The State of West Bengal Vs. Shaikh
Serajuddin Batley  INSC 74 (24 November 1953)
DAS, SUDHI RANJAN SASTRI, M. PATANJALI (CJ)
MAHAJAN, MEHR CHAND HASAN, GHULAM JAGANNADHADAS, B.
CITATION: 1954 AIR 193 1954 SCR 378
CITATOR INFO :
D 1973 SC 381 (12)
Indian Independence (Rights, Property and
Liabilities) Order 1947, Arts. 8(2), 9-Rent payable by Province of Bengal before
15th August, 1947-Purpose of lease exclusive purpose of West Bengal Liability
of West Bengal "Financial obligations," interpretation ofObject of
The liability to pay rent under a lease does
not come with the expression "financial obligations" in article 9 of
the Indian Independence (Rights, Property and Liabilities) Order, 1947.
The Province of Bengal took certain premises
on lease on the 6th February, 1947, agreeing to pay a monthly rent of Rs. 1,800
and the purposes for which the lease was entered into were, after 15th August,
1947, exclusive purposes of the Province of West Bengal: Held, that the
liability to pay rent was not a "financial obligation" contemplated
by article. 9 and the Government of West Bengal was liable under article
8(2)(a) of the above said order to pay the rent which had accrued up to the
15th August, 1947.
Province of West Bengal v. Midnapur
Zemindari Co., Ltd.
(54 C. W. N. 677), Sree Sree Iswar Madan
Gopal Jim v. Province of West Bengal (54 C. W. N. 807) and The State of Punjab
v. L Mohanial Bhayana (A. I. R. 1951 Punj. 382) referred to.
CIVIL APPELLATE. JURISDICTION : Civil Appeal
No. 119 of 1951.
Appeal by special leave granted by the
Supreme Court of, India by its Order dated 14th December, 379 1950, from the
Judgment and Decree dated the 9th March, 1950, of the High Court of judicature
at Calcutta (Harries C. J. and Bannerjee J.) in Appeal from Original Decree No.
162 of 1949 arising out of the judgment and Decree dated the 4th August, 1949,
of the said High Court (Sinha J.) in its Ordinary Original Civil jurisdiction
in Suit No. 1502 of 1948.
S.M. Bose, Advocate General of West Bengal,
and N. C. Chatterjee (B. Sen, with them) for the appellant R. Choudhary and B.
Choadhary for the respondent C.K. Daphiary, Solicitor General for India. (G. N.
Joshi and Porus A. Mehta, with him) for the Union of India.
1953. November 24. The judgment of the Court
was delivered by DAS J.-This is an appeal by special leave by the State of West
Bengal from the judgment and decree passed on the 9th March, 1950, by a
Division Bench of the Calcutta High Court affirming the judgment and decree
pronounced by Sinha J.on the 4th August, 1949, in exercise of the ordinary
original civil jurisdiction of that court. The question for consideration in
this appeal is whether on a proper interpretation of articles 8 and 9 of the Indian
Independence (Rights, Property and Liabilities) Order, 1947, the appellant can
be held liable for payment of rent and taxes for a. period prior to the 15th
August, 1947, in respect of a premises which had been taken on lease by the
undivided Province of Bengal.
The relevant facts are shortly these. By an
indenture of lease dated the 22nd February, 1947, the respondent demised to the
Governor of the undivided Province of Bengal the first, second and third floors
of premises No. 73, Dharmatolla Street, in the town of Calcutta for a term of
three years commencing from the 1st day of February, 1947, Yielding and Paying
unto the lessor therefor during the said term a monthly rent of Rs. 1,800 only
clear of all deductions by equal monthly payments on the 5th day of each and
380 every month for the month immediately preceding and also the sum of Rs. 150
per quarter towards payment of occupicr's share of municipal taxes. By the
lease the lessee covenanted that he would, during the said term, use the
demised premises only for a hostel for the students of the Campbell Medical
School and shall not at any time during the said term use the demised premises
or any part thereof for any other purpose whatsoever. The lessee further agreed
to pay the costs of and. incidental to the lease. On the 15th August, 1947, the
partition of India took place and, amongst other things, two new provinces came
into existence, namely, West 'Bengal and East Bengal, in Place of the old
Province of Bengal. The Province of West Bengal formed part of the Domininion
of India and is now the State of West Bengal in the Union of India while the
Province of East Bengal became and is still a part of the Dominion of Pakistan.
the Indian Independence Act, 1947, by section 9 empowered the GovernorGeneral,
amongst other things, to make such provision as appeared to him to be necessary
or expedient for dividing between the new provinces to be constituted under
that Act the powers, rights, properties, duties and liabilities of the
provinces which under that Act were to cease to exist.
