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State of Andhra Pradesh Represented by Collector, East Godavari at Kakinada Vs. Isukapalli Gangaraju and ors. - Court Judgment

LegalCrystal Citation
SubjectCivil
CourtAndhra Pradesh High Court
Decided On
Case NumberAppeal No. 299 of 1960
Judge
Reported inAIR1964AP485
ActsLimitation Act, 1908 - Schedule - Articles 62 and 120
AppellantState of Andhra Pradesh Represented by Collector, East Godavari at Kakinada
Respondentisukapalli Gangaraju and ors.
Appellant Advocate2nd Government Pleader and ;Nagaramaiah, Adv.
Respondent AdvocateT. Ananta Babu, ;K. Chelapathi Rao, ;M. Venkata Rao and ;P.L. Narasimha Sarma, Advs.
DispositionAppeal allowed
Excerpt:
civil - suit for recovery - articles 62 and 120 of limitation act, 1908 - suit for recovery of money illegally collected by government - whether article 120 applies to suit - high court observed that article 120 does not apply to suit - money received by government need not have been received for plaintiff's use - court to apply a fiction that government received money for plaintiff's use - government bound to refund money - suit to be governed by article 62 - limitation period for suit start when money was received by government. - - 6,340/- which the plaintiff was liable to make good to the government. on behalf of the plaintiff, it was argued that the article of limitation applicable to the present suit is article 120 of the first schedule to the indian limitation act and that the.....1. the state of andhra pradesh represented by the collector, east godavari, kakinada, the defen-dant in the lower court, is the appellant in this appeal. the plaintiff is the respondent. the plaintiff was the licensed renter for the toddy shops in the villages of palacherla and kolamuru for the year 1-10-1947 to 30-9-1948. according to the terms of the auction, the toddy shops had to be located on an unobjectionable site in the 'gram kantam' of the respective villages. but as theplaintiff was not able to obtain a suitable site in the 'grama kantam' of the village of palacherla, he located the shop of that village at a place outside the 'grama kantam'. therefore, his licence for the palacherla shop was withdrawn by the collector of abkari on 24-6-1948. further, purporting to act under.....
Judgment:

1. The State of Andhra Pradesh represented by the Collector, East Godavari, Kakinada, the defen-dant in the lower Court, is the appellant in this appeal. The plaintiff is the respondent. The plaintiff was the licensed renter for the toddy shops in the villages of Palacherla and Kolamuru for the year 1-10-1947 to 30-9-1948. According to the terms of the auction, the toddy shops had to be located on an unobjectionable site in the 'gram kantam' of the respective villages. But as theplaintiff was not able to obtain a suitable site in the 'grama kantam' of the village of Palacherla, he located the shop of that village at a place outside the 'grama kantam'. Therefore, his licence for the Palacherla shop was withdrawn by the Collector of Abkari on 24-6-1948. Further, purporting to act under Clause 37 of the licence, the Collector of Abkari cancelled on 9-7-1948, the licence held by the plaintiff for the toddy shop situate in the village of Kolamur, though with regard to this shop, the plaintiff did not commit breach of any of the terms under which the auction for the toddy shop at Kolamur was held. The plaintiff filed O. S. No. 72 of 1949 against the Province of Madras for a declaration that the orders of the Abkari Collector, East Godavari dated 24-6-1948 and 9-7-1948 cancelling the licence for the two toddy shops at Palacherla and Kolamur and the orders passed by the Collector, East Godavari and the Board of Revenue confirming the said cancellation are illegal and improper and capricious and for a decree for a sum of Rs. 31,381-12-0 consisting of the following items:

Rs.As.P

(a)Refund of deposit...6,40000(b)Refund of rent for siv clays in June 1948 in respect of Palacherla shop...12000(c)Refund of monies spent on trees...7,606120(d)Behind of money paid as free-tax...9,25800(e)Loss of profit which wouldhave been earned...8,00000

Total...31,381120

This suit was resisted by the State of Andhra Pradesh mainly on the ground that the plaintiff committed a breach of the terms of the licence and that, therefore, the Collector of Abkari was entitled to cancel the licence and reauction the right to the same at the risk of the plaintiff. It was also contended that under Clause 37 of the licence, the Collector was entitled to cancel the licence relating to Kolamur shop also though the plaintiff did not commit breach of any of the terms of the auction with respect to that shop. The learned Subordinate Judge, Rajahmundry held that the Government was right in withdrawing the licence for Palacherla shop, but that they had no right to cancel the plaintiff's licence with respect to the Kolamur shop and that the Government had no right also to forfeit the deposits relating to the two shops and hence was liable to refund those amounts. He also held that the plaintiff was entitled to recover, the two sums of Rs. 7,603-12-0 and Rs. 9,258/- paid by him as tree tax. But he rejected the claim under the head of loss of profit. In the result, the suit was decreed except for the sum of Rs. 2,000/-.

