(1) IN THE COURT OF PAWAN KUMAR JAIN ADDITIONAL DISTRICT JUDGE, FAST TRACK COURT, DELHI dcdcdcdcdcdcdcdcdcdcdcdcdcdcdcdcdcdcdc Old Suit No. : 109/80 New Suit No. : 24/07 Date of Institution of case : 01.02.80 Date of transfer to this court : 09.01.07 Judgment reserved on : 24.10.07 Date of decision : 03.11.07 IN THE MATTER : bbbbbbbbb The Ganganagar Sugar Mills Ltd., Now known as Rajasthan State Ganganagar Sugar Mills Ltd. 17-Civil Lines, Jaipur-302006. Plaintiff VERSUS 1. Rampur Distillery & Chemical Company Ltd., (Now known as Radico Khaitan Ltd.) 206, Jor Bagh, New Delhi-110003 New Address : 305-302, Deepali 92, Nehru Place, New Delhi. 2. State of Uttar Pradesh, (2) Through the Chief Secretary to Government of Uttar Pradesh, Sachivalaya, Lucknow. Defendants `SUIT FOR RECOVERY OF Rs.7,36,272.06 RERERERRERERERERERERER Present: Sh. [ENTITY], Ld. Counsel for plaintiff. Sh. [ENTITY], Ld. Counsel for defendant No.1 Sh. [ENTITY], Ld. Counsel for defendant No.2 EcEcEc EcEcEcEcEcEcEcEcEc J U D G M E N T
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1. This is a suit for the recovery of Rs.7,36,272.06, which is pending for the last more than 27 years.
2. The epitome of the plaint is that plaintiff is a company and had authorized its Secretary [ENTITY] to institute the present suit, to sign and verify the pleadings. Defendant no.1 is also a company having its principal office at 206, Jor Bagh, New Delhi and its works at Rampur in Uttar Pradesh.
(i) It is admitted case of both the parties, that plaintiff had purchased the rectified spirit from the defendant no.1 and also paid export duty besides price of the rectified spirit and other taxes, to the defendant no.1 in compliance with the rules and regulations of the defendant no.2. It is averred that plaintiff had paid Rs.7,36,272.06 towards export duty to defendant no.1 during the period 1974 to 1975, detail of which is mentioned in schedule 'A' annexed with plaint. It is further averred that defendant no.1 had deposited the said amount with defendant no.2.
(ii) It is also undisputed fact that High Court of Allahabad vide its judgment dated 31st January 1977 had declared the imposition of export duty levied by defendant no.2 on the export of rectified spirit from the State of Uttar Pardesh as illegal and invalid and further directed the defendant no.2 to refund the amounts already collected by it on account of export duty. It is pertinent to mention here that defendant no.1 was also one of the petitioners in those writ petitions.
(iii) It is averred that plaintiff had paid the export duty amounting Rs.7,36,272.06 under a mistake of law believing that the same was legally and validly imposed by the defendant no.2 but it was not so. It is alleged that plaintiff came to know about the said judgment only on 25th February 1977, when plaintiff had received the copy of said judgment from All India Distillers Association vide their circular no.C-77/53 dated 25th February 1977.
(iv) Thereafter, plaintiff had requested the Excise Commissioner and the Secretary to the Government of Uttar Pardesh to refund the said amount but to no avail and was advised to file a petition. Accordingly, plaintiff had filed a petition before the High Court of Allahabad, in which interim order was passed on 21st February 1978 restraining the defendant no.2 from refunding the said amount to defendant no.1. The said interim order was confirmed on 14th November 1979.
(v) It is averred that on 29th November 1979 plaintiff had sent a legal notice under [SECTION] [ACT] to the defendant no.2, copy of which was also sent to defendant no.1. However, despite the service of the notice, defendants failed to refund the said amount.
(vi) With these averments, plaintiff has filed the present suit for the recovery of Rs.7,36,272.06 along with interest @ 18% per annum.
3. Defendant no.1 contested the suit by filing its separate written statement wherein preliminary objections inter-alia were taken that claim of the plaintiff is barred by the period of limitation and this court has no territorial jurisdiction to try the present suit.
