Royal Construction Company Pvt. Ltd vs National Projects Construction Corporation Ltd. (NPCC)

,,,,,,

\NAVIN CHAWLA,,,,,,

The dispute that remains between the parties is in a very narrow canvas and is whether the respondent has made full payment in terms of the,,,,,,

Arbitral Award to the petitioner or not. Â While the respondent admits that an amount of Rs.1,26,32,320.08 had remained payable in terms of the",,,,,,

Award as on 12.09.2017 and had been duly deposited by the respondent with the Registry of this Court on 11.01.2018 in full and final satisfaction of,,,,,,

the Award, the petitioner claims that even after deposit of this amount a further amount of Rs.1,38,75,302.46 remains due and payable by the",,,,,,

respondent to the petitioner as on 10.09.2018.,,,,,,

To understand the difference in this stand taken by the contesting parties, the brief background from which it arises needs to be considered.",,,,,,

The Sole Arbitrator by his Award dated 10.08.2002 had passed the following directions in favour of the petitioner and against the respondent:,,,,,,

 “I now summarize the quantified results details earlier,as follows:",,,,,,

RESULTS,,,,,,

 CLAIM N0.1  ALLOWED   =ID 77113.000,,,,,,

 CLAIM N0.2  DISALLOWED  =,,,,,,

 CLAIM N0.3  ALLOWED   =ID 27461.880,,,,,,

 CLAIM N0.4  ALLOWED   =ID 60764.000,,,,,,

 CLAIM N0.5  ALLOWED   =ID 16547.26,,,,,,

 CLAIM N0.6  ALLOWED   =ID 12000,,,,,,

 CLAIM N0.7  DISALLOWED  =,,,,,,

 CLAIM N0.8  ALLOWED   =ID 23720Â,,,,,,

 CLAIM N0.9  DISALLOWED  =,,,,,,

 CLAIM No.l0  ALLOWED   =ID 93750,,,,,,

 TOTAL  ID 311356.14,,,,,,

The interest on the allowed claims is 12% p/a from the date of commencement of arbitration proceedings i.e. 26.9.1988 upto the date of payment.,,,,,,

 BANK GUARANTEE ALLOWED  Rs. 20,00,000",,,,,,

The claimant is entitled to an interest of 12% p.a. from the date of encashment of Bank Guarantee upto the date of payment,,,,,,

COUNTER CLAIM,,,,,,

COUNTER CLAIM No.1Â DISALLOWEDÂ =Â,,,,,,

 COUNTER CLAIM No.2 ALLOWED  =ID 25000,,,,,,

 COUNTER CLAIM No.3 ALLOWED  =ID 14920,,,,,,

 COUNTER CLAIM No.4 ALLOWED  =ID 9159,,,,,,

 COUNTER CLAIM No.5 DISALOWED  =,,,,,,

 COUNTER CLAIM No. 6 ALLOWED  =ADJUSTED IN CLAIM N0.5 COUNTER CLAIM No. 7 ALLOWED  =ID 38500,,,,,,

 COUNTER CLAIM No. 8 ALLOWED  =12% p.a. on allowed counter claims,,,,,,

TOTAL = ID 87579 The respondent is entitled to an interest of 12% p.a. on the counter claims allowed from the date of commencement of arbitration,,,,,,

proceedings i.e. 26.9.1988 to upto the date of payment.,,,,,,

After setting off the allowed counter claims of the respondent against the allowed claims of the claimant. I thus make the award as follows:,,,,,,

a. The respondent shall pay ID 223777.14 (Two lakh Twenty three thousand seven hundred seventy seven and point one four) to the claimant,,,,,,

alongwith 12% interest p.a. from the date of commencement of arbitration proceedings i.e. 26.9.1988 upto the date of payment.,,,,,,

b. The respondent shall also pay to the claimant a sum of Rs.20,00,000/- (Rupees Twenty lakhs) alongwith 12% interest p.a. from the date of",,,,,,

encashment of bank guarantee upto the date of payment.,,,,,,

c. The amount payable in ID shall be convertible into US dollars as per the original agreement dated 29.6.1982. Further, all payments of settlement in",,,,,,

foreign exchange shall be made as per original agreement and Government rules.,,,,,,

d. There shall be no order as to costs and the parties are left to bear their own costs.â€​,,,,,,

