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The Secretary of State for India in Council Vs. Hari Bhanji and anr. - Court Judgment

LegalCrystal Citation
SubjectCivil
CourtChennai
Decided On
Judge
Reported in(1882)ILR5Mad273
AppellantThe Secretary of State for India in Council
RespondentHari Bhanji and anr.
Cases ReferredIn Forester v. The Secretary of State
Excerpt:
.....municipal courts have no jurisdiction to entertain claims against the government arising out of acts of state. 13. there are cases in which it has been held that the east india company was amenable to the municipal courts on the ground that the acts complained of were committed in the conduct of undertakings which might be carried on by private persons :the peninsular and oriental steam navigation company v. vii, 166-188). 14. in those cases it was not necessary to do more than to call attention to the general distinction between acts done in the exercise of powers usually termed sovereign and acts done in the conduct of undertakings which might be carried on by persons who enjoyed no delegated powers of sovereignty. but whereas in that case after noticing the distinction above..........his consent and that he is not amenable to the jurisdiction of municipal courts in respect of acts of state. the case of nobin chunder dey v. the secretary of state i.l.r. 1 cal. 11 is unquestionably an authority directly in point. the circumstances were as follows. as a means of collecting the excise revenue, the superintendent of excise offered for sale by public auction the right of retail sale of specified liquors and drugs. the plaintiff was the highest bidder for licenses for five shops; his bids were recorded and he paid the deposit. shortly after he had laid in a stock of goods the excise officers refused him passes and compelled him in consequence to close his shops. having sustained loss on the resale of the goods and in other ways, he claimed compensation in damages or at.....
Judgment:

Charles A. Turner, Kt., C.J.

1. The respondents having purchased a quantity of salt at Bombay and paid excise on it at the rate of Rupees 1-13-0 per maund, the rate leviable under the law there in force, despatched it by sea to certain ports in this Presidency. While the salt was in transit, Act XVIII of 1878 was passed and came into force. By that Act the import duty on salt was raised to Rupees 2-8-0 per maund; but in virtue of a notification issued by the Governor-General in Council under the authority of the Indian Tariff Act, 1875, importers were allowed a deduction of the excise already paid, and consequently they were chargeable only with the difference between the excise and the import duty.

2. On the landing of the salt in this Presidency, the Collector required the respondents to pay the difference, 13 annas per maund, between the excise already paid and the import duty leviable under the Act of 1877, and the respondents, having complied with the Collector's requirements in order to obtain possession of the salt, instituted this suit to recover the sums they had been compelled to pay. Among other pleas the appellant pleaded that the Court had no jurisdiction to entertain the suit. On this plea judgment was given for the respondents, on the other issues for the appellant. In dismissing the suit the learned Judge directed that each party should bear his own costs and assigned, as the reason for the order respecting costs, that the respondents had succeeded on the issue as to jurisdiction.

3. On appeal objection is taken to the order on the ground that the issue as to jurisdiction entailed no costs, which would not have been incurred if the issue had not been raised, that the appellant having succeeded on the main issues was entitled to recover his costs and that the Court had no jurisdiction to entertain the suit.

4. At the hearing the learned Advocate-General admitted that although the Government considered the order as to costs erroneous in that it was at variance with the ordinary practice of the Court, the object of the appeal was principally to obtain the judgment of a Division Bench on the question of jurisdiction.

