minal Appeal No 193 of 1964
Appeal from the judgment and order dated April 29 1964 of the Calcutta High Court in Criminal Appeal No 369 of 1962
section D Banerjee Advocate General for the State of West Bengal B Sen P K Chatterjee M K Banerjee and P K Bose for the appellant
MC Setalvad A N Sinha and Sukumar Ghose for the respondent NS Bindra R H Dhebar and R N Sachthey for inter vener No 1
A V Rangam for intervener No 2
V A Seyid Muhamad Advocate General for the State of Kerala and A G Puddisery for intervener No 3
O P Rana for intervener No 4
I N Shroff for intervener No 5
K B Mehta for intervener No 6
The Judgment of SUBBA RAO CJ WANCHOO SIKRI RAMASWAMI SHELAT BHARGAVA and VAIDIALINGAM JJ was delivered by SBBBA RAO C J BACHAWAT J delivered a separate concurring Judgment
SHAH J delivered a dissenting Opinion
Subbarao CJ
This Full Bench of 9 Judges has been cons tituted to consider the correctness of the decision of this Court 175 in Director of Rationing and Distribution vs The Corporation of Calcutta1
The relevant facts are simple and are not in dispute
The State of West Bengal was carrying on the trade of a daily market at 1 Orphanganj Road Calcutta without obtaining a licence as required under section 218 of the Calcutta Municipal Act 1951 West Bengal Act 33 of 1951 hereinafter called the Act
The Corporation of Calcutta filed a complaint against the State of West Bengal in the Court of the Presidency and Municipal Magistrate Calcutta under section 541 of the Act for contravening the provisions of section 218 thereof
Under section 218 of the Act every person who exercises or carries on in Calcutta any trade shall take out a licence and shall pay for the same such fee as is mentioned in that behalf in Schedule IV to the Act
Admittedly for the year 1960 61 the Government of West Bengal did not take out a licence under the said section but carried on the said trade
The main contention of the Government was that the State was not bound by the pro visions of the Act
The learned Magistrate accepting the said contention acquitted the State
On appeal the High Court of Calcutta held that the State was carrying on the business of running a market and therefore it was as much bound as a private citizen to take out a licence
It distinguished the decision of this Court in Director of Rationing and Distribution vs The Corporation of Calcutta1 on the ground that the said decision was concerned with the sovereign activity of the State
In the result the State of West Bengal was convicted under section 537 of the Act section
537 appears to be a mistake for section 541 and sentenced to pay a fine of Rs 250 with the direction that when realized it should be paid to the Corporation
Hence the present appeal
Learned Advocate General of West Bengal raised before us the following points 1 The State is not bound by the provisions of a statute unless it is expressly named or brought in by necessary implication 2 the said principle equally applies to sovereign and non sovereign activities of a State and Mr N section Bindra learned counsel appearing for the Attorney General raised before us the third point namely this Court has no power under the Constitution to review its earlier judgment
While the learned Advocate General contended that the rule of construction in favour of the State was part of the common law of England accepted as the law of this country and therefore was law in force within the meaning of article 372 of the Constitution Mr N section Bindra argued that the said rule of construction was law of the land in that it was declared to be so by the Judicial Committee in Province of Bombay vs Municipal Corporation of 1  176 the City of Bombay1 and therefore it was law in force within the meaning of article 372 of the Constitution
The third contention need not detain us for it has been rejected by this Court in The Bengal Immunity Company Limited vs The State of Bihar2
There a Bench of 7 Judges unanimously held that there was nothing in the Constitution which prevented the Supreme Court from departing from a previous decision of its own if it was satisfied of its error and of its baneful effect on the general interests of the public
If the aforesaid rule of construction accepted by this Court is inconsistent with the legal philosophy of our Constitution it is our duty to correct ourselves and lay down the right rule
In constitutional matters which affect the evolution of our polity we must more readily do so than in other branches of law as perpetuation of a mistake will be harmful to public interests
While continuity and consistency are conducive to the smooth evolution of the rule of law hesitancy to set right deviations will retard its growth
In this case as we are satisfied that the said rule of construction is inconsistent with our republican polity and if accepted bristles with anomalies we have no hesitation to reconsider our earlier decision
At the outset it will be convenient to notice the facts of the decision of this Court in Director of Rationing and  Distribution vs The Corporation of Calcutta3 and the reasons given by this Court for applying the said rule of construction to an Indian statute
There the Director of Rationing and Distribution was using certain premises in Calcutta for storing rice flour etc
without taking out any licence under section 385 1a of the Calcutta Municipal Act 1923
The Corporation of Calcutta filed a complaint against the said Director in the Magistrate s Court for the contravention of the said provision
This Court held that the State was not bound by the provisions of section 386 1a of the said Act and that the appellant was not liable to prosecution for the contravention of the said section
Sinha C J speaking for Imam and Shah JJ gave one judgment Sarkar J gave a separate but concurrent judgment and Wanchoo J recorded his dissent
The reasoning of Sinha CJ is found in the following passage  It is well established that the common law of England is that the King s prerogative is illustrated by the rule that the Sovereign is not necessarily bound by a statutory law which binds the subject
This is further enforced by the rule that the King is not bound by a statute unless he is expressly named or unless he is bound by necessary implication or unless the statute being for the public good it would be absurd to exclude the King from it at page 170
1 1946 LH 73 IR 271
