Vora Fidaali Badruddin … vs The State Of Bombay (Now Gujarat … on 24 January, 1961

JUDGMENT

Bhagwati, J.

1. This Second Appeal raises a question of considerable importance regarding proprietary rights in lands granted by Rulers of Indian States before the merger of those States with the Dominion of India and the effect of the merger on such proprietary rights. Several arguments have been addressed to us relating to different aspects of this question and the arguments have been both able and ingenious. In order to understand and appreciate these arguments, it is necessary to set out the facts giving rise to this appeal. The facts are not many and may be briefly stated as follows:

2. Prior to 15th August 1947, the Sant State was an independent native State under the paramountcy of the British Crown. On 15th August 1947, India obtained independence and became a Dominion by reason of the Indian Independence Act, 1947. At the same time, the sovereignty of the British Crown over the Indian States lapsed by reason of Section 7 of that Act and as a result thereof, the Sant State became a full sovereign State not owing allegiance to or under the suzerainty o any superior power. Immediately thereafter the Sant State acceded to the Dominion of India by executing an Instrument of Accession. The

Dominion of India was empowered to accept such Instrument of Accession by a suitable amendment in Section 6 of the Government of India Act, 1935. We shall have occasion later in the course of this judgment to consider the effect of the Instrument of Accession on the sovereignty of the Sant State and how far the sovereignty of the Sant State was impaired as a result of the execution of the Instrument of Accession, but suffice it to state at the present stage that the Instrument of Accession was executed by the Sant State in the form which was settled as a result of discussions with the Rulers of Indian States and the Governor General of the-Dominion of India signified his acceptance of the Instrument of Accession under Section 6 of the Government of India Act, 1935.

3. There were certain Jagirdars in the Sant State to whom Jagirs had been given by the Ruler of the Sant State under various types of grants. It appears that the rights over forests in those villages had not been granted to the Jagirdars and the Jagirdars, therefore, complained to the Ruler of the Sant State about the same. The Ruler of the Sant State (thereupon issued an Order No. 371 dated 12th March 1948 granting full right and authority to the Jagirdars over the forests in their respective villages. It is not disputed that as a result of this Order, the Jagirdars became full owners of the forests in their respective villages and became entitled to full right and authority in respect of the same. The Jagirdars could thereafter cut and fell trees in the forests in their respective villages and sell the timber of such trees or give contracts in respect of the same to other persons. Jagirdar Sardarsing Gajesing was one of such Jagirdars and by virtue of this Order he became full owner of the Gotimda forest situate in the Sant State and became entitled to full right and authority in respect of the trees standing in the Gotimda forest.

4. The next stage in the narration of events is that on 19th March 1948, a merger agreement was entered into between the Governor General of India and the Ruler of the Sant State for the-purpose of integration of the Sant State with the Province of Bombay in such manner as the Government of India might think fit. By the merger agreement, the Ruler of the Sant State ceded to the Government of India full and exclusive authority, jurisdiction and powers for and in relation to the governance of the Sant State and agreed to transfer the administration of the Sant State to the Government of India on 10th June 1948. It was provided in the merger agreement that as from 10th June 1948, the Government of India would be competent to exercise full and exclusive authority, jurisdiction and powers for and in relation to the governance of the Sant State in such manner and through such agency as it might think fit. There were various other provisions in the merger agreement but we are not concerned with the same for the purpose of the present appeal. Pursuant to the merger agreement the Ruler of the Sant State transferred the administration of the Sant State to the Government of India on 10th June 1948 and the Government of India became entitled to full and exclusive authority, jurisdiction and powers for and in relation to the governance of the Sant State as a result of the cession made by the Ruler of the

Sant State under the merger agreement. In the mean time the Extra-Provincial Jurisdiction Act,
1947, was passed by the Central Legislature on 24th December 1947 providing for exercise by the Government of India of jurisdiction which by treaty, agreement, grant, usage, sufferance or other lawful means, the Government of India may have for the time being in or in relation to any area outside the Provinces of India. This extra-provincial jurisdiction could be delegated by the Government of India to any officer or authority in such manner and to such extent as it might think fit by virtue of Section 3 of the said Act and in exercise of that power, the Government of India delegated extra-provincial jurisdiction in and in relation to certain Indian States which included the Sant State to the Government of Bombay. The Government of Bombay accordingly became entitled to full and exclusive authority, jurisdiction and powers for and in relation to the governance of the Sant State from 10th June 1948, being the date when the administration of the Sant State was transferred by the Ruler of the Sant State to the Government of India under the merger agreement. The Government of Bombay in exercise of the powers conferred under Section 4 of the said Act made the Administration of the Indian States Order on 2nd June 1948 for the administration of the Indian States in and in relation to which the Government of India was going to acquire extra-provincial jurisdiction from 10th June 1948 and which extra-provincial jurisdiction was delegated by the Government of India to the Government of Bombay under Section 3 of the said Act. The said Order applied to the Sant State and came into force on 10th June 1948. The Government of Bombay also made another Order called the Indian States (Application of Laws) Order,
1948, on 28th July 1948 for extending to the Indian States specified in Schedule I of the said Order,
certain enactments and notifications, orders, schedules, rules and by-laws issued, made or prescribed under such enactments, which were in force in the Province of Bombay immediately before the coining into force of the said Order. The Sant State was one of the Indian States mentioned in Schedule I of the said Order. We have at this stage referred to the aforesaid two Orders made by the Government of Bombay under Section 4 of the said Act because an argument has been advanced by Mr. Rajni Patel, learned advocate on behalf of the appellant, based upon the provisions of the said two Orders. In any event as a result of the said Act and the said two Orders, a stage was reached in the process of integration of the Sant Slate and other Indian States with the Province of Bombay which may be described in the language of the white Paper on Indian States which has been now recognised as a constitutional document which can be referred to by Courts, “a half-way house between complete separateness and full integration”. This, however, could not effect a permanent and organic integration of the Sant State and Other Indian States with the Province of Bombay. The same position also obtained in relation to other Indian States in and in relation to which extra-provincial jurisdiction had been ceded by the Rulers
to the Government of India. As a step in the direction of effecting a permanent and organic integration of the Indian States in respect of which full and exclusive authority, jurisdiction and powers for and in relation to governance were exercisable by the Government of India as a result of cession under merger agreements or otherwise, the Government of India Act, 1935, was amended by introducing two new Sections namely, 290-A and 290-B. We are concerned in the present appeal with only Section 290-A, for it was in exercise of the powers conferred by that Section that the Governor General of India made the States’ Merger (Governors’ Provinces), Order, 1949, on 27th July 1949 which effected complete integration of various Indian States including the Sant State with the Province of Bombay. The said Order came into force on 1st August 1949 and as a result of the said Order, the Sant State became a part of the Province of Bombay from that date. The process of integration of the Sant State with the Province of Bombay was thus completed on 1st August 1949.

5. It may be mentioned at this stage that sometime after the date of the merger agreement, a letter of guarantee dated 1st October 1948 was executed by the Government of India in favour of the Ruler of the Sant State. This letter was signed by Shri V. P. Menon, Secretary to the Government of India, Ministry of States, being the same person who signed the merger agreement on behalf of the Government of India and contained amongst others, the following guarantees:

“2. The cash balances and other assets of your State on the day you transfer the administration of your State to the Dominion Government will as far as possible be spent for the benefit of the people of your State.

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4. The continuation in services of the permanent members of the public services of your State is hereby guaranteed on conditions which will be no less advantageous than those on which they were serving on 1st April 1948. In the event of continuance of service not being possible in any case, reasonable compensation will be paid.

5. Pensions, gratuities, annuities and allowances granted by the State to the members of its Public services who have retired or have proceeded on leave preparatory to retirement before 1st April 1948 as also the enjoyment of ownership of Khangi villages, lands, Jagirs, grants etc., existing on 1-4-1948 are hereby guaranteed. This guarantee is without prejudice to the right of Government of Bombay to issue any legislation which does not discriminate against the States and their subjects.

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7. No order passed or action taken by you before the date of making over the administration to the Dominion Government will be questioned unless the order was passed or action taken after the 1st day of April 1948, and if considered by the Government of India to be palpably unjust or unreasonable. The decision of the Government of India in this respect will be final”.

It was specifically stated in this letter that the contents of this letter would be regarded as part of the merger agreement entered into by the Ruler of the Sant State with the Governor General of India. We have set out in full the aforesaid

guarantees contained in this letter since one of the main arguments advanced by Mr. Rajni Patel is founded on these guarantees and Mr. Rajni Patel has relied on these guarantees and particularly the guarantees contained in Clauses 5 and 7 of this letter for spelling out waiver or relinquishment on the part of the Government of India of the right to ignore or repudiate the existing rights enjoyed by Jagirdars of the Sant State in pre-cession days.

6. To continue the narration further, it may be mentioned that after the administration of the Sant State was transferred by the Ruler of the Sant State to the Government of India, the Government of Bombay exercised in and in relation to the Sant State, extra-provincial jurisdiction which had been delegated to it by the Government of India as aforesaid and administered the Sant State in exercise of such extra-provincial jurisdiction. During this period when the Sant State was being administered by the Government of Bombay in exercise of extra-provincial jurisdiction, a contract dated 21st August 1948 was made between Jagirdar Sardarsing Gajesing and one Vohra Hathimbhai Badruddin Mithaborwala whereby Jagirdar Sardarsing Gajesing granted to Vohra Hathimbhai Badruddin Mithaborwala the right to cut and remove Panchrang and fire-wood trees from the Gotimda forest for a period of three years from 21st August 1948 for the price of Rs. 9,501/- which was to be paid by Vohra Hathimbhai Badruddin Mithaborwala to Jagirdar Sardarsing Gajesing in the instalments mentioned in the said contract. Pursuant to the said contract, Vohra Hathimbhai Badruddin Mithaborwala started cutting and removing Panchrang and firewood trees from the Gotimda forest. Pass-books and authorizations were issued by the Forest Authorities of the Government of Bombay to Vohra Hathimbhai Badruddin Mithaborwala and Vohra Hathimbhai Badruddin Mithaborwala cut Panchrang and fire-wood trees from the Gotimda forest and removed timber and charcoal from the Gotimda forest-under the passes issued by virtue of the said authorizations. Similar contracts for cutting and removing trees from the forests of their respective villages were also granted to different contractors by other Jagirdars who claimed similar rights over the forests by virtue of the Order of the Ruler of the Sant State dated 12th March 1948. It appears that sometime in January 1949, the Forest Authorities stopped Vohra Hathimbhai Badruddin Mithaborwala and other contractors from operating the forests in respect of which rights had been granted to them by Jagirdars as aforesaid. The Jagirdars Association thereupon made a representation to the appropriate authorities and as a result of the said representation, the Conservator of Forests, North Western Circle, issued an Order dated 18th January 1949. Considerable reliance has been placed by Mr. Rajni Patel on the terms of this Order and it would, therefore, be convenient and useful to set out this Order in extenso. It ran as follows :

“The Divisional Forest Officer, Integrated States Division, Devgad-Baria, should issue authorisations to the contractors of the Jahagirdars, who have got rights over the forests as per No. 371 dated 12-3-1948 of His Highness the Maharaja Saheb of Sant. In this connection an

extract copy of the agreement made on 19-3-1948 between the Governor General of India and the Maharaja of Sant, personally produced by the president of the Jahagirdars’ Association on 17-1-1949 is sent to him for perusal, which makes the position clear. If other States have conceded such rights over Forests before 1-4-1948, their cases also stand on equal footing with those of the Jahagirdars of Sant and such cases should, therefore be dealt with in a similar way. However, to safeguard the Government interest, written undertaking should be taken from the Jahagirdars, Inamdars or person or persons concerned that he or they would abide by the decision or orders passed by the Bombay Government in respect of such private forests, when the question of rights over such private forests is finally settled.”

Jagirdar Sardarsing Gajesing accordingly gave an undertaking on 1st February 1949 to abide by the decision of the Government of Bombay in respect of the Gotimda forest which had been granted to him by the Ruler of the Sant State under the Order dated 12th March 1948. The Other Jagirdars also did likewise and the Forest Authorities thereupon issued authorizations to Vohra Hathimbhai Badruddin Mithaborwala and the other contractors and allowed them to carry on the work of cutting Panchrang and firewood trees and removing timber and charcoal from the forests. This state of affairs continued until May 1949 when the Forest Authorities refused to issue authorizations and pass-books as a result of which Vohra Hathimbhai Badruddin Mithaborwala and the other contractors could not cut the trees in the forests and remove timber and charcoal from the forests. The Forest Authorities permitted only the removal of the cut timber to rail-head depots. It appears that thereafter on 8th July 1949, a letter was addressed by the Assistant Secretary to the Government of Bombay, Revenue Department, to the Commissioner, Northern Division, regarding the forest rights of the Jagirdars under the Order of the Ruler of the Sant State dated 12th March 1948. This letter is of the greatest importance and since a considerable part of the argument has turned on this letter, we think it would be desirable if we reproduce this letter in full rather than give the gist and purport of it in our own language, This letter was in the following terms :

“CONFIDENTIAL. Revenue Department.

To

The Commissioner, N. D.

Subject:– Forest Rights : Panchmahals.

Jagir villages, Sant State

Alienation of — in

Reference your memorandum No. ADM(P) 50-A-II, dated 24th May 1949, Government considers that the orders passed by the Ruler of the Sant State under his No. 371, dated 12th March, 1948, transferring forest rights to all the Jagirdars of the Jagir villages are mala fide and that they should be cancelled. Before, however, taking further action in the matter, please ascertain whether the possession of the forests in question is with Government or has gone to the Jagirdars. If the Possession is still with Government please ask the officer of the Forest Department to retain the same and to

refuse to issue passes etc., to private contractors and purchasers.

By order of the Government of Bombay.

Sd.                         

Assistant Secretary to the Government of

Bombay, Revenue Department.        

Copies to : The Collector of Panchmahals (with

reference to his letter No. WTN:WS.

3177 dated 28th April 1949″.

This letter was a confidential document addressed by the Assistant Secretary to the Government of Bombay, Revenue Department, to the Commissioner, Northern Division, and a copy thereof was sent to the Collector of Panchmahals, who was the Chief Administrator in charge of the Executive Administration of the Sant State. The copy of this letter which is Exhibit 163 is obviously the copy which was sent to the Collector of Panchmahals and it appears from the endorsements on the said copy that further copies of this letter were sent to the Mamlatdar, Sant, and the Divisional Forest Officer, Gujarat Integrated and Merged States Division, Baria, for information and necessary action. We shall consider the substance and effect of this letter a little later in the course of this judgment when we deal with the arguments advanced on behalf of the parties, but it is necessary to state at this stage that a copy of this letter was not sent to Jagirdar Sardarsing Gajesing or to the other Jagirdars who claimed rights in forests situate in their respective villages under the Order of the Ruler of Sant State dated 12th March 1948 nor were the contents of this letter at any time communicated to them. Vohra Hathimbhai Badruddin Mithaborwala and the other contractors were also not at any time informed about this letter and did not know anything about the same. The possession of the forests remained with the Jagirdars and the Government of Bombay did not make any attempt to resume possession of the forests from the Jagirdars. Jagirdar Sardarsing Gajesing also continued to remain in possession of the Gotimda forest and the Government of Bombay did not address any communication to him or to Vohra Hatbimbhai Badruddin Mithaborwala cancelling the Order of the Ruler of the Sant State dated 12th March 1948 or forfeiting Or resuming possession of the Gotimda forest. The said letter remained only an interdepartmental communication made in confidence by the Assistant Secretary to the Government of Bombay, Revenue Department, to the Commissioner, Northern Division, with a copy to the Collector or Panchmahals. All that the Government of Bombay did by way of an overt act was to refuse to issue authorizations and pass-books to the contractors including Vohra Hathimbhai Badruddin Mithaborwala for cutting trees in the forests and removing timber and charcoal from the forests and the Government of Bombay thus prevented Vohra Hathimbhai Badruddin Mithaborwaia and the other
contractors from exercising their rights in respect of the forests for which contracts had been granted to them by Jagirdars, but even this Overt act commenced in May 1949 and not in July 1949 pursuant to the said letter. Since according to Vohra Hathimbhai Badruddin Mithaborwala, the Government of Bombay had no right or authority to interfere with the exercise by Vohra Hathimbhai

Badruddin Mithaborwala of his right to cut trees in the Gotimda forest and to remove timber and charcoal from the Gotimda forest, Vohra Hathimbhai Badruddin Mithaborwala filed a, suit against the State of Bombay on 20th June 1950, after giving the requisite notice under Section 80 of the Code of Civil Procedure, for a permanent injunction restraining the Government of Bombay and its officers, servants and agents from interfering or causing any interference with the cutting of trees in the Gotimda forest, the export of timber so cut and the working of the contract in respect of the Gotimda forest and from obstructing the export of the timber cut and lying at the rail-head depots. The suit was filed by Vohra Hathimbhai Badruddin Mithaborwala but it appears that during the pendency of the suit, the benefit of the contract dated 21st August 1948 was assigned to Vohra Fidaali Badruddin Mithaborwala and the latter accordingly got himself substituted as plaintiff in the suit in place and instead of Vohra Hathimbhai Badruddin Mithaborwala. It was Vohra Fidaali Badruddin Mithaborwala who thereafter prosecuted the suit as the plaintiff and he is the appellant before us.

7. The main defence raised by the State of Bombay in its written statement was that the Order of the Ruler of the Sant State dated 12th March 1948 was a collusive Order passed with the impending merger in view and was such that if allowed to stand, it would have permanent and far-reaching consequences likely to be detrimental to public interest and the Government of Bombay as the successor Government, therefore, in exercise of its authority, cancelled the said Order on 8th July 1949, The State of Bombay contended that the plaintiff had no cause of action against the State as the Government of Bombay was fully authorized to act in the manner it had done and the plaintiff’s cause of action, if any, was against Jagirdar Sardarsing Gajesing since the plaintiff had Privity of contract with him and not with the Government of Bombay. The State of Bombay thus relied on the letter dated 8th July 1949 addressed by the Assistant Secretary to the Government of Bombay, Revenue Department, to the Commissioner, Northern Division, as constituting a cancellation of the Order of the Ruler of the Sant State dated 12th March 1948 which the Government of Bombay was entitled to make as successor of the Sant State

8. The suit was tried by the Civil Judge, Senior Division, Godhra. Before the suit reached hearing, a resolution was passed by the Government of Bombay on 6th February 1953, the material portion of which ran as under :

“On the eve of the merger of the Sant State in the State of Bombay, the Ruler of that State issued Tharav No. 371 on 12th March 1948, under which Jiwai, Patawat, Inami, Chakriat and Dharmada Jagirdars and inamdars were given full forest rights over the villages in their charge. The Government of Bombay, after considering the implications of the Tharav, decided that the order was mala fide and cancelled it on 8th July 1949, vide Government letter. Revenue Department, No. 2103-M/49 dated the 8th July 1949. By the time these orders were issued, the tree growth in the Jagiri forests concerned was already sold by some of the Jagirdars and the tree cut Further cutting of trees and

export of trees cut was however stopped by the Forest Department after receipt of the orders of 8th July, 1,949. On representations being made to Government, Government, however, agreed to allow to release the material felled from the forests under dispute, pending decision on the settlement of forest rights subject to the condition that the contractor furnished the sureties solvent for the material removed or deposited with the Divisional Forest Officer, certain amount per wagon load of material. The owner of the material was also asked to give a written undertaking that he would abide by the ultimate decision of Government.

