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1994 DIGILAW 379 (ORI)

SOMANATH MAHASWARA v. ORISSA STATE ROAD TRANSPORT CORPORATION

1994-12-12

A.K.PADHI, D.P.MOHAPATRA

body1994
D. P. MOHAPATRA, J. ( 1 ) THESE four writ applications involve common questions of fact and law and the relief sought is similar. With consent of learned counsel for the parties, the cases were heard together and they are being disposed of by this common judgment. ( 2 ) THE petitioners who are owners of buses had joined the banner scheme formulated by the Orissa State Road Transport Corporation (for short, ";the Corporation";) in pursuance of the said scheme they had entered into agreements with the Corporation in the prescribed form. Initially the scheme was introduced in 1981 which was withdrawn after sometime; a revised scheme was introduced in 1913 which was modified in the year 1985. The scheme was finally withdrawn in 1989 in view of the judgment rendered by this Court on 10-4-89 in a batch of writ applications, O. J. C. Nos. 1729, 1730, 1894, 1895, 1896, 2925, 4025 of 1987 and other cases. In the said judgment this court held, inter alia, that the action of the Corporation in entering into agreements with the private operators to utilise permits held by the Corporation to operate stage carriage services with their (private operators) vehicles without taking recourse to Section 59 of the Motor Vehicles Act was impermissible and unauthorised and the Corporation had therefore to desist from such action and the Transport authorities, Regional Transport Authority or State Transport Authority, as the case may be, should take appropriate action to prevent such unauthorised user of permits granted by it. This Court relied on the principles enunciated by the Apex Court in AIR 1987 SC 29 (Brij Mohan Parihar v. M. P. State Road Transport Corporation ). It is the case of the petitioners that in view of the position of law enunciated in the aforementioned decided cases, they are entitled to refund of the amounts paid to the Corporation as 'service charges' for operating their vehicles under the banner scheme. It may be stated here that one of the salient features under the banner scheme was that the agent, i. e. the private bus owner, shall be liable to pay a service charge per K. M. per bus at the prescribed rate to the Corporation for the service rendered. The rates at which service charges were to be paid by the agent to the Corporation were set out in the agreement. The rates at which service charges were to be paid by the agent to the Corporation were set out in the agreement. The petitioners contend that the agreement entered by them with the Corporation was invalid and the service charges were paid under mistake of law and, therefore, the amount should be refunded by the Corporation to them. They have prayed for a writ of mandamus directing the opp. parties to refund the amount paid by them by way of service charges under the banner scheme. The Orissa State Road Transport Corporation through its Managing Director and the District Transport Manager, Orissa, State Road Transport Corporation, Cuttack. are cited as opp. parties in all the cases. ( 3 ) THE opp. parties in their counter affidavit have denied their liability to refund the amount in question. It is their case that there was no compulsion for any owner of private bus to join the banner scheme. The petitioners had voluntarily joined the scheme, entered into agreements containing the stipulation for payment of service charges at the rates specified. They operated their vehicles under the schemes utilising the permits issued in favour of the Corporation, derived an advantage and financial benefits by such operation and paid service charges as stipulated in the agreement. In the circumstances, contend the opp. parties, the amount cannot be said to have been paid under mistake of law, and therefore refund of the said amount cannot be claimed. The opp. parties have prayed for dismissal of the writ petitions. ( 4 ) ON the case of the parties as discussed above, the question that falls for determination is whether, in the facts and circumstances of the case, the petitioners are entitled to refund of the amount paid as service charges as per the agreements entered by them with the Corporation under the banner scheme. The answer to the question depends on the interpretation and inter play of relevant provisions of the Indian Contract Act, 1872 (for short, ";the Act"; ). Under Section 21 of the Act it is laid down that a contract is not voidable because it was caused by a mistake as to any law in force in India; but a mistake as to a law not in force in India has the same effect as a mistake of fact. Under Section 21 of the Act it is laid down that a contract is not voidable because it was caused by a mistake as to any law in force in India; but a mistake as to a law not in force in India has the same effect as a mistake of fact. Section 65 deals with the obligation of a person who has received advantage under a void agreement or a contract that becomes