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PETITIONER: SALONAH TEA COMPANY LTD

       Vs.

RESPONDENT: SUPERINTENDENT OF TAXES NOWGONG & ORS. ETC.

DATE OF JUDGMENT18/12/1987

BENCH: MUKHARJI, SABYASACHI (J) BENCH: MUKHARJI, SABYASACHI (J) RANGNATHAN, S.

CITATION:  1990 AIR  772            1988 SCR  (2) 474  1988 SCC  (1) 401        1987 SCALE  (2)1435  CITATOR INFO :  D          1991 SC1676  (72)

ACT:      Constitution of  India, 1950:  Article 226 Petition for refund of  tax paid under mistake of law-Maintainability of- Not to  be turned  down on  the negative plea of alternative remedy.      Assam Taxation  (on Goods  Carried by Road or on Inland Water ways)  Act, 1961: ss. 7, 9, 16 & 23-High Court Setting aside assessment  order-but refusing refund on triable issue of limitation-Validity of.      Limitation Act,  1963, Article  113, Laches-Discretion- Exercise of by Court-Must be fair and equitable.

HEADNOTE: %      The Assam  Taxation (on Goods Carried by Road or Inland Water-ways) Act,1954  was struck  down as  ultra  vires  the Constitution in Atiabari Tea Co. Lld. v. State of Assam, AIR 1961 SC  232. A new Act was thereafter passed which received the President’s  assent on  April 6,  1961. The  High  Court declared the  said Act  to be ultra vires on August 1, 1963. The State  and other  respondents preferred  appeals  before Supreme Court  against the  decision. In  the  meantime,  in Khyerbari Tea  Co. Ltd.  & Anr.  v. State of Assam, [1964] 5 SCR 975 the Court held the Act to be intra vires on December 13, 1963.  Following the  decision  in  Khyerbari  case  the appeals filed  by the  State and others were allowed by this Court on  April 1, 1968. After this decision the respondents required the  appellants by notices under s. 7(2) of the Act issued on  July 8,  1968 to  submit return  for  the  period ending June  30, 1961, September 30, 1961, December 31, 1961 and March  31, 1962. Due to the penal consequences mentioned in the said notices the appellants filed returns on July 11, 1968. The assessment orders were passed under s. 9(3) of the Act. The tax was duly paid.      In November  1973 the  appellants filed  writ petitions before the  High Court  seeking direction  for refund of the tax paid  under mistake relying on the High Court’s Judgment in Loong  Soong Tea  Estate (Civil  Rule No.  1005 of  1969) dated July  lO, 1973  declaring the  assessment  as  without jurisdiction.

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475      The High  Court set  aside the  orders and  notices  of demand but  refused claim  of refund  on the ground of delay and laches.  It took  the view  that it was possible for the appellants to  know about  the legality of the tax sought to be imposed  as early  as 1963,  when the Act in question was declared ultra vires. The taxes having been paid in 1968 the claim in  November 1973  was belated. It, however, held that the claim for refund was a consequential relief.      In the  appeals to  this Court it was contended for the appellants that they had paid the tax under a mistake of law and were  entitled  to  seek  refund  thereof,  and  a  writ petition  seeking   refund  of   tax  realised  without  the authority of  law  cannot  be  rejected  on  the  ground  of limitation or  delay unless such delay can be said to amount to laches  or has  caused some  irreparable prejudice to the opposite party.      Allowing the appeals, ^      HELD:  By   the  Court:   (Per  Sabyasachi  Mukharji  & Ranganathan, JJ.)      The money  was refundable  to the  appellants. The writ petitions were within time. [4X4H]      Per Mukharji, J.      1. No State has the right to receive or to retain taxes or monies  realised from  citizens without  the authority of law. There  is in  such cases concomitant duty to refund the realisation as  a corollary of the constitutional inhibition that should  be respected unless it causes injustice or loss in any  specific case  or violates any specific provision of law. [480H; 485E-F]      In the  instant case,  tax was  collected  without  the authority of  law. The notices were without jurisdiction. So was the  assessment made  under s.  9(3)  of  the  Act.  The respondents, therefore, had no authority to retain the money so collected,  and as  such the  money was liable to refund. [480D]      2.1  In   an  application  under  Article  226  of  the Constitution the Court has power to direct the refund unless there  has   been  avoidable  laches  on  the  part  of  the petitioner which  indicate either  the  abandonment  of  his claims or  which is  of such  nature for  which there  is no probable explanation or which will cause an injury either to respondent or any third party. [484C-D] 476      2.2 Courts  have, however,  made a  distinction between those cases where a claimant approaches a High Court seeking relief of  obtaining refund  only and  those where refund is sought as  a consequential relief after striking down of the order of  assessment etc. A petition of the former nature is not ordinarily  maintainable for  the simple  reason that  a claim for such a refund can always be made in a suit wherein it is  open to  the State  to raise all possible defences to the  claim,   defences  which   cannot  in   most  cases  be appropriately raised  and considered in the exercise of writ jurisdiction. [480F-H; 48;B]      In the instant case, s.23 of the Assam Act provided for refund to a producer or a dealer any sum paid or realised in excess of  the sum  due from him under that Act. The section thus applies  only in  a case  where money is paid under the Act. If  there is  no provision for realisation of the money under the Act, the act of payment was ultra vires, the money had not  been paid under the Act. In that view of the matter the case  did not  come within  s. 23  of the  Act. The High Court  having   found  that  the  claim  for  refund  was  a

