IMPORTANT POINT
The doctrine of restitution is applicable in these appeals as questions which are required to be determined in these appeals relate to adjustment of equity.

Headnote:Doctrine of unjust enrichment-Appellants obtained benefit under interim orders of the Court-Adjustment of equity-Whether appellants be asked to pay back the amount of commission received by them from wholesale dealers which were payable to Mysore Sales International Ltd. (MSIL)? (Yes, under doctrine of restitution)-Directions issued under Article 142 of the Constitution.
       Held : The appellants admittedly took benefit of the interim order passed by this Court in Khoday s case. They cannot, having regard to the doctrine of unjust enrichment retain the undue advantages derived by it. They must be asked to pay back the amount received either directly or indirectly on account of MSIL The doctrine of restitution must, thus, be applied in these appeals. We are, therefore, of the opinion that with a view to do complete justice between the parties and having regard to the order passed by this Court in Khoday Distilleries s case. the following directions should be issued :
        (1) The appellants would have no liability to pay any commission to MSIL prior to the appointed date, namely, 1-7-1990 and after 13-2-1997;
        (2) The appellants shall produce or cause to be produced all books of accounts for the period 1.7.1990 to 13.2.1997 without eight weeks from date before the authorised agent of MSIL so as to enable it to determine the amount due and payable to MSIL;
        (3) Determination of such amount shall be confined only to those transactions wherein the appellants had charged commission on account of MSIL or indirectly realized the same although not shown in the bills issued therefor;
        (4) In the event of an unlikely dispute as regards the quantum of the amount of commission, the State of Karnataka if called upon by any of the parties will appoint an authorised officer not below the rank of Principal Secretary to the Government of Karnataka who shall then determine the same upon giving opportunities to the parties of being heard and whose decision shall be final and binding between the parties and shall not be open to judicial review;
        (5) However, in the event, MSIL does not want to take recourse to made in clause (4) above, it may take recourse to such proceedings for recovery of its dues in accordance with law;
        (6) MSIL shall be entitled to enforce its claims, if any, against the appellants in accordance with law;
        (7) On the amount found to be due and owing to MSIL by any of the appellants the same shall be paid with interest at the rate of 18% per annum shall be leviable from the date of realisation till 12-2-1997 and thereafter at the rate of 9% per annum, within twelve weeks from the date of final determination.
       These appeals are disposed of in the above terms. Parties shall bear their own costs of these proceedings. In view of the aforesaid, no further orders are required to be passed in Contempt Petitions. Notice issued to the respondents in Contempt Petitions is hereby discharged. The Contempt Petitions shall stand disposed of. (Paras 30, 31, 32 and 33)

ORDER

The appellants in these appeals have questioned a judgment and order dated 13-11-1989 passed by the High Court of Karnataka in a batch of writ petitions challenging the validity of two notifications issued on 13-9-1989, the effect whereof was to create a monopoly in favour of Mysore Sales International Ltd. (MSIL), a public sector undertaking, in terms whereof the wholesale distribution of liquor and brewery was to be dealt with exclusively by it.

2. According to the appellants in terms of licences granted in their favour under the Karnataka Excise Act, 1965, in Form No.2, they were free to sell their product either to the Distributors possessing CL II licences or directly to wholesellers possessing CL I licences who in turn would sell to the retailers, namely, CL 2 licences.

3. On 13.9.1989 the Excise Rules framed under the Karnataka Excise Act were amended, in terms whereof the State was to appoint an Agency as its sole Distributor as a result whereof manufacturers of liquor etc. were required to sell their products to it only, enabling the latter to sell the same to the wholesellers who in turn could sell the same to the retailers.

4. It is not in dispute that the said amended rules were to come into force with effect from 1.7.1990 i.e. from the next excise year.

5. The said writ petitions were dismissed by the High Court by reason of a judgment and order dated 13.11.1989, inter alia, holding:

"(v) Licences granted under the amended Rules, create a privilege under the Act, that privilege in no way gets the protection of Article 19(1)(g) of the Constitution. Since the existing licences are saved during the current year (i.e. during their current period) no further question of hardship and irrationality in enforcing the Rules, arises."

6. On the said date, the State appointed MSIL as the Sole Distributor in terms of Rule 11(b) of the Karnataka Excise (Sale of Indian and Foreign Liquors) Rules, 1968. On that date itself, a licence was granted in favour of MSIL by the State of Karnataka in the prescribed form. One of the conditions of the said licence was that the terms and conditions mentioned in the letter dated 13.11.1989 shall form part of the licence which was an inter departmental one. Paragraph 4 of the said letter is as under:-

"4. MSIL shall be entitled to charge reasonable margins not exceeding 0.5% on exports and 5% on all sales within the State in respect of its operations as distributors."

7. In the Special Leave Petitions filed by the appellants herein, this Court while granting leave passed the following conditional interim order on 20.11.1989:-

"In case ultimately the petitioners lose in the final hearing provision should be made for the payment of compensation in favour of third respondent namely, M/s Mysore Sales International Limited."

8. However, on 9.4.1990, upon oral mentioning of the matter to withdraw the appeals, a Bench of this Court took the same on Board and passed the following order :

"These matters are taken on Board. The appeals are permitted to be withdrawn, as prayed for. No costs. In view of the fact that these appeals are being withdrawn, there will be no compensation payable to the third respondent".

9. The appellants would contend that MSIL had all along been aware of and acted upon the said order.

10. One of the appellants, namely, Khoday Distilleries Ltd., however, did not withdraw the appeals. By a judgment and order dated 15.12.95, the appeals filed by Khoday Distilleries Ltd. were dismissed [See Khoday Distilleries Ltd. and Others vs. State of Karnataka and Others [(1996) 10 SCC 304]. Therein this Court held :

"It was also submitted before us that the Rules must be considered manifestly arbitrary because the avowed purpose of formulating the amended Rules is to stop evasion of excise. In the counter-statement filed by the Government of Karnataka before the High Court of Karnataka it has set out the object of the amendment. The affidavit states : The impugned Rules have been made with the so

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Judicial Analysis

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2003 Supreme(SC) 177

IMPORTANT POINTThe doctrine of restitution is applicable in these appeals as questions which are required to be determined in these appeals relate to adjustment of equity.

Cases Referred (3)

Judicial Analysis

IMPORTANT POINT
The doctrine of restitution is applicable in these appeals as questions which are required to be determined in these appeals relate to adjustment of equity.