judgement:
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. vs The State of Assam & Ors., ; 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 vs 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 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 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 vs 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.
vs H.B. Munshi & Anr., , 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 vs H. 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 .
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 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 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 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 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 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.
vs Deputy Director of Consolidation (Regional), U.P. & ors.
; , 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 vs State of Madras, ; 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 , and therefore, not within the purview of the Penal Code.
Such a position is also clear from the provisions of the .
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 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 vs Bhailal Bhai & ors.
; , 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 .
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 .
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 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 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 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.
vs The State of Maharashtra & ors.
; , 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 vs Ramchand Sobhraj Wadhwani and another; , 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.
vs 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 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.
vs Nandlal Jaiswal and others etc.
; , 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 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.
section RANGANATHAN J. I agree with the order proposed by my learned brother but would like to add a word of reservation.
In view of the judgment of this Court in Superintendent of Taxes vs 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.
Counsel for the respondents, however, places strong reliance on the following observations of a Constitution Bench of this Court in State of M.P. vs Bhailal Bhai, ; "Though the provisions of the do not, as such, 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 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. vs State, and drawn our attention to the decision in Vallabh Glass Works vs Union, ; where the claim for refund in respect of a period beyond 491 three years was rejected.
He contends, on the strength of the above decisions, that the High Court rightly rejected the appellants ' claims for refund.
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 vs Ramchand, [1962] 1 SCR 75; Chandra Bhushan vs Deputy Director, ; ; Tilokchand Motichand vs Munshi, ; Ramachandra section Deodhar vs State; , ; Joginder Nath vs Union, [ ; Shiv shankar Dal Mills vs State, [ ; and State of M.P. vs Nandlal Jaiswal, ; and contends that these decisions have qualified the observations of Das Gupta, J. in Bhailal Bhai 's case.
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 section 23 of the .
Thus the petitions were within time even by the test enunciated in Bhailal Bhai 's case.
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.

summary/full:
% 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.
vs State of Assam, ; 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.
vs State of Assam, ; 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 section 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 section 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.
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 section 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 section 23 of the Act.
The High Court having found that the claim for refund was a 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 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 vs State of Madhya Pradesh and others.
, AIR 1965 SC 1740; Tilokchand Motichand & Ors.
vs H.B. Munshi & Anr., ; Kantilal Babulal vs H.C. Patel 21 S.T.C. 174; Chandra Bhushan & Anr.
vs Deputy Director of Consolidation (Regional), U.P. & Ors., ; ; R.L. Kapur vs State of Madras, ; ; State of Madhya Pradesh vs Bhailal Bhai & Ors.
J [1964] 6 477 SCR. 261; Ramchandra Shankar Deodhar & ors.
vs The State of Maharashtra & Ors., ; ; A.V. Venkateswaran, Collector of Customs, Bombay vs Ramchand Sobhraj Wadhwani and another; , ; Shiv Shankar Dal Mills etc.
vs State of Haryana & Ors. etc.
; , and State of Madhya Pradesh and others etc.
vs Nandlal Jaiswal and others etc.
; , referred to.
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 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 vs 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 read with section 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. vs 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.


judgement:
Civil Appeal No. 1654 of 1979.
From the Judgment and order dated 28.3.1979 of the Allahabad High Court in Second Appeal No. 3064 of 1972.
J.P. Goyal and S.K. Jain for the Appellant.
S.N. Kacker and O.K. Garg for the Respondent.
The Judgment of the Court was delivered by RANGANATHAN, J.
The question which has come up for consideration in this appeal from judgment of the Allahabad High Court is whether the deposit of rent by a tenant under section 7 C of the Uttar 419 Pradesh (Temporary) Control of Rent and Eviction Act, 1947 (hereinafter called the 'Act ') as such entitles him to resist successfully eviction under the provisions of the Act on the ground of default in payment of rent.
The appellant, Ram Sewak, was a tenant of the respondent, Munna Lal in respect of a shop on a rent of Rs.25 per month.
The rent upto 30.
11.66 had been paid by the tenant.
The landlord, however. claimed that the rent for the period from 1. 12.66 till 28.2.1971, less an amount of Rs.275 which had been received by him by way of money order, was due from the appellant tenant.
This remained unpaid despite notices of demand dated 22.3.71 and 12.4.1971, and a notice of termination of the tenancy dated 27.4.1971.
On these allegations.
The landlord instituted a suit for ejectment of the tenant on the ground of non payment of rent.
He also claimed the recovery of arrears of rent.
mesne profits and certain taxes, which were alleged to be payable by the tenant.
This suit was decreed by the learned Munsif, Jhansi.
A first appeal was unsuccessful insorfar as the decree related to the eviction of the petitioner was concerned but the claim for arrears of rent was rejected in part on the ground of limitation.
A second appeal was also dismissed by the High Court and hence the present appeal.
The defence of the tenant to the suit was that he had tendered the rent to the plaintiff landlord but the latter had refused to accept it.
The rent was sent by money order but even then it was refused.
It was submitted that the tenant had thereupon made an application on 31.7.1967 under section 7 C of the Act in the court of the learned Munsif, Jhansi, for permission to deposit the rent in the court.
