Madhya Pradesh High Court
The State Of Madhya Bharat vs Behramji Dungaji And Co. on 6 September, 1957
Equivalent citations: AIR 1958 MADHYA PRADESH 71, ILR (1957) MP 556, 1958 MPLJ 8, 1958 JABLJ 83
JUDGMENT Dixit, J.
1. The respondents in this appeal were plaintiffs in an action against the appellant to recover Rs. 95,631-14-3 together with interest thereon at the rate of six per cent. per annum from 1st November 1950 to 15th June 1951, amounting to Rs. 3,108 and further interest on the total amount of Rs. 98,739-14-6 from the date of the suit till the date of realisation. The suit was tried by the District Judge of Ratlam and judgment was given for the plaintiff for an amount of Rs. 95,631-14-3 with proportionate costs.
2. The plaintiffs' case was that on 12th January 1947, H. H. Maharaja Sajjan Singh of Ratlam as the sovereign Ruler of the former Ratlam State entered into an agreement with them for the manufacture and distillation of country liquor and for supplying it wholesale to warehouses at Ratlam and Bajna at the rates mentioned therein for a period of seven years from 1st October 1946; that on a representation made by the plaintiffs on 9th May 1947, to the Ruler for an increase in the agreed rates on account of the costs of production having gone up, the Maharaja passed an order on 25th September 1947, raising the rates at which the plaintiffs were to be paid for the liquor supplied by them from 1st February 1947; that when in October 1947, the Council of Ministers of the State recommended to the Ruler that the enhanced rates should be made effective a week after the acceptance of their recommendation, the Maharaja rejected the submission of the Council and on 16th December 1947, passed an order affirming his previous order of 25th September 1947, and directing the State authorities to pay the balance due to the plaintiffs in instalments spread over two years; that subsequently in response to a letter of the Commissioner of Excise of Ratlam State, they submitted a bill claiming Rs. 95,631-14-3 as the balance due to them at the enhanced rate for the liquor supplied by them from 1st February 1947 to 23rd December 1947; and that despite several reminders this amount remained unpaid even until the administration of Ratlam State was handed over to the Raj-Pramukh of Madhya Bharat in accordance with the Covenant entered into on 22nd April 1948, by the Rulers of Gwalior, In-dore and certain other States of Central India including Ratlam State for the formation of Madhya Bharat.
The plaintiffs proceeded to aver that by Article VI of the Covenant and the provisions of the Constitution which was accepted as the Constitution for the State of Madhya Bharat by a supplementary Covenant entered into by the Rulers of the covenanting States towards the end of 1949, the Madhya Bharat State, as the successor State, became liable to pay to them the amount of Rs. 95,631-14-3 which was due to them from the Ratlam State.
The plaintiffs further stated that on 19th June 1948, the Regional Commissioner purported to cancel the orders dated 25th September 1947 and 16th December 1947, of H. H. Maharaja Sajjan Singh of Ratlam, but the order was illegal as the Regional Commissioner had no power to rescind the orders. As the Madhya Bharat Government did not accept the liability of the plaintiffs, they instituted a suit, out of which this appeal arises, claiming Rs. 95,631-14-3 besides interest as the balance due to them, on account of the enhanced rates for the liquor supplied by them to the Ratlam State.
3. The defendant-State admitted that on 12th January 1947, an agreement was concluded between the plaintiffs and the Ruler of Ratlam State for the supply of country liquor for a period of seven years from 1st October 1946, to the State warehouses at Ratlam and Bajna at the rates specified in the contract and that H. H. Maharaja Sajjan Singh subsequently increased the rates and made the enhanced rates effective from 1st February 1947.
The suit was resisted on the grounds : (i) that the order dated 16th December 1947 of H. H. Maharaja Sajjan Singh was validly rescinded by the Regional Commissioner on 19th June 1948; (ii) that the aforesaid order of H. H. Maharaja Sajjan Singh did not create any contractual right in regard to the enhancement of rates but mainly granted gratuitous concessions; (iii) that, therefore, there was no obligation either on the Ratlam State or on the Madhya Bharat State under Article VI of the Covenant to pay the amount claimed by the plaintiffs; and (iv) that the plaintiffs had no right in law enabling them to bring the suit.
