1. These are two appeals by the defendant State against two separate judgments of the District Judge Bikaner of the same date that is tile 31st May, 1954, by which he decreed the suits of the two plaintiffs for damages for breach of certain alleged contracts of service. As these appeals raise precisely the same questions of law, this judgment will govern both of them.
2. The salient facts of the two cases may be shortly stated as follows:
3. The suit in appeal No. 77 of 1954 was filed by Laxminarain, a legal practitioner of the erstwhile Covenanting State of Bikaner and now an Advocate of this Court. His case was that ho had been engaged by the former State of Bikaner as an Assistant Government Advocate in 1931 and since then he had been in continuous employment as such or as Acting Government Advocate or as Government Advocate until October, 1947 in that State. The plaintiff had the option throughout this period to continue his civil practice. From November, 1, 1947, an agreement was entered into between him and the authorities of the Bikaner State according to which he accepted to work as Government Advocate on a starting salary of Rs. 400/-in the grade of Rs. 400-25-600 and the appointment to last for a period of 5 years likely to be renewed subject to the plaintiffs consent. (See Ex. A1).
The plaintiff's main functions were to 'be in charge of the sessions work in the High Court and of appeals arising from such cases.' The plaintiff was permitted civil practice with certain restrictions which are not material for our present purposes. This appointment continued until the Bikaner State was merged into the United State of Rajasthan as constituted in April, 1949, and was further allowed to continue after the Part B State of Rajasthan was formed under the Constitution until the 11th February, 1950.
By a letter of the Law Sercetary and Legal Remembrancer of the State of Rajasthan dated 7th February, 1950, the services of the plaintiff were terminated with effect from the afternoon of the 11th February, 1950, and he was asked to hand over charge to the Commissioner Bikaner. The plaintiff complied with this order. The case of the plaintiff is that this order of termination of his services was a clear breach of the contract which had guaranteed his appointment as Government Advocate for a period of five years from 1-11-1957 and was against the Covenant entered into by the then Ruler of Bikaner with the Rulers or other Covenanting States and was, therefore, unconstitutional, and void.
It was also contended that the defendant State had continued his appointment until after the Constitution had come into force on the 26th January, 1950, and thereby recognised it and therefore it was not open to it to terminate his services in the manner adopted. The plaintiff claimed to be in the permanent service of the former Bikaner State, but as this claim was not pressed by him in the court below and was definitely given up before us, we do not consider it necessary to refer to his claim based on this stand-point for the purposes of these appeals and we are concerned only with the alternative claim put forward by him.
On this latter footing he claimed compensation equal to his salary for a period from 12-2-1950 to 31-10-1952, which he worked out at Rupees 21712/8/-. Against this amount, the plaintiff has made an allowance of Rs. 5712/8/- which he alleges to have earned during the relevant period on account of his criminal practice by way of mitigation of damages. In this way the plaintiff claimed a decree for Rs. 15,000/- together with pen-dente lite and future interest. Before fifing this suit the plaintiff had given the statutory notice under Section 80 C. P. C. claiming his dues from the State but without any success and, therefore, the present suit was brought on 9-4-1953.
4. The facts of the suit in appeal No. 73 of 1954 which was filed by the other plaintiff Madan-swarup are analogous, and the difference is only of details. The plaintiff in this case appears to have been working as Assistant Government Advocate in the then State of Bikaner from the year 1933. He was also a legal practitioner in that State. This appointment lasted until the 1st November, 1948, on varying terms with which we are not concerned and on the last mentioned date it was agreed between the parties that he would work as Assistant Government Advocate on a salary of Rs. 300/- for a period of five years, which was likely to be renewed subject to the plaintiff's agreement.
This plaintiff was also left free to take up civil cases subject to certain restrictions which are not material for our present purposes. Neither the actual order of his appointment nor the agreement has been brought on this record but this much has been admitted that the plaintiff had accepted to work as Assistant Government Advocate on a salary of Rs. 300/- per mensem with effect from the 1st November, 1948. The services of this plaintiff also continued upto 11-2-1950, as in the case of the other plaintiff Laxminarain and were terminated by an exactly identical letter from the Law Secretary and Legal Remembrancer of the Rajasthan State dated 7-2-1950.
As in the case of Laxminarain, the status of this plaintiff as an alleged permanent servant of the State was not pressed before us and do not consider it necessary to refer to that part of theclaim which has been set up in the plaint. All that is relevant to mention is that he also claimed that the premature termination of his services before the full five year term was a breach of the covenant and the Constitution and, therefore, of no effect and he claimed damages equal to his salary for the period between the 12th February, 1950, and the 1st November, 1952, which he estimated at Rs. 11691/- at the rate of his salary at Rs. 320/-per mensem, the having received an increment of Rs. 20/- before his services were terminated) plus a dearness allowance of Rs. 25/- per mensem.
5. These claims were resisted by the defendant State. The defence was common in both the cases. The appointment of the two plaintiffs as Government Advocate and Assistant Government Advocate by the former State of Bikaner each for a five year term were admitted. It was also admitted that they had continued to serve until 11-2-1950, when their services were terminated. It was, however, urged by the State that any contracts made by the former State of Bikaner were not binding upon the successor State of Rajasthan either by virtue of the Covenant entered into between the then Ruler of the State of Bikaner and the Rulers of the other Covenanting States or by anything contained in the Constitution.
It was further contended that important constitutional changes had taken place after the contract had been entered into and the former State of Bikaner was no longer extant and a United State of Rajasthan had come into existence and the contracting State of Bikaner had merged into it. Furthermore, it was contended that the High Court of the former State of Bikaner had been abolished by law, namely, by the Rajasthan High Court Ordinance, 1949, and even the Bench of the Rajasthan High Court which had been set up temporarily at Bikaner had come to an end, and the performance of the contracts aforesaid between the parties had become impossible by the doctrine of frustration and consequently the plaintiffs had no cause of action against the defendant State. Certain other pleas were also raised but I consider it unnecessary to mention that as I have arrived at a firm conclusion what the pleas to which I have referred above go to the root of the whole matter and are sufficient in themselves to dispose of the appeals before us.
