Bhaskar Bhattacharya, J.
1. All these mandamus appeals along with a separate writ application have been assigned to this Bench for hearing inasmuch as common questions of law arise for determination in all these matters.
2. The mandamus appeals are directed against the common judgment dated November 19, 2003 passed by a learned Single Judge of this Court by which His Lordship disposed of nine different writ applications heard analogously by directing the Kolkata Municipal Corporation to accord sanction of the building plans to the respondents without realising any Drainage Development Fees and to refund such fees if already realised. In other words, His Lordship was of the view that the Kolkata Municipal Corporation had no right to realise the Drainage Development Fees as no such right has been conferred upon the Corporation by virtue of the provisions of the Kolkata Municipal Corporation Act or the Rules or the Regulations famed thereunder. In the other writ application, a different learned Single Judge referred the matter to the Division Bench, as by that time, all those writ applications were disposed of and nine mandamus appeals had been preferred by the Kolkata Municipal Corporation against the previously mentioned judgment passed by the learned Single Judge.
3. All these matters were accordingly heard analogously and we propose to dispose of all these matters by this common judgment.
4. First, we proceed to decide the nine mandamus appeals preferred by the Kolkata Municipal Corporation against the common judgment passed by the learned Single Judge.
5. In all those writ applications out of which these mandamus appeals arise, the grievance of the writ petitioners-respondents, the owners of the buildings, was that although they had complied with the formalities required under the provisions of the Kolkata Municipal Corporation Act and the Rules framed thereunder for getting sanctioned plan for their building, the Corporation did not sanction such plan on the ground that the Drainage Development Fees are required to be paid by the writ petitioners in addition to all other fees mentioned in the aforesaid Act, Regulation or the Rules framed thereunder. In all those writ applications, the writ-petitioners challenged the legality of the circular being circular No. 08 of 2002-03 by which provision was made for imposition of the Drainage Development Fees in connection with the sanction of the building plan. According to the writ petitioners, there is no provisions in the Kolkata Municipal Corporation Act, 1980 and the Rules and Regulations framed thereunder, enabling the Kolkata Municipal Corporation authority to demand any amount by way of Drainage Development Fees for sanction of the building plan. The writ petitioners, therefore, prayed for declaration that the circular No. 08 of 2002-2003 issued by the Commissioner of the Kolkata Municipal Corporation was ultra vires the Constitution of India and the Kolkata Municipal Corporation Act and the Building Rules framed thereunder and consequently, prayed for quashing of the said circular and the resulting demand of money on the basis of such circular.
6. Those writ applications were contested by the Kolkata Municipal Corporation by filing affidavits-in-opposition and the defence taken by the Corporation was that the year's budget estimate of the Corporation regarding rates, taxes, fees and charges to be levied by the Corporation contained a specific provision for realization of the fees for Drainage Development and specific rates were mentioned therein and the Mayor with the concurrence of the members of the Mayor-in-Council and the Municipal Commissioner duly approved the levy of the Drainage Development Fees at the specified rates. According to the Corporation, the imposition of the Drainage Development Fees was, thus, in conformity with the provisions contained in the Kolkata Municipal Corporation Act and the Rules and the Regulations framed thereunder and therefore, there was no illegality on the part of the Corporation in demanding the Drainage Development Fees as condition precedent for grant of sanction of the building plans. The Corporation, therefore, prayed for dismissal of those writ applications.
7. The learned Single Judge on consideration of the materials on record and the provisions contained in the Kolkata Municipal Corporation Act and the Rules and the Regulations framed thereunder by a detailed judgment came to the conclusion that neither the statute nor those rules and regulations authorised the Corporation to impose Drainage Development Fees and therefore, realization of money on the aforesaid account was unauthorised and in violation of Article 265 of the Constitution of India. His Lordship, therefore, declared the said circular as invalid and passed a direction upon the Corporation for refund of the money taken from the respondents on such account.
8. Being dissatisfied, the Kolkata Municipal Corporation has come up with these mandamus appeals.
9. Mr. Mitra, the learned Senior Advocate appearing on behalf of the Corporation, has, at the very outset, drawn attention of this Court to the provisions contained in Sections 289(2), 290, 293, 307, 543(2) of the Kolkata Municipal Corporation Act and the Rules 6(h)(ii), 7(d), 24, 49(b) and 114 of the Building Rules and has contended that those provisions authorised the Corporation to realise Drainage Development Fees and therefore, the learned Single Judge erred in law in declaring the circular No. 08 of 2002-03 issued by the Municipal Commissioner as ultra vires the Act and the Constitution. Mr. Mitra, therefore, prays for setting aside the order passed by the learned Single Judge and dismissal of the writ applications filed by the respondents.
