Skip to content


State of Madhya Pradesh Vs. Ch. Jawahirlal Batai Sao and ors. - Court Judgment

LegalCrystal Citation
SubjectCommercial
CourtMadhya Pradesh High Court
Decided On
Case NumberFirst Appeal No. 115 of 1958
Judge
Reported inAIR1962MP348; 1962MPLJ692
ActsCode of Civil Procedure (CPC) , 1908 - Order 8, Rules 4 and 5; Negotiable Instruments Act, 1881 - Sections 118; Extra Provincial Jurisdiction Act, 1947 - Sections 3(2)
AppellantState of Madhya Pradesh
RespondentCh. Jawahirlal Batai Sao and ors.
Appellant AdvocateH.L. Khaskalam, A.G.A.
Respondent AdvocateS.C. Dube, Adv. for Respondents 1 to 8
DispositionAppeal allowed
Cases Referred and Madhaorao v. State of Madhya Bharat
Excerpt:
- indian penal code, 1890.section 306 :[dalveer bhandari & harjit singh bedi,jj] abetment of suicide deceased, a married woman, committed suicide - allegation of abetment of suicide against appellant husband and in-laws - ocular evidence was sketchy - dying declaration recorded by tahsildar completely exonerated all accused in-laws of any misconduct dispelling any suspicion as to their involvement - letter of threat allegedly written by appellant to father of victim was concocted piece of evidence held, though presumption against appellant can be raised, it cannot be said that onus shifts exclusively and heavily on him to prove his innocence. conviction of appellant is liable to be set aside. - defendants 1 and 2, both failed to pay the amount of the promissory-note. in our opinion,.....bhargava, j.1. this first appeal has been filed by the state of madhya pradesh against whom and maharaja ramanul saran singh deo, a suit was brought by the plaintiffs as owners of the joint family firm 'hiralal and brothers' functioning at ambikapur for the recovery of rs. 87,200/- on the basis of a promissory-note, dated 27-9-1947, for rs. 80,000/- carrying interest at the rate of 3 per cent. per annum. the trial court passed a decree for the entire amount claimed in the suit against the state of madhya pradesh and discharged defendant no. 2 who was the ruler of sarguja stale from the obligation to pay the amount of the promissory-note holding that the pro-note was executed by defendant no. 2 in connection with a liability which was the liability of the sarguja state and not his.....
Judgment:

Bhargava, J.

1. This first appeal has been filed by the State of Madhya Pradesh against whom and Maharaja Ramanul Saran Singh Deo, a suit was brought by the plaintiffs as owners of the joint family firm 'Hiralal and Brothers' functioning at Ambikapur for the recovery of Rs. 87,200/- on the basis of a promissory-note, dated 27-9-1947, for Rs. 80,000/- carrying interest at the rate of 3 per cent. per annum. The trial Court passed a decree for the entire amount claimed in the suit against the State of Madhya Pradesh and discharged defendant No. 2 who was the Ruler of Sarguja Stale from the obligation to pay the amount of the promissory-note holding that the pro-note was executed by defendant No. 2 in connection with a liability which was the liability of the Sarguja State and not his individual liability. The State of Madhya Pradesh being dissatisfied with this judgment and decree has preferred this first appeal.

2. Briefly stated, the facts are that in the year 1935 or thereabout, Hiralal and Brothers constructed the Court and Secretariat Buildings at Ambikapur for the State of Sarguja. There arose some disputes with regard to the final measurements and the amount that was required to be paid in respect of the aforesaid construction. Ultimately, after considering the reports of three prominent engineers, namely, Late Diwan Bahadur B. C. Dubey, Mr. Plumley and D. W. Ditchburn, it was decided to nay to the plaintiffs-Rs. 80000/- on account of the aforesaid construction and the defendant No. 2 executed a promissory-note, dated 27-9-1947, for Rs. 80,000/- as referred to above.

