1986 (1) TMI 108 - HC - Central Excise

Issues Involved:
1. Maintainability of the suit for refund.
2. Limitation period for filing the suit.
3. Jurisdiction of the civil court.
4. Claim of unjust enrichment by the defendant.
5. Calculation of interest on the refunded amount.

Detailed Analysis:

1. Maintainability of the Suit for Refund:
The defendant contended that the suit for refund was not maintainable. The trial court rejected this contention, and the High Court upheld the trial court's decision, stating that the plaintiff had no other remedy but to file the present suit for refund after the authorities refused to refund the amount. The court affirmed that the civil court had jurisdiction to entertain the suit despite the pending challenge before the Supreme Court.

2. Limitation Period for Filing the Suit:
The primary issue was whether the suit was barred by limitation. The trial court held that the plaintiff was entitled to a refund but limited the refund to amounts paid within three years before filing the suit, applying Article 24 of the Limitation Act, 1963. The High Court, however, disagreed with this application. It reasoned that the right to claim the refund accrued only after the High Court's decision in the special civil application in 1971, which declared the levy illegal. Therefore, the suit was governed by Article 113 of the Limitation Act, 1963, which provides a three-year period from when the right to sue accrues. Consequently, the High Court held that the entire claim was within the limitation period.

3. Jurisdiction of the Civil Court:
The Union of India argued that the civil court had no jurisdiction over the matter. The High Court dismissed this argument, emphasizing that after the excise authorities refused to refund the amount, the plaintiff had no other option but to seek redress through the civil court.

4. Claim of Unjust Enrichment:
The defendant argued that the plaintiff should be non-suited on the grounds of unjust enrichment. The High Court rejected this contention, noting that the plaintiff's witness testified that the excise duty was not collected from customers or distributors. The court found no evidence to contradict this testimony, thereby dismissing the claim of unjust enrichment.

5. Calculation of Interest on the Refunded Amount:
The trial court awarded interest at 6% on the amount deemed refundable. The High Court recalculated the interest, noting that Rs. 41,642.42 was paid during the period from September 1971 to March 1972, and interest could only be claimed from the date of payment. The High Court determined that the plaintiff was entitled to Rs. 60,249.98 as interest up to the date of the suit. The total amount recoverable was Rs. 3,74,127.10, including the principal and interest. The court directed that interest at 6% per annum be applied to the principal amount from the date of the suit until realization.

Conclusion:
The High Court allowed the plaintiff's appeal, modifying the trial court's decree and directing the Union of India to pay Rs. 3,74,127.10 with full costs and interest at 6% per annum from the date of the suit until realization. The Union of India's appeal was dismissed with costs.

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