23 September 1958
Supreme Court
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SALES TAX OFFICER, BANARAS & OTHERS Vs KANHAIYA LAL MUKUNDLAL SARAF

Bench: DAS, SUDHI RANJAN (CJ),BHAGWATI, NATWARLAL H.,SINHA, BHUVNESHWAR P.,SUBBARAO, K.,WANCHOO, K.N.
Case number: Appeal (civil) 87 of 1957


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PETITIONER: SALES TAX OFFICER, BANARAS & OTHERS

       Vs.

RESPONDENT: KANHAIYA LAL MUKUNDLAL SARAF

DATE OF JUDGMENT: 23/09/1958

BENCH: BHAGWATI, NATWARLAL H. BENCH: BHAGWATI, NATWARLAL H. DAS, SUDHI RANJAN (CJ) SINHA, BHUVNESHWAR P. SUBBARAO, K. WANCHOO, K.N.

CITATION:  1959 AIR  135            1959 SCR  Supl. (1)1350  CITATOR INFO :  R          1959 SC 149  (30)  R          1964 SC1006  (14)  R          1965 SC1942  (34)  RF         1970 SC 898  (18,25,32,46,63)  RF         1976 SC2243  (29)  R          1984 SC 971  (9)  E&R        1985 SC 901  (12)  E          1986 SC1556  (1,27)  R          1990 SC 313  (18)

ACT: Mistake  of  Law-Payment-Sales tax on forward  transactions, subsequently   held  invalid--Claim   for   refund-Voluntary payment-Equitable  considerations-Indian Contract Act,  1872 (9 of 1872),s. 72.

HEADNOTE: Under S. 72 of the Indian Contract Act, 1872: " A person  to whom  money has been paid ... by mistake or  under  coercion must repay or return it ". The respondent, a registered firm, paid sales tax in respect of  its forward transactions in pursuance of the  assessment orders  passed by the sales tax officer for the years  1949- 51,  but  in 1952, the Allahabad High Court having  held  in Messrs.   Budh  Prakash jai Prakash v.  Sales  Tax  Officer, Kanpuy,  1952  A. L. J. 332, that the levy of sales  tax  on forward transactions was ultra vires, the respondent applied for  a refund of the amounts paid, by a writ petition  under Art.  226  of the Constitution.  It was  contended  for  the sales  tax authorities that the respondent was not  entitled to a refund because (1) the amounts in dispute were paid  by the  respondent  under a mistake of law and  were  therefore irrecoverable,  (2)  the payments were in discharge  of  the liability  under  the  Sales  Tax  Act  and  were  voluntary payments  without  protest, and (3) inasmuch as  the  monies which  had  been  received by the Government  had  not  been retaine  but had been spent away by it, the  respondent  was disentitled to recover the said amounts. Held, that the term " mistake " in s. 72 Of the Indian  Con-

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tract  Act  comprises within its scope a mistake of  law  as well  as  a mistake of fact and that, under that  section  a party is entitled to recover money paid by mistake or  under coercion,  and if it is established that the  payment,  even though it be of a tax, has been made by the party  labouring under  a  mistake of law, the party receiving the  money  is bound  to repay or return it though it might have been  paid voluntarily,  subject,  however, to questions  of  estoppel, waiver, limitation or the like. Shib  Prasad Singh v. Maharaja Srish Chandra  Nandi,  (1949) L.R. 76 I.A. 244, relied on. Where  there  is a clear and unambiguous  provision  of  law which  entitles  a  party  to the  relief  claimed  by  him, equitable  considerations  cannot be imported  and,  in  the instant case, the fact that the Government had not  retained the monies paid by the respondent but had spent them away in the ordinary course 1351 of business of the State would not make any difference,  and under the plain terms of s. 72 Of the Act the respondent was entitled to recover the amounts. Observations  in Nagorao v. Governor-General in Council,  A. 1.  R. 1951 Nag. 372, 374, to the effect that where a  party receiving money paid under a mistake has no longer the money with him, equitable considerations might arise, disapproved.