4. By a judgment, which is none too clear either in language or in reasoning, the learned District Judge has in effect held that the defendant-State had failed to prove that the Regional Commissioner had authority to cancel the orders dated 25th September 1947 and 16th December 1947 of the Ruler of Ratlam State; that the result of those orders was to bring in existence a contract between the parties in regard to the payment of liquor at the enhanced rates from 1st February 1947; that even if the orders were in the nature of the grant of a concession, still the plaintiffs had acquired thereunder a right to receive payment at the increased rates and that their right was one enforceable in a Court of law; and, that apart from. Article VI of the Covenant and Article 295 of the Constitution, on the principles of International Law the Madhya Bharat Government, as the successor State, was liable to pay the amount of Rs. 95,631-14-3 claimed by the plaintiffs.
5. The arguments put forward by the learned Government Advocate on behalf of the appellant State may be summarised thus: the orders dated 25th September 1947 and 16th December 1947 of H. H. Maharaja Sajjan Singh were cancelled by the Regional Commissioner; that the burden of proving that the order of the Regional Commissioner dated 19th June 1948, was illegal lay on the plaintiffs and the defendant-State should not have been called upon to establish that the Regional Commissioner's order was a valid order; that the plaintiffs had failed to discharge the burden and had, therefore, no right whatever to receive any payment under the rescinded orders of the Maharaja; that the orders dated 25th September 1947 and 16th December 1947, of the Ruler of Ratlam State did not novate the contract concluded on 12th January 1947, as the plaintiffs, having already supplied liquor during the period from 1st February 1947 to 23rd December 1947, and having received payment therefor according to the rates mentioned in the original contract, there was no subsisting contract which could be novated; that the order merely sanctioned ex-gratia payment to the plaintiffs; and that, therefore, there was no obligation-binding on the Ratlam State which the plaintiffs could enforce by a suit.
It was further argued that even if the-plaintiffs acquired a right against the Ratlam State to be paid at the revised rates for the liquor supplied by them the right could not be enforced against the State of Madhya Bharat in the Municipal Courts of that State when the new State had not recognised the right; that Article VI of the Covenant was not a provision recognising such rights as the subjects of Ratlam State had against that State; that the right to receive payment at higher rates did not fall either under Clause (b) or Clause (c) of Article VI of the Covenant; that the plaintiffs could not avail themselves of Article VI as they were' not parties to the Covenant; and that their claim founded on that Article was not justiciable under Article 363 of the Constitution of India as it involved a dispute arising out of the provisions of the Covenant.
6. In answer, Mr. Bhatt. learned counsel appearing for the respondents, contended that it was for the appellant-State to show that the Regional Commissioner was clothed with the necessary authority to cancel the orders of H. H. Maharaja Sajjan Singh; that despite several adjournments obtained for that purpose from the trial Court, the appellant failed to-prove the fact that the Regional Commissioner was invested with the power to cancel the orders of H. H. Maharaja Sajjan Singh; that the effect of the orders of 25th September 1947 and 16th December 1947, was to vary the contract of 12th January 1947, in regard to the rates; that the contract was for seven years from 1st October 1946, and the Madhya Bharat Government having accepted the continuance of the supply of liquor on the basis of substituted rates during the remaining period of the contract till 1953, it was not now open to them to say that there was no novated contract; that in any case the orders dated 25th September 1947 and 16th December 1947, of H. H. Maharaja Sajjan Singh of Ratlam embodied the sovereign will of the Ruler who was the supreme Legislature, the supreme Judiciary and the supreme Head of the Executive in the State and were binding as law; that the respondents had, therefore, a statutory right which was recognised in Madhya Bharat, first by Ordinance No. 1 of 1948, and then by the Madhya Bharat Regulation of Government Act (No. 1 of 1948) which gave continuity to the laws in force in the covenanting States; that even if the said orders of the Maharaja were regarded as executive acts, they being the orders of the supreme Executive in the State created a right in favour of the plaintiffs and an obligation against the Ratlam State which evolved under Article VI(1) (b) of the Covenant on the State of Madhya Bharat; that Clauses (b) and (c) of Article VI (1) did not create any rights which the inhabitants of a State did not possess in that State, it merely recognised them; and that statutory recognition was given to those rights by Section 3 of Act No. 1 of 1948 which provided that when in pursuance of Clause (b) of para. (1) of Article II of the Covenant any State is included in Madhya Bharat, the provisions of the second paragraph of Article VI of the Covenant shall immediately come into force; that there was no dispute arising out of the Covenant attracting the bar under Article 363 of the Constitution; and that plaintiffs were merely seeking to enforce a right under a law of the Ratlam State which continued to be in force after the formation of Madhya Bharat, and in any case a right which received statutory recognition by Section 3 of Act No. 1 of 1948.
