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IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
ESTATE DUTY REFERENCE NO. 4 OF 1987
For Approval and Signature:
Hon'ble MR.JUSTICE R.K.ABICHANDANI
and
Hon'ble MR.JUSTICE KUNDAN SINGH
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1. Whether Reporters of Local Papers may be allowed : YES
to see the judgements?
2. To be referred to the Reporter or not? : YES
3. Whether Their Lordships wish to see the fair copy : NO
of the judgement?
4. Whether this case involves a substantial question : NO
of law as to the interpretation of the Constitution
of India, 1950 of any Order made thereunder?
5. Whether it is to be circulated to the Civil Judge? : NO
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CONTROLLER OF ESTATE DUTY
Versus
PRATAPSINHJI RAMSINHJI
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Appearance:
1. ESTATE DUTY REFERENCE No. 4 of 1987
MR BB NAIK, Sr. Standing Counsel for the Revenue
MR SN SOPARKAR, SENIOR ADVOCATE FOR MRS SWATI
SOPARKAR & MR MK KAJI for Respondent
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CORAM : MR.JUSTICE R.K.ABICHANDANI
and
MR.JUSTICE KUNDAN SINGH
Date of decision: 22/03/2002
ORAL JUDGEMENT
(Per : MR.JUSTICE R.K.ABICHANDANI for the Court)
1. This reference has been made by the Income Tax
Appellate Tribunal, Ahmedabad Bench `A', under section 64
of the Estate Duty Act, 1953 and the following questions
of law are referred for the opinion of this Court :
"[1] Whether, on the facts and in the circumstances of
the case, the Income Tax Appellate Tribunal
rightly came to the conclusion that at the time
of the death of the deceased Shri Karansinhji
Fatehsinhji of Sagbara, no property passed which
was part of the `Sagbara Estate' and consequently
no Estate Duty in respect thereof was payable?
[2] Whether, on the facts and in the circumstances of
the case, the Income Tax Appellate Tribunal
rightly held that the personal properties of the
deceased Karansinhji Fatehsinhji also stood on
the same footing as the estate of Sagbara and no
property passed on the death of the deceased?
[3] Whether, the finding of the Appellate Tribunal
that no property either on account of `Sagbara
Estate' or any personal property passed on the
death of Shri Karansinhji Fatehsinhji Vasava in
1957 and there was no question of levy of any
estate duty therefor, is correct in law and
sustainable from the material on record?"
2. Shri Karansinhji Fatehsinhji, former Vasava of
Sagbara Estate died on 17th April 1957 and an account in
Form ED1 was filed by his eldest son Ramsinhji Fatesinhji
under the provisions of the Estate Duty Act, 1953,
stating that there was `Nil' property which the deceased
was competent to dispose of at the time of his death, and
he accordingly submitted a `Nil' Return.
2.1 The Deputy Controller of Estate, Western Zone,
Bombay, however, held that the deceased had complete
proprietary rights over the villages of the Estate before
the Estate was taken over by the Government in 1948, and
that the deceased had not accepted the fact of the
dispossession and was fighting for his rights. It was
held :
"It will appear therefore that as at present the
Vasava has complete proprietary rights over all
the lands of 92 Khalsa villages. He has also
proprietary rights over the 22 Dumala villages
even though he is not getting any benefit from
the same. The right of the Vasava in the lands
was there before the estate was taken over by the
Government of Bombay in 1948. The deceased had
not accepted the fact of that dispossession and
was fighting for his right to the best of his
ability. Since he had initially a proprietary
right in this land and since he was at no time
legally divested of his right to the same, I must
hold that the property belonged to him at the
time of his death even though it was not in his
actual possession. It is true that the property
was in occupation of the Government but the
Government in this country does not act in an
autocratic manner. The right to own private
property is guaranteed by the Constitution. It
is possible that the Government which acts
through human agency may make a mistake as to the
effect of a particular law or the scope of its
application. In that case, it has to set it
right when the mistake is pointed out. The party
who suffers from a wrongful decision has also the
right to go to a court of law for redressing his
grievances. Unless therefore a seizure of a
property by the Government is legal, the owner
never loses his title to the same, though for
some time, as in this case, it may be that the
legal owner did not have actual possession of
what was rightly his. When this has been
rectified, the original owner would regain the
possession of the property which had all along
belonged to him. It is abundantly clear from the
order of the Government that it had recognised
the fact that the dispossession was illegal. The
Government had also decided to restore the income
from the estate during the period of such
dispossession to the original owner. This will
show that the Government had recognised that the
deceased was the legal owner of the properties at
all times and had acted accordingly. Under the
circumstances, I must hold that the deceased was
liable to estate duty on the estate left by him
at the time of his death."
2.2 We have set out in detail the reasoning of the
Deputy Controller of Estate, Western Zone, Bombay in his
order dated 11th March 1963, because, this very reasoning
has been adopted before us for contending that the
deceased was the legal owner of the properties which were
purported to have been taken over by the Dominion of
India in 1948, and that the estate property was liable to
payable of the estate duty as it passed on his death.
The estate duty was worked out at Rs.72,62,068=00 by the
said assessment order under section 61(1) of the said Act
and a demand notice was issued pursuant thereto.
3. Thereafter, the Accountable Person preferred
Estate Duty Appeal No. GUJ-16/62-63 under section 62 of
the said Act before the Appellate Controller of Estate
Duty, New Delhi. The Appellate Controller, by his order
dated 20th October 1970, upheld the finding of the Deputy
Controller that the deceased left an estate which passed
on his death and in respect of which, estate duty was
payable. In paragraph 6 of the order, he held :-
"In my opinion, the deceased at the time of his
death had an `Actionable Claim' which
materialised when the Government of Bombay passed
the resolution dated 13th January 1958, by which
the rights of the Vasava over the Sagbara
property were restored to the present Vasava in
January 1958. Section 2(16) of the Estate Duty
Act states that the property passing on death
includes the property passing either immediately
on the death or after any interval either
certainly or contingently. In this case,
property passed after an interval. The Sagbara
Estate was in the possession of the Government
which held the property as a constructive trustee
for the benefit of the real owner i.e. the
deceased. Therefore, on the death of the real
owner of the property, the beneficial interest in
the property passes. The Accountable Person
himself asserted in his letter dated 27th July
1967, addressed to the General Secretary,
Government of Bombay, that the property of the
deceased was held by the Government in Trust.
This assertion was a firm establishment of his
rights over the property as the successor of the
deceased. Once the claim is established, the
Accountable Person cannot now abandon his
previous position. Under these circumstances, I
hold that the Deputy Controller was correct in
coming to the conclusion that the deceased left
an estate which passed on his death and in
respect of which, estate duty is payable."
3.1 The Appellate Controller, however, in view of the
fact that an amount of Rs.30 lakhs was determined as
payable to the Accountable Person by way of compensation
under The Sagbara & Mevasi Estates (Proprietary Rights
Abolition etc.) Regulation Act, 1962, held that the net
value of the estate works out at Rs.30 lakhs minus
Rs.36,000=00 (which were due to one Jayantilal) i.e.
