Citing mistake, Supreme Court recalls money disbursing order in Unitech case

Citing mistake, Supreme Court recalls money disbursing order in Unitech case

Notes the amount was handed out to the two individuals solely on the basis of the Justice Dhingra Committee report

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

It cited the principle enshrined in the Indore Development Authority vs Manoharlal And Ors case that no party should be unfairly advantaged by an order of the court.

The bench comprising Chief Justice of India DY Chandrachud and Justice MR Shah stated, “The act of the court shall prejudice no one and in such a 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 bench held that it was a fit case to apply the principle of actus curiae neminem gravabit and the principle of restitution.

Unitech had claimed that it was the absolute owner of the 26 acres and 19 guntas of land in Bangalore that was sold to Devas. It submitted that it was entitled to the sale consideration of Rs.172.08 crores. However, Rs.87.35 crores was received on Unitech’s account in the Supreme Court Registry and the balance was directed to be paid to Naresh Kempanna (Rs.56.11 crores) and Col. Mahinder Khaira (Rs.41.56 crores).

Appearing for Unitech, Additional Solicitor General N. Venkataraman alleged that the two individuals were not entitled to the money paid to them. He contended that the rights of the parties were not adjudicated by the apex court or the Justice Dhingra Committee.

In 2018, in order to pay back the homebuyers, the top court had set up a three-member panel headed by former Delhi High Court judge Justice SN Dhingra for expeditious auction of Unitech unencumbered immovable properties.

CJI Chandrachud and Justice Shah noted that the amount was disbursed to the two individuals solely on the basis of the report of the Committee, which was premised on a 2018 Memorandum of Understanding.

The disbursal was made without adjudicating the rights of the parties or the claims of the individuals. Moreover, the Committee had submitted the report without any adjudication. The bench observed that there existed serious disputes on the entitlement of the amount disbursed to the individuals.

The courts thus held, “There was an obvious error and/or mistake on the part of this court in directing to pay Rs.56.11 crores to Naresh Kempanna and Rs.41.96 crores to Col. Mohinder Khaira, as it was without any adjudication of the claims. Therefore, the mistake/error committed by this court is to be corrected on the basis of the principle of restitution.”

The bench directed Kempanna and Col. Khaira to return the amount disbursed to them along with interest of 9 percent from the date the payment was received by them. It directed them to deposit the amount with the Supreme Court Registry.

However, the court granted them the liberty to initiate appropriate proceedings for adjudication of their rights vis-a-vis the sale consideration.