The Province of Madras appealed to the High Court of Madras in A.S. No. 699 of 1953. The said appeal was transferred to the High Court of Andhra Pradesh at Hyderabad. The State of Andhra Pradesh came in as the appellant in the place of the State of Madras. By judgment and decree dated 15-4-1958, this High Court modified the decree of the trial Court. The High Court held that the cancellation of the licence for the Kolamur shop was illegal and that the deposits made by the plaintiff could not be forfeited and that the same had to be refunded by the Government to the plaintiff. The judgment and decree of the High Court have become final. But sanding that suit in the trial Court, the Government reauctioned the two shops at Palacherla and Kolamur and claimed that, as a result of the re-auction there was a loss of Rs. 6,340/- which the plaintiff was liable to make good to the Government. A demand was accordingly made on the plaintiff for that amount. The plaintiff paid that amount on 7-11-1950 into the Sub-Treasury, Rajahmundry as per the receipt, Ex. A-1. This amount represents the deficit consequent on the resale of the shops.

The plaintiff claims that he is entitled to a refund of this amount of Rs. 6,340/- minus the sum of Rs. 885/- which was the deficit consequent upon the resale of the Palacherla shop. The High Court in its judgment fn A. S. No. 699 of 1953 noted that it was agreed between the parties that the Government was entitled to deduct the sum of RS. 885/- out of the sum of Rs. 1200/- deposited by the plaintiff with respect to the Palacherla shop. But after the decree of the trial Court in that suit the Government refunded the amount of Rs. 1200/- to the plaintiff. Therefore, in this suit, the plaintiff gave credit to the Government for the sum of Rs. 885/- which was due to the Government with respect to the Palacherla shop, and filed the present suit only for Rs. 5,455/-. The second item claimed in this suit is the interest on that amount i.e. Rs. 2,636-9-4 the suit claim being Rs. 8,091-94. The judgment in O. S. No. 72 of 1949 on the file of the Subordinate Judge's Court is dated 6-1-1953 and the judgment of the High Court in A. S. No. 699 of 1953 is dated 15-4-1958. The present suit, 0. S. No, 47 of 1958 on the file of the Court of the District Judge, East Godavari, Rajahmundry was filed on 17-11-1958. In paragraph 17 at the plaint, it is stated that:

'The cause of action for the suit arose on 7-11-1950 when the amount of Rs. 5,455/- was illegally collected from the plaintiff and on 15-4-1958 when the High Court held that the action of the defendant is illegal and both parties agree to deduct Rs. 885/- which amount representing the Palacherla shop.'

The State of Andhra Pradesh filed a written statement, the main defence being that the suit is barred by limitation. In paragraph 5 of the written statement, It is pleaded that the right of the plaintiff to claim a refund of Rs. 6,340/- or Rs. 5,455/- is not founded on the decision in A. S. No. 699 of 1953 of the Andhra Pradesh High Court. It was pointed out that the plaintiff has all along been contending that the collection of Rs. 6,340/- from him on 7-11-1950 is illegal. Therefore, It is pleaded that his right to recover the whole or a part of Rs. 6,340/- aross on 7-11-1950 and that this suit is barred under Article 62 of the 1st Schedule to the Indian Limitation Act. Again in paragraph 6 of the written statement, it is stated that no cause of action arose on 154-1958 and that the cause of action arose on 7-11-1950 and that the time began to run from the said date.

2. The second issue framed by the lower Court is whether the suit is barred by time. The discussion in the lower Court turned upon two questions, (1) What was the Article of Limitation applicable to the suit claim and (2) When did the cause of action arise? On behalf of the plaintiff, it was argued that the Article of limitation applicable to the present suit is Article 120 of the First Schedule to the Indian Limitation Act and that the cause of action arose on 15-4-1958 when the High Court finally held that the cancellation of the licence by the Government with respect to the Kolamur shop is illegal and that the plaintiff was 'clearly entitled to refund of the deposithe had made for the purpose of the due payment of the rent as well as other necessary consequential reliefs.' It was also suggested that even if it would be held that the cause of action arose on 6-1-1953 the date of the decision of the trial Court in that litigation, the suit is within time having been filed within six years from that date, under Article 120 of the Indian Limitation Act.

