w w w . L a w y e r S e r v i c e s . i n

ERI- Tech Ltd. v/s The Board of Trustees for Port of Kolkata & Others

    APO No. 145 of 2016 WP No. 645 of 2005
    Decided On, 21 December 2017
    At, High Court of Judicature at Calcutta
    For the Appellant: Sabyasachi Chowdhury, Anirban Roy, V.V.V. Sastri, Deepabali Dutta, Nikita Jhunjhunwala, Advocates. For the Respondents: Hirak Mitra, Sr. Advocate, Kinjal Kumar Boral, Advocates.

Judgment Text
I.P. Mukerji, J.

I have read the judgement proposed to be delivered by my learned brother. I am in full concurrence with it. However, I would like to add a few words.

At one point of time, the appellant was a lessee under the first Respondent No.1. The lease was granted in favour of the J J H Industries Private Ltd and thereafter enjoyed by the appellant from 2nd January, 1967 for 30 years. It expired on 1st January, 1997. This respondent was only interested in granting a fresh lease of 15 years with effect from 2nd January, 1997 but the appellant wanted it for 99 years 2003. The said respondent would be willing to grant it for 99 years from 1st March, 2003 upon payment of a premium of Rs.1,08,90131 and occupation charges from 2nd January, 1997 up to 28th February, 2003, amounting to Rs.18,52,481. But it appears that the appellant could not come to a decision, as to what they wanted. By this letter, this respondent also asked the appellant to handover possession of the subject property.

Then came two writ applications before this Court, preferred by the appellant.

The first one was WP No.1523 of 2003 (Eri-Tech Ltd & Ors Vs. Union of India & Ors.) On 31st July, 2003, an interim order was passed by this Court asking the appellant to show their bona fide by depositing Rs.15 lakhs with the Kolkata Port Trust Authorities. At the time of argument, I was told that this sum was not deposited by the appellant and hence the writ application was dismissed.

Thereafter, the appellant filed another writ (WP No.645 of 2005). They claimed that the first respondent was required to grant a fresh lease in their favour for 99 years. On the apprehension that the respondent was to not grant them this lease but instead grant it in favour of some other party the first and second writ applications were preferred in this Court. In the second writ by an interim order dated 30th march, 2005, this Court directed the appellant to deposit a sum of Rs.15 lakhs. But one sentence in the order is very crucial. It said that this sum of Rs. 15 lakhs was to be 'deposited' by the appellant and accepted by the respondent No.1 'without prejudice to the rights and contentions of the parties'.

On 20th January, 2016, in the same writ this Court recorded in another interim order that the appellant had offered to pay to the respondent by 25th January, 2016 Rs. 1 crore 'wholly without prejudice to the rights and contentions of the parties'.

In the final hearing of the writ on 27th January, 2016, Mr. Justice Basak disposed of the writ by vacating all the interim orders. The Estate Officer was asked to complete the eviction proceedings as expeditiously possible within four weeks from the date of communication of this order. He was to quantify the charges payable by the appellant for their occupation of the property from the date of their possession.

The position now is that the appellant has delivered back possession of the subject property to the Respondent No.1. The said respondent is in possession of the property. The appellant wants return of this sum of Rs.1,15,000,00/-.

Mr. Sastri assisted by Ms. Dutta submitted that this sum was deposited as directed by this Court pending negotiations between the parties wholly without prejudice to the rights and contentions of the parties. The negotiations having failed, it ought to be returned by the first respondent.

On the other hand, it was contended on behalf of the port authorities by Mr. H.K. Mitra, learned senior advocate that the lease of the appellant expired long ago on 1st January, 1997. Since then they were in unauthorised occupation of the subject property. A large sum on account unpaid rental was due and payable by them. Apart from that damages or mesne profits payable by them for unauthorised use or occupation of the property had also to be computed. The dues of the appellant towards the respondent Port Trust was much more than the sum of Rs. 1 crore 15 lakhs of the petitioner held by the authority. This amount had been adjusted against these dues in the books of accounts of the Port Trust. Mr. Mitra was very emphatic in interpreting the word 'payment' used in the order dated 20th January, 2016 made by Mr. Justice Basak. He said that the payment was to be distinguished from deposit. When the court ordered payment to be made it gave the port the right to appropriate this amount against its dues against the appellant.


The appellant came to court asking for an order for a fresh lease to be executed in its favour by the Kolkata Port Trust. The last proceeding in this court before Mr. Justice Basak is the most relevant. In its order dated 20th January, 2016 this court noted that the appellant had to pay a sum of Rs. 1 crore to the Kolkata Port Trust by 25th January, 2016. It added that this payment was to be made without prejudice to the rights and contentions of the parties. Learned counsel for the parties told me at the time of hearing of the application that a sum of Rs. 15 lakhs deposited earlier by the appellant in the same proceeding was with the Port. Thus a sum of Rs. 1 crore 15 lakhs was paid by the appellant to them.

Now, the record shows that when the case was being heard before this court in 2016, Kolkata Port Trust opposed the grant of a fresh lease, on the ground that there was a huge outstanding on account of rental, on the part of the appellant. Furthermore, the port was not minded to grant a 99 years’ lease even if the appellant cleared the outstanding. If the outstanding was cleared they were minded to grant a lease for a maximum period of 15 years.

However by their letter dated 2nd June, 2003 the Kolkata Port authorities indicated that upon the appellant paying a premium of Rs. 1,08,90,131 and occupation charges from 2nd January, 1997 to 28th February, 2003 amounting to Rs.18,52,481 they might consider extension of the lease for a further period of 99 years. In case the appellant did not accept this they had the option of accepting a 15 year’s lease. This letter recorded that the appellant exercised neither of the two above options.