10. In order to appreciate the submissions advanced by Mr. Mitra, it will be profitable to refer to the previously mentioned provisions contained in the Act and the Rules framed thereunder which are quoted below:
289. Right of owner or occupier of premises to drain into municipal drain.--(1)...
(2) Any person desirous of availing himself of the provisions of Sub-section (1) shall give to the Municipal Commissioner notice of his proposals, and at any time within one month after receipt thereof the Municipal Commissioner may grant permission or by notice to him refuse to permit the communication to be made, if it appears to him that the mode of construction or condition of the house-drain is such that the making of the communication would be prejudicial to the drainage system, and for the purpose of examing the mode of construction and condition of the house-drain he may, if necessary, require it to be laid open for inspection.
(3)...
290. Connections with municipal drains not to be made except in conformity with Section 289.--No person shall without complying with the provisions of Section 288 or Section 289 and the regulations made thereunder make or cause to be made any connection of a house-drain belonging to himself or to some other person with any municipal drain; and the Municipal Commissioner may close, demolish, alter or remake any such connection made in contravention of this section, and the expenses incurred by the Municipal Commissioner in so doing shall be paid by the owner of the street or the owner or occupier of the premises, as the case may be, for the benefit of which the connection was made or by the person offending.
293. New premises not to be erected without drains.--(1) It shall not be lawful to erect or re-erect any premises in Kolkata or to occupy any such premises unless--
(a) a drain is constructed of such size, materials and descriptions at such level and with such fall as may appear to the Municipal Commissioner to be necessary for the effectual drainage of such premises;
(b) there have been provided and set up on such premises such appliances and fittings as may appear to the Municipal Commissioner to be necessary for the purposes of gathering or receiving the drainage from, and conveying the same off, the said premises and of effectually flushing the drain of the said premises and every fixture connected therewith.
(2) The drain so constructed shall empty into a municipal drain situated at a distance of not exceeding thirty metres from the premises; but if no municipal drain is situated within that distance then such drain shall empty into a cesspool to be constructed by the owner situated with the distance to be specified by the Municipal Commissioner for the purpose.
307. Power of the Municipal Commissioner to levy fees for drainage and sewerage service.-- (1) The Municipal Commissioner may, at any time, levy an annual fee, for drainage and sewerage, at such rate, as may be fixed under the regulations made thereunder, or as stated in the budget estimate referred to in Sub-section (3) of Section 131 in this behalf, on the owner or the occupier or the person responsible to pay property tax on any house or land.
(2) Any unpaid sum under this section shall be recoverable from the person concerned as an arrear of tax under this Act.
543. Signature, conditions, duration, suspension, revocation, etc., of licences and written permissions. --(1)...
(2) Except as otherwise provided in the Act or the rules or the regulations made thereunder, for every such licence or written permission a fee may be charged at such rate as may from time to time be fixed by the Municipal Commissioner with the sanction of the Mayor-in-Council, and such fee shall be payable by the person to whom the licence or the written permission is granted.
6(h)(ii) supply pipes, or any underground water reservoir, for conveying to the premises the supply of wholesome or unfiltered water from the service mains of the Corporation, and pipes, septic tanks, housedrains or other means of communication with any Municipal drain, or the traps or apparatus connected therewith, with reference to Section 313.
7(d) a plan showing the position of pipes, underground and overhead reservoirs of water supply and house drains, septic tanks, if any, or means of communication with any municipal drain or the traps or apparatus connected therewith in conformity with Section 313.
24. Notice for covering up drains, etc. -- (1) Before proceeding to cover up drain or appliances connected with the drainage, the applicant shall give a notice to the Municipal Commissioner in the form as specified in Schedule XI stating that such drains or appliances are ready for inspection and shall specify the date and hour not being a date earlier than seven days from the date of the notice on which he will proceed to cover up such drains or appliances.
(2) An officer of the Corporation duly authorised by the Municipal Commissioner in this behalf shall inspect the work at the site and within three days of such inspection, issue necessary direction, if any.
49. Conditions as to use of a building site. --(a)...
(b) if the building to be erected is intended for human habitation, unless the Municipal Commissioner is satisfied that it is capable of being well drained and that the owner will take necessary step to drain it. 114. Plumbing Services.--(1) The planning, design, construction and installation of water supply, drainage and sanitation and gas supply system shall be in accordance with the provisions of water supply, drainage and sanitation, gas supply on plumbing services of the latest edition of National Building Code of India.
(2) The underground reservoir shall be constructed in such a way that the manhole portion must be raised 300 mm. or more above G.L. to avoid surface contamination. The inlet supply pipe shall always be kept above the higher level of the stored water surface.
Note:- All others, which were not mentioned above, shall conform to the provisions of the latest edition of National Building Code of India.
11. At the very outset, we should bear in mind the provision contained in Article 265 of the Constitution of India according to which no tax shall be levied or collected except by authority of law.
12. At this juncture, it will be profitable to refer to the well-known proposition of law that a natural person has the capacity to do all lawful things unless his capacity has been curtailed by some rule of law. It is equally a fundamental principle that in case of a statutory corporation, it is just the other way. The Corporation has no power to do anything unless those powers are conferred on it by the statutes, which creates it. See: Manimuddin Bepari v. Chairman of the Municipal Commissioner, Dacca reported in 40 CWN 17.
