Union of India & Ors Vs. West Coast
Paper Mills Ltd. & Anr  Insc 77 (5 February 2004)
S.B. Sinha & S.H. Kapadia. S.B. Sinha, J :
the correctness of a two-Judge Bench decision Kerala & Anr. [JT 1996 (2) SC
167: (1996) 2 SCC 496], a Division Bench of this Court has referred the matter
to a three-Judge Bench.
factual matrix required to be taken note of is as under:
respondents herein were transporting their goods through the branch line to the
appellants from Alnavar to Dandeli wherefor the common rate fixed in respect of
all commodities on the basis of weight was being levied as freight. However, a
revision was made in the rate of freight w.e.f. 1.2.1964.
thereby and dissatisfied therewith, the respondents herein filed a complaint
petition before the Railway Rates Tribunal (hereinafter referred to as 'The
Tribunal') challenging the same as unjust, unreasonable and discriminatory as
the standard telescopic class rates on three times of inflated distance was
adopted for levy of freight on goods traffic. The Tribunal by a judgment dated
18.4.1966 declared the said levy as unreasonable whereagainst the appellants
herein filed an application for grant of special leave before this Court.
granting special leave, this Court also passed a limited interim order which is
in the following terms:
Railway may charge the usual rates without inflation of the distance, and the
Respondent will give a Bank guarantee to the satisfaction of the Register of
this Court for Rupees Two Lakhs to be renewed each year until the disposal of
the appeal. One month's time allowed for furnishing the Bank Guarantee. The
stay petition is dismissed subject to the above." Eventually, however, the
said Special Leave Petition was dismissed by this Court on 14.10.1970.
petition was filed by the respondent herein on 05.01.1972 which was marked as
W.P. NO. 210/1972, and the same was disposed by the High Court on 29.10.1973
these matters, in my opinion, cannot be properly adjudicated upon in a Writ
Petition filed under Art. 226 of the Constitution. If so advised the petitioner
could avail of the ordinary remedy of filing a suit for appropriate relief. If
such a suit is filed, it will be open to the respondents to raise all available
contentions in defence just as it is open to the petitioner to raise all
available contentions in support of its claim. Having considered all relevant
aspects, I am of the opinion, that this is a case where I should decline to
exercise my discretion under Art. 226 of the Constitution.
to the aforesaid observations, this writ petition is dismissed." Two suits
thereafter were filed by the respondents on 12.12.1973 and 18.04.1974 which
were renumbered later on as OS NO. 38/1982 and OS No.39/1982.
contention that the said suits were barred by limitation was raised by the
appellants herein stating that the cause of action for filing the same arose
immediately after the judgment was passed by 'The Tribunal' on 18.4.1966 and,
thus, in terms of Article 58 of the Limitation Act, 1963, they were required to
be filed within a period of three years from the said date, as despite the fact
that the Special Leave Petition was preferred thereagainst, no stay had been
granted by this Court and, thus, the period, during which the matter was
pending before this Court, would not be excluded in computing the period of
limitation. Having regard to the plea raised by the Plaintiff-Respondent in the
aforementioned suits as regards the applicability of Sections 14 and 15 of the
Limitation Act, 1963, the Trial Court held that the suits had been filed within
the stipulated period. The High Court in appeal also affirmed the said view.
P.P. Malhotra, learned senior counsel appearing on behalf of the appellant, at
the outset drew our attention to the fact that the Union of India has already
complied with the direction of 'The Tribunal' by refunding the excess freight
charged from the respondent for the period 18.4.1966 to 25.9.1966. The learned
counsel, however, would contend that the suit for refund of excess amount of
the freight for the disputed periods
24.6.1963 to 1.2.1964, and
1.2.1964 to 18.4.1966 were barred by limitation in terms of Article 58 of the
Limitation Act, 1963, as the cause of action for filing the suit had arisen on
the date on which such declaration was made by 'The Tribunal.
would further contend that in absence of an order staying the operation of the
judgment, it became enforceable and, thus, the plaintiff-respondent was required
to file the suit within the period of limitation specified therefor.
Furthermore, the learned counsel would urge that in terms of Section 46A of the
Indian Railways Act, the judgment of the Tribunal being final, the starting
period of limitation for filing the suit would be three years from the said
date. Strong reliance in this behalf has been placed Appeals 1918-1919 page
52], P.K. Kutty (supra), Maqbul Ahmad 1935 PC 85] and Secretary, Ministry of
Works & Housing Govt. Others[(1996) 6 SCC 229].