It was also argued, relying upon certain observations of the Privy Council in Bassu Kuar v. Dhun Singh, ILR 11 All 47 and Mt. Swarnamayi v. Shashi Mukhi Barmani, 12 Moo Ind App 244 (P C), that if the plaintiff filed The present suit even before the High Court finally decided the prior litigation, it would be a futile ore, since so long as the order of the Collector of Abkari cancelling the licence stood, the plaintiff would not be entitled to a refund of the suit amount. On the other hand, it was contended on behalf of the Government that the Article of limitation applicable to the present suit is Article 62 of the Indian Limitation Act, that the period of limitation is only three years and that the cause, of action for the suit arose on 7-11-1950 when the amount was received by the defendant as prescribed by that Article, and that therefore the suit is barred by limitation.

The lower Court was of the opinion that, if this suit were filed even before it was finally held in the prior suit that the cancellation of the licence with respect to the Kolamur shop is illegal, this suit would necessarily have to be dismissed and that the institution of this suit earlier would be only a futile action on the part of the plaintiff. Therefore, it held that the Article of limitation applicable to the present suit is Article 120 of the First Schedule to the Indian Limitation Act and that the cause of action arose only on 154-1958 when A. S. No. 699 of 1953 was finally disposed of by this High Court and when the rights of the parties were finally determined by the High Court, In this view, it held that the suit is not barred by limitation and decreed the suit claim.

3. The same contentions which were urged on behalf of the Government in the lower Court are again urged before me by the learned Government Pleader, and on behalf of the plaintiff-respondent, Mr. Ananta Babu, his learned counsel strenuously contended again before me that the Article of limitation applicable is Article 120 of the First Schedule to the Indian Limitation Act and that the suit is in time whether it be held that the cause of action arose either on 6-1-1953 the date on which the trial Court first held that the cancellation of the licence for Kolamur shop was Illegal or on 15-4-1958 when the High Court also held that the said cancellation is illegal. In either case, it is pointed out, the suit Is in time.

4. It may be noted that by the timer the plaintiff paid Rs. 6,340/- to the Government as per the receipt, Ex. A-1 dated 7-11-1950, the prior suit, O. S. No. 72 of 1949 was already instituted and was pending. The plaintiff could not have included the present suit claim in the previous suit, the cause of action for refund of this amount having arisen subsequent to the institution of the prior suit.

5. In support of his contention that the Article of Limitation applicable to this suit is Article 62 of the First Schedule to the Indian Limitation Act, the leaned Government Pleader contended that this suit is, in substance, one for money payable by the defendant to the plaintiff for money received by the defendant for the plaintiffs use within the meaning of Article 62 and that the suit had to be filed within three years from the datewhen the money was received i.e. from 7-11-1950. Article 62 of the First Schedule to the Indian Limitation Act is as follows :

'For money payable by the delendant to the plaintiff for money received by the defendant for the plaintiff's use.Three years.When the money is received.'

Reliance is placed upon the decision in Rajputana Malwa Railway Co-operative Stores Ltd. v. The Ajmere Municipal Board, ILR 32 All 491, In that case, the Municipal Board illegally levied upon the plaintiff-company and collected from it certain sums by way of octroi duty and the suit was for the refund of that amount illegally collected by the Municipal Board. The question was which Article out of Articles 2, 61, 62 and 120 of the Second Schedule to the Indian Limitation Act, (15 of 1877) was applicable to that suit. First it was held that Articles 61 and 120 clearly do not apply. Then, the learned Judges considered whether Article 2 or Article 62 applied to the case. Those two Articles correspond to Articles 2 and 62 of the First Schedule to the Indian Limitation Act (Act 9 of 1908). The learned Judge had to consider the nature of that claim and, for that purpose, referred to the old common law form of claim in England. They pointed out that:

'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 suit which was adopted when a plaintiff's money had been wrongfully obtained by the defendant, as for example, when money was exacted by extortion, or oppression, or by abuse of legal process, or when over-charges were paid to a carrier to induce him to carry goods or when money was paid by the plaintiff in discharge of a demand illegally made under colour of an office. It was a form of claim which was applicable when the plaintiff's money had been wrongfully obtained by the defendant, the plaintiff in adopting it waiving the wrong and claiming the money as money received to his use (e.g., see Morgan v. Palmer, (1824) 2 B and C 729 also Neate v. Harding, (1851) 6 Ex 349).'

