1. These two cases have come before this Court under the following circumstances.
2. On 12th October 1963, Colonel His Highness Maharaja Sawai Tejsinghji of Alwar filed Civil Suit No. 5 of 1963 in the court of the District Judge, Alwar, for a declaration that the properties detailed in paragraph No. 4 of the plaint were the private properties of the plaintiff and the defendant No. 2, the State of Rajasthan, be ejected therefrom, or, in the alternative, ordered to pay rent at Rs. 1000/- p.m. A decree for Rupees 36,000/- was also claimed for mesne profits. These properties may be briefly described as (1) The stable of the City Palace known as Secretariat these days; (2) Daulatkhana and (3) Indraviman Station. The plaintiff's case is that he was the Ruler of the erstwhile Alwar State on the 1st April, 1948, and till then he was the owner of all the properties belonging to the State of Alwar. On 1st April, 1948, the Alwar State merged into the State of Matsya and thereafter in the State of Rajasthan. The plaintiff made a claim before the Government of India that the City Palace and the adjoining buildings be held to be the private property of the plaintiff. The Union of India accepted this claim and sent a letter D. O. No. F. 4/40/P/49 dated 14th September, 1949, to this effect. According to the plaintiff, the City Palace and the adjoining buildings included the suit properties. The plaintiff further alleged that after the coming into force of the Constitution, the plaintiff became an ordinary citizen of India and became owner of the suit properties in that capacity. On 31st September, 1952, the plaintiff received a letter from the Deputy Secretary, Political Department, Government of Rajasthan, communicating to him that the suit properties were not included in his private properties. On receipt of this letter, the plaintiff carried on correspondence with the Union of India but without any result. He was informed by D. O. No. F10/30/59 dated 24th December, 1959, by the Government of India stating that the disputed properties were not included in his private properties. The plaintiff claimed that the possession of the State of Rajasthan was more permissive possession; but since it is denying the right of ownership of the plaintiff he had a right to obtain the possession of the suit properties and to claim mesne profits for use and occupation for the last three years preceding the suit.
3. In the written statement filed on behalf of the Union of India, it was admitted that on 28th February, 1948, a Government for the formation of the United State of Matsya was entered into by the plaintiff, who was then the Ruler, of Alwar, and the Rulers of Bharatpur, Dholpur and Karauli. Under Article XI of the said Covenant, it was provided that the Ruler of each Covenanting State shall be entitled to enjoy the full ownership, use and enjoyment of all private properties belonging to him on the date of his making over of the administration of his State. Each of the Rulers was required to furnish before 1st May, 1948, an inventory of all the immovable properties, etc. held by him as private property. The said Article also provided for resolution of disputes in regard to the character of any property as between the Ruler and the Union by reference to a nominee of the Government of India. Subsequently on 10th May, 1949, an agreement was drawn up between the Rajpramukh of the United State of Rajasthan and the Rulers of Alwar, Bharatpur, Dholpur and Karauli for the merger of the United State of Matsya with effect from 15th May, 1949, and the abrogation of the Covenant entered into by the Rulers of the Matsya States. In accordance with the provisions of the Matsya Covenant, the Ruler of Alwar submitted an inventory of the properties which he claimed to be private, and in this was included the City Palace including the adjoining building. In their letter dated 14th September, 1949, the following decision of the Government of India in respect of the City Palace was communicated to the Ruler of Alwar:
Decisionof the States Ministry,
CityPalace including adjoining building
Ancestral.The portion of the building at present in use by the State for administrativepurpose or for Museum and Imperial Bank will continue to be soused till such time as required. The requirements of the State in furture will notbe of the same order as today and every effort will be made to releasethe accommodation at present occupied in the Zenana and Mardana Mahals at theearliest practicable date. The State will bear the maintenancecost of the portion used by it. Any addition or alteration in the portion used by the State willrequire the prior consent of His Highness and should be carried out at State expense.'