2 3  177 That was law applicable to India also as authoritatively laid down by the Privy Council in the case referred to above 1946 L R 73 IA 271 it law in force under article 372 of the Constitution must be interpreted as including the common law of England which was adopted as the law of this country before the Constitution came into force At p 173
Sinha CJ therefore held that the said rule of construction was part of the common law of England that it was adopted by this country and that Art  372 of the Constitution continued it
Sarkar J on the other hand agreed with the conclusion arrived at by Sinha CJ but on a different ground
He based his conclusion not on any common law doctrine but simply on the ground that the said rule of construction of statutory provisions was accepted and followed in England America and India
Wanchoo J in his dissent put the case in a different perspective
The following passage brings out his line of thought  Two things are clear from this modern conception of royal prerogative namely 1 that there must be a Crown or King to whom the royal prerogative attaches and 2 that the prerogative must be part of the common law of England
Both these conditions existed when the Privy Council decision in Province1 of Bombay vs Municipal Corporation of the City of Bombay1 was given in October 1946 the King was still there and the Privy Council held that the English common law rule of construc tion applied to Indian legislation as much as to English statutes At p 184
In our country the Rule of Law prevails and our Constitution has guaranteed it by the provisions contained in Part III thereof as well as by other provisions in other Parts
It is to my mind inherent in the conception of the Rule of Law that the State no less than its citizens and others is bound by the laws of the land
When the King as the embodiment of all power executive legislative and judicial has disappeared and in our republican Constitution sovereign power has been distributed among various organs created thereby it seems to me that there is neither justification nor necessity for continuing the rule of construction based on the royal prerogative At p 185 But where the royal prerogative is merely a rule of construction of statutes based on the existence of the Crown in England and for historical reasons I fail to see why in a democratic republic the courts should not follow the ordinary principle of construction that no one 1 1946 LR 73 IA 271
178 is exempt from the operation of a statute unless the statute expressly grants the exemption or the exemption arises by necessary implication At pp 188 189
The conflict between the two views expressed by the learned Judges in the earlier decision mainly rests on the meaning of the expression law in force in article 372 of the Constitution
While Sinha CJ took the view that the common law of England including the rule of construction was accepted as the law of this country and was therefore the law in force within the meaning of the said Article Wanchoo J took the view that whatever might be said of the substantive laws a rule of construction adopted by the common law of England and accepted by the Privy Council at a time when the Crown was functioning in India was not the law in force within the meaning of the said Article
We shall now consider the validity of the conflicting views The common law of England is clear on the subject
In Halsbury s Laws of England 3rd Edn Vol 7 in Part 5 of the Chapter on Constitutional Law under the heading The Royal Prerogative the Royal prerogatives are enumerated and their limitations are given
In para 464 it is stated  The general rule is that prerogatives cannot be affected or parted with by the Crown except by express statutory authority
 The prerogative right can be taken away by law because the law is made by the Crown with the assent of the Lords and the Commons
It can be taken away only by law to which the Crown is a party
Whether a particular statute has taken away such right pertains to the domain of the rule of construction
The relevant rule of construction evolved by judicial decisions in England may be stated thus  At all events the Crown is not reached except by express words or by necessary implication in any case where it would be ousted of an existing prerogative or interest
 See Perry vs Eames 1
It is said much to the same effect in Maxwell s Interpretation of Statutes 11th Edn at page 129 thus  It is presumed that the legislature does not intend to deprive the Crown of any prerogative right or property unless it expresses its intention to do so in explicit terms or makes the inference irresistible The same rule is given in Bacon s Abridgment 7th Edn 9462
The legal position in England may be summarised thus  1 1891 1 179 The substantive rule of law is that the prerogative of the Crown can only be taken away by law
The rule of construction evolved by the courts to ascertain the legislative intention is that it is presumed that a statute has not taken away the prescriptive right unless it has expressly or by necessary implication done so
 There is an essential distinction between a substantive law and a rule of construction and that is well expressed by Craies in his book On Statute Law 6th Edn at p 10 thus  A rule of law eg the Rule against Perpetuities or the Rule in Shelley s case abolished in 1925 exists independently of the circumstances of the parties to a deed and is inflexible and paramount to the intention expressed in the deed
A rule of law cannot be said to control the construction of a statute inasmuch as a British statute is itself part of the supreme law of the land and overrides any pre existing rules with which it is inconsistent
A rule or canon of construction whether of will deed or statute is not inflexible but is merely a presumption in favour of a particular meaning in case of ambiguity
This was well expressed by Bowen LJ in L N W Ry
vs Evans1 These canons do not override the language of a statute where the language is clear  they are only guides to enable us to understand what is inferential
In each case the Act of Parliament is all powerful and when its meaning is unequivocally expressed the necessity for rules of construction disappears and reaches its vanishing point
 The same principle was stated by Bhashyam Ayyangar J in Bell vs The Municipal Commissioners for the City of Madras2 thus  These compendious canons of interpretation which are in the nature of maxims can only be regarded as mere guides to the interpretation of Statutes and ought not to be applied as if they were statutory clauses enacted with all the precision and provisos of an Interpretation Act
