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CASE NO.:

Appeal (civil) 7308-7309 of 2005

PETITIONER:

M/s Tashi Delek Gaming Solutions Ltd. & Anr.

RESPONDENT:

State of Karnataka & Ors.

DATE OF JUDGMENT: 08/12/2005

BENCH:

S.B. Sinha & P.P. Naolekar

JUDGMENT:

J U D G M E N T

[Arising out of S.L.P. (Civil) Nos.6898-6899 of 2005]

W I T H

CIVIL APPEAL NOS. 7310-7312 OF 2005

[Arising out of S.L.P. (Civil) Nos.7744-7746 of 2005]

S.B. SINHA , J :

Leave granted.

Introduction :

Scope and ambit of Article 131 of the Constitution of India is in

question in these appeals, which arise out of a common judgment and order

dated 16.03.2005 passed by a Division Bench of the Karnataka High Court

in Writ Appeal Nos.5516-5117 of 2004 and Writ Appeal Nos.29-31 of 2005,

whereby and whereunder the appeals preferred by the Appellants herein

were dismissed.

Background facts

It is not in dispute that the States of Sikkim and Meghalaya

commenced online lotteries, inter alia, in the State of Karnataka. It is,

however, otherwise a lottery playing State. In exercise of its power

conferred upon it under Section 5 of the Lotteries (Regulation) Act, 1998

(for short, 'the Act') a declaration was made that the State of Karnataka

shall be free zone from online and internet lotteries. By reason of the said

notification sale of all computerized and online lottery tickets marketed and

operated through vending machines, terminals, electronic machines and

through internet in the State of Karnataka became prohibited with immediate

effect.

Writ Proceedings :

The States of Sikkim and Meghalaya together with its agents filed

writ petitions before the Karnataka High Court, challenging the legality

and/or validity of the said notification, inter alia, on the ground that the State

of Karnataka, having itself been organizing lotteries, could not have imposed

the said ban having regard to the decision of this Court in M/s B.R.

Enterprises etc. v. State of U.P. & Ors. etc. [(1999) 9 SCC 700].

The contention of the State of Karnataka, on the other hand, was that

online lotteries had nothing to do with the conventional lotteries and as the

State of Karnataka has put an embargo on online lotteries without any

discrimination, B.R. Enterprises (supra) cannot be said to have any

application.

A preliminary objection was taken on behalf of the State that as the

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dispute involved in the writ petitions related to two State Governments, the

writ petitions were not maintainable, in view of the constitutional bar under

Article 131 of the Constitution of India. The said contention was upheld by

a learned Single Judge of the High Court holding, inter alia, that the agents

of the State of Sikkim and State of Meghalaya had no locus standi to

maintain the writ petitions in view of the fact that they did not have any

independent right in that behalf. The agents of the State of Sikkim preferred

an intra-court appeal thereagainst The State of Meghalaya and its agents

thereafter also preferred writ appeals.

Contentions of the writ petitioners :

The contention of the Appellants herein being agents and distributors

of the State of Sikkim is as under :

Section 4(c) of the Act permits the State Governments to sell tickets

either itself or through distributors or selling agents and in terms thereof the

First Appellant M/s Tashi Delek Gaming Solutions Ltd, was appointed by

the State of Sikkim as an agent for sale of online lotteries. The Second

Appellant, Pan India Network Infravest Pvt. Ltd., is a distributor of the First

Appellant.

It was contended that the Appellants herein have invested a huge

amount of 300 crores for setting up the online lotteries network

infrastructure and 861 retail outlets therefor. They have been paying sales

tax and other taxes running into crores of rupees to the Respondent-State and

have entered into diverse third party arrangements with distributors and

retailers. It was contended that by reason of the impugned notification, their

investments made in this behalf would go totally waste and they would be

seriously prejudiced as they have borrowed funds from banks and financial

institutions on which interest is mounting manifold.

The State of Meghalaya and its agent, M/s Best & Co. in their writ

petition, inter alia, contended :

"The petitioner State for the purposes of sale of the

online and internet lotteries appointed Petitioner No. 2 &

3 as its agent/sub agent to sell the said internet and online

lotteries in various States. Accordingly, the agent

appointed other persons, retailers etc. for the purposes of

establishing computerized retail outlets in the State of

Karnataka. At present there are 1000 number of retail

outlets of the Petitioner State in the State of Karnataka

and more than 30000 number of persons are dependent

on the said business. The Petitioner No.2 and its agents

have spent more than Rs.100 crores for the establishment

of the network of retail computer lottery outlet. The sale

from computerized online and internet lotteries in the

State of Karnataka was presently approximately Rs.90

lacs per day."

