PETITIONER:
SALONAH TEA COMPANY LTD
Vs.
RESPONDENT:
SUPERINTENDENT OF TAXES NOWGONG & ORS. ETC.
DATE OF JUDGMENT18/12/1987
BENCH:
MUKHARJI, SABYASACHI (J)
BENCH:
MUKHARJI, SABYASACHI (J)
RANGNATHAN, S.
CITATION:
1990 AIR 772 1988 SCR (2) 474
1988 SCC (1) 401 1987 SCALE (2)1435
CITATOR INFO :
D 1991 SC1676 (72)
ACT:
Constitution of India, 1950: Article 226 Petition for
refund of tax paid under mistake of law-Maintainability of-
Not to be turned down on the negative plea of alternative
remedy.
Assam Taxation (on Goods Carried by Road or on Inland
Water ways) Act, 1961: ss. 7, 9, 16 & 23-High Court Setting
aside assessment order-but refusing refund on triable issue
of limitation-Validity of.
Limitation Act, 1963, Article 113, Laches-Discretion-
Exercise of by Court-Must be fair and equitable.
HEADNOTE:
%
The Assam Taxation (on Goods Carried by Road or Inland
Water-ways) Act,1954 was struck down as ultra vires the
Constitution in Atiabari Tea Co. Lld. v. State of Assam, AIR
1961 SC 232. A new Act was thereafter passed which received
the President’s assent on April 6, 1961. The High Court
declared the said Act to be ultra vires on August 1, 1963.
The State and other respondents preferred appeals before
Supreme Court against the decision. In the meantime, in
Khyerbari Tea Co. Ltd. & Anr. v. State of Assam, [1964] 5
SCR 975 the Court held the Act to be intra vires on December
13, 1963. Following the decision in Khyerbari case the
appeals filed by the State and others were allowed by this
Court on April 1, 1968. After this decision the respondents
required the appellants by notices under s. 7(2) of the Act
issued on July 8, 1968 to submit return for the period
ending June 30, 1961, September 30, 1961, December 31, 1961
and March 31, 1962. Due to the penal consequences mentioned
in the said notices the appellants filed returns on July 11,
1968. The assessment orders were passed under s. 9(3) of the
Act. The tax was duly paid.
In November 1973 the appellants filed writ petitions
before the High Court seeking direction for refund of the
tax paid under mistake relying on the High Court’s Judgment
in Loong Soong Tea Estate (Civil Rule No. 1005 of 1969)
dated July lO, 1973 declaring the assessment as without
jurisdiction.
475
The High Court set aside the orders and notices of
demand but refused claim of refund on the ground of delay
and laches. It took the view that it was possible for the
appellants to know about the legality of the tax sought to
be imposed as early as 1963, when the Act in question was
declared ultra vires. The taxes having been paid in 1968 the
claim in November 1973 was belated. It, however, held that
the claim for refund was a consequential relief.
In the appeals to this Court it was contended for the
appellants that they had paid the tax under a mistake of law
and were entitled to seek refund thereof, and a writ
petition seeking refund of tax realised without the
authority of law cannot be rejected on the ground of
limitation or delay unless such delay can be said to amount
to laches or has caused some irreparable prejudice to the
opposite party.
Allowing the appeals,
^
HELD: By the Court: (Per Sabyasachi Mukharji &
Ranganathan, JJ.)
The money was refundable to the appellants. The writ
petitions were within time. [4X4H]
Per Mukharji, J.
1. No State has the right to receive or to retain taxes
or monies realised from citizens without the authority of
law. There is in such cases concomitant duty to refund the
realisation as a corollary of the constitutional inhibition
that should be respected unless it causes injustice or loss
in any specific case or violates any specific provision of
law. [480H; 485E-F]
In the instant case, tax was collected without the
authority of law. The notices were without jurisdiction. So
was the assessment made under s. 9(3) of the Act. The
respondents, therefore, had no authority to retain the money
so collected, and as such the money was liable to refund.