5. The contention that the Court had no jurisdiction was not rested on the nature of the subject-matter of the suit as being a matter of revenue in which the Court was prohibited from interference by the provisions of the Letters Patent of the Supreme Court. On that point the decision of the majority of the Full Court in Collector of Sea Customs v. P. Chithambaram I.L.R. 1 Mad. 89 of course binds the Division Bench. The learned Advocate-General stated that the necessity for the further consideration of the judgment of Mr. Justice Innes arose from the circumstance that it was in conflict with the opinion of three learned Judges of the High Court of Calcutta, and therefore the Government of Madras desired to ascertain the opinion of a larger number of the Judges of this Court. He relied mainly on the judgment of the Calcutta Court and supported it by citing authorities illustrating the rules that a sovereign cannot be sued in his own courts without his consent and that he is not amenable to the jurisdiction of municipal courts in respect of acts of state. The case of Nobin Chunder Dey v. The Secretary of State I.L.R. 1 Cal. 11 is unquestionably an authority directly in point. The circumstances were as follows. As a means of collecting the Excise Revenue, the Superintendent of Excise offered for sale by public auction the right of retail sale of specified liquors and drugs. The plaintiff was the highest bidder for licenses for five shops; his bids were recorded and he paid the deposit. Shortly after he had laid in a stock of goods the Excise officers refused him passes and compelled him in consequence to close his shops. Having sustained loss on the resale of the goods and in other ways, he claimed compensation in damages or at least the return of the deposit.

6. The claim was tried by Mr. Justice, now Sir John Phear, who held it could not be sustained. Adverting to the rules that the Crown could not be sued in its own courts, and that the servants of the Crown could not be made liable in respect of acts done by them bond fide on the part of, and as the agents of the Crown, and that the remedy of a person injured could only be sought by petition of right, the learned Judge said that 'to some extent the case is seemingly, though not essentially, different with regard to India.' Having pointed out that, while the Government was in the hands of the East India Company, the Company never entirely lost its private or commercial character, and alluded to the decisions on which it was held that the East India Company, though invested with powers usually called sovereign, was not constituted thereby a sovereign, the learned Judge referred to the Peninsula and Oriental Steam Navigation Company v. The Secretary of State Bourke, pt. VII, 166 and to the distinction there drawn between acts done by the Company in the exercise of what are usually termed sovereign powers and acts done by the Company in the conduct of undertakings which might be carried on by private individuals who had no such powers delegated to them, and he held that the East India Company and the Secretary of State, as succeeding to the liability to suit under which the Company lay, could be sued only for acts done in the conduct of undertakings which might be carried on by private individuals without sovereign powers. Finding that the matter involved in the contract and breach was 'not in any decree an undertaking that might be carried on by private individuals without sovereign powers,' that 'the contract was only part of the administrative contrivance and arrangement by which the Government is accustomed to collect the excise duties, and the levying of the excise duties and other portions of the public revenue certainly could not lawfully be done by private persons not delegated by the Sovereign to do so,' he held that the suit was a suit against the Government itself in respect to an alleged contract made and for acts done in the exercise of sovereign powers and was therefore not maintainable. On appeal, the Chief Justice and' Mr. Justice MACPHERSON affirmed the decree, dismissing the suit on similar grounds. In delivering the judgment of the Court the learned Chief Justice observed: 'The persons who are said to have been guilty of the acts and default of which ho (the plaintiff) complains are the officers employed in that Department of the Government service which relates to the imposition and collection of the excise duties. The ground of the complaint is that these officers have been guilty of various broaches of duty in not fulfilling obligations to the plaintiff which they were bound to fulfil in that capacity. Now it is impossible to doubt for a moment that the laws which are made in this or any other country for the taxation of the subject by the impositions of customs and duties are laws which can only be made or enforced in the exercise of sovereign powers properly so called and these sales at which the plaintiff purchased [277] the rights on which he claims only constitute a portion of the machinery and arrangements by which the imposition and collections of the excise duties are regulated in this country. His claim is therefore clearly one of those which cannot be enforced against the Government of India.'

7. With the hesitation suggested by the respect due to the learned Judges by whom the case of Nobin Chunder Dey was decided, we are unable to acquiesce in the propriety of the decision.

8. Two principal rules regulate the maintenance of proceedings at law by a subject against a sovereign, the one having relation to the personal status of the defendant, the other to the character of the act in respect of which relief is sought.

9. It is an acknowledged attribute of sovereignty and has been described as a rule of universal law that a sovereign is not liable to suit in his own courts without his consent. Consequently in England the form of procedure permitted to a subject who considers himself aggrieved by an act of the Crown is by petition of right. When an order has been passed that justice be done, and not before, the Courts are at liberty to inquire whether the claim is of such a nature that it can be maintained and whether it is well founded.