The Court issued a notice to the landlord, which was also duly served on him.
On the date of hearing there was no appearance on behalf of the landlord.
Thereupon the learned Munsif passed an order, on 11.11.1967, permitting the tenant to deposit the arrears of rent as well as future rent in court.
It was claimed that the tenant had deposited arrears of rent amounting to Rs.200 for the period from 1. 12.1966 to 31.7.1967 in the court along with application and that he continued to deposit in court the rent thereafter from month to month.
It was, therefore, submitted that there were no arrears of rent due from the tenant to the landlord and that, therefore, the suit for eviction was not maintainable.
The learned Munsif and, on appeal, the learned Subordinate Judge found as a fact that the plaintiff had failed to prove that he had tendered the rent to the landlord or that the latter that the latter had refused to 420 accept it.
This being so, they held, the statutory conditions requisite for a valid deposit under section 7C were not fulfilled.
Neither the application made by the plaintiff under section 7C nor the order passed by the learned Munsif on 11.11.67 could therefore, help the plaintiff.
In this view of the matter, both the courts held that the default in payment of rent, within the meaning of sec.
3(1)(a) of the Act, stood established and the plaintiff was, therefore, liable to eviction.
Before us, as before the courts below, learned counsel for the tenant based his case solely on the order under the provisions of section 7C of the Act.
That section reads as follows: "7 C Payment by Deposit of Rental) When a landlord refuses to accept any rent lawfully paid to him by a tenant in respect of any accommodation the tenant may in the prescribed manner deposit such rent and continue to deposit any subsequent rent which becomes due in respect of such accommodation unless the landlord in the mean time signifies by notice in writing to the tenant his willingness to accept.
(2) Where any bona fide doubt or dispute has arisen as to the person who is entitled to receive any rent referred to in sub section (I) in respect of any accommodation, the tenant may similarly deposit the rent stating the circumstances under which such deposit is made and may until such doubt has been removed or such dispute has been settled by the decision of any competent court, or by the settlement between the parties, continue to deposit, in like manner, the rent that may subsequently become due in respect of such building.
(3) The deposit referred to in sub section (1) or (2) shall be made in the Court of the Munsif having jurisdiction in the area where the accommodation is situate.
(4) on any deposit being made under sub section (1) the Court shall cause a notice of the deposit to be served on the landlord, and the amount of deposit may be withdrawn by the landlord on application made by him to the Court in this behalf.
(5) When a deposit has been made under sub section (2) the amount of the deposit shall be held by the Court for 421 the benefit of the person who may be entitled to it and the same shall be payable to such person.
(6) In any case where a deposit has been made, as aforesaid, it shall be deemed that the rent has been duly paid by the tenant to the landlord.
" Learned counsel submitted that, in the event of a landlord 's refusal to accept the rent, the tenant had no other alternative but to deposit the same in the court under the above special provision.
It was open to the landlord to have appeared before the learned Munsif at the time of hearing of the application for deposit and put forward any pleas, which he might have had.
The landlord not having done this, it was claimed that the order passed by the learned Munsif on 11.11.1967 provides a complete defence to the action under section 3(1)(a) of the Act against the tenant particularly in view of the language of sub section (6) of section 7C.
It was contended that the statute should not be constured as requiring that a tenant should prove the fact of his having tendered the rent and the landlord having refused it twice over once while making a deposit under section 7C and, again, in proceedings under section 3(1)(a).
If, despite a deposit under section 7 C, an action under section 3(1)(a) were to be permitted, it was urged, section 7 C would be rendered nugatory and otiose.
Learned counsel also made a point that though the landlord in this case had knowledge that the rent was being deposited in court since August 1967, he chose to keep quiet for a period of four years before issuing a notice calling upon the appellant to pay the arrears of rent.
Prima facie, the arguments of the appellant appear to have some force.
However, after hearing learned counsel for the respondent and considering the facts of this case and the relevant statutory provisions, we have come to the conclusion that this appeal must fail both on technicalities as well as on equities.
section 7C is no doubt a provision intended to protect the interests of the tenant.
But there is the authority of this Court holding that the mere fact of a deposit under this Section, in itself cannot be an answer to an action section 3(1)(a).
In Brahmanand vs Kaushalya Devi, ; , the relations between the landlord and tenant were highly strained.
The tenant therefore deposited the moneys into court and pleaded this as a defence to an action section 3(1)(a).
The High Court rejected this plea on the ground that there was nothing to show that the tenant had tendered the rent physically to the landlord and so the 422 deposit could not be treated as a valid deposit section 7C(I) so attract the deeming effect in section 7C(6).
This Court held that the High Court had taken too narrow a view of the words 'paid to ' the landlord.
Krishna Iyer J. Observed: "a liberal construction of the expression 'paid to him by a tenant.
in section 7 C(l) is necessary.
Physically offering payment when the relations between the parties are strained is to ask for trouble and be impractical.
But harassing the landlord by straight way depositing the rent in court without fulfilment of the conditions required by section 7 C( l) is also unwarranted.
Section 7 C(6) by using the expression 'where the deposit has been made as aforesaid ' takes us back to section 7 C( I).
That is to say the deposit is permissible only when the condition in section 7 C(l) is complied with.
