Calcutta High Court
Agw Realtors(P) Ltd & Anr vs The Kolkata Municipal Corporation & Ors on 14 September, 2010
Author: Debasish Kar Gupta
Bench: Debasish Kar Gupta
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IN THE HIGH COURT AT CALCUTTA
Constitutional Writ Jurisdiction
Original Side
Present:
The Hon'ble Justice Debasish Kar Gupta
W. P. No. 1129 of 2009
AGW Realtors(P) Ltd & Anr.,
Versus
The Kolkata Municipal Corporation & Ors..
For Petitioners : Mr. Mr. Shaktinath Mukherjee; Sr. Adv.
Mr. L. C. Behani; Sr. Adv.
Mr. N. C. Behani; Adv.
For Respondents : Mr. Aloke Ghosh; Sr. Adv.
Mr. Swapan Debnath; Adv.
Judgment On : 14-09-2010.
This writ application is filed by the petitioners for a direction upon the Kolkata Municipal Corporation to refund Drainage Development Fees amounting to Rs.39,14,498/- with interest.
The facts of this case in a nutshell are as follows:-
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M/s. Annapurna Glass Works(P) Ltd., submitted a building plan to the respondent no1 for construction of a building at 56 Raja S. C. Mullick Road, Kolkata-700032. By a letter dated January 29, 2003 the respondent no.8 informed M/s. Annapurna Glass Works(P) Ltd. that the respondent no.4 had been pleased to allow deposit of Drainage Development Fees of Rs.39,14,498/- at premises No.56, Raja S. C. Mullick Road, Kolkata- 700032.(hereinafter referred to as the said premises). M/s. Annapurna Glass Works(P) Ltd. paid the aforesaid Drainage Development Fees to the Kolkata Municipal Corporation on March 28, 2003. Consequent upon compliance of other formalities the building plan in respect of the said premises was sanctioned by the respondent corporation.
Aforesaid Annapurna Glass Works(P) Ltd., changed the name of the company and a fresh certificate of incorporation dated January 20, 2004 was issued incorporating the changed name of the aforesaid company as "AGW Realtors(P) Ltd". The aforesaid private limited company is the petitioner no. 1 and its Director is the petitioner no.2 in this writ application.
Subsequently, the petitioners came to know that by virtue of common judgment dated November 19, 2003 a Single Bench of this court disposed of nine writ applications directing the respondent corporation to accord sanction of building plans without realizing any Drainage Development Fees and to refund such fees, if already realized, holding that the respondent corporation had no 3 right to realise such fees under the provisions of Kolkata Municipal Corporation Act, 1980, Rules or Regulations framed thereunder. The petitioner further came to know that the respondent corporation preferred nine separate appeals against the aforesaid judgment and a Division Bench of this court heard the above appeals along with a writ application which had been referred to the Division Bench on the same point. The Division Bench while dismissing the aforesaid appeals, allowed the above writ application by declaring circular no.08 of 2002/03 in respect of imposition of the Drainage Development Fees as ultra vires statute and the constitution of India as also directing the respondent corporation to refund the Drainage Development Fees collected from the persons concerned with interest @8% per annum from the date of acceptance of the fees till repayment by the corporation.
The petitioner also came to know that the Hon'ble Supreme Court dismissed the special leave petitions of the respondent corporation in the above matter on August 6, 2009.
The petitioners submitted representation dated October 22, 2009 claiming refund of the Drainage Development Fees amounting to Rs.39,14,498/- which had been paid by them to the respondent corporation in connection with sanction of building plan of the said premises. The respondent corporation did not pay any heed the above representation. Hence this writ application. 4
It is submitted by Mr. Sakti Nath Mukherjee, learned senior advocate appearing for the petitioners, that the payment of Drainage Development Fees was declared illegal by a Single Bench of this court on November 19, 2003. It is submitted by him that the above declaration of law reached its finality on August 6, 2009. Since the above payment was made by the petitioners by mistake they were entitled to get refund of that amount in accordance with the provisions of Section 72 of the Indian Contract Act, 1872. It is further submitted by him that in accordance with the provisions of Article 265 of the constitution of India no tax could be realised without authority of law. The respondent Corporation, being a statutory body could do nothing unless authorized by law. Since money was a property, according to him, the petitioners were entitled to get refund of the same after the declaration of the aforesaid law. According to him, assuming that some of the flats situated at the said premises had already been sold to the respective flat owners, the petitioner was entitled to refund of Drainage Development Fees paid by him as a component of the direct tax. According to him Drainage Development Fees was a component of the direct tax and at the time of refund of the same the question of unjust enrichment on the occasion of selling a portion of the property in respect of which the same had been paid, could not arise. It is further submitted by him that considering the date on which the declaration of law in question reached its finality upon dismissal of the SLP filed by the respondent corporation, i.e. on August 6, 2009, the claim of the petitioners could not be said to be barred by limitation.5
