Interest or Compensatory Enhancements can be granted on Equitable Grounds to avoid Unjust Enrichment --- Lahore High Court Upholds Compensation due to Deception by Attorney 

Islamabad 22-03-2025: In a significant ruling addressing fiduciary responsibility and equitable compensation, the Lahore High Court dismissed a Civil Revision Petition, upholding the lower Courts’ decisions to award Rs. 5,766,000 with a 5% annual increase to Respondent Loan, for the fraudulent sale of property involving a deceased co-owner.

Mr. Justice Anwaar Hussain, while modifying the effective date of the 5% annual increase from August 11, 2005 to February 28, 2018, held that the increase was not statutory interest under Section 34 of the Code of Civil Procedure, 1908, but equitable compensation for financial loss, inflation, and the cost of litigation caused by the Petitioner’s misrepresentation.

The case centered on the sale of a property in 2005, where petitioner, acting as general attorney for multiple owners, executed a sale deed without disclosing one of the owner’s prior death. This led to legal heirs challenging the transaction and the respondent incurring additional costs. The Court found that the petitioner breached his fiduciary duty by not informing the respondent of the principal’s death, thereby invalidating the power of attorney.

Citing precedents including (PLD 2003 SC 290), (PLD 1987 SC 393), and (2014 PTD 1939), the Court reaffirmed that interest or compensatory enhancements can be granted on equitable grounds to avoid unjust enrichment. The doctrine of approbation and reprobation was also discussed, with the Court ruling that the Respondent’s change in stance after judicial findings was justified and not contradictory in law.

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