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Shree Baidyanath Ayurved Bhawan Private Limited, Patna v. The State Of Bihar & Others
Concise Analytical Summary of the Opinion (Lalit Mohan Sharma, J.)
Factual and Procedural Background
The petitioner manufactures medicinal preparations according to the Ayurvedic system, specifically an article called "Mrit Sanjivani Sura" produced by fermentation and distillation. Under the Bihar and Orissa Excise Act, 1915, the article was subject to excise duty. The central Medicinal and Toilet Preparations (Excise Duties) Act, 1955 (effective 1 April 1957) imposed a lower rate of duty; the petitioner asserted that after this central Act came into force, duty should be payable under the central Act rather than the State Act. Both Central and State authorities disputed that the product was a "medicinal preparation" under the central Act.
The petitioner filed a writ under Article 32 in the Supreme Court (W.P. No. 352 of 1961), and the Supreme Court allowed the petitions on 7 September 1962 (reported A.I.R. 1963 Supreme Court, page 622). The Supreme Court did not grant refund relief but left petitioners to pursue refunds with the State Governments: "We pass no order as to the claim for refund for that is a matter which the petitioners can take up with the State Governments concerned according to law." The petitioner sought a refund from the State of Bihar of Rs. 91,723.80 (allegedly excess excise collected). After repeated communications and reminders to State authorities (letters and annexures described in the writ petition), the petitioner received a letter from the Secretary to the Government dated 7.12.1973 rejecting the claim (produced as Annexure 11). The petitioner then filed the present writ application in the High Court seeking quashing of the rejection and a direction for payment.
Legal Issues Presented
- Whether the High Court can, in writ jurisdiction, entertain and grant a writ (including mandamus) that effectively awards a money decree directing the State to refund money collected as excise duty.
- Whether the letter rejecting the petitioner's claim (Annexure 11) is an order in a statutory capacity amenable to certiorari and therefore can be quashed by the High Court.
- Whether any question of limitation bars the petitioner's claim and whether limitation issues are relevant to the exercise of writ jurisdiction in this case.
Arguments of the Parties
Respondents' Arguments (State of Bihar and Commissioner of Excise)
- The relief sought is, in substance, a money decree and can only be obtained by filing a regular suit in a civil court of ordinary jurisdiction; a writ petition for pure monetary recovery is not maintainable.
- The claim is barred by limitation; the writ is belated and, therefore, not appropriate relief in writ jurisdiction.
- Although a counter-affidavit attempted to address merit-based points, during oral argument the Government Pleader did not pursue those merits and focused on the procedural objection that a pure money claim is not maintainable under Articles 226 and 227 of the Constitution, particularly when limitation would have barred a suit.
Petitioner's Arguments
- The letter rejecting the refund claim (Annexure 11) was illegal and contrary to the Supreme Court's decision in M.B.S. Oushadhalaya v. Union of India (A.I.R. 1963 Supreme Court, 622), and the grounds for rejection were not stated.
- The petitioner asked for Annexure 11 to be quashed, and consequentially for a direction to pay the money.
- Alternatively, if Annexure 11 could not be quashed in writ jurisdiction, the High Court could nonetheless issue a direction for payment of money simpliciter under its writ jurisdiction.
- The petitioner also contended that the limitation rules applicable to suits do not apply to writ applications and suggested additional letters could be produced to show the claim was not time-barred.
