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Judgment
G. Ramanujam, J.—These Revision Petitions arise out of suits filed by the various plaintiffs, respondents in each of the revision petitions, for
recovery of amounts collected from them by the defendants in each of the suits as Central Sales Tax in respect of certain sales of arecanuts
effected by the defendants to the plaintiffs who are dealers at Tiruvarur, Madras State. As all the above revision petitions raise the same question
of law, they have to be dealt with together.
The defendant in each of the suits is a dealer in arecanuts at Shimoga in Mysore State. They have been selling arecanuts to the plaintiffs during
the years 1961 to 1964. The defendants as sellers have been charging and collecting Central Sales Tax from the plaintiffs on their sales of
arecanuts on the basis that the transactions were inter-State sales attracting the levy of sales tax under the Central Sales Tax Act, 1956. The tax
thus collected has been shown separately in the various invoices issued by the defendant in each of the suits. The sales tax collected by the
defendants from the plaintiffs had been originally remitted by the defendants to the Mysore Sales Tax authorities. Subsequently the Supreme Court,
on 10th November, 1964, held in The Dunlop Rubber Co. Vs. Workmen, , that though Section 6 of the Central Sales Tax Act is the charging
section, the liability to pay tax is subject to the other provisions of the Act, that Section 9 (2) provides that tax shall be calculated at the same rates
and in the same manner as would have been done if the sale had in fact, taken place inside the appropriate State that, the tax under the Central Act
shall be levied in the same manner as the tax on the sale or purchase of goods, under the general sales tax law of the State is assessed, paid and
collected, and that, therefore, if no tax was exigible in respect of the same transaction under the Mysore Sales Tax Act, no tax was payable under
the Central Act. Relying on the said decision, the sales tax authorities of Mysore State refunded the tax collected on inter-state sales of arecanuts
to the defendants in or about 1967. The plaintiffs who became aware of the said refund of the tax have filed various suits in the year 1959 for
recovery of the amounts paid by them as sales tax from the defendants. According to them the Central Sales Tax has been paid by them under a
mistaken impression that the Central Sales Tax was leviable on the inter-State sales of arecanuts by the Mysore dealers. However, with a view to
get over the decision of the Supreme Court referred to above, the ""Central Sales-tax (Amendment) Act, 1969 (Central Act XXVIII of 1969) had
been enacted by Parliament under which Section 9 of Principal Act was amended with retrospective effect, so as to enable the levy of tax on inter-
State sales whether such sales are exigible to tax in the concerned State or not, and all the assessments made already had been validated
notwithstanding any decree or order of any Court to the contrary.
The defendants had resisted the suit on various grounds. One of the grounds raised was that they did not get any refund of the tax from the sales
tax authorities. But the trial Court did not accept that plea but held that on consideration of the evidence the defendants had got refund of the sales
tax paid by them from the sales tax authorities in pursuance of the decision of the Supreme Court referred to above. In these revisions the factum
of refund of tax was not disputed before us.
The other defences taken were (1) that the suits are barred by limitation as they have been filed more than 3 years after the payment of the tax,
(2) that the trial Court had no jurisdiction to try the suits and (3) that in any event, the suits are not maintainable in view of Central Act XXVIII of
1969. These defences were considered by the trial Court in detail but were rejected. We therefore proceed to consider the said contentions
seriatim.
The learned Counsel for the revision-petitioners contends that the sales tax amounts refunded to the defendants by the Mysore Sales Tax
authorities are not monies had and received for the plaintiffs'' use and that therefore, the plaintiffs cannot rely on Article 24 of the Limitation Act of
1963. According to the learned Counsel the suits should have been filed within three years from the actual date of payment of the tax and that the
suits having been filed in 1969, long after the said period of three years, they are barred by time. Therefore, the first point for consideration is
whether Article 24 applied to the facts of these cases. That Article provides a period of three years from the date when the money is received for
suits of the description ""for money payable by the defendant to the plaintiff for money received by the defendant for the plaintiff''s use"". In Royal
Bank of Canada v. R (1913) A.C. 283, Viscount Haldane has laid down the legal principle thus:
It is a well established principle of the English common law that when money has been received by one person which injustice and equity belongs
to another, under circumstances which rendered the receipt of it a receipt by the defendant to the use of the plaintiff, the latter may recover as for
money had and received to his use.