Submissions :

Mr. Soli J. Sorabjee, the learned Senior Counsel appearing on behalf

of the Appellants, relying inter alia upon the decisions of this Court in State

of Bihar v. Union of India [(1970) 1 SCC 67], State of Rajasthan & Ors. etc.

v. Union of India & Ors. [(1977) 3 SCC 592], State of Karnataka v. Union

of India & Anr. [(1977) 4 SCC 608] and Union of India v. State of

Rajasthan [(1984) 4 SCC 238], at the outset submitted that the principles laid

down therein clearly demonstrate inapplicability of Article 131 of the

Constitution of India where along with the State Governments private parties

are also added as Petitioners or Respondents. The Appellants, it was urged,

being statutory agents of the States were persons aggrieved by the impugned

action of the State of Karnataka in their own right and, thus, the writ petition

filed by them with the State Governments were maintainable and, in that

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view of the matter, the findings of the Division Bench to the effect that the

Appellants could not enforce or vindicate their rights under the contract of

agency with the State of Sikkim is erroneous.

Our attention, in this behalf, was drawn to Section 7(3) of the Act to

show that the Act contains a penal provision. In terms of the notification

issued by the State of Karnataka, if the Appellants herein continue to sell

online lottery tickets, the same would attract the penal provision contained in

Section 7(3) of the Act and in that view of the matter, it cannot be said that

the Appellants have no legal right to enforce and/or they are otherwise not

aggrieved by the notification issued by the State of Karnataka enabling them

to maintain a writ application.

It was submitted that in view of a decision of this Court in Ghulam

Qadir v. Special Tribunal & Ors. [(2002) 1 SCC 33], the Appellants herein

being not merely strangers had a right to maintain the writ application.

Mr. K.K. Venugopal, the learned Senior Counsel, supplemented the

submissions of Mr. Sorabjee contending that as the Appellants are agents

coupled with interest, they could sue or be sued in their own names.

Mr. Sanjay R. Hegde, the learned counsel appearing on behalf of the

State of Karnataka, on the other hand, submitted that for the purpose of

determining the maintainability of the writ petition, it was necessary to

determine the nature of rights of the agents of the State. It was argued that

the State Governments having exercised their executive power to carry on

business in lotteries, the activities prohibited by the State of Karnataka being

a matter between two States could be adjudicated upon by this Court alone

as the dispute related to the legal character involving two different States.

Mr. Hegde urged that Article 131 of the Constitution, in view of the

doctrine of federalism should receive wide and expansive definition and in

this case as one State asserts that it had the right to carry on business in

another State, which had been denied, the essential nature of dispute must be

held to have occurred between two States.

Issue :

The short question which arises for consideration is as to whether the

writ petitions filed by the Appellants herein were maintainable.

The Act :

The Parliament of India in terms of Entry 40 List 1 of the Seventh

Schedule of the Constitution of India enacted Lotteries (Regulation) Act,

1998. 'Lottery' has been defined in Section 2(b) of the Act to mean :

"2(b) "lottery" means a scheme, in whatever form and by

whatever name called, for distribution of prizes by lot or

chance to those persons participating in the chances of a

prize by purchasing tickets."

Sections 3 and 4 of the said Act lay down the conditions subject to

which the State Governments could organize, conduct or promote lotteries.

By reason of Section 4 of the Act, distributors and selling agents are said to

have been given statutory status. Section 6 thereof confers power of

prohibition expressly on the Central Government.

Section 5 of the Act reads as follows :

"5. Prohibition of sale of tickets in a State.-A State

Government may, within the State, prohibit the sale of

tickets of a lottery organized, conducted or promoted by

every other State."

Sub-sections (3) of Section 7 of the Act provides for penal provision

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in the following terms :

"(3) If any person acts as an agent or promoter or

trader in any lottery organized, conducted or promoted in

contravention of the provisions of this Act, or sells,

distributes or purchases the ticket of such lottery, he shall

be punishable with rigorous imprisonment for a term

which may extend to two years or with fine or with

both."

