Case: A. Venkata Subba Rao &amp; Others Vs. State of A.P. &amp; Others

that if the terms of a specific Article do apply to a specific case, one could ignore it and seek a general Article merely on the ground that the latter affords a longer period of limitation for the filing of a suit.61. So far as the present claim for recovery of a tax illegally collected is concerned the authorities are fairly uniform that the period of limitation for a suit making such a claim is governed by Art. 62. Rajputana Malwa Railway Co-operative Stores. Ltd. v. The Ajmer Municipal Board, ILR 32 All 491 arose out of a suit against a Municipal Board for refund of certain octroi duty which they were not legally entitled to levy. The suit for that claim was held to be governed by Art. 62, the learned Judges stating:"The language of Art. 62 is borrowed from the form of count in vogue in England under the common Law Procedure Act of 1852. Prior to the passing of the Supreme Court of Judicature Acts of 1878 and 1875, there was a number of forms of pleading known as the common indebitatus counts, such as counts for money lent, money paid by the plaintiff for the use of the defendant at his request, money received by the defendant for the use of the plaintiff and Co. .................. The most comprehensive of the old common law counts was that for money received by the defendant for the use of the plaintiff. This count was applicable where a defendant received money which in justice and equity belonged to the plaintiff under circumstances which rendered the receipt by the defendant to the use of the plaintiff............... It was a form of claim which was applicable when the plaintiffs money had been wrongfully obtained by the defendant."A similar view was taken of claims of a like nature in Municipal Council Dindigul v. Bombay Co. Ltd., Madras, ILR 52 Mad 207 : (AIR 1929 Mad 409 ), India Sugar and Refineries, Ltd. v. Municipal Council Hospet, ILR (1948) Mad 521; (AIR 1948 Mad 191 ), State of Madras v. Abdul Kadar Tharaganar Firm, AIR 1958 Mad 905 and Municipal Committee, Amritsar v. Amar Dass, AIR 1958 Punj 99. Learned Counsel submitted that these cases proceeded, in great part, on the inapplicability of the shorter periods of limitation provided in the particular statutes for amounts improperly collected thereunder. We do not, however, consider that this militates, in any manner, from the reasoning upon which the decisions are based, for they all refer to the terms of Art. 62, to its scope and their applicability in terms to cases of suit for refund of tax illegally collected. In addition, we might point out that in ILR (1943) Mad 521= (AIR 1943 Mad 191 ), the claim for some of the years for which the suit was filed was dismissed as barred by limitation by applying the three year rule. In fact, learned Counsel conceded that save a solitary decision in Govind Singh v. State of Madhya Pradesh, 1961-12 STC 825: (AIR 1961 Madh Pra 320) to which we shall presently refer, the decisions were uniform in applying Art. 62 to cases of suits for refund of taxes illegally collected. We consider that these decisions are correct and they have applied the proper article of limitation.62. Before referring to Govind Singhs cases 1961-12 STC 825: (AIR 1961 Madh Pra 320) (supra) it would be convenient to clarify the position as regards certain circumstances in which the Article would be applicable without making any exhaustive list. Where the defendant occupies a fiduciary relationship towards the plaintiff it is clear that Art. 62 is inapplicable. Next even if the claim could have been comprehended under the omnibus caption of the English "action for money had and received", still if there are other more specific articles in the Limitation Act -vide, e.g., Art. 96 (mistake), Art. 97 (consideration which fails) Art. 62 would be inapplicable. Lastly, if the right to refund does not arise immediately on receipt by the defendant but arises by reason of facts transpiring subsequently, Art, 62 cannot apply, for it proceeds on the basis that the plaintiff has a cause of action for instituting the suit at the very moment of the receipt.63. It is this last point that was involved in 1961-12 STC 825: (AIR 1961 Madh Pra 320), on which learned Counsel relied as a decision which had refused to apply Art. 62 and applied Art. 120 to a claim for refund of tax overpaid. There the assessee deposited along with his return certain sums. He had overpaid and so was entitled to obtain a refund when the assessment was completed. A suit for the amount of that excess was held to be governed by Art. 120. It is clear that at the time when the assessee made the deposit of the tax he was not entitled to the refund. That right accrued to him only after the completion of the assessment. We consider, therefore, that this decision does not assist the appellant in the construction which he seeks to persuade us to adopt of Art. 62.64. If Art. 62 were the proper Article of limitation applicable, Civil Appeal No. 644 of 1962 has to be dismissed as the suit was filed admittedly beyond three years after the receipt of the money by the respondent. There should also have to be a modification in the decree passed in Civil Appeal No. 306 of 1962. The claim in that suit included the amounts collected from the appellant as surcharge in July, 1947, in December, 1947 and November, 1948, i.e., for all the three surcharges. It is common ground that it he three years period of limitation under Art. 62 was applied the claim for the refund of the surcharge imposed in July. 1947 would be beyond time. The appellant is, therefore, entitled only to his claim for the refund of the amounts collected for the surcharges imposed in December, 1947 and November, 1948.

