Somnath Iyer, J.
1. The Appellant before us which is a firm carrying on business in coffee in Mangalore was the plaintiff in the suit out of which this second appeal arises. The Coffee Board established under the Coffee Act, 1942 (Act VII of 1942) was defendant-1. An agent of the Coffee Board was defendant-2. These defendants are the respondents in this appeal.
2. On March 27, 1957 the plaintiff-firm purchased 1000 CWTS. of coffee from the Coffee Board and paid on April 4, 1957, the price of the coffee along with a sum of Rs. 4811/- which was the sales tax calculated at 3 pies for every rupee under the relevant provisions of the Madras General Sales Tax Act, 1939, which was operating at that point of time in the District of South Kanara. On May 19, 1958, the Coffee Board demanded from the plaintiff a further sum of Rs. 1,389.44 as sales tax. It was informed that if the sum of money was not paid, a deposit of the firm with the Coffee Board would be appropriated for that purpose.
3. The plaintiff-firm repudiated this demand and maintained that no additional sales tax was exigible. By its letter addressed to the Coffee Board on May 26, 1958, it is stated that it would pay under protest a sum of Rs. 1,347-25 P., but would institute necessary legal proceedings for the recovery of the amount so paid.
4. It is undisputed that the plaintiff-firm did pay that sum of money to the Coffee Board. After such payment, the plaintiff-firm instituted a suit against the Coffee Board and its agent for the recovery of sum of Rs. 1,372.42 P. consisting of a sum of Rs. 1,347.23 P. paid to the Coffee Board as already observed and the interest thereon and incidental expenses.
5. The Coffee Board contended that the amount paid by the plaintiff-firm was properly payable by it by way of sales tax and that contention was accepted by the Munsiff who dismissed the suit. The appeal preferred by the plaintiff-firm to the District Judge was also dismissed.
6. This Second Appeal preferred by the plaintiff-firm was referred by Narayana Pai J. to a Bench of two Judges under Section 6 of the Mysore High Court Act, 1961 on the ground that it involved a question of considerable importance.
7. It is undisputed that in respect of the sale by the Coffee Board to the plaintiff-firm sales tax was payable by the plaintiff-firm and that under the provisions of the Madras General Sales Tax Act, the sales tax payable was 3 pies for every rupee of the price. It is likewise beyond controversy that if the sales tax is calculated in that way, the sum of Rs. 4,811/- paid by the plaintiff-firm to the Coffee Board on April 4, 1957 would correctly represent the sales tax payable on the sale. But the further demand made by the Coffee Board was founded on the provisions of Sections 3 of the Mysore Existing laws (Construction of References to Values) Act, 1957, and Sections 13 and 14 of the Indian Coinage Act, 1906 (Central Act 3 of 1906) Section 3 of the Mysore Existing Laws Act and Section 14 of the Coinage Act, according to the Coffee Board, directed a substitution for the value expressed in pies in the Madras General Sales Tax Act, the value expressed in new coins referred to in sub-section (1) of Section 14 of the Indian Coinage Act. So, it was maintained by the Coffee Board that for the three pies referred to in the Madras General Sales Tax Act, 2 Naya Paise had to be substituted and that sales tax had to be paid by the plaintiff-firm at 2 naya paise for every rupee of the price.
8. It is not disputed that if sales tax had to be paid at the rate of 2 naya paise for every rupee the plaintiff-firm became liable to pay the further sum of money demanded by the Coffee Board and it is conceded on behalf of the Coffee Board that if such substitution of the new coin is not permissible, the sales tax previously paid by the plaintiff-firm was all that was due from it.
9. We are not concerned in this appeal with Section 13 of the Indian Coinage Act which does no more than to state how and in what coinage a legal tender could be made in payment or on account. The really relevant provisions are section 14 of the Coinage Act and Section 3 of the Mysore Existing (Construction of References to values) Act. Section 14 of the Coinage Act reads:
'14. Decimal system of coinage.