(i) On merits, it is stated that defendant no.1 had collected the export duty from the plaintiff as per the law and defendant no.1 had already deposited the collected duty with defendant no.2. It is further averred that there was no clause in the agreement to refund the duty to the plaintiff, thus question of refunding the duty to the plaintiff does not arise as alleged by the plaintiff. Defendant no. 1 admitted that in [CASE NUMBER], High Court of Allahabad had restrained the defendant no.1 to collect the refund of export duty from defendant no.2 and the said order was confirmed on 14.11.79. It is stated that defendant no. 1 is not liable to pay any amount to the plaintiff.
4. Defendant no.2 also controverted the claim of the plaintiff by filing its separate written statement wherein it is stated that there was no privity of contract with the plaintiff. However, it is admitted that the export duty paid by the plaintiff, must have been deposited by the defendant no.1 with defendant no.2. It is further stated that the liability of defendant no.2 is only towards defendant no.1 and not against the plaintiff. Defendant no.2 has admitted about the interim order passed by the High Court of Allahabad on the petition of the plaintiff.
5. Plaintiff has filed the replication to the written statements of the defendants wherein it denied the defendants' version and re-asserted and re-affirmed the averments made in the plaint.
6. Vide order dated 13th January, 1986 following issues were framed:
(i) Whether the suit has been properly instituted ? (ii) Whether the suit is within limitation ? (iii) Whether this court has jurisdiction to try the present suit ? (iv) Whether the suit is barred by res judicata or principles analogous thereto ? (v) Whether the plaintiff is entitled to refund of the excise duty and if so from which of the defendants and for what amount ? (vi) Relief.
7. To prove its case, plaintiff has examined the following witnesses:-
PW1 Sh. [ENTITY], Accounts Officer PW2 Sh. [ENTITY], Company Secretary In counter defendants failed to adduce any evidence during the trial.
8. I have heard Ld. Counsel for the defendants, perused the record carefully and gave my thoughtful consideration to their contentions. Ld. Counsel for plaintiff has deprived this court from his valuable assistance as Ld. Counsel failed to advance arguments or file the written submission despite opportunity given. However, the plea taken by plaintiff in the pleading and in evidence are also taken into considered. My issue-wise findings are as under:
9. ISSUE NO.1 The onus to prove the said issue should be upon the plaintiff.
(i) Ld. Counsel for the defendant no.1 vigorously argued that the present suit has not be instituted by the duly authorized person as in the plaint, it is nowhere mentioned that any resolution was passed in favour of [ENTITY] to institute the present suit. It is urged that since resolution has not been mentioned in the plaint, hence plaintiff cannot produce the same during the trial. In support of his contention, Ld. Counsel has relied upon [PRECEDENT].
(ii) As per the plea taken by the plaintiff in the plaint, Company Secretary, [ENTITY] was authorized to sign and verify the pleadings and to institute the suit on behalf of the plaintiff company. Plaintiff has relied upon the testimony of PW2 and also upon the documents, which are Ex.PW2/1 & PW2/3.
(iii) The main contention of Ld. Counsel for the defendant no.1 is that since plaintiff has not pleaded about the resolution in the plaint, hence evidence adduced by the plaintiff to prove the resolution cannot be looked into. In support of his contention Ld. Counsel has strongly relied upon [ENTITY] (dead) by [PRECEDENT]. Relevant portion of para 6 reads as under:-
"It is well settled that in the absence of pleading, evidence, if any, produced by the parties cannot be considered. It is also equally settled that no party should be permitted to travel beyond its pleading and that all necessary and material facts should be pleaded by the party in support of the case set up by it. The object and purpose of pleadings is to enable the adversary party to know the case it has to meet. In order to have a fair trial it is imperative that the party should state the essential material facts so that other party may not be taken by surprise. The pleadings however should receive a liberal construction; no pedantic approach should be adopted to defeat justice on hair splitting technicalities. Sometimes, pleadings are expressed in words which may not expressly make out a case in accordance with strict interpretation of law, in such a case it is the duty of the Court to ascertain the substance of the pleadings to determine the question It is not desirable to place undue emphasis on form, instead the substance of the pleadings should be considered. Whenever the question about lack of pleadings is raised the enquiry should not be so much about the form of the pleadings, instead the Court must find out whether in substance the parties knew the case and the issues upon which they went to trial. Once it is found that in spite of deficiency in the pleadings parties knew the case and they proceeded to trial on those issues by producing evidence, in that event it would not be open to a party to raise the question of absence of pleadings in appeal.
