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PETITIONER: A.   VENKATA SUBBA RAO

       Vs.

RESPONDENT: STATE OF ANDHRA PRADESH(With Connected Appeals)

DATE OF JUDGMENT: 14/12/1964

BENCH: SARKAR, A.K. BENCH: SARKAR, A.K. AYYANGAR, N. RAJAGOPALA BACHAWAT, R.S.

CITATION:  1965 AIR 1773            1965 SCR  (2) 577  CITATOR INFO :  R          1970 SC 898  (34,52)  RF         1971 SC1558  (6)

ACT: Essential  Supplies (Temporary Powers) Act (XXIV  of  1946)- Procuring   agents-Appointed  for  procuring   foodgrains-If agents of Government-Profit of procuring agent-Increased  by action  of  Government  in  settling  prices-Obligation   of procuring agent to pay over to Government.

HEADNOTE: In  the  years  1947 and 1948 there  was  rice  scarcity  in certain districts in Madras and Government took action under the  Essential  Supplies (Temporary Powers) Act,  1946,  and passed various Orders for procurement and distribution.  The appellants  were  appointed  procuring  agents  under   that system.  Their duty was to procure rice from specified areas at  prices specified by the Government and to deliver it  to the Government, or to persons nominated or to other licensed purchasers.   The  procurement  price  was  lower  than  the selling  price  and  the appellants  were  entitled  to  the difference between the two prices, under a contract  entered into between the appellants and the Government.  In July and December  1947 and in November 1948, the  Government  passed orders increasing the prices of sale.  On the dates on which those  orders came into force, the appellants had with  them stocks of rice procured by them earlier and which they could sell at the higher sale price.  Government thought that  the appellants were not entitled to the increased profit derived on  the  sale of such stocks at the  increased  sale  price, because  the  enhancement  in  the  appellants’  profit  was entirely  due to Government action; and Government  insisted that  the excess sums which they described  as  "surcharges" should  be  paid over to the Government by  the  appellants. The  Government  employed three methods  for  realising  the excess amounts.  They were (i) threat of cancellation of the licences, (ii) deduction of the amounts from moneys  payable by the Government to the appellants and (iii) in the case of the  increase in November 1948, by requisition of the  stock of  rice  lying with the appellants on the  day  immediately preceding  the coming into force of the increased price,  at

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the  rate  then obtaining, and releasing the stocks  to  the appellants  upon their paying the surcharge or executing  an agreement to pay it. Having paid the amounts under protest, the appellants  filed suits  for their recovery.  Some of the suits  were  decreed and  others dismissed.  On appeal to the High Court  by  the aggrieved parties, the High Court decided all the appeals in favour  of the State.  In appeal to the Supreme  Court,  the appellants  contended  that  the amounts  collected  by  the respondent  State,  were in the nature of  an  unlawful  tax imposed by the executive.  The respondent sought to  support the  judgment  of the High Court, contending that,  (i)  the appellants  were  agents  of the Government  and  liable  to account for the profits; (ii) the appellants, if not agents, stood  in  a fiduciary capacity to the Government  with  the obligation  to account; (iii) The Government was  authorised to issue the direction to pay the surcharges,to it; (iv)  in those cases where the amounts were realised by re- 578 quisitioning  and release, the appellants could not  recover because, (a) the Government had the power to requisition the stock  and  direct  the  sale. and  (b)  by  reason  of  the agreements to pay, the payments were voluntary; and (v) some of the suits and claims were barred by limitation. HELD  (Per Ayyangar and Bachawat, JJ) : (i)  The  appellants were  not the agents of the Government and  were  therefore, not  liable  to account to the Government  for  the  profits which  they derived over and above those fixed for  them  by the relevant notifications of the Government. [604-EF] The  purchases were made by the appellants out of their  own funds;  stored at their own cost, any deterioration,  driage or shortfall fell on them, and they were the full owners  of the paddy procured.  The basis of the agreement to sell  the rice which was with them, at the controlled price, was  that they  were the full owners of paddy.  Sales-tax was  payable by them on the sales, which would not have been the case  if they were merely holding the foodgrains as commission agents on  behalf of the Government.  Further, the licence  granted to  them referred to the foodgrains in their  possession  as their  stocks.  All that the Government desired and  impple- mented by its several orders was mere regulation and control of  the  trade  in foodgrains by  rendering  every  activity connected with it in the ordinary trade channels, subject to licensing and to directions to be issued. [601 B-F; 602 D] (ii) In  the  circumstances  there  is  no  basis  for   the suggestion of a fiduciary obligation de hors a principal and agent relationship. [605 F] (iii)     The  direction  to  pay  the  amounts  was  not  a direction contemplated by the Procurement Scheme, nor was it a direction as regards the &Me, and so, the direction to pay "surcharges" was illegal. [606 H; 607B] (iv) If  the theory that the appellants were the  agents  of the Government be discarded as untenable, there would be  no legal basis at all for the "surcharge".  It would be then in effect  a  tax  imposed by an  executive  flat  without  any legislative sanction.  They were imposed compulsorily by the executive and sought to be collected inter alia by  coercive statutory  powers.   It could hardly be contended  that  the payments  were  voluntary in the sense understood,  and  the fact  that agreements were taken would be no defence to  the claim for refund. [612 B-D] Attorney  General (N.S.W.) v. Homebush Flour Mills  Ltd.  56 C.L.R.  390, Attorney General v. Wills United  Dairies,  127 L.T. 822 and Lower Mainland Dairy Products Sales  Adjustment Committee  v.  Crystal  Dairy,  Limited,  [1933]  A.C.  168,

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referred to. (v)  The period of limitation for a suit for making a  claim for  recovery  of a tax illegally collected is  governed  by Art.  62 of the Limitation Act, 1908, and as the  period  of limitation  is three years from the date of the  receipt  of the money by the respondent, the claims would not be  barred in those cases where the suits in respect of them were filed within the time specified. [619 B; 621 B, D] It is not necessary in order to attract Art. 62, that at the moment  of the receipt, the defendant should  have  actually intended  to receive it for the use of the plaintiff and  it is sufficient if the receipt was in such circumstances  that the  law would impute to him an obligation to retain it  for the  use of the plaintiff and refund to him  when  demanded. L616 G-H] 579 Mahomed  Wahib v. Mahomed Ameer (1905) I.L.R. 32  Cal.  527, Rajputana Malwa Railway Cooperative Stores Ltd. v. The Ajmer Municipal  Board,  (1910)  I.L.R.  32  All.  491,  Municipal Council,  Dindigul  v. The Bombay Co. Ltd.   Madras.  (1929) I.L.R.  52  Mad.  207, India Sugar & Refinery  Ltd.  v.  The Municipal  Council.  Hospet. (1920) I.L.R. 43 Mad. 521,  The Municipal  Committee,  Amritsar v. Amar Dass.   A.I.R.  1953 Punj.  99 and The State of Madras v. A.M.A.A.  Abdul  Kader, A.I.R. 1953 Mad. 905, approved. Anantram Bhattacharjee v. Hem Chandra Kar. (1923) I.L.R.  50 Cal.  475  and   Lingangouda v. Lingandouda.  I.L.R.  [1953] Bom.214, disapproved.      Per Sarkar, J : (i) No relationship of principal and or of  a  fiduciary  character had  ever  come  into  existence betweenthe  appellants and the Government.  Even  if  the appellants were the Government’s agents the appellants would under the contract be entitled to keep the larger difference caused by the selling price having been increased after  the procurement. [582 E-F, H] (ii)The  question of limitation with respect to the  claims where  the  moneys were collected by Government  by  methods other  than  by requisition and release, has to  be  decided under Art. 62 of the Limitation Act only. [583 A] Mahamed  Wahib v. Mahomed Ameer. (1905) I.L.R. 32 Cal.  527, approved. (iii)(Dissenting)   :  Where,  as  a  result   of   the requisition and release, Government had obtained moneys from the appellants, the realisation was legal and did not amount to  unauthorised  levy of tax, and the appellants  were  not entitled  to  recover the amounts from the  Government.   In respect   of  such  requisitions  and  release,  where   the appellants  had  not  paid  the  moneys  but  entered   into engagements  to  pay, those engagements would be  legal  and enforceable. [584 G-H] Government could requisition the stock of rice in possession of a procuring agent at the price previously prevailing  and have  done so, it could sell the rice so requisitioned  back to the same procuring agent at the price subsequently fixed. The   Government’s  acts  would  be  perfectly  within   its statutory powers and legal, as the appellants were free  not to pay and to obtain or not to obtain the release. [584 B-D] Attorney  General  v. Wilts United Dairies,  127  L.T.  822, Attorney General v. Homebush Flour Mills Ltd. 56 C.L.R.  390 and Lower Mainland Dairy Products Sales Adjustment Committee v. Crystal Dairy Ltd. [1933] L.R. A.C. 168. distinguished.

JUDGMENT:

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CIVIL APPELLATE JURISDICTION : Civil Appeals Nos. 101,. 131, 168 to 171, 259 to 260, 302 to 303, 306 to 309, 310, 644 and 837 to 857 of 1962 and 325, 437 to 441 and 996 of 1963.         Appeals from the Judgments and Decrees dated 8.3.58, 18.2.59,  15.7.58, 22.2.60, 22.8..58, 25.8.58 and 1.7.59  of the Andhra Pradesh High Court in Appeal Suits Nos. 33 and 62 of’ 580 1953,  672 to 675 of 1954, 29 and 30 of 1953, 956  of  1953, 551  of  1954,  201,  45, 822, 823 and  54  of1953,  470  of 1955,368,    34,   821,   766,   650,   764,    769,    631, 646,647,648,649,765  and 892 of 1953, 352, 353, 354 and  346 of1954, 644, 700 and 701   of  1953  and  321  of   1954 respectively. K.   R. Chaudhuri, for the appellants (in C. As.  Nos.  101, 168, 169, 171 and 310 of 1962 and 438 of 1963). A.   V. Viswanatha Sastri, A. R. Vedavalli and A. V. Rangam, for the appellants (in C.A. Nos. 131 and 170 of 1962). T.   V.  R. Tatachari, for the appellants (in C.A. Nos.  259 to 260 of 1962, 325, 437, 349, 440, 441 and 996 of 1963). R.   Gopalakrishnan,  for the appellants (in C.A.  Nos.  302 and 303 of 1962). A.   V.  Viswanatha Sastri and T. V. R. Tatachari,  for  the appellants (in C.A. Nos. 306 to 309 of 1962). Lakshmi  Devi and T. Satyanarayana, for the  appellants  (in C.A. No. 644 of 1962). A.   V.  Viswanatha Sastri, N. R. Rao and B.  Parthasarathy, for the appellants (in C.A. No. 837 to 857 of 1962). C.   B.  Agarwala, R. Ganapathy Iyer and B. R. G. K.  Achar, for  the respondents (in C.A. No. 306 to 309 and 837 to  857 of 1962). R.   Ganapathy Iyer, Yogeshwar Prasad and B. R. G. K. Achar, for the respondents (in C.A. Nos. 101, 131, 168 to 171, 259- 260,  302 and 303, 310 and 644 of 1962 and 325, 437  to  441 and 996 of 1963). Sarkar  J.  delivered a separate Opinion.  The  Judgment  of Rajagopala Ayyangar and Bachawat JJ was delivered by  Ayyan- gar J.. Sarkar,  J.  These  appeals arise out  of  suits  filed  for recovery of money from the Government.  The appellants  were the plaintiffs and the respondent in each appeal is a State, the defendant in the suits. 581 In  the  years  1947 and 1948 there  was  rice  scarcity  in certain  distincts  in Madras as it  was  then  constituted. These  districts are now in Andhra Pradesh.  The  Government of   Madras  took  action  under  the   Essential   Supplies (Temporary  Powers) Act, 1946 and passed various orders  for the  procurement and distribution of rice.  Rice  thereafter could be procured only by the Government or by the procuring agents  appointed  by it and disposed of  according  to  the orders  of  the  Government   Under  these  orders  licensed wholesalers   and  retailers  were  also   appointed.    The appellants were procuring agents and wholesalers under  this system.   They  entered  into various  agreements  with  the Government for the purpose.  Their duty was to procure  rice from  specified areas at prices specified by the  Government from time to time and to deliver it at prices so  specified, to the Government or to persons nominated by it or to  other licensed purchasers.  The procurement price was in each case lower  than the selling price and the procuring agents  were under  the contract entitled to the difference  between  the two prices. During  the  period  with  which  we  are  concerned,  three successive orders were made by the Government specifying the

