Format Of Loan Agreement

Format Of Loan Agreement
Format Of Loan Agreement

This Agreement is made at ____________ on this ___ day of ______________ , between :- Mr. ________ resident of _______________ (hereinafter called the Part of First PART )

AND

_____________ S/o _______________ R/______________________ hereinafter called the party of the second part)

WHEREAS the second party is in need of money and is having friendly term with the party of the first part and requires a sum of Rs. ____________/- (Rupees Seventy Five thousand only)

AND WHEREAS, the first party has agreed to give the said loan amount to the party of the second part and in lieu of this payment this receipt cum agreement is being executed between the parties.

AND WHEREAS, in lieu of repayment of the loan amount the second party has issued a post dated Cheque bearing its No. _______ dated __________ for Rs. ________/- drawn on _________ Bank, _______ from his saving Account No. ________

If the above mentioned Cheque would not encashed on its presentation then the first party shall have right to file a Criminal complaint under section 138 of the Negotiable Instruments Act and under section 420 of IPC and the first party shall have also right to launch other criminal proceedings as well as civil proceedings against the second party and the second party shall be fully responsible for the same.

In witnesses whereof the parties of this agreement have set their respective hands on the date month and year first above given.
WITNESES :-

1. FIRST PARTY

2. SECOND PARTY

Format For Bail Affidavit

Format For Bail Affidavit
Format For Bail Affidavit

I, ____ son of ____ resident of _____ do hereby solemnly affirm and declare as under:-

1- That the case FIR No. ________ dated ________ Under section ____ IPC has been registered by the police of ____ against the accused namely ____. I am complainant in this case.

2- That I have not named the accused in the said FIR nor I identified him.

3- That the accused ____ has not committed the offence section ____ IPC as I have not seen him at the time of occurrence. So he is innocent person.

4- That I have no objection if the accused ____ is released on bail.

                                                                                                                                                                                        DEPONENT

VERIFICATION

Verified that the contents of my above affidavit are true to best of my knowledge and belief and nothing concealed therein.
Verified at ____ on ____

                                                                                                                                                                                           DEPONENT

House Declaration

IN THE COURT OF _________, _________ DIVISION, _________     Civil Suit No. _________ of _________ _________ Son of _________ resident of _________, District _________, _________

……PLAINTIFF

VERSUS

1-    _________ son/daughter/wife of _________ 2-    _________ son/daughter/wife of _________ Both residents of _________, _________,

………DEFENDANTS

SUIT FOR DECLARATION

RESPECTFULLY SHOWETH:

1-    That the plaintiff is owner in possession of House/Plot consisting of _________ which is situated in _________, _________.
2-    That the defendants are _________.
3-    That as a matter of fact the total plot measuring _________.
4-    That on _________.
5-    That now the _________.
6-    That the plaintiff _________.
7-    That the cause of action to file the present suit firstly arose on _________.
8-    That no such suit between the same parties on the same subject matter is pending, filed or has been decided by any court of law.
9-    That the parties reside and the property in suit is situated at _________.
10-    That the value of the suit for the purposes of court fees and jurisdiction is assessed at _________ /- upon which a fixed court fees has been paid on the plaint.

PRAYER:

It is, therefore, prayed that a decree for declaration to the effect that the plaintiff is owner in possession of the suit property which are fully detailed and described in Para NO.__ of the plaint may kindly be passed in favour of the plaintiff and against the defendants with costs of the suit.

                                                                                                                                                                      PLANITIFF

THROUGH COUNSEL
_________ ADVOCATE, _________

VERIFICATION:
Verified that the contents of Paras No. __ to __ of the plaint are true and correct to the best of my knowledge and belief and Paras No. __ to __ of the plaint are true to best of my belief. Last para is the prayer Verified at _________ on __________

                                                                                                                                                                           PLAINTIFF

Suit against a commission agent

Hazari Lal vs Hari Ram on 16 February, 1959
Equivalent citations: AIR 1959 Raj 153 a
Author: K Sharma
Bench: K Sharma

JUDGMENT K.K. Sharma, J.

1. This is an appeal by the plaintiff against the appellate judgment and decree of the learned Senior Civil Judge, Baran, dated 18-5-1953.

2. The plaintiff-appellant filed the suit in the court of the Munsif, Baran out of which this appeal has arisen against the defendant-respondent for the recovery of Rs. 1,596-6-6 on 11-2-1952. According to the plaint, the defendant-respondent appointed the plaintiff-appellant his aratia and purchased 200 tins of ghee, weighing 95 Mds-39 Srs.-7 Chhs., through the plaintiff’s arat, on Kartik Sudi 5, Sambat 2005, corresponding to 6-11-1948, for which the plaintiff had to spend Rs. 13,529-7-0 on behalf of the defendant. This ghee was despatched to Deogarh Madaria in November 1948, through Tulsi Ram, the agent of the defendant.

Again, according to the instructions of” the said Tulsi Ram, 200 tins more of ghee were purchased for the defendant by the plaintiff on Magsar Badi 10, Sambat 2005, corresponding to the 26-11-1948, which weighed 89 Mds. 10 Srs. 1 Chhatak and for which the plaintiff had to pay a sum of Rs. 14,313-6-0 on behalf of the defendant. These 200 tins of ghee were taken by the said Tulsi Ram by truck to Kota and were deposited with Gaindi Lal Suraj Mal of Kota. The plaintiff also spent a sum of Rs. 115-4-6 as miscellaneous charges on account of the above ghee. The plaintiff drew up a Hundi for the sum of Rs. 3,000/-/- on the defendant towards the payment of the amounts spent by the plaintiff, but the defendant did not honour that Hundi and the plaintiff had therefore to pay an additional sum of Rs. 9/-/- to the Bank for Hundi expenses.

The plaintiff thus spent a sum of Rs. 30,967-5-0 on account of the defendant. A sum of Rs. 3,000/-/-on account of the Hundi and another sum of Rs. 10,599/-/- on account of the price of the ghee sold at Deogarh Madaria and yet another sum of Rs. 13,197-13-0 on account of the price of the ghee sold through Cendi Lal Suraj Mal of Kota, viz., a total sum of Rs. 29,796-18-0 was credited in the account of the defendant. Thus, a sum of Rs. 1,170-8-6 remained due to the plaintiff on account of principal. It had been stipulated that interest would be paid at the rate of 9 per cent. per annum and so the interest due to the plaintiff, came to Rs. 425-14-0. Thus, a total sum of Rs. 1596-6-6 was due to the plaintiff. The plaintiff claimed a decree for the above amount.

3. The defendant filed his written statement pleading inter alia that the suit was barred by limitation. Learned Munsiff, found that the plaintiff was entitled only to a sum of Rs. 820-4-0 from the defendant. He held that the suit was within time as in his view it was governed by Article 85 of the Limitation Act. He consequently gave a decree to the plaintiff for the recovery of Rs. 820-4-0 by his judgment dated 24-1-1953.

