Gauhati High Court
WP(C)/263/2023 on 29 March, 2023
Page No.# 1/18
GAHC010003452023
THE GAUHATI HIGH COURT
(HIGH COURT OF ASSAM, NAGALAND, MIZORAM AND ARUNACHAL PRADESH)
Case No. : WP(C)/263/2023
1. SHREE SAI ROLLING MILLS (INDIA) LTD.
A DULY REGD. PUBLIC LIMITED COMPANY UNDER COMPANIES ACT 1956
(AS AMENDED), THE HEAD OFFICE OF WHICH IS SITUATED AT 4TH
FLOOR, H.NO. 18, CHANDAN NAGAR, SURVEY, BELTOLA, GHY-28, REP. BY
ITS AUTHORIZED DIRECTOR- MR SANDEEP KUMAR BHAGAT
2: SHREE SAI PRAKASH ALLOYS PRIVATE LIMITED,
A DULY REGD. PUBLIC LIMITED COMPANY UNDER COMPANIES ACT 1956
(AS AMENDED) THE HEAD OFFICE OF WHICH IS SITUATED AT 4TH FLOOR
H.NO. 18, CHANDAN NAGAR, SURVEY, BELTOLA, GHY-28,
REP. BY ITS AUTHORIZED DIRECTOR- MR SANDEEP KUMAR BHAGAT.
.......Writ Petitioners
-VERSUS-
1. NORTH EASTERN DEVELOPMENT FINANCE CORPORATION LTD.
(NEDFI) , A GOVT. OF INDIA OWNED COMPANY DULY INCORPORATED
AND REGD. UNDER THE COMPANIES ACT, 1956 (AS AMENDED) AND
NOTIFIED TO BE A PUBLIC FINANCIAL INSTITUTION HAVING ITS REGD.
OFFICE SITUATED AT NEDFI HOUSE, G.S.ROAD, GANESHGURI, GHY-06
2:THE CHAIRMAN CUM MANAGING DIRECTOR,
NORTH EASTERN DEVELOPMENT FINANCE CORPORATION LIMITED,
NEDFI HOUSE, GANESHGURI, G.S.ROAD, DISPUR, GHY-06
3:THE ASSTT. GENERAL MANAGER,
NORTH EASTERN DEVELOPMENT FINANCE CORPORATION LIMITED,
NEDFI HOUSE, GANESHGURI, G.S.ROAD, DISPUR, GHY-06.
4:MR. HARSH SIOTIA,
M/S BHAGWANI ORIENTAL INDIA PRIVATE LIMITED,
MODI ENTERPRISE, BLOCK NO 6
AT ROAD, JORHAT, ASSAM.
.......Respondents
Page No.# 2/18
- BEFORE -
HON'BLE THE CHIEF JUSTICE
HON'BLE MRS. JUSTICE MITALI THAKURIA
For the Petitioners : Mr. Parag Das, Advocate.
For the respondent(s) : Mr. U.K. Nair, Senior Advocate assisted by Mr. S. Dutta
and Mr. H. Das, Advocates for respondent Nos.1 to 3.
Mr. K.L. Gupta, Advocate, for respondent No.4.
Date of Hearing & Judgment : 29.03.2023.
JUDGMENT & ORDER (ORAL)
[Sandeep Mehta, CJ]
By way of this petition filed under Article 226 of the Constitution of India,
the petitioners seek to invoke the writ jurisdiction of this Court craving the
following reliefs:
"In the premises, it is therefore, prayed that your Lordship would graciously be
pleased to call for the records, issue Rule calling upon the Respondents, more
particularly the Respondent No.2 and 3 to show cause as to why a writ in the
nature of certiorari shall not be issued for quashing and setting aside impugned
E-auction proceeding held on 13.12.2022 and the sale certificate if any thereof
issued in favour of the Respondent No.4 in respect of the immovable property
shown at Schedule below
-AND/OR-
Why such further writ in the nature of certiorari shall not be issued quashing
and setting aside the Revocation of Compromise settlement letter under
reference No NEDFI/PFD-SAMC/2022-23/ No 645 dated 27.05.2022 of M/s
Page No.# 3/18
Shree Sai Prakash Alloys (P) limited (Petitioner No.2)
-AND/OR-
Why a writ in the nature of mandamus shall not be issued commanding,
directing the Respondent No 1, 2 and 3 to restore the operation of the
compromise Settlement sanction letter of the term loan account of the Petitioner
No.1 and 2 under reference No NEDFI/PFD-SAMC/2020-21/No. 4677 dated
31.03.2021, give extension thereof on any condition and to accept the left over
and/or remaining balance amounts of the said Compromise settlement sanction
letter dated 31.03.2021 along with such interest per annum as contracted in
terms of the Term Loan Agreement arrived at Between the parties
-AND/OR-
In the event of repayment of Rs.4,30,000,00/- and Rs.1,20,000,00/- out of the
total compromise amount being about 86% of the compromise settlement, why
such direction shall not be made for handing over possession of the mortgaged
property shown at Schedule below to the Petitioners."
