Appeal No 579 of 1965
Appeal from the judgment and decree dated April 20 28 1960 of the Bombay High Court Now Gujarat High Court in Appeal No 172 of 1956 from Original Decree
NS Bindra MSK Sastri and SP Nayar for the appellant
ST Desai YS Chitale and DN Misra
for the respondent
The Judgment of the Court was delivered by Bachawat J
In January 1948 in view of the imminent constitutional changes in the Baroda State it was considered likely that the services of the Diwan Sri Sudhalkar the appellant and Sri Gaekwad the three official members of the Executive Council of the State would be prematurely terminated
The respondent was then drawing a salary of Rs 2000 per month and was to retire on February 14 1952 on reaching the superannuation age of 56 years
On January 28 1948 His Highness the Maharaja of Baroda enhanced the respondents salary to Rs 2500 per month
By separate orders the salaries of other official member s also were enhanced
By a Huzur order dated February 8 1948 the Maharaja fixed the pension and other retirement benefits of the respondent and Sri Gaekwad
The order was in these terms  His Highness the Maharaja Saheb has been pleased to order that in the event of premature retirement of the Government Members Messrs DV Gaekwad and Chandrachud they will get forthwith as compensation an amount equivalent to the total amount they would have received had they continued in service up to
the date of retirement and a full pension of Rs 500 per month from the date of the premature retirement
Mr DV Gaekwad s salary is raised to Rs 2000 from the date of his confirmation as Naib Dewan
 On the same date the Maharaja by a separate order fixed the pension and retirement benefits of Sri Sudhalkar
On May 18 1948 the Maharaja directed the compulsory retirement of the respondent with effect from June 1 1948
Soon thereafter the respondent drew from the State Treasury Rs 951964 on account of compensation allowance
On June 1 1948 he retired 758 from service
On the same date Dr Jivraj Mehta became the Diwan and President of the Executive Council in place of Sri Sudhalkar
On the representations of Dr Jivraj Mehta the Maharaja passed another Huzur order on July 22 1948 modifying his previous orders and directing that the respondent and the other officials would draw pension only as and when they would reach the age of retirement and that the respondent would in addition draw the salary to which he might be eligible under the Account Rules
In October 1948 there was correspondence touching the Huzur Orders between the Maharaja and Dr Jivraj Mehta
On April 22 1949 the Executive Council of the State of Baroda headed by Dr Jivraj Mehta purported to review and set aside the Huzur Orders with respect to payment of compensation to the retiring officials and directed that 1  the respondent would get 4 months  privilege leave salary and as from April 1 1949 the pension of Rs 500 per month sanctioned by the Maharaja 2 the amount received by the respondent as compensation be forfeited to the State and returned by him to the Treasury 3 Rs 77416consequently due from him after taking into account his salary and pension up to March 31 1949 be recovered from him under section 148 of the Baroda Land Revenue Code
Pursuant to thistle the respondent s properties were attached on April 26 1949
The respondent was compelled to refund to the State Treasury Rs 55000 on April 27 1949 and Rs 10000on April 29 1949
On March 14 1952 the Collector of Baroda sent a notice to the respondent demanding payment of the balance of Rs 12416 
The respondent continued to draw pension at the rate of Rs 500per month from April 1 1949
On April 17 1952 he gave notice of his intention to file the present suit under section 80 of the Code of Civil Procedure
On June 23 1952 he instituted the suit against the State of Bombay asking for a declaration that the Huzur order dated FebrUary 8 1948 as modified by the Huzur order dated July 22 1948 was valid and binding on the defendant a declaration that the order of the Executive Council dated April 22 1949 was invalid an injunction restraining the defendant from recovering Rs 12416 and a decree for Rs 65000 and interest thereon totaling Rs 77300  future interest and costs
On August 31 1955 the Trial Court decreed the suit
On appeal the High Court held that the respondent was entitled to recover Rs 65 000 only without interest and was liable to refund Rs 17250 drawn on account of pension from April 1
1949 up
to February 14 1952
Consequently the High Court reduced the money decree to Rs 47750 give proportionate costs and confirmed the rest of the decree
The present appeal has been filed by the State of Gujarat after obtaining a certificate from the High Court
It is necessary at this stage to refer to the constitutional and political changes culminating in the merger of Baroda State in the 759 Province of Bombay
The Maharaja of Baroda enjoyed internal
sovereignty in the State under the suzerainty of the British crown
