JUDGMENT
V. Bhargava, J.
1. His Highness the Nawab of Rampur has filed these two petitions under Article 226 of the Constitution, challenging the assessment of his income for the assessment years 1951-52 and 1952-53 under the Indian Income-tax Act, iN the petitions, various grounds were taken for challenging the validity of assessment to income-tax of the income of the petitioner, but the learned Advocate-General, who argued these petitions before us, confined himself to only three points, so that we need deal with those three points only.
2. The first point urged by learned counsel for the petitioner was that the petitioner was the ruler of an independent State upto the 30th of June, 1949, and the State of Rampur was merged in the Indian Union by the Rampur Merger Agreement dated the 15th of May, 1949, whereunder a guarantee was granted that:
“the Nawab shall continue to enjoy the same personal rights, privileges, immunities, dignities and titles which he would have enjoyed had this agreement not been made.”
If is claimed that, before the merger of the State of Rampur, the petitioner enjoyed an immunity from income-tax under the Rampur Income-tax Act and, by Article 2 of the Merger Agreement quoted above, this immunity was to be continued to be enjoyed by the Nawab even after the merger, so that his income should be held to be exempt from income-tax under the Indian Income-tax Act.
When this point was raised, learned counsel for the department raised a preliminary objection that this question related to a dispute arising out of the Merger Agreement and this Court had no jurisdiction to decide such a dispute in view of Article 363 of the Constitution, Article 363 of the Constitution bars the jurisdiction of the Supreme Court or any other Court in respect of 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 the Constitution with any ruler of an Indian State and to which the Government of the Dominion of India or any of its pre-decessor Governments was a party and which had or had been continued in operation after the commencement of the Constitution.
We have only referred to that portion of Article 363 of the Constitution which is relevant for our purposes in deciding these two petitions. The Rampur Merger Agreement of 1949, referred to above, was clearly an agreement of the nature mentioned in Article 363 of the Constitution. It was entered into by the petitioner, who was the ruler of an Indian State, at a time when the Constitution had not yet come into force.
On this preliminary point, the submission of learned counsel for the petitioner was that Article 363 of the Constitution should not be held to bar the jurisdiction of the Court on the ground that the dispute, which is raised by these two petitions, is not a dispute arising out of the Merger Agreement. We find ourselves unable to accept this argument. For purposes of dealing with this argument, we may assume that the petitioner did possess immunity from income-tax before the merger of the State of Rampur with the Dominion of India.
The point that arises in these two petitions, however, is whether, after the merger of the State of Rampur with the Dominion of India, the petitioner can still claim to enjoy that immunity. This claim for immunity is based on Article 2 of the Rampur Merger Agreement. There can be no dispute that during the two assessment years 1951-52 and 1952-53, the petitioner was a citizen of India and, if no Merger Agreement had been in existence, the provisions of the Indian Income-tax Act would apply to him.
The petitioner’s claim that he is immune from Indian Income-tax is based on two circumstances: There is first the claim that he possessed immunity from income-tax under the Rampur Income-tax Act and then there is the claim that that very immunity was continued by the Rampur Merger Agreement. The basis of the claim put forward in these two petitions is the continuance of immunity by virtue of the Rampur Merger Agreement. The right to claim this immunity is thus alleged to have continued by the Rampur Merger Agreement.
On behalf of the opposite party, one of the contentions is that, even if there was an immunity enjoyed by the petitioner under the Rampur Income-tax Act, that immunity was not continued by the Rampur Merger Agreement. The dispute, that has to be settled by us, therefore, is in respect of a claim based on the terms of the Rampur Merger Agreement and is, therefore, clearly a dispute arising out of that Agreement. In the absence of that Agreement, the petitioner could not have put forward the claim which is being pressed in these two petitions.
In these circumstances, we hold that Article 363 of the Constitution is applicable and this Court is not competent to go into this dispute. We may, in this connection, refer to a decision of the Calcutta High Court in Governor-General-in-Council v. Associated Live-stock Farm (India) Ltd., AIR 1948 Cal 230, and two decisions of the Supreme Court in A. M. Mair and Co. v. Gordhandas Sagarmull, AIR 1951 SC 9, and Gaya Electric Supply Co., Ltd. v. State of Bihar, AIR 1953 SC 182, In all these three cases, the scope of the expression ‘arising out of was considered though with reference to a contract and not with reference to Article 363 of the Constitution or any corresponding provision.
