Restitution under the Civil Procedure Code

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restitution

What is Restitution?

The term ‘restitution’ has not been defined under the civil procedure code. But there is a direct mention of the term under Section 144 of the code. Hence, the imported definition of restitution is ‘an act of restoring a thing to its proper owner’[1]. Restitution under the code refers to the act of restoring a benefit that has been obtained by one party under a decree to the other party. Why should the benefit under the decree be restored, this can be answered by reading the text of Section 144 of the civil procedure code.

Restitution under Section 144 of the Civil Procedure Code

Section 144 of the code primarily talks about 2 things, Decree and Order. It provides that when either a decree or an order has been either of the following:

  1. Varied or reversed in an Appeal
  2. Varied or reversed in a Revision
  3. Varied or reversed in any other proceeding
  4. Set aside
  5. Modified in any suit instituted for the purpose

When any of the above mentioned happens, then the party who is entitled to the benefit  under the decree or order so reversed, modified or set aside can submit an application for restitution to the court which passed the original decree or order which has been subsequently modified, reversed or set aside. This has been provided as an explanation to Section 144 of the Civil Procedure Code. Over this, the court will put the parties on the same position that they held before the unfavorable order or decree was passed against them i.e. position prior to the decree against them.[2]

Remedies that the court can grant

For the purpose of granting remedies as a part of restitution, the court has been given wide powers phrased as ‘the court may make any orders’. This means that the court can pass any order to meet the ends of justice. The section provides some type of orders that the court may typically pass over an application for restitution. They are:

  1. Orders for the refund of costs
  2. For the payment of Interest
  3. For the payment of Damages
  4. For the payment of Compensation
  5. For the payment of Mesne profits

The only bar to this remedy is that these remedies must arise as a consequence of the variation, setting aside or modification of the decree or order.

Illustration: 1 – Mr. Aobtained a decree of Rs. 1 Lakh against Mr. B. Mr. B being dissatisfied by the decree appeals against the decree. The appellate court thereby reverses the decree. Though the appellate court doesn’t mention about restitution in the decree so reversing the original decree, Mr. B as a matter of right can move to the court of first instance to claim a refund of Rs. 1 Lakh.

Illustration: 2 – Mr. A obtains a decree against Mr. B over the possession of a house. Mr. B being dissatisfied appeals against the decree. The appellate court thereby sets aside the original decree and decrees the possession of the house in favour of Mr. B. Mr. B thereby has a right to restitution of mesne profits arising out of the house for the duration till the house remained in possession of Mr. A.

Nature of Section 144 under the Civil Procedure Code

Section 144 entirely governs on the premises of equity. It is merely an enabling section to do justice to the parties in the most possible manner. Though restitution has been embodied under Section 144, the power of the court to grant restitution is equally derivable from its inherent powers.[3] The proceedings of restitution are considered as execution proceedings.[4]

When an application for restitution has been dismissed, res judicata applies and a fresh application is not maintainable unless the dismissal was on technical grounds.[5] Under Section 144(2), if the remedy for restitution can be claimed by making an application under Section 144, then a separate suit to claim the remedy shall be barred. Hence, a party can only file an application for restitution and cannot institute a separate suit if the circumstances are covered by section 144 of the code[6]. Restitution is in fact an execution of the new decree. It is only its connection with the original decree that the term restoration comes into picture.

In a recent case of Citibank N.A. v. Hiten P. Dalal&Ors[7], the Supreme Court has commented on the nature of restitution.In this case, a money decree was passed in favour of the plaintiff in respect of which the defendant had either to deliver the bonds to the plaintiff or return the money value of the bonds to the plaintiff. The defendant chose to deliver the bonds to the defendant. Later on in an appeal against the money decree, the money decree was reversed. Thereby the Plaintiff had to restore the benefit of the money decree to the defendant. But the Plaintiff had already sold the bonds in the open market.

Over an application of restitution, the Special court determined the amount payable by plaintiff to the defendant on the premise that the defendant would have retained the bonds till the date of maturity in spite of the evidence that the defendant would have further sold the bonds in open market only and the value of bonds could be determined on the basis of the market price of the bonds on the date when they were sold by plaintiff to third parties. The Hon’ble Court rightly held that the special court has erred in determining the amount payable on such premises. The Plaintiff cannot be burdened to pay what the third parties have gained by selling the bonds further. The Court rightly held that “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 the restitution but also the gain, if any, made by other party who is obliged to make restitution”[8]

The court has rightly pointed out the nature of restitution saying that it is an expansive power granted to the courts which should be exercised to give equity, fairness and justice to both the parties. The court must bear in mind the hardships that may be faced by the party obliged to make restitution.

Conclusion

The principle of restitution is a natural form of justice and Section 144 is merely an embodiment of that principle taking a statutory form. Restitution provides that the benefit obtained by a party under a decree should be restored to the other party because the decree has become infructuous on account of a subsequent decree. The court has been given wide powers to pass any orders in an application of restitution that it may deem fit to meet the ends of justice.

Frequently Asked Questions

  1. What is restitution?

Restitution is the act of restoring the benefit of a decree to a party when a decree passed has been modified, set aside or reversed.

  1. Who can file an application for restitution?

The party who is entitled to benefit out of the reversed decree can file an application for restitution.

  1. What are the remedies that can be claimed under restitution?

The court can order refund of costs and for the payment of interest, damages, compensation and mesne profits arising over the modification, reversal or setting aside of decree.

  1. Under which section is the right of restitution embodied?

The right of restitution has been embodied under section 144 of the Civil Procedure Code.

  1. What kind of proceeding is the filing of restitution?

The filing of restitution is an execution proceeding.


[References]

[1]Shorter Oxford English Dictionary (1990) vol 2, 1811-12.

[2]C.K. Takwani, Civil Procedure with Limitation Act, 1963 (8thedn, Eastern Book Company 2017) 726.

[3]Kavita Trehan and Another v Balsara Hygiene Products ltd. [1994] 5 SCC 380.

[4]MahijibhaiMohanbhaiBarot v Patel ManibhaiGokalbhai And Ors[1965] 6 GLR 901.

[5]C.K. Takwani, Civil Procedure with Limitation Act, 1963 (8thedn, Eastern Book Company 2017) 732.

[6]The Code of Civil Procedure 1908, s 144(2).

[7]Citibank N.A. v Hiten P. Dalal&Ors [2015] SCC Online SC 746.

[8]Citibank N.A. v Hiten P. Dalal&Ors [2015] SCC Online SC 746 [17] [19].