Himachal Pradesh High Court
The Reserve Bank Of India And Another vs M/S A.B.Tools (P) Ltd on 17 June, 2015
Bench: Chief Justice, Tarlok Singh Chauhan
IN THE HIGH COURT OF HIMACHAL PRADESH, SHIMLA .
OSA No.2 of 2014 alongwith Cross Objections No.19 of 2014 and OSA No.4002 of 2013.
Judgment reserved on : 05.05.2015.
Date of decision: June 17, 2015.
1. OSA No.2 of 2014 alongwith Cross Objections No.19 of 2014.
The Reserve Bank of India and another
r .....Appellants.
Versus
M/s A.B.Tools (P) Ltd., and another .....Respondents.
For the Appellants : Mr.J.L.Kashyap, Advocate.
For the Respondents : Mr.J.S.Bhogal, Senior Advocate with
Mr.Parmod Negi, Advocate.
2. OSA No.4002 of 2013
M/s A.B.Tools Pvt. Ltd., and another .....Appellants.
Versus
The Reserve Bank of India and another .....Respondents.
For the Appellants : Mr. J.S.Bhogal, Senior Advocate with
Mr.Parmod Negi, Advocate.
For the Respondents : Mr.J.L.Kashyap, Advocate.
Coram
The Hon'ble Mr. Justice Mansoor Ahmad Mir, Chief Justice.
The Hon'ble Mr. Justice Tarlok Singh Chauhan, Judge. Whether approved for reporting?1Yes Tarlok Singh Chauhan, Judge.
CMP No.13380 of 2014.
This application has been preferred by the plaintiffs-appellants (hereinafter referred to as the plaintiffs) for the amendment of the plaint. It Whether the reporters of the local papers may be allowed to see the Judgment?
::: Downloaded on - 15/04/2017 18:22:48 :::HCHP 2is averred that the plaintiffs had prayed for a decree of `26 lacs on account of outstanding charges due from the defendants/respondents (hereinafter .
referred to as the defendants) for the maintenance charges of the common areas, but due to sheer inadvertence they could not claim maintenance charges from the date of filing of the suit till its disposal and, therefore, now seek to incorporate amended para 13 of the plaint to the following effect:-
"The plaintiff is also entitled to future maintenance costs at the rate of `1089/- per flat per month from the date of filing of this suit together with interest thereon till the date of decree and the plaintiff undertakes to pay the court fee on the amount so decreed."
2. In addition, the plaintiffs have sought permission to amend the prayer clause by adding in the prayer clause the following sentence:-
"The plaintiff may also be allowed maintenance charges from the filing of the suit till decree at the rate of `1089/- per month per flat and interest thereon."
3. The defendants have vehemently opposed this application by raising various objections like amendment if allowed would change nature of the case and a new cause of action would be introduced in the case, the amendment was belated and has been moved only when the case has been fixed for arguments. The parties have already led evidence in the case and, therefore, the application was not maintainable and lastly that the proposed amendment was not permissible inasmuch as the plaintiffs have restricted the whole of their claim in the suit to `26 lacs and it was not permissible under Or der 2 Rule 2 of the Code of Civil Procedure to sue for the portion of the claim so omitted or relinquished at this stage. These very objections have been reiterated in reply to the merits of the application.
We have heard the learned counsel for the parties.
::: Downloaded on - 15/04/2017 18:22:48 :::HCHP 34. It is not in dispute that by way of amendment, the plaintiffs are not seeking to introduce any new fact and the parties are alive to the real .
nature of the dispute. It can also not be disputed that wide discretion is vested with the Court in matters of amendment of pleadings. The power to allow amendment is wide and can be exercised at any stage of the proceedings in the interest of justice, though the same has to be exercised with great care and circumspection.
5. By way of amendment, the plaintiffs have only sought maintenance charges that too from the date of filing of the suit till the date of decree and, therefore, even bar of Order 2 Rule 2 CPC is not attracted to such a case. That apart, even in the suit, the plaintiffs have already by an abundant caution prayed for any other relief to which the plaintiffs may be found entitled which prayer in itself takes care even of the proposed amendment.
6. In view of the aforesaid discussion, the application is allowed, as prayed for and the amended plaint is ordered to be taken on record.
OSA No.2 of 2014 alongwith Cross Objections No.19 of 2014 & OSA No.4002 of 2013.
7. The plaintiff-Company A.B.Tools (P) Ltd. and its Managing Director filed a suit against the defendants, the Reserve Bank of India, for recovery of ` 26 lacs alongwith interest at the rate of 21% per annum with quarterly rests from the date of filing of the suit till its realization. The plaintiffs have also prayed for future maintenance costs at the rate of `1089/- per month per flat from the date of filing of the suit together with interest till the date of decree.
8. The plaintiff No.1 vide deed of lease and conveyance dated 08.06.1995 sold to the defendants blocks No.C-2 and C-3 containing 8 flats in the Valley Side Estate, measuring approximately 981.84 sq. mtrs.
::: Downloaded on - 15/04/2017 18:22:48 :::HCHP 4(10565 sq.ft.) a built up area alongwith attic in the said blocks measuring 247.63 sq. mtrs (2665 sq. ft.) together with lease of land measuring 600 .
sq. mtrs (approx.) underneath and appurtenant to blocks No.C-2 and C-3, situated at Station Ward, Bada Shimla, Tehsil and District Shimla (H.P.) for a sum of ` 1,01,07,000/- (Rupees One Crore One Lac Seven Thousand Only).
9. Prior to the execution of the conveyance-cum-lease deed, an agreement for purchase of 8 apartments in blocks No.C-2 and C-3 was executed between the parties on 17.12.1994 and para-xviii thereof reads as under:-
"(xviii) That the Vendors after one year of the execution of the Sale deed and Lease Deed in favour of the Purchaser, shall not be bound in any way to carry out repair or maintenance work of the property hereby intended to be sold. After the period of one year and till alternate arrangements are made by the flat owners Association to be formed for this purpose, if required by the Purchaser, the vendors shall look after and maintain the common areas, services, green areas etc. at the cost of all the flat owners of the Valley Side Estate. The Vendors shall maintain, at its cost, all such areas and services during the defects liability period of one year from the date of the execution of the Sale Deed and the Lease Deed."