Table of Precedents Cited
| Precedent | Rule or Principle Cited For | Application by the Court |
|---|---|---|
| M.B.S. Oushadhalaya v. Union of India, A.I.R. 1963 Supreme Court, 622 | Establishes that certain medicinal preparations fall to be taxed under the Medicinal and Toilet Preparations (Excise Duties) Act rather than State Excise Acts; Supreme Court left refund claims to be pursued with State Governments. | The court relied on the Supreme Court's operative direction and observed that the Supreme Court purposely did not grant refunds but left the matter for the petitioners to take up with State Governments; this informed the court's view that a writ to compel refund was not mandated by the Supreme Court's judgment. |
| Suganmal v. State of Madhya Pradesh, A.I.R. 1965 Supreme Court, 1740 | Holds that mandamus for recovery of money is not ordinarily maintainable because such claims may be pursued by a suit, where the State can raise defences including limitation. | The court applied this principle to hold that the present writ, essentially seeking a money decree, is not maintainable in writ jurisdiction and that the petitioner should file a suit if he seeks recovery. |
| The Commissioner of Police, Bombay v. Gordhandas Bhanji, A.I.R. 1952 Supreme Court, 16 | Recognises that a writ may be issued for refund where the duty to refund arises under statutory rules (case involved Section 45 of the Specific Relief Act in context). | The court distinguished this case on the ground that, in Gordhandas Bhanji, the duty to refund arose under statutory rules, whereas in the present case no statutory duty to refund was shown. |
| Burmah Construction Co. v. The State of Orissa, A.I.R. 1962 Supreme Court, 1320 | Affirmed that where there is a statutory duty to refund (e.g., Section 14 of the Orissa Sales Tax Act), a High Court may direct refund as consequential relief subject to statutory limitation provisions. | The court held this authority inapplicable here because the petitioner’s claim did not rest on a statutory duty to refund; Burmah Construction involved a statutory provision expressly obliging refund. |
| Firm A.T.B Mehtab Majid v. The State of Madras, A.I.R. 1963 Supreme Court, 928 | Recognises grant of refund as consequential relief where the underlying relief in writ jurisdiction is established and where refund arises from statutory circumstances. | The court noted this decision but found it distinguishable since the present claim does not proceed from a statutory duty to refund and was not an ancillary refund claim attendant on other writ reliefs granted. |
| State of Madras v. Bhailal Bhai, A.I.R. 1964 Supreme Court, 1006 | Holds that High Courts have power under Article 226 to give consequential relief including repayment, but this power is discretionary and should not be used to supplant remedies in civil courts where defences (such as limitation) are legitimately available. | The court relied on this principle to emphasise the discretionary nature of Article 226 relief and to support the conclusion that the High Court should not ordinarily substitute a civil suit where the State can raise defences; thus mandamus for refund was not appropriate here. |
| Standard Refinery and Distillery Ltd. v. Union of India, C.W.J.C. 387 of 1971 (disposed 13.12.1973) | Decision of the same High Court supporting the view that writs seeking pure money decrees are not ordinarily maintainable. | The court cited this decision as supporting authority for dismissing the present writ which sought a money decree simpliciter and directing the petitioner to pursue a suit. |
Court's Reasoning and Analysis
The court's analysis proceeds from established facts and precedent without introducing extraneous inferences:
- The court observed that there are no provisions in the Bihar Excise Act or rules (nor any other statutory provision shown) dealing with refund of duty illegally collected. The parties jointly stated the absence of statutory refund provisions.
- Because no statutory duty to refund was identified, the court concluded that the communications from the State (including Annexure 11) do not amount to an order passed in a statutory capacity. The letter was characterised as analogous to a debtor's letter refusing a creditor's demand or a letter rejecting a Section 80 CPC notice — i.e., not a statutorily reviewable order.
- On that basis, the court held Annexure 11 could not be quashed under certiorari since it is not a statutory order; it is comparable to private law correspondence rejecting a demand.
- The court relied on authoritative decisions (notably Suganmal v. State of Madhya Pradesh) to reason that a writ of mandamus for the recovery of money is not ordinarily maintainable because the remedy for monetary recovery generally lies in a suit where the State may raise all available defences, including limitation.
- The court distinguished Gordhandas Bhanji on the ground that that case involved a duty to refund arising under statutory rules, which is absent here. Similarly, Burmah Construction and allied cases involved refund claims rooted in statutory provisions imposing obligations to refund; those precedents were therefore inapplicable to a claim founded on the ordinary debtor-creditor relationship alleged by the petitioner.
- Although the petitioner argued limitation did not apply to writ proceedings, the court declined to decide the limitation question in the writ proceeding. It observed that limitation would be a serious defence open to respondents in an ordinary suit and that it was unnecessary and inadvisable to adjudicate limitation within the writ petition context.
- Finally, synthesising these points and following its own prior decision (Standard Refinery and Distillery Ltd.), the court concluded that the present writ, which seeks a simple monetary decree, cannot be allowed in writ jurisdiction and must be pursued by suit in the appropriate civil forum.
Holding and Implications
DISMISSED.