N Salve, learned senior counsel appearing on behalf of the respondents, on the
other hand, would submit that having regard to the fact situation obtaining in
this case Article 113 of the Limitation Act shall apply and not Article 58
thereof. The learned counsel would urge that as admittedly this Court granted
Special Leave to Appeal in favour of the appellants and passed a limited
interim order, the judgment of the Tribunal was in jeopardy and, thus, cannot
be said to have attained finality. Furthermore, the learned counsel would
submit that when the doctrine of merger applies, the period of limitation would
begin to run from the date of passing the appellate decree and not from the
date of passing of the original decree. In support of the said contention,
reliance has been placed on a decision and Another [(2000) 6 SCC 359].
plaintiff in this case has filed a suit for refund of the excess amount
collected by the defendant-Railways for the period 24.6.1963 to 1.2.1964 and
1.2.1964 to 18.4.1966 with interest accrued thereupon. It is not in dispute
that in terms of the provisions of the Indian Railways Act, as thence existing
'The Tribunal' was only entitled to make a declaration to the effect that the
freight charged was unreasonable or excessive. It did not have any jurisdiction
to execute its own order.
be true that by reason of Section 46A of Indian Railways Act the judgment of
the Tribunal was final but by reason thereof the jurisdiction of this Court to
exercise its power under Article 136 of the Constitution of India was not and
could not have been excluded.
136 of the Constitution of India confers a special power upon this Court in
terms whereof an appeal shall lie against any order passed by a Court or
Special Leave is granted and the appeal is admitted the correctness or
otherwise of the judgment of the Tribunal becomes wide open. In such an appeal,
the court is entitled to go into both questions of fact as well as law. In such
an event the correctness of the judgment is in jeopardy.
in relation to a civil dispute, an appeal is considered to be a continuation of
the suit and a decree becomes executable only when the same is finally disposed
of by the Court of Appeal.
starting point of limitation for filing a suit for the purpose of recovery of
the excess amount of freight illegally realised would, thus, begin from the
date of the order passed by this Court. It is also not in dispute that the
respondent herein filed a writ petition which was not entertained on the ground
stated hereinbefore. The respondents were, thus, also entitled to get the
period during which the writ petition pending, excluded for computing the
period of limitation. In that view of the matter, the civil suit was filed
within the prescribed period of limitation.
Trial Judge as also the High Court have recorded a concurrent opinion that the
respondents were entitled to the benefits of Sections 14 and 15 of the
Limitation Act, 1963.
have no reason to take a different view.
beyond any cavil that in the event, the respondent was held to have been
prosecuting its remedy bona fide before an appropriate forum, it would be
entitled to get the period in question excluded from computation of the period
58 and 113 of the Limitation Act read thus:
of Suit Period of Limitation Time from which period begins to run 58.
obtain any other declaration Three years When the right to sue first accrues
suit for which no period of limitation is provided elsewhere in this Schedule
Three years When the right to sue accrues" It was not a case where the
respondents prayed for a declaration of their rights. The declaration sought
for by them as regard unreasonableness in the levy of freight was granted by
distinction furthermore, which is required to be noticed is that whereas in
terms of Article 58 the period of three years is to be counted from the date
when 'the right to sue first accrues'; in terms of Article 113 thereof, the
period of limitation would be counted from the date 'when the right to sue
accrues'. The distinction between Article 58 and Article 113 is, thus, apparent
inasmuch as the right to sue may accrue to a suitor in a given case at
different points of time and, thus, whereas in terms of Article 58 the period
of limitation would be reckoned from the date on which the case of action arose
first whereas, in the latter the period of limitation would be differently
computed depending upon the last day when the cause of action therefor arose.
fact that the suit was not filed by plaintiff- respondent claiming existence of
any legal right in itself is not disputed. The suit for recovery of money was
based on the declaration made by 'The Tribunal' to the effect that the amount
of freight charged by the appellant was unreasonable. It will bear repetition
to state that a plaintiff filed a suit for refund and a cause of action therefor
arose only when its right was finally determined by this Court and not prior
thereto. This Court not only granted special leave but also considered the
decision of the Tribunal on merit.