In 1940 the Maharaja enacted the Government of Baroda Act 1940 Act No VI of 1940
Section 3 provided that Baroda would continue to be governed by the Maharaja and that all rights authority and jurisdiction appertaining to its government was exercisable by him except as provided in the Act or as may be otherwise directed by His Highness
 Section 4 preserved all the Maharaja s powers legislative executive and judicial in relation to the State and its government and his right and prerogative to make laws and issue proclamations orders and ordinances by virtue of his inherent authority
Section 5 vested the executive  authority of the State in an Executive Council consisting of the Dewan and other members chosen by the Maharaja and holding office during his pleasure subject to the other provisions of the Act and the directions given by the Maharaja
Section 18d provided that no Bill affecting any order passed by the Maharaja in exercise of his prerogative could be moved in the Dhara Sabha without the previous sanction of the Maharaja
Section 32f provided that pensions and gratuities sanctioned by the Maharaja would be expenditure charged on the revenues of the State
On August 15 1947 the Indian Independence Act 1947 was passed and the paramountcy of the British crown lapsed
On the same date the State of Baroda acceded to the Dominion of India
Under the Instrument of Accession the Maharaja of Baroda ceded to the Dominion legislature the power to legislate for the State of Baroda with respect of defence external affairs and communications
The advent of independence in India gave momentum to the popular movement for transfer of power from the Maharaja to the people and for formation of a responsible government in the State
On January 9 1948 the Maharaja issued a proclamation directing the formation of a body elected on the basis of adult franchise frame a Constitution for the State subject to certain reservations and announcing his intention to appoint popular representatives to the Executive Council
By another proclamation dated August 25 1948 the Maharaja announced that 1 the Constitution framing assembly would have full and unrestricted authority to frame a Constitution for the State in respect of all matters and subjects 2 the entire executive authority of the State would immediately vest in the Executive Council the Government of Baroda Act would stand amended accordingly and the words or as may be  otherwise directed by His Highness occurring in section 3 and the whole of section 4 of the Act would be deemed to be omitted On September 16 1948 the Maharaja promulgated the Baroda State Executive Rules
Rule 6 provided that the Executive Council shall have the entire executive authority in regard to the administration of the State in all matters without any reservation
 On March 21 1949 the Maharaja executed the Baroda Merger Agreement whereby  760 he ceded to the Dominion Government full 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 on May 1 1949
On May 1 1949 the administration of the State was made over to the Dominion Government
As from that date all sovereign powers of the Maharaja of Baroda ceased and the Dominion Government acquired full and exclusive extra provincial jurisdiction for and in relation to the governance of the State of Baroda
By a notification No 101 P dated May 1 1949 the Central Government in exercise of its powers under section 32 of the Extra Provincial Jurisdiction Act 1947 delegated to the Provincial Government of Bombay its aforesaid extra provincial jurisdiction including the powers conferred by section 4 of that Act to make orders for the exercise of the jurisdiction
By notification No 453046F of the same date the Government of Bombay in exercise of the powers conferred by section 4 of the Extra Provincial Jurisdiction Act 1947 repealed the provisions of the Government of Baroda Act excepting sections 1 2 and 36 to 45 with immediate effect
On the same date the Government of Bombay promulgated the Administration of the Baroda State Order Paragraph 3 of the Order vested the executive authority of the State in a special commissioner subject to the supervision and control of the Bombay Government
Paragraph 4ib provided for the continuance of a of any law or b of any notification order scheme rule form or bye law issued made or prescribed under any law as were in force immediately before May 1 1949 in the Baroda State
On July 23 1949 the Government of Bombay promulgated the Bombay State Application of Laws Order 1949
Paragraph 3 of the Order provided for the extension and continuance of certain laws to the Baroda State
Paragraph 5 repealed sections 1 2 and 36 to 45 of the Government of Baroda Act and certain other enactments
Paragraph 5iiia provided that the repeal would not affect any right title obligation or liability already acquired accrued or incurred or any remedy or proceeding in respect thereof
