Case: Delhi Cloth &amp; General Mills Co.Ltd Vs. State Of Rajasthan

2. The appellants established a fertilizer unit in villages called Raipura and Ummedganj of District Kota in the State of Rajasthan inOn 1-3-1958, the State of Rajasthan (the first respondent) issued a notification under Section 7(1) of the Rajasthan Town Municipalities Act, 1951, informing the public that, in exercise of powers under Section 5(1) of that Act, it proposed to extend the limits of the Kota Municipality so as to include therein the village of Raipura and it invited objections thereto. On 16-10-1958, in exercise of powers conferred by Section 5(1) of the 1951 Act, the State Government extended the limits of the Kota Municipality to include therein the village of Ummedganj. This inclusion was challenged in a writ petition filed before the Rajasthan High Court. Pending the decision thereof, on 2-5-1960, the State Government excluded the village of Ummedganj from the said municipal limits. On 17-8-1960, Full Bench of the Rajasthan High Court held that Ummedganj was not validly included within the limits of the Kota town municipality inasmuch as the mandatory provisions in that behalf had not beenIt appears that the villages of Raipura and Ummedganj were treated as falling within the municipal limits of Kota and octroi was collected from the appellants. Realising in April 1974, that the levy and realisation of octroi by the Kota Municipality (the second respondent) was illegal, the appellants filed a suit in the Court of the Munsiff, Kota, seeking a permanent injunction restraining the Kota Municipality from levying or collecting octroi from it. An injunction was granted and was upheld in appeal. The appellants also filed a suit in the Court of the District Judge, Kota, for refund of the amount of Rs. 10, 85, 365.32, being the amount of octroi erroneously paid by the appellants to the Kota Municipality during the period of three years prior to the filing of theOn 7-1-1975, the State Government issued the Kota Municipal Limits (Continued Existence) Validating Ordinance, 1975. It was replaced by the Kota Municipal Limits (Continued Existence) Validating Act, 1975, (now called the "Validating Act"). Upon the promulgation of the Ordinance, the appellants filed a writ petition challenging its validity. When the Validating Act was passed, the writ petition was amended to challenge the same. The writ petition was allowed by a learned Single Judge. Both the State Government and the Kota Municipality filed appeals. By the judgment and order under appeal, the Division Bench allowed the appeals and set aside the judgment of the learned Single Judge

Court's reasoning:
18. It must be made clear that in the suit that the appellants have filed in the court of the District Judge, Kota, for refund of the amount of octroi paid by them to the Kota Municipality, which is stated to be pending, it shall be open to the defendants to take every defence available to them other than that concluded by thisAt the stage when special leave to appeal was granted, no stay was ordered except for the year 1974-75. Counsel on behalf of the Kota Municipality agreed that if the appeals were allowed and the Kota Municipality was required to refund the amount paid by the appellants by way of octroi duty, it would refund the same with interest at the rate of 8 per cent per annum. The time within which the refund would have to be made was left to be determined when the court heard and disposed of the appeals. The Kota Municipality is now directed to refund to the appellants the amounts of octroi duty paid by the appellants to it subsequent to the year amount 1974-75 with interest at the rate of 8 per cent per annum from the dates of payment till refund or realisation. Such refund shall be made on or before 15-7-1996