6. At this stage I may briefly summarise the findings of the learned District Judge on the material issues which are Nos. 2 and 5 in both the suits, and are exactly alike. The learned Judge found that all the duties and obligations of the Ruler of the former Bikaner State devolved on his successor the United State of Rajasthan, in accordance with Clause (2) of Article 6 of the Covenant which had been entered into between the Ruler of Bikaner and the other Covenanting States in March 1949, and the Part B State of Rajasthan which was formed under the Constitution was bound by Article 295 thereof to honour the same duties and obligations.
Consequently the learned Judge came to the conclusion that the defendant State was bound by the suit contracts both according to the Covenant and the Constitution. On the question of frustration the finding of the learned Judge is that although it was true that the High Court of Bikaner was abolished and the seat of the High Court of the new State was established at Jodhpur, it could not be said 'by any stretch of reasoning that the contracts became impossible,' as there was nothing to prevent the new State from offering alternative appointments to the plaintiffs for the unexpired term of their contracts.
According to the learned Judge 'impossibility'. under Section 56 of the Contract Act, to be an excuse for the non-performance of a contract, must be a 'physical or legal impossibility, and not merely an impossibility made by an act of the Government itself.' In this view of the matter, the learned Judge decreed both the suits and passed a decree for Rs. 8127/8/- in Laxminarain's case and for Rs. 11,938/5/- in Madanswarup's case. He also allowed costs against the defendant State. The state has now come up in appeal against both these decrees.
7. The first question which arises for determination in these appeals, therefore, is whether the suit contracts made by the former State of Bikaner with the two plaintiffs are binding as a matter of law on the successor State, namely, the United State of Rajasthan; for I have no doubt that if they were not so binding, they can have no protection under the Constitution, and the plaintiffs' suits must fail. But before dealing with this question, I considre it necessary to say a few words about the exact relationship between the plaintiffs and the then State of Bikaner.
This relationship, to my mind, was essentially the relationship of a legal practitioner with his client for a certain monthly remuneration and for a certain period which was likely to be extended further by agreement between the parties. As already stated above, the plaintiffs, at one stage claimed to be in the permanent service of the Bikaner State, but they did not press this contention at the time of arguments in the lower court and wisely gave it up altogether before this Court.
It is not disputed that throughout their term of employment the plaintiffs were allowed to continue their civil practice, in so far as of course it did not interfere with the duties which they had undertaken for the State of Bikaner. It is hardly possible for a legal practitioner on the rolls of a High Court to be both a practitioner and a member of the permanent service of a State, as it is elementary that as soon as he becomes a member of such service, he must have his practice suspended. That was never done.
I may also point out that the mere circumstance that instead of receiving any separate fees for each case conducted by them, they were offered a monthly honorarium which they accepted is hardly something which can affect their true position as legal practitioners and convert them into members of a permanent service. The correct position, therefore, was that the plaintiffs continued to be legal practitioners on the rolls of the High Court of Bikaner and they had a right to practise in all the Courts in that State subject of course to the condition that they could not appear against the Government, and to certain other conditions which would militate against a proper performance of the duties which they had undertaken for the State. In this connection I may refer to an unreported bench decision of this Court in Chandersingh v. State of Rajasthan, Civil Writ No. 76 of 1956 D/-20-11-1956 wherein the position of a certain lawyer as public prosecutor came up for consideration as he claimed protection under Article 311 of the Constitution. What the learned Judges said in that case as regards his being a member of the civil service or being the holder of a civil post was this:
'It is a contradiction in terms, for a person to be a holder of a civil post and to continue still as an advocate of this Court. He is no more and no less than any advocate employed by a private person. The only difference is that in this case the Government finds it convenient to employ thesame person in all its cases. But merely because the Government employs the same person in all its cases and has entered into a contract with him to look after their work in a particular district on payment of a certain honorarium, it does not convert the advocate into a member of a civil service or the holder of a civil post. It would have been a different matter if a cadre of Public Prosecutors had been created and Public Prosecutors were to give their whole time to Government and to give up practice as advocate altogeher. In that case, a Public Prosecutor might have been able to say that he was a member of a civil service or a holder of a civil post.'
With respect, I entirely agree with these observations and need scarcely add that whether a legal practitioner is engaged by the State for conducting its cases in a particular district or for the whole State and the latter styles him as Government advocate or Assistant Government Advocate hardly makes any difference to the real position of such practitioners. I am, therefore, clearly of opinion that the precise relationship between the plaintiffs and the former State of Bikaner was that of a standing counsel and his client, and that the plaintiffs were never members of the civil service of the Bikaner State or the holders of a civil post at any relevant time; and I am equally clearly of opinion that Article 311 cannot possibly foe attracted in such cases. In other words, the contracts between the two parties in the present cases were entirely professional contracts and did not involve the relationship of master and servant.
8. With these preliminary observations I now proceed to address myself to the question whether the contracts in question which had been made in 1947 and 1948 between the plaintiffs and the former State of Bikaner are binding in law on the successor State of Rajasthan into which the State of Bikaner had merged. The plea of the plaintiffs that they were so binding by virtue of the Covenant entered into between the then. Ruler of Bikaner and the Rulers of the other Covenanting States in March 1949, has found favour with the learned trial Judge. The relevant article of the Covenant is Article 6(2) which is in the following terms:--
'The Ruler of each new Covenanting State shall not later than the seventh day of April, 1949, make over the administration of his State to the Raj Pramukh; and thereupon:--
(b) all duties and obligations of the Ruler pertaining or incidental to the Government of the Covenanting State shall devolve on the United State and shall be discharged by it; and
(c) all the assets and liabilities of the Covenanting State shall be the assets and liabilities of the United State.'
I may state at once that the law has become well settled at this date that a Covenant or a Treaty like the one on which the plaintiffs rely is an act of State between the high contracting parties thereto, and no action in a court of law can be founded by any citizen of the new State on the strength of anything contained in the Covenant unless the successor State has otherwise recognised such a right.
