Holding

When a Special Leave Petition is granted and the appeal is entertained, the lower tribunal's decree is not final; the cause of action for a suit arises only after the Supreme Court’s final decision, so the suit is not barred by limitation.

Summary

The Railway Rates Tribunal declared the freight rates charged by the Union of India unreasonable. The Union filed a Special Leave Petition (SLP) in the Supreme Court, which was eventually dismissed after an interim order. The respondents then filed writ petitions and suits for refund of excess freight charges. The Union contended that the suits were barred by limitation under Article 58 of the Limitation Act, 1963, arguing that the cause of action arose on the Tribunal's 1966 declaration. The Supreme Court held that once an SLP is granted and the appeal is entertained, the Tribunal's decree is not final; the cause of action for the refund suit arose only after the Supreme Court finally dismissed the appeal, and the period of pendency of the writ petition is excluded under Sections 14 and 15 of the Limitation Act. Consequently, the suits were within the limitation period and the appeal by the Union was dismissed.

Issues considered

The appropriate commencement date of limitation for the refund suits – whether it is the date of the Railway Tribunal's declaration or the date of the Supreme Court's final order on the SLP.
Whether the doctrine of merger applies to the Tribunal's decree once the Supreme Court entertains the appeal.
Whether the period of pendency of the writ petition before the High Court should be excluded under Sections 14 and 15 of the Limitation Act.

Legislation cited

Constitution of Indias. Article 136
Limitation Act, 1963s. 14, s. 15, s. Article 113, s. Article 58
Railways Acts. 46A

Subjects

LimitationDoctrine of MergerSpecial Leave PetitionRailway Rates TribunalRefund of excess freightSections 14 and 15Article 58Article 113Indian Railways ActSupreme Court appeal

Judgment

UNION Of INDIA AND ORS. A
v.
WEST COAST PAPER MILLS LTD. AND ANR.

FEBRUARY 5, 2004

[V.N. KHARE, CJ., S.B. SINHA AND S.H. KAPADIA, JJ.] B

limitation Act, 1963-Sections 14 & 15-Articles 58 & 113 to the
Schedule-Increase in freight rates by Railways-Declaration by the Railway
Tribunal holding the increase unreasonable-Special Leave Petition by the C
appellants dismissed by Supreme Court-Respondents thereafter filing a suit
before Trial Court for refund ofexcess freight charges collected with interest-
Appellant contending that the suit is barred by limitation-Held, the declaration
of the Tribunal is in jeopardy when the Supreme Court has admitted the
appeal-Cause of action for the suit arose when the appeal was dismissed by
the Supreme Court-Hence, the suit is not barred by limitation by application D
of doctrine of merger.

The respondents filed a complaint petition before the Railway Rates
Tribunal challenging the revision of freight rates at the inflated distance
of transportation of goods as unjust, unreasonable and discriminatory. The
Tribunal declared that the amount of freight charged by the appellants E
as unreasonable. The appellants filed a Special Leave Petition challenging
the declaration of the Tribunal with a petition for stay before this Court.
An interim order was passed by this Court directing the appellants to
charge from the respondents the usual rates without inflation of the
distance from the respondents subject to furnishing of a bank guarantee F
and dismissed the stay petition. The special leave petition of the appellants
was finally dismissed by this Court.

The respondents filed Writ Petitions before High Court for refund
of excess freight charges with interest collected by the appellants duriP-g
the pendency of the litigation before the Tribunal. High Court directed G
the respondents to file a suit before trial court for the relief. The
respondents accordingly filed suits before trial court for refund of excess
freight charges with interest collected by the appellants. ·

The appellants countering the suits contended before the trial court
145 H
Doubting the correctness of P.K. Kutty's case, the Division Bench
referred the matter to a three-judge Bench.

Answering the question referred to it and directing that the matters
G be placed before an appropriate Bench for disposal on merits, the Court.

HELD: 1.1. Under Section 46A oflndian Railways Act, the judgment
of the Tribunal is final. 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
H and the appeal is admitted, the correctness or otherwise of the judgment
U.0.1. v. WEST COAST PAPER MILLS LTD. 147
of the Tribunal becomes wide open. In such an appeal, this Court is entitled A
to go into both questions of fact as well as law. In such an event the
correctness of the judgment is in jeopardy. (151-E, F)

1.2. 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 B
limitation for filing a suit for the purpose of recovery of the excess amount
of freight illegally realised begin from the date of the order passed by this
Court. The respondents are also entitled to get the period during which
the writ petition was pending before the High Court, excluded for
computing the period .of limitation. The civil suit was filed within the C
prescribed period of limitation. The Trial Court and the High Court have
correctly recorded a concurrent opinion that the respondents arc entitled
to the benefits of Sections 14 and 15 of the Limitation Act, 1963. 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 D
period of limitation. (151-F, G, H; 152-A, Bl

1.3. 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. The respondent filed a suit for refund and
a cause of action therefore arose only when its right was finally determined E
by this Court and not prior thereto. This Court not only granted special
leave but also considered the decision of the Tribunal on merit.
(152-H; 153-AI