(1) The rupee shall be divided into one hundred units and the new coin representing such unit may be designated by the Central Government, by notification in the official Gazette, under such name as it thinks fit, and the rupee, half-rupee and quarter rupee shall be respectively equivalent to one hundred, fifty and twenty-five such new coins and shall, subject to the provisions of sub-section (1) and sub-section(2) of Section 13 and to the extent specified therein, be a legal tender in payment or on account accordingly.
(2) All coins issued under the authority of this Act in any denominations of annas pice and pies shall, to the extent specified in Section 13, be a legal tender in payment or on account at the rate of sixteen annas, sixty-four pice or one hundred and ninety two pies, and to hundred new coins referred to in sub section (1) calculated in respect of any such single coin or number of such coins, tendered at one transaction, to the nearest new coin, or where the new coin above and the new coin below are equally near, to the new coin below.
(3) All references in any enactment or in any notification, rule or order under any enactment or in any contract, deed or other instrument to any value expressed in annas, pice and pies shall be construed as references to that value expressed in new coins referred to in sub-section (1) converted thereto at the rate specified in sub-section (2)'.
Sub-sections (1) and (2) of this section concern themselves with a legal tender for payment or on account. They have therefore, no relevance to the question before us. Sub-section (3) upon which dependence was placed by the Coffee board is similar to Section 3 of the Mysore Existing Laws (Construction of References to Values) Act which reads :--
'3. Construction of references to certain values in Existing Laws:-- In every existing law, all references to any value expressed in annas, pice and pies, shall be constructed as references to that value expressed in new coins referred to in sub-section (1) of Section 14 of the Indian Coinage Act, 1906 (Central Act III of 1906) converted thereto at the rate specified in sub-section (2) of Section 14 of the said Act.'
10. Section 14(3) of the Coinage Act and Section 3 of the Mysore Existing Laws (Construction of references to values) Act, contain similar provisions whose meaning is that for a value expressed in old coins in existing laws, its equivalent value in new coins referred to in Section 14(2) of the Coinage Act shall be substituted. The demand made by the Coffee Board was based on assumption that if for the value expressed in terms of pies in the Madras General Sales Tax Act its value in terms for new coins was substituted, sales tax was payable by the plaintiff-firm at 2 N. P. for every rupee. So it was that the computation made in that manner that formed the basis of the further demand. The Court below accepted the permissibility of that computation and Mr. Sundaraswamy appearing for the Coffee Board points out to us that the view taken by the courts below conforms to the opinion expressed by this Court in Canara Workshop Ltd. v. State of Mysore, 1960-38 Mys LJ 567. Mr. Karanth appearing for the plaintiff-firm did not dispute that the computation made by the Coffee Board receives support from the decision of this Court in the case to which we have referred, but contended that the view expressed in that case can no longer be considered as good law after the pronouncement of the Supreme Court in Amrit Banaspati Co., Ltd., v. State of Uttar Pradesh : [1964]8SCR313 . His submission was that it is clear from the decision of the Supreme Court that the provision in Section 14(3) of the Coinage Act does not authorise the conversion of three pies referred to in the Madras General Sales Tax into Naya Paise or the computation of the sales tax on that basis. He maintained that what instead is directed by that sub-section is the conversion of the aggregate sales tax after its computation at three pies for every rupee into its equivalent value in terms of new coins.
11. It is not disputed that the computation suggested by Mr. Karanth would negative the further demand made by the Coffee Board for the reason that the value of the sales tax originally paid is equivalent to its value in terms of new coins.
12. It is now clear from the elucidation made by the Supreme Court in the case of Amrit Banaspati Co. Ltd. : [1964]8SCR313 that sub-section (3) of Section 14 of the Coinage Act does not authorise the conversion of the rate specified in the Madras General Sales Tax Act into a value in terms of the new coins referred to in sub-section (2) of that section. What should be converted is the value of the old coin in terms of the new coin after the aggregate amount of the sales tax is computed at a rate, in terms of the old coin, specified in the Madras General Sales Tax Act. That that is the proper method of calculation is clear from the observations of the Supreme Court which read:--
'We are therefore of opinion that what sub-section (3) of Section 14 requires is that references to any value expressed in annas, pice and pies will be construed to such value and expressed in new coins which would be absolutely equivalent to the value of the old coins when their value is converted at the rate of 16 annas, 64 pice and 192 pies to 100 naya paise.'