According to the Union of India, the above decision broadly and in outline represented the agreement between the Ruler and the Government of India in terms of Article XII, Clause (3) of the Covenant constituting the United State of Rajasthan, which had become applicable, with certain amendments, to the Ruler of the State of Alwar. It is contended that the agreement was not complete and detailed, and there was a difference of opinion between the Government of Rajasthan and the Ruler of Alwar about the precise limits of the City Palace and the adjoining properties. After discussion with the Ruler, it Was decided in 1952, that the main building of the City Palace and the adjoining building comprising the Jagir Office, the Central Record, Imperial Bank, Treasury etc. would be treated as belonging to the Ruler. It was also specifically decided that the Ruler's property would not include, the Secretariat. The Ruler of Alwar was informed of this decision through the State of Rajasthan. The Ruler was also informed on 24th December, 1959, by the Government of India that the suit properties had not been recognised as his private properties. It Was contended that the letter dated 24th December, 1959, represented the final agreement between the parties as regards the property in dispute. It is contended that Article 363 of the Constitution ousted the jurisdiction of the court as regards any disputes arising out of any provision of the Covenant. It was further contended that without prejudice to the provisions of Article 363 of the Constitution, the Ruler having been a party to the discussion after differences had arisen, it was not open to him to go back upon the decision finally communicated to him by the letter dated 24th December, 1959. The State of Rajasthan has also taken up the same line of defence.
4. The trial court framed several Issues and the first issue framed is as follows:
'Is the trial of the suit barred by the provisions of Article 363 of the Constitution of India and the matter being an act of State, the adjudication of the same is beyond the scope of jurisdiction of Civil Court?' The defendant filed an application in this Court under Article 228 of the Constitution praying that the suit be with-drawn from the court of the District Judge. Alwar to this Hon'ble Court to be decided by this Court. Notice of this application was given to the plaintiff-Arguments were heard whether this case is fit to be transferred under Article 228 as also on issue No. 1.
5. The second suit has also been filed by Col. His Highness the Maharaja Tej Singhji of Alwar. To this suit, the State of Rajasthan is the only opposite party. This suit relates to a part of the Mardana Palace in which certain offices of the defendant were functioning. The plaintiff referred to the letter of Shri Menon dated 14th September, 1949, under which it was stated that the State of Rajasthan would vacate the part of the City Palace as early as possible but it failed to do so. It is urged that the plaintiff was entitled to rent or mesne profits at the rate of Rupees 3000/- per mensem for the last three years which amounted to Rs. 1,08,000/-The plaintiff prayed for a decree for that amount.
6. The defendant filed a preliminary objection to the maintainability of the suit stating that it was barred under Article 363 of the Constitution. It was also stated that the suit property was not the exclusive property of the plaintiff. Several issues were framed in this case and the first issue was the same as in the other suit. On an application of the State praying that the suit be withdrawn from the court of the District Judge. Alwar under Article 228 of the Constitution and decided by this Court, the record of the case was summoned and notice of the application was given to the plaintiff. Arguments were heard both on the point whether any substantial question of law both on the applicability of Article 228 of the Constitution and also on issue No. 1.
7. After considering the matter carefully, we have come to the conclusion that in these cases, a substantial question of law as to the interpretation of Article 363 the determination of which is necessary for the disposal of these cases is involved, and we have, therefore, decided to determine that question of law.
8. Before we take up this question, we may refer briefly to the history of the merger of the State of Alwar in the United State of Rajasthan. A Covenant hereinafter called the Matsya agreement was entered into on the 28th February. 1948, by the Rulers of Bharatpur, Dholpur, Alwar and Karauli by which the United State of Matsya came into being on 1st April, 1948. The Covenant provided the integration of the territories of these four States into one State by the name of the United State of Matsya. Article VI of the Covenant provided that the Ruler of each Covenanting State shall as soon as may be practicable and in any event not later than the 15th March, 1948, make over the administration of his State to the Rajpramukh and thereupon all rights, authority and jurisdiction belonging to the Ruler which appertained or were incidental to the Government of the Covenanting State shall vest in the United State. Article XI provided for the private properties of the Ruler and runs as follows:
'(1) The Ruler of each Covenanting State shall be entitled to the full owner-ship, use and enjoyment of all private properties (as distinct from State properties) belonging to him on the date of his making over the administration of that State to the Raj Pramukh.
(2) He shall furnish to the Raj Pramukh before the 1st of May, 1948, an inventory of all the immovable properties, securities and cash balances held by him as such private property.
(3) If any dispute arises as to whether any item of property is the private property of the Ruler or State property, it shall be referred to such person as the Government of India may nominate, and the decision of that person shall be final and binding on all parties concerned.'