Mr. Mukherjee relied upon the decisions of Lal Ram Vs. Dy. Commr., Partabgar, reported in AIR 1923 PC 162, Woolwich Building society Vs. Inland Revenue Commissioner(No.2), reported in (1992) 3 ALL ER 737, Bombay Dyeing Manufacturing Co. Ltd. Vs. State of Bombay, reported in AIR 1958 SC 328, Madan Mohan Pathak Vs. Union of India, reported in AIR 1978 803, Ahmedabad Urban Development Authority Vs. Sharadhumar Jayanti Kumar Pasawalla, reported in AIR 1992 SC 2038, Mahabir Kishore Vs. State of Madhya Pradesh, reported in 1990 SC 313, Commissioner of Central Excise, Calcutta Vs. Panihati Rubber Ltd., (2006) 10 SCC 129, Asian Leather Vs. KMC, reported in 2007(3) CHN 476, Lily Thomas Vs. Union of India, reported in (2000) 6 SCC 224, Labonyamoyee Chandra Vs. State of W. B., reported in 1988(2) CLJ 491, reported in AIR 1959 SC 135, State of W. B. Vs. B. K. Mondal reported in 1962 SC 779, Khadha Co. Ltd. Vs. Union of India, reported in 1983 ELT 2159, Shiv Shanker Dal Mills Vs. State of Haryana, reported in AIR 1980 SC 1037, Mafatlal Industries Ltd. Vs. Union of India, reported in (1997) 5 SCC 536, Canbank Financial Services. Vs. custodian, reported in (2004) 8 SCC 355 and Uttaranchal Jal Sansthan Vs. Laxmi Devi, reported in (2009) 7 SCC 205 in support of above submissions.
On the other hand Mr. Alok Ghosh, learned advocate appearing for the respondent corporation, submitted that admittedly the law was declared setting aside the circular No.08 of 2002-08 of the respondent corporation ultra vires the statute and the constitution of India on November 19, 2003. The instant writ 6 application was filed on November 13, 2009. So, the claim of the petitioners for refunding the money was barred by limitation. According to Mr. Ghosh the petitioner company changed its name in January 2004. Drainage Development Fees were paid by the erstwhile company without raising any objection. Therefore, the petitioner company should not get the opportunity of unjust enrichment. According to him, the erstwhile company developed the said premises and sold out flats.
Mr. Ghosh relied upon the decision of M/s Orissa Cement Ltd. Vs. State of Orissa, reported in AIR 1991 SC 1976, Sugarmal Vs. State of Madhya Pradesh, reported in AIR 1965 SC 1740, Indian Aluminium Co. Ltd. Vs. Thane Municipal Corporation, reported in 1992 Supp(1) SCC 480, Aravili Minerals and Chemicals Industries Vs. State of Rajasthan, reported in 1992 Supp(2) SCC 242, Mafatlal Industries Vs. Union of India, reported in (1997) 5 SCC 536, Shish Ram Vs. State of Haryana, reported in (2000) 6 SCC 84, Vinod Somani Vs. CMC, reported in 2007(4) CHN 416 in support of his above submissions.
Before entering into the merits of this case the preliminary objection raised by the respondent corporation with regard to the period of limitation for filing this writ application is taken up for adjudication. Admittedly Drainage Development Fees were paid to the respondent corporation on March 28, 2003. It is not in dispute that a Single Bench of this court declared realisation of Drainage 7 Development Fees illegal by his judgment dated November 19, 2003. It is not in dispute that a Division Bench of this court while dismissing the appeals arising out of the aforesaid judgment declared imposition of Drainage Development Fees ultra vires statute and the constitution of India by a judgment dated May 14, 2007. The Hon'ble Supreme Court dismissed the special leave petition on August 6, 2009. This writ application was filed on November 13, 2009. In relation to the dispute in question appeals must be considered to be continuation of the proceeding and the declaration of law reached its finality when the same were finally disposed of by the highest court of appeal. This writ application was filed within three and half months from the date of dismissal of the special leave petitions. In view of the above this writ application is not liable to be dismissed at the threshold of the ground the limitation. Reference may be made to the decision of Union of India Vs. West Coast Paper Mills Ltd, reported in (2004)
2 SCC 747 and the relevant portions of the above decision are quoted below:
"15. Even in relation to a civil dispute, an appeal is considered to be a continuation of the suit and a decree becomes executable only when the same is finally disposed of by the court of appeal.
16. The starting point of limitation for filing a suit for the purpose of recovery of the excess amount of freight illegally realised would, thus, begin from the date of the order passed by this court. It is also not in dispute that the respondent herein filed a writ petition which was not entertained on the ground stated hereinbefore. The respondents were, thus, also entitled to get the period during which the writ petition was pending, excluded for computing the period of limitation. In that view of the matter, the civil suit was filed within the prescribed period of limitation."8
With regard to the merits of this case, admittedly collection of Drainage Development Fees was declared ultra vires the statute and the constitution of India by a Division Bench of this court in the matter of Asian Leather Ltd. Vs. KMC, reported in 2007(1) CHN 477 and the relevant portions of the above decision are quoted below:
"52. We, therefore, dismiss the appeals filed by the Corporation in the above matters and so far the writ application filed by the Asian Leather Private Limited is concerned, we pass the same order by declaring the circular as ultra vires the statute and the Constitution of India and at the same time, directing the Corporation to refund the Drainage Development Fees collected from the writ petitioners within three months from today with interest at the rate of 8% per annum from the date of acceptance of the fees till repayment by the Corporation. All the matters, thus, are disposed of accordingly."
