1975 (1) TMI 96 - HC - Companies Law

Summary

Issues Involved:
1. Legality of levy and collection of cess from 18th April 1962 to 27th May 1964.
2. Challenge to the levy and collection of cess.
3. Maintainability of the suit without impleading the State Government.
4. Estoppel against claiming a refund.
5. Limitation period for filing the suit.
6. Correct amount entitled for refund.
7. Relief entitled to the plaintiff.

Detailed Analysis:

1. Legality of Levy and Collection of Cess:
The plaintiff argued that the defendant market committee did not have jurisdiction to levy and collect cess under the Madras Agricultural Produce Markets Act, 1959 (XXIII of 1959) prior to its enforcement on 22nd October 1962, making the collection of cess from 22nd October 1962 to 27th May 1964 invalid. The court concluded that the levy and collection of cess by the defendant from the plaintiff during this period were illegal and unauthorized, finding the issue in favor of the plaintiff.

2. Challenge to the Levy and Collection of Cess:
The defendant contended that the levy was authorized and performed in exercise of its statutory functions, and thus could not be challenged. However, the court found against the defendant on this issue, ruling that the levy and collection were indeed unauthorized.

3. Maintainability of the Suit Without Impleading the State Government:
The defendant argued that the suit was not maintainable as the State Government was not impleaded as a party. The court held that the State Government was not a necessary or proper party to the suit, thus the suit was maintainable without impleading the State Government.

4. Estoppel Against Claiming Refund:
The defendant asserted that the plaintiff was estopped from claiming a refund of the amounts collected. The court found against the defendant on this issue, allowing the plaintiff to claim the refund.

5. Limitation Period for Filing the Suit:
The primary issue argued was whether the suit was barred by limitation. The plaintiff claimed to have discovered the unauthorized nature of the levy in September 1965 and filed the suit on 28th August 1968. The court initially ruled that the suit was within time, considering the mistake could have been discovered only on 20th September 1965. However, upon appeal, the court emphasized that the plaintiff, with reasonable diligence, could have discovered the mistake by 27th May 1964, when the second notification was published. Thus, the suit was barred by limitation under Article 24 of the Limitation Act, as it was filed beyond three years from the date of the second notification.

6. Correct Amount Entitled for Refund:
The plaintiff sought to recover Rs. 19,731.32, comprising amounts collected from its branches in Virudhunagar, Rajapalayam, and Sattur. The court initially decreed the suit as prayed for, but this was overturned on appeal due to the suit being barred by limitation.

7. Relief Entitled to the Plaintiff:
The trial court decreed the suit in favor of the plaintiff, but on appeal, the court held that the suit was barred by limitation. Consequently, the plaintiff was not entitled to any relief, and the appeal was allowed, dismissing the suit without any order as to costs.

Conclusion:
The appeal was allowed, and the suit was dismissed on the grounds of being barred by limitation, with no order as to costs. The court emphasized the importance of adhering to the statutory periods prescribed under the Limitation Act and the necessity for plaintiffs to act with reasonable diligence in discovering mistakes.