 Franfurter J said to the same effect in United States vs United Mine Workers of America thus  3 At best this canon like other generalities about statutory construction is not a rule of law
Whatever persuasiveness it may have in construing a particular 1 1893 I Ch 16 27
2 ILR 1902 25 Mad
457 484
3 1947 91 L ed
180 statute derives from the subject matter and the terms of the enactment in its total environment
 Even in England this rule of interpretation has not been treated as inflexible
It is gradually losing ground in many branches of law
The incongruity of the rule of discrimination in favour of the Crown was pointed out by Glanville L Williams in his treatise on Crown Proceedings at p 53  The rule originated in the Middle Ages when it perhaps had some justification
Its survival however is due to little but the vis inertiae
 The author continues at p 54  With the great extension in the activities of the State and the number of servants employed by it and with the modern idea expressed in the Crown Proceedings Act compare in this connection article 300 of our Constitution that the State should be accountable in wide measure to the law the presumption should be that a statute binds the Crown rather than it does not
 The next question is how far and to what extent the common law of England relating to the prerogatives of the Crown has been accepted as the law of our country Nothing has been placed before us to show that the entire body of the common law pertaining to prerogatives was accepted as the law throughout India
India at the relevant time comprised Provinces and Native States
As Bhashyam Ayyangar J pointed out in Bell vs The Municipal Commissioners for the City of Madras the prerogatives of the Crown in India a country in which the title of the British Crown is of a very mixed character may vary in different provinces as also in the Presidency towns as distinguished from the mofussil The determination with anything like legal precision of all the prerogatives of the British Crown in India is by no means an easy task
 It is well known that the Common law of England was applied as such in the original sides of the High Courts of Calcutta Bombay and Madras and that in the mofussil courts the principles embodied in the common law were invoked in appropriate cases on the ground of justice equity and good conscience
It cannot therefore be posited that either the entire body of common law of England relating to prerogatives of the King or even the rule of construction as forming part of that law was accepted as law in every part of the country
It has to be established whenever a question arises as to what part of the common law was accepted as the law in a particular part of the country
Learned Advocate General of West Bengal referred us to the decision of the Privy Council in Province of Bombay vs Municipal 1 ILR 484
181 Corporation of the City of Bomhay1 in support of his contention that the common law of England was accepted as the law of our country in that regard
In that case the question was whether the Crown was not bound by section 2221 and section 265 of the City of Bombay Municipal Act 1888 which gave the Municipality power to carry water mains for the purposes of water supply through across or under any street and into through or under any land whatsoever within the city
 When the Municipal Corporation wanted to lay water mains through the land belonging to the Government of Bombay the Government did not agree except on some condi tions
Thereafter the dispute between the parties was referred to the High Court
Ultimately setting aside the order of the High Court the Privy Council held that the rule that no statute bound the Crown unless the Crown was expressly or by necessary implication made bound thereunder applied to the Crown in India and that there was no such express intention or necessary implication in the said section
Indeed the High Court also accepted that principle but on the construction of the relevant provisions it came to the conclusion that there was such a necessary implication thereunder
On the application of the principle there was no contest before the Privy Council
The Privy Council expressly stated so at p 274 when it observed  The High Court held following previous decisions of its own that the principle to be applied for the decision of the question whether or not the Crown is bound by a statute is no different in the case of Indian Legislation from that which has long been applied in England
The parties concurred in accepting this view and their Lordships regard it as correct
 The decision made on a concession made by the parties even though the principle conceded was accepted by the Privy Council without discussion cannot be given the same value as one given upon a careful consideration of the pros and cons of the question raised
Further no argument was raised before the Privy Council that the Common law of England had legal force only in the said three Presidency towns and not in the rest of the country for that case happened to be one that arose in the City of Bombay
The observations of the Privy Council that the principles obtaining in England also governed the Crown in India are rather wide
Nor any argument was raised before the Privy Counsel making a distinction between substantive branches of common law and mere rules of construction
It is not possible to predicate what the Privy Council would have said if that distinction had been placed before it
Be that as it may this decision cannot be taken as finally deciding the question that is raised before us
1 1946 LR 73 IA 271
182 Learned counsel relied upon a series of Indian decisions in
support of his contention that this rule of construction had become the law of the land
