1. The suit giving rise to this appeal was filed by the plaintiff originally against Miraj State for the following reliefs :
1. A full and detailed account be taken of defendant's management of the Saranjam Estate from 1915 to the data of suit in respect of income from all items of income such as court fee, registration, stamps, fines, Abkavi, excise, opium and other items received or deemed to have been received by the State in its capacity as the Manager of the Estate.
2. A declaration that the plaintiff is entitled to the income from the date of suit from such items as Abkari, excise opium and such other items as have no relation to the exercise of civil and criminal jurisdiction rights over the villages.
The plaintiff's case may be outlined as follows : The plaintiff's ancestor, Moro Ballal Patwardhan, was a member of the Branch of Govind Had Patwardhan, who founded tile Miraj Saranjam. The Peshwas granted a 'Tainat' or a Saranjam in favour of Govind Hari in 1764 for a sum of Rs. 25 lacs and odd. In this grant was included an allowance of Rs. 5,000 which was ear-marked for Moro Ballal. Certain districts were allotted to Govind Hari from, which he was to recover the amounts granted to him. It appears that in about 1800-1801 five villages were allotted to Moro Ballal in lieu of the amounts which he was entitled to receive under the original grant. Those villages were, Dahivadi, Vayafale, Kusbavde, Rople and Madginhal. Subsequently, there was a partition between the two branches of Miraj Saranjam and in that partition, Vayafale village fell to the share of the Saranjamdar known as Miraj Junior. Therefore, in lieu of village Vayafale, two other villages were granted to the ancestor of the plaintiff which were Lingnoor and Wagholi. The plaintiff's contention is that these grants were confirmed by Mr. Chaplin representing the East India Company. It is further his case that under the covenant or the treaty entered into between the Miraj Ruler on one side and the East India Company on the other, the rights of the Saranjamdars were guaranteed. It is further his case that for over a century the plaintiff's ancestors were not only recovering the land revenue of the villages assigned to them, but were also exercising political jurisdiction and were participating in the administration of the civil and criminal justice. In exercise ofthose rights, they were also recovering the incomes arising out of court fee, registration fee, stamps, fines, Abkari, excise and opium. This Vahiwat went on till the death of Shripatrao Moreshwar which took place on 12th July 1915. Shripatrao left behind him two minor sons-Narayan and Govind and his widow, Raniabai. Narayan and Govind died in 1919 and the plaintiff who belonged to the junior branch of the family of Moro Ballal, was adopted by Ramabai on 27th December 1920. It appears that the step-brother of the plaintiff in the natural family viz., Nikanthrao Patwardhan, raised some dispute about the adoption of the plaintiff. There was, therefore, some delay in the recognition of the adoption, of the plaintiff by Miraj Ruler. The management of the Saranjam Estate of Shripatrao Moreshwar was taken over by the Miraj State under the directions of the Political Agent in about the year 1916. The adoption of the plaintiff was recognised by the Miraj Ruler in 1926. The villages, management of which was taken over by the Miraj State, were also given back to the plaintiff in about 1920-27 in instalments. The Khasgi and Inam properties were handed over in 1926 and the Saranjam property, that is to say, right to recover land revenue was handed over to the plaintiff in 1927. The Miraj State, however, did not hand over the right to exercise civil and criminal jurisdiction and to collect revenues from sources such as registration, court fee, stamps, excise etc. Considerable correspondence took place between the plaintiff on one side and the Miraj State on the other. The Miraj State went on crediting the amounts in respect of the above items in a separate account styled as 'Anamat' or suspense account. From time to time, the authorities informed the plaintiff that the question was in dispute and also under consideration. In 1941, however, the State Authorities took up a different stand and the Miraj State passed an order on 25th April 1941 stating that the plaintiff was entitled only to the cash allowance of Rs. 5,000 and that he was not entitled to the villages as such or to the right to recover the land revenue from those villages. The plaintiff thereafter approached the Resident, who modified the order passed by the Ruler so far as the plaintiff's right to recover the land revenue was concerned. The Resident held that the plaintiff was entitled to recover the land revenue of the six villages assigned to him. At the same time, ho took the view that the plaintiff was not entitled to the incomes from items such as court fee, registration fee, stamps, excise duty etc. The Resident further held that the grant of the above rights appeared to have been made by the Miraj Ruler in view of the close relationship of the plaintiff with the family of the Ruler. Those rights were, therefore, liable to be withdrawn and since the Ruler had withdrawn those rights, nothing more could be done about it. The plaintiff then sent memorials to the Crown Representative as also the Secretary of State. The memorial to the Crown Representative was turned down on 8th May 1943 and that to the Secretary of State was turned down on 15th May 1944. Thereafter, the plaintiff gave the necessary notice under section 80 Civil Procedure Code and brought the present suit on 2nd June 1947 for the reliefs set out above.
2. Pending the suit, the Miraj State came to be merged in the Bombay province and the State or Bombay was substituted in place of the Miraj State. The State of Bombay, therefore, will hereafter be called the defendant. The defendant put in the written statement (Ext. 70) and raised a number of contentions, which are summarised as follows :
1. That the plaintiff's suit was barred under Section 4(1) paragraph 4 and Section 4(f) paragraph 2 of the Bombay Revenue Jurisdiction Act, 1876.
2. That the suit of the plaintiff was also barred under Section 4 of the Indian Pensions Act, 1871.
3. That the plaintiff's suit was barred by limitation. The cause of action for rendition of account arose in the year 1926 and the suit not having been brought within three years from that date, it was barred by limitation.
4. That no suit could be brought in the Municipal Court for the reliefs claimed by the Plaintiff. The Municipal Court was not a proper forum to enforce a treaty between two sovereign powers like the British Government and the Miraj State. A subject of a State could not enforce any rights against the State Government, which were not expressly granted or recognised by the State.
5. That the Miraj State not having recognised the rights of the plaintiff except as to land revenue of six villages, no other rights as were claimed in the plaint could bo enforced against the defendant.
6. That the rights claimed by the plaintiff in paragraph (3) are not rights of a civil nature. They are rights of governance to be exercised by the legislature of a State.
