1950 Supreme(SC) 52

SUPREME COURT OF INDIA
4th December 1950
H.J. KANIA, C.J.I., FAZL ALI, PATANJALI SASTRI, B.K. MUKHERJEA AND CHANDRASEKHARA AIYAR JJ.
The State of Tripura - Appellant
Versus
The Province of East Bengal - Respondent.
Appeal No. 4 of 1949.
Advocates appeared
Shri N. C. Sen Gupta, Senior Advocate (Shri Ajit Kumar Dutta, Advocate, with him), instructed by Shri R. R. Biswas, Agent -for Appellant; Shri Faiyaz Ali, Advocate-General, East Bengal, (Shri B. Sen and Shri Noor-ud-din, Advocates, with him), instructed by Shri P. K. Bose, Agent for Respondent; Shri M. C. Setalvad, Attorney-General for India, (Shri S. M. Sikri and V. N. Sethi, Advocates, with him ), instructed by Shri P. A. Metha, Agent-for Intervener.

Headnote:INDIAN INDEPENDENCE ACT

       Indian Independence Act, 1947, S. 9-Indian Independence Legal Proceedings) Order, 1947, Art. 4-Indian Independence (Rights, Property and Liabilities) Order, 1947, Arts. 10 (2), 12(2)-Transfer of ritghts and liabilities-Liability in respect of actionable wrong-Meaning and scope of-Bengal Agricultural Income Tax Act 1944, S. 65-Notice served on Ruler of State for return of income under the Act-Suit filed in Alipore Court for declaration of invalidity of the Act and injunction against Bengal Government and the Income Tax Officer before partition-Property falling within Province of East Bengal after partition-Whether it can be continued against Province of East Bengal in the Alipore Court, a Court in the Dominion of India.

       The Bengal Agricultural Income-tax Act (Bengal Act IV of 1944) was passed by the Provincial Legislature of Bengal in 1944. It applied to the whole of Bengal, and enabled the Provincial Government to impose a tax on the agricultural income of various classes of persons including "every Ruler of an Indian State." The appellant, Ruler of the State of Tripura, held a Zamindary called Chakla Roshanabad situated in the Province of Bengal outside the territories of that State. On the 28th February, 1945, the Agricultural Income-tax Officer, Dacca Range, issued a notice under section 24 (2) of the Bengal Act to the Manager of the Zamindari Estate calling upon him to furnish a return of the total income derived in the previous year from lands in the Estate used for agricultural purposes. On the 12th June, 1945; the appellant instituted a suit in the court of the Subordinate Judge at Dacca, against the Province of Bengal and the agricultural Income-tax Officer, Dacca Range, claiming the following reliefs :

       (1) For a declaration that the Bengal Agricultural Income-tax Act, 1944, so far as it imposes a liability to pay agricultural income-tax on the plaintiff is ultra vires and void and that the plaintiff is not bound by the same.

       (2) For a declaration that in any case the notice served by the Agricultural Income-tax Officer, Dacca Range, above referred to, is void and of no effect and that no assessment can be made on the basis of that notice.

       1. Reversing A.I.R. 1951 Mad. 572.

       (3) For a perpetual injunction to restrain the defendants from taking any steps to assess the plaintiff to agricultural income-tax.

       On the 15th July, 1945, the suit was transferred to the court of the Subordinate Judge at Alipore, by an order of the Calcutta High Court. While the suit was still pending, the new Province of East Bengal, forming part of the territories of the Dominion of Pakistan, came into existence on the 15th August, 1947, as a result of the Independence Act, 1947, and the whole of the Zamindari Estate in question fell within that Province. On the 9th December, 1947, an application was filed in the court at Alipore on behalf of the Province of East Bengal submitting that the Alipore Court had no jurisdiction to hear the suit or make any order of injunction against the Province of East Bengal or defendant No. 2 (The Agricultural Income tax Officer). Later on at the plaintiffs instance the name of defendant No.2 was struck off the record as not being a necessary party to the suit. On the 13th December 1947, the Province of East Bengal was substituted as the defendant in the place of the Province of Bengal.

       The Subordinate Judge, Alipore, then framed a preliminary issue regarding jurisdiction, and decided that by virtue of the provisions of the Indian Independence (Legal Proceedings) Order, 1947, read with section 9, Indian Independence Act, 1947, the Court had jurisdiction to try the suit against the new Province. Thereupon, the respondent (the Province of East Bengal) moved the High Court at Calcutta under section 115 of the Civil Procedure Code, against the order of the Subordinate Judge, and the High Court allowed the application and set aside the order of the Subordinate Judge. One of the points raised on behalf of the appellant before the High Court was that the Province of East Bengal had submitted to the jurisdiction of the Subordinate Judges Court, but this point was negatived. The appellant was therefore granted a certificate under section 205(1) of the Government of India Act, 1935. On appeal-

       Held: (1) The orders promulgated on the 14th August, 1947, by the -Governor-General of India before the partition in exercise of the powers conferred under S. 9 of the Indian Independence Act, 1947, and containing provisions specially designed to remove the difficulties arising in connection with the transition to the new situation created by the partition are binding both on the Dominion of India and the Dominion of Pakistan. Among "Such Orders relevant to the present case are the Indian Independence (Legal Proceedings) Order, 1947, (Article 4) and the Indian Independence (Rights, Property and Liabilities) Order, 1947 [Article 12 (2)].