2. The Forest Settlement Officer specially appointed by Government to investigate these rights submitted his report on 27th February, 1952, which reached Government on 3rd June 1952, through the proper channel. The various points raised by that Officer and the findings arrived at by him were carefully examined by Government, which is pleased to issue the following orders on the Forest Settlement Officer’s report.

3. Tharav No. 371 dated the 12th March 1948 issued by the Ruler of the Sant State was specifically repudiated by the Government of Bombay. It is true that that order having been issued before the 1st April, 1948, is covered by paragraph 7 of the collateral letter of the Government of India issued to the Rulers of Gujarat State and that the contents of that letter are to be regarded as part of the merger agreement. But it had been held by the Privy Council that even if a treaty of cession stipulated that certain inhabitants should enjoy certain rights, that does not give a title to these inhabitants to enforce the Stipulations in municipal court and that the right to enforce remains only with the high contracting parties, Neither the Jagirdars nor the contractors in this case can, therefore, go to a court of law on the strength of the said collateral letter. As the Tharav issued by the Ruler in 1948 has been considered by Government to be mala fide and the same has already been repudiated, it is not binding on this Government both by law and under the agreement of integration, in spite of the assurance contained in the collateral letter. Since the Tharav has not been recognised by Government but has been specifically repudiated, everything done in pursuance thereof including the contracts entered into after passing of the Tharav, is not valid and, therefore, binding on this Government. The date of repudiation of the Tharav would be immaterial in this connection. On account of its repudiation, the Tharav is bad in law ab initio and the question of its cancellation with effect from the date of its issue does not arise.

4. In view of the position explained above, no inamdar or Jagirdar can claim any forest rights under the Tharav of 1948, and all contracts entered
into on the strength of the Tharav are void”.

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This resolution was also relied on by the State of Bombay in answer to the plaintiffs suit. We shall have occasion to consider this resolution in some detail when we advert to the arguments advanced before us by both the parties.

9. The learned Trial Judge who heard the suit held that the Order of the Ruler of the Sant State

dated 12th March 1948 was not based on any existing legislation of the Sant State and that the same was, therefore, not binding on the Government of Bombay which was the successor Government. The learned Trial Judge came to the conclusion that under Clause 5 of the Indian States (Application of Laws) Order, 1948, only those agreements entered into by the Ruler of the Sant State which were based on some existing law in the Sant State continued to bind the successor Government and even then there was a further condition which was required to be satisfied, namely, that those agreements should conform to some corresponding legislation in one of the statutes mentioned in the Schedule of the said Order, for it was only then that those agreements were saved by the proviso to the said clause. The learned Trial Judge accordingly held that the Order of the Ruler of the Sant State dated 12th March 1948 was not binding on the Government of Bombay and consequently dismissed the suit with costs,

10. The appellant appealed against the dismissal of the suit and the appeal was heard by the District Judge of Panchmahals at Godhra. The learned District Judge also dismissed the appeal with costs. The main ground on which the learned District Judge based his judgment was that the act of the Government of India in acquiring sovereignty over the Sant State by cession following on the merger agreement was an act of State and that Jagirdar Sardarsing Gajesing and through him the appellant could, therefore, make good in the Municipal Courts of India only such rights as the Government of India through its officers recognised and that since the rights of Jagirdar Sardarsing Gajesing over the Gotimda forest granted under the Order of the Ruler of Sant State dated 12th March 1948 were not recognised by the Government of India or the Government of Bombay as the delegate of the Government of India, but were on the contrary repudiated both by the letter dated 8th July 1949 addressed by the Assistant Secretary to the Government of Bombay, Revenue Department, to the Commissioner, Northern Division, as well as the resolution of the Government of Bombay dated 6th February 1953, the said rights were not legally enforceable against the State of Bombay and no relief could, therefore, be granted to the appellant. The learned District Judge also considered various other arguments advanced on behalf of the appellant and rejected the same. The learned District Judge accordingly came to the conclusion that the suit was rightly dismissed by the learned Trial Judge and consequently dismissed the appeal with costs against the appellant. The appellant thereupon filed this Second Appeal and since the questions raised in this Second Appeal were complex and of far-reaching importance, the learned Judge before whom this Second Appeal came up for hearing, referred the same to a Division Bench. Hence this Second Appeal before us.

11. At the outset Mr. B. R. Sompura, learned Assistant Government Pleader appearing on behalf of the State, raised three preliminary objections and contended that having regard to those preliminary objections, the appeal was liable to be dismissed in limine, and we should not, therefore, enter upon a discussion of the merits of the issues

involved in the appeal The preliminary objections were formulated by Mr. B. R. Sompura in the following terms:

(1) Even if Jagirdar Sardarsing Gajesing had any rights over the Gotimda forest which were legally enforceable against the State of Bombay, such rights were abolished by the Bombay Merged Territories and Areas (Jagirs Abolition) Act, 1953, and since the appellant derived his title by virtue of the contract dated 21st August 1948, from Jagirdar Sardarsing Gajesing, the appellant’s rights in respect of the trees standing in the Gotimda forest also came to an end on the coming into force of the said Act and the appellant had, therefore, no rights which he could enforce in the appeal against the State and the appeal was accordingly liable to fail.

(2) The appellant had filed the suit giving rise to the appeal on 20th June 1950 and during the pendency of the suit, the period for which the contract dated 21st August 1948 had been granted by Jagirdar Sardarsing Gajesing had expired and the appellant had therefore, no rights in respect of the trees in the Gotimda forest after the expiration of the period of the said contract which the appellant could enforce in the appeal and the appeal had accordingly become infructuous.

(3) During the pendency of the appeal, the Saurashtra Felling of Trees Act, was extended to the area in which the Gotimda forest is situate and the relief claimed by the appellant against the State could not, therefore, be granted to the appellant inasmuch as the felling of trees had become unlawful by virtue of the provisions of the said Act and the appeal was accordingly liable to be dismissed. If these preliminary objections are well founded, they would dispose of the entire appeal in favour of the State. We are, however, of the opinion that there is no substance in these preliminary objections and for reasons which we shall immediately proceed to state, we think that these preliminary objections should be rejected.

12. The first preliminary objection of Mr. B. R. Sompura was based on the provisions of the Bombay Merged Territories and Areas (Jagirs Abolition) Act, 1953. The said Act came into force on 1st August 1934. The argument of Mr. B. R. Sompura was that even if Jagirdar Sardarsing Gajesing had any rights over the Gotimda forest which were legally enforceable against the State of Bombay, such rights were abolished by virtue of the provisions of the said Act and that from and after 1st August 1954 when the said Act came into force, Jagirdar Sardarsing Gajesing had no rights in respect of the trees standing in the Gotimda forest and that the said trees belonged to the State of Bombay. If this argument was correct, the necessary corollary of this argument which was pressed upon us for acceptance was that since the appellant derived his title from Jagirdar Sardarsing Gajesing under the contract dated 21st August 1948, the appellant’s title also fell with that of Jagirdar Sardarsing Gajesing and the appellant could not have any rights in respect of the trees standing in the Gotimda forest from and after 1st August 1954. The final step in the argument was that if the appellant’s rights in respect of the trees standing in the

Gotimda forest came to an end, the appellant could not maintain the appeal and the appeal was infructuous. It was contended by Mr. B. R. Sompura that the relief claimed by the appellant in the appeal was in enforcement of the appellant’s rights in respect of the trees standing in the Gotimda forest and if the appellant ceased to have such rights, no relief could be possibly granted to the appellant and the appeal was bound to fail. We agree with Mr. B. R. Sompura that if the effect of the said Act was to extinguish the rights of Jagirdar Sardarsing Gajesing in respect of the trees standing in the Gotimda forest, the appellant’s rights being derivative would also come to an end and the appellant would not be entitled to maintain the appeal. The question, however, is whether the rights of Jagirdar Sardarsing Gajesing in respect of the trees standing in the Gotimda forest were extinguished by the said Act. We would have entered upon a consideration of this question and discussed the various provisions of the said Act with a view to determining the effect of the said Act on the rights of Jagirdars over forests situate within their Jagirs but we are saved from doing so, since this question is concluded by a judgment of a Division Bench of the Bombay High Court in Madhavsinhji Ghain-bhirsinhji v. U. R. Mavinkurve, Special Civil Appln. No 2146 of 1958. This decision of the Bombay High Court having been given on 14th January 1959 before the bifurcation of the former State of
Bombay, is binding on us and even otherwise we are in respectful agreement with the reasoning of Chainani, C. J., in this judgment. It has been held in this judgment that in the case of proprietary Jagirs, the Jagirdars became occupants of the forest lands situate within their Jagirs and as such occupants the Jagirdars continued to remain entitled to the frees standing in such forests and those trees did not vest in the Government under any provisions of the said Act. This judgment decides that the rights of the Jagirdars in respect of the trees standing in the forests situate within their Jagirs were not extinguished by the said Act and the trees standing in such forests continued to belong to the Jagirdars. It was not disputed before us that the Jagir or Jagirdar Sardarsing Gajesing was a proprietary Jagir and that the ratio decidendi of this judgment applied fully to the facts of the present case. In view of this judgment we cannot accept the argument of Mr. B. R. Sompura based on the provisions of the said Act. In fairness to Mr. B. R. Sompura it must be observed that as soon as this judgment was pointed out by Mr. Rajni Patel, Mr. B. R. Sompura staled that in view of this judgment he could not press this contention.

13. Turning to the second preliminary objection raised by Mr.B. R. Sompura, we find that this preliminary objection has been raised for the first time before us. Though the period mentioned in the contract dated 21st August 1948 expired on 21st August 1951 and the suit was actually heard long after that date, the State did not raise this preliminary objection before the learned Trial Judge and allowed the hearing of the suit to proceed on the merits on the basis that if the merits were decided against the State, the appellant would be entitled to the relief claimed by him against the

State. This preliminary objection was also not raised by the State in the appeal before the learned District Judge. We do not think we would be justified in allowing the State to raise this preliminary objection before us at such a late stage in the long course taken by this litigation. It is settled law that when a question is sought to be raised for the first time in the Court of appeal, it is not only competent but also expedient in the interests of justice to entertain the question if it is a pure question of law based upon the construction of a document or upon facts either admitted or proved beyond controversy. But if the question sought to be raised is a question of fact or a mixed question of law and fact, the Court of appeal would not permit such question to be raised for the first time in appeal inasmuch as such question cannot by its very nature be properly decided unless the attention of the parties is reverted on the question by framing of a proper issue and evidence is led upon it. In the present case the question sought to be raised by this preliminary objection is not a pure question of law but is a mixed question of law and fact. It cannot be said that if this preliminary objection had been raised before the learned trial Judge and an issue had been framed focussing the attention of the parties on the question raised by this preliminary objection, the appellant could not have possibly led any evidence to show that this preliminary objection was unfounded. The appellant might conceivably have led evidence to show that during the pendency of the suit the period of the contract dated 21st August 1948 was extended by mutual agreement between Jagirdar Sardarsing Gajesing on the one hand and Vohra Hathimbhai Badruddin Mithaborwala or the appellant on the other hand and that the appellant was, therefore, still entitled to claim the relief of injunction against the State notwithstanding that the period of three years mentioned in the said contract had expired. This would have an effective answer to the preliminary objection urged on behalf of the Stale. As a matter of fact we were informed by Mr. Rajni Patel that such was the position and if this preliminary objection had been taken at the appropriate time before the learned trial Judge, the appellant would have led evidence and proved that the period of the contract dated 21st August 1948 was extended by mutual agreement between the parties and would have thus effectively met this preliminary objection. We cannot, under these circumstances, allow Mr. B. R. Sompura to taise this preliminary objection for the first time at the hearing of this appeal before us. We need not, therefore, consider whether this preliminary objection is well founded or not.

14. The third preliminary objection urged by Mr. B. R. Sompura was based on the provisions of the Saurashtra Felling of Trees Act which was extended to the area in which the Gotimda forest is situate during the pendency of this appeal. Beyond stating this preliminary objection Mr. B. R. Sompura did not put forward any arguments in support of the same and in our opinion rightly so because the said Act does not impose a total prohibition on the felling of trees in the area to which the said Act applies but merely prescribes the requirement of sanction or consent of the appropriate authority

before such trees can be felled. The appellant was constrained to adopt the present proceedings because his rights in respect of the trees standing in the Gotimda forest were disputed by the State and what the appellant seeks to do by this appeal is merely to establish and enforce the said rights. It is not the contention of the appellant that he is entitled to cut and remove trees from the Gotimda forest without obtaining the sanction or consent of the appropriate authority under the said Act, it such sanction or consent is necessary. The absence of sanction or consent of the appropriate authority under the said Act cannot, therefore, defeat this appeal which merely seeks to enforce the rights of the appellant in respect of the trees Standing in the Gotimda Forest and docs not claim any right on the part of the appellant to cut and remove the said trees without such sanction or consent. This preliminary objection raised by Mr. B. R. Sompura must also, therefore, be negatived.

15. Coming to the merits of the appeal, the main argument urged on behalf of the State which found favour with the learned District Judge was that the act of acquisition by the Government of India of full and exclusive authority, jurisdiction and powers for and in relation to the governance of the Sant State under the merger agreement was an act of State and that Jagirdar Sardarsing Gajesing who was an inhabitant of the Sant State could, therefore, make good in the Municipal Courts of India only such rights as the Government of India through its officers recognised and that such rights as Jagirdar Sardarsing Gajesing had under the rule of the Ruler of the Sant State availed him nothing. The rights which Jagirdar Sardavsing Gajesing had in respect of the Gotimda forest under the order of the Ruler of the Sant State dated 12th March 1948 were, therefore, not legally enforceable against the Government of India and its delegate the Government of Bombay unless and until the same were recognised by the Government of India or the Government of Bombay as the delegate of the Government of India. The argument was that these rights were not recognised by the Government of India or the Government of Bombay which was the delegate of the Government of India in respect of extra-provincial jurisdiction in and in relation to the Sant State and on the contrary the order of the Ruler of the Sant State date 12th March 1948 which granted these rights was cancelled by the Government of Bombay by the letter dated 8th July 1949 addressed by the Assistant Secretary to the Government of Bombay, Revenue Department, to the Commissioner, Northern Division, as also by the resolution dated 6th February 1953. It was contended that Jagirdar Sardarsing Gajesing had, therefore, no rights in respect of the Gotimda forest which could be enforced against the Government of Bombay as the successor Government and consequently the appellant who claimed under Jagirdar Sardarsing Gajesing was also not entitled to any rights in respect of the trees standing in the Gotimda forest which he could enforce against the Government of Bombay and the appellant was, therefore, not entitled to any relief against the State. Mr. Rajni Patel combated this argument urged on behalf of the State by attacking it on four different grounds which may be shortly stated as follows:

(1) At the date when full and exclusive authority,
jurisdiction and powers for and in relation to the governance of the Sant State were acquired by the Government of India from the Ruler of the Sant State under the merger agreement, the Sant State was not an independent sovereign State and the Ruler of the Sant State had ceased to be an alien and had become a subject of the Dominion of India inasmuch as the Sant State had prior to the date of Such acquisition acceded to the Dominion of India lay executing an Instrument of Accession and thus become a part of the territories of India. The act of acquisition by the Government of India of full and exclusive authority, jurisdiction and powers for and in relation to the governance of the Sant State under the merger agreement was, therefore, not an act of State and the doctrine that when there is an act of State by acquisition of a new territory by a sovereign for the first time, the inhabitants o such territory can make good in the Municipal Courts established by the new sovereign only such rights as the new sovereign has through his officers recognised and that such rights as the inhabitants had under the rule of the predecessor avail them nothing, could not possibly apply. That being the position, the Government of Bombay was not entitled to ignore or repudiate the rights of Jagirdar Sardarsing Gajesing in respect of the Gotimda forest and the appellant was entitled to enforce his rights in respect of the trees standing in the Gotimda forest against the Government of Bombay, and the defence of an act of State was not available to the Government of Bombay.

(2) The order of the Ruler of the Sant State dated 12th March 1948 was a legislative act on the part of the Ruler of the Sant State and the said Order being legislative in character was continued in force by Clause 4 of the Administration of the
Indian States Order to which we have already referred earlier in the course of this judgment while narrating the facts giving rise to this appeal. The Government of Bombay thus recognised by legislation the rights of Jagirdar Sardarsing Gajesing in respect of the Gotimda forest under the said Order and the said rights were, therefore, legally enforceable against the Government of Bombay in the Municipal Courts of this country and the appellant deriving his title from Jagirdar Sardarsing Gajesing could also enforce his rights in respect of the trees in the Gotimda forest against the Government of Bombay.

(3) Even if the Order of the Sant State dated 12th March 1948 was not a legislative act but an executive act on the part of the Ruler of the Sant State, the rights of Jagirdar Sardarsing Gajesing in respect of the Gotimda forest granted under the said Order and through him of tile appellant were recognised by the Government of Bombay by legislation in the shape of the Administration of Indian States Order and acknowledged by acts and conduct of its officers and the plea of an act of State could not, therefore, avail the State. In any event the merger agreement and
the letter of guarantee clearly showed that the Government of Bombay had waived its right to ignore and repudiate the rights of Jagirdar Sardarting Gajesing in respect of the Gotimda forest granted under the said Order and the said right.

were, therefore, available for enforcement to Jagirdar Sardarsing Gajesing and through, him to the appellant and there was no bar to the Municipal Courts of this country entertaining the suit to enforce the appellants rights in respect of the trees standing in the Gotimda forest.