JUDGMENT: CIVIL APPELLATE- JURISDICTION: Civil Appeal No. 87 of 1957. Appeal from the judgment and decree dated December 1,  1955, of  the  Allahabad High Court in Special Appeal  No.  18  of 1955,  arising out of the judgment and order dated  November 30, 1954, of the’ said Court in Civil Misc.  Writ No. 355 of 1952. H.   N. Sanyal, Additional Solicitor-General of India, G.   C. Mathur and C.  P. Lal, for the appellants. P.   R. Das and B. P. Maheshwari, for the respondent. B.   P. Maheshwari, for Agra Bullion Exchange (Intervener). K.   Veeraswami  and  T.  M. Sen, for the  State  of  Madras (Intervener). R.   C. Prasad, for the State of Bihar (Intervener). H.   N. Sanyal, Additional Solicitor-General of India, B.   Gopalakrishnan  and T. M. Sen, for the Union  of  India (Intervener). 1958.   September  23.   The  Judgment  of  the  Court   was delivered by BHAGWATI J.-The facts leading up to this appeal lie within a narrow  compass.  The respondent is a firm registered  under the  Indian  Partnership Act dealing in  Bullion,  Gold  and Silver ornaments and forward contracts in Silver Bullion  at Banaras  in the State of Uttar Pradesh.  For the  assessment years  1948-49, 1949-50 and 1950-51 the Sales  Tax  Officer, Banaras, the appellant No. 1 herein assessed the  respondent to  U.  P. Sales Tax on its forward transactions  in  Silver Bullion.  The respondent had deposited the sums of Rs.  150- 12-0, Rs. 470-0-0 and Rs. 741-0-0 for the said 1352 three  years  which  sums  were  appropriated  to-wards  the payment  of  the sales tax liability of the firm  under  the respective assessment orders passed on May 31, 1949, October 30, 1950 and August 22, 1951. The levy of sales tax on forward transactions was held to be ultra vires, by the High Court of Allahabad by its  judgment

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delivered on February 27, 1952, in Messrs.  Budh Prakash Jai Prakash v. Sales Tax Officer, Kanpur (1) and the  respondent by its letter dated July 8, 1952, asked for a refund of  the amounts  of sales tax paid as aforesaid.  The appellant  No. 2,  the Commissioner of Sales Tax, U. P., Lucknow,  however, by  his  letter dated July 19, 1952, refused to  refund  the same. The  respondent  thereafter  filed  in  the  High  Court  of Allahabad  the  Civil Misc.  Writ Petition No. 355  of  1952 under  Art. 226 of the Constitution and asked for a writ  of certiorari  for  quashing  the  aforesaid  three  assessment orders  and a writ of mandamus requiring the  appellants  to refund the aforesaid amounts aggregating to Rs.  1,365-12-0. The  judgment of the Allahabad High Court was  confirmed  by this Court on May 3, 1954, in Sales Tax Officer, Pilibhit v. Budh Prakash Jai Prakash () and the writ petition  aforesaid was  heard  by Chaturvedi J. The learned judge by  an  order dated November 30, 1954, quashed the said assessment  orders in  so  far as they purported to assess  the  respondent  in respect  of  forward contracts in silver and also  issued  a writ  of  mandamus directing the appellants  to  refund  the amounts paid by the respondent. The appellants filed a Special Appeal No. 18 of 1955 in  the High  Court of Allahabad against that order of  the  learned Judge.   A Division Bench of the said High Court  heard  the said  appeal  on  December 1, 1955.  It was  argued  by  the Advocate-General  on,  behalf  of the  appellants  that  the amounts  in  dispute  were paid by the  respondent  under  a mistake  of  law  and  were  therefore  irrecoverable.   The Advocate-General  also  stated categorically  that  in  that appeal he did not contend that the respondent ought to have (1) (1952) A.L.J- 332. (2) [I955] 1 S.C.R. 243. 1353 proceeded  for the recovery of the amount claimed  otherwise than   by  way  of  a  petition  Under  Art.  226   of   the Constitution.  The High Court came to the conclusion that s. 72  of the Indian Contract Act applied to the  present  case and  the State Government must refund the moneys  unlawfully received by it from the respondent on account of Sales  Tax. It accordingly dismissed the appeal with costs. The  appellants  then applied for a certificate  under  Art. 133(1)(b) of the Constitution which certificate was  granted by  the  High  Court  on July 30,  1956,  on  the  Advocate- General’s giving to the Court an undertaking that the  State will,  in  any event, pay the costs,  charges  and  expenses incurred by or on behalf of the respondent as taxed by  this Court.  This appeal has accordingly come up for hearing  and final  disposal before us at the instance of the  Sales  Tax Officer,  Banaras, appellant No. 1, the Commissioner,  Sales Tax,  U.P., Lucknow, appellant No. 2 and the State of  U.P., appellant No. 3. The  question  that  arises for our  determination  in  this appeal  is whether s. 72 of the Indian Contract Act  applies to the facts of the present case. The  learned Additional Solicitor-General appearing for  the appellants  tried to urge before us that the procedure  laid down  in  the  U.P. Sales Tax Act by way  of  appeal  and/or revision against the assessment orders in question ought  to have  been  followed by the respondent and that  not  having been done the respondent was debarred from proceeding in the civil  courts for obtaining a refund of the monies  paid  as aforesaid.   He also tried to urge that in any event a  writ petition  could not lie for recovering the monies thus  paid by  the respondent.  Both those contentions  were,  however,