On July 27 1949 the Governor General in exercise of his powers under section 290A of the Government of India Act 1935 promulgated the States  Merger Governors Provinces Order 1949
Paragraph 3 of the Order provided that Baroda would be merged in the province of Bombay and administered in all respects as if it formed part of that Province
Paragraph 4 provided for the continuance of laws then in force in the merged State
Paragraph 7 1  provided that all liabilities in respect of such loans guarantees and other financial obligations of the Dominion Government as arose out of the governance of a merged State would as from August 1 1949 be liabilities of the absorbing Province unless the loan guarantee or other financial obligation was relatable to central purposes
Paragraph 9 provided that any proceedings which if the order had not been passed 761 night lawfully have been brought in the merged State against the Dominion might in the case of any liability arising before August 1 1949 be brought a against the Dominion if the proceedings could have been brought against the Dominion had the liability arisen after that date and b otherwise against the absorbing Province
The questions arising for determination in this appeal are as follows  1  Was the order of the Executive Council dated April 22 1949 ultra vires its powers and invalid and not binding on the respondent 2 Was the Government of Baroda liable to pay the sum of Rs 65000 to the respondent and 3 if so has the liability devolved upon the State of Gujarat
The Executive Council Rules made by the Maharaja of Baroda on September 16 1948 vested in the Executive Council the entire executive authority in regard to the administration of the Baroda State in all matters without any reservation
The Executive Council had very wide powers but in our opinion they had no authority to override and rescind the Huzur orders passed by the Maharaja himself
The prerogative and inherent powers of the Maharaja was not delegated to the Executive Council
The Maharaja was still the sovereign ruler
The members of the Executive Council were responsible to him and held office during his pleasure
No appeal lay from his order to the Executive Council On the contrary under Rule 46 of the Privy Council Rules promulgated on December 18 1947 an appeal lay to the Maharaja from an order passed by the Executive Council
In view of section 18d of the Baroda Constitution Act 1940 even a legislative bill affecting an order passed by the Maharaja in the exercise of his prerogative rights could not be moved in the Dhara Sabha without his previous sanction
Under section 32f pensions and gratuities sanctioned by the Maharaja were charged on the revenues of the State
The Fluzur order was passed by the Maharaja on February 8 1948 in the exercise of his prerogative and inherent powers
The order was executed and the monies were paid under it to the respondent
The Executive Council had no authority to revoke the Huzur order and to forfeit the monies
We hold that the order of the Executive Council dated April 22 1949 was ultra vires its powers and was illegal and not binding upon the respondent
It is now conceded that the direction in the order dated April 22 1949 for the recovery of monies under section 148 of the Baroda Land Revenue Code was illegal
That section did not allow recovery of moneys payable under an order of the Executive 762 Council
The attachment levied on the respondent s properties was unlawful
The recovery of Rs 65000 from the respondent under the invalid order of the Executive Council cannot be justified as an act of State
The Courts below rightly found that the respondent was compelled to pay Rs 65000 under coercion
The result of the illegal recovery was that to the extent of Rs 65000 the Ii ability of the Baroda Government under the Huzur Order dated February 8 1948 remained outstanding
The main question arising in the appeal is whether the liability the Baroda Government under the Huzur order dated February 8 1948 devolved upon the successor governments after the merger of the Baroda State on May 1 1949
The view which currently prevails in this Court is that in cases where the Government of India has acquired the territory of a sovereign Indian State either by conquest treaty cession or otherwise the privileges and rights obtained from the predecessor State cannot be enforced by action against the Government of India see Ms Dalmia Dadri Cement Co vs The Commissioner of Income tax1 cession of Jind pema Chibar vs Union of Indiaa conquest of Daman nor can it be sued in the municipal courts for the debts and contractual liabilities of the predecessor see jagannath Agarwala vs State of Orissa3 Cession of Mayrbhunj Firm Bansidhar Premsukhdeo vs State of Rajasthan4 Bharatpur unless it has chosen to recognise the right privilege debt or liability by legislation agreement or otherwise
The rule extends to the acts of the predecessor State after its accession to the Dominion of India on August 15 1947 and before its complete merger in the Dominion