(4) The rights of Jagirdar Sardarsing Gajesing in respect of the Gotimda forest granted under the Order of the Ruler of the Sant State dated 12th March 1948 were rights in property and these rights continued in Jagirdar Sardarsing Gajesing even after full and exclusive jurisdiction, authority and powers for and in relation to the governance of the Sant State were ceded by the Ruler of the Sant State to the Government of India. No doubt the Government of Bombay could as the successor Government confiscate the Gotimda forest and extinguish the proprietary rights of Jagirdar Sardarsing Gujesing in respect of the Gotimda forest by an act of State, but the Government of Bombay did not do so upto 26th January 1950. The result was that right upto 26th January 1950 when the Constitution came into existence, Jagirdar Sardarsing Gajesing continued to have proprietary rights in the Gotimda forest and these rights could not thereafter be extinguished or destroyed by an act of State. The resolution dated 6th February 1953 could not, therefore, be relied upon by the Government of Bombay as an act of State cancelling the Order of the Ruler of the Sant State dated 12th March 1948 or repudiating the rights of Jagirdar Sardarsing Gajesing in respect of the Gotimda forest. Jagirdar Sardarsing Gajesing had, therefore, proprietary rights in respect of the Gotimda forest which were legally enforceable against the Government of Bombay from and after 26th January 1950 and the appellant claiming as he does under Jagirdar Sardarsing Gajesing was entitled to enforce his rights in respect of the trees standing in the Gotimda forest against the State at the date when he filed the suit and the State could not successfully set up the plea of an act of State in defence to the suit.

We shall now proceed to examine these grounds and to consider how far these grounds can afford an answer to the plea of an act of State.

16. The first ground was judged by Mr. Rajni Patel on the strength of a judgment of a Division Bench of the Bombay High Court in State of Bombay v. Raghunath Balkrishna, First Appeal No. 172 of 1956. The Division Bench consisted of Datar and Miabhoy, JJ., and the judgment was delivered by Datar, J. The Indian State concerned in that case was the Baroda State and the question in the case was whether certain Orders passed by the Executive Council of the Baroda State on 22nd April 1949 and 30th April 1949 subsequent to the date of the merger agreement executed by and between the Ruler of the Baroda State and the Governor General of India could be said to be acts of State. The argument was that the cession of full and exclusive jurisdiction, authority and powers for and in relation to the governance of the Baroda State by the Ruler of the Baroda State to the Government of India took place on the execution of the merger agreement and on that date the Baroda State was not an independent sovereign State inasmuch as the Baroda State, had acceded to the Dominion of India by executing an Instrument of Accession and thus become a part of the territories of the Dominion of India. It was argued in that case that there could be an act of State only between two independent sovereign States and that since the Baroda State was not an independent sovereign State at the date of the merger agreement, the cession of full and exclusive jurisdiction, authority and powers for and in relation to the governance of the Baroda State under the merger agreement could not be said to constitute an act of State. The argument proceeded that since the cession of full and exclusive jurisdiction, authority and powers for and in relation to the governance of the Baroda State under the merger agreement did not constitute an act of State, the plea of an act of State in respect of the orders dated 22nd April 1949 and 80th April 1949 alleged to have been passed subsequent to the date of cession also could not be sustained. The argument Was also put in another form namely that on the Baroda State acceding to the Dominion of India by executing an Instrument of Accession, the plaintiff in that case ceased to be an alien and became a subject of the Dominion of India and there could not, therefore, be an act of State against the plaintiff after the date of such accession. These arguments were accepted by the Division Bench of the Bombay High Court and Datar, J. delivering the judgment of the Court in that case, summarised his conclusions as follows:

“The State of Baroda, by acceding to the Dominion of India in the manner provided in the Government of India Act, 1935, became a part of the territories of India as defined in Section 2 of the Indian Independence Act 1947 and for the purposes of Section 5 of the Government of India Act, 1935 one of the units of which the Union was to consist”.

“Therefore, considering the relevant provisions of the Government of India Act, 1935 and the Indian Independence Act, 1947 and the terms of the Instrument of Accession, it seems to me that at the time of the Merger Agreement, His Highness the Maharaja of Gaikwar had by reason of the accession of his State to the Indian Dominion ceased to be an alien but was a subject of the Indian Dominion itself. In this position of affairs, it is difficult to hold that the Merger Agreement was in the nature of a Treaty or an Agreement between two high contracting parties’, two independent sovereigns of different States”.

“Therefore, it seems to me that the orders of the Executive Council dated 22nd April 1949 and 80th April 1949 even if assumed to be the orders of tbe acquiring State–the present Government (as contended by Mr. Munshi), could not amount to acts of State against the plaintiffs who were no longer aliens but had become the citizens of the present Government. If so, the defence of act of State is not available to Government”.

Strong reliance was placed by Mr. Rajni Patel on this judgment of tbe Bombay High Court and the argument advanced by Mr. Rajni Patel on this aspect of the case followed the same line of reasoning which found favour with the Bombay High Court. Mr. Rajni Patel contended that the Sant State having acceded to the Dominion of India by executing an Instrument of Accession in August

1947, was not an independent sovereign State at the date when full and exclusive jurisdiction, authority and powers for and in relation to the governance of the Sant State were ceded by the Ruler of the Sant Stale to the Dominion of India and that the cession did not, therefore, constitute an act of State and this being the position, the rights of Jagirdar Sardarsing Gajesing in respect of the Gotimda forest and through him of the appellant could be legally enforced against the Government of Bombay as the successor Government and the Government of Bombay was not entitled to raise the plea of an act of State for repudiating or defeating the said rights. We are afraid we cannot accept this contention urged on behalf of the appellant even though it is supported by the aforesaid judgment of the Bombay High Court. We on our part do not agree with the reasoning to be found in this judgment. But ordinarily that would be no ground for refusing to follow this judgment which, being a judgment of a Division Bench of the Bombay High Court given prior to 1st May 1960, is binding on this Court. When, however, we find that the reasoning of this judgment of the Bombay High Court is contrary to at least two decisions of the Supreme Court, we cannot accept this judgment of the Bombay High Court as a binding authority and on the basis of this judgment of the Bombay High Court reach a decision which would be contrary to those two decisions of the Supreme Court. We shall presently refer to those two decisions of the Supreme Court and show that this judgment of the Bombay High Court is inconsistent with those two decisions of the Supreme Court and that having regard to those two decisions of the Supreme. Court, we must reject the argument urged on behalf of the appellant, based though it is on this judgment of the Bombay High Court. Before, however, we do so, we would prefer to examine this argument and test its validity upon principle; and upon principle we think it cannot be sustained.

17. In order to understand and appreciate this argument urged on behalf of the appellant, it is necessary to determine the status of the Ruler of the Sant State both before and after the accession of the Sant State to the Dominion of India. Before India obtained independence and became a Dominion by reason of the Indian Independence Act, 1947, the Sant State was an Indian State within the meaning of the definition of “Indian State” contained in Section 311(1) of the Government of India Act, 1935. That definition was an inclusive definition and defined “Indian State” as including any territory, whether described as a State, an Estate, a Jagir or otherwise, belonging to or under the suzerainty of His Majesty and not being part of British India. “British India” meant only those territories which were for the time being comprised within the Governors’ Provinces and the Chief Commissioners’ Provinces. As contrasted with British India which was governed by the British Crown according to the statutes of tbe British Parliament and the enactments of the Indian Legislature, the Indian States possessed internal independence subject to the suzerainty of the British Crown and enjoyed and exercised all the function and attributes of internal sovereignty duly recognised by the British Crown as the paramount

power. The Indian States were independent States under the paramountcy of the British Crown and they acknowledged the British Crown as the suzerain power and owed a modified allegience to it, but, subject to the rights that the British Crown as the paramount power claimed to exercise in relation to the Indian States–which rights covered matters both internal and external–the internal sovereignty o the Indian States was unaffected. On India obtaining independence and becoming a Dominion on 15th August 1947 by reason of the Indian Independence Act, 1947, the suzerainty of the British Crown over the Indian States lapsed because of Section 7 of that Act. The Indian States were released from their obligations to the British Crown and attained the status of truly independent sovereign States possessing and enjoying not only internal independence but also external independence; but this position did not last long and immediately thereafter all but three States acceded to the Dominion of India by executing Instruments of Accession. The form of the Instrument of Accession was settled as a result of discussions with the Rulers at the Indian States and the Instruments of Accession executed by the Rulers of the Indian States provided for the accession of the Indian States to the Dominion of India on three subjects, namely. Defence, External Affairs and Communications, their content being as defined in List I of Schedule VII to the Government of India Act, 1935. The Dominion of India was empowered to accept the Instruments of Accession by a suitable amendment in the Government of India Act, 1935. Section 6 of the Government of India Act, 1935, empowered the Governor General of India to signify his acceptance of the Instruments of Accession. The Sant State was one of the Indian Stales which acceded to the Dominion of India and the Instrument of Accession in that behalf was executed by the Ruler of the Sant State and accepted by the Governor General of India. The Instrument of Accession signed by the Ruler of the Sant State was in the form set out in Appendix VII of the White Paper on Indian States and the same was as follows:

“Whereas, the Indian Independence Act, 1947, provides that as from the fifteenth day of August, 1947, there shall be set up an independent Dominion known as INDIA, and that the Government of India Act, 1935, shall, with such omissions, additions, adaptations and modification as the Governor-General may by order specify be applicable to the Dominion of India;

And Whereas the Government of India Act, 1935, as adapted by the Governor-General provides that an Indian State may accede to the Dominion of India by an Instrument of Accession executed by the Ruler thereof :

Now Therefore I …….. Ruler of ………in
the exercise of my sovereignty in and over my said State do hereby execute this my Instrument of Accession and

1. I hereby declare that I accede to the Dominion of India with the intent that the Governor-General of India, the Dominion Legislature, the Federal Court and any other Dominion authority established for the purposes of the Dominion

shall, by virtue of this my Instrument of Accession but subject always to the terms thereof, and for the purposes only of the Dominion, exercise in relation to the State of ……… (hereinafter referred to as
“this State”) such functions as may be vested in them by or under the Government of India Act, 1935, as in force in the Dominion of India on the 15th day of August, 1947 (which Act so as in force is hereinafter referred to as “the Act”).

2. I hereby assume the obligation of ensuring that due effect is given to the provisions of the Act within this State so far as they are applicable therein by virtue of this my Instrument of Accession.

3. I accept the matter specified in the Schedule hereto as the matters with respect to which the Dominion Legislature may make laws for this State.

4. I hereby declare that I accede to the Dominion of India on the assurance that if an agreement is made between the Governor-General and the Ruler of this State whereby any functions in relation to the administration in this State of any law of the Dominion Legislature shall be exercised by the Ruler of this State, then any such agreement shall be deemed to form part of this Instrument and shall be construed and have effect accordingly.

5. The terms of this my Instrument of Accession shall not be varied by any amendment of the Act or of the Indian Independence Act, 1947, unless such amendment is accepted by me by an Instrument supplementary to this instrument.

6. Nothing in this Instrument shall empower the Dominion Legislature to make any law for this State authorising the compulsory acquisition of land for any purpose, but I hereby undertake that should the Dominion for the purposes of a Dominion law which applies in this State deem it necessary to acquire any land, I will at their request acquire the land at their expense or if the land belongs to me transfer it to them and such terms as may be agreed, or, in default of agreement, determined by an arbitrator to be appointed by the Chief Justice of India.

7. Nothing in this Instrument shall be deemed to commit me in any way to acceptance of any future constitution of India or to fetter my discretion to enter into arrangements with the Government of India under any such future constitution.

8. Nothing in this Instrument affects the continuance of my sovereignty in and over this Stale, or, save as provided by or under this Instrument, the exercise of any powers, authority and rights now enjoyed by me as Ruler of this State or the validity of any law at present in force in this State.

9. I hereby declare that I execute this Instrument on behalf of this State and that any reference in this Instrument to me or to the Ruler of the State is to be construed as including a reference to my heirs and successors.

Given under my hand this….. day of August,
Nineteen hundred and forty-seven………..”

On the Governor-General of India signifying his acceptance of the Instrument of Accession, the Sant State was deemed to have acceded to the Dominion of India by virtue of Section 6 of the Government of India Act, 1935. The question is what was the effect of such accession on the Sant State.

18. The language of the Instrument of Accession leaves no doubt in our mind that the sovereignty of the Sant State was expressly recognised and safeguarded by the Instrument of Accession. The operative words of the Instrument of Accession clearly show that it was in the exercise of his sovereignty in and over the Sant State that the Ruler of the Sant State executed the Instrument of Accession. It was as a sovereign power that the Ruler of the Sant State voluntarily agreed by executing the Instrument of Accession that the Dominion Legislature may make laws for the Sant State with respect to the matters set out in the Schedule to the Instrument of Accession namely, Defence, External Affairs and Communications as defined in List I of Schedule VII of the Government of India Act, 1935, and other ancillary matters and that the Governor General of India, the Federal Court and other Dominion authorities established for the purposes of the Dominion may, by virtue of the Instrument of Accession, but subject always to the terms thereof, and for the purposes only of the Dominion, exercise in relation to the Sant State such functions as may be vested in them by or under the Government of India Act, 1935. It will thus be seen that it was only in respect of Defence, External Affairs and Communications and other ancillary matters that the Ruler of the Sant State agreed that the Dominion Legislature may make laws for the Sant State and that the Governor General of India, the Federal Court and any other Dominion authority established for the purposes of the Dominion, may exercise functions vested in them by or under the Government of India Act, 1935. Apart from these three subjects namely, Defence, External Affairs and Communications, the sovereignty of the Ruler of the Sant State in respect of all other subjects remained unaffected and unimpaired. It was made clear in Clause 5 of the Instrument of Accession that the terms of the Instrument of Accession shall not be varied by any amendment of the Government of India Act, 1935, or of the Indian Independence” Act, 1947, unless such amendment was accepted by the Ruler of the Sant State by a supplementary Instrument of Accession and Clause 7 of the Instrument of Accession clearly provided that nothing in the Instrument of Accession shall be deemed to commit the Ruler of the Sant State in any way to acceptance of any future constitution of India or to fetter his discretion to enter into arrangements with the Government of India under any such future constitution. These two clauses emphasized the continuance of the sovereignty of the Ruler in and over the Sant State notwithstanding the execution of the Instrument of Accession and left the Ruler free in the exercise of his sovereignty to accept or not to accept any amendment of the Government of India Act, 1935 or of the Indian Independence Act, 1947, or any future Constitution of India. Obviously, if the Government of India Act, 1933, was scraped and a new constitution of India was forged which was not acceptable to the Ruler of the Sant State, the Ruler of the Sant State was not bound to accept the same and it was open to the Ruler of the Sant State to enter into such arrangements as he liked with the Government of India under such future constitution. The Instrument of Accession was thus a voluntary agreement between two sovereign powers namely, the Ruler of the Sant State and the Dominion of India, as a result of which the Ruler of the Sant State did not lose any of his sovereignty in and over the Sant State except on three subjects namely, Defence. External Affairs and Communications which were transferred to the Dominion of India. This constitutional position was clinched by Clause 8 of the Instrument of Accession which provided that nothing in the Instrument of Accession shall affect the continuance of the sovereignty of the Ruler in and over the Sant State, or, save as provided by or under the Instrument of Accession, the exercise of any powers, authority and rights then enjoyed by the Ruler as Ruler of the Sant State or the validity of any law then in force in the Sant State. This clause in clear and unmistakable terms safeguarded the sovereignty of the Ruler of the Sant State and stipulated that notwithstanding the Instrument of Accession, the sovereignty of the Ruler in and over the Sant State shall continue unaffected and save as may be otherwise provided by or under the Instrument of Accession, the Ruler shall continue to exercise the same powers, authority and rights as were enjoyed by him as Ruler of the Sant State at the date of execution of the Instrument of Accession. It will, therefore, be seen that the effect of the accession of the Sant State was to retain to the Ruler of the Sant State his full autonomy and sovereignty except on three subjects namely, Defence, External Affairs and Communications which were transferred to the Government of India. The argument of Mr. Rajni Patel, however, was that though a certain measure of sovereignty might have been left in the Ruler of the Sant State after the execution of the Instrument of Accession, that sovereignty was nothing more than internal independence and that inasmuch as the Ruler of the Sant State had been divested of external independence, he could not be a high contracting party to any agreement which could be placed on the level of an act of State between two independent sovereign States. We arc afraid we cannot accept this argument, Internal independence and external Independence arc merely two different aspects of sovereignty and merely because a State is divested of external independence by a treaty or agreement, it does not mean that the State ceases to be a sovereign State
in respect of which there could be no act of State by another sovereign State. It is quite consistent with sovereignty that the Sovereign may in certain respects be dependent upon another power. In every case the Court has to see whether the limitations imposed on the sovereignty of the State are of such a nature as to destroy the attributes of sovereignty and independence or leave a substantial sphere on which the sovereignty can operate. If the treaty or alliance reduces the State substantially to a state of dependence on the other Power, it may be possible to say that the State is no longer
on independent sovereign State and the cession of the residuary powers of the State to the other Power may not be considered an act of State. The test, therefore, to determine whether a State which is bound to another more powerful State by a treaty or alliance continues to be a sovereign State capable of being a high contracting party to an agreement which can be placed on the level of an

act of State between two independent sovereign States is: what is the extent of the limitations imposed on the sovereignty of the State as a result of the constitutional arrangement contained in the treaty or alliance? If an examination of the constitutional arrangements set out in the treaty or alliance shows that the limitations imposed on the sovereignty of the State have no application over a substantial sphere and to not reduce the State _to a position of dependence on the other State deprived of the attributes of sovereignty and independence, the State cannot be said to have ceased to be an independent sovereign State notwithstanding the restrictions on its sovereignty. We find considerable support for this view from the following observations of Viscount Finlay in the case of Duff Development Co. Ltd. v. Kelantan Government, 1924 AC 797:

“It is obvious that for sovereignty there must be a certain amount of independence, but it is not in the feast necessary that for sovereignty there should be complete independence. It is quite consistent with sovereignty that the sovereign may in certain respects be dependent upon another Power; the control, for instance, of foreign affairs may be completely in the hands of a protecting Power, and there may be agreements or treaties which limit the powers of the sovereign even in internal affairs without entailing a loss of the position of a sovereign Power………”

The same view was also expressed by Viscount Cave when he observed as follows in the same case;

“My Lords, in my opinion this argument cannot prevail. Vattel defines a sovereign State as a nation which governs itself by its own authority and laws without dependence on any foreign power; but he also lays it down that a State may without ceasing to be a sovereign State be bound to another more powerful state by an unequal alliance, and he adds :

* * * *

No doubt the engagements entered into by a Stale may be of such a character as to limit and quality, or even to destroy, the attributes of sovereignty and independence :……..”