The Rulers of the four States made over the administration of their States to the Rajpramukh and the new State by the name of United State of Matsya came into being on 1st April, 1948. Thereafter the United State of Rajasthan comprising the territories of the other States in Rajasthan was formed and by an agreement dated 10th May, 1949, between the Rajpramukh of the United State of Rajasthan and the Rulers of Alwar, Bharatpur. Dholpur and Karauli, the United State of Matsya was integrated with that or became part of the United State of Rajasthan as from the mid-day of the 15th May, 1949, and the Covenant entered into by the Rulers of the Matsya States for the formation of Matsya stood abrogated. This agreement provided for the adoption of the Covenant hereinafter called the Rajasthan Covenant entered into between the Rulers of the United State of Rajasthan with some modifications. Article XII of that Covenant runs as follows:
(1) The Ruler of each Covenanting State shall be entitled to the full ownership, use and enjoyment of all private properties (as distinct from State properties), belonging to him on the date of his making over the administration of that State to the Raj Pramukh of the former Rajasthan State or, as the case may be, to the Raj Pramukh of the United State under this Covenant.
(2) If any dispute arises as to whether any item of property is the private property of the Ruler of a Covenanting State other than a new Covenanting State or is State property, it shall be referred to such person as the Government of India may nominate in consultation with the Raj Pramukh, and the decision of that person shall be final and binding on all parties concerned:
Provided that no such dispute shall be so referrable after the first day of May, 1949. (3) The private properties of the Ruler of each new Covenanting State shall be as agreed to between the Government of India in the States Ministry and the Ruler concerned and the settlement of properties thus made shall be final.' It may be mentioned that both the Covenants and the Agreement contained a guarantee on behalf of the Government of India and in this sense to these documents, the Government of India was a party. With regard to the private property of the Ruler of Alwar, the letter dated 14th September, 1949, was sent to the plaintiff by Shri V. P. Menon on behalf of the Government of India with a copy of the final inventory of his private property. In both the cases, the foundation for the plaintiff's suits is this letter and the copy of the inventory of the property which he sent with the letter. The material portion of the letter has already been referred to above.
9. According to the plaintiff, the inventory with the letter was the final list of his private property which received the approval of the Government of India and that the City Palace including the adjoining buildings mentioned in the inventory included the suit property in civil case No. 5 of 1963 filed in the court of the District Judge, Alwar. It is contended on behalf of the plaintiff that with respect to this property there had been a final approval of the Government of India and the contention of the Government of India that it was not a final approval was wrong. In this case, the argument is that with the abdication of his sovereign powers by the Ruler of Alwar on the formation of the United State of Matsya, the plaintiff became a private citizen owning private property the extent of which was finally approved by the Government of India by the letter of Mr. Menon dated 14th September, 1949, and it was not open to any body and least of all the Union of India to change its approval subsequently. In civil suit No. 4 of 1963, the contention of the plaintiff is that the letter of Mr. Menon included the entire Mardans Mahal in the private property of the plaintiff and the State of Rajasthan was permitted to vacate the same at the earliest practicable date and as it failed to do so, it was bound to reimburse the plaintiff. This in brief is the gist of the case of the plaintiff in both the suits.
10. In suit No. 5 of 1963, the defence of the defendants is that the letter of Shri Menon did not specify clearly the limits of the adjoining buildings to the Palace and later on it was found that the suit properties involved in that suit were not part of the private properties of the plaintiff. In civil suit No. 4 of 1963, the defence of the State of Rajasthan which is the sole defendant in that case is that part of Mardana Mahal in its possession was not the exclusive private property of His Highness.
11. We have thus mentioned the nature of the disputes involved in both the cases and we have examined whether such disputes are not justiciable by the Civil Courts in view of Article 363 of the Constitution.
12. Article 363 runs as follows:
'363. (1) Notwithstanding anything in this Constitution but subject to the provisions of Article 143, neither the Supreme Court nor any other Court shall have jurisdiction in any dispute arising out of any provision of a treaty, agreement, covenant, engagement, sanad or other similar instrument which was entered into or executed before the commencement of this Constitution by any Ruler of an Indian State and to which the Government of the Dominion of India or any of its predecessor Governments was a party and which has or has been continued in operation after such commencement, or in any dispute in respect of any right accruing under or any liability or obligation arising out of any of the provisions of this Constitution relating to any such treaty, agreement, covenant, engagement, sanad or other similar instruments. (2) In this article-
(a) 'Indian State' means any territory recognised before the commencement of this Constitution by His Majesty or the Government of the Dominion of India as being such a State; and
(b) 'Ruler' includes the Prince, Chief or other person recognised before such commencement by His Majesty or the Government of the Dominion of India as the Ruler of any Indian State.'