Article 265 of the constitution of India prohibits levy or collection of a tax except by an authority of law. The implied limitation is this the law providing for levy of tax should be one which is a valid law. Therefore, in view of the declaration of law as discussed hereinabove, the corporation collected the Drainage Development Fees from the petitioner without authority of law.
In this case a refund is claimed on the ground that the provisions of the act under which it was levied had been held to be unconstitutional. Such a claim, is maintainable by virtue of Section 72 of the Indian Contract Act, 1872 and the same is quoted below:
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"72. Liability of person to whom money is paid, or thing delivered, by mistake or under coercion: A person to whom money has been paid, or anything delivered, by mistake or under coercion, must repay or return it."
The above provision applied with the same vigour to the state as it applied to a citizen. No distinction can be drawn in the matter of application of Section 72 between payment made in respect of tax liability and any other liability. The legislative object is to prevent unjust enrichment and ensure refund or return of the amount. The principle of unjust enrichment is applicable in a case where the following conditions are fulfilled:
(i) The recipient has been enriched by the receipt of a benefit.
(ii) This enrichment is at the expense payee.
(iii) The retention of the enrichment be unjust.
Reference may be made to the decision of Mahavir Kishore Vs. State of M. P., reported in AIR 1990 SC 313 and the relevant portions of the above decision are quoted below:
"11. The principle of unjust enrichment requires: first, that the defendant has been 'enriched' by the receipt of a "benefit": secondly, that this enrichment is "at the expense of the plaintiff"; and thirdly; that the retention of the enrichment be unjust. This justifies restitution. Enrichment may take the form of direct advantage to the recipient's wealth such as by the receipt of money or indirect one for instance where inevitable expense has been saved."10
The only issued which is left to be decided is that after payment of Drainage Development Fees the petitioner sold out considerable number of flats to third parties. In the selling price the petitioner company had merged the Drainage Development Fees originally paid. Therefore, if refund is made whether the company would be getting an additional amount over and above the normal price which they would have charged but for the fact that the petitioner company was initially asked to pay the Drainage Development Fees? In view of the facts and circumstances of this case there was no evidence that the petitioner company had charged any Drainage Development Fees separately for selling those flats to third parties. In the absence of recovery of the Drainage Development Fees separately from the third parties the question of unjust enrichment of the petitioner company does not arise. Reference may be made to the decision of Tata Engg. & Locomotive Co. Vs. Municipal Corpn. Thane, reported in AIR 1992 SC 645 and the relevant portions of the above decision are quoted below:
"31. The learned counsel for the respondent then contended that the appellants have recovered the amounts paid by them by way of octroi duty from the dealers or the customers to whom they had sold the goods and therefore they are in any case not entitled to get a refund. The argument was that if refund is ordered it would amount to allowing the appellants to unjustly enrich themselves at the cost of the public to whom the burden had already been passed. This argument is based on the ground that in the selling price the Company had merged the octroi duty originally paid as deposit and if a refund is made the company would be getting an additional amount over and above normal price which they would have charged but for the fact that they were initially asked to deposit octroi. There is no evidence that any of the articles sold by the company is subject to any price control by the Government or that the company 11 had charged any octroi separately in the bills. Invoices and the other documents of sale to the outside purchasers produced before us do not also show that any octroi was separately charged and collected by the company. It may be mentioned that in the rejoinder filed by the appellant in the writ petition they have specifically denied that they "have recovered the amount paid by them by way of octroi duty from the dealers to whom they had sold the goods or that the dealers in turn have recovered the octroi duty from the customers." In view of this the question of unjust enrichment does not arise."
I do not find that the decisions of Indian Aluminum Co. Ltd.(Supra), is not applicable in the instant case in view of the distinguishable facts and circumstances of this case. In the above case the octori duty paid by the company passed on to the consumers separately. Similarly in the matter of Mafatlal Industries Ltd.(supra) the excise duty passed on the customs separately. The decisions of Orissa Cement Ltd.(supra), Sugarmal(supra), Aravili Minerals(supra), Shish Ram(supra), , Vinod Somani(supra) are also not applicable in this case in view of the distinguishable facts and circumstances of this case.
Consequent upon the discussions and observations made hereinabove this writ application is allowed directing the Kolkata Municipal Corporation to refund the Drainage Development Fees collected from the petitioners within three months from today with interest at the highest prevailing rate payable on fixed deposit by a Nationalized Bank from the date of acceptance of the above fees till repayment by the corporation.
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There will be, however, no order as to costs.
Urgent Photostat certified copy of this judgment, if applied for, be given to the parties, as expeditiously as possible, upon compliance with the necessary formalities in this regard.
( Debasish Kar Gupta, J. )