[480D]
2.1 In an application under Article 226 of the
Constitution the Court has power to direct the refund unless
there has been avoidable laches on the part of the
petitioner which indicate either the abandonment of his
claims or which is of such nature for which there is no
probable explanation or which will cause an injury either to
respondent or any third party. [484C-D]
476
2.2 Courts have, however, made a distinction between
those cases where a claimant approaches a High Court seeking
relief of obtaining refund only and those where refund is
sought as a consequential relief after striking down of the
order of assessment etc. A petition of the former nature is
not ordinarily maintainable for the simple reason that a
claim for such a refund can always be made in a suit wherein
it is open to the State to raise all possible defences to
the claim, defences which cannot in most cases be
appropriately raised and considered in the exercise of writ
jurisdiction. [480F-H; 48;B]
In the instant case, s.23 of the Assam Act provided for
refund to a producer or a dealer any sum paid or realised in
excess of the sum due from him under that Act. The section
thus applies only in a case where money is paid under the
Act. If there is no provision for realisation of the money
under the Act, the act of payment was ultra vires, the money
had not been paid under the Act. In that view of the matter
the case did not come within s. 23 of the Act. The High
Court having found that the claim for refund was a
consequential relief, it could have directed the State to
refund the amount in question. [483-G-H;484A-B]
2.3 Exercise of every discretion must be fair and
equitable. The period of limitation prescribed for recovery
of money paid by mistake under the Limitation Act was three
years from the date when the mistake was known. In the
instant case, knowledge is attributable from the date of
judgment in Loong Soong’s case on 10th July, 1973. There
being a statement that the appellants came to know of that
fact in October 1973 and there being no denial by the
averment made on this ground, the High Court was in error in
presuming that there was a triable issue on this ground and
refusing to grant refund. Within a month in November 1973
the present petitions were filed. There was no unexplained
delay. The appellants had proceeded diligently. There is
nothing to indicate that had they been more diligent, the
appellants could have discovered the constitutional
inhibition earlier. The position is not clear even if there
is a triable issue. The position becomes clearer only after
the decision in Loong Soong’s case. It could not, therefore,
be said that the appellants had abandoned their claims.
[487B-D]
Suganmal v. State of Madhya Pradesh and others., AIR
1965 SC 1740; Tilokchand Motichand & Ors. v. H.B. Munshi &
Anr., [1969] 2 SCR 824; Kantilal Babulal v. H.C. Patel 21
S.T.C. 174; Chandra Bhushan & Anr. v. Deputy Director of
Consolidation (Regional), U.P. & Ors., [1967 2 SCR 286; R.L.
Kapur v. State of Madras, [1972] 3 SCR 417; State of Madhya
Pradesh v. Bhailal Bhai & Ors.J [1964] 6
477
SCR. 261; Ramchandra Shankar Deodhar & ors. v. The State of
Maharashtra & Ors., [1974] 2 SCR 216; A.V. Venkateswaran,
Collector of Customs, Bombay v. Ramchand Sobhraj Wadhwani
and another, [1962] 1 SCR. 753; Shiv Shankar Dal Mills etc.
etc. v. State of Haryana & Ors. etc., [1980] 1 SCR. 1170 and
State of Madhya Pradesh and others etc. etc. v. Nandlal
Jaiswal and others etc. etc., AIR 1987 SC 251 referred to.
3. It is only on the delivery of the judgment in Loong
Soong’s case in 1973, the appellants realised the right to
claim the relief of refund as a consequential relief,
setting aside the assessment and the assessment was set
aside by the very order itself. That right has been granted
by the High Court. The High Court has not refused the
setting aside on the ground of delay. It would be
inconsistent for the High Court to refuse to grant
consequential relief after setting aside the assessment. If
the realisation was without the authority of law and that
was declined by the High Court by the judgment in the
instant case, which claimed also the consequential relief,
that relief must automatically follow. Refunding the amount
as a consequence of declaring the assessment to be bad and
recovery to be illegal will be in consonance with justice,
equity and good conscience. [489F-H]
4. The challenge to the assessment on the ground that
the assessment was bad could not be made in an appeal under
the Act because the right to appeal being a creature of the
Act, if the Act is ultra vires that right would not ensure
to the benefit of the appellant. Section 16 of the Act under
which an appeal lay within thirty days from the date of
service of an assessment order therefore had no application.
Similarly, rule 55 of the Rules framed under the Act barring
claims of refund unless made within one year from the date
of the original order of assessment being unconstitutional
had no application. [485H; 486A-B; 487H]
1. The assessments on the appellants were illegal. The
taxes demanded on the basis thereof had been collected
without the authority of law. The High Court, therefore,
while allowing the appellant’s prayer for quashing the
assessment should also have allowed the refund of the
illegally collected taxes. [490D]
Superintendent of Taxes v. Onkarmal Nathmal Trust,
[1975] Supp. SCR 365, applied.
478
The petitions filed in November, 1973 were within the
period of limitation prescribed in Article 113 of the
Limitation Act read with s. 23 of the Assam Act. The
appellants’ averment that they realised their mistake only
when they came to know about the decision of Loong Soong Tea
Estate case in July, 1973 stands uncontroverted. There is
nothing on record to show that the appellants had realised
their mistake earlier[491D-f]
State of M. P. v. Bhailal Bhai [1964]6 SCR 261 referred
to.
It was considered unnecessary therefore to consider the
larger question whether the bar of limitation would be fatal
to a writ petition for refund. 149. F-G l
JUDGMENT:
CIVIL APPELLATE JURISDICTION: Civil Appeal Nos. 3023-
3029 OF 1979.
From the Judgment and order dated 14.6. 1979 of the
High Court of Gauhati in Civil Rule Nos. 509 to 512 of 1973.
R.F. Nariman, P.H Parekh. M.K.S. Mench and Sanjay
Bharthri for the Appellants.
Prabir Chaudhary for the Respondents.