(iv) The above judgment elucidates that it is not the form of pleadings but its substance is to be looked into at the time of ascertaining whether the evidence led by the party is beyond pleadings or not. In the instant case, it is averred in the plaint that [ENTITY] is the company secretary of the plaintiff company and he had been authorized to institute the present suit and to sign and verify the pleadings etc. In the written statement defendant no.1 denied the same for want of knowledge and further stated that plaintiff be put to strict proof regarding the authority of [ENTITY]. No doubt plaintiff has not specifically mentioned about the resolution through which [ENTITY] was authorized to institute the suit but from the substance of the plaint it emerges clearly that Plaintiff Company had authorized its company secretary Mr. [ENTITY] to institute the suit, to sign and verify the pleadings on behalf of the company. In order to establish that Plaintiff Company had authorized its company secretary Mr. [ENTITY], filed the resolutions passed by the Board of Directors of the company and proved the said resolutions by producing the minutes book in the Court. Pondering the above facts, I am of the view that merely plaintiff has not mentioned the words 'resolution' in the plaint is not sufficient to discard the evidence led by the plaintiff to prove the fact that Mr. [ENTITY] was authorized to institute the suit, to sign and verify the pleadings. In my opinion the said contention is devoid of merits, hence rejected.
(v) Ld. Counsel for the defendant no.1 has cited [PRECEDENT] and [PRECEDENT] in support of his contention that the present suit has not been filed by the duly authorized person. I have gone through all the above judgments and of the view that the same are not applicable to the case in hand as the facts of the above judgments were totally different from that of the present case, thus no purpose would be achieved to discuss the same separately.
(vi) PW2 in his deposition deposed that on 18th October 1979 in a meeting of Board of Directors, a resolution was passed authorizing the then Company Secretary Shri [ENTITY] to take all necessary actions to file the suit on behalf of the company. The said resolution was proved by PW2 after producing the minute's book of the company and the same is Ex.
PW2/1. He further deposed that the Board of Directors in the meeting held on 7th December 1981 ratified all the actions of the then Company Secretary in respect of the suits filed by him on behalf of the company and the said resolution was proved by producing the minutes book and the same is exhibited as Ex. PW2/3. He further deposed that vide Ex.PW2/2 Sh. [ENTITY] was authorised to sign, verify the pleading and institute the suit on behalf of plaintiff company. During the cross- examination of PW2, even no suggestion was put to him that no such resolution was passed in favour of Mr. [ENTITY]. In other words, the testimony of PW2 to that extent remained unrebutted during the trial. Even defendants failed to lead any contrary evidence to show that Mr. [ENTITY] was not authorized to institute the suit, to sign and verify the pleadings. In these circumstances, there is no reason to disbelieve the uncontroverted testimony of PW2.
(vii) Mulling over the on-going discussion, I am of the considered opinion that Mr. [ENTITY] was duly authorized by the plaintiff company to institute the suit, to sign and verify the pleadings on behalf of the plaintiff company. Accordingly, I decide this issue in favour of the plaintiff and against the defendants.
The onus to prove the said issue was upon the plaintiff.
(i) Ld. Counsel for the defendant no.1 energetically contended that the present suit is barred by the period of limitation under [SECTION] of the [ACT] and strongly relied upon the judgment Bhavnagar Salt & Industrial Works (P) Ltd; v/s Union of India reported in AIR 1985 GUJARAT
21. As per the plea taken by the plaintiff, limitation period would start from 25.02.77, when plaintiff had received the circular from All India Distillers Associations alonwith the copy of judgment dated 31.01.77 passed by Hon'ble High Court of Allahabad. From the said plea, it appears that plaintiff has relied upon [SECTION] of the [ACT].