10. It is claimed that the terms of the agreement of purchase were incorporated and infact formed an integral part of the sale-cum-lease deed executed between the parties as Appendix 'A' and, therefore, all the conditions became inseparable part of the registered deed executed between the parties. The lease-cum-conveyance deed specifically incorporated and mentioned that by agreement dated 17.12.1994, 8 apartments in blocks C-2 and C-3 had been purchased by the defendants.
The plaintiffs claim to have spent `26 lacs towards maintenance of the ::: Downloaded on - 15/04/2017 18:22:48 :::HCHP 5 common areas/facilities provided to the entire estate holders and thereafter future maintenance at the rate of `1089/- per month.
.
11. The defendants contested the suit wherein preliminary objections regarding maintainability, locus-standi, cause of action, limitation, want of notice under Section 80 CPC and the suit being abuse of process of law, false, frivolous, vexatious and vague. On merits, it was pleaded that the defendants are not liable to pay any maintenance charges and placed reliance on clause (vi) of the deed of lease and conveyance dated 08.06.1995 which reads as under:-
"(vi) THAT the Vendors hereby grant to the Purchaser the rights pertaining to (i) use of the main access road connecting the Valley Side Estate to the Municipal and main road, (ii) use of the common green areas, (iii) maintenance of Electrical cables water supply and drainage lines, sewer and storm water drains, (iv) use of internal path ways together with the use of steps connecting the pathways with the main access road on both ends, more particularly delineated and marked green in Annexure 'P' and 'Q' (v) access to common facilities and use thereof etc. without any further consideration whatsoever over and above the aforesaid total consideration of Rs.1,01,07,000/- (Rupees One Crore One Lakh Seven Thousand Only)."
12. The plaintiffs filed replication and reiterated the averments made in the plaint and, at the same time, refuted the allegations as set out in the written statement.
13. On the pleadings of the parties, the following issues were framed:-
1. Whether in terms of the agreement, whereby the suit property was sold to the defendants, the defendants are liable to pay certain charges for the maintenance of roads and common facilities, as alleged? OPP.::: Downloaded on - 15/04/2017 18:22:48 :::HCHP 6
2. If issue No.1 is proved, whether the plaintiffs are entitled to the suit amount or any other amount of money on account of .
the charges, referred to in issue No. 1? OPP
3. Whether the claim of the plaintiffs is barred by time? OPD
4. Whether defendants are Government, within the meaning of Section 80 of the Code of Civil Procedure and, hence, notice under the aforesaid provision was required to be served before the institution of the suit and no such notice having been served, whether the plaint is liable to be rejected? OPD.
5. Whether the plaint lacks material particulars, especially the details of the claim? If so, its effect? OPD
6. Whether the plaintiffs are estopped to file the present suit by their acts of omission and commission and conduct of their functionaries? OPD
7. Relief.
14. After recording the evidence and evaluating the same, the suit of the plaintiffs was partly decreed for a sum of `3,13,632/- along with past, pendente lite and future interest at the rate of 12% per annum as maintenance charges for the aforesaid facilities for a period of three years preceding institution of the suit i.e. from 18.01.2003 to 17.01.2006 at the rate of `1089/- per flat per month.
15. Aggrieved by the judgment and decree passed by the learned single Judge, both the parties have filed separate appeals before this Court. The plaintiffs have filed OSA No.4002 of 2013 against the part dismissal of the suit and have prayed for decreeing the suit in its entirety, whereas, the defendants have not only filed the Cross Objections registered as Cross Objections No.19 of 2014 in the appeal filed by the plaintiffs being OSA No.4002 of 2013, but have also filed on the same allegations separate appeal being OSA No.2 of 2014 against the decree passed by the learned single Judge.
::: Downloaded on - 15/04/2017 18:22:48 :::HCHP 716. The plaintiffs (appellants in OSA No.4002 of 2013) have vehemently argued that the learned single Judge while partly deciding .
issue No.3 in their favour has misappreciated the provisions of Section 22 of the Limitation Act, 1963. They have further contended that the learned single Judge while applying the provisions of Section 70 of the Indian Contract Act failed to appreciate that it also contains the provisions of "quasi contract" and, therefore, the provisions of Section 22 of the Limitation Act, 1963, will also apply to the claim preferred under Section 70 of the Indian Contract Act. It is also claimed that the learned single Judge had not given due consideration to the fact that the plaintiffs had been raising the demand right from the date the amounts became due in 1996 and the defendants had been assuring them that the matter was under
consideration and it was only in the year 2005 that the claim of the plaintiffs came to be repudiated by the defendants, for the first time, and immediately thereafter in January, 2006, the plaintiffs had instituted the suit.
17. On the other hand, the defendants (appellants in OSA No.2 of 2014) have argued that the learned single Judge while deciding against the appellants and even while decreeing the suit of the plaintiffs for a sum of `3,13,632/- had lost sight of the fact that between 12.02.1999 and 20.09.2004 there had not been given any acknowledgement on behalf of the appellants and, therefore, admittedly the suit was barred by time even as on 20.09.2004. It is further contended that the learned single Judge had erred in recording a finding that the defendants are also responsible for formation of the association and the plaintiffs alone cannot be held responsible for non-formation of the association which findings are contrary to clause xxiii of the purchase agreement whereby responsibility ::: Downloaded on - 15/04/2017 18:22:48 :::HCHP 8 of the vendor (plaintiff) was to form the association. It is also argued that the plaintiffs in their letter dated 04-18/06/2005 had clearly admitted that .
the common areas had not been transferred and are with the plaintiffs. In such circumstances, if the plaintiffs were maintaining those premises without any express authority or an agreement that they would be entitled to receive maintenance charges, the plaintiffs were not entitled to make any claim for the same. It was further contended that the learned single Judge has not appreciated that the provisions of Clause xviii of purchase agreement clearly envisage that the plaintiffs after one year of the execution of the sale deed and lease deed in favour of the defendants shall not be bound to carry out any repair or maintenance work and having said so, it was not permissible for the plaintiffs without express authority and permission of the defendants to carry out the maintenance work as per the provisions of Section 70 of the Indian Contract Act.