9. The question came up before their Lordships of the Supreme Court in Dalmia Dadri Cement Co. Ltd. v. Union of India, AIR 1958 SC 816. Certain rights were sought to be claimed in that case by a limited company on the basis of an agreement entered into by the assignor of the company and the then independent State of Jind. The State of Jind came to an end some time in earlyMay of 1948, and the Rulers of certain States including Jind entered into a Covenant for the merger of their territories into one State called the Patiala and East Punjab States Union. Article 6 of that Covenant is almost identical with the Covenant we are called upon to consider in these cases. It was in these circumstances that the question arose what was the legal position under the Covenant.
10. Their Lordships considered practically all the earlier authorities bearing on the point including a case of their own reported as Virendra Singh v. State of Uttar Pradesh, AIR 1954 SC 447, and have laid down the law in the following words:
'The question that arises for our decision is whether the Covenant was an act of State. On that, there can be no two opinions. It was a treaty entered into by rulers of independent States, by which they gave up their sovereignty over their respective territories and vested it in the ruler of a new State.
The expression 'act of State' is, it is scarcely necessary to say. not limited to hostile action between rulers resulting in the occupation of territories. It includes all acquisitions of territory by a sovereign State for the first time, whether it be by conquest or cession. Vide Vajesinghji Joravar Singhji v. Secy. of State, 51 Ind. App. 357 at p. 360: (AIR 1924 PC 216 at p. 2171 and Thakur Amar Singhji v. State of Rajasthan, 1955-2 SCR 303 at p. 335: (AIR 1955 SC 504 at p. 523). And on principle, it makes no difference as to the nature of the act, whether it is acquisition of new territory by an existing State or as in the present case, formation, of a new State out of territories belonging to quondam States. In either case, there is establishment of new sovereignty over the territory in question, and that is an act of State. ......
Altogether different considerations arise when the act of the sovereign has reference not to the rights of his subjects but to acquisition of territories belonging to another sovereign. That is a matter between independent sovereigns, and any dispute arising therefrom must be settled by recourse not to municipal law of either States but to diplomatic action, and that failing, to force. That is an act of State pure and simple, and that is its character until the process of acquisition is completed by conquest or cession. 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 now sovereign. It is also well established that in the new set-up these residents do not carry with them the rights which they possessed at subjects of the ex-sovereign, and that as subjects of the new sovereign, they have only such rights as are granted or recognised by him. Vide Secretary of State v. Bai Rajbai, 42 Ind. App. 229: (AIR 1915 PC 59), 51 Ind. App. 357: (AIR 1924 PC 216 (supra). Secretary of State v. Rustam Khan, 68 Ind. App. 109: (AIR, 1941 PC (34) and Asrar Ahmed v. Durgah Committee, Ajmer AIR 1947 PC 1. In law, therefore, the proress of acquisition of new territories is one continuous act of Shite terminating on the assumption of sovereign powers do jure over them by the new sovereign and it is only thereafter that rights accrue to the residents of those territories as subjects of that sovereign, In other words, as regards the residents of territories which come under the dominion of a new sovereign, the right of citizenship commences when the act of State terminates and the two therefore cannot co-exist.
It follows from this that no act done or declaration made by the new sovereign prior to his assumption of sovereign powers over acquired territoriescan quoad the residents of those territories be regarded as having the character of a law conferringon them rights, such as could be agitated in hisCourts. In accordance with this principle, it hasbeen held Over and over again that clauses in atreaty entered into by independent rulers providingfor the recognition of the rights, of the subjects ofthe ex-sovereign are incapable of enforcement inthe Courts of the new sovereign'.' (The underlining (here in ' ') is mine).
Their Lordships further proceeded to observe asfollows:
'It must follow from this that the Covenant in question entered into by the rulers of the Covenanting States is in its entirety an act of State, and that Article VI therein cannot operate to confer on the appellant any right as against the Patiala Union.'
The attention of their Lordships was invited to an earlier decision of theirs in (S) AIR 1955 SC 504, a case which went from our own State wherein the Covenant with which we are concerned was described as a 'Constitution'. I cannot do better, with respect than to reproduce what their Lordships have themselves said about this:
'Apart from the use of the word 'Constitution,' we find nothing in these passages which has any bearing on the point now under consideration. There, the question was as regards the vires of a law enacted by the Rajpramukh of Rajastban, and that depended on whether he was the authority in whom the legislative authority of the State was vested within Article 385. This Court held that under the Covenant it was the Rajpramukh who had the power to enact laws, and that the Ordinance issued by him was therefore valid, and it was in that context that the Covenant was referred to as a Constitution. We had not to consider there the question whether the Covenant was an act of State, or whether it was a law conferring on the citizens of the defunct States rights which were enforceable in a court of law. No such question arose for decision, and therefore the description of the Covenant as a Constitution cannot he read as importing a decision that it is a law conferring rights and not an act of State. In the result, we hold that the Covenant is in whole and in parts an act of State, that Article VI therein does not operate to confer any rights cm the subjects of the Covenanting States as against the sovereign of the new State constituted thereunder and that Ordinance No. 1 of Sm. 2005 is. in consequence not open to attack as being a violation of Article VI.'
After the decision of their Lordships of the Supreme Court referred to above, the contention that a citizen of the former State can found an action against the successor State on the basis of anything contained in the Covenant in the law courts of the successor State must be dismissed as futile. This case was, however, sought to be distinguished before us on certain other aspects, and I may have to revert back to it when we come to those aspects. But so far as the broad statement of the law, on the question of the force and effect of the Covenant or anything contained therein) is concerned, I cannot but point that the correct legal position at this date stands where their Lordships have left it notwithstanding the decisions of this Court or any other Court in our country to the contrary. I consider it unnecessary to refer to certain other decisions to which our attention was invited in this connection.
11. The result, therefore, is that the plaintiffs cannot be allowed to base their claim on the whole or any part of the Covenant entered into by the Rulers of the several States including that of Bikaner constituting the United State of Rajasthan, and it was not open to the courts of the successor State to entertain or adjudicate upon such claims without more,
12. The aforesaid legal position was sought to be avoided by the plaintiffs by a two-fold contention. In the first place it was argued that the present cases are distinguishable from the Supreme Court case of AIR 1958 SG 816, because unlike what had been done by the Rajpramukh of the Patiala Union by means of an Ordinance by which all the laws of the Covenanting States had been repealed and the laws of the Patiala State had been made to apply immediately on the coming into existence of the new State, the Rajpramukh of Rajasthan had acted exactly in the reverse manner, and by the Rajasthan Administration Ordinance (No. 1) of 1949 promulgated that all the laws in force in any Covenanting State immediately before the commencement of this Ordinance in that State shall, until altered or repealed or amended by a competent Legislature or other competent authority, continue in force in that State.
