SAIKIA J.

1. This plaintiffs appeal by special leave is from the appellate judgment of the Madhya Pradesh High Court dismissing the appeal, upholding the judgment of the trial court dismissing the plaintiffs suit on the ground of limitation A registered firm, Rai Saheb Nandkishore Rai Saheb Jugalkishore (appellants), was allotted contracts for manufacture and sale of liquor for the calendar year 1959 and for the subsequent period from January 1, 1960, to March 31, 1961, for Rs. 2, 56, 200 and Rs. 4, 71, 900, respectively, by the Government of Madhya Pradesh which also charged 71/2 per cent. over the auction money as mahua and fuel cess. As writ petitions challenging the Governments right to charge this 71/2 per cent. were pending in the Madhya Pradesh High Court, the Government announced that it would continue to charge it and the question of stopping it was under consideration of the Government whose decision would be binding on the contractors. The firm (appellants) thus paid for the above contracts a total extra sum of Rs. 54, 606.

On October 17, 1961, the Under Secretary to Government, M. P., Forest Department, Bhopal, wrote the following letter No. 10130-x/61 (exhibit D-23) to the Chief Conservator of Forests, Madhya Pradesh, Rewa.

"Subject : Levy of cess on liquor contractors

Under former M. P. Government (Forest Department) memo No. 4595-CR-73-XI dated 25th July, 1953, a royalty at 71/2 per cent. of the licence fee for liquor shops was imposed on liquor contractors to cover the value of mahua and fuel extracted from the reserved or protected forests by the contractors for their still.

2. The M. P. High Court has since decided that the levy of the aforesaid cess is illegal and that the cess cannot be recovered from the liquor contractors. In pursuance of this decision, Government desires that all processes whenever issued or proceedings instituted against liquor contractors for recovery of the mahua or fuel cess should forthwith be withdrawn and no revenue recovery certificates should be issued in respect of this cess.

3. Simultaneously, no free supply of mahua or fuel should be permitted by virtue of the imposition mentioned above:

Immediate compliance is requested

No. . . x/61 Dt. Bhopal the 61

Copy forwarded for immediate compliance to

1. Conservator of Forests, Bilaspur

2. All Divisional Forest Officers, Bilaspur Circle

3. Copy to C. F. Raipur Circle for similar action in this cess levied in any division of his Circle."

4. On April 24, 1959, the Madhya Pradesh High Courts judgment in Surajdin Laxmanlal v. State of M. P. declaring the collection of 71/2 per cent. illegal was reported in [1960] MPLJ 39. [LQ/MPHC/1959/132] Even after this decision, the Government continued to charge 71/2 per cent. extra money. Again, on August 31, 1961, the High Court of Madhya Pradesh in N. K. Doongaji v. Collector decided that the charging of 71/2 per cent. by the Government above the auction money was illegal. This judgment was reported in [1962] MPLJ 130. It is the appellants case that they came to know about this decision only in or about September, 1962. On October 17, 1964, they served a notice on the Government of Madhya Pradesh under section 80 of the Code of Civil Procedure requesting the refund of Rs. 54, 606, failing which, a suit for recovery would be filed ; and later they instituted Civil Suit No. 1-B of 1964 in the Court of the Additional District Judge, Jabalpur, on December 24, 1964. The Government resisted the suit on, inter alia, the ground of limitation. The trial court, taking the view that articles 62 and 96 of the First Schedule to the Limitation Act, 1908, were applicable and the period of limitation began to run from the dates the payments were made to the Government, held the suit to be barred by limitation and dismissed it. In appeal, the High Court took the view that article 113 read with section 17, and not article 24, of the Schedule to the Limitation Act, 1963, was applicable ; and held that the limitation began to run from October 17, 1961, on which date the Government decided not to charge extra 71/2 per cent. on the auction money, and as such, the suit was barred on December 17, 1964, taking into consideration the period of two months prescribed by section 80 of the Code of Civil Procedure. Consequently, the appeal was dismissed. The appellants petition for leave to appeal to this court was also rejected observing, "it was unfortunate that the petitioners filed their suit on December 24, 1964, and, as such, the suit was barred by time by seven days."Mr. M. V. Goswami, learned counsel for the appellants, submits, inter alia, that the High Court erred in holding that the limitation started running from October 17, 1961, being the date of the letter, exhibit D-23, which was not communicated to the appellants or any other contractor and, therefore, the appellants had no opportunity to know about it on that very date with reasonable diligence under section 17 and the High Court ought to allow at least a week for knowledge of it by the appellants in which case the suit would be within time. Counsel further submits that the High Court, while rightly discussing that section 17 of the Limitation Act, 1963, was applicable, erred in not applying that section to the facts of the instant case, wherefore, the impugned judgment is liable to be set aside.