3. The Madhya Pradesh Government took over the administration of Sarguja State on 1-1-1948 after merger. The Court and the Secretariat buildings were also taken possession of by the Madhya Pradeah Government.

Defendants 1 and 2, both failed to pay the amount of the promissory-note. The plaintiffs, therefore, after serving notice under Section 80 of the Code of Civil Procedure to the defendant No. 1 State of Madhya Pradesh, brought the present suit against defendant No. 1 on the ground that it was liable to pay the amount of the pro-note because it had taken possession of the Court and the Secretariat buildings regarding the liability of construction of which the pro-note was brought into existence. Defendant No. 2 was impleaded on the ground of his being the executor of the pro-note.

4. Defendant No. 2 admitted all the plaint allegations but contended that the responsibility to pay the amount under the pro-note was not his but it became the liability of defendant No. 1 which took over the administration of the Sarguja State and took possession of the Court and the Secretariat buildings which were public buildings. It was also contended that under the provision of Section 85 of the Code of Civil Procedure, defendant No. 2 could not be sued without the previous consent of the Government of India.

5. Defendant No. 1 denied all the material plaint allegations but more or less in an evasive manner. It was urged on behalf of defendant No. 1 that it was not in possession of the relevant documents in respect of the plaintiff's claim and so could neither admit nor deny the material facts. It was urged that the Sarguja State had ample resources at the relevant time and consequently, it was pleaded that the amount of pro-note must have been paid by the State. The liability under the pro-note was not admitted to be a public liability and was stated to be the personal liability of defendant No. 2. The pro-note was labelled to be suspicious on the ground that a copy supplied by the defendant No. 2 to the State materially differed from the original. On these grounds, the suit was contested.

6. The trial Court found against defendant No. 1 on all the material points and decreed the plaintiffs claim in its entirety.

7. On behalf of defendant No. 1 in this appeal, the following points have been urged:

(1) That the pro-note could not be treated to be a genuine document, it having been brought into existence solely with the idea of imposing a wrong liability on the State.

(2) That the State of Madhya Pradesh could not be held responsible for the amount of the promissory-note because the liability was never accepted by the State and was ultimately denied. The denial constituted an act of the State which could not be inquired into by the Municipal Courts.

8-9. As regards the first question, we may at once say that the point has no substance in it. (His Lordship considered the evidence and proceeded).

10. It is further pertinent to observe that the denial of the execution of the pro-note in the written statement is a very vague one. Under the provisions of Order 8 Rules 4 and 5, on account of the denial being not specific, the written-statement has to be read as if the execution of the pro-note was admitted.

11. It is also important to note that in the instant case, no documents of the Sarguja State have been produced on behalf of defendant No. 1 which could have substantiated the plea to the effect that the amount of the pro-note was paid. In this state of evidence, it is not possible to hold that the pro-note was not genuine and was brought into existence from some ulterior motives. We, therefore, hold that the execution of the promissory-note is duly proved.

12. The promissory-note was also attacked from this stand-point that the lower Court could not presume its consideration under Section 118 of the Negotiable instruments Act as the liability was desired to be enforced against a party who had not executed the pro-note. In our opinion, even if the legal position be assumed to be as the appellant-State would like us to presume, the result is not affected at all because there is positive evidence in the case to show that the pro-note was executed for consideration. Undoubtedly, the Secretariat and District Court buildings were constructed by the plaintiffs. They also received a part payment. Both Moharlal (P. W. 3) and the Ruler of Sarguja State (P. W. 1) prove that at the time of the execution of the document, Rs. 80,000/- remained, to be paid and for that, the promissory-note was executed.

13. It was vehemently, urged on behalf of the appellant that an inference should be drawn against the plaintiffs in the matter of consideration because they failed to produce their own books of account which showed the balance to be Rs. 80,000/- and further failed to get, the account-books of the State produced. We are of the view that this contention also must fail as it has no substance in it.