Rs.29,64,000=00 as against Rs.77,62,068=00 determined by
the Deputy Controller. The assessment order was
accordingly revised.
4. The Accountable Person carried the matter further
to the Income Tax Appellate Tribunal under section 63 of
the Act, requiring the Tribunal to adjudicate upon the
issue, whether there was any Estate left by the then
Vasava of Sagbara, and if so, what was its value? The
Tribunal noted that the relationship between the
Feudatory State, whose head was known as Vasava, and the
Princely State of Rajpipla was regulated by an agreement
which was approved by the Government of India under their
resolution dated 20-9-1890. As per that agreement, the
Vasava admitted his subordination to the Rajpipla State
and agreed to submit to the general control of his
administration by that State, as mentioned in Article 1
of the agreement. It was observed that the Vasavas of
the Sagbara Estate were semi-independent Chieftains of
their Estate and exercised full authority and power
subject to general control of Rajpipla State till 10th
June 1948. The Ruler of Rajpipla State like other such
States entered into an agreement with the Dominion of
India, as per which, Rajpipla State merged into the
Province of Bombay in 1948 and the Government of Bombay
took over the charge of the estate by appointing an
Administrator. The Tribunal noted in paragraph 6 of the
order that the Government of India, in 1948, proceeded
under the assumption that Sagbara Estate was a part of
the Rajpipla State and took over the full control and
entire administration without any separate agreement with
the Vasava. The Vasava thereafter protested to the
Government of Bombay by taking a stand that the accession
of Rajpipla State did not affect the status and right of
Sagbara since it was a distinct and separate political
entity. On 16-11-1950, the Government of Bombay
sanctioned Rs.2,000=00 per month for his life on the
application of the Vasava of the Sagbara Estate for
maintenance allowance. The then Vasava Karansinh made an
application on 29th August 1953 to the Government of
India for sanction of a privy purse for him. The
Government of India, however, informed him by letter
dated 28-6-1954 that he could not be recognised as a
Ruler and therefore, no privy purse can be allowed, and
further that, the villages which were claimed by him as
private properties could not be restored to him. It was,
however, stated that the income of those villages was
taken into account in fixing his allowance at Rs.2,000=00
per month. The Tribunal also noted that, after the death
of Vasava Karansinhji on 17-4-1957 apparently leaving no
personal property, his son Ramsinhji took up the matter,
from where it was left off, by making a representation to
the Government of Bombay on 29th July 1957, repeating the
claim made by his father earlier for restoring the income
from the property and a settlement to be made treating
him as a feudatory chief. The Government of Bombay
thereafter made a resolution on 13-1-1958 holding that
the status of Vasava of Sagbara was akin to the status of
the chieftains of Mevassi Estate in West Khandesh i.e.
of a superior holder, and therefore, the action taken by
the Government in past in respect of the Sagbara Estate
was required to be regularised. As a consequence,
therefore, the Government canceled with retrospective
effect the monthly grant of Rs.2,000=00 and the adhoc
grant of Rs.10,000=00 given as advance and ordered
recovery of these payments. The Government accepted that
the three Dumala villages and four buildings situated at
Sagbara and Korai were private and personal properties of
the Vasava and ordered that their possession should be
handed back to the Vasava alongwith income from those
villages realised from the date of take-over i.e.
1-8-1949. It was also ordered that Vasava was liable to
pay land revenue in respect of his estate. The Tribunal
noted that Vasava was refunded Rs.1,24,365=00 on
settlement of accounts as per the noting of the Revenue
Department dated 12-4-1960. After the Gujarat State was
formed, `The Sagbara And Mehwasi Estates Regulations
1962' were framed, which came into force from 1-12-1962
and as per the said regulations, tenure of the Sagbara
Estate, Dumala villages and Mehwasi Estate was abolished,
and compensation was fixed by the Collector for the
Vasava Ramsinh at Rs.30,15,926=00, which was enhanced by
the Revenue Tribunal, by its order dated 1-2-1974 to
Rs.68,72,370=00.
4.1 After considering the historical background, the
Tribunal considered the rival contentions raised before
it on the question whether the Sagbara Estate passed on
the death of Vasava Karansinhji so as to attract the
provisions the said Act. It held that the Government of
India did not keep in mind that the Sagbara was not a
part of Rajpipla State when the administration was taken
over on 10th June 1948. Not only the possession of the
Estate was taken over, but the personal properties of the
Vasava consisting of three Dumala villages were also
taken over. It was held by the Tribunal in paragraph 24
of the order that such action of the Government of India
amounted to annexation of the said territory. It was,
therefore, held that the Sagbara became part of the then
Indian territory by `Act of State'. The Tribunal took
note of the letter dated 28th June 1954 written by the
Government of India, Ministry of States in response to
the representation of the Vasava informing him that,
after carefully considering the matter, the Government of
India regretted that it was not possible for it to
recognise him as a Ruler and therefore, there was no
question of fixation of a privy purse for the Vasava. It
was held in terms that it will not be possible to restore
Dumala villages to him since he had failed to produce
supporting evidence before the Bombay Government.
However, those villages were taken into account in
calculating his allowance. He was further informed that
a sum of Rs.4,000=00 approximately was recoverable from
him as a result of initial advances taken by him from the
treasury. The Tribunal noted that there was no ambiguity
in this letter and the Government did not recognise any
of the Vasava's rights over the Estate or over the other
Dumala villages. The Tribunal, therefore, held that the
Estate vested in the Government of India as a part of
Indian territory and the Vasava could not claim any right
in respect thereof, and there was no question of any of
the rights in regard to the Estate remaining in the
Vasava on his death on 17th April 1957. The Tribunal
held that, any subsequent recognition on 14th March 1958
was, in the above background, a fresh grant only. It was
noted that there was a lot of difference in the nature of
the rights of the deceased Vasava before 1948 and the
rights given to his son in 1958, and that, by the letter
dated 19-1-1958, the Government of India wanted to
regularise the take-over of the estate. It was held that
the content of the rights of the successor was completely
different from the rights of his predecessor and it
cannot be said that it was only recognition of the
existing rights. The Tribunal held that, after the Act
of State, the property vested in the Government of India
and therefore, there was no question of the property
passing after an interval, as was held by the Appellate
Controller. As regards the personal properties of the
deceased Vasava, the Tribunal, on the basis of the
material on record, came to a finding that the personal
properties of the deceased also stood on the same footing
as the Estate of Sagbara. On the basis of the
correspondence, it was held that the deceased Vasava was
asking for compensation not only in respect of Sagbara
Estate, but also in respect of Dumala villages, which
were taken over alongwith the Estate. It was held that,
as a matter of fact, no distinction was maintained
between the Sagbara Estate and the Dumala properties of
the Vasava, which were taken over by the Act of State.
