Patna High Court
The Patna Municipal Corporation vs Shree Bihariji Mills Ltd. And Anr. on 22 July, 1971
Equivalent citations: AIR1972PAT357, AIR 1972 PATNA 357
JUDGMENT Shambhu Prasad Singh, J.
1. In this second appeal by defendant No. 1, the only question which arises for decision is whether the entire claim made by plaintiff-Respondent No. 1 was within time or part of it was barred. Respondent No. 1 is a factory, situate within the limits of the Patna Municipal Corporation, the appellant. Its case was that though there was no water hydrant or any scheme for water supply in the area concerned, the appellant served a demand notice on it for payment of water tax. Respondent No. 1 pointed out to the office-bearers and employees of the appellant that it was not liable to pay any water tax, but they did not appreciate the legal position and realised water tax from Respondent No. 1. For the water tax illegally realised from Respondent No. 1 for the period uptill fourth quarter of 1955-56, it instituted Title Suit No. 158 of 1956 in the Court of Munsif 1st at Patna. The suit was decreed by the trial Court and the decree was affirmed by the first appellate Court as well as by this Court where a second appeal was filed. Even during the pendency of the suit, the appellant went on realising water tax illegally from Respondent No. 1 and hence the present suit was instituted for refund of the water tax amounting to Rupees 6054.75 N. P. so realised from 14-7-1956 to 23-3-1960.
2. The defence of the appellant was that the realisation of water tax from Respondent No. 1 was legal. It was realised bona fide in exercise of statutory duty of the appellant and the suit was not maintainable. It also took a plea of limitation and that the suit was bad for want of notice under Section 508 of the Patna Municipal Corporation Act. State of Bihar (Respondent No. 2) which was also made a defendant in the suit supported the written statement of the appellant and took a further plea that the suit was bad for want of notice under Section 80 of the Code of Civil Procedure.
3. Both the Courts below have concurrently overruled the defences of the appellant and Respondent No. 2 except on the question of limitation. The trial court held that the suit was governed by Article 62 of the first Schedule to the Indian Limitation Act (Act 9 of 1908). It accordingly decreed the suit in part for the payments made from 26th December, 1958 to 23rd September, 1960, which were within three years of the institution of the suit and dismissed it in respect of payments made on and after 14th July, 1956 and before 26th December, 1958. The lower appellate court held that the Article of the first Schedule to the said Limitation Act, which was applicable to the suit, was Article 120 which prescribed a six years period of limitation. In its opinion therefore, the entire claim of Respondent No. 1 was within time and it has accordingly decreed the suit in full.
4. Mr. B. P. Gupta, learned Counsel for the appellant, has urged that the trial Court was correct in applying Article 62 to the case and the lower appellate Court has erred in applying Article 120. He has, therefore, submitted that the decree of the lower appellate Court be set aside and that of the trial Court restored. Article 120 of the first Schedule to the said Limitation Act was a residuary Article which applied to suits for which no period of limitation was provided elsewhere in the Schedule and prescribed a period of six years as limitation from the date when the right to sue accrued. This Article would apply to the suit only if Article 62 is held to be inapplicable. Article 62 runs as follows:
Description of suit Period of limitation Time from which period begins to run
62. For money payable by the defendant to the plaintiff for money received by the defendant for the plaintiff's use.
Three years.
When the money is received.
5. It has been settled by the decision in Venkata Subbarao v. The State of Andhra Pradesh, AIR 1965 SC 1773, that m order to attract Article 62 , it is not necessary that at the moment of the receipt of money the defendant should have actually intended to receive it for the use of the plaintiff and that it is sufficient if the receipt is in such circumstances that the law would impute to him an obligation to retain it for the use of the plaintiff and refund to him when demanded. It was further held that Article 62 most nearly approaches the formula of money had and received by the defendant for the plaintiffs use, if read as a description and apart from the technical qualifications imported in English Law and Procedure. The suits from which the appeals before the Supreme Court arose were instituted for recovery of money paid to the Government of Madras. Under the Essential Supplies (Temporary Powers) Act, 1946, Government of Madras passed various orders for the procurement and distribution of rice. Under these orders, rice could be procured only by Government or by procuring agents appointed by them and disposed of according to the orders of the Government.