Primarily, the plaintiffs were entitled to base their claim on the promissory note the execution of which has been duly proved. Secondly, if the defendant-State desired to challenge the consideration entered, in the pro-note on the basis of any accounts maintained by the plaintiffs, it was proper for it to at least make a demand for the production of those accounts. In the absence of any such request on its part, the contention raised is not acceptable.

As regards the non-production of the account-books of the Sarguja State, the defendant-State in the written statement stated that they were not aware of the actual position as to whether the amount claimed, in the suit was due or not because they did not possess the account books. It is difficult to see as to wherefrom the plaintiffs could get the account-boofs produced in these circumstances. We are, therefore, of the view that no conclusion adverse to the plaintiffs can in the instant case be drawn merely because of the non-production of the accounts.

14. It is admitted that the District Court and the Secretariat building is public property and is in the possession of defendant No. 1. It, therefore, appears that, by executing the pro-note by defendant No. 2, the liability that was created was not merely the personal liability of defendant No. 2 but the State also became liable under it.

15. The second contention raised is that the liability of the State of Sarguja under the pro-note was at best a contractual liability and this liability could only be enforced against the State of Madhya Pradesh if after the cession of the erstwhile State of Sarguja, the new State had, expressly or impliedly, undertaken to meet that liability. The new State was entitled to accept it and then it would have become liable to pay. It was also entitled to refuse to make payment. If the new State did not undertake to make payment, the liability could not be enforced in the municipal Courts of the new State.

On this aspect, of the question, it was contended on behalf of the plaintiffs-respondents that after the cession, the new State of Madhya Pradesh became entitled to all the assets of the Sarguja State and so at the same time became liable to meet all the liabilities of that State. Under the laws in force in the State of Sarguja, the State could be sued for the contractual obligations by following the procedure under Section 80 of the Code of Civil Procedure as the Code which was in force in the British India was applied to the Sarguja State some years before the time of the merger of that State.

It was further contended that the State of Madhya Pradesh, after the service of notice under Section 80 of the Code of Civil Procedure, invited details of the claim from the plaintiffs for inquiry and up to the time of the institution of the suit and even subsequently did not refuse to make payment of the amount of the promissory note. All that it said in the written statement amounted merely to pointing out that the defendant-State had no knowledge of the liability. This assertion in no sense amounted to refusal in making payment of the amount claimed, if it was proved.

16. To appreciate this argument, it would be necessary to examine the question as to what is an 'act of State' and how long does it last and whether merely by asking the plaintiffs to supply details of their claim and satisfying the defendant-State about its correctness, it could be inferred that the defendant-State has accented the liability. The question has come up for consideration in various cases. We may, therefore, now refer to some rulings bearing on the point.

17. In Secretary of State v. Rustam Khan AIR 1941 PC 64, the facts were that an agreement in 1903 between the Khan of Kalat and the Agent to the Governor-General in Baluchistan the Khan of Kalat granted to the British Government a perpetual lease of the Nasirabad Niabat a part of the Kalat territory at a quit rent and ceded, in perpetuity the entire management of the Nasirabad Niabat absolutely and with all the rights and privileges, State or personal, as well as full and exclusive revenue, civil and criminal jurisdiction and all other forms of administration. Over part of the land comprised in the agreement the predecessors of the plaintiffs held proprietorial rights granted to them prior to 1903 by the then Khan and the grants continued to be of full force up to the date of the agreement. After the agreement, the Government of India made a settlement of the territory and recorded certain lands including those comprised in the grant to the predecessors of the plaintiffs as Government unoccupied lands.

The plaintiffs brought a suit claiming that as the lands in suit were comprised in their grant from the Khan of Kalat, the Government had no title to them and could not treat them as Government unoccupied lands.

It was held that the agreement was not a 'commercial contract' intended only to effect a more convenient method of collecting revenue and granting powers only for that object and the agreement created rights between two sovereign States. The British Government were to exercise the rights and privileges ceded to them in as ample a manner as if acquired by conquest or cession by virtue of Section 1, Foreign Jurisdiction Act.