The above principle has been adopted in this country also, (vide Mohammed Wahid v. Mohammed Ameer ILR (1905) Cal. 527, and A.
Venkata Subba Rao Vs. State of Andhra Pradesh, . In Johari Lal and Another Vs. The Bihar State Co-operative Bank Ltd., , it has been held that
where money is received by the defendant from a third person directly or impliedly for and on behalf of the plaintiff that will be a clear case for the
application of Article 62 of the Limitation Act, 1908. In State of Andhra Pradesh Vs. Isukapalli Gangaraju and Others, , the Court has observed:
Therefore, I hold that, to the present case, which is a suit for money illegally collected by the Government from the plaintiff, Article 62 of the First
Schedule to the Indian Limitation Act applies. The cases, which are binding on me have pointed out that when the money was received by the
defendant, it need not have been in fact received for the plaintiff''s case. When the execution is illegal, the Court applies the fiction that the
defendant received the money for the plaintiff''s use, because the defendant injustice and equity is bound to refund it to the plaintiff and has no right
to retain it.
In A. Venkata Subba Rao Vs. State of Andhra Pradesh, , their Lordships of the Supreme Court have held that in order to attract Article 62 of the
Limitation Act of 1908 which corresponds Article 24 of the Limitation Act of 1963, it is not necessary that at the moment of the receipt of money
the defendant should have actually intended to receive it for the use of the plaintiff and that it is sufficient if the receipt is in such circumstances that
the law would impute to him on obligation to retain it for the use of the plaintiff and refund it to him when demanded. In the light of the principle
enunciated in the above decisions we cannot agree with the contention put forward on behalf of the petitioners that the refund of the ax by the
Sales Tax authorities to the defendants cannot be said to be for the benefit of the plaintiff; It is not in dispute that Central Sales tax was collected by
the petitioners under a mistake of law. If really the plaintiffs are not liable in law to pay tax in respect of their purchase of arecanuts from the
defendants, collection of the amounts by the defendants should be held to be unauthorised and the plaintiffs are entitled to get back the"" same. The
fact that the sales tax authorities refunded the amount to the defendants cannot mean that they are entitled to the benefit of those amounts. The trial
Court finds specifically that the refunds have been actually made by the sales tax authorities to the defendants in November-December, 1967 and
there is no contra evidence on the side of the defendants. Therefore, the suits having been filed in 1969 well within the period of three years from
December, 1967 when the defendants got the refunds, they are within time.
Then we came to the question of jurisdiction. While the plaintiffs would state that the cause of action for the suits arose within the jurisdiction of
the trial Court, the defendants would state that it was the Court at Shimoga in Mysore State that would have the exclusive jurisdiction to entertain
and try the suits in question. On the facts it is seen that the Shimoga merchants have sent the goods in question by lorry and the goods have been
taken delivery of by the plaintiffs at Thiruvarur, after honouring the hundis sent by the Shimoga merchants through the bank and retaining the lorry
receipt at Tiruvarur. Though it is said that there was prior offer and acceptance, no letter of offer or acceptance had been produced before the
Court. But from the invoices marked in evidence it is seen that the purchases have been made by one broker and that brokerage had been
included in the invoices. In the reverse of the invoices there is a printed clause to the effect that all claims and disputes arising out of the transaction
are subject to the jurisdiction of the Court at Shimoga. From this clause it is sought to be contended by the petitioners that it is only the Court at
Shimoga that will have jurisdiction. Reliance is placed on a decision of a Division Bench of this Court in Hoosen Kasam Dada (India) Ltd. Vs.