Article 131 \026 Scope and Ambit :

Article 131 of the Constitution of India postulates that this Court to

the exclusion of any other court shall have original jurisdiction in any

dispute between the Government of India and one or more States; or

between the Government of India and any State or States on one side and

one or more other States on the other; or between two or more States. We in

this case are not concerned with the proviso to the said Article. The said

Article would be attracted where adjudication is necessary in relation to a

legal right of one State or the Union of India vis-`-vis other States, as the

case may be. Indisputably, the expression 'legal right' has received liberal

interpretation by this Court from time to time. However, it is now well-

settled by various decisions of this Court that this Article will not be

applicable where citizens or private bodies are parties either jointly or in the

alternative with the State or the Government of India. The enlarged

definition of 'State' under Article 12 would not extend to Article 131 of the

Constitution. It is also not in dispute that even a statutory corporation is not

a state within the meaning of the said provision.

Locus of the Appellants :

The Appellants herein were appointed as agents of the State, which

were governed by contract, in terms whereof, they had invested a huge

amount. If the statements made in the writ petitions to which we have

adverted to hereinbefore are correct, in the event the impugned notification

is implemented, the Appellants would not only loose a huge amount of

money which they have invested but also would be liable to pay

compensation to a large number of work force appointed by them in view of

the fact that they would have to close their business. The Appellants are the

agents coupled with interest. Such agencies are contemplated under the laws

of contract. The Act also postulates that in the event an agent violates the

notification issued by the State, he would face the penal consequences laid

down therein. The notification has the force of law. In the aforementioned

backdrop, the question which arises for consideration is as to whether the

Appellants herein had any independent right to question the validity of the

said notification.

The learned Single Judge, as noticed hereinbefore, held that they did

not have any such right. On the other hand, the Division Bench was of the

opinion :

"\005May be, the appellants also got adversely affected

with the prohibition imposed by the State of Karnataka

but it is only incidental because they are the agents of the

State of Sikkim and can have their rights only through

their principal\005."

We cannot subscribe to the said view.

'Agent' has been defined in Section 182 of the Indian Contract Act,

1872, to mean a person employed to do any act for another or to represent

another in dealings with third persons. The person for whom such act is

done, or who is so represented, is called the 'principal'. Section 185 of the

Contract Act postulates that no consideration is necessary to create an

agency. The authority of an agent may be express or implied in terms of

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Section 186 thereof. Section 202 of the Contract Act provides that where

the agent has himself an interest in the property which forms the subject-

matter of the agency, the agency cannot, in the absence of an express

contract, be terminated to the prejudice of such interest. The right of an

agent to sue or be sued in its own name, is governed by Section 230 of the

Contract Act, which reads as under :

"230. Agent cannot personally enforce, nor be

bound by, contracts on behalf of principle.- In the

absence of any contract to that effect an agent cannot

personally enforce contracts entered into by him on

behalf of his principal, nor is he personally bound by

them."

The second part of the said provision does not envisage a situation

where the right of an agent is protected in terms of Section 202 of the

Contract Act. We have noticed hereinbefore that Section 4(c) of the Act

envisages appointment of agents, which empowers the State Government to

sell the tickets either itself or through distributors or selling agents. Such

distributors or selling agents may also be companies or body corporates.

Section 7(3) of the Act, as noticed hereinbefore, provides for a penal

consequence. If any person acts as an agent or promoter or trader in any

lottery, he may be subjected to punishment if he sells, distributes or

purchases tickets of such lottery in contravention of the provisions of the

said Act, which may include any notification issued under Section 5 of the

Act.

Right to Sue :

An agent coupled with interest has a right to sue. He may in certain

situations be sued as regard his own liabilities independent of his principal.

The right of an agent having interest to sue or be sued in its own name

came up for consideration before the Madras High Court in Subrahmania

Pattar v. Narayanan Nayar [ILR 24 Mad 130] wherein it was held :

"It was argued before us that by the document in

question the plaintiff became an agent with interest, and

that he, therefore, had a right to sue in his own name and

Williams v. Millington; Robinson v. Rutter; Gray v.

Pearson; and other cases and text-books were cited in

support of this proposition, and Pestanji Mancharji

Wadia v. Matchett; was also cited as a further authority

for the same proposition. The proposition as stated is in

our judgment too wide. In Williams v. Millington; and

Robinson v. Rutter; the agents who were held entitled to

sue were agents who had made the contract with the

defendant as auctioneers, and it was held that, though

they had contracted as agents having an interest, they

were entitled to sue in their own names. In Gray v.