2. Brief facts relevant and essential for disposal of the writ petition are noted
hereinbelow.
3. The present writ petition has been filed by two petitioner Companies
through their authorized Director- Mr. Sandeep Kumar Bhagat seeking the
above said reliefs.
The petitioner Companies took term loans of Rs.7 crores and Rs.5 crores
respectively from the respondent Nos.1 and 2 for generating working capital.
The term loans were sanctioned on 23.09.2011 (Rs.7 crores) and 15.03.2014
(Rs.5 crores).
It may be stated that for securing the loans, equitable mortgage was
created by pledging the personal properties of the Directors Sandeep Kumar
Bhagat and Smt. Shalini Bhagat. The Companies ran into financial crisis
sometime around the year 2016 and thus, the repayments became irregular.
The accounts were declared NPA. The respondent Nos.1 and 2 initiated
Page No.# 4/18
proceedings for securing the loan amount. A One Time Settlement (OTS in
short) was arrived at between the parties on 30.07.2019. However, as the
petitioners failed to pay the amount under the One Time Settlement (OTS), a
revised settlement was proposed vide communication dated 31.03.2021. The
loan account of the petitioner No.1 was fully liquidated. Thus, for all practical
purposes, the writ petition filed on behalf the petitioner No.1 is misconceived.
However, the petitioner No.2 failed to repay the due amount of loan nor did it
act as per the restructuring provided under the revised/extended OTS upon
which, the respondents initiated proceedings under the Securitization and
Reconstruction of Financial Assets and Enforcement of Security Interest Act,
2002 (SARFAESI in short).
4. E-auction Sale Notice was published on 10.11.2022 for auctioning the
mortgaged assets being the personal properties of the Directors of the
petitioner No.2. The bid of respondent No.4 has been accepted whereupon the
petitioners have approached this Court assailing the auction proceedings and
seeking the above mentioned relief.
5. Learned counsel Mr. Parag Das representing the petitioners has filed
detailed written arguments wherein the principal thrust of challenge to the
impugned action projected is that the proceedings under the SARFAESI Act are
not maintainable on the grounds, namely, (1) that less than 20% of the
principal amount and interest remains due to be paid and (2) proceedings for
corporate resolution have been initiated by the respondents in the NCLT and
hence, the proceedings under the SARFAESI Act are barred by law and the
mortgaged properties cannot be sold without permission of the NCLT.
6. The respondent Nos.1, 2 and 3 have filed a detailed affidavit-in-opposition
stating therein that the loan account of the petitioner No.1 was closed much
Page No.# 5/18
before the writ petition came to be filed.
So far the petitioner No.2 is concerned, a sum of Rs.7 crores was sanctioned
to it as Term Loan. Under the One Time Settlement, the petitioner No.2 was
given the opportunity to settle the account for a sum of Rs.4,57,62,867/- which
would include the principal amount as well as legal cost. Interest accrued to the
tune of Rs.2,17,50,000/- odd was waived. However, the petitioner failed to act
in terms of the One Time Settlement which was further extended till
31.12.2021.
7. It has been pertinently mentioned in the affidavit-in-opposition that the
assets mortgaged with the Bank to secure the loan are personal properties of
the Directors and thus, the insolvency proceedings pending before the NCLT,
would not come in the way of the Bank to proceed with the sale and secure its
dues because only the property owned by the corporate debtor is saved by
virtue of the IBC.
At para No.9 of the affidavit, it has been stated that the petitioner No.2 had
earlier approached this Court by filing writ petition, WP(C) No.130/2021
challenging the very same SARFAESI proceedings and thereafter, also preferred
applications before the learned Debts Recovery Tribunal (DRT) which had since
been disposed of.
