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PETITIONER:

THE STATE OF WEST BENGAL

Vs.

RESPONDENT:

SHAIKH SERAJUDDIN BATLEY.UNION OF INDIA: INTRVENER

DATE OF JUDGMENT:

24/11/1953

BENCH:

DAS, SUDHI RANJAN

BENCH:

DAS, SUDHI RANJAN

SASTRI, M. PATANJALI (CJ)

MAHAJAN, MEHR CHAND

HASAN, GHULAM

JAGANNADHADAS, B.

CITATION:

1954 AIR 193 1954 SCR 378

CITATOR INFO :

D 1973 SC 381 (12)

ACT:

Indian Independence (Rights, Property and Liabilities) Order

1947, Arts. 8(2), 9-Rent payable by Province of Bengalbefore

15th August, 1947-Purpose of lease exclusive purpose of West

Bengal Liability of West Bengal "Financial obligations,"

interpretation of- Object of Art. 9.

HEADNOTE:

The liability to pay rent under a lease does not come

with the expression "financial obligations" in article 9 of

the Indian Independence (Rights, Property and Liabilities)

Order, 1947.

The Province of Bengal took certain premises on lease on

the 6th February, 1947, agreeing to pay a monthly rent of

Rs. 1,800 and the purposes for which the lease was entered

into were, after 15th August, 1947, exclusivel purposes of

the Province of West Bengal: Held, that the liability to pay

rent was not a "financial obligagation" contemplated by

article. 9 and the Government of West Bengal was liable

underar article 8(2)(a) of the abovesaid order to pay the

rent which had accrued up to the 15th August, 1947.

Province of West Bengal v. Midnapur Zemindari Co., Ltd.

(54 C. W. N. 677), Sree Sree Iswar Madan Gopal Jim v.

Province of West Bengal (54 C. W. N. 807) and The State of

Punjab v. L Mohanial Bhayana (A. I. R. 1951 Punj. 382)

referred to.

JUDGMENT:

CIVIL APPELLATE. JURISDICTION : Civil Appeal No. 119

of 1951.

Appeal by special leave granted by the Supreme Court of,

India by its Order dated 14th December,

379

1950, from the Judgment and Decree dated the 9th March,

1950, of the High Court of judicature at Calcutta (Harries

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C. J. and Bannerjee J.) in Appeal from Original Decree No.

162 of 1949 arising out of the judgment and Decree dated the

4th August, 1949, of the said High Court (Sinha J.) in its

Ordinary Original Civil jurisdiction in Suit No. 1502 of

1948.

S.M. Bose, Advocate General of West Bengal, and N. C.

Chatterjee (B. Sen, with them) for the appellant

R. Choudhary and B. Choadhary for the respondent

C.K. Daphiary, Solicitor General for India. (G. N. Joshi

and Porus A. Mehta, with him) for the Union of India.

1953. November 24. The judgment of the Court was delivered

by

DAS J.-This is an appeal by special leave by the State of

West Bengal from the judgment and decree passed on the 9th

March, 1950, by a Division Bench of the Calcutta High Court

affirming the judgment and decree pronounced by Sinha J.on

the 4th August, 1949, in exercise of the ordinary original

civil jurisdiction of that court. The question for

consideration in this appeal is whether on a proper

interpretation of articles 8 and 9 of the Indian

Independence (Rights, Property and Liabilities) Order, 1947,

the appellant can be held liable for payment of rent and

taxes for a. period prior to the 15th August, 1947, in

respect of a premises which had been taken on lease by the

undivided Province of Bengal.

The relevant facts are shortly these. By an indenture of

lease dated the 22nd February, 1947, the respondent demised

to the Governor of the undivided Province of Bengal the

first, second and third floors of premises No. 73,

Dharmatolla Street, in the town of Calcutta for a term of

three years commencing from the 1st day of February, 1947,

Yielding and Paying unto the lessor therefor during the said

term a monthly rent of Rs. 1,800 only clear of all

deductions by equal monthly payments on the 5th day of each

and

380

every month for the month immediately preceding and also the

sum of Rs. 150 per quarter towards payment of occupicr's

share of municipal taxes. By the lease the lessee

covenanted that he would, during the said term, use the

demised premises only for a hostel for the students of the

Campbell Medical School and shall not at any time during the

said term use the demised premises or any part thereof for

any other purpose whatsoever. The lessee further agreed to

pay the costs of and. incidental to the lease. On the 15th

August, 1947, the partition of India took place and, amongst

other things, two new provinces came into existence, namely,

West 'Bengal and East Bengal, in Place of the old Province

of Bengal. The Province of West Bengal formed part of the

Domininion of India and is now the State of West Bengal in

the Union of India while the Province of East Bengal became

and is still a part of the Dominion of Pakistan. the Indian

Independence Act, 1947, by section 9 empowered the Governor-

General, amongst other things, to make such provision as

appeared to him to be necessary or expedient for dividing

between the new provinces to be constituted under that Act

the powers, rights, properties, duties and liabilities of

the provinces which under that Act were to cease to exist.

In exercisc of that power the Governor General promulgated

an Order called the Indian Independence (Rights, Property

and Liabilities) Order, 1947, hereinafter referred to as the

said Order, to deal with the power.%, rights, property,

dudes and liabilities of the respective Governments of West

Bengal and East Bengal. Article 8(2) of that Order, which

is material for the purposes of this appeal, was in the

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following terms

"Any contracts made on behalf of the Province of

Bengal before the appointed day shall, as from that day

(a) if the contract is for purposes which as from that

day are exclusively purposes of the Province of West Bengal,

be deemed to have been made on behalf of that Province

instead of the Province of Bengal: And

381

(b) in any other case be deemed to have been made on behalf

of the Province of East Bengal instead of the Province of

Bengal ;

and all rights and liabilities which have accrued or may

accrue under any such contract shall., to the extent to

which they would have been rights or liabities of the

Province of Bengal, be rights or liabilities of the Province

of West Bengal or the Province of East Bengal, as the case

may be."