4. Against the above judgment and decree of the learned Munsiff, both the parties went in appeal to the court of the Senior Civil Judge, Baran. The appeal filed by the plaintiff was dismissed, but the appeal filed by the defendant was allowed by the judgment dated 18-5-1953. Learned Senior Civil Judge held that Article 85 did not apply to the facts of the case and that it was Article 83which applied. As more than three years had elapsed since the payment made by the plaintiff on account of the defendant before the suit was brought, learned Senior Civil Judge dismissed the plaintiff’s suit in toto. Against this judgment and decree of the learned Senior Civil Judge, the plaintiff has come in appeal.

5. I have heard Shri P. C. Bhandari on behalf of the plaintiff-appellant and Shri D. P. Gupta on behalf of the defendant-respondent.

6. The only point canvassed before me is that of limitation. It has been argued by Shri P. C, Bhandari that Article 83 of the Limitation Act did not apply to the facts of the present case. It was argued that Article 83 applied only when there is an express contract to indemnify between the parties, but in the present case, there was no express contract to indemnify. It was argued that by virtue of Section 222 of the Contract Act, the principal is no doubt liable to indemnify his agent against consequences of lawful acts. But this liability arises by virtue of law and not by any contract. Article 83, therefore, did not apply.

It was argued that the only other Article is 61 of the Limitation Act, but that does not apply to the case of an agent and principal. There is, therefore, no specific Article of Limitation Act applying to the facts of the present case and therefore Article 120 of the Limitation Act, which applies when no period of limitation is provided elsewhere in the First Schedule of the Limitation Act should be applied to the facts of the present case.

7. On behalf of the respondent, it was argued by Shri D. P. Gupta that Article 83 does not say that it is applicable only to the case of an express contract to indemnify. The word used is ‘contract,’ which may be an implied as well as an express contract. Section 222 of the Contract Act gives a right to the agent to be indemnified against consequences of lawful acts. In a contract of agency, therefore, there is an implied contract that the agent would be indemnified against consequences of lawful acts by the principal, and, therefore, Article 83 is fully applicable to the case of an agent, who is damnified in doing lawful acts for the principal. Learned counsel relied upon the following rulings in support of his contention –

(i) Mangi Ram v. Firm of Ram Saran Das Maman Chand, 26 Ind Cas 415: (AIR 1914 Lah 407) (ii)Upendra Nath v. Kumar Bimalendu AIR 1944 Cal 302 (1) (iii) Firm Kadari Pershad Chhedi Lal v. Har Bhagwan and Tirath Ram AIR 1921 Lah. 167; (iv) Firm Devi Sahai-Ramji Das v. Thirath Ram AIR 1923 Lah 473; (v) Firm Kirpa Ham Lachhman Dass v. Firm Sawan Mal Gopi Chand AIR 1927 Lah 826; (vi) Bhagwan Das-Giani Ram v. Mustsaddi Lal, AIR 1931 Lah 392; (vii) Harakchand Tarachand v. Sumatilal Chunilal, AIR 1932 Bom 25.

8. On behalf of the plaintiff-appellant, Shri P. C. Bhandari relied upon a ruling of Madras High Court in Kandaswamy Pillai v. Avayambal, ILR 34 Mad 167 in order to show that Article 83 lid not apply to a case like the present. In the said Madras case, Article 61 was made applicable, but Shri Bhandari argued that so far as that decision holds that Article 61 is applicable, he did not rely upon it, because to his mind, only the residuary Article 120 applied.

9. I have considered the arguments of both the learned counsel.

10. I may say at once that I do not agree with Shri Bhandari that Article 120 of the Limitation Actapplies to the present case. That Article is a residuary Article and applies only when there is no other Article of Schedule I of the Limitation Act which can be made applicable. To my mind, the competition in the present case, can be only between Article 61 and Article 83 of the Limitation Act Article 61 is general and can be applied in a case, where the plaintiff sues for money paid for the defendant. In the present case, the price of the ghee was no doubt paid by the plaintiff for the defendant and therefore if Article 83 or for the matter of that any other specific Article of the Limitation Act did not apply to the facts of the present case. Article 61 would apply.

11. Having considered the rulings cited on behalf of both the parties, I am more inclined to the view that Article 83 applies to the facts of the present case, and not Article 61. Article 83 is a special Article which applies to the case of a suit upon any contract to indemnify, other than a contract covered by Article 81, or Article 82 which apply respectively to a suit by a surety against a principal-debtor and by a surety against a co-surety. The present is not a suit by a surety against the principal-debtor, nor is it a suit by a surety against a cosurety. If, therefore, there is a contract to indemnify in the present case, it is a contract other than a contract envisaged by Article 81 orArticle 82. The question to be seen is whether there is a contract to indemnify in the present case.

12. There can be no doubt that there is no express contract to indemnify, but the words used inArticle 83 are not ‘express contract’, but ‘contract’ only. The contract may, therefore, well be an implied contract. Now by virtue of Section 222 of the Contract Act, the employer of an agent is bound to indemnify him against the consequences of all lawful acts done by such agent in exercise of the authority conferred upon him. The contract of agency, therefore, implies a contract by the principal to indemnify the agent against the consequences of all lawful acts done by such agent in exercise of the authority conferred upon him. In the present case, the authority to purchase ghee was conferred on the plaintiff. In paying for the price of that ghee on behalf of his principal, the plaintiff did a lawful act.

In consequence of that act, the plaintiff was damnified inasmuch as he was out of pocket for a certain amount to meet the liability of his principal. The suit is for the balance of the amount that remained due to the plaintiff out of the amount paid by him on account of the defendant. Article 83, therefore, clearly applies to the facts of the present case. I have in my support the ruling of the Calcutta High Court in the case of AIR 1944 Cal 302 (1), relied upon by the learned counsel for the respondent. In that case, the plaintiff was the defendant’s agent for looking after the criminal litigation started against his principal. The plaintiff spent a certain amount out of his own pocket in exercise of the authority conferred upon him by the defendant. The plaintiff filed a suit for the recovery of the said amount. It was observed:

“Once the relationship of principal and agent is established, Section 222, Contract Act, comes into operation. The obligation of the principal to indemnify the agent, therefore, flows from the nexus of the principal and agent. It is a part of the contract of agency, although it is an obligation imposed by statute. We are, therefore, of opinion that the liability under Section 222, Contract Act, to indemnify the agent is a liability under a contract within the meaning of Article 83,Limitation Act.”

As to the starting point of limitation, it was held that-

“An agent is damnified when he makes the payment on behalf of the principal; in other words, when the expenses incurred by him are recoverable.”

As the amount in that suit was spent by the plaintiff more than three years before the institution of the suit, the suit was held to be time barred. Besides the above ruling, there is a string of rulings of Lahore High Court in which it has been held that Article 83 of the Contract Act applies to the case of an aratia suing for the money spent on behalf of his principal. The earliest ruling is that of Punjab Chief Court, which was the predecessor of Lahore High Court. In that case (26 Ind Cas 415 : AIR 1914 Lah 407), it was held that :

“The right of an agent to be recouped by his principal in respect of losses sustained by the agent in his agency is a direct consequence of the agency contract, and a suit to enforce the right is governed by Article 83 of the Limitation Act.”