13. In the subsequent case of Ahmedabad Urban Development Authority v. Sharad Kumar Jayant Kumar Passawalla reported in : [1992]3SCR328 , the Supreme Court made the following observation:.it appears to us that in a fiscal matter it will not be proper to hold that even in the absence of express provision, a delegated authority can impose tax or fee. In our view, such power of imposition of tax and/or fee by delegated authority must be very specific and there is no scope of implied authority for imposition of such tax or fee. It appears to us that the delegated authority must act strictly within the parameters of the authority delegated to it under the Act and it will not be proper to bring the theory of implied intent or the concept of incidental and ancillary power in the matter of exercise of fiscal power.
14. Bearing in mind the aforesaid principles and after going through the various provisions of the Act, the Rules and the Regulations framed thereunder, referred to by Mr. Mitra, the learned Senior Advocate appearing on behalf of the appellant, we do not find that either in the Act or the Rules or the Regulations framed thereunder, any right or authority has been given to the Corporation to realise Drainage Development Fees from the owners of the land or the building at the time to the sanction of the building-plan as condition precedent for grant of permission to raise building.
15. Mr. Mitra in this connection placed strong reliance upon the provision contained in Sections 397 and 131 of the Act and contended that there being specific budget estimate the Corporation to realise fees for drainage development and such provision having been approved by the Mayor-in-Council with the concurrence of the Municipal Commissioner, the imposition of the Drainage Development Fees is legal and valid. After going through the provision contained in Section 307 of the Act, we find that by virtue of that provision, the Municipal Commissioner, may at any time, levy an annual fee, for drainage and sewerage, at such rate, as may be fixed under the regulations made thereunder, or as stated in the budget estimate referred to in Sub-section (3) of Section 131 in this behalf, upon the owner or the occupier or the person responsible to pay property tax on any house or land and that any unpaid sum of money under the said section should be recovered as an arrears of tax under the Act.
16. Section 131 of the Act, on the other hand, requires that the Corporation shall on or before the 22nd day of March in each year, adopt for the ensuing year, the budget estimate which should be the estimate of the receipt and expenditure of the Corporation to be received and incurred on account of the Municipal Government of the Kolkata. According to Sub-section (2) of the said section, the budget estimate shall separately state the income and the expenditure of the Corporation to be received and incurred in terms of the following accounts:
(a) The Water Supply, Sewerage and Drainage Account,
(b) the Road Development and Maintenance Account,
(c) the Bustee Service Account,
(d) the Commercial Projects Account, and
(e) the General Account.
17. The Sub-section (3) of the said section provides that the budget estimate should state the rates at which various taxes, surcharges, cases and fees shall be levied by the Corporation in the year next following.
18. A conjoint reading of Sections 307 and 131 of the Act makes it abundantly clear that if provision is made in the budget estimate showing the amount of money to be received and spent towards drainage account, an amount of annual fees may be levied upon the land and building owners at the rates fixed therein for realisation of the same. In our view, those provisions permit the Corporation to impose annual fees at the rate indicated therein upon the building owners or the landowner or the person liable to pay property-tax on the basis of budget estimate reflecting the receipt and expenditure on that account but those provisions do not authorise the Corporation to levy Drainage Development Fees for the purpose of realising 'a one-time money' as condition precedent for sanction of the building-plan of a proposed building for drainage development of the surrounding area by imposing such fees only on those persons who will apply for permission to erect building leaving other landowner or the owner of the building or the persons liable to pay property-tax,
19. We are, therefore, not at all impressed by the aforesaid contention advanced by Mr. Mitra.
20. The next question is whether imposition of such fees is authorised by Section 543(2) of the Act.
21. According to the said Sub-section, except as otherwise provided in the Act or the Rules or the Regulations made thereunder, for every licence or written permission required to be signed by the Municipal Commissioner or any officer authorised to grant any permission, a fee may be charged at such rate as may from time to time be fixed by the Municipal Commissioner with the sanction of the Mayor-in-Council, and such fee shall be payable by the person to whom the licence or the written permission for construction of the building, written permission is necessary and in the Building Rules, specific provision is made for obtaining fees for grant of such permission and in the cases before us, the landowners who applied for grant of permission for erecting building have all paid the requisite fees prescribed in the Rules under different heads. But the Act, Rules or the Regulation do not require any separate permission to be taken by the owner of the land who has prayed for construction of building for the alleged purpose 'development of drainage system' in that area. Therefore, Section 543(2) of the Act cannot be of any help to the Corporation for justifying unauthorised imposition of Drainage Development Fees. None of the provisions referred to by Mr. Mitra authorises the Corporation to realise the Drainage Development Fees from the persons who apply for permission to erect building.
