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SUPREME COURT OF INDIA
8th March, 1961
J.L. KAPUR, M. HIDAYATULLAH AND J.C. SHAH, JJ.
Jagannath Agarwala, Appellant
Versus
State of Orissa and another, Respondents.
Civil Appeals Nos. 666 and 667 of 1957. 1362
Advocates appeared
Mr. N. C. Chatterjee, Senior Advocate (Mr. G. C. Mathur, Advocate, with him), for Appellant; M/s. A. V. Viswanatha Sastri and K. N. Rajagopal Sastri, Senior Advocates (Mr. T. M. Sen, Advocate, with them), for Respondents.
ACT OF STATE - CLAIMS AGAINST FORMER STATE - ENQUIRY BY CLAIMS OFFICER - REJECTION OF CLAIM BY GOVERNMENT - WHETHER ACT OF STATE - RIGHT TO HEARING - CONSTITUTION OF INDIA, ART. 226.
Fact of the Case:
The appellant filed two petitions under Art. 226 of the Constitution for writs of mandamus, etc., to enforce a claim he had against the former State of Mayurbhanj and the ex-Ruler of Mayurbhanj. The claims arose out of two agreements entered into between the appellant and the Maharaja of Mayurbhanj for establishing a business for the manufacture of industrial alcohol and essential oils and for purchases of wheat and barley in the Punjab.
Finding of the Court:
The High Court dismissed the petitions. The Supreme Court held that the rejection of the claim was an act of State, and that the new Sovereign State could not be compelled by a process of the municipal courts to accept a liability of the old Ruler. The Court further held that the enquiry conducted by the Claims Officer was not a trial of any issue between the appellant and the Government, and that the appellant was not entitled to a viva voce hearing before the Member, Board of Revenue.
Issues: 1. Whether the rejection of the claim was an act of State? 2. Whether the appellant was entitled to a hearing before the Member, Board of Revenue?
Ratio Decidendi: 1. The act of State could not be said to have come to an end, when the Government allowed claims to be preferred, or when their own officer made his report. The Claims Officer was not a part of the municipal courts, and Government cannot be said to have submitted itself to the jurisdiction of the municipal courts, when it entrusted the enquiry to him. 2. The enquiry conducted by the Claims Officer was not a trial of any issue between the appellant and the Government. To judge such an action with the same rigour with which a judicial enquiry or trial is judged is to convert the enquiry into a civil suit.
Final Decision: The appeals were dismissed.
Judgment
HIDAYATULLAH, J. : These two appeals raise a common question of law, and it is convenient to deal with them together. They have been filed (with certificate) against a judgment of the High Court of Orissa, by Jagannath Agarwala, who sought to enforce a claim he had against the former State of Mayurbhanj and the ex-Ruler of Mayurbhanj. They arise out of two petitions under; Art. 226 of the Constitution, for writs of mandamus, etc., which the High Court of Orissa dismissed by its order under appeal.
2. It appears that in the year 1943 the Maharaja of Mayurbhanj entered into an agreement or arrangement with Jagannath Agarwala for establishing a business for the manufacture of industrial alcohol and essential oils and for purchases of wheat and barley in the Punjab, Civil Appeal No. 666 of 1957 relates to the establishment of the manufacturing business, and Civil Appeal No. 667 of 1957, to the purchases of wheat and barley. With reference to the establishment of the business, the appellant urged that it was agreed that the capital required would be contributed by the parties in equal shares, and that the profit and loss would also be shared equally. As regards the purchases, the appellant was to advance such money as might be required, and the State of Mayurbhanj was to provide necessary permits and facilities for transport.
3. In furtherance of this agreement, the appellant urges that he established a factory and started the business, but the Maharaja, instead of contributing his share of the capital, asked the appellant to do so on his behalf, promising to pay him the amount. The factory was constructed, and, it appears, it went into production, but later closed down, suffering a total loss of Rs. 2,80,875-9-3. In the first case. therefore, the claim of the appellant against the Maharaja and the State was RS. 1,40,400/- and odd. In the second case, the appellant advanced a sum of Rs. 50,000/- and also incurred a further expenditure of Rs. 3,741-7-9. The State of Mayurbhanj failed in its promise of procuring the necessary permits and facilities for transport, and the appellant was, therefore, required to sell the food-grains in the Punjab, and thus incurred a loss of Rs. 14,844-0-3. The appellant alleges that the Maharaja promised to pay the amount.
4. From January 1, 1949, the Mayurbhanj State merged with the Province of Orissa, and on the same day, the Government of Orissa promulgated the Administration of Mayurbhanj State Order, 1949, under S. 4 of the Extra Provincial Jurisdiction Act, 1947 (47 of 1947). That Order allowed claims against the State of Mayurbhanj to be preferred to Government for its consideration. Clause 9 of the Order, in so far as it is material, is as follows:
"9. Claims against Ruler of the State.- (a) The Administrator shall as soon as possible publish a notification in the Gazette in English and in vernacular calling upon will persons having pecuniary claims, whether immediately enforceable or not, against the State or the Ruler of the State in his capacity as Ruler of that State, or notify the same in writing to the officer authorised by the Administrator in this behalf (hereinafter called the said officer) within three months from the date of the notification.
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(b) The notice shall also be published at such places and in such other manner as the Administrator may be special or general order direct.
(c) Every such claimant shall, within the period specified in sub-paragraph (a) notify to the said officer in writing his claim with full particulars thereof and any claim presented after the expiration of such period shall be summarily rejected.
(d) Every document including entries in books of account in the possession of or under the control of the claimant on which he bases his claim shall be produced before the said officer along with the statement of the claim.
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(f) Nothing in the preceding sub-paragraphs shall apply to any pecuniary claim of Government or any local authority.
(g) Th
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