8. After this statement made in the affidavit filed by the respondent Nos.1, 2
and 3, the petitioners filed an affidavit dated 16.02.2023 wherein, the factum of
filing of the aforesaid writ petition, WP(C) No.130/2021 has been admitted with
a lame explanation that the earlier action of litigations that were disposed did
not involve similar cause of action as to the violation of Article 8 and 9 of
Security Interest (Enforcement) Act which is the pertinent ground of challenge
Page No.# 6/18
in this writ petition.
Nonetheless, the petitioners have not denied the fact that the earlier writ
petition was also filed in relation to the very same loan account/s.
9. We have called for the records of the writ petition, WP(C) No.130/2021
filed by Mr. Sandeep Kumar Bhagat in the capacity of Suspended Director of
both the petitioner Companies.
The prayer clause in the writ petition WP(C) No.130/2021 reads as below :-
"In the premises aforesaid, it is most humble prayed that your Lordships may
be pleased to admit the petition, call for the records, issue notice upon the
Respondent to show cause as to why the impugned letter dated 24.02.2020
(Annexure No.11) for revocation of OTS dated 30.07.2019 shall not be set aside
and quashed and pending hearing and disposal of the writ petition, no
consequential effects of revocation shall be initiated by the respondent
authorities and further be pleased to restrain the respondent Corporation from
initiating any no coercive measures/action by reviving the OTS sanction dated
30.07.2019 and/or pass such further Order/Orders as your Lordships may
deem fit and proper."
10. The writ petition aforesaid was disposed of by the Division Bench of this
Court by order dated 01.02.2021. The operative portion thereof has material
bearing on this litigation and hence the same is reproduced hereinbelow for the
sake of ready reference:-
"...............
The petitioner has approached this Court against the vacation notice which
has been passed by the Secured Creditor of the respondent Bank under the
provisions of Securitization and Reconstruction of Financial Assets and
Enforcement of Security Interest Act, 2002 (SARFAESI Act).
The admitted position is that the petitioner had taken a loan from the
respondent Bank which he subsequently could not repay in time, and therefore,
his account has been declared as NPA.
Proceeding has been initiated by the respondent Bank under the
provisions of SARFAESI Act, and under these circumstances, this writ petition
Page No.# 7/18
has been filed challenging the order passed by the Secured Creditor of the
respondent Bank under the Act.
All the same, the petitioner has a statutory remedy to file an appeal before
the Debts Recovery Tribunal under Section 17 of the SARFAESI Act. We are,
however, also conscious of the fact that the appeal of the present petitioner may
be delayed, being outside the statutory period of limitation.
Considering the strange and difficult circumstances of the present COVID-
19 pandemic situation and, being aware of the fact that Debts Recovery
Tribunal is not given specific powers to condone the delay, we request the Debts
Recovery Tribunal to consider that aspect of the matter while entertaining the
application of the petitioners.
We must also refer at this stage the directions given by the Hon'ble Apex
Court in 2020 SCC OnLine SC 343 whereby the period of limitation has been
directed to be extended on account of to COVID-19 pandemic situation, which
reads as under:
"ORDER
This Court has taken Suo Motu cognizance of the situation arising
out of the challenge faced by the country on account of Covid-19 Virus
and resultant difficulties that may be faced by litigants across the
country in filing their petitions/applications/suits/appeals/all other
proceedings within the period of limitation prescribed under the general
law of limitation or under Special Laws (both Central and/or State).
To obviate such difficulties and to ensure that lawyers/litigants do
not have to come physically to file such proceedings in respective
Courts/Tribunals across the country including this Court, it is hereby
ordered that a period of limitation in all such proceedings, irrespective of
the limitation prescribed under the general law or Special Laws whether
condonable or not shall stand extended w.e.f. 15 th March 2020 till
further order/s to be passed by this Court in present proceedings.
We are exercising this power under Article 142 read with Article 141
of the Constitution of India and declare that this order is a binding order
within the meaning of Article 141 on all Courts/Tribunals and authorities.
This order may be brought to the notice of all High Courts for being
communicated to all subordinate Courts/Tribunals within their respective
jurisdiction. Issue notice to all the Registrar General of the High Courts,
returnable in four weeks."
The delay condonation application of the petitioner, should be considered
Page No.# 8/18
should it be filed, before the Debts Recovery Tribunal, keeping in mind the
above directions of the Hon'ble Apex Court.