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not available to him by reason of the categorical  statement made  by  the Advocate-General before the High  Court.   The whole matter had proceeded on the basis that the  respondent was  entitled  to  recover the amount claimed  in  the  writ petition  which  was filed.  No such point  had  been  taken either in the grounds of appeal or in the statement of  case filed before us in this Court and we did not feel  justified in allowing the 1354 learned  Additional Solicitor-General to take this point  at this stage. Section 72 of the Indian Contract Act is in the following terms: "  A  person  to  whom money  has  been  paid,  or  anything delivered by mistake or under coercion, must repay or return it." As  will be observed the section in terms does not make  any distinction  between a mistake of law or a mistake of  fact. The term " mistake " has been used without any qualification or  limitation  whatever and comprises within  its  scope  a mistake  of  law  as well as a mistake  of  fact.   It  was, however,  attempted  to  be argued on  the  analogy  of  the position in law obtaining in England, America and  Australia that  money  paid  under  a mistake  of  law  could  not  be recovered and that that was also the intendment of s. 72  of the Indian Contract Act. The position in English law is thus summarised in Kerr on  " Fraud and Mistake " 7th Edn., at p. 140: " As a general rule it is well-established in equity as well as at law, that money paid under a mistake of law, with full knowledge of the facts, is not recoverable, and that even  a promise to pay, upon a supposed liability, and in  ignorance of the law, will bind the party.  " The ratio of the rule was thus stated by James L.   J. in Rogers v. Ingham(1) : " If that proposition were trite in respect of this case  it must  be true in respect to every case in the High Court  of Justice  where  money has been paid under a  mistake  as  to legal  rights, it would open a fearful amount of  litigation and  evil  in the cases of distribution of estates,  and  it would be difficult to say what limit could be placed to this kind  of  claim, if it could be made after  an  executor  or trustee  had distributed the whole estate among the  persons supposed to be entitled, every one of them having  knowledge of all the facts, and having given a release.  The thing has never been done, and it is not a thing which, in my opinion, is to be encouraged.  Where people have a (1)  (1876) 3 Ch.  D. 351,356. 1355 knowledge of all the facts and take advice, and whether they get  proper  advice  or not, the money is  divided  and  the business is settled, it is not for the good of mankind  that it  should  be reopened..." (See also National  Pari  Mutual Association  Ltd. v. The King (1) and Pollock  on  Contract, 13th Edn., at pp. 367 & 374). The American doctrine is also to the same effect as  appears from the following passage in Willoughby on the Constitution of the United States, Vol. 1, p. 12: "  The general doctrine that no legal rights  or  obligation can accrue under an unconstitutional law is applied in civil as  well as criminal cases.  However, in the case  of  taxes levied  and  collected  under  statutes  later  held  to  be unconstitutional,  the  tax payer cannot recover  unless  he protested the payment at the time made.  This, however, is a special  doctrine applicable only in the case of taxes  paid