       (2) The suit was not with respect to any property transferred from the Province of Bengal to the Province of East Bengal as part of the territories of Pakistan under the scheme of partition, under the Indian Independence (Rights, Property and Liabilities) Order, 1947, Art. 12(2). Nor was there any transfer of" rights" such as was contemplated under that article, for the only right with respect to which the Province of Bengal could be said to have been a party to the pending proceedings on the facts of this case was the right to tax the agricultural income of the plaintiff under the provisions of the Bengal Agricultural Income-tax Act, 1944, and that right was not derived by the Province of East Bengal by transfer under the Rights, Property and Liabilities Order. The right to taxation under the said Act passed to the Province of East Bengal as part of the sovereign Dominion of Pakistan by virtue of the provisions of S. 18(3) of the Indian Independence Act, 1947, and Art. 12(2) of the said Order did not apply to the case.

       (3) Per Kania C.J., Patanjli Sastri, Mukherjea and Chandrasekhra Aiyar JJ. (Fazal Ali J disenting) : (i) The intention being to provide for the initial distribution of rights, property and liabilities as between the two Dominions and their Provinces a wide and liberal construction, as far as the language used would admit, should be placed upon the terms of the Indian Independence (Rights, Property and Liabilities) Order, 1947, so as to leave no gap or lacuna in relation to the matters sought to be provided for. There is no reason, accordingly, why the words "liability: in respect of an actionable wrong" should be understood in the restricted sense of liability for damages for completed tortious acts. The words are apt to cover the liability to be restrained by injunction from completing what on the plaintiffs case was an illegal or unauthorised act already commenced. As the Province of Bengal was, according to the plaintiffs case, liable to be restrained from proceeding with an illegal assessment; that liability was, accordingly, a liability in respect of an actionable wrong other than breach of contract" within the meaning of Art. 10(2) (a) of the aforesaid order; and, as the cause of action arose wholly in Dacca within the Province of East Bengal under Art. 10(2) (a), the latter must be deemed to be substituted as a party to the suit and the suit must continue in the court of the Subordinate Judge at Alipore, under Art. 4 of the Indian Independence (Legal Proceedings) Order, 1947.

       (ii) Assuming that the cause of action for the suit did not arise wholly within the territories of the Province of East Bengal within the meaning of Art. 10(2) (a) inasmuch as the notice calling for a return, though issued from Dacca, was received by the Manager of the Estate in Tripura State, Article 10(2) (c) would apply and the Province of East Bengal would still be liable, though jointly with the Province of West Bengal.

       (iii) The suit not being a suit to set aside or modify an assessment made under the Bengal Act of 1944, as no assessment had yet been made when it was instituted, S. 65 of the said Act did not apply and the suit was therefore one in respect of an "actionable" wrong within the meaning of Art. 10(2) (a) of the said Order.

       Per Fazl Ali J-(i) The word "liability" in Article 10 of the Indian Independence (Rights, Property and Liabilities) Order, 1947, refers to liability capable of being ascertained in terms of money and not liability in any abstract or academic sense. Even giving to the words" actionable" wrong" and "liability" as wide a meaning as they can bear in a legal text, "wrong" must consist of two elements, namely (1) there must be an act or omission amounting to an infringement of a legal right of a person or a breach of legal duty towards him; and (2) the act or omission must have caused harm or damage to that person in some way, the damage being either actual or presumed. Both these elements are wanting in this case. The mere issuing of a notice under S. 4 of the Bengal Act of 1944, by the Income-tax Officer is not an actionable wrong as no right is infringed thereby and no action for damages can be maintained in respect of such an act, even assuming that the Income-tax Officer had exceeded his powers or acted under an invalid provision of law. It is also not the case of the appellant that the notice has in any way caused any actual damage to him. It is therefore inappropriate to invoke Article 10 of the said Order in the present case. No "liability for an actionable wrong" was thus involved in the suit and no liability in respect of such a wrong could therefore be said to have been transferred to the Province of East Bengal within the meaning of Art. 10(2) of the said order so as to entitle the plaintiff to• continue the suit against the Province of East Bengal under Art. 10(2).

       (ii) For the purpose of understanding the full scope of section 65. of the said Bengal Act of 1944, we must read not only the first part of the section which bars suits to set aside or modify an assessment, but also its latter part which provides that" no suit or other proceeding shall lie against any officer of the Crown for anything in good faith intended to be done under this Act. The latter part of the section clearly excludes the jurisdiction of the court to prevent the Income-tax Officer from proceeding with an assessment which has already been started, and, on a fair construction, it must be held to bar all suits in connection with such assessment whether against the State or an Income-tax Officer of the State. Consequently, if no suit or action lies, there can be no liability for an actionable wrong. Bengal Agricultural Income-tax Act, 1944, S. 65-Notice served on Ruler of State for return of income under the ActSuit filed in Alipore Court for declaration of invalidity of the Act and injunction against Bengal Government and the Income-tax Officer before partition - Property falling within Province of East Bengal after partition-whether it can be continued against province of East Bengal in the court of Alipore, a court in the Dominion of India-Indian Independence Act, 1947, S. 9.- Indian Independence (Rights, Property and Liabilities, Order, 1947, Arts. 10 (2), 12 (2) -Indian Independence Legal Proceedings Order, 1947, Art. 4.