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The Municipal Council, Murwara (Katni) and ors. Vs. S.K. Kahansons and Co. - Court Judgment

LegalCrystal Citation
SubjectMunicipal Tax;Limitation
CourtMadhya Pradesh High Court
Decided On
Case NumberSecond Appeal No. 396 of 1968
Judge
Reported inAIR1976MP228
ActsMadhya Pradesh Municipalities Act, 1961 - Sections 319(2); Limitation Act, 1963 - Sections 17(1) - Schedule - Article 24
AppellantThe Municipal Council, Murwara (Katni) and ors.
RespondentS.K. Kahansons and Co.
Appellant AdvocateR.S. Dabir, Adv.
Respondent AdvocateS.P. Sinha and ;O.P. Namdeo, Advs.
DispositionAppeal dismissed
Cases ReferredBhikamchand v. M. C. C. Chhindwara
Excerpt:
- - 6. clearly article 120 (old) or article 113 (new) can have no application here. the case is therefore clearly distinguishable......coal for manufacture of lime. the municipal council, murwara, was recovering terminal tax on coal, lime and lime stone on export, import by rail at the rate of 75 paise, 75 paise and 50 paise per wagon. by notification dated 9-12-60, the rates were enhanced to rs. 2, rs. 3 and rs. 2/- per wagon. in writ petn m. p. no. 122 of 1961 (mf), mohanlal v. m. c. murwara, the levy of terminal tax on gun powder for the first time under this notification was challenged and it was quashed by this high court on 12-10-1961. earlier the high court had quashed similar notification of another municipal council whereby the rates of terminal taxes on some items and fresh imposition on some other items were sought to be enforced. it was held by this court that after the constitution, no state or local.....
Judgment:

C.P. Sen, J.

1. This second appeal has been filed by the defendants against the decree of the lower appellate Court, affirming the decree of the trial Court.

2. The respondent was a registered firm, carrying on business of sale and manufacture of lime and lime stone. It used to purchase coal for manufacture of lime. The Municipal Council, Murwara, was recovering terminal tax on coal, lime and lime stone on export, import by rail at the rate of 75 paise, 75 paise and 50 paise per wagon. By notification dated 9-12-60, the rates were enhanced to Rs. 2, Rs. 3 and Rs. 2/- per wagon. In Writ Petn M. P. No. 122 of 1961 (MF), Mohanlal v. M. C. Murwara, the levy of terminal tax on gun powder for the first time under this notification was challenged and it was quashed by this High Court on 12-10-1961. Earlier the High Court had quashed similar notification of another municipal council whereby the rates of terminal taxes on some items and fresh imposition on some other items were sought to be enforced. It was held by this Court that after the Constitution, no State or local authority has any jurisdiction to impose or vary the terminal taxes on goods carried by Railway, Sea or Air, as terminal tax is a central subject: Bhikamchand v. M. C. C. Chhindwara 1961 MPLJ 937. In spite of these decisions, the Municipal Council, Murwara, continued to collect the terminal taxes at the enhanced rates as Civil Appeal No. 695/ 1962 was preferred by the Council in the Supreme Court. This appeal along with other appeals were dismissed by the Supreme Court on 3-3-1964 (reported in AIR 1964 SC 1166). According to the respondent, he had paid terminal taxes at enhanced rates from 1-1-1961 to 7-4-1964 on coal, lime and lime stone. The present suit was, therefore, filed on 29-10-1965 for recovery of Rs. 3531.75 p. towards the excess amount so paid. The suit was resisted by the appellants, mainly contending that the claim is barred by limitation as some payments were beyond 3 years of the filing of the suit.

3. The learned trial Court held that Article 24 (Article 62, old) of the Limitation Act, 1963, was applicable and the limitation would start from the last date of payment by relying on T. S. H. W. Co-op. Society v. Sundaram, AIR 1957 Trav Co 61. The learned appellate Court held that Article 120 (old) applied and the claim was within limitation as the suit is within 5 years as per Section 30 of the new Limitation Act in respect of each of the item of payments. Article 120 was applied by relying on a decision of this Court in Govind Singh v. State of M. P., AIR 1961 Madh Pra 320.