The Judgment of the Court was delivered by
SABYASACHI MUKHARJI, J. These appeals arise out of the
Judgment and order dated 14th June, 1979 of the High Court
of Gauhati in Assam setting aside the order and notice of
demand under the Assam Taxation (on Goods carried by Road or
Inland Waterways) Act, hereinafter called the Act, but
declining to order any refund of the taxes paid. In 1954
Assam Taxation (on Goods carried by Road or Inland
Waterways) Act was first enacted. This Court struck down the
Act as ultra vires the Constitution of India. See Atiabari
Tea Co. Ltd. v. The State of Assam & Ors., AIR 1961 SC 232.
On 6th of April, 1961 a new Act passed received the assent
of the President. The High Court again struck down the Act
declaring it ultra vires the Constitution on 1.8.63. On
13.12.63 Khyerbar Tea Co. Ltd. & another v. State of Assam,
[1964] 5 SCR ts
975 in a challenge to the Act under Article 32 of the
Constitution, this Court held the Act to be intra vires. On
19th December, 1966, Judgment was passed in Civil Rule No.
190/ 1965. On Ist April 1968, the appeals preferred by the
State of Assam against the
479
High Court order dated 13.12.63 were allowed on the
basis of the declaration of the Act to be intra vires the
Constitution. Thereafter notices were issued by
Superintendent of Taxes, Nowgong, requiring the appellant
under section 7(2) of the Act to submit returns for the
period ending 30.6.61, 30.9.61, 31.12.61 and 31.3.62.
Returns were duly filed. Assessment orders were passed under
section 9(3) of the said Act. On 10th July, 1973, the High
Court passed judgment in Loong Soong Tea Estate, (Civil Rule
No. 1005 of 1969) declaring the assessment as without
jurisdiction. It is the case of the appellant-petitioner
that in view of the above judgment, the appellant came to
know about the mistake in paying the tax as per assessment
order and also that the appellant became entitled to refund
of the amount paid. The present Writ Petition was filed in
November, 1973 before the High Court of Assam. Thereafter in
June, 1976, the learned Single Judge of the High Court
referred the matter to a larger Bench. The Division Bench on
June 14, 1979, passed judgment setting aside the orders and
notices of demand but refused relief of refund claimed by
the appellant.
Aggrieved thereby, the appellant has preferred the
present appeals. The appellant-petitioner claimed in all
these petitions that the assessments were illegal and prayed
that directions be given to the respondents to refund the
tax collected in pursuance of those orders.
The Legislature of Assam passed the Act, as mentioned
hereinbefore in 1954 called the Assam Taxation (on Goods
carried by Road and Inland Waterways) Act, 1954 which
purported to levy tax on manufactured tea and jute carried
by road and inland waterways. The Act was declared ultra
vires the Constitution by this Court in Atiabari case
(supra) on the ground that previous sanction of the
President was not taken. Thereafter the Legislature passed
the Act which received the assent of the President on
6.4.61. The validity of the Act was also challenged and the
High Court declared that Act to be ultra vires on 1st
August, 1963. Against the judgment and order passed by the
High Court, the State of Assam and other respondents
preferred appeals before this Court. In the meantime, M/s
Khyerabari Tea Co. Ltd. challenged the provisions of the Act
directly before this Court by filing an application under
Article 32 of the Constitution and this Court in its
judgment dated 13.12.63 held the Act to be intra vires.
Following the aforesaid decision of this Court, the appeals
filed by the State of Assam and others against the judgment
of the High Court were allowed by this Court on the 1st
April, 1968. It was after this decision that the respondents
required the appellant by a notice under section
480
7(2) of the Act issued on 8.7.68 to submit returns for four
periods mentioned hereinbefore. Due to penal consequences
mentioned in the said notices in the event of failure to
file return and pay the taxes, the appellant filed return on
July 11, 1968 and paid the various taxes.
In the judgment under appeal after elaborate
discussion, the High Court came to the conclusion that when
a petitioner approaches the High Court with the sole claim
for refund of money by writ of mandamus, the same is
normally not granted but where the refund is prayed as a
consequential relief the same is normally entertained if
there is no obstruction or if there be no triable issue like
that of limitation which could not be conveniently tried in
writ petition.
In this case indisputably it appears that tax was
collected without the authority of law. Indeed the appellant
had to pay the tax in view of the notices which were without
jurisdiction. It appears that the assessment was made under
section 9(3) of the Act. Therefore, it was with out
jurisdiction. In the premises it is manifest that the
respondents had no authority to retain the money collected
without the authority of law and as such the money was
liable to refund.