(supra), this Court held:
The logic underlying the doctrine of merger is that there cannot be more than
one decree or operative orders governing the same subject-matter at a given
point of time. When a decree or order passed by an inferior court, tribunal or
authority was subjected to a remedy available under the law before a superior
forum then, though the decree or order under challenge continues to be
effective and binding, nevertheless its finality is put in jeopardy. Once the
superior court has disposed of the lis before it either way - whether the
decree or order under appeal is set aside or modified or simply confirmed, it
is the decree or order of the superior court, tribunal or authority which is
the final, binding and operative decree or order wherein merges the decree or
order passed by the court, tribunal or the authority below.
the doctrine is not of universal or unlimited application. The nature of
jurisdiction exercised by the superior forum and the content or subject-matter
of challenge laid or which could have been laid shall have to be kept in
view." It was further observed:
Once a special leave petition has been granted, the doors for the exercise of
appellate jurisdiction of this Court have been let open. The order impugned
before the Supreme Court becomes an order appealed against. Any order passed
thereafter would be an appellate order and would attract the applicability of
doctrine of merger. It would not make a difference whether the order is one of
reversal or of modification or of dismissal affirming the order appealed
against. It would also not make any difference if the order is a speaking or non-speaking
one. Whenever this Court has felt inclined to apply its mind to the merits of
the order put in issue before it though it may be inclined to affirm the same,
it is customary with this Court to grant leave to appeal and thereafter dismiss
the appeal itself (and not merely the petition for special leave) though at
times the orders granting leave to appeal and dismissing the appeal are
contained in the same order and at times the orders are quite brief.
Nevertheless, the order shows the exercise of appellate jurisdiction and
therein the merits of the order impugned having been subjected to judicial
scrutiny of this Court.
merge" means to sink or disappear in something else; to become absorbed or
extinguished; to be combined or be swallowed up. Merger in law is defined as
the absorption of a thing of lesser importance by a greater, whereby the lesser
ceases to exist, but the greater is not increased; an absorption or swallowing
up so as to involve a loss of identity and individuality.(See Corpus Juris Secundum,
Vol. LVII, pp. 1067- 68)" Commissioner of Central Excise, 2002 (4) AD
(Delhi) 621) The question as regard applicability of merger with reference to
the provisions for departmental appeal and revision had first been considered
by this Court in Sita Ram "The initial difficulty in the way of the
appellant, however, is that departmental enquiries even though they culminate
in decisions on appeals or revision cannot be equated with proceedings before
the regular courts of law." However, the said view was later on not
accepted to be correct.
the rigours of Section 3 of the Limitation Act, 1963, the provisions thereof
are required to be construed in a broad based and liberal manner. We need not
refer to the decisions of this Court in the matter of condoning delay in filing
appeal or application in exercise of its power under Section 5 of the
Limitation Act. SCR 595] Vivian Bose, J. held that justice should be done in a
common sense point of view stating:
see no reason why any narrow or ultra technical restrictions should be placed
on them. Justice should, in my opinion be administered in our courts in a
common sense liberal way and be broadbased on human values rather than on
narrow and restricted considerations hedged round with hair-splitting
technicalities...." However, in that case also a distinction was sought to
be made between a judgment of a 'Court' and 'Tribunal'.
582], noticing the earlier Constitution Benches decision of this Court in
Mohammad Nooh (supra), Madan Gopal Rungta Ltd. [(1963) 2 SCR 563] as well as
3-Judge Bench of this 384], this Court observed:
The distinction adopted in Mohammad Nooh case (1958 SCR 595 : AIR 1958 SC 86)
between a court and a tribunal being the appellate or the revisional authority
is one without any legal justification. Powers of adjudication ordinarily
vested in courts are being exercised under the law by tribunals and other
constituted authorities. In fact, in respect of many disputes the jurisdiction
of the court is now barred and there is a vesting of jurisdiction in tribunals
and authorities. That being the position, we see no justification for the
distinction between courts and tribunals in regard to the principle of merger.
On the precedents indicated, it must be held that the order of dismissal made
by the Collector did merge into the order of the Divisional Commissioner when
the appellant's appeal was dismissed on August 31, 1966." Rathore's case (supra) was
followed in Mohd.
and noticed in Kunhayammed (supra).
now, keeping in view the law laid down by this Court, as noticed hereinbefore,
consider the decisions relied upon by Mr. Malhotra.
Boid (supra) the question which arose for consideration was as to in a suit for
recovery of the purchase money paid for sale of a patni taluk under Bengal
Regulation VIII of 1819, which had been set aside; what would be the date when
cause of action therefor can be said to have arisen? In that case several suits
were filed. The sale was reversed in its entirety in the first suit. Stay was
not granted in the other suits. In the peculiar fact situation obtaining
therein it was held that under the Indian law and procedure when a original
decree is not questioned by presentation of an appeal nor is its operation
interrupted; where the decree on appeal is one of dismissal, the running of the
period of limitation did not stop.
Ahmad (supra) the question which arose for consideration was as to whether
subsequent to the passing of a preliminary decree in the mortgage suit, an
application to obtain execution under the preliminary decree can be dismissed.