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prices  arid in each case there was an increase.  The  first increase in prices took effect on July 27, 1947, the  second on  or about December 6, 1947 and the third on November  21, 1948.  On the dates on which each of these orders came  into force,  each appellant had lying with him in  stock  certain quantity  of  rice.  This had been procured  by  the  agents earlier and therefore at the then prevailing lower  purchase price.   The  appellants had to sell this rice  at  the  new increased price and hence became automatically entitled to a larger  sum  than  they  were  before  the  increase.    The enhancement of the procuring agents’ profit was entirely due to  the Government action in increasing the prices  and  the Government  thought  that they were not entitled to  it  and insisted that the excess sums should be paid to it by  them. The  appellants  paid these moneys to the  Government  under protest  and  it is for the recovery of the moneys  so  paid that, broadly speaking, the suits were filed. Now various methods had been employed by the Government  for realising these excess amounts which have been described  in these  proceeding as ’surcharges’.  Thus in some  cases  the procuring  agents  or  wholesalers  refusing  to  pay   were threatened with cancellation of their licences and to  avoid this  they  made  the  payments.   In  other  cases,   these surcharges were deducted from 582 moneys  payable by the Government to them for rice  supplied by them.  The third method which concerned the increase made in November 1948 was to requisition the stock of rice  lying with  the procuring agents on the day immediately  preceding the  coming  into force of the increased price at  the  rate then  obtaining  and thereafter releasing such rice  to  the procuring agents only upon their paying the surcharge or  on their executing an agreement to pay the same. It  is clear that if the Government was not entitled to  the amount of the surcharge, it could not retain the moneys paid by  the  appellants to it on that  account.   The  principal question  is, Was the Government entitled to those moneys  ? In  regard to the moneys collected except by the  method  of requisition  and  release, the Government’s  contention  was that  the appellants were its agents and that being so,  any excess  amount which was coming to them as a result  of  the orders  was  profit  made by them  in  connection  with  the business of the agency for which they were liable to account to the Government.  It was also said that if the  appellants were not the Government’s agents strictly speaking, they  at least  stood  in a fiduciary relationship to it  which  made them  liable  to account for the extra profit.   My  learned brother  Ayyangar has dealt with this question and there  is nothing that I have to add to that.  I am in full  agreement with his view that no relationship of principal and agent or of  a  fiduciary  character had  ever  come  into  existence between the appellants and the Government.  I wish, however, to  observe  that I do not see how, even if  the  appellants were the Government’s agents, Government was entitled to the extra  profit.   Admittedly  under the  contract  between  a procuring  agent and the Government, even if  that  contract was  of agency, the procuring agent was to procure and  sell rice  at  the  prices  fixed  and  prevailing  at  the  time respectively  of  the  procurement  and  sale.   It  is  not disputed  that  the difference belonged to him.  It  was  in fact  said that was the commission to which he was  entitled under  the  contract  as  an agent.   If  this  is  so,  the procuring agent would under the contract be entitled to keep the  larger  difference caused by the selling  price  having been increased after his procurement.  Hence it seems to  me

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that  under the contract, irrespective of whatever  kind  it was, the difference, even though it became larger,  belonged to  the procuring agent and the Government had no  right  to it. Another  question that arises in these appeals in regard  to the  moneys collected by the methods other than  requisition and 583 releases  is  whether the claims of the appellants  for  the refund  were not barred.  I agree with my  brother  Ayyangar that Art. 62 of the Limitation Act governed the case and the claims were not barred if the suits in respect of them  were filed  within the time there specified.  With regard to  the meaning  of the words "Money received by the defendant,  for the  plaintiff’s use" in that article, I think, as  Ayyangar J. pointed out, the correct view was taken in Mahomed  Wahib v. Mahomed Ameer(1).  The suits in which the claims arose in circumstances  other  than  those  described  hereafter  the question on limitation has to be decided under Art. 62 only. I do not feel called upon on the present occasion to  decide to what other cases, if any, Art. 62 might apply. It remains  to deal with the amounts realised by the  method of  requisitioning the rice in stock and releasing  it.   It was  contended  on behalf of the appellants  that  this  was really  taxation  by  executive fiat and  was  therefore  an illegal levy of tax  I am uanable to accept this contention. Support  for it was sought by the appellants from  Attorney- General  v. Wilts United Dairies (2 ) . It does not seem  to me  that that case furnishes any basis for  the  contention. There the Ministry of Food Production had granted a  licence to  a trader to buy milk on payment of a certain charge  and it  was held that the charge could not be levied  except  on the  authority given by statute and that no  such  authority had  been  given   Another case to  be  considered  in  this connection  is  attorney-General  v.  Homebush  Flour  Mills Limited(3).  There it was held that a certain statute  which had been passed by the Parliament of New South Wales, though purporting to require payment upon the exercise of an option by a trader in fact left him no choice and compelled him  to make the payment and therefore in reality imposed an  excise duty which only the Commonwealth Parliament could impose and for this reason the statute was ultra vires the legislature. The last case on this point which I have to notice is  Lower Mainland  Dairy  Products  Sales  Adjustment  Committee   v. Crystal Dairy, Limited(4).  There the provincial legislature of  British  Columbia had passed an Act which  authorised  a committee constituted under it to impose a certain levy  and it  was held that the levy was a tax which  the  legislature had no power to impose. The Australian case and the Canadian case were cases of levy under  ultra  vires statutes and the English case was  of  a charge (1)  I.L.R. 32 Cal. 527. (2)  127 L.T. 822. (3)  56 C.L.R. 390. (4)  [1933] L.R. 168. 584 made  without any statutory backing at all.  It seems to  me that  the present case is not of any of these kinds.   There is  here  no  challenge to the  legality  of  the  Essential Supplies (Temporary Powers) Act under which the  requisition and release had been made.  Nor was it contended that  under the  Act the Government could not requisition the  stock  of rice  in  the possession of a procuring agent at  the  price previously prevailing, nor that having done so, it could not

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sell  the  rice so requisitioned at the  price  subsequently fixed.   If  it could so sell the rice requisitioned  to  an outsider,  it  could equally sell it back to  the  procuring agent  from whom it was taken.  This is precisely  what  was done  in this ,case.  The Government’s acts  were  perfectly within  its  statutory powers and legal.  It is not  a  case where  the  appellants  had been  compelled  to  obtain  the release  on payment to avoid going out of trade as was  held in  the  Australian case to have happened.   The  appellants were  free  not to pay and to obtain or not  to  obtain  the release.   If they had not, it has not been said that  their trade  would  have  stopped.  The  ratio  decidendi  of  the Australian  case that the trader had been compelled to  pay, which  was  why the payment was held to have amounted  to  a tax, does not apply to the case in hand. There is not the slightest doubt that the extra profit  with which we are concerned had not come to the procuring  agents by  reason  of  any merit of their own;  it  had  come  into existence  only because the exigencies of the  circumstances prevailing  had  compelled the Government  to  increase  the price.   The Government had apparently felt doubtful if  its earlier  methods of realising the extra profits  were  legal and to avoid the consequences of any illegality, it followed this  procedure  and  to  the  legality  of  it  I  find  no objection.  If the procedure was legal, as 1 think it was it could  not  have  resulted in an  illegal  levy.   I  would, therefor( hold that where as a result of the requisition and release   the  Government  had  obtained  moneys  from   the appellants,  the  realisation  had been legal  and  did  not amount  to unauthorised levy of tax and the  appellants  are not  entitled to recover them from the Government.  For  the same reason where in respect of such requisition and release the appellants had not paid money directly, but had  entered into  engagements to pay moneys, those engagements would  be legal  and  enforceable.  The question of  payments  and  of agreements  of this particular kind are involved in  appeals Nos. 840, 842,845, 850, 853 and 855 of 1962. 1 would dismiss those appeals so far as they concern claim for the  recovery of  moneys  realised by the Government  by  requisition  and release 585 and the enforceability of the agreements in respect of them. The  other  appeals except where the suits  were  barred  as stated by Ayyangar J. should be allowed. Ayyangar,  J.  This  batch of 44  appeals  have  been  heard together  because most of the points of law raised  in  them are common.  They are before us by virtue of certificates of fitness granted for each appeal by the High Court of  Andhra Pradesh. The  facts leading to the suits out of which  these  appeals arise  are  briefly  these : The appellants  are  owners  or lessees  of  rice mills in the districts of  West  Godavari, East  Godavari  and krishna.  Their  business  consisted  in purchasing  paddy from producers, milling their purchase  in their  mills and in selling the rice so milled to  wholesale dealers  in rice and others.  While so, in or about  1946-47 and  even  before, severe restrictions were imposed  in  the State  of  Madras  on the trade in foodgrains  in  order  to maintain   their  supplies  and  ensure  their  proper   and equitable  distribution  to the community.  Action  in  that behalf was taken in respect of two matters; (1)  Procurement of  paddy  and  rice, and (2) Dealing  in  them.   For  this purpose  the power vested in the State Government under  the Essential Supplies (Temporary powers) Act, 1946 was utilised and  two  orders "The Foodgrains, Procurement  Order,  1946"

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(later  modified  by the  Foodgrains  Intensive  Procurement Order,  1947) and the Foodgrains Licensing Order, 1946  were issued.   Under  the former the procurement or  purchase  of foodgrains including paddy was placed under control and  the right  to purchase was restricted to the Government  and  to the Procurement agents appointed and notified by them.   The appellants were among those who were appointed as "Procuring agents"  under that order.  The sales to be effected by  the procuring  agents of the milled rice were also placed  under control  by virtue of the Licensing Order  which  prohibited all trade or dealing in foodgrains including rice except  by those  who held licences and subject only to the  terms  and conditions of the licence.  The appellants were each one  of them  licensed to deal in rice under this  Licensing  Order. It  might be mentioned that the price, at which paddy  could be  Procured  as well as the price at which paddy  and  rice could  be  sold by the licensed dealers were also  fixed  by orders,  notifications issued under the  Essential  Supplies Act.   While,  the appellants were thus  carrying  on  their business  subject to the provisions of the two  "Orders"  we have  mentioned earlier, the prices at which the  appellants could sell rice which they milled out of the paddy  procured by  them  were enhanced on three  occasion,;  -July,  19471, December, 1947 and November 1949 and, on each 586 occasion, they were directed to submit statements  regarding the  stocks of paddy and rice held to them on the  day  just previous to that on which the increased prices were to  come into  effect and they were directed to pay as a  "surcharge" the amount representing that increase on the stocks held  by them.  The appellants demurred, but payment was insisted  on and the same was either paid under protest or recovered from them  in  several modes to which we shaji  refer  in  detail later.   The  suits out of which these appeal,,  arise  were brought by these miller-procuring agents for recover) of the amounts  of  one or more of the three surcharges  that  were collected  from  them, on the ground that  the  "surcharges" were  virtually taxes which had been illegally  imposed  and levied  or  them.   These  suits were  filed  in  Courts  of different Subordinate Judges having territorial jurisdiction over  their  places of business.  Some of these  suits  were decreed while others were dismissed.  Appeals were filed  to the  High Court of Andhra Pradesh by the  aggrieved  parties and  most of these appeals were heard together by  the  High Court  and  a common judgment was  delivered  directing  the dismissal  of  all  the suits.  A few of them  came  on  for hearing  subsequently, but the learned Judges following  the judgment of the Court in the main batch disposed of them  in accordance with that decision.  On applications made by  the several  plaintiffs certificates of fitness were granted  by the  High Court and that is how the appeals are  now  before us. As would be seen from the foregoing, the main point in  con- troversy in these appeals is the legality of the  collection by  the Government of amounts which are termed  "surcharges" in  these proceedings from these several plaintiffs who  are the  appellants before us.  In order to appreciate  how  the surcharge came to be imposed and the circumstances attending their collections as also the defences raised to the  suits, it   is  necessary  briefly  to  advert  to  the   statutory provisions  which furnish the background in which this  levy came to be made and collected. As  is  well-known, at the end of the Second World  War  the country  was  faced with a scarcity of foodgrains  with  the result  that  statutory rationing had to be resorted  to  in