It was further enacted that the word 'law' would mean any Act, Ordinance, regulation, rule, order or bye-law which, having been made by a competent Legislature or other competent authority in a Covenanting State, has the force of law in that State. Relying on this Ordinance, it was argued that the Ruler of the then State of Bikaner who was the absolute and sovereign monarch in his own State had entered into the contracts in suit or they had been entered into with his approval, and that this amounted to a law within the meaning of Sub-section (2) of Section 3 of the aforesaid Ordinance. It was, therefore, argued that the Rajpramukh had himself recognised the validity of these arrangements, and, therefore, the case was taken out of the mischief of the principle accepted above.
13. This argument, in my opinion, is altogether without any substance, for it presupposes that the contracts on which the present suits are founded amounted to law, a proposition for which I can find no support on authority or principle. As a member of the Bench which decided Somnath Mal v. State of Rajasthan, ILR (1953) 3 Raj 664: (AIR 1954 Raj 162), I had occasion to consider the distinction between the executive and the legislative acts of the Ruler of another princely State of Rajasthan, as an order of the Council of that State passed in December, 1941 came up for consideration there, and a good deal of what has been said there applies to the present cases, and I am firmly of the opinion that there is no vestige of any legislative act in the arrangements made between the former State of Bikaner and the plaintiffs and that what had really happened in this case was an offer made by one party and accepted by another. For one-thing, there is no order of His Highness the Maharaja of Bikaner in any of the two case. So far as the case of Laxminarain is concerned, all that we have on the record is a letter Ex. A-1 which embodies the offer made to him on behalf of His Highness the Maharnja and the former's accepttance at the foot of it couched in the following words:
'The terms arc acceptable to me and I am willing to continue working.'
So far as Madanswarup's case goes, we do not have even this much, and all that we have is the initial offer made to him vide Ex. 9 dated 21-10-1947, and a number of letters addressed by him to the authorities concerned thereafter showing that the terms were not acceptable to him, but no document showing the finalisation of the arrangements has been brought on the record. I find itimpossible to hold under the circumstances than what was done by the former Ruler of Bikaner in these two cases amounted to a legislative act or a law, and as we look at it, it was nothing more than an offer made on one side and finally accepted on the other with or without modifications. That being so, the specific argument based on Section 8 of the Rajasthan Administration Ordinance No. 1 of 1949 collapses to the ground.
13a. The next argument which was very strenuously urged before us was that the United State of Rajastban into which the former State of Bikaner had merged had affirmed or recognised both contracts in suit, though not expressly but by their conduct. In this connection reliance was placed on the circumstance that although the old State and its High Court had been abolished, a Bench of the Rajasthan High Court was set up in Bikaner to clear off the arrears pending in the former Court and that the plaintiffs were allowed to work there even after the formation of the new State on 7-4-1949, upto the 11th February, 1950, and throughout this interval of ten months, the plaintiffs were performing their usual duties of looking after the criminal work in the High Court on behalf of the State and representing it, first before the Bikaner High Court as it continued up to 28-8-1949, and thereafter before the Bench or the Rajasthan High Court sitting at Bikaner until the 25th January, 1950, and were drawing their salaries from the State Exchequer without any objection whatsoever on the part of the new State. It was. further submitted in this connection that the present cases were distinguishable from the AIR 1958 SC 816 referred to above, and that in fact the observations of their Lordships in the majority judgment contained in para 23 of the report were sufficient to save them from the general rule laid down therein.
'It was argued that Article VI of the Covenant would at least be valuable evidence from which affirmance of those rights could be inferred. That is so; but that inference must relate to act or conduct of the new State, and that can only be after its formation on 20-8-1948. If there were any acts of the new State which were equivocal in character, it would have been possible to hold in the light of Article VI of the Covenant that its intention was to affirm the concessions in Clause (23) of Ex. A. But the act of the new sovereign immediately after he became in titulo was the application of the Patiala State laws including the Patiala Income-tax. Act to the territories of Jind involving negation of those rights . ..... The appellant has failed to substantiate his plea that there has been affirmance of Clause (23) of Ex. A by the Patiala State Union, and this point also must be found against it.'
The narrow question which arises for determination therefore is whether the United State of Rajasthan had affirmed the contracts made between the plaintiffs and the Ruler of the former Bikanuv State. It is not, disputed before us that there was so express order of any competent authority of the United State of Rajasthan by which these contracts were affirmed or recognized. It is, however, contended that recognition or affirmation need not be express or direct but may be implied by conduct as well, and that affirmation by implied conduct is established here by the. discharge of their normal duties on the side of the plaintiffs and the payment of their monthly salaries on the side of the successor State.
The submission on behalf of the State to this argument is that it would be going too far to hold in the peculiar circumstances of these cases that there was any affirmation by conduct inasmuch as the hands of the new State which had been evolved out of a conglomeration of as many as 14 States followed soon after by a further merger of another group of four States in May. 1949. were more than full with problems of highly difficult and delicate nature and which claimed the prior consideration of the Government and, therefore, it has scarcely any time or opportunity to attend to personal contracts of this nature which might have been enter-ed into by the Rulers of the former States and the persons concerned.
It was further contended that in these circumstances, a period of 9 or 10 months intervening between April, 1949, and February, 1950, was hardly enough for it to enable it to direct its attention to matters of this character and that as soon as the Government had time to direct its attention to these contracts, they immediately informed the plaintiffs that the High Court of Bikaner had ceased to exist with effect from the 29th August, 1949 and that thereafter a Bench of the High Court of Rajasthan was constituted at Bikaner to dispose of pending cases of the former High Court of Bikaner and that there were no more criminal cases left on the file of the Bench, and, therefore, it was no longer necessary for the Government to continue their appointments and their services were accordingly being terminated with effect from the afternoon of 11-2-1950.