Pearso the plaintiff's suit was dismissed. There, there

was no contract entered into between the plaintiff and the

defendant. The plaintiff was merely the manager for

others and the words used by Willes, J., in his judgment,

to which our attention was called, do not assist the

plaintiff's contention. He says the proper person to bring

the action is the person whose right has been violated.

Though there are certain exceptions to the general rule,

for instance, in the case of agents, auctioneers or factors,

these exceptions are in truth more apparent than real, &c.

The real proposition of law, which these and other cases

establish, is that where an agent enters into a contract as

such, if he has interest in the contract, he may sue in his

own name."

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Yet again in Mallhu v. Megh Raj [AIR 1920 Lah. 196], it was held :

"The only point calling for consideration in this

application for revision is whether the plaintiff is

debarred under S. 230, Contract Act from maintaining

the suit. It is true that part of the wheat belonged to one

Khem Lal and was sold by the plaintiff as Khem Lal's

agent, but the other part was the plaintiff's own wheat, so

that he had an interest in the contract, and the law is that

when an agent enters into a contract, he may sue thereon

in his own name if he has an interest in the contract."

The question again came up for consideration before the Bombay

High Court in Coorla Spinning & Weaving Mills v. Vallabhdas (AIR 1925

Bom. 547], wherein it was opined :

"It was next argued on behalf of the defendants that the

suit was defective and must have been dismissed unless

and until the Mill Company was added. In other words,

that the Mill Company were necessary and not merely

proper parties. The plaintiffs, on the other hand,

contended that the selling agents had here a beneficial

interest in the completion of the contract, and could

accordingly sue in respect of it. This rule extends in

England to auctioneers and factors, and is thus expressed

in Bowstead on Agency, 7th Edn., p. 431:-

"An agent may sue in his own name on

contracts made by him on behalf of his principal in

the following case, namely\005.(b) where, as in the

case of factors and auctioneers, he has a special

property in or lien upon, the subject-matter of the

contract, or has a beneficial interest in the

completion thereof,"

The Sind Court had also an occasion to consider the said question in

R.P. Kharas v. Bawanji Narsi [AIR 1926 Sind 6], wherein the law was stated

in the following terms :

"The case of an agent who has an interest in the

contract made by him as such is not within the rule. He

is the person to sue, and he is liable to be sued on the

contract. An auctioneer or factor being in possession of

his employer's goods having a lien on them for his

charges and advances is in this position. An auctioneer

may be sued for non-delivery of the goods sold and he

may sue the buyer for the price."

In Durga Prasad Manna Lal v. Cawnpore Flour Mills [AIR 1929 Oudh

417], upon referring to the provisions of the Indian Contract Act, it was held:

"The three cases mentioned in this section in

which a contract to that effect may be presumed are by

no means exhaustive. Thus there can be no difficulty in

presuming such a contract in a case in which the agent

has an interest in the transaction. Apart from this the

position of an agent in such a case is virtually that of a

principal to the extent of the interest, which he has in the

contract. This rule is based upon general principles and

not on any technicalities peculiar to the English Law. It

has been followed in the Indian Courts as well."

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The Lahore High Court had also the occasion to deal with the said

question in Firm Hardayal Mal Mohri Lal v. Kishan Gopal Jhanji [AIR 1938

Lah 673], wherein Tek Chand, J. opined :

"These documents therefore do not affect the

matter. This is clearly a case of an "agency coupled with

interest" and therefore the ordinary rule laid down in

S.230 is inapplicable. It is settled law in England and as

observed by Pollock and Mulla in their Commentary on

the Indian Contract Act (Edn.6) page 638 :

The like rule is laid down by Indian Courts that

where an agent enters into a contract as such if he has an

interest in the contract he may sue in his own name. This

is not a real exception to the rule laid down at the

beginning of the Section, the agent being in such a case

virtually a principal to the extent of his interest in the

contract."

