1. Prosecution for false declarations under a demonetisation ordinance applied to a princely state — validity of sanction and continued operation of the ordinance post-merger. (Para 3 , 4 , 5 , 6 )
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1959 Supreme(SC) 213
SUPREME COURT OF INDIA
2nd December 1959
B.P. SINHA, C.J.I., P.B. GAJENDRAGADKAR, K. SUBBA RAO, K.C. DAS GUPTA AND K.C. SHAH, JJ.
M. G. Desai and another, Appellants
Versus
State of Bombay, Respondent.
Criminal Appeal No. 70 of 1956.
Advocates appeared
M/s. M. B. Chitre and Naunit Lal, Advocates, for Appellants; M/s. R. Gopalakrishnan and R. H. Dhebar, Advocates, for Respondent.
Advocates:
M.B.CHITRE, NAUNIT LAL, R.GOPAL KRISHNAN, R.H.Dhebar
M.B.CHITRE, NAUNIT LAL, R.GOPAL KRISHNAN, R.H.Dhebar
Laws promulgated under a ruler's inherent power are not subject to temporal limits and continue to operate post-merger via the Foreign Jurisdiction Act and Article 372 of the Constitution, regardless of whether the President has formally adapted them.
Headnote:(A) High Denomination Bank Notes (Demonetisation) Ordinance, 1946 - Section 7; State Constitution Act - Sections 6 and 31; Extra-Provincial Jurisdiction (Foreign) Act, 1947 - Section 4; Constitution of India - Article 372 - Validity of sanction for prosecution - Continuity of laws post-merger of a princely state - Inherent legislative powers of a ruler.
(B) Sanction for prosecution - Where the sanction refers to the deception of a state treasury, it is inferred that the sanction was granted under the state ordinance rather than the central ordinance (Para 10).
(C) Legislative power - Ordinances issued by a ruler in exercise of inherent legislative authority are not subject to temporal limitations, notwithstanding other provisions in the state's constitution act that limit the duration of regulations framed during emergencies (Paras 11, 12).
(D) Continuity of laws - Laws in force in a princely state immediately before its merger continue to remain in force by virtue of the foreign jurisdiction act and Article 372 of the Constitution until repealed or amended (Para 14). The power of the President to adapt existing laws under Article 372(2) does not make such adaptation a condition for the laws to remain in operation (Para 15).
Facts of the case:
Appellants, serving as managing directors of a company in a princely state, were prosecuted for submitting false declarations to exchange high-denomination bank notes under a demonetisation ordinance. The prosecution was based on a sanction granted by the central government. The appellants challenged the proceedings on the grounds that the ordinance had lapsed due to temporal limits and upon the merger of the princely state with the dominion and the subsequent enactment of the Constitution.
Findings of Court:
The court held that the sanction was validly granted under the state ordinance. It further ruled that the ordinance did not lapse as it was issued under the ruler's inherent powers and continued to be in force post-merger through the foreign jurisdiction act and Article 372 of the Constitution.
Issues: Whether the sanction for prosecution was granted under the central ordinance or the state ordinance; whether the state ordinance lapsed due to temporal limitations; and whether the ordinance remained in force after the merger of the state and the commencement of the Constitution.
Ratio Decidendi: Laws promulgated under the inherent legislative authority of a ruler are not subject to temporal limits. Such laws persist after the merger of a state into the dominion via the foreign jurisdiction act and Article 372 of the Constitution, and their continued validity is not contingent upon formal adaptation by the President.
Result: Appeal dismissed.
Legal Category Hierarchy
- crime and sentencing
- constitutional law
- administrative law
Table of Contents
2. Whether the ordinance lapsed before prosecution, whether the sanction was validly granted under the state or central ordinance, and whether merger extinguished the law. (Para 7 )
3. Sanction referred to state treasury, indicating state ordinance authority; inherent legislative powers of the ruler are not temporally limited; merger laws and Constitution preserve existing laws. (Para 10 , 11 , 12 , 13 , 14 , 15 , 16 )
4. Laws promulgated via inherent sovereign power do not lapse by temporal limits; existing laws remain in force post-merger and post-Constitution unless specifically repealed or amended. (Para 11 , 12 , 14 , 15 )
5. Appeal dismissed; proceedings against the appellants to continue. (Para 18 )
6. How is the nature of a prosecution sanction determined when multiple ordinances apply?
The court examines the recitals of the sanction; references to specific state entities, such as a state treasury, indicate the sanction was granted under the state-specific ordinance rather than the general central ordinance. (Para 10 )
7. Does a law promulgated under the inherent legislative power of a ruler lapse after a fixed period?
No. While emergency regulations may have temporal limits, laws issued under the inherent legislative and prerogative powers of a ruler are not subject to temporal limitation unless expressly stated. (Para 11 , 12 )
8. Do laws of a princely state remain in force after its merger with the Dominion of India and the enactment of the Constitution?
