'There Was Mistake On Part Of This Court' : Supreme Court Recalls Order Disbursing Money To Two Persons In Unitech Case

Recently, the Supreme Court applied the principle of restitution and directed two individuals to return the money disbursed pursuant to its order, from the sale proceeds of Unitech’s land sold to M/s. Devas Global Services LLP.

While passing the order of restitution, a Bench comprising CJI DY Chandrachud and Justice MR Shah reiterated the principle enshrined in Indore Development Authority v. Manoharlal And Ors. that no party should be unfairly advantaged by an order of the Court -

“...the act of the Court shall prejudice no one and 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…any undeserved or unfair advantage gained by a party invoking the jurisdiction of the court must be neutralized, as the institution of litigation cannot be permitted to confer any advantage on a suitor by the act of the Court.”

The Court held that it was a fit case to apply the principle of actus curiae neminem gravabit and the principle of restitution.

Unitech claimed that it was the absolute owner of the 26 acres and 19 guntas of land in Bangalore that was sold to Devas. Being the owner, Unitech submitted that it was entitled to the sale consideration of Rs 172.08 crores. However, Rs. 87.35 crores was received to Unitech’s account in the Supreme Court Registry and the balance amount was directed to be paid to Naresh Kempanna (Rs. 56.11 crores) and Col. Mahinder Khaira (Rs. 41.56 crores). Additional Solicitor General, Mr. N. Venkataraman appearing for Management of Unitech alleged that these individuals are not entitled to the money directed to be paid to them. It contended that the rights of the parties were not adjudicated upon by the Apex Court or the Justice Dhingra Committee. In 2018, the Apex Court had set up a 3 member panel headed by former Delhi High Court judge, Justice SN Dhingra for expeditious auction of Unitech unencumbered immovable properties, in order to pay back the homebuyers.

The Bench noted that previously it had disbursed the concerned amount to the two individuals solely on the basis of the report of the Justice Dhingra Committee, which was premised on a 2018 MoU. The disbursal was made without adjudicating the rights of the parties or the claims of the individuals. Furthermore, the Justice Dhingra Committee had submitted the report without any such adjudication. It was taken note of that there exists serious disputes on the entitlement of the amount disbursed to the two individuals. The Bench concluded -

“Thus, there was an obvious error and/or mistake on the part of this Court in directing to pay Rs. 56.11 crores to Shri Naresh Kempanna and Rs. 41.96 crores to Col. Mohinder Khaira, which as such was without any adjudication of the claims of the aforesaid two persons. In that view of the matter, we are of the opinion that the mistake/error committed by this Court is to be corrected on the basis of the principle of restitution.”

In view of the same, the Bench directed Naresh Kempanna and Col. Mahinder Khaira to return the amount disbursed to them along with interest of 9% from the date the payment was received by them. They were directed to deposit the amount with the Supreme Court registry. However, liberty was granted to them to initiate appropriate proceedings for adjudication of their rights vis-a-vis the sale consideration.

[Case Title: Bhupinder Singh v. Unitech Limited Civil Appeal No. 10856 of 2016]

Citation : 2023 LiveLaw (SC) 263

Principle of actus curiae neminem gravabit - The act of the Court shall prejudice no one and in such a fact situation, the Court is under an obligation to undo the wrong done to a party by the act of the Cour-any undeserved or unfair advantage gained by a party invoking the jurisdiction of the court must be neutralized, as the institution of litigation cannot be permitted to confer any advantage on a suitor by the act of the Court- Court recalls order allowing disbursement of money to two individuals- Asks them to return

Click Here To Read/Download Judgment