It was held in The Secretary of State in Council of India vs The Bombay Landing and Shipping Company Limited1 that in a winding up proceedings the Crown was entitled to the same precedence in regard to the debts due to it in England in Ganpat Putava vs Collector of Kanara2 that the Crown was entitled to the same precedence in regard to fees payable to it by a pauper plaintiff in The Secretary of State for India vs Mathura Bhai that section 26 of the Limitation Act 1877 being a branch of substantive law did not affect the Crown s right in Motilal Virchand vs The Collector of Ahmedabad4 that the Mamlatdars  Courts could not entertain and decide a suit to which the collector was a party in The Government of Bombay vs Esufali Salebhai5 that the Crown had a prerogative right to intervene and claim compensation in Land Acquisition proceedings in Hiranand Khushiram vs Secretary of State6 that the Crown was not bound by the provision of the Bombay Municipality Act in The Secretary of State for India vs The Municipal Corporation of Bombay No 17 that the Crown was subject to a charge under section 212 of the Bombay City Municipal Act
A careful study of these decisions discloses that all of them related to particular prerogatives of the Crown and that the Court held either that the prerogative of the Crown Was taken away by the statute or not having regard to the construction placed by it on the relevant statute
It is true that in some of the decisions the said rule of construction was noticed but as the decisions turned upon the construction of the relevant provisions it could not be said that the said rule had been accepted as an inflexible rule of construction by the Bombay High Court
In one of the judgments even the applicability of the rule of construction was doubted
A learned thesis on the subject is found in the judgment of Bhashyam Ayyangar J in Bell vs The Municipal Commissioners for the City of Madras8
The Superintendent of the Government Gun carriage Factory Madras having brought timber belonging to the Government into the City of Madras without taking out a licence and paying the licence fees prescribed by section 341 of the City of Madras Municipal Act was prosecuted
There was no mention of Government in the said section
A Division Bench of the Madras High Court 1 1868 5 Ho H C Rep 2327
3 Bom
5 Bom
7  509
2 Dom 7
4 Bom
6 AIR 1934 Bom
8 ILR I 902  484 183 Indian legislation statutes imposing duties or taxes bound the Government unless the very nature of the duty or tax was such is to be inapplicable to it
Bhashyam Ayyangar J in his judgment after considering all the relevant material on the subject statutes and English and Indian decisions came to the conclusion that exemption from the payment of tolls rates and taxes was not in reality a prerogative of the Crown but depended solely upon the right construction to be put on the Crown grant or the statute in question
Though the learned Judge noticed the rule of construction and affirmed its application both to English and Indian statutes vis a vis the Crown he pointed out that the said rule like every cognate rule of construction was not really a pre rogative of the Crown but only a canon of interpretation and a mere guide to the interpretation of statutes
That case arose in the Madras City
In Madras the_ position was that non liability of the Crown to taxes was not treated as its prerogative and the aforesaid rule of construction was only treated as a guide in interpreting the provisions of a statute
Now coming to Calcutta a Division Bench of the Calcutta High Court in Corporation of Calcutta vs Bhupal Chandra Sinha1 held that the Crown was bound by section 421 of the Calcutta Municipal Act 1923 and that the unwholesome barley found in the Government stores was liable to be destroyed
No doubt the Court re stated the said rule of construction and came to the conclusion that by necessary implication the State was bound by the said provision
A Division Bench of the same High Court in Corporation of Calcutta vs Director of Rationing and Distribution2 held that the State Government which was carrying on a trade at premises No 259 Upper Chitpur Road Calcutta and was using or permitting the use of the said premises for the purpose of storing rice etc
without licence was liable to be convicted under section 3861a of the Calcutta Municipal Act 1923 read with section 488 thereof When the said rule of construction was pressed upon the learned Judges they held that the law even after coming into force of the Government of India Act 1935 was that the Crown or the Government was bound by the statute unless it was exempted from its operation either expressly or by necessary implication
They did not therefore accept the rule of construction laid down by the Privy Council
It cannot therefore be said that in the City of Calcutta there was a universal recognition of the rule of construction in favour of the Crown
The legislative practice in India establishes that the various Legislatures of the country provided specifically exemptions in 1  AIR 1950 Cal
2AIR 1955 Cal282
184 favour of the Crown whenever they intended to do so indicating thereby that they did not rely upon any presumption but only on express exemptions see for instance section 74 of the Contract Act section 9 of the Specific Relief Act section 90 of the Indian Registration Act section 2a and b of the Indian Easements Act The Crown Grants Act XV of 1895 sections 295 proviso 356b and 411 and 616 a of the Code of Civil Procedure old section 212 proviso of the Indian Companies Act section 20 proviso of the  section 14i of the Indian Ports Act section 3 proviso 1 of the Indian Stamps Act 1899 and section 3 of the India Act XI of 1881 etc
What is more Act XI of 1881 empowered the Governor General in Council by order to prohibit the levy by a Municipal Corporation of any specified tax payable by the Secretary of State for India and to direct the Secretary of State for India to pay to the Municipal Corporation in lieu of such tax some definite amounts
This Act was a pointer against the contention that there was a presumption in favour of the Crown that a statute was not binding on it
It is true that there are other Acts where there are specific provisions to the effect that the provisions of the Acts shall be binding on the Government see section 10 of the Arbitration Act Act X of 1940 section 116 of the Oil Field Regulation and Development Act Act LIII of 1948
Subsequent to the making of the Constitution also there were Acts where such a provision was found
There is no firm legislative practice based upon the said presumptive rule of construction
Different statutes adopted different devices to achieve their desired results
The legislative practice therefore does not support the contention that in India the said rule of construction was accepted
It only shows that wherever an exemption was intended to be given to the Government it was expressly mentioned and wherever there might have been any doubt of the liability of the Government it was expressly made liable
