Holding

A writ petition for refund of illegally collected water cess is maintainable, the respondents’ claim is not barred by delay, and the Supreme Court’s decision is binding under Article 141, so the refund order stands.

Summary

The respondents, owners of sugar and distillery units, were levied water cess under the Water (Prevention and Control of Pollution) Cess Act, 1977 and paid it under protest. After the Supreme Court in Saraswati Sugar Mills v. Haryana State Board held that sugar industries were not covered by Entry 15 of Schedule I, the respondents sought refund of the cess through writ petitions, which the Allahabad High Court granted. The petitioners appealed via Special Leave Petitions, arguing that a refund writ was not maintainable, that the respondents were barred by delay and by earlier dismissed writs, and that the Supreme Court’s decision bound only the parties before it. The Supreme Court held that collection of cess without legal authority is illegal and refundable, that the writ petitions were filed within a reasonable time, and that the judgment in Saraswati Sugar Mills is binding under Article 141 on all parties. Consequently, the Court dismissed the Special Leave Petitions and upheld the High Court’s order for refund.

Issues considered

The maintainability of a writ petition under Article 226 for refund of money collected as water cess without legal authority.
Whether the respondents’ claim for refund is barred by the earlier dismissal of their writ petitions and by alleged delay or laches.
Whether the Supreme Court’s decision in Saraswati Sugar Mills v. Haryana State Board binds parties not before it under Article 141.
Whether the passage of the collected cess to the State and Central Governments precludes a refund.

Legislation cited

Central Excise and Salt Act, 1944s. Section 11-B
Constitution of Indias. Article 141, s. Article 226, s. Article 265

Subjects

water cessrefund of taxwrit of mandamusArticle 226Article 141public interestdelay and lachesSupreme Court binding precedentsugar industrydistillerypollution control

Judgment

U.P. POLLUTION CONTROL BOARD AND ORS. A
~ v.
KANORIA INDUSTRIAL LTD. AND ANR.
-~

JANUARY 24, 2001

[S. RAJENDRA BABU AND SHIVARAJ V. PATIL, JJ.] B
-~-

Constitution of India, 1950: Article 226.

Writ petition-Mandamus-Issue of-For refund of money-
Maintainability of-Sugar industry and distillery-Water cess-Demand of- c
Water cess paid under protest-But Supreme Court held sugar industries not
. ~ ;..- liable to pay water cess-No action taken by assessing authority Of! the
claim for refund of money-Writ petition for refund of money allowed by High
Court-Correctness of-lf.eld: Collection of money as water cess is illegal
and without authority of ldw-There is no reason to deny relief of refund on·
principles of public interest and equity-Hence, writ petition demanding D
refund of money maintainable and rightly allowed by High Court-Water
(Prevention and Control of Pollution) Cess Act, 1977, Entry No. 15 Sch. I.
..... Writ Petition-Delay and /aches-Writ petition for refund of money
filed after delay of 4 to 5 years-Maintainability of-Held : Claims for
E
refund of money made within a reasonable time after judgment a/Supreme
Court-No rights are created in third parties-Hence, no question of delay
and !aches-Writ petition maintainable.

Article 141-Supreme Court's judgment-Binding nature of-Held: ls
~
binding not only on the parties before the Supreme Court but also on those F
in respect of whom no appeal is filed.

The respondents were owners of industrial units manufacturing sugar
from sugarcane and liquor/alcohol from molasses. The petitioner demanded
water cess from the respondents under Water (Prevention and Control of
Pollution) Cess Act, 1977. The respondents paid the water cess under protest G
~· and filed writ petitions before the High Court challenging the demand on the
ground that sugar industries and distillery were not industries covered
under Entry No. 15 of Schedule I of the Act. These writ petitions were
dismissed and the respondents did not challenge their dismissal. But this
Court in Saraswati Sugar Mills· case reversed the decision of the High
H
559
560 SUPREME COURT REPORTS [200 I] I S.C.R.

A Court and held that sugar-manufacturing industries did not fall within Entry
No. 15 of Schedule I of the Act.