The respondent challenged the above Award by way of a petition under Section 34 of the Arbitration and Conciliation Act, 1996 (hereinafter",,,,,,

S.N.,"Particulars as per Award dated

10.08.2002 and various Orders passed",,"Amount

P ayable in

INR",Amount Paid,"Amount

Receivable",

1.,"Total Iraqi Dinar payable as per

Award          dated

10.08.2002","ID

2,23,777.14",,,,

,"Conversion of 1 Iraq i Dinar into

US $","3.37778 US

$",,,,

,"Rate  of conversion into Indian Rupees

per US $ in June,

1982","Rs. Â Â Â

9.220/- per

US $",,,,

1(A),"Total Iraqi Dinar Payable in Indian

Currency","ID

2,23,777.14

X

     Â

3.37778

US $ X Rs.

9.220/-","Rs.

69,69,120.92",,,

2(A),"Payable amount of      Bank

Guarantee","Rs.

20,00,000/-","Rs. 20,00,000/-",,,

,"Principal Amount deposited in Court on

07.12.2009",,,"Rs.

1,14,48,374.35",,

AA,"Differential

 amount         (i.e.

Principal amount deposited in Court Rs.

1,14,48,374.35

 minus       Actual

Principal amount as per Judgment dated

16.05.2017

 â€

                 Â

Rs.

89,69,120.92/-)",,,,"Rs.

24,79,25

3.43",

3(A)Â,"Total ( = Rs.

89,69,120.92

 Minus           Rs.

1,14,48,374.35/-)",,"Rs.

89,69,120.92","Rs.

1,14,48,374.35","Rs.

24,79,253.4

3",

1(B),"Interest payable on Rams.1o,u7n7t, 2p4a,8y6a1b.l1e8 in Rs.

69,69,120.92/- @ 12 interest p.a. from the

date of commencement of arbitration

proceedings i.e. 26.9.1988 upto the date of

payment i.e.

07.12.2009",,,,,

2(B),"Interest payable on amount payable on Rs.

20,00,000/- @

12% interest p.a. from the date of

encashment of bank guarantee (i.e.

16.07.1987as per Award) upto the date of",,"Rs.

53,72,712.33",,,

,"payment           i.e.

07.12.2009",,,,,

,"TOTAL

AMOUNT

PAYABLE Â Â Â Â Â Â IN

INR. (I.E. 1(B)

PLUS 2(B)",,"Rs.

2,30,97,573.51",,,

BB,"Interest @ 7.25% under FDR on

AA Â Â Â Â Â Â Â Â Â Â Â Â Â Â

fromÂ

08.12.2009 till 12.09.2017 as applicable

from time to time, if the said amount in the

account of

NPCC",Â,,,,"Rs.

18,51,051

CC,"Â Additional

amount deposited in Court on

14.03.2011",,,,"Rs. 35,51,626/-","Rs.

35,51,626/-

DD,"Interest @ 8.50% under FDR on CC from

14.03.2011 till 12.09.2017 as applicable

from time to time, if the said amount in the

account of

NPCC",,,,,"Rs.

25,83,323/-

,Total Receivable (AA + BB + CC+ DD),,,,,"Rs.

1,04,65,253

.43

,"Total Payable (=Rs. 2,30,97,573.51/- Minus Rs. 1,04,65,253.43/-)",,,,,"Rs.

1,26,32,320

.08

TOTAL AMOUNT PAYABLE IN INR.

