Under Sub-section (3) of Section 7 of the High Denomination Bank Notes (Demonetisation) Ordinance, 1946 (No. III of 1946), the Central Government hereby grants sanction to the institution of prosecution against (1) Shri M. G. Desai, (2) Shri D.B. Pathak and (3) Shri H. R. Karandikar who are alleged to have contravened the provisions of the said Ordinance in the circumstances set forth below constituting offences punishable under Sub-section (1) of Section 7 of the said Ordinance and other provisions of law.
On 21st January, 1946, (1) Shri M. G. Desai, (2) Shri D. B. Pathak and (3) Shri H. R. Karandikar submitted false declaration under Section 6 of the said Ordinance knowing them to be false, and committed forgery of documents by showing fictitious depositors for getting exchange of high Denomination Bank Notes of Rs. 1,000 each of the total value of Rs. 10,55,000 from the Reserve Bank of India through the Bhor Treasury and actually got exchange of the said amount on the 4th February, 1946. The Treasuary would have refused payment if they had stated the true facts regarding the possession of the amount. They have thus cheated the Reserve Bank of India and the Bhor Treasury and are therefore, punishable for offences under Section 7 of the said Ordinance.
Sd. (N. C. Sen Gupta)
Deputy Secretary to the
Government of India.
10. By his notification dated January 19, 1946, the Rajasaheb of Bhor had applied 'Mutatis Mutandis' Ordinance No. III of 1946 promulgated by the Central Government to the whole of Bhor State with immediate effect and the bare reference to Ordinance No. III of 1946 in the body of the sanction will not justify an inference that the sanction was accorded under the Ordinance in operation in British India and not granted under the Bhor State Ordinance. The recitals in the Ordinance make it abundantly clear that the Central Government was seeking to exercise authority under the Bhor State Ordinance. It is recited that the Reserve Bank of India, Bombay and the Bhor State Treasury were cheated, because of the false declaration made by the appellants and Karandikar. A reference to the alleged deception practised on the Bhor State Treasury was material only if the sanction was given for breach of the Bhor State Ordinance. There is again nothing in the recitals which supports the view that the authority under Ordinance No. III of 1946 conferred by Section 7, Sub-section 3 as in operation in British India was intended thereby to be exercised. In the absence of any sufficient ground indicating that the authority exercised by the Central Government in granting sanction to prosecute the appellants and 'Karandikar was not exercised under the Bhor State Ordinance for breach of which alone they can be prosecuted, but was exercised under the Ordinance in operation in British India, the inference inevitably arises that it was in pursuance of the authority vested in the Central Government under the Bhor State Ordinance that the sanction was given.
11. The contention that the Bhor State Ordinance had lapsed before the initiation of prosecution against the appellants is without substance. The Rajasaheb of Bhor expressly exercised in issuing the Ordinance his inherent power under Section 6 of Act I of 1942 of the Bhor State. The legislative act of the Rajasaheb of Bhor in 'exercise of the inherent power is not subject, unless expressed otherwise, to any temporal limitation. The argument raised by counsel for the appellants that Section 31 overrides Section 6 of Act I of 1942 is plainly unsustainable. In terms, it is provided by Section 6 :
'Notwithstanding anything contained in this or any other Act, all powers--legislative, executive and judicial--in relation to the Bhor State and its Government are hereby declared to be and to have always been inherent in and possessed and retained by the Ruler for the time being of the Bhor State; and nothing contained in this or any other Act shall be deemed to have affected the right and prerogative of the Ruling Prince to make laws, and issue proclamations, orders and ordinances by virtue of his inherent authority'.
By Section 6, the inherent right and prerogative to exercise legislative powers remained uncontrolled, any provision of the Act notwithstanding.
12. Undoubtedly, in respect of the same legislative field, authority could be exercised under Section 6 as well as under Section 31, but that did not affect the competency of the Rajasaheb to make laws or issue ordinances in exercise of his inherent authority when he so chose. It was open to the Rajasaheb to exercise his authority either under Section 6 or Section 31. Promulgation of the ordinance applying 'Mutatis Mutandis' Ordinance No. III of 1946 issued by the Central Government to the whole of the Bhor State was expressly made in exercise of an authority under Section 6 of Act I of 1942, and accordingly that Ordinance did not lapse on the expiry of six months from the date of its promulgation.
