Power to order restitution-value of property-hypothetical-CPC

Civil Procedure Code, 1908 — S. 144 — Power to order restitution: S. 144 CPC vests expansive power in court. Such power must be exercised to ensure equity, fairness and justice to both the parties. For ascertaining the value of property which is no longer available for restitution on account of it having been further sold, etc., court should adopt a realistic and verifiable approach instead of resorting to hypothetical and presumptive value. Court should keep under consideration not only the loss suffered by the party entitled to restitution but also the gain, if any, made by the other party who is obliged to make restitution. No unmerited injustice should be caused to either party. [Citibank N.A. v. Hiten P. Dalal

IN THE SUPREME COURT OF INDIA

                        CIVIL APPELLATE JURISDICTION

                        CIVIL APPEAL NO. 3580 OF 2005

Citibank N.A.                                       …..Appellant

      Versus

Hiten P. Dalal & Ors.                                     …..Respondents

                                    WITH

                        CIVIL APPEAL NO. 3584 OF 2005

The simple grievance of the appellant is that by impugned judgment and order dated 12.04.2005 passed by a Hon’ble Judge presiding over the Special Court (Trial of Offences Relating to Transactions in Securities) at Bombay has erred in determining an excessive amount payable by the appellant Citibank to the respondent applicant – Canbank Financial Services Limited (hereinafter referred to as ‘Canfina’) by way of restitution. There is no dispute that on account of reversal of a money decree in favour of Citibank in Suit No. 1 of 1995 filed by it against Canfina, by a common order dated 7.7.2004 passed by this Court in Civil Appeal nos. 7426, 9063 and 9138 of 1996, the Citibank is required to restore back the monetary benefits it received under the decree against Canfina

In the ultimate analysis we find that the law on restitution under Section 144 of the CPC is quite well settled. It vests expansive power in the Court but such power has to be exercised to ensure equity, fairness and justice for both the parties. It also flows from more or less common stand of parties on the principle of law that for ascertaining the value of the property which is no longer available for restitution on account of sale etc., the Court should adopt a realistic and verifiable approach instead of resorting to hypothetical and presumptive value. It is also one of the established propositions that in the context of restitution the Court should keep under consideration not only the loss suffered by the party entitled to restitution but also the gain, if any, made by other party who is obliged to make restitution. No unmerited injustice should be caused to any of the parties.

Keeping the aforesaid principles in view it has to be seen whether the order under appeal suffers from any illegality requiring interference and correction by this Court. In our considered view in the course of finding out the value of the bonds which are no longer available for restitution, the learned Special Court committed a clear error of law in ignoring a relevant fact that the bonds in question were a tradable commodity on the stock market and its value could be easily ascertained either on the date when the bonds were handed over to the Citibank or at the time when the Citibank sold the bonds to third parties. Such relevant facts should not have been lost sight of and no presumption should have been made that Canfina would have retained the bonds with it till the maturity period. There are sufficient materials available to lend credence to the view that in all eventuality Canfina would have sold the bonds because it was in such business and also because earlier when it had the option, it chose to hand over the bonds to Citibank instead of preferring the other option of paying its monetary value. Sale of the bonds by Citibank to third parties at a verifiable rate not being under dispute, it is evidently unjust to saddle Citibank with liability to repay the possible gains made by the third party or subsequent purchasers of the bonds. For these reasons we come to the conclusion that the amount determined by the Special Court for restitution and payment by Citibank is unjust and is a result of error in not keeping under view the relevant facts as well as in applying the settled legal propositions for the purpose of compensating Canfina by way of restitution. In view of above the impugned order is set aside. In order to bring the dispute to a just, logical and early conclusion, instead of remanding the matter to the Special Court we accept the last chart submitted on behalf of appellant to be correct calculation of the amount payable by way of restitution by Citibank to Canfina. As noted earlier as per such chart the total amount payable to Canfina on 20.7.2004 is Rs. 115,08,98,835/- and after adjusting the further amount paid by Citibank to Canfina under protest on 25.4.2005 the Citibank is entitled to a refund by Canfina as on 25.4.2005 to an amount of Rs. 22,14,36,756/-. In line with earlier orders, we allow interest on this amount at the rate of 9% per annum from 25.4.2005 till the date of actual refund. Canfina should make a refund of aforesaid due amount along with interest awarded by us within four weeks. Both the appeals are allowed to the extent indicated above. In the facts of the case there shall be no order as to costs.