2004 Supreme(SC) 1040

2004(6) Supreme 613
Supreme Court of India
(From Delhi High Court)
K.G. Balakrishnan & B.N. Srikrishna, JJ.
Draupadi Devi & Ors. —Appellants
versus
Union of India & Ors. —Respondents
Civil Appeal No. 3861 of 2001
With
Civil Appeal No. 3862 of 2001
Decided on 9-9-2004
Counsel for the Parties :
For the Appellants : Joseph Vellapally, Sr. Advocate, Anil Sharma, Rajiv Endlaw, Vijay Gupta and Navin Prakash, Advocates.
For the Respondents : Mrs. Avinash Ahlawat, Mrs. Rani Chhabra, Brajesh Kumar, Mrs. Sudha Pal, Mohit Madan, Mrs. Rashmi Chopra, Ms. Seema Nair, Shreekant N. Terdal, Hemant Sharma, D.S. Mahra, Ajay Sharma, Mrs. Sushma Suri, Anil Mittal, S.D. Jain, Dr. Kailash Chand, Advocates.­

Important point
Any dispute with regard to what the covenant guarantees or whether the act of the Government of India was justified under the covenant is, beyond the pale of jurisdiction of the Court by reason of Article 363 of the Constitution of India.

Headnote:(i) Constitution of India—Article 363—Act of State—Bar to interference by Courts in disputes arising out of certain agreements—Dispute arising as to whether any item of property was private property of the Ruler or State property—Plaintiff claimed that he had purchased the suit property for a consideration of Rs. 1.50 lacs from Maharaja, erstwhile Ruler of Kapurthala State—Plaintiff’s case that suit property was bought by Maharaja out of his personal funds—Suit property was de­scribed as State property in aide memoire prepared by the then Prime Minister of Kapurthala State—Plaintiff instituted a suit in 1960 for declaration of title to the property being land and building situated at 3, Mansingh Road, New Delhi, known as ‘Kapurthala House’—Whether High Court was justified in making a finding that the suit was barred by Article 363 of the Constitu­tion and was liable to fail—(Yes).

       Held : The Maharaja of Kapurthala was an independent sovereign Ruler. To merge or not to merge with the Dominion of India was a political decision taken by him and the instrument of accession dated 16.8.1947 was, without doubt, an act of State. So was the covenant dated 5.5.1948. By the covenant all rights, authority and jurisdiction of the erstwhile Rulers were vested in the Patiala and East Punjab States Union and all assets and liabilities of the covenanting States became the assets and liabilities of the Union, PEPSU. It is only Article XII which ensured certain rights to the Ruler with regard to full ownership, use and enjoyment of all private properties (as distinct from State properties) belonging to him on the date of his making over the administration of the State to the Raj Pramukh. Consequently, he was also required to furnish to the Raj Pramukh, before the deadline, an inventory of all the immovable properties, securities and cash balances held by him as such private property. This was obviously done so that the Government of India could ascertain the correctness of the claim. No doubt, clause (3) of Article XII provides that a dispute arising as to whether any item of property was the private property of the Ruler or State property was referable to a nominee of the Government of India and such nominee’s decision would be final and binding on all the parties concerned, provided that such dispute was to be referred by the deadline of 31.12.1948. Interpreting this clause, the learned Single Judge took the view that under the treaty the Government of India could not unilaterally refuse to recognise any property as private property of the Ruler, and, if it did, it was obliged to refer it to the person contemplated by clause (3). Failure to do so would imply recognition of the claim as to private property. In our view, this reasoning of the learned Single Judge was erroneous on two counts. In the first place, this interpretation ignores the true nature of the covenant. The covenant is a political document resulting from an act of State. Once the Government of India decides to take over all the properties of the Ruler, except the properties which it recognises as private properties, there is no question of implied recognition of any property as private prop­erty. On the other hand, this clause of the covenant merely means that, if the Ruler of the covenanting State claimed property to be his private property and the Government of India did not agree, it was open to the Ruler to have this issue decided in the manner contemplated by clause (3). Clause (3) of Article XII does not mean that the Government was obliged to refer to the dispute upon its failure to recognise it as private property. Secondly, the dispute as to whether a particu­lar property was or was not recognised as private property of the Ruler was itself a dispute arising out of the terms of the cove­nant and, therefore, not adjudicable by municipal courts as being beyond the jurisdiction of the municipal courts by reason of Article 363 of the Constitution of India. (Para 44)

       We are of the view that after the Government of India took over all the properties of the Ruler of the Kapurthala State, by an act of State, assuring him by the covenant only that he would be entitled to the full ownership, use and enjoyment of all private properties. A procedure was prescribed for recognition of such private properties. The evidence on record does not suggest that at any point of time the Ruler of Kapurthala had disputed the power of the Government of India to decide the issue as to whether the suit property was the property of the State of Kapurthala or private property of the Ruler. On the contrary, the correspondence placed on record suggests that at all points of time the Ruler of Kapurthala accepted the position that the Government of India had the right to decide the nature of the property and was merely pleading that the suit property be declared as his private property. Finally, in any event, we are of the view that the issue as to whether the Government of India was obliged to recognise the private property of the Ruler of Kapurthala, and whether, under the terms of the covenant (Article XII of the covenant), the Ruler of Kapurthala was entitled to have it thus recognised, are disputes which are clearly barred by Article 363 and the court had no jurisdiction to decide the said issues. (Para 46)

