GOA STATE COOPERATIVE BANK LTD. versus KRISHNA NATH A. (DEAD) THROUGH LRS. AND OTHERS on 20 August 2019

[2019] 10 S.C.R. 721

GOA STATE COOPERATIVE BANK LTD.

v.

KRISHNA NATH A. (DEAD) THROUGH LRS. AND OTHERS

(Civil Appeal No.10596 of 2010)

AUGUST 20, 2019

[ARUN MISHRA, S. ABDUL NAZEER AND

M. R. SHAH, JJ.]

Maharashtra Co-operative Societies Act, 1960: s. 109 –Termination of liquidation proceedings – Expiry of the period fixedfor liquidation – Effect of, on the proceedings for recovery of duesinstituted/pending as against the members – Held: Concept ofrestitution is a remedy against unjust enrichment or unjust benefit –When there is stay of proceedings by court, no person can be madeto suffer for no fault on his part and a person who has liability butfor the interim stay, cannot be permitted to reap the advantages onthe basis of interim orders of the court – Thus, the members whohave obtained stay in appeal or on recovery proceedings or thecase is pending, cannot take advantage of the fact that the periodfixed for Liquidator under the Act is over – Once a report has beensubmitted, the Registrar has to take action in terms of the reportand in such circumstances when the proceedings for recovery arepending against the members and the Society has taken loan fromthe banks for its member, the actual money has to go to the creditor-bank – In such cases it would be appropriate for the Registrar tosend notice of the proceedings to Banks – On facts, bank itself is aprime lender cum liquidator – Proceedings cannot come to the end– Thus, it is open to the bank to continue with the recoveryproceedings and make recoveries from the defaulting members –Merely on the liquidation of Society, or the factum that the periodfixed for liquidation is over, liability of the members for the loanscannot be said to have been wiped off.

Allowing the appeal, the Court

HELD: 1.1 The termination of the winding up under section109 of the Maharashtra Co–operative Societies Act, 1960, cannotbe strictly applied so as to defeat the very purpose of the

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Alegislative intent of recovery of amount. The recovery of publicmoney from defaulting members is absolutely necessary failingwhich huge financial loss would be caused to the appellant–bank.The interim stay granted by the tribunal cannot come to theprejudice of the bank. Thus, the provisions of section 109 haveto be construed in such a fashion so as to enable continuance ofBthe proceedings for recovery. As the interim order of the courtcannot work to the prejudice of any of the parties, the provisionof section 109 of the Act should be construed in a manner that itis not used to interdict recovery from the defaulting members.[Para 15, 16] [731-E-G]

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1.2 It is apparent from the facts of the instant case that thewinding up of the Society has been ordered and liquidator hasbeen appointed as the Society has utterly failed to achieve itsavowed objectives in disbursement of loans to proper personsand in its recovery. No doubt about it that the liquidation of theDSociety has come to an end after a particular period of time asfixed under section 109. However, on lapse of time as fixed undersub–section (1) of section 109 of the Act, proceedings have to beterminated by the Registrar on receipt of final report from theliquidator as ordered under section 109(2). However, at the sametime, the Registrar has power to extend the period of 6 yearsEfixed under section 109(1), not exceeding one year at a time andfour years in the aggregate, and maximum for 10 years. In casetime is not extended, the winding up comes to an end on theexpiry of 6 years or at the end of the extended period. The totalperiod can be 10 years. The second proviso to section 109 makesFit clear that if the Registrar comes to a conclusion that the workof liquidation could not be completed by the liquidator due to thereasons beyond his control, he shall call upon the liquidator tosubmit his report. After getting the report, if the Registrar issatisfied that the realisation of assets, properties, sale of propertiesstill remains to be realised, he shall direct the liquidator toGcomplete the entire work and carry out the activities only for thepurposes of winding up and submit his report within such periodnot exceeding one year reckoned from the date of receipt of thereport from the liquidator. [Para 17] [731-H; 732-A-D]

