Civil Appeal No 12 of 1965
From the Judgment and Decree dated 29 4 1965 of the Rajasthan High Court in D B Civil Misc
Case No 67 of 1965
B D Sharma for the Appellant
section N Kacker Sol
Genl U R Lalit and Girish Chandra for Respondent No l section M Jain for Respondent No 2 The Judgment of the Court was delivered by KOSHAL J
The facts forming the background to this appeal by certificate granted by the High Court of Rajasthan against its judgment dated the 29th April 1968 in so far as they are undisputed may be stated in some detail
On the 28th February 1948 the Rulers of the erstwhile States of Alwar Bharatpur Dholpur and Karauli entered into a Covenant hereinafter referred to as the Matsya Covenant agreeing to merge their States into one State known as the United State of Matsya which was to come into being on the 1st of April 1948 with the Ruler of Dholpur as its Raj Pramukh
Article VI of the Covenant provided that the Ruler of each Covenanting State shall as soon as may be practicable and in any event not later than the 15th March 1948 make over the administration of his State to the Raj Pramukh and that thereupon all rights authority and jurisdiction belonging to such Ruler which appertained or were incidental to the Government of his State
shall vest in the United State of Matsya
65 Article Xl of the Covenant provided for the private properties of the Ruler and ran thus 1
The Ruler of each Convenanting State shall be entitled to the full ownership use and enjoyment of all private properties as distinct from State properties belonging to him on the date of his making over the administration of that State to the Raj Pramukh
He shall furnish to the Raj Pramukh before the 1st May 1948 an inventory of all the immovable properties securities and cash balances held by him 16 such private property
If any dispute arises as to whether any item of property is the private property of the Ruler or State property it shall be referred to such person as the Government of India may nominate and the decision of that person shall be final and binding on all parties concerned
 The United State of Matsya came into being as stipulated in the Matsya Covenant on the 1st of April 1948 and during the same month the Ruler of Alwar who is the appellant before us furnished to the Raj Pramukh an inventory of all the immovable properties securities and cash balances held and claimed by him as his private properties
On the 11th of April 1948 the Rulers of ten States namely Banswara Bundi Dungarpur Jhalawar Kishengarh Kotah Mewar Partabgarh Shahpura and Tonk entered into a Covenant agreeing to merge them into one State named the United State of Rajasthan
That Covenant was superseded by another dated the 10th of March 1949 hereinafter called the Rajasthan Covenant through which the United State of Rajasthan was to consist of the said ten States as also of four others namely Bikaner Jaipur Jaisalmer  and Jodhpur with the Ruler of Jaipur as the Raj Pramukh
Clause c of Article I of the Rajasthan Covenant defined the expression new Covenanting State to mean any of the said four States
Article II of the Covenant last mentioned provided that the United State of Rajasthan would include any other State the Ruler of which entered into an agreement with the Raj Pramukh with the approval of the Government of India to the integration of that State with the United State of Rajasthan Article XII of the Rajasthan Covenant provided 1 The Ruler of each Covenanting State shall be entitled to the full ownership use and enjoyment of all private properties as distinct from State properties belonging to 66 him on the date of his making over the administration of that State to the Raj Pramukh of the former Rajasthan state or as the case may be to the Raj Pramukh of the United State under this Covenant
 2 If any dispute arises as to whether any item of property is the private property of the Ruler of a Covenanting State other than a new Covenanting State or is State pro perty it shall be referred to such person as the Government of India may nominate in consultation with the Raj Pramukh and the decision of that person shall be final and binding on all parties concerned Provided that no such dispute shall be so referable after the first day of May 1949
3 The private properties of the Ruler of each new Covenanting State shall be as agreed to between the Government of India in the States Ministry and the Ruler concerned and the settlement of properties thus made shall be final
 On the 1st of May 1949 the Rulers of the States of Alwar Bharatpur Dholpur and Karauli which were the constituent States of the United State of Matsya entered into an agreement hereinafter called the Amending Agreement with the Raj Pramukh of the United State of Rajasthan merging with four States into it with effect from the 15th of May 1949 in abrogation of the Matsya Covenant
While subscribing to the Amending Agreement the Ruler of Dholpur acted not only in his capacity as such but also as the Raj Pramukh of the United State of Matsya
Article IV of that Agreement effected amendments in the Rajasthan Covenant so as to make it applicable to the said four States with effect from the date last mentioned