The rule of construction was not statutorily recognised either by incorporating it in different Acts or in any General Clauses Act at the most it was relied upon as a rule of general guidance in some parts of the country
Some of the American decisions may usefully be referred to at this stage
It was said that in America where the Crown did not exist the same rule of construction was adopted in that country as law of the land and therefore by analogy the same legal position must be accepted in India
The decision in H Snowden Marshall vs People of the State of New York1 only lays down that the State of New York has the common law prerogative right of priority over unsecured creditors
This case has nothing to do with the rule of construction but was based upon the common law prerogative of the 1 1920 65 Lcd
185 Crown expressly embodied in the State s Constitution
The decision in Guarantee Trust Company of New York vs United States of America1 accepted the immunity of the sovereign from he operation of statutes of limitation
That decision was based upon the doctrine of public policy evolved by courts though in evolving the said policy the courts had been influenced to some extent by the doctrine of the pregrogative of the Crown
This decision also does not express any opinion on the rule of construction
The decision in United States of America vs United Mine Workers of America2 ruled that statutes which in general terms divested pre existing rights and privileges would not be applied to the sovereign without express words to that effect
But Frankfurter J after citing the said rule pointed out that At best this canon like other generalities about statutory construction is not a rule of law
 The same rule was again re stated in United States of America vs Reginald P
Wittek3 The question there was whether the District of Columbia Emergency Rent Act did not apply to Government owned defence houses in the District such as Bellevue Houses
The Court relied not only upon the said rule of construction but also on other circumstances in support of the conclusion that the United States was exempt from the operation of that Act by necessary implication
In Jess Larson as War Assets Administrator and Surplus Property Administrator vs Domestic and Foreign Commerce Corporation4 the purchaser of surplus coal from the War Assets Administration filed a suit against the said Administration for an injunction prohibiting the latter from selling or delivering the coal to any other person
The suit was dismissed on the ground that the sovereign immunity in suits for injunction or for specific performance was based upon public policy
But it was argued that the principle of sovereign immunity was an archaic hangover not consonant with modern morality the majority conceded that there was substance in such a viewpoint as applied to suits for damages
Mr Justice Frankfurter in his dissent went further and pointed out that the doctrine of sovereign immunity was in disfavour
The American decisions therefore were mainly based either on the provisions of the constitution of the State or on
the ground of public policy evolved by Courts
The founding fathers carried with them the English doctrine of the Crown Prerogative and it continued to influence some of the principles of public policy evolved in that country
Even so the decisions made it clear that the rule of construction was relied upon only as one of the guides to arrive at the intention of a particular statute
That apart the fact that the common law of England pertaining to 214 11938 82 L ed 1224
31949 93 L ed 1406
M19Sup
CI66 13 2 1947 91 L ed 884923
4 1949 93 L ed
186 prerogatives influenced some of the decisions of the Supreme Court of the United States cannot help us in coming to a conclusion whether the said rule had become part of the Law in India
Mr Bindra the learned counsel appearing for the Attorney General sought to reach at the same result by a different process
He argued that the decision of the Privy Council in Province of Bombay vs Municipal Corporation of the city of Bombay and another1 is a law of the country
We have already noticed the decision in another context
It accepted the rule of construction on a concession made by the counsel
Even if it was a considered decision on the point it was nothing more than an application of a rule of construction with which it was familiar for ascertaining the intention of statutory provisions applicable to the Bombay city
To sum up  some of the doctrines of common law of England were administered as the law in the Presidency Towns of Calcutta Bombay and Madras
The Common Law of England was not adopted in the rest of India
Doubtless some of its principles were embodied in the statute law of our country
That apart in the mofussil some principles of Common Law were invoked by courts on the ground of justice equity and good conscience
It is therefore a question of fact in each case whether any particular branch of the Common Law became a part of the law of India or in any particular part thereof
The aforesaid rule of construction is only a canon of interpretation it is not a rule of substantive law
Though it was noticed in some of the judgments of the Bombay High Court the decisions therein mainly turned upon the relevant statutory provisions
One decision even questioned its correctness
There is nothing to show that it was applied in other parts of the country on the ground of justice good conscience and equity
In Madras it was not considered to be a binding rule of law but only as a simple canon of construction
In Calcutta there was a conflict  one Bench accepted the construction and the other rejected it
The Privy Council gave its approval to the rule mainly on the concession of Advocates and that decision related to Bombay City
It is therefore clear that the said rule of construction was not accepted as a rule of construction throughout India and even in the Presidency towns it was not regarded as inflexible rule of construction
In short it has not become a law of the land
Let us now proceed on the assumption that it has been accepted as a rule of construction throughout India
This leads us to the question whether the said rule of construction is the law of the land after the Constitution came into force