18. We have heard the learned counsel for the parties and have gone through the records of the case.
19. It is the specific case of the plaintiffs that till the flat owners' association had not been formed, it was the plaintiffs, who were required to look after and maintain the common areas, services green areas etc. at the cost of all the flat owners of the Valley Side Estate. Records reveal that no such association was formed, though as per Clause xix, the defendant No.1 had undertaken to become a member of such association. The plaintiffs admittedly vide notice Ex.PW-1/B dated 10.06.1995 had raised a demand with the defendants for maintenance charges at the rate of `1058/- per flat per month. However, the defendants in their reply dated 28.07.1995 (Ex.PW-1/C) informed that no such claim was tenable for the period of one year from the date of registration of deed of lease and ::: Downloaded on - 15/04/2017 18:22:48 :::HCHP 9 conveyance dated 08.06.1995. The plaintiffs thereafter issued notice dated 17.12.1996 Ex.PW-1/ZC wherein a fresh demand of `1058/- per flat .
per month for the period 08.06.1996 to 08.12.1996 (six months) was raised. It was after prolonged correspondence that the plaintiffs on 6th July, 2004 asked the defendants to settle the issue of maintenance charges which was pending for years together.
20. The defendants in response to this letter informed the plaintiffs that the matter was still under consideration and as and when any decision is taken, they would be informed accordingly. However, when even after six months, nothing was heard from the defendants, the plaintiffs again sent a reminder on 22.01.2005, however, the defendants vide letter dated 08.02.2005 (Ex.PW-1/Z) repudiated the claim of the plaintiffs and this was again reiterated in letter dated 17.09.2005.
21. Undoubtedly, the property requires maintenance, but the question is who is to maintain the same. As per the deed of lease and conveyance, the right of use/maintenance viz:-
i) use of the main access road connecting the Valley Side Estate to the Municipal and main road;
ii) Use of the common green areas;
iii) maintenance of electrical cables, water supply and drainage
lines, sewer and storm water drains;
iv) use of internal pathways together with the use of steps
connecting the pathways with the main access road on both ends;
v) access to common facili ties and use thereof were granted by the plaintiff No.1 to the defendant No.2 without any further consideration whatsoever over and above the aforesaid total sale consideration of `1,01,07,000/-.
22. The rights of user were implicit in the property sold and, therefore, no further consideration was to be charged by the plaintiffs from ::: Downloaded on - 15/04/2017 18:22:48 :::HCHP 10 the defendant No.1 on this score. But, then who was to bear expenditure which would be incurred on the maintenance of these facilities in future is .
the moot question.
23. DW-1 Shri Pankaj Arora has stated that the defendants had an Annual Maintenance Contract (AMC) for maintaining their part of the premises from the date of sale, but he was unable to produce on record any document to this effect. While, on the other hand, plaintiff No.2 Shri Satish Jain while appearing as PW-1 has stated in unequivocal terms that the plaintiff had been providing all services to the defendants which obviously were not gratuitous nor was there any undertaking given to this effect to any of the residents. It is not even the case of the defendants that the plaintiffs were providing such facilities gratuitously. The plaintiffs have calculated the maintenance cost at `1089/- per month per flat for eight flats and the defendants have not seriously disputed this.
24. Section 70 of the Indian Contract Act, 1872, (for short the 'Act') reads thus:-
"70. Obligation of person enjoying benefit of non-gratuitous act.- Where a person lawfully does anything for another person, or delivers anything to him, not intending to do so gratuitously, and such other person enjoys the benefit thereof, the latter is bound to make compensation to the former in respect of, or to restore, the thing so done or delivered."
25. The conditions to be satisfied for invoking of Section 70 of the Act are three-fold.
i) A person must lawfully do anything for another person or deliver anything to him.
ii) The person so doing must have done it with no intention to do so gratuitously.
::: Downloaded on - 15/04/2017 18:22:48 :::HCHP 11iii) The other person must have enjoyed the benefit thereof.
.
If these three conditions stand fulfilled, then the latter is bound to make compensation to the former in respect of or to restore the things so done or delivered.
26. In State of West Bengal versus M/s B.K. Mondal and Sons AIR 1962 SC 779 with regard to the conditions to be fulfilled for invoking r to the provisions of Section 70, it was observed as follows:-
"(13) Section 70 reads thus:
"Where a person lawfully does anything for another person, or delivers anything to him, not intending to do so gratuitously, and such other person enjoys the benefit thereof, the latter is bound to make compensation to the former in respect of, or to restore, the thing so done or delivered."
(14) It is plain that three conditions must be satisfied before this section can be invoked. The first condition is that a person should lawfully do something for another person or deliver something to him. The second condition is that in doing the said thing or delivering the said thing he must not intend to act gratuitously; and the third is that the other person for whom something is done or to whom something is delivered must enjoy the benefit thereof. When these conditions are satisfied S. 70 imposes upon the latter person, the liability to make compensation to the former in respect of or to restore, the thing so done or delivered. In appreciating the scope and effect of the provisions of this section it would be useful to illustrate how this section it would operate. If a person delivers something to another it would be open to the latter person to refuse to accept the thing or to return it; in that case S. 70 would not come in to operation. Similarly, if a person does something for another it would be open to the latter person not to accept what has been done by the former; in that case again S. 70 would not apply. In other words, the person said to be made liable under S. 70 always has the option not to accept the thing or to return it. It is only where he voluntarily accepts the thing or enjoys the work done that the liability under S. 70 arises.