The respondents filed applications for refund of the amounts realised
illegally and without authority as water cess. But no action was taken on
these applications. The respondents, therefore, filed writ petitions before the
B High Court seeking a mandamus to the petitioners to refund the amount
collected as water cess. The High Court directed refund of the amount
realised as water cess. Hence this Special Leave Petition.

On behalf of the petitioners it. was contended that writ petition for
refund of money was not maintainable; that the respondents having failed in
C the earlier writ petitions challenging the very levy of cess before the High
Court and having not challenged the order of the High Court further could
not make a claim for refund on the basis of the subsequent judgment of this
Court; and that the High Court could not have entertained the writ petitions
after an inordinate delay of about 4 to 5 years.

D On behalf of the respondents it was contended that the water cess was
paid under protest and that it was not passed on to the consumers.

Dismissing the petition, the Court

HELD : 1.1. It is one thing to say that the High Court has no power
E under Article 226 of the Constitution to issue a writ of mandamus for
making refund of the money illegally collected. It is yet another thing to
say that such power can be exercised sparingly depending on facts and
circumstances of each case. In the present case, collection of money as cess
was itself without the authority of law; no case of undue enrichment was
made out and the amount of cess was paid under protest; the writ petitions
F were filed within a reasonable time from the date of the declaration that the
law under which tax/cess was collected was unconstitutional. There is no
good reason to deny a relief of refund to the citizens in such cases on the
principles of public interest and equity. However, it must not be understood ,,
that in all cases where collection of cess, levy or tax is held to be
G unconstitutional or invalid, the refund should necessarily follow. Even in
cases where collection of cess, levy or tax is held to be unconstitutional or -t/ -
invalid, refund is not an automatic consequence but may be refused on
several grounds depending on the facts and .::ircumstances of a given case.
1568-H; 569-A-BI

H HMM Ltdv. Administrator, Bangalore City Corporation, 1198914 SCC
U.P. POLLUTION CONTROL BOARD v. K. INDUST. LTD. 561

640 and Salonah Tea Company Ltd. v. The Superintendent of Taxes, Nowgong, A
AIR 11990] SC 772, relied on. .....-

Shree Baidyanath Ayurved Bhawan Pvt. Ltd. v. State of Bihar, (1996(
6 SCC 86; Orissa Cement Ltd. v. State of Orissa, (1991] Supp. 1 SCC 430
and Mafatlal Industries Ltd., (1997] 5 SCC 536, referred to.
B
Suganmal v. State of MP, AIR (1965] SC 1740, held inapplicable.

2. When the Supreme Court declares a law and holds either a particular
levy as valid or invalid it is idle to contend that the law laid down by this Court
in that judgment would bind only those parties who are before the Court and
not others in respect of whom appeal had not been filed. To do so is to ignore C
the binding nature of a judgment of this court under Article 141 of the
Constitution. To contend that the conclusion reached in such a case as to the
validity of a levy would apply only to the parties before the Court is to destroy
the efficacy and integrity of the judgment and to make the mandate of Article
141 illusory. When.the main judgment of the High Court has been rendered
ineffective, it would be applicable even in other cases, for exercise to bring D
those decisions in conformity with the decisions of the Supreme Court will
be absolutely necessary. 1569-E-F]

Shenoy v. Commercial Tax Officer, (1985( 2 SCC 512, referred to.

3. The argument that the relief should be denied to the respondents on E
the ground of delay and laches in approaching the High Court by filing writ
petitions claiming refund is equally unsustainable. The respondents made
the claims for refund within a reasonable time after the judgment was
rendered by this Court in Saraswati Sugar Mills' case. The respondents
have paid water cess under protest. The collection of water cess in view of F
the law laid down by this Court was clearly illegal and without authority of
law. It is also not the case that where the rights are created in third parties
o~ account of delay, if any, in approaching the court and that by entertaining
the writ petitions rights of third parties are prejudiced. There was no
' question of delay and laches on the part of the respondents on the facts found
and circumstances stated. 1572-B-CI G
__ ,__ .· Saraswati Sugar Mills v. Haryana State Board, (1992] I SCC 418;
Mafatlal Industries Ltd. v. Union of India, (1997( 5 SCC 536; Municipal
Corporation of Greater Bombay v. Bombay Tyres International Ltd., (1998]
4 SCC 100; Northern India Caterers (India) Ltd., (1978] 4 SCC 36 and
Delhi Rohtas Light Railway Company Ltd. v. District Board, Bhojpur, (1992( H
562 SUPREME COURT REPORTS [200 I] I S.C.R.

