."

156. 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. c

157. 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 im12ortant 12rinci12les which need elucidation are regarding unjust enrichment, restitution and com~ound . ~ interests. F

158. Dr. Arun Mohan, Senior Advocate of this court in a recently published book with the title "Justice, Courts an.d Delays" analytically, lucidly while taking .in view prag.m~t1c ..... realities elucidated concepts of unjust enrichment, restitution and compound interest. G

159. 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 H

258 SUPREME COURT REPORTS [2011] 9 S.C.R.

• • A 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.

160. By judgment dated 4.11.1997 this Court, accepting the ascertainment, fixed the amount. The order reads as under: 8 "......... remedial measures taken on the basis of the NEERI report shall be treated as final.

We accept the proposal submitted by the Government of c 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." D

161. 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. E

162. 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.

F 163. 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 G - nearly 14 years later - been finally decided against them.

164. 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 H but here it is almost 14 years have been lapsed and amount

INDIAN COUNCIL FOR ENVIRO-LEGAL ACTION v. 259 UNION OF INDIA & ORS. [DALVEER BHANDARI, J.] has not been paid. The questions therefore are really three: A

1. Can a party wlio 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 B 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? c Answering these questions will necessitate analysis of certain concepts. · I

·""' 165. It is settled principle of law that no one can take advantage of his own wrong. D

166, 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.

167. 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.

168. 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

169. Unjust enrichment has been defined as: "A benefit H

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. .. A 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.

B 170. 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."

C 171. '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, . D 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.

E 172. 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)

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

174. 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 H

INDIAN COUNCIL FOR ENVIRO-LEGAL ACTION v. 261 -t .UNION OF INDIA & ORS. [DALVEER BHANDARI, J.] ' remedies for cases of what has been called unjust A 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 8 fall within a third category of the common law which has been called quasi-contract or restitution."

175. Lord Denning also stated in Nelson v. Larholt, [1947] 2 All ER 751 as under:- c "It is no longer appropriate, however, to draw a distinction between law and equity. Principles have now

- J 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 D 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." E

176. The above principle has been accepted in India. This Court in several cases has applied the doctrine of unjust enrichment. f ) RESTITUTION AND COMPOUND INTEREST F

177. 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 G 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 H

262 SUPREME COURT REPORTS [2011] 9 S.C.R.

A 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."

178. 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."

179. 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 • • F 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

INDIAN COUNCIL FOR ENVIRO-LEGAL ACTION v. 263 UNION OF INDIA & ORS. [DALVEER BHANDARI, J.] -' l belong to another. A

180. 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 Manda/ Ltd B } vs Commissioner of Central Excise & Customs {{2005) 3 sec 738). 181. This Court said: "'Unjust enrichment' means retention of a benefit by a person that is unjust or inequi able. 'Unjust '..3nrichment' occurs when a person retains money or benefits which in justice, equity and good conscience, belong to someone else." c

182. 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 D 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. E

183. 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 r ) becomes a substantive law (or common law) right that the court F 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 H will be ' allowing the Court's own process, along with time delay, to do G injustice.

184. 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 H

264 SUPREME COURT REPORTS [2011] 9 S.C.R.

. A court has to levelise and not go further into the realm of penalty which will be a separate area for consideration altogether.

185. 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 B of Lords (now the UK Supreme Court) reported as Sempra Metals Ltd (formerly Metaflgesef/schaft Limited) v Her Majesty's Commissioners of Inland Revenue and Another = = (2007] UKHL 34 (2007] 3 WLR 354 (2008] 1 AC 561 = (2007) All ER (D) 294. c

F finally paid."

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

G 188. 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.

189. In other words, if payment of an amount equivalent of H

INDIAN COUNCIL FOR ENVIRO-LEGAL ACTION v. 265 UNION OF INDIA & ORS. [DALVEER BHANDARI, J.] what the ledger account in the nationalised bank on a clean load A 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. B

190. 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 c 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 D PROCEDURE

191. 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. E 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 ;-- J empowered to allow only simple interest. A case for law reform F on this is a separate issue.

192. 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 G ""' equity are each sufficient to enable an order directing p~yment of compound interest. The power to order compound interest as part of restitution cannot be disputed, otherwise there can never be res\i\u\ion.

266 SUPREME COURT REPORTS [2011) 9 S.C.R.

\- .. A PRECEDENTS ON EXERCISE OF POWERS BY THE COURT TOMAKE THE BENEFICIARY WHOLE - RESTITUTION

193. This court in Grindlays Bank Limited vs Income Tax B Officer, Calcutta (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 c 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 -· D for it. .. ."