It was observed that-

“…….Section 222 of the Contract Act purports to be and is an integral part of the law of contract and it merely affirms and expressly lays down one of the principles of the law of contract. In effect it says that, unless there be some agreement to the contrary, the establishment of the relation of principal and agent shall inevitably bring in its train the liability of the principal to indemnify the agent. The right, instead of being merely implied in accordance with general principles, is expressed clearly by the Statute.”

The suit having been brought more than three years after the plaintiffs were damnified was held barred by time. The same view was taken in the cases of AIR 1921 Lah 167; AIR 1923 Lah 473; AIR 1927 Lah 826; AIR 1931 Lah 392 by Lahore High Court. A Division Bench of Bombay High Court has taken the same view in the case of AIR 1932 Rom 25. In that case, a difference of opinion arose between Fawcett and Mirza JJ. That case was the case of a commission agent (aratia), paying losses of his principal on forward contract. Fawcett J. held that Article 83 applied on forward contract, whereas Mirza J., held that it did not. The case was referred to a third Judge Patkar J.. who agreed with Fawcett J. and held that Article 83 applied. It was observed by Patkar J. that-

“In Kandaswamy’s case, ILR 34 Mad 167 the Madras High Court appears to have held that the agent’s right to indemnification arises from the statute law, i.e., Section 222, Contract Act, and is not a part of the agency contract. We think that the right to indemnification though recognized by statute is the necessary consequence of the agency contract. The contract to indemnify underArticle 83 Lim. Act, need not be by express stipulation, and may be either imposed by statute or implied or inferred in virtue of the jural relations of the parties:

“We think that a suit by a commission agent to recover loss on the transactions entered into on behalf of his constituents is governed by Article 83 Lim. Act.”

Fawcett J., after referring to Kandaswamy Pillai’s case and the cases of Lahore and other High Courts observed, as follows:-

”I agree with the view taken in these latter cases (the cases of Lahore and Calcutta High Courts) because there is nothing in the article itself which, in my opinion, justifies the distinction made by the Madras High Court”. (‘The words within the brackets are mine).

13. Thus, there is a preponderance of authority in favour of the view that a case like the present is governed by Article 83 of the Limitation Act. The Madras High Court in the case of Kaiidaswamy Pillai, ILR 34 Mad 167, thought that Article 83 can be made applicable only to a case where there is an express contract of indemnity and because the duty of principal under Section 222 of the Contract Act, to indemnify the agent is an obligation imposed by law and is attached to the relation of principal and agent constituted by act of parties, Article 83 does not apply.

For the reasons given by me above and those in the rulings of the majority judgment of Bombay High Court and Lahore and Calcutta High Courts referred to above, I respectfully differ from the view taken by the Madras High Court in Kandaswamy Pillai’s caso ILR 34 Mad 167 and hold that the present suit is barred by Article 83 of the Limitation Act, as it was brought more than three years after the payment was made on account of the principal by the plaintiff. I may observe here that even if Article 61 were to apply, the suit would be barred as it was brought more than three years after the payments wore made and even if the view of the Madras High Court were to be preferred the present suit will, all the same be time barred and that is why Shri Bhundari did not rely upon the ruling of the Madras High Court so far as it says that Article 61 applies. Tie relied upon that ruling only so far as it says that Article 83 does not apply.

14. I see no reason to interfere with the judgment and decree of the lower appellate court.

15. The appeal is dismissed. The defendant-respondent shall get his costs from the plaintiff-appellant.

 

Suit against surety for payment of rent

Against Surety for Payment of Rent

In the Court of ………………………………..

A.B. (add description and residence) …………………. Plaintiff

against

C.D. (add description and residence) ……………….. Defendant

A. B., the above-named plaintiff, states as follows:-

1. On the …… day of…… 19… , E.F. hired from the plaintiff for the term of……years, the [house No. …… , …… street], at the annual rent of…… rupees, payable [monthly].

2. The defendant agreed, in consideration of the letting of the premises to E. F. to guarantee the punctual payment of the rent.

3. The rent for the month of…… 19… , amounting to …… rupees, has not been paid.

[If, by the terms of the agreement, notice is required to be given to the surety, add:-]

4. On the …… day of…… 19… , the plaintiff gave notice to the defendant of the non-payment of the rent, and demanded payment thereof.

5. The defendant has not paid the same.

[i. Facts showing when the cause of action arose and that the Court has jurisdiction. ]

ii. The value of the subject-matter of the suit for the purpose of jurisdiction is …………….rupees and for the purpose of court-fees is …………….rupees., and Relief claimed.]

Dated :

Plaintiff

Through, Advocate

Verification:

I, ______, do hereby verify that the contents from paras 1 to ______ are correct and true to the best of my knowledge and personal belief and no part of it is false and nothing material has been concealed therein.

Affirmed at Coimbatore this ______.

Plaintiff

Suit can be file where both the parties decided the jurisdiction as per contract

Suit can be file where both the parties decided the jurisdiction as per contract
Suit can be file where both the parties decided the jurisdiction as per contract

Parties are bound to perform their choosen Jurisdiction to file/Initiate the proceeding at their chosen jurisdiction only.

