Skip to content


Mukhi Tapoobhai Keshavji Vs. Gondal Municipality - Court Judgment

LegalCrystal Citation
SubjectOther Taxes;Limitation
CourtGujarat High Court
Decided On
Case NumberFirst Appeal No. 389 of 1975
Judge
Reported inAIR1983Guj47; (1983)1GLR340
ActsCode of Civil Procedure (CPC), 1908 - Order 2, Rule 2 and 2(3); Limitation Act, 1963 - Schedule - Article 113; Madhya Bharat Sales Tax Act; Constitution of India - Articles 226 and 301; Indian Contract Act - Sections 72
AppellantMukhi Tapoobhai Keshavji
RespondentGondal Municipality
Appellant Advocate Suresh M. Shah, Adv.
Respondent Advocate J.D. Ajmera, Adv.
DispositionAppeal partly allowed
Cases ReferredD. Cawasji and Co. v. State of Mysore
Excerpt:
.....to refund - parties realised correct legal position regarding such duty when appeal was decided - suit filed within time. - - the plaintiff had failed. bach party will have a belief of success, and with that belief the party carries on the litigation. again, where even if there is no such delay the government or the statutory authority against whom the consequential relief is prayed for raises a prima facie triable issue as regards the availability of such relief on the merits on the grounds like limitation the court should ordinarily refuse to issue the writ of mandamus for such payment. he failed to get decree. ' 10. a tax is intended for immediate expenditure for the common good and it would be unjust to require its repayment after it has been in whole or in part expended, which..........no. 9 of 1971 was barred under order 2, rule. 2 of the civil procedure code; and (ii) whether the suit filed was within period of limitation, 6. the learned advocate shri ajmera submitted that when the plaintiff filed civil suit being civil suit no. 54 of 1958, he could have claimed a relief of permanent injunction restraining gondal municipality from recovering octroi duty on potatoes and onions. it is submitted before us that as the plaintiff did not claim the relief of permanent injunction, this suit for refund of octroi is barred under order 2, rule 2 of the civil procedure code. order 2, rule 2 of the civil procedure code reads as under:--'2. (1) every suit shall include the whole of the claim which the plaintiff is entitled to make in respect of the cause of action; but a.....
Judgment:

S.L. Talati, J.

1. This appeal is directed against the Judgment renderedby the Civil Judge (S. D.), Gondal in Special Civil Suit No. 9 of 1971 decided on 31-12-1974. The facts which gave rise to the filing of this appeal may be briefly stated as under:--

The original plaintiff who is the appellant is a partnership firm and it is carrying on the business of fruits and vegtables at Gondal. The respondent --Gondal Municipality had levied octroi duties on various items. However, vegetables were exempted from levy of octroi, The plaintiff amongst other vegetables was carrying on the business of potatoes and onions. Gondal Municipality felt that Octori could be collected on those two items as according to Gondal Municipality potatoes and onions were not vegetables within the meaning of their octroi rules.

2. The plaintiff challenged the contention of Gondal Municipality and filed Civil Suit No. 54 of 1958. In that suit the plaintiff claimed a relief of declaration and prayed that it be declared that potatoes and onions were not liable to octroi duty. The consequential relief that was claimed was for refund of octroi paid and that relief was valued at Rs. 500/-, The plaint of that suit is produced at Exh. 161, That suit came to be dismissed on 2-1-1960, The plaintiff filed First Appeal in the District Court which was numbered as First Appeal No. 16 of 1960. That appeal was decided on 1-12-1960. The Assistant Judge, Gondal had heard the appeal and the appeal was allowed and the declaration sought in the original suit was granted. However, the consequential relief that was prayed for was not granted. The copy of the decree is produced at Exh. 19. Gondal Municipality filed Second Appeal in the High Court. It was numbered as Second Appeal No. 257 of 1961. That second appeal came to be decided on 20-8-1968. The Second Appeal came to be dismissed. The judgment is produced at Exh. 21,

3. After Second Appeal was dismissed the original plaintiff filed Special Civil Suit No. 9 of 1971 in the Court of Civil Judge (S. D.) Gondal. In that suit he claimed a refund of the octroi paid by him between 5-12-1960 and 25-5-l966. The total amount claimed was Rupees 26251-34. The details of this claim are stated in paragraph 18 of the plaint. The plaintiff also claimed Rs. 7280.00 as interest from 20-8-1968 to 20-12-1970. He claimed Rs. 250/- as notice charges. Total claim was for Rs. 33741.34. This suit was filed on 26-4-1971.