(ii) The contentious issue is as to whether the facts of the instant case attract the provision of [SECTION] or [SECTION] of the [ACT]. [SECTION] reads as under:
"For money payable by the defendant to the plaintiff for money received by the defendant, for the plaintiff's use"
Limitation period is three years and it will start from the date when the money is paid.
[SECTION] reads as under:-
Effect of fraud or mistake - (1) where, in the case of any suit or application for which a period of limitation is prescribed by this Act-
(a) or
(b) or
(c)the suitor application is for relief from the consequences of mistake ; or
The period of limitation shall not begin to run until the plaintiff or applicant has discovered the fraud or the mistake or could, with reasonable diligence, has discovered it, or in the case of a concealed document, until the plaintiff or the applicant first had the means of producing the concealed document or compelling its production
(iii) In Bhavnagar Salt & Industrial Works (P) Ltd.(Supra), it is held in para 8 that :
"The decision which is really helpful on the point is the one rendered by the Supreme Court [PRECEDENT] (supra).Interpreting [SECTION], [ACT], the Supreme Court held that the right to relief under [SECTION] extends to money paid under mistake of law i.e. "mistake in thinking that the money paid was due when, in fact, it was not due." While thus interpreting what mistake of law is, the Supreme Court followed the decision of the Privy Council in [PRECEDENT] and its earlier decision in [PRECEDENT]. Thus, it is settled beyond controversy that when payment is made believing that it is due, but in fact, it is not due, it can be said to be payment made under a mistake of law. It therefore, follows there from that if payment was made not labouring under such a belief but because of coercion or for some other reason, for example, for avoiding some adverse consequences, it cannot be said to be payment made under mistake of law. For the payment to be a payment made under a mistake of law, it has to be a payment made willingly and under a belief that money paid is really due and payable. It is the subsequent event which proves that belief to be mistaken and it is really because of that reason that the limitation is made to run only from the date when such a mistake is discovered either because of a declaration to that effect made by a competent Court or because of some other reason. If a person believes that the party seeking to recover a particular amount from him has no authority to do so and disputes its authority either by filing a suit or in any other manner., then it cannot be said that the payments made by him subsequently, not believing that money is really payable by him, but for some other reason, were made under a mistake of law.
(iv) The above judgment elucidates clearly that if the payment was made under the belief that it was due, while in fact it was not due, it amounts the payment had been made under mistake of law. However, if the payment was not made under such a belief but made under coercion or for some other reason, for example to avoid some adverse consequences, in such a case it cannot be said that the payment was made under mistake of law.
Moreover, it is pertinent to mention here that the facts of that case were totally different from the facts of the present case, thus the said judgment is not helpful to the defendants in any manner. On the contrary the said judgment supports the plaintiff's version.
(v) In the instant case, plaintiff had paid the suit amount to the defendant no.2 through defendant no.1 towards export duty believing that the duty imposed by the defendant no.2 was constitutional and valid but the High Court of Allahabad vide its judgment dated 31.01.1977 declared the said duty unconstitutional and invalid and also directed the defendant no.2 to refund the amount of duty, which was already collected by it. Thus, the plaintiff had paid the duty to the defendant no. 2 through defendant no.1 under the belief that the duty imposed by defendant no.2 was constitutional and valid, while it was not so. Hence, to my mind, plaintiff had paid the duty under mistake of law.
(vi) In [ENTITY] Industries Vs Union of India (1997)5 SCC 536, it was held that:-
"Such a claim is maintainable both by virtue of the declaration contained in [SECTION] of the [ACT] and also by virtue of [SECTION] of the [ACT]. In such cases, period of limitation would naturally be calculated taking into account the principle underlying clause (c) of sub-section (1) of Section 17 of the [ACT]."
(vii) Further, in the present case cause of action arose in favour of the plaintiff only when the High Court of Allahabad had declared the said duty invalid and unconstitutional and directed the defendant no.2 to refund the duty already collected by it. If the duty were not declared unconstitutional, plaintiff would not have any right to recover the suit amount. Thus, in my view the facts of the case in hand do not fall within the ambit of [SECTION] of the [ACT].
(viii) Bestowing my thoughtful consideration, I am of the view that provisions of [SECTION] of the [ACT] are applicable in the present case.
