Suppose one was to construct a house in a place. Another goes to the court and obtains an interim order staying such construction. Ultimately when the case is decided it is found that the claim of the second was unfounded and the construction was in order. In such a scenario what happens to the loss of investment and other costs incurred by the first owing to the interim order requiring him from further construction? Can it be argued by the second person that since the court grave the order, therefore no case is made out for compensating the first person? Well, the answer is no.
Common law follows the doctrine that an order of court shall prejudice no one and thus the actions and omissions arising out of an interim order of a court require restitution by the person claiming relief under the interim orders. The Supreme Court in a recently reported decision [Amarjeet Singh v. Devi Ratan, AIR 2010 SC 3676] has explained this concept in the following terms;
14. In view of the above, the State Government ought to have reverted the respondents as their promotions were subject to the decisions of the said petition. In view of the fact that the respondents continued on a higher post under the orders of this Court for years together and even after dismissal of the petition filed by the State, and the exercise for making promotions was not undertaken by the State Authorities, the appellants should not suffer for no fault of theirs. It has fairly been conceded by learned counsel appearing for the respondents that had the exercise of making promotions been undertaken immediately after the order of this Court dated 19.8.1998, the appellants could have been promoted much earlier and they could have been senior to the respondents. Thus the question does arise as to whether appellants should be asked to suffer for the interim order passed by this Court in a case having no merits at all.
15. 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 his own wrongs by getting 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 institution of litigation cannot be permitted to confer any advantage on a suitor from delayed action by the act of the Court. (Vide Shiv Shankar & Ors. Vs. Board of Directors, Uttar Pradesh State Road Transport Corporation & Anr., 1995 Suppl. (2) SCC 726; M/s. GTC Industries Ltd. Vs. Union of India & Ors., AIR 1998 SC 1566; and Jaipur Municipal Corporation Vs. C.L. Mishra, (2005) 8 SCC 423).
16. In Ram Krishna Verma & Ors. Vs. State of U.P. & Ors., AIR 1992 SC 1888 this Court examined the similar issue while placing reliance upon its earlier judgment in Grindlays Bank Limited Vs. Income Tax Officer, Calcutta & Ors., AIR 1980 SC 656 and held that no person can suffer from the act of the Court and in case an interim order has been passed and petitioner takes advantage thereof and ultimately the petition is found to be without any merit and is dismissed, the interest of justice requires that any undeserved or unfair advantage gained by a party invoking the jurisdiction of the Court must be neutralized.
17. In Mahadeo Savlaram Sheke & Ors. Vs. Pune Municipal Corporation & Anr., (1995) 3 SCC 33, this Court observed that while granting the interim relief, the Court in exercise of its discretionary power should also adopt the procedure of calling upon the plaintiff to file a bond to the satisfaction of the Court that in the event of his failing in the suit to obtain the relief asked for in the plaint, he would adequately compensate the defendant for the loss ensued due to the order of injunction granted in favour of the plaintiff. Even otherwise the Court while exercising its equity jurisdiction in granting injunction is also competent to grant adequate compensation to mitigate the damages caused to the defendant by grant of injunction. The pecuniary award of damages is consequential to the adjudication of the dispute and the result therein is incidental to the determination of the case by the Court. The Court can do so in exercise of its inherent jurisdiction in doing ex debito justitiae mitigating the damage suffered by the defendant by the act of the Court in granting injunction restraining the defendant from proceeding with the action complained of in the suit. Such a procedure is necessary as a check on abuse of the process of the Court and adequately compensate the damages or injury suffered by the defendant by act of the Court at the behest of the plaintiff.
18. In South Eastern Coalfields Ltd. Vs. State of M.P. & Ors., AIR 2003 SC 4482, this Court examined this issue in detail and held that no one shall suffer by an act of the Court. 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 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. 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. 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. The Court further held :
“…..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 earlier 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……”
Similarly in Karnataka Rare Earth & Anr. Vs. Senior Geologist, Department of Mines & Geology & Anr., (2004) 2 SCC 783, a similar view has been reiterated by this Court observing that the party who succeeds ultimately is to be placed in the same position in which they would have been if the Court would not have passed an interim order.
19 In Dr. A.R. Sircar Vs. State of U.P. & Ors., (1993) Supp. 2 SCC 734, the dispute arose regarding the seniority of direct recruits and promotees on the post of Professor of Medicine in a medical college. The appellant therein faced the selection process for direct appointment along with the respondents who had been working on the said post on ad hoc basis. The appellant was duly selected, however, the private respondents could not succeed. The respondents filed the writ petition before the High Court and precluded the appointment of appellant pursuant to his selection, by obtaining the interim order and on the other hand they got their ad hoc promotion to the post regularized under the rules. The appellant could succeed in obtaining the appointment only after dismissal of the writ petition against him after several years of his selection. This Court held that in addition to the relief under the statutory provisions the appellant was entitled in equity to get the seniority over the respondents as they succeed in precluding his appointment to the post by obtaining an interim order in a case having no merits whatsoever.
20. In Committee of Management, Arya Nagar Inter College & Anr. Vs. Sree Kumar Tiwari & Anr., AIR 1997 SC 3071, the services of the respondent therein were terminated, however, he continued to be in service on the basis of interim order passed by the High Court in the writ petition filed by him. During the pendency of the writ petition, the rules for regularization of ad hoc appointees were amended and in pursuance thereof his services also stood regularized. Ultimately, the writ petition filed by the respondent was dismissed. This Court held that his continuity in service and regularization had to be understood as it was subject to the result of the writ petition. As the writ petition was dismissed the order of regularising of his services, passed during the pendency of the writ petition, became inoperative.
21. In view of the above, the appellants are entitled for the relief purely on equitable grounds without going into any other legal issue and appeals deserve to be allowed and the seniority list quashed by the High Court has to be restored.
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