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to  the  State.   Thus,  in  transactions  between   private individuals, moneys paid under or in pursuance of a  statute later  held  to be unconstitutional, may  be  recovered,  or release from other undertakings entered into obtained.  " The High Court of Australia also expressed a similar opinion in  Werrin  v. The Commonwealth (2) where Latham C.  J.  and MacTiernan  J.  held  that money paid  voluntarily  under  a mistake  of  law  was irrecoverable.  Latham C.  J.  in  the course  of  his judgment at p. 157 relied upon  the  general rule,  as stated in Leake on Contracts, 6th Edn. (1911),  p. 63  " that money paid voluntarily, that is to  say,  without compulsion  or  extortion  or undue  influence  and  with  a knowledge  of. all the facts, cannot be  recovered  although paid without any consideration.  " It  is no doubt true that in England, America and  Australia the position in law is that monies paid voluntarily, that is to  say, without compulsion or extortion or undue  influence and with a knowledge of  all  facts,  cannot  here   covered although paid without any consideration.Is the position  the same in India ?      (1) 47 T.L.R. 110.  (2) 59 C.L.R. 150. 172 1356 It  is necessary to observe at the outset that what we  have got  to consider are the plain terms of s. 72 of the  Indian Contract  Act as enacted by the Legislature.  If  the  terms are  plain  and  unambiguous we cannot have  resort  to  the position  in  law  as it obtained in  England  or  in  other countries  when the statute was enacted by the  Legislature. Such  recourse  would be permissible only if there  was  any latent  or patent ambiguity and the courts were required  to find  out what was the true intendment of  the  Legislature. Where, however, the terms of the statute do not admit of any such  ambiguity,  it  is the clear duty  of  the  courts  to construe the plain terms of the statute and give them  their legal effect. As was observed by Lord Herschell in the Bank of England  v. Vagliano Brothers (1) : "  I  think the proper course is in the  first  instance  to examine  the language of the statute and to ask what is  its natural  meaning uninfluenced by any considerations  derived from  the previous state of the law, and not to  start  with enquiring  how the law previously stood, and then,  assuming that it was probably intended to leave it unaltered, to  see if the words of the enactment will bear an interpretation in conformity with this view.  " "If  a  Statute, intended to embody in a code  a  particular branch  of  the law, is to be treated in  this  fashion,  it appears  to  me  that its utility will  be  almost  entirely destroyed,  and  the very object with which it  was  enacted will  be frustrated.  The purpose of such a  statute  surely was that on any point specifically dealt with by it, the law should  be  ascertained by interpreting  the  language  used instead  of,  as before, by roaming oyer a  vast  number  of authorities   in  order  to  discover  what  the  law   was, extracting it by a minute critical examination of the  prior decision............... This passage was quoted with approval by their Lordships  of the  Privy  Council in Narendranath Sircar  v.  Kamal-Basini Dasi  (2) while laying down the proper mode of dealing  with an Act enacted to codify a particular branch of the law. (1) [1891] A.C. 107, 144. (2) (1896) I.L.R. 23 Cal. 563, 571. 1357 The  Privy  Council adopted a similar  reasoning  in  Mohori

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Bibee v. Dhurmodas Ghose (1) where they had to interpret  s. 11  of  the Indian Contract Act.  They had before  them  the general  current of decisions in India that ever  since  the passing of the Indian Contract Act the contracts of  infants were voidable only.  There were, however, vigorous  protests by  various  judges from time to time; and there  were  also decisions   to  the  contrary  effect.   Under  these   cir- cumstances, their Lordships considered themselves at liberty to  act  on  their own view of the law as  declared  by  the Contract Act, and they had thought it right to have the case reargued before them upon this point.  They did not consider it  necessary  to examine in detail the  numerous  decisions above referred to, as in their opinion the " whole  question turns upon what is the true construction of the Contract Act itself  ".  They  then  referred  to  the  various  relevant sections  of  the  Indian  Contract  Act  and  came  to  the conclusion  that the question whether a contract is void  or voidable presupposes the existence of a contract within  the meaning of the Act and cannot arise in the base of an infant who is not " competent to contract.  " In Satyabrata Ghose v. Mugneeram Bangur & Co. (2), s. 56  of the  Indian Contract Act came up for consideration  by  this Court.  B. K. Mukherjea J. (as he then was) while delivering the judgment of the Court quoted with approval the following observations  of  Fazl Ali J. in Ganga Saran v.  Ram  Charan (3): " It seems necessary for us to emphasise that so far as  the courts  in  this  country  are  concerned,  they  must  look primarily  to the law as embodied in sections 32 and  56  of the Indian Contract Act, 1872. and proceeded to observe : "  It  would  be incorrect to say that  section  56  of  the Contract Act applies only to cases of physical impossibility and that where this section is not applicable, recourse  can be  had  to the principle of English law on the  subject  of frustration.   It must be held also that to the extent  that the Indian Contract Act deals (1) (1902) L.R. 30 I.A. 114.  (2) [1954] S.C.R. 310. (3) [1952] S.C.R. 36, 52. 1358 with  a particular subject, it is exhaustive upon  the  same and  it  is  not permissible to  import  the  principles  of English   law  dehors  these  statutory   provisions.    The decisions  of the English courts possess only  a  persuasive value  and  may  be helpful in showing  how  the  courts  in England  have decided cases under circumstances  similar  to those which have come before our courts.  " It is, therefore, clear that in order to ascertain the  true meaning and intent of the provisions, we have got to turn to the  very  terms of the statute itself,  divorced  from  all considerations as to what was the state of the previous  law or  the  law in England or elsewhere at the  time  when  the statute  was enacted.  To do otherwise would be to make  the law,  not  to interpret it. (See Gwynne v. Burnell  (1)  and Kumar Kamalranjan Roy v.   Secretary of State (2). The  courts  in  India do not appear  to  have  consistently adopted this course and there were several decisions reached to the effect that s. 72 did not apply to money paid under a mistake of law, e.g., Wolf & Sons v. Dadyba Khimji & Co. (3) and  Appavoo  Chettiar v. S. 1. Ry.  Co. (4).   In  reaching those  decisions the courts were particularly influenced  by the  English decisions and also provisions of s. 21  of  the Indian  Contract Act which provides that a contract  is  not voidable because it was caused by a mistake as to any law in force  in  British India.  On the other hand,  the  Calcutta