11. Ld. Counsel for the defendant no.1 argued that the limitation period would start from the date of judgment i.e. 31.01.1977 and not from 25.02.1977 as claimed by the plaintiff. As per the plaintiff's version, the limitation period would start from the date of the discovery of the mistake and in the present case, plaintiff had came to know about the said judgment only on 25.02.1977, when plaintiff had received the circular along with the copy of judgment dated 31.01.1977, from the All India Distillers' Association.
(i) It is undisputed fact that plaintiff was not a party in the writ petitions pending before the High Court of Allahabad. Admittedly, the present suit was filed on 1st February 1980. If the limitation period would start from day of judgment i.e. 31.01.1977, there is a delay of one day in filing the present suit. As plaintiff was not a party in those writ petitions, thus there is every possibilities that plaintiff may not came to know about the judgment on that every day. Further, the plaintiff's office is situated in Rajasthan, while the judgment was pronounced by the High Court of Allahabad. In these circumstances, plaintiff would require at least one-week time to have the copy of judgment.
(ii) According to the plaint, plaintiff came to know about the said judgment only on 25th February 1977, when plaintiff had received the circular along with the copy of judgment from All India Distillers' Association. PW2 has deposed the said facts in his examination-in-chief. Though PW2 was cross examined on the point of circular by Ld. Counsel for defendant No.1 yet nothing came out, which may cause any dent in his testimony. But during his cross-examination, no suggestion was put to him that plaintiff had not received the said judgment through said circular or that plaintiff was aware about the said judgment prior to 25th February 1977. In the absence of any contrary evidence on record, there is no reason to disbelieve the testimony of PW2 to that extent.
(iii) Pondering the entire facts of the case, I am of the opinion that plaintiff had no occasion to come to know about the judgment of High Court of Allahabad on 31st January 1977 and plaintiff would require at least one-week time to know about the said judgment. Further, the testimony of PW2 [ENTITY] to the extent that plaintiff had come to know about the said judgment only on 25th February 1977 remained un-rebutted. Thus, I am of the view that the present suit is not barred by the period of limitation. Accordingly, I decide this issue in favour of the plaintiff and against all the defendants.
The onus to prove the said issue was upon the plaintiff.
(i) Ld. Counsel for the defendant no.1 vehemently contended that this Court has no territorial jurisdiction to try the present suit as the cause of action had arisen at Rampur, U.P., where the works of defendant no.1 is situated and from where the rectified spirit was supplied to the plaintiff. It is further urged that defendant no.2 also does not carry on its business within the territorial jurisdiction of this Court.
(ii) The plea of the plaintiff is that the principal office of the defendant no.1 is situated in Delhi and this fact is not disputed by the defendant no.1 in its written statement, thus defendant no.1 can be sued in Delhi. It further appears that vide order dated 15th February 1980, plaintiff had been permitted to sue the defendant no.2 in Delhi.
(iii) Admittedly, plaintiff in its plaint empathetically averred that defendant no.1 has its principal office at Jor Bagh in New Delhi and has also works at Rampur, U.P. Defendant no.1 has not disputed the said fact in its written statement. Thus, it is proved that defendant no.1 has its principal office in New Delhi and carries its business from there.
(iv) Under [SECTION] of the [ACT], defendant can be sued at a place where he actually and voluntarily resides, or carries on business, or personally works for gain. Explanation to the said section further manifests where corporation is a defendant, it shall be deemed to carry on business at its sole or principal office in India. In the instant case defendant no.1 is a corporation, hence for the purpose of jurisdiction, it will be presumed that defendant no.1 carries its business from its principal office, which admittedly is situated in Delhi.
(v) Illustration (a) to [SECTION] [ACT] further elucidates that this Court has territorial jurisdiction to try the present suit, the illustration reads as under: -
"A is a tradesman in Calcutta. B carries on business in Delhi. B, by his agent in Calcutta, buys goods of A and requests A to deliver them to the East Indian Railway Company. A delivers the goods accordingly in Calcutta. A may sue B for the price of goods either in Calcutta, where the cause of action has arisen, or in Delhi, where B carries on business."
