Dhanyalakshmi Rice Mills Vs. The
Commissioner of Civil Supplies & ANR  INSC 29 (16 February 1976)
RAY, A.N. (CJ) RAY, A.N. (CJ) BEG, M.
HAMEEDULLAH SARKARIA, RANJIT SINGH SHINGAL, P.N.
CITATION: 1976 AIR 2243 1976 SCR (3) 387 1976
SCC (4) 723
Practice and Procedure-Representation by
millers for permission to export rice-Permits granted on payment of surcharge
to meet expenses of administrative machinery set up to ensure export-Writ of
mandamus to refund money collected-When may be issued by this Court.
Indian Contract Act (9 of 1872), s. 72-scope
The respondent-State Government was
exercising powers delegated to it by the Central Government under the Essential
Commodities Act, 1955. It introduced an 'Incentive Export Scheme' under which,
millers, who delivered 50% of their purchases to the Food Corporation of India
towards mill levy, would be eligible for exporting rice either within the State
from one block to another or to States outside. On payment of administrative
charges. On the representation of the millers (appellants) that they could not
sell rice locally because there was no demand, and that unless they were
allowed to move rice outside the blocks or outside the State there would be
deterioration of stocks resulting in loss to both trade and the consuming
public, the State passed orders permition the export of rice subject to the fulfillment
of their commitments to the Food Corporation and the payment of administrative
charges; and also set up the necessary administrative machinery for ensuring
such export. Permits were accordingly granted on terms and on condition of
payment of the surcharge fixed.
and the millers paid the surcharge and
received the benefits under the permits. Thereafter, they claimed refund of the
administrative surcharge on the ground that the State had no right to collect
it and that they made the payments under mistake of law. Where the State
collected administrative charges but could not grant permits, the State
refunded the money, but, where millers obtained permits and had taken advantage
thereof, the State contended that there was no mistake on the part of the
millers and that the payments were made voluntarily with full knowledge of
facts and in discharge of their contractual obligations.
The millers filed writ petitions praying for
directions to the State to refund the administrative surcharges collected from
them, but the High Court held that they were not entitled to the relief on the
grounds of delay, insufficiency of particulars regarding expenses and charges
incurred by the Government, and the payments being voluntary.
Dismissing the appeals to this Court,
HELD: The petitions were rightly dismissed by
the High- Court. Also, since various question of fact are involved as to
whether there was really a mistake, or whether it was a case of voluntary
payment pursuant to contractual rights and obligations. the remedy under Art.
226 is not appropriate in the present cases. [396C-D] (a) A mandamus will go
where there is a specific legal right. If there is no other means of obtaining
justice, the writ of mandamus is granted to enable justice to be done. A writ
of mandamus for recovery of money could be issued only when the petitioner was
entitled to recover that money under some statute. An order for payment of
money may sometimes be made to enforce a statutory obligation. A mandamus for
refund of tax could be issued when the assessments were held to be illegal; but
contractual obligations cannot be enforced through a writ of mandamus.
Normally, the parties are relegated to a suit of enforce civil liability
arising out of a breach of contract or a tort, to pay an amount of money.
Mandamus may also be refused where there is an alternative remedy which is
equally convenient, beneficial and effectual [395F-396C] 388 R. V. Bristol and
Exeter Railway Co. 1845(3) Ry. & Can.
Cas. 777; Lekh Raj v Deputy Custodian, 
1 S.C.R. 120.
Har Shankar & ors. v. Deputy Excise and
Taxation Commissioner & Ors., A.I.R. 1975 S.C. 1121; Sales Tax officer
Banaras & ors. v. Kanhaiya Lal Mukundalal Saraf,  S.C.R. 1350;
Suganmal v. State of Madhya Pradesh & ors., A.I.R. 1965 S.C. 1740; Burmah
Construction Co. v.
State of Orissa,  Supp. 1 S.C.R 242 and
State of Kerala v. Aluminium Industries Ltd., 16 S.T.C. 689, referred to.