It was held that the effect of the Memorandum of 1954 was
repudiation of the claim of the former Vasava. On this
finding, the Tribunal held that no property passed on the
death of Vasava and therefore, there was no question of
levy of any estate duty thereon. The question of
valuation of the properties, therefore, did not survive.
5. The Reference came to be made by the Tribunal in
view of the order dated 20th April 1987 of the Hon'ble
Supreme Court of India in Civil Appeal No. 1256 (NT) of
1987. Earlier, a Division Bench of the High Court (Coram
: Hon'ble Mr. Justice B.J.Divan, CJ & Hon'ble Mr.
Justice S.B.Majmudar, J.) had rejected the Estate Duty
Application No.3 of 1980 on 21-10-1980, by observing that
the Tribunal had interpreted the grant to Ramsinhji as a
fresh grant, and that the same contention was also urged
before the Division Bench of this Court in First Appeal
No.157 of 1972, which was disposed of on 28-9-1976, in
which, it was held that there was a fresh grant to
Ramsinhji, because, by an Act of State, the grant which
was earlier in favour of Karansinhji had come to an end.
It was noted that an application for leave to appeal
filed against that decision before the Supreme Court, was
rejected by the Supreme Court and therefore, the decision
of the High Court in first Appeal No.157 of 1972 had
become final. It was held that the tribunal, on its own
analysing the terms of the grant in the historical
background, had also come to the same conclusion. It was
then observed : "If the decision of the first appeal had
not been there in the case of this very Estate of
Sagbara, we would have granted this rule under section
64(3) of the Estate Duty Act because the question whether
it was a fresh grant to Ramsinhji or whether there was
any retrospective operation of the grant, would have been
required to be gone into." It was observed that, even
before the Supreme Court the same position would have
prevailed, because, the Supreme Court rejected the
Special Leave Petition and as between the parties to that
first appeal, the matter had now become final and the
result was that, when karansinhji died in 1957, he had no
right in the Sagbara Estate property as such. In the
Civil Appeal No. 1258 (NT) of 1987, the Supreme Court,
observing that the Special Leave Petition against the
decision in First Appeal was rejected in limine and there
was nothing to indicate that the Supreme Court expressed
any view on the merits of the controversy between the
parties, held that the High Court's refusal to call for
the statement of the case on the questions of law
suggested by the Appellate Controller of Estate Duty on
the ground that the dismissal of the Special Leave
Petition seeking to appeal against the decree passed in
First Appeal No.157 of 1972 concluded the matter, was
erroneous. The Supreme Court observed that the questions
suggested called for consideration and that a statement
of case should be referred to the High Court by the
Appellate Tribunal. The Appellate Tribunal was
accordingly directed to refer the questions of law
suggested by the appellant, which we have reproduced
hereinabove, from the reference made by the Tribunal.
6. It was contended by the learned senior standing
counsel on behalf of the revenue that the Sagbara Estate
was not a separate Estate and therefore, there was no
question of taking over the possession of the Estate
whereby the rights of the holders of the Estate would be
abolished. It was submitted that the merger agreement
was entered into between the Rajpipla State and Dominion
of India and the Vasava Karansinhji who was the Chieftain
of the Sagbara Estate was not a party to any such merger
agreement in respect of his Estate. It was therefore
submitted that the initial take over of the Estate could
not have been validly done under the treaty between the
State of Rajpipla and Dominion of India and the
Government officials could not have forcibly taken over
the Estate. It was submitted that, because the old
initial take-over was erroneous, the Government of India
restored the Estate to the Vasava in January 1958. It
was argued that the Government realised that the
possession of the Estate property was wrongly taken over
as it was not the property of the Rajpipla State and
therefore, on the representation by the Vasava, the
possession of the Estate was restored under the
resolution dated 13-1-1958 alongwith the personal
properties to Ramsinhji as the heir apparent of the
deceased Karansinhji. It was submitted that since the
income derived from 10-6-1948 was also to be returned,
and the cash amount seized from the treasury in 1948 to
be accounted for, that would show that the Estate
continued to be of late Karansinhji till it came to be
abolished under The Sagbara & Mevasi Estates (Proprietary
Rights Abolition etc.) Regulation Act, 1962, and even the
compensation came to be paid under those Regulations to
Ramsinhji. Therefore, on the date of death of
Karansinhji i.e. on 17-4-1957, Ramsinhji should be
deemed to be holding the Estate which passed to him on
the death of his father. It was then contended that
there was a compromise decree between the heirs of
Karansinhji showing that the compensation in respect of
the Sagbara Estate was distributed between them as the
heir of Karansinhji. It was further argued that the
judgement in First Appeal No.157 of 1972 of this Court
(Coram : J.B.Mehta and M.C.Trivedi, JJ.) delivered on
28th September 1976, was rendered in context of suits
filed by the forest contractors claiming rights under the
agreements executed in their favour by the deceased
Vasava Karansinhji, and that the said decision should not
be taken to be conclusive on the issue whether estate
duty was payable under the said Act on the ground that
the property passed on the death of Karansinhji to his
heir apparent. It was also argued that there could not
have been granted any fresh estate on 13-1-1958 in view
of the constitutional set up under which such estates
were to be abolished. The learned standing counsel
supported the orders of the Deputy Controller and the
Appellate Controller on their finding that the deceased
left his estate which passed on his death in respect of
which, the estate duty was payable.
7. The learned senior counsel appearing for the
Accountable Person contended that, in view of the
findings rendered by the Division Bench in First Appeal
No.157 of 1972 and First Appeal No. 431 of 1972 in their
judgement dated 28-11-1976 that, on the eve of the death
of Karansinhji, no property had vested in him by virtue
of the properties having already vested in the State, the
property did not pass on his death and therefore, no
estate duty was payable. He submitted that the State of
Gujarat was a party in those appeals and the question,
whether the property had vested in the State or had
continued to remain with Karansinhji after the merger of
the Rajpipla State alongwith the Estate on 10th June
1998, was directly and substantially in issue and it was
held that, by recognising the status of Ramsinhji, the
Government had done purely an act of bounty and no other
person could claim title, because, "the root of title of
this family after the death of Karansinhji was only the
Government Order exh. 237 of January 13, 1958". He
relied upon the finding that ".... during the
intervening period, the Act of State having materialised
against all the properties, public as well as private of
the Vasava Karansinhji by the seizure of the whole estate
after merger on June 10, 1948, no title had remained
outstanding in anyone as per the aforesaid legal
position", and that, "....in any event, the State having
recognised by this fresh grant exh.237, only defendant
No.3, as Vasava, no outstanding title remained in any
other heir of Karansinhji so as to confer any title on
the deceased plaintiff by the aforesaid registered
document, exh. 411, dated December 15, 1959."
