Unjust Enrichment

 

 

 

THE writ petition in this case concerns the octroi duty paid by the petitioner, M/s Colgate Palmolive (India) Ltd. to the respondents-Mumbai Mahanagar Palika and the Deputy Assessor and Collector (Octroi) between April, 1995 and March, 2001 and the dispute arising therefrom has been decided by Justices MS Sonak and Kamal Khata on July 26, 2024. The HC has noted that there is neither any record nor any clear averment in the petition that the Octroi Duty for the said period was paid by the petitioner “under protest” or “Without prejudice” to the petitioner’s rights to question the levy or to question the alleged overcharging. However, from March 2001, the petitioner protested alleged overcharging and required the Deputy Assessor and Collector (Octroi)-2 to decide on the merits of the petitioner’s application of March 16,2001.

 

Therefore, by an interim order on November 27, 2001, in this petition, the HC directed the respondent-2 to decide the petitioner’s application on merits within 6 weeks after giving an opportunity of personal hearing to the petitioner. The respondent-2 held against the petitioner, and therefore, the petitioner appealed to the Appellate Authority, the Small Causes Court. These appeals were decided favouring the petitioner by the Small Causes Court. Against these decisions, from 2001 onwards, the Bombay Municipal Corporation (“BMC”)has instituted its First Appeals in the HC in the Year 2020. As the Corporation has not bothered to remove the office-objections, those are yet to be regularly numbered. The record shows that from 2001 onwards, the petitioner has not only protested the levy of Octroi at the rates demanded by the BMC but, further, invited the respondent-2 to determine the correct rates. Since, according to the petitioner, the respondent -2 did not determine the correct rates, the petitioner appealed to the Small Causes Court. The Small Causes Court upheld the petitioner’s contention and even directed a refund to the petitioner. The BMC, aggrieved by the orders of the Small Causes Court, has instituted several appeals in the HC corresponding to each of the levies or at least for each of the Assessment Years.

 

However, regarding the impugned levy for 1995 to 2001 the petitioner did not follow such a procedure. The petition was admitted on February 20, 2002. According to the HC, the fact that the petitioner paid octroi at the rates demanded without any protest or demur for the period from 1995 to 2001 is a relevant circumstance, which dissuades the Court from exercising its discretionary jurisdiction under Article 226 of the Constitution of India. Besides, the rival contentions regarding determining the value of articles under sub-clauses (a) and (b) of Rule 2(7) of the Rules of 1965 raise arguable issues that would involve the examination of certain factual aspects. This is why the MMC Act and the rules made thereunder require the party to seek a determination from the respondent-2 on such issues. Further, if the party is aggrieved by the determination by the respondent-2, the party can appeal against the same to the Small Causes Court. Since all this procedure was never followed by the petitioner in so far as the levies from 1995to2001 are concerned, the Court’s discretionary jurisdiction under the Article 226 of the Constitution of India cannot be conveniently exercised to adjudicate, inter alia, disputed questions of fact or to grant some general declaratory relief to the petitioner. The grant or refusal of relief would depend upon factual aspects like the genuineness of the original invoice etc.

 

The HC has pointed out that it has, in one of the Single Bench decision of the case –Tupperware India Pvt. Ltd. v. State of Maharashtra-(2018) SCC OnLine Bom. 18029, observed that a petition challenging consolidated levies spread over several transactions was “quite misadventurous”. The decision reasons that it was well established that each import for the purpose of levy of octroi was required to be considered on its own merits as per the 1965 Rules. The Scheme contained in the Rules is a complete code. It has been stated further by the HC that it was difficult to conceive a straitjacket formula suggested by the petitioner to accept STVs regarding all its imports or to insist that the STVs should be held as conclusive regarding the value of the goods.

 

The Single Judge had held that each import within the Corporation limit was required to be based on its independent documents along with the requisite forms to be submitted by the importer as mandated by the rules. Further, in case of any dispute, then subject to recourse to a determination by a commissioner, an appeal could always be filed by the importer under section 217 of the MMC Act before the Small Causes Court disputing the levy. Finally, in the opinion of the Court, granting the petitioner any relief regarding the levies from 1995 to 2001 would result in the petitioner’s unjust enrichment. This is also one of the considerations for the HC refusing to exercise discretionary jurisdiction under Article 226 or to grant any relief to the petitioner in this petition. There is no record of the petitioner paying the demanded octroi duties under protest to the BMC. Duties were paid without protest or demur. It is reasonable to infer that the petitioner has already passed on the burden of each of the octroi duties to its millions of consumers. Therefore, if the BMC, a public authority, is directed to refund the alleged excess octroi duty collected by it to the petitioner, then the petitioner would certainly be enriched.

 

It is impossible to direct or enforce the direction for the petitioner to return this amount to millions of its consumers. This is another consideration for declining to exercise our writ jurisdiction. The refund claimed can be allowed / decreed when the petitioner establishes that he has not passed on the burden of the duty or to the extent he has not passed on, as the case may be. The power of the Court is not meant to be exercised for unjustly enriching a person. The doctrine of unjust enrichment is, however, inapplicable to the State. The State represents the people of the country. No one can speak of the people being unjustly enriched. The HC has dismissed the petition with clarification that it has kept open the question whether the value of articles in this case ought to have been determined under clause (a) or (b) of Rulev2(7)of the Rules of 1965.