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consequential relief,  it could  have directed  the State to refund the amount in question. [483-G-H;484A-B]      2.3 Exercise  of every  discretion  must  be  fair  and equitable. The  period of limitation prescribed for recovery of money  paid by mistake under the Limitation Act was three years from  the date  when the  mistake was  known.  In  the instant case,  knowledge is  attributable from  the date  of judgment in  Loong Soong’s  case on  10th July,  1973. There being a  statement that  the appellants came to know of that fact in  October 1973  and there  being  no  denial  by  the averment made on this ground, the High Court was in error in presuming that  there was a triable issue on this ground and refusing to  grant refund.  Within a  month in November 1973 the present  petitions were  filed. There was no unexplained delay. The  appellants had  proceeded diligently.  There  is nothing to  indicate that  had they  been more diligent, the appellants  could   have   discovered   the   constitutional inhibition earlier.  The position is not clear even if there is a  triable issue. The position becomes clearer only after the decision in Loong Soong’s case. It could not, therefore, be said  that the  appellants had  abandoned  their  claims. [487B-D]      Suganmal v.  State of  Madhya Pradesh  and others., AIR 1965 SC  1740; Tilokchand  Motichand & Ors. v. H.B. Munshi & Anr., [1969]  2 SCR  824; Kantilal  Babulal v. H.C. Patel 21 S.T.C. 174;  Chandra Bhushan  & Anr.  v. Deputy  Director of Consolidation (Regional), U.P. & Ors., [1967 2 SCR 286; R.L. Kapur v.  State of Madras, [1972] 3 SCR 417; State of Madhya Pradesh v. Bhailal Bhai & Ors.J [1964] 6 477 SCR. 261;  Ramchandra Shankar Deodhar & ors. v. The State of Maharashtra &  Ors., [1974]  2 SCR  216; A.V. Venkateswaran, Collector of  Customs, Bombay  v. Ramchand  Sobhraj Wadhwani and another,  [1962] 1 SCR. 753; Shiv Shankar Dal Mills etc. etc. v. State of Haryana & Ors. etc., [1980] 1 SCR. 1170 and State of  Madhya Pradesh  and others  etc. etc.  v.  Nandlal Jaiswal and others etc. etc., AIR 1987 SC 251 referred to.      3. It  is only on the delivery of the judgment in Loong Soong’s case  in 1973,  the appellants realised the right to claim the  relief  of  refund  as  a  consequential  relief, setting aside  the assessment  and the  assessment  was  set aside by  the very order itself. That right has been granted by the  High Court.  The High  Court  has  not  refused  the setting  aside   on  the   ground  of  delay.  It  would  be inconsistent  for   the  High   Court  to  refuse  to  grant consequential relief  after setting aside the assessment. If the realisation  was without  the authority  of law and that was declined  by the  High Court  by  the  judgment  in  the instant case,  which claimed  also the consequential relief, that relief  must automatically follow. Refunding the amount as a  consequence of  declaring the assessment to be bad and recovery to  be illegal  will be in consonance with justice, equity and good conscience. [489F-H]      4. The  challenge to  the assessment on the ground that the assessment  was bad could not be made in an appeal under the Act  because the right to appeal being a creature of the Act, if  the Act  is ultra vires that right would not ensure to the benefit of the appellant. Section 16 of the Act under which an  appeal lay  within thirty  days from  the date  of service of an assessment order therefore had no application. Similarly, rule 55 of the Rules framed under the Act barring claims of  refund unless  made within one year from the date of the  original order  of assessment being unconstitutional had no application. [485H; 486A-B; 487H]      1. The  assessments on the appellants were illegal. The

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taxes demanded  on the  basis  thereof  had  been  collected without the  authority of  law. The  High Court,  therefore, while allowing  the  appellant’s  prayer  for  quashing  the assessment should  also  have  allowed  the  refund  of  the illegally collected taxes. [490D]      Superintendent of  Taxes  v.  Onkarmal  Nathmal  Trust, [1975] Supp. SCR 365, applied. 478      The petitions  filed in  November, 1973 were within the period of  limitation  prescribed  in  Article  113  of  the Limitation Act  read with  s.  23  of  the  Assam  Act.  The appellants’ averment  that they  realised their mistake only when they came to know about the decision of Loong Soong Tea Estate case  in July,  1973 stands  uncontroverted. There is nothing on  record to  show that the appellants had realised their mistake earlier[491D-f]      State of M. P. v. Bhailal Bhai [1964]6 SCR 261 referred to.      It was considered unnecessary therefore to consider the larger question whether the bar of limitation would be fatal to a writ petition for refund. 149. F-G l