22. We, therefore, find no substance in the aforesaid contention of Mr. Mitra.
23. We have already indicated that unless specifically authorised by the statute, a Corporation cannot realise any amount from the citizen and so far, the delegated legislation is concerned, nothing can be implied for the justification of realisation of any amount either as tax or as fees, which is not specifically authorised.
24. We now propose to deal with the decisions cited by Mr. Mitra in this behalf.
25. Mr. Mitra placed reliance upon the following four decisions of the Supreme Court:
(a) Corporation of Calcutta v. Liberty Cinema reported in : [1965]2SCR477 ;
(b) Municipal Corporation of Delhi v. Md. Yasin reported in : [1983]142ITR737(SC) ;
(c) B.S.E. Broker's Forum v. Securities and Exchange Board of India reported in : AIR2001SC1010 ;
(d) Calcutta Municipal Corporation v. Sherry Mercantile Put. Ltd. and Ors. reported in : AIR2005SC1879 .
26. The object of Mr. Mitra for placing those decisions was to impress upon us that the finding of the learned Single Judge that in the term 'fees', there must be the elements of quid pro quo, was not correct and that the learned Single Judge erred in holding that the imposition of the Drainage Development Fees amounted to double taxation.
27. After going through the judgment impugned we find that the learned Single Judge principally arrived at the conclusion that either the Act or the Rules or the Regulations did not authorise the Corporation to levy Drainage Development Fees as there is no reference of such fees in those Act, Rules or the Regulations. Thereafter, His Lordships distinguished the term 'fees' from 'tax' by referring to the element of quid pro quo in the former and came to further conclusion that the proposed Drainage Development Fees were within the purview of the property-tax as defined in Section 268(A) of the Act and thus, the attempt on the part of the Corporation to realise further amount of revenue by way of the disputed fees really amounted to double taxation.
28. The strict concept of difference between the terms 'fees' and 'taxes' has undergone change in course of last forty years as it appears from the various decisions of the Apex Court cited by Mr. Mitra. The following observations of the Supreme Court in the case of Calcutta Municipal Corporation v. Sherry Mercantile Pvt. Ltd. (supra) will be sufficient for our purpose;
As noticed in the City Corporation of Calicut : [1985]2SCR1008 (supra), the traditional concept of quid pro quo in a fee has undergone considerable transformation. From a conspectus of the ratio of the above judgments, we find that so far as the regulatory fee is concerned, the service to be rendered is not a condition precedent and the same does not lose the character of fee provided the fee so charged is not excessive. It is also not necessary that the services to be rendered by the collecting authority should be confined to the contributions alone. As held in Sirsilk Ltd. : AIR1989SC317 (supra), if the levy is for the benefit of the entire industry, there is sufficient quid pro quo between the levy recovered and services rendered to the industry as a whole.
29. In the case before us, in our opinion, the learned Single Judge was quite justified in holding that Sections 307 and 131 of the Act did not authorise the Corporation to levy the disputed fees and at the same time, the Act, Rules or the Regulations did not permit the Corporation to levy such fees. We have already indicated that the power of the delegated authority to impose fees cannot be inferred but such power must be explicit from the statute.
30. Before us, Mr. Mitra tried to justify imposition by taking shelter under Section 543(2) of the Act and such argument was not advanced before the learned Single Judge. In this connection, Mr. Mitra strongly relied upon the decision of the Supreme Court in the case of Liberty Cinema (supra).
31. In the case of Liberty Cinema, the cinema hall owner challenged the authority of the Corporation to enhance the licence-fees. Section 443 of the then Act of 1951 provided that no person should without a licence granted by the Corporation keep open any cinema-house for public amusement. It, however, did not say that any fee was to be paid for the licence. But Sub-section (2) of Section 548 which is pari materia with the present Section 543(2) of the Act indicated that for every licence under the Act, a fee might, unless otherwise provided, be charged at such rate as might from time to time be provided. In 1948, the Corporation had fixed the scale of fees on the basis of the annual valuation of the cinema-houses made by a method, which did not appear on the record. The respondent had under these sections obtained a licence for its cinema-house and had been paying a licence-fee calculated on the aforesaid basis. The fee so calculated was Rs. 400/- per annum.
32. By a resolution passed on March 14, 1958 the Corporation changed the basis of assessment of the licence-fee with effect from April 1, 1958. Under the new method, the fee was to be assessed at the rates prescribed per show according to the sanctioned seating capacity of the cinema-houses. The respondent's cinema-house had 551 seats and under the changed method, it became liable to a fee of Rs. 5/- per show. In the result, it became liable to pay a fee of Rs. 6,000/- per year.
33. The respondent then moved the High Court at Calcutta under Article 226 of the Constitution for a writ quashing the resolution. The application was first heard by Sinha, J., who allowed it. This order was confirmed by an Appellate Bench of the same Court consisting of Bose, CJ. and G. K. Mitter, J. on appeal by the Corporation. Hence, the said appeal before the Apex Court.