(vi) So far the objection pertaining to defendant no.2 is concerned, plaintiff had moved an application under [SECTION] [ACT] for seeking permission to sue the defendant no.2 in Delhi. After considering the application, Court vide order dated 15th February 1980 permitted the plaintiff to sue the defendant no.2 by issuing notice of the suit to the defendants.
(vii) Considering the above discussion, I am of the view that this Court has territorial jurisdiction to try the present suit. Accordingly, I decide this issue in favour of the plaintiff and against both the defendants.
13. ISSUE No.4 Onus to prove the said issue should be upon the defendants but during the course of arguments, Ld. Counsel for the defendants have not pressed for the said issue, thus the same is decided against the defendants and in favour of plaintiff.
Onus to prove the said issue should be upon the defendants.
(i) Ld. Counsel for defendant no.1 astutely contended that there is no iota of evidence on record to show that defendant no.1 had received the refund of the export duty from the defendant no.2, which was deposited by the plaintiff,. On the contrary, it is admitted case of the plaintiff that plaintiff had filed a writ petition in the High Court of Allahabad wherein a stay order was granted in favour of the plaintiff restraining the defendant no.2 from refunding the amount of export duty to the defendant no.1. It is urged since defendant no.1 had not received any refund from defendant no.2, question of claiming from defendant no. 1 does not arise.
(ii) According to the plaintiff's version, defendant no. 1 had taken the refund from defendant no. 2, thus defendant no.1 is liable to pay suit amount. During the course of arguments, ld. Counsel for the defendants also drew the attention of this court towards the judgment dated 11.04.2007 passed by this court in the similar matter in title [PRECEDENT].
(iii) It is admitted case of both the parties that defendant no.2 had charged the 'Excise Duty' under the nomenclature of 'Export Duty' on the export of rectified spirit. The said 'duty' was declared unconstitutional by the High Court of Allahabad vide its judgment dated 31st January 1977 and the same is Ex. PW1/1. At page 15 of the said judgment, Hon'ble Court observed as under:-
"Excise duty is primarily a duty on the production or manufacture of goods produced or manufactured within the country. It is an indirect duty which the manufacturer or producer passes on to the ultimate consumers "
(iv) In its entire plaint, plaintiff has nowhere specifically mentioned that defendant no.1 had taken the refund from the defendant no.2. On the contrary, in the para 11 of the plaint, it is mentioned that plaintiff had filed a [CASE NUMBER] in the High Court of Allahabad against both the defendants and vide interim order dated 21st February 1978, High Court of Allahabad restrained the defendant no.2 to refund the export duty amount to the defendant no.1 and the said interim order was subsequently confirmed on 14th November 1979. Ultimately the plaintiff withdrew the said petition on 1st February, 1980. There is nothing on record even to suggest that during that period either of the defendants had violated the orders of the High Court of Allahabad. In other words, till 1st February, 1980 defendant no.2 had not given the refund of export duty, which was deposited by the plaintiff to the defendant no.1. On the other hand, defendant no.1 nowhere admitted in its written statement that it had taken the refund of export duty from the defendant no.2. Similarly, defendant no.2 in its written statement nowhere stated that the said duty was refunded to the defendant no.1. In nutshell, the plaint does not illuminate that defendant no.1 had taken the refund of said amount from defendant no.2.
14. It is admitted case of the plaintiff that he had filed a Civil (Misc.) Petition before the High Court of Allahabad wherein defendant no.2 was restrained from refunding the Export Duty amount to the defendant no.1 and the said order was confirmed on 14th November, 1979. Thereafter, plaintiff had withdrawn the said petition on 1st February, 1980. If the defendant no.2 had refunded the Export Duty amount to the defendant no.1 during the existence of stay order, plaintiff would certainly bring this fact in the knowledge of the High Court of Allahabad but there is nothing on record even to show prima- facie the same. The present suit was filed in 1980. Even in the suit, plaintiff nowhere mentioned that defendant no.1 had taken the refund of the export duty. As there was stay order to refund the export duty to the defendant no.1, there was no occasion for the defendant no.2 to refund the said amount to the defendant no.1. Even defendant no.2 had not mentioned in its written statement that the said amount had already been refunded to the defendant no.1. Had the said amount been refunded to the defendant no.1, defendant no.2 would certainly mention the same in its written statement but it is not so.