A 2 sec 598, referred to.
Sales Tax Officer, New Delhi v. East India Hotels Ltd., 119981 9 SCC
622, held inapplicable.

Salonah Tea Co. Ltd. v. Supdt. a/Taxes, [1998) 1SCC40 and Mahabir
B Kishore v. State of M.P., [1989) 4 sec 1, cited.

CIVIL APPELLATE JURISDICTION : Special Leave Petition (C)
Nos. 4436-4437 of 1998 Etc. .,.._ _

From the Judgment and Order dated 22. l 0.97 of the Allahabad High
C Court in C.W.P. No. 9353/92 and 9046of1993.
With

SLP (Civil) Nos. 5241-42of1998.

With
D
SLP (Civil) No. 12654 of 1998.

Altaf Ahmed, Additional Solicitor General, Dushyant Dave, Sudhir
.
Chandra, Pradeep Misra, Ir.du Misra, Ms. Indu Malhotra, H.K. Puri, S.K. Puri,
Rajesh Srivastava, Ujjwal Banerjee, Ms. Anindita Gupta, Jayant Bhushan, Ms.
E Rebecca George, Ms. Achintya Dwivedi and Vijay Panjwani for the appearing
parties.

The Judgment of the Court was delivered by

SHIV ARAJ V. PATIL, J. In all these cases the controversy raised relates
F to the claim of refund of the amount paid by the respondents as water cess ~
under the provisions of the Water (Prevention and Control of Pollution) Cess
Act, 1977 (for short 'the Act'). Briefly stated, the facts leading to the filing
of these petitions are: The respondents are the owners of industrial units·
manufactwring sugar from sugarcane and liquor/alcohol from molasses, a by-
G pr()"duc; On demand made by the State Government under the provisions of
the Act they were required to pay water cess. They protested against the
demand principally contending that sugar industry and distillery were not ~ ·
industries covered by Entry No. 15 of Schedule 1 of the Act arid consequently
they were neither liable to submit any return nor to make any payment of
water cess; when their protests were not accepted and the demand persisted
H fq~ 41ayment of water cess the respondents paid the amount under protest.
U.P. POLLUTION CONTROL BOARD\'. K. INDUST. LTD. [SHIVARAJ V. PATIL, J] 563

Some of them filed writ petitions Nos. 3558of1980, 494of1980 and 17646' A
of 1986. The writ petitions came to be dismissed. Thereafter, special leave
petitions were filed before this Court, which were disposed of by judgment
in Mis. Saraswati Sugar Mills v. Haryana State Board and others, [1992] 1
SCC 418, reversing the decision of the High Court and .holding that the sugar
manufacturing industries did not fall within Entry 15 of Schedule I of the Act. B