JUDGMENT:      CIVIL APPELLATE  JURISDICTION: Civil  Appeal Nos. 3023- 3029 OF 1979.      From the  Judgment and  order dated  14.6. 1979  of the High Court of Gauhati in Civil Rule Nos. 509 to 512 of 1973.      R.F. Nariman,  P.H  Parekh.  M.K.S.  Mench  and  Sanjay Bharthri for the Appellants.      Prabir Chaudhary for the Respondents.      The Judgment of the Court was delivered by      SABYASACHI MUKHARJI,  J. These appeals arise out of the Judgment and  order dated  14th June, 1979 of the High Court of Gauhati  in Assam  setting aside  the order and notice of demand under the Assam Taxation (on Goods carried by Road or Inland Waterways)  Act,  hereinafter  called  the  Act,  but declining to  order any  refund of  the taxes  paid. In 1954 Assam  Taxation   (on  Goods   carried  by  Road  or  Inland Waterways) Act was first enacted. This Court struck down the Act as  ultra vires  the Constitution of India. See Atiabari Tea Co.  Ltd. v. The State of Assam & Ors., AIR 1961 SC 232. On 6th  of April,  1961 a new Act passed received the assent of the  President. The  High Court again struck down the Act declaring it  ultra vires  the Constitution  on  1.8.63.  On 13.12.63 Khyerbar  Tea Co. Ltd. & another v. State of Assam, [1964] 5 SCR ts 975 in  a challenge  to the  Act under  Article  32  of  the Constitution, this  Court held the Act to be intra vires. On 19th December,  1966, Judgment  was passed in Civil Rule No. 190/ 1965.  On Ist  April 1968, the appeals preferred by the State of Assam against the 479      High Court  order dated  13.12.63 were  allowed on  the basis of  the declaration  of the  Act to be intra vires the Constitution.   Thereafter    notices   were    issued    by Superintendent of  Taxes, Nowgong,  requiring the  appellant under section  7(2) of  the Act  to submit  returns for  the period  ending   30.6.61,  30.9.61,  31.12.61  and  31.3.62. Returns were duly filed. Assessment orders were passed under section 9(3)  of the  said Act. On 10th July, 1973, the High Court passed judgment in Loong Soong Tea Estate, (Civil Rule No. 1005  of  1969)  declaring  the  assessment  as  without jurisdiction. It  is the  case of  the  appellant-petitioner

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that in  view of  the above  judgment, the appellant came to know about  the mistake  in paying the tax as per assessment order and  also that the appellant became entitled to refund of the  amount paid.  The present Writ Petition was filed in November, 1973 before the High Court of Assam. Thereafter in June, 1976,  the learned  Single Judge  of  the  High  Court referred the matter to a larger Bench. The Division Bench on June 14,  1979, passed judgment setting aside the orders and notices of  demand but  refused relief  of refund claimed by the appellant.      Aggrieved thereby,  the  appellant  has  preferred  the present appeals.  The appellant-petitioner  claimed  in  all these petitions that the assessments were illegal and prayed that directions  be given  to the  respondents to refund the tax collected in pursuance of those orders.      The Legislature  of Assam  passed the Act, as mentioned hereinbefore in  1954 called  the Assam  Taxation (on  Goods carried by  Road  and  Inland  Waterways)  Act,  1954  which purported to  levy tax  on manufactured tea and jute carried by road  and inland  waterways. The  Act was  declared ultra vires the  Constitution  by  this  Court  in  Atiabari  case (supra)  on   the  ground  that  previous  sanction  of  the President was  not taken.  Thereafter the Legislature passed the Act  which received  the  assent  of  the  President  on 6.4.61. The  validity of the Act was also challenged and the High Court  declared that  Act to  be  ultra  vires  on  1st August, 1963.  Against the  judgment and order passed by the High  Court,  the  State  of  Assam  and  other  respondents preferred appeals  before this  Court. In  the meantime, M/s Khyerabari Tea Co. Ltd. challenged the provisions of the Act directly before  this Court  by filing  an application under Article 32  of  the  Constitution  and  this  Court  in  its judgment dated  13.12.63 held  the Act  to be  intra  vires. Following the  aforesaid decision of this Court, the appeals filed by  the State of Assam and others against the judgment of the  High Court  were allowed  by this  Court on  the 1st April, 1968. It was after this decision that the respondents required the appellant by a notice under section 480 7(2) of  the Act issued on 8.7.68 to submit returns for four periods mentioned  hereinbefore. Due  to penal  consequences mentioned in  the said  notices in  the event  of failure to file return and pay the taxes, the appellant filed return on July 11, 1968 and paid the various taxes.      In  the   judgment   under   appeal   after   elaborate discussion, the  High Court came to the conclusion that when a petitioner  approaches the  High Court with the sole claim for refund  of money  by  writ  of  mandamus,  the  same  is normally not  granted but  where the  refund is  prayed as a consequential relief  the same  is normally  entertained  if there is no obstruction or if there be no triable issue like that of  limitation which could not be conveniently tried in writ petition.       In  this case  indisputably it  appears that  tax  was collected without the authority of law. Indeed the appellant had to pay the tax in view of the notices which were without jurisdiction. It  appears that the assessment was made under section  9(3)  of  the  Act.  Therefore,  it  was  with  out jurisdiction. In  the  premises  it  is  manifest  that  the respondents had  no authority  to retain the money collected without the  authority of  law and  as such  the  money  was liable to refund.      The only  question that falls for consideration here is whether  in   an  application   under  Article  226  of  the Constitution the  Court should  have directed  refund. It is