The only question that falls for consideration here is
whether in an application under Article 226 of the
Constitution the Court should have directed refund. It is
the case of the appellant that it was after the judgment in
the case of Loong Soong Tea Estate the cause of action
arose. That judgment was passed in July 1973. It appears
thus that the High Court was in error in coming to the
conclusion that it was possible for the appellant to know
about the legality of the tax sought to be imposed as early
as 1963, when the Act in question was declared ultra vires
as mentioned hereinbefore. Thereafter the taxes were paid in
1968. Therefore the claim in November, 1973 was belated. We
are unable to agree with this conclusion. As mentioned
hereinbefore the question that arises in this case is
whether the Court should direct refund of the amount in
question. Courts have made a distinction between those cases
where a claimant approaches a High Court seeking relief of
obtaining refund only and those where refund is sought as a
consequential relief after striking down of the order of
assessment etc. Normally speaking in a society governed by
rule of law taxes should be paid by citizens as soon as they
are due in accordance with law. Equally, as a corollary of
the said statement of law it follows that taxes collected
without the authority of law as in this case from a citizen
should be refunded because no State has the right to receive
or to retain taxes or monies realised from citizens without
the authority of
481
In Suganmal v. State of Madhya Pradesh and others, AIR
1965 SC 1740, this Court held that the High Courts have
power to pass any appropriate order in the exercise of the
powers conferred on them under Article 226 of the
Constitution. A petition solely praying for the issue of a
writ of mandamus directing the State to refund the money
alleged to have been illegally collected by the State as tax
was not ordinarily maintainable for the simple reason that a
claim for such refund can always be made in a suit against
the authority which had illegally collected the money as a
tax and in such a suit it was open to the State to raise all
possible defences to the claim, defences which cannot in
most cases,, be appropriately raised and considered in the
exercise of writ jurisdiction. It appears that Section 23 of
the Act deals with refund. In the facts of this case, the
case did not come within section 23 of the Act. But in the
instant appeal, it is clear as the High Court found in our
opinion rightly that the claim for refund was a
consequential relief.
In Tilokchand Motichand & Ors. v. H.B. Munshi & Anr.,
[1969] 2 S.C.R. 824, claimants in that case contended that
they did pay taxes under section 2 1(4) of the Bombay Sales
Tax Act, 1953 which was ultra vires on the particular ground
on which it was struck down by this Court. On 28th March,
1958 the petitioners in that case filed a writ petition in
the High Court and contended that section 2 1(4) of the said
Act was ultra vires the powers of the State Legislature and
was violative of Articles 19(1)(f) and 265 of the
Constitution. The single Judge of the High Court dismissed
the petition on the ground that the petitioners defrauded
their customers and so were not entitled to any relief even
if there was a violation of fundamental rights. The
appellate bench of the High Court dismissed the appeal on
the ground that it would not interfere with the
discretionary order of the single Judge. Thereafter, it
appears that on December 24, 1958, the Collector attached
the properties of the petitioners for recovering the amount
as arrears of land revenue and the petitioners paid the
amount in instalments between August 1959 and August 1960.
On September 29, 1967 this Court in Kantilal Babulal v. H.
C. Patel, 2 1 S.T.C. 174 struck down section 12A(4) of the
Bombay Sales Tax Act, 1946 corresponding to section 21(4) of
the 1953 Act, on the ground that it was violative of Article
19(1)(f) of the Constitution inasmuch as the power conferred
by the section was unguided, uncanalised and uncontrolled
and so was not a reasonable restriction on the fundamental
right guaranteed under that Article. On the assumption that
section 21(4) of the 1953 Act was also liable to be struck
down on the same ground, on February 9, 1968, the
petitioners therein filed a writ petition under Article 32
of
482
the Constitution claiming a refund of the amount. The
petitioners contended that they did not know that the
section was ultra vires on the particular ground on which
this Court had struck it down and they had paid the amounts
under coercion or mistake, that the mistake was discovered
on September 29, 1967 (the date of the judgment of this
Court) and that they were entitled to the refund under
section 72 of the Indian Contract Act, 1872.
It was held by the majority that the petition should be
dismissed on the ground of laches. Hidayatullah, C.J. held
that Article 32 gave the right to move the Court by
appropriate proceedings for enforcement of fundamental
rights and the State cannot place any hindrance in the way
of an aggrieved person. But once the matter had reached this
Court, the extent or manner of interference is for this
Court to decide. (emphasis supplied). The Chief Justice
reiterated that this Court had put itself in restraint in
the matter of petitions under Article 32. For example, this
Court, reiterated the Chief Justice? refrained from acting
under the Article if the party had already moved the High
Court under Article 226 and if the High Court had exercised
its parallel jurisdiction. It was said in such a case, the
Court would not allow fresh proceedings to be started under
Article 32 but would insist on the decision of the High
Court being brought before it on appeal. Similarly, in
inquiring into belated and stale claims, this Court should
take note of evidence of neglect of the petitioner’s own
rights for a long time or of the rights of innocent parties
which might have emerged by reason of the delay. The Chief
Justice emphasised that it was not possible for this Court
to lay down any specific period as the ultimate limit of
action and each case will have to be considered on its own
facts. A petition under Article 32 was neither a suit nor an
application to which the Limitation Act applied. Further,
putting curbs in the way of enforcement of fundamental
rights through such legislative action might be questioned
under Article 13(2) for, if a short period of limitation was
prescribed the fundamental right might be frustrated.