With regard to the plaintiff's claim in that suit, the learned Judses held that it was in the nature of a claim for money had and received by the defendant-Municipality for the plaintiff's use and was not a claim for compensation or damages and that it was the old count for money had and received in modern dress. The learned Judges finally held that the claim in their opinion clearly came within Article 62 and not within Article 2.

6. It is argued that In the present case also the cause of action for the suit Is the illegal collection of the money consequent on the re-sale of the toddy shop after cancellation of the licence, which cancellation itself is illegal and that therefore, the proper Article to be applied is Article 62. This decision is referred to and followed by the Madras High Court in India Sugars and Refineries Ltd. v. Municipal Council, Hospet, (1942) 2 Mad LJ 663 : (AIR 1943 Mad 191), That case arose out of a suit for recovery of profession tax alleged to have been wrongfully levied by the Municipal Council. The learnedJudges held that Article 62 is intended to apply to all actions for money had and received to the use of the plaintiff whether they be actions which may be deemed strictly to be based on Implied contracts or whether they be merely to enforce an equitable claim to the return of the money had and received. The learned Judges repelled the argument that Article 62 applies only to an action for money had and received in the strictest sense of the terms as understood in the Courts of Common Law in England and that when the action is based not on any implied contract, but on the principle of ex aequo et bono Article 62 would have no application and the residuary Article 120 would apply.

So, this decision is a definite authority for the proposition that in suits for recovery of money illegally obtained by the defendant from the plaintiff, the proper Article of limitation is Article 62 and not Article 120 of the Indian Limitation Act. The learned Judges held that the plaintiff's claim so far as it related to the payment made prior to three years before the suit was barred by limitation. In Municipal Council, Dindigui v. Bombay Co. Ltd., AIR 1929 Mad 409, the suit was by the company to recover money wrongfully collected from it by the Municipality. The Municipality contended that the suit was ona for damages or compensation within the meaning of Section 350 of the Madras District Municipalities Act (5 of 1920) and was hence barred under that section. On behalf of the company, it was argued that it was an equitable action for money had and received and was not barred. Coutts-Trotter, Chief Justice, referred to the following passage from the decision of the Privy Council in John v. Dodwell and Co. Ltd., AIR 1918 PC 241:

'Under principles which have always obtained in Ceylon, law and equity have been administered by the same Courts as aspects of a single system, and it could never have been difficult to treat an action analogous to that for money had and received as maintainable in all cases 'where the defendant has received money which ex aequo et bono he ought to refund'. If, as in Ceylon, there is no necessity to find an actual contract or to impute the fiction of a contract, inasmuch as every Court can treat the question as one not merely of contract, but of trust found where necessary, there is no difficulty in extending the remedy to all the cases covered by the words just quoted.' Then, the learned Chief Justice observed as follows:

'I take that as being equally applicable to the Courts of British India and I take it to mean this that in Courts such as those in Ceylon and those of British India an action for money had and received may be treated, though the English Common Law cannot treat it as an action, founded on any equity binding on the conscience of the recipient of the money which is shown not to behis.'

*****

I do not quite understand his Lordship's words 'trust fund' but it appears to me reasonably clear that as he is dealing throughout with an action for money had and received, he cannot be supposed to have intended to apply what he said merely to earmarked funds, for such do not arise in the case of actions for money had and received.'

Madhavan Nair, J., the other learned Judge, who decided that case also held that the plaintiff's suit for recovery of the money wrongfully collected by the defendant can-not be described as a suit for damages or compensation, being essentially an equitable action for money had and received.

7. Reliance is also placed upon the decision in San-thanna v. State of Madras, (1957) 2 Andh WR 260 : (AIR 1958 Andh Pra 670). That case arose out of a suit for refund of the sales-tax illegally collected by the Government. The question was whether the suit was barred under Section 18 of the Madras General Sales Tax Act as having been filed more than six months after it was illegally collected; where it was the contention on behalf of the assessee that such a suit was governed by Article 62 of the Indian Limitation Act. The learned Judges applied Article 62 of the Indian Limitation Act to that case. If, on the authority of these decisions, it is to be held that Article 62 applies to this case, the cause, of action arose on 7-11-1950 when the defendant received the plaintiff's money and the suit will be barred by limitation because it was filed more than three years after that date.