It was further held that the agreement gave the British Government full sovereign rights over the territory and they had a right to recognize or not to recognize the existing, titles to land. The act of the British Government in not recognizing the title of the plaintiffs to the suit lands was an 'act of State' for which the plaintiffs could have no recourse against the Government in municipal courts.

18. In Asrar Ahmed v. Durgah Committee Ajmer AIR 1947 PC 1 it was held that where a State had been ceded by a Native Ruler to the British Government, the rights which the inhabitants of that State enjoyed against its former rulers, availed them nothing against the British' Government and could not be asserted in the Courts established by that Government except so far as they had been recognized by the new Sovereign Power. Such recognitions may be by legislation or by agreement express or implied.

19. In Vajesinghji Joravarsinghji v. Secretary of State, 51 Ind App 357 : (AIR 1924 PC 216), it has been held :

'After a sovereign state has acquired territory, either by conquest, or by cession under treaty, or by the occupation of territory theretofore unoccupied by a recognized ruler, or otherwise, an inhabitant of the territory can enforce in the municipal Courts only such proprietary rights as the sovereign has conferred or recognized. Even if a treaty of cession stipulates that certain inhabitants shall enjoy certain rights that gives them no right which they can so enforce. The meaning of a general statement in a proclamation that existing rights will be recognized is that the Government will recognize such rights as upon investigation it finds existed. The Government does not thereby .......... renounce its rights to recognize only such titles as it considers should be recognized, nor confer upon the municipal Courts any power to adjudicate in the matter.'

20. In Secretary of State v. Bai Rajbai ILR 39 Bom 625 : (AIR 1915 PC 59), following the cases of Secy. of State in Council of India v. Kamachee Boye Sahaba 7 Moo Ind App 476 (PC) and Cook v. Sprigg 1899 AC 572 it has been laid down :

'The only legal enforceable rights the Kasbatis could have as against the British Government were those, and those only, which that Government by agreement, express or implied, or by legislation chose to confer upon them. The relation in which they stood to their native sovereign and the consideration of the existence, nature, and extent of their rights before the cession were only relevant matters for the purpose of determining whether and to what extent the British Sovereign had recognized their ante-cession rights, and had elected or agreed to be bound by them. The burden of proving that they had any such rights which the Bombay Government consented to their continuing to enjoy rested upon the respondent.'

21. In Dalmia Dadri Cement Co., Ltd. v. I. T. Commissioner AIR 1958 SC 816, it has been observed in paragraph 13 of the judgment :

'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 because as between the sovereign and his subjects there is no such thing as an act of State, and it is incumbent on his officers to show that their action which is under challenge is within the authority conferred on them by 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 out 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 corrected by conquest or cession. Now, 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. It is also well established that in the new set-up these residents do not carry with them the rights which they possessed as subjects of the ex-sovereign, and that as subjects of the new sovereign, they have only such rights as are granted or recognized by him. Vide 42 Ind App 229 : (AIR 1915 PC 59), 51 Ind App 357 : (AIR 1924 PC 216) [supra), 68 Ind App 109 : (AIR 1941 PC 64) and AIR 1947 PC 1. In law, therefore, the process of acquisition of new territories is one continuous act of Slate terminating on the assumption of sovereign powers de jure over them toy the new sovereign and it is only thereafter that lights 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.'

Further it has been observed in para 14 of the same judgment :

'........ .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 it has been held over and over again that 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 new sovereign.'

In paragraph 17 of the same judgment, the following observations are also made.

. . . . . . When a treaty is entered into by sovereigns of independent States whereunder sovereignty in territories passes from one to the other, clauses therein providing for the recognition by the new sovereign of the existing rights of the residents of those territories must be regarded as invested with the character of an act of State and no claim based thereon could be enforced in a Court of law'.