4. Gondal Municipality contested the suit. The learned Civil Judge framed issues at Exh. 22. At the trial on behalf of plaintiff-Abdulmalek Kasam gave his evidence at Exh. 92. He examined one Rajaball, Partner of the firm at Exh. 164. On behalf of the defendant, Octroi Officer of Gondal Municipality Dinkarray gave his evidence at Exh. 177. We may here state that the learned Civil Judge dismissed the suit mainly on two grounds. The first ground on which the suit was dismissed was that the suit was barred under Order 2, Rule 2, of the Civil Procedure Code. The second ground was that the suit was not within time.

5. We have heard the learned advocate Shri S. M. Shah for the appellant and the learned advocate Shri J. D. Ajmera for the respondent. We may here state that the only points which we are required to decide are two points and those two points are:--

(i) Whether Civil Suit No. 9 of 1971 was barred under Order 2, Rule. 2 of the Civil Procedure Code; and

(ii) Whether the suit filed was within period of limitation,

6. The learned Advocate Shri Ajmera submitted that when the plaintiff filed Civil Suit being Civil Suit No. 54 of 1958, he could have claimed a relief of permanent injunction restraining Gondal Municipality from recovering octroi duty on potatoes and onions. It is submitted before us that as the plaintiff did not claim the relief of permanent injunction, this suit for refund of octroi is barred under Order 2, Rule 2 of the Civil Procedure Code. Order 2, Rule 2 of the Civil Procedure Code reads as under:--

'2. (1) Every suit shall include the whole of the claim which the plaintiff is entitled to make in respect of the cause of action; but a plaintiff may relinquish any portion of his claim in order to bring the suit within the jurisdiction of any court.

(2) Where a plaintiff omits to sue m respect of, or intentionally relinquishes, any portion of his claim, he shall not afterwards sue in respect of the portion so omitted or relinquished.

(3) A person entitled to more than one relief in respect of the same cause of action may sue for all or any of such reliefs, but if he omits, except with the leave of the Court, to sue for all such reliefs, he shall not afterwards sue for any relief so omitted.

Explanation :-- For the purposes of this rule an obligation and a collateral security for its performance and successive claims arising under the same obligation shall be deemed respectively to constitute but one cause of action.'

Here, we may state that no cause of action had arisen in 1958 to claim refund for the amounts which are claimed in this suit as the amounts claimed are from 5-12-1960 onwards. This amount was never paid and could never have been claimed in the suit which had been filed in the year 1958. Now, therefore, realising this difficulty the learned advocate Shri Ajmera mainly concentrated on Order 2, Rule 2 (3) and he submitted that the plaintiff was entitled to a relief of permanent injunction and he omitted to sue for that relief. The only answer is that the plaintiff in this suit never claimed a permanent injunction. Now, therefore, there could not be any bar for refund of octroi when the plaintiff did not sue for permanent injunction. Here we may state that when the tax liability is challenged and a permanent injunction is asked for normally interim injunction is not granted and if granted it is subject to certain conditions. Granting or not granting permanent injunction would arise at the time of final examination of the suit. Now, therefore, even if one succeeds in getting permanent injunction he will have again to file a suit for refund because during all that period he would be required to pay octroi unless he was granted interim injunction which he may or he may not have been granted. Strictly speaking when we go through the Order 2. Rule 2 (3), we can only save that a person who omits to claim a relief of injunction cannot by any stretch of imagination be precluded from suing afterwards in regard to the refund of moneys which he had to pay because of existing law at that particular point of time. In a case of State of Madhya Pra-l desh v. State of Maharashtra, reported' in : (1977)IILLJ369SC , it was held in paragraphs 25 and 27 of the judgment as under:--

'25. The contention of Madhya Pradesh cannot be accepted. The plaintiff will be barred under Order 2, Rule 2 of the Code of Civil Procedure only when he omits to sue for or relinquishes the claim in a suit with knowledge that he has a right to sue for that relief. It will not be correct to say that while the decision of the Judicial Committee in Lall's case () (supra) was holding the field the plaintiff could be said to know that he was yet entitled to make a claim for arrears of salary. On the contrary, it will be correct to say that he knew that he was not entitled to make such a claim. If at the date of the former suit the plaintiff is not aware of the right on which he insists in the latter suit the plaintiff cannot be said to be disentitled to the relief in the latter suit. The reason is that at the date of the former suit the plaintiff is not aware of the right on which he insists in the subsequent suit. A right which a litigant does not know that he possesses Or a right which is not in existence at the time of the first suit can hardly be regarded as a 'portion of his claim' within the meaning of Order 2, Rule 2 of the Code of Civil Procedure.'