Applying this test, we find on an analysis of the constitutional arrangements set out in the Instrument of Accession that the limitations imposed on the sovereignty of the Sant State had no application over a very substantial sphere of State activity and span from the three subjects namely. Defence, External Affairs and Communications, which were transferred to the Government of India, all the other subjects remained under the sovereignty of the Sant State and far from the Sant State having been reduced to a position of dependence on the Government of India, the sovereignty of the Sant State was expressly recognised and safeguarded by the Instrument of Accession as is evident from an analysis of the terms of the Instrument of Accession. There is no doubt in our mind that the Ruler of the Sant State was a sovereign Ruler within the limits imposed on him by the constitutional arrangements set out in the Instrument of Accession and it is idle to contend that by executing the Instrument of Accession, he ceased to be a sovereign Ruler or became a subject of the Dominion of India. It may be mentioned in this connection that their Lordships of the Privy Council in the case of Secy. of State in Council of India v. Kamachee Boye Sahaba, 7 Moo Ind App 476 held that though the Rajah of Tanjore was, by virtue of Treaties, under the protection of the East India Company, and the power of free action was left to him within his territories under the Treaties, he was an independent Sovereign and the act of the East India Company in seizing the Raj of Tanjore on the death of the Rajah without leaving male issue, was an act of State. Under the Treaties powers of the widest amplitude were granted to the East India Company and not only was external independence lost by the Rajah of Tanjore but serious inroads were also made into the internal independence of the Rajah of Tanjore and yet it was held by their Lordships of the Privy Council that the Rajah of Tanjore was an independent sovereign of his territories. Lord Kingsdown delivering the judgment of the Privy Council, observed :

“The Rajah was an independent Sovereign of territories undoubtedly small, and bound by Treaties to a powerful neighbour, which left him, practically, little power of free action; but he did not hold his territory, such as it was, as a fief of the British Crown, or of the East India Company….”

Speaking of this case in a subsequent decision in G. C. W. Forester v. Secy, of State for India in Council, Ind App Supp Vol. 10, their Lordships of the Privy Council pointed out that the Rajah of Tanjore “retained at least the shadow of original and independent sovereignty” whereas in the case before them, the Begam was not in any sense an independent sovereign though she had more powers than the Rajah of Tanjore. These decisions of the Privy Council lend considerable support to the view we are inclined to take namely, that the Sant State continued to be an independent sovereign State notwithstanding the execution of the Instrument of Accession by the Ruler of the Sant State and the acceptance thereof by the Governor General of India. It must be stated that this view which we are disposed to take is contrary to the view taken by the Division Bench of the Bombay High Court in the judgment to which we have already referred at the commencement of the discussion of this question and if the matter had rested there, we would have been bound to follow the judgment of the Bombay High Court and to accept the view taken in that judgment But as we have already pointed out earlier, the judgment of the Bombay High Court is inconsistent with two decisions of the Supreme Court and the principles which form the basis of those two decisions of the Supreme Court appear to have been overlooked in the judgment of the Bombay High Court. The constitutional position of the Indian Stales after the execution of the Instruments of Accession is set out in these two decisions of the Supreme Court and it can be safely stated that according to these two decisions of the Supreme Court, the Indian States continued to be independent sovereign States in spite of the restrictions on their sovereignty imposed under the Instruments of Accession. Out of these two decisions of the Supreme Court, one is Virendra Singh v. State of Uttar Pradesh, AIR 1954 SC 447 and the other is Dalmia Dadri Cement Co. Ltd., v. The Commr. of Income-tax, 1959 SCR 729: (AIR 1958 SC 816). In the case of AIR 1954 SC 447 the Indian States concerned were the States of Charkhari and Savila which acceded to the Dominion of India by executing Instruments of Accession and in relation to the accession, Bose, J. delivering the judgment of the Court observed:

“Broadly speaking, the effect of the accession was to retain to the Rulers their full autonomy and sovereignty except on three subjects: Defence, External Affairs and Communications. These were transferred to the Central Government of the new Dominion”.

The Rulers of Charkhari and Sarila along with Rulers of thirty-three other Indian States thereafter signed a covenant on 18th March 1948 uniting themselves into one State which was to be called the United States of Vindhya Pradesh and dealing with this Covenant Bose, J. again emphasised the sovereignty of the States of Charkhari and Sarila even after the execution of the Instrument of Accession, in the following language :

“It is important to note that this was a purely domestic arrangement between themselves and not a treaty with the Dominion of India. Each Ruler necessarily surrendered a fraction of his sovereignty to the whole but there was no further surrender of sovereign powers to the Dominion of India beyond those already surrendered in 1947, namely Defence, External Affairs and Communications. Despite the readjustment, the sum total of the sovereignties which had resided in each before the covenant now resided in the whole and its component parts; none of it was lost to the Dominion of India”.

This constitutional arrangement, however, did not work satisfactorily and so on 26th December 1949, the same thirty-five Rulers entered into an Instrument of Merger abrogating the covenant and dissolving the newly created State as from 1st January 1950 and by this Instrument of Merger, each Ruler ceded to the Government of India as from the same date “full and exclusive authority, jurisdiction and powers for, and in relation to, the governance or that State”. Dealing with this Instrument of Merger dated 26th December 1949, Bose, J. stated:

“…….The flow of events upto the date of final
accession, 1-1-1950, are only of historical interest in the present matter. The Rulers of Charkhari and Sarila retained, at the moment of final cession, whatever measure of sovereignty they had when paramountcy lapsed, less the portion given to the Indian Dominion by their Instruments of Accession in 1947; they lost none of it during the interlude when they toyed with the experiment of integration. There was then redistribution of some of its aspects but the whole of whatever they possessed before the integration returned to each when the United State of Vindhya Pradesh was brought to an end and ceased to exist. Thereafter each acceded to the Dominion of India in his own right”.

Now it must be pointed out here that the accession which is referred to by Bose, J. in the above paragraph, is not the accession to the Dominion of India

by execution of an Instrument of Accession, but the accession in the shape of cession of full and exclusive authority, jurisdiction and powers for, and in relation to, the governance of the States of Charkhari and Sarila under the Instrument of Merger dated 26th December 1949, It is in this sense that Bose J., said that each of the Rulers of the States of Charkhari and Sarila acceded to the Dominion of India in his own right and in continuation of the same idea and in the same sense Bose J. further observed:

“Now it is undoubted that the accessions and the acceptance of them by the Dominion of India were acts of State into whose competency no municipal Court could enquire; ….”

This observation of Bose J., clinches the position and in terms declares that the cession of full and exclusive authority, jurisdiction and powers for, and in relation to, the governance of the State of Charkhari and Sarila under the Instrument of Merger dated 26th December 1949 was an act of State, notwithstanding the execution o Instruments of Accession by the Rulers of the said States in August 1947. The other decision of the Supreme Court in AIR 1954 SC 447 (supra) also lays down the constitutional position in the same terms. In that case the Indian State concerned was the Jind State and the Ruler of the Jind State also had executed an Instrument of Accession like the Rulers of other States. The Ruler of the Jind State along with the Rulers of seven other Indian States in East Punjab thereafter entered into a covenant on 5th May 1948 for the merger of their territories into one State called the Patiala and East Punjab States Union. The question that arose for decision was whether the covenant was an act of State and dealing with that question, Venkatarama Aiyar J., emphatically stated in no uncertain terms:

“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 at a new State”.

It may be noted that this observation was made by Venkatarama Aiyar J., in relation to the Rulers of Indian States who had already acceded to the Dominion of India by executing Instruments of Accession before they entered into the covenant for the merger of their territories into the Patiala and East Punjab States Union. These two decisions of the Supreme Court establish firmly that by acceding to the Dominion of India by executing Instruments of Accession, the Rulers of Indian States did not cease to be independent sovereign Rulers and the acquisitions by the Government of India of full and exclusive jurisdiction, authority and powers for, and in relation to, the governance of the Indian States by cession under the merger agreements executed by the Rulers of the Indian States in favour of the Government of India, constituted acts of State. Having regard to these two decisions of the Supreme Court, we cannot accept the judgment of the Bombay High Court as a binding authority and we hold in accordance with the principles laid down in these two decisions of the Supreme Court that

at the date of the merger agreement, the Ruler of the Sant State was an independent sovereign power and that the acquisition by the Government of India of lull and exclusive jurisdiction, authority and powers for, and in relation to, the governance of the Sant State by cession under the merger agreement was an act of State. There were one or two other arguments advanced by Mr. Rajni Patel on this aspect of the case which appear to have been accepted in the judgment of the Bombay High Court; but in view of the over-riding authority of these two decisions of the Supreme Court, we do not think any useful purpose would be served by entering upon a discussion of those arguments.

19. That takes us to the other three grounds urged by Mr. Rajni Patel in answer to the plea of act of State. But before we examine those grounds, it is necessary to understand precisely the meaning and implications of an act of State. It is a fundamental principle of British Jurisprudence which also pervades, the Indian system of law that no member of the Executive can interfere with the liberty or property of the subject except on the condition that he can support the legality of his action before a Court of justice. This is the necessary consequence of the rule of law which lies at the core of British Jurisprudence. The Rule of law implies, without regard to the content of the law, that all power in the State should be derived from and exercised in accordance with the law. The exercise of the power by the Executive must be within whatever limits the law prescribes. The subordination of the Executive to the law is such that if the Executive is not able to justify its action by reference to the law, the individual who has suffered damage as a result of the action of the Executive has a remedy against the Executive either civil or criminal. The rule of law, however, affords protection only to the subject. This protection has also been extended to an alien who is the Subject of another State and who is resident in British territory with the permission of the British Crown on the principle that the subject of a State at Peace with the British Crown, white permitted to reside in British territory, owes allegiance to the British Crown and is, therefore, entitled to the protection of the British Crown and is to be regarded as a British subject for the time being by virtue of such local allegiance. It must follow that where a wrong has been done by a member of the Executive to a British subject or to an alien and resident in British territories with the permission of the British Crown, the person wronged must have a legal remedy if the rule of law is to have any meaning at all. But the doctrine that the King can do no wrong provides complete immunity to the sovereign and the person wronged has, therefore, no legal remedy against the sovereign. The rule has, therefore, been evolved that the person wronged may sue the member of the Executive for the wrong and the latter cannot plead the authority of the sovereign for, from the maxim that the King can do no wrong, it follows as a necessary consequence that the King also cannot authorize any wrong. No member of the Executive can be permitted to plead as a defence to an action for wrong that he did the wrong under the authority of the sovereign. The result is that any member of the

Executive who does wrong to a British subject or to an alien resident in the British territories with the permission of the sovereign, must justify his action under the law on pain of being held responsible for the wrong if he fails to do so. The authority of the sovereign would be no defence to an action on the part of the person wronged. To quote the words of Lord phillimore in Johns tone v. Pedlar, (1921) 2 AC 262:

“When a subject sues another subject for a supposed tort, the defendant cannot plead as a defence that he did the act that is said to be a tort by authority of the King. The maxim “The King can do no wrong” is to be applied to litigation in this way: No one complained of for an act which is said to be a tort can withdraw the cognizance of that claim from the Courts of the land by averring that he did the act by command of the King; because if it was a lawful act, such averment is unnecessary, and if it was an unlawful act, he cannot be admitted to say that he was told to do it by the King; The King cannot authorize any wrong”.

This rule, however, does not apply when the person injured is an alien resident abroad. If an officer of the sovereign causes a wrong to an alien resident abroad, under the authority of the sovereign, or if the act of causing the injury is adopted by the sovereign, it is an act of State and the alien is without redress except by diplomatic action taken through the Government of his own country. This is one example of an act of State. The other examples of an act of State may be found in declarations of war, treaties and dealings with foreign countries. “Acts of State are not all of one kind; their nature and consequences may differ in an infinite variety of ways” as observed by Fletcher Moulton, L. J., in Salaraan v. Secy, of State for India, (1906) 1 KB 613. But in all cases, an act of State is essentially an exercise of sovereign power neither intended nor purporting to be legally founded. An act of State does not affect to justify itself on grounds of Municipal law. Being essentially a sovereign act which is neither grounded in law nor pretending to be so grounded, an act of State cannot be challenged, controlled or interfered with by Municipal Courts. Its sanction is not that of law but that of sovereign power and whatever it be, Municipal Courts must accept it as it is without question. Municipal Courts administer Municipal law and can, therefore, grant relief to the person wronged even against the State when the action of the State is required to be within the authority conferred by Municipal law which is the case as between the State and its subjects, but the transactions of the State with another sovereign power or with the subjects of sudh sovereign power are manifestations of sovereign power outside the Municipal law and are governed by considerations which are not grounded on Municipal law and Municipal Courts cannot, therefore, form any judgment on the desirability or the justice of such actions and Municipal Courts have accordingly no jurisdiction over such actions. This legal proposition is firmly established and is repeated over and over again in several decisions of the Privy Council, but the most classic statement of it is to be found in the following observations of Lord Kingsdown in (1859) 13 Moo PC 22:

“The general principle of law 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 make”.

After holding that the act of seizure of the Uaj of Tanjore by the East India Company on behalf of the Crown of Great Britain was an act of State, Lord Kingsdown further observed in relation to that act of State:

“Of the propriety or justice of that act, neither the Court below nor the Judicial Committee have the means of forming, or the right of expressing it they had formed, any opinion. It may have been just or unjust, politic or impolitic, beneficial or injuries, taken as a whole, to those whose interests are affected. These are considerations into which their Lordships cannot enter. It is sufficient to say, that, even if a wrong has been done, it is a wrong for which no Municipal Court of Justice can afford a remedy”.

The last words of Lord Kingsdown’s judgment clearly show that when there is an act of State either against another sovereign, or against a subject of another sovereign, there is no doubt a wrong inflicted upon the other person but it is a wrong for which no Municipal Court of the State inflicting the wrong can afford any remedy. “It is on the authorities quite clear that the injury inflicted upon a sovereign or the subject of such sovereign by the act of State of another sovereign authority does not by reason o the nature o the act by which the injury is inflicted cease to be a wrong. What these authorities do establish is that a remedy for the wrong cannot be sought in the Courts of the sovereign authority which inflicts the injury” and that the aggrieved party must depend for redress upon diplomatic action. (Vide (1921) 2 AC 262). If the aggrieved party is the sovereign, the dispute relating to the wrong must be settled by recourse to diplomatic action and failing that, to force and it the aggrieved party is an individual other than the sovereign, he must depend for redress upon the diplomatic action o the sovereign of whom he is a subject. The Municipal Courts of the sovereign inflicting the injury would not be competent to afford any remedy for the injury inflicted and no remedy for the wrong can be sought in the Municipal Courts. The defence of an act of State does not change the character of the act which inflicts the wrong or injury but merely ousts the jurisdiction of the Municipal Courts in respect of such act. The act of State being an exercise of sovereign power, the sovereign is not subject to the control of the Municipal Courts either in respect of the act or in respect of its consequences and the obligations arising from such act are as pointed out by Tindal C. J. in Gibson v. East India Company, ((1839) 5 Bing NC 262) obligations which want the vinculum juris, although binding in moral equity and conscience and which the sovereign may in foro conscientious choose to make good but of which the performance must be sought for by petition, memorial or remonstrance and not by action in the Municipal Courts of the sovereign. The basis of the rule is, as we have already pointed out, that an

act of State is manifestation of sovereign power neither intended nor purporting to be grounded in law and the Municipal Courts which are Courts of law cannot by their very nature enter into considerations of propriety, magnanimity, wisdom and public duty, in short, of policy in the broadest and widest sense of the word which would be the only considerations behind such an act of State. This is made quite clear by Hidayatullah J., in State of Saurashtra v. Memon Haji Ismail, AIR 1959 SC 1383 when he says:

“From these cases it is manifest that an act of State is an exercise of sovereign power against an alien and neither intended nor purporting to be legally founded. A defence of this kind does not seek to justify the action with reference to the law but questions the very jurisdiction of the Courts to pronounce upon the legality or justice of the action”.