7. On the arguments of the learned counsel appearing for the parties, three distinct questions arise for consideration, namely, (i) first whether it has been proved in the case that the orders dated 25th September 1947 and 16th December 1947, of the Maharaja of Ratlam were validly rescinded by the Regional Commissioner; (ii) secondly, whether under the orders of the Maharaja the plaintiffs acquired an enforceable right against the Ratlam State of being paid for the liquor supplied by them at the rates substituted by those orders; and (iii) thirdly, whether, if they did acquire this right, it could be asserted in a Court of law against the State of Madhya Bharat, on the Ratlam State ceasing to exist and becoming a part of Madhya Bharat and after the coming into force of the Constitution.
8. It would be convenient and logical to deal first with the question relating to the rescission of the orders of the H. H. Maharaja Sajjan Singh. It is common ground that on 19th June 1948, the Regional Commissioner made an order purporting to cancel the orders in question passed by the Maharaja. The questions whether the order placed on record was the one which the Regional Commissioner passed on 19th June 1948, and whether he was competent to cancel the orders of the Maharaja were, however, matters of proof, the burden of establishing these facts clearly lay on the appellant-State.
For, though the plaintiffs, anticipating the pleas of the State, stated in the plaint that the order of the Regional Commissioner purporting to cancel the orders of the Maharaja was not valid, it was the appellant who knew the circumstances relating to the making and the validity of the order of the Regional Commissioner and who stood to gain by proving that the orders of the Maharaja were validly cancelled by the Regional Commissioner.
The appellant failed to produce any evidence to establish these facts though the hearing of the case was thrice adjourned for the purpose. It was at the stage of the arguments that the appellant sought leave to tender in evidence an order of Maharaja Lokendra Singh, the successor of Maharaja Sajjan Singh, who had in the meantime died, relating to the administration of his State during his absence from India. The learned District Judge rightly refused the leave.
In the absence of any evidence in support of the pleas of the appellant that the Regional Commissioner by an order dated 19th June 1948, validly rescinded the order of the Maharaja Sajjan Singh, learned Government Advocate felt himself constrained to resort to the presumption under Section 114, illustration (e) of the Evidence Act, and to argue that when the fact that an order was made by the Regional Commissioner purporting to cancel the orders of Maharaja Sajjan Singh was not disputed, then, in the absence of anything to suggest that the order was invalid, it should be taken that it was a valid one.
In my opinion, the presumption under Section 114, illustration (e) does not in any way assist the appellant. Section 114, illustration (e) authorises the presumption that a particular judicial or official act, which has been performed, has been performed regularly. But it does not authorise the presumption without any evidence that the act has been performed or that it is a valid one. The presumption under that section is as regards the manner of doing an official act and not as regards its validity.
This view is supported by the decision of a Division Bench of the Calcutta High Court in B. Walvekar v. King-Emperor, ILR 53 Cal 718: (AIR 1926 Cal 966) (A). In the Calcutta case, a question as to the validity of a warrant issued under Section 46 of the Calcutta Police Act was under consideration. That section authorised the issue of a warrant when after certain preliminaries had been complied with the issuing officer had reason to believe that any house, room or place was being used as a common gaming house.
In that case, the officer issuing the warrant had deposed that it had appeared to him that there was cause to suspect that the premises in question were being used and kept as and for a common gaming house. It was argued before the learned Judges of the Calcutta High Court that under Section 114, illustration (e), it should be presumed that all acts necessary before the issue of a warrant had been properly performed. Rejecting this contention, the Division Bench observed -
"The learned Magistrate seems to think that Section 114, illustration (e), of the Indian Evidence Act, covers this case and that we may presume that official and judicial acts have been regularly performed, i.e., that the acts necessary before issue of a warrant of this description were properly performed. This argument, as I understand it, has been employed for the purpose of doing away with the necessity for proof of compliance of the preliminaries referred to above, namely 'information on oath' and of 'due enquiry' before issue of warrant.
Having regard, however, to what I have al-ready held about the validity of the warrant, Section 114, illustration (e), of the Indian Evidence Act, cannot in my opinion be relied upon in this case. The meaning of that provision is that if an official act is proved to have been done, it will be presumed to have been regularly done.
In other words, as has been laid down by Mr. Justice Mitter, where under an Act certain things are required to be done before any liability attached to any person in respect of any right or obligation, it is for the person who alleges that that liability has been incurred to prove that the things prescribed in the Act have been actually done: see Ashanullah v. Trilochan, ILR 13 Cal 197 (B)."
From these observations it is clear that the presumption under Section 114, illustration (e), Indian Evidence Act, is not with regard to the doing of an official act or as to its validity, but it is only as regards the manner of doing it.