13. The case before the Supreme Court was very similar to the case before us. Sales tax was payable by the dealer in that case under the Uttar Pradesh Sales Tax Act which mentioned the rate of sales tax in terms of the old coins. The sales tax demanded was an amount calculated after conversion of the rate specified in the U.P., Sales Tax Act in terms of the old coin into the corresponding value in terms of the new coin specified in Section 14(2) of the Coinage Act. That was the initial step taken in the computation of the sales tax. Then for every rupee of the turnover sales tax was calculated at a rate arrived in terms of the new coin in that way. The contention urged before the Supreme Court was that the sales tax which could be claimed in terms of the new coin should be absolutely equivalent to the sales tax paid in terms of the old coin and what should be converted into the new coin is the aggregate sales tax and not the rate. That contention succeeded before the Supreme Court which made the elucidation that sales tax which could be demanded in terms of the new coin should be absolutely equivalent to the tax calculated in terms of the old.
14. This enunciation made by the Supreme Court supersedes the view taken by this Court to the contrary in the South Kanara Workshop case, 1960-38 Mys LJ 567 in which it is was expounded that the conversion should in the first instance be of the rate expressed in terms of the old coin.
15. Mr. Sundaraswamy appearing for the Coffee-Board asks us to say that the enunciation made by the Supreme Court did not involve the interpretation of Section 3 of the Mysore Existing Laws (Construction of References to Values) Act and that the law declared by the Supreme Court was not, therefore an authority which should guide the interpretation of that section. He maintained that the plain meaning of that section was that wherever a value was expressed in terms of old coin in any law which was operating at the time when the Mysore Existing Laws (Construction of References to values) Act came into force, there should be a substitution of the corresponding value in terms of the new coin. He therefore, asked us to say that if the madras General Sales Tax stated that three pies for every rupee of the turnover was payable by way of sales tax, the concerned authority functioning under the Act had the power to substitute for it its equivalent value in terms of the new coin which would be 2 Naya Paise. It was asserted that the language of Section 3 of the Mysore Existing Laws (Construction of References to Values) Act can have no other meaning and that it was not reasonable to restrict its operation so as to regulate the conversion of the aggregate amount of the sales tax and not the rate at which it should be calculated. The argument pressed on us was that this section speaks of values specified in an existing law and not of the values which can be arrived at on a calculation of the aggregate sales tax. He urged that that was not a matter to which there was any reference in any existing law whereas, the rate at which sales tax should be computed was. So, he asked us to say what could be converted is the rate and not the aggregate sales tax.
16. We are precluded from investigating into the sustainability of this ratiocination by reason of the very clear elucidation made by the Supreme Court in Amrit Banaspati's case : [1964]8SCR313 from which it is clear that the value which could be arrived at after conversion should be absolutely equivalent to the value in terms of the old coin. What is equally clear from that decision is that in the computation of the sales tax payable under a law like the Madras General Sales Tax Act what has to be converted is the aggregate tax and not the rate which is prescribed.
17. We are not impressed by the argument that Section 3 of the Mysore Existing Laws (Construction of References to Values) Act is outside this exposition. This section contains provisions which are similar to those contained in Section 14(3) of the Coinage Act. Indeed Section 14(3) of the Coinage Act, is comprehensive enough to include a conversion of the value specified in the Madras General Sales Tax Act and as explained by this Court in the Canara Workshop case, 1960-38 Mys LJ 567, Section 3 of the Mysore Existing Laws (Construction of References to Values) Act was enacted by way of abundant caution to extend its application to laws to which section 14(3) of the Coinage Act may not apply. However that may be, the meaning of Section 3 of the Mysore Existing Laws (Construction of References to Values) Act and that of Section 14(3) of the Coinage Act is the same. Both of them provide for the construction of references to values in existing laws as references to value expressed in terms of new coins. That being so, the exposition by the Supreme Court is in truth an interpretation of the principle which section 3 of the Mysore Existing Laws (Construction of References to Values) Act incorporates.