3. Appropriate issues were framed. But, in the first instance, Mr. H. S. Patil, who heard the suit, decided a few of the issues, which were treated as preliminary issues. Mr. Patil held that the Civil Court has jurisdiction to decide the dispute in suit. He also held that the Bombay State was liable to render accounts in respect of the items claimed by the plaintiff so far as the management of the property since 1916 was concerned. At the same time, he took the view that the grant being Jadid, that is to say, a grant made by the Miraj Ruler, was liable to be revoked and no relief could be claimed for continuance of the rights under the said grant. After the above decision, further issues were framed by Mr. R. K. Saklikar, the successor of Mr, Patil, and he heard and decided those issues. The principal issue framed by Mr. Saklikar was as to whether the plaintiff's claim for the accounts was in time, and he held that the plaintiff's suit was barred by limitation. Consequently, he dismissed the suit with costs. It is from that decision that the plaintiff has come up in appeal.
4. This appeal raises a number of interesting questions of law. In order, however, to appreciate the arguments that wore advanced on these points, it is necessary to make ourselves clear about the nature of the plaintiff's case and the reliefs claimed by him in the present suit. The plaintiff claimed that the rights to exercise political jurisdiction and to recover fees such as court-fee, stamps, registration and income from such sources as can be compendiously called excise, were granted to his ancestors by the Peshwas. This grant was confirmed by the Miraj Ruler and came to be enshrined in the treaty that was entered into between the Miraj State Ruler on one side and the East India Company on the other. In paragraph (9) of the plaint, specific reference has been made to article (8) of the treaty between the Miraj Ruler and the Company Government entered into in 1819 and it is said that the decision given by the Raja Saheb as also by the Resident negatived the plaintiff's rights guaranteed to him in the aforesaid article. It is evident that any right based on a covenant or a treaty between two States is unenforceable even in the Municipal Court of the Miraj State. Mr. Kotwal, for the appellant, contended that those rights have been acquired by the plaintiff by virtue of long usage, and, in any case, those rights stood till they were revoked in 1941. He, therefore, contended that so far as the right to claim the accounts of the management from 1916 to 1947 was concerned, that right must remain unaffected by the subsequent event viz., merger of the Miraj State in the Bombay Province. He suggested that inasmuch as the management of the Estate was taken over by the Miraj State under the directions of the Political Agent, the Miraj State was liable as trustees under Section 94 of the Indian Trusts Act, 1882. This then is the broad outline of the case set up on behalf of the plaintiff.
5. In order to understand what rights were conferred upon the plaintiff's ancestors, it is necessary to trace Ehe history as disclosed by the documentary evidence on the record. This history will have to he divided into two parts: (1) from 1764 to 1819 A. D. and (2) from 1819 to 1948. Exh. 93 is a Tainat Japta granted by the Peshwas in respect of the rights of Govind Hari in 1764 A. D. It appears therefrom that a sum of Rs. 25 lacs and odd was granted as Saranjam to Govind Hari. By Saranjam is meant a political grant made in consideration of political or military service. In the present case, Govind Hari and his Bhaubands, Parasram and Nilkanth were called upon to maintain troops and in lieu of this service a sum of Rs. 24 lacs was granted. In addition to the above, an extra grant to the tune of Rs. 76,000 and odd was made for personal allowance and it is in this category that the sum of Rs. 5,000 is mentioned in favour of Moro Ballal. It is further stated that certain districts were assigned to Govind Hari. The latter died in 1771-72, and therefore, a second Tainat Japta was made in favour of Wamanrao in 1773-74 (Exh, 94). The contents of this document are the same as those of the earlier document. Moro Ballal died in 1774 and, in the next Tainat Japla, which was made in favour of Chintamanrao Pandurang, the name of Shripatrao Moreshwar in place of Moro Ballal is mentioned. In about the year 1800-01 there was a partition between the two branches known as Miraj Branch and Sangli Branch and in the partition deed (Exh. 168) it is stated that for the amount of Tainat of Shripatrao Moreshwar, villages should be assigned to him. (The Marathi word 'Gav' stands for singular as also plural, and from the context it is clear that the word stands for the plural i.e., villages). It is, therefore, clear that upto 1800-01' the ancestors of the plaintiff were receiving a cash allowance of Rs. 5,000, which was treated as a personal allowance, and for the first time after 1800 or1801, certain villages were assigned to them. It is, however, significant to note that there is no indication in these documents as to the nature of the grant. It is not clear whether the grant was in respect of the land revenue only or it also covered-rights, which partook of the character of the political rights such as exercising civil and criminal jurisdiction, recovering court fee, stamps, excise duty etc. Exh. 173 is a Sanad in respect of one of the villages namely Dahivadi issued in the year 1803-04. It appears that in pursuance of the decision taken at the time of the partition between the Miraj Branch and the Sangli Branch in regard to the assignment of certain villages, that Sanads were issued which were meant to serve as confirmation of the grant. The Sanads of the other villages except Dahivadi, however, are not forthcoming. Exh. 173 speaks of the amount of 'Government revenue, the whole of it except the Sardeshmukhi'. This document specifically uses the words, 'Government revenue except Sardeshmukhi'. What is exactly meant by Sardeshmukhi is nor clear from the record, nor is it necessary for us to consider the same, as it has been expressly excepted from what was granted. In any case, it is clear that the document does not refer to rights of a political nature as are now claimed by the plaintiff. Exh. 174 is another Sanad in favour of Balwantrao, the great grand-son of Shripatrao, in 1816-17 and that also is in respect of Dahivadi village and it speaks of collection of revenue and Balwantrao is mentioned as the head of the cavalry. This document also does not refer to any other rights other than the right of collection of revenue. This is all the documentary evidence that pertains to the pre-British period.
6. Then comes the treaty of 1819 entered into between the Miraj Ruler and the East India Company. The terms of the treaty are set out at page 262 of Aitchison's Treaties, Engagements and Sanads, Vol. VIII, 1931. Article 8 of those terms, on which reliance was placed on behalf of the plaintiff, runs as follows:
'You will continue all rights within your Jaghirc whether belonging to the State or individuals; all Doomalee, Surinjam and Inam villages and lands, x x x x x in conformity of the list contained in the grant of your Surinjam; and if in any particular instance any interruption shall have been offered to a grant not annulled by Government, such grant shall likewise be made good without hindrance to the proprietor, x x x x x x'.