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most urban areas; and for the purpose of enforcing rationing stocks of paddy and rice had to be made available.  Power in this  behalf was originally exercised under the  Defence  of India Act and the Rules framed thereunder and by subordinate legislation undertaken by virtue of powers conferred by  the Defence  of  India  Rules.  When the Defence  of  India  Act ceased to be in force on the expiry of six months after  the termination of the war and as this scarcity still 587 continued  the  Essential Supplies (Temporary  Powers)  Act, 1946   repleading  and  replacing  the  Essential   Supplies (Temporary  Powers)  Ordinance,  1946 (XVIII  of  1946)  was enacted to be in force originally for 5 years till April  1, 1951  to  deal  with the  probelm  of  maintaining  supplies essential to the community.  Under S. 3 of this statute "The Central  Government,  so  far  as it appears  to  it  to  be necessary  or expedient for maintaining or  increasing  sup- plies  of  any essential commodity, or  for  securing  their equitable distribution and availability at fair prices,  may by   order  provide  for  regulating  or   prohibiting   the production,  supply and distribution thereof and  trade  and commerce  therein".  Without prejudice to the generality  of the  powers  conferred by sub-s. (1), sub-s.  (2)  empowered Government by order to provide inter alia for :               "(c)  for controlling the prices at which  any               essential commodity may be bought or sold;               (d)   for  regulating by licences, permits  or               otherwise     the     storage,      transport,               distribution,  disposal, acquisition,  use  or               consumption of any essential commodity;               (e)   for  prohibiting  the  withholding  from               sale  of  any essential  commodity  ordinarily               kept for sale;               (f)   for  requiring any person holding  stock               of an essential commodity to sell the whole or               a  specified part of the stock at such  prices               and to such persons or class of persons or  in               such circumstances, as may be specified in the               order;               (i)   for   requiring   persons   engaged   in               production,  supply  or  distribution  of,  or               trade or commerce in, any essential  commodity               to  maintain and produce for  inspection  such               books, accounts and records relating to  their               business  and  to  furnish  such   information               relating  thereto, as may be specified in  the               order;" Under the powers thus conferred a scheme was devised for (a) the  procurement of foodgrains (we are here  concerned  with paddy  and  rice)  from producers, (b)  for  their  sale  to wholesalers,  (c)  a  further  sale  to  retailers  and  (d) ultimately the sale to the consumers, the last of which was, as stated already, based on a system of rationing to  secure equitable  distribution.  The appeal is concerned  with  the machinery  and  procedure employed for  the  procurement  of foodgrains in the districts of East Godavari, West  Godavari and  Krishna  which  were  reckoned  as  surplus  districts. Though  legislation  or  that of a  similar  type  was  also applicable  to certain other areas;-these appeals  are  only concerned with the 588 events   that  happened  in  these  three  districts.    The plaintiffs  who  filed  the several suits  which  have  been directed  to be dismissed by the High Court and who are  the appellants before us were owners of rice mills or lessees or

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licensees of such mills in these three districts.  They were appointed as procurement agents for buying up paddy from the producers i.e., cultivators or landholders.  They were  also licensed  under  several Control Orders to  which  reference will be made later, to deal in the paddy which they procured or  the  rice into which they converted the paddy  in  their mills.   The  prices at which they could procure  the  paddy from the producers was fixed by executive order issued under the  powers  contained  in s. 3 (2)  (c)  of  the  Essential Supplies  (Temporary Powers) Act.  Similarly, the  price  at which they could sell to wholesalers was likewise fixed. While  things  were going on in this state  with  he  prices fixed operating to determine the purchase and the sale price of  these procuring agents, Government raised  the  purchase and  sale  price of paddy and rice in or about  July,  1947. They  then  directed these procuring agents to pay  over  to them as a "surcharge the difference between the original and the enhanced price on the stock of paddy held by them on the day  previous to the rise in price.  These  miller-merchants resisted the levy but were forced to make the payment  which they did under protest.  There were similar rises in  prices on  December  7,  1947 and on November 21,  1948  and  in  a similar   manner  the  amounts  of  these  surcharges   were collected  from the several millers, the amount  payable  by each  being  calculated  on  the  stock  of  paddy  or  rice remaining  with  them on December 6, 1947 and  November  20, 1948 respectively. A  very large number of suits were filed by these  merchants against  the Government in the Courts of Subordinate  Judges of.  Eluru, Narasapur, Amalapuram, Kakinada, Rajahmundry and Masulipatnam  for  the repayments of these sums  which  they alleged  had been illegally collected from them.   The  main defence  of the Government was that the millers were  really the agents of the Government and so were accountable to them for  the extra profit they would have made by reason of  the increase  in the price effected by Government.  Besides,  it was  also asserted that the demand for the  "surcharge"  was authorised  or  permitted  by the terms  of  the  "procuring agreement" entered into with them as also by the  conditions of the licences which were granted to them under which  they were permitted to trade in paddy or rice.  There was also  a minor  point raised that the suits were barred by s.  16  of the Essential Supplies Act, 1946.  As stated earlier,  suits filed in 589 some  of  the Courts were dismissed  accepting  the  defence raised  by the Government while those filed in other  Courts succeeded  and decrees were passed for the repayment of  the several sums collected by the Government.  Appeals filed  to the  High Court from these decrees and then those  filed  by the  Government  were  allowed while those  by  the  miller- plaintiffs  were  directed  to  be  dismissed  by  a  common judgment  from which most of the, appeals before  us  arise. We should, however, mention even at this stage that  besides this  common question there have been other defences  raised to  some  of these suits to which it would be  necessary  to advert  but we shall defer stating them until after we  have finished  with  the  points that are  common  to  all  these appeals. We  shall  first take up for consideration  the  main  point urged  before  us by Mr. Agarwala for  the  respondent-State that  the appellant-millers were "agent’. of the  Government or,  in  any  event, stood in a fiduciary  capacity  to  the Government,  so that the latter had a right to call on  them to disgorge any profit they might make in their business  of

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procuring  and  selling  foodgrains  over  and  beyond   the remuneration  permitted to them by the relevant  agreements, licences,  notifications  etc.   For  this  purpose  it   is necessary to set out the various statutory provisions  under which  the  appellants functioned as well as the  terms  and conditions  of the agreements entered into by them with  the Government.   We  shall  also narrate  in  some  detail  the circumstances  in  which the " surcharge" were  imposed  and collected  as  they bear on the points urged  before  us  in these appeals. The  first  relevant  statutory provision  to  which  it  is necessary  to  advert  in  this  connection  is  the  Madras Foodgrains Procurement Order, 1946 dated the 15th June, 1946 issued  under Rule 81 (2) of the Defence of India  Rules  by the  Government of Madras.  It applied to several  districts in  the State, among them East Godavari, West  Godavari  and Krishna with which these appeals are concerned. Paragraph  1 of this Order required "every person who whether as  holder, occupier,  tenant,  sub-tenant or licensee or in  any  other capacity  cultivates  any land with paddy during  the  Fasli 1355 or Fasli 1356 or who receives any portion of such paddy or  rent or interest or repayment of loan in kind" "to  sell the  surplus  of such paddy as determined  by  the  District Collector  to  be  available with  such  person  after  each harvest either as paddy or rice to the District Collector or an agent appointed by him and to no one else.  The  District Collector  and those authorised by him in that  behalf  were thus  to  have the monopoly of purchasing surplus  paddy  or rice from cultivators.  The formula for the determination of the surplus L4Sup./65-4 590 was  laid  down  in the same paragraph but  to  this  it  is unnecessary  to  refer.  Under Paragraph 2 delivery  of  the paddy and rice had ’Lo be made to the Collector or his agent in the village in which that paddy or rice was cultivated or at  some place within the District in which the  cultivation took  place,  the price varying with the place  of  delivery i.e.,  taking  into  account  the  transport  charges.   The provision  that the procurement by the Government  or  their authorised  agents and at the prices fixed by the  Collector on  a monopoly basis was reinforced by Para 3 of this  Order which  prohibited  any  person  from  selling  or  otherwise disposing  of  any quantity of paddy or rice to  any  person other  than the District Collector or an agent  notified  in that  behalf.   We  are  ommiting  reference  to  the  other paragraphs  of this order as unnecessary for  our  purposes. This Order was, among several others, continued in force  by the Essential Supplies (Temporary Powers) Act, 1946 when the Defence  of India Act lapsed and ceased to be in  operation. Slight  variations  were made in this  Order  by  subsequent notified orders-vide for instance, the Intensive Procurement Order   dated   March  26,  1947  but   these   changes   or modifications  related  mostly to the formula or  basis  for determining,  the  surplus available for  purchase,  but  as these made no material variation for our present purpose  we are not setting them out. Several  millers  in the three districts of  East  and  West Godavari  and  Krishna whose business  consisted  in  buying paddy,  milling  them and selling the rice, applied  to  the Government for appointment as procuring agents in accordance with  this  notification.   Before  however  they  could  be appointed as procuring agents each of them had to execute an agreement in a form prescribed by rules and as the terms  of this  agreement  from  the core of the  case  of  the  State

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Government  on  the question of Agency it  is  necessary  to refer  to  them in some detail.  The heading of  this  model agreement  which  was signed by each one of  the  appellants reads               "Agreement executed by Procuring  Agent/Autho-               rised wholesale Distributor."               It then proceeds :               "I......  having been appointed a  dealer  for               the  purchase,  storage  and  distribution  of               paddy,  rice  or.  .  .  under  the  Intensive               Procurement  Scheme and or Informal  Rationing               Scheme,  shall  abide by  all  the  provisions               prescribed  from time to time by or under  the               said   schemes  ind  any   directions   issued               thereunder               591               In particular-               I  undertake to purchase paddy, rice....  that               are   available  for  purchase  in  the   area               allotted  to me at the rates  prescribed  from               time  to  time by the  Commissioner  of  Civil               Supplies, Madras, or any officer authorised by               him in this behalf.               I  undertake to store paddy, rice  or  millets               purchased  by me in proper godowns and  to  be               responsible for their safe custody.               I also undertake to sell the stocks of  paddy,               rice or millets with me to the persons to whom               I am directed to sell it at such rates as  may               be  prescribed from time to time.  I agree  to               deposit     with    the    District     Supply               Officer........  District Rs. 2,000/-  against               the fulfilment of this undertaking.               I  agree  to the forfeiture  by  the  District               Supply   Officer........  District   of   this               deposit for any breach by me or by any  person               acting on my behalf for failure on my part  to               comply  with or to secure compliance with  the               aforesaid  provisions, regulations and  duties               prescribed   from  time  to  time  under   the               Intensive   Procurement   and   or    Informal               Rationing Scheme." On  the execution of this agreement they were  appointed  as agents  for purchasing paddy and rice determined as  surplus with  the  ryots.   This appointment  was  notified  in  the District  Gazette  and as against each group of  agents  the area in which they were authorised  to procure was set out. This   was,  however,  not  the  only  statutory   provision regulating  the  conduct  and dealings  of  the  appellants. Under the Madras Foodgrains Control Order, 1947 issued under the  Essential Supplies Act, 1946 which was in  supersession of  the Madras Foodgrrains Control Order,  1945  promulgated under  Rule  81(2)  of the Defence  of  India  Rules  though containing  substantially  the same terms, the  business  of dealing  in foodgrains was subjected to  statutory  control. Clause  3 of this Order prohibited any person from  engaging in  any  undertaking which involved the  purchase,  sale  or storage for sale in wholesale quantities of any  foodgrains" except  and  in  accordance with a licence  issued  in  that behalf   by  an  officer  authorised  by  the   Government". Purchase  and sale of 10 maunds and more in one  transaction was  defined  by  the Order as,  being  in  whole-,ale  and, similarly. storage of 15 maunds and 592 more  was so treated.  Each one of the appellants before  us

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held  licences to deal in foodgrains under this Order.   Two of the clauses of the licence issued under this Order are of some  relevance to the points arising in these  appeals  and have been referred to during the course of the arguments and it would be convenient to set them out at this stage :               "Clause   8.  The  licensee  shall  give   all               facilities  at  all reasonable  times  to  any               authorised  officer  of  Government,  for  the               inspection  of his stocks and accounts at  any               shop,  godown or other place used by  him  for               the  storage or sale of any of the  foodgrains               mentioned in paragraph 1 and for the taking of               samples of such foodgrains for examination.               Clause  9. The licensee shall comply with  any               directions  that  may be given to him  by  the               Government  or  by the  officer  issuing  this               licence  in  regard to the purchase,  sale  or               storage for sale of any of the foodgrains men-               tioned in paragraph 1............" Of course, these licenses were granted on applications  made in statutory form by the several applicants and a  paragraph in this application read :               "I  have  carefully  read  the  conditions  of               licence given in Form A of the Second Schedule               to the Foodgrains Control Order and I agree to               abide by them." It  need  hardly  be pointed out that the  prices  at  which purchases and sales by the procuring agents, wholesalers and retailers  could  take place were all determined  by  orders issued  from  time to time, under ss. 3(1) and 2(c)  of  the Essential  Supplies  Act, and these  dealers  were  enjoined strictly  to  adhere  to them on pain  of  prosecutions  and cancellation  of  their licences.  The prices  fixed  varied from  district to district and, of course,  between  several varieties  of paddy and rice.  In their  fixation  allowance was made for transport charges by adding the freight to  the prime  cost.  It is not necessary to go into the details  of these  prices but it is sufficient to state that  they  were varied from time to time. Pausing  here,  it is necessary to refer to  the  manner  in which  the  miller-procuring agents disposed  of  the  stock which they had procured from the producers.  They could sell only  to  dealers who had licences to  purchase  from  them, these  buyers might be either wholesalers or retailers.   It is in evidence that in some 593 cases   the  procedure  followed  (particularly  where   the purchasers  authorised to buy from the millers were  outside their district) was that the purchasers were directed to pay the  value  of  the  grain which  they  were  authorised  to purchase  into  the  Government  Treasury.   Intimation  was thereafter  given to the millers of the deposit and  of  the quantity  which the purchaser was permitted to obtain.   The specified  quantity of grain would then be delivered to  the authorised  purchaser and the millers would then be paid  by Government.  This, however, was not the only method by which the miller-procuring agents could or did effect sales.  They were,  besides, permitted and authorised to sell to  dealers of their choice provided such dealers were licensed  dealers and  so authorised to buy.  Needless to add that  the  price which  the  millers could charge the dealers had to  be  the controlled price. Procurement, however, was, as would be evident from what  we have  stated  earlier, confined to particular areas  of  the Province  which  were  surplus in that  type  of  foodgrain.

