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The Town Area Committee Vs. Rajendra Kumar and anr. - Court Judgment

LegalCrystal Citation
SubjectCivil
CourtAllahabad High Court
Decided On
Case NumberFirst Appeal No. 127 of 1968
Judge
Reported inAIR1978All103
ActsContract Act, 1872 - Sections 65
AppellantThe Town Area Committee
RespondentRajendra Kumar and anr.
Advocates:G.P. Bhargava and ;A.N. Bhargava, Advs.
DispositionAppeal allowed
Excerpt:
.....of the taxes well as the mode adopted for its collection was invalid and void. 6. in the ,present case the plaintiff clearly asserted that after the auction sale of the right to collect the taxes in their favour the defendants started realising the weighing dues and continued the collection throughout the year and out of the contract money they deposited a sum of rs. with regard to the collection of dues it was pleaded that the town area was under an obligation to extend its help in making realisation of the dues but the plaintiff failed to get a huge amount of weighing dues realised. rajendra kumar clearly admitted that he owed a sum of rs. even if it be assumed that the defendants failed to realise weighing dues from some of the parties, in the absence of even an assertion that the..........and interest thereon at six per cent. the case set up by the plaintiff was that since long the town area has been auctioning the right to realise weighing dues; that for the year 1962-63 the right to realise weighing dues in the town area was auctioned on 18-3-1962 in favour of the defendants who made the highest bid of rs. 42,000/- the bid was accepted by the town area and was approved by the collector, jhansi; that the defendants started realising the weighing dues but did not execute any formal agreement; that they paid rs. 21,500/- towards the contract; that the plaintiff had no obligation to help defendants in realisation of the dues but still it extended help and assistance from time to time; and that in spite of repeated demands the defendants failed to pay the balance due and.....
Judgment:

K.N. Seth, J.

1. The Town Area Committee, Moth, filed a suit against the respondents for recovery of Rs. 23,677.50 which comprised of the balance of the contract money and interest thereon at six per cent. The case set up by the plaintiff was that since long the Town Area has been auctioning the right to realise weighing dues; that for the year 1962-63 the right to realise weighing dues in the Town Area was auctioned on 18-3-1962 in favour of the defendants who made the highest bid of Rs. 42,000/- the bid was accepted by the Town Area and was approved by the Collector, Jhansi; that the defendants started realising the weighing dues but did not execute any formal agreement; that they paid Rs. 21,500/- towards the contract; that the plaintiff had no obligation to help defendants in realisation of the dues but still it extended help and assistance from time to time; and that in spite of repeated demands the defendants failed to pay the balance due and hence the suit.

2. The defendants pleaded that the Town Area levied the weighing dues in 1933 and it was a tax imposed under the Market Bye-Laws. Since it was a tax it could not be validly imposed by means of a bye-law and could not be legally assigned or transferred by way of Theka and the contract being opposed to public policy was invalid and unenforceable in law. It was also pleaded that no completed and valid contract between the parties came into existence. It was further pleaded that the plaintiff committed a breach of the contract by not extending its help in realising the weighing dues and, therefore, the plaintiff was not entitled to realise the balance of the contract money. The claim for interest was also challenged. The suit was also said to be barred by time.

3. The trial court refected the plea that the plaintiff committed a breach of the contract by not extending assistance in recovery of the dues from the shopkeepers on the finding that under the terms of the auction sale the Town Area was not required to assist the defendants in realising the weighing dues from the shop-keepers. The court further rejected the defendants' plea that no completed contract had come into existence. The suit was, however, dismissed on the ground that the plaintiff Town Area was not competent to impose the weighing dues as it amounted to a tax and consequently it could not give a contract for the recovery of the weighing dues. The contract between the parties was held to be void. The learned Judge further held that the claim for the second instalment of Rs. 10,500/- was barred by time. The plaintiff was also held not entitled to interest.

4. Sri G. P. Bhargava, learned counsel for the appellant, contended that the view taken by the court below that imposition of weighing dues under a bye-law was invalid was not sound. Reliance was placed on the decision of a learned single Judge of this Court in Civil Misc. Writ Petition No. 2392 of 1962, Firm Sri Narain Vijai Narain v. Town Area Committee Chirgaon, decided on 29-4-1963 which was affirmed by a Bench of this Court of which one of us was a member in Sri Narain Vijai Narain v. Town Area Committee Chirgaon, (1972 All. L.J. 268). In that case an exactly similar bye-law framed by the Town Area Committee Chirgaon, was held to be valid. Reference was also made to the decision of a learned single Judge of this Court in Civil Misc. Writ No. 3199 of 1968. Battoo Lal Neckhra v. Town Area Committee, Moth, decided on 3-9-1970 in which the validity of the imposition of weighing dues by the present Town Area was sought to be challenged. The Court upheld the validity of the imposition and dismissed the writ petition. Relying on the aforesaid decisions it was urged that not only the imposition of the weighing dues was valid but its collection through a Thekedar was also valid inasmuch as the Town Area could either realise the dues through its own Officers or could appoint an agent for that purpose. In adopting the method of realising the weighing dues through a Thekedar the Town Area did not adopt a method which was against public policy or was beyond the powers of the Town Area. Sri Jagdish Swarup, learned counsel for the respondents, urged that since it was not disputed that the nature of the weighing dues was that of tax it could not be levied and collected except by authority of law as provided by Article 265 of the Constitution and since the levy was done through a bye-law, it was invalid. Similarly the machinery for collection of the tax should also have been provided by law and it could not be done by a private machinery under a contract entered into by the authority imposing the tax. It was urged that since this aspect of the matter had neither been canvassed nor considered in the decisions referred to above, the matter should be referred to a larger Bench for consideration. We are, however, not inclined to refer the matter to a larger Bench for considering the correctness of the view taken in the above noted decision as, in our opinion, the dispute between the parties can be decided on another ground, assuming for the sake of argument that the imposition of the taxes well as the mode adopted for its collection was invalid and void.

