Current AffairsIndia

State cannot act like Shylock and squeeze citizens of money erroneously paid: Kerala High Court

The Kerala High Court on Tuesday made scathing remarks over the State;s failure to refund an erroneous duplicate payment of certain dues, commenting that the State and its authorities could not act in a Shylockian manner and squeeze money from its citizens (Seahorse Ship Agencies v. Union of India).


Justice N Nagaresh described the failure to make the payment an unjust enrichment, adding 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 Court was hearing a petition moved by a shipping agent seeking the Court’s intervention in obtaining a refund for a duplicate payment erroneously made as ‘light dues’ to the Director General of Lighthouses and Lightships (DGLL).

After the agent’s first attempt at making the payment via the web portal failed to generate a receipt, the agent made a manual payment of the amount a second time, believing the first payment to not have been successful.

On the following day, the company received a receipt confirming the online payment.

Though the duplicate payment was made in 2016, the company took steps to recover the same only in 2018. The petitioner submitted in Court that the company’s auditor had resigned. After a representation, an application for a refund, and an appeal rejecting the shipping agent’s claim (the appeal was rejected on the ground that it was filed after the limitation period), the agent approached the High Court.

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, the Customs authorities and the DGLL, asserted that the application was for an excess payment barred by statutory limitation.

The Court distinguished an excess payment from a double payment of light dues. Light dues, the Court explained, were collected from shipping companies/agents when ships entered a certain port for the maintenance of lighthouses along the coast. The dues paid related to the tonnage of the ship, which shipping companies/agents were expected to accurately measure.

“Excess payment can occur when payment of Light Dues is made disproportionately disregarding the tonnage of the ship”, Justice Nagaresh stated.

Expounding on this theme, Justice Nagaresh emphasized that the petitioner’s payment was only a dual or duplicate payment, a result of the web portal’s failure to generate a receipt when the payment was paid online. Therefore, it could not be subject to the limitation for applying for the recovery of excess payments.

The Court stated further that the amount towards light dues was properly remitted by the petitioner, and the only reason for the duplicate payment was a system failure. Therefore, the State could not hold on to the amount, the Court concluded.

Highlighting that the State could not hold on to erroneous, forced, or inadvertent payments by bringing in the defence of limitation, the petition was allowed.

Advocate Joy Thattil Ittoop appeared for the petitioner, Central Government Counsel KR Rajkumar represented the DGLL and the Centre, while Standing Counsel Sreelal N Warrier argued for the Customs Department.


Via Bar & Bench
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