If the landlord refuses to accept rent paid to him a deposit is permissible.
But payment need not be by physical tender, person to person.
It can be by money order, or through messenger or by sending a notice to the landlord asking him to nominate a bank into which the rents may be regularly paid to the credit of the landlord.
If the landlord refuses under these circumstances, then a court deposit will be the remedy.
" In the present case, on account of the bad blood between the parties a physical tender of the rent is ruled out.
At the same time the Courts below have not considered whether the circumstances which drove the appellant into depositing the rent in court were such as eliminated the other possibilities of direct payment we have indicated.
It is therefore fair to set aside the finding of the Courts below and remand the case to the lower appellate Court (which is the final court of fact under ordinary circumstances) to ascertain whether any of the alternatives we have indicated, or may otherwise be made out by the tenant as equivalent to payment of rent, is present in the case.
if no such circumstances is made out by the tenant justifying deposit of rent in court, the decree for eviction will stand.
Other wise, the petition for eviction will be dismissed.
" It is important to note that this Court did not view the deposit section 7C as conclusive of the issue.
On the other hand, it held that if no circumstance was made out by the tenant justifying the deposit in 423 court, the decree for eviction will stand.
In other words, this Court the view that, irrespective of the fact of deposit section 7C, the tenant has to show, when a suit is under section 3(1)(a), that the existence of circumstances justifying a deposit under section 7C.
In the present case, the Courts have been concurrently found that there was no valid tender of rent by the tenant or refusal thereof by the landlord.
There is no ground therefore to interfere with the decision of the Courts below.
A careful perusal of section 7C and the rules and forms made thereunder also supports the above conclusion.
The application for a deposit under this section has to be made in the form prescribed in Appendix A to the rules framed under the Act.
The appellant 's application to the court was filed in this form.
Column 6 of the application form is filled in by the tenant may be extracted: (A) (B) 6.
Whether deposit is made "the deposit is being under sub section (1)/(2) made under sub section(1) of Section 7 C.
In case of of 7 C of the Act.
Fact in Sub section(1) briefly brief is that the landlord state the circumstances of has reused to accept the refusal by the owner.
in rent.
It is being deposited case of sub section(2), under section 7 c of the UP mention circumstances of act 3 of 1947.
" doubt or dispute about ownership.
The rules framed under the Act also prescribed the form in which notice is to be served on the respondent when an application is made under section 7 C This form reads as follows: XXXX XX "To Whereas . . . has deposited Rs . . as rent for the period . .for the premises .
Of which you have been mentioned as the land lord.
424 Notice is hereby given to you under sub section (4) of Section 7 C of the U.P. (Temporary) Control of Rent and Eviction Act, 1947, that the said amount will be paid to you on an application for withdrawal being presented to this Court.
Given under my hand seal this day of .
. Munsif.
" Reading section 7 C, the rules framed thereunder and the above statutory forms together, it would appear that this provision envisages that where a tenant finds that the landlord refuses to accept the rent or there is some dispute regarding the ownership, he can, in order to protect his interests seek the permission of the Court to deposit the arrears of rent as well as future rent in the court instead of running after the landlord.
Though the applicant is asked to indicate briefly the circumstances in which he wants to make a deposit, there is no procedure contemplated for an enquiry into those circumstances.
The section or rules do not seem to contemplate the transmission of this application to the landlord, the fixing of a date of hearing on which both the tenant and the landlord could be heard or the passing of a considered order by the court after hearing both sides and being satisfied that there was in fact a tender of rent by the tenant and a refusal by the landlord to receive the rent or a dispute regarding the ownership of the property which rendered it difficult or impossible for the tenant to send the money to the landlord straight.
The notice which is sent to the landlord merely sets out that money has been deposited in the court and that the landlord is at liberty to withdraw it if he so desires.
All that the landlord can do on receipt of the notice is either to withdraw the moneys deposited or stop future deposits by expressing a willingness directly to the tenant to accept direct payment of rent thereafter.
On the language of the statutory provisions therefore, it is not possible to say that a deposit section 7C is necessarily a valid one preceded by an enquiry or satisfaction of the court that the condition precedent set out in section 7C( I) is fulfilled.
Counsel for the petitioner submits that in Fateh Chand vs Bal Saroop Goel, [ and other cases, the Allahabad High Court has held that a deposit section 7C is not a mere formality and that before directing or permitting a deposit the court has to go into the question whether there has been a tender and a refusal.
In fact, the 425 High Court has gone further and held that the Court has to go into that question, at two stages: one, when an application is presented and before issuing notice to the landlord; and the other when the landlord appears before the court and disputes the validity of the procedure sought to be invoked by the tenant.
Perhaps these requirements have been read into the section on grounds of equity and natural justice.
Whatever that may be, we are constrained to say that such procedure does not appear to have been followed in this case.
As we have already mentioned the application in the present case gave no details in the space against column 6.
Instead of setting out the circumstances in which it was alleged that the landlord had refused to receive the rent, the application barely asserted that the landlord had refused to accept the rent.
There is no information as to the nature of the notice served on the landlord but it must have been only in the form of Appendix already set out.