(b) The ground of delay on which the High
Court, in the exercise of its discretion, refused to grant a mandamus is not
confined purely to the period of limitation. Though some of the petitions were
filed within 3 years from the date of payment, the delay is bound up with
matters relating to the conduct of parties in regard to payments pursuant to
agreements between the parties.
[395B-C] (c) In the present cases, several petitioners
have joined in the writ petitions. Since each has an individual and independent
cause of action, such a combination would be open to the objection of
misjoinder even in a suit.
[395C-D] (d) The issues regarding limitation,
estoppel and questions of fact in ascertaining the expenses incurred by the
Government for administrative purposes of the scheme and allocating the
expenses with regard to the quality as well as quantity of rice covered by the
permits, are triable more appropriately in a suit.
[395D] (e) The plea of mistake is a bare
averment in the writ petition. The payments did not disclose the circumstances
under which the alleged mistake occurred nor the circumstances in which the
legal position became known to the millers. Whether there was a mistake in
paying the amounts and when exactly the mistake occurred, are also issues
triable in a suit.
[1396D-E] (f) The Government did not support
its demand for administrative charges either as a tax or a fee, but as a
condition of the permit and as a term of agreement between the parties to meet
the maintenance and supervision ex penses for the Scheme of export permits.
Under s. 72, Contract Act, 1872 if one party, under a mistake of law, pays to
another money which is not due by contract or otherwise, that money has to be
repaid. The mistake is material only so far as it leads to the payment being
made without consideration. But if a mistake of law had led to the formation of
a contract. s. 21 of the Contract Act enacts that such a contract is not, for
that reason, voidable; and if money is paid under that contract, it cannot be
said that the money was paid under mistake of law. It was paid because it was
due under a valid contract, and if it had not been paid, payment could have
[396E-397A] The State of Kerala etc. v. K. P.
Govindan Tapioca Exporter etc.  2 S.C.R. 635; State of Madhya Pradesh v.
Bhailal Bhai  6 S.C.R. 261 and Shiba Prasad Singh v. Srish Chandra Nandi,
76 I.A. 244, referred to.
(g) Where the High Court has, in the exercise
of its discretion refused to grant a writ of madamus, this Court does not
ordinarily interfere [394E] Municipal Corporation of Greater Bomboy v. Advance
Builders (India) Private Limited.  I S.C.R. 408 at p.
420 and D. Cawasji d Co. v. State of Mysore
 2 S.C.R.
511 at p. 527, referred to.
CIVIL APPELLATE JURISDICTION: Civil Appeals
No. 2390- 2391 of 1972.
(From the Judgment and order dated 27-3-1972
of the High Court of Andhra Pradesh in Writ Petition Nos. 3976-3977 of 1971.)
Civil Appeal No. 604 of 1975 (From the Judgment and order dated 28-3-1973 of
the Andhra Pradesh High Court in Writ Petition No. 685/72).
389 Civil Appeals Nos. 2423-2437 (From the
Judgment and order dated 27-3-1972 of the Andhra Pradesh High Court in Writ
Petitions Nos. 3974, 3975, 3978, 4015, 4016, 4017, 4018, 4019, 4020, 4021,
4247, 4246, 4248, 4249 and 5779/71).
Civil Appeal Nos. 2584-2586 of 1972 (From the
Judgment and order dated 28-3-1972 of the Andhra Pradesh High Court in Writ
Petition No. 606 and 620, 622/72). Civil Appeals Nos. 281-286of 1973 (From the
Judgment and order dated 28-3-1972 of the Andhra Pradesh High Court in Writ
Petitions Nos. 4642, 4643, 4644, 4701, 4702 and 5776 of 1971) Civil Appeals No.
539-540 of 1973 (From the Judgment and order dated 27.3.1972 of the High Court
of Andhra Pradesh in Writ Petition NOS. 5170, 5173/71).
Civil Appeals No. 2019-2034 of 1973.
