Mahabir Kishore v. State of M.P., AIR 1990 SC 313

« »

This case deals with Section 17(1)(c) of the Limitation Act, 1963 which says when the suit is based on the fraud of the defendant, the period of limitation shall not begin until the plaintiff or applicant has discovered the fraud.

In this case, individuals incurred an additional fee for the manufacturing and sale of liquor.
Upon discovering that a court deemed this fee impermissible, they sought a refund, but the government contended that the request came too late.
Despite ongoing legal debates regarding the government's authority to impose this fee, officials insisted on its continuation until they opted to cease.
Subsequently, a Court ruled against the fee, but the government persisted in collecting it.
When the people demanded reimbursement and faced government resistance, they brought the case to court.
The Trial Court ruled that the suit is barred by limitation to seek a refund, and upon appealing to the High Court, the decision remained unchanged.
Hence, the appellants approached the Supreme Court.

The Court emphasized that the current case seeks the reimbursement of funds erroneously paid, and the refusal to refund could lead to unjust enrichment, depending on the specific circumstances.
The SC discussed the principle of unjust enrichment; it observed the following points about the application of doctrine: -
- first, that the defendant has been 'enriched' by the receipt of a "benefit";
- secondly, that this enrichment is "at the expense of the plaintiff"; and
- thirdly, that the retention of the enrichment be unjust.
This supports the need for restitution, where enrichment can manifest as a direct benefit to one's wealth, such as receiving money, or an indirect benefit, like saving inevitable expenses.
The Court also delved into the details of Section 17(1)(c) of the Limitation Act, 1963, stating that in cases involving a claim based on a mistake, the limitation period starts only when the plaintiff discovers the mistake or could have reasonably discovered it with due diligence. In situations where the payment is made under a mistake of law, as opposed to a factual error, the party often becomes aware of the mistake only when a court declares the law invalid.

The SC finally held that the HC was not correct and set aside the judgment of the HC and allowed the appeal.
The Court finally held that the Limitation cannot be calculated from the date of internal communication regarding withdrawal of levy, a copy whereof was not sent to the assessee; as a week's allowance must be made for the petitioner to come to know of the Court's decision, refund claim not barred by limitation.