7.1 The learned senior counsel further argued that,
whether the State could or could not have taken
possession of the Estate was not a matter of any
consequence, because, once it is found that the Estate
was, in fact and reality, taken over by the Government,
the subject would no more own the property and it vested
in the State by the Act of State. It was submitted that
it was undisputed that the Sagbara Estate was taken over
as a part of the State of Rajpipla under the merger
agreement and by statutory orders that property which had
merged in the Province of Bombay was dealt with, and
therefore, it could not be said that, in 1957 when
Karansinh died, he had any such estate or property which
could passed on his death. It was submitted that the
fact that the Government of Bombay made a grant on
13-1-1958 to Ramsinhji as the heir apparent of
Karansinhji cannot lead to a conclusion that it was a
recognition of the earlier right of late Shri
Karansinhji, because, by the Act of State by which the
Estate had merged with the Province of Bombay under the
merger agreement between the Rajpipla State and the
Dominion of India, all the rights of Karansinhji in the
estate stood extinguished. It was also submitted that
the terms and conditions of the grant in favour of
Ramsinhji were entirely different and there was no
restoration of any sovereign power in favour of
Ramsinhji. As regards the compromise decree between the
heirs of Karansinhji, it was argued that such a decree in
an administrative suit could have no bearing on the
present litigation where the question as to whether the
property vested in the State on the doctrine of "Act of
State" was involved, which could not have been the
subject matter of the administrative suit.
7.2 In support of his contentions, the learned senior
counsel referred to the following decisions :
[a] The decision of the Privy Council in Nayak
Vajesingji Joravarsingji v. The Secretary of
State for India, reported in AIR 1924 P.C. 216
was cited for the proposition that, when a
territory is acquired by a sovereign state for
the first time, that is an Act of State. It
matters not how the acquisition has been brought
about. It may be by cession following on treaty,
it may be by occupation of territory hitherto
unoccupied by a recognised ruler. In all cases,
the result is the same. Any inhabitant of the
territory can only make good in the municipal
courts established by the new sovereign such
rights as that sovereign has, through his
officers, recognised. Such rights as he had
under the rule of predecessors avail him nothing.
Even if in a treaty of cession, it is stipulated
that certain inhabitants should enjoy certain
rights that does not give a title to those
inhabitants to enforce these stipulations in the
municipal courts. The right to enforce remains
only with the High Contracting Parties.
[b] The decision of the Supreme Court in Maharaj Umeg
Singh v. State of Bombay, reported in AIR 1955
SC 540 was cited to point out that, in the group
of petitions before the Supreme Court, petition
No.343 of 1954 was by the relations of the Ruler
of the erstwhile State of Rajpipla and petition
No. 340 of 1954 was by the jagirdars of the
erstwhile State of Rajpipla, and these petitions
alongwith other cognate matters, in which the
provisions of the Bombay Merged Territories and
Areas (Jagirs Abolition) Act, 1953 were
challenged, were dismissed, by holding that, if
the grievance was that the impugned Act had
brought about discrimination in breach of clause
5 of the letter of guarantee which was to be
regarded as a part of the merger agreement
entered into by the States with the Governor
General of India, then the dispute clearly arose
out of the letter of guarantee and would by
Article 363 of the Constitution be placed beyond
the jurisdiction of the Supreme Court.
[c] The decision of the Supreme Court in State of
Gujarat v. Vora Fiddali Badruddin Mithibarwala
and others, reported in AIR 1964 SC 1043 was
relied upon for the proposition that the
integration of Indian States with the dominion of
India was an Act of State, and that it was open
to the new sovereign not to recognise any grant
created on the eve of the merger by a `Tharao'.
[d] The decision of the Supreme Court in T.R.Bhavani
Shankar Joshi v. Somasundara Moopanar reported
in AIR 1965 SC 316 was relied upon for the
proposition that, as the Government intended to
seize all the property which actually was seized,
whether public or private, the seizure as a whole
was an Act of State. The Act of State having
thus materialised in 1856 against all the
properties of the Rajah, no title could be said
to have remained outstanding in any one. The
Government Order of 1862, by which the private
properties were `relinquished and restored' by
the Government, could not, therefore, be
construed as anything except as a fresh grant due
to the bounty of the British Government. It was
held that the fact that the Government Order was
not worded as a grant, because, it used the words
`relinquished' and `restored' did not affect the
position. The document created its own
conditions and indicated the line of succession.
8. There is no dispute about the fact that the
Sagbara Estate was taken over under the merger agreement
between the State of Rajpipla and the Dominion Government
of India on 10th June 1948. This fact is reflected in
various letters of Vasava Karansinhji also. In his
letter dated 22nd June 1949, Vasava Karansinhji wrote to
the Chief Secretary to the Government of Bombay that,
"The Chief Administrator, Rajpipla the Collector of
Broach District, has taken possession of my estate
Sagbara - my three Dumala villages and cash on the 10th
June 1948". In the petition dated 29-8-1953 by
Karansinhji to the Chief Secretary, a copy of which is at
Annexure `L' in the paper-book, it was mentioned in
paragraph 2 as under :
"That the administration of Rajpipla State was
taken over by the Central Government on
10-6-1948. The fact that Sagbara was a distinct
political separate entity was not noticed, by the
then Administrator of the State, and on 9-6-1948,
Sagbara's possession was taken over forcibly by
bringing a posse of constables from Rajpipla,
together with all immovable properties, and the
movables, cash, account books, and everything
which went to make up the paraphernalia of
Sagbara State by the then authorities."
It was then stated in paragraphs 3 and 4 as
follows :-
"That, being thus deprived of everything, which
the petitioner owned one time, and being reduced
absolutely to penury and to the position of a man
in street, without any means, he made frantic
efforts to approach the Bombay Government, in the
matter of redress ......... That it was a matter
of grace on the part of the Bombay Government
that sometime in 1949, they gave a sum of
Rs.10,000=00 as a solatium, and later on,
sanctioned from November 1949 a monthly allowance
of Rs.2,000=00 to the petitioner. ....."
In paragraph 10 of that petition, it was
contended that -
"The merger of Rajpipla was not an effective act
for the merging of Sagbara, which was a distinct
political entity itself. ...".
In paragraph 11 of that petition, it was alleged
that -
"The action taken in dispossessing the petitioner
of his state has been something like a police
action. His all "Daftar" and records of his
administration together with all the account
books have been seized and forcibly taken
possession of; all cash, moneys lying in his
treasury have been forcibly removed; and his
places of abode and the residence in which he was
living have been also forcibly taken possession
of. His staff was dismissed; and Sagbara
territory was put under the control and
administration of the Broach Collector, the
Collector being nominated as the Administrator.
This tragedy was enacted on the eventful day, at
10 O'clock in the night, on 9th June 1948, all
suddenly without any notice being given to the
petitioner, and behind his back, and in his
absence."
Karansinhji therefore prayed that the arrears of
monthly allowance from 10th June 1948 till the date of
his petition be paid to him, and that, "an arrangement
commensurate with his status as feudatory chief of the
Sagbara with the Dominion of India, providing for the
transference of all jurisdiction and powers from him to
it, be made, and a proper provision for his privy purse,
be made, and .....".