Decision (1 = appeal accepted, 0 = rejected): 0

Explanation:
0[ds]5. It is clear that if the Government was not entitled to the amount of the surcharge, it could not retain the moneys paid by the appellants to it on that account.learned brother Ayyangar has dealt with this question and there is nothing that I have to add to that. I am in full agreement with his view that no relationship of principal and agent or of a fiduciary character had ever come into existence between the appellants and the Government. I wish, however, to observe that I do not see how, even if the appellants were the Governments agents, Government was entitled to the extra profit. Admittedly under the contract between a procuring agent and the Government even if that contract was of agency, the procuring agent was to procure and sell rice at the prices fixed and prevailing at the time respectively of the procurement and sale. It is not disputed that the difference belonged to him. It was in fact said that was the commission to which he was entitled under the contract as an agent. If this is so, the procuring agent would under the contract be entitled to keep the larger difference caused by the selling price having been increased after his procurement. Hence it seems to me that under the contract, irrespective of whatever kind it was, the difference, even though it became larger, belonged to the procuring agent and the Government had no right toagree with my brother Ayyangar that Art. 62 of the Limitation Act governed the case and the claims were not barred if the suits in respect of them were filed within the time there specified. With regard to the meaning of the words "Money received by the defendant, for the plaintiffs use" In that article, I think, as Ayyangar, J. pointed out, the correct view was taken in Mohomed Wahib v. Mahomed Ameer, ILR 32 Cal 527. The suits in ,which the claims arose in circumstances other than those described hereafter the question on limitation has to be decided under Art. 62 only. I do not feel called upon on the present occasion to decide to what other cases, if any, Art. 62 mightam unable to accept this contention. Support for it was sought by the appellants fromv. Writs United Dairies, Ltd. (1922) 127 LT 822. It does not seem to me that that case furnishes any basis for theratio decidendi of the Australian case that the trader had been compelled to pay which was why the payment was held to have amounted to a tax does not apply to the case inThere is not the slightest doubt that the extra profit with which we are concerned had not come to the procuring agents by reason of any merit of their own; it had come into existence only because the exigencies of the circumstances prevailing had compelled the Government to increase the price. The Government had apparently felt doubtful its. earlier methods of realising the extra profits were legal and to avoid the consequently of any illegality, it followed this procedure and to the legality of it I find no objection. If the procedure was legal, as I think it was it could not have resulted in an illegal levy. I would, therefore, hold that where as a result of the requisition and release the Government had obtained moneys from the appellants, the realisation had been legal and did not amount to unathorised levy of tax and the appellants are not entitled to recover them from the Government. For the same reason where in respect of such requisition and release the appellants had not paid money directly, but had entered into engagements to pay moneys, those engagements would be legal andfacie, therefore, it would appear that the procuring agents were merely conducting their business in the purchase of paddy and the sale of rice, on their own account, subject, however, to the regulation and restrictions imposed by the statutory orders and the licences issued thereunder which enabled Government to effectively control in the acquisition and distribution of foodgrains through the usual trade channels to the ultimate consumer in an orderly and equitablemay be pointed out that the order last referred to was to direct these "agents" not to engage in private trade apparently in connection with the sale of the paddy procured. This last document might be ignored s it emanated from the Collector and, as is clear from the context in which it occurred, that it was meant as a warning to the procuring agents not sell the procured paddy or rice except to those authorised to purchase them.Before proceeding further, it is necessary to clarify two matters. First, though Mr. Agarwala referred to the margin between the procurement price and the price at which the procured paddy or rice could be sold as "remuneration," a contention which found favour with the High Court, we do not find it possible to accept the submission. There was a similar margin between the price at which a wholesaler could buy rice and that at which he could sell and similarly, it was the case of the retail dealer, but it is hardly possible to call these as "remuneration." This margin or difference in the purchase and sale price was necessary in order to induce anyone to engage in this business and was of the