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the case  of the appellant that it was after the judgment in the case  of Loong  Soong Tea  Estate the  cause  of  action arose. That  judgment was  passed in  July 1973.  It appears thus that  the High  Court was  in error  in coming  to  the conclusion that  it was  possible for  the appellant to know about the  legality of the tax sought to be imposed as early as 1963,  when the  Act in question was declared ultra vires as mentioned hereinbefore. Thereafter the taxes were paid in 1968. Therefore  the claim in November, 1973 was belated. We are unable  to agree  with  this  conclusion.  As  mentioned hereinbefore the  question  that  arises  in  this  case  is whether the  Court should  direct refund  of the  amount  in question. Courts have made a distinction between those cases where a  claimant approaches  a High Court seeking relief of obtaining refund  only and those where refund is sought as a consequential relief  after striking  down of  the order  of assessment etc.  Normally speaking  in a society governed by rule of law taxes should be paid by citizens as soon as they are due  in accordance  with law. Equally, as a corollary of the said  statement of  law it  follows that taxes collected without the  authority of law as in this case from a citizen should be refunded because no State has the right to receive or to  retain taxes or monies realised from citizens without the authority of 481      In Suganmal  v. State of Madhya Pradesh and others, AIR 1965 SC  1740, this  Court held  that the  High Courts  have power to  pass any  appropriate order in the exercise of the powers  conferred   on  them   under  Article   226  of  the Constitution. A  petition solely  praying for the issue of a writ of  mandamus directing  the State  to refund  the money alleged to have been illegally collected by the State as tax was not ordinarily maintainable for the simple reason that a claim for  such  refund can always be made in a suit against the authority  which had  illegally collected the money as a tax and in such a suit it was open to the State to raise all possible defences  to the  claim, defences  which cannot  in most cases,,  be appropriately  raised and considered in the exercise of writ jurisdiction. It appears that Section 23 of the Act  deals with  refund. In  the facts of this case, the case did  not come  within section 23 of the Act. But in the instant appeal,  it is  clear as the High Court found in our opinion  rightly   that  the   claim  for   refund   was   a consequential relief.      In Tilokchand  Motichand & Ors. v. H.B. Munshi & Anr., [1969] 2  S.C.R. 824, claimants in  that case contended that they did  pay taxes under section 2 1(4) of the Bombay Sales Tax Act, 1953 which was ultra vires on the particular ground on which  it was  struck down  by this Court. On 28th March, 1958 the  petitioners in  that case filed a writ petition in the High Court and contended that section 2 1(4) of the said Act was  ultra vires the powers of the State Legislature and was  violative   of  Articles   19(1)(f)  and   265  of  the Constitution. The  single Judge  of the High Court dismissed the petition  on the  ground that  the petitioners defrauded their customers  and so were not entitled to any relief even if  there   was  a  violation  of  fundamental  rights.  The appellate bench  of the  High Court  dismissed the appeal on the  ground   that  it   would  not   interfere   with   the discretionary order  of the  single  Judge.  Thereafter,  it appears that  on December  24, 1958,  the Collector attached the properties  of the petitioners for recovering the amount as arrears  of land  revenue and  the petitioners  paid  the amount in  instalments between  August 1959 and August 1960. On September  29, 1967  this Court in Kantilal Babulal v. H.

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C. Patel,  2 1  S.T.C. 174 struck down section 12A(4) of the Bombay Sales Tax Act, 1946 corresponding to section 21(4) of the 1953 Act, on the ground that it was violative of Article 19(1)(f) of the Constitution inasmuch as the power conferred by the  section was  unguided, uncanalised  and uncontrolled and so  was not  a reasonable restriction on the fundamental right guaranteed  under that Article. On the assumption that section 21(4)  of the  1953 Act was also liable to be struck down  on   the  same   ground,  on  February  9,  1968,  the petitioners therein  filed a  writ petition under Article 32 of 482 the Constitution  claiming  a  refund  of  the  amount.  The petitioners contended  that  they  did  not  know  that  the section was  ultra vires  on the  particular ground on which this Court  had struck it down and they had paid the amounts under coercion  or mistake,  that the mistake was discovered on September  29, 1967  (the date  of the  judgment of  this Court) and  that they  were entitled  to  the  refund  under section 72 of the Indian Contract Act, 1872.      It was held by the majority that the petition should be dismissed on  the ground  of laches. Hidayatullah, C.J. held that Article  32  gave  the  right  to  move  the  Court  by appropriate  proceedings   for  enforcement  of  fundamental rights and  the State  cannot place any hindrance in the way of an aggrieved person. But once the matter had reached this Court, the  extent or  manner of  interference is  for  this Court to  decide. (emphasis  supplied).  The  Chief  Justice reiterated that  this Court  had put  itself in restraint in the matter  of petitions under Article 32. For example, this Court, reiterated  the Chief  Justice? refrained from acting under the  Article if  the party  had already moved the High Court under  Article 226 and if the High Court had exercised its parallel  jurisdiction. It  was said in such a case, the Court would  not allow fresh proceedings to be started under Article 32  but would  insist on  the decision  of the  High Court being  brought before  it  on  appeal.  Similarly,  in inquiring into  belated and  stale claims, this Court should take note  of evidence  of neglect  of the  petitioner’s own rights for  a long time or of the rights of innocent parties which might  have emerged  by reason of the delay. The Chief Justice emphasised  that it  was not possible for this Court to lay  down any  specific period  as the  ultimate limit of action and  each case  will have to be considered on its own facts. A petition under Article 32 was neither a suit nor an application to  which the  Limitation Act  applied. Further, putting curbs  in the  way  of  enforcement  of  fundamental rights through  such legislative  action might be questioned under Article 13(2) for, if a short period of limitation was prescribed  the   fundamental  right  might  be  frustrated. Therefore, for the matter of relief in each case, this Court had to  exercise its description from case to case and where there was  appearance of  an avoidable  delay and  the delay affected the  merits of the claim, this Court held the party disentitled to invoke its extraordinary jurisdiction. In the facts of  that case,  the majority  Judges found that by his own conduct, the petitioner had abandoned his own litigation years ago  and the  Court would not apply the analogy of the Article in the Limitation Act in cases of mistake of law and give him relief.       Bachawat,  J. in  a concurring  judgment observed that the normal 483 remedy for  recovery  of  money  paid  to  the  State  under coercion or  mistake of  law is  by suit.  The right to move