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1.3 Section 109 (2) of the Act contains a non-obstante clausewhich empowers the Registrar to terminate the liquidationproceedings on receipt of the final report from the liquidator.The liquidator shall state in the report that the liquidationproceedings of the society have been closed, and how the windingup has been conducted and the property and the claims of thesociety have been disposed of and shall include a statementshowing a summary of the account of the winding up includingthe cost of liquidation, the amount, if any, standing to the creditof the Society in liquidation, after paying off its ‘liabilities’ includingthe share or interest of members and suggest how the surplusshould be utilised. [Para 18] [732-E-F]

1.4 It is apparent that on the termination of the liquidationproceedings, liability of the members for the debts taken by themdoes not come to an end. There is no such provision in the Actproviding once winding up period is over, the liability of themembers for loans obtained by them which is in their hands, andfor which recovery proceedings are pending shall come to anend. No automatic termination of recovery proceedings againstthe members is contemplated. On the other hand, on completionof the period fixed to liquidate the society, final report has to besubmitted as to the amount standing to the credit of the societyin liquidation after paying off its liabilities including the share orinterest of members. Thus, even in the case of liquidation theaccountability remains towards surplus and liabilities do not cometo an end. Even if the period fixed for liquidation of society isover, that does not terminate the proceedings for recovery whichhave been initiated and appeals are pending. [Para 20] [732-H;733-A-C]

1.5 The concept of restitution is a common law principleand it is a remedy against unjust enrichment or unjust benefit. Itis a settled law that when there is stay of proceedings by court,no person can be made to suffer for no fault on his part and aperson who has liability but for the interim stay, cannot bepermitted to reap the advantages on the basis of interim ordersof the court. The court cannot be used as a tool by a litigant toperpetuate 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, A

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Aand wins, he would turn out to be a loser and wrong–doer as areal gainer, after 20 or 30 years. Thus, the members who haveobtained stay in appeal or on recovery proceedings or the case ispending, cannot take advantage of the fact that the period fixedfor Liquidator under the Act is over. [Para 23] [734-C-D]

BAmarjeet Singh v. Devi Ratan (2010) 1 SCC 417 : [2009]15 SCR 1010 ; South Eastern Coalfields Ltd. v. Stateof M.P. (2003) 8 SCC 648 : [2003] 4 Suppl. SCR 651– referred to.

1.6 Once a report has been submitted, the Registrar has toCtake action in terms of the report and in such circumstances whenthe proceedings for recovery are pending against the membersand the Society has taken loan from the banks for its member,the actual money has to go to the creditor i.e., to the bank who isgoing to be benefitted by recovery of public money in the handsof members. In such cases it would be appropriate for theDRegistrar to send notice of the proceedings to a person who is tobe benefitted from the recovery. In the instant case, the bankitself is a prime lender cum liquidator. The proceedings cannotcome to the end. Thus, it is open to the bank to continue with therecovery proceedings and make recoveries from the defaultingEmembers. Merely on the liquidation of Society, or the factum thatthe period fixed for liquidation is over, liability of the membersfor the loans cannot be said to have been wiped off. Thedisbursement of loan in an arbitrary manner and failure to recoverwas the very fulcrum on the basis of which winding up of theSociety was ordered. [Para 24] [734-E-G]F

1.7 The decision of the High Court being to the contrary, isset aside. Though the Liquidator cannot continue once theproceedings are over. Notice in such cases should be issued bythe Registrar to the creditors and to persons for whose benefitrecovery is to be made, to continue the pending proceedings inGthe instrumentality of court/tribunals/recovery officers etc.Appellant Bank can continue the pending proceedings. [Para 25][735-A-B]

GOA STATE COOPERATIVE BANK LTD. v. KRISHNA NATHA. (D) THR. LRS.

Case Law Reference

[2009] 15 SCR 1010referred to.Para 21

[2003] 4 Suppl. SCR 651referred to.Para 22

CIVIL APPELLATE JURISDICTION : Civil Appeal No. 10596of 2010.

From the Judgment and Order dated 29.11.2006 of the High Courtof Bombay at Goa in Writ Petition No. 358 of 2001.

Arvind Sharma, Aniteja Sharma, Saurabh Mishra, Abhishek Singh,Arun Verma, Onkar Singh, Advs. for the Appellant.