9. Even if the order of the Regional Commissioner dated 19th June 1948, placed on record, is taken into consideration and read with the order passed by Maharaja Lokendra Singh on 11th May 1948, it is clear that the order of the Regional Commissioner is on the face of it not a valid order. The order which was passed by Maharaja Lokendra Singh on 11th May 1948, runs as follows:--
"As I am going out of India, it is necessary to pass orders regarding the disposal of work by the Council. Hitherto I have been approving all the resolutions of the Council but now decisions passed by the Council unanimously may be given effect to and orders issued thereon at once. Cases not decided by the Council unanimously but only by majority should be submitted to the Regional Commissioner for final approval and orders. In case of emergency and in urgent important cases the Chief Minister may issue an order on his own responsibility even if he is not in agreement with the majority, pending final order from the Regional Commissioner."
It will be seen from the above order that the Regional Commissioner was empowered to pass final orders only in those cases which originated in the Council and on which there was no unanimous opinion in the Council but only a majority opinion. The order, which has been produced in the case as the order of the Regional Commissioner, does not at all show that a proposal for a review of the orders of H. H. Maharaja Sajjan Singh originated in the Council, and that there was no unanimity of opinion in the Council on the proposal but only a majority of the members of the Council were in favour of it.
There is also nothing to show that it was within the competence of the Council of Ministers of Ratlam State to moot a proposal for review of the orders passed by the Ruler of the State. The order of the Regional Commissioner dated 19th June 1948, on the other hand, indicates that the Chief Minister of Ratlam State on his own initiative recommended to the Regional Commissioner to set aside the orders of Maharaja Sajjan Singh passed on 25th September 1947 and 16th December 1947. In these circumstances, it cannot clearly be held that the two orders in question passed by Maharaja Sajjan Singh were rescinded by the Regional Commissioner and that the Regional Commissioner had the power to do so.
10. The next question to consider is whether the orders dated 25th September 1947 and 16th December 1947, of H. H. Maharaja Sajjan Singh gave any rights to the respondents to receive payment for the liquor supplied by them from 1st February 1947 to 23rd December 1947, at the rates specified in those orders.
The burden of the argument of the learned Government Advocate on this question was that Section 62 of the Contract Act presupposes that the original contract is still capable of performance and as, for the supply of liquor for the above period the respondents had already received payment from the Ratlam State at the original rates, there was no subsisting contract which could be novated by a change in the rates. The argument is based on a misconception.
The contract for the supply of liquor at the rates agreed to on 12th January 1947, was for a period of seven years from 1st October 1946. It cast an obligation on the plaintiffs to supply liquor till 30th September 1953, and on the Ruler of Ratlam State to pay the plaintiffs at the scheduled rates. If there had been a breach of the contract, the defaulting party would have been liable to pay to the other party money damages which would have put him in as good a position as that in which full performance would have put him.
It is, therefore, fallacious to argue that in respect of that period, short of the full term of the contract, for which the plaintiffs received payment at the original rates for the liquor supplied by them, there was a separate contract which had been completely performed, and that, therefore, there could be no novation in respect of the rates of the liquor supplied during that period.
It is unnecessary to pursue the point further as the plaintiff-respondents rely not so much on there being a contractual right in their favour under the orders dated 25'th September 1947 and 16th December 1947, as those orders being the orders of the supreme legislative & executive authority in the Ratlam State conferring on them a right to receive payment from the Ratlam State for the liquor supplied by them at the substituted rates so long as those orders stood and had not been varied by the Ruler.
In support of the contention that the orders of the Ruler of the Ratlam State as expressions of the sovereign will of the Maharaja of Ratlam were binding on the State as any other law, the plaintiffs relied mainly on the decision of the Supreme Court in Ameer-un-Nissa Begum v. Mahboob Begum, AIR 1955 SC 352 (C). That the limitation on the exercise of the sovereign rights in external affairs because of the paramountcy of the British Crown did not deprive the Ruler of Ratlam State of Majestasand that in regard to internal matters he was an absolute sovereign is now a matter of history.
It cannot be disputed, and has not been disputed, before us. That the said orders had the effect of law is clear from the decisions of the Supreme Court in AIR 1955 SC 352 (C) and Director of Endowments, Government of Hyderabad v. Akram Ali, (S) AIR 1956 SC 60 (D). Both these cases related to the nature and effect of certain Firmans issued by the Nizam of Hyderabad. In AIR 1955 SC 352 (A), the Nizam had issued a Firman directing that the report of a Commission appointed by him to advise on a case of succession of a deceased Nawab, be implemented.