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this  Court   for  enforcement  of  fundamental  rights  was guaranteed by  Article 32,  and no  period of limitation was prescribed for such a petition. Bachawat, J. reiterated that the writ  issues as  a matter  of course  if a  breach of  a fundamental right is established, but this did not mean that in giving  relief under  the Article this Court might ignore all laws  of procedure.  The  extraordinary  remedies  under Articles 32  and 226 of the Constitution, said Bachawat, J., are not  intended to enable a claimant to recover monies the recovery of  which by  suit is  barred by limitation. In the absence of  any rules  of procedure under Article 145(1)(c), the Court  may  adopt  any  reasonable  rule.  Bachawat,  J. emphasised that  for example,  the Court  will not  allow  a petitioner to move this Court under Article 32 on a petition containing misleading  and inaccurate statements. Similarly, the general  principles of  res judicata  were applied where applicable  on   grounds  of  public  policy.  Bachawat,  J. emphasised that where the remedy in a writ application under Article 32  or Article  226 corresponded  to a  remedy in an ordinary suit  and the  latter remedy was subject to the bar of a statute of limitation, the Court imposed on analogy the same  limitation   on  the   summary  remedy   in  the  writ jurisdiction even  though there was no express statutory bar of limitation,  on grounds  of  public  policy  and  on  the principle that  the laws  aid the vigilant and not those who slumber. Mitter, J. more or less expressed the same view.      Sikri, J.  allowed the  appeal because  he was  of  the opinion that  the petitioners  were under  a mistake of law, the mistake  was discovered,  like all  assessees, when  the Court struck  down section  12A(4) of  the 1946 Act and they came to  this Court within six months of that date and hence there was no delay.      Hegde, J.  allowed the  petition. He was of the opinion that in  the facts  of that  case, there  was no  delay.. He observed that mere impression of a party that a provision of law might be ultra vires cannot be equated to knowledge that the provision was invalid.      Under Article  113 of  the  Limitation  Act,  1963  the limitation was  the period  of three years from the date the right to  sue accrues.  It may  be noted that in the instant case under  section 23  of the Act, it was provided that the Commissioner shall,  in the  prescribed manner  refund to  a producer or  a dealer  any sum paid or realised in excess of the sum  due from  him under  this Act either by case or, at the option of the producer or dealer, be set off against the sum due from him in 484 respect of  any other  period. Section  23 applies only in a case where  money is  paid under  the Act.  If there  is  no provision for  realisation of  the money  under the Act, the act of  payment was ultra vires, the money had not been paid under the  Act. In  that view of the matter section 23 would not apply.      The High  Court in the instant case after analysing the various decisions  came  to  the  conclusion  that  where  a petitioner approached the High Court with the sole prayer of claiming refund  of money  by writ of mandamus, the same was normally not  granted but  where the  refund was prayed as a consequential relief  the same  was normally  entertained if there was  no obstruction  or if  there was no triable issue like that  of limitation.  We agree  that normally in a case where tax  or money  has been realised without the authority of law,  the same  should be  refunded and in an application under Article 226 of the Constitution the Court has power to direct the  refund unless there had been avoidable laches on

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the  part  of  the  petitioner  which  indicate  either  the abandonment of  his claims  or which  is of  such nature for which there  is no  probable explanation or which will cause any injury  either to  respondent or  any third party. It is true that in some case the period of three years is normally taken as  a period  beyond which  the Court should not grant relief but  that is  not an inflexible rule. It depends upon the facts  of each  case. In  this case,  however, the  High Court refused  to grant  the relief  on the ground that when the section was declared ultra vires originally that was the time when refund should have been claimed. But it appears to us, it  is only when the Loong Soong case was decided by the High Court  in 1973  that the  appellant became aware of his crystal right  of having the assessment declared ultra vires and in  that view  of the  matter in  October, 1973 when the judgment was  delivered in  July, 1973 the appellant came to know that  there is  mistake  in  paying  the  tax  and  the appellant was  entitled to  refund of  the amount paid. That was the time when the appellant came to know of it. Within a month in November 1973 the present petition was filed. There was no unexplained delay. There was no fact indicated to the High  Court  from  which  it  could  be  inferred  that  the appellant had  either abandoned his claims or the respondent had changed  his position in such a way that granting relief of refund  would cause  either injury  to the  respondent or anybody else.  On the  other hand, refunding the amount as a consequence of  declaring  the  assessment  to  be  bad  and recovery to  be illegal  will be in consonance with justice, equity and  good conscience.  We are,  therefore of the view that the  view of  the High  Court in  this matter cannot be sustained. 485      Chandra  Bhushan   &  Anr.   v.  Deputy   Director   of Consolidation (Regional),  U.P. &  ors., [1967l 2 S.C.R. 286 was a  case where  this Court  observed that  the High Court erred in  exalting  a  rule  of  practice  into  a  rule  of limitation and  rejecting the  petition of the appellant for refund without  considering whether the appellant was guilty of laches  and undue delay. Shah, J. delivering the judgment of the Court observed that the primary question in each case is whether  the applicant had been guilty of laches or undue delay.      Reference may  be made in this connection to R.L. Kapur v. State  of Madras, [1972] 3 S.C.R. 417. There the question arose  about   punishing  for   contempt.  The  jurisdiction conferred on  the  High  Court  under  Article  215  of  the Constitution to  punish for contempt of itself was a special one, not arising or derived from the Contempt of Courts Act, 1952, and  therefore, not  within the  purview of  the Penal Code. Such  a position  is also clear from the provisions of the Contempt  of Courts Act. The effect of section 5 of that Act was only to widen the scope of the existing jurisdiction of a  special kind and not conferring a new jurisdiction. So far as  contempt of  the High  Court itself is concerned, as distinguished from  that of  court subordinate  to  it,  the Constitution vested these rights in every High Court, and so no Act  of a  legislature could  take away that jurisdiction and confer  it afresh  by virtue  of its own authority. That being the  position, this  Court held that section 25 of the General Clauses Act would not apply.      Similarly, it  appears  to  us  that  this  was  a  tax realised in  breach of  the section, the refund being of the money realised without the authority of law. The realisation is bad  and there  is  a  concomitant  duty  to  refund  the realisation   as   a   corollary   of   the   constitutional