34. Before the Supreme Court one of the points taken was that, the levy authorised by Sections 443 and 548 was a fee in return for services to be rendered and not a tax and it had therefore to be commensurate with the costs incurred by the Corporation in providing those services. It was further argued that Articles 19(1)(f) and (g) of the Constitution were violated in that case as Section 548 gave an arbitrary power of taxation. These contentions found favour with the learned Judges of the High Court negatived such contention in the following words:
The second challenge to the levy was put in this way: The levy authorised by Sections 443 and 548 was a fee in return for services to be rendered and not a tax and it had therefore to be commensurate with the costs incurred by the Corporation in providing those services. The present levy of Rs. 6,000/- per year was far in excess of those costs and was for that reason invalid. The Corporation's answer to this contention is that the levy was a tax and not a fee taken in return for services and no question of its being proportionate to any costs for services arose. The Corporation does not dispute that if the levy was a fee in the sense mentioned, it would be invalid. The only question on this part of the case, therefore, is, was the levy a fee in return for services? Another subsidiary question is, what is the nature of the services which makes a levy in respect of them, a fee? It is not disputed that a levy made in return for services rendered would be a fee. It is, therefore, unnecessary to consider what a fee is or the tests by which it is to be determined. Nor is it necessary to discuss whether in order that a levy may be a fee the statute imposing it must intend primarily to confer the benefits of the services on those who pay it and benefits received from those services by the public at large, if any, must be secondary. A discussion of these aspects of fees, will be unprofitable and will only cloud the point really in issue.
Now, on the first question, that is, whether the levy is in return for services, it is said that it is no because Section 548 uses the word 'fee'. But, surely nothing turns on words used. The word 'fee' cannot be said to have acquired a rigid technical meaning in the English language indicating only a levy in return for services. No authority for such a meaning of the word was cited. However that may be, it is conceded by the respondent that the Act uses the word 'fee' indiscriminately. It is admitted that some of the levies authorised are taxes though called fees. Thus, for example, as Mitter J, pointed out, the levies authorised by Sections 218, 222 and 229 are really taxes though called fees, for no services are required to be rendered in respect of them. The Act, therefore, did not intend to use the word fee as referring only to a levy in return for services.
This contention is not really open to the respondent for Section 548 does not use the word 'fee'; it uses the words 'licence fee' and those words do not necessarily mean a fee in return for services. In fact in our Constitution fee for licence and fee for services rendered are contemplated as different kinds of levy. The former is not intended to be a fee for services rendered. This is apparent from a consideration of Article 110(2) and Article 199(2) where both the expressions are used indicating thereby that they are not the same. In Shannon v. Lower Mainland Dairy Products Board 1938 AC 708 : AIR 1939 PC 36 it was observed at pp. 721-722 (of AC) : at pp. 38-39 of AIR:
if licences are granted, it appears to be no objection that fees should be charged in order either to defray the costs of administering the local regulation or to increase the general funds of the Province or for both purposes.... It cannot as Their Lordships think, be an objection to a licence plus a fee that it is directed both to the regulation of trade and to the provision of revenue, It would, therefore, appear that a provision for the imposition of a licence fee does not necessarily lead to the conclusion that the fee must be only for services rendered.
35. Regarding the allegation of delegation of excessive power without fixing any guidelines, the Apex Court concluded in the following way:
It remains now to notice an argument advanced by Mr. Pathak on behalf of the Corporation. It is that even if it be assumed that no guidance for the taxation has been prescribed, the provision for taxation in the Act would be valid. He said that the Act may be said to have been passed under Entry 5 of List II in the Seventh Schedule to our Constitution. That entry authorises the passing of a law concerning the Constitution and powers of a Municipal Corporation. Mr. Pathak contended that the powers of a Corporation contemplated in this entry must necessarily include power to levy tax, for no Municipal Corporation could work without its own funds. He pointed out that this has been the base with the Municipal Corporations created before and after the Constitution. He, therefore, said that the present was not a case of delegation of taxing power which might be bad if no guidance to the exercise of that power had been furnished by the Act, it is a case where under the Constitution independent power to tax had been conferred on the Corporation. The conferment of such power did not require any guidance for its exercise to make it valid. He pointed out that delegation of power necessarily meant delegation of the power of the delegator. On such delegation the delegated power could only be exercised by the delegatee for the use of the delegator. That was not the case of power concerned under Entry 5. In such a case the power of taxation conferred was for the purpose of the Corporation itself. The amount collected by taxation belonged to the Corporation. This is what had happened here. As at present advised, we think that this contention of Mr. Pathak deserves consideration. It is unnecessary, however, for us to pronounce finally on it, for in either view the taxing power challenged must be held to be good.