This Article shuts out the jurisdiction of all the courts in any dispute arising out of any provision of a treaty, agreement, covenant, engagement, sanad or other similar instrument which were entered into or executed before the commencement of the Constitution by any Ruler of an Indian State, It is urged on behalf of the defendants that in both the suits there was a dispute arising out of the provisions of the Covenants, and the agreement dated 10th May, 1949, to both of which the Dominion of India was a party and which had continued in operation after the commencement of the Constitution. The crux of the matter, therefore, is to examine in each case whether in deciding these suits the court would be called upon to decide or adjudicate any dispute arising out of any provisions of the aforesaid Covenants or of the aforesaid agreement.
13. We first take up suit No. 5 ofIn order that the provisions of363 be attracted in this case, there must be a dispute which must arise out of any provisions of the aforesaid Covenants or must arise out of the agreement. The contention of the plaintiff is that none of these conditions are satisfied. It may be said that so far as the provisions of the Covenants are concerned, there was no dispute between the parties. Both the sides agree with regard to their contents and their terms. Nor is there any disagreement about the interpretation of any clause contained in these Covenants.
14. On behalf of the defendants, the contention is that under Article XII (3) of the Rajasthan Covenant, the private property of the ruler of each Covenanting State shall be as agreed between the Government of India and the Ruler concerned and the settlement of the property thus made shall be final and the dispute that has arisen is with regard to the terms of the agreement as embodied in the letter dated 14th September, 1949. Learned counsel for the plaintiff argued that the letter dated 14th September, 1949, was not an agreement but it merely conveyed the decision of the Government of India on the claim of the plaintiff which he had preferred under Article XI of the Matsya Covenant and it cannot be said that it contained any agreement between the Ruler and the Government of India.
15. An inventory was submitted under Article XI of the Matsya Covenant but by the time decision was taken by the Government of India, the United State of Matsya had merged in the United State of Rajasthan and under Article XII of the Rajasthan Covenant, it was contemplated under Sub-clause (3) that the private properties of the ruler shall be as agreed to between the Government of India and the Ruler concerned. In our opinion, the letter incorporated the result of such agreement. The concluding paragraph of that letter clearly shows that the settlement of the inventory was an integral part of an over-all agreement in respect of all outstanding matters of dispute and did not stand by itself. The defendants have in this case raised a dispute with regard to that agreement on the point that the description given in the inventory did not include the suit property. Such a dispute cannot be said to be not a dispute arising out of the provisions of the agreement between the Government of India and the Ruler which was contemplated with regard to private properties under Clause (3) of Article XII of the Covenant.
16. Learned counsel for the plaintiff has then argued that after abdication of his sovereign power, the ruler of Alwar became a private citizen though for the purpose of Constitution, he remained a Ruler, and as a private citizen he could own private property and the extent of his private properties was settled by the Government of India by that letter and as a private citizen he has a right to get an adjudication by a civil court on the point whether a particular property has been recognised by the Government of India or not and such adjudication cannot be said to be barred under Article 363 of the Constitution because if such an interpretation of Article 363 will be adopted, the plaintiff will be put in a position worse than that of a private citizen. He has placed before us various authorities of the Privy Council and the Supreme Court to show that a private citizen of India could enforce any right which he possessed before the commencement of the Constitution if those rights had been recognised by the State.
