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TMI Blog1989 (7) TMI 99X X X X Extracts X X X X X X X X Extracts X X X X ..... ess. As writ petitions challenging the Government's right to charge this 71/2 per cent. were pending in the Madhya Pradesh High Court, the Government announced that it would continue to charge it and the question of stopping it was under consideration of the Government whose decision would be binding on the contractors. The firm (appellants) thus paid for the above contracts a total extra sum of Rs. 54,606. On October 17, 1961, the Under Secretary to Government, M. P., Forest Department, Bhopal, wrote the following letter No. 10130-x/61 (exhibit D-23) to the Chief Conservator of Forests, Madhya Pradesh, Rewa : "Subject : Levy of cess on liquor contractors. Under former M. P. Government (Forest Department) memo No. 4595-CR-73-XI dated 25th July, 1953, a royalty at 71/2 per cent. of the licence fee for liquor shops was imposed on liquor contractors to cover the value of mahua and fuel extracted from the reserved or protected forests by the contractors for their still. 2. The M. P. High Court has since decided that the levy of the aforesaid cess is illegal and that the cess cannot be recovered from the liquor contractors. In pursuance of this decision, Government desires that all ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ribed by section 80 of the Code of Civil Procedure. Consequently, the appeal was dismissed. The appellants' petition for leave to appeal to this court was also rejected observing, "it was unfortunate that the petitioners filed their suit on December 24, 1964, and, as such, the suit was barred by time by seven days." Mr. M. V. Goswami, learned counsel for the appellants, submits, inter alia, that the High Court erred in holding that the limitation started running from October 17, 1961, being the date of the letter, exhibit D-23, which was not communicated to the appellants or any other contractor and, therefore, the appellants had no opportunity to know about it on that very date with reasonable diligence under section 17 and the High Court ought to allow at least a week for knowledge of it by the appellants in which case the suit would be within time. Counsel further submits that the High Court, while rightly discussing that section 17 of the Limitation Act, 1963, was applicable, erred in not applying that section to the facts of the instant case, wherefore, the impugned judgment is liable to be set aside. Mr. Ujjwal A. Rana, learned counsel for the respondent, submits, inter ali ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e purely fictitious. Lord Mansfield in Moses v. Macferlan [1760] 2 Burr. 1005 at page 1012 explained the juridical basis of the action for money "had and received" thus : "This kind of equitable action to recover back money, which ought not in justice to be kept, is very beneficial, and, therefore, much encouraged. It lies only for money which, 'ex aequo et bono", the defendant ought to refund ; it does not lie for money paid by the plaintiff which is claimed of him as payable in point of honour and honesty, although it could not have been recovered from him by any course of law; as in payment of debt barred by the statute of limitations, or contracted during his infancy, or to the extent of principal and legal interest upon a usurious contract, or, for money fairly lost at play ; because in all these cases, the defendant may retain it with a safe conscience, though by positive law he was barred from recovering. But it lies for money paid by mistake ; or upon a consideration which happens to fail ; or for money got through imposition (express or implied) ; or extortion ; or oppression ; or an undue advantage taken of the plaintiff's situation, contrary to laws made for the protect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ant be under an obligation, from the ties of natural justice, to refund ; the law implies a debt, and gives this action founded in the equity of the plaintiff's case, as it were, upon a contract (quasi ex contractu) as the Roman law expresses it." As Lord Wright in Fibrosa Spolka Akcyjna v. Fairbairn Lawson Combe Barbour Ltd. [1943] AC 32 ; [1942] 2 All ER 122 (HL), pointed out, "the obligation is as efficacious as if it were upon contract. Such remedies are quasi contract or restitution and theory of unjust enrichment has not been closed in English law." Section 72 of the Indian Contract Act deals with the liability of person to whom money is paid or thing delivered, by mistake or under coercion. It says : "A person to whom money has been paid, or anything delivered, by mistake or under coercion, must repay or return it." Illustration (b) to the section is : "A railway company refuses to deliver up certain goods to the consignee, except upon the payment of an illegal charge for carriage. The consignee pays the sum charged in order to obtain the goods. He is entitled to recover so much of the charge as was illegally excessive." Our law having been codified, we have to apply