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There  were  deficit districts which the Government  had  to supply  with  the  requisite quantity  of  foodgrains.   The foodgrains  necessary for this purpose was obtained  by  the Government by purchases from the procuring agents.  For this purpose  agreements  were  entered  into  with  the  miller- procuring  agents  to which it is now  necessary  to  refer. That agreement ran, to quote only the material terms               "This  agreement made the day of  between  His               Excellency  the Governor of Madras of the  one               part    and....   (hereinafter   called    the               supplier. . of the other part.               Whereas       the       District        Supply               officer .....................has               been  authorised  to  buy paddy  and  rice  on               behalf of the Government of Madras.               Whereas the District Supply Officer has agreed               to  buy  and the supplier has agreed  to  sell               paddy/rice as detailed in the schedule below.               Now  these  presents witness and  the  parties               hereto hereby mutually agree as follows :-               1.    The  supplier shall deposit a sum of  Rs               (rupees....  only)  with the  District  Supply               Officer.   The  deposit  shall  unless  it  is               forfeited under the terms of this agreement be               returned  to  the supplier upon  the  complete               fulfilment of this agreement by the supplier.               594               2.    The  District Supply officer  will  have               the  right to reject the whole or any  portion               of  the  paddy  or rice  supplied  under  this               agreement on the ground that the paddy or rice               supplied is different from or inferior to  the               sample  tendered by the supplier and  accepted               by  the  District Supply officer or  that  the               packing  is defective or that there  is  undue               delay and default in supplying or on any other               ground  whatsoever.   He will  also  have  the               right  to accept the supply and to reduce  the               rate  within  six  weeks  from  the  date   of               despatch  of  the  consignment,  in  case   he               considers  either  suo motu or  otherwise  the               paddy  or  rice  supplied to  be  inferior  in               quality to the sample tendered.  The  decision               of  the District Supply Officer regarding  the               quantity  and  quality  shall  be  final   and               binding and on the supplier.               3.    In  the  event of  the  District  Supply               Officer rejecting the whole or any portion  of               paddy or rice, the supplier shall be bound  to               supply paddy or rice of the proper quality and               quantity within such extended time, if any, as               may  be  given to him by the  District  Supply               Officer.   If no time is given or if the  time               is given and the supplier fails to supply  the               balance  or  the whole of the  paddy  or  rice               within  the  time  originally  fixed  or  such               extended time, the supplier shall be bound  to               pay  such  damages  as may  be  fixed  by  the               Commissioner   of   Civil   Supplies,   Madras               (hereinafter  called the  Commissioner).   The               award  of the Commissioner shall be final  and               binding on the supplier and shall not be  open               to question in any Court of law.               4.    The  District Supply Officer shall  have               the  right to cancel the whole or any  portion

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             of   this  agreement  at  any   time   without               assigning any reason whatsoever.               5.    When  paddy  or rice is required  to  be               delivered  at  any station/port the  paddy  or               rice shall be considered to be at the risk  of               the   supplier   till  it   is   loaded   into               railwaywagons/steamer.               6.It  is distinctly agreed by and  between               the parties               that-               (1)The  supplier  will not hold  the  District               Supply Officer responsible personally for  any               loss sustained by               595               the  supplier  by reason of any act,  deed  or               thing done by him touching this agreement; and               (9)  The supplier shall pay the general  sales               tax." To this agreement was a Schedule and the quantity in tons of what  was  contracted to be purchased was set out in  it  as also  the  rate  as well as the place and  dated  fixed  for delivery. Paddy  was  thus being procured from the  producers  by  the millers appointed so to procure under the Procurement  Order we have set out earlier and they were disposing of the  rice after   milling  the  paddy  procured  to  wholesalers   and retailers at the prices fixed by the Government.   Similarly those Millers who had entered into contracts to supply  rice to  the  District Supply Officer were  duly  fulfilling  the terms  of  the  contract  and were  being  paid  the  prices stipulated in the agreements subject to any deductions  that were  made on account of inferior quality, deterioration  of goods etc.  While things were in this state, the  Government of  Madras promulgated, on the 17th of July, 1947,  what  is termed  "a  bonus  scheme" for  subsidizing  cultivators  to induce them to increase their production so as to have  more surpluses  for  enabling procurement of  larger  quantities. The  amount  of  the bonus was Re. 1 per  maund  of  surplus paddy.   Out  of this one-half was to be passed  on  to  the consumers by enhancing by eight annas a maund the  wholesale and  retail  prices  and the other half was to  be  paid  to producers  by the Government themselves.  This  increase  in price  was to take effect from July 27, 1947.   Instructions were  issued  to  the Collectors and  revenue  officials  to ascertain  the  quantity  of  rice  and  paddy  lying   with procuring agents as also wholesalers at the end of the day’s transactions  on  July 26, 1947 i.e.,  the  stock  remaining unsold which bad been obtained by them at prices  prevailing before  the  enhancement of price which was to  have  effect from  the  next day and to require them to pay over  to  the Government  as  "a surcharge" the enhanced prices  at  which they  were permitted to sell after that date, namely,  eight annas per maund of paddy and twelve annas per maund of rice. Demands were made on some of the appellants for the  payment of  this surcharge.  When they failed and neglected  to  pay surcharge   demanded   they   were   threatened   with   the cancellation of licences which they held under the Licensing Order and by reason of this threat, it is stated that,  they made the payments demanded from them. A similar and further increase in price was effected in  the first  week of December, 1947.  The increase was Rs.  2  per maund 596 of rice and Re. 1 16 1 - per maund of paddy.  The  procuring agents,  wholesalers and others who had stocks were, by  the

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orders  of Government issued on that occasion,  directed  to disclose  the  stock of paddy and rice with them as  on  the evening  of December 6, 1947 and in respect of the stock  on that date, they were directed to pay to the Government  "the surcharge"  at  the rates specified earlier.   Demands  were made  on  this basis on several of the appellants  and  when they refused to do so, two methods of recovery were  adopted in order to enforce the demand.  In the case of some of them where  there were amounts owing by Government on account  of rice  supplied  under the contract for  supply  referred  to earlier or by reason of the Government having collected  the amounts  from purchasers who were authorised to lift  stocks from  the  procuring  agents, the  Government  deducted  the "surcharge"  from the amounts due by them and paid only  the balance.   This was one method.  The other method  was  that which   had  been  adopted  for  the  realisation   of   the "surcharge"  levied  in July, 1947, namely,  by  threatening them  with cancellation of their licences to deal  in  paddy and rice. Before  proceeding further and for the sake of  completeness and  to  avoid  having to revert to it  later  it  would  be convenient  to  mention  here  the  ground  upon  which  the surcharge  was justified in the G.O. dated December 6,  1947 by  which it was imposed.  In paragraph 8 after setting  out the quantity of rice and paddy on which the surcharge  would be levied and collected, the G.O. continued:               "Increased  prices  at the rate of Rs.  2  per               maund   of  rice........  will  have   to   be               collected   as  surcharge  on   the   quantity               available  with the wholesalers and  retailers               on  the  evening  of 6th  December,  1947,  as               directed in Government Memo No......               The  collection  of  this  surcharge  will  be               unearned profit to Government.  The Government               direct that this profit should be utilised  to               set off the amount recoverable as surcharge." Pausing here, it may be pointed out that it appears from the evidence  that even with the adoption of these  methods  the Government were unable to realise the surcharges from  every one  of the procuring agents or other dealers wholesale  and retail  on  whom these surcharges had been levied.   We  are mentioning  this  in  order to indicate the  change  in  the methods  adopted for the recovery of the surcharge  when  it was imposed on the next occasion 597 and  this was on the 21st of November, 1948.  By a  G.O.  of that date the Government directed the Collectors to levy  on all  stocks  of paddy and rice with  the  procuring  agents, wholesalers  and  retailers on the evening of  November  20, 1948,  a further surcharge and recover the same  from  them. Some  of the appellants paid this amount under  protest;  in the case of others the amount of the surcharge was  deducted from  the sums payable to them by Government for the  supply by them of rice.  In the case of certain others the Board of Revenue  which had found that there were some merchants  who had  failed to pay the two earlier surcharges that had  been imposed, suggested the adoption of a new method in order  to realise the sum.  This was that the Collectors should  issue orders  of requisition of paddy in the possession  of  these merchants   in   respect  of  the  quantities   which   were ascertained  as  being with them on the  20th  of  November, 1948,  and release the stocks by cancelling the  requisition order  only on their payment of the surcharges or  on  their executing at writing agreeing to make the payment.  We shall have  occasion  to refer to the special  defence  raised  by

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Government  in respect of this class of stockholders in  the proper place. With  this narration we are now in a position to  deal  with the arguments addressed to us in these appeals.  As would be seen from what we have stated earlier, the contention  urged by the State of Andhra Pradesh was that the appellants  were the agents of the Government and were, therefore, liable  to account to them for the profits which they derived over  and above  the  commission or remuneration which was  fixed  for them  by the relevant notification of Government fixing  the prices  which might be charged.  The learned Judge-, of  the High Court were not prepared to accept this submission  that the  appellants  were  agents of the  Government,  but  they nevertheless  held  that  on a proper  construction  of  the Intensive Procurement Order, 1947, read in conjunction  with the  terms  of  the  Notification  appointing  the   several plaintiffs as "procuring agents" coupled with the  agreement which  they  executed  to  whose  clauses  we  have  already adverted,  the plaintiffs were under a fiduciary  obligation to Government which was akin to, though not exactly the same as an agency, by reason whereof they were bound to pay  over to  the Government the extra profit which they had  made  by the enhancement of the prices effected by the Government  on the three occasions.  The contention raised on behalf of the plaintiffs  that the "surcharge" was in reality a tax  which was  illegally  levied by executive order  was  rejected  by them. 598 As  the principal point in controversy between  the  parties related  to  the  precise  legal  relationship  between  the Procuring -agents and the Government, we shall take that  up first.  Before considering the arguments addressed to us  by Mr. Agarwala it would be convenient to set out certain facts relevant  to  this matter which are not in dispute.   It  is common  ground  that  the procuring agents had  to  buy  and bought  the grain from the producers with their  own  money. The grain purchased was transported to the godowns at  their cost  and stored by them at their own risk the  godown  rent being  paid by them.  In other words, there was no  ,dispute that  the property in the goods purchased by  the  procuring agents vested in them.  If there was any depreciation in the quality  ,or  if there was any short-fall owing  to  driage, action of rodents, insects, moisture, theft, etc., the  loss would be theirs.  In order to raise the necessary funds  and to finance themselves for the purchase the procuring  agents pledged  their goods including the foodgrains  purchased  by them  and  obtained  loans from banks  and  other  financing institutions.   They could effect a sale of the  -rain  with them subject, however, to two conditions : (1) the purchaser must  be  one authorised to buy, (2) the  price  should  not exceed  that fixed under the notification and orders  issued from time to time, i.e., sales at free market rate were  not permitted.  Prima facie, therefore, it would appear that the procuring  agents were merely conducting their  business  in the  purchase  of paddy and the sale of rice, on  their  own account, subject however to the regulation and  restrictions imposed  by  the statutory orders and  the  licences  issued thereunder  which enabled Government to effectively  control in  the acquisition and distribution of  foodgrains  through the  usual  trade channels to the ultimate  consumer  in  an orderly  and  equitable  manner.  Learned  Counsel  for  the State,  however, urged that the true legal relationship  had to be determined on other considerations.  First, there  was the obligation cast by para 1 of the Foodgrains  Procurement Order  on  producers of foodgrains to sell  the  surplus  of