5. Mr. Ujjwal A. Rana, learned counsel for the respondent, submits, inter alia, that October 17, 1961, having been the date on which the Government finally decided not to recover extra 71/2 per cent. above the auction money, the High Court rightly held that the limitation started from that date and the suit was clearly barred under article 24 or 113 of the Schedule to the Limitation Act, 1963 ; and that though the records did not show that the Government decision was communicated to the appellants, there was no reason why they, with reasonable diligence, could not have known about it on the same date.

6. The only question to be decided, therefore, is whether the decision of the High Court is correct. To decide that question, it was necessary to know what the suit was for. There is no dispute that 71/2 per cent. above the auction money was charged by the Government of Madhya Pradesh as mahua and fuel cess and the High Court subsequently held that it had no power to do so. In view of those writ petitions challenging that power, the Government asked the contractors to continue to pay the same pending Governments decision on the question ; and the appellants accordingly paid. Ultimately, on October 17, 1961, the Government decided not to recover the extra amount any more but did not yet decide the fate of the amounts already realised. There is no denial that the liquor contracts were performed by the appellants. There is no escape from the conclusion that the extra 71/2 per cent. was charged by the Government believing that it had the power, but the High Court in two cases held that the power was not there. The money realised was under a mistake and without authority of law. The appellants also, while paying, suffered from the same mistake. There is, therefore, no doubt that the suit was for refund of money paid under mistake of lawThe question is what was the law applicable to the case. Nul ne doit senrichir aux depens des autres-No one ought to enrich himself at the expense of others. This doctrine at one stage of English common law was remedied by "indebitatus assumpsit" which action lay for money "had and received to the use of the plaintiff". It lay to recover money paid under mistake, or extorted from the plaintiff by duress of his goods, or paid to the defendant on a consideration which totally failed. On abolition of "indebitatus assumpsit", courts used to imply a promise to pay which, however, in course of time, was held to be purely fictitious. Lord Mansfield in Moses v. Macferlan [1760] 2 Burr. 1005 at page 1012 explained the juridical basis of the action for money "had and received" thus:

"This kind of equitable action to recover back money, which ought not in justice to be kept, is very beneficial, and, therefore, much encouraged. It lies only for money which, ex aequo et bono", the defendant ought to refund ; it does not lie for money paid by the plaintiff which is claimed of him as payable in point of honour and honesty, although it could not have been recovered from him by any course of law; as in payment of debt barred by the statute of limitations, or contracted during his infancy, or to the extent of principal and legal interest upon a usurious contract, or, for money fairly lost at play ; because in all these cases, the defendant may retain it with a safe conscience, though by positive law he was barred from recovering. But it lies for money paid by mistake ; or upon a consideration which happens to fail ; or for money got through imposition (express or implied) ; or extortion ; or oppression ; or an undue advantage taken of the plaintiffs situation, contrary to laws made for the protection of persons under those circumstances. In one word the gist of this kind of action is that the defendant, upon the circumstances of the case, is obliged by the ties of natural justice and equity to refund the money."

In that case, Moses received from Jacob four promissory notes of 30sh each. He endorsed these to Macferlan who, by a written agreement, contracted that he would not hold Moses liable on the endorsement. Subsequently, however, Macferlan sued Moses on the notes in a Court of Conscience. The court refused to recognise the agreement and Moses was forced to pay. Moses then brought an action against Macferlan in the Kings Bench for money "had and received" to his use. Lord Mansfield allowed him to recover observing as above.