3. But it is contended by Mr. Ananta Babu, the learned, counsel for the plaintiff-respondent that it cannot be said that the defendant in this case collected the money for the plaintiffs use and that unless and until the order cancelling licence was finally held by the Subordinate Judge's Court, Rajahmundry and by the High Court in A. S. No. 699 of 1953 to be illegal, the plaintiff had no cause of action at all to file the suit and that to a suit of this kind, the Article applicable is Article 120 of the Indian Limitation Act.

In support of this argument, I am first referred to the decision in Anantram Bhattacharjee v. Hem Chandra Kar, ILR 50 Cal 475 : (AIR 1923 Cal 379). In that case, in view of the dispute between owners of contiguous properties, some lands were attached under Section 146 of the Code of Criminal Procedure and the income was deposited in the Collectorate. It was drawn out by the defendant claiming to be entitled to it; whereas in fact the plaintiff was the owner of the property from which the income was derived. Therefore, the plaintiff filed a suit to recover the money thus wrongfully drawn out by the defendant from the Collectorate. The question was whether the suit was governed by Article 62 or Article 120 of the Indian Limitation Act. The learned Judges held that the case was governed by Article 120. Ghose, J. stated that in his opinion

'the plain meaning of the words in Article 62 of the Limitation Act should be given effect to without having recourse to any technical rules of English law regarding forms of action. The plaintiffs in this case are equitably entitled to the money as the profits of their lands, which the defendant No. 1 withdrew, honestly believing that he was entitled to it.'

Then, the learned Judge referred to the earlier case in Gurudas Pyne v. Ram Narain Sahu, ILR 10 Cal 860 (PC), which arose out of a suit to enforce an equitable claim and held that the suit was governed by Article 120.

9. Reliance is also placed upon certain observations of Sadasiva Ayyar, J. in Ramasami Naidu v. Muthusami Pillai, ILR 41 Mad 923 : (AIR 1919 Mad 957). After referring to the English forms of action for money had and received in the olden days, the learned Judge pointed out:

'But the scope of that action ought not to be extended beyond what would be covered by the principles govern-ing the numerous decisions which have laid down what kinds of actions do come within it and what kinds of actions do not.'

Then, the learned Judge proceeded to observe as follows :

'While privity of contract between the parties is of course not necessary to sustain such an action, I think there must be what might be called some privity of a legally recognizable nature such as some knowledge of particular facts in the man who received the money and some mistake or ignorance of fact on the part of the man who paid the money or some relation of trust and confidence between the person who received the money and the person claiming the money or a portion thereof on which the Court could fasten as creating the relation of principal and agent (though by fiction) between the plaintiff and the defendant.'

If this test has to be applied to the present case, I shall have to rule out the applicability of Article 62. In Kapildeo Rai v. Gopal Dutt Mishra, : AIR1961Pat195 , the plaintiff's properly was wrongfully sought to be sold in satisfaction of a decree, to which he was not a party and he was forced to deposit the decretal amount in order to save his properly from sale in execution and then He filed a suit against the defendants for return of the money deposited by him and received by the defendants. The question was whether the suit was governed by Article 120 or Article 62 of the Indian Limitation Act. The learned Judge followad the observations of Sadasiva Ayyar, J. in ILR 41 Mad 923 : (AIR 1919 Mad 957) and held that that suit was governed by Article 120 and not Article 62 of the Indian Limitation Act, because when the defendants withdrew the money belonging to the plaintiff it could not be said that it was received by the defendants for plaintiff's use, as the defendants received it as their own on their behalf inasmuch as that money had been deposited in their favour by the plaintiff.

But in my opinion, this view does not accord with the decisions in ILR 32 All 491: AIR 1929 Mad 409, (1942) 2 Mad LJ 663 : (AIR 1943 Mad 191) and (1957) 2 Andh W R 260 : (AIR 1958 Andh Pra 670). In all those casss also, it cannot be said that, as a matter of fact, the plaintiff's money was received by the defendants therein for the plaintiff's use. The defendants received the money on the footing that they were entitled to receive it and that the plaintiff was bound to pay it. That will be so in all cases of illegal collection of taxes and illegal extortions of money. If the decision in : AIR1961Pat195 , is correct, it must follow that the other cases were wrongly decided.

In Nirmal Kumar v. Satya Prakash, : AIR1961All109 , the defendants wrongfully received money due under a decree to which the plaintiff was really entitled and the question arose which of the two Articles 62 or 120 applies to a suit by the plaintiff to recover the money from the defendants. The learned Judge held that:

'In construing Article 62 the Court has to interpret a statute and it should not travel beyond the words of the Article. The first column of the schedule against entry No. 62 clearly requires that the defendant should have received the money for the plaintiff's use. This expression should be strictly construed, because a liberal construction would result in more plaintiffs losing in a large number of cases on the ground of limitation.'