Ms. Shobha Gupta, Bony Mehra, Ms. A. Subhashini, Advs. forthe Respondents.

The Judgment of the Court was delivered by ARUN MISHRA, J.

1. The question involved in the present matter is whether underthe provisions of Section 109 of the Maharashtra Co-operative SocietiesAct, 1960 (hereinafter referred to as ‘the Act’) on expiry of the periodfixed for liquidation, the proceedings for recovery of dues instituted/pending as against the members, shall stand closed.

2. Goa, Daman and Diu Cooperative Fisheries Federation Limited(hereinafter referred to as ‘the Society’) was registered under the Actas it is applicable to Goa. The main objective of the Society was topromote fisheries and improve socio-economic condition of the fishermenby providing necessary financial assistance, in order to enable them toprocure mechanized fishing boats/trawlers. During the period from 1974to 1980, the Society advanced loans to its members to the extent ofRs.316 lacs to purchase engines/hull, winches, nets, etc. by raising loanfrom the Goa State Cooperative Bank Limited.

3. While granting loan to its members, serious irregularities werecommitted by the Board of Directors of the Society. Due to which,Registrar of Cooperative Societies filed Misfeasance Case No.4/1/80.

4. On the basis of enquiry conducted under Section 83(1) of theAct and in view of the report dated 1.8.1980, the Registrar of CooperativeSocieties, Goa passed an interim order on 23.8.1985 under Section102(1)(a) of the Act for winding up of the Society. The Registrar of the A

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ACooperative Societies confirmed the order, in exercise of power underSection 102(2), on 24.1.1986 and appointed Additional Collector of Goaas Liquidator, who continued till 9.12.1991. As liquidation proceedingswere not completed, the Registrar on 10.12.1991 appointed Mr. B.N.Pathan, Assistant Registrar of the Cooperative Societies as Liquidator,who continued till 28.2.1992. Yet another Liquidator was appointed byBthe Registrar on 21.2.1992, who continued till 15.10.1995. The Registrarvide order dated 16.10.1995 appointed Goa State Cooperative Bank asLiquidator in order to ensure speedy recovery of loans from the membersof the Society.

5. The Bank in the capacity of Liquidator filed 156 recovery casesCagainst the defaulting members of the Society, to whom the loans wereadvanced. The amount of outstanding was reduced to Rs.56 lacs towardsprincipal and Rs.154 lacs towards interest. Out of 156 cases filed againstthe defaulting members, 99 appeals were preferred to the CooperativeTribunal, which were pending adjudication. The recovery could not beDcompleted in view of the pendency of the appeals, interim stay grantedby courts etc.

6. In the year 2001, one of the defaulting members of the Societyfiled Writ Petition No.358 of 2001 in the High Court of Bombay at Goa,prayer was made to declare that the winding up proceedings with respectEto the Society be deemed to have been terminated with retrospectiveeffect from 24.1.1993 and for an order restraining respondents continuingwith the winding up/liquidation proceedings in respect of the Society.

7. The High Court allowed the writ petition vide judgment andorder dated 29.11.2006, which has resulted in heavy financial losses toFthe Bank as the cases pending before the Adjudicating Authority willcome to standstill. The High Court vide impugned judgment and orderdated 29.11.2006 held that as per Section 109 of the Act, the winding upproceedings have to be closed as soon as practicable within six yearsfrom the date the Liquidator takes control of all the property, unless theperiod is extended by the Registrar under Section 109. Under SectionG109(1) of the Act, the Registrar cannot extend the period more than 1year at a time and 4 years in the aggregate and after the expiry of threeyears from the date on which the Liquidator took control, it will be deemedthat liquidation proceedings have been terminated and therefore, there isno choice left with the Registrar, but to obtain a final report from the H

Liquidator. The High Court has directed the Registrar to examine thereport submitted by the Bank and take appropriate steps according tolaw. The High Court has held that Registrar has to close the winding upproceedings as a period of 7 years has lapsed and there is no provisionunder the law to continue with the winding up proceedings. Therefore,the writ petition was allowed and it has been declared that the windingup proceedings in respect of the Society are deemed to have beenterminated with retrospective effect from 24.1.1993. The Registrar andthe Liquidator have been restrained from continuing with the windingup/liquidation proceedings in respect of the Society.