7. Courts in England have since been trying to formulate a juridical basis of this obligation. Idealistic formulations as "aequum et bonum" and "natural justice" were considered to be inadequate and the more legalistic basis of unjust enrichment is formulated. The doctrine of "unjust enrichment" is that, in certain situations, it would be "unjust" to allow the defendant to retain a benefit at the plaintiffs expense. The relatively modern principle of restitution is of the nature of quasi-contract But the English law has not yet recognised any generalised right to restitution in every case of unjust enrichment. As Lord Diplock has said, "there is no general doctrine of unjust enrichment recognised in English law. What it does is to provide specific remedies in particular cases of what might be classed as unjust enrichment in a legal system, i.e., based upon the civil law." In Sinclair v. Brougham [1914] AC 398 (HL), Lord Haldane said that law could not "de jure" impute promises to repay whether for money "had and received" otherwise, which may, if made de facto, it would inexorably avoid.

8. The principle of "unjust enrichment" requires : first, that the defendant has been "enriched" by the receipt of a "benefit" ; secondly, that this enrichment is "at the expense of the plaintiff" ; and thirdly, that the retention of the enrichment is unjust. This justifies restitution. Enrichment may take the form of direct advantage to the recipient wealth such as by the receipt of money or indirect one for instance where inevitable expense has been savedAnother analysis of the obligation is of quasi-contract. It was said : "if the defendant be under an obligation, from the ties of natural justice, to refund ; the law implies a debt, and gives this action founded in the equity of the plaintiffs case, as it were, upon a contract (quasi ex contractu) as the Roman law expresses it." As Lord Wright in Fibrosa Spolka Akcyjna v. Fairbairn Lawson Combe Barbour Ltd. [1943] AC 32 ; [1942] 2 All ER 122 (HL), pointed out, "the obligation is as efficacious as if it were upon contract. Such remedies are quasi contract or restitution and theory of unjust enrichment has not been closed in English law."

9. Section 72 of the Indian Contract Act deals with the liability of person to whom money is paid or thing delivered, by mistake or under coercion. It says:

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

Illustration (b) to the section is

"A railway company refuses to deliver up certain goods to the consignee, except upon the payment of an illegal charge for carriage. The consignee pays the sum charged in order to obtain the goods. He is entitled to recover so much of the charge as was illegally excessive."

Our law having been codified, we have to apply the law. It is true, as Pollock wrote in 1905 in the preface to the first edition of Pollock and Mullas Indian Contract and Specific Relief Acts

"The Indian Contract Act is in effect ... a code of English law. Like all codes based on an existing authoritative doctrine, it assumes a certain knowledge of the principles and the habits of thought which are embodied in that doctrine."

10. It is, therefore, helpful to know "those fundamental notions in the common law which are concisely declared, with or without modification by the text"There is no doubt that the instant suit is for refund of money paid by mistake and refusal to refund may result in unjust enrichment depending on the facts and circumstances of the case. It may be said that this court has referred to unjust enrichment in cases under section 72 of the Contract Act. See Shiv Shanker Dal Mills v. State of Haryana, AIR 1980 SC 1037 [LQ/SC/1979/446] ; U. P. State Electricity Board v. City Board, AIR 1985 SC 883 [LQ/SC/1985/45] and State of M. P. v. Vyankatlal, AIR 1985 SC 901 [LQ/SC/1985/109] .

11. The next question is whether, and if so, which provision of the Limitation Act will apply to such a suit. On this question, we find two lines of decisions of this court, one in respect of civil suits and the other in respect of petitions under article 226 of the Constitution of India. Though there is no constitutionally provided period of limitation for petitions under article 226, the limitation prescribed for such suits has been accepted as the guideline, though a little more latitude is available in the former.