Motilal Padampat Sugar Mills Co. Ltd., , by the learned Counsel for the petitioners. That was a case where the contract contained this clause. ""All
disputes in respect of the contract shall be settled by arbitration, failing which they shall be settled in the Court of the - seller''s jurisdiction, where
the contract shall be deemed to have been entered into"". In construing that clause the Court held that:
Where there are two competent Courts which can deal with the subject-matter of litigation, it is open to the parties to a contract to agree that
disputes in respect thereof should be adjudicated upon by one of the two competent Courts and such an agreement is perfectly legal and not
contrary to the provisions of the Contract Act.
That was a case where there was a specific mention in the contract itself that one Court shall have jurisdiction and the other Court shall not have
such a jurisdiction. In this case there is no contract forthcoming and we are not in a position to say whether there was a specific agreement
between the parties excluding the jurisdiction of the Court at Thiruvarur and conferring the exclusive jurisdiction on the Courts at Shimoga. From
the facts set out above, there cannot be any doubt that part of the cause of action has arisen at Thiruvarur, and normally-the Court at Thiruvarur
will also have jurisdiction to entertain the suits, unless by agreement of parties the jurisdiction of that Court is specifically excluded. It is true that
there is a printed clause in the back of the invoices to the effect that all claims and disputes arising thereunder are subject to the jurisdiction of the
Court at Shimoga. But there is no evidence in this case as to whether the plaintiffs were made aware at all of the existence of this clause in the
invoices, and. whether the plaintiffs really agreed to exclude the jurisdiction of the Thiruvarur Court in respect of the transactions in question.
In Patel Bros. Vs. Vadilal Kashidas Ltd., , Ramachandra Iyer, J. (as he then was) dealt with a similar case.. There the bill issued by the
defendant to the plaintiff with the words at the top ''subject to Bombay jurisdiction'' was produced. On the question whether that clause excluded
the jurisdiction of the Court within whose jurisdiction the buyer resided, the Court held that'' mere printing of the words ""subject to Bombay
jurisdiction"" in a bill could not amount to a contract that both parties agreed to have Bombay as the only venue for the settlement of the disputes,
that the mere recital as the top of the bill could not be incorporated as a term of the contract and that ouster of jurisdiction of a Court to which a
person is entitled to resort to under the CPC or any other statute cannot be a matter of assumption or presumption but one to be proved by
express words contained in the contract or at least by necessary or inevitable implication. The learned Judge in that case distinguished the earlier
decision in B.K. Dada (India) Ltd. v. M.P. Sugar Mills Co. Ltd. ILR (1954) Mad. 855 : (1954) 1 M.L.J. 434, on the ground that there was a
specific term in that contract excluding the jurisdiction of the Court and that that clause specifically excluded all other Courts except the Court
within whose jurisdiction the seller resided. With respect, I am inclined the follow the reasoning of Ramachandra Iyer, J. (as he then was) and hold
that in this case the printed clause in the invoices has not been shown to be a term of the contract between the parties and that, in any event, the
clause ''does not expressly or by necessary implication exclude the jurisdiction of the Courts other than the Courts at Shimoga.
The learned Counsel for the petitioners places considerable reliance on the following passage in ""Chitty on Contracts"" 23rd edition Vol. I at
page 277.
Course of dealing. Conditions will not necessarily be implied into a contract by reason of a previous course of dealing, which has been subject to
similar conditions, between the parties. But they may be implied where each party has led the other reasonably to believe that he intended that their
tights and liabilities should be ascertained by reference to the terms of a document which had been consistently used by them in previous
transactions.
Relying on the above passage what the learned Counsel contends is that the printed clause in the invoices should be treated as a term of the
contract between the parties in view of the previous transactions between the parties wherein such invoices have been used leading to the inference
that the plaintiffs as purchasers should have been aware of the above claims in the invoices and that the rights and liabilities have to be ascertained
with reference to the terms set out in the invoices which have been consistently used by the defendants even in previous transactions. We are not
inclined to agree with this contention of the learned Counsel that the printed clause in the invoices should be taken to-be a term of the contract
without any proof of the purchasers being made aware of the said clause before the contracts of sale were entered into. As already stated, the
transactions seem to have been arranged by the brokers and there is no knowing as to whether the purchasers have at all noted this clause which is
found in the invoices. Therefore, the trial Court''s view that it had jurisdiction to entertain and try the suits has to be upheld.