(I.E. 1(B) PLUS 2(B)",,,,"Rs. 2,30,97,573.51/-",,

Total Receivable (AA+ BB+ CC+DD),,,,"Rs. 1,04,65,253.43",,

Total Payable (=Rs. 2,30,97,573.51/- Minus Rs. 1,04,65,253.43/-

)",,,,"Rs. 1,26,32,320.08",,

3,"Amount in Indian Rupees considering

conversion rate as on June 1982 ie;

1USD=Rs.9.22 (USD7 55869.95 x

9.22)",Rs.,6969120.92,,,

4.,"Interest on Award Amount @ 12%

from 26/09/1988 to 10/08/2002 ie; 5066

days, (6969120.92 x 5066/365 x 0.12)",Rs.,,,,

5.,"Bank Guarantee Amount Receivable

Interest on Bank Guarantee Amount

from the date of encashment of Bank

Guarantee, (ie;16.07.1987, as per the

Award) upto the date of Award,

10.08.200 (5504 Days), (2000000 x

5504/365 x 12%)",Rs.,,,,

3

4","Amount Receivable as on the date of

Award, 10.08.2002

Interest from 11/08/2002 to 07/12/2009

ie;2675 Days on Rs.6969120.92+Bank

Guarantee Amount

Rs.2000000=8969120.92

(8969120.92x2675/365x0.12)","Rs.

Rs.","24195498.97

7887911.823",,,

5.,"Amount receivable as on 07/12/2009

(date of 1st payment by NPCC)",Rs.,32083410.80,,,

6.,"LESS: Firstp ayment made by NPCC

on07/12/2009 is Rs.11448374",Rs.,-11448374.00,,,

7

8

9

10","Total Amount receivable as on

07/12/2009

Interest from 08/12/2009 to 14/03/2011

(Date of second payment) ie;461 days,

(8969120.92x461/365x0.12)

Total Amount receivable as on

14/03/2011

LESS: Secondp ayment received from NPCC

Ltd. on 14/03/2011 is Rs.3551626","Rs.

Rs.

Rs.

Rs.","20635036.80

1359374.71

21994411.51

-3551626.00",,,

11

12","Amount receivable from NPCC Ltd. as

on 14/03/2011

Interest from 15/03/2011 to 02/01/2018

(Date of third payment) ie;2485 days

(8969120.92 x2485/365 x.12)","Rs.

Rs.","18442785.51

7327648.93",,,

13

14","Amount receivable from NPCC Ltd. as

on 02/01/2018

LESS: Thirdp ayment deposited by

NPCC in High Court on 02/01/2018 is

Rs.12632320","Rs.

Rs.","25770434.43

-12632320.00",,,

15,"Payment receivable from NPCC as on

02/01/2018

Interest from 03/01/2018 to 10/09/2018",Rs.,13138114.43,,,

16

23","ie;250 Days (8969120.92x250/365x0.12)

Amount receivable from NPCC Ltd. as

on 10/09/2018","Rs.

Rs.","737188.02

13875302.46",,,

24,Rounded,Rs.,13875302.00,,,

conversion rate.â€​,,,,,,

As noted above, the primary dispute between the parties is whether the amounts Rs.1,14,48,374/- and Rs.35,51,626/- deposited by the respondent",,,,,,

are to be adjusted against the principal sum awarded in the Arbitral Award or against the interest so awarded. Learned senior counsel for the,,,,,,

respondent submits that as the Division Bench of this Court in its Interim Order dated 26.11.2009 had directed the respondent to deposit the principal,,,,,,

amount in the Court, the amounts so deposited have to be adjusted first against the principal sum awarded by the Arbitral Award. In support of his",,,,,,

contention he has placed reliance on the judgments of the Supreme Court in Gurpreet Singh v. Union of India, (2006) 8 SCC 457; Bharat Heavy",,,,,,

Electricals Limited v. R.S. Avtar Singh and Co., (2013) 1 SCC 243; and Himachal Pradesh Housing and Urban Development Authority and Anr. v.",,,,,,

Ranjit Singh Rana, (2012) 4 SCC 505.",,,,,,

On the other hand, learned senior counsel for the petitioner relying upon the judgment of the Supreme Court in V.Kala Bharathi & Ors. v. The",,,,,,

