(1) This appeal arise under the following circumstances: The right to collect toll from the shopkeepers, who have their stalls in the market place at the weekly shandy was auctioned by the Estate Thasildar of Anakapalli, and the respondent herein happened to be the highest bidder. The auction was confirmed in his name. The sale was subject to the payment of cess to the Government at the rate of Rs. 0-5-0 in the rupee. The case of the plaintiff, who is the respondent herein is that he made representations to the Government that Government should not levy any of the auctions of the right to collect tolls in the years past and in fact the auction for the previous year fasli 1361 was also not subject to the payment of any cess.
The plaintiff stated that in spite of protests having been raised by the plaintiff with regard to the collection of the amount of cess, the authorities, compelled him to pay the amount and thereupon he paid the amount of Rs. 970-10-0 on 1-10-1951 to the Estate Tahsildar, Anakapalli under protest at the same time submitting a petition protesting against the levy of cess, that he was not liable to pay, that he was compelled to pay the amount because of the persistent demands of the Government. His main contention was that the auction of the right to collect toll at the Pravada shandy was not subject to the payment of cess, that it was not one of the conditions of the auction, and that the previous auctions held by the Vizianagram Estate were not subject to the condition. He therefore submitted that the levy in question was illegal and as such he was entitled to a refund of the amount, and the present suit was filed claiming a refund of the amount of the cess collected from him on 1-10-1951 together with interest at 6 per cent per annum.
(2) The Government of Andhra, the defendant in the case, rested the suit mainly on the ground that it was proper levy and that the plaintiff was not entitled to file the suit for recovery of the amount, that it was a statutory obligation to pay arising on the conclusion of the contract and as such it could not be regarded as any imposition of levy and that the Government was authorised under the statute to collect the cess. It was also contended that the suit was barred by limitation not having been filed within one year as provided under the Art. 16 of the Limitation Act.
(3) The two questions that arose before the trail Court were as to whether it was an illegal levy and secondly whether the suit filed by the plaintiff was within time.
(4) The trial court held that the amount collected from the plaintiff was one authorised by the statute and as such the levy was legal and that the plaintiff was not entitled to claim any refund of the amount. On the question of limitation, the court held that the cess was governed by Art. 16 of the Limitation Act and therefore was barred by limitation.
(5) Then the matter came up in appeal before the District Judge, the District Judge was of the opinion that the Madras Local Boards Act under which this cess is said to have been collected did not authorise the collection of the cess from the licensees of the leasehold right empowered to collect tolls from shop-keepers in the shady at the market place and that the liability of the plaintiff was not a statutory liability and if it was not a statutory liability the amount could not be demanded and collected form the successful bidder unless it was an express term of the contract and in the view that the Judge took that this was not a statutory liability he held the imposition to be illegal and therefore set a side the judgement of the trial court and decreed the plaintiff's suit. No doubt the learned Judge d id not expressly give a finding as to whether the suit was barred by limitation.
(6) The Government has now come up in Second Appeal. The learned Principal Government Pleader argued that this could not be regarded as an illegal levy because this was governed by Sections 74 and 78 of the Madras Local Boards Act. Section 74 (b) which occurs in the Chapter relating to 'taxation' says that in every district a land cess shall be levied in accordance with the provisions contained in the Act and that cess could be levied as a tax on the annual rent value of the lands. Section 78 speaks of land cess. It says that the land cess shall be levied on the annual rent value of all occupied lands on whatever tenure held and that such cess shall consist of a tax of Re. 0-2-0 in the rupee of the annual rent value of all such lands in the District. There is no dispute as regards the quantum of the cess levied. But the objection is that this levy is not authorised under the statute and the imposition of a cess is authorised only in respect of occupied lands and not otherwise and in this case where the right of the plaintiff was only to collect toll from persons having shops in the shady, the case could not be said to be covered by S. 78 of the Local Boards Act for the [x1]reason that there was no occupation of the land as such, the licensee being authorised to collect toll from the persons holding shops in the market does not involve occupation of the land.