Section20. Other suits to be instituted where defendants reside or cause of action arises.
Subject to the limitations aforesaid, every suit shall be instituted in Court within the local limits of whose jurisdiction-
  • The defendant, or each of the defendants where there are more than one, at the time of the commencement of the suit, actually and voluntarily resides, or carries on business, or personally works for gain; or
  • Any of the defendants, where there are more than one, at the time of the commencement of the suit actually and voluntarily resides, or carries on business, or personally works for gain, provided that in such case either the leave of the Court is given, or the defendants who do not reside, or carry on business, or personally work for gain, as aforesaid, acquiesce in such institution; or
  • The cause of action, wholly or in part, arises.
2[Explanation].-A corporation shall be deemed to carry on business at its sole or principal office in
3[India] or, in respect of any cause of action arising at any place where it has also a subordinate office, at such place.
“Whether parties to a contract may agree to have their disputes resolved
by a foreign court of their choice as a neutral forum according to law applicable to
that court ?
Here is the judgment passed by the Hon”ble High Court of Delhi:-
 IN THE HIGH COURT OF DELHI AT NEW DELHI
SUBJECT : RECOVERY OF AMOUNT
Date of reserve : 03.10.2007
Date of decision : 09.10.2007
CRP No.95/2006
U.CAN Migrate Consultants Pvt. Ltd. …. Petitioner
Versus
Canadian Connections Groups Ltd. …. Respondent
Advocates who appeared in this case :
For the petitioner : Mr. V.K. Singh and Mr. L.B. Rai, Advocates.
For the respondent : None.
J.M. MALIK, J.
1. The controversy in the case in hand pivots around a very interesting
question, “Whether parties to a contract may agree to have their disputes resolved
by a foreign court of their choice as a neutral forum according to law applicable to
that court”“ I have heard the counsel for the petitioner but it is unfortunate that the
counsel for the respondent did not appear to assist the court. This case was fixed
for 3rd October, 2007. Counsel for the respondent did not turn up despite second
call till 2.30 p.m. The respondent company was served vide notice dated
12.03.2007 on 15.03.2007 in this case. The order sheet dated, 17.05.2007, before
the Registrar, shows that Mr. Amrendra Singh appeared for the respondent. Again
on 06.08.2007 Mr. J.K. Chawdhary appeared on behalf of the respondent. On
06.09.2007 Mr. Amrendra Singh proxy counsel appeared on behalf of the
respondent. Today none has appeared on behalf of the respondent. Record reveals
that no vakalatnama was filed on behalf of the respondent. Since, the respondent
was served and represented by an advocate, therefore, the order is being passed in
respondent’s absentia.
2. The respondent filed a suit under Order XXXVII of the CPC for recovery of
Rs.4,90,000/- along with pendente lite and future interest before the trial court on
17.02.2003. The petitioner moved an application for leave to defend. In para 4 (B)
of the application they have taken a specific plea that the jurisdiction to try and
entertain the present suit vests with Ontario courts, as per provincial law of
Ontario, Canada and it was agreed between the parties that in case of dispute the
parties shall be governed by the above said court. However, the trial court presided
over by Mr. D.C. Anand, ADJ, did not find favour with this plea vide its order
dated 14.02.2006. It, however, granted leave to defend in favour of the petitioner
subject to its depositing Rs.1,45,000/-. Aggrieved by that order the instant petition
was filed in this court. 3. I have perused the copy of contract filed before me. Its
relevant portions are reproduced as hereunder:- “1. CONTRACT Canadian
Connections Group Ltd. having its office located at 245 Galloway Road Toronto
Ontario M1E 1X5 Canada. Hereinafter called the party of the first part and referred
to as the “CONSULTANT”. And Ucan Migration Consultants P. Ltd., having their
US office at 1240, I 85 south and Freedom Drive Charlotte, NC 28208 USA and
Registered Office in India. Hereinafter referred to as the party of the second part
and referred to as the “CLIENT”. Whereas The Client hereby retains the services
of the Consultant for the purposes of receiving follow up report from Canadian
Authorities with respect to prospective Twenty Eight (28) as per Annexure-A
permanent immigration cases/Client’s client already filed by the client. The follow
up on Application, on behalf of the client and their applicants / accompanying
family members, the Consultant hereby accept such mandate, subject to the
following terms and conditions. 2. DUTIES OF THE CONSULTANT The
Consultant shall : 1. Assess the Client’s referred applicant’s files for CANADIAN
permanent resident immigration. 2. Request the Client for the required information
from the applicants; 3. Submit the required information, application and supporting
documentation to the processing visa office; 4. Advice the Client for the selection
interview with the processing Visa office; 5. Effect all additional written and / or
verbal representations to the processing Visa office and related authorities
processing the application for permanent resident status of the applicant i.e.
immigration office/Embassy/ High Commission as is deemed necessary by the
Consultant, advice the client of the ongoing requirement by the Visa office with
respects the Client’s applications; 6. Never direct contact with the Applicants
referred by the Client.
3. x x x x NON REFUNDABLE FEE BY THE CONSULTANT The consultant
will not refund any fee to the clients for the reasons given below: 1. If the client
fail to make any of the payments as prescribed in the agreement, then the firm will
no longer act as my immigration services company and will cease the follow up
immediately. 2. If the applicant and their spouse fails medical, security or criminal
requirements and if it is determined that the applicant, and my spouse have
misrepresented or were untruthful about any material fact to the firm, or visa
officer, or immigration officer, or change the disposition regarding immigration to
Canada or abandon the application. 3. Where the application is rejected / revoked
by the Embassy due to false representation, submission of wrong documents by the
client, failing in personal technical /communication interview.
4. This Agreement will supercede all oral, written statements that may have been
given / communicated to the Clients by any and all employees of the Consultant on
signing this agreement by both the parties. 5. This Consultant shall be governed,
interpreted and enforced in accordance with the Provincial Laws of Ontario
Canada. All disputes will be subject to Ontario courts Jurisdiction and as per the
Provincial Laws of Ontario, Canada. 6. x x x x” 4. Counsel for the petitioner has
drawn my attention towards three authorities. First is reported in Shriram City
Union Finance Corporation Ltd. Vs. Rama Mishra, 2002 (9) SCC 613, wherein it
was held :- “In case parties under their own agreement expressly agree that their
dispute shall be tried by only one of them then the parties can only file the suit in
that court alone to which they have so agreed. In the present case, as we have said,
through clause 34 of the agreement, the parties have bound themselves that in any
matter arising between them under the said contract, it is the courts in Calcutta
alone which will have jurisdiction. Once parties bound themselves as such it is not
open for them to choose a different jurisdiction as in the present case by filing the
suit at Bhubaneshwar. Such a suit would be in violation of the said agreement.”
5. He has cited another authority of the Apex Court reported in Hakam Singh Vs.
M/s. Gammon (India) Ltd., 1971 (1) SCC 286, which goes to buttress his case.
6. He has also cited another authority reported in New Moga Transport Co. Vs.
United India Insurance Co. Ltd., (2004) 4 SCC 677, it was held that :- “By a long
series of decisions it has been held that where two courts or more have jurisdiction
under CPC to try a suit or proceeding, an agreement between the parties that the
dispute between them shall be tried in any one of such courts is not contrary to
public policy and in no way contravenes Section 28 of the Indian Contract Act,
1872. Therefore, if on the facts of a given case more than one court has
jurisdiction, parties by their consent may limit the jurisdiction to one of the two
courts. But by an agreement parties cannot confer jurisdiction on a court which
otherwise does not have jurisdiction to deal with a matter.”
7. I am also able to locate few authorities reported in Modi Entertainment Network
and another Vs. W.S.G. Cricket PTE. Ltd., (2003) 4 SCC 341, it was held :- “In
regard to jurisdiction of courts under the Code of Civil Procedure(CPC) over a
subject-matter one or more courts may have jurisdiction to deal with it having
regard to the location of immovable property, place of residence or work of a
defendant or place where cause of action has arisen. Where only one court has
jurisdiction it is said to have exclusive jurisdiction; where more courts than one
have jurisdiction over a subject-matter, they are called courts of available or
natural jurisdiction. The growing global commercial activities gave rise to the
practice of the parties to a contract agreeing beforehand to approach for resolution
of their disputes thereunder, to either any of the available courts of natural
jurisdiction and thereby create an exclusive or non-exclusive jurisdiction in one of
the available forums or to have the disputes resolved by a foreign court of their
choice as a neutral forum according to the law applicable to that court. It is a wellsettled
principle that by agreement the parties cannot confer jurisdiction, where
none exists, on a court to which CPC applies, but this principle does not apply
when the parties agree to submit to the exclusive or non-exclusive jurisdiction of a
foreign court; indeed in such cases the English courts do permit invoking their
jurisdiction. Thus, it is clear that the parties to a contract may agree to have their
disputes resolved by a foreign court termed as a “neutral court” or “court of
choice” creating exclusive or non-exclusive jurisdiction in it.” It was further held :-
“It is a question of interpretation, governed by the proper law of the contract,
whether a jurisdiction clause is exclusive or non-exclusive, or whether the claim
which is the subject-matter of the action falls within its terms. If there is no express
choice of the proper law of the contract, the law of the country of the chosen court
will usually, but not invariably, be the proper law.”
8. In Man Roland Druckimachinen AG Vs. Multicolour Offset Ltd. and another,
(2004) 7 SCC 447, it was held:- “9. Undoubtedly, when the parties have agreed on
a particular forum, the courts will enforce such agreement. This is not because of a
lack or ouster of its own jurisdiction by reason of consensual conferment of
jurisdiction on another court, but because the court will not be party to a breach of
an agreement. Such an agreement is not contrary to public policy nor does it
contravene Section 28 or Section 23 of the Contract Act. This has been held in
Hakam Singh Vs. Gammon (India) Ltd., AIR 1971 SC 740, A.B.C. Laminart (P)
Ltd. Vs. A.P. Agencies, (1989) 2 SCC 163 and Modi Entertainment Network Vs.
W.S.G. Cricket Pte. Ltd., (2003) 4 SCC 341, SCC at p.351. The decision of the
Delhi High Court in Rajendra Sethia Vs. Punjab National Bank, AIR 1991 Del 285
relied on by the Commission which holds to the contrary is, therefore, clearly
erroneous.”
9. In a recent authority reported in Harshad Chiman Lal Modi Vs. DLF Universal
and anr., AIR 2005 SC 4446 while quoting Halsbury’s Laws of England, (4th
edition), Reissue, Vol. 10; para 317; it was held:- “317. Consent and waiver.
Where, by reason of any limitation imposed by statute, charter or commission, a
court is without jurisdiction to entertain any particular claim or matter, neither the
acquiescence nor the express consent of the parties can confer jurisdiction upon the
court, nor can consent give a court jurisdiction if a condition which goes to the
jurisdiction has not been performed or fulfilled. Where the court has jurisdiction
over the particular subject matter of the claim or the particular parties and the only
objection is whether, in the circumstances of the case, the court ought to exercise
jurisdiction, the parties may agree to give jurisdiction in their particular case; or a
defendant by entering an appearance without protest, or by taking steps in the
proceedings, may waive his right to object to the court taking cognizance of the
proceedings. No appearance or answer, however, can give jurisdiction to a limited
court, nor can a private individual impose on a judge the jurisdiction or duty to
adjudicate on a matter. A statute limiting the jurisdiction of a court may contain
provisions enabling the parties to extend the jurisdiction by consent.” It was further
held:- “It is, no doubt true, as submitted by Ms. Malhotra that where two or more
courts have jurisdiction to entertain a suit, parties may be agreement submit to the
jurisdiction of one court to the exclusion of the other court or courts. Such
agreement is not hit by Section 28 of the Contract Act, 1872, nor such a contract
can be said to be against public policy. It is legal, valid and enforceable. Before
more than thirty years, such question came up for consideration before this court in
Hakam Singh Vs. Gammon (India) Ltd., 1971 (1) SCC 286. It was the first leading
decision of this court on the point. There, a contract was entered into by the parties
for construction of work. An agreement provided that notwithstanding where the
work was to be executed, the contract ‘shall be deemed to have been entered into at
Bombay’ and Bombay Court ‘alone shall have jurisdiction to adjudicate’ the dispute
between the parties. The question before this Court was whether the court at
Bombay alone had jurisdiction to resolve such dispute.”
10. In National Thermal Power Corporation Vs. Singer Company and others,
(1992) 3 SCC 551, it was held :- “13. Dicey and Morris in The Conflict of Laws,
11th edn., Vol. II (‘Dicey’) refer to the ‘proper law of a contract’ thus: “Rule 180 “
The term ‘proper law of a contract’ means the system of law by which the parties
intended the contract to be governed, or, where their intention is neither expressed
nor to be inferred from the circumstances, the system of law with which the
transaction has its closest and most real connection.” The expression ‘proper law of
a contract’ refers to the legal system by which the parties to the contract intended
their contract to be governed. If their intention is expressly stated or if it can be
clearly inferred from the contract itself or its surrounding circumstances, such
intention determines the proper law of the contract. In the words of Lord Herschell,
L.C.: “…..In this case, as in all such cases, the whole of the contract must be looked
at, and the contract must be regulated by the intention of the parties as appearing
from the contract. It is perfectly competent to those who, under such circumstances
as I have indicated, are entering into a contract, to indicate by the terms which they
employ which system of law they intend to be applied to the construction of the
contract, and to the determination of the rights arising out of the contract.”
11. In A.B.C. Laminart Pvt. Ltd. and another Vs. A.P. Agencies, Salem, (1989) 2
SCC 163, it was held :- “21. From the foregoing decisions it can be reasonably
deduced that where such an ouster clause occurs, it is pertinent to see whether
there is ouster of jurisdiction of other courts. When the clause is clear,
unambiguous and specific accepted notions of contract would bind the parties and
unless the absence of ad idem can be shown, the other courts should avoid
exercising jurisdiction. As regards construction of the ouster clause when words
like ‘alone’, ‘only’, ‘exclusive’ and the like have been used there may be no
difficulty. Even without such words in appropriate cases the maxim ‘expressio
unius est exclusio alterius’ “ expression of one is the exclusion of another “ may be
applied. What is an appropriate case shall depend on the facts of the case. In such a
case mention of one thing may imply exclusion of another. When certain
jurisdiction is specified in a contract an intention to exclude all others from its
operation may in such cases be inferred. It has therefore to be properly construed.”
12. In the light of the discussion, I hold that above said court in Canada has the
jurisdiction as per clause 5 of the above said Contract. Delhi courts have no
jurisdiction. I set aside the order passed by the trial court. The plaint be returned to
the respondent for filing it before the proper court. Revision petition stands
accepted and the case stands disposed of.
October 09, 2007 J.M. MALIK, J.