Therefore, for the matter of relief in each case, this Court
had to exercise its description from case to case and where
there was appearance of an avoidable delay and the delay
affected the merits of the claim, this Court held the party
disentitled to invoke its extraordinary jurisdiction. In the
facts of that case, the majority Judges found that by his
own conduct, the petitioner had abandoned his own litigation
years ago and the Court would not apply the analogy of the
Article in the Limitation Act in cases of mistake of law and
give him relief.
Bachawat, J. in a concurring judgment observed that
the normal
483
remedy for recovery of money paid to the State under
coercion or mistake of law is by suit. The right to move
this Court for enforcement of fundamental rights was
guaranteed by Article 32, and no period of limitation was
prescribed for such a petition. Bachawat, J. reiterated that
the writ issues as a matter of course if a breach of a
fundamental right is established, but this did not mean that
in giving relief under the Article this Court might ignore
all laws of procedure. The extraordinary remedies under
Articles 32 and 226 of the Constitution, said Bachawat, J.,
are not intended to enable a claimant to recover monies the
recovery of which by suit is barred by limitation. In the
absence of any rules of procedure under Article 145(1)(c),
the Court may adopt any reasonable rule. Bachawat, J.
emphasised that for example, the Court will not allow a
petitioner to move this Court under Article 32 on a petition
containing misleading and inaccurate statements. Similarly,
the general principles of res judicata were applied where
applicable on grounds of public policy. Bachawat, J.
emphasised that where the remedy in a writ application under
Article 32 or Article 226 corresponded to a remedy in an
ordinary suit and the latter remedy was subject to the bar
of a statute of limitation, the Court imposed on analogy the
same limitation on the summary remedy in the writ
jurisdiction even though there was no express statutory bar
of limitation, on grounds of public policy and on the
principle that the laws aid the vigilant and not those who
slumber. Mitter, J. more or less expressed the same view.
Sikri, J. allowed the appeal because he was of the
opinion that the petitioners were under a mistake of law,
the mistake was discovered, like all assessees, when the
Court struck down section 12A(4) of the 1946 Act and they
came to this Court within six months of that date and hence
there was no delay.
Hegde, J. allowed the petition. He was of the opinion
that in the facts of that case, there was no delay.. He
observed that mere impression of a party that a provision of
law might be ultra vires cannot be equated to knowledge that
the provision was invalid.
Under Article 113 of the Limitation Act, 1963 the
limitation was the period of three years from the date the
right to sue accrues. It may be noted that in the instant
case under section 23 of the Act, it was provided that the
Commissioner shall, in the prescribed manner refund to a
producer or a dealer any sum paid or realised in excess of
the sum due from him under this Act either by case or, at
the option of the producer or dealer, be set off against the
sum due from him in
484
respect of any other period. Section 23 applies only in a
case where money is paid under the Act. If there is no
provision for realisation of the money under the Act, the
act of payment was ultra vires, the money had not been paid
under the Act. In that view of the matter section 23 would
not apply.
The High Court in the instant case after analysing the
various decisions came to the conclusion that where a
petitioner approached the High Court with the sole prayer of
claiming refund of money by writ of mandamus, the same was
normally not granted but where the refund was prayed as a
consequential relief the same was normally entertained if
there was no obstruction or if there was no triable issue
like that of limitation. We agree that normally in a case
where tax or money has been realised without the authority
of law, the same should be refunded and in an application
under Article 226 of the Constitution the Court has power to
direct the refund unless there had been avoidable laches on
the part of the petitioner which indicate either the
abandonment of his claims or which is of such nature for
which there is no probable explanation or which will cause
any injury either to respondent or any third party. It is
true that in some case the period of three years is normally
taken as a period beyond which the Court should not grant
relief but that is not an inflexible rule. It depends upon
the facts of each case. In this case, however, the High
Court refused to grant the relief on the ground that when
the section was declared ultra vires originally that was the
time when refund should have been claimed. But it appears to
us, it is only when the Loong Soong case was decided by the
High Court in 1973 that the appellant became aware of his
crystal right of having the assessment declared ultra vires
and in that view of the matter in October, 1973 when the
judgment was delivered in July, 1973 the appellant came to
know that there is mistake in paying the tax and the
appellant was entitled to refund of the amount paid. That
was the time when the appellant came to know of it. Within a
month in November 1973 the present petition was filed. There
was no unexplained delay. There was no fact indicated to the
High Court from which it could be inferred that the
appellant had either abandoned his claims or the respondent
had changed his position in such a way that granting relief
of refund would cause either injury to the respondent or
anybody else. On the other hand, refunding the amount as a
consequence of declaring the assessment to be bad and
recovery to be illegal will be in consonance with justice,
equity and good conscience. We are, therefore of the view
that the view of the High Court in this matter cannot be
sustained.