10a. The Supreme Court observed:--''The determination of all these questions depends primarily upon the meaning and effect to be given to the various 'Firmans' of the Nizam which we have set out already. It cannot be disputed that prior to the integration of Hyderabad State with the Indian Union and the coming into force of the Indian Constitution, the Nizam of Hyderabad enjoyed uncontrolled sovereign powers.
He was the supreme Legislature, the supreme Judiciary and the supreme Head of the Executive, and there were no constitutional limitations upon his authority to act in any of these capacities. The 'Firmans' were the expressions of the sovereign will of the Nizam and they were binding in the same way as any other law -- nay, they would override all other laws which were in conflict with them. So long as a particular 'Firman' held the field, that alone would govern or regulate the rights of the parties concerned, though it could be annulled or modiried by a later 'Firman' at any time that the Nizam willed." In the other case, (S) AIR 1956 SC 60 (D), a Firman of the Nizam directing the Ecclesiastical Department to supervise a Dargah until the rights of the contending parties were enquired into and decided by a Civil Court came up for consideration before the Supreme. Court. It was observed:--
"Now the Nizam was an absolute sovereign, regarding all domestic matters at that time and his word was law. It does not matter whether this be called legislation or an executive act or a judicial determination because there is in fact no clear-cut dividing line between the various functions of an absolute Ruler whose will is law. Whatever he proclaimed through his Firmans had the combined effect of law and the decree of a Court."
The rule deducible from these two decisions is that if the Ruler of an Indian State was an absolute sovereign regarding all domestic matters, then his will as expressed in his order was the law of the land. Learned Government Advocate did not say anything even to suggest that the position of the Ruler of the Ratlam State was different from that of the Nizam in regard to internal sovereignty and that the decisions of the Supreme Court referred to above were inapplicable here.
The question whether a particular order of such a Ruler did or did not confer any right on any party and whether it cast an imperfect or a perfect obligation on the State in regard to the matters dealt with by the order would of course be a matter of construction of the or-der. Applying the rule indicated in the two decisions of the Supreme Court, it must be held that under the orders dated 25th September 1947 and 16th December 1947, whether viewed as legislative acts or as executive acts, there was a binding obligation on the Ratlam State-authorities to pay to the plaintiff-respondents the enhanced rates for the liquor supplied by them.
11. On the third question whether the plaintiffs could enforce their right to be paid at revised rates under the two orders of the Ruler of Ratlam State against the Madhya Bharat State, learned Government Advocate relied on the decisions of the Supreme Court and of the Privy Council which have laid it down that when a territory is acquired by a sovereign State, whether by cession following a treaty or by occupation, the rights which the inhabitants of the acquired territory had enjoyed against its former sovereign power avail them nothing against the new sovereign power and cannot be asserted in the Courts established by the new sovereign power except so far as they are recognised by the new sovereign power, and for this purpose a reference was made to the decisions in Rajinder Chand v. Mt. Sukhi, (S) AIR: 1957 SC 286 (E) ; Secy, of State for India v. Bai Rajbai, AIR 1915 PC 59 (F); Nayak Vajesingjr v. The Secretary of State, AIR 1924 PC 216 (G) and Asrar Ahmad v. Durgah Committee, AIR 1947 PC 1 (H).
He argued that the rights which the subjects of the covenanting States had against their former Rulers had not been recognised by the State of Madhya Bharat. The principle of international law on which the learned Government Advocate relied does not admit of any doubt and the cases cited by him are merely illustrative of that principle.
On that principle it is clear that for the purpose of determining whether the respondents have an enforceable right against the appellant-State, it is necessary to see whether the Madhya Bharat State recognised the rights which the subjects of the covenanting States had against or under their former Rulers.
That recognition is to be found in Section 4 of the Regulation of Government Act (No. 1 of 1943), and Article VI of the Covenant read with Section 3 of Act No. 1 of 1948. By Section 4 (and by the analogous section in Madhya Bharat Ordinance No. 1 of 1948 which was replaced by Act No. 1 of 1948), it was provided as follows:--
"When the administration of any covenanting State has been taken over by the Raj Pramukh or when any State has merged in the United State as aforesaid, all laws, Ordinances, Acts, Rules, Regulations, etc., having the force of law in the said State shall continue to remain in force until repealed or amended under the provisions of the next succeeding section, and shall be construed as if references in them to the Ruler or Government of the State were references to the Raj Pramukh or the Government of the United State respectively."
This section gave continuity to the laws of the covenanting States. The words "etc., having the force of law in the said State' in Section 4 indicate that any provision in the covenanting States having the character or having the force of law was continued in Madhya Bharat by Section 4, Now if the orders dated 25th September 1947 and 16th December 1947, of Maharaja Sajjan Singh of Ratlam had the effect of law, as I think they had, on the authority of (S) AIR 1956 SC 60 (D) and AIR 1955 SC 352 (C), then under Section 4 of Act No. 1948 those orders having the force of law in Ratlam State were continued after the formation of Madhya Bharat.