8. Mr. Arvind Sharma, learned counsel appearing on behalf ofappellant-Bank has submitted that the High Court has erred in law inallowing the writ petition even after lapse of the period fixed under Section109 of the Act, the proceedings for recovery of loan amount frommembers have to be continued. Ms. Shobha Gupta, learned counselappearing on behalf of LRs. of respondent no.1, has submitted that nocase for interference with the impugned judgment and order is made outand has taken us to the scheme of the Act to take-home the submission.

9. Where we consider the provisions in the Act, it is apparent thatunder Section 102 of the Act, the Registrar is empowered to pass aninterim order directing winding up. The same shall be communicated tothe Society and thereupon Registrar may pass final order, vacating orconfirming the interim order. When Registrar has passed interim orderor final order under Section 102, the Registrar is empowered under Section103 to appoint a person as Liquidator and thereupon as provided underSection 103(2), the society shall hand over the custody and control of allthe property, effects and actionable claims including books, records andother documents. After final order is passed confirming the interimorder of winding up, the officers of the society shall vacate their officesas provided in Section 103(3). As per the provisions of Section 103(4),the Liquidator, subject to the general control of the Registrar, exerciseall or any of the powers mentioned in Section 105 of the Act and theRegistrar is empowered to remove the Liquidator and appoint anotherwithout assigning any reason. It is provided under Section 103(5) thatthe assets of the society shall vest in the Liquidator. Section 103(6)makes a provision that in case interim order is vacated, the personappointed as Liquidator shall hand over the property to the officers who A

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Ahad delivered the same to him and the officers of the society shall bebound by the action taken by the Liquidator.

10. Under Section 105, the Liquidator appointed under Section103 shall have power subject to supervision and control of the Registrarto institute and defend legal proceedings, civil or criminal on behalf ofBthe society; carry on business of the society; to sell the immovable andmovable property and actionable claims of the society by public auctionor private contract, with any person or body corporate, or sell the samein parcels. Section 106 deals with the effect of order of winding up.The order shall be effective and operative in favour of all the creditorsand the “contributories” of the society. When a winding up order becomesCeffective, the Liquidator shall proceed to realise the assets of the societyby sale or otherwise, and no fresh dispute shall be commenced or, ifpending at the date of the winding up order, shall be proceeded with,against the society, except by leave of the Registrar on such terms asmay be imposed by the Registrar. The Registrar, may on his own motion,Dhowever, entertain or dispose of any dispute by or against the society.The provisions contained in Section 107 bars the civil court to takecognizance of any matter connected with the winding up or dissolutionof a society under the Act. Under Section 108, the Liquidator’s accountscan be audited and Liquidator has to furnish the Registrar such vouchersand information as may be required. The Liquidator shall cause aEsummary of audited accounts to be prepared and send a copy of suchsummary to every contributory as provided under Section 108(2).

11. Section 109 provides for termination of liquidation proceedings.The provisions contained in Section 109 reads as under:

F“109. Termination of liquidation proceedings

(1) The winding up proceedings of a society shall be closed assoon as practicable within six years from the date the Liquidatortakes over the custody or control of all the property, effects andactionable claims to which the society is or appears to be entitledGand of all books, records and other documents pertaining to thebusiness of the society, under sub-section (2) of section 103, unlessthe period is extended by the Registrar:

Provided that, the Registrar shall not grant any extension for aperiod exceeding one year at a time and four years in the aggregate, GOA STATE COOPERATIVE BANK LTD. v. KRISHNA NATHA. (D) THR. LRS. [ARUN MISHRA, J.]

and shall, immediately after the expiry of ten years from the dateaforesaid, deem that the liquidation proceedings have beenterminated, and pass an order terminating the liquidationproceedings.