No charge however was made in the provisions of clause c of Article I of Article XII of the Rajasthan Covenant
On the 14th of September 1949 Mr V P Menon of the Ministry of States Government of India wrote the following letter to the Ruler of Alwar My dear Maharaja Sahib Your Highness will recall that the inventory of immovable properties securities and cash balances furnished by Your Highness in accordance with Article XI of the Covenant for the formation of the United State of Matsya was discussed with Your Highness at New Delhi on the 9th and 10th April 1949
I now forward for Your Highness s information a 67 copy of the final inventory of Your Highness s private properties
It has the approval of the Government of India in the Ministry of States
The following claims of Your Highness and the counter claims of the former Matsya Government are still under consideration and the decision will be communicated to Your Highness as soon as possible
1 cash balance of the Alwar State treasury 2 claim for Rs 482520 as arrears of Privy Purse of Your Highness for 6 years from 1936 37 to 1942 43
Your Highness will appreciate that the settlement of the inventory is an integral part of an over all agreement in respect of all outstanding matters of dispute and does not stand by itself
With kind regards Yours sincerely Sd V P Menon This letter was accompanied by a copy of the final  inventory which listed 32 items
Reproduced below is the item at Serial No 1 of that inventory section Description of property
Decision of the State No Ministry
City Palace including adjoining building
Ancestral
The portion of the building at present in use by the State for administrative purposes or for Museum and Imperial Bank will continue to be so used till such time as required
The requirements of the State in future will not be of the same order as today and every effort will be made to release the accommodation at present occupied in the Zenana  Mardana Mahals at the earliest practicable date
The State will bear the maintenance cost of the portions used by it
Any addition or alteration in the portion used by the State will require the prior consent of His Highness and should be carried out at State expense
 68 Thereafter correspondence went on between the Ministry of States and the Ruler of Alwar and on the 24th September 1952 the later received from the former a written communication dealing with 26 items of properties
The opening clause of Para 2 of the letter stated 2
The Government of India have carefully considered all the outstanding questions in respect of your High Courts private properties in consultation with the Rajasthan Government and their decisions in respect thereof are as follows  The description of each item covered by the letter was followed by the decision in respect thereof That part of the letter which deals with item 26 is set down below 26 City Palace including adjoining buildings The City Palace with the adjoining buildings comprising of the Jagir office Central Record lmperial Bank Treasury Gandhi National School etc
will be your Highness s ancestral property
The secretariat building will however be State 1 property
This decision was reiterated in an office Memorandum issued by the Government of Rajasthan in the Political Department on the 30th of December 1952
Through a letter dated the 14th of October 1959 proceeding from his Private Secretary and addressed to the Chief Secretary Ministry of Home Affairs Government of India
the Ruler of Alwar claimed rent for three properties known as the Secretariat building Daulat Khana building and Indra Viman Station adjoining the City Palace and the bungalow at Sariska which were in the occupation of the Rajasthan Government
The claim was made on the ground that all the four properties had been declared to be the private properties of the Ruler in the inventory appended to the letter dated the 14th September 1949 mentiond above
The claim was rejected by the Ministry of Home Affairs which asserted in its letter dated the 24th of December 1959 that the four properties in question had not been recognized as the private properties of the Ruler
The claim was reiterated by the Ruler through a letter issued by Shri Gopesh Kumar Ojha his Legal  Financial Adviser but the name was again turned down by the Ministry of Home Affairs through their letter dated the 6th8th of December 1960 in which the position taken was The Statement regarding the extent of your Private Property rights in the City Palace area made in our letter dated 24 12 59 are based upon the decision reached in March 1952 after discussion with your Highness and we regret that they cannot now be reopened 69 2
It was in the above background that the Ruler of Alwar filed two suits being suits Nos 4 and 5 of 1963 in the court of the District Judge Alwar
In Suit No 5 the prayer made was that the three properties known as the Secretariat building Daulat Khana building and Indra Viman Station be declared to be the private properties of the plaintiff and that the State of Rajasthan be ejected therefrom or in the alternative be ordered to pay rent at a specified rate