Again, though the application of the appellant under section 7 C appears to have come up before the Munsif on 11.11.1967, and the order mentions that the landlord is "absent though served sufficiently", the order is only that the landlord may withdraw the amount deposited on proper application.
It does not indicate any application of mind by the learned Munsif as to whether the conditions precedent for a valid deposit section 7C were satisfied.
There is certainly no finding at that stage on this vital requirement.
The grant of permission to deposit under section 7C, in the circumstances of the case, cannot therefore be treated as conclusive that a valid deposit had been made under that section.
Sri Kackar took up the stand that even if section 7C is interpreted as providing an opportunity to both parties and even if a clear finding is recorded in these proceedings, after hearing both parties, that the preconditions of a valid deposit under that section are satisfied, that will not constitute res judicata or take away the court 's rights in an action section 3(1)(a), of being satisfied on the evidence before it to the same effect.
He relied in this context on two decisions of the Allahabad High Court.
It is sufficient to refer to extract some portions from the head note of one of them, viz. Hazi Abdul Karim vs Mohd. Ismail.
[1978] U.P. Rent Cases 691) P. "A finding merely on a collateral fact of jurisdiction cannot operate as res judicata in later proceedings between the same parties.
It has been stated in Halsbury 's Laws of England, Third Edition (Volume XV) paragraph 367 (at page 192).
It is a fundamental rule that a judgment is not conclusive to anything but the point decided, or of any matter 426 which came collaterally in question or of any matter incidentally cognizable.
The principle behind this rule seems to be that even though in the previous proceedings a decision on a collateral fact about jurisdiction, wrongly given may be binding on the parties for a limited purpose i.e., only so far as those proceedings are concerned, yet it would completely defeat the ends of justice, if such erroneous decision were allowed to become final and perpetuate itself.
It would be conducive to the ends of justice that in later regular proceedings the parties should not be thwarded by an earlier wrong .
finding and should be afforded full opportunity of demonstrating that the condition precedent to the exercise of jurisdiction were absent.
It cannot, therefore, operate as res judicata and the parties must be left free to agitate the same question again in a subsequent suit for ejectment or other appropriate proceedings.
The whole scheme of Section 7 C is inconsistent with any adjudication of the rights of the parties.
Under this section the learned Munsif is not required to determine the rights and obligations of the landlord and the tenant in these proceedings.
All that he has to do on deposit of rent under Section 7 C (1) is to issue a notice to the landlord informing him that such deposit has been made.
The deposit, made under section 7 C is by itself a neutral act and it acquires its legal completion only when F. the rights of the parties are later determined in appropriate proceedings.
The deposit is thus without prejudice to the rights of the parties which ought to be determined in the appropriate proceedings.
X x x x x X . . the entire scheme of Section 7 C leads to the inescapable conclusion that it is merely a tentative or provisional forum provided for the purpose of checkmating any sinister attempt on the part of the landlord for letting it appear that no rent had been actually paid to him and thereby procuring the ejectment of a tenant.
It is a legal fiction operating 427 for the benefit of tenant in order to destroy a substerfuge which may unjustly result in the eviction of the tenant.
A deposit, therefore, per se does not decide the rights of the parties.
Its significance and legal impost actually take shape according to the tenor and upshot of other subsequent proceedings in which such rights any be actually adjudicated.
For the purposes of the present case, we need not go into this larger question.
In view of our conclusion regarding the scope of section 7C and our finding that, here.
there was no enquiry or finding recorded in the proceedings u section 7C which could at all operate as res judicata against the landlord in the suit section 3( l)(a).
Learned counsel for the appellant strongly relied on two decisions of this court in support of his contention.
The first was Kaloo and others vs GauriShanker, 51.
Learned counsel relied on certain passages in paragraphs 13, 19 and 23.
In our opinion this decision is not of much help as the court in that case was concerned with a clear case of refusal of rent by the landlord fully justifying the deposit under section 7 C.
This is cleary from various passages in the judgment particularly in paragraphs 19 and 20.
The other judgment relied upon is that of this court in Kameshwar Singh Srivastava vs IV Addl.
District Judge, Lucknow and others; , This was a decision under a later Act of Uttar Pradesh, namely Act 13 of 1972.
Section 3() of the said Act is a provision similar to section 7 C of the Act presently in question.
In this case also it was found as a fact that there had been a tender of rent to the landlord, who did not accept the same and this was held to be a complete answer in proceedings for eviction.
There can be no doubt that, by virtue of section 7 C(6) a deposit properly and justifiably made under section 7 C would be deemed to be a payment of rent to the landlord himself.
Once there is a proof of a valid deposit, then there can be no eviction of the tenant under section 3(1)(a) since the section equates such a deposit to a payment to the landlord, thus negativing the existence of any arrears of rent or any wilful default.
But, at the same time it is necessary for the courts to ensure that the tenants do not resort to the provisions of section 7 C merely to harass the landlord.
The decision in Kameshwar Singh 's case emphasises this aspect in paragraph 7: "7.
We should not be understood to have laid down that the tenant should deposit rent in court instead of paying the same to the landlord.
Primarily, a tenant is under a legal obligation to pay rent to the landlord as and when due and 428 if he fails to pay the same on demand from the landlord and if he is in arrears for a period of more than four months he would be liable to ejectment.