The learned Judge referred to with approval the observation of Chagla, Chief Justice, in Lingangouda Marigouda v. Lingangouda Fakirgouda, : AIR1953Bom79 , that:

'It is not always safe to follow English decisions in construing Article 62. If anything, in India, Article 62 should be more strictly construed, because a liberal construction would result in more plaintiffs losing in a largo number of cases on the ground of limitation, because if Article 62, is strictly construed, then the suit would fall under Article 120 which gives to the plaintiff a longer period, of limitation.'

The above decisions take a more equitable view of the scope of Article 62 than the one taken by the Madras High Court and I also would take the same view if I am not bound by the decisions of the Madras High Court.

10. The argument of Mr. Ananta Babu is that even assuming that the plaintiff could have filed a suit for the return of the amount paid by him as per the receipt, Ex. A-1 immediately after such payment, still a fresh cause of action had accrued to the plaintiff to sue for the amount when the High Court finally decided on 154-1958 that the cancellation of the licence by the Government for the Kolamuru shop is illegal and when the High Court finally decided that the plaintiff would be entitled to refund of the deposit he made 'as well as all other necessary consequential reliefs.' I may at once point out that, when mentioning 'all other necessary consequential reliefs' the High Court, in my opinion, was merely referring to the other reliefs claimed in the plaint in that suit than the refund of the deposit. They were not referring to the refund of the suit amount.

In support of this contention, reliance is placed upon three decisions of the Privy Council. In 12 Moo Ind App 244 (PC), a sale under the Bengal Regulation 8 of 1819 having been set aside and the Putneedars restored to possession, the Zamindar filed a suit for recovery of the arrears of rent which had accrued before and during the time they were out of possession. The defence was that the claim was barred because the suit had not been brought within three years from the date when each Instalment of rent fell due. This contention was overruled and it was held by the Privy Council that the cause of action accrued on the date of the decree reversing the auction sale and the consequent revival of the obligation to pay the rent. Their Lordships' view of the case is stated thus:

'upon the setting aside of this sale, and the restoration of the parties to possession, they took back the estate, subject to the obligation to pay the rent; and that the particular arrears of rent claimed in this action must be taken to have become due in the year in which that restoration to possession took place.'

The next decision is ILR 11 All 47 (PC). The facts of this case may be summarised as follows: Dhum Singh, who was indebted to Baru Mal on account stated, agreed to sell his property to Baru Mal and the debt was to be set off against the purchase-money. A sale-deed was accordingly executed in which the full purchase-money was acknowledged as received, but none actually passed. Dhum Singh sued Baru Mal for the balance of the purchase-money after deducting the amount of the debt owing by Dhum Singh to Baru Mal. That suit was first decreed by the trial Court; but on appeal to the High Court, the High Court set aside the decree and dismissed the suit, on the ground that the sale deed was not binding on BaruMal. Thereupon, Baru Mal brought a suit against Dhum Singh to recover the debt. On those facts, the Privy Council hold that Article 97 applied and that the time thereunder ran when Dhum Singh's prior suit for specific performance was dismissed,

Their Lordships pointed out that it had throughout been common ground to both disputants that there was a contract made between them and that among its terms were the sale of the villages for Rs. 55,000/-, the retention by Dhum Singh of his debt of Rs. 33,359-3-6 as part payment and the payment by Baru Mal of the balance. Their Lordships considered the question both under Section 65 of the Contract Act and Article 97 of the Indian Limitation Act. The agreement became wholly ineffectual and was discovered to be void within the meaning of Section 65 of the Contract Act when the High Court decreed it to be so on 14th March 1834. Therefore, by the terms of that section, Dhum Singh became entitled to pay his debt on that date. Then, their Lordships referred to Article 97 of the Indian Limitation Act under which an action for money paid upon an existing consideration which afterwards fails, is not barred till three years after date of the failure and pointed out that a debt retained in part payment of the purchase-money is in effect, and as bet-ween vendor and purchaser, a payment of that part and that consideration failed when the decree was made by the High Court in 1884.