By the continuation of those orders, the plaintiff-respondents' right received legislative recognition by the Madhya Bharat State and became enforceable against the Madhya Bharat State in its Municipal Courts. Apart from Section 4, the same conclusion follows from Article VI of the Covenant read with Section 3 of Act No. 1 of 1948. Article VI of the Covenant states:--
"(1) The Ruler of each covenanting State shall, as soon as may be practicable, and in any event not later than the first day of July 1948, may make over the administration of his State to the Raj Pramukh; and thereupon -
(a) ..........
(b) all duties and obligations of the Ruler pertaining or incidental to the Government of the Covenanting State shall devolve on the United State and shall be discharged by it;
(c) all the assets and liabilities of the covenanting State shall be the assets and liabilities of the United State;
(d) ..........
(2) When in pursuance of any such agreement of merger as is referred to in Clause (b) of para. (1) of Article II, the administration of any other State is made over to the Raj Pramukh, the provisions of Clauses (a), (b), (c) and (d) of para. (1) of this Article shall apply in relation to such States as they apply in relation to a covenanting State."
To my mind, when Clauses (b) and (c) of Article VI of the Covenant spoke of the duties and obligations of a Ruler of a covenanting State pertaining or incidental to the Government of that State devolving on Madhya Bharat and of their being discharged by the State of Madhya Bharat, and of the assets and liabilities of the covenanting States becoming the assets and liabilities of Madhya Bharat, there was a clear recognition by the new State of Madhya Bharat of the obligations and liabilities of the covenanting States including the State of Ratlam.
These provisions did not create any rights, as the learned Government Advocate seemed to think. They are provisions of the devolution and recognition of pre-existing rights and obligations. Learned Government Advocate stated that the plaintiff-respondents' right under the two orders of Maharaja Sajjan Singh in regard to payment at certain enhanced rates was not an obligation of the Ruler of Ratlam State pertaining or incidental to the Government of that State.
He, however, did not indicate the scope of the expression 'all duties and obligations pertaining or incidental to the Government of the covenanting State' in Clause (b) of Article VI (1). Even if the amount claimed by the plaintiffs was not an obligation of the Ruler of Ratlam State pertaining or incidental to the Government of that State, it was in any case a liability of the Ratlam State which under Clause (c) of Article VI(1) became the liability of the State of Madhya Bharat.
Now the recognition of rights by Article VI became a recognition by legislation when Section 3 of Act No. 1 of 1948 made it a part of the Municipal law of the State of the Madhya Bharat. Section 3 ran as follows:--
''When in pursuance of Clause (b) of para. (1) of Article II of the Covenant, any State be included in the United State, the provisions of para. (2) of Article VI of the Covenant shall immediately come into force."
The provisions of para. (2) of Article VI of the Covenant, which were to come into force in relation to a State when it became a part of Madhya Bharat, provided that when the administration of a State was made over to the Raj Pramukh, then the provisions of Clauses (a), (b) (c) and (d) of para. (1) of Article VI would apply in relation to that State, by process of substitution. Clauses (a) (b), (c) and (d) of Article VI(1) have thus to be read in Section 3. So read Section 3 becomes a provision saying that when any State is included in Madhya Bharat, then the consequences mentioned in Clauses (a) (b), (c) and(b) of para. (1) of Article VI of the Covenant shall ensue in relation to that State.
The effect of Section 3 is, therefore, to give to the persons concerned a right by law to the benefit of Article VI of the Covenant with a corresponding title to enforce their right in the Courts of Madhya Bharat. The plaintiffs had thus a legal right to enforce their claim to receive payment under the orders in question against the Madhya Bharat Government by an action in the Municipal Courts of Madhya Bharat.
The authority which bears the closest analogy to the present case is that of the Privy Council in Wigg v. Attorney-General for Irish Free State, 1927 AC 674 (I). That was a case where two civil servants of the British Crown were transferred to the service of the Irish Free State on the establishment of that State. They retired in consequence of the change of Government, and later on, being dissatisfied with the retiring allowance granted to them, brought an action against the Attorney-General for the Irish Free State claiming declarations as to their rights.
By Article 10 of a Treaty between Great Britain and Ireland, the Irish Free State agreed to pay fair compensation in terms not less favourable than those accorded by the Government of Ireland Act, 1920, to civil servants who should retire in consequence of the change of Government effected under the Treaty. Act No. 1 of 1922 of the Legislature of the Irish Free State gave to the Treaty the force of law and by Article 78 of the Constitution which it enacted transferred civil servants were to have the benefit of Article 10.