36. By relying upon the aforesaid decision, Mr. Mitra tried to impress upon us that as Section 548 of the 1951 Act corresponds to Section 543 of the present Act, it necessarily follows that the imposition of fees and the rate fixed by the Corporation in these cases is sanctioned by Section 543(2) of the Act and thus, cannot be challenged as ultra vires. In our view, while making such submission, Mr. Mitra totally overlooked the fact that in the case of Liberty Cinema, Section 443 of the Act authorised imposition of licence-fee on the owner of the cinema hall whereas in the cases before us, there are no provisions in the Act or the Rules or the Regulations giving power of imposing Drainage Development Fees at the time of sanctioning of the building-permission and as such, Section 543 of the Act cannot come into play for saving the Corporation.
37. Therefore, we do not find any substance in the additional point taken by Mr. Mitra in the present appeal.
38. We, consequently, find no substance in the contentions raised by Mr. Mitra and hold that the learned Single Judge rightly concluded that the imposition of Drainage Development Fees was unauthorised.
39. Now we take up the assigned writ application filed by the Asian Leather Limited and another.
40. In view of our finding that the imposition of the Drainage Development Fees was illegal in the foregoing appeals, the only question that remains to be decided is whether the writ petitioners are entitled to the refund of the money realised by the Corporation by virtue of the circular declared ultra vires.
41. Mr. Ghosh, the learned Advocate appearing on behalf of the Corporation in this matter strenuously contended before us that merely because the statutory auhority realised some money in violation of the provisions of the statute of which it is a creature, such fact does not enable the persons from whom the money was taken to realise the same as a matter of course. According to Mr. Ghosh, his client having spent the money for the benefit of the public and in furtherance of its statutory duty, no direction should be given for refund of the money. Secondly, Mr. Ghosh contends that the period of limitation fixed for institution of a suit for realisation of the amount having expired, the right of the writ petitioners to recover the money had become barred and therefore, the writ petitioners have no existing legal right to get back the money and consequently, in the absence of any existing legal right, an application under Article 226 of the Constitution of India is not maintainable against the Corporation. In support of such contention, Mr. Ghosh relies upon the following decisions:
(1) Orissa Cement Ltd. v. State of Orissa and Ors. reported in AIR 1991 SC 1976.
(2) Suganmal v. State of Madhya Pradesh and Ors. reported in : [1965]56ITR84(SC) .
(3) Dhanyalakshmi Rice Mills etc. v. Commissioner of Civil Supplies and Anr. reported in 0065/1976 : [1976]3SCR387 .
(4) A. V. Venkateswaran, Collector of Customs, Bombay v. Ramchand Sobhraj Wadhwani and Anr. reported in : 1983ECR2151D(SC) .
42. Mr. Mukherjee, the learned Senior Advocate appearing on behalf of the writ petitioners, has, however, opposed the aforesaid submissions of Mr. Ghosh and has contended that the right to recover the money illegally realised by the Corporation accrued in favour of his clients only after the illegal act of the Corporation was declared ultra vires by a competent Court and thus, the time would run not from the date of payment of money but from the date of such declaration by the competent Court and as such, the learned Single Judge rightly passed a direction for return of the money. Mr. Mukherjee further contends that in a writ application filed by a citizen praying for declaration of a demand of money by a statutory Corporation as illegal with consequential relief for injunction or refund of money illegally realised, once the act of such a 'State' within the meaning of Article 12 of the Constitution is declared illegal and ultra vires the statute which controls the activity of such 'State', the refund of money, is a matter of course. In support of such contention, Mr. Mukherjee relies upon the following decisions:
(1) Sales Tax Officer, Banaras and Ors. v. Kanhaiya Lal Makund Lal Saraf reported in : [1959]1SCR1350 .
(2) State of Kerala v. Aluminium Industries Ltd. reported in 1965(16) Sales Tax 689.
(3) State of Madhya Pradesh v. Bhailal Bhai and Ors. reported in : [1964]6SCR261 .
(4) K.S. Venkataraman and Co. (P) Ltd. v. State of Madras reported in : [1966]60ITR112(SC) .
(5) Mahabir Kishore and Ors. v. State of Madhya Pradesh reported in : [1990]184ITR548(SC) .
(6) Commissioner of Sales Tax, U.P. v. Auriaya Chamber of Commerce, Allahabad reported in : [1987]167ITR458(SC) .
43. After hearing the learned Counsel for the parties and after going through the materials on record we are of the view that if a person makes payment by mistake of law, Section 72 of the Contract Act is applicable and the period of limitation is three years as prescribed by Article 133 of the Schedule to the Limitation Act, 1963 and the provisions of Section 17(1)(c) of that Act will be applicable so that the period will begin to run from the date of knowledge of the particular law under which the money was paid being declared void; this could be the date of the judgment of a competent Court declaring that law void. According to Section 17(1)(c) of the Limitation Act, 1963, in the case of a suit for relief on the ground of mistake, the period of limitation does not commence to run until the plaintiff had discovered the mistake or could with reasonable diligence, have discovered it. In a case where payment has been made under a mistake of law in contrast with a mistake of fact, generally the mistake becomes known to the party only when a Court makes a declaration as to the invalidity of the law. Though a party could, with reasonable diligence, discover a mistake of fact even before a Court makes a pronouncement, it is seldom that a person can, even with reasonable diligence, discover a mistake of law before a judgment adjudging the validity of the law. See: Mahabir Kishore and Ors. v. State of Madhya Pradesh reported in : [1990]184ITR548(SC) .