17. We need not review the entire law on the subject and the following propositions may be taken to be well settled on the authority of the judgment of the Supreme Court in Promod Chandra v. State of Orissa, AIR 1962 SC 1288:
'On an examination of the authorities discussed or referred to above, the following propositions emerge. (1) 'Act of State' is the taking over of sovereign powers by a State in respect of territory which was not till then a part of its territory, either by conquest, treaty or cession, or otherwise, and may be said to have taken place on a particular date, if there is a proclamation or other public declaration of such taking over. (2) But the taking over of full sovereign powers may be spread over a number of years, as a result of a historical process. (3) Sovereign power, including the right to legislate for that territory and to administer it, may be acquired without the territory itself merging in the new State, as illustrated in the case in 57 Ind. App. 318: AIR 1930 PC 267. (4) Where the territory has not become a part of the State, the necessary authority to legislate in respect of that territory may be obtained by a legislation of the nature of Foreign Jurisdiction Act. (5) As an act of State, derives its authority not from a municipal law but from ultra-legal 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'. (6) Whether the act 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 rights and wrongs of the transaction and to pronounce upon them and, that, therefore, such a Court cannot enforce its decisions, if any. It may be that the presumption is that the pre-existing laws of the 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 obligations. (7) Similarly by virtue of the treaty by which the new territory has been acquired, it may have been stipulated that the precession rights of old inhabitants shall be respected, but such stipulations cannot be enforced by individual citizens because they are no parties to those stipulations. (8) The Municipal Courts recognised by the new sovereign have the power and the jurisdiction to investigate and ascertain only such rights as the new sovereign has chosen to recognise or acknowledge by legislation, agreement or otherwise. (9) Such an agreement or recognition may be either express or may be implied from circumstances and evidence appearing from the mode of dealing with those rights by the new sovereign. Hence, the Municipal Courts have the jurisdiction to find out whether the new sovereign has or has not recognised or acknowledged the rights in question, either expressly or by implication, as aforesaid. (10) In any controversy as to the existence of the right claimed against the new sovereign, the burden of proof lies on the claimant to establish that the new sovereign had recognised or acknowledged the right in question.'
18. Learned counsel for the plaintiff has laid stress on propositions Nos. 8 and 9 and urged that the right of the plaintiff to the suit property was recognised by both the Government of India and the State of Rajasthan and if there is any doubt on this point, the Municipal Court has the jurisdiction to find out whether they had or had not recognised the rights of the plaintiff to the suit property. This is the position which every citizen of India can take up as against the State, and there is no reason why the plaintiff who was at one time the Ruler of a princely State of Rajasthan be not allowed to take up this position.
19. Learned counsel has also submitted that the sovereign cannot exercise an act of State against its own subject. If we leave aside Article 363 of the Constitution, this contention of learned counsel for the plaintiff is correct in the eye of law. It has been held that a Ruler of a State becomes an Indian citizen after the coming into force of the Constitution and as against him the State cannot exercise any act of State. In this connection we may refer to the following observations made in Virendra Singh v. State of Uttar Pradesh, 1955 SCR 415 :(AIR 1954 SC 447):
'Article 1 (1) sets out that India shall be a Union of States and Clauses (2) and (3) define the territories of which India shall be composed. They include the territories in which the disputed lands are situate. Article 5 defines Indian citizens. They include in their wide embrace the Rulers of Charkhari and Sarila who made the grants, the petitioners who received them and those who now seek as an act of State to make the confiscation. It is impossible for a sovereign to exercise an act of State against its own subjects. However disputable the proposition may be that an act of State can be exercised against a citizen who was once an alien the right being only in abeyance till exercised there has never been any doubt that it can never be exercised against one who has always been a citizen from the beginning in territory which has from its inception belonged to the State seeking to exercise the right. This is so even on the English authorities which claim far higher rights for the State than other laws seem to allow. Lord Atkinson said in Johnstone v. Pedlar, (1921) 2 A. C. 262 at p. 281:
'The last words of Lord Halsbury's judgment clearly suggest that the Government of this country cannot assert as a defence against one of their own subjects that an act done to the latter's injury was an act of State, since such a subject clearly could not rely on his own sovereign bringing diplomatic pressure against himself to right the subject's wrong. In conformity with this principle it was held in Walker v. Baird, (1892) A. C. 491 that where the plaintiffs are British subjects in an action for trespass committed within British territory in time of peace it is no answer that the trespass was an act of State, and that thereby the jurisdiction of the Municipal Courts was ousted.' And so Lord Phillimore said at page 295: 'Because between Her Majesty and one of her subjects there can be no such thing as an act of State.' Thus after the coming into force of the Constitution, there is no question of any act of State against the plaintiff but still if a dispute falls under Article 363 of the Constitution, it cannot be decided by any court in India. The remedy lies by making an appeal to the President to make a reference to the Supreme Court of India under Article 143 of the Constitution.