In the litigation before Mr. Justice Bask negotiations of a similar nature were taking place. The end result was that the Kolkata Port Trust did not grant any extension of lease or a fresh lease in favour of the petitioner.

The payment or deposit of Rs.1 crore 15 lakhs made by the appellant was to facilitate such negotiation by showing their bona fide, in my view.

The property in question was public premises under the Public Premises (Eviction of Unauthorised Occupants) Act, 1972. As my learned brother has pointed out in his separate judgement, the appellant was evicted following the procedure mentioned in Section 4 of the said Act.

The Estate Officer has also the jurisdiction under Section 7 thereof to make a calculation of arrear rent due and payable by the appellant to the port and also the power to assess the occupation charges or mesne profits payable by them for wrongful occupation of the said premises. Till date no such assessment has been made or even proposed to be made by this statutory authority.

The Kolkata Port has purported to adjust this sum against their dues as computed by them without taking recourse to Section 7 of the said Act. There is not even a notice making a preparation for initiating a proceeding thereunder, for this purpose.

Now, that the negotiations have failed, the lease has not been renewed or a fresh lease granted. The appellant handed back the property to the Kolkata Port Trust. This sum was paid or deposited without prejudice during the negotiation process. In the usual course the petitioner would not have paid or deposited that money. When the negotiations failed the sum ought to have been returned. Now, to use this special circumstance as a means of recovery of the dues from this fund is not fair on the part of the Kolkata Port Trust. It is most inequitable.

Again, a contention was sought to be made that the dues of the Port were liquidated and could be adjusted against any sum of the appellant in their hands. Let us assume that the dues of the Port Trust are liquidated. The money of the appellant in their hands did not come to them in the ordinary course of events but were held by them pursuant to orders of this court. If money belonging to the debtor comes into the hands of the creditor in the usual course of things and is held in their capacity by that creditor, it may be adjusted against their liquidated debt. When money is deposited or paid by one party to another without prejudice to his rights and contentions, further to an order of this court, it is understood that no order would be passed by the court or no step would be taken by the recipient, with regard to the money without proper adjudication or without the consent of the payer.

In this case, in my opinion, the Port was holding the money further to orders of this court, with an obligation to return it to the payer if the negotiations for renewal of the lease or grant of fresh lease failed. In my opinion, that is the meaning and effect, I ascribe to the phrase 'without prejudice to the rights and contentions of the parties.'

In those circumstances, this appeal succeeds.

The port can still make an adjustment of this money lying in their hands but by following a proper procedure in accordance with law.

In the absence of a contrary order from a court of law or any other competent forum the Kolkata Port Trust is directed to forthwith refund the sum of Rs. 1 crore 15 lakhs to the petitioner within eight weeks of communication of this order, in the manner indicated by my brother Banerjee in his judgment.

This is an appeal by the Writ Petitioner/Appellant against the final Order dated January 27, 2016 passed by the Learned Single Judge in W.P. No.645 of 2005 [Eri-Tech Limited and Another-v-The Board of Trustees for the Port of Kolkata and Others], by which the writ petition was dismissed with certain directions being given and a certain liberty being granted.

Undisputedly the Appellant took on lease land belonging to the first respondent, for factory and godown purposes, for a period of 30 years without any option for renewal with effect from January 2, 1967. Admittedly this expired on January 1, 1997. The premises constitute 'public premises' for the purpose of the Public Premises (Eviction of Unauthorized Occupants) Act, 1971. Admittedly, after expiry of the said lease by efflux of time, till the time mentioned below, the Appellant continued to occupy the said premises, without any new lease and without paying a single rupee as occupation charges, whether at the erstwhile contractual rate or otherwise.

The 1st Respondent by letters dated August 1, 2001 and September 13, 2001 sought to know from the Appellant whether the latter was interested in a lease for 99 years in respect of the said land with effect from January 2, 1997 on payment of premium of Rs.88,52,000/- approximately subject to escalation of 25% every 10 years and if the Appellant was not interested in that period, then whether it was interested in a lease for 15 years with effect from the same date, but at a lower non-refundable and non-adjustable premium of Rs.8,,36,430/- and security deposit, without in either case there being any option for renewal. The 1st respondent made it clear that only on knowing the opinion of the Appellant relating to either mode, would the 1st respondent take steps for obtaining sanction from the appropriate authority.

By a letter dated October 10, 2001 the Appellant wrote to the 1st respondent expressing its interest to take a lease for 99 years but also confessing its inability to make payment of the entire lease premium for the purpose at one go, instead requesting that it be allowed to make payment by equal installment over 20 years. This was obviously not acceptable to the 1st respondent which instead offered by a letter dated March 1, 2002, a lease for 15 years laying down detailed conditions. As late as on September 27, 2002 the respondent No. 1 wrote to the Appellant informing it that since the sanction of the respondent No. 5 was yet to be communicated, it had decided to grant lease for 15 years to the Appellant which the respondent No. 1 was the authority to grant, and the Appellant was asked to communicate its acceptance of the terms and conditions.

However, the Appellant did not accept the lease for 15 years. This is the reason why no concluded contract was formed.

Despite the aforesaid position on the face of the records, when the Appellant did not agree to a lease for fifteen years, by a letter dated June 2, 2003 the respondent No. 1 alleged, contrary to the records, as if a lease had been granted by the respondent No. 1 for fifteen years with effect from January 2, 1997, and it was further stated there 'However as you have continued occupation damage charges from the date of expiry of the lease i.e 2.01.1997 till the date of vacation will have to be paid by you.'