44. By following the aforesaid proposition of law, we are of the view that in the cases before us, the writ petitioners had no cause of action for claiming refund of money so long the act on the part of the Corporation was declared illegal and ultra vires. The Corporation realised money in the name of Drainage Development Fees by virtue of a circular illegally issued by the Municipal Commissioner. So long, the competent Court did not declare such circular to be invalid, no question of refund of that amount arose and the limitation really starts from the moment, such action is declared to be invalid. Therefore, once it is held that the Corporation by its purported circular illegally recovered money from the citizen, as a consequential measure, a Writ Court is entitled to give the benefit of refund of money realised on the strength of such circular to the writ petitioners and the learned Single Judge did not commit any illegality in passing direction for refund of the money illegitimately taken by the Corporation.
45. So far the case of Asian Leather Private Limited is concerned, it appears that the amount was paid on 22nd November, 1999 and the writ application was filed on 25th June, 2003 and the learned Single Judge by order dated November 19, 2003, during the pendency of the writ application, declared the action of the Corporation as ultra vires. Therefore, in this case before us, there is no scope of any argument that the claim of the Asian Leather Private Limited was barred by the law of limitation. At this stage, it will not be out of place to mention the decision of the Supreme Court in the case of Sales Tax Officer, Banaras and Ors. v. Kanhaiya Lal Mukund Lal Saraf (supra), where the Supreme Court in clear language stated that merely because the State has not returned the money paid as sales-tax by the assessee but has spent them away in the ordinary course of the business of the State will not make any difference to the position under the plain terms of Section 72 of the Contract Act and that the assessee would be entitled to recover back the monies paid by it to the State under mistake of law. Therefore, we do not find any substance in the contention of Mr. Ghosh that merely because the Corporation has spent that money for the purpose of public works, that fact would enable it to resist the claim of the writ petitioners.
46. We now propose to deal with the decisions cited by Mr. Ghosh.
47. In the case of Orissa Cement Limited v. State of Orissa and Ors. (supra), the Supreme Court held that if levy of tax is declared to be invalid and unconstitutional, tax already recovered should not be automatically refunded and in such a case, the Court has discretion and can mould or restrict relief in the manner appropriate to the situation. The Supreme Court pointed out that where a petitioner wanted relief against an illegal exaction sought to be retained by the State, in a writ petition often came whether the petitioner's prayer for refund of taxes collected over an indefinite period of years should be granted once the levy is found to be illegal. To answer the question in affirmative, according to the Supreme Court, would result in discrimination between the persons based on their choice of the forum for relief, a classification which prima facie, is too fragile to be considered a relevant criterion for resulting discrimination. In the said case, however, the Supreme Court passed direction for refund of amount of tax from the date on which the levy was declared unconstitutional. In the case before us, we are concerned with payment of a 'one-time money' and therefore, the moment the demand of such 'one-time money' is declared, that amount should be directed to be refunded as prior to such declaration, the citizen had no right to claim refund. These are not the cases where the claims of refund have been made log time after the circular of the Corporation has been declared illegal by the competent Court. We, therefore, find that the said decision does not help Mr. Ghosh in anyway in the facts of the present case.