::: Downloaded on - 15/04/2017 18:22:48 :::HCHP 12Taking the facts in the case before us, after the respondent constructed the warehouse, for instance, it was open to the .
appellant to refuse to accept the said warehouse and to have the benefit of it. It could have called upon the respondent to demolish the said warehouse and take away the materials used by it in constructing it; but; if the appellant accepted the said warehouse and used it and enjoyed its benefit then different considerations come into play and S. 70 can be invoked. Section 70 occurs in chapter V which deals with certain relations resembling those created by contract. In other words, this chapter does not deal with the rights or liabilities accruing from the contract. It deals with the rights and liabilities accruing from relations which resemble those created by contract. That being so, reverting to the facts of the present case once again after the respondent constructed the warehouse it would not be open to the respondent to compel the appellant to accept it because what the respondent has done is not in pursuance of the terms of any valid contract and the respondent in making the construction took the risk of the rejection of the work by the appellant. Therefore, in cases falling under S. 70 the person doing something for another or delivering something to another cannot sue for the specific performance of the contract nor ask for damages for the breach of the contract for the simple reason that there is no contract between him and the other person for whom he does something or to whom he delivers something. All that Section 70 provides is that if the goods delivered are accepted or the work done is voluntarily enjoyed then the liability to pay compensation for the enjoyment of the said goods or the acceptance of the said work arises. Thus, where a claim for compensation is made by one person against another under S. 70, it is not on the basis of any subsisting contract between the parties, it is on the basis of the fact that something was done by the party for another and the said work so done has been voluntarily accepted by the other party. That broadly stated is the effect of the conditions prescribed by S. 70."
27 In V.R.Subramanyam versus B.Thayappa (deceased) and others AIR 1966 SC 1034, it has been held that if a party to the contract has rendered service to the other, not intending to do so gratuitously and ::: Downloaded on - 15/04/2017 18:22:48 :::HCHP 13 other person has obtained some other benefit, the former is entitled to compensation for the value of the services rendered by him.
.
28. In a case falling under Section 70 of the Act, a person doing something for another or delivering something to another cannot sue for the specific performance of the contract, nor ask for damages for the breach of the contract, for the simple reason that there is no contract between him and the other person. So, when a claim for compensation is made by one person against another under Section 70 of the Act, the juristic basis of the obligation is not founded upon any contract or tort but upon a third category of law, namely, quasi-contract or restitution.
29. In Fibrosa versus Fairbairn (1943) A.C. 32, Lord Wright stated the legal position as follows:-
"......any civilized system of law is bound to provide remedies for cases of what has been called unjust enrichment or unjust benefit, that is, to prevent a man from retaining the money of, or some benefit derived from, another which it is against conscience that he should keep. Such remedies in English Law are generally different from remedies in contract or in tort, and are now recognized to fall within a third category of the common law which has been called quasi-contract or restitution."
30. In Nelson versus Larholt (1948) 1 K.B. 339, Lord Denning observed as follows:
"....It is no longer appropriate to draw a distinction between law and equity. Principles have now to be stated in the light of their combined effect. Nor is it necessary to canvass the niceties of the old forms of action. Remedies now depend on the substance of the right, not on whether they can be fitted into a particular framework. The right here is not peculiar to equity or contract or tort, but falls naturally within the important category of cases where the court orders restitution if the justice of the case so requires."::: Downloaded on - 15/04/2017 18:22:48 :::HCHP 14
31. In Mulamchand versus State of Madhya Pradesh, AIR 1968 SC 1218, the observations of Lord Wright and of Lord Denning, extracted .
above, were adverted to and it was further observed as follows:-
".....The important point to notice is that in a case falling under Section 70 the person doing something for another or delivering something to another cannot sue for the specific performance of the contract, nor ask for damages for the breach of the contract, for the simple reason that there is no contract between him and the other person for whom he does something or to whom he delivers something. So where a claim for compensation is made by one person against another under Section 70, it is not on the basis of any subsisting contract between the parties but on a different kind of obligation. The juristic basis of the obligation in such a case is not founded upon any contract or tort but upon a third category of law, namely, quasi contract or restitution....."
32. In M/s Hansraj Gupta and Co. versus Union of India AIR 1973 SC 2724, it has been countenanced that the liability under Section 70 of the Act arises on equitable grounds, even though express agreement or a contract may not be proved.
33. Thus, what would be seen is that Section 70 is not founded on contract, but embodies the equitable principle of restitution and prevention of unjust enrichment.
34. The principle of unjust enrichment proceeds on the basis that it would be unjust to allow one person to retain a benefit received at the expense of another person. This was so held by the Hon'ble Supreme Court in Renusagar Power Co. Ltd. Vs. General Electric Co.
1994 Supp (1) SCC 644:-
"98. The principle of unjust enrichment proceeds on the basis that it would be unjust to allow one person to retain a benefit received at the expense of another person. It provides the theoretical foundation for the law governing restitution. The principle has, ::: Downloaded on - 15/04/2017 18:22:49 :::HCHP 15 however, its critics as well as its supporters. In the words of Lord Diplok: "...there is no general doctrine of unjust enrichment in .
English law. What it does is to provide specific remedies in particular cases of what might be classed as unjust enrichment in a legal system that is based upon civil law." (See: Orakpo V. Manson Investments Ltd. 1978 AC, 104). In The Law of Restitution by Goff and Jones, it has, however, been stated "that the case-law is now sufficiently mature for the courts to recognize a generalized right of restitution" (3rd Edn., P. 15). In Chitty on Contracts, 26th Edn., Vol. I, p. 1313, para 2037, it has been stated that "the principle of unjust enrichment is not yet clearly established in English law". The learned editors have, however, expressed the view:
"Even if the law has not yet developed to that extent, it does not follow from the absence of a general doctrine of unjust enrichment that the specific remedies provided are not justifiable by reference to the principle of unjust enrichment even if they were originally found without primary reference to it." (pp. 1313-1314, para 2037)."