194. In Ram Krishna Verma and Others vs State of U.P. and Others (1992) 2 sec 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 Bah/'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 G 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

INDIAN COUNCIL FOR ENVIRO-LEGAL ACTION v. 267 UNION OF INDIA & ORS. [DALVEER BHANDARI, J.] 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 8 or portion thereof and forfeited their right to hearing of the objections filed by them to the draft scheme dated Feb. 26, 1959.... "

195. This court in Kavita Trehan vs Balsara Hygiene Products (1994) 5 SCC 380 observed as under:- C

"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 D 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 E 144; but the aggrieved party in such a case can appeal to the larger and general powers of restitution inherent in every court."

196. This court in Marshall Sons & Co. (/) 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 t~e respond_ent 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 ~n one coun~ or the other and on occasion become highly technical H

268 SUPREME COURT REPORTS [2011] 9 S.C.R.

A 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 B 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 c 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 D 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.·

E 197. 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 H

INDIAN COUNCIL FOR ENVIRO-LEGAL ACTION v. 269 UNION OF INDIA & ORS. [DALVEER BHANDARI, J.] .; -I

the Court. One of the aims of every judicial system has to A 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." B

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

199. 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 c 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 /is, 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 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 ~ G loaded in their favour, since even if they lose, the time gained is the real gain. This situation must be redeemed by the Courts."

200. Against this judgment, Special Leave to Appeal H

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A (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 B Petition is, accordingly, dismissed."

Interest on interest

201. This court in Alok Shanker Pandey vs Union of India c & 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 a, 1rlition 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. F 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."

G Compound Interest

202. 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 H convenient approach is calculating interest. But here interest

INDIAN COUNCIL FOR ENVIRO-LEGAL ACTION v. 271 UNION OF INDIA & ORS. [DALVEER BHANDARI, J.] -~ 1 has to be calculated on compound basis - and not simple - A for the !atter leaves much uncalled for benefits in the hands of the wrongdoer.

203. Further, a related concept of inflation is also to be kept in mind and the concept of compound interest takes into .} B 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.

204. Some of our statute law provide only for simple interest and not compound interest. In those situations, the c 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 D Commission to consider and recommend necessary amendments in relevant laws.

205. 'Compound interest' is defined in Black's Law Dictionary, Eighth Edition (Bryan A. Garner) at page 830 as E '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.

206. As noted, compound interest is a norm for all ' 1 commercial transactions. F

207. 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 w·estdeutsche Landesbank Girozentra/e v London Borough Council 1996 A.C. 669 the issue for the House of Lords was whether compound interest was G

available in respect of all restitutionary claims. By a majority it was decided that, since the jurisdiction to award H.

272 SUPREME COURT REPORTS (2011) 9 S.C.R.

' ..... A 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 B 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 c 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 jurisdiction to award compound ~

interest is still available in appropriate cases. D 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 I '' 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

INDIAN COUNCIL FOR ENVIRO-LEGAL ACTION v. 273 UNION OF INDIA & ORS. [DALVEER BHANDARI, J.] 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."

208. In Marshall sons and company (/) Limited v. Sahi Oretrans (P) Limited and another (1999) 2 sec 325 this court in para 4 of the judgment observed as under: c "... 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 D 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 E 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 _; i property. In appropriate cases, the court may appoint a F 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 G the decree is passed and to protect the property including further alienation .... "

209. In Ouseph Mathai and others v. M. Abdul Khadir (2002) 1 sec 319 this court reiterated the legal position that the stay granted by the court does not confer a right upon a party H

274 SUPREME COURT REPORTS [2011] 9 S.C.R.

\ ..__ A 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 B 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 sec 648 on examining the principle of restitution in para 26 of the judgment observed as c 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: (1) return or restoration of some specific thing to its rightful owner or status; (i1) compensation for benefits derived from a wrong done to another; and (iii) compensation or reparation for the loss caused to another."

211. The court in para 28 of the aforesaid judgment very • 1- F 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 I • encouraged to approach the courts, persuading the court to pass interlocutory order:) favourable to them by making - out a prima facie case when the issues are yettabe heard and determined on merits and if the concept of restitution is excluded from application to interim orders, then the

INDIAN COUNCIL FOR ENVIRO-LEGAL ACTION v. 275 -J_' ..,;J' ~ UNION OF INDIA & ORS. [DALVEER BHANDARI, J.] 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 8 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."