48. In the case of Dhanyalakshmi Rice Mills etc. v. Commissioner of Civil Supplies and Anr. (supra), the Govermnent of Andhra Pradesh introduced a scheme known as 'Incentive Export Scheme'. Under that scheme, all millers who delivered 50 per cent of their purchases to the Food Corporation of India towards mill-levy were eligible for expert under the scheme. By an order dated July 22, 1968, pursuant to the representation of the millers for export of rice outside the block but within the State, the Govermnent of Andhra Pradesh passed orders that permits for export of rice would be issued subject to the fulfilment of their commitments and that an administrative charge of Rs. 2.50/- per quintal of rice would be collected from the millers before the issue of permits. The appellants applied for and obtained permits by fulfilling the two principal considerations. Subsequently, they applied to the Govermnent to refund the amount paid as administrative surcharge as they had paid it under mistake of law and that the latter had no right to collect it. In the petitions, they contended that the respondent-Govermnent had no legal right to collect any administrative surcharge and therefore, the amount should be refunded. The appellant alleged that they made the payments under mistake of law. The High Court held that the levy of administrative surcharge was not backed by valid legislative sanction but observed that the appellants were not entitled to any relief on three grounds. First, the administrative surcharges were paid voluntarily by the appellants. Secondly, the Court would not be justified in exercising discretion in favour of the appellants who voluntarily paid the administrative charges, obtained the permits and derived considerable profits therefrom. Thirdly, there was undue delay in claiming the refund. In such case, the Supreme Court refused to interfere with the order passed by the High Court. While dismissing the appeal, the Supreme Court observed that remedy under Article 226 was not appropriate in those cases for the following additional reasons as well: First, several petitioners had joined and each petitioner had individual and independent cause of action and a suit by such a combination of plaintiffs would be open to misjoinder. Secondly, there were highly triable issues like limitation, estoppel and questions of fact in ascertaining the expenses incurred by the Government for administrative surcharges of the Scheme and the allocation of expenses with regard to quality as well as quantity of rice covered by permits and further Section 72 of the Contract Act stated that a person to whom money had been paid or anything delivered, by mistake or under coercion, must repay or return it and such mistake is material only so far as it leads to the payment being made without consideration. The true principle, according to the Supreme Court in that decision, is that if one part under a mistake of law pays to another, which is not due under the contract, or otherwise, that is to be paid. When there is a clear and unambiguous position of law, the Apex Court proceeded, which entitles a party to the relief claimed by him, equitable considerations are not imported. According to the Supreme Court, if money is paid under a contract, it cannot be said that money was paid under mistake of law, it was paid because it was due under a valid contract and if it had not been so paid, the payment could have been enforced. In our view, in the cases before us, the writ petitioners paid the Drainage Development Fees because they were compelled to pay the amount otherwise they were not granted permission to construct building thereon, a right which is recognised by the Act itself, notwithstanding the fact that they complied with all the statutory requirements for availing of such right and the demand of Drainage Development Fees was in violation of Article 265 of the Constitution of India. Therefore, these cases cannot be compared with a case where money was paid through mistake in terms of a mutual contract and that there were so many defects in the writ application. We, therefore, find that the said decision cannot help the Corporation in this case.
49. In the case of Suganmal v. State of Madhya Pradesh and Ors. (supra), the Supreme Court held that a writ application was not maintainable solely for the refund of tax, alleged to have been illegally collected by the State for the simple reason that a claim for such a refund can always be made in a suit against the authority which had illegally collected the money as a tax and in such a suit, it is open to the State to raise all possible defences to the claim, which, cannot in most of the cases, be appropriately raised and considered in the exercise of writ jurisdiction. In the cases before us, however, the writ petitioners prayed for declaration that the circular issued by the Corporation was ultra vires the statute and as a consequential measure, have prayed not refund of the money. Therefore, the principles laid down in the said case cannot have any application to the cases before us.
50. In the case of A V. Venkateswaran Collector of Customs, Bombay v. Ramchand Sobhraj Wadhwani and Anr. (supra), the Supreme Court reiterated that the well-settled principle, that a party, who applies for issue of high prerogative writ, should, before he approaches the Court, have exhausted all other remedies open to him under the law, is not the one which bars the jurisdiction of the High Court to entertain the petition or to deal with it; but is rather a rule which the Courts have laid down in exercise of their discretion. According to the Supreme Court, the wide proposition is that the existence of an alternative remedy is a bar to the entertainment of a petition under Article 226 of the Constitution of India unless, (1) there is a complete lack of jurisdiction in the officer or authority, to take the action impugned, or, (2) where the order is prejudicial to the writ petitioner and has been passed in violation of the principles of natural justice and therefore, should be treated as void. The two exceptions to the normal rule, according to the Supreme Court, as to the effect of the existence of an adequate alternative remedy, are, by no means, exhaustive. In the said case, the writ petitioner had disabled himself from availing of the statutory remedy by his own fault in not doing so within the prescribed time and therefore, according to the Supreme Court, he should not be permitted to urge that point as a ground for the Court dealing with the petition under Article 226 to exercise its discretion. At this stage it will not be out of place to mention that the Supreme Court, in the case of Salonath Tea Company Limited v. Superintendent of Taxes and Ors. reported in : [1988]173ITR42(SC) specifically held that the principles laid down in the case of A V. Venkawteswaran, Collector of Customs, Bombay v. Ramchand Sobhraj Wadhwami and Anr. (supra), has no application where a particular provision has been declared unconstitutional as would appear from paragraph 23 of the said judgment.
51. We, thus, find that the decisions cited by Mr. Ghosh are of no avail to his client.
52. We, therefore, dismiss the appeals filed by the Corporation in the above nine matters and so far the writ application filed by the Asian Leather Private Limited is concerned, we pass the same order by declaring the circular as ultra vires the statute and the Constitution of India and at the same time, directing the Corporation to refund the Drainage Development Fees collected from the writ petitioners within three months from today with interest at the rate of 8% per annum from the date of acceptance of the fees till repayment by the Corporation. All the matters, thus, are disposed of accordingly.
53. In the facts and circumstances, there will be, however, no order as to costs.
Kishore Kumar Prasad, J.
54. I agree.