5. There is no dispute that the tax in question was imposed as far back as 1933 The right to collect the tax for the year 1962-63 was auctioned in favour of the defendants who made the highest bid of Rs. 42,000/- and that the defendants started realising the tax claiming to be so entitled under the contract entered into between them and the plaintiff Town Area and they paid to the Town Area a sum of Rs. 21,500/- towards the contract money. The defendants made the realisations throughout the year 1962-63. On these facts it was contended that even if it be accepted that the contract between the parties was void, the defendants who had received advantage under the contract were bound to pay the balance money due to the plaintiff. Reliance was placed on Section 65 of the Indian Contract Act which contains the principle of restitution after benefit, has been received and the contract is later discovered to be void. The contention appears to be sound. The basis of this principle is the doctrine of 'restitio in integrum'. The section does not make a new contract between the parties but only provides for restitution of the advantage taken by a party under the contract. The obligation to pay compensation under this section is quite different from a claim under the contract itself. The remedy is treated as quasi-contractual. The nature of the remedy has been described by Lord Wright in Fibrosa Spolka Akcyjna v. Fairbairn Lawson Combe Barbour Ltd., (1943 AC 32) in the following words:--

'It is clear that any civilised system of law is bound to provide remedies for cases of what has been called unjust enrichment or unjust benefit, that is, to prevent a man from retaining the money of, or some benefit derived from, another which it is against conscience that he should keep.'

The principle of unjust benefit or unjust enrichment according to the jurist presupposes three things: first, that the defendant has been enriched by the receipt of a benefit, secondly, that he has been so enriched at the plaintiff's expense; and thirdly, that it would be unjust to allow him to retain the benefit. The plaintiff may have paid money to the defendants in pursuance of a transaction which he thought to be a valid contract but which in truth, through the operation of some rule of law, is null and void. It appears logical and just that such money should be recoverable in quasi contract. As observed by Lord Mansfield the gist of this kind of action is that, the defendant, upon the circumstances of the case, is obliged by the ties of natural justice and equity to refund the money. Equity also developed, independently of the common law remedy for unjustifiable enrichment, some principles which are aimed at the same result, viz., to force a man to disgorge property in his possession which rightly belongs to the plaintiff. This very principle is contained in Section 65 of the Indian Contract Act.

6. In the ,present case the plaintiff clearly asserted that after the auction sale of the right to collect the taxes in their favour the defendants started realising the weighing dues and continued the collection throughout the year and out of the contract money they deposited a sum of Rs. 21,500/- on different dales. The defendants admitted to have made the payments alleged by the plaintiff. With regard to the collection of dues it was pleaded that the Town Area was under an obligation to extend its help in making realisation of the dues but the plaintiff failed to get a huge amount of weighing dues realised. The court below has held that the plaintiff was under no legal obligation to extend any help to the defendants in realising the weighing dues. That part of the finding has not been challenged before us. It appears from the record that although the Town Area was under no obligation to extend any help to the defendants in making the realisation of weighing dues it did at times issue writs of demand against the defaulting persons. Rajendra Kumar (D.W. 1) admitted that he submitted a list of defaulting persons to the Chairman, Town Area, on which notices were issued and amounts were recovered. He however, alleged that when a second list was submitted to the Chairman, no action was taken over it. It was not denied that the collection was made by the defendants throughout the year, It was also not asserted that no realisation could ultimately be made from the parties against whom the defendants had sought the assistance of the Town Area. Rajendra Kumar clearly admitted that he owed a sum of Rs. 20,500/- to the Town Area. The defendants did not produce their books of account, which they admittedly maintained, to show that the realisation made by them for the year for which they held the Theka was below Rs. 42,000/- or that any sum remained due against any one which could not ultimately be realised. Even if it be assumed that the defendants failed to realise weighing dues from some of the parties, in the absence of even an assertion that the total sum realised by them was below Rs. 42,000/- they are bound to pay to the Town Area both in law and equity the sum which is admittedly due from them.

7. The view taken by the court below that the plaintiff's suit for a part of the amount due was barred by limitation is obviously erroneous. There was one single debt. In the terms of auction there was no stipulation that the amount would be paid in instalments. Merely because the plaintiff allowed to the defendants an easy mode of payment, the date of such payments could not be starting points of limitation. Since the debt was a single and indivisible one, the limitation in the present case would run from 1-4-1963. The suit filed on 22-12-1965 was well within limitation. Sri Jagdish Swarup, learned counsel for the respondents, frankly conceded that the view taken by the court below on the question of limitation could not possibly be supported.

8. As regards the claim for interest admittedly there was no contract between the parties with regard to interest payable on the amount of arrears, if any. No custom or usage in respect of interest on such amount has been proved by the plaintiff. Mool Chand (P.W. 1) admitted that no interest was ever charged on the arrears in the past also. The court below rightly negatived the plaintiff's claim for interest.

9. In the result the appeal is allowed. The plaintiff's suit for recovery of Rupees 20,500/- with pendente lite and future interest at the rate of six per cent on the aforesaid amount is decreed against the defendants with costs throughout.


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