The principle of this rule has been extended to all acquisitions of territory by a sovereign for the first time, whether it be by conquest or by cession and it has been held that the rights enjoyed by the subjects of the ex-sovereign of those territories cannot be made good in the Municipal Courts established by the new sovereign unless the new sovereign chooses to waive or relinquish his right to ignore or repudiate those existing rights. What form such waiver or relinquishment can take is a matter which we shall discuss a little later but this much is certain that unless the new sovereign waives or relinquishes his privilege or prerogative to ignore or repudiate the existing rights of the subjects of the ex-sovereign, the subjects o the ex-sovereign cannot enforce the said rights against the new sovereign in his Municipal Courts. The principle behind this rule is that when the new sovereign acquires territory for the first time whether by conquest or annexation or cession or otherwise, it is for the new sovereign to decide in exercise of his sovereign power whether or not to ignore existing rights of the subjects of the ex-sovereign and to repudiate the same. It is obvious that if the new sovereign repudiates the existing rights of the subjects of the ex-sovereign at the time of acquisition o the territory, such action would amount to an act of State and the rights of the subjects of the ex-sovereign would cease to exist and they would have no remedy in respect of such action in the Municipal Courts of the new sovereign. The new sovereign while making peace with the ex-sovereign, if the acquisition is by conquest, or while accepting cession of territory from the ex-sovereign if the acquisition is by cession, may in exercise of his sovereign power make any conditions he thinks fit respecting the rights of subjects of the ex-sovereign and may ignore or repudiate the existing rights. The sanction behind such action would not be law but military force and such action would partake of all the characteristics of an act of State. It would equally make no difference if the new sovereign does not ignore or repudiate the existing rights of the subjects of the ex-sovereign at the time of acquisition of the territory but does so after some time. No possible reason can be assigned for any such distinction. In many cases much enquiry may be necessary before it can be ascertained under what circumstances the rights were acquired and what rights should in foro conscientiae be recognized. The new

sovereign may nor, therefore, be in a position to decide at the time of acquisition of the territory whether to ignore and repudiate or to recognize particular existing rights and the new sovereign may very well wait and then decide at his option to ignore Or repudiate such existing rights. The action on the part of the new sovereign in such a case would be as much an act of State as any action on his part in repudiating existing rights at the time of acquisition of the territory. It is true that when the process of acquisition of the territory is complete on the assumption of sovereign powers de jure over the territory by the new sovereign, the subjects of the ex-sovereign become the subjects of the new sovereign and, therefore, the action of the new sovereign in repudiating the existing rights of the subjects of the ex-sovereign after the process of acquisition is completed would amount to an act of State on the part of the new sovereign against his own subjects and this would apparently conflict with the principle that there can be no such thing as an act of State between the sovereign and his subjects. The conflict is, however, resolved by the theory that until the process of acquisition of the territory is complete on the assumption of sovereign powers de jure over the territory by the new sovereign, the subjects of the ex-sovereign are aliens to the new sovereign and the new sovereign can, therefore, ignore or repudiate their existing rights as an act of State and this right of the new sovereign to ignore or repudiate their existing rights, if not exercised before the assumption of sovereign powers de jure over the territory by the new sovereign, remains in abeyance and can be exercised at a subsequent date even after they cease to be aliens and become subject of the new sovereign on completion of the process of acquisition by the assumption of sovereign powers de jure over the territory by the new sovereign. Briefly stated, the principle would appear to be that an act of State can be exercised against a citizen who was once an alien, the right having originated when he was an alien and being only in abeyance until exercised. The summary of the legal position, therefore, is that when the new sovereign acquires territory for the first time, whether it be by conquest or cession or otherwise, the new sovereign may in exercise of his sovereign power, ignore or repudiate the existing rights of the subjects of the ex-sovereign either during the process of acquisition before the act of State is terminated or after the termination of the act of State by completion of the process of acquisition. As observed by Venkatarama Aiyar J, in Dalmia Dadri case, 1959 SCR 729: (AIR 1958 SC 816) (supra), “the process of acquisition of new territories is one continuous act of State terminating on the assumption of sovereign powers de jure over them by the new sovereign”. It, therefore, follows that the new sovereign may, in exercise of his sovereign power, ignore or repudiate the existing rights of the subjects of the ex-sovereign cither during the continuance of the act of State or after the act of State is terminated on the assumption of sovereign power de jure over the territory by the new sovereign. In either case it is an act of State over which the Municipal Courts of the new sovereign have no jurisdiction and the subjects of the sovereign whose existing rights are thus violated or repudiated cannot implead the new sovereign in any action before the Municipal Courts and enforce the said rights against the new sovereign. The self-same authorities which declare this, power of the new sovereign to ignore or repudiate the existing rights of the subjects of the ex-sovereign by an Act of State also admit that it can be waived or relinquished. This would appear to be so also on principle, for a right or power can always be waived or relinquished by the person entitled to it except in cases such as those where the right or power is conferred for public good or in aid of public interest. If this prerogative to ignore or repudiate the existing rights of the subjects of the ex-sovereign is waived or relinquished by the new sovereign before it is exercised, the existing rights become legally enforceable against the new sovereign in his Municipal Courts and if there is any violation of the existing rights by the new sovereign, the new sovereign having waived or relinquished his right to exercise an act of State, cannot oust the jurisdiction of the Municipal Courts to entertain a complaint in respect of the violation of the existing rights. This waiver or relinquishment of the power of the new sovereign to ignore or repudiate the existing rights of the subjects of the ex-sovereign is variously referred to in the authorities as recognition or acknowledgment of the existing rights by the new sovereign, for when the new sovereign waives or relinquishes his prerogative to ignore or repudiate the existing rights, he in effect recognizes or acknowledges them. It is for this reason that we find that in the following statement of the law by Lord Dunedin in Vajesinghji Joravar Singhji v. Secy, of State, AIR 1924 PC 210, Lord Dunedin has referred to the recognition of the existing rights by the new sovereign as a condition of their enforceability against the new sovereign in his Municipal Courts :

“When a territory is acquired by a sovereign State for the first time that is an act of State. It matters not how the acquisition has been brought about. It may be by conquest, it may be by cession following on treaty, it may be by occupation of territory hitherto unoccupied by a recognized ruler. In all cases the result is the same. Any inhabitant of the territory can make good in the municipal courts established by the new sovereign only such rights, as that sovereign has, through his officers, recognized. Such rights as he had under the rule of predecessors avail him nothing. Nay more, even if in a treaty of cession it is stipulated that certain inhabitants should enjoy certain rights, that does not give a title to those inhabitants to enforce these stipulations in the municipal Courts. The right to enforce remains only with the high contracting parties”.

Whether it be tailed recognition or acknowledgment, it means the same thing for the principle behind the rule is waiver or relinquishment by the new sovereign of his power to ignore or repudiate the existing rights of the subjects of the ex-sovereign and it is this waiver or relinquishment which exempts the existing rights from the exercise of prerogative or sovereign power by the new sovereign and renders them enforceable against the new sovereign in his Municipal Courts. In every case, therefore, where a subject of the ex-sovereign

wants to make good in the Municipal Courts of the new sovereign the existing rights acquired by him under the ex-sovereign, he must show that the new sovereign has waived or relinquished his right or prerogative to ignore or repudiate the existing rights which the subject seeks to establish and enforce, for otherwise the violation of the existing rights would be invested with the character of an act of State and the Municipal Courts would have no jurisdiction to entertain any complaint in respect of the violation of the existing rights. It is indisputable that this waiver or relinquishment can be by legislation or by proclamation or by agreement and it can even be inferred from circumstantial evidence such as the mode of dealing with the subject adopted by the new sovereign, his recognition of the existing rights of the subject and express or implied election to respect them and be bound by them. (Vide Secy, of State v. Bai Rajbai AIR 1915 PC 59 and AIR 1954 SC 447). According to the appellant this waiver or relinquishment can also be established from the covenant or treaty itself and the covenant or treaty can be referred to for the purpose of determining whether the new sovereign has in the covenant or treaty elected to waive or relinquish his right to ignore or repudiate the existing rights in question and to exempt those existing rights from the exercise of his prerogative or sovereign power. This is one of the main arguments advanced on behalf of the appellant and it has been strenuously resisted by the State. We shall consider this argument in some detail a little later in the course of this judgment.

20. There is another principle of law which is equally well established by authorities and which emerges as a necessary corollary from the aforesaid discussion relating to act of State and it is clearly and succinctly set out in the last few words of Lord Dunedin in the passage from his judgment in AIR 1924 PC 216 (supra) quoted above. These words may be reproduced again for the sake of convenience.

“Nay more, even if in a treaty of cession it is stipulated that certain inhabitants should enjoy certain rights, that does not give a title to those inhabitants to enforce these stipulations in the municipal Courts. The right to enforce remains only with the high contracting parties”.

The same principle is also to he found in the following words of Lord Atkinson when citing the Pongoland Case of Cook v. Sprigg, (1899 AC 572) he says in AIR 1915 PC 59 (supra):

“It was held that the annexation of territory was an act of State, and that any obligation assumed under a treaty either to the ceding sovereign or to Individuals is not one which Municipal Courts are authorised to enforce”.

The reason of the rule is that the treaty of cession is an act of State and both in respect of entering into the treaty as also in respect of the performance of the treaty, the sovereign is beyond the jurisdiction of the Municipal Courts and the Municipal Courts have no jurisdiction over the act of Sate or its consequences. The acts of the sovereign in making the treaty and in exercising his powers under it are acts of State for which the sovereign cannot be impleaded. The clauses in the treaty are, to use

the language of Venkatarama Aiyar, J., in Dalmia Dadri Case, 1959 SCR 729: (AIR 1958 SC 816) (supra) “invested with the character of an act of State” and no claim based thereon can be enforced in the Municipal Courts. If any obligations arc assumed by the sovereign under the treaty, they are obligations which cannot be enforced against the sovereign. The obligations unquestionably exist which bind the sovereign and which ought most scrupulously to be observed by the sovereign but none-the-less they cannot be enforced by an action in the Municipal Courts, Correspondingly, if any rights are conferred by the treaty on the subjects of the ex-sovereign, the rights undoubtedly exist, but if not respected by the new sovereign, they are incapable of legal enforcement in the Municipal Courts. No subject of the ex-sovereign can enforce against the new sovereign rights conferred on him by the treaty or obligations assumed by the new sovereign under the treaty for they flow alike from the treaty which is an act of State. If the new sovereign does not discharge any obligations assumed by him under the treaty or violates or repudiates any rights conferred on the subject of the ex-sovereign under the treaty and thereby commits a breach of the stipulations in the treaty, the subject of the ex-sovereign who is wronged by such breach cannot enforce those (stipulations in the Municipal Courts, since those stipulations are invested with the character of an act of State and the bargain contained in those stipulations can be enforced only by the high contracting parties namely, sovereign against sovereign “in the ordinary course of diplomatic pressure”. There is also another justification of this principle and it is to be found in the following observations of Venkatarama Aiyar, J., in Dalmia Dadri Case, 1959 SCR 729: AIR 1958 SC 816) (supra) :

“…… In law, therefore, the process of acquisition of new territories is one continuous act of State terminating on the assumption of sovereign powers de 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 declarations made by the new sovereign prior to his assumption of sovereign, powers over acquired territories can quoad the residents of those territories be regarded as having the character of a law conferring on them rights such as could be agitated in his courts. In accordance with this principle, it has been held over and over again that clauses in a treaty entered into by independent rulers providing for the recognition of the rights of the subjects of the ex-sovereign are incapable of enforcement in the courts of the new sovereign”.

When the stipulations in the treaty confer any rights on the subject of the ex-sovereign, such rights are conferred prior to the assumption by the new sovereign of sovereign powers over the acquired territory i.e., before the act of State terminates and the subject of the ex-sovereign becomes the subject of the new sovereign and those rights can

not, therefore, be agitated in the Municipal Courts of the new sovereign nor can the stipulations of the treaty conferring those rights be enforced in the Municipal Courts of the new sovereign. It is only when the treaty is made that the act of State terminates and the right of citizenship commences and it is only thereafter that any act done or declaration made by the new sovereign can have the effect of conferring on the residents of the acquired territory rights which can be agitated in the Municipal Courts of the new sovereign. Looking at the question from either point of view, the result is the same and it is this namely, that clauses or stipulations in a treaty entered into by the independent sovereigns are incapable of enforcement in the Municipal Courts of the new sovereign and no rights conferred or obligations assumed under such clauses or stipulations can be enforced in the Municipal Courts of the new sovereign. This principle for
med the basis of the decisions in. (1906) 1 KB 613, Hoani Te Heuheu Tukino v. Aotea District Maori Land Board, (1941) AC 308 : (AIR 1941 PC 109) and 1959 SCR 729 : (AIR 1958 SC 816) (supra). This principle was not disputed before us by Mr. Rajni Patel hut his argument was that there is a fundamental distinction between a subject of the ex-sovereigri seeking to enforce a right conferred on
him by clauses or stipulations in a treaty and a subject of the ex-sovereign referring to clauses or stipulations in a treaty for the purpose of establishing that the new sovereign has elected to waive or relinquish his prerogative or sovereign power to ignore or repudiate the existing rights acquired by the subject under the ex-sovereign. Whether this distinction is well-founded or not and what are its consequences are matters which we shall discuss a little later. But for the present the above discussion is sufficient to clarify the principles underlying different aspects of an act of State.

21. It is in the context of this background that we shall now proceed to examine the remaining three grounds urged by Mr. Rajni Patel as an answer to the defence of an act of State. The first of the three grounds hinges on the true nature and character of the Order of the Ruler of the Sant State dated 12th March 1948. The argument of Mr. Rajni Patel was that the said Order was a legislative act on the part of the Ruler of the Sant State and being legislative in character, the said Order was continued in force by Clause 4 of the Administration of the Indian States Order, the relevant portion of which ran as follows:

“4. Application and continuance of Laws: (1) Such provisions, or such parts of provision :

(a) of any law, or

(b) of any notification, order, scheme, rule, form or by-law issued, made or prescribed under any law,

as were in force immediately before the appointed day in any Indian State shall continue in force until altered, repealed or amended by an Order under the Extra-Provincial Jurisdiction Act, 1947 (XLVII of 1947) :

Provided that the powers that were exercised by the Ruler of an Indian State in respect of or in relation to such Indian State under any such provisions of law immediately before the appoint

ed day, shall be exercised by the Provincial Government or any officer specially empowered in this behalf by the Provincial Government”.

* * * *

The argument proceeded that the Government or Bombay thus waived or relinquished its right or power to ignore or repudiate the rights of Jagirdars including Jagirdar Sardarsing Gajesing under the said Order by recognizing the said rights by legislation and the said rights were, therefore, legally enforceable against the Government of Bombay in the Municipal Courts of this country and the appellant having a derivative title could also enforce his rights in respect of the trees standing in the Gotimda forest against the Government of Bombay. A further argument was also advanced by Mr. Rajni Patel that the said Order having been continued in force by Clause 4 of the Administration of the Indian States Order, which was made by the Government of Bombay under Section 4 of the Extra-Provincial Jurisdiction Act, 1947, the Government of Bombay could not cancel the said Order and even if the Government of Bombay could cancel the said Order, the Government of Bombay could do so only by another legislative Order made under Section 4 of the Extra-Provincial Jurisdiction Act, 1947, which Order was required to be notified in the Official Gazette. The argument was that since neither the letter dated 8th July 1949 addressed by the Secretary to the Government of Bombay, Revenue Department, to the Commissioner Northern Division, nor the resolution of the Government of Bombay dated 6th February 1953 was an order made under Section 4 of the Extra-Provincial Jurisdiction Act, 1947 or was notified in the Official Gazette, it could not have the effect of cancelling the said Order and the said Order continued to be in force and the rights granted under the said Order could be enforced against the Government of Bombay and the appellant could also, therefore, enforce his rights in respect of the Gotimda forest against the Government of Bombay. These arguments postulate that the said Order was a legislative act on the part of the Ruler of the Sant State; but we arc not at all satisfied that such was the position. By the said Order the Ruler of the Sant State granted to the Jagirdars full rights and authority over the forests in their respective villages and it is difficult to see how such an act on the part of the Ruler of the Sant State can be said to be a legislative act. Mr. Rajni Patel relied on the judgment of the Bombay High Court in First Appeal No. 172 of 1956 to which we have already referred in another connection and contended that just as the Order of the Ruler of the Baroda State in that case was a legislative act, similarly the Order of the Ruler of the Sant State in the present case was also a legislative act. Mr. Rajni Patel laid considerable stress on the following passage from the Treatise on Constitutional Law by Willis quoted in the judgment in that case :

Mr. Green has defined the Legislative power as the power to create rights, powers, privileges, or immunities, and their correlatives, as well as status, not dependent upon any previous rights, duties, etc., (or for the first time), that is, apparently, the power of creating antecedent legal capacities and liabilities. He defines judicial power as the

power to create some right or duty dependent upon a previous right or duty, that is, apparently the power to create remedial legal capacities and liabilities. He finds difficulty in defining executive power, except as including all governmental power which is not a part of the process o legislation or adjudication, that is, the power which is concerned mostly with the management and execution of public affairs…… Perhaps it would he better to say that
it is a legislative function to make all substantive law, and a judicial function finally to determine constitutional jurisdiction and the application of substantive law to specific facts.. .. .The legislative
function, then is general and relates to the future, whereas the judicial function is specific, final and ordinarily relates to the post. The executive function is the function of administering public attains and enforcing or carrying out the law”,

and contended that inasmuch as the said Order was general in nature embracing within its scope all Jagirdars in the Sant State and created rights in them for the first time over the forests situate in their respective villages, the said Order was in the nature of a legislative enactment. We arc afraid we cannot accept this contention. It must be stated at the outset that it is always difficult to discriminate between legislative acts and executive acts and this task becomes all the more difficult when the act in question is that of a sovereign who is the fountain-head of all judicial, legislative and executive authority. It is indisputable that prior to the integration of the Sant State with the Government of India, the Ruler of the Sant State enjoyed uncontrolled sovereign powers. He was the supreme legislature, the supreme judiciary and the supreme head of the executive, and there were no constitutional limitations upon his authority to act in any of these capacities. His will was law in respect of all matters on which it was pronounced and he was bound by no will except of his own. Whatever he did was an expression of his sovereign will and it was binding on all his subjects. Since he was not only the supreme legislature but was the supreme head of the executive as well, a rigid line of demarcation between legislative act and executive act on his part would from the very nature of things be extremely difficult. This aspect was emphasized by Their Lordships of the Supreme Court in Ameer-Un-Nissa Begum v. Mahboob Begum, AIR 1955 SC 352. In that case the question arose whether the firmans issued by the Nizam as the Ruler of the Hyderabad State were in the nature of legislative enactments or judicial Orders and dealing with this question, Their Lordships o the Supreme Court observed :

“Before the High Court the question was elaborately discussed as to whether the ‘Firmans’ that were passed in the present case were in the nature of legislative enactments or judicial orders. We do not think that the question is of any practical importance for purposes of the present case though it may have some bearing in the rule of construction that is to be applied in interpreting these ‘Firmans’.

The Nizam was not only the supreme legislature, he was the fountain of justice as well. When he constitvited a new Court, he could, according to ordinary notions, be deemed to have exercised.

his legislative authority. Where again he affirmed or reversed a judicial authority. When again he affirmed or reversed a judicial decision, that may appropriately be described as a judicial act. A rigid line of demarcation, however, between the one and the other would from the very nature of things be not justified or even possible. The learned counsel appearing before us on both sides, it may be stated, did not advance any arguments upon this point at all”.

The same question was considered by their Lordships of the Supreme Court in another case viz., Director of Endowments, Government of Hyderabad v. Akram All, (S) AIR 1956 SC 60. In that case there were disputes about the right to possession and supervision of a Darga between Akram All, the respondent, and one Azam Ali. The Ecclesiastical Department of the Hyderabad State handed over the supervision of the Darga to Azam Ali in or about 1914. Azam Ali was, however, received in 1920 and the Ecclesiastical Department of the Hyderabad State took over the possession and supervision of the Darga under a Firman issued by the Nizam on 31st December 1920, which was in the following terms ;

‘Tending enquiry of the case the said Maash need not be handed over to anyone. Let it remain in the supervision of the Government. I should be informed of whatever the results of the enquiry establishes so that proper orders may be passed”.

Their Lordships of the Supreme Court considered the effect of this Finnan and observed as follows:

“Now the Nizam was an absolute sovereign regarding all domestic matters at that time and his word was law. It does not matter whether this be culled legislation or an executive act or a judicial determination because there is in fact no clear cut dividing line between the various functions of an absolute ruler whose will is law. Whatever he proclaimed through his Firmans had the combined effect of law and the decree of a Court”.