Under Article 372 173 IA 271 187 all the laws in force in the territory of India immediately before the commencement of this Constitution shall continue in force therein until altered or repealed or amended by a competent Legislature or other competent authority
Can it be said that the said canon of construction was a law in force  which can only be amended by a Legislature Under Explanation 1 to the said Article the expression law in force  shall include a law passed or
made by a Legislature or other competent authority in the territory of India before the commencement of the Constitution
it has been held by this court that the said expression includes not only enactments of the Indian Legislatures but also the Common Law of the land which was being administered by the Courts in India
See Director of Rationing and Distribution vs The Corporation of Calcutta and others and V section Rice and Oil Mills  others vs State of Andhra Pradesh2
But it is not possible to hold
that a mere rule of construction adopted by English Courts and also by some of the Indian Courts to ascertain the intention of the Legislature was a law in force within the meaning of this term
There is an essential distinction between a law and a canon of construction
This distinction between law and the canon of construction has been noticed by us earlier and we have held that a canon of construction is not a rule of law
We are not concerned here
with the statutory rules of interpretation
We are therefore of the opinion that a rule of construction is not a law in force  within the meaning of Article 372
The next question is whether this Court should adopt the rule of construction accepted by the Privy Council in interpreting statute vis a vis the Crown
There are many reasons why the said rule of construction is inconsistent with and incongruous in the present set up we have no Crown the archaic rule based on the prerogative and perfection of the Crown has no relevance to a democratic republic it is inconsistent with the rule of law based on the dictrine of equality
It introduces conflicts and discrimination
To illustrates 1 State A made a general Act without expressly making the Act binding on the said State
In the same State States B C and D and the Union have properties
Would the rule of construction apply only to the properties of State A  or to the properties of all the States and the Union  2 The Central Act operated in different States the rule of construction was accepted in some States and rejected in other States
Is the Central Act to be construed in different States in different ways  3 Acts in general terms might be made in different States States where the said rule of construction was accepted and the States where it was not so accepted Should different States construe 1 1961 1SCR 158
2 188 the General Acts in different ways some applying the presumption and some ignoring it  There is therefore no justification for this Court to accept the English canon of construction for it brings about diverse results and conflicting decisions
On the other hand the normal construction namely that the general Act applies to citizens as well as to State unless it expressly or by necessary implication exempts the State from its operation steers clear of all the said anomalies It prima facie applies to all States and subjects alike a construction consistent with the philosophy of equality en shrined in our Constitution
This natural approach avoids the archaic rule and moves with the modern trends
This win not cause any hardship to the State
The State can make an Act if it chooses providing for its exemption from its operation
Though the State is not expressly exempted from the operation of an Act under certain circumstances such an exemption may necessarily be implied
Such an Act provided it does not infringe fundamental rights will give the necessary relief to the State
We therefore hold that the said canon of construction was not the law in force  within the meaning of article 372 of the Constitution and that in any event having regard to the foregoing reasons the said canon of construction should not be applied for construing statutes in India
In this view it is not necessary to express our opinion on the question whether the aforesaid rule of construction would not apply to the trade activities of the State even if it applied to its sovereign activities
Even so it was contended that by necessary implication the State was excluded from the operation of section 218 of the Act
It was contended that as the infringement of the said provision entailed a prosecution and on conviction imposition of fine and imprisonment and that as the State could not obviously be put in prison and as the fine imposed on the State would merge in the consolidated fund of the State it should necessarily be implied that the State was outside the scope of the section
This argument was based upon the reasoning of Wanchoo J in his dissenting judgment in Director of Rationing and Distribution vs Corporation of Calcutta1
To appreciate the argument it is necessary to notice the relevant provisions of the Act
Under section 2181 every person who exercises or carries on in Calcutta any of the trades indicated in Schedule IV shall annually take out a licence before the prescribed date and pay the prescribed fee
Section 218 is in Ch
Under section 5411b if any person exercises on or after the first day of July in any year any profession trade or calling referred to in Chapter XIII without having the licence prescribed by that chapter he shall be punished with fine and under section 5412 1  189 such fine when levied shall be taken in full satisfaction of the demand on account of the said licence
Under section 547A which was inserted in the Act by section 96 of the Calcutta Municipal Amendment Act 1953 West Bengal Act XIX of 1953 in every case of an offence punishable with imprisonment or fine or with fine only in which the offender is sentenced to pay an fine it shall be competent to the Court to direct that in default of payment of the fine the offender shall suffer imprisonment for such term or further term not exceeding six months as may be fixed by the Court
Under the Act there is a distinction between fines imposed under section 537 and under section 541 of the Act
The fines under section 537 are in respect of offences enumerated therein and they certainly go to the coffers of the States