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High Court had decided in Jagdish Prasad Pannalal v. Produce Exchange Corporation Ltd. (5), that the word " mistake "  in s. 72 of the Indian Contract Act included not only a mistake of fact but also a mistake of law and it was further pointed out  that this section did not conflict with s.  21  because that  section dealt not with a payment made under a  mistake of law but a contract caused by a mistake of law, whereas s. 72  dealt  with  a  payment which was  either  not  under  a contract  at all or even if under a contract, it was  not  a cause of the contract. (1)  7  Cl. & F. 696. (2) L. R. 66 I. A. 1, 10.  (3)  (1919) I.L.R. 44 Bom. 631, 649. (4) A.I.R. 1929 Mad. 177. (5)  A.I.R. 1946 Cal. 245. 1359 The  Privy  Council resolved this conflict in  Shiba  Prasad Singh  v.  Srish Chandra Nundi(1).  Their Lordships  of  the Privy Council observed that the authorities which dealt with the meaning of " mistake " in the section were  surprisingly few  and  it could not be said that there  was  any  settled trend of authority.  Their Lordships were therefore bound to consider  this matter as an open question, and stated at  p. 253: "  Those learned judges who have held that mistake  in  this context must be given a limited meaning appear to have  been largely  influenced  by the view expressed  in  Pollock  and Mulla’s  commentary  on s. 72 of the  Indian  Contract  Act, where it is stated (Indian Contract & Specific Relief  Acts, 6th  Edn.,  p.  402):  " Mistake of  law  is  not  expressly excluded by the words of this section; but s. 21 shows  that it  is not included ". For example, Wolf & Sons  v.  Dadyaba Khimji  & Co. (2).  Macleod J. said referring to s. 72 "  on the  face of it mistake includes mistake of law.  But it  is said  that  under s. 21 a contract is not  voidable  on  the ground  that the parties contracted under a mistaken  belief of the law existing in British India, and the effect of that section  would be neutralized if a party to such a  contract could  recover  what he had paid by means of  s.  72  though under s. 21 the contract remained legally enforceable.  This seems  to be the argument of Messrs.  Pollock and Mulla  and as  far  as I can see it is sound." In Appavoo  Chettiar  v. South Indian Rly. (3), Ramesam and Jackson JJ. say: " Though the word ’ mistake’ in s. 72 is not limited it must refer to the  kind of mistake that can afford a ground for relief  as laid  down in ss. 20 and 21 of the Act.........  Indian  law seems to be clear, namely, that a mistake, in the sense that it is a pure mistake as to the law in India resulting in the payment  by  one person to another and making  it  equitable that  the  payee should return the money is  no  ground  for relief."  Their  Lordships have found no case  in  which  an opinion  that  ’,mistake" in s. 72 must be given  a  limited meaning has been based on any other ground.  In their (1) (1949) L.R. 76 I.A. 244.  (2) (1919) I.L.R. 44 Bom. 631.           (3) A.I.R. 1929 Mad. 648. 1360 Lordships’  opinion  this  reasoning is  fallacious.   If  a mistake of law has led to the formation of a contract, s. 21 enacts  that that contract is not for that reason  voidable. If money is paid under that contract, it cannot be said that that  money  was  paid under mistake of law ;  it  was  paid because it was due under a valid contract, and if it had not been  paid payment could have been enforced.  Payment  "  by mistake  "  in s. 72 must refer to a payment which  was  not legally  due and which could not have been enforced ; the  " mistake  " is thinking that the money paid was due when,  in fact,  it  was not due.  There is  nothing  inconsistent  in