It is this article, which, according to the Plaintiff, guarantees the continuance of the plaintiff's right over the Saranjam Estate. In the year 1820 there was a partition between the four branches of the Patwardhan family. Exh. 138 is a letter, which was written by Mr. Chaplin, who was the Commissioner, Central Division, to the Secretary to the Governor of Bombay, explaining on what principles, the partition was brought about. That letter contains the following sentence:
'The separate Tayenahes and other deductions have been kept distinct and the remainder divided on the above principles as fully shown in the accompanying abstract (Ex. 139)'.
Exh. 96, which purports to be signed by Mr. Chaplin, mentions the names of six villages, which wereassigned to Balwantrao Moreshwar, viz., Dahivadi, Vayafale, Kusbavde, Rople and Madginhal. Exh. 171 is a letter dated 16-2-1882 written by Mr. Chaplin to Eao Saheb Madhavrao, suggesting to the latter that in lieu of village Vayafale, which was allotted to the share of Miraj Junior Ruler,, the villages of Lingnoor, Wagholi and Kusbavde should be given to Balwantrao Moreshwar, Several 'Adnyapatras' were issued. (Exs. 98 to 101 and Exs. 176 to 179) to the village officers of the six villages allotted to Balwantrao Moreshwar calling upon them to enforce the rights of the latter. It is significant that in none oi these documents referred to above, any mention has been made relating to the political rights now claimed by the plaintiff.
7. For the first time, reference to the tight of the plaintiff's ancestors to exercise civil and criminal jurisdiction was made in 1873. Ex. 153 is a Yadi written by the Dewan of Miraj to Abasaheb Moreshwar, the ancestor of the plaintiff. In this letter instructions have been given as to how civil and criminal justice was to be administered. Abasaheb was invested with powers of a Magistrate and was also asked to keep police Bandoobast in the villages assigned to him. It was stated that the amounts recovered as fine would be handed over to Abasaheb. It was further stated that part of the income recovered from court fee and general stamps will be given to Aba Saheb. He was also permitted to claim a share in the amount of registration fee. Exs. 155 and 156, which are respectively of the year 1876 and 1885, mention that the registration fee should be divided between the plaintiff's ancestor and the Miraj State in a certain proportion. It should be noted that even in the aforesaid documents, no mention was made relating to the excise income. Exh. 157 is a letter written by the Karbhari, Miraj, to Abasaheb Moreshwar wherein information regarding excise income was called for from the latter. Exh. 158 is a letter written to the Karbhari by the Political Agent, in which some information was called for'relating to the income realised by the auction of liquor shops. This letter was forwarded to Shripatrao for sending the necessary information. It appears from Exh. 151, which is a memorandum written by the Karbhari to Shripatrao on 21-8-1903 that a share in the amounts realised from the liquor contracts was given to the latter. Mr. Kotwal mainly relied on these documents for his contention that there was an uninterrupted usage under which the right of the plaintiff's ancestors to recover all kinds of income was recognised. The question for our consideration is whether the exercise of the civil and criminal rights as also the right for collecting fees, which form the subject-matter of the dispute in this suit for a long period, would confer any rights upon the plaintiff, which, can be enforced in a Court of Law. Those lights are rights of a political character and the plaintiff claims the position of a State within a State or an 'imperio within an impcrium.' There must be strong evidence for spelling out a grant of such a character. Ordinarily, no State would countenance any of its subjects to exercise the rights of a political character. It may be that the Ruler of Miraj allowed the plaintiffs ancestors to exercise the political rights, because of the close relationship between the plaintiffs family and that of the Miraj' Ruler. It may also be that becauseof the ties of kinship the Ruler tolerated the encroachment upon their rights of sovereignty by the plaintiff's ancestors. If that is so, then it was open to the Ruler to revoke those rights from the plaintiff's family at any time he liked. We do not think that Article 8 of the treaty of 1819 will protect such rights of the plaintiff. At best it could, be invoked for the protection oi the plaintiff's right to recover the land revenue, and it was on that basis that the Political Agent interfered with the order passed in 1941 and restored that right in respect of the above six villages to the Plaintitt.
8. Mr. Kotwal then contended that so tar as the rights to claim accounts of the management between 1916 and 1941 are concerned, that would not be affected by anything done by the Ruler in 1941. He says that the deceased Shripatrao had exercised those rights and the State took over the management at the property after his death and purported to carry on the management as was done by Shripatrao. It is to be noted that this right of the plaintiffs was expressly denied by the Miraj Ruler and the Political Agent accepted that position. So far as the rights in suit are concerned, Mr. Kolwal's argument is that the management was taken over by the-State under the directions of the Political Agent and therefore, the State stood in the position of a trustee and the plaintiff is entitled to claim accounts of the management under Section 94 of the Indian Trusts Act, 1882. It appears that the Indian Trusts Act was applied to the Miraj State in 1926. In the first place, it is not clear in respect of exactly which property the management was taken over by the Miraj. Ruler. The rights of political character were, no doubt exercised by the plaintiffs adoptive father. On the death of the latter, however those rights ceased and, in our view, there was no question of the State assuming those rights on behalf of the minor sons of Shripatrao or on behalf of the plaintiff, who was later on adopted by Ramabai. The assumption of the management must be restricted to the right to recover the land revenue in respect of the six villages. Assuming, for a moment, that the Miraj State was really liable under Section 94 of the Indian Trusts Act, the more important question to be considered is, whether that liability can be enforced against the succeeding State viz., the Bombay State.