(From the Judgment and order dated 28.3.1972
of the Andhra Pradesh High Court in Writ Petitions Nos. 4512, 4588, 4589, 4590,
4591, 4679, 4683, 4684, 4690, 4943, 4953, 4983, 5115, 5117 and 5118 of 1971)
Civil Appeal No. 653-662/74 (From the Judgment and order dated 28.3.1972 of the
High Court of Andhra Pradesh in Writ Petitions NOS. 603, 607, 609, 621, 627,
629, 738, 739, 744 and 746/72).
Civil Appeals NOS. 637, 1837-1842 of 1973.
(From the Judgment and order dated 27.3.1972
of the Andhra Pradesh High Court in Writ Petitions NOS. 343/72 and 5669/71,
254, 256, 260, 334, 562/72).
A. K. Sen, for the appellants in CAs 2390-2391
& 2423- 2437/72.
P. A. Chowdhary, for the appellants in Cas
N. Bhaskar Rao, for the appellants in CAs
B. Kanta Rao, for all the appellants.
A. K. Sen with S. Markandeya and N.
Madhusudan Raj, for the appellants in CAs 604/75, 2584-2586/72 and 653-662/74.
H A. K. Sen with N. Madhusudan Raj and G. N. Rao, for the appellants in CAs
390 P. Ram Reddy with P. P. Rao, for the
respondents in CAs 2390 2391 & 2423-2437/72, 281-282, 539, 540,
rr. 2-4 in CA No. 664/75, 653-662/74 and
1-3 in CA 1042/73 and for rr. in CA 636/73.
P. P. Rao for Respondent No. 1 in CA 604/75.
S. P. Nayar and Girish Chandra for respondent
No. 1 in CAs 653-662/74 & rr. in CAS 2584-2586/72.
The Judgment of the Court was delivered by
RAY, C.J. These appeals are by certificate from the common judgment dated 27
March, 1972 of the Andhra Pradesh High Court dismissing the writ petitions of
The appellants filed the writ petitions for
an appropriate writ or order directing the respondent State of Andhra Pradesh
to refund the sums of money collected from the appellants as administrative
The appellants are dealers in food grains and
held licences issued in accordance with the provisions of relevant statutes and
Under the provisions of the Essential
Commodities Act, 1955 various Control orders have been issued for maintaining
or increasing supplies of any essential commodity or for securing their
equitable ` distribution and availability at fair prices. The Control orders
contemplate regulation or prohibition or production, supply and distribution of
essential commodities and trade and commerce therein.
The State Government exercising powers
delegated to it by the Central Government in accordance with the provisions of
the Essential Commodities Act issued several measures to achieve the objectives
of the Control orders.
The Government 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 would be eligible for export under the Scheme.
Incentive export permits were to be granted in the ratio of 2: 3. The ratio
meant that if a miller delivered two additional wagons to the Food Corporation
of India he would be entitled to export three wagons on private trade account.
The last date for delivering rice to the Food Corporation of India was fixed as
20 May, 1971. The last date for issue of permits was fixed as 31 May, 1971.
Permits were of four types. The A type of
permits was for export from one block to another within the State. Under these
permits administrative charge were Rs. 2.50 per quintal. The type of permits
was for export from the State of Andhra Pradesh to other States in the South.
The administrative charges under the type permits were RS. 10/- per quintal.
The type permits was for export to any State outside Andhra Pradesh. The
administrative charges for type permits were RS. 8/- per quintal. The fourth
391 type of permits was for export of broken rice under the A type or the A
type permits and the surcharges were Re. 1.00 per quintal.