485
Chandra Bhushan & Anr. v. Deputy Director of
Consolidation (Regional), U.P. & ors., [1967l 2 S.C.R. 286
was a case where this Court observed that the High Court
erred in exalting a rule of practice into a rule of
limitation and rejecting the petition of the appellant for
refund without considering whether the appellant was guilty
of laches and undue delay. Shah, J. delivering the judgment
of the Court observed that the primary question in each case
is whether the applicant had been guilty of laches or undue
delay.
Reference may be made in this connection to R.L. Kapur
v. State of Madras, [1972] 3 S.C.R. 417. There the question
arose about punishing for contempt. The jurisdiction
conferred on the High Court under Article 215 of the
Constitution to punish for contempt of itself was a special
one, not arising or derived from the Contempt of Courts Act,
1952, and therefore, not within the purview of the Penal
Code. Such a position is also clear from the provisions of
the Contempt of Courts Act. The effect of section 5 of that
Act was only to widen the scope of the existing jurisdiction
of a special kind and not conferring a new jurisdiction. So
far as contempt of the High Court itself is concerned, as
distinguished from that of court subordinate to it, the
Constitution vested these rights in every High Court, and so
no Act of a legislature could take away that jurisdiction
and confer it afresh by virtue of its own authority. That
being the position, this Court held that section 25 of the
General Clauses Act would not apply.
Similarly, it appears to us that this was a tax
realised in breach of the section, the refund being of the
money realised without the authority of law. The realisation
is bad and there is a concomitant duty to refund the
realisation as a corollary of the constitutional
inhabitation that should be respected unless it causes
injustice or loss in any specific case or violates any
specific provision of law.
In that view of the matter in the facts of this case we
are of the opinion that the money was refundable to the
appellant. The appellant had proceeded diligently. There is
nothing to indicate that had the appellant been more
diligent, the appellant could have discovered the
constitutional inhibition in 1966. The position is not clear
even if there is any triable issue. The position becomes
clearer only after the decision in Loong Soong’s case as
mentioned hereinbefore.
Our attention was drawn on behalf of the respondents
that under section 16 of the Act an appeal lay in the
prescribed manner within thirty days from the date of
service of any order of assessment but the
486
challenge to the assessment on the ground that the
assessment was bad could not be made in an appeal under the
Act because the right to appeal being a creature of the Act,
if the Act is ultra vires that right would not enure to the
benefit of the appellant.
In State of Madhya Pradesh v. Bhailal Bhai & ors.,
[1964] 6 S.C.R. 261 this Court had occasion to consider what
was unreasonable delay in moving the court when tax was paid
under a mistake. There the respondents were dealers in
tobacco in the State of Madhya Bharat. The State had imposed
sales tax on the sale of imported tobacco by the
respondents. But no such tax was imposed on the sale of
indigenous tobacco. The respondents filed writ petitions
under Article 226 of the Constitution for the issue of writ
of mandamus directing the refund of sales tax collected from
them. They contended that the impugned tax was violative
under Article 301(a) of the Constitution and they paid the
tax under a mistake of law and the tax so paid was
refundable under section 72 of the Indian Contract Act,
1872. The appellant contended that there was no violation of
Article 301 of the Constitution, and even if there was such
violation the tax came within the special provision under
Article 304(a) of the Constitution and the High Court had no
power to direct refund of tax already paid and in any event
the High Court should not exercise its discretionary power
of issuing a writ of mandamus directing this to be done
since there was unreasonable delay in filing the petition.
The High Court rejected all the contentions of the appellant
and a writ of mandamus was issued as prayed for. It was held
that tax was violative under Article 301 of the
Constitution. But it was held that even though the tax
contravened Article 30 1 of the Constitution, it was valid
if it came within the saving provisions of Article 304 of
the Constitution. Tobacco manufactured or produced in the
appellant State, similar to the tobacco imported from
outside had not been subjected to the tax and therefore the
tax was not within the saving provisions of Article 304(a)
of the Constitution. It was reiterated that the tax which
had already been paid was so paid under a mistake of law
under section 72 of the Indian Contract Act. The High Courts
had power for the purpose of enforcement of. fundamental
rights and statutory rights to grant consequential reliefs
by ordering repayment of money realised by the Government
without the authority of law. It was reiterated that as a
general rule if there has been unreasonable delay the court
ought not ordinarily to lend its air to a party by the
extraordinary remedy of mandamus. Even if there is no such
delay, in cases where the opposite party raises a prima
facie issue as regards the availability of such relief on
the merits on grounds like limitation the Court should
ordinarily refuse to issue the writ of
487
mandamus. Though the provisions of the Limitation Act did
not as such, it was further held, apply to the granting of
relief under Article 226, the maximum period fixed by the
legislature as the time within which relief by a suit in a
Civil Court must be claimed may ordinarily be taken to be a
reasonable standard by which delay in seeking remedy under
Article 226 could be measured. The Court might consider the
delay unreasonable even if it is less than the period of
limitation prescribed for a civil action for the remedy.
