What do you understand by restitution? Under what circumstances can the court order restitution? Can an order passed by the Court on an application for restitution be appealable?

Question: What do you understand by restitution? Under what circumstances can the court order restitution? Can an order passed by the Court on an application for restitution be appealable?

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Answer

The word restitution in this section means restoring to a party, on the variation or reversal of a decree, what has been lost to him in the execution of the decree or directly in consequence of that decree, though not through proceedings under it.

The doctrine of restitution is that on the reversal of a judgment the law raises an obligation on the party to the record, who received the benefit of the erroneous judgment, to make restitution to the other party for what he had lost. It is the duty of the Court to enforce that obligation unless it is shown that restitution would be clearly contrary to the interests of justice.

Under Section 144 of the CPC, the word “restitution” means restoring to a party, on the variation or reversal of a decree, what has been lost to him in the execution of the decree or directly in consequence of that decree, though not through proceedings under it. The concept of restitution is founded on the idea that when a decree is reversed, the law imposes an obligation on the party who received an unjust benefit of the erroneous decree to restitute the other party for what the other party has lost during the period the erroneous decree was in operation.

Therefore, the Court while granting restitution is required to restore the parties as far as possible to the same position as they were in at the time when the Court by its erroneous action displaced them. The concept of restitution is a common law principle and it is a remedy against unjust enrichment or unjust benefit. A restitution order can be passed only if one party has unjustly enriched.

The Supreme Court in South Eastern Coalfields Ltd v. State of MP, AIR 2003 SC 4482 (4491) provided the meaning of restitution. According to the apex court,

the word “restitution” in its etymological sense means restoring to a party the modification, variation, or reversal of a decree or order, what has been lost to him in the execution of the decree, or order of the Court, or in direct consequence of a decree or order.

This section applies only when the property was lost in the execution of the decree or directly in consequence of that decree. It necessarily carries with it the right to restitution of all that has been done under the erroneous decree. As held by the Hon’ble Supreme Court in Binayak Swami v. Ramesh C Panigrahni, AIR 1966 SC 948, the court in making restitution is bound to restore the parties so far as they can be restored, to the same position they were in, at the time when the Court by its erroneous action had displaced them from.

Circumstances under which the Court can order restitution

In order to apply this section, the following conditions must be fulfilled:

• The restitution sought must be in respect of a decree which had been varied or reversed or set aside or modified in any suit instituted for that purpose. Such variation or reversal must be by a Court of competent jurisdiction. Otherwise, there would not be a legal variation or reversal. This section applies only where a decree is varied or reversed, and it does not apply where an order is varied or reversed. When an order is varied or reversed, the Court may order restitution under its inherent powers on the basis of this section.
• The party applying for restitution must be entitled to a benefit under the reversing decree.
• The relief claimed must be consequential on the reversal or variation of the decree.

In case the above conditions are fulfilled, the Court is bound to pass an order for restitution.

Can an order passed by the Court on an application for restitution be appealable

According to Mulla, the determination of a question under Section 144 is a decree, as expressly provided under Section 2(2), and is appealable as such. However, various High Courts are of different opinions as Allahabad, Kerala, Lahore, Patna, and Punjab HCs in various cases have held that an order of restitution made under Section 151 is not appealable.

The reason for their decision being contrary to Mulla’s opinion is observed as :

A right of appeal should be conferred by a statute or by some authority equivalent to a statute and does not exist as an inherent right. This proposition is well established by the decisions of the highest tribunal which followed the principle recognized under decisions in England vide Minakshi v. Subramamia and Rangoon Botatoung Co. Ltd. v. the Collector of Rangoon.

As observed in Hansraj Gupta v. Official Liquidators of Dehradun (1933) 35 BOMLR 319:

Under the Code, the right of appeal as provided by Section 96 from every decree passed by any Court exercising original jurisdiction. Section 104 and Order 43, C.P.C. provide appeals from orders. Section 2(2) defines a “decree” as including an order rejecting a plaint, orders under Section 47, C.P.C., and orders under Section 144, C.P.C.

The first part of the definition is confined to a conclusive determination by a court of the rights of the parties with regard to all or any of the matters in controversy in the suit. It follows from this definition that a decree may be a conclusive determination of the rights of parties with regard to matters in controversy in a suit; it may be an order rejecting a plaint or an order falling under Section 47 or Section 144 C. P.C.

It excludes from its purview appealable orders and also an order of dismissal for default. Therefore to confer a right of appeal, adjudication must be either a “decree” in the sense defined by the Code or an “order” that falls under Section 104 or Order 43 CPC. As an order for refund or restitution under Section 151 CPC. is not order within Section 144 and is not otherwise included either in the definition of the decree or the appealable orders enumerated in Section 104 and Order 43 there is no right of appeal against such an order.

An application not being ordered in a suit would not be a decree; a suit should be instituted by a plaint and not by an application. So, even if the order determines conclusively the matters in controversy between the parties, as it is not an order passed in a suit, it won’t be a decree within the meaning of the first part of the definition of the decree.

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