10. The East India Company was not a sovereign, and the personal exemption from suit which is the attribute of sovereignty did not attach to it : Nabob of the Carnatic v. East India Company 1 jr 370 : 2 jr. 56 : 4 Cases 179; Bank of Bengal v. East India Company Bignell (Calcutta Reports) 120, cited in Bourke, pt. VII, p. 180, The Peninsular and Oriental Steam Navigation Company v. The Secretary of State (Bourke, pt. VII. 166-188), where the Court expressed its entire concurrence in the opinion expressed by Chief Justice Grey that the fact of the Company having been invested with powers usually called sovereign powers did not constitute them sovereigns. And this is further shown by the circumstances that the Company was held liable for the negligence or misconduct of its officers in cases in which the Sovereign would not have been held liable even on petition of right (p. 179). Not only was the Company liable to suit in the courts of the Sovereign, but it also submitted to the jurisdiction of its own Courts. (Regulation III of 1793, Bengal, preamble.)

11. On the assumption by the Crown of the direct government of British India it was provided that persons should have the same suits and remedies against the Secretary of State in Council as they had theretofore been entitled to maintain and pursue against the Company. Consequently, the Secretary of State in Council cannot in this country claim on behalf of the Crown the prerogative of immunity from suit. The Crown has consented to submit its acts in this country to the extent we shall presently indicate to the jurisdiction of the Municipal Courts. This point was allowed by Mr. Justice Phear, and the learned Chief Justice and Mr. Justice Macpherson have not expressed any doubt respecting it.

12. The second rule to which we have referred as having relation to the nature of the act complained of is the rule that Municipal Courts have no jurisdiction to entertain claims against the Government arising out of acts of state. What is the sense in which the term 'act of state' is to be understood in this rule? In one sense all acts done by the officers of the Government in the exercise of powers committed to them for purposes of administration and which cannot legally be done by private persons may be termed acts of state.

13. There are cases in which it has been held that the East India Company was amenable to the Municipal Courts on the ground that the acts complained of were committed in the conduct of undertakings which might be carried on by private persons : The Peninsular and Oriental Steam Navigation Company v. The Secretary of State (Bourke, pt. VII, 166-188).

14. In those cases it was not necessary to do more than to call attention to the general distinction between acts done in the exercise of powers usually termed sovereign and acts done in the conduct of undertakings which might be carried on by persons who enjoyed no delegated powers of sovereignty.

15. In the conduct of the commercial operations of the Company, the occurrence of actionable wrong, could hardly be altogether avoided, and it was obvious that no character of sovereignty attached to such operations. But the decision in the case of Nobin Chunder Dey goes beyond the decisions to which we have referred. It is apparent that the learned Judges had in view the able judgment in the Peninsular and Oriental Steam Navigation Company v. The Secretary of State; but whereas in that case after noticing the distinction above mentioned, the Court held that exemption from suit could not be claimed in respect of the latter class of acts and expressed no opinion that all acts of the former class would enjoy such immunity, in Nobin Chunder Dey's case it has been ruled that the liability of the Government or of its officers to suit is restricted to acts of the latter class. It appears to us that this position cannot be maintained, and that the decided cases show that in the class of acts which are competent to the Government and not to any private person, a distinction taken is between those which lie outside the province of Municipal law and those which fall within that law, and that it is of the former only that in this country the Municipal Courts in British India cannot take cognizance.

16. Acts done by the Government in the exercise of the sovereign powers of making peace and war and of concluding treaties, obviously do not fall within the province of Municipal law and although in the administration of domestic affairs, the Government ordinarily exercises powers which are regulated by that law, yet there are cases in which the supreme necessity of providing for the public safety compels the Government to acts which do not pretend to justify themselves by any canon of Municipal law. For the exercise of these powers the Government though irresponsible to the Courts is not wholly without responsibility. Under the constitution of England it is more or less responsible to Parliament through the responsible ministers of the Crown.

17. Acts thus done in the exercise of sovereign powers but which do not profess to be justified by Municipal law are what we understand to be the acts of state of which Municipal Courts are not authorized to take cognizance.