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their paddy as determined by the authorities to the District Collector or "an agent appointed and notified by him in this behalf" and to no one else.  In the subsequent paragraphs of the  same Order, the persons to whom the foodgrains were  to be  delivered  were  referred  to  as  "the  agents  of  the Collector"  authorised or appointed by him in  that  behalf. Next  was the description of these procuring agents  in  the notification  regarding their appointment.  There  also  the same  terminology  of  referring to  them  "as  agents"  for procurement  was  employed.   Thirdly,  in  the   agreements executed 599 by  the  "procuring  agents"  reliance  was  placed  on  the following  clauses specifying the obligations undertaken  by them :               (1)   They  undertook to purchase  paddy  that               were  available  for  purchase  in  the  areas               allotted to them.               (2)   They  undertook  to store the  paddy  or               rice  purchased  in proper  godowns  and  made               themselves responsible for the safe custody of               the grain.               (3)   They  undertook  to sell the  stocks  of               paddy  or  rice with them to persons  to  whom               they  were directed to sell at such prices  as               might be prescribed. It was urged that their description as "agents" which  prima facie  had  to be taken as having meaning as  indicative  of their real position, was established as a fact by the duties which  they  were  called  on  to  perform  and  which  they undertook  to perform under their agreement.  In  particular it  was  stressed  they were  constituted  the  "agents"  of Government  to buy up the surplus paddy made  available  for them,  to  store  the  grain  purchased  on  behalf  of  the Government  in  secure  godowns,  and  to  sell  the   goods purchased on behalf of Government and also stored on  behalf of Government to such persons who might be nominated in that behalf   and  at  prices  fixed  by  Government.   It   was, therefore,  submitted that they were "agents" who  would  on the  one hand be entitled to indemnity from  the  Government for  any loss that they might sustain in their  engaging  in the business of the agency of purchase and storage and  sale on  behalf  of Government and, on the other, were  bound  to make over to the Government such profit that they may obtain out of the business of the agency.  It was the further  case of   the   Government  that  the  difference   between   the procurement price and the price which was fixed for sale  by them constituted the commission or remuneration which  would belong   to  the  agents.   In  further  support  of   these submissions learned Counsel referred us to the fact that  in the  Notification  appointing  some  of  the  plaintiffs  as procuring agents, published in the Krishna District  Gazette they were referred to as "village procuring agents for paddy or  rice  on  behalf  of  Government"  in  their  respective villages.   Our attention was also drawn to a  communication by  the Collector of Kakinada dated April 26, 1947 in  which he  referred  to  the purchases of paddy  by  the  procuring agents as having been made " on Government account".  It may be pointed out that the order last referred to was to direct these "agents" not to engage in private trade apparently  in connection  with the sale of the paddy procured.  This  last document might be ignored as it emanated 600 from  the  Collector and, as is clear from  the  context  in which  it  occurred, that it was meant as a warning  to  the

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procuring  agents  not to sell the procured  paddy  or  rice except to those authorised to purchase them. The  point  that  has now to be considered  is  whether  the description of the plaintiffs as "pro-curing agents" and the undertaking by them in the agreements which they executed to purchase the paddy offered, to store them in proper  godowns and  to  sell them at prescribed prices to persons  who  had obtained  requisite  permission to purchase rice  or  paddy, would make them agents of the Government so as to (a) render Government  liable  to indemnify them for any  losses  which they might sustain in the business, and (b) conversely in  a situation  of immediate relevance, enable the Government  to claim   any  profit  made  by  them  over  and   above   the "remuneration" permitted to them. Before  proceeding further, it is necessary to  clarify  two matters.  First, though Mr. Agarwala referred to the  margin between  the  procurement price and the price at  which  the procured  paddy or rice could be sold as  "remuneration",  a contention which found favour with the High Court, we do not find  it  possible to accept the submission.   There  was  a similar margin between the price at which a wholesaler could buy  rice and that at which he could sell and similarly,  in the case of the retail dealer, but it is hardly possible  to call these as "remuneration".  This margin or difference  in the purchase and sale price was necessary in order to induce any one to engage in this business and was of the essence of a  control over procurement and distribution which  utilised normal  trade channels.  It would, therefore, be a  misnomer to  call  it "remuneration" or "commission"  allowed  to  an agent and so really no argument can be built on it in favour of the relationship being that of principal and agent. The second matter to which we would like to refer is that in the  present  case the direction "to account by  the  agent" adopting  the  theory contended for by the  respondent,  was given  and  enforced even before the agent made  any  profit i.e., on the basis of an anticipated profit.  We are drawing attention  to  this feature to emphasise the fact  that  the several  orders  of Government imposing  the  surcharge  and enforcing  the levy did not proceed on any theory  that  the procuring agents were "agents" who were called on to account for  profits which they made in the business of the  agency. It is only necessary to add that not merely procuring agents but  wholesalers and retailers who could on no  argument  be called "agents" were directed to pay the surcharge. 601 We shall now proceed to deal with the arguments advanced  to establish  that  the procuring agents were, in fact  and  in law, agents. No  doubt, the description in the Procurement Order and  the agreement  as "agent" is of some value, but is not  decisive and one has to gather the real relationship by reference  to the  entire facts and circumstances.  To start with,  it  is clear  that  as  the purchases were made  by  the  procuring agents out of their own funds, stored at their own cost, the risk of any deterioration, draige or shortfall fell on them, they  were  the full owners of the paddy procured  and  they pledged  the goods for raising funds.  This aspect of  their full ownership of the grain purchased is highlighted by  the fact  that they entered into agreements with the  Government itself  to  sell  the  rice with  them  to  District  Supply Officers  at the controlled market prices.   Any  contention that  the procuring agents were not full owners of paddy  or rice  procured  by  them  must  manifestly  fail  as   being inconsistent  with  the basis upon which this  agreement  by them  to  sell to Government was entered into.   If  further

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confirmation were needed it is provided by the fact that  on the  sales  by procuring agents to  Government  under  their Supply agreement sales-tax was payable which on the terms of the  Madras General Sales Tax Act in force at  the  relevant time would not have been payable if the paddy and rice  were that  of Government and which they were holdings  merely  as commission agents on behalf of the Government. Next,  it  may  be pointed out that  these  plaintiffs  held licences   under  the  Licensing  Order  under  the   Madras Foodgrains Control Order, 1947 in order that they might deal in  the rice in their possession.  In the licence which  was granted  to the plaintiffs which was in statutory  form  the foodgrains  in  their possession were referred to  as  their stocks.  It may be pointed out that the form of the  licence granted  to procuring agents, wholesalers and retailers  was the same. Learned  Counsel urged that even assuming that the  property in  the goods purchased passed to the procuring agents  that would  not by itself negative the relationship of  principal and agent.  For this purpose reliance was placed on  Article 76 of Bowstead on Agency which runs: .lm15 " Where an agent, by contracting personally, renders himself personally liable for the price of goods bought on behalf of his  principal,  the property in the goods, as  between  the principal  and agent, vests in the agent, and does not  pass to the principal until he pays 602 for the goods, or the agent intends that it shall pass." He  also referred us to certain decisions of the Madras  and Punjab High Courts in which the principle laid down in  this passage  had been applied.  We do not consider it  necessary to  examine  this  question in its fulness  because  we  are satisfied  that  the  procuring agent, when  he  bought  the goods,  was purchasing it for himself and not on  behalf  of the Government.  The acceptance of the argument addressed on this  aspect  would mean that if the  procurement  agent  so desired  he  might contract in the name  of  the  principal, namely,  the Government and thus establish  privity  between the  Government  and the purchaser and make  the  Government liable  to  pay for the price of the goods at which  he  had purchased.   This  situation  would,  in  our  opinion,   be unthinkable  on  the scheme of the  Procurement  Orders  and generally  of  the  Food  Control  Orders  under  which  the procurement and distribution of foodgrains was placed  under statutory control.  What the Government desired and what was implemented   by  these  several  orders  was   merely   the regulation  and  control  of  the  trade  in  foodgrains  by rendering  every  activity  connected  with  it  subject  to licensing  and to the directions to be issued  in  pursuance thereof  and  not  directly  to  engage  in  the  trade   in foodgrains. The  respondent can derive no advantage from the  obligation on  the part of the procuring agents to store the  paddy  or rice  properly  a  stipulation on which  Mr.  Agarwala  laid considerable  stress-and  this  for two reasons  :  (1)  The purpose  of the clause was to ensure that there was no  loss of foodgrains which were then a scarce commodity.  That this is  so would be apparent from the terms of s. 3 (2)  (d)  of the Essential Supplies Act which was effectuated by cl. 9 of the  licence  granted under the  Madras  Foodgrains  Control Order,  1947 which applied to all dealers in foodgrains,  be they  procuring agents (who also, as stated earlier  had  to obtain   and  obtained  these  licence+;),  wholesalers   or retailers.  This clause reads :

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             "9.   The  licensee  shall  comply  with   any               directions  that  may be given to him  by  the               Government  or  by the  officer  issuing  this               licence  in  regard to the  purchase  sale  or               storage  for  sale of any  of  the  foodgrains               mentioned in paragraph (1 ).............. " The  second  reason is that the agreement  executed  by  the procuring agents in which this clause as regards storage  in proper godowns and undertaking responsibility for the  safe- custody of the grain 603 occurs,  is one which was a form intended for execution  not merely  by  procuring agents but also  authorised  wholesale distributors  i.e., those who purchased  their  requirements from procuring agents;: admittedly the authorised  wholesale dealers  were not "agents" and the fact that this  condition was  insisted on even in their case is clear proof  that  it has  no relevance to the question now under discussion.   It therefore,  appears  to us that the expression  "agent"  was used  in the Intensive Procurement Order as well as  in  the agreements  merely as a convenient expression  to  designate this class of dealers. Before  proceeding further it is necessary to advert to  the decision  of the High Court of Assam in  Bhowrilal  Maliesri and  Ors. v. State of Assam(1) on which Mr. Agarwala  placed considerable   reliance  in  support  of   this   contention regarding agency.  The Government of Assam had passed an  ad hoc  order  directing  certain  foodgrain  dealers  to  lift certain  quantities of foodgrains from a  Goverrunent  Depot with  a view to its being sold to persons nominated in  that behalf  by the Government.  The dealers cornplied with  this direction  but  when they tried to sell it to  the  persons. nominated  by the Government the latter refused to  purchase or to accept the goods sold on the ground that the stuff was unfit  for human consumption.  At the time when the  dealers took  possession from Government godowns they had  paid  the price fixed by the Government and they filed a suit for  the recovery  of  the price and the damage suffered by  them  on foot  of indemnity claimable by an agent from  a  principal. The High Court of Assam upheld their claim and held that  an agency  had been constitutedbetween the parties under  which an  obligation had been east on the Government to make  good the  loss  suffered by the dealer.  We do not see  how  this decision  assuming  it is correct, on which  wepronounce  no opinion,  bears any resemblance to the case on hand.   There the  dealers  were required by Government  to  acquire  from Government  foodgrains which was Government property on  the basis that they would be able to sell the same to purchasers designated.  The terms of the contract were that they should pay the value in the first instance and recover it from  the purchasers  specified  by  Government.  It  was  in  such  a situation that an agency was held to arise.  The position in the  case before us is totally different.  By reason of  the exercise   of  statutory  power  trade  in  foodgrains   was controlled and placed under a licensing system.  No  persons could buy or sell rice or paddy exceeding specified’  limits of  quantity  unless be held a licence to  do  so.   Dealers were- (1)  A.I.R. 1961 Assam 64. 604 classified into three classes, procuring agents. wholesalers and retailers.  We are now concerned with procuring  agents. Before the introduction of the licensing system, the millers as  part  of  their business used  to  purchase  paddy  from growers, hull them in their mills and sell the rice obtained

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to wholesalers who in their turn sold to retailers from whom the  consumers obtained their requirement.  This  method  of trading  and  the same trade channels were utilised  by  the Government  for the purpose of exercising control  over  the acquisition  and distribution of foodgrains.  In  the  first instance,   the  supplies  available  with   producers   for procurement was determined by Government so as not to  leave with  them  more than what could reasonably  be  needed  for their  use.  The producer was required to sell the  quantity thus  determined so as to make it available to  the  general public.   The  quantity  having  thus  been  determined  the millers  were brought under the Control Orders by  requiring them to take out licences for purchase or sale of paddy  and it  is in the context of this method of utilising the  trade channels  for  the  purpose of  procuring  and  distributing supplies of essential foodgrains that the legal relationship between  the  parties  has to be  viewed.   As  pointed  out earlier,  the agreement executed by procuring agents was  in the  same form and contained the same stipulations  as  that executed  by  "wholesale  authorised  distributors".   These wholesale  dealers  thus undertook the same  obligations  as procuring agents to purchase, store and distribute paddy and rice  in  accordance  with  the  licensing  orders  and  the directions  issueable under them.  Obviously this could  not turn  the wholesalers into "agents".  The argument that  the procuring  agents were agents because they were  remunerated by the allowance of a commission in the shape of the  margin or  difference between the price fixed for  procurement  and for sale by them has already been dealt with and need not be repeated. Mr.  Agarwala next submitted that assuming that even  if  he were not right in these contentions that the plaintiffs were the  agents  of  the  Government still  they  were  under  a fiduciary obligation to Government.  Reference was, in  this connection, made to S.   88  of the Indian Trusts Act  which reads :               "Where  a trustee, executor,  partner,  agent,               director of a company, legal adviser, or other               person  bound  in  a  fiduciary  character  to               protect  the interests of another  person,  by               agailing  himself of his character, gains  for               himself any pecuniary advantage, or where  any               person so bound enters into any dealings under               circumstances in which his own interests  are,               or may be, adverse to               605               those  of such other person and thereby  gains               for  himself  a pecuniary advantage,  he  must               hold for the benefit of such other person  the               advantage so gained." The relevance of this provision was explained by saying that even  though  the plaintiffs might be legal  owners  of  the paddy and rice procured by them, the beneficial interest  in these   goods  vested  in  Government  and  that  thus   the plaintiffs  being persons bound in a fiduciary character  to protect the interest of Government had obtained a  pecuniary advantage by availing themselves of their position.  We must plainly  confess  that  we are  unable  to  appreciate  this argument.   A fiduciary relationship would, no  doubt,  have arisen  if  the  plaintiffs were agents, but  if  this  were rejected we do not see on the basis of what relationship the fiduciary obligations can be rested.  The purchase of  paddy and  rice by them was not as benamidars for Government,  for their  purchases  were on their own account with  their  own monies  though at prices fixed by the Government because  of