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inhabitation that  should  be  respected  unless  it  causes injustice or  loss in  any specific  case  or  violates  any specific provision of law.      In that view of the matter in the facts of this case we are of  the opinion  that the  money was  refundable to  the appellant. The  appellant had proceeded diligently. There is nothing  to  indicate  that  had  the  appellant  been  more diligent,  the   appellant   could   have   discovered   the constitutional inhibition in 1966. The position is not clear even if  there is  any triable  issue. The  position becomes clearer only  after the  decision in  Loong Soong’s  case as mentioned hereinbefore.      Our attention  was drawn  on behalf  of the respondents that under  section 16  of the  Act an  appeal  lay  in  the prescribed manner  within  thirty  days  from  the  date  of service of any order of assessment but the 486 challenge  to   the  assessment   on  the  ground  that  the assessment was  bad could not be made in an appeal under the Act because the right to appeal being a creature of the Act, if the  Act is ultra vires that right would not enure to the benefit of the appellant.      In State  of Madhya  Pradesh v.  Bhailal Bhai  &  ors., [1964] 6 S.C.R. 261 this Court had occasion to consider what was unreasonable delay in moving the court when tax was paid under a  mistake. There  the  respondents  were  dealers  in tobacco in the State of Madhya Bharat. The State had imposed sales  tax   on  the   sale  of   imported  tobacco  by  the respondents. But  no such  tax was  imposed on  the sale  of indigenous tobacco.  The respondents  filed  writ  petitions under Article  226 of the Constitution for the issue of writ of mandamus directing the refund of sales tax collected from them. They  contended that  the impugned  tax was  violative under Article  301(a) of  the Constitution and they paid the tax under  a  mistake  of  law  and  the  tax  so  paid  was refundable under  section 72  of the  Indian  Contract  Act, 1872. The appellant contended that there was no violation of Article 301  of the Constitution, and even if there was such violation the  tax came  within the  special provision under Article 304(a) of the Constitution and the High Court had no power to  direct refund of tax already paid and in any event the High  Court should  not exercise its discretionary power of issuing  a writ  of mandamus  directing this  to be  done since there  was unreasonable  delay in filing the petition. The High Court rejected all the contentions of the appellant and a writ of mandamus was issued as prayed for. It was held that  tax   was  violative   under  Article   301   of   the Constitution. But  it was  held that  even  though  the  tax contravened Article  30 1  of the Constitution, it was valid if it  came within  the saving  provisions of Article 304 of the Constitution.  Tobacco manufactured  or produced  in the appellant  State,  similar  to  the  tobacco  imported  from outside had  not been subjected to the tax and therefore the tax was  not within  the saving provisions of Article 304(a) of the  Constitution. It  was reiterated  that the tax which had already  been paid  was so  paid under  a mistake of law under section 72 of the Indian Contract Act. The High Courts had power  for the  purpose of  enforcement of.  fundamental rights and  statutory rights  to grant consequential reliefs by ordering  repayment of  money realised  by the Government without the  authority of  law. It  was reiterated that as a general rule  if there has been unreasonable delay the court ought not  ordinarily to  lend its  air to  a party  by  the extraordinary remedy  of mandamus.  Even if there is no such delay, in  cases where  the opposite  party raises  a  prima

