1977 (1) TMI 41 - HC - Income Tax

Issues Involved:
1. Limitation Period for Filing Suit
2. Applicability of Article 113 and Section 17 of the Limitation Act
3. Knowledge of Mistake and Starting Point of Limitation
4. Equitable Considerations in Limitation Law

Issue-wise Detailed Analysis:

1. Limitation Period for Filing Suit:
The primary issue in the case was whether the suit filed by the plaintiff was barred by limitation. The defendant contended that the suit was out of time, arguing that the limitation period should be calculated from the date of the High Court's judgment quashing the assessment, rather than from the date of the Supreme Court's final decision.

2. Applicability of Article 113 and Section 17 of the Limitation Act:
The court analyzed the applicability of Article 113 and Section 17 of the Limitation Act. Article 113 is the "omnibus" article for suits for which no specific period of limitation is provided elsewhere in the schedule. Section 17(1)(c) of the Limitation Act states that in cases of mistake, the period of limitation shall not begin to run until the plaintiff discovers the mistake or could, with reasonable diligence, have discovered it. The court acknowledged that the proper article applicable in this case is Article 113 read with Section 17 of the Act.

3. Knowledge of Mistake and Starting Point of Limitation:
The court examined when the estate could be said to have acquired knowledge of the mistake in the payment of tax. The lower court held that the limitation period should start from the date of the Supreme Court's judgment on October 5, 1971. However, the court found this view incorrect, stating that the limitation should begin from the date of the High Court's judgment. The court cited several precedents, including Hukum Chand Boid v. Pirthichand Lal Chowdhury, which held that the failure of consideration occurs at the date of the first court's decree and not the appellate court's decree.

4. Equitable Considerations in Limitation Law:
The court acknowledged that statutes of limitation are strict and inflexible enactments, intended to quiet long possession and extinguish stale demands. The court emphasized that the Limitation Act must be applied in all its force, regardless of any hardship that might arise in isolated cases. The court noted that the dismissal of the suit should not prevent the Government from considering the refund of the amount taken from the Zamorin's estate by way of tax, which was held to be illegal by the highest court of the land. The court also referred to the principle that the statutes of limitation are founded on public policy to prevent the rearing up of claims at great distances of time when evidence is lost.

Conclusion:
The court allowed the appeal, set aside the judgment and decree of the lower court, and dismissed the suit. The court concluded that the limitation period began from the date of the High Court's judgment, making the suit barred by limitation. The court expressed hope that the Government would act in an equitable and proper manner, despite the technical dismissal of the suit on the point of limitation. The parties were ordered to bear their costs throughout.

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