22. In Raghubar Sarup v. State of U. P. AIR 1959 SC 909, Zamindars in the erstwhile Rampur State relied upon a collateral letter to the agreement between the Ruler of Rampur and the Dominion Government and it was urged that in view of the agreement made, it was not open to the State of Uttar Pradesh to abolish estates in Rampur. Clause (iii) of the letter, relied upon was as follows :

'All contracts and agreements entered into by your Highness before the date on which the administration is made over to the Govt. of India will be honoured except in so far as any of these contracts or agreements may either be repugnant to the provisions of a law made applicable to the State or inconsistent with any general policy of the successor Government.'

It was held, following the case in Umeg Singh v. State of Bombay AIR 1955 SC 540 that the Zamindar could not rely upon the agreement between the Ruler of Rampur and the Dominion of India and raise any dispute on the basis of this agreement in view of the bar of Article 363 of the Constitution. It was further held at page 910 :

'Assuming that the jagirs, zamindaris, and muafis were the result of some contracts or agreements entered into by the Ruler of Rampur these contracts and agreements would only be honourned except where they became inconsistent with any general policy of the successor government. As soon therefore as the State of Uttar Pradesh which was the successor Government decided to abolish the jagirs, zamindaris and muafis in pursuance of a general policy to abolish all estates in the whole of Uttar Pradesh, these contracts and agreements must fall and those deriving benefits from these contracts and agreement could not put them forward against the general policy of the successor Government'.

23. The meaning of the term 'act of State' was exhaustively considered in State of Saurashtra v. Mamom Haji Ismail, AIR 1959 SC 1383 :

'The term 'act of State' has many uses and meanings. In France and some Continental countries the acts of the State and its officers acting in their official capacity are not cognizable by the ordinary Courts nor are they subject to the ordinary law of the land. The reason of the rule is ... stated to be that the State as the fount of all law cannot be subordinate to it. In our system of law which is inherited from English Jurisprudence this is not accepted and save some acts of a special kind, all other official acts must be justified as having a legal foundation. In this sense, 'act of State' means not all governmental acts as it does in the French and Continental Systems but only some of them. The term is next used to designate immunities and prohibitions sometimes created by statutes, The term is also extended to include certain prerogatives and special immunities enjoyed by the sovereign and its agents in the business of internal government. The term is even used to indicate all acts into which, by reason that they are official in character, the Courts may not inquire or in respect of which an official declaration, is binding on the Courts.'

An act of State involving an alien outside the State was held to be a sovereign act which is neither grounded in law nor does it pretend to be so. It was observed after reviewing various authorities in paragraph 16 of the same judgment:

' ......... an act of State is an exercise of sovereign power against an alien and neither intended nor purporting to be legally founded. A defence of this kind does not seek to justify the action with reference to the law but questions the very jurisdiction of the Courts to pronounce upon the legality or justice of the action'.

It was clearly held that the essence of an act of State is the exercise of sovereign power and that is done arbitrarily, on principles either outside or paramount to the municipal law. The fact that the sovereign allows the inhabitants to retain their old laws and customs does not make the sovereign subject to them and all rights under those laws are held at the pleasure of the sovereign. It is only when the sovereign can be said to have purported to act within the laws that the act of State ceases to afford a plea in defence. Before that stage is reached, government may be influenced by the existing laws and rights and obligations but is not governed or bound by them.

24. In Pravin Chandra v. State of Madhya Pradesh, AIR 1961 SC 775, it has clearly been laid down that in view of the provisions of Article 363(1) of the Constitution, any dispute arising out of the Merger Agreement or the Instrument of Accession is beyond the competence of the Courts to enquire into.

25. The question as to what is the 'act of State' and when it ceases to apply between the new sovereign and the subjects of a State ceded to the new sovereign came up for consideration before the Supreme Court in Jagannath Agarwala v. State of Orissa Civil Appeal Nos. 666 and 667 of 1957 D/- 8-3-1961 : (AIR 1961 SC 1361). The salient facts were that Jagannath Agarwala who was the appellant in both the appeals urged that for establishing a business for the manufacture of industry of alcohol and essential oils and for purchase of wheat and barley in the Punjab, there was an agreement between him and the Maharaja of Mayurbhanj that the capital would be contributed by the parties in a specified manner and that the profit and loss would also be shared equally.