th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e in discharge of the liability under the Sales Tax Act and were voluntary payments without protest, and (3) inasmuch as the monies which had been received by the Government had not been retained but had been spent away by it, the respondent was disentitled to recover the said amounts. This court held that the term "mistake" in section 72 of the Indian Contract Act comprised within its scope a mistake of law as well as a mistake of fact and that, under that section, a party is entitled to recover money paid by mistake or under coercion, and if it is established that the payment, even though it be of a tax, has been made by the party labouring under a mistake of law, the party receiving the money is bound to repay or return it though it might have been paid voluntarily, subject, however, to questions of estoppel, waiver, limitation or the like. On the question of limitation, it was held that section 17(1)(c) of the Limitation Act, 1963, would be applicable and that where a suit was to recover "monies paid under mistake of law, a writ petition within the period of limitation prescribed, i.e., within three years' of the knowledge of the mistake, would also lie." It was also accepted t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... i's case [1975] 2 SCR 511 that although section 72 of the Contract Act has been held to cover cases of payment of money under a mistake of law, as the State stands in a peculiar position in respect of taxes paid to it, there are perhaps practical reasons for the law according to a different treatment both in the matter of the heads under which they could be recovered and the period of limitation for recovery. P. N. Bhagwati J., as he then was, in Madras Port Trust v. Hymanshu International [1979] 4 SCC 176, deprecated any resort to the plea of limitation by a public authority to defect the just claim of citizens observing that, though permissible under law, such technical plea should only be taken when a claim is not well-founded. Section 17(1)(c) of the Limitation Act, 1963, provides that, in the case of a suit for relief on the ground of mistake, the period of limitation does not begin to run until the plaintiff had discovered the mistake or could, with reasonable diligence, have discovered it. In a case where payment has been made under a mistake of law as contrasted with a mistake of fact, generally, the mistake becomes known to the party only when a court makes a declaration ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... declared on December 13, 1963, the Act to be intra vires. Consequently, the above appeals were allowed. Notices were, therefore, issued requiring the appellant under section 7(2) of the Act to submit returns. Returns were duly filed and assessment orders passed thereon. On July 10, 1973, the Gauhati High Court in its judgment in Loong Soong Tea Estate's case (Civil Rule No. 1005 of 1969 decided on July 10, 1973) declared the assessment to be without jurisdiction. In November 1973, the appellant filed a writ petition in the High Court contending that, in view of the decision in Loong Soong Tea Estate's case, he came to know about the mistake in paying the tax as per assessment order and also that he became entitled to refund of the amount paid. The High Court set aside the order and the notice of demand for tax under the Act but declined to order refund of the taxes paid by the appellant on the ground of delay and laches as, in the view of the High Court, it was possible for the appellant to know about the illegality of the tax sought to be imposed as early as in 1963, when the Act in question was declared ultra vires. Allowing the assessee's appeal, Mukharji J., speaking for this ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Limitation Act, 1963. It is thus settled law that, in a suit for refund of money paid by mistake of law, section 72 of the Contract Act is applicable and the period of limitation is three years as prescribed by article 113 of the Schedule to the Limitation Act, 1963, and the provisions of section 17(1)(c) of that Act will be applicable so that the period will begin to run from the date of knowledge of the particular law whereunder the money was paid being declared void ; and this could be the date of the judgment of a competent court declaring that law void. In the instant case, though the Madhya Pradesh High Court in Surajdin Laxmanlal v. State of M. P. declared the collection of 71/2 per cent. illegal and that decision was reported in [1960] MPLJ 39, the Government was still charging it saying that the matter was under consideration of the Government. The final decision of the Government as stated in the letter dated October 17, 1961, was purely an internal communication of the Government, copy whereof was never communicated to the appellants or other liquor contractors. There could, therefore, be no question of the limitation starting from that date. Even with reasonab ..... X X X X Extracts X X X X X X X X Extracts X X X X
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