9. It is a well-established principle of international law that when a territory is acquired by a Sovereign State, that amounts to an act of State. It makes no difference how the acquisition was brought about. It may be by conquest, it may be by cession following on treaty, it may be by occupation of territory hitherto unoccupied by a recognised Ruler. In all cases, the result is the same. Any inhabitant of the territory can make good in the Municipal Courts established by the new Sovereign only such rights as that Sovereign has, through his officers, recognised. Such rights as he had under the rule of predecessors avail him nothing. Nay more, even if in a treaty of cession it is stipulated that certain inhabitants should enjoy certain rights, that does not give a title to those inhabitants to enforce these stipulations in the Municipal Courts. The right to enforce remains only with the high contracting parties. These propositions were laid down by the Privy Council in Vajesingji Joravarsingji v. Secy, ot State, 51 Ind App 357: AIR 1924 PC 216at p. 217) and were accepted by the Supreme Court in Virendra Singh v. State of Uttar Pradesh, : 1SCR415 . The same principles have been reiterated in subsequent decisions of the Supreme Court and also or this Court. That being the position, it is necessary for the plaintiff to establish that the rights, which existed against the Miraj State, were recognised by the defendant. Mr. Kotwal conceded this position, but tried to show that the liability of the Miraj State was taken over by the defendant, by referring to various enactments, which culminated in the merger of the Miraj State in the Bombay State. We propose to review the various steps that were taken in connection with the merger, briefly, as follows:
10. The Indian Independence Act was passed by the British Government in 1947. It is well-known that the British Crown had acquired certain rights in relation to Indian States by treaties, usages, engagements and Sanads IInd also by assertion of sovereign powers in its relation with those States, which rights are compendiously known as Para-moimtcy. Although political power was transferred by the British Government to the Indian Government, still puramountcy was not and could not be transferred. By their very nature, the paramountcy lights were incapable of transfer. The concept of puramountcy is a creature of the peculiar historical circumstances and defies any attempt at its definition. The Butler Committee had, therefore, to remain content by making a cryptic statement viz., 'paramountcy must remain paramount'. Consistently with these principles, a provision is made in Section 7(1)(b) of the Indian Independence Act to the effect that as from the appointed day, the suzerainty of His Majesty over the Indian States lapsed. Now, the lights of paramountcy or suzerainty, which lapsed on account of the said provisions, were assumed by the Indian Government and the Central Legislature passed an Act known as the Extra Provincial Jurisdiction Act, 1947 laying down, the mode in which the rights of paramountcy were to be exercised. The preamble of the Act refers to the rights, which were acquired by treaty, agreement, grant, usage, sufferance and other lawful means. This reference is, obviously, to the rights which were acquired by the British Crown. It also refers to similar rights, which may be acquired in course of time by the Central Government in relation to the areas outside the Provinces of India. Section 3(1) of the Act provides that 'it shall be lawful for the Central Government to exercise extra provincial jurisdiction in such manner as it thinks fit'. Sub-section (2) of Section 3 provides that 'the Central Government may delegate any such jurisdiction as aforesaid to any officer or authority in such manner and to such extent as it thinks fit'. Section 4(1) empowers the Central Government to make such orders as may seem to it expedient for the effective exercise of any extra provincial jurisdiction of the Central Government, by notification in the official Gazette. Sub-section (2) of Section 4 details the provisions in respect of which orders may be passed under Sub-section (1) thereof. In exercise of the powers conferred by Sections 3 and 4 of the Extra Provincial Jurisdiction Act, the Central Government issued a Notification No. 150-IB dated 25th February, 1948, which, in substance, provides that
'the Central Government is pleased to delegate to the Government of Bombay, the power conferred by section 4 of the said Act to make orders for or in relation to the governance of the said States in respect of any of the matters enumerated in List II or List III of the Seventh Schedule to the Government of India Act, 1935'.
That means that the Government of Bombay was empowered to pass any orders in respect of subjects which fall within the provincial list or the concurrent list enumerated by the Government of India Act, 1935. The above notification was superseded by another Notification No. 174-1B, dated 23rd March 1948, which, in substance, provides that
'the Central Government is pleased to delegate to the Provincial Government of Bombay, the extra provincial jurisdiction aforesaid, including the power conferred by section 4 of the said Act to make orders for the exercise of that jurisdiction'.
In pursuance of the aforesaid delegation of power, the Government of Bombay issued an Order on 2nd March 1948 called the 'Administration of Deccan States Order, 1948'. At this stage, it may be mentioned that an agreement was entered into between the Miraj Ruler on one side and the Dominion Government on the other relating to the merger of the former's territory in the State of Bombay. Article 1 of that Merger Agreement, which is contained in Appendix XIII of the White Paper on Indian Slates (p. 183), runs as follows:
'The ...... of hereby cedes to the DominionGovernment full and exclusive authority, jurisdiction and powers for and in relation to the governance of the State and agrees to transfer the administration of the State to the Dominion Government on the .....day of......1948'.
The above-mentioned Order i.e. 'The Administration of the Deccan States Order' of 2nd March 1948 came into force on 8th March, 1948. That Order was intended to give effect to the Merger Agreement entered into between the Dominion Government on one side and the Deccan States including the Miraj State on the other. Clause (4) of that Order, on which strong reliance was placed by Mr. Kotwal, runs as follows:
'(1). Such provisions or such parts of provisions -- (a), of any law relating to any of the matters enumerated in Lists II and III in the Seventh Schedule to the Government of India Act, 1935, or (b), of any notification, order, scheme, rule, form or by law issued, made or prescribed under any law of the class referred to in clause (a), as were in force immediately before the appointed day in any Dec-can State shall continue in force until altered, repealed or amended by an Order under the Extra Provincial Jurisdiction Act, 1947'.
It is clear from this provision that the laws that were in force in any of the Deccan States before the appointed day, i.e., 8-3-1948, were continued until repealed by the new State. The Administration of Deccan States Order 1948, was superseded by another Order called the Administration of the Indian States Order 1948, which came into force on 10-6-1948. Clause 4 of this Order is similar to clause 4 of the repealed Order, and in effect provides that
'such provisions, or such parts of provision--(a) of any law, or (b) of any notification, order, scheme, rule, form or by-law issued, made or prescribed under any law, as were in force immediately before the appointed day in any Indian State shall continue in force until altered, repealed or amended by an Order under the Extra Provincial Jurisdiction Act, 1947'.