There can be no doubt that where it is sought to make a person liable for the payment of a cess fee or tax, the provisions of the statute imposing a levy are to be strictly construed. The words in S. 78 are that 'the land cess shall be levied on the annual rental value of all 'occupied lands''. The question therefore would be whether in the instant case the land where the shandy is held could be regarded as occupied land coming within the ambit of the aforesaid section (S. 78). Here is a case where the plaintiff has been authorised only to collect tolls from the shop-keepers in the shandy. Obviously it would amount to stretching the words far to say that because he is permitted to collect tolls from the shop-keepers who occupy the land once a week on the weekly shandy day it would amount to the land being an occupied land. This question came to be considered by this Court in an analogous matter. The question to be considered is as to whether it could be regarded as a benefit derived from the land. As to whether the right to collect fees in slaughter houses would amount to property arising out of the land was the subject of consideration in cases before the Madras High Court. It is not necessary to go into those cases for, the words 'occupied field' occurring in S. 78 have to be interpreted with reference to the right possessed by the plaintiff.
In a case before Satyanarayana Raju, J. in Varahala Reddy v. Dharma reddi, 1959-2 Andh WR 146, the facts were: there was a public market in the village of Aravilli in West Godavari District and the right to collect fees was auctioned by the President of the Panchayat Board. The highest bidder executed an agreement in favour of the Panchayat Board and the auction was confirmed in his favour. Subsequently, the auction purchaser filed an application before the Panchayat Board alleging that he transferred his rights to collect fees in the public market to one Venkata Reddi and requested the Board to recognise the transfer. The transfer was not recognised by the Board. Subsequently, there was an election under the Madras Village Panchayats Act wherein this auction purchaser and another person were elected as members of the Board. There was an objection petition with regard to the election of the auction purchaser on the ground that he was not qualified to be a member of the Panchayat because he had an interest in a subsisting contract with the Panchayat Board. The auction purchaser then stated that there was no valid contract between him and the Panchayat Board because there was no written contract of lease and he also stated that the contract amounted to a lease of immovable property which entitled him to the exemption under the provisions of cl. (1) notification No. 5 of the Panchayat Election.
We are concerned with the second argument and the learned Judge in considering the position of the laws, observed that a person who bids at the auction and purchases the right to collect the fees cannot be said to have any interest in the land on which the weekly market is held. The confirmation of the auction in his favour does not confer on him any interest in the land and it could only be regarded as a licence granted to him and not a lease of immovable property. In the view that the learned Judge took he refused to interfere with the order of the lower court declaring the auction purchaser to be disqualified form being a member of the Panchayat Board. The facts of this case are almost identical to the facts of the instant case.
The view taken by the learned Judge was that any right obtained at an auction to collect fees from the vendors of articles in the shandy would not be regarded as conferring any right on the person with regard to the immovable property nor could it be regarded as an interest In immovable property. It would therefore follow that the essential condition for the imposition of the levy or cess under S. 78 of the Local Boards Act is the occupation of the land, that is, the party possessing or having an interest in the land. That being the case the right to collect cannot arise in a case where the person is only empowered to collect certain tolls from persons having their shops in the market. He has nothing to do with the land as such except that he gets a right to collect hire from the shop-keepers and hire from stalls in the shandy.
The case decided by the Madras High Court in Venugopala v. Thirunavukkarasu, AIR 1949 Mad 148, was a case of lease of toddy trees and the learned Judges observed that the right to tap toddy trees was in the nature of immovable property being a benefit arising out of the land. That case can have no application to the facts of this case at all and it cannot by any stretch of imagination, be held that this could be regarded as any benefit arising out of the land. Therefore it must be taken that in this case the right of the Government to collect the cess cannot fall under S. 78 of the Local Boards Act for the reason that it lacks the essential condition that there is no occupation of the land by the plaintiff, the plaintiff having no interest land.
(7) The further argument advanced by the learned counsel for the respondent is that once it is held that it is not a legal levy, it cannot be recovered as arrears of land revenue; for under the revenue Recovery Act only such amounts as are legally recoverable under the law that could be recovered by the process mentioned in the Act as arrears of land revenue. Where therefore the Government could not recover this levy as not falling under S. 73 of the Local Boards Act, this could not be recovered as arrears of land revenue. If therefore this could not be recovered as arrears of land revenue or if it cannot be regarded as a demand recoverable as arrears of land revenue, Art. 16 of the Limitation Act could have no application. The further argument was that there were no proceedings taken, as would ordinarily be taken, where anay amount is ought to be recovered as arrears of land revenue. In this case the government rest content by merely issuing a notice calling upon the respondent to pay the amount
In this regard the learned counsel relied upon India Sugars and Refineries Ltd. v. The Municipal Council, Hospet ILR (1943) mad 521 : (AIR 1943 Mad 191). That case can have no application to the facts of this case. The plaintiff in that case sought to recover licence fees and professional tax on the ground that the Municipality had wrongly levied the same. The question that came to be levied the same . The question that came to be considered was as to whether the claim was within time. The point that arose fore consideration was as to whether the case would be governed by Article 62 or Article 120 of the Limitation Act. What the learned Judges decided was that Art. 62 alone would apply, because that Article was intended to apply to all actions for money having been received to the use of the plaintiff whether such actions were based on implied contracts or whether the action was to enforce an equitable claim for the return of money having been received.