It was observed by the Privy Council that "Article 10 of the Treaty, taken by itself, might not have been enforceable by an individual citizen in the Irish Courts, but by a series of enactments following upon the Agreement for a Treaty, it had been made a part of the Municipal law of the Free State........The effect of these enactments, and particularly of Article 78 of the Constitution, was to give to every existing officer who was transferred to the Provisional Government and afterwards to the Free State, a right by Irish law to the benefit of Article 10 of the Agreement for a Treaty with a corresponding title to enforce that right in the Courts of the Free State."
The position here is in substance no different. By Clauses (b) and (c) of Article VI, the Madhya Bharat State was required to discharge the obligations of the Ruler pertaining or incidental to the Government of the Covenanting State and to make good the liabilities of the Covenanting States. These provisions along with other two sub-clauses of Article VI(1) were made part of the Municipal law by Section 3 of Act No. 1 of 1948 enacted by the Legislature of the Madhya Bharat State.
The effect of this was to give legal recogni-Ition to the obligations and liabilities of the covenanting States and to give to a person en-titled to the benefit of the obligations and lia-bilities a corresponding title to enforce them in the Court of the State of Madhya Bharat. It is worthy of note that Act No. 1 of 1948 was enacted "to provide for the peace and good Government of the United State of Gwalior, In-dore and Malwa (Madhya Bharat) and for taking over the administration of the Covenanting States."
Sections 4, 5, 6, 7 and 8 of the Act deal with the application of local laws, making of regulations for the merged State, salaries of Ministers, conduct of business of the Government, and enquiry into the advice given by the Ministers to the Raj Pramukh. It will be seen, that it was wholly unnecessary to include Section 3 in the Act for the purposes mentioned in the preamble of the Act.
The fact that it was included only shows that the object of Section 3 was no other than to convert the recognition of the rights, duties obligations and liabilities dealt with by Article VI(1) from the plane of a Covenant, that is of an agreement, to the plane of a statute so as to give any person interested in those rights, obligations and liabilities a legal enforceable right in respect of them against the State of Madhya Bharat.
12. I am, therefore, of the view that the plaintiffs could assert their claim against the State of Madhya Bharat in the Courts of that State. The question whether the plaintiffs" right subsisted after the coming into force of the Constitution is easily answered by reference to Article 295(2) of the Constitution which provides:--
"(2) Subject as aforesaid, the Government of each State specified in Part B of the first Schedule shall, as from the commencement of that Constitution, be the successor of the Government of the corresponding Indian State as regards all property and assets and all rights, liabilities and obligations, whether arising out out any contract or otherwise, other than those referred to in Clause (1)."
The language of this provision is clear enough to show that the liability of the Ratlam State as regards the plaintiffs' claim became the liability of the Madhya Bharat State as a part B State under the Constitution. Learned Government Advocate submitted that Article 295 was of no help to the respondents as their dispute being one arising out the provisions of Article VI of the Covenant, no Court had jurisdiction in that dispute under Article 363(1).
He relied on the decisions of the Supreme Court in Maharaj Umeg Singh v. State of Bombay, (S) AIR 1955 SC 540 (J) and State of Seraikella v. Union of India, AIR 1951 SC 253 (K), I see no force in this contention. It is true that Article 363(1) is subject to Article 143 and overriding every provision of the Constitution it bars altogether the jurisdiction of all Courts in any dispute arising out of any provision of a treaty, agreement, covenant, engagement, Sanad or similar instrument executed by the authorities mentioned in that Article.
If the dispute is one falling under Article 363(1), then, even, if it relates to a liability or an obligation of a Part B State under Article 295(2), a suit for enforcing the liability or obligation would no doubt be not maintainable in a Court of law. But in the instant case, there is no dispute in respect of the Covenant.
The claim of the plaintiffs rests not upon Article VI of the Covenant but upon Section 3 of Act No. 1 of 1948, which accorded statutory recognition to the right which was available to them against the Ratlam State under the orders dated 25th September 1947 and 16th December 1947 of the Ruler of Ratlam State, and on Section 4 of the Act which gave continuity to those orders.
Their claim is one to enforce the two orders of the Maharaja of Ratlam by virtue of Sections 3 and 4 of Act No. 1 of 1948. It is not a claim to enforce any right under the Covenant. Nor does it become one of that character merely because the provisions of Article VI(1) have to be read into Section 3 of the Act, as it is worded.