Thereafter, the Central Government issued an Order known as the States Merger (Governor's Provinces) Order, 1949, and the provisions of this Order are the operative provisions, which we will have to consider in the present case. Clause 4 of the Order runs thus:
'All the law in force in a merged State or in any part thereof immediately before the appointed day (1st August 1949), including Orders made under section 3 or 4 of the Extra Provincial Jurisdiction Act, 1947, shall continue in force until repealed, modified or amended by a competent legislature or other competent authority'.
Mr. Kotwal's argument, therefore, is that we have a chain of provisions in the successive orders under which the Jaws that were Originally in force in the Miraj State, were continued to be in force after the merger of that State in the Bombay State. Mr. Kotwal also relics on the provisions of clauses 5, 6 and 9 of that Order. Clause 5(1) provides that
'All property, wherever situate, which, immediately before the appointed day, is vested in the Dominion Government for purposes of the governance of a merged State shall, as from that day, vest in the Government of the absorbing province, unless the purposes for which the property is held immediately before that day are central purposes'.
11. Mr. Kotwal then contended that inasmuch as all the assets of the merging State were taken over by the Dominion Government, it must follow that the liabilities of the former Government were also taken over by the succeeding State. Mr. Kotwal says that the matter does not rest there. There is a specific provision in clause 7 of the Order of 1949 relating to all liabilities. Clause 7(a) provides:
'All liabilities in respect of such loans, guarantees and other financial obligations of the Dominion Government as- arise out of the governance of a merged State, including in particular the liability for the payment of any sums to the Ruler of the merged State on account of his privy purse -- shall, as from the appointed day, be liabilities of the absorbing province, unless the loan guarantee or other financial obligation is relatable to central purposes'.
Mr. Kotwal's argument is that financial obligations arising out of the governance of a merged State include the liabilities of the former States in relation to the citizens. We are unable to accept this argument. The financial liabilities referred to in the above clause are the liabilities incurred by the Dominion Government in the process of the governance of the merged State. The rights of private citizens against the merged Stale which had accrued prior to its merger have no relation, whatsoever, to the governance of a State; nor do they arise out of the governance of a State. They are not, therefore, financial obligations, which pass on to the successor Government. Clause 9 of the Order of 1949, in effect, provides:
'Any proceeding which, if this Order had not been made, might lawfully have been brought in amerged State by or against the Dominion shall, in the case of any liability arising before the appointed day or arising under any contract made before that day, be brought-
(a) by or against the Dominion, if the proceedings could have been brought by or against the Dominion had the liability arisen after the appointed day, and
(b) otherwise, by or against the absorbing province'.
The first part of this clause, obviously, refers to the liability, which the Dominion Government had incurred after the merger of the State and before the appointed day and the second part relates to the liability, which has arisen after the appointed day. This clause, therefore, cannot assist Mr. Kotwal in his present argument.
12. In a nutshell, Mr. Kotwal's argument is that the laws that were in force in the former Miraj State, were continued by the various Orders and one of such laws is the Indian Trusts Act, which was extended to the Miraj State in 1926. Under this Act, the Miraj State was liable to render accounts of the management to the plaintiff. Mr. Kotwal, therefore, contended that if the laws are saved, the rights arising under those laws are also saved. According to him, therefore, the plaintiff's right to sue the Miraj State for accounts of the management carried on by it from 1916 onwards has been continued by the various provisions referred to by him. We are unable to accept this line of argument. The laws that were in force in the Miraj State before its merger were, no doubt, continued. The rights arising under those laws were rights between a citizen and a citizen. Assuming that the plaintiffs right against the former Miraj State were kept alive, because the laws under which they arose, were kept alive, still the question remains whether those rights could be enforced by the plaintiff in the Municipal Courts of the succeeding State. To that question, the provisions relied upon by Mr. Kotwal do not afford any answer. The rights between a citizen and a citizen are saved and, therefore, the proceedings for the enforcement of those rights, can be instituted in a Municipal Court of the succeeding State. But, that does not apply to a right against the State. The enforceability of that right will depend upon the acceptance of that liability by the succeeding State. From the mere fact' that certain laws, which were in force in the former State, were allowed to continue by the succeeding State, it does not follow that the liabilities of the citizens against the State were also recognised by the succeeding State. On the point of recognition stronger proof will have to be adduced on behalf of the plaintiff. That proof may consist of express recognition or implied recognition or of recognition by conduct, but, it must be a recognition of a specific right.
13. Mr. Kotwal strongly relied upon a decision, of the Supreme Court in Bholanath v. State of Sau-rashtra, : (1955)ILLJ355SC . The facts of that case stood as follows: A, who officiated as Sarnyayadhish, continued to serve the Wadhwan State till the administration of the State was made over to the Saurashtra Government on 16-3-1948. Section 5 of the Dhara (Act) No. 29 of Samvat 2004 promulgated by the Ruler of Wadhwan State fixed the superannuation age for the State civil servants at 60 and A thus became entitled to remain in service till he completed his age of 60 years. The Ruler of the Wadhwan State entered into a Covenant for the formation of the United States of Kathiavvar on 24-1-1948. Under Art, 16(1) of the Covenant, the United States of Kathiawar had guaranteed either the continuance in service of the permanent members of the public services of each of the Covenanting State on conditions which would not be less advantageous than those on which they were serving before the date on which the administration of the State was made over to the Raj Pramukh or the payment of reasonable compensation. The Ruler of the Wadhwan Stale made over the administration of the State to the Saurashtra Government. By an Order dated 29-6-1948, A was retired by the Saurashtra State on the ground that he had passed the age of superannuation tion which was taken at 55 years on payment of three months leave salary and a monthly pension. Upon this A filed a suit against the Saurashtra State claiming a sum as compensation by reason of his premature compulsory retirement. It was contended on behalf of the State that the guarantee contained in Article 16 of the Covenant which was sought to be enforced by A could not be enforced in the Municipal Courts and the suit was therefore incompetent, and that the services of A with the Wadhwan State were during the pleasure of the Ruler of the 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 position of A was no better so far as the Saurashtra State also was concerned. Held: that when the Wadhwan State merged with the Saurashtra State all the existing laws