Holding (core ruling): The writ petition seeking a direction for refund of money collected (Rs. 91,723.80) was dismissed. The court held that (i) Annexure 11 (the letter rejecting the refund claim) is not a statutory order amenable to certiorari; (ii) a writ of mandamus to recover money simpliciter is not ordinarily maintainable where the claim is essentially one for monetary recovery and not founded on a statutory right to refund; and (iii) the petitioner should file a suit to seek recovery, where respondents may raise statutes of limitation and other defences.
Implications:
- Direct effect on the parties: The petitioner is denied relief in writ jurisdiction and is directed to pursue recovery through a civil suit if it wishes to press its monetary claim. The parties were directed to bear their own costs.
- Broader legal impact: The decision applies established Supreme Court principles limiting the exercise of writ jurisdiction in cases seeking purely monetary relief not founded on a statutory duty to refund. The court emphasised the discretionary nature of Article 226 and the inappropriateness of substituting civil remedies where a suit is the proper forum. The opinion does not purport to create new precedent beyond applying existing authorities.
Application dismissed. (Order delivered by Lalit Mohan Sharma, J.; S. Ali Ahmad, J. concurred.)
Lalit Mohan Sharma, J.:— By this writ application, the petitioner wants the High Court to direct the respondent no. 1, State of Bihar, and respondent no. 3, Commissioner of Excise, Government of Bihar, to pay to the petitioner a sum of Rs. 91,723.80P. The question raised in this case relates to the maintainability and/or propriety of issuing such a writ.
2. The petitioner has been carrying on business of manufacturing medicinal preparation according to the Ayurvedic system of medicine and it has been manufacturing one of the items known as Mrit Sanjivani Sura by the process of fermentation and distillation in accordance with the Ayurvedic system of medicine as prescribed in ancient and authoritative books on the subject. The arcticale was subject to payment of excise duty under the Bihar and Orissa Excise Act, 1915. In 1955, the Parliament passed Medicinal and Toilet Preparations (Excise Duties) Act which came into effect on the 1st April, 1957. The rate of duty payable under this central Act was considerably lower than that payable under the Bihar Excise Act, and the petitioner asserted that the duty on Mrit Sanjivani Sura was not, thereafter payable under the Excise Act. Both the Central Government and the State Government insisted that the item was not a medicinal preparation attracting the Medicinal and Toilet Preparations (Excise Duties) Act and the duty was leviable under the State Excise Act. The petitioner filed an application under Article 32 of the Constitution of India before the Supreme Court, which was registered as W.P No. 352 of 1961 and was allowed along with other similar applications by a common judgment dated 7th September, 1962. The judgment has been reported at page 622 of A.I.R 1963 Supreme Court. The State of Bihar had, in the meantime, collected the duty in accordance with the higher rate under the Bihar Excise Act, and the petitioner was asking for a refund of the excess amount so collected. The Supreme Court, however did not grant any relief for refund and left the petitioner to take up the question with the State Government. The operative portion of the judgment is in the following words:—
“We, therefore, allow the petitions and direct that these three medicinal preparations should not be taxed under the various Excise Acts in force in various States and can only be taxed in accordance with the provisions of the Medicinal and Toilet Preparations (Excise Duties) Act. We pass no order as to the claim for refund for that is a matter which the petitioners can take up with the State Governments concerned according to law.”
3. According to the statement in paragraph 11 of the present writ application, the excess sum collected by the State Government amounted to Rs. 91723.80 and the petitioner moved the Excise Department of the State of Bihar by a letter dated the 17th October, 1962 addressed to the Minister of Excise Bihar. As the request was not acceded to, the demand was reiterated and on 21.1.1963, a statement of accounts as included in Annexure 5 was also filed. It is further asserted that on the 25th December, 1963, a memorandum was submitted to the Chief Minister, Bihar and the demand was repeated to the Commissioner of Excise. Bihar by a letter dated 31.3.1964 (Annexure 6). Another letter (Annexure 7) was sent on 6.4.1964 and thereafter on 12.4.1969 a further letter (Annexure 8) was addressed to the Commissioner of Excise. The petitioner appended to the writ application as Annexure 9 a copy of the letter from the Commissioner of Excise dated 13.5.1969 addressed to the petitioner stating that no decision had been taken by the Government on the question and information would be sent after the matter was decided. The petitioner, thereafter, sent another letter as contained in Annexure 10 dated 28.10.1964 to the Commissioner of Excise, Bihar, and the Secretary to the Government of Bihar, Excise Department, reminding them to pass an order for refund in accordance with the judgment of the Supreme Court. In paragraph 22 of the writ application, it was stated that the petitioner on 11.11.1974 learnt that its claim for refund had been rejected without assigning any reason and in the writ application the petitioner prayed for a writ in the nature of certiorari quashing the order of the State Government refusing to refund and issuing a direction for making payment. The application was admitted on 25.11.1974 The petitioner produced as Annexure 11 to a supple mentary affidavit filed on 22.4.1975 a copy of the letter dated 7.12.1973 written by the Secretary to the Government to the petitioner rejecting the claim of refund.