Where the delay is more than that period it will almost
always be proper for the court to hold that it is
unreasonable. The period of limitation prescribed for
recovery of money paid by mistake under the Limitation Act
was three years from the date when the mistake was known. In
this case knowledge is attributable from the date of the
judgment in Loong Soong’s case on 10th July, 1973 and there
being a statement that the appellant came to know of that
fact in October, 1973 and there being no denial by the
averment made on this ground, the High Court, in our
opinion, in the instant case was in error in presuming that
there was a triable issue on this ground and refusing to
grant refund.
In Ramachandra Shankar Deodhar & Ors. v. The State of
Maharashtra & ors. [1974] 2 S.C.R. 216, in a different
context, it was observed that laches or existence of
alternative remedy may be ground for not granting relief.
But in view of the facts of this case, it is not necessary
to deal with that case in any detail.
In A. V. Venkateswaran, Collector of Customs, Bombay v.
Ramchand Sobhraj Wadhwani and another, [1962] 1 S.C.R. 753
this Court held that the High Court was in error in its view
that though the respondent had failed to exercise his
statutory remedy, the fact that it had become time-barred at
the date of the hearing of the appeal against the order in
the petition under Article 226, was a good ground for the
Court to exercise its discretion in granting the relief
prayed for by the respondent in his petition.
Learned counsel drew our attention to Rule 55 of the
Act where it was stated that no claim to any refund shall be
allowed unless it was made within one year from the date of
the original order of assessment or within one year of the
final order passed on appeal or revision as the case may be,
in respect of such assessment. It was contended on behalf of
the respondents that here a fixed period of limitation was
prescribed and by virtue of Article 226 of the Constitution,
we should not allow to subvert that rule. This principle, in
our opinion, in view of the fact that the rule was
unconstitutional will have no application.
488
In Shiv Shanker Dal Mills etc. etc. v. State of
Haryana & Ors. etc., [1980] l S.C.R. 1170 Krishna Iyer, J.
speaking on behalf of him self as well as on behalf of R.S.
Pathak, J. as the learned Chief Justice then was and A.D.
Koshal, J. Observed that where public bodies under colour of
public laws recover people’s money, later discovered to be
erroneous levies the dharma of the situation admits of no
equivocation. There was no law of limitation especially for
public bodies on the virtue of returning what was wrongly
recovered to whom it belongs. In our jurisprudence it is not
palatable to turn down the prayer for high prerogative writs
on the negative plea of alternative remedy, since the root
principle of law married to justice, is ubi jus ibi
remedium. His Lordship observed as follows:
“Since the root principle of law married to justice,
is ubi jus ibi remedium. Long ago Dicey wrote:
‘The law ubi jus ibi remedium, becomes from this
Point of view something more important than a mere
tautological proposition. In its bearing upon
constitutional law, it means that the Englishmen
whose labours gradually formed the complicated set
of laws and institutions which we call the
Constitution, fixed their minds far more intently
on providing remedies for the enforcement of
particular rights or for averting definite wrongs,
than upon any declarations of the Rights of Man or
English men…The Constitution of the United
States and the Constitutions of the separate
States are embodied in written or printed
documents, and contain declaration of rights. But
the statesmen of America have shown an unrivalled
skill in providing means for giving legal security
to the rights declared by American Constitutions.
The rule of law is as marked a feature of the
United States as of England.
Another point. In our jurisdiction, social
justice is a pervasive presence; and so, save in
special situations it is fair to be guided by the
strategy of equity by asking those who claim the
service of the judicial process to embrace the
basic rule of distributive justice, while moulding
the relief, by consenting to restore little sums,
taken in little transactions, from little persons,
to whom they belong.”
489
We are in respectful agreement with this approach. A
ln State of Madhya Pradesh and others etc. etc. v.
Nandlal Jaiswal and others etc. etc., A.I.R. 1987 S.C. 251
this principle was reiterated by Bhagwati, C.J. that it was
well settled that the power of the High Court to issue an
appropriate writ under Article 226 of the Constitution was
discretionary and the High Court in the exercise of its
discretion did not ordinarily assist the tardy and the
indolent or the acquiescent and the lethargic. If there was
inordinate delay on the part of the petitioner in filing a
writ petition and such delay was not satisfactorily
explained, the High Court might decline to intervene and
grant relief in the exercise of its writ jurisdiction. The
evolution of this rule of laches or delay was premised upon
a number of factors. The High Court did not ordinarily
permit a belated resort to the extraordinary remedy under
the writ jurisdiction because it was likely to cause
confusion and public inconvenience and bring in its train
new injustices. It was emphasised that this rule of laches
or delay is not a rigid rule which can be cast in a
straitjacket formula. There may be cases where despite delay
and creation of third party rights the High Court may still
in the exercise of its discretion interfere and grant relief
to the petitioner. But where the demand of justice is so
compelling that the High Court would be inclined to
interfere in spite of delay or creation of third party
rights would by their very nature be few and far between.