As for the salary drawn for this intervening period, it is submitted that it was done in the usual routine manner and that the plaintiffs had been paid for the period for which they had rendered their services; but this payment should not be taken as tantamount to a recognition of the contracts which had been entered into with the plaintiffs in 1947 or 1948 before the new State had come into existence.
I have very earnestly and carefully examined this aspect of the case and am not satisfied that the conduct of the United State of Rajasthan during the material period can fairly be taken as an affirmation of the suit contracts. I should undoubtedly require much more positive evidence to be able to come to that conclusion; for indeed this is a matter of common knowledge that problems which arose out of the merger of a large number of the princely States of Rajasthan in 1949 and early part of 1950 were of a momentous nature calling for high priorities to matters of first importance, such as the establishment of a central Secretariat to deal with the various organisational matters, the establishment of a common High Court, and the selection of suitable personnel for performing the huge task of integration of the services of the various States and so on and so forth.
If, therefore, in the aftermath of this historic integration of the 18 princely States of Rajasthan which were sovereign before the merger, contracts of this description did not claim the attention of the competent authorities as to whether they should be affirmed or otherwise, it can hardly be a matter of surprise. What may be said at the best for the plaintiffs is that here was a case of silence and a continuance of the old order for some time; but before such a plate of things may legitimately amount to affirmance, this silence should, if I may put it that way, have amounted to 'speech' which, in my Opinion, it is not.
The observations of their Lordships of the 'Supreme Court in the D. D. Cement Co.'s case AIR 1958 SC 816 on which learned counsel of the plaintiffs have placed reliance were, in my respectful opinion, made in an entirely different context, and, again speaking with all respect do not appear to me to be sufficient to hold in the circumstances of these cases that there was affirmance of the contracts in question, It also seems to me that conduct which may property amount to affirmance in law of the acts of a former sovereign State by the successor State should be in the nature of a conscious act, if I may use that expression.
There is also clear authority for the proposition that the burden of proving that the United State of Rajasthan which was the successor State to the then state of Bikaner had affirmed these contracts, squarely lies on the shoulders of the plaintiffs, and they must discharge this burden before they can be allowed to succeed on this ground. Having regard to the circumstances to which I have made reference above, I am clearly of opinion that this burden they have failed to discharge, and, therefore, they are out of court on the broad principle which has been accepted by me above, namely, that any obligation assumed under a treaty or a Covenant between the high contracting parties concerned is an act of State and the Municipal Courts of the successor State are not authorised to recognise or enforce it, I have felt fortified in coming to the conclusion to which I have by the decision of their Lordships of the Privy Council in AIR 1915 PC 59.
14. The brief facts of the above-noted case were that the plaintiffs who were known as Kasbatis filed a suit for a declaration that they were entitled to the continued possession and management of a certain village as absolute owners thereof. This village formed part of the territories of the Gaekwar before the district of Ahmedabad wherein it was situate was ceded to the British Government in 1817. At the time of the cession, the ancestors of the plaintiffs were possessed of a number of villages of which the suit village was one. The settlement of the territories ceded was not undertaken till 1822-23.
In the meantime an official of the East India Company was appointed to investigate the local conditions. He was apparently of the opinion that the ancestors of the plaintiffs had acquired a sort of claim to the villages of which they were found in possession when this part of the country was delivered to the Bombay Government and he also wrote to the Collector that he had concluded an arrangement with them by which they were to retain, during the pleasure of the Government, nine of the villages found under their management when the Pargana came into British possession.
In June, 1823, the Secretary of the Government of Bombay wrote to the Collector of Ahmedabad informing him that the Governor in Council had approved an 'agreement with the Kasbatis by which they were to retain during the pleasure of Government nine of the villages found under their management when the Paragana fell into the possession of the British. The courts in India held that the plaintiffs were not lessees but something more and were not liable to ejectment though subject to certain conditions. The Secretary of State went up in appeal! to the Privy Council, which was allowed.
Their Lordships held that the Kasbatis could not carry on under the new regime the legal rights, if any, which they might have enjoyed under the old, and that the only legally enforceable rights they could have as against their new sovereign were those, and only those, 'which that new sovereign, by agreement expressed or implied, or by legislation, chose to confer upon them.
They further observed that this implied agreement might be proved by circumstantial evidence, such as the mode of dealing with them which thenew sovereign adopted, his recognition of their old right), and express or implied election to respect them and be bound by them. Their Lordships further held that the burden of proving that the Government of Bombay had recognised their rights of absolute ownership was upon them. What their Lordships further said is of importance for our present purposes:
'It may well be that the Bombay Government did not intend to disturb them, and even intended, if all things went well, to grant to them, as acts of grace, new leases as the old leases expired, and it may also well be that the Kasbatis fully believed and trusted that this would be done, as indeed for many years it was done. From these facts, if they existed, moral obligations (with which this Board is not concerned) may arise, but the mere repetition of such acts of grace cannot per se create legal right to their continuance.'
Their Lordships then considered the various pattas for the village in question which had been granted to the ancestors of the plaintiffs for as much as a period of 68 years, one after the other. None of these pattas contained a provision that upon its expiration, a new patta was to be granted to the lessees, and it was contended before their Lordships on behalf of the plaintiffs that the inference to be drawn from the continued omission of such a provision was that the lessees had a legal right to continue in possession after the patta or lease had terminated.
Reliance was also placed on a settlement of 1822 with the then ancestor of the plaintiffs in possession of the suit village, the eifect of which was that, in lieu of a certain amount which was to be paid, he was settled permanently in the possession of the village with a right to manage it, and it was submitted that the only way of reconciling the grant of the pattas with the relation created by the settlement was to hold that the pattas only dealt with the mode of the management of village and not with the tenure of it.
Their Lordships, however, held that the only proper inference to be drawn from the entire evidence brought forth in the case was that the respondents had failed to discharge the burden which rested upon them, and that the Bombay Government had never by an agreement express or implied conferred upon the plaintiffs or any of their ancestors the proprietary rights in, or ownership of, the village, and that the only rights which were conferred were by the leases which the Government from time to time granted to them, and, therefore, the Bombay Government never were under any legal obligation to grant any lease of this village, and that the granting or withholding the same rested solely in their discretion, and in this view of the whole matter, the appeal was allowed. This case clearly shows that the burden to prove the affirmance of a pre-existing contract between a plaintiff and his former sovereign, by the successor sovereign clearly rests upon the plaintiff, and until and unless he squarely discharges his burden, he cannot succeed.