12. A tax paid under mistake of law is refundable under section 72 of the Indian Contract Act, 1872. In STO v. Kanhaiya Lal Makund Lal Saraf [1959] SCR 1350 [LQ/SC/1958/108] , where the respondent, a registered firm, paid sales tax in respect of its forward transactions in pursuance of the assessment orders passed by the Sales Tax Officer for the years 1949 to 51 ; in 1952, the Allahabad High Court held in Budh Prakash Jai Prakash v. STO [1952] ALJ 332, that the levy of sales tax on forward transactions was ultra vires. The respondent asked for a refund of the amounts paid by filing a writ petition under article 226 of the Constitution. It was contended for the sales tax authorities that the respondent was not entitled to a refund because (1) the amounts in dispute were paid by the respondent under a mistake of law and were, therefore, irrecoverable, (2) the payments were in discharge of the liability under the Sales Tax Act and were voluntary payments without protest, and (3) inasmuch as the monies which had been received by the Government had not been retained but had been spent away by it, the respondent was disentitled to recover the said amounts. This court held that the term "mistake" in section 72 of the Indian Contract Act comprised within its scope a mistake of law as well as a mistake of fact and that, under that section, a party is entitled to recover money paid by mistake or under coercion, and if it is 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 receiving the money is bound to repay or return it though it might have been paid voluntarily, subject, however, to questions of estoppel, waiver, limitation or the like. On the question of limitation, it was held that section 17(1)(c) of the Limitation Act, 1963, would be applicable and that where a suit was to recover "monies paid under mistake of law, a writ petition within the period of limitation prescribed, i.e., within three years of the knowledge of the mistake, would also lie." It was also accepted that the period of limitation does not begin to run until the plaintiff has discovered the mistake or could, with reasonable diligence, have discovered itThe money may not be recoverable if, in paying and receiving it, the parties were in pari delicto. In Kiriri Cotton Co. Ltd. v. Ranchhoddas Keshavji Dewani [1960] AC 192, where the appellant company, in consideration of granting to the respondent a sub-lease asked for and received from him a premium of $ 10, 000 and the latter claimed refund thereof, the Privy Council held that the duty of observing the law was firmly placed by the Ordinance on the shoulders of the landlord for the protection of the tenant, and the appellant company and the respondent were not, therefore, in pari delicto in receiving and paying respectively the illegal premium, which, therefore, in accordance with established common law principles, the respondent was entitled to recover from the landlord and that the omission of a statutory remedy did not, in cases of this kind, exclude the remedy by money had and received. In the instant case also, the parties could not be said to be in pari delicto in paying and receiving the extra 71/2 per cent. Had the appellants not paid this amount, they would not have been given the contracts.

13. In D. Cawasji and Co. v. State of Mysore [1975] 2 SCR 511 [LQ/SC/1974/334] , the appellants paid certain amounts to the Government as excise duty and education cess for the years 1951-52 to 1965-66 in one case and from 1951-52 to 1961-62 in the other. The High Court struck down the provisions of the relevant Acts as unconstitutional. In writ petitions before the High Court claiming refund, the appellants contended that the payments in question were made by them under mistake of law; that the mistake was discovered when the High Court struck down the provisions as unconstitutional and the petitions were, therefore, in time but the High Court dismissed them on the ground of inordinate delay. Dismissing the appeals, this court held that where a suit would lie to recover monies paid under a mistake of law, a writ petition for refund of tax within the period of limitation would lie. For filing a writ petition to recover the money paid under a mistake of law, the starting point of limitation is from the date on which the judgment declaring as void the particular law under which the tax was paid was rendered. It was held in D. Cawasjis case [1975] 2 SCR 511 [LQ/SC/1974/334] that although section 72 of the Contract Act has been held to cover cases of payment of money under a mistake of law, as the State stands in a peculiar position in respect of taxes paid to it, there are perhaps practical reasons for the law according to a different treatment both in the matter of the heads under which they could be recovered and the period of limitation for recovery. P. N. Bhagwati J., as he then was, in Madras Port Trust v. Hymanshu International [1979] 4 SCC 176 [LQ/SC/1979/1] , deprecated any resort to the plea of limitation by a public authority to defect the just claim of citizens observing that, though permissible under law, such technical plea should only be taken when a claim is not well-foundedSection 17(1)(c) of the Limitation Act, 1963, provides that, in the case of a suit for relief on the ground of mistake, the period of limitation does not begin to run until the plaintiff had discovered the mistake or could, with reasonable diligence, have discovered it. In a case where payment has been made under a mistake of law as contrasted with a mistake of fact, generally, the mistake becomes known to the party only when a court makes a declaration as to the invalidity of the law. Though a party could, with reasonable diligence, discover a mistake of fact even before a court makes a pronouncement, it is seldom that a person can, even with reasonable diligence, discover a mistake of law before a judgment adjudging the validity of the law.