The learned counsel sought to place much reliance upon the decision of Panchapakesa Iyer, J. in the case of the State of Madras v. A. M. N. A. Abdul Kadar Tharaganar Firm, : AIR1953Mad905 . That was a case where a suit was filed for the recovery of an amount said to have been collected illegally form the plaintiff as sales tax by the State. The question arose as to whether S. 18 of the Madras General Sales Tax Act applied to the case and whether the claim was barred by limitation. Section 18 of the Madras General Sales Tax Act runs as follows:
'No suit shall be instituted against the Crown and no suit, prosecution or other proceeding shall be instituted against any officer or servant of the Provincial Government in respect of any act done or purporting to be done under this Act unless the suit, prosecution or proceeding is instituted within six months from the date of the act complained of'.
The learned Judge held that S. 18 of the General Sales Tax Act would not obviously apply because that section was only intended to cover suits for compensation or damages against tortious or criminal acts committed by Government officers or servants or by the Government itself. It could never apply to a suit filed for refund of taxes illegally collected. While stating so, the learned Judge also referred to Art. 16 of the Limitation Act and observed that Art. 16 could have no application to a case that kind where the tax was merely recoverable as arrears of land revenue. The learned Judge in making a reference to Art. 16 of Limitation Act stated that Art. 16 would not apply for the reason that it would apply only where the tax was recoverable as arrears of land revenue and where the claim is made by the revenue authorities on account of arrears of land revenue or on account of demand recoverable as such arrears.
In the case before the learned Judge because the tax was made within the 15 days prescribed and had not become a tax liable to be recovered as arrears of land revenue, he declared that Art. 16 would not apply, because there was no occasion for making a demand as arrears of land revenue in that case. Therefore it must be stated that having regard to the particular facts of that case where the question of making a demand as arrears of land revenue did not arise Art. 16 according to the learned Judge could have no application. This case, in my opinion, is clearly distinguishable. The amount was paid within 15 days and no action for making a demand as arrears of land revenue arose in that case.
(8) It was further urged that this decision of Panchapakesa Iyer, J., had been followed by a Bench of this Court in the case of A. Santhana v. State of Madras, AIR 1958 Andh Pra 670. No doubt of Panchapakesa Ayyar, J., in the case cirted above, but it has to be noted that they followed those observations when considering as to whether the case was governed by Art. 62 of the Limitation Act or not. In the case in question before the Bench of this Court the question of applicability of Art. 16 of the Limitation Act never came up for consideration. Therefore when the Bench approved of the observation of Panchapakesa Iyer J. the Bench must be deemed to have approved of the observations in so far as they related to the application of Art. 62 of the Limitation Act alone.
(8a) Article 16 of the Limitation Act reads as follows:
16. Against Government to recover money paid under One year When the payment
17. protest in satisfaction of a claim made by the is made.
revenue-authorities on account of arrears of revenue or on account of demands recoverable as such arrers.
The following ingredients are necessary for Art. 16 being attracted.
(a) there must be a claim on behalf of the Government .
(b) it must be made by the revenue authorities,
(c) it must be in respect of a demand recoverable as arrears of land revenue and
(d) such amount must have been paid by the party under protest.
There can be no doubt that in this case if the levy could be made, it could be recovered as arrears of land revenue. That this demand was made by the revenue authorities there is ample evidence in the case. That the amount was paid under protest is admitted by the plaintiff. Therefore where all these ingredients are found, there can be no doubt that Art. 16 of the Limitation Act would apply. The question of limitation or as to whether the particular suit is within time or not, would not depend upon the decision of the court on the merits of the suit. The question of limitation would have to be considered having regard to the allegations in the plaint.
The arguments of the learned counsel that if after investigation it is found that the cess could not be levied under the Local Boards Act, obviously the levy could not be recovered as arrears of land revenue and inasmuch as Art. 16 only envisaged such demands as could be recovered as arrears of land revenue, Art. 16 would not apply, can have absolutely no force. As to whether a claim is within time or not is not to be determined after the matter has been investigated and the court gave its findings but on the nature of the case and the relief asked for. The question to my mind is not entirely free difficulty. I would therefore refer the case to a Bench.