continued until repealed. It follows that A's rights under Dhara No. 29 of Samvat 2004 were still good and could have been enforced in the Municipal Courts until either repealed or repudiated as an act of State. These rights were carried over after the Constitution when the Indian Republic was formed with this important difference, viz. that as A then became in Indian citizen the repudiation as the act of State was not any longer possible. The only way, therefore, to defeat his rights was by legislation, if that could be done under the Constitution. It was also held 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. Mr. Kotwal argued that this case is an authority for the proposition that when the existing laws prevailing in the merging State are continued after its merger, the rights flowing under those enactments, can be enforced against the succeeding State. We are not prepared to accept his line of reasoning. The first point to be noted a that the Wadhwan Ruler had passed an Act known as Dhara No. 29 of Samvat 2004, under which he fixed the superannuation age for the State servants at 60. Under this Act, the appellant in that case could claim to serve till 60 years of age. There-after there was an agreement entered into amongst the various Rulers of the States of Kathiawar including the respondent State, as a result of which the United States of Kathiawar came into being. The agreement entered into by the Rulers of the States of Kathiawar was an agreement between SovereignStates of equal status. By coming together and forming a United State, they surrendered all their sovereign rights and made them over to the new State of Kathiawar. One of the covenants of the agreement provided that the conditions of service of the various States would not be worse off in the newly created State. This Covenant was Article 16(1). The Covenant further guaranteed either continuance of service of the permanent members on the same conditions or payment of reasonable compensation. The United States of Kathiawar. was, later on, transformed into the State of Saurashtra and it was as a result of the Order of the latter that, the appellant was made to retire. It is important to remember that Dhara No. 29 of Smt. 2004 was continued by the new State. It is significant to note that the right of the appellant in the above case directly flowed from Dhara No. 29, which was continued in force after the formation of the Saurashtra State. The appellant's right was not a matter, which required adjudication. There was no question of anybody disputing the appellant's claim to serve till 60 years of age. In the present case, the right of the plaintiff is hotly disputed and, in fact, was repudiated by the Ruler of the Miraj State and that decision was upheld by the Political Agent. The second point of distinction is that under the Covenant the rights of the servants of the various merging States flowing from the various enactments in force in those States, were preserved and guaranteed. The Supreme Court has pointed out 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. In the present case, all that has happened is that, the general laws prevailing in the Miraj State have been preserved. The plaintiff's right does not flow from any of the provisions of the old Acts. On the other hand, it was a disputed claim and had no basis to stand upon until it was finally decided by a competent court. In such a case, it can hardly be argued that since the laws have been continued, the rights against the State also have been preserved.
14. Mr. Kotwal then referred to a decision of Full Bench of this Court reported in Bhojrajji v. Saurashtra State, 61 Bom L.R. 20. In that case, the Thakore Saheb of Sayla had directed that a sum of Rs. 30,000/- should be paid to the appellant, who was his younger son, for building a Darbargadh at the appellant's Giras village Dhedhuki. The Order provided that the amount of Rs. 30,000/- should be paid to the appellant within five years. Pursuant to this Order, the appellant was paid Rs. 6,000/- in the year 1946 and Rs. 6,000/- in the year 1947. The sum of Rs. 18,000/- remained unpaid, and in the mean time, the Sayla Stale integrated with the United States of Saurashtra. The appellant applied to the Chief Secretary of the United States of Saurashtra for payment of Rs. 18,000/-. Chagla, C. J. who delivered the judgment of the Full Bench, allowed the appellant's claim and, in support of this view, relied upon the decision in Bholanath's case, : (1955)ILLJ355SC . The legislative history, which culminated in the formation of the State of Saurashtra, was considered. It was as follows: The first constitutional document is the Covenant entered into between the various merging States to constitute the United States of Kathiawar. Article VI(1)(c) of that Covenant provided that 'all the assets and liabilities of the Covenanting State shall be the assets and liabilities of the United States of Kathiawar. Thereafter, Ordinance I of 1948 transformed the name of the United States of Kathiawar into the State of Saurashtra, and provided by clause 3(1):
'When in pursuance of paragraph I of Article VI of the Covenant, the administration of any Covenanting State has been taken over by the Raj Pramukh, the fact shall be notified in the Saurashtra Government Gazette and thereupon the provisions of clauses (a), (b) and (c) of paragraph 1 of Article VI shall immediately come into force.' It is thus clear that on the appointed day, as far as Sayla State was concerned, clause (c) of Article VI(1) came into force, under which all the assets and liabilities of the Covenanting State became the assets and liabilities of the State of Saurashtra. Thereafter, Chagla C. J. referred to the provisions of the States Reorganization Act, under which the Saurashtra State became merged with the enlarged Bombay State, to point out that the assets and liabilities of the State of Saurashtra were taken over by the reconstituted State of Bombay. It was mainly on the ground that the Saurashtra State in the first instance and the Bombay State in the final instance had taken over the liabilities of the merging State, that Chagla C. J. took the view that the Bombay State was liable to satisfy the appellant's claim. As stated above, in the present case, there is no law under which the liabilities of the merging State have been taken over by the Bombay State. In the course of the judgment, Chagla, C. ]., referred to Bholanath's case, : (1955)ILLJ355SC and observed: 'But the matter is no longer now a matter of controversy because the Supreme Court has taken the view in : (1955)ILLJ355SC that the Covenant itself may be looked upon as a waiver by the Covenanting State of its rights to ignore private rights of the citizen of the State of which it is the successor. It is true that under International Law when there is a cession or succession or a conquest, the State which benefits by the cession or succession or conquest is not bound to recognize the rights of the citizens of the State which it has absorbed. The recognition must be either by law or by proclamation. But, as the Court of Appeal pointed out in West Rand Central Gold Mining Co. v. Rex (1905) 2 K.B. 391, that the law as laid down by the Privy Council was that the new Sovereign State may choose to waive its rights and recognise titles and rights as they existed at the date of cession.'
But, in view of the facts of the present case that the light of the plaintiff to claim accounts of the management was repudiated by the Miraj State, it must be established by the plaintiff, by clear and cogent evidence, that the right, which was repudiated by the former Kuler was accepted by the new State. We do not, therefore, think that any of the rulings cited by Mr, Kotwal will advance bis case for fixing the liability upon the succeeding State.