void. The section provides that when an agreement is discovered to be void, or when a contract becomes void, any person who has received any advantage under such agreement or contract is bound to restore it, or to make compensation for it, to the person from whom he received it. Section 72 which makes provision relating to liability of person to whom money is paid, or thing delivered, by mistake or under coercion lays down that a person to whom money has been paid or anything delivered by mistake or under coercion must repay or return it. ( 5 ) THESE provisions have been interpreted by courts from time to time. The Privy Council in the case of Sri Shiba Prasad Singh v. Maharaja Srish Chandra Mandi reported in AIR 1949 PC 297 held that if a mistake of law has led to the formation of a contract, Section 21 enacts that that contract is not for that reasons voidable; if money is paid under that contract, it cannot to said that that money was paid under mistake of law; it was paid because it was due under a void contract and if it had not been paid payment could have been enforced; that payment ";by mistake"; in Section 72 must refer to a payment which was not legally due and which could not have been enforced; the mistake in thinking that the money paid was due, when in fact it was not due; that there is nothing inconsistent in enacting on the one hand that if parties enter into a contract under mistake of law that contract must stand and is enforceable, but on the other hand that if one party acting under mistake of law pays to another party money which is not due by contract or otherwise, that money must be repaid. Accepting the principle of law enunciated in Pannalal v. Produce Exchange Co. Accepting the principle of law enunciated in Pannalal v. Produce Exchange Co. Ltd. , AIR 1946 Cal 245 the Privy Council held that it may be well to add that their Lordships' judgment does not imply that every sum paid under mistake is recoverable no matter what the circumstances may be; there may in a particularcular case no circumstances which disentitle a plaintiff by estoppel or otherwise. The above legal position was reiterated by the Apex Court in the case of the Sales Tax Officer v. Kanhaiya Lal Mukund Lal Saraf, reported in AIR 1959 SC 135 in which the Court ruled that the term 'mistake' used in Section 72, Contract Act, has been used without any qualification or limitation whatever and comprises within its scope a mistake of law as well as mistake of fact; that there is no warrant for ascribing any limited meaning to the word 'mistake' as has been used therein; that there is no conflict between the provisions of Section 72 on the one hand and Sections 21 and 22 of the Contract Act on the other; that the true principle is that if one party under a mistake, whether of fact or law, pays to another party money which is not due by contract or otherwise that Honey must be repaid. A similar view was taken by the Apex Court in the case of Dhanyalakshmi Rice Mills etc. v. The Commr. of Civil Supplies, reported in AIR 1976 SC 2243 in which it was held that Section 72 of 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; that the mistake is material only so far as it leads to the payment being made without consideration; that the true principle is that if one party under a mistake of law pays to another money which is not due by contract or otherwise that is to be repaid. The Apex Court declined to interfere with the order passed by the High Court refusing to grant the writ of mandamus in exercise of its discretion. The two principal matters which weighed with the High Court were that: first the appellants voluntarily paid the amounts and derived full advantage and benefit by utilising the permits and second, there is undue delay in claiming refund. The two principal matters which weighed with the High Court were that: first the appellants voluntarily paid the amounts and derived full advantage and benefit by utilising the permits and second, there is undue delay in claiming refund. The Madras High Court in the case of P. S. Machado v. K. Venkatarama Gopala Iyer, reported in AIR 1963 Madras 231, interpreting Section 72 of the Contract Act held that even where the enter into a contract by reason of mistake in law but such a contract has been performed, it would be extremely inequitable for the party who accepts the benefit of the contract, to claim the amount on the footing that the payment thereunder was under a mistake of law without restoring the other party to his original position and therefore any payment made under a contract albeit such a contract was induced by a mistake of law cannot be recovered back. The Court clarified that the principle is different in case where payment was not made under a contract, but under a mistake, i. e. where such payment was made although it was not actually due under the contract or otherwise; in such a case money could be recovered as paid under a mistake of law under Section 72 of the Contract Act. The Andhra Pradesh High Court in the case of Alapeti