Supreme Court on 20th August in Goa State Cooperative Bank Ltd v Krishna Nath A. (Dead) held that no person can suffer from the act of court or gain unfair advantage due to interim orders; while deciding the final order, effect of such stays should be neutralized. “The Court should never permit a litigant to perpetuate illegality by abusing the legal process. It is the bounden duty of the court to ensure that dishonesty and any attempt to abuse the legal process must be effectively curbed and the court must ensure that there is no wrongful, unauthorised or unjust gain for anyone by the abuse of process of the court. No one should be allowed to use the judicial process for earning undeserved gains or unjust profits.”- the court observed.
The bench of Justices Arun Mishra, S. Abdul Nazeer and MR Shah reiterated the common law principle of restitution which is a remedy against unjust enrichment or unjust benefit.
Court was answering the question whether under the provisions of Section 109 of the Maharashtra Cooperative Societies Act, 1960 (hereinafter referred to as ‘the Act’) on expiry of the period fixed for liquidation, the proceedings for recovery of dues instituted/pending as against the members, shall stand closed.
Further Court said, “The court cannot be used as a tool by a litigant to perpetuate illegality. A person who is on the right side of the law, should not have a feeling that in case he is dragged in litigation, and wins, he would turn out to be a loser and wrongdoer as a real gainer, after 20 or 30 years. Thus, the members who have obtained stay in appeal or on recovery proceedings or the case is pending, cannot take advantage of the fact that the period fixed for Liquidator under the Act is over.”
Court said that a party must disgorge the advantage gained due to delay, in case lis is lost.
Court ordered that “it is open to the bank to continue with the recovery proceedings and make recoveries from the defaulting members. Merely on the liquidation of Society, or the factum that the period fixed for liquidation is over, liability of the members for the loans cannot be said to have been wiped off.”
–India Legal Bureau