15. The same principle, in my view, is established by AIR 1924 PC 216. What their Lordships said in this case was as follows:
'The moment that cession is admitted, the appellants necessarily become petitioners and have the onus cast on them of showing the acts of acknowledgment, which give them the right they wish to be declared.'
16. Bearing this principle in mind, I find it difficult to hold that on the facts and circumstances which the plaintiffs have been able to establishin this case they have succeeded in discharging the onus which squarely lay upon them to establish that the successor State, namely, the United State of Rajasthan had ever affirmed the suit contracts by any conscious act on its part, and I further hold that the mere failure on its part to apply its mind to the propriety of the continuance of these contracts or otherwise within the short period at its disposal from April, 1949, to some time before the beginning of February, 1950, having regard to the attendant circumstances to which we have drawn attention above, cannot in all fairness be treated as any recognition or affirmance of these contracts on the part of the new State.
17. If that is the correct conclusion to come to, on the facts and circumstances of these cases, as I think it is, it must follow that the United State of Rajasthan was not bound in law by the suit contracts of the previous State of Bikaner by virtue of anything contained in the Covenant or on the principle of affirmance of these contracts by the new State. I hold accordingly.
18. The next question which then arises in whether Article 295 of the Constitution can come to the assistance of the plaintiffs in these cases. The relevant portion of the Article reads as under:
'(2) Subject as aforesaid, the Government of each State specified in Part B of the First Schedule shall, as from the commencement of this Constitution, be the successor of the Government of the corresponding Indian State as regards all property and assets and all rights, liabilities and obligations, whether arising out of any contract of otherwise, other than those referred to in Clause (1)'. In plain language this article provides that as from the commencement of the Constitution the Part B State of Rajasthan shall succeed to the property and assets as well as the rights, liabilities and obligations, contractual or otherwise, of 'the corresponding Indian State' except in so far as they have devolved on the Government of India under Clause (1) of the Article. The point which then arises for decision is what is the precise meaning of the phrase 'corresponding Indian State' as used in this Article. The term 'Indian State' has been defined in Clause 15 of Article 366 as 'any territory which tho Government of the Dominion of India recognised as such a State.'' The learned District Judge apparently thought that this was the old State of Bikaner. With this I find myself unable to agree. The expression used in the Article is not merely 'an Indian State' but ''a corresponding Indian State.'
It is a matter of recent history that the Princely States of Rajasthan entered into various unions -- and it is unnecessary to detail here the various steps on which they embarked, in order to constitute the United State of Rajasthan. It clearly seems to mo that the Ruler of the princely State of Bikaner with which State we are concerned in the present case (as well as his brother Rulers of tho other Covenanting States) had agreed to surrender his sovereignty over that State in March, 1949. And by Article 2 of the Covenant, that State integrated its territories with 13 other States in a new single State, namely, the United State of Rajasthan.
Under Article 6 of the same Covenant, the said Ruler was to, and did make over the administration of his State to the Rajpramukh of the United State, and, thereupon all rights, authority and jurisdiction belonging to the former Ruler which appertained or were incidental to the Government of the Covenanting State vested in the United State and were to be exercisable only as provided in the Covenant or the Constitution under contemplation,and all duties and obligations of the Ruler pertaining or incidental to the Government of the Covenanting State were to be discharged by the United State, and the assets and liabilities of the Covenanting State were thenceforward to become the assets and liabilities of the new State.
It was the Rajpramukh of the United State who then entered into a fresh instrument of accession with the Dominion of India, vide pages 332 to 335 of the White Paper on Indian States published by the Government of India, and all the previous instruments of accession entered into in 1947 and 1948 by the Rulers of the various Covenanting States and the Rajpramukh of the former Rajasthan State were cancelled. In these circumstances, the old Bikaner State had lost its separate or independent existence altogether, and that it did so by a voluntary integration on the part of its Ruler makes no difference to this position.
I am, therefore of opinion that the only State in existence, the rights, liabilities or obligations whereof were under the Constitution to devolve by succession on the Part B State of Rajasthan were the rights, liabilities and obligations of the United State of Rajasthan and not of any of the Covenanting States as such. I am fully conscious that the rights, liabilities and obligations of each of the Covenanting States had earlier been taken over by the new United State itself, but that was under the Covenant, which, as already discussed above, no subject of the old Covenanting States could enforce in the courts of the new State and were, therefore, of no avail against the latter in its municipal courts.
That being so, I am inclined to hold that the phrase 'corresponding Indian State' as used in Article 295 means 'the United State of Rajasthan.' I think that this State was, without any undue straining of language, an Indian State comprising as it did the territories of the old Indian States as distinguished from the British Indian Provinces which were later styled in the Constitution as Part A States. There is no doubt either that the United State was recognised by the Dominion of India inasmuch us, as already indicated above, it was the Rajpramukh of the United State who had executed a fresh instrument of accession and which instrument was accepted by the Governor General of India, all earlier instruments of accession being cancelled.
The conclusion at which I have arrived is not, in my opinion, in any way affected by certain provisions contained in the Constitution with a view to safeguarding the personal rights, privileges and dignities of the Rulers of the Covenanting States, wherein they have been referred to as Rulers of Indian States, (See Articles 291 and 362). Nor, in my opinion, is this conclusion affected, in any way, by the provision contained in Article 363 which prohibits the courts from entertaining any dispute arising out of treaties, agreements, sanads or covenants, and the like, entered into with the Rulers of the Indian States, as the phrase 'Indian State' has been specifically defined in this Article as any territory recognised before the commencement of the Constitution by his Majesty or the Government of the Dominion of India as such State. Such a definition would have been entirely unnecessary if the phrase 'Indian State' was normally to bear the meaning which is sought to be attributed to it on behalf of the plaintiffs. I may in this connection also draw attention to the provision contained in Article 385 where the expression ''corresponding Indian State' has been used, and there it undoubtedly means the integrated or the unionised State which was in existence just at the commencement of the Constitution. I also wish in this connection to draw attention to the first schedule of the Constitution where it is provided that the Part B State of Rajasthan shall comprise the territory which immediately before the commencement of the Constitution was comprised in or administered by the Government of the corresponding State which, be it noted, was, in the case of Rajasthan, the United State and the United State only, into which all the Covenanting States (which in a sense were also Indian States) had integrated themselves and to which, they had surrendered their old sovereignty and therefore the latter no longer existed. I am, therefore, disposed to hold on the whole that the phrase 'corresponding Indian State'' in Article 295 connotes the United State of Rajasthan and not any of the Covenanting States constituting the United State.