A decree for 36000 was also claimed for mesne profits
In suit No 4 of 1963 the Claim was that the plaintiff was entitled to rent or mesne profits in respect of a building forming part of the Mardana Palace
Both suits were resisted by the Union of India and the State of Rajasthan who were joined as the two defendants to each of them and it was claimed inter alia that the provisions of article 363 of the Constitution of India were a complete bar to their maintainability
The two suits were transferred by me High Court of Rajasthan to itself and the question of their maintainability was mooted before it with reference to the provisions of article 363 of the Constitution 1 which states 1 Notwithstanding anything in this Constitution but subject to the provisions of article 143 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 this Constitution by any Ruler of Indian State and to which the Government or the Dominion of India or any of its predecessor Governments 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 this Constitution relating to any such treaty agreement covenant engagement sanad or other similar instrument
2 In this article a Indian State means any territory recognised before the commencement of this Constitution by His Majesty or the Government of the Dominion of India as being such a State and b Ruler includes the Prince Chief or other per son recognised before such commencement by 70 His Majesty or the Government of the Dominion of India as the Ruler of any Indian State
The High Court proceeded to determine whether the dispute in suit No 5 of 1963 was one arising out of an agreement such as fell within the ambit of article 363 as was contended by the defendants or was merely a one sided decision of the Government of India and therefore outside the purview of the article as was asserted by the plaintiff
It held that the decisions contained in the latter dated the 14th of September 1949 had really resulted from an agreement between the Ministry of States and the plaintiff that the extent of the building adjoining the City Palace was not to be found with precision in the inventory appended to the said letter that consequently there was a real dispute between the parties whether the suit property was included in the expression adjoining building and that the adjudication of such a dispute was barred by the provision of article 363 of the Constitution
Suit No 5 of 1963 was therefore dismissed but with no order as to costs
In regard to suit No 4 of 1963 however the High Court held that the property in dispute was clearly a part of the City Palace itself as it was comprised in the Mardana Mahal that the dispute was altogether illusory in view of the fact that right up to the 8th of December 1960 the Government of India had been taking the stand that the disputed property was the private property of the plaintiff that the dispute was consequently not barred by the provisions of article 363 of the Constitution and that the suit there fore deserved to be decided by the District Judge on merits
In the result suit No 4 of 1963 was remitted to the trial court for decision according to law
It is the judgment of the High Court in suit No S of 1963 alone that is challenged in this appeal
Mr B D Sharma learned Counsel for the appellant Ruler has vehemently contended that the letter dated the 14th December 1949 was not the result of an agreement between the plaintiff and the Government of India and that on the other hand it was a decision arrived at in pursuance of clause 3 of Article XI of the Matsya Covenant
In support of this contention it was pointed out that the letter was issued as a sequel to the inventory furnished by the plaintiff under clause 2 of that Article and that the operative part of the inventory appended to the letter is headed decision of the States Ministry which according to learned Counsel clearly negatives an agreement
It was further urged that even the Rajasthan Covenant did not envisaged any agreement in so far as the plaintiff was concern cd because he was not the Ruler of a new Covenanting State with 71 in the meaning of that expression as used in clauses 2 and 3 of Article XII thereof that it was clause 2 of that Article which governed him and which again provided for a decision being given on disputes relating to properties and that the letter dated 14th September 1949 must still be construed as a decision if the Matsya Covenant was held to be inapplicable
A careful examination of the material on the record however clearly makes out that the contention is without substance as we shall presently show
It is no doubt true that the plaintiff had furnished the inventory of the properties held by him in accordance with Article XI of the Matsya Covenant as is stated in the opening paragraph of the letter dated the 14th of September 1949
It further cannot be gain said that the third column of the inventory to that letter was headed decision of the State Ministry