Mr. S. Dutta, learned Standing Counsel for the respondent Bank has very
fairly sated that for two weeks from today, they will not be taking any coercive
measure against the petitioner, to enable the petitioner to approach the Debts
Recovery Tribunal.
The writ petition stands disposed of in the above terms."
Whilst disposing of the writ petition, the Court granted indulgence to the
petitioner to approach the DRT by considering the prayer of the petitioner to
condone the delay in filing of the application in light of the Hon'ble Supreme
Court judgment in the case of Cognizance for Extension of Limitation, In re,
reported in 2020 SCC OnLine SC 343.
The Bank's counsel, gave an undertaking that coercive measures would be
deferred by 2(two) weeks so as to enable the petitioner to approach the DRT.
11. It has been mentioned in the para No.14 of written submissions of the
petitioners that the disputes between the borrower and the Bank should not be
entertained by the Hon'ble High Courts under writ jurisdiction without availing
alternative statutory forum of DRT as held by Hon'ble Supreme Court in the
cases of Authorized Officer, State Bank of India, Travancore & Anr. Vs.
Mathew K.C., reported in (2018) 3 SCC 85 and ICIC Bank Limited & Ors.
Vs. Umakanta Mahapatra and Ors ., reported in (2019) 13 SCC 497.
However, the petitioners have tried to distinguish the said judgment by
projecting purely disputed questions of facts.
12. As has been stated by the respondents in para No.17 of their affidavit-in-
opposition, not only the petitioner Sandeep Kumar Bhagat filed writ petition in
relation to the very same recovery proceedings but thereafter, some applications
Page No.# 9/18
were filed before the DRT as well. However, while filing the present writ petition,
the petitioners have intentionally, chosen to not to make a disclosure regarding
details of the applications filed before the DRT in addition to the blatant
concealment regarding filing of the WP(C) No.130/2021 and the order passed
by the Division Bench therein.
13. The Hon'ble Supreme Court has time and again, held that litigants who
approach the Courts by indulging concealment of material facts should be
repelled and dealt with strong hands.
14. Considering the fact that the petitioners have made blatant concealment
of facts by not disclosing the factum of earlier writ petition filed by the
suspended Director Sandeep Kumar Bhagat who has sworn the affidavit in
support of this writ petition and the fate of the applications filed before the DRT
in relation to the same loan Account, we are of the view that the petitioners do
not deserve indulgence of this Court in exercise of the extra-writ jurisdiction.
Rather, we are of the firm opinion that the petitioners have blatantly misused
the process of law by repeatedly, avoiding to settle the matter in the One Time
Settlement proposed by the Bank which was also revised previously too, the
petitioners, made an attempt to stall the SARFAESI proceedings by filing writ
petition, WP(C) No.130/2021 which stands disposed of as narrated in the para
No. 9 of the affidavit-in-opposition filed by the respondent Nos.1, 2 and 3. The
petitioners also filed some applications in the DRT pertaining to the same loan
account but they have conveniently made no reference to the facts of such
applications in the writ petition.
15. In A. Shanmugam Vs. Ariya Kshatriya Rajakula Vamsathu Madalaya
Nandhavana Paripalanai Sangam, reported in [2012] 0 AIR(SC) 2010, the
Hon'ble Supreme Court summarized the earlier judgments on the issue of
Page No.# 10/18
dealing with frivolous litigations with heavy hands and to deal with such
unscrupulous litigants by imposing cost.
The relevant observations made by the Hon'ble Supreme Court in para
Nos.35 to 43 of A. Shanmugam (supra) are reproduced hereinbelow for the
sake of ready reference.
"35. Unless wrongdoers are denied profit or undue benefit from frivolous
litigations, it would be difficult to control frivolous and uncalled-for litigations.
Experience also reveals that our courts have been very reluctant to grant the
actual or realistic costs. We would like to explain this by giving this illustration.
When a litigant is compelled to spend Rs. 1 lac on a frivolous litigation there is
hardly any justification in awarding Rs. 1000/- as costs unless there are
special circumstances of that case. We need to decide cases while keeping
pragmatic realities in view. We have to ensure that unscrupulous litigant is not
permitted to derive any benefit by abusing the judicial process.