14. E. S. Venkataramiah J., as his Lordship then was, in Shri Vallabh Glass Works Ltd. v. Union of India [1985] 155 ITR 560 (SC), where the appellants claimed refund of excess duty paid under Central Excises and Salt Act, 1944, laid down that the excess amount paid by the appellants would have become refundable by virtue of section 72 of the Indian Contract Act if the appellants had filed a suit within the period of limitation and that section 17(1)(c) and article 113 of the Limitation Act, 1963, would be applicable.

15. In CST v. Auraiya Chamber of Commerce [1987] 167 ITR 458 [LQ/SC/1986/121] ; [1986] 3 SCC 50 [LQ/SC/1986/121] , the Supreme Court, in its decision dated May 3, 1954, in STO v. Budh Prakash Jai Prakash [1954] 5 STC 193 [LQ/SC/1954/84] having held that tax on forward contracts to be illegal and ultra vires the U. P. Sales Tax Act and that the decision was applicable to the assessees case, the assessee filed several revisions for quashing the assessment order for the year 1949-50 and for subsequent years which were all dismissed on the ground of limitation. On appeal to this court, Sabyasachi Mukharji J., while dismissing the appeal, held that money paid under a mistake of law comes within section 72 of the Contract Act; there is no question of any estoppel when the mistake of law is common to both the assessee and the taxing authority. His Lordship observed that section 5 of the Limitation Act, 1908, and article 96 of its First Schedule which prescribed a period of 3 years were applicable to suits for refund of illegally collected taxIn Salonah Tea Co. Ltd. v. Superintendent of Taxes, Nowgong [1988] 173 ITR 42 [LQ/SC/1987/872] ; [1988] 1 SCC 401 [LQ/SC/1987/872] , the Assam Taxation (on Goods Carried by Road or Inland Waterways) Act, 1954, was declared ultra vires the Constitution by the Supreme Court in Atiabari Tea Co. Ltd. v. State of Assam, AIR 1961 SC 232 [LQ/SC/1960/173] . A subsequent Act was also declared ultra vires by the High Court on August 1, 1963, against which the State of Assam and other respondents preferred appeals to the Supreme Court. Meanwhile, the Supreme Court, in a writ petition Khyerbari Tea Co. Ltd. v. State of Assam [1964] 5 SCR 975 [LQ/SC/1963/296] , declared on December 13, 1963, the to be intra vires. Consequently, the above appeals were allowed. Notices were, therefore, issued requiring the appellant under section 7(2) of theto submit returns. Returns were duly filed and assessment orders passed thereon. On July 10, 1973, the Gauhati High Court in its judgment in Loong Soong Tea Estates case (Civil Rule No. 1005 of 1969 decided on July 10, 1973) declared the assessment to be without jurisdiction. In November 1973, the appellant filed a writ petition in the High Court contending that, in view of the decision in Loong Soong Tea Estates case, he came to know about the mistake in paying the tax as per assessment order and also that he became entitled to refund of the amount paid. The High Court set aside the order and the notice of demand for tax under the but declined to order refund of the taxes paid by the appellant on the ground of delay and laches as, in the view of the High Court, it was possible for the appellant to know about the illegality of the tax sought to be imposed as early as in 1963, when the in question was declared ultra vires. Allowing the assessees appeal, Mukharji J., speaking for this court, held (at p. 45)

"In this case, indisputably, it appears that tax was collected without the authority of law. Indeed, the appellant had to pay the tax in view of the notices which were without jurisdiction. It appears that the assessment was made under section 9 (3) of the. Therefore, it was without jurisdiction. In the premises, it is manifest that the respondents had no authority to retain the money collected without the authority of law and as such the money was liable to be refunded."