After the said judgment was rendered by this Court representations
were made to the Board and the Cess Officer/Assessing Authority of the
Board for refund of the amounts illegally and without the authority of law
realized by them as water cess. Despite several representations there was no
response from the Board and its authorities. Hence the writ petitions were C
filed consequent upon law .declared by this Court in Saraswati Sugar Mills
case (supra) seeking a mandamus to the petitioners to refund the amount
collected from them as cess with interest @ 18% per annum. In the writ
petitions it was contended that the writ petitioners themselves have paid the
amount as water under protest and they had not passed on the liability to
the customers. D
The petitioners contested the claim made by the respondents before the
High Court. They filed the counter affidavit in the High Court, in short taking
the stand that the respondents were not entitled to refund of any amount from
the Board for the reasons that after collection, the amount has been paid to E
the State Government, which in turn has paid the amount to the Government
of India; referring to the representations of the respondents it was stated that
a reference had been made to the State Government in the matter and their
reply was awaited; after the judgme11t in Mis. Saraswati Sugar Mills case
(supra) Entry 15 of Schedule 1 of the Act was amended with effect from
2.1.1992 covering sugar industries and distilleries and making them liable to F
pay water cess under the amended provisions of Entry 15 of Schedule I of
the Act. In these petitions, we are not concerned with the said amended Entry
. and the levy and collection of cess from 2.1 .. 1992. The High Court, after
considering the rival submissions and relying few judgments of this Court,
disposed of the writ petitions directing the petitioners to refund the sums G
realized froni the respondents as water cess after verification of the amount
stated to have been paid by them within the given time. Hence the petitioners
have filed these special leave petitions.

Shri Altaf Ahmed, learned Additional Solicitor General appearing for the
petitioners in special leave petitions 4436-4437 of 1998, contended ( 1) that in H
564· SUPREME COURT REPORTS .. [2001) l S.C.R.

A the absence of any specific direction given by this Court in Saraswati Sugar
Mills case for refund of the amount collected under the provisions of law, the .·-F4
respondents were not entitled for refund; (2) the respondents. having failed
in the earlier writ petitions challenging the vety levy of cess before the High
Court and having not challenged the order of the High Court further could
.not make claim for refund on the basis of subsequent judgment of this Court;
B (3) in view of the decision of this Court in Orissa Cement v. State ofOrissa,
(1991] Supp. 1 sec 430, no direction could be given for r~fund of the amount;
mere prayer for grant of refund could not be granted by issuing a writ of
mandamus; and (4) the High Court could not have entertained the writ petitions
of the respondents after inordinate delay of about 4 to 5 years when their
C earlier writ petitions were dismissed in 1987.

'Shri Sudhir Chandra, learned senior counsel and Ms. lndu Malhotra and
Shri H.K. Puri, learned counsel for the respondents submitted that having«
regard to the facts and circumstances of these cases and in the light of the
law laid down by this Court as referrea to in the impugned judgment, the High
D Court was quite justified in allowing the claim of the respondents for refund
of the amount; when the collection ofcess was wholly ille.,aal and not authorized
as Entty 15 of Schedule I of the Act did not· cover ' sugar industry and
distillety prior to the amendment .of th"e ·Schedule, the respondents were ·
entitled for refund of the amount; since the respondents· had paid the cess
E -_ under protest the ground of delay could not be put against them; the writ
petitions filed by them earlier challenging the validity of collecting cess under
Entty 15 of Schedule I of the Act were dismissed by the High Court following
the decision of the Division Bench of the same High Court in Civil,
Miscellaneous Writ No. 21497 of 1986 (The Kisan Sahkari Chini Mills ltd
Badaun v. State of U.P. and others); taken· in appeal to this Court and was·
F heard along with Sar~swati Sugar Mill's case; since the appeal filed against
the judgment of the.Division Bench of the High Court was reversed in the
Saraswati Sugar Mills case aforementioned, the argument that the earlier
orders passed in some writ petitions had become final was only technical.'

G · · Shri Dushyant Dave, learned senior counsel for respondents in special
leave petitions 5241-5242 of 1998 supporting the submissions made by the.
learned Additional Solicitor General, added that writ petitions seeking writ of .
mandamus only for refund of the amount were not at all maintainable. He cited
. few decisions in support of this submission.· The arguments of the learned
counsel for the respondents are already noticed above in special leave peti.tions
H 4436-4437ofl998. · · ·• •-
u.r. POLLUTION CONTROL BOARD 1' K. INDUST. LTD. [SHIVARAJ V. PATIL, J] 565

The learned counsel for the respondents in special leave petition 12654 A
of 1998 submitted that when the petitioners did not make refund in spite of
several representations a writ petition was filed and the same was disposed
of on 8.1.1998 following the common judgment impugned in special leave
petitions 4436-4437 of 1998 and 5241-5242 of 1998. He submitted that the
respondents had also paid the amount under protest and in the matter of
refund the respondents stand on the similar footing as the respondents in B
other petitions.

