Case: Dhanyalakshmi Rice Mills Etc Vs. Commissioner of Civil Supplies and Another

These appeals are by certificate from the common judgment dated 27 March, 1972 of the Andhra Pradesh High Court dismissing the writ petitions of theappellants filed the writ petitions for an appropriate writ or order directing the respondent State of Andhra Pradesh to refund the sums of money collected from the appellants as administrative surcharges.The appellants are dealers in food grains and held licences issued in accordance with the provisions of relevant statutes and control orders.Under the provisions ofthe Essential Commodities Act, 1955 various Control orders have been issued for maintaining or increasing supplies of any essential commodity or for securing their equitable distribution and availability at fair prices. The Control orders contemplate regulation or prohibition or production, supply and distribution of essential commodities and trade and commerce therein.The State Government exercising powers delegated to it by the Central Government in accordance with the provisions of the Essential Commodities Act issued several measures to achieve the objectives of the ControlGovernment of Andhra Pradesh introduced a scheme known as "Incentive Export Scheme". Under that Scheme all millers who delivered 50 per cent of their purchases to the Food Corporation of India towards mill levy would be eligible for export under the Scheme. Incentive export permits were to be granted in the ratio of 2: 3. The ratio meant that if a miller delivered two additional wagons to the Food Corporation of India he would be entitled to export three wagons on private trade account. The last date for delivering rice to the Food Corporation of India was fixed as 20 May, 1971. The last date for issue of permits was fixed as 31 May, 1971.ermits were of four types. The A type of permits was for export from one block to another within the State. Under these permits administrative charge were Rs. 2.50 per quintal. The type of permits was for export from the State of Andhra Pradesh to other States in the South. The administrative charges under the type permits were RS. 10/- per quintal. The type permits was for ex port to any State outside Andhra Pradesh. The administrative charges for type permits were RS. 8/- per quintal. The fourth type of permits was for export of broken rice under the A type or the A type permits and the surcharges were Re. 1.00 peran order dated 24 July, 1967 under section S of the Essential Commodities Act, l955 the Central Government directed that the powers conferred on it by section 3 (1) of the Essential Commodities ` I Act, 1955 to make orders to provide for matters specified in clauses (a), (b), (c), (d), (e), (f), (h), (i) and (j) of sub-section (2) thereof shall, in relation to foodstuffs be exercisable also by a State Government subject to the conditions (1) that such power shall be exercised by a State government subject to such directions, if any, as may be issued by the Central Government in this behalf, and (2) .- that before making any order relating to any matter specified in clauses (a) and (c) or in regard to regulation of transport of any foodstuffs under clause (d) of section 3 (2) of the Essential Commodities Act, the State Government shall also obtain prior concurrence of the Centralan order dated 30 September, 1967 in exercise of powers conferred by section S of the Essential Commodities Act the Central .- Government made an amendment to the order dated 24 July, 1967. The amendment was to the effect that before making an order relating to any matter specified in clauses (a), (c) and (f) or in regard to t distribution or disposal of foodstuffs to places outside the State or in regard to regulation of transport of any foodstuff under clause (d) the State Government shall obtain the prior concurrence o f the Central Government.The State of Andhra Pradesh by an order dated 22 July, 1968 pursuant to the representation of the millers for export of rice outside the block but within the State passed orders that permits for export of rice would be issued subject to the fulfillment of their commitments and that administrative charging of Rs. 2.50 per quintal of rice would be collected from the millers before the issue ofthe Southern States (Regulation of Export of Rice) (Order, 1964, Andhra Pradesh Rice and Paddy (Restriction on Movement) order 1965 and the Andhra Pradesh Rice Procurement (Levy and Restriction on Sale order, 1967 every dealer or miller was required to supply a minimum quantity of rice to the State Government or its nominees and the balance, that is to say levy free rice, could be sold in the open market or exported to the places outside the block or State under permit issued by the State Government. The representation of the millers for permission to export rice outside the block or the State was that the denial of permission to export rice would result in deterioration of stocks and consequential loss to both the trade and consuming public.The appellants applied for and obtained permits by fulfilling two principal conditions. One was to satisfy the statutory requirements of supply to the Food Corporation of India and the another was payment of administrative surcharges for ever y quintal ofthe petitions before the High Court the appellant alleged that they paid the surcharge under "trying circumstances", "mistaken belief and impression" that "the respondent has the right to collect the surcharge" . The appellants also alleged that having come to know about the correct legal position in the matter they asked the respondents to refund the administrative surcharges. The respondents refused to refund any administrative surcharge.The appellants contended in the petitions that the respondent Government has no right to collect any administrative surcharge, and, therefore the amount should be refunded. The appellants alleged that they made the payments under mistake ofHigh Court held that the levy of administrative surcharge is not backed by valid legislative sanction". The High Court said that the agreements between the State and the appellant millers for export were an executive scheme undertaken by the State but liability to pay tax must be covered by the statute. The High Court expressed the view that there could be no estoppel when both parties are under a mistake ofHigh Court however hold that the appellants were not entitled to any relief on three grounds. First, the administrative surcharges were paid voluntarily by the appellants. The appellants themselves represented for issue of permits. The appellants obtained the permits. They exported rice under the permits. The High Court, therefore, held that the appellants cannot claim refund of the entire amount without giving due credit for the expenses or charges incurred by the Government for the issue of permits and for the supervision of export, transport and other administrative charges. The second reason given by the High Court was that the Court would not be justified in exercising discretion in favour of the appellants who voluntarily paid the administrative charges, obtained the permits and derived considerable profits there from. The third reason given by the High Court was that there was undue delay in claiming the refund.

Court's reasoning:
The plea of mistake is a bare averment in the writ petitions. The payments did not disclose t he circumstances under which the alleged mistake occurred and the circumstances in which the legal position became known to the appellants. The respondents contradicted the plea of mistake. A triable issue arose as to whether there w as a mistake in paying the amounts and when exactly the mistake occurred and under what circumstances.Section 72 of the Contract Act states that a person to whom money has been paid, or anything delivered, by mistake or under coercion, must rep ay or return it. The mistake is material only so far as it leads to the payment being made without consideration. This Court has said that the true principle is that if one party under a mistake of law pays to another money which is not due by contract or otherwise that is to be repaid. When there is a clear and unambiguous position of law which entitles a party to the relief claimed by him equitable considerations are not imported. A contract entered into under a mistake of law of both parties falls under section 21 of the Contract Act and not section 72. If a mistake of law had led to the formation of a contract, section 21 enacts that the contract is not for that reason voidable. If money is paid under that contract, it cannot be said that the money was paid under mistake of law; it was paid because it was due under a valid contract and if it had not been paid payment could have been enforced. (See Shiba Prasad Singh v. Srish Chandra Nandi(76 I.A. 244.) See also Pollock &Mulla-Contract Act 9th Ed. by J. L. Kapur pp. 519-520). In the present case, the respondents do not support the demand for administrative charges either as a tax or as a fee but as a term and condition of permit and as a term of agreement between the parties for the maintenance and supervision expenses for the scheme for export permits of rice from one block to another within the State or outside themay be stated here that in cases where the State collected administrative changes but could not grant permits the State refunded moneys to such Person. It is only where millers have obtained permits and taken advantage thereof that the State contends that there is no mistake and that the payments were made voluntarily with full knowledge ofadditional reasons in our opinion are that various questions of fact arise as to whetherthere was really mistake or it was a case of voluntary payment pursuant to contractual rights and