It was urged by the appellant that in furtherance of the agreement, he established a factory and started the business but the Maharaja instead of contributing the share of the capital asked the appellant to do so on his behalf promising to pay him the amount invested. Losses were sustained ultimately in both the businesses and the appellant claimed half of the loss from the Mayurbhanj State. From January 1, 1949, the State merged with the Province of Orissa and on the same day the Government of Orissa promulgated the Administration of Mayurbhanj State Order, 1949, under Section 4 of the Extra Provincial Jurisdiction Act, 1947 (47 of 1947). Clause 9 of the Order provided for the making of claims against the Ruler of the State. Claims were invited under that Clause from the various creditors and the appellant made a claim before the Claims Officer who reported to the authorities concerned for the acceptance of the claim. Ultimately however the claims were rejected by the Revenue Minister without an opportunity being given to the appellant to be heard viva voce before the ultimate decision was reached.

It was contended on behalf of the State of Orissa before the Supreme Court that the rejection of the claim was an act of State and that the new sovereign State could not be compelled by process of municipal Courts to accept a liability of the old Ruler and though the new sovereign State may make such inquiry as it chose, the right of hearing could not be claimed in the manner that it is ordinarily claimed in a civil Court. It was pointed out by their Lordships that it was not necessary to specifically raise the plea that this was a part of an act of State on the authority of 51 Ind App 357 : (AIR 1924 PC 216) (supra). Their Lordships observed :

'It is the acceptance of the claim which would have bound the new Sovereign State and the act of State Would then have come to an end. But short of an acceptance either express or implied, the time for the exercise of the Sovereign right to reject a claim was still open.'

It is clear from these observations that the act of State cannot be said to have come to an end when the Government allowed claims to be preferred or when an Officer of the Government made his report. Their Lordships stated:

'The Claims Officer was not a part of the municipal Courts, and Government cannot be said to have submitted itself to the jurisdiction of the municipal Courts, when it entrusted the enquiry to him.'

On these considerations, it was ultimately held in the case that till there was an acceptance by Government or some officer of the Government who could be said to bind the Government, the act of State was still open and in their Lordships' opinion it was so exercised in that tase.

26. Quite recently, the same point came up for consideration in the case of Sri Promod Chandra Dev v. State of Orissa, Civil Appeal No. 79 of 1957 D/- 16-11-1961: (AIR 1962 SC 1288), before the Supreme Court, Their Lordships explained in detail the meaning, character, extent and implications of 'an act of State'.

It has been made clear in the judgment that the taking over of full sovereign powers may be spread over a number of years, as a result of historical processes. It was further pointed out that as an act of State derives its authority not from the municipal law but from ultra vires or supra legal means, municipal Courts have no power to examine the propriety or legality of an act which comes within the ambit of 'act of State'. It has also been explained in the case that whether the Ad of State has reference to public rights or to private rights, the result is the same, namely, that it is beyond the jurisdiction of municipal Courts to investigate the right and wrong of the transaction and to pronounce upon them and that, therefore, such a Court cannot enforce its decisions, if any. It was further said that it may be that the presumption is that the pre-existing laws of a newly acquired territory continue and that according to ordinary principles of international law private property of the citizens is respected by the new sovereign but municipal Courts have no jurisdiction to enforce such international law obligation.

It was also pointed out that it may have been stipulated in the treaty by which the new territory was acquired that the pre-cession rights of the old inhabitants shall be respected but such stipulations cannot be enforced by individual citizens because they are not parties to those stipulations. The municipal Courts have jurisdiction to investigate and ascertain only such rights as a new sovereign has chosen to recognise or acknowledge by legislation, agreement or otherwise.