36. This Court in another important case in Indian Council for Enviro-Legal
Action v. Union of India (2011) 8 SCC 161) (of which one of us, Dr . Bhandari, J.
was the author of the judgment) had an occasion to deal with the concept of
restitution. The relevant paragraphs of that judgment dealing with relevant
judgments are reproduced hereunder: :-
193. This Court in Grindlays Bank Ltd. v. Income Tax 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 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 for it.....'
194. In Ram Krishna Verma and Others v. State of U.P. and Others
(1992) 2 SCC 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 Jeewan Nath
Wahal's case [Jeewan Nath Wahal v. State of U.P., (2011) 12 SCC
769] and the High Court earlier thereto. As a fact, on the expiry of
the initial period of grant after Sep. 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
Page No.# 11/18
Officer [1990] 2 SCC 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 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 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 v. Balsara Hygiene Products Ltd., (1994)
5 SCC 380 observed as under:
"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.'
196. This Court in Marshall Sons & Co. (I) Ltd. v. Sahi Oretrans (P)
Ltd. (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 the respondent to deliver the possession to the appellant
since the suit filed by the respondent is still pending. It is true that
proceedings are dragged on 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 advantage and 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 long time. In 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 property. In appropriate cases, the
court may appoint a Receiver and direct the person who is holding
Page No.# 12/18
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 the decree is
passed and to protect the property including further alienation.'
197. In Padmawati v. 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 the 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 the courts. One of the
aims of every judicial system has to 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."
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 overflowing of
court dockets is the frivolous litigation in which the courts are engaged by
the litigants and which is dragged on for as long as possible. Even if
these litigants ultimately lose the lis, 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 but also must be burdened with exemplary
costs. The 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 the 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 the settled legal positions, the
obvious wrongdoers, use one after another tier of judicial review
mechanism as a gamble, knowing fully well that dice is always loaded in
their favour, since even if they lose, the time gained is the real gain. This
situation must be redeemed by the courts".
Page No.# 13/18
200. Against this judgment of the Delhi High Court, Special Leave to
Appeal (Civil) No. 29197/2008 was preferred to this Court. The Court
passed the following order :
"We have heard the learned counsel appearing for the parties. We
find no ground to interfere with the well-considered judgment
[(2008) 154 DLT 411] passed by the High Court. The special leave
petition is, accordingly, dismissed."
208. In Marshall Sons & Co. (I) Ltd. v. Sahi Oretrans (P) Ltd. [(1999) 2 SCC
325] this Court in para 4 of the judgment observed as under: (SCC pp.
326-27)
". ... It is true that proceedings are dragged on 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 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 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 property. In appropriate cases, the
court may appoint a 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 the decree is
passed and to protect the property including further alienation...."
209. In Ouseph Mathai v. M. Abdul Khadir [(2002) 1 SCC 319] this Court
reiterated the legal position that the stay granted by the court does not
confer a right upon a party and it is granted always subject to the final
result of the matter in the court and at the risks 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 does not
automatically amount to extension of a statutory protection.'
210. This Court in South Eastern Coalfields Ltd. v. State of M.P. [(2003) 8
SCC 648] on examining the principle of restitution in para 26 of the
judgment observed as 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 [1984 Supp SCC 505] ). In law, the term
"restitution" is used in three senses: (i) return or restoration of some
Page No.# 14/18
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.'
211. The Court in para 28 of the aforesaid judgment very carefully
mentioned that the litigation should not turn into a fruitful industry and
observed as under: (South Eastern Coalfields Ltd. case [(2003) 8 SCC
648]
'..... 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.'
212. The Court in the aforesaid judgment also observed that once the
doctrine of restitution is attracted, the interest is 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 v. Devi Ratan [(2010) 1 SCC 417] 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
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 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.'
215. In consonance with the concept of restitution, it was observed that
Page No.# 15/18
courts should be careful and pass an order neutralising the effect of all
consequential orders passed in pursuance of the interim orders passed by
the court. Such 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 principles of equity, justice and good
conscience Judges should ensure that the legal process 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 be effectively curbed and the court must ensure that there is
no wrongful, unauthorised 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 dishonest litigation.
217. The court's constant endeavour must be to ensure that 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 (Dr 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 as to 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 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
various courts. The appellants have also wasted judicial time of the
various courts for the last 40 years."