15. Another line of argument pursued by Mr. Kotwal was that, at the time of the merger of Miraj State with Bombay State, the suit filed by the plaintiff was pending in the Municipal Court of the former State. After the merger, the Bombay State wassubstituted in place of the Miraj State. Mr. Kotwal referred to the provisions of article 300(2)(b) of the Constitution of India, which lays down:
'If at the commencement of this Constitution--(b) any legal, proceedings are pending to which a Province or an Indian State is a party, the corresponding State shall be deemed to be substituted for the Province or the Indian State in those proceedings'.
Mr. Kotwal contended that the State, which has been substituted in place of the old State, can only take up such defence as was open to the formed State, and for this purpose, he relied upon the pro-visions of order 22 Rule 10, Civil Procedure Code. These provisions relate to substitution by devolution. In the present case, the substitution took place as a result of the constitutional provision contained in Article 300 of the Constitution of India. The principles, which hold good in the case of a party substituted under Order 22 Rule 10 Civil Procedure Code, can hardly apply to the case of a State, which has been substituted in its constitutional right. The provisions for substitution have been obviously made to cover those cases where the liability has been accepted by the succeeding State. It must be established that there is a right, which can be enforced against the succeeding State. If the right has lapsed, then the substitution will not revive plaintiff's right. In such a case, the substitutive takes place for enabling the substituted State to resist the plaintiff's claim.
16. Mr. Gumaste, for the defendant, drew out attention to a recent decision of the Supreme Court in Dalmia Dadri Cement Co. Ltd v. Commr. of Income-tax : 34ITR514(SC) . In that case, there was an agreement between A and the Jind State, by which A was granted a license to manufacture cement in the State area. A was to form a limited public Company to which A was to assign the license and all rights under it. Clause 23 of the Agreement provided that the Company shall be assessed to income-tax in accordance with the State procedure but the rate of income-tax shall always be four per cent upto a limit of income of rupees five lacs and five per cent on such incense as is in excess of rupees five lacs. Thereafter, the Ruler of Jind State along with the Rulers of the Fast Punjab entered into a Covenant for the merger of their territories into one State called the Patiala and East Punjab States Union. Income-tax was sought to be levied upon the appellants on the basis of the laws prevailing in the Indian Union. That was resisted on the basis of clause 23 of the Agreement. The Supreme Court held that the Agreement was no longer binding upon the succeeding State. Mr. Justice Venkatararna Aiyar, who delivered the judgment of the Court, observed :
'When the Sovereign of a State--meaning by that expression, the authority in which the sovereignty of the State is vested--enacts a law which creates, declares or recognises rights in the subjects, any infraction of those rights would be actionable in the Courts of that State even when that infraction is by the State acting through its officers. It would be no defence to that action that the act complained of is an act of State, and it is incumbent on his officers to show that their action which is under challenge fe within the authority conferred on themby law. Altogether different considerations arise when the act of the Sovereign has reference not to the rights of his subjects but to acquisition of territories belonging to another Sovereign. That is a matter between independent Sovereigns, and any dispute arising therefrom must be settled by recourse not to Municipal Law of either States but to diplomatic action, and that failing, to force. That is an act of State pure and simple, and that is its character until the process of acquisition is completed by conquest or cession. The status of the residents of the territories which are thus acquired is that until acquisition is completed as aforesaid, they are the subjects of the ex-sovereign of those territories, and thereafter they become the subjects of the new sovereign. In the new set-up these residents do not carry with them the rights which they possessed as subjects of the ex-sovereign, and as subjects of the new sovereign, they have only such rights as are granted or recognised by him... In law, therefore, the process of acquisition of new territories is one continuous act of State terminating on the assumption of sovereign powers de jure over them by the new sovereign and it is only thereafter that rights accrue to the residents of those territories as subjects of that sovereign. In other words, as regards the residents of territories which come under the dominion of a new sovereign, the right of citizenship commences when the act of State terminates and the two therefore cannot co-exist. It follows from this that no act done or declaration made by the new sovereign prior to his assumption of sovereign powers over acquired territories can quoad the residents of those territories be regarded as having the character of a law conferring on them rights such as could be agitated in his Courts. In accordance with this principle, clauses in a treaty entered into by independent Rulers providing for the recognition of the rights of the subjects of the ex-sovereign are incapable of enforcement in the Courts of the new sovereign.''
It is clear from the above citation that the rights of a citizen come to an end as soon as there is merger and a new State is in the process of formation. The rights will lapse and they can only be revived after the new State acknowledges those rights. At page 827 of the said ruling, Mr. Justice Vivian Bose observed :
'In the present case, in so far as the right is claimed on the basis of contract, it would fall to the ground on any view; and in so far as it is not founded on contract, it is an obligation that is sought to be fastened on the new State. There is no contract between the new State and the appellant, so there also he is out of Court; and even if there was some agreement or understanding between the high contracting parties, it cannot be enquired into, or enforced by the Municipal Courts of the new State.'
In view of this latest and most authoritative pronouncement of the highest Court, it is clear that whatever rights the plaintiff in the instant case had, they lapsed on the merger of the Miraj State with the Bombay State.
17. Mr. Gumaste relying upon two decisions of the Supreme Court in Ameer-Un-Nissa Begum v. Mahboob Begum : AIR1955SC352 and Director of Endowments, Govt. of Hyderabad v. Akram Ali : AIR1956SC60 , which were cases from the Hyderabad State, contended that the decision taken, by the Supreme Ruler is final whether it is regarded as a piece of legislation or a judicial act, because the Nizam of Hyderabad was the fountain-head of all the powers viz., legislative, executive and judiciary. Mr. Kotwal argued that this point was not taken in the written statement and that this question is being agitated for the first time in this Court. In view of the conclusion already arrived at, we do not feel called upon to decide this question one way or the other.