In State of Gujarat vs Fiddali5 the Ruler of Sant State issued a resolution or Tharao granting certain forest rights on March 12 1948 after the accession of the State to the Dominion
On June 10 1948 he transferred the administration of the State to the Dominion under a merger agreement dated March 19 1948
The Court held that the Tharao was not binding upon the successor government
It was said that the Rulers of the Indian States parted with their sovereignty in successive stages firstly on accession and finally on merger
As a result of accession the Dominion of India acquired power to legislate for the territories of the acceding state in respect of defence external affairs and communications
Under section 5 of the Indian Independence Act the Dominion was as from August 15 1947 a union comprising the acceding State
But the acceding State continued to retain its separate existence and individual sovereignty until its complete merger in the Dominion
1 1959 SCR 729
2  3  4  5  763 The question then is whether the successor governments recognized the rights and liabilities under the Huzur order dated February 8 1948
The onus of proving the recognition is upon the respondent see Valesinghji Joravarsingji vs Secretary of State for India1
The recognition may be either express or may be implied from circumstances and evidence appearing from the mode of dealing with those rights of the new sovereign see State Gularat vs Fiddali2
On behalf of the respondent it was argued that the Huzur Order dated February 8 1948 was a law and as such was recognised and continued in force by the Government of India
We axe unable to accept this contention
A grant made by the Ruler of an Indian State is not a law see State of Gujarat vs Fiddali2 461 grant of forest rights RN Pratap Singh Deo vs State of Orissaa grant of khorposh allowance Union of India vs Gwalior Rayon Silk Manufacturing Weaving Co4 grant of exemption from taxation State of Madhya Pradesh vs Lal Bhargavendra Singh5 grant of maintenance allowance nor is an agreement executed by the Ruler a law see Maharaja Shri Umaid Mills Ltd vs Union of India6
Accordingly it was held in State of Madhya Pradesh vs Col
Ram Pal7 that an order granting retirement pension in relaxation of the State Pension and Gratuity Rules was not a law
The Huzur order dated February 8 1948 did not lay down a rule conduct for the official members of the Executive Council generally
It fixed the retirement benefits of the respondent and of Gaekwad and enhanced Gaekwad s salary
A separate order fixed the retirement benefits of Sudhalkar the other official member
The order concerning the respondent was an executive act and had none of the characteristics of law unlike other laws it was not published in the Adhya Patrika or the official gazette of Baroda State
We hold that the order was not a law
The next question is whether the Baroda merger agreement dated March 21 1949 recognised the rights and liabilities under the Huzur Order dated February 8 1948
Now the Articles of the merger agreement may furnish valuable evidence of the affirmance of rights conferred by the predecessor State see Ms Dab mia Dadri Cement Co Ltd vs The Commissioner of Income taxs
In the State of Madhya Pradesh vs Shyam Lal9 a recognition of those rights was inferred from articles in merger agreements providing for the continuance of the laws of the merging State and for the taking over its assets and the liabilities by the new State
In the present case article VIII of the merger agreement 1 1924 LR 51 IA 357 361
2  at p 510
3  4  5  6 1963 Supp 2 SCR 515
7  8 1959 S CR 729 at p 748
9 764 dated March 21 1951 provided  1  The Government of India hereby guarantees either the continuance in service of the permanent members of the Public Services of Baroda on conditions which will be less advantageous than those on which they were serving before the date on which the administration of Baroda is made over to the Government of India or the payment of reasonable compensation
2 The Government of India further guarantees the continuance of pensions and leave salaries sanctioned by His Highness the Maharaja to the members of the public services of the State who have retired or proceeded on leave preparatory to retirement before the date on which the administration of Baroda is made over to the Government of India
Clause 2 of article VIII applies to the respondent
He was member of the public services of the Baroda State and he retired before the date of the merger
It guarantees the continuance of the pension and  leave salary sanctioned to him by the Maharaja
Now what does the word pension in clause 2 of article VIII mean Ordinarily the word pension means a periodical allowance of money granted by the Government in consideration or recognition of meritorious services