Therefore, it is clear from the admitted position and the records, that the respondent No. 1 was neither acting equitably or fairly or consistently, nor alleging that any liquidated sum was due from the Appellant, but that the respondent No. 1 had a claim for 'occupation charge damages' for the Appellant’s occupying the said public premises from after the expiry of lease, from January 2, 1997 till the date of vacating, and that this was without prejudice to the respondent No. 1’s rights relating to the said occupation of public premises.

The record shows that the Appellant moved WP No.1523 of 2003 under Article 226 of the Constitution of India seeking in effect a fresh lease for 99 years on a declaration that the schedule of rent according to the above gazette notification had lost its force, and for quashing the demands for lease premium and seeking to prevent the respondent No. 1 from evicting it. This was the first round of litigation. By an order dated July 31, 2003 this Court granted an interim order on terms, that if the Appellant (writ petition therein) deposited a sum of Rs.15 lacs with the respondent No. 1 by way of a bank draft within a fortnight status quo would be maintained, in terms of the said order. However, the Appellant did not make such deposit, and the writ petition was disposed of without any order on August 18, 2003.

Thereafter, the Appellant instituted W.P. No.645 of 2005, for various reliefs, but seeking in effect a renewal of the lease for 99 years, and for a mandamus on the respondents not to demand any damages, among other reliefs. In this writ petition, a case was made out that since the factory of the Appellant had been closed due to some reasons, it had not been able to arrange for any funds to make the deposit as directed on July 31, 2003 in the earlier writ petition, but since then it had arranged for the entire lease premium as originally demanded by the respondent No. 1 for granting a lease for 99 years. Proceedings were taken by the 1st respondent for eviction of the Appellant under the provisions of Section 4 of the Public Premises (Eviction of Unauthorized Occupants) Act, 1971. By an Order dated March 30, 2005 in this second writ petition, status quo was directed to be maintained until further orders 'provided the petitioners deposit a sum of Rs.15 lakhs with the Kolkata Port Trust by way of bank draft within one week from date. The petitioners will deposit the above amount and the respondent Kolkata Port Trust will accept the same without prejudice to the rights and contentions of the parties in the present writ petition.'

Admittedly this sum of Rs.15 lakhs was deposited, and the order of status quo continued. Affidavits were exchanged.

However, when the writ petition was being heard on January 20, 2016, this Court recorded 'The petitioners offer to pay a sum of Rs.1 crore to the Kolkata Port Trust Authorities by January 25, 2016 wholly without prejudice to the rights and contentions of the parties.' This money was also paid.

As a matter of fact, by the Judgement dated January 27, 2016, the Learned Single Judge dismissed the writ petition with a finding that there was no concluded contract between the parties. This conclusion is unexceptionable, because while the 1st respondent kept on offering a lease of 15 years at a reduced premium the Appellant kept asking for a lease of 99 years on the higher premium being paid in installments. So, the parties never agreed on the term of the lease or the premium and hence there was, demonstrably, no concluded contract between the parties and hence no question of direction for execution of a fresh lease or its registration.

The writ petition was dismissed by the above Order dated January 27, 2016 with the following operative directions:-

'All the interim orders passed in this writ petition are vacated. The Estate Officer in seisin of the eviction proceedings will proceed in accordance with law with regard thereto. It is expected that the Estate Officer should complete such eviction proceedings as expeditiously as possible and preferably within four weeks from date of communication of this order. The Estate Officer in doing so will not grant any unnecessary adjournments to any of the parties. This is order is passed in view of the long pendency of the writ petition since 2005 till date. A public property is involved here. It is in public interest. The status of such public property is required to be decided as expeditiously as possible. It would be open to Estate Officer to quantity the occupation charges payable by the petitioners for their occupation of the property from the date of their possession until their eviction.

With the aforesaid observations, WP No. 645 of 2005 is disposed of. No order as to costs.' (emphasis supplied).

The Appellant has very candidly admitted that after the impugned Order was passed by the Learned Single Judge, the competent statutory authorities have concluded the proceedings under Section 4 of the Act of 1972 and after an eviction order was passed, the Appellant has handed over possession of the premises in question to the 1st respondent. The Appellant is no longer interested in any lease of the said premises. Yet it wants the amount of Rs.1.15 crores back, id est, refunded by the respondent No. 1.

It is here that the problem has arisen. The real difficulty lies in the fact that a sum of Rs.1.15 crores that is to say, Rs.15 lakhs deposited with the respondent No. 1 by the Appellant under the Order dated March 30, 2005 and the amount of Rs. 1 crore offered to be paid by the Appellant on January 20, 2016 and in fact paid by the Appellant to the respondent No. 1, is lying with the respondent No. 1 which says it has appropriated it in its entirety and is still owed money by the Appellant.

From the Bar various theories have been submitted to try and explain why this money was offered by the petitioners to be paid. On behalf of the Writ petitioners/Appellants, four learned Advocates have argued the case on successive dates – first Mr. VVSSastri, Learned Advocate, and then Mr. Anirban Ray, Advocate and again Ms. DeepabaliDatta, Learned Advocate on November 13, 2017 and finally Mr. Sabyasachi Chowdhury, Learned Advocate on November 15, 2017. According to them, the entire money was offered to be paid and in fact paid, as a condition for getting the writ petition heard and to show the bona fides of the Appellant, who in the earlier round of litigation referred to above, had not been able to deposit even Rs.15 lakhs as a condition for the order of status quo to operate until further orders. Now that the writ petition has been heard out, they say, and in effect rejected and there is no question of any lease, the Appellant is entitled, they say, to get the entire amount of Rs.1.15 crore back from the 1st respondent.