We have carefully considered the submissions made by the learned
counsel for the parties. On the question of maintainability of the writ petitions
we may notice few decisions of this Court on the very point as to claim for C
refund of money in a writ petition under Article 226 of the Constitution of
India.
In HMM limited and another v. Administrator, Bangalbre City
Corporation and another, [ 1989] 4 SCC 640, it is held that a tax or money
realized without authority of law is bad under Article 265 of the Constitution D
and that the money or tax so collected are refundable. In that case octroi was
levied and collected in respect of goods on their mere physical entry into the
city limits, which were not used or consumed or sold within the municipal
limits. This Court, dealing with the refund in para 12 of the judgment, held
thus:-
"We see no ground as to why amount should not be refunded. E
Realisation of tax or money without the authority of law is bad under
Article 265 of the Constitution. Octroi cannot be levied or collected
in respect of goods which are not used or consumed or sold within
the municipal limits. So these amounts become collection without the
authority of law. The respondent is a statutory authority in the present F
case. It has no right to retain the amount, so far and so much. These
are refundable within the period of limitation. There is no question of
limitation. There is no dispute as to the amount. There is no scope
of any possible dispute on the plea of undue enrichment of the
petitioners. We are; therefore, of the opinion that the Division Bench

··•·
was in error in the view it took Where there is no question of undue G
enrichment, in respect of money collected or retained, refund, to
which a citizen is entitled, must be made in a situation like this."
[emphasis supplied]
This case fully supports the submissions made on behalf of the
respondents. H
)..

566 SUPREME COURT REPORTS (2001] I S.C.R.

A Similar view was taken by this Cou11 in Sa/onah Tea Company ltd. Etc.,
v. The Superintendent of Taxes, Nowgong and others, etc., AIR (I 990) SC 772.
Para 6 of the said judgment reads: -

"6. The only question that falls for consideration here is whether in
an application under Article 226 of the Constitution the Court
B should have directed refund. It is the case of the appellant that it was
after the judgment in the case of Loong Soong Tea Estate the cause
of action arose. That judgment was passed in July 1973. It appears
thus that the High Court was in error in coming to the conclusion that
it was possible for the appellant to know about the legality of the tax
sought to be imposed as early as 1963, when the Act in question was
c declared ultra vires as mentioned hereinbefore. Thereafter the taxes
were paid in 1968. Therefore the claim in November, 1973 was belated.
We are unable to agree with this conclusion. As mentioned hereinbefore
the question that arises in this case is whether the Court should direct
refund of the amount in question. Courts have made a distinction
D between those cases where a claimant approaches a High Court seeking
relief of obtaining refund only and those refund were sought as a
consequential relief after striking down of the order of assessment etc.
Normally speaking in a society governed by rule of law taxes should
be paid by citizens as soon as they are due in accordance with law.
Equally, as a corollary of the said statement of law it follows that
E taxes collected without the authority of law as in this case from a
citizen should be refunded because no State has the right to receive
or to retain taxes or monies realized from citizens without the
authority of law. "
[emphasis suppli~d]
F In the para extracted above, in a similar situation as arising in the
present cases relating to the very question of refund, while answering the
said question affirmatively, this Court pointed out that the courts have made
distinction between those cases where a claimant approached a High Court
seeking relief of obtaining refund only and those where refund was sought
G as a consequential relief after striking down of the order of assessment etc.
In these ca~es also the claims made for refund in the writ petitiol)s were
consequent upon declaration of law made by this Court. Hence, High Court
committed no error in entertaining the writ petitions.

This Court again in Shree Baidyanath Ayurved Bhawan Pvt. ltd. V.
H State of Bihar and others, [1996] 6 SCC 86, held that such a writ petition even
UP POLLUTION CONTROL BOARD 1·. K. IN DUST LTD. [SHI VARA.IV. PATIL, J] 567
568 SUPREME COURT REPORTS [2001) I S.C.R.