8.1 A reminder was sent on 19th November 1953 by
Karansinhji in context of his said representation dated
29th August 1953 regarding grant of privy purse etc.
Thereupon, the Government of India communicated to him by
its decision dated 28th June 1954 in which it was stated
that the Government of India having carefully considered
the matter further, regretted that it was not possible
for the Government of India - "to recognise you as a
Ruler. Accordingly, there can be no question of fixation
of a privy purse for you". Thus, the entire claim put up
by Vasava Karansinhji raising objections against the
manner in which his Estate was merged with the Province
of Bombay under the merger agreement entered into by
State of Rajpipla with the Dominion of Government of
India stood rejected finally by this official
communication.
9. Two independent dominions were set up in India,
to be known respectively as India and Pakistan from the
15th day of August 1947, by section 1 of the Indian
Independence Act, 1947. By section 2, it was provided
that subject to sub-sections (3) and (4) thereof, the
territories of India shall be the territories under the
sovereignty of His Majesty which, immediately before the
appointed day, were included in British India except the
territories which, under sub-section (2) of section 2
were to be the territories of Pakistan. The Legislature
of each of the new Dominions was given full powers to
make laws for that Dominion, including laws having extra
territorial operations, as provided by section 6 of that
Act. By section 7(1)(b) of the Act, it was provided that
as from the appointed day "the suzerainty of His Majesty
over the Indian States lapses, and with it, all treaties
and agreements in force at the date of the passing of
this Act between His Majesty and the Rulers of Indian
State, ....".
10. On 24th December 1947, The Extra - Provincial
Jurisdiction Act, 1947 received assent of the Governor
General (published in the Gazette of India,
Extraordinary, Part IV, dated the 24th December, 1947).
This Act was enacted to provide for the exercise of
certain extra-provincial jurisdiction of the Central
Government in respect of jurisdiction that the Central
Government had or which it may acquire in relation to
areas outside the provinces of India by treaty,
agreement, grant, usage, sufferance and other lawful
means. "Extra-provincial jurisdiction" was defined to
mean, "any jurisdiction which by treaty, agreement,
grant, usage, sufferance or other lawful means the
Central Government has for the time being in or in
relation to any area outside the Provinces". Under
section 4 of that Act, the Central Government was
empowered by notification in the official gazette, to
make such orders as may seem to it expedient for the
effective exercise of such extra-provincial jurisdiction
of the Central Government. Section 5 of that Act
provided that, every act and thing done, whether before
or after the commencement of this Act, in pursuance of
any extra-provincial jurisdiction of the Central
Government in an area outside the Provinces shall be as
valid as if it had been done according to the local law
then in force in that area.
11. Sagbara was a feudatory of Rajpipla, as can be
seen from the agreement concluded between Rajpipla State
and the Vasavas of Sagbara, a copy of which is at
Annexure `R' in the paper-book. Under Article 1 of that
agreement, the then Vasava admitted his subordination to
the Rajpipla State, and agreed to submit to the general
control of his administration by that State. Under
Article VI of the agreement, it was provided that, on any
change in the succession to the estate, the new Vasava
shall proceed to Nandod, to be recognised as such and
shall present to the Rajah of Rajpipla a Nazzrana of
Rs.100=00 (British) in return for which he shall be
presented with an "address of about the same value".
Article XIII of the agreement provided that, the Vasava
will not keep in his employee any foreign mercenaries,
such as, Pathans, Arabs, Makranis, Kabulis and the like.
Article XV of the agreement provided that, all laws
introduced into the State will have force in the estate
so far as they may apply.
12. Rajpipla State merged with the Province of Bombay
under the merger agreement entered into with the Dominion
of India with effect from 10th June 1948. The form of
that merger agreement is reproduced in paragraph 5 of the
judgement of the Supreme Court in Umeg Singh (supra).
Under Article 1 of the merger agreement, which was signed
by Rulers of the States in the area of Gujarat, it was
provided that the State ceded to the Dominion Government
full and exclusive authority, jurisdiction and powers for
and in relation to the Governance of the State and agreed
to transfer the administration of the State to the
Dominion Government, and from the said day, the Dominion
government will be competent to exercise the said powers,
authority and jurisdiction in such manner and through
such agency as it may think fit. Admittedly, such a
merger agreement was made between the Ruler of Rajpipla
State and the Governor General of India, by which the
Rajpipla State had merged with effect from 10th June
1948.
13. By the States' Merger (Governors' Provinces)
Order, 1949 made by the Governor General (Order No. S.O.
25 dated 27th July 1949 published in the Gazette of
India, Extraordinary dated 27th July 1949), the States
specified in each of the Schedules were to be
administered in all respects as if they formed part of
the Province specified in the heading of that Schedule,
from the appointed day i.e. the date of the commencement
of the said Order, as provided in clause (3) thereof.
Accordingly, any reference to Acceding State in the
Government of India Act, 1935 or in any Act or Ordinance
made on or after the appointed day was to be construed as
not including a reference to any of the merged States,
and any reference in any such Act or Ordinance as
aforesaid to a province specified in a Schedule to this
Order was to be be construed as including the territories
of all the States specified in that Schedule. All the
laws in force in a merged State or any part thereof
immediately before the appointed day, including orders
made under section 3 or section 4 of the Extra-provincial
Jurisdiction Act, 1947 were to continue to be in force
until repealed, amended or modified. Schedule II
mentioned the names of the States merged in the Province
of Bombay which included Rajpipla.
14. By Notification No. 2751/46-F issued by the
Government of India and re-published in the Bombay
Government Gazette Extraordinary Part IV-A, dated 4th
June 1948, the jurisdiction for, and in relation to, the
governance of the States specified in the Schedule
annexed thereto, which included "Rajpipla (including
Sagbara)", was delegated subject to the control of the
Central Government to the Provincial Government of
Bombay. In this notification issued by the Government of
India, there is a recital that the Central Government had
full and exclusive extra-provincial jurisdiction for, and
in relation to, the governance of the States specified in
the Schedule, [which included "Rajpipla (including
Sagbara)"], the delegation in favour of the Provincial
Government of Bombay of the extra-provincial jurisdiction
of the Central Government was made in exercise of the
powers conferred by sub-section (2) of section 3 of the
Extra-Provincial Jurisdiction Act, 1947.
14.1 By Notification No. 2751/46-F-1 published in the
Bombay Government Gazette Extraordinary, Part IV A, on
8th June 1948 (P. 242), it was provided in paragraph 3
that -
"The areas comprised of the Rajpipla State along
with its subordinate State of Segbara shall merge
with and form part of the Broach District and
shall be administered accordingly."