13. Whether on the merger of the Bhor State with the Dominion of India the Bhor State Ordinance lapsed may now be considered. Before 1947, the Bhor Ruler was one of the treaty chiefs exercising jurisdiction in criminal and civil cases. With the enactment of the Indian Independence Act, 1947, the suzerainty of the British crown over the Indian States lapsed as from August 15, 1947, and with it all the treaties and agreements in force between the British Crown and the Rulers of the Indian States; and all the functions exercisable by the British Crown and obligations of the British Crown existing on August 15, 1947, towards the Indian States or the Rulers thereof and powers, rights or the jurisdiction exercised by the British Crown also lapsed. But by the Instruments of Accession, the Dominion Government of India was competent to exercise all powers and jurisdiction which the Grown Representative previously exercised. To regulate the exercise of the powers and jurisdiction granted to the Dominion Government under the Instrument of Accession and Stand-still Agreements executed by the Rulers of Indian States, Extra-Provincial (later called 'Foreign') Jurisdiction Act XLVII of 1947 was enacted. By this Act, the Central Government could exercise or delegate to any officer or authority the exercise of the 'foreign jurisdiction' vested in it by virtue of treaties, agreements, grants, usage, sufferance or other lawful means. In February 1948, the Ruler of the Bhor State decided upon integration with the Bombay Province and signed a merger agreement. By Clause 1 of the agreement the form whereof is set out in Appendix 13 to the White Paper on Indian States issued by the Government of India Ministry of States at p. 183-- the Bhor State ceded to the Dominion Government full and exclusive authority, jurisdiction and powers for and in relation to the governance of the State and agreed to transfer the administration of the State to the Dominion Government on the date specified and as from the said day, the Dominion Government was invested with the said powers, authority and jurisdiction in such manner and through such agency as it thought fit. By notification No. 150-1B dated February 25, 1948, the Government of India delegated to the Government of Bombay the powers under Section 4 of the Foreign Jurisdiction Act in respect of the Deccan States respecting any matters enumerated in List II or List III of the seventh schedule to the Government of India Act, 1935.
14. On June 2, 1948, the Government of Bombay issued an Order called 'The Administration of the Indian States Order' in exercise of the powers conferred by Section 4 of the Extra-Provincial Jurisdiction (Foreign) Act of 1947 and it was provided by paragraph 4 of the Order that 'Such provisions ... .of any law . . . . as were in force immediately before the appointed day in any Indian State (which included Bhor State) shall continue in force until altered, repealed or amended by an order under the Extra Provincial Jurisdiction, Act.' On July 28, 1948, another Order called 'The Indian States (Application of Laws) Order, 1948' was issued. This Order applied among others to the Bhor State and laws which were in force in the Province of Bombay were extended to the area of the Bhor State and corresponding laws in force in that State prior to the merger stood repealed. But the Bhor State Ordinance was not repealed by that Order; nor was Ordinance No. III of 1946 made applicable to the Bhor State in supersession of the Bhor State Ordinance. On July 27, 1949, the 'States Merger (Governor's Provinces) Order, 1949' was issued by the Governor General and by paragraph 4 of that Order, all the laws in force in the merged States immediately before the appointed day, i. e., August 1, 1949, continued to remain in force until repealed, modified or amended by a competent legislature. By Clause 1 of Article 372 of the Constitution of India, all the laws in force in the territory of India immediately before the Constitution remained in force until repealed or amended by a competent legislature or competent authority. The Bhor State Ordinance continued to remain in operation notwithstanding merger of the Bhor State by virtue of the order issued under Section 4 of the Foreign Jurisdiction Act, 1947 and under Article 372 of the Constitution it remained in operation even j after the Constitution was enacted. The High Court was therefore, in our judgment, I right in holding that the Ordinance had not | ceased to be in operation on the date of the j commencement of the prosecution against the appellants and Karandikar.
15. There is no substance in the contention that in the absence of adaptations which the President of India is competent to make under Clause 2 of Article 372, the Bhor State Ordinance lapsed. By Clause 2 of Article 372, the President is authorised to adapt existing laws; but the application of the existing laws is not conditioned by the making of adaptations or modifications in that law by the President.
16. The plea that the Province of Bombay was incompetent to extend the Bhor State Ordinance to the area which was formerly administered by the Bhor State, its competence to enact, laws being restricted to laws specified in schedules 2 and 3 of the Government of India Act, 1935 is also without substance, because the Bhor State Ordinance remained in operation by virtue of the order issued under Section 4 of the Extra Provincial Jurisdiction Ac^ and not by any express enactment by the Government of the Province of Bombay in exercise of delegated authority from the Central Government. Nor is there any force in the contention that the sanction should have been given by the Provincial Government for the prosecution of the appellants. By the merger agreement, the Central Government was invested with all the powers of the Ruler of Bhor State, and because of the delegation of its authority by the Central Government to the Provincial Government, that authority did not become ineffective. The Central Government still retained its right to sanction prosecution for infringement of the provisions of the Bhor State Ordinance.
17. The plea that the appellants could not be prosecuted in the absence of a sanction under Section 188 of the Code of Criminal Procedure was not set up before this court.
18. The High Court was accordingly right in holding that no case was made out' for quashing the proceedings commenced against the appellants in the court of the Special Judicial Magistrate First Class (A. C. Branch), Poona. The appeal therefore fails and is dismissed.
19. We hope that the proceedings commenced against the appellants and Karandikar will be taken up for hearing without avoidable delay, and heard expeditiously.