Mr. Hirak Kumar Mitra, Learned Senior Advocate, instructed by Mr. Boral, the Learned Advocate-on-Record for the respondents No.1 to 4, on the other hand submitted, that this was not 'Deposited' but 'offered by the petitioner to be paid', to its landlord, to which it had not paid a single rupee for occupation charges after expiry of the lease but whose property the Appellant had continued to occupy. It was his case that during the course of hearing of the writ petition, when he had submitted that the Appellant owed more than Rs.2 crores to the respondent No. 1 on count of unpaid occupation charges and interest, the Appellant had made the offer to pay and that subsequently the entire sum, being the deposit Rs.15 lakhs and the payment of Rs.1 crore made by the Appellant, had been adjusted and appropriated by the respondent No. 1. In this connection, the recording made by the Learned Single Judge in the impugned Order is to be noted: - 'There is a dispute with regard to the quantum of the occupation charges payable by the petitioners for the continued occupation during the period of pendency of the writ petition as well as for the period prior to the filing of the writ petition. The petitioners have paid a sum of Rs.1,15,00,000/- pursuant to orders of Court. The Kolkata Port Trust authorities claim a sum in excess of Rs.1,33,00,000/- excluding any interest.' (emphasis supplied). Mr. Mitra’s client has not challenged this recording.

Therefore, I find that the Learned Single Judge has treated the entire amount of Rs.1.15 crores as money paid by the Appellant under Orders of the Court and this finding has not been challenged by way of a crossobjection.

The submissions of the Appellant in this regard can be summarized as follows: -

(i) The money was paid under orders of Court without prejudice to the respective rights and contentions. Had a lease been directed to be granted or registered, then the money could have been adjusted with the premium. Since no lease had been directed to be registered, the money had to be returned.

(ii) Alternatively, the money was paid as a condition for the writ being heard, to show the bona fides of the Appellant. Once the writ was heard, the money had to be returned if the lease was not directed to be granted.

(iii) The 1st respondent was claiming occupation charges which are in the nature of unliquidated damages. It had no claim for unpaid 'Rent', since its claim arose from after the expiry of the lease in 1997. So, without adjudication of the quantum nothing was payable. Admittedly there were disputes between the parties about the occupation charges payable. Nothing has crystallized. No proceedings for adjudication of the quantum was initiated till the date of dismissal of the writ petition and it has not been done even now. Therefore, there was obligation on the part of the Appellant to make payment to the respondent No. 1 any money whatsoever during the pendency of the writ petition. The respondent No. 1 got its hand on the money paid/deposited without prejudice, only because of the Court Order. Therefore, on the writ petition being disposed of without a finding as to the quantum of damages payable, the respondent No. 1 was bound to refund or return the same.

In support of this proposition, the Learned Advocates representing the Appellant, relied upon the decision of the Hon'ble Supreme Court in the case of South Eastern Coalfields Ltd-v-State of M.P. And Others reported in (2003) 8 SCC 648, particularly paragraphs 25, 26, 27 and most particularly paragraph 28, which are set out hereinbelow for convenience: -

25. On the principle which we have upheld just hereinabove, it would not have been necessary to enter into this aspect of the issue, however, it becomes necessary to deal therewith inasmuch as it was submitted on behalf of the consumers/purchasers that their non-payment of enhanced amount of royalty was protected by judicial orders, though of an interim nature, passed by the courts, and therefore, they should not be held liable for payment of interest so long as the money was withheld under the protective umbrella of the court order. Merely because the writ petitions were finally held liable to be dismissed, it cannot be urged that the interim orders passed by the courts were erroneous. Soon on dismissal of their writ petitions, the payment of the enhanced amount of royalty which was disputed earlier was promptly cleared by the writ petitioners and, therefore, their act was bona fide. We find no merit in this submission either.

26. 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, U.P. [1984 Supp SCC 505 : AIR 1985 SC 39] ) In law, the term 'restitution' is used in three senses: (i) return or restoration of some 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. (See Black's Law Dictionary, 7th Edn., p. 1315). The Law of Contracts by John D. Calamari & Joseph M. Perillo has been quoted by Black to say that 'restitution' is an ambiguous term, sometimes referring to the disgorging of something which has been taken and at times referring to compensation for injury done:

'Often, the result under either meaning of the term would be the same. … Unjust impoverishment as well as unjust enrichment is a ground for restitution. If the defendant is guilty of a non-tortious misrepresentation, the measure of recovery is not rigid but, as in other cases of restitution, such factors as relative fault, the agreed-upon risks, and the fairness of alternative risk allocations not agreed upon and not attributable to the fault of either party need to be weighed.'

The principle of restitution has been statutorily recognized in Section 144 of the Code of Civil Procedure, 1908. Section 144 CPC speaks not only of a decree being varied, reversed, set aside or modified but also includes an order on a par with a decree. The scope of the provision is wide enough so as to include therein almost all the kinds of variation, reversal, setting aside or modification of a decree or order. The interim order passed by the court merges into a final decision. The validity of an interim order, passed in favour of a party, stands reversed in the event of a final decision going against the party successful at the interim stage. Unless otherwise ordered by the court, the successful party at the end would be justified with all expediency in demanding compensation and being placed in the same situation in which it would have been if the interim order would not have been passed against it. The successful party can demand (a) the delivery of benefit earned by the opposite party under the interim order of the court, or (b) to make restitution for what it has lost; and it is the duty of the court to do so unless it feels that in the facts and on the circumstances of the case, the restitution far from meeting the ends of justice, would rather defeat the same. Undoing the effect of an interim order by resorting to principles of restitution is an obligation of the party, who has gained by the interim order of the court, so as to wipe out the effect of the interim order passed which, in view of the reasoning adopted by the court at the stage of final decision, the court earlier would not or ought not to have passed. There is nothing wrong in an effort being made to restore the parties to the same position in which they would have been if the interim order would not have existed.