20. In Usmanali Khan v. Sagar Mal, AIR 1965 SC 1798, the matter has been put in another form by pointing out that Article 363 preserves the political character of the obligation entered into by the State of India by ousting the jurisdiction of the Courts to such questions. It has been observed:
'The guarantee given by the Government of India was in the nature of a treaty obligation contracted with the sovereign Rulers of Indian States and cannot be enforced by action in municipal courts. Its sanction is political and not legal. On the coming into force of the Constitution of India, the guarantee for the payment of periodical sums as privy purse is continued by Article 291 of the Constitution, but its essential political character is preserved by Article 363 of the Constitution and the obligation under the guarantee cannot be enforced in any municipal court.'
21. Article 363 is a provision which shuts out the jurisdiction of a court of law and like any other provision of similar nature it is to be construed strictly so that a citizen of India may not be denied the opportunity, except when the case strictly falls under this Article to get his right adjudicated and decided by a civil court and obtain any relief which he may be found entitled to. This article is applicable not only when there is a direct dispute between the State and the citizen but even when the dispute arises in a case to which the State of India is not a party and a claim is made either on behalf of the State or by any other party to the dispute that the subject-matter of the dispute is covered by Article 363 of the Constitution. This article is couched in a language which lays emphasis not to the parties to the suit but to the nature of the dispute and if any dispute arises out of any provision of a treaty, agreement, covenant etc. the jurisdiction of the civil court is barred.
22. Now in a suit in which the State of India is not a party and an illusory dispute is raised by a defendant, can it be said that the jurisdiction of the court is barred? If so, would it make any difference in which the State of India is a party? These points we are compelled to examine because in both the cases it is strongly emphasized by learned counsel for the plaintiff that the defendants are raising disputes which have altogether no substance but which have been raised by them only to defeat the claim of the plaintiff by invoking Article 363 of the Constitution. Whether this is so in both the cases, we shall decide presently. At this stage, let us consider whether the jurisdiction of the court of law is ousted as soon as a dispute arising out of any provision of a treaty, agreement etc. is raised or the civil court can at least examine whether the dispute is not altogether illusory and the defence raised by the defendant on the very face of it untenable.
23. We realise that in answering the above question, we are faced with a very difficult proposition of law. One view may be that howsoever illusory the dispute may be. It is not for the court of law to decide it because a dispute has been raised. The other view may be that the court of law should examine whether prima facie there is no valid ground for raising that dispute and when there is no valid ground, the court may hold that no dispute really exists. If the first view is adopted, it may in certain circumstances result in such injustice that the court of law may shudder to construe Article 363 in such manner. For example, a Ruler may file a suit for the ejectment of a trespasser from a property which indisputably belongs to him and such person raises the defence that it is not the private property of the Ruler. Would the court of law be justified in rejecting the claim of the ruler on the ground that it has no jurisdiction to entertain it because of the provisions contained in Article 363 of the Constitution? Can the court of law not take into consideration that the defence raised by him is illusory and as there is no real dispute raised for the application of Article 363, the court's jurisdiction is not ousted? Can such person be permitted to say that whatever may be the nature of the dispute, it is still there and if an inquiry is embarked upon for examining the merits of the dispute, it cannot be permitted under Article 363 of the Constitution?
24. We have examined this matter carefully. There is no direct authority on this point. Cases have arisen in England in connection with the immunity enjoyed by a sovereign of being sued in a court of law in England. The view taken is that there is no limit to the immunity in the case of a sovereign personally. Cheshire on 'Private International Law' Sixth Edition has stated at page 90:
'Whether there is any limit to the Immunity where an interest in property to which an action relates is claimed by a sovereign is not so clear, for the difficulty is to define what is meant by an interest sufficient to justify a stay of proceedings. It is obvious that if the bare assertion of a right in the property were to be regarded as sufficient, the doctrine of immunity might be nothing but a cloak for injustice.' Then the author mentions some cases in which the immunity has been held to be unlimited and proceeded to observe as follows at page 92:
'The four categories of cases already considered cover the situation where the ouster of a sovereign State from its existing ownership, possession or control is the object of the legal proceedings. What raises a far more complex problem however is an attempt by a sovereign to intervene in an action between two third-parties and to obtain a stay of proceedings on the ground that it possesses, for instance, a contractual interest to the property to which the action relates. In such a case the court is faced with a dilemma. On the one hand the court itself offends the principle of immunity if it requires the sovereign to establish a claim; on the other hand, it can scarcely be content with the bare assertion of a claim that may or may not in fact be baseless. Dealing with this latter position. Lord Greene, in Haile Selassie v. Cable and Wireless Co. Ltd., (1938) Ch. 839 remarked: It would be a strange result if a person claiming property in the hands of, or a debt alleged to be due by, a private individual in this country, were to be deprived of the right to have his claim adjudicated upon by the courts merely because a claim to the property or the debt had been put forward on behalf of a foreign sovereign.' In the case of Jupiter, (1924) 40 TLR 815, Scrutton L.J. took the view that an assertion by a foreign sovereign that he claimed the right in property must be accepted by the court as conclusive without investigation whether the claim is good or bad.
