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Issues Involved:
1. Legality of the Government's entitlement to the surcharge. 2. Whether the appellants were agents or fiduciaries of the Government. 3. Legality of the surcharge as a tax. 4. Limitation period applicable to the claims for refund. Detailed Analysis: 1. Legality of the Government's Entitlement to the Surcharge The primary question was whether the Government was entitled to the excess amounts termed as "surcharges" collected from the appellants. The appellants were procuring agents and wholesalers who procured rice at a lower price and sold it at a higher price due to Government orders increasing the prices. The Government claimed these excess amounts, arguing that the appellants were either its agents or stood in a fiduciary relationship to it, thus liable to account for the extra profit. The judgment concluded that no principal-agent or fiduciary relationship existed between the Government and the appellants. Consequently, the Government had no right to the extra profit, which under the contract belonged to the procuring agents. 2. Whether the Appellants Were Agents or Fiduciaries of the Government The appellants were procuring agents who bought rice with their own funds, stored it at their own cost, and bore the risk of any loss. They were also licensed to deal in foodgrains independently. The Government argued that the appellants were its agents because they were referred to as "agents" in various orders and agreements. However, the judgment clarified that the appellants were not agents since they operated independently, bore all risks, and were full owners of the procured rice. The mere use of the term "agent" in the orders and agreements did not establish an agency relationship. The appellants were not fiduciaries either, as they did not hold the rice for the Government's benefit. 3. Legality of the Surcharge as a Tax The appellants contended that the surcharge was an illegal tax imposed by executive fiat. The judgment examined similar cases, such as Attorney-General v. Wilts United Dairies and Attorney-General v. Homebush Flour Mills Limited, where levies without statutory backing were deemed illegal taxes. The judgment concluded that the surcharge was indeed a tax imposed without legislative sanction, making it illegal. The Government's actions in requisitioning and releasing the rice upon payment of the surcharge or execution of agreements were within its statutory powers, but the surcharge itself was not authorized by any statute. 4. Limitation Period Applicable to the Claims for Refund The judgment addressed whether the claims for refund were barred by limitation. It was held that Article 62 of the Limitation Act, which provides a three-year period for suits for money received by the defendant for the plaintiff's use, applied to the claims. The claims were not barred if filed within this period. The judgment clarified that the term "money received by the defendant for the plaintiff's use" should be interpreted broadly to include situations where the defendant received money in circumstances that in justice and equity belonged to the plaintiff. Therefore, the claims for refunds of surcharges collected in July 1947 and December 1947 were within the limitation period, but those collected in November 1948 were not. Separate Judgments: - Sarkar, J.: Agreed with Ayyangar, J. that no principal-agent or fiduciary relationship existed and that the Government had no right to the extra profit. Also agreed that Article 62 of the Limitation Act governed the claims and that the surcharge was an illegal tax. - Ayyangar, J.: Provided a detailed analysis of the statutory provisions, agreements, and the circumstances of the surcharge imposition. Concluded that the appellants were not agents or fiduciaries and that the surcharge was an illegal tax. Also addressed the limitation period, agreeing that Article 62 applied to the claims. Final Orders: - Civil Appeal 644 of 1962: Dismissed as barred by limitation. - Civil Appeal 306 of 1962: Modified by deducting the amount collected in July 1947 and the interest thereon. - Other Appeals: Allowed, restoring the trial court's decrees for refunds of the surcharges collected in December 1947 and November 1948, with costs awarded to the appellants.
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