In respect of such offences it may be contended that as the fines paid reach the State itself there is an implication  that the State is not bound by the sections mentioned therein for a person who receives the fine cannot be the same person who pays it
This incongruity may lead to the said necessary implication
But the same cannot be said in respect of the provisions covered by section 541
Under the said section the fine recovered for the infringement of the said provisions when levied shall be taken in full satisfaction of the demand on account of the licence not taken thereunder
Though the expression fine is used in effect and substance section 541 is a mode of realization of the fee payable in respect of the licence it goes to the municipal fund and forms part of it
In this context section 115 of the Act is relevant
Under that section there shall be one Municipal Fund held by the Corporation in trust for the purposes of the Act to which the moneys realised or realisable under the Act other than fine levied by Magistrates and all moneys otherwise received by the corporation shall be credited
Reliance is placed upon the words within the brackets viz other than fine levied by Magistrates and an argument is raised that the fine levied under section 541 will not be credited to the Municipal Fund
That interpretation brings that section into conflict with section 512
On the other hand a harmonious construction of these two provisions makes it clear that the fine mentioned in section 115 is the fine imposed under section 537 for section 5412 in terms directs that the fine shall be credited to the demand
All amounts credited towards demands it cannot be denied necessarily have to be credited in the Municipal Fund
Nor section 547A detracts from our conclusion
Under that section in every case of an offence where the offender is sentenced to pay a fine it shall be competent to the court to direct that in default of payment of the fine the offender shall suffer imprisonment
It was said that this section necessarily implied that the State could not be hit by section 218 as it could not obviously be imprisoned for default of payment of fine
But it will be noticed that this section only confers a discretionary power on the court and the court is not bound to 190 direct the imprisonment of the defaulter
It is only an enabling provision
There are other ways of collecting the money from persons against whom an order under section 547A is not made
This enabling provision does not necessarily imply an exemption in favour of the State
For all the aforesaid reasons we hold that the State is not exempt from the operation of section 218 of the Act
In the result we hold that the conclusion arrived at by the High Court is correct
The appeal fails and is dismissed
Shah J The High Court of Calcutta convicted the State of West Bengal of the offence of carrying on trade as owner and occupier of a market at Calcutta without obtaining a license under section 218 of the Calcutta Municipal Act 1951 and imposed a sentence of fine of Rs 250 
In this appeal it is urged that the State not being by express enactment or clear intendment bound by the provisions of the Act relating to the obtaining of a license for carrying on trade as owner or occupier of a market the order of conviction is not sustainable and reliance is placed upon the judgment of this Court in Director of Rationing  Distribution vs The Corporation of Calcutta  Ors1 The Corporation contends that since India became a Republic the rule that Crown is not bound by statute unless specially named or clearly intended has no application to the interpretation of the Calcutta Municipal Act 1951
The argument is urged on two grounds  i since India has ceased to be governed in the name of the British Crown the rule in terms has no application and ii even if it be assumed that the rule applies to the State as the sovereign authority it must be deemed to be superseded for to accept it would be to countenance unequal treatment between the State and the citizens
The origin of the rule in England that the Crown is not bound by a statute unless expressly named or clearly intended lay undoubtedly in the prerogative of the British Crown
In Bacon s Abridgement 7th Edn p 462 the general rule is stated thus where a statute is general and thereby any prerogative right title or interest is divested or taken away from the King in such case the King shall not be bound unless the statute is made by express terms to extend to him But the Crown is bound where it is expressly named or by clear implication intended to be bound
An inference that the Crown was intended to be bound by implication is however not to be raised merely because the Crown assented to the statute for as stated by Plowden when the King gives his assent he does not mean to prejudice himself or to bar himself of his liberty and his privilege but he assents that it shall be a law among his subjects
 1 19611 SCR 158
191 The common law of England was adopted in this country subject to local variations and the personal law of the parties within the Presidency towns by the establishment of Mayors  Courts in the 18th century with the express injunction to apply that law
In the mufassal of the three Presidencies the common law was adopted by the Regulations constituting tribunals for administration of justice enjoining them to decide disputes according to justice equity and good conscience  and elsewhere by the diverse Civil Courts Acts imposing similar injunctions
In the three Presidency towns of Calcutta Madras and Bombay the charters of 1726 which established the Mayors  Courts introduced within their jurisdiction the English common and statute law in force at the time so far as it was applicable to Indian circumstances
By the statute of 1781 21 Geo
III c 70 section 17 the Supreme Court at Calcutta was enjoined to apply in the determination of actions against the Indian inhabitants of the town in matters of succession and inheri tance to lands rents goods and in all matters of contract and dealing between party and party their personal law if both parties belonged to the same community and by the law and usages of the defendant if they belonged to different communities
The English common law in its application to Hindus and Mahomedans in the matters enumerated in the statute was to that extent superseded but in other matters the English common law unless it was inconsistent with statute or Indian conditions continued to apply
Similar statutes were passed enjoining the Courts in the Presidency towns of Madras and Bombay in 1797 37 Geo