It may be noted that in that case, the suit for speci-fic performance filed by Dhum Singh was first decreed by the Subordinate Judge in 1881. It was only on 14th March, 1884 that the High Court set aside that decree and dismissed Dhum Singh's suit. Reviewing these facts, the Privy Council observed as follows :

'Up to the date of the Subordinate Judge's decree in 1881, Dhum Singh retained the amount of his debt asof right, and in accordance with the contract alleged by him. After the decree of 1881 he still retained it as of right, and with a title which could not be disputed in any Court of Justice, except by the one mode of appeal from the decree of 1881. Baru Mal might have sued for his debt, but the utmost benefit that could have come to him from such a suit would have been to have it suspended or retained in Court till after decision of the appeal in the specific performance suit. Dhum Singh's defence would have been that the debt was paid by virtue of the contract, and that defence must have prevailed if the suit were heard while the decree of 1831 still stood unreversed. It would be an inconvenient state of the law if it were found necessary for a man to institute a perfectly vain litigation under peril of losing his property if he does not. And it would be a lamentable state of the law if it were found that a debtor who for years has been insisting that his creditor shall take payment in a particular mode, can, when it is decided that he cannot enforce that mode, turn round and say that the lapse of time had relieved him from paying at all'

In Muthu Korakki Chetty v. Mohd. Madar Ammal, ILR 43 Mad 185 : (AIR 1920 Mad 1) (FB) Sir Abdur Rahim, Officiating Chief Justice, after referring to the two decisions of the Privy Council and other decisions observedat page 200 (of ILR Mad) : (at p. 7 of AIR) as follows:

'But it is hardly to be inferred from such observations that the Privy Council intended to lay down any rule or rules for exclusion of time other than those mentionedin various sections of the Limitation Act, such as, 12, 14 etc. Or that when time has once begun to run, it will be suspended otherwise than according to the provisions of Section 9 or any other similar provision of the Limitation Act itself.'

Again at page 201 (of ILR Mad) : (at p. 7 of AIR), the learned Officiating Chief Justice stated:

'I must however observe that it would almost look that in my judgment Secretary of State v. Ranganayakamma, 59 Ind Cas 98 : (AIR 1920 Mad 948) (SB), I tried to deduce from these cases a principle of general and unlimited application to the effect that where the rights of the parlies have been subjected to determination by the Court, it is from the date of the determination of such rights that limitation should be computed. But on further consideration, I am persuaded that any such deduction would be unjustified, if it be meant thereby to introduce a rule of exclusion or suspension of time covering a larger wound than that traversed by Sections 12, 14, 15, 16, 9 and other similar provisions of the Limitation Act.'

The judgment of Abdur Rahim J. in Secy. of State v. Ranganayakamma was reported in 59 Ind Cas 98 : (AIR 1920 Mad 948) (SB). That case arose out of a suit filed by the Zamindar against the Government for refund of the water cesses illegally collected. The case went before three Judges under Clause 15 of the Letters Patent. Sir John Wallis, Chief Justice, pointed out that:

'the fact that when a cause of action arose the plain-tiff or somebody else had a suit pending which raised the same question does not exempt him from the operation of the Limitation Act, nor does the decree in that suit give him a fresh cause of action with a fresh starting point.'

Reference may also be made in this connection to the decision in Pannaji Devi Chand and Co. Gadag v. Sanaji Kapur Chand, AIR 1930 Mad 635. That was a case under Art. 29 of the Limitation Act, which prescribed a period of three years for a suit for compensation for wrongful seizure of moveable property under legal process from the date of the seizure. It was held that:

'Under Article 29 time begins to run from the date of the actual seizure and not from the date the seizure is declared wrongful by a competent court. For the seizure is wrongful ab initio. It does not become wrongful when declared to be so by the Court.'

The decision of the Privy Council in Shama Purshad Roy v. Purro Purshad Roy, 10 Moo Ind App 203 (PC) turned upon the effect of an order of Her Majesty in Council and has no real bearing on the question to be decided in this appeal.

11. I am unable to distinguish on principle the present case from the decisions in (1942) 2 Mad LJ 663 : (AIR 1943 Mad 191), AIR 1929 Mad 409 and (1957) 2 Andh WR 260 : (AIR 1958 Andh Pra 670) which are binding on me, It is also clear from the decision in ILR 32 All 491 that a suit to recover money illegally collected from the plaintiff by the defendant is governed by Article 62 of the Indian Limitation Act. But Mr. Ananta Babu contended that in those, cases relating to suits for recovery of taxes illegally collected by the Government, the question did not arise whether Article 62 or Article 120 of the Limitation Act would apply and it was not argued that the proper Article to be applied is Article 120. But areference to the decision in (1942) 2 Mad LJ 663 : (AIR 1943 Mad 191) shows that the learned Judges ruled out Article 120 and applied Article 62. This decision is binding upon me.