15. Pondering the above discussion, I am of the opinion that there is no scintilla of evidence to establish that defendant no.1 had taken the refund of Export Duty amounting Rs.7,36,272.06 from defendant no.2, thus defendant no.1 is not liable to pay the said amount to the plaintiff.
16. Now the issue arises as to whether defendant no.2 is liable to refund the said amount to the plaintiff? Before deciding this conundrum issue, it will be pertinent to refer the [ENTITY] Industries' case (supra).
17. [ENTITY] Industries Ltd. v/s Union of India reported in (1997) 5 SCC 536, is a case decided by the bench of 9 Hon'ble Judges wherein the decision of [ENTITY]'s case (supra) was overruled. The first question arose as to whether the taxes paid under the unconstitutional law are automatically refundable under [SECTION] of the [ACT]? The said issue was answered in negative by the Apex Court in para 39, the same is re-produced as under:
"Now, the right to refund arising as a result of declaration of unconstitutionality of a provision of the enactment can also be looked at as a statutory right of restitution. It can be said in such a case that the tax paid has been paid under a mistake of law which mistake of law was discovered by the manufacturer/assessee on the declaration of invalidity of the provision by the court. [SECTION] of the [ACT] may be attracted to such case and a claim for refund of tax on this score can be maintained with reference to [SECTION]. This too, however, does not mean that the taxes paid under an unconstitutional provision of law are automatically refundable under [SECTION]. [SECTION] contains a rule of equity and once it is a rule of equity, it necessarily follows that equitable considerations are relevant in applying the said rule - an aspect which we shall deal with a little later. Thus, whether the right to refund of taxes paid under an unconstitutional provision of law is treated as a constitutional right flowing from [SECTION] or as a statutory right/equitable right affirmed by [SECTION] of the [ACT], the result is the same - there is no automatic or unconditional right to refund.
(i) From the above settled proposition of law, it emerges clearly that in the present case, merely fact that the Export Duty had been declared unconstitutional by the High Court of Allahabad, does not mean that Export Duty, already paid by the plaintiff is automatically refundable. No doubt that declaration creates a right in favour of the plaintiff to claim the refund of the said duty but that right is subject to the 'rule of equity'. The 'Rule of Equity' is defined by the Highest Court of the land in para 80 of the judgment, relevant portion of the same reads as under:
" We are, therefore, of the opinion that equitable considerations cannot be held to be irrelevant where a claim for refund is made under [SECTION]. Now, one of the equitable considerations may be the fact that the person claiming the refund has passed on the burden of duty to another. In other words, the person claiming the refund has not really suffered any prejudice or loss. If so, there is no question of reimbursing him. He cannot be re- compensated for what he has not lost. The loser, if any, is the person who has really borne the burden of duty; the manufacturer who is the claimant has certainly not borne the duty notwithstanding the fact that it is he who has paid the duty. Where such a claim is made, it would be wholly permissible for the court to call upon the petitioner/plaintiff to establish that he has not passed on the burden of duty to a third party and to deny the relief of refund if he is not able to establish the same, as has been done by this Court in [PRECEDENT]. In this connection, it is necessary to remember that whether the burden of the duty has been passed on to a third party is a matter within the exclusive knowledge of the manufacturer. He has the relevant evidence - best evidence - in his possession. Nobody else can be reasonably called upon to prove that fact. Since the manufacturer is claiming the refund and also because the fact of passing on the burden of duty is within his special and exclusive knowledge, it is for him to allege and establish that he has not passed on the duty to a third party. This is the requirement, which flows from the fact that [SECTION] is an equitable provision and that it incorporates a rule of equity. This requirement flows not only because [SECTION] incorporates a rule of equity but also because both the Central excises duties and the customs duties are indirect taxes, which are supposed to be and are permitted to be passed on to the buyer.