Clause (6) of article 8 provided that the provisions of

that article would have effect subject to the provisions of

article 9 of that Order. The relevant portion of article 9

was as follows :

"9. All liabilities in respect of such loans, guar-

ntee and other financial obligations of the Governor General

in Council or of a Province as are outstanding Immediately

before the. appointed day shall as from that day

(a)........................................

(b) in the case of liabilities of the Province of Bengal be

liabilities of the Province of East Bengal."

On the 8th May, 1948,the respondent filed a suit in the

Calcutta High Court against the appellant claiming Rs.

21,600 as arrears of rent at Rs. 1,800 per month from

February, 1947, to January, 1948, Rs. 600 as occupier's

share of municipal tax for the same period and Rs. 523-9-3

being the costs of land incidental to the, lease,

aggregating to Rs. 22,723-9-3. During the pendency of this

suit the appellant paid Rs. 9,250 being the arrears of rent

and taxes from the 15th August, 1947, but denied liability

for the arrears of rent or taxes for any period prior to

that date or for the costs of the lease.

The case was heard by Sinha J., who by his judgment dated

the 10th August, 1947, held, amongst other things that the

lease was entered into for purposes which as from the 15th

August, 1947, were exclusively purposes of the, Province of

West Bengal and that under articlc 8(2)(a) of the said Order

the appellant was clearly liable for the rents which had

accrued previous to the appointed day, that is to say, the

15th

382

August, 1947, and decreed the suit for Rs. 13,473-9-3 with

costs and interest on judgment at. 6 percent. The Province

of West Bengal preferred an appeal from, that judgment but a

Division Bench of the said High Court (Harries C. J. and

Banerjee J.) affirmed the decree and dismissed the appeal

with costs The State of West Bengal which took the place of

the Province of West Bengal applied for leave to appeal but

that application was dismissed. The State of West Bengal

thereafter applied for and obtained special leave to appeal

from this court and the appeal has now come up before us for

final disposal.

The learned Advocate General of West Bengal appearing

in support of this appeal fairly and frankly conceded that

in the absence of anything else this case would be wholly

covered by article 8 (2) (a) but contended that by virtue of

article 8 (6) that article was to have effect subject to the

provisions of article 9. In the circumstances the question

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whether the contract was for purposes which as from the

appointed day were exclusively purposes of the Province of

West Bengal and whether article 8(2) made any distinction

between liabilities which had accrued or which might accrue

need not be considered.

The argument before us has been confined only to the

interpretation of article 9. Learned Advocate General

contends that the liability to pay rent under the lease

comes within the expression "other financial obligations" to

be found in that article. According to him all obligations

to pay money under a contract whether by reason of a

covenant to pay money or by way of damages for breach of

contract may be properly described as "financial

obligations. It is no doubt true an obligation to pay money

under a contract or for breach thereof is in a sense a

"financial obligation" but the question is not what may

popularly be described as "financial obligation" but. what

is the meaning of the expression "other financial obli-

gations in the context in which it has been used. To accept

the argument of the learned Advocated will be to rob article

8 of practically the whole of its

383

content except claims for injunction or specific performance

of a contract or the like. Such, we apprehend, could not

have been the intention of the framers of that article.

This difficulty does not arise if the expression be

construed ejusdem gener is, for so construed it implies an

obligation in the nature of an obligation in respect of

loans and guarantees incurred or undertaken by the State as

held by Harries C J. in Province of West Bengal v. Midnapur

Zemindary Co., Ltd.( 1), which has been followed by Chunder

J. in Sree Sree Isiwar Madan Gopal Jiu v. Province of West

Bengl(2), and by Kapur J. in The State of Punjab v. L. Mohan

Lal Bhayana (3 ). The phrase "loans, guarantees and other

financial obligations" occurred in section 178 in Part VII

of the Government of India Act, 1935, and there cannot be

any doubt that those expressions used in that section did

not refer to au and sundry pecuniary obligations of the

State arising out of contracts of every description. The

loans and guarantees there referred to meant, it would seem,

the special kinds of contracts relating to the State loans

and State guarantees. In that context "financial

obligations" would mean obligations \arising out of

arrangement or agreements relating to State finance such as

distribution of revenue, the obligation to grant financial

assistance by the Union to any State or the obligation of a

State to make contributions and the like. It is, however,

not necessary or desirable to attempt an exhaustive

definition of the expression "financial obligations." The

court will have to consider in each case whether a

particular obligation which may be the subject-matter of

discussion falls within the expression "financial

obligations' within the meaning of article 9. Whatever

liabilities may or may not come within that expression we

are clearly of opinion, in agreement with the High Court,

that the liability to pay rent under a lease certainly does

not come within that expression.

(1) 54 C.W.N. 677, 85 C.L.J.202;A.I.R 1950 Cal.159.

(2) 54 C. W. N. 807.

(3) A.I.R. 1951 Punjab 382.

384

The result, therefore, is that we affirm the decision of the

High Court and dismiss this appeal with costs.

Appeal dismissed.

Agent for the appellant: P. K. Bose.

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Agent for the respondent: A. N. Mitter.

Agent for the intervener : G. H. Raiadhyaksha.