Oriental Insurance Company Ltd., Br.Chitoor, 2014 (59) SCALE 449 and of this Court in Pramod Kumar Mittal & Ors v. Kiri Associates (P) Ltd.",,,,,,

MANU/DE/3909/2017, submits that as the full amount as awarded in the Arbitral Award had not been deposited by the respondent, the petitioner was",,,,,,

within its right to appropriate the amount so deposited first towards interest. As on such appropriation, even the full amount of interest had not been",,,,,,

deposited, there was no question of any amount being appropriated towards the principal sum awarded in the Arbitral Award and therefore, the",,,,,,

interest on the principal sum so awarded continues to run till date.Â,,,,,,

I have considered the submissions made by the learned senior counsels for the parties and I am in agreement with the submissions made by the,,,,,,

learned senior counsel for the petitioner. In the present case, it cannot be disputed that as on dates of such deposit, the amount of",,,,,,

Rs.1,14,48,374/- and Rs.35,51,626/-and Rs.1,26,32,320/- deposited by the respondent pursuant to the Interim Orders passed by this Court were not in",,,,,,

excess of the interest payable by the respondent to the petitioner in terms of the Arbitral Award. Therefore, the petitioner was within its right to",,,,,,

appropriate the said amount towards interest leaving the principal sum outstanding thereby becoming entitled to further interest on the said principal,,,,,,

sum.,,,,,,

Reliance of the learned senior counsel for the respondent on the order dated 26.11.2009 is totally ill-founded. Not only was it an Interim Order,,,,,,

of this Court but also the reference to the principal amount in the said order can only be construed as the quantification of the amount to be deposited,,,,,,

as a condition for stay on the enforcement of the Arbitral Award during the pendency of the Appeal. To put it differently, the Court could at that",,,,,,

stage have also ordered that there would be a stay on the enforcement of the Award on the deposit of Rs.1,14,48,374/-, however, instead of",,,,,,

quantifying the amount, the Court only as a matter of convenience, stated that there shall be a stay on the enforcement of the Arbitral Award on the",,,,,,

deposit of the principal sum so awarded. This does not mean that on deposit of the same, the same was necessarily to be appropriated by the",,,,,,

petitioner towards the principal sum awarded in the Arbitral Award.Â,,,,,,

In any case, the orders dated 26.11.2009 and 18.02.2011 were merely Interim Orders. They would cease to have effect once the Appeal was",,,,,,

disposed of by the Final Order dated 19.05.2014. The said orders, as noted above, do not direct the appropriation of the amount deposited by the",,,,,,

respondent and released to the petitioner to be in any particular manner. The appropriation of the amount so deposited, therefore, has to be",,,,,,

governed by the General Principles of appropriation of such amount. 21. In Gurpreet Singh (Supra), the Supreme Court has held as under:",,,,,,

 “52. What is to happen when a part of the amount awarded by the Reference Court or by the appellate court is deposited pursuant to an interim,,,,,,

order of the appellate court or of the further appellate court and the awardee is given the liberty to withdraw that amount? In such a case, the amount",,,,,,

would be received by the decree-holder on the strength of the interim order and the appropriation will be subject to the decision in the appeal or the,,,,,,

further appeal and the direction, if any, contained therein. In such a case,if the appeal is disposed of in his favour, the decree-holderwould be entitled",,,,,,

to appropriate the amount alreadyreceived by him pursuant to the interim order first towardsinterest then towards costs and the balance,,,,,,

towardsprincipal as on date of the withdrawal of the amount andclaim interest on the balance amount of enhancedcompensation by levying execution.,,,,,,

But on the part appropriated towards the principal, the interest would cease from the date on which the amount is received by the awardee. Of",,,,,,

course, if while passing the interim order, thecourt has indicated as to how the deposited amount is to beappropriated, that direction will prevail and",,,,,,

theappropriation could only be done on the basis of thatdirection.â€​        (Emphasis supplied),,,,,,

A reading of the above would clearly show that where a part of the amount awarded is deposited pursuant to an Interim Order of the Appellate,,,,,,