On those provisions becoming a part of Section 3, any dispute in respect of them would be a dispute arising out of those provisions as part of Section 3 and not as provisions of Article VI of the Covenant simpliciter.
13. The decisions relied upon by the learned Government Advocate are distinguishable on the ground that in none of those cases was the claim of the plaintiffs founded on any statute. In (S) AIR 1955 SC 540 (J), the basis of the claim was Clause (5) of the letter of guarantee which the Rulers of Deccan States had obtained from the Dominion Government.
In AIR 1951 SC 253 (K), the dispute was in respect of an Instrument of Accession. The decision that is in point is of the Supreme Court in Bholanath J. Thaker v. State of Saurashtra, AIR 1954 SC 680 (L). The appellant in that case was appointed officiating Sarnyayadhish in the Wadhwan State. This State became a part of Saurashtra which was formed by a Covenant entered into by the Rulers of Kathiawar States. The Ruler of Wadhwan State was a signatory to the covenant.
Article 16 of the Covenant of Saurashtra State guaranteed either the continuance in service of the permanent members of the public services of each of the covenanting States or conditions which would not be less advantageous than those on which they were serving before the date on which the administration of State was made over to the Raj Pramukh or the payment of reasonable compensation. Sometime after the formation of Saurashtra, the Sarnyayadhish was retired on the ground that he had attained the age of 55 years.
He was paid three months' salary and a monthly pension. The appellant in that case then filed a suit against the Saurashtra State claiming that under Section 5 of Act No. 29 of Sam-vat 2004 promulgated by the Ruler of Wadhwan State, the superannuation age for the Wadhwan State civil servants was 60 years and that he was, therefore, entitled to remain in service till he completed his age of sixty years.
The Sarnyayadhish claimed a sum of compensation by reason of his premature compulsory retirement. The claim was resisted by the State of Saurashtra on the ground that the guarantee contained in Article 16 of the Covenant which was sought to be enforced by the appellant could not be enforced in the Municipal Courts and the suit was, therefore, incompetent; that the services of the appellant in the Wadhwan State were during the pleasure of the Ruler of that State and that the Ruler of the State could have compulsorily retired him without being liable to pay him any compensation whatever; and that, therefore, the appellant was in no better position so far as the Saurashtra State was concerned.
The Supreme Court held that when the Wadhwan State merged into Saurashtra State, all the existing laws continued until repealed; that the Sarnyayadhish's rights under Act No. 29 of Samvat 2004 were still good and could have been enforced in the Municipal Courts until either repealed or repudiated by an Act of the State; that these rights were carried over after the Constitution when the Indian Republic was formed with this important difference, namely, that as the appellant then became an Indian, citizen the repudiation as an Act of State was not any longer possible; that the only way to defeat his rights was by legislation if that could be done under the Constitution and that there was, in fact, no such legislation and, therefore, the appellant's rights remained and the Municipal Courts would be entitled to examine the contract and apply Act No. 29 of Sam-vat 2004 and enforce whatever rights the appellant had under that Act and his contract of service.
It was further held by the Supreme Court that the Covenant could be looked at to see whether the new sovereign had waived his rights to ignore rights given under the laws of the former sovereign; and that there was no dispute arising out of the Covenant and what the appellant was doing was merely to enforce his rights under the existing law which continued in force until they were repealed by ap-proprite legistation and, therefore, the bar under Article 363 could not be invoked.
Here also the plaintiffs are merely enforcing their right under the existing laws, to wit, the two orders of the Maharaja Sajjan Singh which were continued in force under Section 4 of Act No. 1 of 1948 and which right received statutory recognition under Section 3 of that Act. Consistent with the decision of the Supreme Court in the case of Bholanath, AIR 1954 SC 680 (L), it must therefore be held that the bar under Article 363 of the Constitution cannot be invoked here.
In the view I have taken of the matter it is not necessary to consider whether Article VI of the Covenant, taken by itself, would have been enforceable by the plaintiffs in the Madhya Bharat Courts for the purpose of recovering the amount claimed by them.
14. For all these reasons, I am of the opinion that the plaintiffs' suit for the recovery of the amount claimed by them as due to them under the orders dated 25th September 1947 and 16th December 1947, of the Maharaja of Ratlam was maintainable. It is not disputed that if the action was maintainable, then the decree passed by the learned District Judge was correct.
15. For the foregoing reasons, I think the learned District Judge arrived at the right conclusion in decreeing the plaintiffs' claim. In the result, this appeal fails and is dismissed with costs. The appellant shall satisfy the decree on or before 31st December 1957.
Nevaskar, J.
16. I agree.