By an order dated 24 July, 1967 under section
S of the Essential Commodities Act, l955 the Central Government directed that
the powers conferred on it by section 3 (1) of the Essential Commodities ` I
Act, 1955 to make orders to provide for matters specified in clauses (a), (b),
(c), (d), (e), (f), (h), (i) and (j) of sub-section (2) thereof shall, in
relation to foodstufls be exercisable also by a State Government subject to the
conditions (1) that such power shall be exercised by a State government subject
to such directions, if any, as may be issued by the Central Government in this
behalf, and (2) .- that before making any order relating to any matter
specified in clauses (a) and (c) or in regard to regulation of transport of any
foodstuffs under clause (d) of section 3 (2) of the Essential Commodities Act,
the State Government shall also obtain prior concurrence of the Central
By an order dated 30 September, 1967 in
exercise of powers conferred by section S of the Essential Commodities Act the
Central .- Government made an amendment to the order dated 24 July, 1967. The
amendment was to the effect that before making an order relating to any matter
specified in clauses (a), (c) and (f) or in regard to t distribution or
disposal of foodstuffs to places outside the State or in regard to regulation
of transport of any foodstuff under clause (d) the State Government shall
obtain the prior concurrence of the Central Government.
The State of Andhra Pradesh by an order dated
22 July, 1968 pursuant to the representation of the millers for export of rice
outside the block but within the State passed orders that permits for export of
rice would be issued subject to the fulfillment of their commitments and that
administrative charging of Rs. 2.50 per quintal of rice would be collected from
the millers before the issue of permits.
Under the Southern States (Regulation of
Export of Rice) (Order, 1964, Andhra Pradesh Rice and Paddy (Restriction on
Movement) order 1965 and the Andhra Pradesh Rice Procurement (Levy and
Restriction on Sale order, 1967 every dealer or miller was required to supply a
minimum quantity of rice to the State Government or its nominees and the
balance, that is to say levy free rice, could be sold in the open market or
exported to the places outside the block or State under permit issued by the
State Government. The representation of the millers for permission to export
rice outside the block or the State was that the denial of permission to export
rice would result in deterioration of stocks and consequential loss to both the
trade and consuming public.
The appellants applied for and obtained
permits by fulfilling two principal conditions. One was to satisfy the
statutory requirements of supply to the Food Corporation of India and the
another was payment of administrative surcharges for every quintal of rice.
In the petitions before the High Court the
appellant alleged that they paid the surcharge under "trying
circumstances", "mistaken belief and impression" that "the
respondent has the right to collect the surcharge". The appellants also
alleged that having come to know about 392 the correct legal position in the
matter they asked the respondents to refund the administrative surcharges. The
respondents refused to refund any administrative surcharge.
The appellants contended in the petitions
that the respondent Government has no right to collect any administrative
surcharge, and, therefore the amount should be refunded. The appellants alleged
that they made the payments under mistake of law.
The High Court held that the levy of
administrative surcharge is not backed by valid legislative sanction". The
High Court said that the agreements between the State and the appellant millers
for export were an executive scheme undertaken by the State but liability to
pay tax must be covered by the statute. The High Court expressed the view that
there could be no estoppel when both parties are under a mistake of law.
The High Court however hold that the
appellants were not entitled to any relief on three grounds. First, the
administrative surcharges were paid voluntarily by the appellants. The
appellants themselves represented for issue of permits. The appellants obtained
the permits. They exported rice under the permits. The High Court, therefore,
held that the appellants cannot claim refund of the entire amount without
giving due credit for the expenses or charges incurred by the Government for
the issue of permits and for the supervision of export, transport and other
administrative charges. The second reason given by the High Court was that 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 there from. The third reason given by
the High Court was that there was undue delay in claiming the refund.
The appellants contended that the three
grounds on which the High Court dismissed the writ petitions were
unsustainable. It is said on behalf of one of the appellants (Civil Appeals No.
2584 to 2586 of 1972) that in their application dated 10 February, 1970 for refund
of charges paid by them the appellants gave particulars of payments showing the
dates of payment, quantity covered by the permit, the amount of charges paid,
the number of permit against which payment was made as well as the challenge
under which the payment was made Thereafter the appellants called upon the
Collector to furnish copies of regulations under which surcharge was collected.