These two factors without more might have gone a long way to support the case propounded on behalf of the plaintiff but they are sought to be used out of context as is clear from a perusal of the entire letter from which it can be safely spelt out that the so called decision was nothing but an agreement arrived at between the Government of India and the plaintiff
It is pertinent that the letter mentions that the inventory furnished by the plaintiff was discussed with him at New Delhi on the 9th and 10th of April 1949 and then states that a copy of the final inventory of the plaintiff s private properties which had the approval of the Government of India in the Ministry of States was forwarded to him
Now under clause 3 of Article XI of the Matsya Covenant as also clause 2 of Article XII of the Rajasthan Covenant no approval of the Ministry of States was called for
In fact what each of those clauses provided was that if any dispute arose as to whether any item of property was the private property of the Ruler concerned or of his erstwhile State it was to be referred to such person as the Government of India might nominate and the decision of that person was to be final and binding on all parties concerned
Now it is not the case of the plaintiff that the Government of India nominated a person to whom the dispute was to be referred nor is it claimed by him that such a person gave any decision
The contents of the letter therefore are not at all relateable to those of either of the two clauses just above mentioned
On the other hand they clearly indicate that the so called decisions of the Sates Ministry contained in the inventory appended to the letter formed really the record of the agreement arrived at between the Ministry of States and the plaintiff as a result of negotiations held on the 9th and 10th of April 1949
In this connection reference may pointedly be made to paragraph 3 of the letter which bears repetition 72 3
Your Highness will appreciate that the settlement of the inventory is an integral part of an overall agreement in respect of all outstanding matters of dispute and does not stand by itself This paragraph talks of the settlement of the inventory which was to be an integral part of an over all agreement in respect of all outstanding matters of dispute and was not to stand by itself
In our opinion the paragraph is a clincher against the plaintiff and indicates without any shadow of doubt that what the letter said was that all the disputes regarding the property of the Ruler were to be settled by an over all agreement that the contents of the inventory appended to the letter merely recorded the settlement between the plaintiff and the Ministry of States and that even those contents were not to be regarded as a final settlement of the matters dealt with therein unless they formed part of an agreement embracing all items of property
It may be noted here that the Matsya Covenant had been abrogated with effect from the 15th May 1949 by the Rajasthan Covenant as modified by the Amending Agreement and there was thus no question of any decision being given after that date under clause 3 of Article XI of the Matsya Covenant and that the only surviving provision under which disputes regarding property owned by the plaintiff could be determined after the 15th of May 1949 was Article XII of the Rajasthan Covenant
It is true that the expression new Covenanting State as defined in clause c of Article I of that Covenant meant only any of the four States of Bikaner Jaipur Jaisalmer and Jodhpur that the definition was not amended by any provision of the Amending Agreement so that the State of Alwar could not be regarded as a new Covenanting Stat
_ for the purpose of clause 3 of Article XII of the Rajasthan Covenant and that the clause of that Article in accordance with which disputes relating to property claimed by tho Ruler of Alwar as his private property were to be determined was clause 2 which provided for their decision by a person nominated by the Government of India in that behalf
The fact remains however that no such person was ever nominated and that the letter dated the 14th September 1949 cannot be construed for reasons already stated by us as laying down a decision of any such person
What appears to have happened is that instead of following the course indicated in clause 2 last mentioned and having the disputes referred for decision to a person nominated by the Government of India the parties the Government of India and the appellant decided to adopt the method of mutual agreement to settle those disputes a method which always remained open to them notwithstanding the Matsya 73 Covenant and the Rajasthan Covenant
Such mutual agreement could by no stretch of imagination be regarded as a decision by a person nominated by the Government of India either under clause 3 of Article XI of the Matsya Covenant or clause 2 of Article XII of the Rajasthan Covenant and must be deemed to be nothing more or less than an agreement simpliciter even though it was labelled as a decision of the States Ministry in the inventory appended to the letter dated the 14th September 1949