35. The issue regarding undue enrichment thereafter came up before the Hon'ble Supreme Court in Indian Council for Enviro-Legal Action Vs. Union of India and Others (2011) 8 SCC 161 and it was held as follows:-
"UNJUST ENRICHMENT
151. Unjust enrichment has been defined as:
"Unjust enrichment.---A benefit obtained from another, not intended as a gift and not legally justifiable, for which the beneficiary must make restitution or recompense."
See Black's Law Dictionary, 8th Edition (Bryan A. Garner) at page 1573. A claim for unjust enrichment arises where there has been an "unjust retention of a benefit to the loss of another, or the retention of money or property of another against the fundamental principles of justice or equity and good conscience."
152. "Unjust enrichment" has been defined by the court as the unjust retention of a benefit to the loss of another, or the retention ::: Downloaded on - 15/04/2017 18:22:49 :::HCHP 16 of money or property of another against the fundamental principles of justice or equity and good conscience. A person is .
enriched if he has received a benefit, and he is unjustly enriched if retention of the benefit would be unjust. Unjust enrichment of a person occurs when he has and retains money or benefits which in justice and equity belong to another.
153. Unjust enrichment is "the unjust retention of a benefit to the loss of another, or the retention of money or property of another against the fundamental principles of justice or equity and good conscience." A defendant may be liable "even when the defendant retaining the benefit is not a wrongdoer" and "even though he may have received [it] honestly in the first instance."
(Schock v. Nash, 732 A.2d 217, 232-33 (Delaware. 1999). USA)
154. Unjust enrichment occurs when the defendant wrongfully secures a benefit or passively receives a benefit which would be unconscionable to retain. In the leading case of Fibrosa v. Fairbairn, [1942] 2 All ER 122, Lord Wright stated the principle thus : (AC p.61) "... .Any civilized system of law is bound to provide remedies for cases of what has been called unjust enrichment or unjust benefit, that is, to prevent a man from retaining the money of, or some benefit derived from another which it is against conscience that he should keep. Such remedies in English law are generically different from remedies in contract or in tort, and are now recognized to fall within a third category of the common law which has been called quasi-contract or restitution."
155. Lord Denning also stated in Nelson v. Larholt, [1947] 2 All ER 751 as under:-
"..... It is no longer appropriate, however, to draw a distinction between law and equity. Principles have now to be stated in the light of their combined effect. Nor is it necessary to canvass the niceties of the old forms of action. Remedies now depend on the substance of the right, not on whether they can be fitted into a particular frame-work. The right here is not peculiar to equity or contract or tort, but falls naturally within the important ::: Downloaded on - 15/04/2017 18:22:49 :::HCHP 17 category of cases where the court orders restitution if the justice of the case so requires."
.
156. The above principle has been accepted in India. This Court in several cases has applied the doctrine of unjust enrichment. Restitution and compound interest
157. American Jurisprudence 2d. Volume 66 Am. Jur. 2d defined Restitution as follows:
"The word `restitution' was used in the earlier common law to denote the return or restoration of a specific thing or condition. In modern legal usage, its meaning has frequently been extended to include not only the r restoration or giving back of something to its rightful owner, but also compensation, reimbursement, indemnification, or reparation for benefits derived from, or for loss or injury caused to, another. As a general principle, the obligation to do justice rests upon all persons, natural and artificial; if one obtains the money or property of others without authority, the law, independently of express contract, will compel restitution or compensation."
158. While Section 3 (unjust enrichment) reads as under:
"The phrase "unjust enrichment" is used in law to characterize the result or effect of a failure to make restitution of, or for, property or benefits received under such circumstances as to give rise to a legal or equitable obligation to account therefor. It is a general principle, underlying various legal doctrines and remedies, that one person should not be permitted unjustly to enrich himself at the expense of another, but should be required to make restitution of or for property or benefits received, retained, or appropriated, where it is just and equitable that such restitution be made, and where such action involves no violation or frustration of law or opposition to public policy, either directly or indirectly."
159. Unjust enrichment is basic to the subject of restitution, and is indeed approached as a fundamental principle thereof. They are usually linked together, and restitution is frequently based upon the theory of unjust enrichment. However, although unjust ::: Downloaded on - 15/04/2017 18:22:49 :::HCHP 18 enrichment is often referred to or regarded as a ground for restitution, it is perhaps more accurate to regard it as a .
prerequisite, for usually there can be no restitution without unjust enrichment. It is defined as the unjust retention of a benefit to the loss of another or the retention of money or property of another against the fundamental principles of justice or equity and good conscience. A person is enriched if he has received a benefit, and he is unjustly enriched if retention of the benefit would be unjust. Unjust enrichment of a person occurs when he has and retains money or benefits which in justice and equity belong to another.
160. While the term `restitution' was considered by the Supreme Court in South-Eastern Coalfields 2003 (8) SCC 648 and other cases excerpted later, the term `unjust enrichment' came to be considered in Sahakari Khand Udyog Mandal Ltd vs Commissioner of Central Excise & Customs (2005) 3 SCC 738). This Court said:
"31. ...'unjust enrichment' means retention of a benefit by a person that is unjust or inequitable. `Unjust enrichment' occurs when a person retains money or benefits which in justice, equity and good conscience, belong to someone else."
161. The terms `unjust enrichment' and `restitution' are like the two shades of green - one leaning towards yellow and the other towards blue. With restitution, so long as the deprivation of the other has not been fully compensated for, injustice to that extent remains. Which label is appropriate under which circumstances would depend on the facts of the particular case before the court. The courts have wide powers to grant restitution, and more so where it relates to misuse or non-compliance with court orders.
162. We may add that restitution and unjust enrichment, along with an overlap, have to be viewed with reference to the two stages, i.e., pre-suit and post-suit. In the former case, it becomes a substantive law (or common law) right that the court will consider; but in the latter case, when the parties are before the court and any act/omission, or simply passage of time, results in deprivation of one, or unjust enrichment of the other, the ::: Downloaded on - 15/04/2017 18:22:49 :::HCHP 19 jurisdiction of the court to levelise and do justice is independent and must be readily wielded, otherwise it will be allowing the .
Court's own process, along with time delay, to do injustice.