The fact that this was done pursuant to the
merger agreement is clear from the following opening
words of that notification :-
"1. Whereas in accordance with the agreements
executed by the Rulers of estates, thanas and
talukas etc. in Gujarat agreeing to merge their
respective States in the Province of Bombay;
Whereas, by virtue of Article I of the
said agreement, the talukas and estates etc.
mentioned hereafter having merged in the Province
of Bombay with the consent of the Dominion of
India;
Whereas, under the Bombay (Enlargement of
Area and Alteration of Boundaries) Order, 1948,
issued by the Governor General in the Ministry of
Law on the 4th day of June 1948 under section 290
of the Government of India Act, 1935, the
Governor of Bombay has been authorised to make an
order by a notification in the official Gazette
providing for the administration of the areas
mentioned therein as part of the Province of
Bombay either by constituting all or any of them
into one or more new districts of the Province or
by making all or any of them part of one or more
existing districts;
Now, therefore, in exercise of the powers
conferred on him by the said order and of all
other powers enabling him in this behalf, the
Governor of Bombay is pleased to make the
following order :-
2. xxxxx
3. The areas comprised of the Rajpipla State
alongwith its subordinate State of Segbara shall
merge with and form part of the Broach District
and shall be administered accordingly.
4. xxxxx ".
14.2 All enactments, notifications, orders, schemes,
rules and bye-laws issued, made or prescribed under such
enactments and in force in the Province of Bombay were
extended to the areas merged with and included in the
existing district or districts by this notification, as
ordered in paragraph 9 thereof.
14.3 The Government of India, by a Notification
published on 8th June 1948 in the Bombay Government
Gazette Extraordinary Part IV, page 243, appointed the
Collector of Broach to be the district Magistrate for
"Rajpipla with the including the State Segbara".
14.4 In exercise of the powers conferred by section 4
of the Extra-Provincial Jurisdiction Act, 1947, the
Government of Bombay had issued "Judicial Committee
(Integrated States) Order, which came into force from
12th July 1949 (published in the Bombay Government
Gazette Extraordinary, dated 12th July 1949, Part IV-A at
page 574A), by which a judicial committee consisting of
two Judges of the Bombay High Court was constituted with
full powers and jurisdiction to decide all civil and
criminal appeals and other proceedings pending before the
Ruler of any State or any other Tribunal therein by
whatever name called. These integrated States were
specified in the Schedule of the Order and under the
heading "Gujarat States", `Rajpipla (including Sagbara)'"
was specified. The date of integration of the `Gujarat
States' including the State of Rajpipla (including
Sagbara) was shown to be 10-6-1948.
14.5 In exercise of the powers conferred by section 7
of the Land Revenue Code read with Notification No. S.O.
25 dated 27th July 1949, issued by the Government of
India in the Ministry of Law, the Government of Bombay
issued the Order dated 29th July 1949 (published in the
Bombay Government Gazette Extraordinary, Part IV-A, dated
29th July 1949 at page 605, inter alia, re-constituting,
(see its Part III, at page 683), Districts of Bombay
Province `as a result of merger of Baroda and other
Gujarat States'. At item (I) of Part III - Broach
District was re-constituted by ordering that, "The areas
comprising the Rajpipla State and the Gardeshwar Mahal
shall be included in and form part of Broach District".
It was ordered :
"The following new talukas and two mahals
comprising the areas of Rajpipla State and
Gardeshwar Mahal as shown in the schedules I-A to
I-E appended hereto shall be constituted".
`Sagbara Mahal' was mentioned at item (5) as part
of the area of Rajpipla State, which had merged with the
Province of Bombay. As per the Schedule 1-A to 1-E (at
page 727 of the Gazette), talukas of the re-constituted
Broach District are shown. Rajpipla village is one of
the 227 villages of Nandod taluka of Broach district in
Schedule 1-A. Schedule 1-E shows 115 villages of Sagbara
Mahal under the Broach District, including Sagbara
village. Thus, after the merger of the State of Rajpipla
which included Sagbara Estate, the areas of the
integrated State were included in the Broach District
which was in the Province of Bombay by re-constituting
the Broach District.
14.6 By Notification dated 13th July 1949 published in
the Bombay Government Gazette, Part IV-A, dated 31st July
1949, the Government of Bombay, in exercise of powers
conferred by sections 3 and 4 of the Bombay Civil Courts
Act, 1869, altered the limits of the existing judicial
districts, and directed that the limits of the judicial
districts shall comprise the limits of revenue districts
of the same names as constituted under the government
notification dated 29th July 1949. Necessary orders
creating judicial district of Broach for the purpose of
civil and criminal jurisdiction were issued and Sagbara
Mahal (115 villages) was shown as a part of the judicial
district of Broach (see page 152 of the said Gazette).
15. The above facts will show that Rajpipla including
its Sagbara Estate had effectively merged with the
Province of Bombay and had become part of the
re-constituted Broach District. After the possession of
Sagbara Estate was taken over alongwith Rajpipla State,
it stood so merged with effect from 10th June 1948 with
the Province of Bombay pursuant to the merger agreement
with the Dominion Government. The effective legislative,
administrative and judicial control was established over
the merged State of Rajpipla (including Sagbara) and that
integrated State ceased to exist with effect from 10th
June 1948 and became part of the Province of Bombay, as a
result of which its territories came to be included in
the re-constituted District of Broach.
16. By the merger agreement, the States of Rajpipla
including Sagbara ceded with the Dominion of India and
became part of the Province of Bombay. By voluntarily
merging into another State, a State loses all its
independence and becomes a mere part of another. The
object of cession is to establish sovereignty over such
territory as has hitherto already belonged to another
State. As far as Law of Nations is concerned, every
State as a rule can cede a part of its territory to
another State, or by ceding the whole of its territory
can even totally merge in another State. (See
Oppenheim's International Law Vol.I, Eighth Edition, para
215, at page 548).
16.1 Even if, for the sake argument, Sagbara was not
to be treated as a part of the territory of the erstwhile
Rajpipla State, Sagbara Estate alongwith private
properties of the Vasava came to be occupied by the
acquiring State by act of appropriation after it was
taken over on 9th June 1948 forcibly, as stated by the
Vasava himself in his letter dated 29th August 1953. One
of the modes of acquisition of territory of a State is
occupation. By such act of appropriation, the State
intentionally acquired sovereignty over such territory as
is at that time not under the sovereignty of another
State. Occupation differs from cession in that through
cession, the acquiring State receives sovereignty over
the territory concerned from the former owner-State.
Cession, therefore, is a derivative mode of acquisition,
whereas occupation is an original mode. (See Oppenheim's
International Law Volume I Peace, Eighth Edition, Paras
213 and 220).
16.2 The facts, however, clearly disclose that the
territory of Sagbara Estate which was not an independent
State was subjected to the general administrative control
and laws of the Rajpipla (including Sagbara) ceded under
the merger agreement with the Dominion of India with
effect from 10th June 1948. It was accordingly taken
over by the acquiring State and treated as merged with
the Province of Bombay. Effective sovereign control was
established over it by the Dominion of India. The fact
that the administration was handed over to the Collector,
Broach and the jurisdiction of the courts was extended,
shows that the said area of Sagbara Estate was really
governed by the new sovereign after it was taken over
under the said merger agreement. The effectiveness of
take-over that necessarily conferred sovereignty over the
territory on the acquiring State was never questioned at
the relevant time by the Vasava, who only asked for a
privy purse or compensation.