In Subodh Gopal Bose v. Province of Bihar [AIR 1950 Patna 222] a

Division Bench of the Patna High Court considered the question, and upon

noticing a large number of decisions, laid down law in the following terms :

"There is another aspect of the case which has a

more direct bearing on this question. In the suit the main

relief which the appellant has claimed (as disclosed by

the plaint) is a declaration that the appellant is entitled to

quarry lime stone and manufacture lime from the Murli

hill As a mere local agent of the lessee company, the

appellant has no such right of suit. An agent who has

some interest in the property \026 may be a qualified interest

\026 can maintain an action to protect that interest (see

Whittingham v. Bloxham,(1831) 172 E.R. 841: (4 Car. &

P. 597). In Smith's Leading Cases, Vol. II, p. 395 (12th

Edn.) the following statement of the law is made:

"But it is not merely in cases where the

agent has contracted in his own name for an

unnamed principal that he has a right, at law, to

sue upon the contract, when he has made a contract

in the subject-matter of which he has a special

property, he may, even though he contracted for an

avowed principal, sue in his own name."

Legal Right :

If by a statutory provision the right of an agent to carry on his

business is affected, he may, in our considered opinion, in his own right

maintain an action. The question came up for consideration before this

Court in Calcutta Gas Company (Proprietary) Ltd. v. State of West Bengal

and Others [AIR 1962 SC 1044 = 1962 Supp. (3) SCR 1]. Therein a

question arose as to whether the petitioner therein who had a right to manage

the Oriental Gas Company for a period of 20 years and to receive

remuneration for the same could question the vires of the law whereby the

said Oriental Gas Company was taken over as a result whereof, his right to

continue in the business was affected. It was held that the Petitioner

Company had such a right, stating :

"\005It is not necessary in this case to decide whether

under the said agreement the appellant was constituted as

agent or managing agent or a servant of Oriental Gas

Company. Whatever may be its character, by reason of

Section 4 of the impugned Act, it was deprived of certain

legal rights it possessed under the agreement. Under the

agreement, the appellant had the right to manage Oriental

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Gas Company for a period of 20 years and to receive

remuneration for the same. But under Section 4 of the

impugned Act, it was deprived of that right for a period

of five years. There was certainly a legal right accruing to

the appellant under the agreement and that was abridged,

if not destroyed, by the impugned Act. It is, therefore,

impossible to say that the legal right of the appellant was

not infringed by the provisions of the impugned Act. In

the circumstances, as the appellant's personal right to

manage the Company and to receive remuneration

therefor had been infringed by the provisions of the

statute, it had locus standi to file the petition under

Article 226 of the Constitution."

Once it is held, in view of the aforementioned pronouncement that the

Appellants had legal rights to challenge the validity or otherwise of the said

notification issued by the State of Karnataka, there cannot be any doubt

whatsoever that they would have independent rights to maintain the writ

application.

We may consider the question from another angle.

If the agent was to be prosecuted for violation of the term of the

notification, he could challenge the validity thereof. A fortiori, a quia timet

application would also be maintainable. A person must be held to have

access to justice if his right in any manner whether to carry on business or

threat to his liberty is infringed. Access to justice is a human right.

In Dwarka Prasad Agarwal (D) By LRs. v. B.D. Agarwal and Others

[(2003) 6 SCC 230], this Court opined:

"\005A party cannot be made to suffer adversely

either indirectly or directly by reason of an order

passed by any court of law which is not binding on

him. The very basis upon which a judicial process

can be resorted to is reasonableness and fairness in

a trial. Under our Constitution as also the

international treaties and conventions, the right to

get a fair trial is a basic fundamental/human right.

Any procedure which comes in the way of a party

in getting a fair trial would be violative of Article

14 of the Constitution of India. Right to a fair trial

by an independent and impartial Tribunal is part of

Article 6(1) of the European Convention for the

Protection of Human Rights and Fundamental

Freedoms, 1950 [See Clark (Procurator Fiscal,

Kirkcaldy) v. Kelly]\005"

The High Court, therefore, was not correct in holding that they had no

personal right to enforce despite the fact that they would suffer injuries or

would otherwise be prejudiced by the notification issued by the State of

Karnataka. It would, therefore, not be correct to contend that they could

enforce their rights only through their principal and not independently. The

Appellants had a legal right to carry on business. Such a right having been

impugned by reason of the impugned notification, a writ petition at their

instance was maintainable.

Locus Standi :

If the Appellants herein had a legal right, they could seek redressal for

violation thereof before an appropriate forum. The locus standi to maintain

a writ application even otherwise has received liberal interpretation.