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enacting  on  the  one hand that if  parties  enter  into  a contract  under mistake in law that contract must stand  and is  enforceable, but, on the other hand, that if  one  party acting  under  mistake of law pays to  another  party  money which  is not due by contract or otherwise, that money  must be repaid.  Moreover, if the argument based on inconsistency with  s. 21 were valid, a similar argument based  on  incon- sistency  with  s. 22 would be valid and would lead  to  the conclusion  that  s. 72 does not even apply  to  mistake  of fact.  The argument submitted to their Lordships was that s. 72  only applies if there is no subsisting contract  between the  person making the payment and the payee, and  that  the Indian Contract Act does not deal with the case where  there is  a subsisting contract but the payment was not due  under it.   But  there appears to their Lordships to  be  no  good reason  for  so limiting the scope of the Act.  Once  it  is established  that  the payment in question was not  due,  it appears  to  their Lordships to be  irrelevant  to  consider whether  or  not there was a contract  between  the  parties under which some other sum was due.  Their Lordships do  not find   it  necessary  to  examine  in  detail   the   Indian authorities  for the wider interpretation of " mistake "  in s.  72.   They  would  only refer to  the  latest  of  these authorities, Pannalal v. Produce Exchange Corp. Ltd. (1), in which  a  carefully reasoned judgment was given  by  Sen  J. Their Lordships agree with this judgment.  It may be well to add that their (1)  A.I.R. 1946 Cal. 245. 1361 Lordships’ judgment does not imply that every sum paid under mistake is recoverable, no matter what the circumstances may be.   There may in a particular case be circumstances  which disentitle a plaintiff by estoppel or otherwise." We  are  of opinion that this interpretation  put  by  their Lordships  of the Privy Council on s. 72 is correct.   There is no warrant for ascribing any limited meaning to the  word I mistake’ as has been used therein and it is wide enough to cover not only a mistake of fact but also a mistake of  law. There is no Conflict between the provisions of s. 72 on  the one hand and ss. 21 and 22 of the Indian Contract Act on the other and the true principle enunciated is that if one party under  a  mistake, whether of fact or law, pays  to  another party  money which is not due by contract or otherwise  that money must be repaid.  The mistake lies in thinking that the money  paid  was due when in fact it was not  due  and  that mistake, if established, entitles the party paying the money to recover it back from the party receiving the same. The learned Additional Solicitor-General, however, sought to bring his case within the observations of their Lordships of the  Privy  Council that their judgment did not  imply  that every  sum paid under mistake is recoverable no matter  what the  circumstances  might be and that there might  be  in  a particular  case circumstances which disentitle a  plaintiff by  estoppel  or otherwise.  It was thus urged  that  having regard  to the circumstances of the present case, (i) in  so far as the payments were in discharge of the liability under the  U.P. Sales Tax Act and were voluntary payments  without protest and also (ii) inasmuch as the monies which had  been received by the State of U. P. had not been retained but had been  spent  away by it, the respondent was  disentitled  to recover  the said amounts.  Here also, we may  observe  that these  contentions were not specifically urged in  the  High Court or in the statement of case filed by the appellants in this court; but we heard arguments on the same, as they were necessarily involved in the question whether s. 72 of

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1362 the Indian Contract Act applied to the facts of the  present case. Re:  (i):-The  respondent was assessed for the said  amounts under  the U. P. Sales Tax Act and paid the same; but  these payments were in respect of forward transactions in  silver. If the State of U. P. was not entitled to receive the  sales tax  on  these transactions, the provision  in  that  behalf being  ultra vires, that could not avail the State  and  the amounts  were paid by the respondent, even though they  were not due by contract or otherwise.  The respondent  committed the  mistake in thinking that the monies paid were due  when in  fact  they  were  not due  and  that  mistake  on  being established  entitled it to recover the same back  from  the State  under  s.  72 of the Indian Contract  Act.   It  was, however,  contended  that the payments having been  made  in discharge  of the liability under the U. P. Sales  Tax  Act, they were payments of tax and even though the terms of s. 72 of  the  Indian  Contract Act applied to the  facts  of  the present  case  no  monies  paid  by  way  of  tax  could  be recovered.   We do not see any warrant for this  proposition within  the terms of s. 72 itself.  Reliance  was,  however, placed on two decisions of the Madras High Court reported in (1) Municipal Council, Tuticorin v. Balli Bros. (1) and  (2) Municipal Council, Rajahmundry v. Subba Rao (2).  It may  be noted,  however, that both these decisions proceeded on  the basis  that the payments of the taxes there were made  under mistake  of law which as understood then by the Madras  High Court  was  not within the purview of s. 72  of  the  Indian Contract  Act.   The High Court then proceeded  to  consider whether  they  fell within the second part of s.  72,  viz., whether the monies had been paid under coercion.  The  court held on the facts of those cases that the payments had  been voluntarily  made  and  the parties  paying  the  same  were therefore  not entitled to recover the same.  The  voluntary payment was there considered in contradistinction to payment under coercion and the real ratio of the decisions was  that there was no coercion or duress exercised by the authorities for (1) A.I.R. 1934 Mad. 420.     (2) A.I.R, 1937 Mad. 559. 1363 exacting the said payments and therefore the payments having been voluntarily made, though under mistake of law, were not recoverable.  The ratio of these decisions, therefore,  does not  help  the  appellants before  us.   The  Privy  Council decision  in Shiba Prasad Singh v. Srish Chandra  Nandi  (1) has  set  the whole controversy at rest and if  it  is  once established  that the payment, even though it be of  a  tax, has been made by the party labouring under a mistake of  law the  party  is entitled to recover the same  and  the  party receiving  the  same  is bound to repay or  return  it.   No distinction  can,  therefore, be made in respect  of  a  tax liability and any other liability on a plain reading of  the terms of s. 72 of the Indian Contract Act, even though  such a distinction has been made in America vide the passage from Willoughby on the Constitution of the United States, Vol. 1, p. 12 opcit.  To hold that tax paid by mistake of law cannot be recoverd under s. 72 will be not to interpret the law but to make a law by adding some such words as " otherwise  than by way of taxes " after the word " paid ". If this is the true position the fact that both the parties, viz., the respondent and the appellants were labouring under a  mistake  of  law and the  respondent  made  the  payments voluntarily would not disentitle it from receiving the  said amounts.  The amounts paid by the respondent under the U. P.