4. The only questions for determination are (i) whether the suit is barred under Section 319(2) of the M. P. Municipalities Act, 1961, as it is not instituted within eight months of the accrual of the cause of action, if not then (ii) whether suit is governed by Article 24 of the new Limitation Act and therefore those payments beyond 3 years are barred by limitation.

5. It is not in dispute that enhancements in the rates of terminal taxes vide notification dated 9-12-1960 were ultra-vires and therefore the notification was quashed. The levy of terminal taxes at enhanced rates were therefore beyond the powers of the municipal council. Section 319 of the Municipalities Act provides that no suit shall be instituted against any council, its members or servants in respect of anything done or purported to be clone under the Act unless notice in writing is served and the suit is filed within eight months of the accrual of cause of action. Interpreting an identical provision in the Madras General Sales Tax Act, 1930, the Supreme Court in Provincial Govt, Madras v. J. S, Basappa, AIR 1964 SC 1873, held that the expression 'purported to be done under the Act' will not include an act which is wholly outside the provisions of the Act and therefore the section was held to be inapplicable as the levy was illegal and ultra vires. Same is the position here and so Section 319 (2) can have no application.

6. Clearly Article 120 (old) or Article 113 (new) can have no application here. The decision of this Court in Govind Singh v. State of M. P. (AIR 1961 Madh Pra 320) (Supra) was a case for refund of sales tax collected under compulsion and it was held in view of the provisions in the C. P. and Berar Sales Tax Act, 1947, that cause of action arose not from the date of payments but from the date of assessment order. Because under that Act no refund was claimable till the order of assessment. The case is therefore clearly distinguishable.

7. Article 24 of the Limitation Act, 1963 (Article 62 of the old Act) provides for limitation of 3 years from the date of payment of any money payable by the defendant to the plaintiff for money received by the defendant for the plaintiff's use. The Supreme Court in Venkata Subbarao v. State of A. P., AIR 1965 SC 1773 held that this Article would apply where the money was received as tax by the defendant-State from the plaintiff which the plaintiff was not bound to pay but which he was compelled or forced to pay because'of the threats or apprehensions of legal process. But here the amounts were paid under mistake of law, which was subsequently declared to be ultra vires. Under the Limitation Act, 1908, a claim for relief on the ground of mistake was governed by Article 96 and the time 'commenced to run from the dale (he mistake was known to the plaintiff. In State of M. P. v. Bhailal Bhai, AIR 1964 SC 1006 and State of Kerala v. Aluminium Industries, (1965) 16 STC 689 (SC), it has been held that this Article would apply to a suit for recovery of money paid under mistake of law. There is no corresponding Article in the new Limitation Act and it seems that such a provision is now incorporated in Section 17(1)(c) of the new Limitation Act itself. Under this provision, in any suit for relief from the consequence of mistake, the limitation shall not begin to run unti] the plaintiff discovers the mistake. In the aforesaid two Supreme Court decisions and also in K. S. Vcnkatraman v. State of Madras, AIR 1966 SC 1089, it has been held that limitation would run from the date of decision by which the levy was declared ultra vires. There is a direct authority by a Division Bench of this Court in Caltex (India) Ltd. v. Asst. Commr. of S. T., 1971 MPLJ 425 = (AIR 1971 Madh Pra 162) that Article 24 read with Section 17(1)(c) would apply in such a case and limitation would start from the date of decision of the High Court and same will apply to this case also.

8. In the present case, the respondent was not a party in the M. P. No. 122/1961, wherein terminal tax on gun-powder was quashed by this Court on 12-10-1961. But it is not known when the respondent learnt about this decision as it was not reported in law-journals. In that case the dispute was about fresh levy and not about enhancement in rates. It is true that Bhikamchand v. M. C. C. Chhindwara, 1961 MPLJ 937 was reported but another notification of that municipal council was under challenge and not the notification dated 9-12-1960. Therefore, it could be said that the respondent learnt about the mistake on 3-3-1964, when the Supreme Court finally decided all the matters. So, the suit is within limitation, being within 3 years from 3-3-1964.

9. The appeal therefore fails and it is dismissed with costs. Counsel's fee as per schedule, if certified.


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