A to effectuate the rule of law and not to abrogate it. In the present cases there
is no corresponding section to Section 11-B of the Central Excise and Salt
Act, 1944 for making claim for refund of money and, therefore, the respondents
could maintain the writ petitions under Article 226 of the Constitution. Further
in para 108(ii) of the judgment it is held that where, however, a refund is
B claimed on the ground that the provisions of the Act under which it was
levied is or has been held to be unconstitutional, such a claim, being a claim
outside the purview of the enactment, can be made either by way of suit or
by way of writ petition.

In support of the submission that a writ petition seeking mandamus for
C mere refund of money was not maintainable, the decision in Suganmal v.
State of Madhya Pradesh and others, AIR [ 1965) SC 1740, was cited. In para
6 of the said judgment, it is stated that "we are of the opinion that though
the High Courts have power to pass any appropriate order in the exercise of
the powers conferred under Article 226 of the Constitution, such .a petition
solely praying for the issue of a writ of mandamus directing the State to
D refund the money is not ordinarily maintainable for the simple reason that a
claim for such a refund can always be made in a suit against the authority
which had illegally collected the money as a tax."

Again in para 9, the Court held :-

E "We, therefore, hold that normally petitions solely praying for the
re(und of money against the State by a writ of mandamus are not to
be entertained. The aggrieved party has the right of going to the civil
court for claiming the amount and it is open to the State to raise all
possible defences to the claim, defences which cannot, in most cases
be appropriately raised and considered in the exercise of writ
F jurisdiction."

This judgment cannot be read as layins down the law that no writ
petition at all can be entertained where claim is made for only refund of money
consequent upon declaration of law that levy and collection of tax I cess as
G unconstitutional or without the authority of law. It is one thing to say that
the High Court has no power under Article 226 of the Constitution to issue
a writ of mandamus for making refund of the money illegally collected. It is
yet another thing to say that such power can be exercised sparingly depending
or facts and circumstances of each case. For instance, in the cases on hand
where facts are not in dispute, collection of money as cess was itself without
H the authority of law; no case of undue enrichment was made out and the
U.P. POLLUTION CONTROL BOARD r. K. IN DUST.LTD. [SHIVARAJ V. PATIL, J] 569

-..i:. amount of cess was paid under protest; ·the writ petitions were filed within A
a reasonable time from the date of the declaration that the law under which
tax/cess was collected was unconstitutional. There is no good reason to deny
a relief of refund to the citizens in such cases on the principles of public
interest and equity in the light of the cases cited above. However, it must not
be understood that in all cases where collection of cess, levy or tax is held
to be unconstitutional or invalid, the refund should necessarily follow. We B
~-1 wish to add that even in cases where collection of cess, levy or tax is held
to be unconstitutional or invalid, refund is not an automatic consequence but
may be refused on several grounds depending on facts and circumstances of
a given case.
c
Another reason to defeat the claim for refund put forth is that the
respondents have filed writ petitions challenging unsuccessfully the validity
_,\- of levy in question and those orders have become final inasmuch as no
appeal against the same has been filed. The contention is put forth either on
the basis of res judicata or estoppel. It is no doubt true that.these principles
would be applicable when a decision of a court has become final. But in D
matters arising under public law when the validity of a particular provision
or levy is under challenge, this Court has explained the legal position in