The word pension in the  section 601g of the Code of Civil Procedure1908 and section 6g of the implies periodical payments of money by Government to the pensioner see Nawab Bahadur of Murshidabad vs Karnani Industrial Bank Ltd1 Pension gratuity and provident fund are three distinct types of retirement benefits
But the word pension pensionem payment in its widest etymological sense can be construed as including all payments of every kind and description to a retiring government servant see Secretary of State vs Khemchand jeychand2
The term pension is frequently particularly in recent years used in the broad sense of retirement allowance or adjusted compensation for services rendered see Corpus Juris Secundum Vol 67 page 331 Vol 70 page 425
It has received the wider connotation in the definition sections of many modern statutes
To give a few illustrations the word pension includes any payment of a lump sum in respect of a person s employment see Fatal Accidents Act 1959 7  8 Eliz 2c
65 section 22 a superannuation allowance see Midwives Act 1936 26 Geo
5  1 Edw
40 section 26 a gratuity and a return of contributions to a pension fund with or without interest thereon or any other addition thereto see Transport Act 1947 10  11 Geo
49 section 1251 Gas Act 1948 11  12 Geo 6c
67 section 741
1 LR 1931 58 IA 215 219 20
2 ILR  436
765 Now clause 1  of article VIII of the merger agreement guarantees payment of reasonable compensation to officials whose services are dispensed with by the new Government
Clause 2 guarantees the continuance of pensions and leave salaries sanctioned by the Maharaja to officers who had retired before the date of the merger
Considering that the object of article VIII is to guarantee payment of retirement benefits to retired public servants of the merged State we are not inclined to give the word pensions a narrow interpretation
In our opinion the word pensions in clause 2 of article VIII includes the lump sum payable to the respondent as compensation under the Huzur order dated February 8 1948 as modified by the Huzur order dated July 22 1948
In substance the Huzur order directed that the respondent would get his full salary as his pension from the date of his premature retirement up to the completion of his superannuation age and allowed him to draw immediately the entire allowance for the period in one lump sum
The allowance so payable to the respondent a retiring government servant in recognition of his past services is pension within the meaning of cl 2 of article VIII of the merger agreement
Article VIII of the merger agreement thus furnishes strong evidence of recognition by the Government of India of the liability to pay retirement compensation under the Huzur order dated February 8 1948
We have also noticed that the successor governments continued the old laws of the Baroda State until they were repealed or altered
The successor governments resisted the respondent s claim on the ground that the order of forfeiture passed by the Executive Council on April 22 1949 was lawful
There was no question of their disclaiming liability under the Huzur order of February 8 1948 in case it was found that the order of the Executive Council dated April 22 1949 was invalid
In the circumstances we hold that the successor governments recognized and took over the liability under the Huzur order dated February 8 1958
If so it is not disputed that the liability has now devolved on the State of Gujarat
It follows that the Courts below rightly decreed the suit
This conclusion is sufficient to dispose of the appeal and we express no opinion whether the liability was also recognized by paragraph 4ib of the Administration of Baroda State Order paragraph 5iiia of the Baroda State Application of Laws Order 1949 or paragraph 7 1  of the States  Merger Governors  Provinces Order 1949
In the result the appeal is dismissed
There will be no order as to costs in this Court
RKPS Appeal dismissed


Summary:
On August 15 1947 upon the passing of the Indian Independence Act 1947 when paramountcy of the British crown lapsed the erstwhile State of Baroda acceded to India
By a proclamation on August 25 1948 the Maharaja of Baroda announced inter alia that the entire executive authority of the State would immediately vest in his Executive Council
On March 21 1949 he executed the Baroda Merger Agreement whereby the full powers in relation to the governance of the State were transferred to the Indian Government from May 1 1949
These powers were then delegated to the Provincial Government of Bombay
The respondent was an official member of the Maharaja s Executive Council of the State of Baroda
In January
1948 when it was considered likely that in view of the imminent constitutional changes m the State the members of the old Executive Council might be prematurely retired the Maharaja enhanced the respondents salary and by a Huzur order dated February 8 1948 he fixed the pension and other retirement benefits of the respondent and another member of the Executive Council
