SUPREME COURT OF INDIA
State of Uttar Pradesh and Others
Vs
Vam Organic Chemicals Limited and Others
Civil Appeal Nos. 5416-5424 of 2000 with I.A.Nos. 2, 13-21 In C.A.No. 5425/2000, I.A.Nos. 29-46 in C.A.Nos. 5427-5435/2000 and I.A.No. 2 In C.A.No. 8382/2003
(Arijit Pasayat and S. H. Kapadia, JJ)
18.10.2006
ARIJIT PASAYAT, J.
These applications are filed by respondents, in the appeals filed by the State
of Uttar Pradesh i.e., Civil Appeal Nos. 5416-5424 of 2000. State's appeals
were dismissed by a judgment of this Court reported in State of U.P. and others
v. Vam Organic Chemicals Ltd. and others[. 2004 (1) SCC 225. In paragraph
46 of the judgment it was noted that no payment had been made by the
respondents in view of various orders of stay passed by the High Court and this
Court and in fact certain Bank Guarantees were furnished pursuant to the
directions of the High Court and this Court. In that background this Court
noted in the said paragraph that there was no question of any refund as there
was no levy permitted in law, and the question of realization of the amount did
not arise. These interlocutory applications have been filed stating that
certain inaccuracies factually have crept in. In fact, certain payments were
made and, therefore, the respondents in the Civil Appeals were entitled to
refund.
2. In response, learned counsel for the appellant-State submitted that though
it is factually correct that certain payments were made, but this Court has
rightly held that the respondents were not entitled to any refund. The well
known concept of unjust enrichment as highlighted by this Court in Mafatal
Industries Ltd. and others v. Union of India and others[. 5 were pressed into service. It was also pointed out that
though the prayer of the respondents appears to be innocuous, it is really not
so. On the contrary, for the amounts covered by the bank guarantees also the
respondents had collected various amounts from the customers. By seeking a
correction in respect of the cash payments, respondents want to avoid the
application of the unjust enrichment policy. Reliance was placed on a decision
of this Court in Union of India v. Solar Pesticide Private Limited
(SC).].
3. By way of reply learned counsel for the respondents-applicants submitted
that correction is needed in respect of cash payment made and can in no way be
related to collections, if any made, which were covered by the bank guarantees
furnished.
4. Though respondents have no objection to adjudication of the issue of unjust
enrichment so far as the deposits made in cash are concerned, it is stated that
same cannot be a ground to reopen a closed issue relating to bank guarantees
which were furnished, even if it is conceded for the sake of argument that for
the concerned period certain collections were made.
5. Unjust enrichment is the retention of a benefit conferred by another,
without offering compensation, in circumstances were compensation is reasonably
expected. It is a benefit obtained from another, not intended as a gift and not
legally justifiable, for which the beneficiary must make restitution or
recompense.
6.Keeping in view the principles of Unjust Enrichment as highlighted in
Mafatlal's case (supra) and Solar Pesticides' case (supra) the inevitable
conclusion is that whatever has been passed on to the customer by the
respondents has to be tested on the touchstone of the principle of unjust
enrichment.
7. We, therefore, dispose of the I.As. with the following directions:
1. Within a period of four weeks, respondents shall file an application before
the appropriate authority praying for refund of the amount deposited by them:
2.While examining the claim the concerned authority shall keep inview the
principles of "Unjust Enrichment" in respect of all amounts which
have been passed on to any customer in essence that it has been collected from
him;
3. Exemption shall not be extracted only in respect of cash payments and it
shall also extend to the period for which the bank guarantees were furnished.
If during the relevant period any collection has been made the authority shall
examine whether by retention of the amount so collected by the respondents will
there be unjust enrichment so far as the respondents are concerned.
8. The applications are accordingly disposed of.