Provided further that, if, due to termination of liquidationproceedings at the end of ten years, the Registrar comes to aconclusion that, the work of liquidation under Section 105 couldnot be completed by the liquidator due to the reasons beyond hiscontrol, he shall call upon the liquidator to submit the report. Aftergetting the report, if the Registrar is satisfied that the realisationof assets, properties, sale of properties still remained to be realised,he shall direct the liquidator to complete the entire work and carryout the activities only for the purposes of winding up and submithis report within such period not exceeding one year reckonedfrom the date of receipt of report from the liquidator.

Explanation.— In the case of a society which is under liquidationat the commencement of the Maharashtra Co-operative Societies(Second Amendment) Act, 1985 the period of six years shall bedeemed to have commenced from the date on which the Liquidatortook over the custody or control as aforesaid.

(2) Notwithstanding anything contained in the foregoing sub-section,the Registrar shall terminate the liquidation proceedings on receiptof the final report from the Liquidator. The final report of’ theLiquidator shall state that the liquidation proceedings of the societyhave been closed, and how the winding up has been conductedand the property of and the claims of the society have beendisposed of, and shall include a statement showing a summary ofthe account of the winding up including the cost of 1iquidation, theamount (if any), standing to the credit of the society in liquidation,after paying of its liabilities including the share or interest ofmembers and suggest how the surplus should be utilised.

(3) The Registrar, on receipt of the final report from the Liquidator,shall direct the Liquidator to convene a general meeting of themembers of the society for recording his final report.”

It is provided in sub-Section (1) of Section 109 that proceedingsfor liquidation have to be completed within 6 years. The Registrar is A

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Aempowered to grant extension for a period not exceeding 1 years at atime and 4 years in the aggregate and after expiry of 10 years, theliquidation proceedings shall be deemed to have been terminated. Sub-section (1) of Section 109 makes it clear that if due to termination ofliquidation proceedings at the end of 10 years, the Registrar comes to aconclusion that the work of liquidation under Section 105 could not beBcompleted by the liquidator, due to reasons beyond his control, he shallcall upon the liquidator to submit the report. After getting the report, ifthe Registrar is satisfied that the realisation of assets, properties andsale of properties still remained to be achieved, he shall direct the liquidatorto complete the entire work and carry out the activities only for theCpurposes of winding up and submit his report within such period notexceeding one year.

12. Section 109(2) of the Act contains non-obstante clause thatthe Registrar has to terminate liquidation proceedings on receipt of thefinal report of the Liquidator. The final report shall state closure of theDliquidation proceedings and how the winding up has been conducted.The final report shall also contain, inter alia, summary of account of thewinding up including the cost of liquidation, the amount (if any) standingto the credit of the society in liquidation ‘after paying off its liability’including the share or interest of the members and suggest how thesurplus should be utilised. The liability of Society has also to beEconsidered.

13. It is provided under Section 109(3) that Registrar on receiptof the final report of the Liquidator, shall convene a general meeting ofthe members of the society for recording his final report. Section 110 ofthe Act provides for the disposal of the surplus assets as shown in theFfinal report of the Liquidator, which may be divided by the Registrarwith the previous sanction of the State Government, amongst its membersin such manner as may be prescribed for the purposes. Where thesurplus is not so divided, surplus shall vest in the Registrar.

14. It is apparent from the facts of the case that the wound-upGSociety has availed of loans from Goa State Cooperative Bank Ltd. aswell as from the Agricultural Refinance Development Corporation. From1974-75 to 1979-80, the Society has advanced total loans of Rs.323.81lakhs to 155 members. The Society failed to perform its functions. Therewas non-recovery of loans from the members resulting in overdues, H

failure to collect the margin money from the loanees prior to release ofthe loans. There were irregularities in sanction of the loans resulting inbenami transactions. Loans were advanced to non-traditional fishermen.There was mismanagement in the running of the ice factory and dieseloutlet. There was failure to strengthen the affiliated primary fisheriesCooperative Society. Thus, the winding up of the cooperative societywas ordered by the Registrar of Cooperative Societies.