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Sales  Tax  Act in respect of the  forward  transactions  in silver,  had  already been deposited by  the  respondent  in advance  in  accordance with the U. P. Sales Tax  Rules  and were  appropriated  by  the  State  of  U.  P.  towards  the discharge  of  the liability for the sales tax on  the  res- pective  assessment  orders having been  passed.   Both  the parties  were  then labouring under a mistake  of  law,  the legal  position as established later on by the  decision  of the  Allahabad  High  Court in  Messrs.   Budh  Prakash  Jai Prakash  v.  Sales  Tax  Officer,  Kanpur  (2)  subsequently confirmed  by this Court in Sales Tax Officer,  Pilibhit  v. Budh  Prakash Jai Prakash (3) not having been known  to  the parties at the relevant (1) (1949) L. R. 76 1. A. 244.  (2) (1952) A.L.J. 332. (3) [1955] I S.C.R. 243. 173 1364 dates.   This mistake of law became apparent only on May  3, 1954,  when  this Court confirmed the said decition  of  the Allababad High Court and on that position being  established the  respondent  became entitled to recover  back  the  said amounts which had been paid by mistake of law.  The state of mind  of the respondent would be the only thing relevant  to consider in this context and once the respondent established that  the payments were made by it under a mistake  of  law, (and  it may be noted here that the whole  matter  proceeded before  the High Court on the basis that the respondent  had committed a mistake of law in making the said payments),  it was entitled to recover back the said amounts and the  State of  U.  P.  was bound to repay or return  the  same  to  the respondent  irrespective of any other consideration.   There was  nothing in the circumstances of the case to  raise  any estoppel against the respondent nor would the fact that  the payments  were  made in discharge of a  tax  liability  come within  the dictum of the Privy Council  above  referred-to. Voluntary  payment of such tax liability was not  by  itself enough  to preclude the respondent from recovering the  said amounts, once it was established that the payments were made under  a mistake of law.  On a true interpretation of s.  72 of the Indian Contract Act the only two circumstances  there indicated  as entitling the party to recover the money  back are that the monies must have been paid by mistake or  under coercion.    If  mistake  either  of  law  or  of  fact   is established,  he is entitled to recover the monies  and  the party  receiving the same is bound to repay or  return  them irrespective  of  any consideration whether the  monies  had been  paid  voluntarily,  subject however  to  questions  of estoppel,  waiver,  limitation or the like.   If  once  that circumstance  is  established the party is entitled  to  the relief  claimed.  If, on the other hand, neither mistake  of law nor of fact is established., the party may rely upon the fact of the monies having been paid under coercion in  order to  entitle  him  to the relief claimed and it  is  in  that position  that it becomes relevant to consider  whether  the payment  has  been a voluntary payment or  a  payment  under coercion.  The 1365 latter  position has been elaborated in English law  in  the manner  following in Twyford v. Manchester  Corporation  (1) where Romer J. observed: "  Even so, however, I respectfully agree with the  rest  of Walton J.’s judgment, particularly with his statement that a general  rule  applies, namely, the rule that, if  money  is paid  voluntarily, without compulsion, extortion,  or  undue influence,  without fraud by the person to whom it  is  paid