The Collector by letter dated 28 July 1970 informed the appellants that the
State Government alone was competent to give the copy of the relevant rule or
regulation under which surcharge was collected. The appellants referred to the
letters dated 22 December, 1970 and 2 January, 1971 by which the State
Government refused to grant certified copy of the rule or regulation on the
ground that it was part of the official correspondence not meant to be supplied
to the private party. In this back ground the appellants contended that since
10 February, 1970 when the appellants demanded refund the appellants from time
to time made application for refund and the last reminder was on 30 December,
1971. Some of the appellants filed their writ petitions in the 393 High Court
in the month of September, 1970 and some of them filed A, their writ petitions
in the month of January 1972.
It was, therefore, said that The applications
for refund were all made within three years from the date of payment and the
High Court should not have dismissed the writ petitions on the ground of delay.
The appellants next contended that the
pleadings were not vague and the appellants in Civil Appeals No. 2584 to 2586
of 1972 gave B. all details of the payments and, therefore, the High Court
should not have dismissed the writ petitions on the ground of vagueness of
particulars and pleadings.
It was also said on behalf of the appellants
that if the levy as well as collection of administrative surcharges was without
authority of law the High Court was in error in refusing any relief to the
appellants on the ground that the payments were voluntarily made.
The appellants relied on the decision of this
Court in The State of Kerala etc. v. k-. P. Govindan Tapioca Exporter etc.(l)
as an authority for the proposition that the levy of administrative surcharge
is illegal. In the Tapioca case (supra) under the Kerala Tapioca Manufacture
and Export (Control) order, 1966 no person could export tapioca except in
accordance with permit. The State Government Levied administrative surcharge
under a scheme. The State contended that the administrative surcharge was in
effect and substance a licence fee charged in exercise of the police powers of
the State for permitting the appellants by grant of permits to export tapioca.
This Court held that the scheme was not an order under any of the provisions of
the Essential Commodities Act and no licence fee or fee for grant of permit was
imposed by the Kerala Tapioca Control order. The E. Kerala Tapioca Control
order only provided for levy of administrative surcharge. The Kerala Tapioca
Control order came into existence on 9 June, 1966. Even before the promulgation
of the order administrative surcharge was levied under a scheme formulated by
the State Government on 15 April, 1966 published in the Kerala Gazette on 3 May,
1966. The rate of administrative surcharge levied on tapioca under the scheme
dated 15 April, 1966 varied from time to time. This Court found that the order
dated 15 April, 1966 formulating the scheme was not an order under any of the
provisions of section 3 of the Essential Commodities Act.
The Scheme did not impose any licence fee.
The scheme merely provided for levying of administrative surcharge. The orders
levying administrative surcharge which followed the Tapioca Control order did
not refer to the exercise of any power under the order. Therefore, this Court
held that G. the administrative surcharge in the Tapioca case (supra) was bad
and the realisations were without any authority of law.
The appellants contended relying on the
decision of this Court in State of Madhya Pradesh v. Bhailal Bhai(2) that the
High Court in exercise of powers under Article 226 has power to order refund
and repayment of tax illegally collected. The appellants submitted H: that the
State had no power under any statute or any authority to (1)  2 S.C.R.
635 (2)  6 S.C.R 261 394 impose and collect administrative surcharge and,
therefore, the payments which were made by the appellants were made under
mistake of law and the State was liable to refund them. The appellants
contended that the administrative surcharge was neither in the nature of a fee
nor was it a tax and there was no authority of law to support the levy and
collection of administrative surcharge. It was said on behalf of the appellants
that neither the Essential commodities Act, 1955 nor the Southern States
(Regulation of Export of Rice) order, 1964 nor the Andhra Pradesh Rice and
Paddy order, 1965 nor the Andhra Pradesh Rice Procurement (Levy and Restriction
on Sale) order, 1967 conferred any power to levy administrative surcharge.