'27. The appellant Madhya Pradesh is, therefore, not right in contending that the plaintiff is barred by provisions contained in Order 2 Rule 2 of the Code of Civil Procedure from asking for arrears of salary in the 1956 suit. The plaintiff could not have asked for arrears of salary under the law as it then stood. The plaintiff did not know of or possess any such right. The plaintiff, therefore, cannot be said to have omitted to sue for any right.'

In this case also the plaintiff had no right and could never have sued for refund of octroi for the period between 1960 to 1966 when he filed first suit in the year 1958. Therefore, the first contention of the learned advocate Shri Ajmera fails and we hold that the learned Judge committed error in coming to the conclusion that the suit was barred by Order 2, Rule 2 of the Civil Procedure Code.

7. Coming to the question of limitation, it is agreed between the parties that Article that would apply in this case would be Article 113 of the Limitation Act. Article 113 reads as under:--

Descriptionof suit

Periodof limitation

Time fromwhich period begins to run.

'113. Any suit for whichno period of limitation is provided elsewhere in this Schedule

Three Tears

When the right to sue accrues.'

The learned advocate Shri Ajmera submitted that the right accrued to the plaintiff when first appeal was decided on 1-12-1960 and, therefore, the suit was not within limitation. According to the learned advocate Shri Suresh M. Shah for the appellant the right accrued when second appeal No. 237 of 1961 was decided on 20-8-1968. It is not in dispute that if one considers the starting point of limitation before the decision in Second Appeal, the suit is not within time. The only question, therefore, which requires consideration is whether the starting point should be decision given by the first appeal court or the starting point should be considered from the date on which the decision in second appeal was rendered. The appeal is a continuation of a suit. Second appeal is also a continuation of the same suit. The plaintiff had failed. His suit was dismissed. He carried the matter in First Appeal where he succeeded. The respondent filed second appeal. That second appeal was admitted. So soon the second appeal was admitted the question whether the octroi would be legal on potatoes and onions was wide open. The decision could be one way or the other. Neither party could be sure of the decision. Bach party will have a belief of success, and with that belief the party carries on the litigation. Ultimately the court has to decide the matter and when the court decides the matter the question of law becomes settled for all purposes, Till then that question is wide open,

8. The learned advocate Shri Ajmera drew our attention to a case of State of Madhya Pradesh v. Bhailal Bhai reported in : [1964]6SCR261 . The sales tax imposed by two notifications issued under Madhya Bharat Sales Tax Act on tobacco were challenged under Article 301 of the Constitution of India. It was held that the tax contravenes the provisions of Article 301 of the Constitution and the tax is, therefore, invalid. Thereafter the learned Judges observed as under.-

'Where sales tax, assessed and paid by the dealer, is declared by competent court to be invalid in law, the payment of tax already made is one made under a mistake within Section 72 of the Contract Act and so the Government to whom the payment has been made by mistake must in law repay it. In this respect, the High Court has, in exercise of its jurisdiction under Article 226 of the Constitution of India, power for the purpose of enforcement of fundamental rights and statutory rights to give consequential relief by ordering repayment of money realised by the Government without the authority of law.'

The learned Judge in paragraph 17 further observed as under :--

'At the same time the special remedy provided in Article 226 is not intended to supersede completely the modes of obtaining relief by an action in a civil court or to deny defence legitimately open in such actions. The power to give relief under Article 226 is a discretionary power. This is specially true in the case of power to issue writs in the nature of mandamus. Among the several matters which the High Courts rightly take into consideration in the exercise of that discretion the delay made by the aggrieved party in seeking this special remedy and what excuse there is for it. Another is the nature of controversy of facts and law that may have to be decided as regards the availability of consequential relief. Thus, where a person comes to the court for relief under Article 226 on the allegation that he has been assessed to tax under a void legislation and having paid it under a mistake is entitled to get it back, the court, if it finds that the assessment was void, being made under a void provision of law, and the payment was made by mistake, is still not bound to exercise its discretion will depend in each case on its own facts and circumstances. It is not easy nor is it desirable to lay down any rule for universal application. It may, however, he stated as a general rule that if there has been unreasonable delay the court ought not ordinarily to lend its aid to a party by this extraordinary remedy of mandamus. Again, where even if there is no such delay the Government or the statutory authority against whom the consequential relief is prayed for raises a prima facie triable issue as regards the availability of such relief on the merits on the grounds like limitation the court should ordinarily refuse to issue the writ of mandamus for such payment. In both these kinds of cases it will be sound use of discretion to leave the party to seek his remedy by the ordinary mode of action in a civil court and to refuse to exercise in his favour the extraordinary remedy under Article 226 of the Constitution',