(The case was then referred to a Division Bench consisting of Chandra Reddy C.J. and Ramachandra Rao, J. The Judgment of the Bench was delivered by)
Chandra Reddy, C.J.
The applicability of Art. 16 of the Limitation Act falls for decision in this second appeal.
(9) The brief facts relevant for the purpose of this appeal are these. In the village of Paravada in
Vizianagram Estate, which was taken over by the Government in September 1949 under the provisions of the Madras Estates, Abolition Act (Act XXV1 of 1948) a weekly shandy was being held for long time past. The right to collect fees from persons selling goods in the markets vested in the Zamindar and, after the abolition of the estate, in the Government . As per the practice prevailing prior to the abolition, this right was being auctioned every year.
For false 1361, the plaintiff became the successful bidder for a sum of Rs. 3,106/- The sale, which was held by the Tahsildar, was subject to confirmation by the Estate Manager. The latter, while confirming the sale in favour of the plaintiff, demanded cess at a particular rate in addition to the bid amount. The plaintiff objected to the payment of the cess on the ground that it was not an express term of the contract. This was overruled by the Manager , who insisted on the payment of the cess on pain if cancellation of the lease. To escape the unpleasant consequences, the plaintiff paid the money under protest and has laid this action against the Government of Andhra represented by the District Collector, Visakhapatnam for the recovery of the amount. The basis of the suit was that there was bo liability on the part of a contractor situated like the plaintiff to pay land cess, there being no stipulation for payment of that kind.
(10) The answer of the defendant was twofold. The liability to pay cess was a statutory one and, therefore, the absence of a term in that behalf did not absolve him from payment of the cess and that, in any event, the suit was barred by limitation. The defences prevailed with the trial court with the result that the suit was dismissed with costs.
(11) On appeal, the District Judge reached the contrary conclusion on the issue relating to statutory liability and allowed the appeal without giving any finding as to whether the suit was barred by limitation. The
Government has presented this second appeal against the decree and judgement of the lower appellate court.
(12) When the matter came on for hearing before Srinivasachari J. he referred it to a Benchas he felt that the point bearing on limitation was not free from difficulty.
(13) The learned Government pleader did not impugn the view of the District Judge that the impost was unauthorised, there being no provision in the Madras District Boards Act which obliges a licensee like the plaintiff to pay cess and it is, therefore unnecessary for us to go into that question Nevertheless, he contended that the suit is barred by limitation Act. As we have already remarked, the lower appellate court had not applied its mind to this aspect of the matter. Admittedly, the suit was brought beyond one year the action would be barred. If, in the other hand, it falls outside the pale of that article, it is within time.
(14) As the decision of this question turns upon Art. 16 of the Limitation Act, it is useful to extract that Article.
Against Government of recover money paid under One year When the payment is made.
Protest in satisfaction of a claim made by the Revenue authorities on account of arrears of revenue or on account of demands recoverable as such arrears.
(15) It is not disputed that the sums were demanded by the Revenue authorities and were paid pursuant to that demand under protest. Therefore three of the four essential ingredients, which must be present to attract Art. 16 exit in this case. The only other element that is necessary to invoke Art. 16 is that the demand should be recoverable as arrears of revenue. There can be little doubt that the amount was paid by the plaintiff to meet a demand made by the Revenue authorities. It cannot also be controverted that the demand was such as could be recovered as arrears of revenue.
(16) The counsel (16) The counsel for the respondent pressed an argument upon us that as the levy was unauthorised, it could not be predicted that the amount in question could be recovered as arrears. To put the point presented by him differently, Art. 16 is inapplicable to cases of illegal levies and resort could be had to that Article only in cases where the demand was legal.
(17) Before we consider the validity of the argument, we will quote sec. 52 of the Revenue Recovery Act which empowers the authorities concerned to recover the revenue in a summary manner as indicated in that section. Section 52 provides:
'All arrears of revenue other than land revenue due to the State, all advances made by the State Government for cultivation or there purposes connected with the revenue, and all fees or other dues payable by any person to or on behalf of the village servants employed in revenue or police duties and all sums due to the State Government, including compensation for any loss or damage sustained by them in consequence of a breach of contract may be recovered in the same manner as arrears of land revenue under the provisions of this Act, unless the recovery thereof shall have been or may hereafter be otherwise specially provided for'.