Sales Tax Officer, Banaras & … vs Kanhaiya Lal Mukundlal Saraf on 23 September, 1958

hammer_scalesSection 72 of the Indian Contract Act is in the following terms:

” A person to whom money has been paid, or anything delivered by mistake or under coercion, must repay or return it.”

As will be observed the section in terms does not make any distinction between a mistake of law or a mistake of fact. The term ” mistake ” has been used without any qualification or limitation whatever and comprises within its scope a mistake of law as well as a mistake of fact. It was, however, attempted to be argued on the analogy of the position in law obtaining in England, America and Australia that money paid under a mistake of law could not be recovered and that that was also the intendment of s. 72 of the Indian Contract Act.

The position in English law is thus summarised in Kerr on ” Fraud and Mistake ” 7th Edn., at p. 140:

” As a general rule it is well-established in equity as well as at law, that money paid under a mistake of law, with full knowledge of the facts, is not recoverable, and that even a promise to pay, upon a supposed liability, and in ignorance of the law, will bind the party. “

The ratio of the rule was thus stated by James L. J. in Rogers v. Ingham(1) :

” If that proposition were trite in respect of this case it must be true in respect to every case in the High Court of Justice where money has been paid under a mistake as to legal rights, it would open a fearful amount of litigation and evil in the cases of distribution of estates, and it would be difficult to say what limit could be placed to this kind of claim, if it could be made after an executor or trustee had distributed the whole estate among the persons supposed to be entitled, every one of them having knowledge of all the facts, and having given a release. The thing has never been done, and it is not a thing which, in my opinion, is to be encouraged. Where people have a (1) (1876) 3 Ch. D. 351,356.

knowledge of all the facts and take advice, and whether they get proper advice or not, the money is divided and the business is settled, it is not for the good of mankind that it should be reopened…” (See also National Pari Mutual Association Ltd. v. The King (1) and Pollock on Contract, 13th Edn., at pp. 367 & 374).