In Ghulam Qadir v. Special Tribunal [(2002) 1 SCC 33], this Court

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observed :

"38. There is no dispute regarding the legal

proposition that the rights under Article 226 of the

Constitution of India can be enforced only by an

aggrieved person except in the case where the writ

prayed for is for habeas corpus or quo warranto. Another

exception in the general rule is the filing of a writ petition

in public interest. The existence of the legal right of the

petitioner which is alleged to have been violated is the

foundation for invoking the jurisdiction of the High

Court under the aforesaid article. The orthodox rule of

interpretation regarding the locus standi of a person to

reach the court has undergone a sea change with the

development of constitutional law in our country and the

constitutional courts have been adopting a liberal

approach in dealing with the cases or dislodging the

claim of a litigant merely on hypertechnical grounds. If a

person approaching the court can satisfy that the

impugned action is likely to adversely affect his right

which is shown to be having source in some statutory

provision, the petition filed by such a person cannot be

rejected on the ground of his not having the locus standi.

In other words, if the person is found to be not merely a

stranger having no right whatsoever to any post or

property, he cannot be non-suited on the ground of his

not having the locus standi."

The Appellants were not mere strangers.

Maintainability of the suit before this Court :

For determining the question as regard maintainability of the suit

before this Court, it is necessary to consider as to whether the appellants

herein whether independently or together with their principals could

maintain a suit. In view of a large number of decisions of this Court,

evidently, they could not.

Even the States of Sikkim and Meghalaya filed suits against the State

of Karnataka in this Court, the independent right of the Appellants herein to

maintain independent action before the appropriate forum could not have

been taken away.

In State of Bihar v. Union of India and Another [(1970) 1 SCC 67], a

Constitution Bench of this Court while deciding a case wherein the State of

Bihar had not only sued the Union of India but also Hindustan Steel Ltd. in

regard to negligence or deliberate action of servants of both the defendants

therein the matter of short delivery of iron and steel material ordered by the

State in connection with the construction work of Gandak Project, this Court

held that such a suit shall not be maintainable, opining :

"Although Article 131 does not define the scope of

the disputes which this Court may be called upon to

determine in the same way as Section 204 of the

Government of India Act, and we do not find it necessary

to do so this much is certain that the legal right which is

the subject of dispute must arise in the context of the

constitution and the Federalism it sets up. However,

there can be no doubt that so far as the parties to the

dispute are concerned, the framers of the Constitution did

intend that they could only be the constituent units of the

Union of India and the Government of India itself

arrayed on one side or the other either singly or jointly

with another unit or the Government of India."

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This Court further observed :

"Apart from these special provisions a dispute

which falls within the ambit of Article 131 can only be

determined in the forum mentioned therein, namely, the

Supreme Court of India, provided there has not been

impleaded in any said 'dispute any private party, be it a

citizen or a firm or a corporation along with a State either

jointly or in the alternative. A dispute in which such a

private party is involved must be brought before a court,

other than this court having jurisdiction over the matter."

In State of Rajasthan and Others v. Union of India and Others [(1977)

3 SCC 592], this Court opined : :

"\005The Article provides in so many terms in clauses (a),

(b) and (c) that the dispute must be between the

Government of India and one or more States, or between

the Government of India and any other State or States on

one side and one or more other States on the other, or

between two or more States. It does not contemplate any

private party being arrayed as a disputant on one side or

the other. The parties to the dispute must fall within one

or the other category specified in clauses (a), (b) and (c).

In State of Karnataka v. Union of India [(1977) 4 SCC 608], this

Court observed :

" It has to be remembered that Article 131 is traceable

to Section 204 of the Government of India Act. The

jurisdiction conferred by it thus originated in what was

part of the federal structure set up by the Government of

India Act, 1935. It is a remnant of the federalism found in

that Act. It should, therefore, be widely and generously

interpreted for that reason too so as to advance the

intended remedy. It can be invoked, in my opinion,

whenever a State and other States or the Union differ on

a question of interpretation of the Constitution so that a

decision of it will affect the scope or exercise of

governmental powers which are attributes of a State. It

makes no difference to the maintainability of the action if

the powers of the State, which are Executive, Legislative,

and Judicial, are exercised through particular individuals

as they necessarily must be. It is true that a criminal act

committed by a Minister is no part of his official duties.

