Case: State of Rajasthan v Shamlal. High Court of Rajasthan (India)

CourtHigh Court of Rajasthan (India)
Date01 January 1960
India, High Court of Rajasthan,

(Sarjoo Prosad, C.J., Dave, Chhangani, J J.)

State of Rajasthan
and
Shamlal

States as international persons State succession Continuity of the law Merger of states Claim in contract against the former state Whether enforceable against the successor The Constitution of India Use of the merger agreement for evidentiary purposes The law of India

Summary: The facts.In five different cases the plaintiffs, Shamlal and others sued the State of Rajasthan for the refund of export duty deposited in advance with Dholpur, a former Indian native state. This had merged with other similar states to form the United State of Rajasthan which ultimately became the State of Rajasthan in India. It was accepted that had Dholpur still existed it would have been liable to refund the amount. The legal issue, whether the State of Rajasthan was liable as successor, was referred to the Full Bench for decision.

Held: The State of Rajasthan was liable as successor.

The following are the texts of the judgments delivered:

Sarjoo Prosad, C.J.: This Special Bench was constituted on a reference made to me by a Division Bench of this Court presided over by Modi and Bhandari, J J. As the order of reference shows, the learned Judges were not agreed on the proper interpretation to be put on Article 295 (2) of the Constitution in view of the opinions expressed in their respective judgments. They, however were pleased to formulate the point of reference as follows:

Whether the expression Government of the corresponding Indian State used in Art. 295 (2) of the Constitution with reference to Rajasthan properly means the Government of the United State of Rajasthan which was the only Indian State in existence at the time of the commencement of the Constitution or it also includes the Government of any of the Covenanting States which had integrated with the United State before the Constitution came into operation?

Having had the benefit of perusing the judgments of the learned Judges making the reference and the advantage of hearing elaborate arguments of the learned Advocate General and the counsel appearing for the parties, I confess that I have felt considerable difficulty in answering the point formulated. The difficulty has been enhanced because of the narrow compass in which the matter has been laid before us, which tends to restrict unduly the scope of the enquiry. Rule 59 of the High Court Rules provides that

The Chief Justice may constitute a Bench of two or more Judges to decide a case or any question or questions of law formulated by a Bench hearing a case. In the latter event, the decision of such Bench on the question or questions so formulated shall be returned to the Bench hearing the case, and that Bench shall follow that decision on such question or questions, and dispose of the case after deciding the remaining questions, if any, arising therein.

Thus on the terms of R. 59, this Bench is called upon to determine only the question formulated by Modi and Bhandari, J J. I do not find any other Rule in the High Court Rules, which provides specifically for cases where the Chief Justice may constitute a Bench of two or more Judges to hear and decide any difficult and important question of law arising in a case, or to constitute a Full Bench for the purpose of resolving any conflict of decisions in this Court. It appears to me, therefore, that R. 59 cannot be exhaustive of the powers which the Chief Justice must possess in regulating the functioning of the Court to constitute appropriate Benches for the decision of such questions which may, from time to time, necessarily arise. I find that in these cases the most substantial question which arises for consideration is:

Whether on a true interpretation of Art. 295 (2) of the Constitution, the State of Rajasthan can be said to have incurred the liabilities of the other Covenanting States which went to form the United State of Rajasthan, before the Constitution came into operation?

This was, in my opinion, the essential question which fell to be determined in these cases; and this Bench would have been in a happier position to determine the above question, if it had been formulated in that form. Since I have the honour of presiding myself over this Special Bench constituted for the purpose, I think that there can be no valid objection to my enlarging the scope of the enquiry in the present case, and formulating the auxiliary question in the manner that I have done, so that this Special Bench of three Judges may conveniently address itself to this important question of law bearing on the interpretation of Article 295 of the Constitution, and the decision given by this Court may be binding as an authority in future. I notice with some satisfaction that even the question formulated under reference does envisage this aspect of the interpretation of Article 295. This is evident from the latter part of the question formulated which says whether the Government of any of the Covenanting States which had integrated with the United State of Rajasthan was also included in the expression Government of the corresponding Indian State.

(2) There can be no doubt that ex facie the words Government of the corresponding Indian State as used in Article 295 (2) of the Constitution with reference to Rajasthan would mean the Government of the United State of Rajasthan which was the only Indian State in existence at the time of the commencement of the Constitution; but it would be an over simplification of the matter to suggest that this is about all that the Article means.

We have to remember that Article 295 relates to succession to property, assets, rights, liabilities and obligations; and in dealing with these rights and obligations one cannot forget the inexorable logic of the historical events which followed rapidly, almost in cataclysmic succession, before the United State of Rajasthan was formed by its constituent units. My learned brother Dave has very exhaustively dealt with the historical background leading to the evolution of the United State of Rajasthan and the successive Covenants and Agreements which culminated in the constitution of that State.

It is true, no doubt, that as a result of these Covenants the various Covenanting independent Indian States then in existence in Rajasthan and recognized by the Government of the Dominion of India merged in the United State of Rajasthan, and in a sense gave up their sovereignty over their respective territories and vested it in the Rajpramukh of the United State of Rajasthan; but those Covenants, in my opinion, are the fundamental source of the authority under which the United State of Rajasthan was created, and on the strength of which the Rajpramukh of the new State could exercise his executive, legislative or judicial functions. He was not like an independent sovereign who had acquired territory by force of conquest, or to whom any territory had been ceded by some diplomatic pressure exercised by himself; and who could, therefore, act on the strength of his own supremacy or authority.

It would not have been, therefore, wrong to assume that the said Covenants were in the nature of constitutional documents which in form and substance governed the constitution of the new State. It is recognized on all hands that the integration of these States followed a unique pattern of its own for which there is hardly any precedent or parallel. Therefore, it may not be altogether correct to treat these Covenants as mere agreements between high contracting parties to which no such constitutional sanctity could be attached as to enable the subjects of those Covenanting States which entered the Union to take advantage of the terms of those Covenants and enforce their rights in the municipal Courts of the successor State.

Here the same document, from which flowed the rights, the authority, and the jurisdiction of the new sovereign also provided that all the assets and liabilities of the Covenanting State shall be the assets and liabilities of the United State. The powers of the new sovereign, therefore, went hand in hand with the liabilities which the United State incurred for the Covenanting States; and any distinction drawn on the footing that the residents of the territories which came under the dominion of the Rajpramukh of the United State could not acquire any right of citizenship until the act of State had been completed ought not really arise.

There is no interregnum for the completion of the act of State; the rights of the new sovereign and the rights of the citizens in the covenanting territories, they both inhere and spring together. In fact it is all a continuous flow. On a perusal of these documents, therefore it appears to me that the citizens of these territories entered the constitutional haven of the integrated Unit at least as safe and unscathed as they were earlier, if not actually better still. Therefore, the declaration made by the new sovereign in the Covenants in question, to which he along with the other Sovereigns was a party, and by virtue of which alone he could take office and assume his sovereign powers over the integrated territory quoad the residents of these territories should well be regarded as having the character of a constitutional guarantee or at least the character of a law which could be agitated in his Courts.

As such the clauses entered in those Covenants providing for the recognition of the rights of the subjects of ex-Sovereigns were capable of enforcement in the Courts of the new Sovereign. It was of course open to the new Ruler in the exercise of his plenary legislative authority at any subsequent stage to abrogate the old laws and enact new ones; but so long as he did not do so, the rights of his subjects preserved under the existing laws remained unaffected, and could be the foundation of a legal action either between the subjects inter se or between the subject and the State in the Municipal Courts of the new...

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