The American doctrine is also to the same effect as appears from the following passage in Willoughby on the Constitution of the United States, Vol. 1, p. 12:

” The general doctrine that no legal rights or obligation can accrue under an unconstitutional law is applied in civil as well as criminal cases. However, in the case of taxes levied and collected under statutes later held to be unconstitutional, the tax payer cannot recover unless he protested the payment at the time made. This, however, is a special doctrine applicable only in the case of taxes paid to the State. Thus, in transactions between private individuals, moneys paid under or in pursuance of a statute later held to be unconstitutional, may be recovered, or release from other undertakings entered into obtained. ” The High Court of Australia also expressed a similar opinion in Werrin v. The Commonwealth (2) where Latham C. J. and MacTiernan J. held that money paid voluntarily under a mistake of law was irrecoverable. Latham C. J. in the course of his judgment at p. 157 relied upon the general rule, as stated in Leake on Contracts, 6th Edn. (1911), p. 63 ” that money paid voluntarily, that is to say, without compulsion or extortion or undue influence and with a knowledge of. all the facts, cannot be recovered although paid without any consideration. “

It is no doubt true that in England, America and Australia the position in law is that monies paid voluntarily, that is to say, without compulsion or extortion or undue influence and with a knowledge of all facts, cannot here covered although paid without any consideration.Is the position the same in India ?

(1) 47 T.L.R. 110. (2) 59 C.L.R. 150.

It is necessary to observe at the outset that what we have got to consider are the plain terms of s. 72 of the Indian Contract Act as enacted by the Legislature. If the terms are plain and unambiguous we cannot have resort to the position in law as it obtained in England or in other countries when the statute was enacted by the Legislature. Such recourse would be permissible only if there was any latent or patent ambiguity and the courts were required to find out what was the true intendment of the Legislature. Where, however, the terms of the statute do not admit of any such ambiguity, it is the clear duty of the courts to construe the plain terms of the statute and give them their legal effect.

As was observed by Lord Herschell in the Bank of England v. Vagliano Brothers (1) :

” I think the proper course is in the first instance to examine the language of the statute and to ask what is its natural meaning uninfluenced by any considerations derived from the previous state of the law, and not to start with enquiring how the law previously stood, and then, assuming that it was probably intended to leave it unaltered, to see if the words of the enactment will bear an interpretation in conformity with this view. “

“If a Statute, intended to embody in a code a particular branch of the law, is to be treated in this fashion, it appears to me that its utility will be almost entirely destroyed, and the very object with which it was enacted will be frustrated. The purpose of such a statute surely was that on any point specifically dealt with by it, the law should be ascertained by interpreting the language used instead of, as before, by roaming oyer a vast number of authorities in order to discover what the law was, extracting it by a minute critical examination of the prior decision……………

This passage was quoted with approval by their Lordships of the Privy Council in Narendranath Sircar v. Kamal-Basini Dasi (2) while laying down the proper mode of dealing with an Act enacted to codify a particular branch of the law. (1) [1891] A.C. 107, 144.

(2) (1896) I.L.R. 23 Cal. 563, 571.

The Privy Council adopted a similar reasoning in Mohori Bibee v. Dhurmodas Ghose (1) where they had to interpret s. 11 of the Indian Contract Act. They had before them the general current of decisions in India that ever since the passing of the Indian Contract Act the contracts of infants were voidable only. There were, however, vigorous protests by various judges from time to time; and there were also decisions to the contrary effect. Under these cir- cumstances, their Lordships considered themselves at liberty to act on their own view of the law as declared by the Contract Act, and they had thought it right to have the case reargued before them upon this point. They did not consider it necessary to examine in detail the numerous decisions above referred to, as in their opinion the ” whole question turns upon what is the true construction of the Contract Actitself “. They then referred to the various relevant sections of the Indian Contract Act and came to the conclusion that the question whether a contract is void or voidable presupposes the existence of a contract within the meaning of the Act and cannot arise in the base of an infant who is not ” competent to contract. “

In Satyabrata Ghose v. Mugneeram Bangur & Co. (2), s. 56 of the Indian Contract Act came up for consideration by this Court. B. K. Mukherjea J. (as he then was) while delivering the judgment of the Court quoted with approval the following observations of Fazl Ali J. in Ganga Saran v. Ram Charan (3):

” It seems necessary for us to emphasise that so far as the courts in this country are concerned, they must look primarily to the law as embodied in sections 32 and 56 of the Indian Contract Act, 1872. and proceeded to observe : ” It would be incorrect to say that section 56 of the Contract Act applies only to cases of physical impossibility and that where this section is not applicable, recourse can be had to the principle of English law on the subject of frustration. It must be held also that to the extent that the Indian Contract Act deals (1) (1902) L.R. 30 I.A. 114. (2) [1954] S.C.R. 310. (3) [1952] S.C.R. 36, 52.

with a particular subject, it is exhaustive upon the same and it is not permissible to import the principles of English law dehors these statutory provisions. The decisions of the English courts possess only a persuasive value and may be helpful in showing how the courts in England have decided cases under circumstances similar to those which have come before our courts. “

It is, therefore, clear that in order to ascertain the true meaning and intent of the provisions, we have got to turn to the very terms of the statute itself, divorced from all considerations as to what was the state of the previous law or the law in England or elsewhere at the time when the statute was enacted. To do otherwise would be to make the law, not to interpret it. (See Gwynne v. Burnell (1) and Kumar Kamalranjan Roy v. Secretary of State (2).

The courts in India do not appear to have consistently adopted this course and there were several decisions reached to the effect that s. 72 did not apply to money paid under a mistake of law, e.g.,Wolf & Sons v. Dadyba Khimji & Co. (3) and Appavoo Chettiar v. S. 1. Ry. Co. (4). In reaching those decisions the courts were particularly influenced by the English decisions and also provisions of s. 21 of the Indian Contract Act which provides that a contract is not voidable because it was caused by a mistake as to any law in force in British India. On the other hand, the Calcutta High Court had decided in Jagdish Prasad Pannalal v. Produce Exchange Corporation Ltd. (5), that the word ” mistake ” in s. 72 of the Indian Contract Act included not only a mistake of fact but also a mistake of law and it was further pointed out that this section did not conflict with s. 21 because that section dealt not with a payment made under a mistake of law but a contract caused by a mistake of law, whereas s. 72 dealt with a payment which was either not under a contract at all or even if under a contract, it was not a cause of the contract.

(1) 7 Cl. & F. 696. (2) L. R. 66 I. A. 1, 10. (3) (1919) I.L.R. 44 Bom. 631, 649. (4) A.I.R. 1929 Mad. 177. (5) A.I.R. 1946 Cal. 245.