The plaintiffs of those suits were appointed procuring agents and wholesalers under the system. Their duty was to procure rice from specified areas at prices specified by the Government from time to time and to deliver it at prices so specified to the Government or to persons nominated by it or to other licensed purchasers. The procurement price in each case was lower than the selling price and the procuring agents under the contract were entitled to the difference between the two prices. As a result of some subsequent orders passed by the Government, the selling prices were increased and the plaintiffs of those suits had to sell the rice procured by them earlier at the then prevailing lower purchase price at the new increased price and hence they became automatically entitled to larger sum than they were before the increase. The Government thought that the plaintiffs were not entitled to this benefit and insisted that excess sum should be paid to the Government. The plaintiffs paid these monies to the Government under protest and subsequently instituted suits for their recovery. It was held by their Lordships of the Supreme Court that the Government were not entitled to the money recovered from the plaintiffs of those suits. The question then arose which Article of the first Schedule to the Indian Limitation Act (Act 9 of 1908) was applicable whether Article 62 or Article 120. Their Lordships held that Article 62 was applicable. It was explained by their Lordships that in cases where right to refund arose immediately on receipt by the defendant, Article 62 would apply; in cases where it did not arise immediately but by reason of facts transpiring subsequently, Article 62 would not apply but Article 120 would apply.
6. Learned Counsel for Respondent No. 1 could not and did not challenge the correctness of the law as enunciated in the aforesaid decision of the Supreme Court. He, however, drew our attention to paragraph 9 of the written statement of the appellant wherein it stated that Respondent No. 1 could not get refund of the money unless it was declared that the levy of water tax was illegal. According to learned Counsel for Respondent No. 1, this averment of the appellant in its written statement shows that the right to refund in favour of Respondent No. 1 did not arise immediately on receipt by the appellant but did arise on happening of a subsequent event. In my opinion, there is no substance in this submission of learned Counsel for Respondent No. 1. In every case of illegal realisation of money, if the money is not returned voluntarily by the defendant, the plaintiff has to get a finding from the Court that the realisation was illegal. That is not a fact transpiring subsequently upon which the right to refund arises. Where on the date the money is realised, the realisation is illegal, the right to refund arises immediately and in my opinion, suits for recovery of such money instituted before the new Limitation Act came into force would be governed by Article 62 of the first Schedule to the Indian Limitation Act (Act 9 of 1908). In the instant case, therefore, the trial Court was right in holding that it was governed by Article 62 and the lower appellate Court has erred in holding that Article 120 applies to this case.
7. In India Sugars and Refineries Ltd. v. Municipal Council, Hospet, AIR 1943 Mad 191, it was held that a suit to recover the professional tax wrongfully levied and realised by the Municipality was governed by Article 62. Similarly, in Municipal Council, Dindigul v. Bombay Co., Ltd., AIR 1929 Mad 409, it was held that a suit by a Company to recover money wrongly collected from it by a Municipality as tax is not one for damages or compensation but is an equitable action for money had and received. In the Rajputana Malwa Rly. Co.-op. Stores Ltd. v. Ajmere Municipal Hoard, (1905) ILR 32 All 491, it was held that a suit by a Company trading within municipal limits for recovery from the Municipal Board of octroi duty illegally realised was a suit one for money had and received to the use of the defendant within the meaning of Article 62 of the second Schedule to the Indian Limitation Act, 1877 (Corresponding to Article 62 of the first Schedule to the Limitation Act, 1908). I have referred to these decisions because the case before then Lordships of the Supreme Court, referred to above, was not a case against a Municipality, but their Lordships while discussing the scope of Articles 62 and 120 approved the decisions in the aforesaid cases in which Municipalities were parties.
8. The Court of appeal below has placed reliance on decisions in Gurudas Pyne v. Ram Narain Sahu, (1882-83) ILR 10 Cal 860; Lingangouda Marigouda v. Lingangouda Fakirgouda, AIR 1953 Bom 79 and Kapildeo Rai v. Pandit Gopal Dutt Mishra, AIR 1961 Pat 195. Gurudas Pyne's case was not a case of illegal realisation of taxes. It was considered by their Lordships of the Supreme Court in the above referred case of Venkata Subbarao and in spite of that decision their Lordships of the Supreme Court held that the suits from which the appeals arose before them were governed by Article 62. The decision of the Bombay High Court in Lingangouda's case was expressly overruled by their Lordships of the Supreme Court. The decision of the learned Single Judge of this Court in Kapildeo Rai's case was given on quite different facts and is not relevant for the decision of this case.
9. In the result, the appeal is allowed, the judgment and decree of the lower appellate Court are set aside and those of the trial Court restored. However, in view of the fact that the suit of Respondent No. 1 fails in part only on the ground of limitation, there will be no order as to costs for the lower appellate Court and this Court.
Shiveshwar Prasad Sinha, J. 10. I agree.