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hc karella 3

State cannot not hold on to erroneous, forced or inadvertent payments by bringing in the defense of limitation: Kerala High Court

The State and its authorities could not act in a Shylockian manner and squeeze money from its citizens. The Kerala High Court made this remark on observing State’s failure to return the money paid twice for a certain due by the Petitioners. The High Court presided over by J.N. Nagaresh laid down this ratio in the case of M/s. Seahorse Ship Agencies Pvt. Ltd. Vs. Union of India & Ors., [W.P. (C) No. 17924 of 2020].

The brief facts of the case are that the Petitioner i.e. a shipping agent seeking an intervention from the Court in order to obtain a refund for a payment made twice by them for certain ‘light dues’ to the Director General of Lighthouses and Lightships (DGLL). The agent contended that they made an online payment on the first attempt, but the web portal failed to generate a receipt and so the petitioner believed that the first payment made was not successful. The Petitioner manually paid the amount in the second attempt believing that the first online payment was not successful. On the following day the Petitioner received a receipt confirming the online payment. The Petitioner had made duplicate payments in 2016 but efforts to recover the same were made in 2018 and so the DGLL refused to refund the amount as it was beyond the period of limitation. Hence the Petition filed a writ petition to recover the amount paid twice by them.

The Petitioner stated that the reason for the delay in filing for the refund was because their auditor had resigned. Further, relying on provisions of the Lighthouse Act, 1927, the petitioner pointed out that a limitation period was prescribed under the legislation only for making applications for excess payments, rather than for the reimbursement of an amount paid twice. The Respondents submitted that the application was for an excess payment barred by statutory limitation.

The Court after analyzing the submissions was of the opinion that, “the dual payment made by the petitioner in this writ petition cannot be described as excess payment, in the sense contemplated by Section 19 of the Lighthouse Act, 1927. What is effected by the petitioner is a dual payment or duplicate payment. The petitioner was forced to make such dual payment due to the failure of the web portal system to generate a receipt, when the petitioner made the first payment through the web portal. This Court is of the view that Section 19 is not intended to operate in such circumstances. If Section 19 does not apply to the dual payment made by the petitioner, then there is no question of a period of limitation under the Customs Act for making an application for refund of the dual payment.”

The Court further added that, “The State is not expected to get itself unduly enriched by erroneous or forced or inadvertent payments of money made by its citizens. The State is not expected to bring in defence of limitation in respect of such payments resulting in unjust enrichment. The claim of the petitioner for refund of the dual payment, in the circumstances, would not fall within the ambit of Section 19 of the Customs Act.”

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