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the  control orders; they could sell their good, to  others, only  the  buyers  had  to  be  licensed  as  also  to   the Government.   The control exercised under statutory laws  in respect  of these matters cannot obviously render the  trade of the plaintiffs one which they carried on for the  benefit of  the  Government.  If so, we fail to perceive  the  legal basis  upon which the plaintiffs could be said to  hold  the stocks of grain with them for the benefit of Government.  We have   already   pointed  out  that  all  risks   of   loss, deterioration, interest charges, godown rent etc.. were  all their  responsibility.   In the circumstances,  we  consider there  is  no  basis  for  the  suggestion  of  a  fiduciary obligation de hors a principal and agent relationship. It was then said that assuming that the plaintiffs were  not agents  and that they were the full and absolute  owners  of paddy  and rice with them and which they held on  their  own account  and for their benefit, still the direction  to  pay the  surcharges  was a direction which  the  Government  was authorised  to issue under the terms of the licence  granted to  the plaintiffs to deal in the stocks procured  by  them. For  this submission reliance was placed on cl. (9)  of  the Licence  under  Foodgrains Licensing Order  issued  to  them which ran:               "The licensee shall comply with any directions               that may be given to him by the Government  or               by the officer issuing this licence in  regard               to  purchase, sale or storage for sale of  any               of the foodgrains mentioned in paragraph(1)."               Sup.C.1.165-5 606 It  was  said that the direction to pay a  surcharge  was  a direction  in  regard to the sale of  the  stocks.   Further support  was  sought on a similar clause  in  the  agreement executed by the procuring agents under which they agreed "to abide by all the provisions prescribed from time to time  by or   under  the  said  scheme  or  any   directions   issued thereunder."  We do not see any substance in this  argument. The  direction to pay such amounts as might be  demanded  by Government  is  certainly not a  direction  contemplated  or provided  for by the scheme, namely, the Procurement  Scheme nor is it a direction as regards the sale.  Indeed,  learned Counsel did not, when this was pointed out, seriously  press this submission for our acceptance. Before   proceeding  further  it  would  be  convenient   to ascertain   the  precise  legal  category  into  which   the surcharge would fall.  The dealers including the procurement agents  were dealing on their own account in the  matter  of purchase  and  sale of paddy and rice.  The price  at  which they  could buy was fixed and the relevant licensing  orders specified that they were to sell at the prices which were in force  from time to time.  While things were in this  state, the  price  at which the procuring agents,  wholesalers  and others  could sell was raised  of course, in respect of  the stocks  purchased  by them after that date they  would  have paid a higher price which would be compensated by the higher price  at  which  they were permitted to sell,  but  we  are concerned  with  the  stockson-hand  already  purchased  and remaining  with them on July 26, 1947, December 6, 1947  and November 20, 1948.  Under the Foodgrains Control Order under which  they were licensed to deal in foodgrains,  they  were entitled  to sell the stocks with them at the  prices  fixed under the Price Control Order and prevailing on the date  of the  sale.  They would, therefore, have, on an  increase  in the  selling price, the benefit of the enhanced prices.   It was  this that was sought to be mopped up by  Government  by

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the  three impugned orders by which the  difference  between the  old and the new prices was directed to be collected  as "surcharge". It was not suggested that the surcharges could be  justified under  any  of  the provisions contained  in  the  Essential Supplies  (Temporary Powers) Act.  They were not imposed  by notified orders promulgated under S. 3 of that enactment and if  they  were,  the question would  have  to  be  seriously considered  whether  such orders would be  within  the  rule making  power under that Act.  We have already  pointed  out that  they could not be justified as  authorised  directions which  were  permitted  to  be  issued  either  ,under   the Procurement Order, the agreement executed in pur- 607 suance  thereof  or  the Foodgrains Control  Order  and  the licences  issued thereunder.  That was why the only  serious argument  that was raised was an attempt to justify them  on the  ground  of  the same being a liability  to  account  on behalf.  of  an agent and this contention  we  have  already negatived  as  lacking substance.  There was thus  no  legal basis  upon  which the surcharge could be justified  and  it would, therefore, follow that subject to any argument  based upon the claim being barred by limitation, the claim to  the refund of the same could not be resisted. We  shall  be  dealing  with  the  claims  arising  in   the individual appeals later, but at this stage it is sufficient to point out that as regards the claim for the refund of the surcharge collected on the stocks of paddy and rice in July, 1947, there was no defence to the claim except that the same was  barred by limitation.  We should, however, add that  in all  the suits a defence that they were barred by reason  of s. 16 of the Essential Supplies (Temporary Powers) Act, 1946 was  raised, but the plea was wholly untenable  and  learned Counsel  very  properly did not seek to urge it  before  us. When demands for these sums were made they were either  paid under  protest, or when they were not so paid,  the  amounts were recovered by threats that the licences of the merchants should be cancelled. As  regards the surcharge levied in December on  the  stocks held by the plaintiffs on December 6, 1947, we have  already pointed  out that two methods were employed for making  this collection.  They were (1) by withholding the amounts due to them  from Government for rice supplied; and (2) by  threats of  cancellation of licences.  It would follow from what  we have  stated earlier that if the surcharge was not legal  or justifiable,  the  claim for refund could  not  be  resisted subject again to the question whether the claims therefor in the  various  suits were within the  period  of  limitation. When  we  come to the third surcharge  imposed  in  November 1948, as already indicated, three methods were utilised  for the  purpose  of  making  the  collection.  (1)  Threat   of cancellation of licences, (2) Withholding the amount of  the surcharge  from the amounts payable by Government  for  rice supplied   to  them  by  the  procuring  agents,   and   (3) requisition  from them of paddy or rice of a quantity  equal to  the stocks held by them on the evening of  November  20, 1948  and release of the same after they executed a  writing agreeing  to  pay the amount of surcharge  which  agreements they honoured by making the payment demanded.  Mr.  Agarwala conceded  that if the surcharges were illegal, such  amounts as were paid on demand under 608 protest, the amounts collected by withholding sums due  from Government,  as  well  as  sums  collected  on  threats   of cancellation  of  licences would all be recoverable  by  the

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several  plaintiffs.  He, however, contended that  in  those cases  where the foodgrains were requisitioned and  released on  the execution of agreements to pay the surcharges  which were  implemented the plaintiffs could not recover, and  for two  reasons  :  (1) That the Government had  the  power  to requisition  the  stock and direct the traders to  sell  the foodgrains to Government and it might therefore be taken  as if the requisition had been made on terms of paying for  the stock  the price payable on an earlier day, and (2) That  by reason of the agreements which they executed, as a condition of  the release of the stocks, they had bound themselves  to make the payment, and their payment in accordance with their agreement  was  a  voluntary  payment  which  could  not  be recovered.   This point based on the agreements arises  only in Civil Appeals 840, 842, 845, 850, 853 and 855 of 1962. To appreciate this argument it would be necessary to  advert to  the terms of the agreement.  By way of sample  we  might refer  to  the  one  taken  from  the  Manager  of   Kanyaka Parameshwari Rice Mill-appellant in Civil Appeal No. 840  of 1962.  It reads               "As  regards the first quality paddy of  8,220               maunds,  second quality of 1,545 maunds,  rice               first  quality 866, second quality 254,  which               you  have requisitioned in our mill  this  day               i.e., to say 23rd November, 1948, 1 am  hereby               declaring  myself liable to pay the amount  of               difference  in prices fixed by the  Government               for the aforesaid items on the 21st  November,               1948,  and the prices  prevailing  previously.               As you have released the goods on my liability               I am in receipt of the same." This  was  signed  by  the Manager  of  the  Mills  with  an endorsement by the Taluk Supply Officer "released for sale". These  agreements  were,  as  already  indicated  taken   in pursuance  of  the directions by the Board of  Revenue.   It prescribed this method of obtaining agreements as the one to be  pursued  for recovering the surcharge  imposed  on  this occasion.   In  their communication to  the  Collectors  the Board of Revenue stated :               "The stock with all     stock-holders (whether               millers,               wholesalers  or retailers) on the  evening  of               20th November ,               1948,  should first be          with reference               to the stock               register.   These  stocks should  be  formally               requisi--               609               tioned  at  the  old  prices  from  July   19,               1948........  It  is not  necessary  that  the               requisition  notices should be issued  on  the               21st  of November itself; those may be  issued               as  early  as possible after that  date  there               being  no  delay  at any stage,  but  only  in               respect  of  the quantity which  was  held  in               stock on the evening of November 20, 1948.  If               the  stockholders agree in writing to pay  the               difference  in  price due to the  increase  in               price sanctioned by the Government the  stocks               should be released from requisition  otherwise               the  stocks in question should be  seized  and               sold   to  other  merchants  including   quota               holders at the revised prices; the  difference               being  the  old  and  the  new  prices   being               credited to Government."

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The  argument that was addressed to the High Court was  that whatever  might be the position as regards those  plaintiffs who had made the payments under protest or on account of the threats to cancel their licences or by deducting the  amount due  from the Government, merchants who voluntarily  entered into agreements of the type we have just set out, stood on a different  footing  and that in their case  they  could  not legally claim a refund of the, amount thus paid in pursuance of these agreements.  The High Court was apparently inclined to  accept  this  submission.  With  great  respect  to  the learned  Judges  we consider that there is no  substance  in this  argument.  If the theory that the plaintiffs were  the agents  of the Government be discarded as  untenable,  there would be no legal basis at all for the surcharge.  It  would then be in effect a tax imposed by an executive flat without any legislative sanction on the capital value of the  stocks of foodgrains held on a particular date.  In this connection reference  may  be made to Attorney General (N.  S.  W.)  v. Homebush  Flour Mills Ltd.(1) where a scheme by which  flour was  expropriated  by the State at a  "declared"  price  and subsequently  sold by the Crown at a "standard"  price,  the former owner being given the option of buying back flour  at the latter price was held to constitute a tax. Mr.  Agarwala  had to concede that if the surcharge  was  in substance  a tax he could not successfully resist the  claim of  the plaintiffs to the recovery of the  amount  collected even  in  cases  where the agreements were  taken,  for  the agreements  merely set out the nature of the  surcharge  and expressed  the willingness of the executant to pay  it.   In this  connection  it  has  to be  borne  in  mind  that  the Government  was  armed with coercive powers to  enforce  any demand which was legal and in the circumstances, (1)  56 C.L.R. 390. 610 it  could  hardly  be contended  that  these  payments  were voluntary in the sense understood in this context. In  support  of  the submission that the  surcharge  was  in essence  a tax, learned Counsel for the appellants  referred to the decision of the House of Lords in Attorney-General v. Wilts  United Dairies.(1) The Food Controller was  empowered by  the  Defence  of the Realm Regulations  to  make  orders regulating  or  giving  directions  with  respect  to   "the production,   manufacture,  treatment,   use,   consumption, distribution,  supply, sale or purchase or other dealing  in any article as appears to him to be necessary or  expedient" for  the  purpose  of encouraging or  maintaining  the  food supply  of  the  country.   It  was  found  that  there  was disparity  in  the prices of milk  prevailing  in  different areas  and  in  order  to equalise  these  prices  the  Food Controller purporting to exercise powers conferred on him by the   Defence  of  the  Realm  Regulations,   entered   into agreements  with the defendant-company by which  the  latter were permitted to purchase milk within certain defined areas on  terms  that they should pay him a sum of two  pence  per gallon  for this privilege.  The defendant-company  who  was required  to make this payment, refused to do so and to  the information  laid against it raised the contention that  the charge  amounted  in effect to a tax  levied          in  an unconstitutional manner.  The company succeeded in the Court of  appeal  and the Attorney-General brought the  matter  in appeal  before  the House.  In dismissing the  appeal,  Lord Buckmaster  after  accepting  the argument  based  upon  the extreme  difficulty  of the situation in which  the  country found  itself  owing  to  the war,  and  the  importance  of securing  and maintaining vital supplies essential  for  the