In our view this ruling does not help the case of respondent-Gondal Municipality. On the contrary this would mean that as soon as Second Appeal was decided Gondal Municipality should have refunded octroi amount. Having not refunded the octroi the plaintiff had two remedies open, one he could have moved the High Court under Article 226 of the Constitution of India the other remedy was of filing a civil suit. First remedy was a discretionary remedy and if the writ petition was filed it would have been decided in accordance with law. However, the plaintiff had a statutory right to file a suit and that suit was filed within three years from 20-8-1968. That was the date on which the correct position of law became known to both the parties. The plaintiff had a belief in 1958 that the tax was not legal. Therefore, he filed the suit. He failed to get decree. His belief, therefore, was found to be wrong. However, he continued an effort and filed appeal. In appeal he succeeded. He must have thought that his belief was right. Gondal Municipality thought it otherwise. It filed Second Appeal. That Second Appeal was admitted by the High Court The parties under the circumstances though they may have their own belief must be in doubt in regard to the correct position of law which for all purposes was got settled on the day on which Second Appeal was decided and that date was 28-8-1968. The suit is filed within a period of three years from that date.

9. We may also here refer to a case of D. Cawasji and Co. v. State of Mysore, reported in : 1978(2)ELT154(SC) . We quote three paragraphs viz, 8, 9, and 10 from that judgment. They read as under:--

'8. Therefore, where a suit will be to recover moneys paid under a mistake of law, a writ petition for refund of tax within in the period of limitation prescribed i. e. within 3 years of the knowledge of the mistake, would also lie. For filing a writ petition to recover the money paid under a mistake of law, this Court has said that the starting point of limitation is from the date on which the judgment declaring as void the particular law under which the tax was paid was rendered, as that would normally be the date on which the mistake becomes known to the party. If any writ petition is filed beyond three years after that date, it will almost always be proper for the court to consider that it is unreasonable to entertain that petition, though, even in cases where it is filed within three years, the court has a discretion, having regard to the facts and circumstances of each case, not to entertain the application.'

'9. We are aware that the result of this view would be to enable a person to recover the amount paid as tax even after several years of the date of payment, if some other party would successfully challenge the validity of the law under which the payment was made and if only a suit or writ petition is filed for refund by the person within three years from the date of declaration of the invalidity of the law. That might both be inexpedient and unjust so far as the State is concerned.'

'10. A tax is intended for immediate expenditure for the common good and it would be unjust to require its repayment after it has been in whole or in part expended, which would often be the case, if the suit or application could be brought at any time within three years of a court declaring the law under which it was paid to be invalid, be it a hundred years after the date of payment. Nor is there any provision under which the court could deny refund of tax even if the person who paid it has collected it from his customers and has no subsisting liability or intention to refund it to them, or, for any reason, it is impracticable to do so.' It is clear from what has been stated above that the parties in this matter realised the correct legal position in regard to this particular tax when this appeal was decided. Suit, therefore, is within time. The second contention of the learned advocate Shri Ajmera fails and the learned Civil Judge (S.D.), Gondal has committed an error on this point and, therefore, the judgment and order are required to be set aside.

10. Before we conclude we only say that the original plaintiff is not entitled to any interest or notice charges which he has claimed in the suit. However, he would be entitled to interest from the date of filing of the suit.

11. The result is that the judgment and order passed by the learned Civil Judge (S. D.) in Civil Suit No. 9 of 1971 are hereby set aside. The appeal is partly allowed. There will be a decree in favour of the plaintiff for a sum of Rs. 26,251.34 with proportionate costs and with running interest at 6% from the date of filing of the suit till realisation.


Save Judgments// Add Notes // Store Search Result sets // Organizer Client Files //