2017 (3) TMI 695 - SC - Companies Law

Time Limit for Refund Claims Under Major Port Trusts Act Clarified by Supreme Court

The Supreme Court held that Section 55 of the Major Port Trusts Act extinguishes the right to claim a refund if not made within six months. The Court ... Over-charge towards wharfage claim from the Board of Trustees - refund of the amount allegedly paid in excess - Period of limitation - revival of extinguished claim - Held that:- Section 120 of Major Port Trusts Act stipulates six months from the date of “accrual of the cause of action” whereas Section 55 stipulates “six months from the date of the payment”. Proviso to Section 55 authorises the Board to remit the over-charge made in its bill on its own motion and at any time. In other words, notwithstanding the declaration contained under Section 55 of the extinguishment of the right of the claimant for refund, the BOARD is authorised to remit the over-charges in its discretion. It goes without saying that the BOARD being public body, the discretion must be exercised rationally in accordance with some known principles and policy. In view of the authority of the BOARD under the proviso to Section 55, we do not propose to interfere with the directions issued by the High Court in the judgment under appeal though such directions came to be issued on an erroneous appreciation of the law i.e., Section 55 of THE ACT. We undertook the exercise of examining the scope and amplitude of Section 55 only for the purpose of declaring the law as we are informed that a number of claims for refund similar to the claim of the respondent are pending and also likely to arrive in future, therefore, there is need to have clarity on the true meaning and scope of Section 55. Apart from the appellant, we are sure, number of applications under Section 55 must be pending with various other major ports. Issues Involved:1. Whether the respondent made payments exceeding the amount legally due and payable.2. Whether the respondent's claim for refund is barred by limitation under Section 55 of the Major Port Trusts Act, 1963.3. Whether the appropriate remedy for the respondent's claim is through a civil suit or a writ petition.4. Interpretation and applicability of Section 55 of the Major Port Trusts Act, 1963.5. Relevance of the judgment in Mafatlal Industries Ltd. & Others v. Union of India & Others in the context of the case.Issue-wise Analysis:1. Whether the respondent made payments exceeding the amount legally due and payable:The respondent company imported goods through a port administered by the first appellant and paid certain rates. Subsequently, the respondent believed it had overpaid by Rs. 6,99,588.66 and requested a refund. The first appellant rejected this claim on the grounds that it was not made within six months of the payment date, as stipulated by Section 55 of the Major Port Trusts Act, 1963. The questions of whether the payments exceeded the legally due amount and the exact overpaid amount were not examined by the first appellant.2. Whether the respondent's claim for refund is barred by limitation under Section 55 of the Major Port Trusts Act, 1963:The appellants argued that the respondent’s claim was barred by the six-month limitation period prescribed under Section 55 of the Act. The High Court, however, allowed the writ petition and directed the appellants to verify the claim and refund the amount with interest. The Supreme Court examined whether Section 55 extinguishes the right to claim a refund if not made within six months. The Court concluded that Section 55 does extinguish the right to claim a refund if the claim is not made within the stipulated time frame.3. Whether the appropriate remedy for the respondent's claim is through a civil suit or a writ petition:The appellants contended that the claim for recovery of money should be pursued through a civil suit rather than a writ petition. The High Court opined that Section 55 provides an internal remedy but does not bar general remedies available in civil or constitutional courts. The Supreme Court acknowledged that while the jurisdiction of constitutional courts cannot be taken away by statutes, such courts should exercise their jurisdiction consistent with legislative policy.4. Interpretation and applicability of Section 55 of the Major Port Trusts Act, 1963:Section 55 states that no refund of overcharges shall be made unless the claim is preferred in writing within six months from the date of payment. The Supreme Court interpreted this provision as extinguishing the right to claim a refund if not made within the specified period. The Court clarified that this section pertains to the right to claim a refund and not the remedies available for such a claim.5. Relevance of the judgment in Mafatlal Industries Ltd. & Others v. Union of India & Others in the context of the case:The appellants relied on the Mafatlal Industries judgment, which dealt with the constitutionality of Section 11B of the Central Excise Act and the principles governing the exercise of jurisdiction under Article 226 of the Constitution. The Supreme Court distinguished this case, noting that Mafatlal did not address the extinguishment of the right to seek a refund but rather the availability of remedies under Article 226.Conclusion:The Supreme Court concluded that Section 55 of the Major Port Trusts Act extinguishes the right to claim a refund if not made within six months from the date of payment. The Court upheld the High Court’s direction to the appellants to refund the amount, albeit on different legal grounds, emphasizing the need for clarity on the true meaning and scope of Section 55 for future similar claims. The appeal was disposed of accordingly.