The Judgment of the Court was delivered by

Milap Chandra, J.:— The facts of all these cases and the questions involved in them are similar. On the request of the learned counsel for the parties, arguments were simultaneously heard at length at the admission stage for the final disposal of all these cases. As such they are being disposed of by this common order.

2. The petitioners have filed these writ petitions with these allegations. Their factories and establishments are situated in the industrial area, Pali. On the advise of the authorities of the State Insurance Department, Pali and labouring under the mistake of law, they applied for the registration under the Employees State Insurance Act, 1948 (hereinafter to be called as ‘the Act’) and their factories and establishments were covered by the provisions of the Act with effect from the year 1977. Since then they started paying contribution in respect of their various employees and workmen to the respondent. The details of contribution paid from 1979 to 1983 are given in the charts. By notification No. F. 1(3) LSG/74/35476-54 dated June 18, 1975 of the Government of Rajasthan in the department of Local Self government, the industrial area was included in the limits of Pali Municipality, Pali. By Notification No. SO/118 dated December 24, 1983 of the Government of India, published in Gazette of India part II dated January 14, 1984, Chapters IV, V and VI of the Act were brought into force with effect from January 1, 1984 in the extended municipal limits of Pali wherein the factories and establishments of the petitioners are situated. The mistake was realised in the month of December, 1986 and after consultation with the lawyers, notice requesting for the refund of the amounts paid till December, 1983 were served. The said levy and collection of Employees State Insurance Contribution as shown in the charts were wholly without jurisdiction, illegal and void. The petitioners are entitled to get back the said amounts with interest. In reply, it is admitted by the Employees State Insurance Corporation that the factories and establishments of the petitioners were duly registered with effect from the year 1979, they started paying contribution since then and the said notification dated December 24, 1983 was duly issued. The remaining allegations of the petitioners were denied. It has further been averred that the petitioners' factories and establishments are duly covered by the earlier notification of the Central Government No. SRO/2857 dated November 23, 1956, the various employees of the petitioners had already obtained benefits under the Act, the petitioners should have applied to the Corporation for the refund of the amounts before the beginning of the first benefit period, they could have also applied to E.S.I Court for the redressal of their grievance and could also file suit under Section 72, Contract Act in the Civil Court and the writ petitions deserve to be dismissed on the ground of having alternative remedies.

3. It has been contended by the learned counsel for the petitioners that it is clear from the Notification No. F. 1(3) LSG/74/3546-54 dated June 18, 1975 of the Government of Rajasthan that the industrial area, Pali was included within the municipal limits of Pali with effect from June 18, 1975 and by Notification No. SO/118 dated December 24, 1983 of the Government of India, the Act was brought into force in the extended municipal limits of Pali with effect from January 1, 1984 and as such the petitioners were not liable to pay contribution under the Act prior to January 1, 1984. He further contended that the contribution as defined in Section 2(4) of the Act is in the nature of a tax and not fee and the petitioners are entitled under Section 72, Contract Act, to get back the amounts paid by them as E.S.I contributions. He relied upon (1980) 2 SCC 437 : AIR 1980 SC 1037, (1983) 2 SCC 433 : AIR 1983 SC 603, (1986) 3 SCC 50 : AIR 1986 SC 1556, 1963 STC 63, 1969 STC 216 and 1988 (2) STL 97 (SC).

4. In reply, it has been contended by the learned counsel for the respondent that the said notification of the Government of India dated December 24, 1984 is in the nature of clarification, the Act was applicable to the factories and establishments of the petitioners since the year 1979 and the petitioners are not entitled to get back any amount paid as contribution. He further contended that the employees of the petitioners have duly taken advantage under the Act and as such neither the petitioners nor their employees are entitled to get back any amount paid as contribution. He also contended that the petitioners could move the State Insurance Court or could file suits in the Civil Courts for the refund of the amounts paid by them as contribution and the writ petitions deserve to be dismissed on the ground of having alternative remedy. He lastly contended that the petitioners' claim for refund is barred by time.

5. The first question for consideration in this case is from what date the Act came into force in the Industrial Area, Pali. Sub-section (3) of Section 1 of the Act runs as under:—

“(3) It shall come into force on such date or dates as the Central Government may, by notification in the Official Gazette, appoint, and different dates may be appointed for different provisions of this Act and or different States or for different parts thereof.”

