Unlawful state-collected surcharge is refundable, but refund claims follow Article 62 limitation and lawful requisition payments stand.

The Supreme Court held that excess surcharge collected on paddy and rice was not supported by statutory authority, because the procuring agents bought and stored the goods on their own account and the use of the word "agents" did not create a true fiduciary liability; the surcharge was therefore refundable. It further held that refund claims for money illegally collected were governed by Article 62 of the Limitation Act, not Article 120, so amounts claimed beyond three years were time-barred. By contrast, collections made under lawful requisition and release arrangements, and the related agreements, were enforceable and not recoverable.

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Issues: (i) Whether the excess amounts collected as surcharge on stocks of paddy and rice were recoverable from the Government, or whether the procuring agents were liable to account for them as agents or fiduciaries. (ii) Whether the suits for refund were governed by Article 62 of the Indian Limitation Act or by Article 120. (iii) Whether the amounts collected on requisition and release, and the agreements executed in that connection, barred refund.

Issue (i): Whether the excess amounts collected as surcharge on stocks of paddy and rice were recoverable from the Government, or whether the procuring agents were liable to account for them as agents or fiduciaries.

Analysis: The procuring agents bought paddy with their own funds, stored it at their own risk, bore the incidents of ownership, and sold under price-control and licensing restrictions applicable to all dealers. The descriptions used in the procurement orders and agreements as "agents" were treated as convenient labels and not as conclusive of a principal-agent relationship. The margin between procurement and sale prices was not remuneration in the legal sense, and the statutory control scheme did not make the traders hold the goods for the Government. The attempt to justify the surcharge as a direction under the licence or as a fiduciary accounting liability was rejected. The levy had no statutory foundation and was therefore not legally exigible.

Conclusion: The surcharge was unlawful and refundable, and the appellants were not liable to account for the alleged excess profit as agents or fiduciaries.

Issue (ii): Whether the suits for refund were governed by Article 62 of the Indian Limitation Act or by Article 120.

Analysis: A suit for refund of money illegally collected falls within the classical action for money had and received to the plaintiff's use, and Article 62 is the specific provision. The money was received by the Government in circumstances giving rise immediately to a right of recovery, so the residuary Article 120 had no application. Claims for amounts received more than three years before the suit were barred, while later claims were within time.

Conclusion: Article 62 applied, not Article 120, and only the claims beyond the three-year period were barred.

Issue (iii): Whether the amounts collected on requisition and release, and the agreements executed in that connection, barred refund.

Analysis: The requisition-and-release device was held to be within statutory power and therefore valid; in that class of cases the payments or enforceable undertakings could not be treated as illegal exactions. The agreements executed for release of requisitioned stock were upheld, so the corresponding claims failed. This limited relief did not affect the illegality of the surcharge collected by other methods.

Conclusion: Refund was not available for amounts realised through lawful requisition and release, and the connected agreements were enforceable.

Final Conclusion: The levy of surcharge was generally without legal authority and refundable, but the limitation bar defeated the time-barred portion of one claim, and the requisition-and-release collections stood on a different footing and were not recoverable.

Ratio Decidendi: Money compulsorily collected by the State without statutory authority is recoverable as money had and received, but the specific limitation provision for such claims applies, and lawful requisition made under statutory power does not become an illegal levy merely because release is conditioned on payment.

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