27. Section 144 CPC is not the fountain source of restitution, it is rather a statutory recognition of a pre-existing rule of justice, equity and fair play. That is why it is often held that even away from Section 144 the court has inherent jurisdiction to order restitution so as to do complete justice between the parties. In Jai Berhamv. Kedar Nath Marwari [(1922) 49 IA 351 : AIR 1922 PC 269] Their Lordships of the Privy Council said: (AIR p. 271)

'It is the duty of the court under Section 144 of the Civil Procedure Code to ‘place the parties in the position which they would have occupied, but for such decree or such part thereof as has been varied or reversed’. Nor indeed does this duty or jurisdiction arise merely under the said section. It is inherent in the general jurisdiction of the court to act rightly and fairly according to the circumstances towards all parties involved.'

Cairns, L.C. said in Rodger v. ComptoirD'Escompte de Paris [(1871) 3 PC 465 : 7 Moo PCC NS 314 : 17 ER 120] : (ER p. 125)

'[O]ne of the first and highest duties of all courts is to take care that the act of the court does no injury to any of the suitors, and when the expression, ‘the act of the court’ is used, it does not mean merely the act of the primary court, or of any intermediate court of appeal, but the act of the court as a whole, from the lowest court which entertains jurisdiction over the matter up to the highest court which finally disposes of the case.'

This is also on the principle that a wrong order should not be perpetuated by keeping it alive and respecting it (A. Arunagiri Nadar v. S.P. Rathinasami [(1971) 1 MLJ 220] ). In the exercise of such inherent power the courts have applied the principles of restitution to myriad situations not strictly falling within the terms of Section 144.

28. That no one shall suffer by an act of the court is not a rule confined to an erroneous act of the court; the 'act of the court' embraces within its sweep all such acts as to which the court may form an opinion in any legal proceedings that the court would not have so acted had it been correctly apprised of the facts and the law. 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 which 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. The quantum of restitution, depending on the facts and circumstances of a given case, may take into consideration not only what the party excluded would have made but also what the party under obligation has or might reasonably have made. 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. Whenever called upon to adjudicate, the court would act in conjunction with what is real and substantial justice. 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. 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.

On the other hand, Mr. HirakMitra, Learned Senior Advocate, would submit as follows: -

(i) The money was paid in effect as a security for the huge amount of occupation charges which was already owed to the respondent No. 1 by the Appellant and there were only two alternatives – either the writ petition would succeed whereupon the money would be adjusted with the lease premium and the arrears of rent which would then be payable with effect from January 2, 1997 OR the writ petition would fail, in which case the money paid by the Appellant would be adjusted with the occupation charges owed by the Appellant to the respondent No. 1, and interest thereon, and if claim was still not satisfied, then the Appellant would be liable to pay the excess. However, there was no question of returning any money which the respondent No. 1 had already appropriated.

(ii) In response to a query from the Court relating to how the adjudication of the amount of occupation charges was done, a two-fold reply was given – first, that being public premises, proceedings had been taken under Section 7 of the Act of 1971 referred to above; second, the respondent No. 1 being the creditor/landlord, once the money had come into its hands from the debtor, it had the right to appropriate it according to its own books of accounts in the manner it considered fit.

(iii) Alternay,t tihvele money was offered to be paid and in reality, paid by the Appellant to the respondent No. 1, to show its readiness and willingness to make payment of the premium which it ought to have paid had it obtained a lease. He would submit that the writ petition though couched as a public law remedy, was in effect for specific performance of a contract and that is why the offer was made, and payment was done.

(iv)Mr. Mitradisputed that 'without prejudice to the rights and contentions' would indicate that on the writ petition not succeeding, the money paid by the Appellant would have to be returned to it as argued on behalf of the Appellant.Mr. Mitra would submit that the said mechanism cannot used where it would cause prejudice to the person to whom a document is addressed. He would argue that while 'without prejudice' may be intended to mean without prejudice to the doer of action (or writer of a letter) if his offer is rejected, still the writer is not entitled to make this reservation in respect of a document which from its character may prejudice to the person to whom it is addressed if he should reject the offer. In this connection he relies upon the report of the case of Cutts-v-Head and Another, a decision of the Court of Appeal reported in (1884) 1 Chancery Division page 290.

(v) Mr. Mitra strenuously urged that in reality the money was paid by the Appellant as a condition to obtain an interim order in view of his submissions recorded in point (i) above. Since the Appellant failed to obtain the final order in his favour, he could not be allowed enjoy the fruits of his adventure in unjustly preventing the respondent No. 1, the lawful owner, from evicting it, and also get a refund of the money without paying the huge amount of damages. In this connection, he also relies upon the principles of restitution which every court of equity must, according to him, follow. He relies upon two judgments of the Hon'ble Supreme Court, being

a. Kalabharati Advertising-v-Hemant VimalnathNarichania and Others, reported in AIR 2010 SC 3745.

b. Mahadeo SavlaramShelke and Others-v-Pune Municipal Corporation and Another reported in (1995) 3 SCC 33.