18. The decision of the Privy Council in the Tanjore Case 7 M. I. A. 476 declares the rule and indicates an intelligible reason if not for its origin at least for its preservation.

19. On the death of the Raja Sivaji, who enjoyed the status of a sovereign, although, as was observed in a subsequent case, he possessed only the shadow of original and independent sovereignty, the Bast India Company seized the whole of his property as an [280] escheat to the paramount power. On a bill filed by the eldest widow in the Supreme Court of this Presidency, the Court drew a distinction between the state or crown property of the late Raja and his private and particular property and declared the plaintiff entitled to the latter. The Privy Council held that the suit was not maintainable. Lord Kingsdown observed that 'the general principle * * could not with any colour of reason be disputed. The transactions of independent States between each other are governed by other laws than those which Municipal Courts administer: such Courts have neither the means of deciding what is right nor the power of enforcing any decision which they may make,' and their Lordships proceeded to inquire what was the real character of the act done, whether it was a ' seizure by arbitrary power on behalf of the Crown of Great Britain of the dominions and property of a neighbouring State, an act not affecting to justify itself on grounds of Municipal law,' or whether it was in whole or in part a possession taken by the Crown, under colour of legal title, of the property of the late Raja of Tanjore in trust for those who by law might be entitled to it on the death of the last possessor. 'If it were the latter, their Lordships declared the defence set up, the plea that it was an act of state, had no foundation, and having on a view of the evidence arrived at the conclusion that the seizure was an exercise of sovereign power effected at the arbitrary discretion of the Company by the aid of military force, they held there was an absence of jurisdiction in the Court as well in respect of the private estate as of the Crown property. If,' they said, ' the Court cannot inquire into the act at all, because it is an act of State, how can it inquire into any part of it or afford relief on the ground that the sovereign power has been exercised to an extent which the Municipal law will not sanction.'

20. It will be observed that the judgment of the Court did not proceed on the ground that the injury was the result of an act which could only be done by the sovereign power or by those to whom the sovereign had delegated his powers, but on the ground that the act was of a character that did not fall within the purview of Municipal law, an act which Courts charged with the administration of Municipal law could not appreciate and in respect of which no jurisdiction was committed to them. The ground of decision was the same in the earlier case of the Nabob of the Carnatic v. East India Company 4 Cases 198; 2 Vesey 59. Lord Commissioner Eyre in dismissing the bill said:

It is a case of mutual treaty between persons acting in that instance as states independent of each other, and the circumstance that the East India Company are mere servants in relation to this country has nothing to do with it. The treaty was entered into with them not as subjects, but as a neighbouring independent state, and is the same as if it were entered into between two sovereigns : it consequently is not the subject of private Municipal jurisdiction.

21. The decision in Rustomjee v. The Queen L.R. 1. Q.B.D. 487 and 2 Q.B.D. 69 both in the Queen's Bench and on appeal rests on the same ground. A claim was made on a petition of right under the following circumstances. The petitioner had a demand on a colony or guild in China. War broke out between Great Britain and China and the guild was abolished. At the close of the war it was stipulated that 3,000.000 dollars should be paid to the Queen in respect of debts due by the colony to British subjects. The petitioner sought to compel the Crown to satisfy his demand. In holding the claim could not be entertained, Mr. Justice Blackburn observed: 'I do not think it can possibly be said that when the Queen has, as a high act of state, made a treaty, and received money in consequence of an act of state, the mode of distributing it is in any way enforceable by a Court of law, or subject to the findings of juries. I think there is a moral claim that it be given to the right person, which must be investigated in the manner in which Her Majesty is pleased to direct, and the ministers who direct it would probably be responsible in Parliament if they did it unjustly. Mr. Justice Lush said 'all that is done under that treaty is as much beyond the domain of Municipal law as the negotiation of the treaty itself * * * For any omission of that duty (the duty of distribution) the sovereign cannot be held responsible. The responsibility rests with the advisers of the Crown, and they are responsible to Parliament and to Parliament alone,' and in the Exchequer Chamber Lord Coleridge in delivering the judgment of the Court declared the claim untenable because, as in making the treaty, so in performing the treaty, the Queen is beyond the control of Municipal law.'