Where there is a bona fide dispute regarding the landlord 's right to receive rent on account of there being several claimants or if the landlord refuses to accept the rent without there being any justification for the same, the tenant would be entitled to take proceedings under section 30 of the Act and deposit the rent in court thereupon he would be deemed to have paid the rent to the landlord, consequently he would be relieved of his liability of eviction.
It does not however follow that the tenant is entitled to disregard the landlord or ignore his demand for payment of rent to him.
The provisions of the Act safeguard tenants interest but it must be kept in mind that the landlord 's right to receive rent and in the event of the tenant 's being in arrears of rent for a period of more than four months, his right to evict the tenant is preserved, if the tenant makes the deposit in court without there being any justification for the same or it he refuses to pay the rent even on the service of notice of demand by the landlord, he would be liable to eviction.
However, the question whether the tenant is justified in depositing the rent in court and whether deeming provision of s; 30(6) would be available to him to relieve him from the liability of eviction would depend upon facts of each case.
As noted earlier on the special facts of the instant case we have no doubt in our mind that the appellant had relieved himself from the liability of eviction and he was not in arrears of rent for a period of more than four months.
" This decision also, incidentally, proceeds on the basis that, despite an order section 30, it is open to the Court in the proceedings for eviction, to consider whether the deposit was a valid one or not.
In the light of the above observations also, were justified, having regard to the facts and circumstances of the present case, in ordering eviction.
Learned counsel for the appellant submitted that such an interpretation as we have upheld would completely render section 7 C a dead letter.
This is not so.
Section 7 C, as we have pointed out earlier, is only intended as a protection to the tenant to tide over a particular genuine difficulty.
It enables the tenant to deposit the rent from time to time in the court so that the arrears of rent do not accummulate and he is not constrained to pay large sums of money owing to the landlord on a future date.
Secondly, it safeguards the landlord inasmuch as the 429 rent from month to month is being deposited in the court and the landlord is not prejudiced by a huge accummulation of rent which he may find it later on, difficult to recover.
Thirdly, it also protects the tenant in this that, if ultimately he is able to show in the eviction proceedings that the deposit was made because of the refusal of the landlord to accept the rent, it provides a complete answer to the plea of eviction under section 3(1)(a).
It cannot, therefore, be said that section 7 C loses all its meaning and becomes otiose if it is interpreted in the restrictive manner above discussed.
This leaves only the equities of the matter to be considered.
The contention of the learned counsel for the appellant that though the landlord was aware that the rent was being deposited in the court ever since August 1967, he waited for a period of four years before issuing a notice of demand for arrears of rent is seen to be without substance.
Shri Kacker has pointed out that the appellant had filed a suit (No. 786 of 1968) claiming that he had paid Rs.275 towards rent by money order and claiming refund of the same.
This suit was pending till April 197 1.
On 19.4.197 1, the suit was dismissed.
The Third Additional Munsif, Jhansi found that the sum of Rs.275 had been paid towards rent for the period ending 30.11.1966 and that the appellant was not entitled to the refund thereof.
Shri Kacker rightly points out that since the appellant had raised a plea in this suit that the sum of Rs.275 had been paid by him towards the arrears of rent due after November 1966, the landlord was disabled from instituting proceedings for eviction until this issue was decided in the suit.
In other words, the delay from August 1967, when the appellant started depositing the rent in court till 1971, when the proceedings for ejectment were started, was not due to any laches on the part of the respondent but was caused on account of the pendency of the litigation instituted by the tenant.
Indeed it is rather unbelievable that, after having alleged in the application under 'section 7 C that the landlord had refused to accept the amount tendered and deposited the arrears of rent in court, the tenant would have sent a sum of Rs.275 by money order on 30.11.67, as alleged.
In fact the findings in that suit, incidentally, also negative the tenant 's allegation that he had sent several money orders which the landlord had refused to receive.
But this aspect need not detain us as all the three courts have concurrently found that in the present case the appellant had not been able to prove that there had been a tender of the rent by him and refusal thereof by the landlord.
In the result we have come to the conclusion that both in law and in equity the appellant has no case and that the ejectment suit was 430 properly decreed by the courts below.
The appeal, therefore, fails and is dismissed.
We, however, make no order as to costs, since the arrears of rent are available to the landlord for being withdrawn from the court P.S.S. Appeal dismissed.

dataset_name: IN-Abs

summary/full:
^ % Section 3(1)(a) of the U.P. (Temporary) Control of Rent and Eviction Act, 1947 permits eviction of the tenant who is.
in arrears of rent for more than three months and has failed to pay the same to the landlord within one month of the service upon him of a notice of demand.
When a landlord refuses to accept any rent lawfully paid to him, section 7C(l) entitles the tenant to deposit such rent in the court.
Section 7C(4) requires the court to cause a notice of the deposit to be served on the landlord.
Section 7C(6) provides that where a deposit has been made as aforesaid, it shall be deemed that the rent has been duly paid.
The appellant tenant was in arrears of rent of the demised shop from December, 1966 to February, 1971.
The amount remained unpaid despite notices dated March 22, 1971 and April 12, 1971.