It was provided that in the event of their premature retirement they would get as compensation an amount equivalent to what they would have received if they continued in service upto the date of retirement and a full pension of Rs 50000 per month from the date of the premature retirement
On May 18 1948 the Maharaja directed compulsory retirement of the respondent with effect from June 1 1948 and he therefore drew Rs 9519600 on account of his compensation
At the instance of a new Executive Council the Maharaja passed another Huzur order on July 22 1948 modifying his previous orders and directing that the respondent and the other officials would draw pension only when they reached the age of retirement and would in addition draw the salary to which they were eligible under the Account Rules
On April 22 1949 the new Executive Council purported to review and set aside the Huzur orders with respect to payment of compensation to the retired officials and directed inter alia that a sum of Rs 7741600 out of the compensation received by the respondent be recovered
from him under section 148 of the Baroda Land Revenue code
He was compelled to refund Rs 6500000 and a balance of Rs 1241600 was demanded from him by the Collector of Baroda
The respondent filed a suit against the State of Bombay asking inter alia for a declaration that the Huzur order dated February 8 1948 as modified by the Huzur Order dated July 22 1948 was binding on the defendants and that the order of the Executive Council of April 22 1949 was invalid
The Trial 756 Court decreed the suit and the High Court in appeal substantially upheld the respondent s case but reduced the amount of the decree
Apart from the validity of the Executive Council s order of April 22 1949 the other questions arising for determination in the appeal to this Court were whether the Government of Baroda was liable to pay the sum of Rs 65000 to the respondent and if so whether the liability devolved upon the appellant State of Gujarat
HELD Dismissing the appeal i The Huzur order of February 8 1948 was passed by the Maharaja in the exercise of his prerogative and inherent powers
The Executive Council had no authority to revoke that order and until the Maharaja passed the entire executive authority to the Council on August 25 1948 he was still the sovereign ruler
The order of the Executive Council dated April 22 1949 was therefore ultra vires and not binding upon the respondent
761 G ii The direction in the order of April 22 1949 for the recovery of monies under section 148 of the Baroda Land Revenue Code was illegal
That section did not allow recovery of moneys payable under an order of the Executive Council
The result of the illegal recovery of Rs 65000 from the respondent was that to the extent of that amount the liability of the Baroda Government under the Huzur order dated February 8 1948 remained outstanding
762 A iii Clause 1 of Article VIII of the Baroda Merger Agreement guaranteed payment of reasonable compensation to officials whose services were dispensed with by the new Government
Clause 2 guaranteed the continuance of pension and leave salaries sanctioned by the Maharaja to officers who had retired before the date of the merger
Article VIH thus furnishes strong evidence of recognition by the Government of India of the liability to pay retirement compensation under the Huzur order of February 8 1948
Furthermore the successor Governments continued the old laws of the Baroda State until they were repealed or altered
The appellant resisted the respondent s claim on the
basis only of the order of April 22 1949 but as this was invalid it must be held that the successor Governments recognised and took over liability under the Huzur order of February 8 1948 which liability had since devolved on the appellant State of Gujarat
Considering that the object of Article VIII was
to guarantee payment of retirement benefits to retired public servants of the merged State the word pensionS could not be given any narrow interpretation and would include the lump sum payable to the respondent as compensation under the Huzur order dated February 8 1948 as modified by the Huzur order dated July 22 1948
765 A D Ms Dalmia Dadri Cement Co vs The Commissioner of Income Tax
1959 SCR 729 Pema Chibar vs Union of India   Jagannath Agarwala vs State of Orissa   Firm Bansidhar Premsukhdeo vs State of Rajasthan   State of Gujarat vs Fiddali   Vajesinghji Joravarsingji vs Secretary of State for India 1924 LR 51 IA 357 361 RN Pratap Singh Deo vs State of Orissa   Union of India vs Gwalior Rayon Silk Manufacturing Weaving Co   State of Madhya Pradesh vs Lal Bhargavendra Singh 1966 2 SCR 56 Maharaja Shri Umaid Mills Ltd vs Union of India 1963 Supp 2 SCR 757 515 State of Madhya Pradesh vs Col
Ram Pal   Ms Dalmia Dadri Cement Co Ltd vs The Commissioner of Income tax  Nawab Bahadur of Murshidabad vs Karnani Industrial Bank Ltd LR 1931 58 IA 215 219 20 and Secretary of State vs Khemchand Jeychand ILR  436 referred to