”Therefore the effect of this Firman was to deprive the respondent and all other claimants of all rights to possession ‘pending enquiry o the case’……

“Now, as we have said, the Nizam was at that time an absolute ruler and could do what he pleased. His will, as expressed in his Firman, was the law of the land. Therefore, even it be assumed that the respondent was in possession, his rights to immediate possession, whatever they may have been, were taken away and held in abeyance till he could establish them in the civil Courts.”

The same was the position of the Ruler of the Sant State and in a case like this where the Ruler was the fountain head of all judicial, legislative and executive authority, it is difficult to define precisely the boundaries which divide the various functions of the Ruler into legislative, executive or judicial acts. All that the Court can do is to consider the act in question and to decide on an application of broad and general considerations whether the act is a legislative or an executive or a judicial act without making any attempt to formulate rigid or exhaustive tests for determining the true nature or character of the act. It is no doubt true as observed by Willis in the passage quoted above that the legislative power is a power to create rights, powers, privileges or immunities, and their correlatives, for the first time, that is, not dependent upon any previous rights, duties etc. but this observation of Willis merely emphasizes one aspect of legislative power which distinguishes it from judicial power and does not provide a definition, exclusive or inclusive, which would take in every legislative act or exercise of legislative power and not fail to comprehend within its scope some acts of a legislative character. Similarly it is equally true as observed by Willis that the legislative function is ordinarily general and relates to the future; but this observation deals, with another aspect of legislative power and since the general shades off into the particular, it is a peculiarly difficult task to discriminate between the legislative and the executive act by reference to this criterion. In England the question has often arisen whether an Order passed by a Minister or an Officer of the Crown under a Parliamentary enactment is a legislative Order or an administrative Order, for if it is of a legislative character it is required to be published as a statutory instrument. The task has always been difficult and the opinions of Judges as to the proper characterization of the Order have often been at variance. Although the classification of function does not normally depend upon the classification of the authority by which it is exercised, the nature of the function is sometimes determined by a consideration of the authority exercising the function. This test can, however, be of no assistance to us for as we have already pointed out above, the Ruler of the Sant State exercised alt legislative, executive and judicial authority in the Sant State. Sometimes the distinction between legislative and administrative acts is identified with the distinction between acts which do and acts which do not affect the legal rights of members of the public. Judged by this test, the Order of the Ruler of the Sant State cannot possibly be said to be a legislative measure inasmuch as it did not affect the legal rights of the members of the public. The effect of the said Order was merely to transfer rights in forests from the Ruler to the Jagirdars. Sometimes the distinction between legislative and administrative acts is expressed as being a distinction between the general and the particular as can be seen from the passage from Willis quoted above. It is said that a legislative act is the creation and promulgation of a general rule of conduct without reference to particular cases, while an executive act is the making and issue of a specific direction, or the application of a general rule to a particular case in accordance with the requirements of policy. As pointed out above this test merely serves to emphasize one aspect of legislative power and does not provide a line of demarcation with reference to which one can differentiate between legislative and executive acts in all cases. But even applying this test we find that the Order of the Ruler of the Sant State cannot be said to be of a legislative character. The said Order did not create or promulgate any general rule of conduct but merely effected a transfer of rights over forests to a limited number of Jagirdars. If there were ten Jagirdars there could have been ten separate Orders in respect of each Jagirdar, but instead of issuing ten

separate Orders the Ruler of the Sant State issued one composite Order and merely because the said Order embraced within its scope all the Jagirdars, it cannot be said to be a legislative act. Coming back to the first test to be found in the passage from Willis, we find that the said Order does not even fulfil the requirements of that test. The said Order did not create any rights, powers, privileges or immunities, and then correlatives for the first time. The Ruler of the Sant State had full rights and authority over the forests situate in the villages granted to the Jagirdars and this full right and authority was transferred by the Ruler to the Jagirdars under the said Order. What the said Order did was not the creation of any rights but merely the transfer of rights and such an action on the part of the Ruler cannot be said to be a legislative measure. It is difficult to conceive of a transfer of a proprietary right by a Ruler to another person as a legislative act. Normally if one citizen wants to transfer his proprietary rights in immovable property to another citizen, he can do so only by a document in accordance with the law of the land. Since, however, the Ruler is the fountain-head of all legislative, executive and judicial authority, he can effect a transfer of his proprietary rights in immovable property to another by a mere Order. The nature and character of the act would be the same in both cases and it is difficult to see how such an Order of the Ruler can be said to be anything more than an executive fiat. Such, an Order cannot possibly be characterized as a legislative measure. Under these circumstances we are of the opinion that the Order of the Ruler of the Sant State was not a legislative act. Mr. Rajni Patel relied on the judgment of the Bombay High Court in First Appeal No. 172 of 1956, but we do not see how that judgment Can be of any help in determining the question whether the Order of the Ruler of the Sant State was a legislative or an executive act. As pointed out by us, there can be no general definition or test for the purpose of solving this type of question nor does the judgment of the Bombay High Court relied on by Mr. Rajni Fatel even attempt to formulate any such general definition or test which can be applied in all cases for discriminating between the legislative and the executive act. The question whether Or not a particular order is a legislative act must, in our view, be decided on the facts of each case and merely because the Order of the Ruler of the Baroda State in that case was held to be a legislative act, it does not follow that the Order of the Ruler of the Sant State in the present case must also be held to be of the same character. There is absolutely no analogy between the two Orders and it would not be correct to characterize the Order of the Ruler of the Sant State as a legislative measure without having any regard to the nature, substance and effect of the said Order merely because the Order of the Ruler of the Baroda State in that case was held to be a legislative act. The judgment of the Bombay High Court cannot, therefore, help Mr. Rajni Patel on this part of the case. The position which thus emerges is that the Order of the Ruler of the Sant State was not of a legislative character and if the said Order was not in the nature of a legislative act on the part of the Ruler of the Sant

State, Clause 4 of the Administration of the Indian States Order could not apply to the said Order and the present arguments of Mr. Kajni Patel based as they are on the premise that the said Order was continued in force by Clause 4 of the Administration of the Indian States Order must, therefore, be negatived.

22. The next ground urged by Mr. Rajni Patel was that even it the Order of the Ruler of the Sant State dated 12th March 1948 was not a legislative act but an executive act on the part of the Ruler, the rights acquired by Jagirdars under the said Order were recognised and acknowledged by the Government of Bombay by legislation and in any event by acts and conduct of its officers and the Government of Bombay thus waived or relinquished its prerogative or sovereign power to ignore or repudiate the said rights. It was urged by Mr. Rajni Patel that this waiver or relinquishment could also be spelt out from the merger agreement and the letter of guarantee and the rights acquired under the said Order were, therefore, legally enforceable against the Government of Bombay. We shall now proceed to examine these contentions urged on be-half of the appellant by Mr. Rajni Patel.

23. The first contention of Mr. Rajni Patel was that even if the said Order was an executive act it was continued in force by Clause 4(1) of the Administration of the Indian States Order and the rights acquired under it were legislatively recognised by the Government of Bombay and the defence of an act of State was, therefore, not available to the State. Mr. Rajni Patel sought to derive support for this contention from the judgment of the Bombay High Court in First Appeal No. 172 of 1956 to which we have already referred on more than one occasion and leaned heavily on the following observations in that judgment:

“.. .Therefore, the Huzur order, whether As a legislative enactment or an executive order, was in force before 1st May 1949 and was consequently recognised and continued to be in force by the Government of India under the Administration of the Baroda State Order. This was a recognition by legislation of the new Government of the ante-cession laws and orders”.

The Administration of the Baroda State Order with which the Bombay High Court was concerned in that case made provision for application and continuance of laws in regard to the Baroda State in identical language as Clause 4(1) of the Administration of the Indian States Order and hence reliance was placed by Mr. Rajni Patel on the above observations in support of this contention. We are afraid we cannot accept this contention of Mr. Rajni Patel. The language of Clause 4(1) of the Administration of the Indian Stales Order is plain and unambiguous and it rules in no uncertain terms that such provisions, or such parts of provision, of any law, or of any notification, order, scheme, rule, form or by-law issued, made or prescribed under any law as were in force immediately before 10th June 1948 in any Indian State, shall continue in force until altered, repealed or amended by an Order under the Extra-Provincial Jurisdiction Act, 1947. Clause 4(1) is in two parts and is divided into Sub-clauses (a) and (b). Sub-clause (a) provides for the continuance in force of any law i.e., principal legislation enacted by the legislature while Sub-clause (b) provides for the continuance in force of any subordinate legislation in the shape of any notification, order, scheme, rule, form or by-law issued, made or prescribed under any law enacted by the legislature. The important words in Sub-clause (b) are “issued, made or prescribed under any law”. It is not every order made by the Under of an Indian State that is saved and continued by Sub-clause (b) but it is only if the Order is issued, made or prescribed under any law and is in the nature of subordinate legislation that it would attract the applicability of Sub-clause (b) and would be continued in force as a result of the operation of that sub-clause. It is. therefore, clear that neither Sub-clause (a) nor Sub-clause (b) of Clause 4(1) applies to an executive Order made by the Ruler of an Indian State and Clause 4(1). does not operate to continue in force any such executive Order. The marginal note to Clause 4 also shows that the subject matter of that clause is “Application and Continuance of Laws”. It is a well-settled rule of construction that the marginal note cannot be referred to for the purpose of construing a statute but the Court can certainly look at the marginal note as indicating the drift of the section and furnishing some clue as to the meaning and purpose of the enactment. The construction of Clause 4(1) does not admit of any doubt and in our opinion it is impossible to take the view that Clause 4(1) applies to an executive Order made by the Ruler of an Indian State and continues in force such executive Order. The judgment of the Bombay High Court relied on by Mr. Rajni Patel has completely overlooked the important words “issued, made or prescribed under any law” in Sub-clause (b) of Clause 4 and is, therefore, not binding on us as being given per incuriam. This contention of Mr. Rajni Patel must, therefore, be negatived.

24. The next contention of Mr. Rajni Patel was that the rights of Jagirdar Sardarsing Gajesing and through him of the Appellant were acknowledged by the Government of Bombay by acts and conduct of its officers and the Government of Bombay thus waived or relinquished its prerogative or sovereign power to ignore or repudiate the said rights. Reliance was placed on the issue of authorizations and pass-books by the Forest Authorities as also on the Order dated 18th January 1949 issued by the Conservator of Forests, North Western Circle. It was argued that the issue of authorizations and pass-hooks to the Contractor by the Forest Authorities as evidenced inter alia by Exhibits 130 and 131 clearly amounted to recognition of the Jagirdar’s rights in respect of the Gotimda forest. We cannot accept this argument. We do not see how the acts of an Officer like the Divisional Forest Officer in issuing authorisations and pass-books can be regarded as waiver or relinquishment on the part of the Government of Bombay of its prerogative or sovereign power to ignore or repudiate the Jagirdar’s rights in respect of the Gotimda forest. For waiver or relinquishment there must be full knowledge and the act alleged to constitute waiver or relinquishment must be of the person entitled to exercise the right Or power which is waived or relinquished. In order, therefore, to establish

waiver or relinquishment against the Government of Bombay, it must be shown that the Officer whose act is alleged to constitute waiver or relinquishment had full knowledge of the facts and of the prerogative or sovereign power of the Government of Bombay to ignore or repudiate the particular rights in question and further the officer had the authority to waive or relinquish such prerogative or sovereign power on behalf of the Government. These elements Of waiver or relinquishment are lacking in so far as the acts of the Forest Authorities in issuing authorizations and pass-books to the Contractor are concerned and those acts cannot, therefore, be relied upon as constituting waiver or relinquishment by the Government of Bombay of its prerogative or sovereign power to ignore or repudiate the rights of the Jagirdar in respect of the Gotimda forest. So far as the Order dated 18th January 1949 issued by the Conservator of Forests, North Western Circle, is concerned, the Order cannot possibly be regarded as constituting waiver or relinquishment of its prerogative or sovereign power on the part of the Government of Bombay inasmuch as it was made clear in the Order that though authorizations should be issued to the Contractors of the Jagirdars who had got rights over forests under the Order of the Ruler of the Sant State dated 12th March 1948, written undertakings should be taken from the Jagirdars, Inamdars or person or persons concerned that he or they would abide by the decisions or orders passed by the Government of Bombay in respect of such private forests, when the question of rights over such private forests was finally settled. The Order dated 18th January 1949 clearly shows that the Government of Bombay did not recognize the rights, of Jagirdars or their Contractors under the Order of the Ruler of the Sant State dated 12th March 1948 but ordered authorizations to be issued to the Contractor merely as an interim measure until the question of rights over forests was finally settled. The Government of Bombay made it clear that the question of rights of the Jagirdars over the forests was under inquiry and consideration and that the Jagirdars should agree to abide by the decision of the Government of Bombay in respect of that question. Under these circumstances we do not see how the Order dated 18th January 1949 can possibly be read as amounting to recognition by the Government of Bombay of the rights over forests acquired by Jagirdars under the Order of the Ruler of the Sant State dated 12th March 1948. The present contention of Mr. Rajni Patel is, therefore, untenable and must fail.

25. The last contention of Mr. Rajni Patel on this part of the case was founded on Clauses 5 and 7 of the letter of guarantee which have been reproduced in the earlier part of this judgment. It was argued by Mr. Rajni Patel that by subscribing to Clauses 5 and 7 of the letter of guarantee, the Government of India waived or relinquished its prerogative or sovereign power to ignore or repudiate the rights acquired under the Order of the Ruler of the Sant State dated 12th March 1948 and that those rights were, therefore, legally enforceable against the Government of Bombay. Mr. B. R. Sompura contested the validity of this argument on the ground that clauses or stipulations in a treaty at cession cannot be relied upon by the subjects of

the ex-sovereign for any purpose whatsoever inasmuch as they are invested with the character of an act of State and that file appellant cannot, therefore, be permitted to rely on Clauses 5 and 7 of the letter of guarantee to make out a case of waiver or relinquishment on the part of the Government of India. The answer of Mr. Rajni Patel was twofold Firstly he contended that the letter of guarantee was signed on behalf of the Government of India on 1st October 1948 after the act of State in the shape of cession under the merger agreement had terminated on 10th June 1948 on the assumption of sovereign powers de jure over the territory of the Sant State by the Government of India and that the appellant was, therefore, entitled to raly on Clauses 5 and 7 contained in the letter of guarantee for establishing the plea that the Government of India waived or relinquished its prerogative or sovereign power to ignore or repudiate the rights acquired under the Order passed by the Ruler of the Sant State on 12th March 1948 i.e., prior to 1st April 1948 and recognised the said rights. The second contention was that even if the letter of guarantee was considered as part of the treaty of cession and, therefore, invested with the character of an act of State, the appellant was entitled to rely on Clauses 5 and 7 contained in the letter of guarantee not for the purpose o enforcing any rights conferred or any obligations assumed under those clauses but for the purpose of establishing waiver or relinquishment on the part of the Government of India of its prerogative or sovereign power to ignore or repudiate the rights acquired by Jagirdars under the Order of the Ruler of the Sant State. We are not inclined to accept the first contention of Mr. Rajni Patel but we find that there is great force in his second contention and it is supported by at least two decisions of the Supreme Court and one Full Bench decision of the Bombay High Court.

26. It was specifically provided in the letter of guarantee that the contents of the letter of guarantee would be regarded as part of the merger agreement entered into by the Ruler of the Sant State with the Governor General of India. The letter of guarantee merely supplemented the provisions contained in the merger agreement and any clauses or stipulations contained in the letter of guarantee were as much a part of the merger agreement as the clauses or stipulations contained in the merger agreement itself. The letter of guarantee was, therefore, invested with the same character as the merger agreement and if the merger agreement was an act of State, the letter of guarantee could not be regarded as otherwise. The letter of guarantee was also thus invested with the character of an act of State like the merger agreement of which it was to be regarded as a part by its own express provision. The letter of guarantee, therefore, did not stand on a different footing than the merger agreement and if the appellant was not entitled to rely on any clauses or stipulations of the merger agreement for the purpose of establishing the plea of waiver or relinquishment, the appellant would equally not be entitled to rely on any clauses or stipulations of the letter of guarantee for the fame purpose. The crucial question, therefore, is whether a subject of the ex-sovereign can refer to clauses or stipulations in the treaty of cession

for establishing that the new sovereign has elected
to waive or relinquish his prerogative or sovereign power to ignore or repudiate the existing rights of
the subject of the ex-sovereign.