Another contention raised by Mr Sharma was that even if the letter dated the 14th September 1949 was held to evidence an agreement it was not hit by the provisions of article 363 of the Constitution inasmuch as it was an agreement resulting from the Rajasthan Covenant which alone according to him was the agreement covered by the article
This contention is also without substance
Article 363 of the Constitution bars the jurisdiction of all courts in any dispute arising out of any agreement which was entered into or executed before the commencement of the Constitution by any Ruler of an Indian State to which the Government of India was a party
The operation of the article is not limited to any parent Covenant and every agreement whether it is primary or one entered into in pursuance of the provisions of a preceding agreement would fall within the ambit of the article
Thus the fact that the agreement contained in the letter dated the 14th September 1949 had resulted from action taken under the provisions of the Rajasthan Covenant is no answer to the plea raised on behalf of the respondents that article 363 of the Constitution is a bar to the maintainability of the two suits although we may add that agreement did not flow directly from the Rajasthan Covenant but was entered into by ignoring and departing from the provisions of clause 2 of Article XII thereof
The only other contention put forward by Mr Sharma was based on the contents of column 3 of Item 1 of the inventory appended to the letter dated the 14th September 1949
He drew our attention to the mention in that column of the portions of the adjoining building being occupied by the State for administrative purposes or for Museum and Imperial Bank and also comprising the Zenana and Mardana Mahals
According to him this meant that the entire building adjoining the City Palace was held to be the private property of the plaintiff which finally vested in the plaintiff as from the date of the letter and of which the plaintiff could not be divested by any subsequent decision of the Ministry of States
In this connection Mr Sharma urged that the Ministry of States had no power of reviewing a settlement once arrived at and argued that if it was claimed that such 6 817 SCI78 74 a power existed the determination by a court of the limited question of the power of review would be barred by the provisions of article 363 of the Constitution
This contention also is of no avail to him
As held above the agreement dated the 14th September 1949 was not to stand by itself but was to be a part and parcel of an overall agreement embracing all outstanding matters of dispute
It follows that the terms of the agreement contained in the letter were liable to change till a final agreement was reached and in this view of the matter no finality could be said to attach to those terms until all the disputes became the subject matter of an agreed settlement
The terms of the inventory attached to the letter were thus merely tentative the process of settlement being a continuous one till all the disputes were finally resolved
And the ultimate decision of the Ministry of Home Affairs conveyed in its letter of the 24th of December 1959 not to treat the Secretariat building Daulat Khana building and Indra Viman Station adjoining the City Palace to be the private property of the plaintiff was based upon a mutual agreement between the parties which was reached after discussion in March 1952 as part of an over all agreement as is evident from the letter of the Ministry of Home Affairs dated the 6th8th of December 1960
In view of the conclusions arrived at above we hold that the  decision sought to be enforced by the plaintiff is an agreement hit by article 363 of the Constitution and that the High Court was right in dismissing suit No 5 of 1963 as being not maintainable
The appeal therefore fails and is dismissed but with no order as to costs
NVK Appeal dismissed


Summary:
The appellant who was the Ruler of a princely state entered into a covenant agreeing to merge his state into a union called the United States of Matsya
The Matsya Covenant by article Xl Cl
2 provided that the ruler of each state shall furnish to the Raj Pramukh an inventory of all the inn movable properties securities and cash balances held by him as private property and cl
3 provided that if any dispute arose as to whether any item of property was the private property of the ruler or the state property it shall be referred to such person as the Government of India may nominate in the decision of that person shall be final and binding on all parties
The appellant furnished an inventory of all properties claimed to be his private property
Sometime later the rulers of the constituent States of Matsya entered into a Covenant with the Rajpramukh of the United State of Rajasthan for merger of their States into the State of Rajasthan in abrogation of the Matsya Covenant
The Rajasthan Covenant by article XII Cl
2 provided for the settlement of any dispute as to whether the property was private property or state property by reference to such person as the Government of India may nominate in consultation with the Rajpramukh and that the decision of such person shall be final and binding on the parties