Page No.# 16/18
37. False averments of facts and untenable contentions are serious
problems faced by our courts. The other problem is that litigants deliberately
create confusion by introducing irrelevant and minimally relevant facts and
documents. The court cannot reject such claims, defences and pleas at the first
look. It may take quite some time, at times years, before the court is able to see
through, discern and reach to the truth. More often than not, they appear
attractive at first blush and only on a deeper examination the irrelevance and
hollowness of those pleadings and documents come to light.
38. Our courts are usually short of time because of huge pendency of
cases and at times the courts arrive at an erroneous conclusion because of false
pleas, claims, defences and irrelevant facts. A litigant could deviate from the
facts which are liable for all the conclusions. In the journey of discovering the
truth, at times, this Court, at a later stage, but once discovered, it is the duty of
the court to take appropriate remedial and preventive steps so that no one
should derive benefits or advantages by abusing the process of law. The court
must effectively discourage fraudulent and dishonest litigants.
39. Now, when we revert to the facts of this case it becomes quite evident that
the appellant is guilty of suppressing material facts and introducing false pleas
and irrelevant documents. The appellant has also clouded the entire case with
pleas which have nothing to do with the main controversy involved in the case.
IRRELEVANT DOCUMENTS:
40. All documents filed by the appellant along with the plaint have no
relevance to the controversy involved in the case. We have reproduced a list of
the documents to demonstrate that these documents have been filed to mislead
the Court. The First Appellate Court has, in fact, got into the trap and was
misled by the documents and reached to an entirely erroneous finding that
resulted in undue delay of disposal of a small case for almost 17 years.
FALSE AND IRRELEVANT PLEAS:
41. The appellant is also guilty of introducing untenable pleas. The plea
of adverse possession which has no foundation or basis in the facts and
circumstances of the case was introduced to gain undue benefit. The Court must
be cautious in granting relief to a party guilty of deliberately introducing
irrelevant and untenable pleas responsible for creating unnecessary confusion
by introducing such documents and pleas. These factors must be taken into
consideration while granting relief and/or imposing the costs.
Page No.# 17/18
42. On the facts of the present case, following principles emerge:
1. It is the bounden duty of the Court to uphold the truth and do justice.
2. Every litigant is expected to state truth before the law court whether it
is pleadings, affidavits or evidence. Dishonest and unscrupulous litigants have
no place in law courts.
3. The ultimate object of the judicial proceedings is to discern the truth
and do justice. It is imperative that pleadings and all other presentations before
the court should be truthful.
4. Once the court discovers falsehood, concealment, distortion,
obstruction or confusion in pleadings and documents, the court should in
addition to full restitution impose appropriate costs. The court must ensure that
there is no incentive for wrong doer in the temple of justice. Truth is the
foundation of justice and it has to be the common endeavour of all to uphold the
truth and no one should be permitted to pollute the stream of justice.
5. It is the bounden obligation of the Court to neutralize any unjust
and/or undeserved benefit or advantage obtained by abusing the judicial
process.
6. Watchman, caretaker or a servant employed to look after the property
can never acquire interest in the property irrespective of his long possession.
The watchman, caretaker or a servant is under an obligation to hand over the
possession forthwith on demand. According to the principles of justice, equity
and good conscience, Courts are not justified in protecting the possession of a
watchman, caretaker or servant who was only allowed to live into the premises
to look after the same.
7. The watchman, caretaker or agent holds the property of the principal
only on behalf the principal. He acquires no right or interest whatsoever in such
property irrespective of his long stay or possession.
8. The protection of the Court can be granted or extended to the person
who has valid subsisting rent agreement, lease agreement or licence agreement
in his favour.
43. In the instant case, we would have ordinarily imposed heavy costs
and would have ordered restitution but looking to the fact that the appellant is a
Watchman and may not be able to bear the financial burden, we dismiss these
appeals with very nominal costs of Rs. 25,000/- to be paid within a period of
two months and direct the appellant to vacate the premises within two months
from today and handover peaceful possession of the suit property to the
respondent Society. In case, the appellant does not vacate the premises within
two months from today, the respondent-Society would be a liberty to take police
Page No.# 18/18
help and get the premises vacated."
16. In this background, we have no hesitation in holding that the present writ
petition suffers from the vice of suppression of material facts and hence, the
same is liable to be dismissed and is hereby dismissed with cost of
Rs.5,00,000/- (Rupees Five lakhs).
The cost be deposited with the Registry within 30(thirty) days and shall be
appropriated in the funds of the Assam State Legal Services Authority.
JUDGE CHIEF JUSTICE
Comparing Assistant