Since Mr. Mitra had submitted that proceedings were taken for adjudication and recovery of damages under Section 7 of the Act of 1971, we asked him to produce a copy of the notice and the proceedings. It was submitted that these would be produced later. On the last day of hearing of the Appeal, the Learned Advocate-on-Record of the respondent No. 1 handed to the Court a sheaf of documents purporting to be the records of such proceedings.

Since it is not disputed that occupation charges are in the nature of damages which are unliquidated, and in fact, that is what the respondent No. 1 has contended (see the letter dated June 2, 2003 referred to supra), at this stage, it would be instructive to consider the statutory provisions relating to the proceedings by which damages are calculated under the provisions of the Public Premises (Eviction of Unauthorized Occupants) Act, 1971.

'Section 7:

(1) Where any person, is in arrears of rent payable in respect of any public premises, the estate officer may, by order, require that person to pay the same within such time and in such installments as may be specified in the order.

(2) Where any person is, or has at anytime been, in unauthorised occupation of any public premises, the estate officer may, having regard to such principles of assessment of damages as may he prescribed, assess the damages on account of the use and occupation of such premises and may, by order, require that person to pay the damages within such time and in such installments as may be specified in the order.

(2A) While making an order under sub-section (1) or sub-section (2), the estate officer may direct that the arrears of rent or, as the case may be, damages shall be payable together with 2[compound interest] at such rate as may be prescribed, not being a rate exceeding the current rate of interest within the meaning of the interest Act, 1978.

(3) No order under sub-section (1) or sub-section (2) shall be made against any person until after the issue of a notice in writing to the person calling upon him to show cause 3[within seven days from the date of issue thereof], why such order should not be made, and until his objections, if any, and any evidence he may produce in support of the same, have been considered by the estate officer. (4) Every order under this section shall be made by the estate officer as expeditiously as possible and all endeavour shall be made by him to issue the order within fifteen days of the date specified in the notice.'

Therefore, it is clear that the Estate Officer of the respondent No. 1 is to assess the damages on account of use and occupation of the public premises in case of unauthorized occupation, and he can do so only after issuing a notice in writing requiring the person alleged to be the unauthorized occupant to show cause within seven days of receipt thereof why such order shall not be passed, and such order can only be passed after considering that person’s objections and evidence if any produced before the Estate Officer. These are mandatory provisions of the statute which the Estate Officer must comply with, in case he exercises the statutory power to assess and levy damages for unauthorized use and occupation of public premises belonging to the respondent No. 1. He must act in this manner which is prescribed or not at all.

However, the documents relied upon by the respondent No. 1 and handed over by the Learned Advocate-on-Record, as the records of the initiation of Section 7 proceedings, are the following:

A. A letter dated October 24, 2016 bearing No. Lnd.4268/7/A/II/16/2503 sent by the Senior Assistant Estate Manager-I, for the Estate Manager, addressed to the Appellant, on the subject 'Surrender of KoPT land msg. 3344.508 sq. mtrs. at Transport Depot Road (Plate No.D-274/6/A) under your occupation'.

A few paragraphs of the said letter dated October 24, 2016 bear quotation: -

'4. You are aware that lease granted for the purpose of a 'a factory and godown'. In other words, manufacturing activity is ingrained in your purpose of lease. You are also aware that there is no contractual relationship between you and KoPTw.e.f. 02.01.1997 as the lease expired without any option of renewal on 01.01.1997.

5. Section 106 of the Transfer of Property Act, 1882 ordains that in the absence of a contract, a lease of immovable property for manufacturing purposes shall be deemed to be a lease from year to year, terminable on the part of either lessor or lessee by 6 months’ notice, and the said period of 6 months shall commence from the date of receipt of notice which in this case is 03.10.2016. Therefore, as per the law of the land as stated above, you should have given notice accordingly and the said notice period would start from 03.10.2016.

6. In view of the aforesaid, your letter dated 30.9.2016 under reference is improper and not technically and legally valid. However, considering pros and cons of the matter, it has been decided by Kolkata Port Trust (KoPT) to take over vacant and unencumbered possession of the premises at 11 A.M. on 01.11.2016.

8. This is for your information that there is still an outstanding dues of Rs. 1,20,72,443.20 as on 21.10.2016 comprising Rs.32,82,255.00 as principal dues and Rs. 1,20,72,443.20 as interest. You are requested to pay the said amount to KoPT immediately failing which you are liable to appropriate legal proceedings.'

B. A Letter No. Lnd. 4268/7/A/II/17/1194 dated May 17, 2017 written by the Senior Assistant Estate Manager-I, for Estate Manager to the Learned. Estate Officer (and not the Appellant) on the subject 'P.P. Act Proceeding NO. 1116.1116/R of 2011 the Board of Trustees for the Port of Kolkata-vs-M/s Eritech Limited and Others'.

The entirety of this letter is reproduced for appreciating its scope: -


This is to inform you that M/s. JJH Industries Limited became a long term lessee for a period of 30 years without any option of renewal in respect of the Trustees property land msg. 3344. 508 sq.m. at 7, Transport Depot Road, under Plate No. D-274/6/A. The long term lease expired on 01-01-1997. The matter was subjudiced in your court.

It may kindly be noted that as per request made by Eri-Tech Ltd. vide their letter dated 30-09-2016, the possession was taken over by KoPT on 01-11-2016 in vacant, peaceful and unencumbered condition.

Please also note that a total sum of Rs. 36,09,404=00 on account of outstanding rent/compensation dues up to 01-01-2016 and a sum of Rs. 89,70,180+54 on account of accrued interest thereof as calculated upto 07-04-2017 is payable by the O.P. A detailed of calculated sheet showing outstanding dues is enclosed.