The Privy Council resolved this conflict in Shiba Prasad Singh v. Srish Chandra Nundi(1). Their Lordships of the Privy Council observed that the authorities which dealt with the meaning of ” mistake ” in the section were surprisingly few and it could not be said that there was any settled trend of authority. Their Lordships were therefore bound to consider this matter as an open question, and stated at p. 253:

” Those learned judges who have held that mistake in this context must be given a limited meaning appear to have been largely influenced by the view expressed in Pollock and Mulla’s commentary on s. 72 of the Indian Contract Act, where it is stated (Indian Contract & Specific Relief Acts, 6th Edn., p. 402): ” Mistake of law is not expressly excluded by the words of this section; but s. 21 shows that it is not included “. For example, Wolf & Sons v. Dadyaba Khimji & Co. (2). Macleod J. said referring to s. 72 ” on the face of it mistake includes mistake of law. But it is said that under s. 21 a contract is not voidable on the ground that the parties contracted under a mistaken belief of the law existing in British India, and the effect of that section would be neutralized if a party to such a contract could recover what he had paid by means of s. 72 though under s. 21 the contract remained legally enforceable. This seems to be the argument of Messrs. Pollock and Mulla and as far as I can see it is sound.” In Appavoo Chettiar v. South Indian Rly. (3), Ramesam and Jackson JJ. say: ” Though the word ‘ mistake’ in s. 72 is not limited it must refer to the kind of mistake that can afford a ground for relief as laid down in ss. 20 and 21 of the Act……… Indian law seems to be clear, namely, that a mistake, in the sense that it is a pure mistake as to the law in India resulting in the payment by one person to another and making it equitable that the payee should return the money is no ground for relief.” Their Lordships have found no case in which an opinion that ‘,mistake” in s. 72 must be given a limited meaning has been based on any other ground. In their (1) (1949) L.R. 76 I.A. 244. (2) (1919) I.L.R. 44 Bom. 631. (3) A.I.R. 1929 Mad. 648.

Lordships’ opinion this reasoning is fallacious. If a mistake of law has led to the formation of a contract, s. 21 enacts that that contract is not for that reason voidable. If money is paid under that contract, it cannot be said that that money was paid under mistake of law ; it was paid because it was due under a valid contract, and if it had not been paid payment could have been enforced. Payment ” by mistake ” in s. 72 must refer to a payment which was not legally due and which could not have been enforced ; the ” mistake ” is thinking that the money paid was due when, in fact, it was not due. There is nothing inconsistent in enacting on the one hand that if parties enter into a contract under mistake in law that contract must stand and is enforceable, but, on the other hand, that if one party acting under mistake of law pays to another party money which is not due by contract or otherwise, that money must be repaid. Moreover, if the argument based on inconsistency with s. 21 were valid, a similar argument based on incon- sistency with s. 22 would be valid and would lead to the conclusion that s. 72 does not even apply to mistake of fact. The argument submitted to their Lordships was that s. 72 only applies if there is no subsisting contract between the person making the payment and the payee, and that the Indian Contract Actdoes not deal with the case where there is a subsisting contract but the payment was not due under it. But there appears to their Lordships to be no good reason for so limiting the scope of the Act. Once it is established that the payment in question was not due, it appears to their Lordships to be irrelevant to consider whether or not there was a contract between the parties under which some other sum was due. Their Lordships do not find it necessary to examine in detail the Indian authorities for the wider interpretation of ” mistake ” in s. 72. They would only refer to the latest of these authorities, Pannalal v. Produce Exchange Corp. Ltd. (1), in which a carefully reasoned judgment was given by Sen J. Their Lordships agree with this judgment. It may be well to add that their (1) A.I.R. 1946 Cal. 245.

Lordships’ judgment does not imply that every sum paid under mistake is recoverable, no matter what the circumstances may be. There may in a particular case be circumstances which disentitle a plaintiff by estoppel or otherwise.” We are of opinion that this interpretation put by their Lordships of the Privy Council on s. 72 is correct. There is no warrant for ascribing any limited meaning to the word I mistake’ as has been used therein and it is wide enough to cover not only a mistake of fact but also a mistake of law. There is no Conflict between the provisions of s. 72 on the one hand and ss. 21 and 22 of the Indian Contract Act on the other and the true principle enunciated is that if one party under a mistake, whether of fact or law, pays to another party money which is not due by contract or otherwise that money must be repaid. The mistake lies in thinking that the money paid was due when in fact it was not due and that mistake, if established, entitles the party paying the money to recover it back from the party receiving the same. The learned Additional Solicitor-General, however, sought to bring his case within the observations of their Lordships of the Privy Council that their judgment did not imply that every sum paid under mistake is recoverable no matter what the circumstances might be and that there might be in a particular case circumstances which disentitle a plaintiff by estoppel or otherwise. It was thus urged that having regard to the circumstances of the present case, (i) in so far as the payments were in discharge of the liability under the U.P. Sales Tax Act and were voluntary payments without protest and also (ii) inasmuch as the monies which had been received by the State of U. P. had not been retained but had been spent away by it, the respondent was disentitled to recover the said amounts. Here also, we may observe that these contentions were not specifically urged in the High Court or in the statement of case filed by the appellants in this court; but we heard arguments on the same, as they were necessarily involved in the question whether s. 72 of theIndian Contract Act applied to the facts of the present case.

Re: (i):-The respondent was assessed for the said amounts under the U. P. Sales Tax Act and paid the same; but these payments were in respect of forward transactions in silver. If the State of U. P. was not entitled to receive the sales tax on these transactions, the provision in that behalf being ultra vires, that could not avail the State and the amounts were paid by the respondent, even though they were not due by contract or otherwise. The respondent committed the mistake in thinking that the monies paid were due when in fact they were not due and that mistake on being established entitled it to recover the same back from the State under s. 72 of the Indian Contract Act. It was, however, contended that the payments having been made in discharge of the liability under the U. P. Sales Tax Act, they were payments of tax and even though the terms of s. 72 of the Indian Contract Act applied to the facts of the present case no monies paid by way of tax could be recovered. We do not see any warrant for this proposition within the terms of s. 72 itself. Reliance was, however, placed on two decisions of the Madras High Court reported in (1) Municipal Council, Tuticorin v. Balli Bros. (1) and (2) Municipal Council, Rajahmundry v. Subba Rao (2). It may be noted, however, that both these decisions proceeded on the basis that the payments of the taxes there were made under mistake of law which as understood then by the Madras High Court was not within the purview of s. 72 of the Indian Contract Act. The High Court then proceeded to consider whether they fell within the second part of s. 72, viz., whether the monies had been paid under coercion. The court held on the facts of those cases that the payments had been voluntarily made and the parties paying the same were therefore not entitled to recover the same. The voluntary payment was there considered in contradistinction to payment under coercion and the real ratio of the decisions was that there was no coercion or duress exercised by the authorities for (1) A.I.R. 1934 Mad. 420. (2) A.I.R, 1937 Mad. 559.

exacting the said payments and therefore the payments having been voluntarily made, though under mistake of law, were not recoverable. The ratio of these decisions, therefore, does not help the appellants before us. The Privy Council decision in Shiba Prasad Singh v. Srish Chandra Nandi (1) has set the whole controversy at rest and if it is once established that the payment, even though it be of a tax, has been made by the party labouring under a mistake of law the party is entitled to recover the same and the party receiving the same is bound to repay or return it. No distinction can, therefore, be made in respect of a tax liability and any other liability on a plain reading of the terms of s. 72 of the Indian Contract Act, even though such a distinction has been made in America vide the passage from Willoughby on the Constitution of the United States, Vol. 1, p. 12 opcit. To hold that tax paid by mistake of law cannot be recoverd under s. 72 will be not to interpret the law but to make a law by adding some such words as ” otherwise than by way of taxes ” after the word ” paid “.