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and  with  full  knowledge of all the facts,  it  cannot  be recovered,  although  paid  without  consideration,  or   in discharge  of a claim which was not due or which might  have been successfully resisted." The principle of estoppel which has been adverted to by  the Privy  Council in Shiba Prasad Singh v. Srish Chandra  Nandi (2) as disentitling the plaintiff to recover the monies paid under mistake can best be illustrated by the decision of the Appeal  Court in England reported in Holt v. Markham (3)  "- here  it was held that as the defendant had been led by  the plaintiffs’ conduct to believe that he might treat the money as  his own, and in that belief had altered his position  by spending it, the plaintiffs were estopped from alleging that it  was  paid  under  a mistake; and this  brings  us  to  a consideration of point No. 2 above stated. Re:  (ii):  Whether  the principle of  estoppel  applies  or there are circumstances attendant upon the transaction which disentitle  the  respondent  to  recover  back  the  monies, depends  upon the facts and circumstances of each case.   No question of estoppel can ever arise where both the  parties, as  in the present case, are labouring under the mistake  of law  and  one  party is not more to blame  than  the  other. Estoppel  arises  only  when the plaintiff by  his  acts  or conduct makes a representation to the defendant of a certain state  of facts which is acted upon by the defendant to  his detriment;  it is only then that the plaintiff  is  estopped from  setting up a different state of facts.  Even  if  this position  can be availed of where the representation  is  in regard to a position in law, no (1) [1946] 1 Ch. 236, 241.  (2) [1949] L. R. 76 I. A. 244. (3)  [1923] 1 K.B. 504. 1366 such  occasion arises when the mistake of law is  common  to both the parties.  The other circumstances would be such  as would entitle a court of equity to refuse the relief claimed by  the plaintiff because on the facts and circumstances  of the case it would be inequitable for the court to award  the relief  to  the plaintiff.  These  are,  however,  equitable considerations and could scarcely be imported when there  is a clear and unambiguous provision of law which entitles  the plaintiff to the relief claimed by him. Such  equitable considerations were imported by  the  Nagpur High Court in Nagorao v. G. G.-in-Council where Kaushalendra Rao J. observed: "  The  circumstances in a particular case,  disentitle  the pltf. to recover what was paid under mistake." "  If  the reason for the rule that a  person  paying  money under  mistake  is  entitled to recover it  is  that  it  is against conscience for the receiver to retain it, then  when the  receiver has no longer the money with him or cannot  be considered as still having it as in a case when he has spent it on his own purposes-which is not the case  here-different considerations must necessarily arise." We  do not agree with these observations of the Nagpur  High Court.   No  such equitable considerations can  be  imported when the terms of s. 72 of the Indian Contract Act are clear and  unambiguous.   We may, in this context,  refer  to  the observations  of  their Lordships of the  Privy  Council  in Mohori  Bibee v. Dhurmodas Ghose (2) at p. 125.  In  dealing with  the  argument which was urged there in regard  to  the minor’s  contracts which were declared void, viz., that  one who  seeks equity must do equity and that the minor  against whom  the  contract  was  declared  void  must  refund   the advantage which he had got out of the same, their  Lordships observed  that this argument did not require further  notice

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except  by  referring to a recent decision of the  Court  of Appeal in Thurstan v. Nottingham Permanent Benefit  Building Society (3) (1)  A.I.R. 1951 Nag. 372,374.   (2) [19O2] L. R. 30  I.  A. 114. (3)  [I9O2] 1 Ch. 1. 1367 since  affirmed by the House of Lords and they  quoted  with approval the following passage from the judgment of Romer L. J., at p. 13 of the earlier report: " The short answer is that a Court of Equity cannot say that it is equitable to compel a person to pay moneys in  respect of   a  transaction  which  as  against  that   person   the Legislature has declared to be void." That  ratio was applied by their Lordships to the  facts  of the  case,  before them and the  contention  was  negatived. Merely  because  the  State of U. P. had  not  retained  the monies paid by the respondent but had spent them away in the ordinary course of the business of the State would not  make any difference to the position and under the plain terms  of s.  72  of the Indian Contract Act the respondent  would  be entitled to recover back the monies paid by it to the  State of U.P. under mistake of law. The result, therefore, is that none of the contentions urged before us on behalf of the appellants in regard to the non-applicability of s. 72 of the Indian Contract Act to the facts  of  the  present case avail them and  the  appeal  is accordingly dismissed with costs. Appeal dismissed.