(ii) From the above, it is evident that to claim the refund of taxes/duty paid under the unconstitutional law, it is the duty of the plaintiff to establish that he had not passed the burden of such duty to the customers. If the burden of the duty was not passed to the customers, only then plaintiff would be entitled for the refund of such taxes/duty otherwise not. Further, in para 82, the Apex Court held that the presumption is in favour of the State that the burden of the duty/taxes had been passed on the other and burden is upon the petitioner/plaintiff to establish that the same was not passed on the others. The relevant portion of para 82 is read as under:-
" In such a situation, it would be legitimate for the court to presume, until the contrary is established, that a duty of excise or a customs duty has been passed on. It is a presumption of fact, which a court is entitled to draw under [SECTION] of the [ACT]. It is undoubtedly a rebuttable presumption but the burden of rebutting it lies upon the person who claims the refund (plaintiff/petitioner) and it is for him to allege and establish that as a fact he has not passed on the duty and, therefore, equity demands that his claim for refund be allowed.
(iv) In para 83 it is further held that:
"We are also of the respectful opinion that [ENTITY] is not right in saying that the defence of spending away the amount of tax collected under an unconstitutional law is not a good defence to a claim for refund. We think it is, subject to this rider: Where the petitioner-plaintiff alleges and establishes that he has not passed on the burden of the duty to others, his claim for refund may not be refused. In other words, if he is not able to allege and establish that he has not passed on the burden to others, his claim for refund will be rejected whether such a claim is made in a suit or a writ petition. It is a case of balancing public interest vis vis private interest. Where the petitioner-plaintiff has not himself suffered any loss or prejudice (having passed on the burden of the duty to others), there is no justice or equity in refunding the tax (collected without the authority of law) to him merely because he paid it to the State. It would be a windfall to him. As against it, by refusing refund, the monies would continue to be with the State and available for public purposes. The money really belongs to a third party - neither to the petitioner/plaintiff nor to the State - and to such third party it may go. But where it cannot be so done, it is better that it is retained by the State. By any standard of reasonableness, it is difficult to prefer the petitioner-plaintiff over the State.
(v) The above judgment further elucidates that it is duty of the plaintiff to allege and establish that he had not passed the burden of duty to others. The presumption is in favour of the State that the plaintiff had passed the burden of duty/taxes on others being indirect taxes/duty. No doubt the said presumption is rebuttable but the burden is upon the plaintiff to establish by producing unequivocal and unambiguous evidence on record that the he had not passed the burden of such taxes/duty to the others/buyers.
18. In view of the above settled proposition of law, the facts of the present case would be analysized to determine whether plaintiff had passed the burden of Export Duty to others or not? If plaintiff succeeds to establish that the burden of Export Duty was not passed on to the buyers, plaintiff would be entitled to recover the refund of the amount of Export Duty otherwise not.
19. On perusal of the plaint, it emerges that plaintiff has not pleaded the requisite facts to prove that the burden of Export Duty was not passed on to the buyers. Thus, as per the judgment of [ENTITY]'s case, plaintiff failed to fulfil the first mandatory condition to claim the refund of the export duty. However, plaintiff has relied upon the testimony of PW1 to prove the fact that the said burden was not passed on to the others.
(i) PW1 deposed that Rajasthan Government used to fix the price of the manufactured liquor and such price is fixed according to the cost of production. In other words, the imposition of export duty had affected the price structure of the manufactured liquor. It means that when the export duty was levied by the defendant no.2, the said duty was included to ascertain the cost of the manufactured liquor. In other words the burden of the export duty was passed on to the buyers. The burden was upon the plaintiff to establish that the plaintiff had not passed on the burden of Export Duty to others but plaintiff failed to discharge the onus. In the absence of any contrary evidence on record, presumption will be drawn that the plaintiff had passed on the burden of Export Duty to the others/buyers.
20. Pondering the on-going discussion, I am of the considered opinion that plaintiff is not entitled for the refund of the amount of Rs.7,36,272.06, which plaintiff had paid to defendant no.2 through defendant no.1 towards export duty. Accordingly, I decide this issue against the plaintiff and in favour of the defendants.
21. RELIEF In view of my findings on the issues above, I am of the considered opinion that plaintiff is not entitled for any relief. Thus, I hereby dismiss the present suit. No order as to cost. Decree-sheet be prepared accordingly. File be consigned to record-room.
Announced in the open Court On this 3rd day of November, 2007 ([ENTITY]) Additional District Judge Fast Track Court, Delhi