essence of a control over procurement and distribution which utilised normal trade channels. It would, therefore, be a misnomer to call it "remuneration" or "commission" allowed to an agent and so really no argument can be built on it in favour of the relationship being that of principal andare drawing attention to this feature to emphasise the fact that the several orders of Government imposing the surcharge and enforcing the levy did not proceed on any theory that the procuring agents were "agents" who were called on to account for profits which they made in the business of the agency. It is only necessary to add that not merely procuring agents but wholesalers and retailers who could on no argument be called "agents" were directed to pay the surcharge.No doubt the description in the Procurement Order and the agreement as "agent" is of some value, but is not decisive and one has to gather the real relationship by reference to the entire facts and circumstances. To start with, it is clear that as the purchases were made by the procuring agents out of their own funds, stored at their own cost, the risk of any deterioration , driage orfell on them, they were the full owners of the paddy, procured and they pledged the goods for raising funds. This aspect of their full ownership of the grain purchased is highlighted by the fact that they entered into agreements with the Government itself to sell the rice with them to District Supply Officers at the controlled market prices. Any contention that the procuring agents were not full owners of paddy or rice procured by them must manifestly fail as being inconsistent with the basis upon which this agreement by them to sell to Government was entered into. If further confirmation were needed it is provided by the fact that on the sales by procuring agree to Government under their Supply agreementwas payable which on the terms of the Madras General Sales Tax Act in force at the relevant time, would not have been payable if the paddy and rice were that of Government and which they were holding merely as commission agents on behalf of thedo not consider it necessary to examine this question in its fulness because we are satisfied that the procuring agent when he bought the goods, was purchasing it for himself and not on behalf of the Government. The acceptance of the argument addressed on this aspect would mean that if the procurement agent so desired he might contract in the name of the principal. namely, the Government and thus establish privity between the Government and the purchaser and make the Government liable to pay for the price of the goods at which he had purchased. This situation would, in our opinion, be unthinkable on the scheme of the Procurement Orders and generally of the Food Control Orders under which the procurement and distribution of foodgrains was placed under statutory control. What the Government desired and what was implemented by these several orders was merely the regulation and control of the trade in foodgrains by rendering every activity connected if with it subject to licensing and to the directions of be issued in pursuance thereof and not directly to engage in the trade in foodgrains.35. The respondent can derive no advantage from the obligation on the part of the procuring agents to store the paddy or rice properly a stipulation on which Mr. Agarwala laid considerablethis for two reasons: (1) The purpose of the clause was to ensure that there was no loss of foodgrains which were then a scarce commodity.That this is so would be apparent from the terms of S. 3 (2) (d) of the Essential Supplies Act which was effectuated by cl. 9 of the licence granted under the Madras Foodgrains Control Order, 1947 which applied to all dealers in foodgrains, be they procuring agents (who also, as stated earlier, had to obtain and obtained these licences), wholesalers orsecond reason is that the agreement executed by the procuring agents in which this clause as regards storage in proper godowns and undertaking responsibility for the safe custody of the occurs, is one which was a form intended for execution not merely by procuring agents but also authorised wholesale distributors, i.e., those who purchased their requirements from procuring agents; admittedly the authorised wholesale dealers were not "agents" and the fact that this condition was insisted on even in their case is clear proof that it has no relevance to the question now under discussion. It, therefore, appears to us that the expression "agent" was used in the Intensive Procurement Order as well as in the agreements merely as a convenient expression to designate this class ofmust plainly confess that we are unable to appreciate this argument. A fiduciary relationship would, no doubt, have arisen if the plaintiffs were agents, but if this were rejected we do not see on the basis of what relationship the fiduciary obligation can be rested. The purchase of paddy and rice by them was not as benamidars for Government for their purchases were on their own account with their own monies though at prices fixed by the Government because of the control orders they could sell their goods to others, only