18. So, we reach the conclusion that no further payment of sales was exigible and that the demand made for its payment was impermissible.
19. This conclusion makes it unnecessary for us to investigate whether the sale was concluded on March 27, 1957, as contended by Mr. Karanth when the Indian Coinage Act had not yet come into force or whether the sale became complete only on April 4, 1957, as contended by Mr. Sundaraswamy after that Act had begun to operate. This question ceases to have materiality on the interpretation we have placed on Section 3 of the Mysore Existing Laws (Construction of References to Values) Act and on the interpretation placed by the Supreme Court on Section 14(3) of the Coinage Act.
20. But it was urged by Mr. Sundaraswamy that even if the plaintiff-firm was called upon by the Coffee Board to pay the sum of Rs. 1347-23 P. which was not due by way of sales tax, no suit could be brought by the plaintiff-firm for its recovery. It was contended that under Section 8(b) of the Madras General Sales Tax Act, the Coffee Board which was a registered dealer was under a duty to collect sales tax due under the Act and to pay over the tax so collected to the State Government. The postulate placed before us was that the excess tax so recovered from the plaintiff-firm by the Coffee Board was collected in the performance of this duty and that since the amount so collected was paid over by the Coffee Board to the State Government as the agent of the State Government, its recovery from the Coffee Board was impossible.
21. A two-fold submission was made before us in the context of this argument. This first rested on Section 18-A of the Madras General Sales Tax Act and the second on an equitable principle. It was first maintained that Section 18-A bars a suit in any Court to set aside or modify an assessment made under the Act and that a suit for the recovery of the excess tax collected by the Coffee Board was in substance to pay that amount by way of tax, although it was not exigible. In support of this argument, reliance was placed on a decision of the Supreme Court in the Firm of Illuri Subbayya Chetty & Sons v. State of Andhra Pradesh : [1963]50ITR93(SC) in which it was explained that a suit by an assessee for the recovery of a sum of money against the State on the ground that the said amount had been illegally recovered from him as sales tax under the Madras General Sales Tax Act, 1939, is incompetent in view of the bar enacted by Section 18-A of that Act.
22. It is obvious however, that the bar created by that section operates only against a person who seeks the cancellation or modification of an assessment made under the Act. If the Coffee Board had instituted a suit for that purpose, it is plain that that suit would have been within the prohibition, but the plaintiff-firm did not seek a modification or cancellation of any assessment made under the provisions of the Act. It is not very clear whether any assessment had been made on the Coffee Board which was a registered dealer but even if one had been made, whatever might be the impediment to the suit which could be brought by the Coffee Board created by Section 18-A, no such impediment could preclude the plaintiff-firm from instituting a suit for recovery of excess tax paid by it to the Coffee Board.
23. A suit by a purchaser for recovery of the tax collected from him by a registered dealer is not, in our opinion, within the prohibition of the section. That suit involves no cancellation or modification of an assessment made on the registered dealer.
24. It was next urged that the Coffee Board collected the excess tax from the plaintiff-firm in obedience to the circular issued by the Commissioner of Commercial Taxes that the computation of the tax should be made by converting the rate in terms of the old coin into a value in terms of the new. It was urged that under S. 8-B of the Madras General Sales Tax Act the Coffee Board became an agent of the State Government for the collection of the tax and its payment to the State Government and that the Coffee Board was under a duty to implement the direction of the Commissioner of Commercial Taxes in that regard. It was urged that if the amount was collected in that way and the Coffee Board had bona fide paid over the amount collected to the State Government in performance of the duty enjoined by Section 8B(2) such payment exonerates the Coffee Board from restitution.
25. An investigation into the validity of this submission should be preceded by a narration of the events which culminated in the payment under protest by the plaintiff-firm of the excess tax demanded.