~
.l. Mis. Shenoy and Co. v. Commercial Tax Officer, Circle II, Bangalore & Ors.,
(1985] 2 SCC 512, that when the Supreme Court declares a law and holds either
a particular levy as valid or invalid it is idle to contend that the law laid down E
by this Court in that judgment would bind only those parties who are before
the Court and not others in respect of whom appeal had not been filed. To
do so is to ignore the binding nature of a judgment of this Court under article
141 of the Constitution. To contend that the conclusion reached in such a
case as to the validity of a levy would apply only to the parties before the
court is to destroy the efficacy and integrity of the judgment and to make the F
mandate of Article 141 illusory. When the main judgment of the High Court
has been rendered ineffective, it would be applicable even in other cases, for
exercise to bring those decisions in conformity with the decisions of the
Supreme Court will be absolutely necessary. Viewed from that angle, we find
this contention to be futile and deserves to be rejected.
G
--~
The next case relied on by the petitioners is Municipal Corporation of
Greater Bombay v. Bombay Tyres International Ltd. & others, [ 1998] 4 SCC
IOO, to support the contention that the claim for refund could be made only
within the period of limitation prescribed for filing suits for recovery of the
amount due. S. Rajendra Babu J., (one of us) speaking for the Bench in para H
570 SUPREME COURT REPORTS [2001] I S.C.R.

A 9 of the judgment has stated thus:- ...
"Attacking this finding, the learned ~ounsel for the petitioner relied
upon the decisions of this Court in Salonah Tea Co. Ltd. v. Supdt.
of Taxes, [1998] I SCC 40 I, and Mahabir Kishore v. State of M.P.
[1989] 4 SCC I and submitted that levy of water charges itself being
B illegal, the recoveries made pursuant to that provision could not be
retained but refunded in which event the principles of limitation or
!aches would not apply. This is not a case where the pr,ovisions of
the rule which enabled the levy of water charges was struck down on
the ground that it was incompetent but on a ground that such rule
c had been framed inarticulately and was not clear enough. Payments
made by the petitioner should be treated as having been made by
mistake but once a declaration of law had been made by the Bombay
High Court on 16.9.1987, it was open to the petitioner to claim for
recoveries and the same should have been made within a reasonable
time thereafter. In ascertaining what is the reasonable time for claiming
D refund, the courts have often taken note of the period of limitation
prescribed under the general Law of Limitation for filing of suits for
rec?very of amount due to them. In the present case also that standard
adopted by the High Court is the same in ascertaining whether there
has been !aches on the part of the appellant in seeking relief in due
E time or not. The finding clearly recorded is that long after the charges
had been paid and law had been declared by the Court, the writ
petition has been filed and, therefore, such a refund should not be
allowed. We do not think such a view taken by the High Court calls
for interference under Article 136 of the Constitution. Hence we dismiss
the petition."
F
It is clear from the said paragraph that a distinction is made between
the claims made for refund where collection of tax was illegal and not authorized
and the cases where rule had been struck down on the ground that it had
been framed inarticulately and was not clear enough. Further it is only noticed
G that in ascertaining as to what is the reasonable time for cl&iming refund, the
courts have often taken note of the period of limitation presc~jbed under the
general Law of Limitation for filing suits for recovery of the amount due to
them. In exercise of writ jurisdiction, facts and circumstances of each case are
to be kept in mind in ascertaining whether there have been (aches on the part
of the parties seeking relief in due time or not. In these cases having regard
H to the facts and circumstances already stated above, it cannot be said that
U.P. POLLUTION CONTROL BOARD v. K. IN DUST.LTD. [SHIVARAJ V. PATIL, J] 57]

there were !aches on the part of the respondents or that they had abandoned A
their claim for refund.

In Sales Tax Officer, New Delhi v. East India Hotels ltd. and another,
[ 1998] 9 sec 662, the appellant authority charged sales tax on the sales
thereof prior to the judgment of this Court in Northern India Caterers (India)
ltd. v. Lt. Governor, Delhi, [1978] 4 SCC 36. A fresh assessment order was B
passed thereafter on the basis of the revised return filed by the first respondent.
Ultimately an order was passed holding that the first respondent had made
application for refund of the excess amount paid within the permissible period.
When no action was taken for long period, a writ petition was filed praying
for writ of mandamus directing the authority to refund the amount with C
interest thereon. The High Court allowed the writ petition finding that no
further consideration was required and that the defence of unjust enrichment
was not maintainable. On the facts of the case, this Court allowed the appeal
and directed the Sales Tax authorities to hear the first respondent on the
refund application and dispose of the same within a given time. It appears that
other cases referred to above were not brought to the notice of this Court. D
Thus we find that the said case governs its own facts. Hence we reject the
contentions advanced on behalf of the petitioner as to the maintainability of
the writ petitions.