the buyers had to be licensed as also to the Government. The control exercised under statutory laws in respect of these matters cannot obviously render the trade of the plaintiffs one which they carried an for the benefit of the Government. If so, we fail to perceive the legal basis upon which the plaintiffs could be said to hold the stocks at grain with them for the benefit of Government. We have already pointed out that all risks of loss, deterioration, interest charges, godown rent etc., were all their responsibility. In the circumstances, we consider there is no basis for the suggestion of a fiduciary obligation de hors a principal and agentdo not see any substance in this argument. The direction to pay such amounts as might be demanded by Government is certainly not a direction contemplated or provided for by the scheme, namely, the Procurement Scheme nor is it a direction as regards the sale. Indeed, learned Counsel did not, when this was pointed out, seriously press this submission for our acceptance.39. Before proceeding further it would be convenient to ascertain the precise legal category into which the surcharge would fall. The dealers including the procurement agent; were dealing on their own account in the matter of purchase and sale of paddy and rice. The price at which they could buy was fixed and the relevant licensing orders specified that they were to sell at the prices which were in force from time to time. While things were in this state, the price at which the procuring agents, wholesalers and others could sell was raised. Of course, in respect of the stacks purchased by them alter that date they would have paid a higher price which would be compensated by the higher price at which they were permitted to sell, but we are concerned with thealready purchased and remaining with them on July 26, 1947, December 6, 1947 and November 20, 1948. Under the Foodgains Control Order under which they were licensed to deal in foodgrains, they were entitle to sell the stacks with them at the prices fixed under the Price Control Order and prevailing on the date of the sale. They would, therefore, have, on an increase in the selling price, the benefit of the enhanced prices. It was this that was sought to be mopped up by Government by the three impugned orders by which the difference between the old and the new prices was directed to be collected as "surcharge".40. It was not suggested that the surcharges could be justified under any of the provisions contained in the Essential Supplies (Temporary Powers) Act. They were not imposed by notified orders promulgated under S. 3, of that enactment and if they were, the question would have to be seriously, considered whether such orders would be within the rule making power under that Act. We have already pointed out that they could not be justified as authorised directions which were permitted to be issued either under the Procurement Order, the agreement executed in pursuance thereof or the Foodgrains Control Order and the licences issued thereunder. That was why the only serious argument that was raised was an attempt to justify them on the ground of the same being a liability to account on behalf of an agent and this contention we have already negatived as lacking substance. There was thus no legal basis upon which the surcharge could be justified and it would, therefore, follow that subject to any argument based upon the claim being barred by limitation, the claim to the refund of the same could not be resisted.41. We shall be dealing with the claims arising in the individual appeals later, but at this stage it is sufficient to point out that as regards the claim for the refund of the surcharge collected on the stocks of paddy and rice in July, 1947, there was no defence to the claim except that the same was barred by limitation. We should, however, add that in all the suits a defence that they were barred by reason of S.16 of the Essential supplies (Temporary Powers) Act, 1946 was raised, but the plea was wholly, untenable and learned Counsel very properly did not seek to urge it before us. When demands for these sums were made they were either paid under protest, or when they, were not so paid, the amounts were recovered by threats that the licences of the merchants should be cancelled.42. As regards the surcharge levied in December on the stocks held by the plaintiffs on December 6, 1947, we have already pointed out that two methods were employed for making this collection. They were (1) by withholding the amounts due to them from Government for rice supplied; and (2) by threats of cancellation of licences. It would follow from what we have stated earlier that if the surcharge was not legal or justifiable, the claim for refund could not be resisted subject again to the question whether the claims for refund could not be resisted subject again to the question whether the claims therefor in the various suits were subject again to the question whether the claims therefor in the various suits were within the period of limitation. When we come to the third surcharge imposed in November 1948, as already indicated, three methods were utilised for the