The respondents contended that the permits
were granted pursuant to the representation of the appellants that unless they
were allowed the movement of rice to places outside their blocks or outside the
State they could not sell rice locally because there was no demand. The
respondents further said that for ensuring export of rice the administrative
machinery had to be set up. The permits were grant ed on terms and conditions
of payment of surcharge and the appellants voluntarily paid surcharge and
received benefits under permits. The respondents also said that the permits
were contractual obligations between the appellants and the respondents.
The High Court in exercise of its discretion
refused to grant mandamus on a consideration of facts and circumstances of the
case. The two principal matters which weighed with the - High Court are these.
First, the appellants voluntarily paid the amounts and derived full advantage
and benefit by utilizing the permits. Second, there is undue delay in claiming
refund. Where the High Court has in exercise of discretion refused to grant a
writ of mandamus, this Court does not ordinarily interfere. (See Municipal
Corporation of Greater Bombay v. Advance Builders (India) Private Limited;(l)
D. Cawasji & Co, v. State of Mysore.(2) Refund of illegal taxes stands on a
different footing from claiming refund of surcharge paid under terms and
conditions of permits. The only basis of tax is legislative sanction and if the
legislative sanction fails, the collection of tax cannot be sustained. In the
present case the claim for refund is to be judged between the rival
contentions. The appellants contend that there is no legislative sanction for
collection of administrative surcharge. The respondents on the other hand
support the collection of administrative surcharge first as a condition for
permit and second as an item of maintenance charges in the maintenance and
supervision of the scheme for export of rice.
The respondents also contend that the
appellants have no right to claim refund under section 72 of the Indian
Contract Act because the payments were neither under mistake of law nor under
coercion. It is said by the respondents that there is no coercion because the
export scheme was voluntary. Again, it is said that there is no mis take
because the payments made were in fact due as part of the export scheme
initiated at the instance of the appellants.
The respondents deny the claim of the
appellants on the further ground that the (1)  1 S.C.R. 408 at p. 420.
(2) [19751 2 S.C.R.
Sl I at p. 527 395 appellants having derived
the benefit and caused detriment to the A Government are estopped from
questioning the validity of the payments voluntarily made. Another ground on
which the respondents challenge the claim of the appellants is that the
payments were part of the consideration of the agreement entered into by the
appellants with State. If it be assumed that the agreements are illegal, the
respondent contends that the appellant being a party to the same cannot sue for
recovery of money paid.
All the matters were covered by the common
judgment. In some cases the claims were beyond three years from the date of the
payments. In some cases they were within a lesser time but the ground of delay
on which the High Court exercised discretion is not confined L purely to period
of limitation but is bound up with matters relating to conduct of parties in
regard to payments pursuant to agreements between the parties.
The remedy under Article 226 is not
appropriate in the present cases for these reasons as well. First, several
petitioners have joined. Each petitioner has individual and independent cause
of action. A suit by such a combination of plaintiffs would be open to
misjoinder. Second, there are triable issues like limitation, estoppel and
questions of fact in ascertaining the expenses incurred by the Government for
administrative surcharges of the scheme and allocating the expenses with regard
to quality as well as quantity of rice covered by the permits.
The appellants contended that in all cases of
claim for refund of money, the payments were voluntary and, therefore, the High
3 Court was in error in refusing refund because of the voluntary character of
payment. In cases relating to refund of payments of tax which is illegal the
voluntary character of payment is that tax payer has no say but is compelled to
pay. In the present cases the questions are whether it can be said that payments
of administrative charges were voluntary in order to reap benefits of export of
rice covered by the permits. The contention of the respondents that the export
scheme was framed at the instance of the appellants and that the administrative
surcharge is the consideration for preparation, maintenance and supervision of
the scheme raises questions which can be solved by a suit. A mandamus will go
where there is a specific legal right. Mandamus may be refused where there is
an alternative remedy which is equally convenient, beneficial and effectual. If
there is no other means of obtaining justice, the writ of mandamus is granted
to enable justice to be done. Those are cases where justice can not be done
unless a mandamus is to go. R. V. Bristol and Exeter Railway Co.(l) is an
authority for the proposition where the Corporation could be compelled to pay a
sum of money pursuant to an agreement which could not be enforced by action
because the agreement was not under seal. This Court in Lekh Raj v. Deputy
Custodian(2) and Har Shankar & Ors. v. Deputy Excise and Taxation
Commissioner & ors.(8) held that contractual obligations cannot be enforced
through a writ of mandamus.