This Court in Mis. Debri Rohtas light Railway Company Ltd. v. District
Board, Bhojpur and others, [ 1992] 2 sec 598, dealing with a case where E
demand was made for refund in somewhat similar circumstances on the
question of delay and !aches, in para 13, has stated thus: -

"The rule which says that the Court may not enquire into belated and
stale claim is not a rule of law but a rule of practice based on sound
and proper exercise of discretion. Each case must depend upon its F
own facts. It will all depend on what the breach of the fundamental
right and the remedy claimed are and how delay arose. The principle
on which the relief to the party on the grounds of laches or delay is
denied is that the rights which have accrued to others by reason of
the delay in filing the petition should not be allowed to be disturbed G
unless there is a reasonable explanation for the delay. The real test to
determine delay in such cases is that the petitioner should come to
the writ court before a parallel right is created and that the lapse of
time is not attributable to any !aches or negligence. The test is not
to physical running of time. Where the circumstances justifying the
conduct exists, the illegality which is manifest cannot be sustained on H
572 SUPREME COURT REPORTS (200 I] I S.C .R.

A the sole ground of !aches."

The argument that the relief should be denied to the respondents on
the ground of delay and !aches in approaching the High Court by filing writ
petitions claiming refund is equally unsustainable. The claims for refund were
made by the respondents within a reasonable time after the judgment was
B rendered by this Court in Saraswati Sugar Mill case aforementioned. The
respondents have paid water cess under protest. The collection of water cess
in view of law laid down by this court was clearly illegal and without authority
of law. It is also not the case that where the rights are created in third parties
,,
on account of delay, if any, in approaching the court and that by entertaining
C the writ petitions rights of third parties are prejudiced. In this view there was
no question of delay and !aches on the part of the respondents on the facts
found and circumstances stated.

The respondents had specifically pleaded that they did not pass on the
liability of the water cess on their customers; it appears this contention was
D not denie~ by the petitioners before the High Court. On the other hand the
only plea taken by the petitioners was that money had been passed to the
Central Government under Section 8 of the Act. It was brought to the notice
of the Court by the respondents that 65% of the sugar was sold by the
respondents through public distribution systeni under the Essential
E Commodities Act. Hence there was no question of unjust enrichment also in
these cases.

The stand of the petitioners that the respondents were not entitled for
refund on the ground that the amount of cess collected was passed on to the
State Government, which in turn gave it to the Central Government and the
F Central Government has appropriated the same by passing on money back to
various State Pollution Control Boards does not help them. Before the High
Court, they only stated that they made reference to the Government in regard
to tt.e claim made by the respondents for refund and they were waiting for
response. It was also not made out by the petitioners as to how they had
G difficulties in making the refund to the respondents. It may also be kept in
view that immediately after the notices were issued demanding water cess
they were challenged. Even in some cases interim orders were also passed in
the High court; the amount of water cess was paid under protest. So, in this
situation when finally this Court held that the very collection of water cess
was without the authority of law, the claim of the respondents for refund
H cannot be denied merely on the ground that the petitioners passed on the
U.P. POLLUTION CONTROL BOARD v. K. INDUST. LTD. [SHIVARAJ V. PATIL,J) 573

money to the State Government and in turn the money was sent to the Central A
-...,.., Government and later the Central Govt. appropriated the same by passing it
back
'
to the various State
.
Pollution Control Boards.

The High Court in our view having taken all asp'i:cts into consideration
was right in allowing the claims of the respondents made for refund in the
writ petitions: We do not see any good ground or valid reason to interfere B
with the judgments and orders of the Higq Court impugned in these petitions .
..._.,.. Hence the special leave petitions are dismissed. The p~s shall bear their
own costs.

v.s.s .. Petitions dismissed.