In the suit for his ejectment under section 3(1)(a), the tenant took the defence that he had tendered the rent to the plaintiff landlord but the latter had refused to accept it, that even the rent sent by money order was refused, and thereupon he had made the deposit in the court under section 7C(1) of the Act, and there were no arrears of rent due from him.
The trial court and the first appellate court held that statutory conditions requisite for a valid deposit were not fulfilled and, therefore, the default in payment of rent within the meaning of section 3(1)(a) stood established and the tenant was liable to eviction.
The High Court dismissed the appeal.
In the appeal before this Court in addition to the defence taken before the courts below, it was contended that though the landlord was aware that the rent was being deposited in the court ever since August, 1967 he waited for a period of four years before issuing a notice of demand for arrears for rent.
417 Dismissing the appeal, A ^ HELD: 1.
Both in law and equity the appellant had no case.
The ejectment suit was properly decreed by the Courts below.
[429H; 430A] 2.1 The mere fact of a deposit under section 7C.of the U.P. (Temporary) Control of Rent and Eviction Act, 1947 in itself cannot be an answer to an action under section 3(1)(a) for eviction of the tenant for default in payment of rent.
Irrespective of the fact of such deposit the tenant has to show the existence of circumstances justifying the deposit.
[42tG; 423A] Brahmanand vs Kaushalya Devi, ; , referred to.
2.2 Reading section 7C, the rules framed thereunder and the statutory forms together, it cannot be said that a deposit under section 7C is necessarily a valid one preceded by an enquiry or satisfaction of the Court that the condition precedent set out in section 7C(1) is fulfilled.
Though the applicant is asked to indicate briefly the circumstances in which he wants to make a deposit, there is no procedure contemplated for an enquiry into those circumstances.
The statutory provisions do not contemplate transmission of the application to the landlord, the fixing of a date of hearing on which both the tenant and the landlord could be heard or the passing of a considered order by the Court thereafter and being satisfied that there was in fact a tender of rent by the tenant and a refusal by the landlord to receive the rent or a dispute regarding the ownership of the property which rendered it difficult or impossible for the tenant to send money to the landlord straight.
The notice which is sent to the landlord merely sets out that the landlord is at liberty to withdraw it if he so desires.
[424C F] 2.3 In the instant case, the trial court, the first appellate court and the High Court have concurrently found that there was no valid tender of rent by the tenant or refusal thereof by the landlord.
The application filed by the tenant under section 7C gave no details in the space against column 6 of the form prescribed in Appendix 'A ' to the Rules framed under the Act, setting out the circumstances in which it was alleged that the landlord had refused to receive the rent.
The application barely asserted that the landlord had refused to accept the rent. 'Where was no information as to the nature of notice served on the landlord.
[424H; 425B C] There was no enquiry of finding recorded in the proceedings 418 under section 7C which could at all operate as res judicata against the landlord in the suit under section 3(1)(a).
Though the order of the Munsif under section 7C mentioned that the landlord was absent though served succinctly, the order was only that the landlord may withdraw the amount deposited on proper application.
It does not indicate any application of mind by the Munsif as to whether the conditions precedent for a valid deposit under section 7C were satisfied.
There was certainly no finding at that stage on this vital requirement.
The grant of permission to deposit under section 7C, in the case cannot, therefore, be treated as conclusive of the fact that a valid deposit had been made under that section.
[427B; 425D E] Haji Abdul Karim vs Mohd. Ismail, [1978] U.P. Rent Cases 691, referred to.
Fateh Chand, vs Bal Saroop Goel, ; Kaloo and others vs Gauri Shankar, and Kameshwar Singh Srivastava vs IVAddl.
District Judge, Lucknow and others, AIR 1987 S .
138 distinguished.
The contention of the appellant that though the landlord was aware that the rent was being deposited in the court ever since August, 1967 he waited for a period of four years before issuing a notice of demand for arrears of rent was without substance.
The delay was not due to any laches on the part of the respondent but was caused on account of the pendency of the litigation instituted by the tenant claiming refund of a sum of Rs.275 paid towards rent.
[429C D]


judgement:
Appeal No. 96 of 1957.
Appeal by special leave from the judgment and order dated December 17, 1956, of the Punjab High Court (Circuit Bench) at Delhi in Civil Misc.
No. 896 D of 1956, arising out of the judgment and order dated November 1, 1956, of the Court of Commercial Subordinate Judge, Delhi in Suit No. 264 of 1956 under Order XXXVII, C.P.C. ]A. V. Vishwanatha Sastri 'and Naunit Lal, for the appellant.
Bakhshi Gurcharan Singh and Sardar Singh, for the respondent.
February 5.
The following Judgment of the Court was delivered by BOSE J. The defendants, Santosh Kumar and the Northern General Agencies, were granted special leave to appeal.
The plaintiff filed the suit out of which the 1213 appeal arises on the basis of a cheque for Rs. 60,000 drawn by the defendants in favour of the plaintiff and which, on presentation to the Bank, was dishonoured.
The suit was filed in the Court of the Commercial Subordinate Judge, Delhi, under 0.
XXXVII of the Code of Civil Procedure.