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facie issue  as regards  the availability  of such relief on the merits  on grounds  like  limitation  the  Court  should ordinarily refuse to issue the writ of 487 mandamus. Though  the provisions  of the  Limitation Act did not as  such, it  was further held, apply to the granting of relief under  Article 226,  the maximum  period fixed by the legislature as  the time  within which relief by a suit in a Civil Court  must be claimed may ordinarily be taken to be a reasonable standard  by which  delay in seeking remedy under Article 226  could be measured. The Court might consider the delay unreasonable  even if  it is  less than  the period of limitation prescribed  for a  civil action  for the  remedy. Where the  delay is  more than  that period  it will  almost always  be   proper  for  the  court  to  hold  that  it  is unreasonable.  The   period  of  limitation  prescribed  for recovery of  money paid  by mistake under the Limitation Act was three years from the date when the mistake was known. In this case  knowledge is  attributable from  the date  of the judgment in  Loong Soong’s case on 10th July, 1973 and there being a  statement that  the appellant  came to know of that fact in  October, 1973  and there  being no  denial  by  the averment made  on  this  ground,  the  High  Court,  in  our opinion, in  the instant case was in error in presuming that there was  a triable  issue on  this ground  and refusing to grant refund.      In Ramachandra  Shankar Deodhar  & Ors. v. The State of Maharashtra &  ors. [1974]  2 S.C.R.  216,  in  a  different context,  it  was  observed  that  laches  or  existence  of alternative remedy  may be  ground for  not granting relief. But in  view of  the facts of this case, it is not necessary to deal with that case in any detail.      In A. V. Venkateswaran, Collector of Customs, Bombay v. Ramchand Sobhraj  Wadhwani and  another, [1962] 1 S.C.R. 753 this Court held that the High Court was in error in its view that though  the  respondent  had  failed  to  exercise  his statutory remedy, the fact that it had become time-barred at the date  of the  hearing of the appeal against the order in the petition  under Article  226, was  a good ground for the Court to  exercise its  discretion in  granting  the  relief prayed for by the respondent in his petition.      Learned counsel  drew our  attention to  Rule 55 of the Act where it was stated that no claim to any refund shall be allowed unless  it was made within one year from the date of the original  order of  assessment or within one year of the final order passed on appeal or revision as the case may be, in respect of such assessment. It was contended on behalf of the respondents  that here  a fixed period of limitation was prescribed and by virtue of Article 226 of the Constitution, we should not allow to subvert that rule. This principle, in our  opinion,  in  view  of  the  fact  that  the  rule  was unconstitutional will have no application. 488       In  Shiv Shanker  Dal Mills  etc.  etc.  v.  State  of Haryana &  Ors. etc.,  [1980] l S.C.R. 1170 Krishna Iyer, J. speaking on  behalf of him self as well as on behalf of R.S. Pathak, J.  as the  learned Chief  Justice then was and A.D. Koshal, J. Observed that where public bodies under colour of public laws  recover people’s  money, later discovered to be erroneous levies  the dharma  of the  situation admits of no equivocation. There  was no law of limitation especially for public bodies  on the  virtue of  returning what was wrongly recovered to whom it belongs. In our jurisprudence it is not palatable to turn down the prayer for high prerogative writs on the  negative plea  of alternative remedy, since the root

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principle  of  law  married  to  justice,  is  ubi  jus  ibi remedium. His Lordship observed as follows:       "Since  the root  principle of law married to justice, is ubi jus ibi remedium. Long ago Dicey wrote:           ’The law  ubi jus  ibi remedium, becomes from this           Point of view something more important than a mere           tautological  proposition.  In  its  bearing  upon           constitutional law,  it means  that the Englishmen           whose labours gradually formed the complicated set           of  laws   and  institutions  which  we  call  the           Constitution, fixed  their minds far more intently           on  providing  remedies  for  the  enforcement  of           particular rights or for averting definite wrongs,           than upon any declarations of the Rights of Man or           English  men...The   Constitution  of  the  United           States  and  the  Constitutions  of  the  separate           States  are   embodied  in   written  or   printed           documents, and  contain declaration of rights. But           the statesmen  of America have shown an unrivalled           skill in providing means for giving legal security           to the  rights declared by American Constitutions.           The rule  of law  is as  marked a  feature of  the           United States as of England.                Another point.  In our  jurisdiction,  social           justice is  a pervasive  presence; and so, save in           special situations  it is fair to be guided by the           strategy of  equity by  asking those who claim the           service of  the judicial  process to  embrace  the           basic rule of distributive justice, while moulding           the relief,  by consenting to restore little sums,           taken in little transactions, from little persons,           to whom they belong." 489      We are in respectful agreement with this approach. A      ln State  of Madhya  Pradesh and  others etc.  etc.  v. Nandlal Jaiswal  and others  etc. etc., A.I.R. 1987 S.C. 251 this principle  was reiterated by Bhagwati, C.J. that it was well settled  that the  power of  the High Court to issue an appropriate writ  under Article  226 of the Constitution was discretionary and  the High  Court in  the exercise  of  its discretion did  not ordinarily  assist  the  tardy  and  the indolent or  the acquiescent and the lethargic. If there was inordinate delay  on the  part of the petitioner in filing a writ  petition   and  such   delay  was  not  satisfactorily explained, the  High Court  might decline  to intervene  and grant relief  in the  exercise of its writ jurisdiction. The evolution of  this rule of laches or delay was premised upon a number  of factors.  The High  Court  did  not  ordinarily permit a  belated resort  to the  extraordinary remedy under the  writ  jurisdiction  because  it  was  likely  to  cause confusion and  public inconvenience  and bring  in its train new injustices.  It was  emphasised that this rule of laches or delay  is not  a rigid  rule  which  can  be  cast  in  a straitjacket formula. There may be cases where despite delay and creation  of third party rights the High Court may still in the exercise of its discretion interfere and grant relief to the  petitioner. But  where the  demand of  justice is so compelling  that   the  High  Court  would  be  inclined  to interfere in  spite of  delay or  creation  of  third  party rights would  by their  very nature  be few and far between. Ultimately it would be a matter within the discretion of the Court; ex  hypotheses every  discretion  must  be  exercised fairly and justly so as to promote justice and not to defeat it. We are in respectful agreement with this approach also.      In this  case looked  at from  one point of view, it is