15. The Society and the liquidator had filed recovery cases againstall the defaulting members of the society to whom loans were advanced.The bank in total advanced Rs.250 lakhs to the society and on takingcharge by the Bank as liquidator of the said society, the bank hadoutstanding of Rs.241 lakhs as principal amount and Rs.233 lakhs towardsinterest. The arrears due to the efforts of the liquidator bank were reducedto Rs.37 lakhs towards principal and Rs.154 lakhs towards interest. It ispertinent to mention that the bank has further pointed out that out of thecases filed against the defaulting members, in 42 cases appeals hadbeen filed before the Cooperative Tribunal wherein stay orders weregranted. It is also pointed out that 80 cases were pending with the ZonalRecovery Offices, i.e., Assistant Registrar, Cooperative Society’s Salesand Recovery Officer under section 156 of the Act. Therefore, thetermination of the winding up under section 109 of the Act, cannot bestrictly applied so as to defeat the very purpose of the legislative intentof recovery of amount.

16. It is also submitted that by lapse of time under section 109(1)of the Act, recovery proceedings cannot come to an end. It is furtherpointed out that the recovery of public money from defaulting membersis absolutely necessary failing which huge financial loss would be causedto the appellant-bank. The interim stay granted by the tribunal cannotcome to the prejudice of the bank. Thus, the provisions of Section 109have to be construed in such a fashion so as to enable continuance ofthe proceedings for recovery. As the interim order of the court cannotwork to the prejudice of any of the parties, the provision of section 109of the Act should be construed in a manner that it is not used to interdictrecovery from the defaulting members.

17. It is apparent from the facts of the instant case that the windingup of the Society has been ordered and liquidator has been appointed asthe Society has utterly failed to achieve its avowed objectives in A

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Adisbursement of loans to proper persons and in its recovery. No doubtabout it that the liquidation of the Society has come to an end after aparticular period of time as fixed under section 109. However, on lapseof time as fixed under sub-section (1) of section 109 of the Act,proceedings have to be terminated by the Registrar on receipt of finalreport from the liquidator as ordered under section 109(2). However, atBthe same time, the Registrar has power to extend the period of 6 yearsfixed under section 109(1), not exceeding one year at a time and fouryears in the aggregate, and maximum for 10 years. In case time is notextended, the winding up comes to an end on the expiry of 6 years or atthe end of the extended period. The total period can be 10 years. TheCsecond proviso to section 109 makes it clear that if the Registrar comesto a conclusion that the work of liquidation could not be completed bythe liquidator due to the reasons beyond his control, he shall call upon theliquidator to submit his report. After getting the report, if the Registrar issatisfied that the realisation of assets, properties, sale of properties stillremains to be realised, he shall direct the liquidator to complete the entireDwork and carry out the activities only for the purposes of winding up andsubmit his report within such period not exceeding one year reckonedfrom the date of receipt of the report from the liquidator.

18. Section 109(2) of the Act contains a non-obstante clause whichempowers the Registrar to terminate the liquidation proceedings on receiptEof the final report from the liquidator. The liquidator shall state in thereport that the liquidation proceedings of the society have been closed,and how the winding up has been conducted and the property and theclaims of the society have been disposed of and shall include a statementshowing a summary of the account of the winding up including the costFof liquidation, the amount, if any, standing to the credit of the Society inliquidation, after paying off its ‘liabilities’ including the share or interestof members and suggest how the surplus should be utilised.

19. Section 110 of the Act deals with disposal of surplus assets.They should either be divided by the Registrar, with the previous sanctionGof the State Government, amongst its members, if they specify that sucha surplus shall be utilised for the particular purpose or may be utilised forboth the purposes.

20. It is apparent that on the termination of the liquidationproceedings, liability of the members for the debts taken by them does H

not come to an end. There is no such provision in the Act providing oncewinding up period is over, the liability of the members for loans obtainedby them which is in their hands, and for which recovery proceedings arepending shall come to an end. No automatic termination of recoveryproceedings against the members is contemplated. On the other hand,on completion of the period fixed to liquidate the society, final report hasto be submitted as to the amount standing to the credit of the society inliquidation after paying off its liabilities including the share or interest ofmembers. Thus, even in the case of liquidation the accountability remainstowards surplus and liabilities do not come to an end. Even if the periodfixed for liquidation of society is over, that does not terminate theproceedings for recovery which have been initiated and appeals arepending.