17. The municipal courts cannot go into the question
whether territory has been validly acquired by the State
by cession or occupation and it lies within the
prerogative powers of the State to extend its sovereignty
and jurisdiction to areas of land or sea over which it
has not previously claimed or exercised sovereignty of
jurisdiction. The acquisition of territory by sovereign
State for the first time is an Act of State which cannot
be challenged, controlled or interfered with by the
Courts of the State. This principle precludes any
contest between the executive and judicial branches of
the State as to whether a territory does or does not
legally belong to the State. The Act of State by which
the area is acquired by the State and its sovereignty
established over it is not justiciable in the municipal
courts.
17.1 It will be seen from the provisions of Article
363 of the Constitution that, neither the Supreme Court
nor any other Court shall have jurisdiction, in any
dispute arising out of any provision of a treaty,
agreement, covenant, engagement, sanad or other similar
instrument which was entered into or executed before the
commencement of the Constitution by any Ruler of an
Indian State and to which the Government of the Dominion
of India or any of its predecessor Government was a party
and which has or has been continued in operation after
such commencement, or in any dispute in respect of any
right accruing under or any liability or obligation
arising out of any of the provisions of the Constitution
relating to any such treaty, agreement, covenant,
engagement, sanad or other similar instrument. The words
`Indian State' are defined to mean, `any territory
recognised before the commencement of the Constitution by
His Majesty or the Government of the Dominion of India as
being such a State. A dispute that the territory of
Sagbara Estate was not transferred under the merger
agreement between the Ruler of Rajpipla State and the
Governor General, would amount to raising a dispute as to
whether the territory of Sagbara estate validly merged in
the Province of Bombay under that merger agreement, which
would be barred by Article 363. The statutory provisions
that followed the merger agreement clearly show that the
acquiring sovereign, treated Sagbara Estate as a part of
Rajpipla State which had ceded under the merger agreement
with the Dominion of India and became part of the
Province of Bombay pursuant thereto. It would,
therefore, not be open even for the Revenue to raise a
contention that Sagbara Estate had not legally been
transferred under the merger agreement between the Ruler
of Rajpipla State ceding Rajpipla including Sagbara
Estate to the acquiring State. Therefore, even in the
context of Article 363 of the Constitution, the
contention, which was surprisingly sought to be raised on
behalf of the Revenue, that the initial take over of
Sagbara Estate as a part of Rajpipla State was void and
that the Estate could not have forcibly taken over by
treating it as a part of Rajpipla State, cannot be
countenanced.
17.2 As observed by the Supreme Court in paragraph 10
of the judgement in Umeg Singh (supra), if the
petitioners in that group of matters were deemed to be
parties to the agreements of merger and letter of
guarantee, they would be faced with the bar to the
maintainability of the petitions under Article 363 of the
Constitution, which lays down that neither the Supreme
Court nor any other Court shall have jurisdiction in any
dispute arising out of any provision of a treaty,
agreement, covenant, engagement, sanad or other similar
instruments which was entered into or executed before the
commencement of the Constitution by any Ruler of an
Indian State and to which the Government of the Dominion
of India was a party.
18. An Act of State is essentially an exercise of
sovereign power, and therefore, cannot be challenged,
controlled or interfered with by municipal courts. Its
sanction is not that of law, but of sovereign power, and,
whatever it be, municipal Courts must accept, as it is,
without question. But it may, and often must, be part of
their duty to take cognizance of it. For instance, if an
act is relied upon as being an Act of State, and as thus
affording an answer to claims made by a subject, the
Courts must decide whether it was in truth an Act of
State, and what was its nature and extent. In the case
of Salman v. Secretary of State in Council of India,
reported in (1906) 1 K.B. 613, where the East India
Company, as representing the Crown, annexed the territory
of a native State, and confiscated the State property,
granting to the Maharajah, the Ruler of the State, who
was then an infant, a pension for life, and the Company
also assumed the custody of his person during his
minority, and took possession of his private property,
and an action was brought after his death by the trustee
in bankruptcy of his residuary legatee against the
Secretary of State for India, as the successor of the
East India Company, for arrears of the pension, and for
an account of the private property, it was held by the
Court of Appeal that, under the circumstances, the acts
done seize the whole, for, the purposes which they had in
view required application of the whole and held that:
"The property now claimed by the respondent has been
seized by the British Government acting as a sovereign
power through its delegate, the East India Company, and
that the act so done, with its consequences, is an act of
State over which the Supreme Court of Madras has no
jurisdiction". It was held that : "...acts done in the
execution of the sovereign powers were not subject to
control by municipal courts, either of India or Great
Britain, was sufficiently established by the cases of
Nabob of Arcot v. The East India Company in the Court of
Chancery, in the year 1793, and The East India Company v.
Sayed Ally before the Privy Council in 1827."
18.2 The Privy Council judgement in Kamachee's case
(supra) was considered by the Supreme Court in State of
Gujarat v. Vora Fiddali Badruddin Mithibarwala, reported
in AIR 1964 SC 1043, and it was noticed in paragraph 22
that the decision was referred to with approval by the
Privy Council in a case from India in Secretary of State
v. Bai Raibai, reported in AIR 1915 PC 59, where the
question that arose before the Privy Council was, whether
the respondent was entitled to continue ownership and
possession of village called Charodi in the "Province of
Gujarat". The respondent's title to the village was
ultimately based on rights claimed to have been granted
by the Gaekwar of Baroda. The territory in which the
village was situated was ceded by the Gaekwar to British
Government in 1817. The claim of the respondent to full
ownership of the property was not recognised by the
Indian Government after the cession and Government held
that the respondent had no more than a leasehold
interest. The question before the Privy Council was
whether the respondent was entitled to assert in
municipal courts rights more extensive than what had been
recognised by the authorities. Lord Atkinson, delivering
the judgement, said -
"..... The relation in which they stood to their
native sovereigns before this cession, and the
legal rights they enjoyed under them, are, save
in one respect, entirely irrelevant matters.
They could not carry in under the new regime the
legal rights, if any, which they might have
enjoyed under the old. The only legal
enforceable rights they could have as against
their new sovereign were those, and only those,
which that new sovereign, by agreement expressed
or implied, or by legislation, chose to confer
upon them. ....."
The Supreme Court also referred to the decision
of the Privy Council in Asrar Ahmed v. Durgah Committee,
Ajmer, reported in AIR 1947 PC 1, in which Lord Simonds
said -
"From this, it follows that the rights, which the
inhabitants of that State enjoyed against its
former rulers, availed them nothing against the
British Government and could not be asserted in
the Courts established by that Government except
so far as they had been recognised by the new
sovereign power. Recognition may be by
legislation or by agreement express or implied.
...."