Court and the awardee is given the liberty to withdraw that amount, the appropriation of this amount shall be subject to the decision in the Appeal or",,,,,,

further Appeal and the direction, if any, contained therein. If the Appeal is disposed of in favour of the awardee, he would be entitled to appropriate",,,,,,

the amount already received by him pursuant to the Interim Order first towards the interest then towards the costs and the balance towards the,,,,,,

principal as on the date of the withdrawal of the amount and claim interest on the balance amount; the exception being where in the passing of the,,,,,,

Interim Order, the Court had indicated as to how the deposited amount is to be appropriated, in which case, that direction will prevail and the",,,,,,

appropriation could only be done on the basis of that direction.Â,,,,,,

It is not the case of the respondent that while ordering the release of the amount in favour of the petitioner, the Division Bench of this Court had",,,,,,

directed the manner in which the amount so released has to be appropriated by the petitioner. Therefore, the petitioner was within its right to",,,,,,

appropriate the said amount towards interest payable by the respondent as on that date and claim further interest on the principal amount that,,,,,,

remained payable.Â,,,,,,

In Bharat Heavy Electricals Limited (supra), the Supreme Court culled out the following principles of appropriation:",,,,,,

 “31. From what has been stated in the said decision, the following principles emerge:",,,,,,

31.1. The general rule of appropriation towards a decretal amount was that such an amount was to be adjusted strictly in accordance with the,,,,,,

directions contained in the decree and in the absence of such directions adjustments be made firstly towards payment of interest and costs and,,,,,,

thereafter towards payment of the principal amount subject, of course, to any agreement between the parties.",,,,,,

31.2. The legislative intent in enacting sub-rules (4) and (5) is a clear pointer that interest should cease to run on the deposit made by the judgment-,,,,,,

debtor and notice given or on the amount being tendered outside the court in the manner provided in Order 21 Rule 1(1)(b).,,,,,,

31.3. If the payment made by the judgment-debtor falls shortof the decreed amount, the decree-holder will be entitled toapply the general rule of",,,,,,

appropriation by appropriating theamount deposited towards the interest, then towards costsand finally towards the principal amount due under",,,,,,

thedecree.,,,,,,

31.4. Thereafter, no further interest would run on the sum appropriated towards the principal. In other words if a part of the principal amount has been",,,,,,

paid along with interest due thereon as on the date of issuance of notice of deposit interest on that part of the principal sum will cease to run,,,,,,

thereafter.,,,,,,

31.5. In cases where there is a shortfall in deposit of the principal amount, the decree-holder would be entitled to adjust interest and costs first and the",,,,,,

balance towards the principal and beyond that the decree-holder cannot seek to reopen the entire transaction and proceed to recalculate the interest,,,,,,

on the whole of the principal amount and seek for reappropriation.â€​     (Emphasis supplied),,,,,,

A reading of the above would clearly show that if the payment made by the Judgment Debtor falls short of the decreed amount, the Decree",,,,,,

Holder will be entitled to apply the general rule of appropriation by appropriating the amount deposited first towards interest, then towards cost and",,,,,,

finally towards the principal amount due under the decree. Â,,,,,,

The above principle was reiterated by the Supreme Court in the judgment of V.Kala Bharti (Supra), holding as under:",,,,,,

 “26. In view of above and more particularly keeping in view the ratio of the Constitution Bench judgment in Gurpreet Singh (supra) where,,,,,,

considering an identical question in respect of Order XXI Rule 1 of the CPC, it was held that if the amount deposited by the judgmentdebtor falls short",,,,,,

of the decretal amount, the decreeholder is entitled to apply the rule of appropriation by appropriating the amount first towards interest, then towards",,,,,,

costs and subsequently towards principal amount due under the decree; we are of the opinion that the appellants herein are entitled to the amount,,,,,,

awarded by the executing court, as the amounts deposited by the judgment-debtor fell short of the decretal amount. After such appropriation, the",,,,,,

decree-holder is entitled to interest only to the extent of unpaid principal amount. Hence, interest be calculated on the unpaid principal amount.â€​",,,,,,