Ultimately it would be a matter within the discretion of the
Court; ex hypotheses every discretion must be exercised
fairly and justly so as to promote justice and not to defeat
it. We are in respectful agreement with this approach also.
In this case looked at from one point of view, it is
only on the delivery of the judgment in Loong Soong’s case
in 1973, the appellant realised the right to claim the
relief of refund as a consequential relief, setting aside
the assessment and the assessment was set aside by the very
order itself in this case. That right has been granted by
the High Court, the High Court has not refused the setting
aside on the ground of delay. It would be inconsistent for
the High Court to refuse to grant consequential relief after
setting aside the assessment. If the realisation was without
the authority of law and that was declined by the High Court
by the judgment in this case which claimed also the
consequential relief, that relief must automatically follow
and the High Court was wrong in taking the view that a
triable issue of limitation arises in this case. In the
absence of any averment to the contrary, the averment of the
appellant in the petition that they came to know only after
the Loong Soong’s case must be accepted. The High Court was
wrong in
490
contending that they should have been more diligent. After
all the discretion must be fair and equitable. In the facts
of this case, we are of the opinion that the High Court was
in error in the approach it took. We, therefore, set aside
the judgment and order of the High Court and direct refund
of the tax illegally realised by the respondent.
The appeals are allowed. We set aside the judgment and
order to the extent that it refused refund of the tax
illegally realised. In the facts of this case the parties
will pay and bear their own costs.
S. RANGANATHAN J. I agree with the order proposed by
my learned brother but would like to add a word of
reservation.
2. In view of the judgment of this Court in
Superintendent of Taxes v. Onkarmal Nathmal Trust, [ 1975]
Supp SCR 365, there can be no doubt that the assessments on
the appellants were illegal and that. the taxes demanded on
the basis thereof had been collected without the authority
of law from the appellants. The appellant’s contention is
that they had paid the taxes under a mistake of law and are
entitled to seek refund thereof. It is difficult to see how
the High Court could have allowed the appellant’s prayer for
quashing the assessments but refused the prayer for the
refund of the illegally collected taxes. The appeals have,
therefore, to be allowed.
3. Counsel for the respondents, however, places strong
reliance on the following observations of a Constitution
Bench of this Court in State of M.P. v. Bhailal Bhai,
[1964] 6 SCR 261:
“Though the provisions of the Limitation Act do
not, as such, apply to the granting of relief
under Art. 226, the maximum period fixed by the
Legislature as the time within which relief by a
suit in a Civil Court must be claimed may
ordinarily be taken to be a reasonable standard by
which delay in seeking remedy under Art. 226 could
be measured XXXX
Where the delay is more than that period it
will almost always be proper for the Court to hold
that it is unreasonable. ”
He also relies on Cawasji & Co. v. State, [1975] 2 SCR 5tl
and drawn our attention to the decision in Vallabh Glass
Works v. Union, [1984] 3 SCR 180 where the claim for refund
in respect of a period beyond
491
three years was rejected. He contends, on the strength of
the above decisions, that the High Court rightly rejected
the appellants’ claims for refund.
4. On the other hand, it is contended for the
appellants that a writ petition seeking refund of taxes
collected without the authority of law cannot be rejected on
the ground of limitation or delay unless such delay can be
said to amount to laches or has caused some irreparable
prejudice to the opposite party or some other like forceful
reason exists. Counsel refers in this context to
Venkateswaran v. Ramchand, [1962] 1 SCR 75; Chandra Bhushan
v. Deputy Director, [1967] 2 SCR 286; Tilokchand Motichand
v. Munshi, [1969] 2 SCR 824; Ramachandra S. Deodhar v.
State, [1974] 2 SCR 216; Joginder Nath v. Union, [ 1975] 2
SCR 558; Shiv shankar Dal Mills v. State, [ 1980] 1 SCR 1170
and State of M.P. v. Nandlal Jaiswal, AIR 1987 SC 251 and
contends that these decisions have qualified the
observations of Das Gupta, J. in Bhailal Bhai’s case.
5. As pointed out by my learned brother, in the present
case, the appellants’ averment that they realised their
mistake only when they came to know about the decision in
the Loong Soong Tea Estate case in July 1973 stands
uncontroverted. There is nothing on record either to show
that the appellants had realised their mistake even earlier,
at about the time when the writ petition in the Loong Soong
Tea Estate case was filed or at the time when the earlier
decision of 1966 referred in the Loong Soong Tea Estate case
judgment was rendered. On this finding of fact, the writ
petitions, filed by the appellants in November 1973, were
filed within the period of limitation prescribed in Article
113 read with s. 23 of the Limitation Act, 1963. Thus the
petitions were within time even by the test enunciated in
Bhailal Bhai’s case.
6. I think, therefore, that, for the purposes of the
present case, it is unnecessary to consider the larger
question whether the bar of limitation should be considered
as fatal to a writ petition as to a suit for recovery or
whether it is only a relevant but not conclusive factor that
should be taken into account by the court in exercising a
discretion.
P.S.S. Appeals allowed.
492