6. By Notification No. SRO/2857 dated November 23, 1956 of the Central Government, the Act was made applicable to the area covered by Pali Municipality. It is clear from the Notification No. F. 3 LSG/74/35746-54 dated June 18, 1975 of the Government of Rajasthan read with certificate dated December 30, 1986 (Annexure 1) issued by the Commissioner, Nagar Parishad, Pali that the Industrial Area where the factories and establishments of the petitioners are situated was included in the Municipal Limits of Pali with effect from June 18, 1975. The Notification No. SO/118 dated December 24, 1983 issued by the Government of India runs as under:—

“In exercise of the powers conferred by sub-section (3) of Section 1 of the Employees State Insurance Act, 1948 (34 of 1948) the Central Government hereby appoints the 1st January, 1984 as the date on which the provisions of Chapter IV (except Section 44 and 45 which have already been brought into force) and Chapter V and VI (except subsection (1) of Section 76 and Sections 77, 78, 79 and 81 which have already been brought into force) of the said Act shall come into force in the following areas in the State of Rajasthan, namely.

“The areas comprised within the extended Municipal Limits of Pali. “(N.S 38013/32/83-HI)”

7. Sub-section (16) of Section 3 of the Rajasthan Municipalities Act, 1959 defines ‘Municipality’ as under:—

“Municipality” means any local area which is, at the commencement of this Act, a Municipality and any local area which may hereafter be constituted a municipality under Section 4.”

8. All these provisions leave no manner of doubt that the Act came into force in the Industrial Area, Pali with effect from January 1, 1984.

9. The second question for consideration is whether contribution as defined in Section 2(4) of the Act is a tax or fee. Section 40(1) runs as under:—

“40. Principal employer to pay contribution in the first instance. —(1) The principal employer shall pay in respect of every employer, whether directly employed by him or by or through an immediate employer, both the employer's contribution and the employees contribution.”

10. It is clear from the above quoted provisions that the payment of contribution by an employer is compulsory. It has to be paid by each and every employer who is governed by the Act irrespective of the fact whether his employees are taking benefits under the Act or not. It is thus in the nature of a tax and not a fee. In para No. 2 page 2 of the reply, the respondent has stated.

“The coverage under the Act cannot be disputed or delayed on the ground that the employees have not received the benefits under the Act because the benefit to be received by the employees under the Act has nothing to do with the employer's liability to make the requisite contribution.”

11. It has been observed in Anand Kumar v. Employees State Insurance Corporation . AIR 1957 All. 185 at page 141 para 32., as follows:—

“The learned Chief Justice has held that the contribution levied upon the factory owners under Chapter V-A of the Act is a Tax, and I agree with him. I may however add a ground in support of the same view. In Article 366(28) of the Constitution the words ‘taxation’ and ‘tax’ have been defined as.

“Taxation” includes the imposition of any tax or impost, whether general or local or special, and ‘tax’ shall be construed accordingly.”

According to this definition the word ‘tax’ would include any impost whether general, local or special, and I do not think there can be much doubt that the contribution made payable under the Act is an impost of one or more of the three Kinds mentioned in the definition given above. It is a compulsory levy and is clearly an impost on the owners of factories. It is therefore covered by the definition of the word ‘tax’ mentioned above.”

12. It has also been held in M/S. Gwalior Rayons Silk Manufacturing Co. v. E.S.I Corporation . 1975 Lab IC 1395 Kerala DB para 12. Sakthi Pipes Ltd. v. Regional Director, Employees' State Insurance Corporation . 1978 Lab IC 410 Madras DB page 410., Mysore Kirloskar Ltd. v. E.S.I.C . 1981 Lab IC 794 Karnataka DB., The Associated Cement Co. Ltd. v. The Regional Director, Employees' State Insurance Corporation, Bombay . 1981 Lab IC 1409 Bombay paras 15 and 16. and Employees' State Insurance Corporation, Chandigarh v. T.C Vermani . 1984 Lab IO 1406 para 8., that the said contribution is a tax and not a fee.

13. The third question for consideration is Whether the petitioners are entitled to get back the amounts paid by them as contribution under the Act for the period 1979 to 1983 during which the Act was not applicable to their Factories and establishments. In para 5 of the writ petitions it is stated that the petitioners received letter (Annexure 4) from the Regional Director (respondent) stating that the Central Government has issued Notification No. FRO/2857 dated November 23, 1956 under Section 1(3) of the Act applying the provisions of the Act to all factories and establishments within the Municipal Limits of Pali, such an establishment/factory is required to register itself under Section 2-4 of the Act, Chapter IV casts a responsibility on the principal employer to insure its employees and to pay contribution in respect of the said employee covered under the Act, and on the basis of the inspection done, the factories/establishments fall within the purview of Section 2(12)/1 (5) of the Act. A request was made to take immediate steps for the registration and payment of contribution and maintenance of records under the Act. This para has been admitted by the respondent vide para No. 5 of the reply. It is thus clear that the petitioners started making payment of the contribution in pursuance of the said letter of the respondent.