(18) An argument is advanced by the counsel for the respondent that , in view of Sec. 91 of the Madras District Boards Act the Revenue Department could have recourse to Sec. 52 only in cases where the ceases are legally due and payable. That provision of law is in the following words:
'If a land-holder or sub-land holder shall on any date fixed by the District Collector under section 88 have failed to pay either in whole or in part the cess due by him in respect of his lands of if a tenant shall have failed to pay either in whole or in part the cess due by him, on the water rate payable direct by him to Government in respect of lands occupied by him the said cess or such part of it as remains unpaid shall be recoverable as if its were an arrear of revenue under the Madras Revenue Recovery Act, 1864 and the provisions contained in sec. 42 of the said Act shall be applicable to all lands brought to sale for arrears of cess'.
(19) This section cannot throw any light on the problem to be solved by us. That only lays down that ceases due by the persons concerned would be recovered as if they are arrears of land revenue. As we have already remarked, Sec. 52 covers all forms of revenue. Anything that falls within the reach of Sec. 52 would come within the words 'on account of arrears of revenue'. In other words, ceases lawfully imposed on lands fall within the concept of revenue. Article 16 goes beyond the recovery of the amount paid as arrears of revenue. The article also takes in payments made on account of demands recoverable as such arrears. If the article excludes ceases illegally levied, the latter clause becomes otiose. Some meaning must be attributed to those words.
In our opinion, they apply to payments made pursuant to a demand, whether legal or illegal, if they could be recovered as arrears of revenue as well. The only pre-requisite of the applicability of the last clause is that the payment should be made in compliance with the demand which could be recovered as arrear irrespective of whether the demand was justified or not. If the intention of the legislature was to confine it to cases of levies which were legal, it would not have employed the last clause. We feel that this clause is of wide import taking in imposts, whether legal or illegal, and the article is not confined to levies legally made. Therefore, a suit for recovery of money demanded as land cess and paid under protest comes within the scope of Art. 16.
(20) We are supported in this view of ours by a number of decided cases. In Secy. of State v. Ranganayakamma, 12 Mad LW 334 : (AIR 1920 Mad 948) a Full Bench of the Madras High Court decided that a suits for recovery of money which was demanded illegally by the Government as water cess was governed by Art. 16 of the Limitation Act. In that case, it was specifically found that neither the land holder nor the riot was liable to pay the cess. Yet it was ruled that the remedy to sue the Government to recover back money levied from them under duress was to be brought within one year as contemplated by Art. 16.
(21) The same principle is illustrated Secy. of State v. Venkataratnam, 45 Mad LJ 12 : (AIR 1923 Mad 652). To a like effect is another judgment of the same court in Secy. of State v. Nagaraja Iyer, 44 Mad LJ 645 : (AIR 1923 Mad 665).
(22) Mr. Kuppuswami called in aid : AIR1953Mad905 to substantiate his proposition that Art. 16 would come into play in cases only where the tax was legally recoverable. We do not think that that case presents any analogy to the present one. There, the tax was paid within the 15 days prescribed and had not become liable to be recovered as arrears of land revenue. It does not also appear that the payment was made there under protest. The learned Judge would not have laid down any proposition contrary to the Full Bench and the Bench decisions of that court.
(23) AIR 1958 Andh Pra 670 relied on by the respondent does not carry him any farther as it merely approved of : AIR1953Mad905 .
(24) Secretary of State v. Midnapore Zamindari Co. Ltd., AIR 1937 PC 224 does not afford us any guidance in this enquiry. In that case their Lordships of the Privy Council ruled that Art. 16 was inapplicable because the sums claimed by the Government were claimed as rents payable to the tenure-holders for lands held by them. The rents claimed in such cases could not be described as revenue or a demand which could be recoverable as arrears of revenue because there was no enactment which brought such rents under the category of 'Revenue'. The observations of their Lordships in this behalf are significant:
' Such rents are not arrears of revenue and unless it can be shown that by some enactment they have been made to come under that description or have been made recoverable as arrears of revenue, Art. 16 cannot be applied to them'.
It is seen that Sec. 52 of the Madras Revenue Recovery Act is of a very wide amplitude. Moreover, that case has not much of relevancy to the second clause of Art. 16. If at all, it militates against the contention of the respondent. If Art. 16 was inapplicable to the recovery of money paid as rent, for the collection of which there was no warrant, the point could have been disposed of on that short ground. Therefore, none of the cases relied on by the respondent comes to his help. In our opinion, the suit is barred by limitation as it comes within the mischief of Art. 16 of the Limitation Act.
(25) In the result, the appeal is allowed. In the circumstances of the case, the parties will bear their own costs throughout.
(26) Appeal allowed.