In exercisc of that power the Governor
General promulgated an Order called the Indian Independence (Rights, Property
and Liabilities) Order, 1947, hereinafter referred to as the said Order, to
deal with the power.%, rights, property, dudes and liabilities of the
respective Governments of West Bengal and East Bengal. Article 8(2) of that
Order, which is material for the purposes of this appeal, was in the following
terms "Any contracts made on behalf of the Province of Bengal before the
appointed day shall, as from that day (a) if the contract is for purposes which
as from that day are exclusively purposes of the Province of West Bengal, be
deemed to have been made on behalf of that Province instead of the Province of
Bengal: And 381 (b) in any other case be deemed to have been made on behalf of
the Province of East Bengal instead of the Province of Bengal ;
and all rights and liabilities which have
accrued or may accrue under any such contract shall., to the extent to which
they would have been rights or liabities of the Province of Bengal, be rights
or liabilities of the Province of West Bengal or the Province of East Bengal,
as the case may be." Clause (6) of article 8 provided that the provisions
of that article would have effect subject to the provisions of article 9 of
that Order. The relevant portion of article 9 was as follows :
"9. All liabilities in respect of such
loans, guarntee and other financial obligations of the Governor General in
Council or of a Province as are outstanding Immediately before the. appointed
day shall as from that day (a)........................................
(b) in the case of liabilities of the
Province of Bengal be liabilities of the Province of East Bengal." On the
8th May, 1948,the respondent filed a suit in the Calcutta High Court against
the appellant claiming Rs.
21,600 as arrears of rent at Rs. 1,800 per
month from February, 1947, to January, 1948, Rs. 600 as occupier's share of
municipal tax for the same period and Rs. 523-9-3 being the costs of land
incidental to the, lease, aggregating to Rs. 22,723-9-3. During the pendency of
this suit the appellant paid Rs. 9,250 being the arrears of rent and taxes from
the 15th August, 1947, but denied liability for the arrears of rent or taxes
for any period prior to that date or for the costs of the lease.
The case was heard by Sinha J., who by his
judgment dated the 10th August, 1947, held, amongst other things that the lease
was entered into for purposes which as from the 15th August, 1947, were
exclusively purposes of the, Province of West Bengal and that under article
8(2)(a) of the said Order the appellant was clearly liable for the rents which
had accrued previous to the appointed day, that is to say, the 15th 382 August,
1947, and decreed the suit for Rs. 13,473-9-3 with costs and interest on
judgment at. 6 percent. The Province of West Bengal preferred an appeal from,
that judgment but a Division Bench of the said High Court (Harries C. J. and
Banerjee J.) affirmed the decree and dismissed the appeal with costs The State
of West Bengal which took the place of the Province of West Bengal applied for
leave to appeal but that application was dismissed. The State of West Bengal
thereafter applied for and obtained special leave to appeal from this court and
the appeal has now come up before us for final disposal.
The learned Advocate General of West Bengal
appearing in support of this appeal fairly and frankly conceded that in the
absence of anything else this case would be wholly covered by article 8 (2) (a)
but contended that by virtue of article 8 (6) that article was to have effect
subject to the provisions of article 9. In the circumstances the question
whether the contract was for purposes which as from the appointed day were
exclusively purposes of the Province of West Bengal and whether article 8(2)
made any distinction between liabilities which had accrued or which might
accrue need not be considered.
The argument before us has been confined only
to the interpretation of article 9. Learned Advocate General contends that the
liability to pay rent under the lease comes within the expression "other
financial obligations" to be found in that article. According to him all
obligations to pay money under a contract whether by reason of a covenant to
pay money or by way of damages for breach of contract may be properly described
as "financial obligations. It is no doubt true an obligation to pay money
under a contract or for breach thereof is in a sense a "financial
obligation" but the question is not what may popularly be described as
"financial obligation" but. what is the meaning of the expression
"other financial obligations in the context in which it has been used. To
accept the argument of the learned Advocated will be to rob article 8 of
practically the whole of its 383 content except claims for injunction or
specific performance of a contract or the like. Such, we apprehend, could not
have been the intention of the framers of that article.
This difficulty does not arise if the expression
be construed ejusdem gener is, for so construed it implies an obligation in the
nature of an obligation in respect of loans and guarantees incurred or
undertaken by the State as held by Harries C J. in Province of West Bengal v.
Midnapur Zemindary Co., Ltd.( 1), which has been followed by Chunder J. in Sree
Sree Isiwar Madan Gopal Jiu v. Province of West Bangle (2), and by Kapur J. in
The State of Punjab v. L. Mohan Lal Bhayana (3 ). The phrase "loans,
guarantees and other financial obligations" occurred in section 178 in
Part VII of the Government of India Act, 1935, and there cannot be any doubt
that those expressions used in that section did not refer to au and sundry
pecuniary obligations of the State arising out of contracts of every
description. The loans and guarantees there referred to meant, it would seem,
the special kinds of contracts relating to the State loans and State
guarantees. In that context "financial obligations" would mean
obligations \arising out of arrangement or agreements relating to State finance
such as distribution of revenue, the obligation to grant financial assistance
by the Union to any State or the obligation of a State to make contributions
and the like. It is, however, not necessary or desirable to attempt an
exhaustive definition of the expression "financial obligations." The
court will have to consider in each case whether a particular obligation which
may be the subject-matter of discussion falls within the expression
"financial obligations' within the meaning of article 9. Whatever
liabilities may or may not come within that expression we are clearly of
opinion, in agreement with the High Court, that the liability to pay rent under
a lease certainly does not come within that expression.
(1) 54 C.W.N. 677, 85 C.L.J.202;A.I.R 1950
(2) 54 C. W. N. 807.
(3) A.I.R. 1951 Punjab 382.
384 The result, therefore, is that we affirm
the decision of the High Court and dismiss this appeal with costs.
Agent for the appellant: P. K. Bose.
Agent for the respondent: A. N. Mitter.
Agent for the intervener : G. H.