In Himachal Pradesh Housing and Urban Development Authority (Supra), the Supreme Court was confronted with the case where the entire",,,,,,

amount due in the Award had been deposited before the High Court. In those facts, the Supreme Court held that the deposit of the awarded amount",,,,,,

into Court is nothing but a payment to the credit of the Decree Holder. In the present case, admittedly the full amount awarded in terms of the",,,,,,

Arbitral Award had not been deposited by the respondent on 07.12.2009 or 14.03.2011 or 02.01.2018. The said judgment, therefore, would have no",,,,,,

application to the facts of the present case.,,,,,,

While I was finalizing the present judgment, in another case, the respondent therein canvassing the same proposition as was being canvassed by",,,,,,

the respondent herein, placed reliance on the judgment of the Supreme Court in Union of India & Anr. v. M.P. Trading and Investment RAC",,,,,,

Corporation Ltd., (2016) 16 SCC 699. I therefore, considered the said judgment as well. In the said case, the Judgment Debtor has deposited the",,,,,,

principal amount before the High Court. In paragraph 5 of the judgment, while confining the interest as per the Award from the date of the Award",,,,,,

till the principal amount was deposited in the High Court, the Supreme Court further directed that the respondent therein shall be entitled to interest in",,,,,,

terms of the Award on the balance of the Award amount which the Appellant had failed to deposit in Court as per the Award. This Court in NTPC,,,,,,

Ltd. v. M/s V.U. Seemon, 2016 SCC OnLine Del 698, considered the above judgment and observed as under:",,,,,,

 “10. This Court is of the opinion that the appellant‟s contentions are unmerited. The judgment in H.P. Housing & Urban Development,,,,,,

Authority(supra) cannot be construed as an authority given that in that case the entire amount difference including interest was deposited in the,,,,,,

court. We notice that M.P. Trading and Investment Rac. Corporation Ltd‟scase (supra) merely followed H.P. Housing & Urban Development,,,,,,

Authority‟s (supra) without dwelling upon the rule of appropriation enunciated in Gurpreet Singh‟s case (supra) by a larger Bench. Furthermore, R.S.",,,,,,

Avtar Singh and Co.‟s case (supra) too applied the appropriation principle in the case of an arbitration award.â€​,,,,,,

In view of the above, the judgment of M.P. Trading and Investment RAC Corporation Ltd.(supra) is also of no assistance to the case of the",,,,,,

respondent.Â,,,,,,

Even otherwise, to accept the contention of the respondent would be to give benefit of the pendency of the appeal filed by it to the respondent,",,,,,,

though the said appeal was eventually dismissed against it. The petitioner cannot be made to suffer because of an Interim Order in an Appeal, in",,,,,,

which it finally succeeded. To do so would be against all cannons of justice and equity and cannot be accepted.Â,,,,,,

In South Eastern Coalfields Ltd. v. State of M.P. and Ors.(2003) 8 SCC 648, the Supreme Court has held as under:",,,,,,

“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.,,,,,,

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.) 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.â€​,,,,,,

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 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.,,,,,,

Section 144 CPC is not the fountain source of restitution, it is rather a statutory recognition of a preexisting 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 Marwari 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.â€​,,,,,,

Cairns, L.C. said in Rodger v. Comptoir D'Escompte de Paris: (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.â€​",,,,,,

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.,,,,,,

Rathinasami). 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.,,,,,,

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 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 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.â€​,,,,,,

In view of the above, the contention of the learned senior counsel for the respondent that the amounts deposited by the respondent pursuant to the",,,,,,

Interim Orders have to be adjusted towards the principal sum awarded by the Arbitral Award is without merit and is rejected. Consequently, the claim",,,,,,

of the respondent of interest on the alleged excess amount deposited by it towards the principal sum is also rejected.,,,,,,

I find the calculation given by the petitioner and as reproduced herein above to be correct and direct the respondent to pay the balance amount due,,,,,,

and payable by it to the petitioner within a period of four weeks from today.,,,,,,

List on 14th November, 2018.",,,,,,