27. It is firmly established by authorities — and we have so held in an earlier part of this judgment–that every subject of the ex-sovereign who wants to make good in the Municipal Courts of the new sovereign the rights acquired by him under the ex-sovereign must show that the new sovereign has waived or relinquished his right or power to ignore or repudiate those rights, for it is only then that those rights would be legally enforceable against the new sovereign in his Municipal Courts. The authorities also establish that this waiver or relinquishment can he by legislation or by proclamation or by agreement and it can even be inferred from circumstantial evidence such as the mode of dealing with the subject adopted by the new sovereign, his recognition of the existing rights of the subjects and express or implied election to respect them and be bound by them. The question, however, is whether clauses or stipulations in a treaty of cession which is an act of State can be referred to for the purpose of establishing such waiver or relinquishment on the part of the new sovereign? Before we discuss the authorities bearing upon this question, we should like to consider this question on principle. We have already seen that when the new sovereign acquires territory for the first time whether it be by conquest, cession or otherwise, the new sovereign may in exercise of his sovereign right or power ignore or repudiate the existing rights of the subjects of the ex-sovereign and this right or power may be exercised by the new sovereign either during the continuance of the act of State or after the act of State is terminated on the assumption of sovereign power de jure over the acquired territory by the new sovereign. Now waiver or relinquishment is abandonment or giving up of a right or power and ordinarily a right or power can he abandoned or given up at any point of time at which it is exercisable, unless some other principle of law intervenes and prevents the application of this rule. It is undisputed that the right or power to ignore or repudiate the existing rights of the subjects of the ex-sovereign can be waived or relinquished by the new sovereign after the act of State is terminated by completion of the process of acquisition. Is there then any reason why the, new sovereign cannot waive or relinquish his right or power to ignore or repudiate the existing rights of the subjects of the ex-sovereign during the continuance of the act of State? No reason can possibly be assigned for any such distinction. If the new sovereign can exercise the right or power to ignore or repudiate the existing rights of the subjects of the ex-sovereign during the continuance of the act of State, he should equally be competent to waive or relinquish that right or power during the, continuance of the act of State, unless there is some principle of law which forbids such waiver or relinquishment or prevents the Municipal Courts from recognizing or giving effect to such waiver or relinquishment. We do not know of any such principle. On the contrary it is implicit in the judgment of the Supreme Court in AIR 1959 SC 1383 (supra) that the right or power to ignore or repudiate the existing rights of the subjects of the ex-sovereign can be waived or relinquished by the new sovereign during the continuance of the act of State. In that case the Administrator of the Junagadh State passed an Order on 1st October 1948 resuming certain immovable property belonging to the respondent Memon Haji Ismail and a suit was thereupon filed by the respondent Memon Haji Ismail challenging the Order as illegal, unjust and contrary to all canons of natural justice. The Order was passed after the Government of India took over the administration of the Junagadh State on 9th November 1947 at the request of the Nawab’s. Council but before the Junagadh State was formally annexed on 20th January 1949. During this period between 9th November 1947 and 20th January 1949, the Central Government maintained law and order and carried on the administration of the Junagadh State through the Regional Commissioner, Western India and Gujarat States Region and the Administrator appointed by him. The defence of the State was that the act of resumption by the Administrator was an act of State performed on behalf of the Government of India and involved an alien outside the State and was not, therefore, justiciable in the Municipal Courts. Upholding this defence, the Supreme Court held that the process of acquisition of the territory of the Junagadh State was a continuous act of State which was not over until 20th January 1949 when the Junagadh. State merged with the State of Saurashtra and that the resumption was made by the Administrator before the act of Stale was completed and at a time when the people of Junagadh including the respondent Memon. Haji Ismail were aliens outside the State. Though the existing rights of property of the respondent Memon Haji Ismail were confiscated and resumed by the Government of India as the new sovereign during the continuance of the act of State, the Supreme Court proceeded to consider whether the Government of India had waived its right or power-to ignore or repudiate those existing rights by recognising them prior to the act of resumption and observing that “there is nothing to prove that the Dominion had expressly or even tacitly recognized the old rights, the burden of proving which lay upon the respondent” the Supreme Court held that the Government of India was entitled to resume the immovable property in question and that the act of resumption, however arbitrary, was an act of State on behalf of the Government of India and was not justiciable in the Municipal Courts. This judgment of the Supreme Court clearly postulates that the new sovereign can waive or relinquish his right or power to ignore or repudiate the existing rights of the subjects of the ex-sovereign and re-cognise them even during the continuance of the act of State before the act of State is completed by the assumption of sovereign powers de jure over the acquired territory by the new sovereign. To continue the discussion further let us examine the question from another angle. It is no doubt true that clauses in a treaty of cession are invested with the character of an act of State and no rights conferred or obligations assumed under such clauses are enforceable in the Municipal Courts of the new sovereign. But there is a fundamental distinction between enforcing a right conferred or obligation

assumed under such clauses and referring to such clauses for the purpose of establishing a plea of waiver or relinquishment. One of the reasons why clauses in a treaty of cession are regarded as incapable of legal enforcement in the Municipal Courts of the new sovereign is that as in making the treaty, so in performing it, the new sovereign is beyond the control of Municipal law and if the sovereign chooses not to perform any clauses of the treaty, no Municipal Courts can enforce such performance. There is also another reason for this rule
which has already been set out by us above and it is that no act done or declaration made by the new sovereign prior to the termination of the act of State can have the effect of conferring on the residents of the acquired territory rights which can be agitated in the Municipal Courts of the new sovereign. These reasons do not apply when reliance is sought to be placed on clauses in a treaty of cession not for the purpose of enforcing any rights conferred or any obligations assumed under those clauses but for the purpose of establishing waiver or relinquishment on the part of the new sovereign of his right or power to ignore or repudiate the existing rights of the subjects of the ex-sovereign. Where a subject of the ex-sovereign refers to clauses in a treaty of cession for the purpose of establishing that the new sovereign has elected to waive or relinquish his prerogative or sovereign power to ignore or repudiate the existing rights acquired by the subject under the ex-sovereign, he does not seek performance of any clauses in the treaty nor does he seek to establish any right alleged to have been conferred on him by any clauses in the treaty. The right which such a subject of the ex-sovereign seeks to enforce is not a right alleged to have been conferred on him by any clauses in the treaty of cession so that there is no scope for the application of the aforesaid two reasons which underlay the principle that clauses or stipulations in a treaty of cession are incapable of enforcement in the Municipal Courts of the new sovereign and no rights conferred or obligations assumed under such clauses or stipulations can be enforced in the Municipal Courts of the new sovereign. The right which is sought to he enforced by such a subject of the ex-sovereign is the existing right acquired by him under the ex-sovereign and reliance is sought to be placed on clauses in the treaty of cession not for the purpose of enforcing any rights conferred or obligations assumed under such clauses but for the purpose of establishing that the new sovereign has elected to waive or relinquish his right or power to ignore or repudiate the existing right which is sought to be enforced against the new sovereign. It is this fundamental distinction which, in our opinion, takes the case of such a subject of the ex-sovereign out of the sphere of application of
the principle that clauses in a treaty of cession providing for the recognition of the rights of the subjects of the ex-sovereign are incapable of enforcement in the Municipal Courts of the new sovereign. We are, therefore, of the opinion that there is nothing in principle which makes it impermissible for a subject of the ex-sovereign to rely on clauses in the treaty of cession for the purpose of establishing that the new sovereign has elected to waive or relinquish his right or power to ignore or repudiate the existing rights which were acquired by the subject under the ex-sovereign and which the subject seeks to enforce against the new sovereign. So much on principle. Turning now to the authorities we find that the view we are inclined to take has been accepted in at least two decisions of the Supreme Court and one Full Bench decision of the Bombay High Court. It may be noted that these decisions are binding on us and even if our view on this question were different, we would be in duty bound to follow these decisions. The first decision is that of the Supreme Court in AIR 1954 SC 447 (supra). In this case Bose J., who delivered the judgment of the Court, after referring to the Privy Council case of Mayor of Lyons v. East India Co., 1 Moo Ind App 175 observed as follows in regard to waiver or relinquishment by the new sovereign of his right of confiscation of private property belonging to the subject of the ex-sovereign:

“The Privy Council go even further in 1 Moo Ind App 175 at. p. 283, and say that the waiver or relinquishment can be established from the treaty itself.

‘…. it cannot be denied that the Crown may relinquish its prerogative; indeed, whenever the inhabitants of conquered provinces are held to obtain the rights of subjects by treaty, (and even Sir F. Norton has no doubt of this being possible) those who hold the doctrine the most vigorously must say that the treaty is a voluntary abandonment of a right of the Crown. It evidences the will of the sovereign to exempt the conquered territory from this branch of his prerogative. But the same will of the sovereign may be collected from other circumstances, and the like abandonment of the prerogative be thus evidenced’.”

These observations clearly show that the Supreme Court read the Privy Council case as laying down that waiver or relinquishment on the part of the new sovereign can be established from the treaty itself and approved of that proposition as a correct statement of the law. The second decision of the Supreme Court which lays down the same proposition is Bholanath J. Thaker v. State of Saurashtra, AIR 1954 SC 680. No doubt the question in this case was whether the appellant was entitled to enforce against the State of Saurashtra his rights under Dhara No. 29 of St. 2004 promulgated by the Ruler of the Wadhwan State before the administration of the Wadhwan State was handed over to the Government of Saurashtra under the merger agreement. But the principle must remain the same whether the rights sought to be enforced by the subject of the ex-sovereign against the new sovereign are based on legislative enactment or on executive Order. N. H. Bhagwathi, J. delivering the judgment of the Court observed:

“….The Covenant could be looked at to see whether the new sovereign had waived his rights to ignore rights given under the laws of the former sovereign. The terms of the Covenant showed that the existing laws were to continue and whatever the rights of the Appellant were under the existing laws were available for enforcement to the Appellant and there was no bar to the Municipal Courts entertaining a suit to enforce such rights.”

The Full Bench decision of the Bombay High Court in Bhojrajji v. Saurashtra State, 61 Bom LR

20 has also taken the same view as will appear from the following passage from the judgment of Chagla, C. J., in that case :

“….But the matter is no longer now a matter
of controversy because the Supreme Court has taken the view in AIR 1954 SC 630, that the Covenant itself may be looked upon as a waiver by the Covenanting State of it’s rights to ignore private rights of the citizen of the State of which it is the successor. It is true that under international law when there is a cession or a succession or a conquest, the State which benefits by the cession or succession or conquest is not bound to recognize the rights of the citizens of the State which it has absorbed. The recognition must be either by law or by proclamation. But as the Court of Appeal pointed out in West Rand Central Gold Mining Company v. Rex, (1905) 2 KB 391, that the law as laid down by the Privy Council was that the new sovereign State may choose to waive its rights and recognise titles and rights as they existed at the date of cession, and it is in the light of this observation of the Privy Council that Mr. Justice Bhagwati in the case just referred to has stated (p. 682):

There was in fact no Such legislation and therefore his rights remained and the Municipal Courts would be entitled to examine the contract and apply the Dhara No. 29 of St. 2004 and enforce whatever rights the appellant had under that Dhara and his contract of service……. The Covenant
could be looked at to see whether the new sovereign had waived his rights to ignore rights given under the laws of the former sovereign. The terms of the Covenant showed that the existing laws were to continue and whatever the rights of the appellant were under the existing laws were available for enforcement to the appellant and there was no bar to the Municipal Courts entertaining a suit to enforce such rights.

‘In this view of the matter Article 363 of the Constitution could not be invoked by the respondent. There was no dispute arising out of the Covenant and what the appellant was doing was merely to enforce his rights under the existing laws which continued in force until they were repealed by the appropriate legislation. This ground therefore could not avail the respondent.’

As a matter of fact, in our case the position is much stronger. The observations of Mr. Justice Bhagwati, with respect, would apply even if the matter rested at the covenant and nothing more had happened……..”

The result of these authorities, therefore, is that the treaty of cession can be looked upon as waiver or relinquishment by the new sovereign of his rights or power to ignore or repudiate the private rights of the subject of the ex-sovereign. Mr. B. R. Sompura, however urged that a contrary view has been taken by the Supreme Court in Dalmia Dadri Case, 1959 SCR 729: (AIR 1958 SC 816) (supra) which is a case later in point of time than Virendra Singh’s Case, AIR 1954 SC 447 (supra) and Bholanalh J. Thaker’s Case, AIR 1954 SC 680 (supra). Mr. B. R. Sompura relied strongly on the following observations of Venkatarama Aiyar, J. in that case:

“It follows from this that no act done or declaration made by the new sovereign prior to his assumption of sovereign powers over acquired territories can quoad the residents of those territories be regarded as having the character of a law conferring on them rights such as could be agitated in his courts. In accordance with this principle, it has been held over and over again that clauses in a treaty entered into by independent rulers providing for the recognition of the rights of the subjects ot the ex-sovereign are incapable of enforcement in the courts of the new sovereign……………….

…….. …The result of the authorities then is that
when a treaty is entered into by sovereigns of independent States whereunder sovereignty in territories passes from one to the other, clauses therein providing for the recognition by the new sovereign of the existing rights of the residents of those territories must be regarded as invested with the character of an act of State and no claim based thereon could be enforced in a Court of law……”

We do not think that these observations apply to a case like the present where the appellant does not complain of any violation of the terms of the treaty of cession and does not seek to enforce any right alleged to have been conferred by any clause in the treaty of cession but merely seeks to enforce existing rights acquired under the ex-sovereign namely, the Ruler of the Sant State and relies on clauses in the treaty of cession only for the purpose of establishing waiver or relinquishment on the part of the new sovereign namely the Government of India of its right or power to ignore or repudiate the said rights. What happened in Dalmia Dadri Case, 1959 SCR 729: (AIR 1958 SC 816) (supra) was that on 5th May 1948, eight of the Rulers of the States in East Punjab including Jind entered into a Covenant for the merger of their territories into one State called the Patiala and East Punjab States Union. For brevity, we shall refer to the Patiala and East Punjab States Union as the Patiala Union. Article VI(b) of the Covenant provided that all duties and obligations of the Ruler pertaining or incidental to the Government of the Covenanting State shall devolve on the Patiala Union and shall be discharged by it. Pursuant to the Covenant the Ruler of the Jind State handed over the administration of Jind to the Raj Pramukh of the Patiala Union on 20th August 1948 and immediately after assumption of the office, the Raj Pramukh promulgated Ordinance No. I of Section 2005 which had the effect of extinguishing the rights to concessions conferred on Dalmia Dadri Cement Co. Ltd., hereinafter referred to by us as the Company, under an agreement which had been entered into between the Company and the Ruler of the Jind State long before the merger of the Jind State into the Patiala Union. The concessions conferred under that agreement were in respect of income-tax payable to the Jind State and since the rights to these concessions were extinguished by the Ordinance and income-tax was claimed from the Company by the Patiala Union on the basis of the Patiala Income-tax Act, Section 2001, which was made applicable by the Ordinance, the Company filed a petition in the Supreme Court challenging the Ordinance as unconstitutional and void. One of the grounds on which the Ordinance was challenged was that the Ordinance was in violation of the terms of the

Covenant and was ultra vires the powers of the Raj Pramukh under the Covenant. The argument was that the Ruler of Jind had for good and valuable consideration undertaken certain obligations under Clause (23) of the agreement with reference to taxation which is a governmental function, that he had himself scrupulously honoured them so long as he was a Ruler, and then passed them on under Article VI(b) to the new State of Fatiala Union created under the Covenant, that the Raj Pramukh who was a party to the Covenant and claimed under it was bound by that obligation, that his power to enact laws was subject under Article VI(a) to the obligations mentioned in Article VI(b), and that it the impugned Ordinance was construed as having the effect of abrogating those obligations, it was ultra vires the powers of the Raj Pramukh under the Covenant and was, therefore, void. The whole basis of the argument was that the Ordinance was unconstitutional and void because it was contrary to the terms of the Covenant which prescribed the power of the Raj Pramukh to enact laws and violated the rights conferred on the Company under the Covenant. What the Company, therefore, sought to do was to enforce the rights conferred on the Company and the obligations assumed by the Patiala Union under the Covenant for the purpose of establishing that the Ordinance was unconstitutional and void. The rights acquired by the Company under the agreement with the Ruler of the Jind State were abrogated by the Ordinance and it was, therefore, necessary for the Company to challenge the Ordinance and one of the grounds on which the Ordinance was challenged was that it violated the rights conferred on the Company and the obligations assumed by the Patiala Union under the Covenant. The question, therefore, arose whether such a ground could form the subject of any action in the Municipal Courts and the above observations were made by Venkatarama Aiyar, J., while dealing with this question. These observations lay down the same principle which we have discussed in the earlier part of this judgment namely, that clauses or stipulations in a treaty of cession are invested with the character of an act of State, and no rights conferred or obligations assumed under such clauses can be enforced in the Municipal Courts of the new sovereign. These observations do not apply to a case where a subject of the ex-sovereign seeks to enforce an existing right acquired by him under the ex-sovereign and relies on the clauses in the treaty of cession not for the purpose of enforcing any rights conferred or obligations assumed under such clauses but for the purpose of establishing that the new sovereign has waived or relinquished his right or power to ignore or repudiate the existing right which the Subject seeks to enforce. This distinction between a subject of the ex-sovereign seeking to enforce any rights conferred on him or any obligations assumed by the new sovereign under the treaty of cession and a subject of the ex-sovereign seeking to enforce an existing right acquired by him under the ex-sovereign and relying on clauses in the treaty of cession merely for the purpose of establishing waiver or relinquishment on the part of the new sovereign, has also been recognised and emphasized by Chagla, C. J., in the Full Bench decision of the Bombay High Court

in 61 Bom LR 20 (supra) as will appear from the following passage from his judgment:

“….The first aspect is this, If the matter had stood merely at the covenant entered into between the different States to set up the United State of Kathiawar, what is urged by the Government Pleader is that the liability undertaken by the new State was a liability under the covenant, the plaintiff was not a party to that covenant, and it is well settled that the rights arising out of the covenant must be adjudicated as between the high contracting parties to the Covenant, and a stranger to the Covenant has no right to claim any benefit conferred under the Covenant. So what Ss urged is that although the United State of Kathiawar may have undertaken the liabilities of the Sayla State, inasmuch as the plaintiff was not a party to the Covenant, he cannot claim the benefit of that Covenant. Now, in the first place, it is not quite true to say that the plaintiff is seeking to enforce a right which arises under the Covenant. His right, in the first instance, arises under the Hindu Law or Hindu custom, and secondly it arises out of the contract which commutes his right of residence under Hindu Law for a fixed sum of Rs. 30,000/-. Therefore, what he is seeking to enforce is his rights under private law, and it is a difficult Proposition to accept that when a citizen seeks to enforce his contractual right or his rights under the ordinary law of the land, merely because ha is asserting those rights against the State, the State can rely on the provisions of Article 363 for contending that because the liability was taken over under the original covenant the right of the plaintiff cannot be adjudicated in a civil Court as provided by Article 363”.

