The court ruled that claims for money allegedly collected illegally are governed by Article 62 of the Indian Limitation Act, which necessitates filing within three years of the payment date.

1. The State of Andhra Pradesh represented by the Collector, East Godavari, Kakinada, the defendant in the lower Court, is the appellant in this appeal. The plaintiff is the respondent. The plaintiff was the licensed renter for the toddy shops in the villages of Palacherla and Kolamuru for the year 01-10-1947 to 30-09-1948. According to the terms of the auction, the toddy shops had to be located on an unobjectionable site in the 'gram kantam' of the respective villages. But as the plaintiff was not able to obtain a suitable site in the 'grama kantam' of the village of Palacherla, he located the shop of that village at a place outside the 'grama kantam'. Therefore, his licence for the Palacherla shop was withdrawn by the Collector of Abkari on 24-06-1948, further, purporting to act under clause 37 of the licence, the Collector of Abkari cancelled on 9-7-1948, the licence held by the plaintiff for the toddy shop situate in the village of Kolamur, though with regard to this shop, the plaintiff did not commit breach of any of the terms under which the auction for the toddy shop at Kolamur was held. The plaintiff filed O. S. No. 72 of 1949 against the Province of Madras for a declaration that the orders of the Abkari Collector, East Godavari dated 24-06-1948 and 09-07-1948 cancelling the licence for the two toddy shops at Palacherla and Kolamur and the orders passed by the Collector, East Godavari and the Beard of Revenue confirming the said cancellation are illegal and improper and capricious and for a decree for a sum of Rs. 31,381-12-0 consisting of the following items :
 
This suit was resisted by the State of Andhra Pradesh mainly on the ground that the plaintiff committed a breach of the terms of the licence and that, therefore, the Collector of Abkari was entitled to cancel the licence and re - auction the right to the same at the risk of the plaintiff. It was also contended that under clause 37 of the licence, the Collector was entitled to cancel the licence relating to Kolamur shop also though the plaintiff did not commit breach of any of the terms of the auction with respect to that shop. The learned Subordinate judge, Rajahmundry held that the Government was right in withdrawing the licence for Palacherla shop, but that they had no right to cancel the plaintiff's licence with respect to the Kolamur shop and that the Government had no right also to forfeit the deposits relating to the two shops and hence was liable to refund those amounts. He also held that the plaintiff was entitled to recover the two sums of Rs. 7,603-12-0 and Rs. 9,258/- paid by him as tree tax. But he rejected the claim under the head of loss of profit. In the result, the suit was decreed except for the sum of Rs. 2,000/-.
The Province of Madras appealed to the High Court of Madras in A. S. No. 699 of 1953. The said appeal was transferred to the High Court of Andhra Pradesh at Hyderabad. The State of Andhra Pradesh came in as the appellant in the place of the State of Madras. By judgment and decree dated 15-04-1958, this High Court modified the decree of the trial Court. The High Court held that the cancellation of the licence for the Kolamur shop was illegal and that the deposits made by the plaintiff could not be forfeited and that the same had to be refunded by the Government to the plaintiff. The judgment and decree of the High Court have become final. But pending that suit in the trial Court, the Government re - auctioned the two shops at Palacherla and Kolamur and claimed that, as a result of the re - auction there was a loss of Rs. 6,340/- which the plaintiff was liable to make good to the Go