JUDGMENT

Kirpal, J.-The appellants are the dealers in petrol and diesel oil in the former French Establishment of Mahe, now in the Union Territory of Pondicherry. The Erstwhile French Establishments in India were divided by the French Government into 17 Communes approximating to Municipalities or Local Self Governments. Mahe was one such Commune.

2. A French Decree dated 12.3.1880 governed and regulated the municipal body of each commune. It, inter alia, provided for setting up of a Mayor and elected Municipal Council. Paragraph 46 of the said Decree inter alia, comtemplated the Municipal Councils to deliberate the budget of the Communes as well as the mode of assessment, rates and rules regarding collection of all municipal revenues etc. The deliberations of the Municipal Councils were required to be forwarded to the Governor and would become enforceable only after the approval by the Governor in Privy Council.

3. By an agreement dated 21.10.1954, there was a de facto transfer by the French Government of all its French Territories to the Indian Government. Thereafter the Government of India in exercise of the powers conferred by Section 4 of the Foreign Jurisdiction Act, 1947 made th