Bhupinder Singh vs. Unitech Ltd.
Background
This order arises within the long-running Unitech Limited litigation before the Supreme Court. Unitech's land (26 acres 19 guntas at Kadiganahalli Village, Bangalore) was sold to M/s Devas Global Services LLP for about Rs. 172.08 crores pursuant to earlier court orders, but only about Rs. 87.35 crores reached Unitech's account: the balance (Rs. 56.11 crores and Rs. 41.96 crores) had earlier been paid out to two individuals, Shri Naresh Kempanna and Col. Mohinder Khaira, based solely on a report of a court-appointed committee (the Justice Dhingra Committee) that in turn relied only on a private MOU dated 02.01.2018, without any actual adjudication of whether these two individuals had any real title or ownership claim to the land. Unitech's present management filed an application asking the Court to correct this, alleging fraud and seeking return of the diverted funds.
Decision Breakdown
The Supreme Court held that since Kempanna's and Khaira's entitlement to a share of the sale proceeds had never actually been adjudicated, the money was paid out solely on the strength of an unproven MOU and committee recommendation, there had been "an obvious error and/or mistake" by the Court in directing that payment. Applying the principle of restitution (as elaborated by the Constitution Bench in Indore Development Authority v. Manoharlal) and the maxim actus curiae neminem gravabit ("an act of the court shall prejudice no one"), the Court held that any undeserved advantage obtained through a court order must be neutralized. It directed Kempanna and Khaira to return the amounts paid to them, with 9% interest from the date of receipt, to be deposited with the Court Registry within four weeks, while leaving them free to file fresh applications to have their claims to the sale proceeds properly adjudicated on merits.
Lesson Learnt
Money or benefits received under a court order that was passed without actually deciding the underlying dispute on merits are not secure: a court can later direct restitution (return of the money, with interest) once it becomes clear the original order rested on an unadjudicated or mistaken basis, since no one should profit from an error of the court.