The defendants applied for leave to defend the suit under r. 3 of that Order.
The learned trial Judge held that " the defence raised by the defendants raises a triable issue," but he went on to hold that the defendants " have not placed anything on the file to show that the defence was a bona fide one." Accordingly, he permitted the defendants to appear and defend the suit on the condition of their giving security to the extent of the suit amount and the costs of the suit.
" The defendants applied for a review but failed.
They then applied under article 227 of the Constitution to the Delhi Circuit Bench of the Punjab High Court and failed again.
As a result, they applied here under article 136 and were granted special leave.
At first blush, 0.
XXXVII, r. 2(2), appears drastically to curtail a litigant 's normal rights in a Court of justice, namely to appear and defend himself as of right, if and when sued, because it says that when a suit is instituted on a bill of exchange, hundi or a promissory note under the provisions of sub rule (1) ". . the defendant shall not appear or defend the suit unless he obtains leave from a judge as hereinafter provided so to appear and defend." But the rigour of that is softened by r. 3(1) which makes it obligatory on the Court to grant leave when the conditions set out there are fulfilled.
Clause (1) runs " The Court shall, upon application by the defendant, give leave to appear and to defend the suit, upon affidavits which disclose such facts as would make it incumbent on the holder to prove consideration, or such other facts as the Court may deem sufficient to support the application.
" 1214 But no sooner is the wide discretion given to the Court in r. 2(2) narrowed down by r. 3(1) than it is again enlarged in another direction by r. 3(2) which says that " Leave to defend may be given unconditionally or subject to such terms as to payment into Court, giving security, framing and recording issues or otherwise as the Court thinks fit.
" The learned counsel for the plaintiff argues that the discretion so conferred by r. 3(2) is unfettered and that as the discretion has been exercised by the learned trial Judge, no appeal can lie against it unless there is a " grave miscarriage of justice or flagrant violation of law" and he quotes D. N. Banerji vs P.R. Mukherjee (1) and Waryam Singh vs Amarnath (2).
Now what we are examining here are laws of procedure.
The spirit in which questions about procedure are to be approached and the manner in which rules relating to them are to be interpreted are laid down in Sangrayn Singh vs Election Tribunal, Kotah, Bhurey Lal Baya (1).
" Now a code of procedure must be regarded as such.
It is procedure, something designed to facilitate justice and further its ends; not a penal enactment for punishment and penalties; not a, thing designed to trip people up.
Too technical a construction of sections that leaves no room for reasonable elasticity of interpretation should therefore be guarded against (provided always that justice is done to both sides) lest the very means designed for the furtherance of justice be used to frustrate it.
Next, there must be ever present to the mind the fact that our laws of procedure are grounded on a principle of natural justice which requires that men should not be condemned unheard, that decisions should not be reached behind their backs, that proceedings that affect their lives and property should not continue in their absence and that they should not be precluded from participating in them.
Of course, there must be exceptions and where they are clearly defined (1) ; , 305.
(2) ; (3)[1955] 2 S.C.R. 1, 8 9. 1215 they must be given effect to.
But taken by and large, and subject to that proviso, our laws of procedure should be construed, wherever that is reasonably possible, in the light of that principle.
" Applied to the present case, these observations mean that though the Court is given a discretion it must be exercised along judicial lines, and that in turn means, in consonance with the principles of natural justice that form the foundations of our laws.
Those principles, so far as they touch the present matter, are well known and have been laid down and followed in numerous cases.
The decision most frequently referred to is a decision of the House of Lords in England where a similar rule prevails.
It is Jacobs vs Booth 's Distillery Company (1).
Judgment was delivered in 1901.
Their Lordships said that whenever the deferce raises a " triable issue", leave must be given, and later cases say that when that is the case it must be given unconditionally, otherwise the leave may be illusory.
See, for example, Powszechny Bank Zwiazkowy W. Polsce vs Paros (2), in England and Sundaram Chettiar vs Valli Ammal (3) in India.
Among other cases that adopt the " triable issue " test are Kiranmoyee Dassi vs J. Chatterjee and Gopala Rao vs Subba Rao (5).
The learned counsel for the plaintiff respondent relied on Gopala Rao vs Subba Rao (5), Manohar Lal vs Nanhe Mal (6), and Shib Karan Das vs Mohammed Sadiq (7).
All that we need say about them is that if the Court is of opinion that the defence is not bona fide, then it can impose conditions and is not tied down to refusing leave to defend.
We agree with Varadachariar J. in the Madras case that the Court has this third course open to it in a suitable case.
But it cannot reach the conclusion that the defence is not bona fide arbitrarily.
It is as much bound by judicial rules and judicial procedure in reaching a conclusion of this kind as in any other matter.
It is unnecessary (1) (2) (3) (1935) 1 (4) (5) A.I.R. (1936) Mad.246.
(6) A.I.R. 1938 Lah.
(7) A.I.R. 1936 Lah.
12l6 no examine the facts of those cases because they are not in appeal before us.
We are only concerned with the principle.
It is always undesirable, and indeed impossible, to lay down hard and fast rules in matters that affect discretion.
But it is necessary to understand the reason for a special procedure of this kind in order that the discretion may be properly exercised.