25. With regard to this view, the Privy Council observed in Juan Ysmael & Company Incorporated v. Government of the Republic of Indonesia, 1955 AC 72 at p. 87 that
'The view that a bare assertion by a foreign government of its claim is sufficient has the advantage of being logical, and simple in application, but it may lead to a very grave injustice if the claim asserted by the foreign government is in fact not maintainable and the view of Scrutton L. J. has not found favour in subsequent cases.' After examining several cases it was observed as follows:
'In their Lordships' opinion the view of Scrutton L. J. that a mere assertion of a claim by a foreign government to property the subject of an action compels the court to stay the action and decline jurisdiction is against the weight of authority, and cannot be supported in principle. In their Lordships' opinion a foreign government claiming that its interest in property will be affected by the judgment in an action to which it is not a party, is not bound as a condition of obtaining immunity to prove its title to the interest claimed, but it must produce evidence to satisfy the court that its claim is not merely illusory, nor founded on a title manifestly defective. The court must be satisfied that conflicting rights have to be decided in relation to the foreign government's claim. When the court reaches that point it must decline to decide the rights and must stay the action, but it ought not to stay the action before that point is reached.' This view of the Privy Council was considered by the House of Lords in Rahimtoola v. Nizam of Hyderabad, 1958 AC 379. Lord Denning in his speech observed as follows at pages 415-416:
'It has sometimes been supposed that there is an absolute rule that a foreign Government cannot be impleaded in our courts in any circumstances, and, as a corollary, that it cannot be asked to come to our courts to litigate about its interest in property. That is supposed to be the result of Dicey's rule and Lord Adkin's two set propositions. But there are difficulties in it. To begin with, the rule about 'not impleading a foreign Government' is by no means universal or absolute, as I will show. In the next place, the rule about 'property' only applies, I think, to property which plainly or admittedly belongs to a foreign sovereign, or plainly or admittedly is in his possession or control. It is not appropriate in cases such as the present where the question 'to whom does this debt belong?'.....'whose property is it?' is the very question which has to be decided in the action. It cannot also be the question which has to be decided on a summons to stay. It is obvious that, if that is the question to be decided by the courts, it ought to be decided at the trial--or, at any rate, at a trial after full discovery and examination of witnesses, instead of being done imperfectly at this preliminary stage with no discovery and on insufficient materials. Lord Maugham was of that opinion. He thought the foreign Government ought to prove its title. But if that is to be done, there is no point in a stay. You might as well have the trial anyway.
What is the alternative? If the foreign Government has not to prove its title, will a mere claim by it suffice? That is the only logical alternative, as Scrutton L. J. perceived. He pointed out that if the foreign Government is not to be impleaded, directly or indirectly, it must not be called upon for proof of anything, not even to show good cause: see (1924) 40 T. L. R. 815. But the Privy Council have refused to carry the rule about 'not impleading a 'foreign Government' to that absolute extreme. It would be far too unjust to a plaintiff in an English court: see 1955 A. C. 72. But is there any halfway house? The Privy Council there said that a foreign Government is not bound to prove its title 'but it must produce 'evidence to satisfy the court that its claim is not merely illusory, nor founded on a title manifestly defective'. Even this leaves many questions unanswered. What degree ofevidence needed for this purpose? And if the foreign Government produces some evidence, is it not open to the plaintiff to displace it? And if the plaintiff does succeed in displacing it (as the Nizam did here)--so that on the uncontroverted affidavits there is no longer an arguable issue--is the foreign Government still entitled to a stay?'