Those decisions, however, indicate that a dispute of the nature raised by these two petitions would be a dispute arising out of the Rampur Merger Agreement. Such a dispute is, therefore, outside the jurisdiction of the Courts in India under Article 363 of the Constitution and the only remedy, which the petitioner can seek in such circumstances, is to approach the Union Government. The provision contained in Article 363 of the Constitution is clearly intended to oust the jurisdiction of the Courts with the object that the disputes of the nature mentioned therein should be decided exclusively by the Indian Government in exercise of their function as the governing authority in this country.
In appropriate cases, of course, assistance from Courts can be sought if the President considers it desirable to obtain a report from the Supreme Court under Article 143 of the Constitution but the fact that, at some stage, the opinion of the Supreme Court can be obtained is immaterial so far as exercise of jurisdiction by this Court in these petitions under Article 226 of the Constitution is concerned. The first ground put forward by learned counsel for the petitioner for claiming the relief in these petitions is, therefore, one which cannot be examined by this Court and the petitions cannot be allowed on this ground.
3. The other two points which have been urged by learned counsel for the petitioner before us in these two petitions, are not included in the grounds enumerated in the two petitions, and, for this reason, learned counsel for the opposite-party raised a preliminary objection that we should not hear learned counsel for the petitioner on those two points. There is no doubt that those two points are not included in the grounds mentioned in these petitions and this itself would be a sufficient reason for rejecting these contentions. We have, however, heard learned counsel for the petitioner on both those grounds also and, in the circumstances, we consider it advisable to express our opinion, particularly as we have come to the view that neither of those points has any force.
4. One ground urged by learned counsel is based on the provisions contained in Section 3(2) of the Taxation Laws (Extension to Merged States and Amendment) Act, 1949 (Act No. LXVII of 1949). It was by this Act that the provisions of the Indian Income-tax Act were extended to the area which previously comprised the State of Rampur and which, after merger, formed part of the United Provinces and, subsequently, of the State of Uttar Pradesh.
Learned counsel for the petitioner drew our attention to the provisions of Section 3(2) of this Act under which it was laid down that the Indian Income-tax Act and all rules and orders made thereunder shall Operate as if they had been extended to, and brought into force in all the merged States on the 1st day of April, 1949. It was urged that
the State of Rampur merged in the United Provinces by virtue of the Rampur Merger Agreement with effect from 1st July, 1949, and consequently the extension of the Indian Income-tax Act or bringing it into force in the merged State area with effect from 1st April, 1949, was void inasmuch as the Legislature of India was not competent to legislate for the period between 1st April, 1949, and 1st July, 1949, because, during that period, the State of Rampur was not a part of India.
It appears, however, that, so far as these two petitions before us are concerned, this argument is not applicable at all. As we have mentioned earlier, these two petitions relate to the assessment years 1951-52 and 1952-53. The previous years of the petitioner corresponding to these assessment years are from 1st July 1949 to 30th June, 1950, and from 1st July, 1950 to 30th June, 1951. The assessment years as well as the previous years all, therefore, fall in the period subsequent to the merger of the State of Rampur in Uttar Pradesh.
The Indian Income-tax Act was extended to, and was enforced in the merged area of the State of Rampur, by the provision contained in Sub-section (1) of Section 3 of the Taxation Laws (Extension to Merged States and Amendment) Act, 1949. Even if it be held, though we may make it clear that we express no such ‘opinion, that Sub-section (2) of Section 3 of this Act Is not valid in so far as it extends and enforces the Indian Income-tax Act in respect of the period prior to merger, it would not affect the applicability of the Income-tax Act in respect of the assessment years with which we are now concerned in these two petitions and even the previous years relating to those assessment years are not affected as they also fall completely in the period subsequent to merger.
The inapplicability of the Indian Income-tax Act prior to the date of merger is thus immaterial to these petitions before us and we need not, therefore, enter into this question at all. So far as these two petitions are concerned, the argument fails as the assessment years as well as the previous years none of them covers any period prior to the merger and, consequently, the assessments of the petitioner to income-tax, which are being challenged by these petitions, are unaffected and valid.
5. The last argument advanced by learned counsel is based on the Merged States (Taxation Concessions) Order, 1949, reliance being placed on paragraph 5 of that Order. Paragraph 5 of that Order is, however, of no assistance to the petitioner because, under that paragraph, concession is granted only where the income profits and gains of any previous year ending after the 31st day of March, 1948, are being taxed and the previous year is for the merged State assessment year 1948-49 or for the merged State assessment year 1949-50. In these two petitions before us, the assessment years for the merged State, which are in question are 1951-52 and 1952-53, so that the provision’s of paragraph 5 of this Order are not at all attracted. This argument also, therefore, fails.
6. In these circumstances, there is no force in these petitions and they are dismissed with Costs which we assess at Rs. 250/- in each case representing fee of learned counsel for the Department.