In ILR 32 All 491 also, the learned Judges held that Article 120 does not apply and that only Article 62 applies. Therefore, I hold that, to the present case, which is a suit for money illegally collected by the Government from the plaintiff, Article 62 of the First Schedule to the Indian Limitation Act applies. The cases, which are binding on me, have pointed out that when the money was received by the defendant, it need not have been in fact received for the plaintiff's use. When the exaction is illegal, the Court applies a fiction that the defendant received the money for the plaintiff's use, because the defendant in justice and equity is bound to refund it to the plaintiff and has no right to retain it.

12. Mr. Anantha Babu relied also in the decision of the Privy Council in Annamalai Chettiar v. Muttukarup-pam Chettiar, 60 Mad LJ 1 : (AIR 1931 PC 9). The case arose out of a suit for an account against a person in the position of a trustee and was clearly governed by Article 120 and not Article 62 of the Limitation Act. It is contended ay the learned Counsel that the plaintiff could not have sued for any specific amount prior to the decision of the High Court and that it is only after deducting the amount of Rs. 885/- which the Govt. is entitled to retain, that the present suit had to be filed for the balance, viz., Rs. 5,455/-. But it is clear from the judgment of the High Court that the amount of Rs. 885/- which the Government was entitled to retain was the amount of the loss sustained by the Government by reason of the re-sale of the toddy shop at Palacheria. The Government could have deducted that amount from the amount of deposit of Rs. 1200/- made by the plaintiff with respect to that shop. That had nothing to do with the amount of Rs. 5,455/- collected from the plaintiffs as per Ex. A-1 with respect to the Kolamuru shop.

The plaintiff himself gave credit to that amount in this suit and sued for the balance only because, after the decision of the trial Court in the prior suit, he received from the Government the entire deposit of Rs. 1200/-which he made with regard to the Palacheria shop. In my opinion, there is no question of accounting at all between the parties and there is no question of the rights of the parties being finally determined by the trial Court in the previous suit or by the High Court in appeal. From the very beginning, the cancellation of the licence with regard to the Kolamuru shop and its re-sale was illegal and the Government had no right to recover from the plaintiff the loss of Rs. 5455/- occasioned by that re-sale. It was not the decision of the Subordinate Judges' Court or the decision of the High Court in A. S. No. 699/53 that made the recovery of the amount illegal.

In fact, in the prior suit, besides asking for a declaration that the orders cancelling the licence were illegal, the plaintiff claimed refund of the amounts deposited by him and other amounts which he was entitled to as well as damages. He did not and need not have waited till the declaration was given to sue for the amounts for which he ultimately obtained the decree. Similarly, he could have filed a suit on and after 7-11-50 for the refund of this amount of Rs. 5455/- on the ground that the recovery of the same by the Government is illegal. I am unable to find any provision in Indian limitation Actwhich prevented the plaintiff from instituting such a suit for refund of the amount of Rs. 5,455/- immediately after the Government collected the amount from him. Article 62 of the Indian Limitation Act is very clear and limitation starts when the money was received (i.e. 7-11-50) and the suit to recover the amount should be filed within three years. Of course, the plaintiff would have the two months' period for the notice under Section 80 C. P. C. In this view, the plaintiff's suit is barred by limitation and has to be dismissed.

13. The learned Government Pleader also tried to argue that the suit is barred under Article 18 of the First Schedule to the Indian Limitation Act. That plea was not raised in the written statement in which it was specifically pleaded that the suit is barred under Article 62. It was not suggested in the lower Court that Article 16 applies even during the course of the arguments before it. Further, the facts necessary for the application of that Article are not proved in this case. Even in the Memorandum of appeal, it is not suggested that the suit is barred under Article 16. In these circumstances, I am of the view that the appellant cannot be permitted to raise that question for the first time during the course of the arguments before me. Therefore, I disallow that contention.

14. It is also argued by the learned GovernmentPleader that the lower Court erred in decreeing interest tothe plaintiff from 7-11-50 the date of payment till 6-9-53,the date of the suit notice. On this question also, thereis no issue in the lower Court. Anyhow, in the view Ihave taken that the entire claim is barred by limitation,it is not necessary for me to express my view on the question of the grant of interest.

15. In the result, the appeal is allowed, the judgment and decree of the lower Court are set aside and the suit is dismissed. But, in the circumstances of the case, I direct the parties to bear their own costs here and in the lower Court.


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