Union of India (UOI) vs Nath Bros Exim International Ltd.

This is a batch of four appeals under Clause X of the Letters Patent filed by the Union of India against a common judgment and order dated 10th January, 2008 passed by a learned Single Judge of this Court. At the outset, it may be mentioned that six writ petitions were decided by the learned Single Judge by the impugned order but appeals have been filed only in respect of four cases.

In the writ petitions, the Respondents had assailed a public notice bearing No, 28-ETC(PN)/87 dated 15th October, 1987 issued by the Government of India. This public notice embodied a policy for export of garments for three calendar years commencing from 1988 to 1990. A quota distribution scheme was set up in terms of paragraph 7 of the public notice. We need not go into the details of the scheme except to note that the Respondents had to apply for making exports of garments on payment of a premium.

The requirement of payment of a premium in terms of the scheme was challenged by the All India Garments Export Common Cause Guild (for short ''the Guild'') in a writ petition which came to be allowed by a Division Bench of this Court by a decision rendered on 22nd February, 1989. This decision is All India Garment Export Common Cause Guild and Another Vs. Union of Indian and Others, .

In paragraph 19 of the decision rendered by the Division Bench, it was concluded that the premium charged by the Union was not permissible under the Import and Export Control Act, 1947 and the Export (Control) Order, 1988. Subsequently, in paragraph 22 of the decision, the Division Bench held that the premium was charged not only without authority of law but that it clearly infringes the fundamental right of the members of the Guild guaranteed under Article 19(1)(g) of the Constitution. Consequently, the requirement of paying premium as well as the relevant clauses of the scheme were struck down.

The decision rendered by the Division Bench was challenged by the Union by filing an appeal in the Supreme Court being Civil Appeal No. 3948-49/1989. On 7th August, 1996 the Supreme Court passed the following order:

No orders on the Intervention Application.'' Mr. Chaudhary, learned senior counsel appearing for the Union of India candidly states that the policy and the decisions made thereon, upset by the High Court, are no longer in vogue and the Union of India has no intention for their revival in the immediate future. He says that these appeals can be disposed of leaving the questions open lest those may require to be agitated at a future date. We dismiss the appeals accordingly on such statement.

In the meanwhile, sometime in 1989 itself three of the Respondents before us filed writ petitions in this Court challenging the public notice and seeking a refund of the premium paid. When the writ petitions came up for consideration, the learned Single Judge noticed the facts of the case, including the decision of the Division Bench as well as the order passed by the Supreme Court, and concluded that the Respondents were entitled to a refund of the amount of premium collected from them along with interest @ 10% per annum with effect from 22nd February, 1989 till the date of payment. This order is impugned before us. The fourth writ Petitioner filed a writ petition in 2000 and that was also allowed by the impugned order.

It may be noted at this stage that all that the learned Single Judge has done is to follow the decision rendered by the Division Bench.

However, the Union raised an additional contention before the learned Single Judge to the effect that the Respondents would be unjustly enriched if the premium was refunded to them. This contention was rejected by the learned Single Judge on the ground that the Union had failed to disclose any benefit which the Respondents had purportedly received and the counter affidavit filed by the Union did not give any details with regard to any benefit that might have accrued to the Respondents.

Feeling aggrieved by the order passed by the learned Single Judge, the Union has filed these appeals under Clause X of the Letters Patent.

The learned Additional Solicitor General contended that in view of the order of the Supreme Court the question of law determined by the Division Bench of this Court was left open for consideration. All that we can say is that the question of law was left open for determination by the Supreme Court and not by the High Court which has already taken a decision in the matter. This is clear from the language of the order of the Supreme Court leaving the questions of law open Test those may require to be agitated at a future date.''

Nevertheless, we have examined the decision of the Division Bench with the assistance of learned Counsel for the parties and do not find any reason to take view contrary to that already expressed by the Division Bench. All the contentions that have been urged before us were advanced before the Division Bench and were considered and rejected by the Division Bench. This is not an appropriate case where the matter should be reopened at the level of the High Court.

The next contention of the learned Additional Solicitor General is that if the refund of the premium is granted to the Respondents, they would be unjustly enriched. There is a distinction between a litigant unjustly enriching himself and a litigant being enriched because of a refund granted to him. The latter is not a case of unjust enrichment but recovery or return of an amount legitimately due to the litigant. If the bald proposition of the learned Additional Solicitor General were to be accepted, no one would ever be entitled to any refund of his legitimate dues.

We have noted that the learned Additional Solicitor General has not been able to show any specific benefit unjustly obtained by the Respondents. A general allegation or averment is not adequate to deny a refund to a litigant. That apart, if the demand of premium is itself unconstitutional as held by the Division Bench and in any case contrary to the Import and Export Control Act, 1947 and Export (Control) Order, 1988, the Appellant could not have, in the first place, even taken the amount from the Respondents.

After the relevant clauses in the public notice were struck down by the Division Bench, the Union was obliged to refund the amount unlawfully collected from the Respondents but they failed to do so. Instead, the Union compelled the Respondents to approach this Court for a refund of the amount unlawfully collected way back in 1989. The bogey of unjust enrichment raised after a gap of 20 years cannot be accepted in the facts and circumstances of the case.

We may also note that it has been held by the Supreme Court in Mahabir Kishore and others Vs. State of Madhya Pradesh, that a tax paid under a mistake of law is refundable u/s 72 of the Indian Contract Act, 1872. For this proposition, the Supreme Court relied upon an earlier decision in the case of Sales Tax Officer, Banaras and Others Vs. Kanhaiya Lal Mukundlal Saraf, . In view of the law laid down by the Supreme Court, the learned Single Judge did not commit any error in directing the Union to refund the premium collected without any authority of law and in fact unconstitutionally from the Respondents.

Consequently, we reject three of the appeals filed by the Union and direct refund of the premium to the Respondents within a period of six weeks from today with interest @ 10% per annum as directed by the learned Single Judge. However, we make it clear that the refund will carry simple interest @ 10% per annum.

LPA No. 281/2008: This appeal arises out of the same order passed by the learned Single Judge but in a writ petition filed by one of the Respondents being WP (C) No. 3905/2000. Ex facie, this writ petition was filed after an enormous delay.

Learned Counsel for the Respondents submits that the decision of the Division Bench was rendered sometime in February, 1989 and the decision of the Supreme Court was rendered in August, 1996 and, therefore, there is not that much of a delay in approaching this Court for a refund. It is submitted that the Respondents came to know about the decision of this Court as well as the Supreme Court only in October, 1999 and it is soon thereafter that the writ petition was filed.

We are not prepared to accept this contention for the reason that the issue was first raised on behalf of the entire set of garment exporters which includes the Respondents M/s. Pearl Global Ltd. and others. In fact, the Guild had taken up a common cause for and on behalf of the garment exporters and it is not possible to accept the contention of learned Counsel for the Respondents that none of the exporters in this appeal (as many as 18 of them) had any clue of the pendency or decision of such an important matter that was raised on their behalf by the Guild.

That apart, we find that ordinarily even a suit for recovery would not have been entertained after a gap of three years. In this case, the undisputed dates are: the decision of the Division Bench was rendered sometime in February, 1989; the decision of the Supreme Court was rendered in August, 1996; the first demand made by the Respondents was in October, 1999 which is beyond the period of three years and more than ten years after the decision of the Division Bench.

Given these facts and circumstances, we decline to exercise our discretionary jurisdiction in favour of the Respondents and in view of this we set aside the decision of the learned Single Judge granting relief in favour of the Respondents in LPA No. 281/2008.

All the appeals are disposed of.