Those who thumb through the 100-odd pages of cases listed in the Supreme Court every day will often find titles like this recent one: Khadervali Saheb (dead) Versus Gudu Saheb (dead). The original litigants have died and their legal representatives have inherited the civil suit. This is because civil litigation often does not end with one generation.
The Supreme Court dealt with such heartbreaking stories in a judgment last fortnight and laid down eight-point guidelines to speed up civil litigation. The court is ever hopeful of the government and the legal profession heeding its advice. Cynics would call it triumph of hope over experience.
The occasion to discuss the delays caused by litigants was the way an industrial unit succeeded in delaying the execution of an order against it for more than 15 years. In its judgment, Indian Council for Enviro-Legal Action vs Union of India, the court said: “This is a classic example how by abuse of process of law even the final judgment of the apex court can be circumvented for more than a decade and a half.” The court had ordered Hindustan Agro Chemicals Ltd in Rajasthan to pay Rs 37 crore to restore the environmental damage it had done to Bichhri village in Udaipur district. That was in 1997. But the “litigation has been deliberately kept alive by filing one interlocutory application or the other to avoid compliance,” the court said, which enhanced the amount to Rs 200 crore.
In the elaborate judgment running into 160 pages, it discussed the principles of polluter pays, unjust enrichment, restitution and imposition of compound interest. The “polluter pays” rule was evolved by the court in the nineties to make industries pay for the damage they cause to ecology, causing distress to the people where the units are located. This principle, rarely used, was invoked against the chemical company.
Since the payment was not made, the government could not utilise the money for taking remedial measures. By not complying with the order, the company was able to retain the money and enjoyed the fruits of its non-compliance. The court, therefore, invoked the principle of “unjust enrichment”.
When there is unjust enrichment, the guilty party has a duty of restitution. Both are inter-linked. Restitution in law means not only restoration of the earlier condition, but includes even indemnification and reparation of loss or injury caused to another. If restitution is not ordered, non-compliance will be encouraged. Therefore, the erring party should be forced to “disgorge all the benefits” it had derived.
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The law as it stands now does not have the potency to tweak the wrongdoer. Section 34 of the Civil Procedure Code provides for the imposition of simple interest, not compound interest, on the decreed amount. The court called for law reforms on this point, since this difference “prompts much of our commercial litigation because the debtor feels – calculates and assesses – that to cause litigation and then to contest with obstructions and delays will be beneficial because the court is empowered to allow only simple interest.” The court must use its inherent powers and the principle of equity to order compound interest as part of restitution. Otherwise there can never be restitution, the judgment said. It gave several examples in which the court had in fact ordered restitution at heavy cost to the offender.
Apart from compound interest, the court has sometimes imposed interest on interest as in the case, Alok Shanker vs Union of India (2007). In this case, the Supreme Court ordered payment of interest on interest at the rate of 12 per cent. This is because the government had unjustly delayed refund of instalments paid by an individual.
Another factor that should be taken into account, according to the court, is the inflationary trends. Imposition of compound interest takes care of inflation to some extent but the courts are handicapped because the laws provide for only simple interest. One more way to combat delays and abuse of legal process is to impose “punitive costs” in cases in which there was an attempt to deliberately delay the proceedings.
“You have only to engage professionals to prolong the litigation so as to deprive the rights of a person and enjoy the fruits of illegalities,” stated the Delhi High Court in the case Padmavati vs Harijan Sevak Sangh (2008) and it was approvingly quoted by the Supreme Court.
The court has come up with guidelines to combat delays and abuse of process of court, but again their implementation depends on the will of the legal profession. Well-meaning rules of procedure, not backed by penal force, are not likely to change century-old habits. Guidelines like “litigation should not be permitted to turn into a fruitful industry” and “no litigant can derive benefit from the mere pendency of a case” are aspirational but not functional.