(1) 1845 (3)(1) 1845(3)Ry. & Can. Cas.
777. (2) 11966] I S.C.R. 120.
(3) A.I.R. 1975 S.C. 1121.
396 The view of this Court in Sales Tax
officer, Banaras & ors. v A Kanhaiya Lal Mukundalal Saraf(1) was that a
mandamus could be issued when the assessments were found to be illegal. In
Suganmal v. State of Madhya Pradesh & ors.(2) this Court said that the
mandamus for recovery of money could be issued only when the petitioner was
entitled to recover that money under some statute. In Burmah Construction Co.
v. State of Orissa(8) this Court said that normally the parties are relegated
to a suit to enforce civil liability arising out of a breach of contract or a
tort to pay an amount of money. An order for payment of money may sometimes be
made to enforce a statutory obligation. In the State of Kerala v. Aluminium
Industries Ltd.(4) the refund claimed was by reason of the moneys being paid
under mistake of law and the collection having been made wrongly. The petitions
solely for the writ of mandamus directing the State to refund the moneys in the
present case have been rightly refused by the High Court on the grounds of
delay, insufficiency of particulars and pleadings, and voluntary payments. The
additional reasons in our opinion are that various questions of fact arise as
to whether there was really mistake or it was a case of voluntary payment
pursuant to contractual rights and obligations.
The plea of mistake is a bare averment in the
writ petitions. The payments did not disclose the circumstances under which the
alleged mistake occurred and the circumstances in which the legal position
became known to the appellants. The respondents contradicted the plea of
mistake. A triable issue arose as to whether there was a mistake in paying the
amounts and when exactly the mistake occurred and under what circumstances.
Section 72 of the Contract Act states that a
person to whom money has been paid, or anything delivered, by mistake or under
coercion, must repay or return it. The mistake is material only so far as it
leads to the payment being made without consideration. This Court has said that
the true principle is that if one party under a mis take of law pays to another
money which is not due by contract or otherwise that is to be repaid. When
there is a clear and unambiguous position of law which entitles a party to the
relief claimed by him equitable considerations are not imported. A contract
entered into under a mistake of law of both parties falls under section 21 of
the Contract Act and not section 72. If a mistake of law had led to the
formation of a contract, section 21 enacts that the contract is not for that
reason voidable. If money is paid under that contract, it cannot be said that
the money was paid under mistake of law; it was paid because it was due under a
valid contract and if it had not been paid payment could have been enforced.
(See Shiba Prasad Singh v. Srish Chandra Nandi(5) See also Pollock &
Mulla-Contract Act 9th Ed. by J. L. Kapur pp. 519-520). In the present case,
the respondents do not support the demand for administrative charges either as
a tax or as a fee but as a term and condition of permit and as a (1) 
S.C.R. 1350. (2) A.I.R. 1965 S.C. 1740.
(3)  Supp. 1 S.C.R. 242. (4) 16 S.T.C.
(5) 76 I.A. 244.
397 term of agreement between the parties for
the maintenance and supervision expenses for the scheme for export permits of
rice from one block to another within the State or outside the State.
It may be stated here that in cases where the
State collected administrative changes but could not grant permits the State
refund ted moneys to such Person. It is only where millers have obtained
permits and taken advantage thereof that the State contends that there is no
mistake and that the payments were made voluntarily with full knowledge of
For these reasons the appeals are dismissed.
If the parties are so advised they may institute suits and all rival
contentions would be open to both parties. Parties will pay and bear their own
V.P.S. Appeals dismissed.