       After the instrument of accession was executed by the Maharaja on 16.8.1947, he executed the covenant on 5.5.1948, and he forwarded the list of his private property by way of an aide memoire and handed it over on 15.7.1948 to the Raj Pramukh. Logically, this would have been the first occasion for the Maharaja of Kapurthala to lay claim to the suit property as his private property. Interestingly, there is no reference made to the suit property or any other property as private property in this aide memoire. The only anxiety appears to be to get the privy purse fixed which was a big amount to be paid regularly by the Government of India. (Para 49)

       In the light of these developments, it is clear that the act of State continued from the date when the instrument of accession was signed i.e. 16.8.1947 to the date on which the final decision of the Government of India was conveyed to the Maharaja. The fact that time was taken in conveying the decision, or the fact that the Constitution of India had come into force in the interregnum, do not change the character of the act of the Government of India in refusing to recognise the suit property as the private proper­ty of the Maharaja of Kapurthala. Agarwala (supra) holds that an act of State need not be a prompt decision, but could stretch over a period of time. Vora Fiddali (supra) states that the act of State would continue till the new sovereign recognises the rights. In this case, however, the act of State terminated with the final decision of non-recognition being conveyed. What the Government of India did in the year 1951 was not referable to anything flowing from the Constitution, but, action albeit de­layed, referable to the instrument of accession and the covenant signed by the Maharaja. Any dispute with regard to what the covenant guarantees, or whether the act of the Government of India was justified under the covenant is, beyond the pale of the jurisdiction of the court by reason of Article 363 of the Constitu­tion of India. The Division Bench of the High Court was, there­fore, justified in making a finding that the suit was barred by Article 363 and was liable to fail. (Para 63)

       There is not doubt, whatsoever, that the Maharaja of Kapurthala held properties outside the territory of Kapurthala, say, for example, in Mussoorie and Delhi. Even with regard to these prop­erties, the Government took a decision as to their character and whether they could be recognised as private property of the Ruler. As to Delhi property, the Government of India decided that it would be treated as State property and in the case of Mussoor­ie property, half of it to be treated as State property and half of it to be treated as private property of the Maharaja of Ka­purthala. Further, we find that Article VI of the Covenant dated 5.5.1948 vests “all” the assets and liabilities of the covenant­ing States in the Union of PEPSU and makes exception only with regard to private properties as contemplated by Article XII. There is no reference whatsoever therein to the situs of the property. The covenant, therefore, drew a distinction only bet­ween State property and private property of the Ruler irrespec­tive of where the property was situated. In our view, any further dispute with regard to the interpretation of this clause of the covenant would again be beyond the jurisdiction of the court by reason of Article 363 of the Constitution of India. (Para 65)

       (ii) Limitation Act, 1908—Section 3, Article 120—Period of limitation—Suit for declaration of title to the property—Plaint does not plead clearly as to when the cause of action arose—Decision of Government of India not to recognise the suit property as private property of Maharaja was taken some time in year 1951—Suit was filed only on 11.5.1960—Suit held liable to be dismissed being barred by limitation—Civil Procedure Code, 1908—Order VII, Rule 1(e).

       Held : Under the Code of Civil Procedure, Coder VII Rule 1(e) requires a plaint to state “the facts consti­tuting the cause of action and when it arose”. The plaintiff was bound to plead in the plaint when the cause of action arose. If he did not, then irrespective of what the defendants may plead in the written statement, the court would be bound by the mandate of Section 3 of the Limitation Act, 1908 to dismiss the suit, if it found that on the plaintiff’s own pleading his suit is barred by limitation. In the instant case, the plaint does not plead clearly as to when the cause of action arose. In the absence of such pleadings, the defendants pleaded nothing on the issue. However, when the facts were ascertained by evidence, it was clear that the decision of the Government of India not to recog­nise the suit property as private property of the Maharaja was taken some time in the year 1951, whether in March or May. Dewan Jarmanidass, the plaintiff and the Maharaja were very much aware of this decision. Yet, the suit was filed only on 11.5.1960. The Division Bench was, therefore, right in applying Article 120 of the Limitation Act, 1908 under which the period of limitation for a suit for which no specific period is provided in the Schedule was six years from the date when the right to sue accrues. The suit was, therefore, clearly barred by limitation and by virtue of Section 3 of the Limitation Act, 1908, the court was mandated to dismiss it. As rightly pointed out by the Division Bench, the learned Single Judge ought to have permitted the plea to be raised on the basis of the facts which came to light. The Division Bench has correctly appreciated the plea of limitation, in the facts and circumstances of the case, and rightly came to the conclusion that the suit of the plaintiff was liable to be dismissed on the ground of limitation. We agree with the conclusion of the Divi­sion Bench on this issue. (Paras 73 to 75)