Ramamurthi Galli Krishnamurthi and Co. v. Maddi Seetheramayya, reported in AIR 1958 Andh Pra 427 interpreting Sections 65 and 72 of the Contract Act held that Section 65 confers a right of restitution when a contract is discovered to be void; a party who has received any advantage under such a contract is bound to restore it to the other; the doctrine of restitution in interegurum is of general application and underlies the provisions of Section 65; the object of Section 65 is not to make a new contract between the parties when the contract entered into between them has been discovered to be void but only to restore the advantage received by one party thereunder to the other; and unless a court can restore the parties to their original position, having regard to the circumstances of each case, there is no scope for the application of Section 65. Regarding applicability of Section 72, the court held that the said section could not apply to the facts of the case because a mistake of law had led to the formation of the contract and on the basis of that contract, the money was due to the defendant and was paid to him and therefore the mistake was not in the plaintiff thinking that the money was due to the defendant when it was not due under the contract. The Court followed the decision of the Privy Council in AIR 1949 PC 297. The Madhya Pradesh High Court in the case of Firm Durga Prasad Magniram v. Dr. Ganesh Prasad, reported in AIR 1982 Madh Pra 219 considered a case where the sub - tenancy was void in view of Section 12a of the Rent Control Order, 1949 and Section 23 of the Contract Act and the question arose whether the tenant would be entitled to recover arrears of rent from the sub-tenant by virtue of section 65 of the Act. The Court held that the appellant tenant would be entitled to recover the arrears of rent from the sub-tenant. Since the sub-tenant had obtained possession of premises from the tenant and thus took advantage by use and occupation of the premises, therefore the agreement of subtenancy though void, the sub-tenant was liable to pay compensation to the appellant tenant for use and occupation of the premises. ( 6 ) TESTING the case at hand in the light of the principles enunciated in the aforementioned decisions, the clear position that emerges is that the permits authorising operation of stage carriage and contract carriage services on the routes were held by the Corporation, under the terms of the banner scheme and the stipulations in the agreement the petitioners took advantage of those permits for plying their buses on the routes and derived benefit from such operations. It is to be kept in mind that under the provisions of the Motor Vehicles Act no stage carriage or contract carriage service could be operated without a permit issued by the competent transport authority. The petitioners had voluntarily entered into agreements with the Corporation accepting the terms and conditions stipulated therein including that for payment of service charges to the Corporation for the facilities provided by it to the agents. They had also paid the service charges voluntarily. The petitioners had voluntarily entered into agreements with the Corporation accepting the terms and conditions stipulated therein including that for payment of service charges to the Corporation for the facilities provided by it to the agents. They had also paid the service charges voluntarily. It is not the case of the petitioners that there was any fraud, coercion or undue influence exercised by the Corporation in the matter. No doubt, this court held that arrangement for operation of passenger transport service by agents utilising the permits held by the Corporation without taking recourse to Section 59 of the Motor Vehicles Act was impermissible and unauthorised and accordingly the Corporation was directed to desist from such action and the transport authorities were directed to take appropriate action to prevent such unauthorised user of permits granted by it. But on that basis refund of the amount paid by the petitioners to the Corporation under terms of the agreement which they had accepted, utilised and had been benefited cannot be claimed. Service charges were paid by the petitioners to the Corporation since it was due under the contract. As such, it cannot be said that the sum which was not due to the corporation was paid under mistake of law. It may be that the agreement was entered under a mistake of law but it does not follow from it that there was any mistake of law in payment of the amount. The service charges being due under the agreement, the petitioners paid the same to the corporation. Further, in the facts and circumstances, it was not possible to restore the party to its former position. Therefore, Section 72 of the Contract Act cannot be applied in the case. ( 7 ) THE resultant position is that the writ applications are devoid of merit. They are accordingly dismissed, but in the circumstances of the case without any order for costs. ( 8 ) A. K. PADHI, J. I agree. Petition dismissed. .