In view of the foregoing, it is humbly prayed before your kind honour to take up the matter and pass necessary order for recovery of compensation of damages alongwith accrued interest thereon.

Encl: As stated'.

I find that there is, thus, no notice within the meaning of Section 7 on October 24, 2016 requiring the Appellant to show cause but there is a demand for certain sums on account of principal and interest without any opportunity of being heard as envisaged under Section 7 being given to the Appellant before the assessment. It has been made by the respondent No. 1 unilaterally without reference to any proceeding under Section 7.

On the other hand, the first reference to a proceeding before the Estate Officer for recovery of damages is on May 17, 2017, but this is not a notice from the Estate Officer to the Appellant, being the person concerned who is alleged to be in unauthorized occupation, whether to show cause or otherwise, but a request from the respondent No. 1 to its Estate Officer to take up the matter and pass orders according to the dictate of the respondent No. 1, without any proceeding for assessment of damages, but only for recovery.

Therefore, we have no hesitation in holding that even as late as on May 17, 2017 or in fact, as on the date that the hearing of the Appeal was concluded, there was no proceeding for assessment of damages within the meaning of Section 7(2) of the Act of 1971 and there has been no notice within the meaning of Section 7 of the said Act initiating such proceeding. Both the letters dated May 17, 2017 and October 24, 2016 are otherwise than in the manner prescribed by statute if they are purported to be notices under Section 7(3) of the said Act and are procedurally ultra vires and non est in the eye of law.

Thus, despite expressly liberty given by the Learned Single Judge while dismissing the writ petition, the Estate Officer has not quantified the damages payable by the Appellant for the unauthorized occupation of the said public premises and there is no proceeding in the eye of law where it can be done, as on the date when the hearing of the appeal was concluded. There was no interim order in the appeal which prevented the quantification of damages by taking proper proceeding. So, the respondent No. 1 has not had the damages/occupation charges claimed by it quantified and no amount has crystallized which it can demand from the Appellant. The respondent No. 1 and its officers have acted negligently in the matter of public money and its recovery.

So far as the submissions made on behalf of the 1st respondent which we have summarized above, these have to be considered bearing in mind that the writ petition was dismissed without in fact granting any lease to the writ petitioner as it had sought. The contentions contained in paragraphs (i), (ii) and (v) of our precis of Mr. Mitra’s submissions depended upon there being a crystallized sum assessed in accordance with lawas occupation charges/damages for unauthorized occupation by the Appellant, to allow the respondent No. 1 to retain the amount paid to it or deposited with it by the Appellant. Since, as we have found above from the records, there is no such assessment in accordance with law, and no quantification, the said submissions fail and cannot be sustained. Thus, we find that since despite liberty being granted in that behalf the respondent No. 1 did not have its claim for damages for unauthorized occupation assessed and quantified in terms of Section 7 of the Act of 1971, it has no right to hold on to the amount of Rs.1.15 crores in pro tanto satisfaction of its claim.

The second limb of the submissions contained in paragraph (iii) of our precis of Mr. Mitra’s submissions, to the extent that the landlord/creditor can appropriate any money of the debtor in his hands, in the way he thinks appropriate cannot, we think, arise in the facts and circumstances of the case, where it is less a debt and more a claim for unliquidated damages. As and when they are quantified in accordance with law, such a case could have been made out – but since they have not been so quantified, the question of appropriating the money paid by the Appellant cannot, in our mind, arise.

In fact, strictly speaking this cannot be equated with a case of restitution. For the principles of restitution to apply, first a party must have obtained a benefit in a litigation by a final adjudication by the Court, and thereafter, in appeal or other proceeding, that final adjudication must be reversed so that the party who had got the benefit from the other party, is required to 'restore' the benefit that he had got under the original adjudication. Here, no final adjudication of the writ petition had occurred by which a lease had been granted to the Appellant. It had got no benefit by a final order and there has been no reversal of the final order.

Therefore, a lot turns on the expression 'without prejudice' as used in the Order dated January 20, 2016. Coming now to the decisions relied upon by Mr. Mitra from the Bar on the point, especially the English decision which is of persuasive, but not authoritative value, it will appear that the said decision was rendered on the basis of a letter where an offer was made by a party without prejudice and the entire decision turned on whether the document could have been looked at by the Court without both the parties agreeing to its production. The authorities relied upon in the said decision were also on receiving in evidence and appreciating such a letter, which had been couched in the form of 'without prejudice' while negotiations were on. The said decision is not an authority of any value, persuasive or otherwise for construing the words 'without prejudice' when money is paid by a party 'wholly without prejudice to the rights and contentions of the parties' which the Court in the final order, records as having been paid under orders of the Court.

I would have rather thought that 'without prejudice to the rights and contentions of the parties', when applied to the present fact situation, would imply that one party has made payment while the other party has received payment, without giving up the right in case of one party, to argue that no money was payable and in the case of the other party, that a lot more was payable, but without any right to appropriate the sum, since the money was being paid under orders of a court, without adjudication of any liability to pay or any quantum which was payable.

