IMPORTANT POINT
Restitution demands equity, fairness and justice for both parties and flows more or less form common stand of the parties. Loss suffered by the party entitled to restitution and the gain made by other party obliged to make restitution are important factors.

Judgment

Shiva Kirti Singh, J.

1. The simple grievance of the appellant is that by impugned judgment and order dated 12.04.2005 passed by a Hon’ble Judge presiding over the Special Court (Trial of Offences Relating to Transactions in Securities) at Bombay has erred in determining an excessive amount payable by the appellant Citibank to the respondent applicant – Canbank Financial Services Limited (hereinafter referred to as ‘Canfina’) by way of restitution.

2. There is no dispute that on account of reversal of a money decree in favour of Citibank in Suit No. 1 of 1995 filed by it against Canfina, by a common order dated 7.7.2004 passed by this Court in Civil Appeal nos. 7426, 9063 and 9138 of 1996, the Citibank is required to restore back the monetary benefits it received under the decree against Canfina. The operative part of the said decree dated 22/23/26.04.1996 in Suit no. 1 of 1995 is as follows:

“121. xxxx Accordingly, the defendants are directed to deliver to the plaintiffs, 9% IRFC Bonds of the face value of Rs. 50 crore within a period of 16 weeks xxx”

“122. the question then arises as to the interest the defendants must therefore pay to the plaintiffs, the interest @ 9% on these Bonds for the period starting from 15th July, 1991 till they deliver the Bonds. If the Defendants do not deliver the Bonds but choose to return the monies they must still pay interest. However, in my view the Plaintiffs would still be entitled to interest at 9% only. This, however, will be from the date the consideration amount was received by the Defendants till the date of repayment. xxx"

3. Since the decree gave an option to Canfina, it opted to deliver to the Citibank the 9% IRFC Bonds of the face value of Rs. 50 crores on 13.8.1996. It also paid the awarded interest at the rate of 9%. The aggregate interest amounted to Rs.22,34,58,904/- calculated for the period 15.7.1991 to 30.6.1996. There is no controversy so far as the restitution of interest amount is concerned but there is a strong disagreement between the parties as to how the market value of the bonds be calculated for the purpose of effective and satisfactory restitution. Admittedly the bonds delivered to Citibank on 13.8.1996, were being traded in the market and there is no serious dispute that on that date the market value of a bond was Rs. 81/- and the aggregate value of the bonds on that basis would be Rs 40.50 crores.

4. According to learned senior counsel, Mr. Kapil Sibal the Canfina suffered only the loss of Rs 40.50 crores and Rs. 22.34 crores and on decree being set aside it is entitled only to such loss along with 9% interest, by way of restitution.

5. There would have been no difficulty in working out the loss of Canfina if it had opted to pay the money value of the bonds instead of delivering the bonds. It is also not in dispute that after receiving the bonds, Citibank in its wisdom disposed of the bonds in the market during March/April 1997 when the prevailing average market rate was Rs. 85/-per bond although its face value was Rs. 100/-redeemable on 15.7.2001. The bonds delivered to City Bank carried with them coupons for half yearly interest at the rate of 9% on the face value of the bonds and for one set of coupons for half yearly interest, Rs. 2.25 crores in aggregate was also received by Citibank in January 1997. Thereafter between April/March 1997 the Citibank sold the bonds at average price of Rs. 85/- receiving in aggregate Rs. 42.56 crores.

6. By the very nature, the bonds, on 15.7.2001 at their face value would be worth Rs. 50 crores. This along with half yearly interest through coupons redeemed after April 1997 has presumably gone to third parties who might have purchased the bonds in the market.

7. The appellant Citibank in compliance of the judgment of this Court dated 7.7.2004 had to offer restitution of “total amount paid” by Canfina to Citibank (principal and interest) along with interest at the rate of 9% per annum from the date of payment. But in case the fu