The object is explained in Kesavan vs South Indian Bank Ltd. (1), and is examined in greater detail in Sundaram Chettiar vs Valli Ammal (supra), to which we have just referred.
Taken by and large, the object is to see that the defendant does not unnecessarily prolong the litigation and prevent the plaintiff from obtaining an early decree by raising untenable and frivolous defences in a class of cases where speedy decisions are desirable in the interests of trade and commerce.
In general, therefore, the test is to see whether the defence raises a real issue and not a sham one, in the sense that, if the facts alleged by the defendant are established, there would be a good, or even a plausible, defence on those facts.
Now, what is the position here? The defendants admitted execution of the cheque but pleaded that it was only given as collateral security for the price of goods which the plaintiff supplied to the defendants.
They said that those goods were paid for by cash payments made from time to time and by other cheques and that therefore the cheque in suit had served its end and should now be returned.
They set out the exact dates on which, according to them, the payments had been made and gave the numbers of the cheques.
This at once raised an issue of fact, the truth and good faith of which could only be tested by going into the evidence and, as we have pointed out, the learned trial Judge held that this defence did raise a triable issue.
But he held that it was not enough for the defendants to back up their assertions with an affidavit; they should also have produced writings and documents which they said were in their possession (1) I.L.R. 1217 and which they asserted would prove that the cheques and payments referred to in their defence were given in payment of the cheque in suit; and he said " In the absence of those documents, the defence of the defendants seems to be vague consisting of indefinite assertions. . . .
This is a surprising conclusion.
The facts given in the affidavit are clear and precise, the defence could hardly have been clearer.
We find it difficult to see how a defence that, on the face of it, is clear becomes vague simply because the evidence by which it is to be proved is not brought on file at the time the defence is put in.
The learned Judge has failed to see that the stage of proof can only come after the defendant has been allowed to enter an appearance and defend the suit, and that the nature of the defence has to be determined at the time when the affidavit is put in.
At that stage all that the Court has to determine is whether " if the facts alleged by the defendant are duly proved " they will afford a good, or even a plausible, answer to the plaintiff 's claim.
Once the Court is satisfied about that, leave cannot be withheld and no question about imposing conditions can arise; and once leave is granted, the normal procedure of a suit, so far as evidence and proof go, obtains.
The learned High Court Judge is also in error in thinking that even when the defence is a good and valid one, conditions can be imposed.
As we have explained, the power to impose conditions is only there to ensure that there will be a speedy trial.
If there is reason to believe that the defendant is trying to prolong the litigation and evade a speedy trial, then conditions can be imposed.
But that conclusion cannot be reached simply because the defendant does not adduce his evidence even before he is told that he may defend the action.
We do not wish to throw doubt on those decisions which decide that ordinarily an appeal will not be entertained against an exercise of discretion that has been exercised along sound judicial lines.
But if the 1218 discretion is exercised arbitrarily, or is based on a mis understanding of the principles that govern its exercise, then interference is called for if there has been a resultant failure of justice.
As we have said, the only ground given for concluding that the defence is not bona flde is that the defendant did not prove his assertions before he was allowed to put in his defence ; and there is an obvious failure of justice if judgment is entered against a man who, if he is allowed to prove his case, cannot but succeed.
Accordingly, interference is called for here.
The appeal is allowed.
We set aside the orders of the High Court and the learned trial Judge and remand the case to the first Court for trial of the issues raised by the defendants.
The costs of the appellants in this Court will be paid by the respondent who has failed here.
Appeal allowed.

summary/full:
The respondent filed a suit against the appellant under 0.
xxxvII of the Code of Civil Procedure on the basis of a cheque for Rs. 60,000 drawn by the appellant in favour of the respondent which, on presentation to the Bank, had been dishonoured.
The appellant applied under r. 3 Of 0.
XXXVII for leave to appear and defend the suit on the ground that the cheque had been given only as a collateral security for the price of goods supplied, that the goods had been paid for by cash payments and by other cheques and that therefore the cheque in question had served its I54 1212 end and was without consideration.
The Court held that the defence raised a triable issue but that the defence was vague and was not bona fide as the appellant had produced no evidence to prove his assertions and consequently granted leave to defend the suit on the condition of the appellant giving security for the suit amount and the costs of the suit : Held, that the imposition of the condition was illegal and the appellant was entitled to defend the suit without giving the security.
The object of the special procedure under 0.
XXXVII of the Code is to see that a defendant does not unnecessarily prolong the litigation by raising untenable and frivolous defences.
The test is to see whether the defence raises a real issue and not a sham one, in the sense that, if the facts alleged by the defendant are established, there would be a good, or even a plausible, defence on those facts.
If the Court is satisfied about that, leave must be given and given unconditionally.
Held, further, that the Court was wrong in imposing the condition about giving security on the ground that for want of production of documentary evidence the defence was vague and not bona fide as the stage of proof can only arise after leave to appeal and defend has been granted.
Though the Court is given a discretion about imposing conditions it must be exercised judicially and in consonance with principles of natural justice.
If the discretion is exercised arbitrarily, or is based on a misunderstanding of the principles that govern 'its exercise, then interference is called for if there has been a resultant failure of justice.