1.4. In P.K. Kutty's case, no argument was advanced as regard
applicability of doctrine of merger. This Court failed to take into F
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. ( 157-H; 158-A, BJ
G
Kunhayammed and Ors. v. State of Kera/a and Anr., (2000) 6 SCC 359;
S.S. Rathore v. State of Madhya Pradesh, 119891 4 SCC 582; Madan Gopa/
Rungia v. Secy. to the Government of Orissa, 119621Supp3 SCR 906;
Collector of Customs, Calcutta v. East India Commercial Co. ltd., (l 963) 2
SCR 563; Somnath Sahu v. State of Orissa, (1969) 3 SCC 384 and Mohd.
Quaramuddin (Dead) By lrs. v. State of A.P., 119941 5 SCC 118, relied on. H
148 SUPREME COURT REPORTS (20041 2 S.C.R.

A P. K.. Kuity Anuja Raja and Anr. v. State of Kera/a and Anr., 119961 2
sec 496, overruled.
Juscurn Boid and Anr. v. Pirthichand Lal, (LR Indian Appeal 1918-
1919 Page 52; Muqbul Ahmad and Ors. v. Onkar Pratap Narain Singh and
Ors., AIR (1935) PC 85; Sales Tax Officer, Banaras and Ors. v. Kanhaiya
B Lal Makund Lal Saraf. AIR (1959) SC 135 and Secretary Ministry of Works
and Housing Govt. of India and Ors. v. Mohinder Singh Jagdev and Ors.,
I 19861 6 sec 229 differentiated.
The State of VIiar Pradesh v. Mohammad Nooh, 119581SCR595 CB
C and Sita Ram Goel v. Municipal Board, Kanpur, 119591SCR1146, referred
to.

Raja Mechanical Company Pvt. ltd, v. Commissioner of Central fa:cise.
(2002) 4 AO (Delhi) 621, approved.

D CIVIL APPELLATE JURISDICTION : Civil Appeal Nos 1061-62
of 1998.

From the Judgment and Order dated 26.2.96 of the Karn·ataka High
Court in R.F.A. Nos. 450-451 of 1986.

E P.P .. Malhotra, S.A. Matoo, S.Wasim A Qadri, S.N. Terdol and Arvind
Kun~ar Sharma (NP) for the Appellants.

Harish N. Salve, Kailash Vasdev, Prateek Kumar, Ms. Gayatri Goswami
and Ms. V.D. Khanna for the Respondents.

The Judgment of the Court was delivered by
F
S.B. SINHA, J. Doubting the correctness of a two-Judge Bench decision
of this Court in P.K. Kutty Anll}a Raja & Anr. v. State of Kera/a and 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.
G 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
H as freight. However, a revision was made in the rate of freight w.e.f. 1.2.1964.
lJ.0.1. v. WEST COAST PAPER MILLS LTD. [SINHA. J.] 149

Aggrieved thereby and dissatisfied therewith, the respondents herein A
tiled 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 B
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
C
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." D
Eventually, however, the said Special Leave Petition was dismissed by
this Court on 14.10.1970.

A writ petition was filed by the respondent herein on 05.0 l .1972 which
was marked as W.P. NO. 210/1972, and the same was disposed by the High E
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 ordim,1ry remedy of filing a
suit for appropriate relief. If such a suit is filed, it will be open to the p
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.
G
Subject to the aforesaid observations, this writ petition is
dismissed."

Two suits thereafter were tiled 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. H
150 SUPREME COURT REPORTS [2004] 2 S.C.R.

A A contention that the said suits were barred by limitation was raised by 'j<

the appellants herein stating that the cause of action for filing the same arose
immediately after the judgment was passed by 'The Tribunal' on I 8.4.1966
and, thus, in terms of Article 58 of the Limitation Act, 1963, they were
required to be filed within a period of 1hree years from the said date, as
r
despite the fact that the Special Leave Petition was preferred thereagainst, no
B 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-
Resporident 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
c 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
D 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 I 8.4. I966 were barred by Iimitation in terms
of Article 58 of the Limitation Act, I 963, as the cause of action for filing the
suit had arisen on the date en which such declaration was made by 'The
E 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 to file the suit within the period of limitation specified
therefore. Furthermore, the learned counsel would urge that in terms of Section
F 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
Anr. v. Pirthichand Lal, [L.R. Indian Appeals 1918-1919 page 52], P.K.
Kutty (supra), Maqbul Ahmad and Ors. v-. Onkar Pratap Narain Singh and
G Ors., AIR (1935) PC 85 and Secreta1y, Ministry of Works & Housing Govt.
of India and Ors. v. Mohinder Singh Jagdev and Ors., [ 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 timitation Act shall apply
H and not Article 58 thereof. The learned counsel would urge that as admittedly
\_
U.0.I. v. WEST COAST PAPER MILLS LTD. [SINHA, .1.) 151

this Court granted Special Leave to Appeal in favour of the appellants and A
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 B
contention, reliance has been placed on a decision of this Court in
Kunhayammed and Ors. v. State of Kera/a and Anr [2000] 6 SCC 359.