The Ministry of States Government of India wrote on 14th September 1949 to the appellant that the settlement of the inventory was an integral part of an overall agreement in respect of all outstanding matters of dispute and did not stand by itself
After correspondence with the Government of India the appellant received a written communication intimating the decision of the Government of India in respect of 25 items of the property
The appellant claimed that four buildings which were in occupation of the State Government had been declared as his private properties in the inventory appended to the letter of the Government of India and that the State Govern 63 ment should pay rent to him in respect of those buildings
This claim of the appellant having been rejected he filed a suit in the district court for a declaration that the properties were his private properties and that the respondents should be ordered to pay rent to him
The suit was transferred by the High Court to itself The High Court dismissed the suit on the ground that adjudication of the dispute was barred by article 363 of the Constitution
In appeal to this Court it was contended that the letter of 14th September 1949 was the result of a decision arrived at in pursuance of cl
3 of article XI of Matsya Covenant and cl
2 of article XII of the Rajasthan Covenant and must be construed as a decision of the Government of India
Dismissing the appeal  HELD 1
The decision sought to be enforced is an agreement hit by article 363 of the Constitution and the High Court was right in dismissing the suit
74H 2
The so called decision was nothing but an agreement between the Government of India and the appellant
The letter clearly stated that the inventory furnished by the plaintiff was discussed with him at New Delhi and that a copy of the final inventory of the appellant s private properties which had the approval of the Government of India in the Ministry of States Was forwarded to him
Under clause 3 article XI of the Matsya Covenant as also clause 2 of article XII of the Rajasthan Covenant no approval of the Ministry of States was called for
What each of these clauses provided was that if any dispute arose as to whether any item of property was the private property of the ruler concerned or of his erstwhile state it was to be referred to such a person as the Government of India might nominate and the decision of that person was to be final and binding on all parties concerned
Neither the Government of India nominated a person to whom the dispute was to be referred nor did any such person give a decision on the point
The contents of the letter are not at all relatable to those of either of the two clauses
On the other hand they clearly indicate that the so called decisions of the States Ministry contained in the inventory appended to the letter formed really the record of the agreement arrived at between the Ministry of States and the plaintiff as a result of negotiations
71D H 3
Paragraph three of the letter talks of the settlement of the inventory 
which was tc
be an integral part of an overall agreement in respect of all outstanding matters of dispute and was not to stand by itself
What the said was that all the disputes regarding the property of the Ruler were to be settled by an overall agreement that the contents of the inventory appended to the letter merely recorded the settlement between the appellant and the Ministry and that even those contents were not to be regarded as final settlement of the matters dealt with therein unless they formed part of an agreement embracing all items of property
72B C 4
In the instant case instead of having the disputes referred for decision to a person nominated by the parties they decided to adopt the method of mutual agreement to settle those disputes
Such mutual agreement could not 64 be regarded as a decision by a person nominated by the Government of India either under clause 3 of article of Matsya Covenant or clause 2 of article Xll of Rajasthan Covenant
It must be deemed to be nothing more nor less than an agreement simpliciter even though it was labelled as a decision of the States Ministry
72H 73B 5
Article 363 of the Constitution bars the jurisdiction of all courts in any dispute arising out of any agreement which was entered into or executed before the commencement of the Constitution by any Ruler of an Indian Sate to which the Government of India was party
The operation of the Article is not limited to any parent Covenant and every agreement whether it was primary or one entered into in pursuance of the provisions of a preceding agreement would fall within the ambit of the Article
The fact that the agreement contained in the letter dated the 14th September 1949 had resulted from action taken under the provisions of the Rajasthan Covenant is no answer to the plea raised on behalf of the respondents that article 363 of the Constitution is a bar to the maintainability of the two suits although that agreement did not flow directly from the Rajasthan Covenant but was entered into by ignoring and departing from the provisions of clause 2 of article XII thereof
73D E