21. It is a settled law that when there is stay of proceedings bycourt, no person can be made to suffer for no fault on his part and aperson who has liability but for the interim stay, cannot be permitted toreap the advantages on the basis of interim orders of the court. InAmarjeet Singh v. Devi Ratan, (2010) 1 SCC 417, it was held that noperson can suffer from the act of court and unfair advantage gained bya party of interim order must be neutralised. The Court should neverpermit a litigant to perpetuate illegality by abusing the legal process. It isthe bounden duty of the court to ensure that dishonesty and any attemptto abuse the legal process must be effectively curbed and the court mustensure that there is no wrongful, unauthorised or unjust gain for anyoneby the abuse of process of the court. No one should be allowed to usethe judicial process for earning undeserved gains or unjust profits. Theobject and true meaning of the concept of restitution cannot be achievedunless the courts adopt a pragmatic approach in dealing with the cases.The Court observed:

“18. In Ram Krishna Verma v. State of U.P. (1992) 2 SCC 620,this Court examined the similar issue while placing reliance uponits earlier judgment in Grindlays Bank Ltd. v. ITO, (1980) 2 SCC191 and held that no person can suffer from the act of the courtand in case an interim order has been passed and the petitionertakes advantage thereof and ultimately the petition is foundto be without any merit and is dismissed, the interest of justicerequires that any undeserved or unfair advantage gained by A

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734SUPREME COURT REPORTS

[2019] 10 S.C.R.

Aa party invoking the jurisdiction of the court must beneutralised.”

(emphasis supplied)

22. The principle of restitution enjoins a duty upon the courts to docomplete justice to the party at the time of final decision, and to do awayBwith the effect of interim order in the fact situation of the case. In SouthEastern Coalfields Ltd. v. State of M.P., (2003) 8 SCC 648, it wasobserved that no party can take advantage of litigation, it has to disgorgethe advantage gained due to delay, in case lis is lost.

23. The concept of restitution is a common law principle and it isCa remedy against unjust enrichment or unjust benefit. The court cannotbe used as a tool by a litigant to perpetuate illegality. A person who is onthe right side of the law, should not have a feeling that in case he isdragged in litigation, and wins, he would turn out to be a loser and wrong-doer as a real gainer, after 20 or 30 years. Thus, the members who haveDobtained stay in appeal or on recovery proceedings or the case is pending,cannot take advantage of the fact that the period fixed for Liquidatorunder the Act is over.

24. Once a report has been submitted, the Registrar has to takeaction in terms of the report and in such circumstances when theEproceedings for recovery are pending against the members and the Societyhas taken loan from the banks for its member, the actual money has togo to the creditor i.e., to the bank who is going to be benefitted byrecovery of public money in the hands of members. In such cases itwould be appropriate for the Registrar to send notice of the proceedingsto a person who is to be benefitted from the recovery. In the instantFcase, the bank itself is a prime lender cum liquidator. The proceedingscannot come to the end. Thus, in our considered opinion, it is open to thebank to continue with the recovery proceedings and make recoveriesfrom the defaulting members. Merely on the liquidation of Society, orthe factum that the period fixed for liquidation is over, liability of theGmembers for the loans cannot be said to have been wiped off. Thedisbursement of loan in an arbitrary manner and failure to recover wasthe very fulcrum on the basis of which winding up of the Society wasordered.

GOA STATE COOPERATIVE BANK LTD. v. KRISHNA NATHA. (D) THR. LRS. [ARUN MISHRA, J.]

25. The decision of the High Court to the contrary, deserves to beAand is hereby set aside. Though the Liquidator cannot continue once theproceedings are over. Notice in such cases should be issued by theRegistrar to the creditors and to persons for whose benefit recovery isto be made, to continue the pending proceedings in the instrumentality ofcourt/tribunals/recovery officers etc. We hold that appellant Bank canBcontinue the pending proceedings. The appeal is allowed to the aforesaidextent.

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