4. The application has been resisted on behalf of the respondents 1 and 3, mainly on the grounds that, in substance, the relief prayed for was for passing a money decree which can be done only in a regular suit in a civil court of ordinary jurisdiction and a writ petition is not maintainable, and the claim is barred by the rule of limitation. In a counter affidavit filed by the respondents, an attempt has been made to make out a case on merits also against the claim of refund but in the course of argument, Mr. Md. Khaleel, learned Government Pleader, appearing for the respondents 1 and 3 did not advance any argument. He strenuously contended that a pure money claim cannot be granted by the High Court under its extraordinary jurisdiction under Articles 226 and 227 of the Constitution of India specially when the application is filed so belatedly that a suit for that purpose would on the date of the filing of the writ application, have been barred by limitation.
5. Mr. T.K Prasad, appearing for the petitioner, contended that the order as contained in Annexure 11 to the supplementary affidavit was wholly illegal being contrary to the decision of the Supreme Court in (1) M.B.S Oushadhalaya v. Union of India (A.I.R 1963 Supreme Court, 622) and for the further reason that the grounds for rejection of the petitioner's claim had not been indicated. It was argued that Annexure 11 should be quashed and, as a consequence thereof, a direction for payment of the money should be given. Alternatively, it was submitted that even if the nature of Annexure 11 be considered such that it may not be quashed in writ jurisdiction, a direction for payment of money simpliciter can be issued by the High Court.
6. It has been jointly stated by the learned Advocates of the parties that there are no provisions whatsoever in the Bihar Excise Act or the rules framed thereunder nor are there any statutory provision anywhere else dealing with the refund of duty illegally collected and it has not been suggested on behalf of the petitioner that by refusing to make a refund or by writing a letter as contained in Annexure 11, the respondents have violated any statutory provision or neglected to perform any statutory duty. The steps by the petitioner in demanding refund have not been taken under any particular Act or rule and it appears that the nature of the demand is that made by an ordinary creditor from his debtor. The letter (Annexure 11) does not, to my mind, amount to an order passed in a statutory capacity. It is on a par with a letter refusing to accede to the demand of a creditor written by a debtor and is similar in nature to a letter rejecting the demand of a person serving a notice under Section 80 of the Code of Civil Procedure before filing a suit. It cannot be suggested that after a demand in a notice under Section 80 of the Code of Civil Procedure is rejected, by the State, a writ can lie. I, therefore, hold that there is no question of quashing the letter as mentioned in Annexure 11 to the supplementary affidavit.
7. In substance, the sole relief asked for by the petitioner in the present case is for a writ of mandamus directing the State to refund the duty illegally collected and it has been established by the decision in (2) Suganmal v. State of Madhya Pradesh (A.I.R 1965 Supreme Court, 1740) that such an application is not ordinarily maintainable for the simple reason that such a claim can always be made in a suit and in such a suit it is open to the State to raise all possible defences including a plea of limitation. Before the Supreme Court, reliance was placed by Mr. M.C Setalvad appearing for the appellant on an earlier decision of the Supreme Court in (3) The Commissioner of Police, Bombay v. Gordhandas Bhanji (A.I.R 1952 Supreme Court, 16) in support of the contention that a writ could be issued for refund of money even if the petitioner's right to refund did not arise, under any statutory law, but arose under any law. In that case, a writ was prayed under Section 45 of the Specific Relief Act. Distinguishing that case, the Supreme Court in Suganmal v. State of Madhya Pradesh (Supra) pointed out that in the case of The Commissioner of Police, Bombay v. Gordhandas Bhanji (Supra), the duty to refund arose under statutory rules. The other decisions specifically stating that a mandamus for recovery of money could be issued only when the petitioner is entitled to recover that money under some statute were followed (See paragraph 13). It has been urged by the learned Government Pleader that a serious question of limitation would have arisen if the petitioner had filed a suit in November, 1974 as a period of more than three years elapsed between Annexures 1 and 8 and again between Annexures 9 and 10 and at no point of time an acknowledgement of lability was made by the respondents extending the period of limitation. Mr. T.K Prasad submitted that the petitioner could produce some more letters before this court for the purpose of showing that the claim in November, 1974 was not barred by rule of limitation and that these letters were not filed with the writ application as the provision regarding limitation prescribed for suits did not apply to a writ application. I do not consider it necessary or advisable to go into the question of limitation, applicable to a suit if it had been filed by the petitioner in November, 1974 or if it is filed in future; but it must be said that the respondents can raise a serious question of limitation which can be appropriately decided in a suit.