The plaintiff in this case has filed a suit for refund of the excess aniount
collected by the defendant-Railways for the period 24.6.1963 to i .2. I 964 and
I .2. I964 to I 8.4. I 966 with interest accrued thereupon. It is not in dispute C
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 \eason of Section 46A of Indian Railways Act D ·
the judgment of the Tribunal was final but by reason thereof the jurisdiction
of this C_ourt 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 E
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.
F
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 G
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 H
152 SUPREME COURT REPORTS (2004] 2 S.C.R.

A 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.ofthe Limitation Act, 1963. We have no reason to take a different view.

B It is beyond any cavil that in the event, the respondent was held to have
been prosecuting il:s 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:
c
"Description of Suit Period of Time from which
Limitation period begins to run

58. To obtain any Three years When the right to sue
other declaration first accrues
D 113. Any suit for which Three years When the right to sue
no period of limitation accrues"
is provided elsewhere in
this Schedule
It was not a case where the respondents prayed for a declaration of
E 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
F 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
G whereas, in the latter the period of limitation would be differently computed
depending upon the last day when the cause of action therefore 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
H the amount of freight charged by the appellant was unreasonable. It will bear
J...,
1J

U.0.1. v. WEST COAST PAPER MILLS LTD. [SINHA, J.] 153

repetition to state that a plaintiff filed a suit for refund and a cause of action A
therefore arose only when its right was finally determined by this Court and
not prior thereto. This Comt not only granted special leave but also considered
the decision of the Tribunal on merit.

In Kunhayammed (supra), this Court held:
B
"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, C
neve1theless 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 D
decree or order passed by the court, tribunal or the authority below.
However, the doctrii1e 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."
E
It was further observed:

"41. Once a special leave petition has been granted, the doors for the
exercise of appellate jurisdiction of th is 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 F
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 f'!lt inclined to apply its G
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 H
154 SUPREME COURT REPORTS [2004] 2 S.C.R.

A 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 els~; to
become absorbed or extinguished; to be combined or be swallowed
B up. Merger in law is defined as the absorption of a thing of lesser
importance by a greater, wher~by 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)"
t
C (See also Raja Mechanical Company Pvt. ltd. v. 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
D this Court in Sita Ram Goel v. 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."
E
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
F 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 v. Mohammad Nooh, [1958] SCR 595
Vivian Bose, J. held that justice should be done in a common sense point of
G view stating:

"I see no reason why any narrow or ultra technical restrictions should
be pla.ced 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
H hedged round with hair-splitting technicalities ...."
U.0.1. v. WEST COAST PAPER MILLS LTD. [SINHA. J.] 155

However, in that case also a distinction was sought to be made between A
a judgment of a 'Court' and 'Tribunal'.

In S.S. Rathore v. State of Madhya Pradesh [ 1989] 4 SCC 582, noticing
the earlier Constitution Benches decision of this Court in Mohammad Nooh,
(supra), Madan Gopal Rungta v. Secy. To the Government of Orissa, [ 1962]
Supp 3 SCR 906, Collector of Custo111s, Calcutta v. East /J7dia Com111ercial B
Co. Ltd., [ 1963] 2 SCR 563 as well as 3-Judge Bench of th is Court in
Somnath Sahu v. State of Orissa, [ 1969] 3 SCC 384, this CoUli 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 C
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 aurhorities. That being the position, we see no justification for D
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."
E
Rathore 's case (supra) was followed in Mohd. Quaramuddin (Dead) By
Lrs. v. 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.
F
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 Bc!lgal Regulation VIII of I 819, which had been set aside; what
would be the date when cause of action therefor can be said to have aiisen?

In that case several suits were filed. The sale was reversed in its entirety G
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 procedu're
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. H
156 SUPREME COURT REPORTS [2004] 2 S.C.R.

A In Maqbul 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
B 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:
c "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
D 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
E of this Cou11 in Sales Tax Officer, Banaras and Ors. v. Kanhaiya Lal Makund
Lal §araf, 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
F 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
G 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 I st January,
1968. This Court negatived the said plea stating:

"3 ... We are unable to agree with the learned counsel. It is not in
.H dispute that at his behest the assessment was quashed by the High
U.0.1. v. WEST COAST PAPER MILLS LTD. [SINHA, .I.] 157
Court in the aforesaid OP on 1-1-1968. Thereby the limitation started A
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:
B
"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 C
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: D
"7. The crucial question is whether the suit is barred by limitation?
Section 3 of the Limitation Act, 1963 (for sho11, "the Act") postul~tes
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, E
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 F
to sue had first accrued to the respondent on I0-9-1957 when the
respondent's services came to be t_erminated. 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 G
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 H
brought to the court's .notice.
158 SUPREME COURT REPORTS [2004] 2 S.C.R.

A 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 Iis 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
B relevance once this Court grants special leave and decides to hear the maJter
on 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.
Hav.ing regard to the doctrine of merger as also the principle that an appeal
C 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
D in the present case.

We, therefore, are of the opinion that P. K. Ku tty (supra) does not lay
down the law correctly and is overruled accordingly.

The matter may now be placed before an appropriate Bench for disposal
E of the appeals on merits.

B.S. Answered the Question.

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