The learned Counsel for the petitioners then argues that the suits are not maintainable in view of the Central Act XXVIII of 1969. It is
contended that as this Act has validated all levies made under the Central Sales-Tax Act, 1956 and has also provided that no proceeding shall be
maintained or continued in any Court for the refund of sales tax paid, the plaintiffs are disentitled from making any claim against the defendants for
refund, of the sales-tax. We are of the view that the above contention is misconceived. By means of the amending Act Sub-section (I-A) was
added to Section 6 and Section 9 was recast in the principal Act and such incorporation is deemed to have been always there in the principal Act.
Section 6 (1-A) provides that a dealer shall be liable to pay tax under the Act as sales of any goods effected by him in the course of inter-State
trade or commerce notwithstanding that no tax would have been leviable (whether on the seller or the purchaser) under the Sales Tax Law of the
appropriate State if that sale had taken place inside that State. Section 9 of the amending Act validates, assessment, re-assessment, levy or
collection of any tax made or any action or thing done in relation to such assessment, re-assessment, levy or collection under the provisions of the
principal Act before 9th day of June, 1969, and Section 9(1) (a) provides that all acts, proceedings or things done or taken by the Government or
by any officer of the Government or by any other authority in connection with the assessment, reassessment, levy or collection of such tax shall, for
all purposes be deemed to be and to have always been, done or taken in accordance with the law. Clause (b) provides that no suit or other
proceedings shall be maintained or continued in any Court or before any authority for the refund of any such tax, and Clause (c) provides that no
Court shall enforce any decree or order directing the refund of any such tax. The suits contemplated by Clause (b) of Section 9 of the amending
Act are suits filed against the State for refund of tax paid and it will not apply to the suits in question where one party claims from another the
amount which has been wrongly collected from him. Therefore, it cannot be said that the suits as such are not maintainable in view of the provisions
of the amending Act.
Of course, the defendants can successfully resist the suit if it is shown that in enforcement of the provisions of the amending Act there has been
a re-assessment of the turnover in question in their hands and that the amounts refunded earlier had been paid back to the State towards the sales
tax liability as reassessed. Unless the sales tax authorities at Mysore make a re-assessment and recall the order of refund, the provisions or the
amending Act will not entitle them to call back the amount which they had refunded to the defendants. The amending Act merely validates
assessments, re-assessment, levy or collection of tax already made and that will not enable the authorities to go behind the order of refund unless
there has been a re-assessment bringing to charge the inter-State transactions in question on the basis of the amending Act. In M.M.
Mthukaruppan Chettiar v. Deputy Commercial Tax Officer (1960) 2 M.L.J. 20 : (1960) 11 S.T.C. 220, this Court, while construing a similar
validating provision in Section 17 of the Madras General Sales Tax (Third Amendment) Act of 1956, had expressed the view that the validating
Act will not enable the collection of the refunded amount unless there are clear words to that effect in the amending Act. In that case a hotel
proprietor was assessed to sales tax for 1953-54 at the enhanced rate of tax of 4 1/2 pies in the rupee under the proviso to Section 3 (1) (b) of
the Madras General Sales Tax Act, 1939. Later the said proviso to Section 3(1) (b) was held to offend Article 14 of the Constitution by the High
Court. In view of the said decision the Tribunal held that the assessee was liable to be taxed only at 3 pies in the rupee. On the basis of the order
of the Tribunal which became final, a certain sum was refunded to the assessee in September, 1956. Subsequently the proviso to Section 3(1) (b)
was replaced with retrospective effect by another proviso and the earlier assessments were validated. Thereafter the assessing authority issued a
notice to the assessee requiring him to repay the sum refunded to him on the ground that by reason of the amendment made retrospectively the
refund made was not proper. That demand was challenged by the assessee before this Court, and this Court expressed the view that:
When the excess over three pies per rupee was refunded to the petitioner, it was an amount lawfully due to him and was properly paid. The only
question is, whether the payment had become unlawful or could be deemed to have been made under a mistake of law. If ex hypothesi the refund
was due it was due because of the judgment of this Court upholding the objection of the validity of the charging provision; there could be no
mistake in law in making the refund and the mere fact that the proviso has been re-enacted with retrospective effect cannot have the effect of
rendering the refund then made either illegal, unlawful or one under a mistake of law....I consider that the demand for the repayment of the amount
refunded is not justified by law, and that the petitioners are entitled to the reliefs which they seek by these petitions.