In paragraph 29 of the judgement, the Supreme
Court held -
"That a new sovereign emerged on the unification
of India by the merger or absorption of the
Indian States with the Provinces of British India
cannot be questioned and that this was by the
process of the sovereignty of the rulers of the
former Indian States being extinguished cannot be
disputed either."
In paragraph 30 of the judgement, it was held -
"A transfer of territory from under one sovereign
to another may be effected in a variety of ways;
conquest, annexation, by cession under a treaty
after a war or without a war, by revolution, by
emancipation of subject people and by territorial
resettlements. These changes possess one common
feature viz., that one sovereign ceases to rule a
territory and another takes its place. ..."
18.3 The Kamchee's case (supra) was also approvingly
considered in T.R.Bhavani Shankar Joshi v. Somasundara
Moopanar, reported in AIR 1965 SC 316, in paragraphs 4
and 7 of the judgement, and it was held that it was
impossible to construe the Government Order by which the
private properties of the Rajah were `relinquished and
restored' as anything except as a fresh grant.
18.4 In Govindrao v. State of Madhya Pradesh reported
in AIR 1982 SC 1201, the Supreme Court in paragraph 33 of
the judgement held that -
"After a sovereign state has acquired territory,
either by conquest or by cession under treaty or
by the occupation of territory theretofore
unoccupied by the recognised Ruler or otherwise,
an inhabitant of a territory can enforce in the
Municipal Courts only such proprietary rights as
the sovereign has conferred or recognised. Even
if a treaty of cession stipulates that certain
inhabitants shall enjoy certain rights, that
gives them no right which they can so enforce."
19. The learned senior standing counsel for the
Revenue submitted that, if the Sagbara Estate vested in
the Dominion of India and merged with the Province of
Bombay pursuant to the merger agreement by the Ruler of
Rajpipla State, the subsequent release by the Central
Government under the communication dated 13th January
1958 was equally an Act of State, which restored the
Sagbara Estate to the Vasava with retrospective effect,
as a result of which, it should be deemed to have passed
on his death on 17th April 1957. In order to avoid
misconception, it is necessary to note here that the
doctrine as to Act of State can apply only to acts which
affect foreigners and which are done by the orders or
with the ratification of the sovereign. As between the
sovereign and his subjects, there can be no such thing as
an act of State. The duty of the courts of law indeed is
to protect the subjects from the illegalities that may be
committed by the public authorities.
19.1 In the Halsbury's Laws of England, Third Edition,
Vol.7, an Act of State is defined in para 593 as
follows:-
"An act of the executive as a matter of policy
performed in the course of its relations with
another state including its relations with the
subjects of that state, unless they are
temporarily within the allegiance of the Crown,
is an Act of State."
An act of State is a prerogative act of policy in
the field of foreign affairs performed by the sovereign
in the course of its relationship with another State or
its subjects. (See Para 1413, Halsbury's Laws of
England, 4th Edition, Vol. 18 at page 725). Making of
treaties, annexation of area or territory, seizure of
land are typical acts of State. Thus, while acquisition
of Sagbara Estate by cession pursuant to the merger
agreement and by its effective merger was indeed an act
of State on the part of the Dominion of India, the
subsequent release in favour of Ramsinhji was not an act
of State, but was only a grace shown by the Government of
India towards its own citizen, because, after merger,
Ramsinhji became the subject of the Dominion of India.
20. One more aspect needs to be noted here. When on
cession or by subjugation sovereignty is passed on to the
acquiring State over a territory and sovereignty is
assumed over it by the new sovereign, there can be no
resumption or restoration of such sovereignty by the
erstwhile sovereign. "....if a sovereign authority parts
with its sovereignty, it cannot, of its own will, resume
it." (See Grammar of Politics by Harold, J. Laski : 5th
Edition, Page 50). Cession can be only by a treaty
between two sovereign states and once the erstwhile state
ceased to exist as an international person, there could
arise no question of entering into a treaty, with an
extinct State for restoration. Sovereignty once conceded
goes beyond the reach of the ceding State which becomes
extinct and there remains no such political entity to
whom the sovereign power can be restored. After all,
sovereignty cannot be reduced to a level of a commodity
which can be given and taken back. If at all, the new
sovereign may by division of its territory create a new
State and transfer its sovereignty over such portion for
effectively creating a new sovereign State. Then only
the territory given up by effecting the division will
belong to the newly created sovereign State. No such
thing could be attributed to the act of releasing the
Sagbara estate by the Central Government under letter
dated 13th January 1958 to Ramsinhji who by then, was an
Indian citizen. It was just an instance of grace shown
by the Government of India which had acquired complete
sovereignty over this territory by virtue of the merger
agreement with the Dominion of India, which could not
have been questioned in the municipal courts in India, in
view of the provisions of Article 363 of the
Constitution, on the ground that it had not legally
merged the area of Sagbara Estate when the Ruler of
Rajpipla ceded the territory of the State of Rajpipla
including the Sagbara Estate to the Dominion of India.
In other words, once the area of the Sagbara estate had
become a part of the Indian territory, there could arise
no question of restoring it retrospectively with effect
from 10th June 1948 to the Vasava as if it had not merged
under the cession that took place on 10-6-1948,
integrating Rajpipla State including the Sagbara Mahal
with the Dominion of India. Restoration of Sagbara
Estate under the letter dated 13-1-1958 has, therefore,
necessarily to be treated as a fresh grant to Ramsinhji
made on its own conditions and not with a view to confer
any quasi-sovereign status within the Independent Indian
Republic.
21. Thus, since the area of Sagbara Estate and the
private properties of the Vasava were taken over on 10th
June 1948 by the Dominion of India under the merger
agreement with the erstwhile ruler of Rajpipla, Vasava
Karansinhji who was reduced to penury as lamented by him
in paragraphs 2 and 3 of his letter dated 29th August
1953 (at Annexure `L' in the paper-book), there remained
no property with Karansinhji, who at the time of his
death on 17th April 1957, was not competent to dispose of
any of the properties which were taken over by the act of
State on 10th June 1948 and had vested in the Dominion of
India under the merger agreement. Only the property
which the deceased had at the time of his death and which
he was competent to dispose of, shall be deemed to pass
on his death, as provided by section 6 of the Estate Duty
Act. Since there was no property which could pass on the
death of Karansinhji under section 5 of the Estate Duty
Act, there could arise no question of levy of estate duty
from the accounting person.
22. The Tribunal was, therefore, in our opinion,
right in holding that, at the time of death of
Karansinhji of Sagbara, no property which was part of
Sagbara Estate or personal property of the deceased which
stood on the same footing, passed on his death on 17th
April 1957. All the three questions referred to this
Court by the Tribunal are, therefore, answered in the
affirmative against the Revenue and in favour of the
Accounting Person. The Reference is answered accordingly
and is disposed of, with no order as to costs.
MARCH 22, 2002 [R.K.ABICHANDANI, J.]
[KUNDAN SINGH, J.]
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