18. It is not also necessary to decide the question of limitation as also the bar of the Bombay Revenue Jurisdiction Act, 1876, and the Pensions Act, 1871. But, in view of the fact that the trial court held the suit as barred by limitation, and further in view of the fact that detailed arguments were advanced before us on both points, we will briefly deal with them. We will first take up the question of limitation. Mr. Kotwal's main argument was that between the long period of 1916 and 1941, the State Government had, at no time, repudiated or rejected the plaintiff's claim. On the other hand, it went on treating the amounts received by it as disputed items or doubtful items, and had gone on crediting those amounts in the suspense account. According to Mr. Kotwal, the first repudiation came in 1941 when the Ruler of Miraj State passed the Order on 25th April 1941 already referred to (Exh. 52). In this connection, he relied upon two decisions of the Privy Council in Bolo v. Koklan and Annamalai Chettiar v. Muthukaruppan Chettiar . Before considering the effect of those decisions, it is necessary to determine under which article the present case falls. Mr. Gumaste suggested that the case may fall either under Article 62 or 89 of the Indian Limitation Act. Article 62 applies to a claim for money payable by the defendant to the plaintiff for money received by the defendant for the plaintiff's use. The present claim of the plaintiff is for the accounts of the management, and, therefore, is not in respect of an ascertained sum. Article 89 applies to a suit by a principal against his agent for movable property received by the latter and not accounted for. The doctrine of agency does not apply to a case in which parties stand in fiduciary relationship. The only article that is applicable to the present case is article 120, which is a residuary article. Under that article limitation starts from the date of accrual of the cause of action. In it has been laid down that under Article 120 of the Limitation Act, the terminus a quo is 'when the right to sue accrues', and there can be no 'right to sue' until there is an accrual of the right asserted in the suit and its infringement or at least a clear and unequivocal threat to infringe that right by the defendant against whom the suit is instituted. In the present case, we do not find from the record of the case that there was, at any time, a clear and unequivocal threat much less any infringement of the plaintiff's claim. As a matter of fact, as late as 1932, the Ruler of the Miraj State informed the plaintiff that the proceedings were still going on in respect of the plaintiff's claim. Exh. 50 is theletter written by the Diwan, Miraj State, on 27th September 1932, to the plaintilf. In that letter, after mentioning that the proceedings were still going on, the Diwan asked the plaintiff to submit written arguments. In the schedule of accounts, the amounts that were due to the plaintiff have been shown as being credited to the suspense account and the plaintiff's name is shown as being the person to whom those amounts were due. Mr. Gumaste contended that the threat was clear as far back as 1927 when the State handed over the other Saranjam Estate to the plaintiff except the rights in question. We are unable to accept this line of reasoning. The position has been stated in still more clear terms in the later decision of the Privy Council in . In that case, it has been held that
'the article of the Indian Limitation Act applicable to an equitable claim against a trustee, liable to account, for an account and ascertainment of what may be due, is the residuary article 120, and not article 62; and limitation docs not begin to run until the right to sue accrues, i.e., until there is an accrual of the right asserted in the suit and its infringement or at least a clear and unequivocal threat to infringe that right by the defendant'.
19. The question relating to the bar under the Revenue Jurisdiction Act and the Pensions Act can be easily disposed of Section 4(a) paragraph (4) of the Bombay Revenue Jurisdiction Act, on which reliance is placed by the defendant, runs as follows:
'No Civil Court shall exercise jurisdiction as to any of the following matters :
xx xx xx xx claims against the Crown relating to lands held under treaty, or to lands granted or held as Saranjam, or on other political tenure, or to lands declared by the Provincial Government or any officer duly authorized in that behalf to be held for service'.
The claim contemplated by this paragraph is a claim relating to lands and not to other rights. The rights claimed in the present suit have no relation to the lands or the villages granted to the plaintiff's ancestors. Then, again reliance is placed on clause (f) of Section 4 of the said Act, which runs thus :
'No Civil Court shall exercise jurisdiction as to any of the following matters :
xx xx xx xx (f). claims against the Crown--to hold land whollyor partially free from payment of land revenue orto receive payments charged on or payable out ofthe land revenue, or to set aside any cess or rateauthorized by the Provincial Government under theprovisions of any law for the time being in force'.
The present case does not raise any question relatingto exemption from payment of land revenue eitherin full or in part. This clause, therefore is obviouslynot applicable to this case. Mr. Gumaste thenrelied upon a decision of the Supreme Court reported in Bhujangrao Daulatrao v. Malojirao Daulatrao, : 1SCR402 . That decision, obviously, is inapplicable to the present case,because the act of Government, which was soughtto he impugned in that suit, related to the landsheld as Saranjam and the Plaintiffs claim in thepresent suit is not in respect of Saranjam lands. Sofar as the Pensions Act is concerned, reliance isplaced on Section 4 of the said Act, which runs asfollows :
'Except as hereinafter, provided, no Civil Courtshall entertain any suit relating to any pension or grant of money or land revenue conferred or made by the British or any former Government, whatever may have been the consideration for any such pension or grant, and whatever may have been the nature of the payment, claim or right for which such pension or grant may have been substituted'.
In order to fall within the mischief of this section, the claim must be in relation to grant of money or Ipension or land revenue. The claim in the presentsuit dues not fall within the purview of any ofthese three categaries. In this connection, Mr.Gumaste relied upon the decision in Nasiruddin. v.Secretary of State 37 Bom. L.R. 763 : AIR 1935 Bom 439 for the purpose of the definition of theterm ' pensions'. In that case, it was held that theterm 'pensions' includes periodical payments out ofthe revenues of the Government of India on accountof past services etc. It is clear even from thisdefinition that the pension must relate to certainservices rendered in the past. Again, the paymentsmust be periodical and must come out of the revenuesof the Government as such.
20. In that view of the case, the appeal fails and is dismissed. No order as to costs of this appeal.
21. The Civil Application No. 4014 of 1958 has been filed by the plaintiff for admitting fresh evidence as additional evidence in this appeal. We do not think that the evidence sought to be adduced is necessary for pronouncing a proper decision in the case. It is, therefore, rejected. No order as to costs.
22. The Civil Revision Application No. 1663 of 1956 has been filed by the State for recovering court fee from the plaintiff on the amount, as ascertained by the court, which, but for the law of limitation, would have been payable by him. The claim of the plaintiff was rejected by the trial court. The appeal preferred by the plaintiff has also bees dismissed by this Court. Therefore, the question of levying court fee on that amount does not arise. The application is, therefore, rejected. No order as to costs.
23. Appeal dismissed.