163. For this second stage (post-suit), the need for restitution in relation to court proceedings, gives full jurisdiction to the court, to pass appropriate orders that levelise. Only the court has to levelise and not go further into the realm of penalty which will be a separate area for consideration altogether.
164. This view of law as propounded by the author Graham Virgo in his celebrated book on "The Principle of Law of Restitution"
has been accepted by a later decision of the House of Lords (now the UK Supreme Court) reported as 136 Sempra Metals Ltd (formerly Metallgesellschaft Limited) v Her Majesty's Commissioners of Inland Revenue and Another [2007] UKHL 34 = [2007] 3 WLR 354 = [2008] 1 AC 561 = [2007] All ER (D) 294.
165. In similar strain, across the Altantic Ocean, a nine judge Bench of the Supreme Court of Canada in Bank of America Canada vs Mutual Trust Co. [2002] 2 SCR 601 = 2002 SCC 43 (both Canadian Reports) took the view :
"There seems in principle no reason why compound interest should not be awarded. Had prompt recompense been made at the date of the wrong the plaintiff should have had a capital sum to invest; the plaintiff would have received interest on it at regular intervals and would have invested those sums also. By the same token the defendant will have had the benefit of compound interest. Although not historically available, compound interest is well suited to compensate a plaintiff for the interval between when damages initially arise and when they are finally paid."
This view seems to be correct and in consonance with the principles of equity and justice.
166. Another way of looking at it is suppose the judgment- debtor had borrowed the money from the nationalised bank as a clean loan and paid the money into this court. What would be the bank's demand.
::: Downloaded on - 15/04/2017 18:22:49 :::HCHP 20167. In other words, if payment of an amount equivalent of what .
the ledger account in the nationalised bank on a clean load would have shown as a debit balance today is not paid and something less than that is paid, that differential or shortfall is what there has been : (1)failure to restitute; (2) unfair gain by the non-complier;
and (3) provided the incentive to obstruct or delay payment. Unless this differential is paid, justice has not been done to the creditor. It only encourages non-compliance and litigation. Even if no benefit had been retained or availed even then, to do justice, the debtor must pay the money. In other words, it is this is not only disgorging all the benefits but making the creditor whole i.e. ordering restitution in full and not dependent on what he might have made or benefited is what justice requires."
36. What therefore can be gathered from the aforesaid exposition of law is that the terms of Section 70 of the Contract Act are unquestionably wide, but they have to be applied with discretion so as to enable the Courts to do substantial justice in cases where it would be difficult to impute to the person's concerned relations actually created by contract. Section 70 prevents undue enrichment and it applies as much to individuals as to Corporation and Government and where one voluntarily accepts the things and enjoys the work done that the liability under Section 70 arises voluntarily accepts all the benefits of the wor k done or the things delivered is the foundation of the claim under Section
70. If once the benefit of the work done or the things delivered is accepted, it can be presumed that the said work was done or thing was delivered, not intending to do so gratuitously. Similarly, it can as well be presumed that the person who has accepted the work done or thing delivered has enjoyed the benefit also.
37. Clause xviii of the agreement dated 17.12.1994 provides as under:-
::: Downloaded on - 15/04/2017 18:22:49 :::HCHP 21"After the period of one year and till alternate arrangements are made by the flat owners association to be formed for this .
purpose, if required by the purchaser, the vendors shall look after and maintain the common areas, services, green areas etc. at the cost of all the flat owners of the Valley Side Estate."
38. Indisputably, no flat owners associati on was formed and there is positive evidence on record that the common areas and the services were maintained by the plaintiffs, who had been maintaining the other areas also for which the flat owners had been paying for the same.
Therefore, once the defendants have taken advantage of the services which obviously were not rendered by the plaintiff gratuitously, they cannot escape their liability to pay for such services as per the provisions of Section 70 of the Act. The mere fact that the defendants may not have requested the plaintiffs to do maintenance and even if there is no express agreement qua the same, it is of no consequence since this aspect could have been considered only in the event of all the flat owners association having been formed.
39. Thus, it can be safely concluded that all the three conditions as envisaged under Section 70 of the Contract Act have been fulfilled in this case. The plaintiffs have undertaken the maintenance work for the defendants and the said work was done with no intention to do so gratuitously and the defendants have enjoyed the benefit thereof.
40. Now the further question that arises as to what provisions of the Limitation Act would be applicable to the facts of the present case.
41. The learned counsel for the plaintiffs has strenuously argued that the learned single Judge erred in invoking the provisions of Article 113 of the Limitation Act and held the plaintiffs entitled to the amount only for the period of three years preceding the institution of the sui t, ::: Downloaded on - 15/04/2017 18:22:49 :::HCHP 22 whereas, the breach on behalf of the defendants was continuous and, therefore, it was Section 22 of the Limitation Act which was applicable.
.
42. Section 22 of the Limitation Act provides as under:-
"22. Continuing breaches and torts-In the case of a continuing breach of contract or in the case of a continuing tort, a fresh period of limitation begins to run at every moment of the time during which the breach or the tort, as the case may be, continues."
43. Section 22 deals with the question as to when the period of limitation commences for a suit or other proceedings in respect of various cause of action may arise from the wrongful act of the parties. It provides that in case of a continuing breach, or of a continuing tort, a fresh period of limitation begins to run at every moment of time during which the breach or the tort, as the case may be, continues.
44. The underlying principle of this Section is that the plaintiff is not bound to launch an endless succession of suits each day wrong persists. He can wait and include in the action all damages sustained by a reason of the wrong down to the date of filing of the suit. The criteria for application of Section 22 is not whether the right or its corresponding obligation is a continuing one, but whether the wrong is a continuing one.
45. Where rights and duties are created by the terms of a contract between the parties, a breach of duty is a wrong arising out of contract.