26. We have already observed that the demand for the payment of this amount was made on May 19, 1958 when the plaintiff-firm was informed by the Coffee Board that a further sum of Rs. 1,389-44 P. on account of Sales tax was due by the plaintiff-firm and that if it did not pay up that amount, the deposit made by the plaintiff-firm would be appropriated for that purpose. The plaintiff-firm repudiated the demand in its reply despatched on May 26, 1958. The Coffee Board was informed by that letter that the demand was not legal and that the appropriation of the deposit was not possible. The Coffee Board was also informed that the plaintiff-firm would pay Rs. 1347.23 P. to the Coffee Board under protest and that a suit would be institute for its recovery. In its reply, the Coffee Board maintained on June 1, 1958 that if a suit is instituted, it would be defended.
27. It is obvious from these three communications that the plaintiff-firm paid the sum of Rs. 1347.23 P. under compulsion and duress. It felt constrained to make the payment in the face of the threat, that, in default, the deposit made by the plaintiff-firm would be appropriated towards the tax.
The plaintiff-firm elected to make the payment under protest and intimated the Coffee Board that appropriate legal proceedings would be commenced for the recovery of the amount which it was compelled to pay.
28. If these are the circumstances in which the plaintiff-firm was obliged to part with a sum of money which could not be properly demanded as tax under the provisions of the Madras General Sales Tax, could it be said that there is any principle which precludes the plaintiff-firm from asking for restitution by reason of the payment of the amount collected to the State Government? Section 72 of the Contract Act which creates liability for the return of money paid under a mistake or coercion reads:
'72. Liability of Person to whom money is paid, or thing delivered by mistake or under Coercion:-- A person to whom money has been paid, or anything delivered by mistake or under coercion, must repay or return it.'
Illustration (b) to that section reads:--
'(b) A railway company refuses to deliver up certain goods to the consignee except upon the payment of an illegal charge of carriage. The consignee pays the sum charged in order to obtain the goods. He is entitled to recover so much of the charge as was illegally excessive.'
29. It seems to us that the case before us is fully within the provisions of this section and equally within illustration (b). It is clear that the word 'coercion' occurring in this section should not be understood in manner defined by Section 15 of the Contract Act and that that word has to be understood in its ordinary sense. 'Coercion' to which that section refers includes every kind of compulsion even if it does not measure up to the 'coercion' defined by Section 15 of the Contract Act, which incorporates a special definition of that word occurring in the preceding section. That exclusive definition cannot assist the interpretation of Section 72 of that Act. That that is so was explained by Lord Moulton in Seth Kanhaya Lal v. National Bank of India (1913) 40 Ind App 56 (PC). Discussing the meaning of the word 'coercion' occurring in section 72 of the Indian Contract Act, Lord Moulton said this:
'It is impossible to contend that the coercion referred to in this section or in the above illustration is 'with the intention of causing any person to enter into an agreement. The word 'coercion' must therefore be used in its general and ordinary sense as an English word, and its meaning is not controlled by the definition in Section 15.'
In that case the Judicial Committee had before them a case in which the plaintiff alleged that he was the sole proprietor of certain cotton mills and their contents. The defendants who had a money decree against a limited company, obtained thereunder an attachment against his said property, took possession and prevented him from working the mills. The plaintiff was in consequence compelled to pay to the defendants under protest, the sum claimed by them and sought its recovery in the suit. The contention that there was no coercion within the meaning of Sec 15 of the Contract Act was a repelled on the ground that the word 'coercion' occurring in Section 72 of the Contract Act was used in its general and ordinary sense and that its meaning was not controlled by the definition contained in Section 15.
30. In the case before us the plaintiff-firm was obliged to pay the amount demanded by reason of the compulsion exerted on it by the Coffee Board and the amount was paid under protest. So, according to the plain meaning of Section 72 of the Contract Act the Coffee Board became liable to return it.
31. We do not think that that liability became extinguished on payment of the amount collected in that way to the State Government. In the course of the argument Mr. Sundaraswamy asked attention to cases decided both in this country as well as in England in which it was explained that a person who paid money to another under a mistake could recover it from the person to whom it was paid only if that person was still in possession of the money and had not bona fide and without notice paid it to another. The decisions in K.M.P.R., Firm v. Official Assignee of Madras, AIR 1923 Mad 17 and Soloman Jacob v. National Bank of India Ltd. Aden, ILR 42 Bom 16 = (AIR 1917 Bom 119) were two of the cases on which Mr. Sundaraswamy depended. On the principle of these decisions we were asked to say that since the Coffee Board was no longer in possession of the excess tax collected from the plaintiff, but had parted with it, the claim for restitution could, if at all, be made against the State Government and not against the Coffee Board.