But, if any of the organs of the State claim exclusive

power to take cognizance of it, the State, as such,

becomes interested in the dispute about the legal

competence or extent of powers of one of its organs

which may emerge."

Yet again in Union of India v. State of Rajasthan [(1984) 4 SCC 238],

it was observed :

"On a careful consideration of the whole matter in the

light of the decisions of this Court referred to above, we

feel that Article 131 of the Constitution is attracted only

when a dispute arises between or amongst the States and

the Union in the context of the constitutional relationship

that exists between them and the powers, rights, duties,

immunities, liabilities, disabilities etc. flowing therefrom.

Any dispute which may arise between a State in the

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capacity of an employer in a factory, a manufacturer of

goods subject to excise duty, a holder of a permit to run a

stage carriage, a trader or businessman carrying on

business not incidental to the ordinary functions of

Government, a consumer of railway services etc. like any

other private party on the one hand and the Union of

India on the other cannot be construed as a dispute

arising between the State and the Union in discharge of

their respective executive powers attracting Article 131

of the Constitution. It could never have been the intention

of the framers of the Constitution that any ordinary

dispute of this nature would have to be decided

exclusively by the Supreme Court. It is well to remember

that the constitutional proposals of the Sapru Committee

advocated the strengthening of the position of the Federal

Court in India and widening its jurisdiction on the

original side so that the Federal Court could act as an

interpreter and guardian of the Constitution and as a

tribunal for the determination of the disputes between the

constituent units of the Federation. The Joint Committee

on Indian Constitutional Reforms was also of opinion

that the object of conferring exclusive original

jurisdiction on the Federal Court was that the disputes of

the kind specified between the Federation and the

Provinces as the constituent units of the Federation

should not be left to be decided by courts of law of a

particular unit but be adjudicated upon only by the

highest tribunal in the land which would be beyond the

influence of any one constituent unit. The Special

Committee consisting of Sriyuts S. Varadachariar, Alladi

Krishnaswami Ayyar, B.L. Mitter, K.M. Munshi and

B.N. Rau appointed by the Constituent Assembly to

consider and report on the constitution and powers of the

Supreme Court suggested "that the Supreme Court, like

the Federal Court under the 1935 Constitution, would be

the best available forum for the adjudication of all

disputes between the Union and a unit and between one

unit and another and proposed that the court should have

an exclusive original jurisdiction in such disputes". (Vide

The Framing of India's Constitution\027A Study by Shri B.

Shiva Rao at p. 483). Considered in the light of the

foregoing the conclusion becomes inevitable that

disputes of the nature involved in this case could not

have been in the contemplation of the framers of the

Constitution when they adopted Article 131 of the

Constitution."

Conclusion :

The Division Bench of the High Court accepted the position that the

Appellants herein are statutory agents but it evidently failed to take into

consideration the status of the Appellants vis-`-vis their contractual rights

and obligations with their principal coupled with their individual rights to

maintain their writ petitions in proper perspective. It is no doubt true that

had the State of Sikkim or the State of Meghalaya intended to sue the State

of Karnataka independently; in terms of Article 131 of the Constitution of

India the only forum where the dispute between them could have been

resolved is this Court alone but when such a lis is brought by the State

jointly with their agents who had also independent cause of action and had a

legal right to maintain writ application questioning the legality and/or

validity of the said notification issued by the State, a suit in terms of Article

131 of the Constitution of India would not have been maintainable.

The Appellants herein were not busy bodies. They had an interest in

the subject-matter of the writ petition. They were, thus, not merely strangers

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having no right whatsoever in the matter.

It has not been contended, nor could it be contended that the

Appellants are mere smoke screens of the States of Sikkim and Meghalaya.

In absence of such a plea and in view of the fact that the Appellants here not

been held to be mere strangers without having any legal right, we are of the

opinion that the writ petitions were maintainable. The impugned judgment,

therefore, cannot be sustained, which is set aside accordingly.

The appeals are allowed.

Keeping in view the fact that the Appellants are out of business, the

High Court is requested to consider the desirability of disposing of the writ

petitions as expeditiously as possible and preferably within a period of two

months from the date of communication of this order. The Chief Justice of

the High Court, having regard to the importance of the question, may also

consider the desirability of getting the matter heard out and disposed of by a

Division Bench.

The Appellants are entitled to costs throughout. Counsel fee assessed

at Rs.25,000/- in each appeal.