Holding

Interest is payable as part of restitution under Section 144 CPC when a decree is varied or reversed.

Summary

The appellants received compensation for land acquired under the Land Acquisition Act, which was later enhanced and subsequently reduced on appeal. While the appeal was pending, they executed the decree and recovered the enhanced amount together with interest. The State filed an application under Section 144 of the Code of Civil Procedure seeking restitution of the excess amount along with interest. The District Judge allowed restitution of the principal but denied interest, whereas the High Court directed payment of interest. On appeal, the Supreme Court examined whether interest is payable under Section 144 when the decree is varied or reversed. It held that the doctrine of restitution under Section 144 is "consequential" and includes interest or damages to restore the parties to their original position. Consequently, the Court dismissed the appeal, upholding the High Court's order for restitution with interest.

Issues considered

Whether interest is payable to the State under Section 144 CPC when restitution of excess compensation is ordered, in the absence of an explicit direction for interest.

Legislation cited

Code of Civil Procedure, 1908s. 144
Land Acquisition Acts. 28, s. 4(1)

Subjects

RestitutionSection 144 CPCInterestLand acquisition compensationDecree reversalExcess amountAppellate jurisdiction

Judgment

A KART AR SINGH @ NARANJAN SINGH AND ORS.
v.
STATE OF PUNJAB

MARCH 21, 1995

B [K. RAMASWAMY, N. VENKATACHALA AND
S. SAGHIR AHMAD, JJ.]

Code of Civil Procedure, 1908:
1-
C S.144--Doctrine of Restitution-What is-'Consequentially~eaning
of-Obligation on the party to the suit who received the benefit of the
e"oneous decree-Restitution to the other party for what he has /osHncludes
interest thereon.

Certain lands of the appellants were acquired under S.4(1) of t'1e
D Land Acquisition Act and he was awarded a sum df Rs. 1,30,949.30. On
reference the compensation was enhanced @Rs. 300. per maria. On appeal
by the State, it was reduced to Rs. 255 per maria. Pending appeal, the
appellants executed the decree and recovered the enhanced compensation
with interest.

E. · State filed an application under s.144 CPC for restitution of the
excess amount with interest. Appellants deposited the excess amount and
the District Judge disallowed the interest payable thereon. On appeal,
High Court directed the appellants to pay interest.

F In appeal to this Court, the appellants contended that the respon-
dent was not entitled to interest since there was no direction to pay
interest.

Dismissing the appeal, this Court.

G HELD: 1.1 The owner or the person interested in the land when
recovered the compensation under the award and decree ·which was
reversed, varied or modified appeal, the court is empowered under s.144
CPC to restitute the amount to the State with interest or quantified
damages or by way of compensation. (924-G)

H 1.2 The condition precedent for restitution,.is that the decree of the
i 922
KARTARSINGHv. STATE 923

trial court must be reversed or varied in appeal or otherwise. The word A
"consequentially" lays emphasis on the obligation on the party to the suit
or proceedings who received the benefit of the erroneous decree to make
restitution to the other party for what he has lost. [924-D]

1.3 The judgment-debtor is entitled to get back not only the sum
recovered but also the interest thereon or damages or compensation for B
the period that the amount had been retained by him. The reason being
that the person who has taken the money improperly from the judgment-
debtor has to restitute to him the amount as a corollary with interest
r during the time that the money has been withheld from him. [924-F]

CIVIL APPELLATE JURISDICTION: Civil Appeal No. 4155 of
c
1995.

From the Jli.dgment and Order 5.11.85 of the Punjab and Haryana
High Court in E.F.A. No. 1374 of 1985.
D
Uma Dutta for the Appellants.

G.K. Bansal for the Respondent.
i The following Order of the Court was delivered :

Leave granted.
E

For the lands of the appellants acquired by the notification under
s.4(1) of the Land Acquisition Act, published on October 15, 1971, the
Land Acquisition Collector, in his award dated January 24, 1973, awarded
a sum of Rs. 1,30,949.30. On reference, the Addl. District Judge, by his p
award and decree dated August 27, 1975, enhanced the compensation at
the rate of Rs. 300 per marla but, on appeal by the respondent in RF.A.
No. 15/1976, it was reduced to Rs. 255 per maria. Pending appeal, the
appellants had executed and recovered the enhanced compensation with
interest on May 27, 1976. The State, therefore, filed an application under
s.144 CPC on February 28, 1983 for restitution of the excess amount with G
interest payable thereon. The appellant had deposited principal excess
amount of Rs. 57,920.26 on February 21, 1.985. The District Judge by his
order dated March 15, 1985 while upholding restitution of the excess
amount, disallowed interest payable thereon. On appeal, the High Court,
by the impugned order in Execution P.A. No. 1374/85 dated November 5, H
\_
924 SUPREME COURT REPORTS [1995] 2 S.C.R.

A 1985 direct~d the appellants to pay interest. Thus this appeal by special
leave.

Learned counsel for the appellants vehemently contended that in an
application for restitution under s.144 of the CPC, the respondent is not
entitled to the interest, since there was no direction to pay interest. We
B find no force in the contention. Admittedly, the appellants had realised the
enhanced amount of compensation with interest computed under s.28 of
the Act.

Under s.144 C.P.C., the doctrine of restitution contemplates that
C where a property was received by a decree-holder in execution of a decree
which, on appeal, either in whole or in part thereof, is subsequently
reversed or varied, the court is empowered to restore to the judgment-
debtor what has been lost to him in execution of the decree and it is the
consequence of the erroneous decree. The restitution is consequential to
D the variation or reversal of the decree or on its being modified or set aside.
The condition precedent for restitution, therefore, is that the decree of the ·
trial court must be reversed or varied in appeal or otherwise. The word
"consequentially" lays emphasis on the obligation on the party to the suit
or proceedings who received the benefit of the erroneous decree to make
restitution to the other party for what he has lost. The court, therefore, is
E bound to restore the parties, as far as they can be, to the same position
- they were at the time when the court by its erroneous action had displaced
them from it. Equally where a sum of money was recovered in execution
by a decree which was subsequently reversed or varied, the judgment-debt-
or is entitled to get back not only the sum recovered but also the interest
F thereon or damages or compensation for the period that the amount had
_been retained by him. The reason bemg that the person who has taken the
money improperly from the judgment-debtor has to restitute to him the
amount as a corollary with interest during the time that the money has been
withheld from him. The owner or the person interested in the land when
recovered the compensation under the award and decree which was
G reversed, varied or modified on appeal, the court is empowered under s.144
CPC to restitute the amount to the State with interest or quantified
damages or by way of compensation.

It is seen that the High Court had reduced the compensation from
H Rs. 300 to Rs. 255, per marla and in the meanwhile the appellants had
/
KARTAR SINGH\'. STATE 925
recovered the award amount at Rs. 300 per maria in execution with A
inte1 est. So the appellants are liable to restitute the excess amount realised
in execution of the decree of the reference court or appeal under s.54 with
interest. Granting of interest or damage or compensation is consequential
to the variation, reversal or setting aside of the enhanced compensation
under s.23(1) and competition of statutory interest under s.28 on enhanced
compensation and interest on solatium if paid as per the decree or order
B
of the Court. The State is entitled to restitute of the benefit accrued to the
owner in the original decree. Direction to restitute the amount with interest
is within the powers conferred on the court under s.144 of the Code.
~ .,-- Therefore, the High Court rightly directed the appellants to refund the
enhanced amount with interest since the appellants had the benefit of the C
money after the realisation till date of return or restitution.

The appeal is dismissed. No costs.

G.N. Appeal dismissed.

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