purpose of making the collection. (1) Threat of cancellation of licences, (2) Withholding the amount of the surcharge from the amounts payable by Government for the rice supplied to them by the procuring agents, and (3) requisition from them of paddy or rice of a quantity equal to the stocks held by them on the evening of November 20, 1948 and release of the same after they executed a writing agreeing to pay the amount of surcharge which agreements they honoured by making the payment demanded.The argument that was addressed to the High Court was that whatever might be the position as regards those plaintiffs who had made the payments under protest or on account of the threats to cancel their licences or by deducting the amount due from the Government, merchants who voluntarily entered into agreements of the type we have just set out, stood on a different footing and that in their case they could not legally claim a refund of the amount thus paid in pursuance of these agreements. The High Court was apparently inclined to accept this submission. With great respect to the learned, Judges we consider that there is no substance in this argument. If the theory that the plaintiffs were the agents of the Government be discarded as untenable, there would be no legal basis at all for the surcharge. It would then in effect a tax imposed by an executive fiat without any legislative sanction on the capital value of the stocks of foodgrains held on a particular date. In this connection reference may be made to 56 CER 390, where a scheme by which flour was expropriated by the State at a "declared" price and subsequently sold by the Crown at a "standard" price, the former owner being given the option of buying back flour at the latter price was held to constitute athis connection it has to be borne in mind that the Government was armed with coercive powers to enforce any demand which was legal and in the circumstances, it could hardly be contended that these payments were voluntary in the sense understood in this context.Pausing here, we might advert to two matters: (1) The last words of the learned Lord we have just quoted sufficiently answer an argument addressed to us based upon the rise to which the amount of surcharge collected was to be expended, namely, as bonus to the producers. Secondly the fact that the company obtained licences from the Food Controller on the stipulation that they would pay him the two pence per galion was not considered material for determining their obligation in law to make the payment.Besides, if there is no legal basis for these demands by the Government we consider that it is not possible to characterise them as anything else than as taxes. They were imposed compulsorily by the executive and are sought to be collected by the State by the exercise inter alia of coercive statutory powers, though these latter are vested in Government for very different purposes. We are clearly of opinion that the fact that agreements were taken from some of these merchants affords no defence to their claim for refund.The suit out of which Civil Appeal No. 306 of 1962 arises, namely, O. S. No. 2 of 1951 on the file of the Subordinate Judge, Rajahmundry made a claim for the refund of the surcharges collected from him in July, 1947, December, 1947 and November, 1948. The claim in regard to the surcharges of December, 1947 and November, 1948 were within the three year period of limitation provided by Art. 62, but the claim as regards what was collected in July, 1947 was beyond that period. The learned subordinate Judge who negatived the defence based on the plaintiff being the agent of the Government decreed the suit in its entirety holding that it was not. Art. 62 that applied but Art. 120 of the Indian Limitation Act which prescribes a period of six years. The learned Judges of the High Court having dismissed the suit on the merits had no occasion to consider the proper Article of Limitation that would govern the different claims contained in theview of our decision that the surcharges were not legally levied and that the Government was not authorised to collect them, the question whether the suit is burred by limitation necessarily arises forArticle 120 can apply only, if no other specific Article were applicable, we have to examine the question whether there is any other specific Article applicable and in particular whether the language of the first column of Art. 62 covers a suit making a claim of the nature made in the plaints before us.Having considered the matter carefully we are inclined to prefer the interpretation of the Article by, Mookherjee, J. in Mahomed Wahibs case. ILR 32 Cal 527.What we are solely concerned with is the meaning of the words employed in the first column of the Article which specifies the nature of the suit dealt with. That they were derived and adopted from the terminology employed in the English action for money had and received is not disputed. The Courts in India being Courts administering both law and equity, no doubt we are not concerned with the technicalities of the English forms of action which originated at a time before the judicature Acts when law and equity were