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

213. In a relatively recent judgment of this court in Amarjeet Singh and others v. Devi Ratan and others (2010) 1 SCC 417 D 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 Wiit 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 ...... ." H

276 SUPREME COURT REPORTS [2011] 9 S.C.R.

A 214. In another recent judgment of this court in Kalabharati Advertising v. Hemant Vimalnath Narichania and others (2010) 9 sec 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 B 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 c 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 D situation the court is under an obligation to undo the wrong done to a party by thP 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 E advantage on a party by the delayed action of the court."

215. 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 F 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.

216. In consonance with the principle of equity, justice and G good conscience judges should ensure that the legal process I ' 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 H

INDIAN COUNCIL FOR ENVIRO-LEGAL ACTION v. 277 ...) UNION OF INDIA & ORS. [DALVEER BHANDARI, J.] • 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 dishonestlitigation.

217. The court's constant endeavour must be to ensure that c 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.

218. 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 H

278 SUPREME COURT REPORTS [2011] 9 S.C.R.

• '- A imposing costs is for how long the defendants or respondents were compelled to contest and 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 B various courts. The appellants have also wasted judicial time of the various courts for the last 40 years."

219. 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 c Apex Court should not be disturbed particularly in a case where review and curative petitions have already been dismissed.

220. 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 ·mder 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? \Nhen 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.

221. 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 H

INDIAN COUNCIL FOR ENVIRO-LEGAL ACTION v. 279 UNION OF INDIA & ORS. [DALVEER BHAN~ARI, J.] _,. (ii) The exception to this general rule is where in the A 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. B <~ (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. c

222. 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. ~

223. The other aspect which has been dealt with in great details is to neutralize any unjust enrichme,nt 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 G Court.

4. A person in wrongfd possession should not only be removed from that place as early as possible but be compelled to pay for wrongful use of that H

280 SUPREME COURT REPORTS (2011] 9 S.C.K.

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. B

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

7. Litigation should not be permitted to turn into a c 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. D

224. It may be pertinent to mention that even after dismissal of review petition and of the curative petition on 18.7.2002, the applicants (respondent Nos. 4 to 8) have been repeatedly filing one petition or the other in order to keep the E litigation alive. It is indeed astonishing that the orders of this court have not been implemented till date. The applicants have made all possible efforts to avoid compliance of the judgment of this Court. This is a clear case of abuse of process of the court. F

225. The Court in its order dated 04.11.1997 while accepting the report of the MOEF directed the applicant - M/s Hindustan Agro Chemical Ltd. to pay a sum of Rs.37.385 crores towards the costs of remediation. The amount which ought to have been deposited way back in 1997 has yet not been deposited by keeping the litigation alive.

226. We have carefully considered the facts and circumstances of this case. We have also considered the law declared by this Court and by other countries in a number of cases. We are clearly of the opinion that the concerned

INDIAN COUNCIL FOR ENVIRO-LEGAL ACTION v. 281 UNION OF INDIA & ORS. IDALVEER BHANDARI, J.] .) ' applicant-industry must deposit the amount as directed by this A Court vide order dated 4.11.1997 with compound interest. The applicant-industry has deliberately not complied with the orders ·of this court since 4.11.1997. Thousands of villagers have been adversely affected because no effective remedial steps have been taken so far. The applicant-industry has succeeded in their B design in not complying with the court's order by keeping the litigation alive.

227. Both these interlocutory applications being totally devoid of any merit are accordingly dismissed with costs. C Consequently, the applicant-industry is directed to pay Rs.37.385 crores along with compound interest @ 12% per annum from 4.11.1997 till the amount is paid or recovered.

228. The applicant~industry is also directed to pay costs of litigation. Even after final judgment of this Court, the litigation D has been kept alive for almost 15 years. The respondents have been compelled to defend this litigation for all these years. Enormous court's time has been wasted for all these years.

2~29. On consideration of the totality of the facts and · E circumstances of this case, we direct the applicant-industry to pay costs of Rs.10 lakhs in both the Interlocutory Applications. The amount of costs would also be utilized for carrying out remedial measure in village Bichhri and surrounding areas in t1daipur District of Rajasthan on the direction of the concerned F authorities.

230. In case the amount as directed by this Court and costs imposed by this Court are not paid within two months, the same

. ' would be recovered as arrears of the land revenue.

231. Both these interlocutory applications are accordingly disposed of. G

Interlocutory Applications dismissed. R.P. H