Full Judgment Text
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CASE NO.:
Appeal (civil) 1061-62 of 1998
PETITIONER:
Union of India and Ors.
RESPONDENT:
West Coast Paper Mills Ltd. & Anr.
DATE OF JUDGMENT: 05/02/2004
BENCH:
CJI, S.B. Sinha & S.H. Kapadia.
JUDGMENT:
JUDGMENT
S.B. SINHA, J :
Doubting the correctness of a two-Judge Bench decision
of this Court in P.K. Kutty Anuja Raja & Anr. Vs. State of
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.
The factual matrix required to be taken note of is as
under:
The 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.
Aggrieved 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.
While granting special leave, this Court also passed a
limited interim order which is in the following terms:
"The 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.
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A writ 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 observing:
"All 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.
Subject 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.
A 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.
Mr. 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 (a) 24.6.1963 to 1.2.1964, and (b)
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.
Mr. Malhotra 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
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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
on Juscurn Boid and Another Vs. Pirthichand Lal [L.R. Indian
Appeals 1918-1919 page 52], P.K. Kutty (supra), Maqbul Ahmad
and others Vs. Onkar Pratap Narain Singh and others [AIR
1935 PC 85] and Secretary, Ministry of Works & Housing Govt.
of India and Others Vs. Mohinder Singh Jagdev and
Others[(1996) 6 SCC 229].
Mr. Harish 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
of this Court in Kunhayammed and Others Vs. State of Kerala
and Another [(2000) 6 SCC 359].
The 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.
It may 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.
Article 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 Tribunal.
Once a 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.
Even 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.
The 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
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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.
The 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.
We have no reason to take a different view.
It is 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 of limitation.
Articles 58 and 113 of the Limitation Act read thus:
"Description of
Suit
Period of
Limitation
Time from which
period begins to run
58.
To obtain any
other declaration
Three years
When the right to
sue first accrues
113.
Any 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 the Tribunal.
A 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
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therefor arose.
The 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.
In Kunhayammed (supra), this Court held:
"12. 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.
However, 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:
"41. 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
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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.
42."To 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)"
(See also Raja Mechanical Company Pvt. Ltd. Vs.
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
Goel Vs. Municipal Board, Kanpur [1959 SCR 1148] stating :
"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.
Despite 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.
In The State of Uttar Pradesh Vs. Mohammad Nooh [1958
SCR 595] Vivian Bose, J. held that justice should be done in
a common sense point of view stating:
"I 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
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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’.
In S.S. Rathore Vs. State of Madhya pradesh [(1989) 4
SCC 582], noticing the earlier Constitution Benches decision
of this Court in Mohammad Nooh (supra), Madan Gopal Rungta
Vs. Secy. To the Government of Orissa [1962 Supp 3 SCR 906],
Collector of Customs, Calcutta Vs. East India Commercial Co.
Ltd. [(1963) 2 SCR 563] as well as 3-Judge Bench of this
Court in Somnath Sahu Vs. State of Orissa [(1969) 3 SCC
384], this Court observed:
"14. 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.
Quaramuddin (Dead) By LRS. Vs. State of A.P. [(1994) 5 SCC
118] and noticed in Kunhayammed (supra).
We may now, keeping in view the law laid down by this
Court, as noticed hereinbefore, consider the decisions
relied upon by Mr. Malhotra.
In Juscurn 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.
In Maqbul Ahmad (supra) the question which arose for
consideration was as to whether subsequent to the passing of
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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:
"It 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 the suit.
That 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.
Before we advert to P.K. Kutty (supra) we may notice
another decision of this Court in Sales Tax Officer, Banaras
and others Vs. Kanhaiya Lal Makund Lal Saraf [AIR 1959 SC
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.
In 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:
"3...We 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:
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"5.. .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:
"7. 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.
In the 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
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merit.
It has 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.
The 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 case.
We, therefore, are of the opinion that P.K. Kutty
(supra) does not lay down the law correctly and is overruled
accordingly.
The matter may now be placed before an appropriate
Bench for disposal of the appeals on merits.