A similar view has been taken in Sundaram Iyengar and Sons v. Deputy Commercial Tax Officer (1960) 11 S.T.C. 443, in respect of amending
Act XVII of 1954. We are, therefore of the view that the validating Act XXVIII of 1969 will not enable the collection of the refunded amount
straightaway.
The learned Counsel for the petitioners perhaps realising the above position wanted to submit that in all these cases there has been re-
assessments in pursuance of the amending Act bringing to charge the transactions in question and that orders of refund had in fact been recalled
and demands have been issued for payment of the tax as reassessed. In fact he has filed affidavits enclosing certain re-assessment orders and
correspondence that passed between the defendants and the sales tax authorities at Mysore in support of his statement that there have been
reassessments bringing to charge the transactions in question and that they have been made liable to pay the sales tax in respect of the said
transactions. The documents filed along with the affidavits show that the assessments of the petitioners in C.R.P. Nos. 1749, 1823,1824, 1825,
and 1826 of 1970, have been reopened for some of the assessment years in question. In C.R.P. Nos. 1937 and 1938 of 1970 more affidavits
have been filed by the assessees stating that they have received show cause notices from the sales tax authorities requiring them why the
assessments should not be rectified and why the amounts refunded should not be recalled. But the said affidavits do not indicate as to what is the
assessment year to which the proposed reassessment proceedings and the demands related. It is not, therefore, possible to act on those affidavits
and hold that the defendants have been re-assessed in relation to the transactions in question which took place in the assessment years 1961-62,
1962-63 and 1963-64. In the other cases no material of any kind has been produced to establish that the petitioners have been re-assessed in
respect of the transactions in dispute. Therefore, except for the cases in which some materials have been produced to show that reassessments
have been made and the refunded amounts have been called back, we have to proceed in the other cases there have been no reassessments nor
the refunded amounts have been called back by the sales tax authorities. In those cases where no materials have been produced, the decree and
judgment of the trial Court have to be upheld. In C.R.P. No. 1827 of 1970 certain reassessment orders have been filed but they show that the
assessee is one Moola Rangappa. The petitioner in C.R.P. No. 1827 of 1970 is one Mooja Rangappa and Company. Therefore the above
documents are not relevant for establishing that the petitioner in C.R.P. No. 1827 of 1970 has been reassessed by the Mysore Sales Tax
authorities during the relevant assessment years. In respect of the C.R.P. in which materials have been placed to show that there has been re-
assessments, the matters have to be remitted to the trial Court for finding out whether the reassessment covers the entire period and the
transactions in dispute, and to dispose of the cases in the light of the consideration of the above material. Therefore C.R.P. Nos. 1749, 1823,
1824, 1825 and 1826 of 1970 are remanded to the trial Court for fresh disposal. The documents filed in the above C.R.Ps. will be sent to the trial
Court and the trial Court is directed to receive the same and consider the matters afresh in the light of the oral evidence that may be adduced by
the parties in relation thereto. The other Civil revision petitions are dismissed. There will be no order as to costs in any of these petitions. This
decision will not prejudice the right of the defendants to get back the amounts decreed as and when they are reassessed and forced to pay the
sales tax on the transactions involved in any of the suits.