“But the matter is no longer how a matter of controversy because the Supreme Court has taken the view in 61 Bom LR 20 (FB) (supra) that the Covenant itself may be looked upon as a waiver by the Covenanting State of its rights to ignore private rights of the citizen of the State of which it is the successor………”

The summary of the legal position, therefore, appears to be that a subject of the ex-sovereign who seeks to enforce against the new sovereign an existing right acquired by him under the ex-sovereign can rely upon clauses in the treaty of cession for establishing that the new sovereign has elected to waive or relinquish his right or power to ignore or repudiate the existing right which the subject seeks to enforce. The same principle would also apply to a treaty between the conquering State and the vanquished State. We must, however, make it clear that this principle would apply only in case of completed rights such as rights of property acquired by the subject under the ex-sovereign and would not apply in case of rights involving obligations of a contractual nature or other financial obligations on the part of the ex-sovereign. As observed by Lord Alverstone, C. J., in (1905) 2 KB 391 :

“…..It must not be forgotten that the obligations of conquering States with regard to private property of private individuals, particularly land as to which the title had already been perfected before the conquest or annexation, are altogether different from the obligations which arise in respect of

personal rights by contract. As is said in more cases than one, cession of territory does not mean the confiscation o the property of individuals in that territory. If a particular piece of property has been conveyed to a private owner or has been pledged, or a lien has been created upon it, considerations arise which are different from these which have to be considered when the question is whether the contractual obligation of the conquered State towards individuals is to be undertaken by the conquering State………”

The position in respect of rights of property is that they are really lights in rem and not rights in per-sonam and so long as they are not repudiated by the new sovereign by an act of State, they continue to remain in the subject of the ex-sovereign even after the acquisition of territory by the new sovereign and they can be enforced against all persons except the new sovereign provided of course the new sovereign has not waived or relinquished his right or power to ignore or repudiate them, for in the event of such waiver or relinquishment they would be enforceable also against the new sovereign (vide Virendra Singh’s Case, AIR 1954 SG 447 (supra)). If the new sovereign repudiates or confiscates the rights of property acquired by the subject under the ex-sovereign either under the treaty or at any time subsequent to the treaty by an act of State, such rights of property would be extinguished and the subject would have no rights which he can enforce against anyone. So far, however, as obligations of a contractual nature or other financial obligations are concerned, the obligations being personal obligations and the rights in respect of such obligations being rights in personam, they cannot have any existence or validity except as against the person liable and the new sovereign cannot be liable for such obligations unless he has chosen expressly or impliedly to take over such obligations and be bound by them. In the case of such obligations there would be no question of considering whether the new sovereign has waived or relinquished his right or power to ignore or repudiate such obligations, for such obligations being personal obligations as distinguished from obligations in respect of rights in rem such as rights of property, the new sovereign can be liable for such obligations only by novation and not by waiver or relinquishment. The only question, therefore, in the case of such obligations would be whether such obligations have been assumed expressly or impliedly by the new sovereign? If the new sovereign chooses to assume any such obligations of the ex-sovereign and be bound by them, there would be a novation and the subject would be entitled to enforce such obligations against the new sovereign. Of course such obligations, in order to be enforceable against the new sovereign, would have to be assumed by the new sovereign after the treaty for if they are assumed by any clauses under the treaty, they would not be enforceable against the new sovereign in his Municipal Courts. The present case is a case in which rights of property, namely, rights Over Gotimda forest acquired under the Order of the Ruler of the Sant State dated 12th March 1948 are sought to be enforced against the successor State and we must, therefore, hold that the appellant is entitled to rely on Clauses 5 and 7

of the letter of guarantee which forms part of the treaty of cession between the Ruler of the Sant State and the Government of India, for the purpose of establishing that the Government of India waived or relinquished its right or power to ignore or repudiate those rights. Clause 5 clearly guarantees the enjoyment of ownership of Khangi villages, lands, Jagirs, grants etc., existing on 1st April 1948 and Clause 7 provides that no order passed or action taken by the Ruler of the Sant State before 10th June 1948 will be questioned unless the Order was passed or action taken after 1st April 1948. The Order of the Ruler of the Sant State in question was passed on 12th March 1948 i.e.. prior to 1st April 1948 and the rights of Jagirdar Sardarsing Gajesing over Gotimda forest by virtue of the said Order were existing on 1st April 1948. It is, therefore, clear that by subscribing to Clauses 5 and 7, the Government of India waived or relinquished its right or power to ignore or repudiate the rights acquired by Jagirdar Sardarsing Gajesing over Gotimda forest under the Order of the Ruler of the Sant State dated 12th March 1948 and that the said rights were, therefore, legally enforceable against the Government of India and its delegate the Government of Bombay. If this is the true legal position, the appellant claiming as he does under Jagirdar Sardarsing Gajesing is also entitled to enforce his rights in respect of the trees standing in the Gotimda forest against the State and the defence of an act of State cannot avail the State to defeat the appellant’s action.

28. This would be sufficient to dispose of this Second Appeal. But there remains the last point urged by Mr. Rajni Patel and having regard to the full and elaborate arguments advanced before us and the importance, of the question involved, we think it right to deal with this point and to give our decision on it. There is no doubt that the rights of Jagirdar Sardarsing Gajesing in respect of the Gotimda forest granted under the Order of the Ruler c the Sant State dated 12th March 1948 were rights in property and these rights continued in Jagirdar Sardarsing Gajesing even after full and exclusive jurisdiction, authority and powers for and in relation to the governance of the Sant State were ceded by the Ruler of the Sant State to the Government of India under the merger agreement. It is indisputable that the Government of Bombay as the successor Government could repudiate the proprietary rights of Jagirdar Sardarsing Gajesing in respect of the Gotimda forest and confiscate the Gotimda forest as an act of State, but until this was done, Jagirdar Sardarsing Gajesing had proprietary rights in respect of the Gotimda forest which he could enforce against all except the Government of India or the Govt. of Bombay as the delegate of the Govt. of India. Of course if the Govt. of India or the Govt. of Bombay waived or relinquished its prerogative or sovereign power to ignore or repudiate the proprietary rights of Jagirdar Sardarsing Gajesing in the Gotimda forest, those rights would also become legally enforceable against the Government of India and the Government of Bombay. But so long as this did not happen, those rights undoubtedly continued in Jagirdar Sardarsing Gajesing and were enforceable against

all except the Government of India and the Government of Bombay. The possession of the Gotimda forest also remained with Jagirdar Sardarsing Gajesing and his right and title to continue in possessuib was good at any rate against all but the Government of India and the Government of Bombay. The only way in which these rights of Jagirdar Sardarsing Gajesing could be extinguished was by repudiation or confiscation by the Government of India or the Government of Bombay as an act of State. If these rights of Jagirdar Sardarsing Gajesing in respect of the Gotimda forest were not repudiated or confiscated by the Government of India or the Government of Bombay upto 26th January 1950, they could not be repudiated or confiscated after the coming into force of the Constitution of India and there could be no act of State thereafter in respect of those rights. The crucial question, therefore, is whether the rights of Jagirdar Sardarsing Gajesing in respect of the Gotimda forest under the Order of the Ruler of the Sant State dated 12th March 1948 were repudiated or confiscated by the Government of India or the Government of Bombay at any time upto 26th January 1950? If they were not so repudiated or confiscated upto 28th January 1950, they could not be repudiated or confiscated after the corning into force of the Constitution and would be enforceable against the State without any let or hindrance. The decision of the Supreme Court in Virendra Singh’s case, AIR 1954 SC 447 (supra) clearly supports this legal position as will appear from the following passages from the judgment of Bose, J., in that case :

“Now what was the effect of the non-exercise of those rights? Even on the English view, the person in ‘de facto’ possession is not without rights in the land, nor is he altogether without remedy. It is just a question of the means of redress……”

“We think it is clear on a review of these authorities that whichever view be taken, that of the Privy Council and the House of Lords, or that of Chief Justice Marshall, these petitioners, who were in ‘de facto’ possession of the disputed lands, had rights in them which they could have enforced up to 26-1-1950 in the Dominion Courts against all persons, except possibly the Rulers who granted the land and except possibly the State. We do not by any means intend to suggest that they could not have enforced them against the Rulers and the Dominion of India as well, but for reasons which we shall presently disclose it is not necessary to enter into that particular controversy. It is enough for the purposes of this case to hold that the petitioners had, at any rate, the rights defined above.” “Now what was the extent of the petitioners’ rights? These properties were not State properties in the sense of public buildings and so forth. They were indisputably properties over which the Rulers had absolute rights of disposition at the date of the grants. The grants are absolute in character and would under any civilised system of law pass an absolute and indefeasible title to the grantee. Let it be conceded, as was argued (though we do not so decide), that they were defeasible at the mere will of a sovereign who held absolute and despotic sway over his subjects in all domestic concerns. The fact remains that up till that time they were neither resumed by the former rulers nor confiscated

by the Dominion of India as an act of State. Therefore, up to the 25th of January 1950, the right and title of the petitioners to continue in possession was good, at any rate, against all but the Rulers and the Dominion of India”.

“Now what effect did the Constitution have on that? In our opinion, the Constitution, by reason of the authority derived from, and conferred by, the peoples of this land, blotted out in one magnificent sweep all vestiges of arbitrary and despotic power in the territories of India and over its citizens and lands and prohibited just such acts of arbitrary power as the State now seeks to uphold”.

We must, therefore, address ourselves to the question whether the rights of Jagirdar Sardarsing Gajesing in respect of the Gotimda forest under the Order of the Ruler of the Sant State dated 12th March 1948 were repudiated or confiscated by the Government of India or the Government of Bombay as an act of State at any time before 26th January 1950. Now the only act of repudiation or confiscation which has been relied upon by Mr. B. R. Sompura on behalf of the State is the letter dated 8th July 1949 addressed by the Assistant Secretary to the Government of Bombay, Revenue Department, to the Commissioner, Northern Division. We find it difficult to construe this letter as constituting repudiation or confiscation by the Government of Bombay of the rights of Jagirdar Sardarsing Gajesing in respect of the Gotimda forest. This letter was merely an interdepartmental communication between two departments of the Government of Bombay. Neither was a copy of this letter sent to Jagirdar Sardarsing Gajesing or to the other Jagirdars who claimed rights in forests situate in their respective villages under the Order of the Ruler of the Sant State dated 12th March 1948 nor were the contents of this letter at any time communicated to them. Vohra Hathimbhai Badruddin Mithiborwala and the other Contractors were also not at any time informed about this letter and did not know anything about the same. No order was issued cancelling the Order of the Ruler of the Sant State dated 12th March 1948 or repudiating the rights granted under the said Order or confiscating the forests over which rights were granted by the said Order. The possession of the Gotimda forest remained with Jagirdar Sardarsing Gajesing and the Government of Bombay did not make any attempt to resume possession of the Gotimda forest from Jagirdar Sardarsing Gajesing nor did the Government of Bombay address any communication to Jagirdar Sardarsing Gajesing or to Vohra Hathimbhai Badruddin Mithiborwala cancelling the Order of the Ruler of the Sant State or forfeiting or resuming possession of the Gotimda forest. The said letter remained only an inter-departmental communication made in confidence by the Assistant Secretary to the Government of Bombay, Revenue Department, to the Commissioner, Northern Division, with a copy to the Collector of Panchmahals. Under these circumstances it is difficult to see how it can be said that the rights of Jagirdar Sardarsing Gajesing in respect of the Gotimda forest were repudiated or confiscated by the Government of Bombay as an act of State by the said letter. A secret decision of the Government recorded in a confidential inter-departmental letter is not enough to constitute

repudiation or confiscation of rights of property by an act of State, particularly when the property is in the possession of the person whose rights are alleged to have been extinguished by the act of State, unless the decision is communicated to such person or the possession of the property is forfeited or resumed by the Government. We cannot, there-fore, accept the contention urged on behalf of the State that the Order of the Ruler of the Sant State dated 12th March 1948 was cancelled and the rights of Jagirdar Sardarsing Gajesing in respect of the Gotimda forest were repudiated or confiscated by the Government of Bombay by the said letter as an act of State. There is also another reason why the said letter cannot be construed by us as having brought about such effect. The language of the said letter shows that the said letter did not cancel the Order of the Ruler of the Sant State dated 12th March 1948 but merely conveyed to the Commissioner, Northern Division, the opinion of the Government that the Order passed by the Ruler of the Sant State dated 12lh March 1948 was mala fide and that it should, therefore, be cancelled. There was no effective cancellation of the Order of the Ruler of the Sant State by the said letter. The resolution of the Government of Bombay dated 6th February 1953 no doubt recites that the Government of Bombay after considering the implications of the Order of the Ruler of the Sant State decided that the said Order was mala fide and cancelled it on 8th July 1949 by the said letter, but that recital cannot help the State because the question as to whether the said Order was in fact cancelled by the said letter and whether the rights of Jagirdar Sardarsing Gajesing over the Gotimda forest were repudiated or confiscated by the said letter has to be decided by us on a consideration of the terms of the said letter and the facts and circumstances relating to the same and not on the basis of any statement which may be made by the Government of Bombay in a subsequent resolution Apart from the said letter, no other action or Order of the Government of Bombay was relied upon by Mr. B. R. Sompura as constituting cancellation of the Order of the Ruler of the Sant State or repudiation or confiscation of the rights acquired by Jagirdar Sardarsing Gajesing over Gotimda forest under the said Order. We are, therefore, of the view that right upto 26th January 1950 when the Constitution came into force, the Order of the Ruler of the Sant State dated 12-3-1948 was not cancelled and the rights of Jagirdar Sardarsing Gajesing in respect of Golimda forest granted under the said Order were not repudiated or confiscated by the Government of Bombay by an act of State. The result was that right upto 26th January 1950, Jagirdar Sardarsing Gajesing continued to have proprietary rights over the Gotimda forest and these rights could not thereafter be extinguished or destroyed by an act of State. The resolution of the Government of Bombay dated 6th February 1953 could not be relied upon by the Government of Bombay as an act of State cancelling the Order of the Ruler of the Sant State or repudiating or confiscating the rights in respect of the Gotimda forest. The rights in respect of Gotimda forest acquired by Jagirdar Sardarsing Gajesing under the Order of the Ruler of the Sant State were, therefore, legally enforce

able against the Government of Bombay at any sale from and after 26th January 1950, when the Constitution came into force and since the appellant derived his title from Jagirdar Sardarsing Gajesing, the appellant was also entitled to enforce his rights in respect of the trees standing in the Gotimda forest against the State at the date when he filed the suit and the State cannot successfully set up the plea of an act of Slate in defence to the suit.

29. There was a further argument urged by Mr. Rajni Patel based on the provisions of Section 4 of the Extra-Provincial Jurisdiction Act, 1947. The argument was that every order of the Central Government under Section 4 was required to be made by notification in the Official Gazette and that the Central Government could not, therefore, act in exercise of its extra-provincial jurisdiction except by an Order made by notification in the Official Gazette. It was contended that what was true of the Central Government was also true of the Provincial Government to whom extra-provincial jurisdiction might be delagated by the Central Government under Section 3(2) of the Act and if, therefore, extra-provincial jurisdiction in relation to any territory was delegated by the Central Government to the Provincial Government under Section 3(2), such extra-provincial jurisdiction could be exercised by the Provincial Government only by orders made by notification in the Official Gazette. It was urged that extra-provincial jurisdiction in and in relation inter alia to the Sant State was delegated by the Central Government to the Government of Bombay and the Government of Bombay was, therefore, entitled to exercise extra-provincial jurisdiction in and in relation to the Sant State and every order of the Government of Bombay in exercise of such extra-provincial jurisdiction was accordingly required to be by notification in the Official Gazette and it any order was made by the Government of Bombay which was not notified in the Official Gazette, such order was invalid and inoperative. The argument was that whether the letter dated 8th July 1949 addressed by the Assistant Secretary to the Government of Bombay, Revenue Department, to the Commissioner, Northern Division, or the resolution of the Government of Bombay dated 6th February 1953 was accepted as the order of the Government of Bombay cancelling the Order of the Ruler of the Sant State dated 12th March 1948 and repudiating the rights of the Jagirdars, such Order was invalid and inoperative inasmuch as it was not made by notification in the Official Gazette. Since we have already taken the view that for the reasons stated above the rights acquired by Jagirdars under the Order of the Ruler of the Sant State dated 12th March 1948 were legally enforceable against the Government of Bombay right from the beginning namely 10th June 1948 or in any event from and after 26th January 1950, we would not have ordinarily thought it necessary to deal with the present argument urged by Mr. Rajni Patel. But the argument lies in a narrow compass and is patently incorrect and we might as well dispose of the same. The argument is based upon a confusion between the exercise of extra-provincial jurisdiction under Section 3 and the making or Orders for the effective exercise of such extra-provincial jurisdiction by

virtue of the enabling provision contained in Section 4. Section 3, Sub-section (1) provides that it shall be lawful for the Central Government to exercise extra-provincial jurisdiction in such manner as it thinks fit and Sub-section (2) confers on the Central Government power to delegate any extra-provincial jurisdiction to any Officer or authority in such manner and to such extent as it thinks fit. When, therefore, the Central Government delegates any extra-provincial jurisdiction to the Provincial Government, it is lawful for the Provincial Government by reason of Sub-Section (2) read with Sub-section (1) of Section 3 to exercise such extra-provincial jurisdiction in such manner as it thinks fit. The Provincial Government may do all such acts and things as it may consider necessary in exercise of such extra-provincial jurisdiction. Section 4 contains merely an enabling provision which authorizes the Central Government to make such orders as may seem to it expedient for the effective exercise of the extra-provincial jurisdiction delegated to it by the Central Government. (?) (Sic) Section 4 does not prescribe that the Central Government or the Provincial Government as the case may be must act in the exercise of its extra-provincial jurisdiction only by means of orders notified in the Official Gazette. Such a construction would lead to absurd results and render the exercise of extra-provincial jurisdiction not only cumbrous but almost impossible. It is only when the Central Government or the Provincial Government wants to make orders for the effective exercise of its extra-provincial jurisdiction that such orders have to be made by notification in the official Gazette. The Central Government or the Provincial Government may not consider it necessary to make any orders for the effective exercise of its extra-provincial jurisdiction and may exercise such extra-provincial jurisdiction without making any such orders. Such a course would be perfectly legitimate and it cannot be suggested that any action of the Central Government or the Provincial Government in exercise of its extra-provincial jurisdiction would be invalid if it is not in the shape of an Order notified in the Official Gazette. The enabling provision in Section 4 cannot be construed so as to impose a restriction or limitation on the mode of exercise of extra-provincial jurisdiction under Section 3, for that would be confrary to all canons of construction. We are, therefore, of the opinion that it was not at all necessary for the Government of Bombay as the delegate of the Central Government in respect of extra-provincial jurisdiction in and in relation to the Sant State to make any Order by notification in the Official Gazette for effectively cancelling the Order of the Ruler of the Sant State dated 12th March 1948 and repudiating the rights acquired by Jagirdars under the said Order. The Order of the Ruler of the Sant State dated 12th March 1948 could be cancelled and the rights acquired by Jagirdars under the said Order could be forfeited or repudiated by the Government of Bombay by any action taken or Order made in exercise of its extra-provincial jurisdiction and no order made by notification in the Official Gazette was necessary for achieving such result.

30. No other contentions have been raised on behalf of the State. The only objection urged on behalf of the State was that founded on want of

title and the title having been established, the appellant must succeed. Whether the State would have the right to refuse to grant permission to the appellant to cut any trees in the Gotimda forest or to issue authorizations and pass-books to the appellant on any grounds other than want of title is a matter on which we express no opinion. It is enough to say that the appellant’s rights in respect of the trees standing in the Gotimda forest under the contract with Jagirdar Sardarsing Gajesing are established and the appellant is entitled to enforce the said rights against the State. The result is that we allow the Second Appeal and decree that a permanent injunction be issued restraining the State of Gujarat and its Officers, servants and agents from interfering or causing any interference in any manner whatsoever with the appellant’s cutting of the trees of the Gotimda forest during the period of the contract with Jagirdar Sardarsing Gajesing as also with the working of the contract by the appellant and the export of the timber cut by the appellant and also from obstructing the appellant in exporting the timber lying at the rail-head depots. The State of Gujarat will pay the costs of the Second Appeal including all costs throughout.