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only on  the delivery  of the judgment in Loong Soong’s case in 1973,  the appellant  realised the  right  to  claim  the relief of  refund as  a consequential  relief, setting aside the assessment  and the assessment was set aside by the very order itself  in this  case. That  right has been granted by the High  Court, the  High Court has not refused the setting aside on  the ground  of delay. It would be inconsistent for the High Court to refuse to grant consequential relief after setting aside the assessment. If the realisation was without the authority of law and that was declined by the High Court by  the  judgment  in  this  case  which  claimed  also  the consequential relief,  that relief must automatically follow and the  High Court  was wrong  in taking  the view  that  a triable issue  of limitation  arises in  this case.  In  the absence of any averment to the contrary, the averment of the appellant in  the petition that they came to know only after the Loong  Soong’s case must be accepted. The High Court was wrong in 490 contending that  they should  have been more diligent. After all the  discretion must be fair and equitable. In the facts of this  case, we are of the opinion that the High Court was in error  in the  approach it took. We, therefore, set aside the judgment  and order  of the High Court and direct refund of the tax illegally realised by the respondent.       The appeals are allowed. We set aside the judgment and order to  the extent  that it  refused  refund  of  the  tax illegally realised.  In the  facts of  this case the parties will pay and bear their own costs.       S.  RANGANATHAN J.  I agree with the order proposed by my  learned  brother  but  would  like  to  add  a  word  of reservation.        2.   In  view  of  the  judgment  of  this  Court  in Superintendent of  Taxes v.  Onkarmal Nathmal Trust, [ 1975] Supp SCR  365, there can be no doubt that the assessments on the appellants  were illegal and that. the taxes demanded on the basis  thereof had  been collected without the authority of law  from the  appellants. The  appellant’s contention is that they  had paid the taxes under a mistake of law and are entitled to  seek refund thereof. It is difficult to see how the High Court could have allowed the appellant’s prayer for quashing the  assessments but  refused the  prayer  for  the refund of  the illegally  collected taxes. The appeals have, therefore, to be allowed.      3. Counsel  for the respondents, however, places strong reliance on  the following  observations of  a  Constitution Bench  of  this  Court  in State  of M.P.  v. Bhailal  Bhai, [1964] 6 SCR 261:           "Though the  provisions of  the Limitation  Act do           not, as  such, apply  to the  granting  of  relief           under Art.  226, the  maximum period  fixed by the           Legislature as  the time  within which relief by a           suit  in   a  Civil  Court  must  be  claimed  may           ordinarily be taken to be a reasonable standard by           which delay in seeking remedy under Art. 226 could           be measured XXXX                Where the  delay is  more than that period it           will almost always be proper for the Court to hold           that it is unreasonable. " He also  relies on  Cawasji & Co. v. State, [1975] 2 SCR 5tl and drawn  our attention  to the  decision in  Vallabh Glass Works v.  Union, [1984] 3 SCR 180 where the claim for refund in respect of a period beyond 491 three years  was rejected.  He contends,  on the strength of

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the above  decisions, that  the High  Court rightly rejected the appellants’ claims for refund.      4.  On   the  other  hand,  it  is  contended  for  the appellants that  a writ  petition seeking  refund  of  taxes collected without the authority of law cannot be rejected on the ground  of limitation  or delay unless such delay can be said to  amount to  laches or  has caused  some  irreparable prejudice to  the opposite party or some other like forceful reason  exists.   Counsel  refers   in   this   context   to Venkateswaran v.  Ramchand, [1962] 1 SCR 75; Chandra Bhushan v. Deputy  Director, [1967]  2 SCR 286; Tilokchand Motichand v. Munshi,  [1969] 2  SCR 824;  Ramachandra  S.  Deodhar  v. State, [1974]  2 SCR  216; Joginder Nath v. Union, [ 1975] 2 SCR 558; Shiv shankar Dal Mills v. State, [ 1980] 1 SCR 1170 and State  of M.P.  v. Nandlal  Jaiswal, AIR 1987 SC 251 and contends   that   these   decisions   have   qualified   the observations of Das Gupta, J. in Bhailal Bhai’s case.      5. As pointed out by my learned brother, in the present case, the  appellants’ averment  that  they  realised  their mistake only  when they  came to  know about the decision in the  Loong  Soong  Tea  Estate  case  in  July  1973  stands uncontroverted. There  is nothing  on record  either to show that the appellants had realised their mistake even earlier, at about  the time when the writ petition in the Loong Soong Tea Estate  case was  filed or  at the time when the earlier decision of 1966 referred in the Loong Soong Tea Estate case judgment was  rendered. On  this finding  of fact,  the writ petitions, filed  by the  appellants in  November 1973, were filed within  the period of limitation prescribed in Article 113 read  with s.  23 of  the Limitation Act, 1963. Thus the petitions were  within time  even by  the test enunciated in Bhailal Bhai’s case.      6. I  think, therefore,  that, for  the purposes of the present case,  it is  unnecessary  to  consider  the  larger question whether  the bar of limitation should be considered as fatal  to a  writ petition  as to  a suit for recovery or whether it is only a relevant but not conclusive factor that should be  taken into  account by  the court in exercising a discretion. P.S.S.                                      Appeals allowed. 492