8. Reliance was placed on the decisions in (4) Burmah Construction Co. v. The State of Orissa (A.I.R 1962 Supreme Court, 1320) (5) Firm A.T.B Mehtab Majid v. The State of Madras (A.I.R 1963 Supreme Court, 928) and (6) State of Madras v. Bhailal Bhei (A.I.R 1964 Supreme Court, 1006) on behalf of the petitioner. In the case of Burmah Construction Co. v. The State of Orissa (supra) the writ application was filed before the Orissa High Court for, inter alia, declaring the provisions of the Orissa Sales Tax Act authorising imposition of Sales tax on certain turnovers as ultra vires and for quashing that assessment made by the authorities which resulted in illegal realisation of tax. As an ancillary relief, the petitioner in that case prayed for a direction on the State of Orissa to refund the illegally collected amount of sales tax. The writ application was allowed by the Orissa High Court, and a direction to refund the collected tax was also made subject to the rule of limitation mentioned in Section 14 of the Orissa Sales Tax Act. The first paragraph of the said Section 14 imposed an obligation upon the Collector to refund to the dealer any amount realised, but there was a restriction put in the proviso to the section by introducing a special period of limitation, which the High Court ruled, had to be respected. The decision was affirmed by the Supreme Court and it was pointed out that the petitioner's application for refund was founded on the statutory duty to refund as mentioned in Section 14. The said decision of the Supreme Court cannot apply to the case before me for two reasons, namely, (i) that the claim for refund was made as a consequence to the other reliefs entertainable under writ jurisdiction and that the duty to refund arose under a statute.
9. In the case of Firm A.T.B Mehtab Majid v. The State of Madras (supra) also a direction for refund of tax illegally collected was given by way of a consequential relief. In the case of State of Madras v. Bhailal Bhai (supra), it was observed in paragraph 16 of the judgment that the High Courts have power for the purpose of enforcement of fundamental rights and Statutory rights to give consequential relief by ordering repayment of money realised without authority of law (the word consequential has been underlined by me) and in paragraph 17 of the judgment it was further observed that Article 226 was not intended to supersede the modes of obtaining relief through a civil court or to deny defences legitimately open in such actions. The High Court's power under Article 226 of the Constitution is a discretionary one and specially so while issuing writs of mandamus, and due regard must be had in every case in relation to the facts and circumstances as to whether a relief for refund of money should be the subject matter of a regular suit in the civil court. I do not agree with the contention raised on behalf of the petitioner that since the Supreme Court while deciding W.P 352 of 1961 left the question of refund for the petitioner to take up with the State Government, a writ must issue. If the matter were so plain, the Supreme Court would have itself directed in its judgment. The Supreme Court did not make any final pronouncement on that point which was left at large and it was open to the petitioner to file a suit “according to law”.
10. On a consideration of all the relevant facts, I hold that the present writ application which, in essence, seeks to obtain a money decree simpllciter for the petitioner, cannot be allowed. My view gets support from a decision of this court in (7) C.W.J.C 387 of 1971 (Standard Refinery and Distillery Ltd. v. Union of India) disposed of on 13.12.1973 The petitioner may file a suit for the purpose in accordance with law and it will be open to the respondents in that event to raise any plea by way of defence including a question of limitation which may be validly open to them. I would accordingly dismiss this writ application, but would direct the parties to bear their own costs.
11. S. Ali Ahmad, J. I agree.
Application dismissed.
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