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life  of the community, proceeded to consider  the  question whether  a  power  to make such a  levy  was  granted.   The statute  had confined the duties of the Food  Controller  to regulating the supply and consumption of food and taking the necessary steps for maintaining proper supplies.               It was observed               "The  powers  so  given  are  no  doubt   very               extensive,  and very drastic, but they do  not               include  the  power of levying  upon  any  man               payment  of  money which the  Food  Controller               must  receive as part of a national  fund  and               can  only  apply  under  proper  sanction  for               national purposes.  However, the character  of               this  payment may be clothed, by  asking  your               Lordships to consider the               (1)   127 Law Times 822.               611               necessity  for its imposition, in the  end  it               must remain a payment which certain classes of               people  were  called  upon  to  make  for  the               purpose  of exercising certain privileges  and               the  result  is that the money so  raised  can               only  be  described as a tax  the  levying  of               which  can never be imposed upon  subjects  of               this  country  by anything  except  plain  and               direct statutory means." Lord Wrenbury expressed the same idea in slightly  different language when he said :               "The  Crown in my opinion cannot here  succeed               except  by  maintaining the  proposition  that               where  statutory authority has been  given  to               the executive to make regulations  controlling               acts to be done by His Majesty’s subjects,  or               some  of  them,  the  Minister  may,   without               express authority so to do, demand and receive               money as the price of exercising his power  of               control in a particular way, such money to  be               applied   to   some  public  purpose   to   be               determined by the Executive." Pausing here, we might advert to two matters : (1) The  last words  of the learned Lord we have just quoted  sufficiently answer  an  argument addressed to us based upon the  use  to which the amount of surcharge collected was to be  expended, namely,  as bonus to the producers.  Secondly the fact  that the  company obtained licences from the Food  Controller  on the  stipulation that they would pay him the two  pence  per gallon  was  not considered material for  determining  their obligation in law to make the payment. While on this topic reference could usefully be made to  the decision  of  the  Privy Council  in  Lower  Mainland  Dairy Products  Sales  Adjustment  Committee  v.  Crystal   Dairy, Limited.(1)  The  case was concerned with  the  legality  of certain   adjustment  levies  imposed  on  farmers   by   an adjustment  Committee  created by an  enactment  of  British Columbia  by which the disparity in the production of  fluid milk  as  compared  with  milk products  was  sought  to  be countered.  It was contended on behalf of the State that the levies  were  not  taxes but merely  a  scheme  for  pooling profits in a provincial trade.  Lord Thankerton speaking for the Board said               "The main issue of this appeal is whether  the               adjustment   levies  are  taxes.....  In   the               opinion  of  their Lordships,  the  adjustment               levies  are  taxes.   They  are   compulsorily               imposed by a statutory committee. . .they

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             (1)   [1933] A.C. 168.               612               are  enforceable  by law.   Compulsion  is  an               essential feature of taxation.  The  Committee               is  a public authority, and the imposition  of               these  levies  is for a public  purpose.   The               fact  that moneys so recovered or  distributed               as bonus among the traders in the manufactured               products  market  does not affect  the  taxing               character of the levies made." Besides, if there is no legal basis for these demands by the Government   we  consider  that  it  is  not   possible   to characterise them as anything else than as taxes.  They were imposed  compulsorily by the executive and are sought to  be collected  by  the  State  by the  exercise  inter  alia  of coercive statutory powers, though these latter are vested in Government  for very different purposes.  We are clearly  of opinion  that the fact that agreements were taken from  some of  these  merchants affords no defence to their  claim  for refund. What remains for consideration is the defence based upon the claim  being barred by limitation.  The contention urged  on behalf of the State is that the claim for a sum not  legally due  but  illegally collected by Government  which  was  the basis  of these suits was governed by Art. 62 of the  Indian Limitation  Act which provides a period of three years  from the time when the money is received. That Article reads ----------------------------------------------------------- " Description of suits  Period of limitation Time from which                                              which period                                              begins to run ------------------------------------------------------------   62. for money payable       Three          When the money    payable by the            years           is recieved" defandant to the plaintiff for money,recived by the  pliantiff’s use ------------------------------------------------------------- If  this  Article were applied the portion of the  claim  in Civil  Appeal  No.  306 of 1962 relating to  the  refund  of surcharge  imposed  in July, 1947 and the  entirety  of  the claim in Civil Appeal No. 644 of 1962 would be barred. The  suit out of which Civil Appeal No. 306 of 1962  arises, -namely,  O.S.  No. 2 of 1951 on the Me of  the  Subordinate Judge,  Rajahmundry  made  a claim for  the  refund  of  the surcharges collected from him in July, 1947, December,  1947 and  November, 1948.  The claim in regard to the  surcharges of  December, 1947 and November, 1948 were within the  three year  period of limitation provided by Article 62,  but  the claim as regards what was collected in July, 1947 was beyond that period.  The learned 613 Subordinate  Judge  who negatived the defence based  on  the plaintiff being the agent of the Government decreed the suit in  its  entirety holding that it was not  Article  62  that applied  but Article 120 of the Indian Limitation Act  which prescribes a period of six years.  The learned Judges of the High  Court having dismissed the suit on the merits  had  no occasion  to consider the proper Article of Limitation  that would govern the different claims contained in the suit. The other appeal in which the question of limitation  arises is  Civil  Appeal  No.  644 of 1962.   ’Mat  arises  out  of original  Suit No. 18 of 1954 filed before  the  Subordinate Judge of Rajahmundry which claimed repayment of sums paid in

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July, 1947, December 1947 and November, 1948.  In the plaint the dates on which payments were made by him were stated  as November  29,  1947,  June 3, 1948, November  30,  1948  and August 1, 1949.  The suit was filed on November 27, 1953 and unless therefore the period of limitation for the claims  in the  suit was the six years period specified in Article  120 the entirety of the claims in the suit would be barred.  The learned Subordinate Judge upheld the claim of the  plaintiff to refund on the merits but dismissed it on the ground  that it was barred by limitation.  ’Me plaintiff filed an  appeal to  the  High  Court but as his claim was  rejected  on  the merits it becomes unnecessary to decide whether the suit was also barred by limitation.  In view of our decision that the surcharges  were not legally levied and that the  Government was not authorised to collect them, the question whether the suit  is  barred by limitation necessarily arises  for  con- sideration. It  was submitted by the learned Counsel for the  appellants that  it was not Article 62 that applied to a suit making  a claim  of  this nature but the residuary Article  120  which runs : ----------------------------------------------------------- "Description  of    period of limitation   time  from  which suits                                      period begins                                              to run ----------------------------------------------------------- 120. Suit for which        Six yaers       When the right to no period of limitation                    sue accrues" is provided elsewhere  in this schedule. ----------------------------------------------------------- As  Article 120 can apply only if no other specific  Article were  applicable,  we have to examine the  question  whether there  is  any  other specific  Article  applicable  and  in particular  whether  the  language of the  first  column  of Article  62 covers a suit making a claim of the nature  made in the plaints before us.  The contention urged on behalf of the appellant in Civil Appeals 306 and 614 644 of 1962 was that the Article refers to "money payable by the  defendant to the plaintiff" only in those  cases  where "the money was received by the defendant for the plaintiff’s use".   The latter condition that the money which is  sought to be recovered must have been received by the defendant for the  plaintiff’s  use  should, it was  urged,  be  literally satisfied  before that Article could be applied.   In  other words, the contention was that that Article could not  apply unless at the moment when a defendant received the money, he received  it specifically for the use of the plaintiff.   On the  other  hand, the rival construction  suggested  by  the respondent  was  that  the  language  of  the  Article   had reference  to  the action "for money had  and  received"  as known  to  the  English Law and that the  reference  to  the receipt being for the plaintiffs use was a technical term of English pleading and law which imposed upon a defendant  who received money in circumstances which in justice and  equity belonged to the plaintiff rendered its receipt a "receipt by the  defendant to the use of the plaintiff".  Here,  it  was pointed  out, the money was received by the  defendant  from the  plaintiff which the plaintiff was not bound in  law  to pay  but which he was compelled or forced to pay because  of the   threats  or  apprehension  of  legal   process.    The circumstances,  therefore, in which the money  was  received were,  it  was  said, such  that  notwithstanding  that  the receipt by the defendant purported to be for his own benefit

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still  it was money which at the very moment of the  receipt in  justice and equity belonged to the plaintiff,  and  that was the whole basis of the plaintiff’s claim on the merits. The  questions  for consideration, therefore, are  (1)  Does Article 62 embody the essential elements of the action known in English Law and pleading as the "action for money had and received to the plaintiff’s use?" (2) Does the fact that  at the; moment of receipt the defendant intended to receive the money  for  his  own  benefit and not for  the  use  of  the plaintiff render the Article inapplicable ? Stated in  other terms is a literal compliance with the words that the  money must have been received by the defendant for the  plaintiffs use  necessarily  before  the  Article  applies,  or  is  it sufficient that the circumstances of the case are such  that the plaintiff being entitled in equity to the money, the law would  impute to the defendant the intention to hold it  for the  plaintiffs  use  and  compel a  refund  of  it  to  the plaintiff. There has been difference of opinion on the exact  rationale on which that obligation was rested.  One view was based  on imputed                             615 promise or a quasi contract which cast an obligation on  the conscience  of  the  party  to  restore  benefits   unjustly obtained.   That  quasi  contract was  necessitated  by  the allegations,  necessary in the ancient writ  of  indebitatus assumpsit.   There  has  been  some  difference  of  opinion observable  in the cases decided by the several High  Courts as  to  the  circumstances  in which  Article  62  could  be invoked.   The  controversy has ranged on the  point  as  to whether there ought to be a literal compliance with the last part  of the first colunm of the Article before it could  be applied.   This  in its turn, as we  shall  show  presently, stems  from a difference of’ opinion as to the rationale  on which  the  action for money had and received rests  in  the English Law. The  doctrine  on  which  the  action  for  "money  had  and received"  was  based was propounded by  Lord  Mansfield  in Moses  v.  Macferlan(1) where it was explained that  it  lay "for  money  which ex aquo et bono the  defendant  ought  to refund"  and  in  a later case (2)  as  "a  liberal  action, founded  on large principles of equity, where the  defendant cannot conscientiously hold the money".  In later  decisions it was said to be based not merely on an equitable  doctrine but  was a Common Law right(").  The jural basis  on’  which the action was originally supported, was a promise to pay by the  defendant implied or imputed by law.   Lord  Mansfield’ explained :               "If the defendant be under an obligation  from               the ties of natural justice to refund the  law               implies a debt and gives this action,  founded               on  the equity of the plaintiffs case,  as  it               were upon a contract." Moses v. Macferlan(1) itself was an action of assumpsit  and the’  imputed promise was an extension of the  principle  on which  it  was in its origin based as stated in  Cheshire  & Fitfoot.  In the third Edition of Bullen and Leake published in 1868 they said               "The action for money had and received is  the               most  comprehensive of all the common  counts.               It  is applicable wherever the  defendant  has               received money, which, in justice and  equity,               belongs  to the plaintiff under  circumstances               which  render the receipt of it a  receipt  by               the defendant to the use of the plaintiff."