administered by different Courts But that is only as regards the merits of a claim and its maintainability in a Court. With great respect to the learned Judges who decided Anantrams and Lingangoudas cases, ILR 50 Cal 475: (AIR 1923 Cal 379  ) and ILR (1953) Bom 214  : (AIR 1958 Bom 79  ), we are unable to agree that the changes which the doctrine has undergone in England have any bearing on what the Article meant in 1871 when the legislature lifted the words descriptive of a form of an English action and incorporated it in the Indian statute. Nor are we impressed with the argument that if the terms of a specific Article do apply to a specific case, one could ignore it and seek a general Article merely on the ground that the latter affords a longer period of limitation for the filing of a suit.61. So far as the present claim for recovery of a tax illegally collected is concerned the authorities are fairly uniform that the period of limitation for a suit making such a claim is governed by Art. 62. Rajputana Malwa RailwayStores. Ltd. v. The Ajmer Municipal Board, ILR 32 All 491 arose out of a suit against a Municipal Board for refund of certain octroi duty which they were not legally entitled tosimilar view was taken of claims of a like nature in Municipal Council Dindigul v. Bombay Co. Ltd., Madras, ILR 52 Mad 207  : (AIR 1929 Mad 409  ), India Sugar and Refineries, Ltd. v. Municipal Council Hospet, ILR (1948) Mad 521; (AIR 1948 Mad 191  ), State of Madras v. Abdul Kadar Tharaganar Firm, AIR 1958 Mad 905 and Municipal Committee, Amritsar v. Amar Dass, AIR 1958 Punj 99. Learned Counsel submitted that these cases proceeded, in great part, on the inapplicability of the shorter periods of limitation provided in the particular statutes for amounts improperly collected thereunder. We do not, however, consider that this militates, in any manner, from the reasoning upon which the decisions are based, for they all refer to the terms of Art. 62, to its scope and their applicability in terms to cases of suit for refund of tax illegally collected. In addition, we might point out that in ILR (1943) Mad 521= (AIR 1943 Mad 191  ), the claim for some of the years for which the suit was filed was dismissed as barred by limitation by applying the three yearfact, learned Counsel conceded that save a solitary decision in Govind Singh v. State of Madhya Pradesh,STC 825: (AIR 1961 Madh Pra 320) to which we shall presently refer, the decisions were uniform in applying Art. 62 to cases of suits for refund of taxes illegally collected. We consider that these decisions are correct and they have applied the proper article of limitation.62. Before referring to Govind Singhs casesSTC 825: (AIR 1961 Madh Pra 320) (supra) it would be convenient to clarify the position as regards certain circumstances in which the Article would be applicable without making any exhaustive list. Where the defendant occupies a fiduciary relationship towards the plaintiff it is clear that Art. 62 is inapplicable. Next even if the claim could have been comprehended under the omnibus caption of the English "action for money had and received", still if there are other more specific articles in the Limitation Actvide, e.g., Art. 96 (mistake), Art. 97 (consideration which fails) Art. 62 would be inapplicable. Lastly, if the right to refund does not arise immediately on receipt by the defendant but arises by reason of facts transpiring subsequently, Art, 62 cannot apply, for it proceeds on the basis that the plaintiff has a cause of action for instituting the suit at the very moment of the receipt.63. It is this last point that was involved inSTC 825: (AIR 1961 Madh Pra 320), on which learned Counsel relied as a decision which had refused to apply Art. 62 and applied Art. 120 to a claim for refund of tax overpaid. There the assessee deposited along with his return certain sums. He had overpaid and so was entitled to obtain a refund when the assessment was completed. A suit for the amount of that excess was held to be governed by Art. 120. It is clear that at the time when the assessee made the deposit of the tax he was not entitled to the refund. That right accrued to him only after the completion of the assessment. We consider, therefore, that this decision does not assist the appellant in the construction which he seeks to persuade us to adopt of Art. 62.64. If Art. 62 were the proper Article of limitation applicable, Civil Appeal No. 644 of 1962 has to be dismissed as the suit was filed admittedly beyond three years after the receipt of the money by the respondent. There should also have to be a modification in the decree passed in Civil Appeal No. 306 of 1962. The claim in that suit included the amounts collected from the appellant as surcharge in July, 1947, in December, 1947 and November, 1948, i.e., for all the three surcharges. It is common ground that it he three years period of limitation under Art. 62 was applied the claim for the refund of the surcharge imposed in July. 1947 would be beyond time. The appellant is, therefore, entitled only to his claim for the refund of the amounts collected for the surcharges imposed in December, 1947 and November, 1948.