32. It will be seen from the discussion in the two cases upon which reliance was placed, that the view in those cases was to some extent influenced by the principle applicable to a suit against an agent who had received money from another, for payment to his principal and had paid it to him. We do not think that that principle can have any application to a case like the one before us.
33. Although if may be said that Coffee Board in a sense is an agent of the State Government for the purpose of Section 8B of the Madras General Sales Tax Act, and so has the power and is under a duty to collect sales tax in respect of the sales effected by it, what is abundantly clear from Section 8-B is that the tax which could be so collected is a tax due under the Act. There is no power under that section to collect what is not due under the Act. Recovery of money although demanded by way of tax, is not within section 8-B, if the tax is not exigible. In that view of the matter, the question would arise whether the collection of tax which is not exigible involves any agency.
34. However that may be, a payment made under a mistake has no resemblance to a payment made under coercion. It is easy to understand the equitable doctrine that restitution should not be allowed where the person seeking such restitution has to blame himself for the payment which he made under a mistake. If the money so paid is innocently paid to another without notice of the claim for restitution, it may be as explained by Coutts-Trotter J. inequitable to direct restitution by the person to whom the payment was made under a mistake.
35. But a person who coerced another to make a payment which is not due cannot claim the protection of equity on the plea that having coerced such payment he parted with the amount paid. What creates liability to make restitution is the acts of coercion which was itself wrongful. It is no defence for the person who coerced such payment that the amount paid was no longer with him or that he was himself coerced by another to exert duress or compulsion upon the person seeking restitution. 'Coercion' within the meaning of section 72 of the Contract Act is a wrongful act producing liability to restitution which that section statutorily enjoins. The liability to make that restitution is absolute, and there is nothing in that section which can persuade the view that liability can come to an end if the person compelling the payment parts with the amount received by him.
36. The Coffee Board thus became liable to return the amount paid by the plaintiff-firm to it, whether or not the money paid by the plaintiff-firm was still with the Coffee Board or was paid over to the State Government. What creates liability is the act of compulsion which enabled it to recover the money from the plaintiff-firm.
37. We, therefore, negative the argument that the liability of the Coffee Board came to an end after the amount recovered by it from the plaintiff firm was paid over to the State Government.
38. Mr. Sundaraswamy suggested to us that the Coffee Board has been placed in a predicament in consequence of the circular issued by the Commissioner of Commercial Taxes in pursuance of which the Coffee Board was obliged to pay the sales tax by resort to impermissible conversion. He has explained to us that the bar of Section 18-A of the Madras General Sales Tax Act is an impediment to the recovery of the amount collected from the plaintiff-firm, from the State Government to whom it has been paid. But it is obvious that our pronouncement that the sales tax was not exigible should be a sufficient ground for resting a claim for refund by the Coffee Board from Government. If the Coffee Board collected from the plaintiff-firm a sum of money which was not due and that sum of money was paid over by the Coffee Board to the State Government, we have no doubt in our mind that the State Government would have no hesitation in refunding that amount to the Coffee Board especially after a decree is made against the Coffee Board for its return to the plaintiff-firm. The apprehension of Mr. Sundaraswamy, that even after the elucidation made by this Court the State Government would ever think of unjust enrichment is in our opinion, utterly groundless.
39. We must therefore, dissent from the view taken by the Courts below that the plaintiff's suit could not succeed. We reverse the decrees made by the Courts below and make a decree in favour of the plaintiff-firm and against the Coffee Board as prayed in the plaint. The plaintiff-firm will be entitled to current interest on the sum of Rs. 1347-23 P. from the date of the institution of the suit till the date of payment at six per cent per annum.
40. The plaintiff-firm will be entitled to its costs in all the three courts.
41. Appeal allowed.