19. I also consider it of no small significance to point out in this connection that if the expression 'corresponding Indian State' as used in Article 295 means the. various Covenanting Stales as contra distinguished from the United State, one wants to know the provision in the Constitution dealing with the devolution of the property and assets or the rights, liabilities and obligations of the United State of Rajasthan which had without a shadow of doubt been functioning some time immediately preceding the commencement of the Constitution. To my mind, there is hardly any other provision in the Constitution which deals with this topic and I think it well-nigh impossible to imagine that when the Constitution was being finally hammered out, its framers had forgotten to make any provision for the devolution of the liabilities of the United State which was very much in existence and were instead providing for the devolution of the right and obligations of the erstwhile States which existed at one time but which had become defunct to all intents and purposes at the time of the inauguration of the Constitution. The expression 'corresponding Indian State' in Article 295 cannot, in my humble judgment, mean both things at one and the same time and. therefore, I am satisfied that this expression in the context of Art, 295 connotes the United State of Rajasthan and not the smaller units which earlier combined together to form it. With all respect, it may the permissible to sav here that the framers of the Constitution might have thought it sufficient that so Jar as the devolution of the liabilities and obligations of the integrating States was concerned, that had been already adequately provided for in the Covenant itself and therefore no further provision with respect thereto was necessary in the Constitution. As it has turned out, however, such a provision in the Covenant on the highest judicial authority in our country does not confer any rights on the subjects of the old States, and the municipal courts of the United State could not have recognised them and, therefore, in my view, all that can be said at the best in connection with the liabilities and obligations of the integrating States as respects their devolution on the United State is that the liability of the latter State in this regard may be a moral one but the courts of law are not concerned with it and can neither recognise nor enforce them. It must follow that the plaintiffs had no legally enforceable right against the United State of Rajasthan in respect of the claims in suit and therefore such right would not avail them against the Part B State of Rajasthan within the meaning of Article 295 of the Constitution, or against the present State, Or putting it in a slightly different manner, if the liabilities and obligations of the former State of Bikaner did not as a matter of municipal law devolve on the United State of Rajasthan as its successor State under the Constitution, there can be no questionof that liability being fastened on to the Part B State of Rajasthan in accordance with the. provisions of Article 295 of the Constitution, or on the present State of Rajasthan on account of anything contained in the States Reorganisation Act. On the aforesaid interpretation of Article 295 which I feel persuaded to hold as correct, I am of opinion that Article 293 of the Constitution docs not afford any help to the plaintiffs in these cases. I hold accordingly.
20. The next question that falls for consideration is whether the finding of the learned District judge that the doctrine of frustration is inapplicable to the contracts before us is sound in law, The principal contention of the defendant on this aspect of the case was that on the merger of the old Bikaner State with the United State of Rajasthan, radical changes had taken place. With the abolition of the former State of Bikaner, its High Court was also abolished and a new High Court lor the integrated State was set up elsewhere,
Our attention was emphatically drawn in this connection to the circumstance that the principal place where both the plaintiffs were expected to function was the High Court at Bikaner so far as the plaintiff Laxminarain is concerned. Ex. A-1 which was the letter of offer sent to him on behalf of the Ruler o'f Bikaner clearly mentions that he would be in charge of the sessions work in the High Court and of appeals arising from such cases.
We were also informed during the course of arguments that appeals from the decisions of the subordinate courts in criminal cases lay directly to the High Court in the erstwhile State of Bikaner. So far as the plaintiff Madanswarup is concerned, it was undoubtedly contended before us by his learned counsel that there was no such limitation on his duties, and that he was required neither exclusively nor even mostly to work in the High Court of the former State of Bikaner and that his work lay in other courts also. Ex. 9 which was the initial letter of offer sent to this plaintiff does not give any indication of the court where he was supposed principally to work.
The matter has, however, been put beyond all doubt or dispute by the various letters brought on the record by this plaintiff himself, and these are Exs. 12, 14, 15, 16 and 17, which be either addressed to the authorities of the former Bikaner State or later to those of the successor State of Rajasthan, and a perusal of all these letters clearly shows that this plaintiff was expected to and did actually function almost exclusively in the High Court at Bikaner.
It was further submitted that the High Court for the new State was established at Jodhpur, and as a temporary measure, a Bench of the new High Court was set up at Bikaner to clear off the old cases pending on the file of that Court, and this bench was abolished on 25-1-1950. In these circumstances, the contention on the side of the State was that the entire foundation underlying the contracts which the former State of Bikaner had entered into with the plaintiffs had changed, and an entirely new situation had come into existence, and consequently the contracts, which the authorities of the former Bikaner State had entered into with the plaintiffs inevitably became frustrated, and the successor State could not be held liable in law for the performance of those contracts.
This argument in my opinion is not without force. The learned District Judge seems to us to have fallen into confusion, in the first place, when he thought that the impossibility must have been a physical or absolute impossibility, and, in the second place, while he recognised that frustration may come about by a legal impossibility, he failed to apply the law properly and thought 'that the legal impossibility in this case was an act of the Government itself and, therefore, no plea of frustration could be founded on it. In Satyabrata v. Mugnceram Bangur and Co., AIR 1954 SC 44, it was held by their Lordships of the Supreme Court that the word ''impossible' in Section 56 of the Contract Act has not been used in the sense of physical or literal impossibility.