27. Applying the principles above stated to the facts of the present case, it becomes clear that by virtue of the agreement of integration, dated 14-12-1947, the defendant No. 2 made over to the Central Government full and exclusive authority, jurisdiction and powers for and in relation to the governance of the State of Sarguja. Thereupon, in exercise of the powers conferred by Sub-section (2) of Section 3 of the Extra Provincial Jurisdiction Act, 1947, the Central Government delegated on 23-12-1947 to the Provincial Government all their powers under the said instrument. The Provincial Government took over sovereign powers over the territories of the erstwhile State of Sarguja by the process of cession. No suit can, therefore, be maintained against the State of Madhya Pradesh on the basis of the promissory-note to enforce any obligation arising thereunder in favour of the plaintiff unless the liability thereunder was subsequently accepted by the present State or the Provincial Government. The plaintiffs being citizens of the acquired territory can enforce and establish in the municipal Courts those rights only which the new sovereign recognised. The stipulation, even (sic) it be presumed to be in the covenant of cession does not confer on the plaintiffs any right of action so as to entitle them to enforce any such stipulation of the treaty against the will of the new sovereign.

There is nothing on record to show that at any time the defendant-State admitted, expressly or impliedly, the right of the plaintiffs to recover any amount from it under the pronote or on the basis of the original contract which resulted in the execution of the promissory note. The legal position that the State of Sarguja could be sued for the contractual obligations under the laws in force in that State also avails nothing to the plaintiff against the defendant-State because the rights under the contractual obligation could not be asserted in the municipal Courts of the defendant-State except so far as recognized by the new sovereign power. The present suit therefore, is not, in our opinion, maintainable. The municipal Courts could have jurisdiction, only to find out whether the new sovereign had or had not recognized or acknowlodged the rights in question. But, as already said, there is no evidence given by the plaintiffs to show that their rights were so recognised.

28. Shri S. C. Dubey, in the next place, contended on behalf of the respondents that the pro-note operated as binding law on the State in the sense that it could be interpreted as an order to the officers of the Sarguja State to pay the amount specified therein. He relied upon the cases of Ameer-unnissa Begum v. Mahboob Begum AIR 1555 SC 352 and Madhaorao v. State of Madhya Bharat AIR 1961 SC 298 in support of the contention that where the Ruler constituted 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 capacity, any order Issued by him would govern or regulate the rights of the parties concerned though it could be annulled or modified later by the Ruler himself. It was stressed that the orders of the Ruler, however issued, would have the force of law and would govern and regulate the affairs of the State including the rights of its citizens.

29. It is, however, important to notice as was pointed out by the Supreme Court in the case of AIR 1961 SC 298 (supra) that even where an order is issued by the sovereign ruler, one must look to the character of the order and its content to find out whether it enacted a binding rule. There may not have been a set pattern of language in the Sarguja State for the framing of rules for the issuing of orders and regulations but even then the character of the document itself shows that it was not intended to be a mandate emanating from a sovereign and thus, had no force of law. Rightly interpreted, the document only gave this right to the plaintiffs that if they failed to receive the amount promised therein, they could pursue the ordinary course of remedy, that is to say, they could sue the defendant No. 2 or the State of Sarguja, on its basis.

30. It may be pointed out that the respondents themselves never treated the pro-note to be amounting to law or a rule or order having the force of law. They did not present the promissory-note for payment to the treasury. They complied with the procedure prescribed under Sec. 80 of the Code of Civil Procedure and actually filed the suit to recover the amount and the same procedure would have been followed by them even if the promissory-note had been executed by an ordinary citizen.

We are, therefore, not prepared to give to the promissory-note in question the force of an existing piece of legislation or an order or regulation having the force of law. If the document in question represented the will of the sovereign in the executive, judicial or legislative sense, it need not have been executed on the stamppaper merely recording the liability. It could be couchedin the language of an order but it had not been sodone.

31. The result is that the appeal succeeds and isallowed but in the circumstances of the case, the partiesshall bear their own costs throughout.


Save Judgments// Add Notes // Store Search Result sets // Organizer Client Files //