22. The Tanjore case 7 M.I.A. 476 is at the same time an authority, for the position that where the act which is the ground of complaint is an act which professes to be done under the sanction of Municipal law and in the exercise of powers conferred by that law, the circumstance that it is an act done by the sovereign power or by the deputy of that power does not oust the jurisdiction of the Civil Courts. That the parties to the act then in question could claim such protection as was afforded by the status of sovereignty was not disputed, and the question on which the decision turned was, as will be seen from the passages we have quoted, whether the act affected to justify itself on grounds of Municipal law or whether it was in whole or in part a possession taken by the Crown under colour of legal title, and in the latter case the committee determined that the defence of absence of jurisdiction had no foundation.

23. In Forester v. The Secretary of State (Sutherland's P. C. Judgments, Vol. II, 628, S.C. Indian Appeals 1872, 1873, p. 55) the plaintiff claimed title from the Begam Sumroo. At the time the East India Company acquired the Doab and territories on the west of the Jumna, this lady held a jaghir in the Doab on jaidad tenure, i. e., subject to the obligation of maintaining a body of troops for the service of the sovereign. Practically the whole administration of the territory included in the jaghir whether civil or criminal was vested in the Begam who exercised a sort of delegated sovereignty therein; the Regulation Law was not introduced till after the acts of which the plaintiff complained. On the death of the Begam, the East India Company resumed the jaghir and seized the arms and military stores. The plaintiff sued to recover the estate and compensation for the seizure of arms, &c.; It was pleaded that the Begam was an independent or quasi independent sovereign, and that the resumption and seizure were acts of state of which the propriety and validity were not cognizable by any municipal court. The Privy Council having found that the Begam was not a sovereign princess, overruled the plea. Their Lordships adverting to the Tanjore case observed: 'The act of Government in this case was not the seizure by arbitrary power of territories which up to that time had belonged to another sovereign state; it was the resumption of lands previously held from the Government under a particular tenure upon the alleged determination of that tenure. The possession was taken under colour of a legal title, that title being the undoubted right of the sovereign power to resume and retain [283] or assess to the public revenue all lands within its territories upon the determination of the tenure under which they may have been exceptionally held rent-free. If by means of the continuance of that tenure or for other cause a right be claimed in derogation of the title of the Government, that claim like any other arising between the Government and its subjects would prima facie be cognizable by the municipal courts of India.' Although the plaintiff failed to recover the estate because he could not prove a heritable title, he succeeded in the 'Arms Suit.' (Sutherland's P.O. Judgments Vol. II p. 639).

24. If the decision on which the Government relies is correct, then it was obviously unnecessary for the Privy Council in Forester's case to have inquired into the title of the Begam, for the resumption of her jaghir was an act which could under no circumstances have been legally done by a private person--it was an act of the Government done in the exercise of administrative powers, but because it professed to be done under the sanction of municipal law it was examinable by the municipal courts.

25. The cases we have cited appear to us to afford a sufficiently clear indication of the sense in which the term ' act of state' is to be understood in the rule which restricts the jurisdiction of civil courts. In the case before us, the demand of which the respondents complained was levied by the Collector acting as he believed under the authority of municipal law.

26. For the reasons we have given, we agree with the learned Judge from whose decree this appeal is brought, that the Court had jurisdiction to entertain the suit.

27. On the question of costs, we are unable to say that sufficient grounds were shown to warrant a departure from the usual rule. The respondents had brought the appellant into court without grounds, and the appellant. was justified in objecting to the jurisdiction by the ruling which it has been our duty to examine. We must, therefore, allow the appeal and vary the order by directing that the respondents do pay the appellant's costs in the Court of First Instance, but as it is admitted the appeal would not have been brought except to try the question of jurisdiction, we direct the appellant to bear his own costs of this appeal.

28. The Acting Government Solicitor {William Morgan) for Appellant.


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