Yes. Under the Foreign Jurisdiction Act, merger agreements, and Article 372 of the Constitution, laws in force in merged states continue until repealed or amended by a competent legislature. (Para 13 , 14 )
9. Is the continued operation of existing laws under Article 372 of the Constitution dependent on the President making adaptations?
No. While the President is authorized to adapt existing laws under Clause 2 of Article 372, the application of those laws is not conditioned upon such adaptations or modifications. (Para 15 )
Judgment
SHAH, J. : By order dated February 12, 1957, this court remanded the proceeding in this appeal to the High Court of Bombay with a direction that proper steps be taken for recording a finding on the question whether the sanction for the prosecution of the appellants was accorded by the Central Government under Indian Ordinance No. III of 1946 or under the Bhor State Ordinance, i.e., the Ordinance which was in force in the Bhor State. Pursuant to this direction, the Special Judicial Magistrate First Class (A. C. Branch), Poona recorded a finding that sanction had been given by the Central Govt., under the Indian Ordinance No. III of 1946 and also under the Bhor State Ordinance of 1946, but primarily the sanction was given under the Ordinance in force in the Bhor State. The Additional Sessions Judge, Poona to whom the record was submitted for his opinion recorded a finding that the sanction was granted under the Ordinance which was in force in the State of Bhor. The High Court at Bombay did not record any express finding on this question.
2. To appreciate the pleas raised in this appeal, certain material facts may be briefly set out.
3. Bhor was one of the Indian States in the Deccan area. The Rajasaheb of Bhor promulgated Act I of 1942, being "The Government of Bhor State Act, 1942" with a view to introduce certain constitutional reforms in the State of Bhor. By S. 25 of the Act, a Council to be constituted under the Act was subject to the provisions of the Act, given authority to make, repeal or alter the laws for the whole or any part of the Bhor State and for the subjects of the Rajasaheb wherever they may be. But by S. 26, from the competency of the Council to legislate, certain matters set out in sub-s. 1 were excluded, and by S. 30, jurisdiction was conferred on the Rajasaheb to legislate in respect of the matters so excluded. By S. 31, power was conferred on the Rajasaheb, if he was satisfied that an emergency existed which rendered it necessary to take immediate action in matters other than those falling under S. 26, to frame any measure or regulation for that purpose. Such measure or regulation on receiving the assent of the Rajasaheb was to have the force of law for six months from the date of its promulgation in the official Gazette. By the proviso, the Rajasaheb was competent to extend the period of the operation of the measure or regulation for three months. By S. 6, inherent authority executive, legislative, and judicial, of the Rajasaheb, notwithstanding anything contained in the Constitution Act was affirmed, and it was expressly enacted that nothing contained in the Constitution Act or any other Act shall be deemed to have affected the right and prerogative of the Rajasaheb to make laws, issue proclamations, orders and ordinances.
4. The Laxmi Textile Mills Ltd., a limited liability company had its registered office in Bhor State and the two appellants were its Managing Directors. On January 12, 1946, the Government of India promulgated in exercise of the powers conferred by S. 72 of the Government of India Act, 1935, as set out in the IXth Schedule Ordinance No. III of 1946 called the High Denomination Bank Notes (Demonetisation) Ordinance, 1946. By S. 3 of that Ordinance, after January 12, 1946, all high denomination bank notes, notwithstanding anything contained in S. 26 of the Reserve Bank of India Act, 1934 ceased to be legal tender in payment or on account at any place in British India. By S. 4, transfer to the possession of another person of any high denomination bank note was prohibited. Provision was made by S. 6 for exchange of high denomination bank notes held by persons other than banks or Government Treasuries, and by Cl. 9 of S. 6, high denomination bank notes exceeding in value rupees ten lakhs held by any person were exchangeable only with the Reserve Bank at Bombay, Calcutta and Madras. By Cl. 2 of S. 6, every owner of the high denomination bank notes desiring to tender them for exchange wa