26. It is not our purpose to review the entire case law on the subject nor is it necessary to do so. Strictly speaking, the principles contained in the cases decided by the highest courts in England are not directly applicable to the cases before us. But nonetheless, they do show that if the jurisdiction of a municipal court is ousted however flimsy may be the defence raised by the defendants while seeking shelter under Article 363 of the Constitution, cases may occur where injustice may be inflicted on the plaintiff solely for the reason that the defendants have mala fide adopted a defence which in truth has no basis and which the court of law would reject outright. On the other hand, if a preliminary investigation in the nature of the dispute by a court of law is permitted, there is no limit how far the investigation is to go in order to determine whether in truth the defendants had a defence. Placed in this situation, we prefer to adopt the view taken by their Lordships of the Privy Council that the court must be satisfied that conflicting rights have to be decided between the parties and it is only where there is such a case that it must decline to decide the rights and must stay the action, but it ought not to stay the action before that point is reached.
27. Applying this test to suit No. 5 of 1963, we find that the inventory attached to the letter of Mr. Menon dated 14th September, 1949, mentioned that the City Palace including the adjoining building is to be treated as private property of the plaintiff but the extent of adjoining building is not to be found with precision in that inventory and there is really a dispute between the parties in this case whether the suit property was included in the expression 'adjoining building.'
28. This dispute no doubt arises out of the provision contained in the letter dated the 14th September, 1949, but, as we have already pointed out, it embodies the agreement referred to in Article 363 of the Constitution.
29. This being the position, in our opinion, issue No. 1 in suit No. 5 of 1963, should be partly decided in favour of the defendants and it is held that the suit is barred by the provision of Article 363 of the Constitution.
30. Now we come to suit No. 4 of 1963. The principle which we have adopted with regard to suit No. 5 when applied in this case, leads to the conclusion that the property about which mesne profits are claimed in this suit is part of City Palace itself. It is a part of Mardana Mahal as mentioned in the decision of the State Ministry embodied in the letter of Sri Menon with regard to the private property of the plaintiff. It has been further mentioned that every effort will be made to release the accommodation at present occupied in the Mardana Mahal at the earliest possible date. In the written statement filed by the State of Rajasthan, practically all this is conceded but it is said that the suit property was not the exclusive property of the plaintiff but what is meant by saying it as not exclusive property of the plaintiff is not clarified. An altogether illusory dispute about a matter that it is not the property of the plaintiff is sought to be raised by the State of Rajasthan in this suit. The plaintiff has produced letter dated 6/8th December, 1960, from Ministry of Home Affairs, para No. 3 of which runs as follows:
'Regarding the buildings recognised as Your Highness' private property, but maintained and utilised by the Government of Rajasthan, the State Government have informed us that they would be prepared to consider purchasing them if you are agreeable to this course. By parting with the proprietary rights over these buildings, you will be eliminating a cause of potential friction with the State Government and also saving the expenditure on the payment of wealth tax on them. We, therefore, feel that the suggestion is worth consideration. If your Highness agrees you will no doubt inform that State Government.' This letter exposes the illusory character of defence adopted by the State Government.
31. Thus, in our view, there is no real dispute between the parties so as to bar the jurisdiction of the District Judge, Alwar under Article 363 of the Constitution. It may also be mentioned that the plaintiff in this case has claimed mesne profits about this property and if there is no genuine dispute about the suit property, no dispute can arise about the mesne profits out of the provisions of any covenant or agreement as contemplated in Article 363. We have already pointed out that there is no question of exercise of an act of State against a subject. Thus, in our opinion, issue No. 1 in this case must be decided in favour of the plaintiff. We do not think that for deciding other issues, arising in this case, this case should be kept in this Court.
32. We, therefore, remit this case back to the trial court for deciding the other issues arising in this case according to law.
33. The result is that suit No. 5 of 1963 (Col. H. H. Maharaja Sawai Shri Tej Singh of Alwar v. The Union of India and another) is dismissed. We award no costs to the defendants in this case. Suit No. 4 of 1963 (Col. H. H. Maharaja Shri Sawai Tejsingh of Alwar v. State of Rajasthan) is remitted to the trial court to be decided as mentioned above. We do not award any costs to the plaintiff in this Court.