On facts, the decision in AIR 2010 SC 3745 is vastly different from the facts of the present case. In the case of Kalabharati cited before us, the writ petitioner had admittedly obtained certain orders during the pendency of the petition and then withdrawn the same without getting proper adjudication of the issue involved therein, but had still insisted on the continuance of the benefits of the interim orders or consequential orders passed in pursuance of the interim order originally passed. Here, after the original interim order was passed, (not on condition of payment of Rs.1.15 crores, but deposit only of Rs.15 lakhs) the writ petitioner/Appellant did not withdraw the writ petition, nor avoided adjudication on merits. On the contrary, after a full hearing when the writ petitioner/Appellant lost in the writ petition, with the issues being adjudicated, on January 27, 2016, it faced the consequences of the said Order, participated in the proceedings for its eviction and thereafter, on eviction order being passed, surrendered the possession without coercive process. It did not seek continuance of any interim order by which its possession had been protected during the pendency of the writ petition. A little difference in facts, makes a lot of difference in value of a binding decision as a precedent. A decision is only an authority for what it decides and not what can be logically deduced from it, as is settled law. Therefore, on facts this decision does not apply to the present case.

The second Indian decision cited by Mr. Mitra appearing for the respondent No. 1 is the case of Mahadeo referred to above. At paragraph 14 of the said judgement as reported in Supreme Court Cases (supra), it has been held by the Hon'ble Supreme Court as follows: -

'14. It would thus be clear that in a suit for perpetual (sic) injunction, the court should enquire on affidavit evidence and other material placed before the court to find strong prima facie case and balance of convenience in favour of granting injunction otherwise irreparable damage or damage would ensue to the plaintiff. The court should also find whether the plaintiff could adequately be compensated by damages if injunction is not granted. It is common experience that injunction normally is asked for and granted to prevent the public authorities or the respondents to proceed with execution of or implementing scheme of public utility or granted contracts for execution thereof. Public interest is, therefore, one of the material and relevant considerations in

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either exercising or refusing to grant ad interim injunction. While exercising discretionary power, the court 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 has also jurisdiction and power to grant adequate compensation to mitigate the damages caused to the defendant by grant of injunction restraining the defendant to proceed with the execution of the work etc. 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 pecuniary jurisdiction of the court of first instance should not impede nor be a bar to award damages beyond its pecuniary jurisdiction. In this behalf, the grant or refusal of damages is not founded upon the original cause of action but the consequences of the adjudication by the conduct of the parties, the court gets inherent jurisdiction in doing ex debitojustitiae 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'. There can be no quarrel with this proposition. Admittedly, damage was caused to the respondent No. 1 from January 2, 1997 till the date that possession was delivered to it on November 1, 2016. Between 2005 an January 27, 2016, the second writ petition was pending before the Learned Single Judge and an interim order had protected the possession of the Appellant which ultimately lost in the writ petition. However, the Learned Single Judge made provision for the recovery of damages in the Operative Portion of the Order by allowing the Estate Officer to quantify the amount of damages, which could be done and recovered through Section 7 of the Act of 1971. Admittedly, the respondent No. 1 neither appealed from this portion of the Order seeking damages ex debitojustitiae nor preferred a Memorandum of Cross Objection on the principle enunciated in the judgement now being relied upon it. Nor, for that matter, did it proceed to assess and quantify the damages pursuant to the liberty granted by the Learned Single Judge as demonstrated above. Without assessment and quantification of damages, an exercise that cannot be done without taking evidence, it cannot be said what are the damages payable. That the Hon'ble Supreme Court referred to the pecuniary jurisdiction of the Courts when speaking of the equitable jurisdiction to grant damages, shows that what was being contemplated was a court before which cases are filed for perpetual injunction based on pecuniary jurisdiction, which is to say a civil court, which tries issues of facts and law on taking evidence. The High Court acting under Article 226 of the Constitution of India does not normally hear matters on evidence nor is its jurisdiction under Article 226 of the Constitution of India dependent upon pecuniary limits. Therefore, the decision in the case of Mahadeo referred to above was followed by the Learned Single Judge by granting such liberty to quantify damages which the Estate Officer has not yet done, even after the expiry of almost 23 months from the date of the said final order and we respectfully agree with that conclusion that damages may be quantified by the Estate Officer. It is true that while disposing of the writ petition, the Learned Single Judge ought to have clarified what was to be done with the sum of Rs.1.15 crores recorded by it as having been paid by the Writ Petitioner/Appellant pursuant to orders of Court, and which earlier orders record as having been paid by the Appellant to or deposited with the respondent No. 1 without prejudice to the rights and contentions of the parties. However, that is something which we as a Court of Appeal also have the power to supply. In the light of the above discussion, we are firmly of the opinion that the Order dated January 27, 2016 impugned before us dismissing the writ petition and granting the respondents and/or the concerned Estate Manager the direction to proceed with the proceedings for eviction and with liberty to quantify the damages for unauthorized occupation by the Appellant after January 2, 1997 in accordance with law requires no interference and is affirmed, but with only one modification as to the amount of Rs.1.15 crores as aforesaid. We direct, in modification of the ordering portion of the said Order dated January 27, 2016, that the sum of Rs.1.15 crores deposited/paid by the Appellant with the Respondent No. 1 pursuant to the orders of the Learned Single Judge, without prejudice to the respective rights and contentions, shall be returned by the respondent No. 1 to the Appellant in the following manner: -Through a Banker’s Cheque in the name of the Appellant by the respondent No. 1 and tendered to the Learned Advocateon- Record of the Appellant or the Appellant itself, within eight weeks from the date of communication of this Order. This shall not prevent the respondent No. 1 from proceeding in accordance with law for quantification and recovery of damages under the Public Premises (Eviction of Unauthorized Occupants) Act, 1971. The appeal is disposed of on the above terms and all interim orders and undertakings stand vacated and discharged. The parties shall bear their own costs. Certified photocopy of this Judgment and order, if applied for, be supplied to the parties upon compliance with all requisite formalities.