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             "But,  despite  this  formidable  measure   of               unanimity,  the  abolition  of  the  forms  of               action in the middle of the (1)  (176)) 2 Burr.. 1005, (2)  Sadler v. Evans (176)) 4 Burr. 1984. (3)  See for instance Royal Bank of Canada v.  Reh. [1913]A. C. 283, (4)  Cheshire  &  Fitfoot,  Law of  Contract,  5th  Edn.  p. 555--556.               nineteenth  century and the temptations  of  a               new    analytical   jurisprudence    gradually               undermined Lord Mansfield’s position.  So long               as  the  common lawyers thought  in  terms  of               procedure  and associated quasi-contract  with               the  writ of Indebitatus Assumpsit, they  were               content  to accept the implications of  unjust               benefit.    But  when  they  abandoned   their               traditional forms and substituted a  dichotomy               of  tort  and contract,  the  old  explanation               seemed  no  longer to  suffice.   The  various               actions  grouped under the insidious title  of               quasi-contract were ,clearly not tortious : if               the  new  antithesis  of the  common  law  was               inevitable, they must perforce be contractual.               And,  as they were equally clearly  not  based               upon any genuine consent, they must rest  upon               an implied or hypothetical agreement." Various  bases  have been suggested in modem  times  as  the rationale  and  proper  foundations on which  to  rest  this action.   But  we are not concerned with these  theories  or their  history  and  evolution  in  England.   What  is   of relevance  is  the  content and significance  of  the  words "received  by  the  defendant  for  the  plaintiff’s   use". Article  62  in its present form was first  enacted  in  the Limitation  Act of 1871 as Art. 60 and it has  continued  in the same terms since then with only a change in its  number. We  have,  therefore, to see what exactly the  draftsmen  of this Article meant when it was first introduced in 1871.  In Mahomed  Wahib v. Mahomed Ameer(1) Mookerjee,  J.  explained the basis of Article 62 in these terms :               "The  Article,  when it speaks of a  suit  for               money  received  by  the  defendant  for   the               plaintiffs  use,  points  to  the   well-known               English action in that form; consequently  the               Article ought to apply wherever the  defendant               has received money which in justice and equity               belongs  to the plaintiff under  circumstances               which  in  law  render the receipt  of  it,  a               receipt  by  the defendant to the use  of  the               plaintiff." In  other  words,  the learned Judge held that  it  was  not necessary in order to attract Article 62 that at the  moment of  the receipt the defendant should have actually  intended to  receive it for the use of the plaintiff and that it  was sufficient if the receipt was in such circumstances that the law  would impute to him an obligation to retain it for  the use of the plaintiff and refund to him when (1).L.R. 32 Cal. 527 at p. 533. -- 617 demanded.   In  Biman  Chandra v. Promotho  Nath(1)  it  was said,.  following the decision in Mahomed Wahib  v.  Mahomed Ameer(2) that Article 62 most nearly approaches the  formula of  ’money  had  and  received  by  the  defendant  for  the plaintiff’s use, if read as a description and apart from the technical   qualifications  imported  in  English  Law   and

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Procedure’. A  different note was, however, struck by the Calcutta  High Court  in Anantram Bhattacharjee v. Hem Chandra Kar(2).   It was  not  a case where the defendant directly  received  the money from the plaintiff but where a defendant withdrew from the office of the Collector an amount which in law  belonged to the plaintiff.  The learned Judges held that there was no reason  why the artificial’ form of action of money had  and received  should be imported to, decide a  question  whether the  suit would come under Article 62. Ghose, J. with  those judgment Walmsley, J. agreed, took the view that the Article would  apply  only to a case where the  defendant  in  terms received  the  money for the benefit of the  plaintiff.  The learned Judge observed :               "The  Common Law form of action for money  had               and received grew out of the circumstance that               at Common Law in England an action in personam               is  maintainable only on contract or on  tort.               Where  therefore  an action was not  based  on               tort and the plaintiff was unable to establish               any   contract  by  evidence,  it  was   found               necessary  to have recourse to a fiction of  a               promise  to pay "implied in law" in  order  to               give  relief to the plaintiff and to meet  the               justice of the case.  The history of this form               of  action  and the reasons which led  to  its               extension  are  set  forth  in  the  case   of               Sinclair v. Brougham (1914 A.C. 398).   Speech               of Lord Haldane, L. C. at pages 415--417,  and               of  Lord  Sumner  at  pages  454-456.   It  is               pointed out by Lord Sumner that this was  said               to  be  a  ’liberal’ action  in  that  it  was               attended’  by a minimum of formality, and  was               elastic  and readily capable of being  adapted               to  new circumstances.  There does not  appear               to   be   any  sufficient  reason   why   this               artificial  form of action should be  imported               in this, country in order to decide whether  a               suit  would  come  under  Article  62  of  the               Limitation  Act.  In India law and equity  are               administered  by  the same Courts,  which  are               untrammelled by any technical rules as to  the               form               (1)  I.L.R. 49 Cal.  886.                  (2)               I.L.R. 32 Cal. 527 at p. 533               (3) I.L.R. 50 Cal. 475 at p. 480.               618               of   an  action  in  giving  relief   to   the               plaintiff,  where the defendant  has  received               money  which according to the justice  of  the               case he ought to refund.  The observations  of               the Judicial Committee in the case of John  v.               Dodwell    (1918   A.C.   563)   furnish    an               illustration  of this view. In my 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." He  then cited the decision of the Privy Council in  Gurudas Pyne v. Ram Narain Sahu(1) where Article 120 was applied  to a  claim  ,against  a  person in  a  fiduciary  position  as supporting his views.  A similar view was adopted by Chagla, C.  J.  in Lingangouda v. Lingangouda(2) where  the  learned judge  preferred to follow Anantram’s(3) case in  preference to Mahomed Wahib’s(4) case.  In the case before him he  held

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that  the claim of the plaintiff was an equitable claim  and not  a contractual claim thus attracting not Article 62  but the  residuary  Article 120.  One of the  main  reasons  why Chagla,  C.  J. held that Article 62 should not apply  to  a case  where  the  terms of the section  were  not  literally complied  with was that such a construction would result  in plaintiffs  losing a large number of cases on the ground  of limitation, whereas if Article 120 were held applicable they would be safe.  There are a few other decisions of the  High Courts taking a similar view but as these merely follow  the Calcutta  and  the Bombay cases we have referred to,  it  is unnecessary to detail them. Having  considered the matter carefully we are  inclined  to prefer the interpretation of the Article by Mookerjee, J. in Mahomed  Wahib’s(4) case  What we are solely concerned  with is the meaning of the words employed in the first column  of the  Article  which specifies the nature of the  suit  dealt with    That  they  were  derived  and  adopted   from   the terminology employed in the English action for money had and received is not disputed.  The Courts in India being  courts administering  both  law  and equity, no doubt  we  are  not concerned  with the technicalities of the English  forms  of action which originated at a time before the Judicature Acts when  law and equity were administered by different  Courts. -But  that is only as regards the merits of a claim and  its maintainability  in  a  Court  With  great  respect  to  the learned  Judges who decided Anantram’s(3) and  Lingangouda’s (2) cases, we are unable to agree that the changes which the doctrine  has undergone in England have any bearing on  what the Article meant in (1)  I.L.R. 10 Cal. 860.              (2)  I.L.R. 1953  Bom. 214 (3)  I.L.R. 50 Cal. 475 at p. 480.   (4) I.L.R. 32 Cal.  527 at p. 533. 619 1871 when the legislature lifted the words descriptive of  a form of an English action and incorporated it in the  Indian statute.  Nor are we impressed with the argument that if the terms of a specific Article do apply to a specific case, one could  ignore  it and seek a general Article merely  on  the ground that the latter affords a longer period of limitation for the filing of a suit. So far as the present claim for recovery of a tax  illegally collected  is concerned the authorities are  fairly  uniform that the period of limitation for a suit making such a claim is  governed  by Article 62.  Rajputana  Malwa  Railway  Co- operative Stores Ltd., v. The Ajmer Municipal Board(2) arose out  of  a  suit against a Municipal  Board  for  refund  of certain octroi duty which they were not legally entitled  to levy.   The suit for that claim was held to be  governed  by Article 62, the learned Judges stating :               "The  language of Article 62 is borrowed  from               the  form of count in vogue in  England  under               the  Common Law Procedure Act of 1852.   Prior               to  the  passing  of  the  Supreme  Court   of               Judicature Acts of 1873 and 1875, there was  a               number  of  forms  of pleading  known  as  the               common indebitatus counts, such as counts               for  money lent, money paid by  the  plaintiff               for  the use of the defendant at his  request,               money received by the defendant for the use of               the  plaintiff,  & co......... The  most  com-               prehensive  of the old common law  counts  was               that  for money received by the defendant  for               the  use  of the plaintiff.   This  count  was

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             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 claim which was               applicable when the plaintiff’s money had been               wrongfully obtained by the defendant." A  similar  view  was taken of claims of a  like  nature  in Municipal   Council  Dindigul  v.  The  Bombay   Co.   Ltd., Madras(2),  India Sugar and Refinery Ltd. v.  The  Municipal Council  Hospet(2),  State  of  Madras  v.  A.M.N.A.   Abdul Kader(4),  and  The Municipal Committee,  Amritsar  v.  Amar Dass(5).    Learned  Counsel  submitted  that  these   cases proceeded,  in  great part, on the  inapplicability  of  the shorter  periods  of limitation provided in  the  particular statutes for amounts improperly collected thereunder.  We do not,  however, consider that this militates, in any  manner, from the (1) I.L.R. 32 All. 491.                       (2) I.L.R.  52 Mad. 207. (3)  I.L.R.  43 Mad. 521.                        (4)  A.I.R. 1953 Mad. 995 (5)  A.I.R. 1953 punjab 99. 620 reasoning  upon which the decisions are based, for they  all refer  to  the terms of Article 62, to its scope  and  their applicability  in terms to cases of suit for refund  of  tax illegally  collected.  In addition, we might point out  that in  India Sugar and Refinery Ltd. v. The Municipal  Council, Hospet(1) the claim for some of the years for which the suit was filed was dismissed as barred by limitation by  applying the three year rule.  In fact, learned Counsel conceded that save  a  solitary decision in Govind Singh v. The  State  of Madhya  Pradesh(2)  to which we shall presently  refer,  the decisions  were uniform in applying Article 62 to  cases  of suits for refund of taxes illegally collected.  We  consider that  these decisions am correct and they have  applied  the proper article of limitation. Before  referring  to  Govind Singh’s(2) case  it  would  be convenient  to  clarify  the  position  as  regards  certain circumstances  in  which  the Article  would  be  applicable without  making  any exhaustive list.  Where  the  defendant occupies  a fiduciary relationship towards the plaintiff  it is clear that Article 62 is inapplicable.  Next even if  the claim could have been comprehended under the omnibus caption of the English "action for money had and received", still if there  are  other more specific articles in  the  Limitation Act--vide  e.g.,  Article  96 (mistake),  Article  97  (con- sideration  which fails) Article 62 would  be  inapplicable. Lastly, if the right to refund does not arise immediately on receipt  by  the  defendant but arises by  reason  of  facts transpiring  subsequently, Article 62 cannot apply,  for  it proceeds  on  the basis that the plaintiff has  a  cause  of action  for instituting the suit at the very moment  of  the receipt. It  is this last point that was involved in Govind Singh  v. The  State  of Madhya Pradesh (2) on which  learned  Counsel relied  as a decision which had refused to apply Article  62 and applied Art. 120 to a claim for refund of tax  overpaid. There  the assessee deposited along with his return  certain sums.   He  had  overpaid and so was entitled  to  obtain  a refund  when the assessment was completed.  A suit  for  the amount  of  that excess was held to be governed  by  Article 120.   It is clear that at the time when the  assessee  made the  deposit of the tax he was not entitled to  the  refund.

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That  right accrued to him only after the completion of  the assessment.  We consider, therefore, that this decision does not assist the appellant in the construction which he  seeks to persuade us to adopt of Article 62. If  Article  62  were  the  proper  Article  of   limitation applicable  Civil Appeal 644 of 1962 has to be dismissed  as the suit was filed (1) I.L.R. 43 Mad. 521 (2) 12 S.T.C. 825. 621 admittedly beyond three years after the receipt of the money by  the  respondent.   There  should  also  have  to  be   a modification  in  the decree passed in Civil Appeal  306  of 1962.  The claim in that suit included the amounts collected from the appellant as surcharge in July, 1947, in  December, 1947 and November, 1948 i.e., for all the three  surcharges. It  is  common  ground that if the three  years’  period  of limitation  under Article 62 was applied the claim  for  the refund  of  the  surcharge imposed in July,  1947  would  be beyond time.  The appellant is, therefore, entitled only  to his  claim for the refund of the amounts collected  for  the surcharges imposed in December, 1947 and November, 1948. As a result of the foregoing Civil Appeal 644 of 1962  shall stand dismissed, but there shall be no order as to costs  as the  appellant  has succeeded on the merits  of  his  claim, though the appeal fails on the ground of limitation. All  the  other appeals excepting Civil Appeal 306  of  1962 will  be  allowed  and the judgment of the  High  Court  set aside.   In  Civil Appeals 101, 131, 168 to 171,  259,  260, 302,  307  to 310, 838, 839 of 1962 and Civil  Appeals  325, 437-441 and 996 of 1963 the decrees of the trial court shall be restored with costs here and in the High Court. In Civil Appeal 306 of 1962 the amount decreed by the  trial Court shall be modified by deducting therefrom a sum of  Rs. 2,725/14/-  made up of Rs. 2,261/8/- paid for the  surcharge in  July, 1947 together with Rs. 464/6/- being the  interest claimed  on the said sum.  Subject to this modification  the decree of the trial Court shall be restored with costs  here and in the High Court. In Civil Appeals 303, 837, 840-857 of 1962 the suits will be decreed for the amounts prayed for with costs throughout. In   the computation of the costs in this Court two sets of hearing   fees shall be allowed--one set to be shared by the appellants     in  Civil  Appeals 131, 170, 307 to  309  and 837-857  of  1962  and  the  other  set  by  the  successful appellants  in  the other appeals to whom  we  have  awarded costs.                            ORDER In  accordance with the majority judgment, appeals are  dis- missed with costs. L4Sup.165-6 622