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1998 Supreme(Del) 938
High Court Of Delhi
GANGANAGAR SUGAR MILLS LIMITED - Appellant
Versus
DELHI CLOTH AND GENERAL MILLS COMPANY LIMITED - Respondent
Decided On : 11/11/1998
The doctrine of unjust enrichment is inapplicable to the State.
Headnote:
EXPORT DUTY - REFUND - UNJUST ENRICHMENT - DOCTRINE OF UNJUST ENRICHMENT - APPLICABILITY TO STATE - STATE OF RAJASTHAN - GANGANAGAR SUGAR MILLS LTD. - EXCISE DUTY ON RECTIFIED SPIRIT - PAYMENT OF DUTY UNDER MISTAKE OF LAW - RECOVERY OF DUTY - SECTION 72 OF THE CONTRACT ACT, 1872 - PRINCIPLE OF EQUITABLE RESTITUTION - DOCTRINE OF UNJUST ENRICHMENT - APPLICABILITY TO STATE - STATE OF RAJASTHAN - GANGANAGAR SUGAR MILLS LTD. - EXCISE DUTY ON RECTIFIED SPIRIT - PAYMENT OF DUTY UNDER MISTAKE OF LAW - RECOVERY OF DUTY - SECTION 72 OF THE CONTRACT ACT, 1872 - PRINCIPLE OF EQUITABLE RESTITUTION.
Fact of the Case:
The plaintiff, Ganganagar Sugar Mills Ltd., a company wholly owned by the State of Rajasthan, filed a suit against the defendants, a private organization and the State of Uttar Pradesh, seeking the recovery of Rs. 24,09,839.42, being the amount of export duty paid by the plaintiff to the defendants under a mistake of law. The plaintiff claimed that the export duty was invalid and that it was entitled to a refund of the amount paid.
Finding of the Court:
The court held that the plaintiff was entitled to a refund of the export duty paid to the defendants. The court found that the plaintiff had paid the duty under a mistake of law and that it had not passed on the burden of the duty to its customers. The court also held that the doctrine of unjust enrichment was inapplicable to the State of Rajasthan, which was the real beneficiary of the refund.
Issues: 1. Whether the plaintiff was entitled to a refund of the export duty paid to the defendants? 2. Whether the doctrine of unjust enrichment was applicable to the State of Rajasthan?
Ratio Decidendi: The court held that the plaintiff was entitled to a refund of the export duty paid to the defendants because: * The plaintiff had paid the duty under a mistake of law. * The plaintiff had not passed on the burden of the duty to its customers. The court also held that the doctrine of unjust enrichment was inapplicable to the State of Rajasthan because: * The State of Rajasthan was the real beneficiary of the refund. * Permitting the defendants to retain the amount would clearly be violative of the principles which have been laid down by Their Lordships in the case of Mafatlal Industries, (supra ).
Final Decision: The court granted a decree for the recovery of Rs. 24,09339.42 in favour of the plaintiff and against defendant No. 1 with interest at the rate of 18% per annum in aforesaid terms. The plaintiff shall also be entitled to recover costs from defendant No. 1. The suit against defendant No. 2 is dismissed.
( 1 ) THE plaintiff filed a suit for the recovery of Rs. 24,09,839. 42 against the defendants, and prayed that a decree of the said amount be passed in favour of the plaintiff and against the defendants. The plaintiff further prayed that the defendants be directed to pay interest on the decretal amount from the date of the institution of the suit till realization alongwith the costs.
( 2 ) ACCORDING to the allegations in the plaint, the plaintiff company during the period between March, 1973 and April, 1976 imported rectified spirit from various States, including the State of Uttar Pradesh for the manufacture of country liquor at its various distilleries and warehouses situated in the State of Rajasthan.
( 3 ) IN order to import the rectified spirit required by the plaintiff for its distilleries and warehouses it had to comply with the relevant provisions of the Excise Act prevalent in the State of Rajasthan relating to import and also of those prevalent in the State of Uttarpradesh relating to export. Incompliance with the law in force in the State of Uttar Pradesh, the plaintiff used to approach the Excise Commissioner, Government of Uttar Pradesh, Allahabad for allotment of supplies to the distilleries/manufacturers in Uttar Pradesh to enable the said plaintiff to make the required purchase of rectified spirit from them. The distilleries were allotted different quantities of rectified spirit during the material period for sale to the plaintiff. Apart from the price, the plaintiff was required to pay to the manufacturer all the duties/taxes, etc.
( 4 ) THE plaintiff had no choice in the matter of payment of excise duty, as without paying the same, it could not obtain permission from the second defendant to export the rectified spirit purchased from the first defendant out of the State. The plaintiff had paid a sum of Rs. 24,09,839. 42 as export duty by a mistake. The said sum was not due to the defendant but was paid by the plaintiff under mistaken belief that it was due. The legality and validity of the imposition of the said levy of export duty on rectified spirit was challenged by way of several petitions under Article 226 of the Constitution before the High Court of Allahabad. The Allahabad High Court by a common judgment delivered on 31. 1. 1977 declared the imposition of excise duty on the export of rectified spirit out of Uttar Pradesh as invalid and directed the second defendant (State of Uttar Pradesh) to refund the amount already collected. Acopy of the judgment of the Allahabad High Court was circulated to the plaintiff by the All India Distillers Association vide circular dated 25. 2. 1977. The plaintiff immediately thereafter requested the Excise Commissioner as well as the Secretary to the Government of Uttar Pradesh in the Excise Department for the refund of the said amount wrongly collected but to no avail. Ultimately, the plaintiff had to file a writ petition under Article 226 of the Constitution in the High Court of Allahabad. The plaintiff had also preferred anapplication for interim relief in which a prayer had been made that the State ofuttar Pradesh be restrained from refunding the amount of excise duty collected from the said plaintiff to the first defendant and other distillers and manufacturers through whom the said amount was paid. On 21. 2. 1978, the Court was pleased to pass the interim order as prayed, and the said order was confirmed on 14. 11. 1979.
( 5 ) IT is further mentioned in the plaint that the defendants have withheld and are wrongfully withholding the said amount of Rs. 24,09,839. 42, which is payable to the plaintiff. The plaintiff has sent a notice under Section 80, Civil Procedure Code to the second defendant but despite service of notice, the defendants have not paid the amount due to the plaintiff. When the defendant did not refund the amount, the present suit for recovery of the amount has been filed in this Court. It is mentioned in the written statement t