Where they are created otherwise than under a contract, the breach of a duty is a wrong independent of a contract. The duty may be either positive or negative. In the case of a positive duty, the test to find out whether a breach of duty would amount to a continuous wrong is to see whether the duty is one to continue to do the act. In other words, where the wrong commences in the omission of the legal duty to continue to do something the omission to do it is a continuous wrong. Where the duty is negative, ::: Downloaded on - 15/04/2017 18:22:49 :::HCHP 23 the test would be to see whether the act produces, a state of affairs whose continuous every moment amounts to a new injury and renders its doers .
responsible for its being continuous. If the wrongful act is of such a nature, it is a continuing wrong.
46. Thus, it can safely be concluded that the very essence of a continuing wrong is that it is an act which creates a continuing source of injury and renders the doers of the act responsible and liable for the continuance of the said injury.
47. A cause of action may be either single or continuing. When an Act is final and complete and becomes a cause of action for injury to the plaintiff, it is single, arises once and for all and the plaintiff is entitled to sue for compensation at one time. But if there is a repetition of a wrongful act or omission, it will comprise a continuing cause of action.
48. In Hole versus Chard Union reported in 1894 (1) Ch. 293 Lord Justice Lindley held:-
"What is a continuing cause of action? Speaking accurately, ' there is no such thing; but what is called a continuing cause of action is a cause of action which arises from the repetition of acts or omissions of the same kind as that for which the action was brought."
What is emphasized is that there has to be repetition of acts or omissions in respect of repeated wrongs.
49. The principles underlying continuous wrongs and recurring and successive wrongs were lucidly explained by the Hon'ble Supreme Court in Union of India and others versus Tarsem Singh (2008) 8 SCC 648 wherein it was held as under:-
"4. The principles underlying continuing wrongs and recurring/ successive wrongs have been applied to service law disputes. A "continuing wrong" refers to a single wrongful act which causes a continuing injury. "Recurring/successive wrongs" are those which ::: Downloaded on - 15/04/2017 18:22:49 :::HCHP 24 occur periodically, each wrong giving rise to a distinct and separate cause of action. This Court in Balakrishna Savalram .
Pujari Waghmare vs. Shree Dhyaneshwar Maharaj Sansthan AIR 1959 SC 798, explained the concept of continuing wrong (in the context of section 23 of Limitation Act, 1908 corresponding to section 22 of Limitation Act, 1963) : (AIR p.807, para 31) "31......It is the very essence of a continuing wrong that it is an act which creates a continuing source of injury and renders the doer of the act responsible and liable for the continuance of the said injury. If the wrongful act causes an injury which is complete, there is no continuing wrong r even though the damage resulting from the act may continue. If, however, a wrongful act is of such a character that the injury caused by it itself continues, then the act constitutes a continuing wrong. In this connection, it is necessary to draw a distinction between the injury caused by the wrongful act and what may be described as the effect of the said injury."
5. In M. R. Gupta vs. Union of India (1995) 5 SCC 628, the appellant approached the High Court in 1989 with a grievance in regard to his initial pay fixation with effect from 1.8.1978. The claim was rejected as it was raised after 11 years. This Court applied the principles of continuing wrong and recurring wrongs and reversed the decision. This Court held: (SCC pp.629-30, para 5) "5......The appellant's grievance that his pay fixation was not in accordance with the rules, was the assertion of a continuing wrong against him which gave rise to a recurring cause of action each time he was paid a salary which was not computed in accordance with the rules. So long as the appellant is in service, a fresh cause of action arises every month when he is paid his monthly salary on the basis of a wrong computation made contrary to rules. It is no doubt true that if the appellant's claim is found correct on merits, he would be entitled to be paid according to the properly fixed pay scale in the future and the question of limitation would arise for recovery of the arrears for the ::: Downloaded on - 15/04/2017 18:22:49 :::HCHP 25 past period. In other words, the appellant's claim, if any, for recovery of arrears calculated on the basis of difference in .
the pay which has become time barred would not be recoverable, but he would be entitled to proper fixation of his pay in accordance with rules and to cessation of a continuing wrong if on merits his claim is justified. Similarly, any other consequential relief claimed by him, such as, promotion etc., would also be subject to the defence of laches etc. to disentitle him to those reliefs. The pay fixation can be made only on the basis of the situation existing on 1.8.1978 without taking into account any other consequential relief which may be barred by his laches and the bar of limitation. It is to this limited extent of proper pay fixation, the application cannot be treated as time barred........."
6. In Shiv Dass vs. Union of India (2007) 9 SCC 274, this Court held: ( SCC p.277, paras 8 & 10) "8......The High Court does not ordinarily permit a belated resort to the extraordinary remedy because it is likely to cause confusion and public inconvenience and bring in its train new injustices, and if writ jurisdiction is exercised after unreasonable delay, it may have the effect of inflicting not only hardship and inconvenience but also injustice on third parties. It was pointed out that when writ jurisdiction is invoked, unexplained delay coupled with the creation of third party rights in the meantime is an important factor which also weighs with the High Court in deciding whether or not to exercise such jurisdiction.
* * *
10. In the case of pension the cause of action actually continues from month to month. That, however, cannot be a ground to overlook delay in filing the petition.......If petition is filed beyond a reasonable period say three years normally the Court would reject the same or restrict the relief which could be granted to a reasonable period of about three years."
::: Downloaded on - 15/04/2017 18:22:49 :::HCHP 267. To summarise, normally, a belated service related claim will be rejected on the ground of delay and laches (where remedy is .
sought by filing a writ petition) or limitation (where remedy is sought by an application to the Administrative Tribunal). One of the exceptions to the said rule is cases relating to a continuing wrong. Where a service related claim is based on a continuing wrong, relief can be granted even if there is a long delay in seeking remedy, with reference to the date on which the continuing wrong commenced, if such continuing wrong creates a continuing source of injury. But there is an exception to the exception. If the grievance is in respect of any order or administrative decision which related to or affected several others also, and if the re-opening of the issue would affect the settled rights of third parties, then the claim will not be entertained. For example, if the issue relates to payment or re-fixation of pay or pension, relief may be granted in spite of delay as it does not affect the rights of third parties. But if the claim involved issues relating to seniority or promotion etc., affecting others, delay would render the claim stale and doctrine of laches/limitation will be applied. In so far as the consequential relief of recovery of arrears for a past period, the principles relating to recurring/successive wrongs will apply. As a consequence, High Courts will restrict the consequential relief relating to arrears normally to a period of three years prior to the date of filing of the writ petition."