16. The question there was whether, in the application under article 226 of the Constitution, the court should have refused refund on the ground of laches and delay, the case of the appellant having been that it was after the judgment in the case of Loong Soong Tea Estate that the cause of action arose. That judgment was passed in July, 1973. The High Court was, therefore, held to have been in error in refusing to order refund on the ground that it was possible for the appellant to know about the legality of the tax sought to be imposed as early as 1963 when the in question was declared ultra vires. The court observed (at p. 46 of 173 ITR)

"Normally speaking, in a society governed by rule of law, taxes should be paid by citizens as soon as they are due in accordance with law. Equally, as a corollary of the said statement of law, it follows that taxes collected without the authority of law as in this case from a citizen should be refunded, because no State has the right to receive or to retain taxes or monies realised from citizens without the authority of law."

17. On the question of limitation, referring to Suganmal v. State of M. P. [1965] 56 ITR 84 [LQ/SC/1964/303] ; AIR 1965 SC 1740 [LQ/SC/1964/303] , and Tilokchand Motichand v. H. B. Munshi [1969] 2 SCR 824 [LQ/SC/1968/360] , his Lordship observed that the period of limitation prescribed for recovery of money paid by mistake started from the date when the mistake was known. In that case, knowledge was attributable from the date of the judgment in Loong Soong Tea Estates case on July 10, 1973. There had been a statement that the appellant came to know of that matter in October, 1973, and there was no denial of the averment made. On that ground, the High Court was held to be in error. It was, accordingly, held that the writ petitions filed by the appellants were within the period of limitation prescribed under article 113 of the Schedule read with section 23 of the Limitation Act, 1963It is thus settled law that, in a suit for refund of money paid by mistake of law, section 72 of the Contract Act is applicable and the period of limitation is three years as prescribed by article 113 of the Schedule to the Limitation Act, 1963, and the provisions of section 17(1)(c) of that Act will be applicable so that the period will begin to run from the date of knowledge of the particular law whereunder the money was paid being declared void ; and this could be the date of the judgment of a competent court declaring that law void.

18. In the instant case, though the Madhya Pradesh High Court in Surajdin Laxmanlal v. State of M. P. declared the collection of 71/2 per cent. illegal and that decision was reported in [1960] MPLJ 39 [LQ/MPHC/1959/132] , the Government was still charging it saying that the matter was under consideration of the Government. The final decision of the Government as stated in the letter dated October 17, 1961, was purely an internal communication of the Government, copy whereof was never communicated to the appellants or other liquor contractors. There could, therefore, be no question of the limitation starting from that date. Even with reasonable diligence, as envisaged in section 17(1)(c) of the Limitation Act, the appellants would have taken at least a week to know about it. Mr. Rana has fairly stated that there was nothing on record to show that the appellants knew about this letter on October 17, 1961, itself or within a reasonable time thereafter. We are inclined to allow at least a week to the appellants under the above provision. Again Mr. Rana has not been in a position to show that the statement of the appellants that they knew about the mistake only after the judgment in Doongajis case [1962] MPLJ 130, in or about September, 1962, whereafter they issued the notice under section 80 of the Code of Civil Procedure was untrue. This statement has not been shown to be false. In either of the above cases, namely, of knowledge one week after the letter dated October 17, 1961, or in or about September, 1962, the suit would be within the period of limitation under article 113 of the Schedule to the Limitation Act, 1963In the result, we set aside the judgment of the High Court, allow the appeal and remand the suit. The records will be sent down forthwith to the trial court to decide the suit on merits in accordance with law, expeditiously. The appellants shall be entitled to the costs of this appeal

19. Appeal allowed.