Their Lordships have laid down that the performance of an act may not be literally impossible but it may be impracticable and useless from the point of view of the object and purpose which the parties had in view, and if an untoward event or change of circumstances totally upsets the very foundation upon which the parties rested their bargain, it can very well be said that the promisor finds it impossible to do the act which he promised to do.
Their Lordships further pointed out that in a large majority of cases, the doctrine of frustration was applied not only on the ground that the parties themselves had agreed to an implied term which operated to release them from the performance of the contract, but the relief was given by the court on the ground of subsequent impossibility when it finds that the whole purpose or basis of a contract was frustrated by the intrusion or occurrence of an unexpected event or change of circumstances which was beyond what was contemplated by the parties at the time when they entered into the agreement, and that when such an event or change of circumstances occurs which is so fundamental as to be regarded by law as striking at the root of the contract as a whole, it is the court which can pronounce the contract to be frustrated and at an end, and in order to be able to so pronounce or not, the court must undoubtedly examine the contract and the entire circumstances under which it was made.
21. Applying this test to the present cases, I nave no doubt that the parties to the suit contracts at the time they made them could not possibly imagine the colossal changes which since came into existence. The old State of Bikaner was merged with another State consisting of a number of other States. Its High Court was abolished. A new High Court for the United State of Rajasthan was established at another place by law. With the abolition of that High Court, the entire functions assigned to the two plaintiffs became almost impossible.
It is true that a Bench of the new High Court was set up at Bikaner to dispose of the cases pending on the file of the former Bikaner High Court, and it was on that account that the plaintiffs continued to function in the new Court. But the Bench was also abolished. All these events, in my opinion, clearly constitute the bringing about an entire change of circumstances which the parties could not have possibly visualised at the time they had entered into the agreements.
In my opinion, therefore the very basis which lay at the foundation of the engagement of the two plaintiffs by the former State of Bikaner broke down completely. It is another matter that the new State might have thought fit to utilize the services of these persons at some place or places of business as its law officers; but this was or should have been a matter of its discretion, if not benevolence and the plaintiffs cannot in law compel the performance of the suit contracts which hadcome into being under entirely different circumstances.
Again, the view of the learned District Judge that the State itself had brought about this change and, therefore, could not take advantage of it seems to us to be based on his failure to appreciate the force and effect firstly, of an Act of State, and secondly, the distinction between the legislative and executive functions of the new State. The merger of the Bikaner State into the United Stata of Rajasthan was an Act of State which is entirely outside the purview of the Municipal Courts of the country to pronounce upon.
Then the High Court of the United State of Rajasthan was set up by an Act of Legislature, ana it does not matter that the legislative authority at that time was vested in the Rajpramukh who was also the head of the State, and with this the High Court of the old State of Bikaner was abolished and its work was to be removed to the High Court set up at Jodhpur. The change, therefore, which led to the termination of the services of the plaintiffs was brought about by law and it became no longer possible for the High Court to function at Bikaner,
22. Reference may he made in this connection to Reilly v. The King, 1934 AC 176. In this case, the appellant Mr. 'Reilly was a practising member of the bar of Quebec and was appointed a member of the Board established by a statute which specified the period of his appointment and the salary attaching to it. During the currency of the appointment as extended by subsequent Orders in Council, the Parliament of Canada abolished the office by repealing the provision which established the Board, and no compensation was provided to the member.
The appellant filed a petition of right on the ground that there was a contract between him and the Crown, which had been broken. The courts in Canada decided that by reason of the statutory abolition of the office, Mr. Reilly was not entitled to any remedy. One of the learned judges of the Supreme Court of the Canada based his decision on the ground that the relation between the holder of a public office and the Crown was not contractual at all.
The other learned Judge was prepared to admit that the relation might be contractual but ho held further that any such contract was subject to the necessary term that the Crown could dismiss at pleasure. Their Lordships of the Privy Council, however, decided the case on the ground of frustration. What they held was that the contract was determined by the elementary proposition that if performance thereof became impossible by legislation having that effect, the contract was discharged.
It was observed that the office held by the appellant was abolished by statute and thereby it became illegal for the executive to continue him in that office or pay him any salary, and it was equally impossible for him to exercise bis office, and, therefore, so far as the rights and obligations rested on contract, further performance of the contract had been made impossible, and the contract was discharged or, in other words, it was 'put an end to' and not ''broken.'
23. I am of opinion that the principle of this case clearly applies to the cases before us. The High Court of Bikaner which was the principal place where both plaintiffs were required to function was abolished by statute, and with the abolition of that court and the removal of its work to the new High Court at Jodhpur, their services could notpossibly be utilised as originally contemplated. It was another matter that they were allowed to function for the time being until a Bench of the new High Court, which was, as a temporary measure, set up to dispose of the pending cases of the Bikaner High Court, continued to sit in Bikaner.
But the services of the plaintiffs who were attached to the High Court of the former State of Bikaner might very well have come to an end as soon as the abolition of that Court came about. Any further performance of the contracts which the authorities of the former Bikaner State had entered into with the plaintiffs became virtually impossible thereafter, and, therefore, when the contracts were eventually terminated, all that can be legitimately said is that they were discharged or 'put an end to' and not 'broken' in the words of their Lordships of the Privy Council in Reilly's case 1934 AC 176. The conclusion, therefore, to which I am inevitably led is that the suit contracts stand discharged by the doctrine of frustration also, and the plaintiffs cannot successfully found any action for damages or compensation on that account.
24. The result is that I would allow both these appeals, set aside the judgments and decrees of the learned District Judge and dismiss the plaintiffs' suits. I would, however, leave the parties to bear their own costs throughout in all the circumstances of these cases.
25. I agree with my learned Brother that both the appeals should be allowed. I would do so on the ground that the State of Rajasthan is entitled to the benefit of the doctrine of frustration as by an appropriate legislative enactment, the Bikaner High Court had been abolished. On the other ground which calls for the interpretation of Article 295 of the Constitution, I reserve my opinion for some other ease.
26. BY THE COURT: The order of the Courtis that these appeals be allowed and the judgments and decrees of the learned District Judge,Bikaner, set aside and the suits do stand dismissed.Having regard to all the circumstances of the case,the parties are left to bear their own costs throughout.