50. The plaintiffs in Para-14 of the plaint have raised the plea of cause of action which reads thus:-
"That the cause of action arose in favour of the plaintiffs and against the defendants on various dates specially on 17.12.1994 when the agreement was executed between the plaintiffs and defendants on 8th June, 1995 when the lease and conveyance deed was executed between the plaintiffs and defendants and on various dates when the defendants acknowledged and accepted the fact that the estate had to be maintained and the common facilities were being enjoyed regularly the defendants, on 10.6.1995, 28.7.1995, 2.8.1995, 17.12.1996, 6.5.1997, 21.2.1998, 2.1.1999, 18.1.1999, 12.2.1999, 5.5.1999, 7.6.1999, 14.8.1999, 23.10.1999, 6.11.1999, 7.12.1999, 28.4.2000, ::: Downloaded on - 15/04/2017 18:22:49 :::HCHP 27 19.5.2000,24.10.2000, 23.1.2001, 26.5.2004, 6.7.2004. 10.9.2004, 20.9.2004, 22.1.2005, 8.2.2005, 4/18.6.2005 when the .
letters were addressed by the plaintiff to the defendants or by the defendants to the plaintiffs and finally on 17.9.2005 when the claim of the plaintiff was rejected by the defendants when the right to use arose on the rejection of the claim as in none of the previous communications the claim of the plaintiffs had been rejected rather the plaintiffs were assured that the claim would be accepted. The cause of action still continues to subsist in favour of the plaintiffs and against the defendants. The cause is a continuing cause with each day on which the defendants are enjoying the facilities provided by the plaintiffs without bearing the proportionate cost payable by them."
51. The learned single Judge held that since the plaintiffs' case was based on Section 70 of the Indian Contract Act, therefore, it was Article 113 of the Limitation Act which was applicable in the instant case and consequently the plaintiffs were held entitled to the maintenance charges but only for a period of three years preceding institution of the suit.
52. It is the consistent view of the various High Courts that since the obligation under Section 70 is statutory and not contractual, it would be Article 113 of the Limitation Act, 1963 (Article 120 of the Limitation Act, 1908) which would be applicable to such cases. (Refer: Upendra Krishna Mandal and another versus Naba Kishore Mandal and others AIR 1921 Calcutta 93, Nalini Ranian Guha versus Union of India (1954) 93 Calcutta Law Journal 373, Kora Lukose versus Chacko Uthuppan AIR 1957 Kerala 19 (Full Bench), State of Bihar versus Thawardas Pherumal AIR 1964 Patna 225, Keshab Kishore Narain Saraswati versus State of Bihar and another AIR 1971 Patna 99 and Union of India versus Kamal Kumar Goswami and others AIR 1974 Calcutta 231).
::: Downloaded on - 15/04/2017 18:22:49 :::HCHP 2853. Article 113 of the Limitation Act reads thus:
"_______________________________________________ .
Description of Period of Time from which
application limitation period begins to run
113. Any suit for which Three years When the right to
no period of sue accrues.
limitation is
provided elsewhere
in this Schedule."
54.
It is established on record that the defendants had impliedly admitted the liability vide their letter dated 28.07.1995 Ex.PW-1/C and thereafter vide their letter dated 03.05.1997 Ex.DX had requested the plaintiffs to send their representatives for discussion and again vide letter dated 12.02.1999 Ex.PW-1/J had informed plaintiff No.1 that the matter was being examined and they would revert to the plaintiffs in due course.
Even as late as on 20.09.2004, plaintiff No.1 was informed vide letter Ex.PW-1/X that the matter was still under consideration and as soon as any decision was taken, it would be informed accordingly. This suit was admittedly filed on 18.01.2006 i.e. within three years from the accrual of the cause of action which as was observed commences on 20.09.2004.
Thus, there was no occasion for the learned single Judge to have held that the limitation already stood expired on 07.06.1999 and, therefore, could not have been revived even vide letter dated 20.09.2004. In a case of continuous tort, as per Section 22 the cause of action for filing a suit in respect of a continuous tort would arise during which the tort continuous.
55. Now the question which remains to be determined is as to whether the plaintiffs can be held entitled to the future maintenance costs at the rate of `1,089/- per flat per month from the date of filing of this suit together with interest thereon till the date of decree. This question need ::: Downloaded on - 15/04/2017 18:22:49 :::HCHP 29 not detain us any longer in view of the fact that we have already held that the cause of action in favour of the plaintiffs is a continuing one and the .
defendants have also not disputed the rate of maintenance. That being so, the plaintiffs are, therefore, entitled to the future maintenance costs at the rate of `1,089/- per flat per month from the date of filing of the suit together with interest at the rate of 12% per annum till the date of decree.
56. In view of the aforesaid discussion, we find merit in the appeal filed by the plaintiffs being OSA No.4002 of 2013 and the same is accordingly allowed and the plaintiffs are held entitled:-
i) a decree for `26 lacs alongwith past, pendente lite and future interest @12% per annum from the date of institution of the suit;
ii) the plaintiffs are further held entitled to future maintenance costs at the rate `1,089/- per flat per mo nth from the date of institution of the suit i.e.18.01.2006 together with interest @ 12% per annum.
This, however, shall be subject to the plaintiffs paying court fee on this amount within a period of eight weeks from today. The appeal filed by the defendants being OSA No.2 of 2014 alongwith Cross Objections No.19 of 2014 is ordered to be dismissed. The judgment and decree passed by the learned single Judge is modified to the aforesaid extent. Parties are left to bear their own costs.
(Mansoor Ahmad Mir), Chief Justice.
( Tarlok Singh Chauhan), June 17, 2015. Judge.
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