14. Article 265 of the Constitution of India mandates that no tax shall be levied or collected except by authority of law. The contribution for the period 1979 to 1983 could not be levied or collected as the Act authorising the same was not applicable. It was collected without any authority of law. Section 72, Contract Act runs as under:—

“72. Liability of person to whom money is paid, or thing delivered, by mistake or under coercion.—Person to whom money has been paid, or anything delivered, by mistake or under coercion, must repay or return it.”

15. It is correct that the respondent has stated in its reply that the employees have also taken benefit of the medical facilities etc. Details of these benefits have not been specified. As already mentioned above, it has been stated in the reply. “The coverage under the Act cannot be disputed on the ground that the employees have not received the benefit under the Act, because the benefit to be received by the employees under the Act has nothing to do with the employer's liability to make the requisite contribution.” Besides this, no equitable consideration can be imported when the terms of Section 72 of the Contract Act are clear and unambiguous. It has been observed in Sales Tax Officer v. Kanhaiyala P., as follows:—

“…………………The other circumstances would be such as would entitle a court of equity to refuse the relief claimed by the plaintiff because on the face and circumstances of the case it would be inequitable for the court to award the relief to the plaintiff. These are, however, equitable considerations and could scarcely be imported when there is a clear and unambiguous provision of law which entitles the plaintiff to the relief claimed by him.

Such equitable considerations were imported by the Nagpur High Court in Nagorao v. G.G in Council, where Kaushalendra Rao J. observed:

“The circumstances in a particular case, disentitle, the plaintiff to recover what was paid under mistake.”

“If the reason for the rule that a person paying money under mistake is entitled to recover it is that it is against conscience for the receiver to retain it, then when the receiver has no longer the money with him or cannot be considered as still having it as in a case when he has spent it on his own purposes which is not the case here different considerations must necessarily arise.”

16. We do not agree with these observations of the Nagpur High Court. No such equitable considerations can be imported when the terms of Section 72 of the Indian Contract Act are clear and unambiguous. We may, in this context, refer to the observations of their Lordships of the Privy Council in 30 Ind App. 114 (supra) at p. 125. In dealing with the argument which was urged there in regard to the minor's contracts which were declared void viz., that one who seeks equity must do equity and that the minor against whom the contract was declared void must refund the advantage which he had got out of the same, their Lordships observed that this argument did not require further notice except by referring to a recent decision of the Court of Appeal in Thuratan v. Nottinghan Permanent Benefit Building Society, since affirmed by the House of Lords and they quoted with approval the following passage from the judgment of Romer L.J at p. 13 of the earlier report:—

“The short answer is that a Court of Equity cannot say that it is equitable to compel a person to pay moneys in respect of a transaction which as against that person the Legislature has declared to be void.”

17. The fourth question for consideration in these cases is whether the writ petitions deserve to be rejected on the ground of alternative remedy and limitation. As held above, the demand and collection of the contribution was not under the authority of law. In such cases the questions of exhausting alternative remedy and limitation do not arise. It has been observed in Shiv Shanker Dal Mills etc. v. State of Haryana, as follows:

“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 is no law of limitation, especially for public bodies, on the virtue of returning what was wrongly recovered to whom it belongs. Nor is it palatable to our jurisprudence 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.”

18. Thus the petitioners are entitled for the refund of the amounts on contribution realised without authority of law.

19. The last question for consideration is the extent of the refund of the E.S.I contribution. It has been stated in the reply by the respondent that the amounts deposited by the petitioners as E.S.I contribution also included the contribution made by their employees. No rejoinder has been filed by any petitioner controverting this averment. It is not disputed that the petitioners were entitled to deduct ⅓rd share of E.S.I contribution from the wages of their employees. As such the petitioners are entitled for the refund of the ⅔rd amount of the contribution deposited by them.

20. Consequently, all the writ petitions are allowed with costs. The respondent is directed to refund ⅔rd of the amounts deposited by the petitioners as E.S.I contribution in respect of the period ending on December 31, 1983 with interest @ 12% per annum from the date of deposit, particulars of the amounts deposited as E.S.I contribution by a petitioner are shown in the chart, Annexure V, enclosed with his writ petition and their total has been mentioned in para No. 6 of the writ petition. If an account payee draft in the name of the petitioner in respect of the refundable amount and interest is sent through registered A.D post to him within six months from today, interest would then be payable and calculated @ 6% per annum instead of 12%.

21. If an employee of a petitioner requests the respondent within one year from today for the refund of the amount deducted from his wages and deposited as his contribution in respect of the period ending on December 31, 1983, the same would be refunded to him with interest @ 12% per annum from the date of the deposit. If refundable amount is remitted by Money order within six months of the written request, the interest would be payable and calculated @ 6% per annum instead of 12%.