In that case a preliminary mortgage decree was obtained on 7th May, 1917 which
was amended in some respects on 22nd May, 1917. Some of the mortgagors who were
interested in different villages comprised in the mortgage, appealed to the
High Court against the preliminary decree. Two such appeals were filed. One
appeal succeeded while the other failed. The decrees of the High Court
disposing of those appeals were made on 7th June, 1920 whereafter the
decree-holder proceeded to seek execution under the preliminary decree. In the
aforementioned situation, it was held:
is impossible to say, apart from any other objection, that the application to
obtain execution under the preliminary decree was an application for the same
relief as the application to the Court for a final mortgage decree for sale in
being so, it is not permissible, on the basis of S. 14 in computing the period
of limitation prescribed, to exclude that particular period." The question
which falls for consideration in this case did not arise therein.
we advert to P.K. Kutty (supra) we may notice another decision of this Court in
Sales Tax Officer, Banaras 135]. In that case an order of assessment was in
question which came up before this Court. The question which arose for
consideration therein was as to whether Section 72 of the Indian Contract Act
had any application. This Court held that cause of action for filing the suit
for recovery would arise from the date when such payment of tax made under a
mistake of law became known to the party.
P.K. Kutty (supra) an order of assessment under the Agricultural Income Tax was
set aside by the High Court by a judgment dated 1st January, 1968. A civil suit
was filed in the year 1974. The suit was held to be barred by limitation. A
Contention was raised therein that the appellant had discovered the mistake on
5th October, 1971 when the Court dismissed the appeal filed by the State
against the order passed by the High Court dated 1st January, 1968. This Court negatived
the said plea stating:
are unable to agree with the learned counsel. It is not in dispute that at his
behest the assessment was quashed by the High Court in the aforesaid OP on
1-1-1968. Thereby the limitation started running from that date. Once the
limitation starts running, it runs its full course until the running of the
limitation is interdicted by an order of the Court." Distinguishing Kanhaiya
Lal (supra), it was observed:
.We do not have that fact situation in this case. The appellant is a party to
the proceedings and at his instance the assessment of agricultural income tax
was quashed as referred to hereinbefore and having had the assessment quashed
the cause of action had arisen to him to lay the suit for refund unless it is
refunded by the State. The knowledge of the mistake of law cannot be
countenanced for extended time till the appeal was disposed of unless, as
stated earlier, the operation of the judgment of the High Court in the previous
proceedings were stayed by this Court." In Mohinder Singh Jagdev (supra)
also this Court held:
The crucial question is whether the suit is barred by limitation ? Section 3 of
the Limitation Act, 1963 (for short, "the Act") postulates that the
limitation can be pleaded. If any proceedings have been laid after the expiry
of the period of limitation, the court is bound to take note thereof and grant
appropriate relief and has to dismiss the suit, if it is barred by limitation.
In this case, the relief in the plaint, as stated earlier, is one of
declaration. The declaration is clearly governed by Article 58 of the Schedule
to the Act which envisages that to obtain "any other" declaration the
limitation of three years begins to run from the period when the right to sue
"first accrues". The right to sue had first accrued to the respondent
on 10-9- 1957 when the respondent's services came to be terminated. Once
limitation starts running, until its running of limitation has been stopped by
an order of the competent civil court or any other competent authority, it
cannot stop. On expiry of three years from the date of dismissal of the
respondent from service, the respondent had lost his right to sue for the above
declaration." Unfortunately in P.K. Kutty (supra) and Mohinder Singh Jagdev
(supra) no argument was advanced as regard applicability of doctrine of merger.
The ratio laid down by the Constitution Benches of this Court had also not been
brought to the court's notice.
aforementioned cases, this Court failed to take into consideration that once an
appeal is filed before this Court and the same is entertained, the judgment of
the High Court or the Tribunal is in jeopardy. The subject matter of the lis
unless determined by the last Court, cannot be said to have attained finality.
Grant of stay of operation of the judgment may not be of much relevance once
this Court grants special leave and decides to hear the matter on merit.
not been and could not be contended that even under the ordinary civil law the
judgment of the appellate court alone can be put to execution. Having regard to
the doctrine of merger as also the principle that an appeal is in continuation
of suit, we are of the opinion that the decision of the Constitution Bench in
S.S. Rathore (supra) was to be followed in the instant case.
facts obtaining in Mohinder Singh Jagdev (supra) being totally different, the
same cannot said to have any application in the facts obtaining in the present
are of the opinion that P.K. Kutty (supra) does not lay down the law correctly
and is overruled accordingly.
matter may now be placed before an appropriate Bench for disposal of the
appeals on merits.