If this is the true position the fact that both the parties, viz., the respondent and the appellants were labouring under a mistake of law and the respondent made the payments voluntarily would not disentitle it from receiving the said amounts. The amounts paid by the respondent under the U. P. Sales Tax Act in respect of the forward transactions in silver, had already been deposited by the respondent in advance in accordance with the U. P. Sales Tax Rules and were appropriated by the State of U. P. towards the discharge of the liability for the sales tax on the res- pective assessment orders having been passed. Both the parties were then labouring under a mistake of law, the legal position as established later on by the decision of the Allahabad High Court in Messrs. Budh Prakash Jai Prakash v. Sales Tax Officer, Kanpur (2) subsequently confirmed by this Court in Sales Tax Officer, Pilibhit v. Budh Prakash Jai Prakash (3) not having been known to the parties at the relevant (1) (1949) L. R. 76 1. A. 244. (2) (1952) A.L.J. 332. (3) [1955] I S.C.R. 243.

dates. This mistake of law became apparent only on May 3, 1954, when this Court confirmed the said decition of the Allababad High Court and on that position being established the respondent became entitled to recover back the said amounts which had been paid by mistake of law. The state of mind of the respondent would be the only thing relevant to consider in this context and once the respondent established that the payments were made by it under a mistake of law, (and it may be noted here that the whole matter proceeded before the High Court on the basis that the respondent had committed a mistake of law in making the said payments), it was entitled to recover back the said amounts and the State of U. P. was bound to repay or return the same to the respondent irrespective of any other consideration. There was nothing in the circumstances of the case to raise any estoppel against the respondent nor would the fact that the payments were made in discharge of a tax liability come within the dictum of the Privy Council above referred-to. Voluntary payment of such tax liability was not by itself enough to preclude the respondent from recovering the said amounts, once it was established that the payments were made under a mistake of law. On a true interpretation of s. 72 of the Indian Contract Act the only two circumstances there indicated as entitling the party to recover the money back are that the monies must have been paid by mistake or under coercion. If mistake either of law or of fact is established, he is entitled to recover the monies and the party receiving the same is bound to repay or return them irrespective of any consideration whether the monies had been paid voluntarily, subject however to questions of estoppel, waiver, limitation or the like. If once that circumstance is established the party is entitled to the relief claimed. If, on the other hand, neither mistake of law nor of fact is established., the party may rely upon the fact of the monies having been paid under coercion in order to entitle him to the relief claimed and it is in that position that it becomes relevant to consider whether the payment has been a voluntary payment or a payment under coercion. The latter position has been elaborated in English law in the manner following in Twyford v. Manchester Corporation (1) where Romer J. observed:

” Even so, however, I respectfully agree with the rest of Walton J.’s judgment, particularly with his statement that a general rule applies, namely, the rule that, if money is paid voluntarily, without compulsion, extortion, or undue influence, without fraud by the person to whom it is paid and with full knowledge of all the facts, it cannot be recovered, although paid without consideration, or in discharge of a claim which was not due or which might have been successfully resisted.”

The principle of estoppel which has been adverted to by the Privy Council in Shiba Prasad Singh v. Srish Chandra Nandi (2) as disentitling the plaintiff to recover the monies paid under mistake can best be illustrated by the decision of the Appeal Court in England reported in Holt v. Markham (3) “- here it was held that as the defendant had been led by the plaintiffs’ conduct to believe that he might treat the money as his own, and in that belief had altered his position by spending it, the plaintiffs were estopped from alleging that it was paid under a mistake; and this brings us to a consideration of point No. 2 above stated. Re: (ii): Whether the principle of estoppel applies or there are circumstances attendant upon the transaction which disentitle the respondent to recover back the monies, depends upon the facts and circumstances of each case. No question of estoppel can ever arise where both the parties, as in the present case, are labouring under the mistake of law and one party is not more to blame than the other. Estoppel arises only when the plaintiff by his acts or conduct makes a representation to the defendant of a certain state of facts which is acted upon by the defendant to his detriment; it is only then that the plaintiff is estopped from setting up a different state of facts. Even if this position can be availed of where the representation is in regard to a position in law, no (1) [1946] 1 Ch. 236, 241. (2) [1949] L. R. 76 I. A. 244. (3) [1923] 1 K.B. 504.

such occasion arises when the mistake of law is common to both the parties. The other circumstances would be such as would entitle a court of equity to refuse the relief claimed by the plaintiff because on the facts and circumstances of the case it would be inequitable for the court to award the relief to the plaintiff. These are, however, equitable considerations and could scarcely be imported when there is a clear and unambiguous provision of law which entitles the plaintiff to the relief claimed by him.

Such equitable considerations were imported by the Nagpur High Court in Nagorao v. G. G.-in-Council where Kaushalendra Rao J. observed:

” The circumstances in a particular case, disentitle the pltf. to recover what was paid under mistake.” ” If the reason for the rule that a person paying money under mistake is entitled to recover it is that it is against conscience for the receiver to retain it, then when the receiver has no longer the money with him or cannot be considered as still having it as in a case when he has spent it on his own purposes-which is not the case here-different considerations must necessarily arise.” We do not agree with these observations of the Nagpur High Court. No such equitable considerations can be imported when the terms of s. 72 of the Indian Contract Act are clear and unambiguous. We may, in this context, refer to the observations of their Lordships of the Privy Council in Mohori Bibee v. Dhurmodas Ghose (2) at p. 125. In dealing with the argument which was urged there in regard to the minor’s contracts which were declared void, viz., that one who seeks equity must do equity and that the minor against whom the contract was declared void must refund the advantage which he had got out of the same, their Lordships observed that this argument did not require further notice except by referring to a recent decision of the Court of Appeal in Thurstan v. Nottingham Permanent Benefit Building Society (3) (1) A.I.R. 1951 Nag. 372,374. (2) [19O2] L. R. 30 I. A.

114. (3) [I9O2] 1 Ch. 1.

since affirmed by the House of Lords and they quoted with approval the following passage from the judgment of Romer L. J., at p. 13 of the earlier report:

” The short answer is that a Court of Equity cannot say that it is equitable to compel a person to pay moneys in respect of a transaction which as against that person the Legislature has declared to be void.”

That ratio was applied by their Lordships to the facts of the case, before them and the contention was negatived. Merely because the State of U. P. had not retained the monies paid by the respondent but had spent them away in the ordinary course of the business of the State would not make any difference to the position and under the plain terms of s. 72 of the Indian Contract Actthe respondent would be entitled to recover back the monies paid by it to the State of U.P. under mistake of law.

The result, therefore, is that none of the contentions urged before us on behalf of the appellants in regard to the non-applicability of s. 72 of the Indian Contract Act to the facts of the present case avail them and the appeal is accordingly dismissed with costs.