III c 142 section 13 to apply in the enumerated matters the personal law of the parties
it may however be observed that by the Supreme Court charters English law not in its entirety but as nearly as the circumstances of the place and of the inhabitants admit was applied Advocate General of Bengal vs Ranee Surnomove Dossee1 In the mufassal Courts by Bengal Regulation III of 1793 in respect of Bengal by Regulation 11 of 1802 in respect of Madras it was ordained that where no specific rule existed the Courts were to act according to justice equity and good conscience which expression was interpreted to mean the rules of English common law in so far as they were applicable to Indian society and circumstances Waghela Rajsanji vs Shekh Masludin2
The Bombay Regulation IV of 1827 provided by section 26 that the law to be observed in the trial of suits shall be Acts of Parliament and Regulations of Government in the absence of such acts and regulations the usage of the country in which the suit arose if none such appears the law of the defendant and in the absence of specific law and usage equity and good conscience
By the Letters Patents of the High Courts of the three principal Courts of Calcutta Madras and Bombay by cls
19 in exercise of the original jurisdiction law or equity to be applied 1 1864 9 M 1
A 387
2 1887 14 1
A 89
192 was such law or equity which would have been applied if the Letters Patents had not been issued
By cl 20 in respect of suits tried in exercise of the extraordinary original jurisdiction and by cl 21 in respect of the appellate jurisdiction the High Courts were directed to apply law or equity and the rule of good conscience which the Court in which the proceeding was originally instituted would have applied
Similar provisions were made in the Letters Patents of the Allahabad Patna Lahore and Nagpur High Courts by cls
13  14 and in respect of Jammu  Kashmir High Court by cls
14  15 and in respect of Rajasthan by cls
33  34 of the Rajasthan High Court Ordinance 1949
The jurisdiction of the Assam and Orissa High Courts was derived from their respective parent High Courts the Calcutta High Court and the Patna High Court
In the Courts in the mufassal the Civil Courts Acts eg section 37 the  section 5 the Central Provinces Laws Act 1875 sections 5 6 the  section 3
require the Courts to decide cases according to justice equity and good conscience
There can therefore be no doubt that the Courts which functioned in the former British India territory were enjoined to decide cases not governed by any specific statutory rules according to justice equity and good conscience which meant rules of English common law in so far as they were applicable to Indian society and circumstances
By a long course of decisions of the High Courts in India the rule of the English common law that the Crown is not unless expressly named or clearly intended bound by a statute was applied in India
In The Secretary of State in Council of India vs Bombay Landing and Shipping Co Ltd1 the Secretary of State for India claimed priority in the payment of a debt in the course of winding up of a company and it was held by the High Court of Bombay that a judgment debt due to the Crown is in Bombay entitled to the same precedence in execution as a like judgment debt in England if there be no special legislative provision affecting that right in the particular case
The Court held that as the Crown is not either expressly or by implication bound by the Indian Companies  Act X of 1866 and as an order made under that Act for the winding up of a Company does not work any alteration of property against which execution is sought such an order does not enable the Court to stay the execution of a judgment debt due to the Crown or to the Secretary of State in Council for India
Westropp J who delivered the judgment of the Court after an exhaustive review of the earlier authorities observed The King by his prerogative regularly is to be preferred in payment of his duty or debt before any subject although the King s debt or duty be the latter 1 5 Bom
HCR OCJ
193 The learned Judge also observed that the rule was recognised by the laws of many countries as applicable to the claims of the Sovereign or the State eg France Spain America and Scotland and that principle was no novelty in India because at an earlier date it was promulgated by Hindu jurists Yajnavalkya and others
In The Secretary of State for India vs Mathurahbai and Ors1 the rule was held to apply to India as a rule of construction of statutes
In that case the inhabitants of a village sued to establish their right of grazing their cattle on certain Government land and for an injunction restraining the Government from interfering with their right
It was held by the High Court of Bombay that the right of free pasturage which the plaintiffs enjoyed did not necessarily confer that right on any particular piece of land and that section 26 of the Limitation Act 15 of 1877 did not bind the Secretary of State
It was also applied in three later decisions of the Bombay High Court Hiranand Khushiram Kirpalani vs Secretary of State 2 Secretary of State vs Municipal Corporation Bombay No 13 and Province of Bombay vs The Municipal Corporation of Bombay4
In the first case the Secretary of State was held not bound by sections 305 489 and 491 of the Bombay City Municipal Act 1888 which deal with levelling metalling or paving sewering draining channelling and lighting of private streets and with execution of that work to the satisfaction of the Commissioner if the work be not done in accordance with the requisition and for recovery of the expenses incurred in that behalf
In the second case the Court held that the Crown was bound by necessary implication in respect of the charge which arises under section 212 of the Bombay City Municipal Act 3 of 1888 that section being an integral part of the general scheme of the Act imposing tax on land in Bombay including Government land
In the third case the Bombay High Court observed that the general principle is that the Crown is not bound by legislation in which it is not named expressly or by necessary implication
But reading the relevant sections in the Act relating to the water supply it appeared that it would be impossible to carry them out with reasonable efficiency unless Government was bound by them
The view of the High Court in the last judgment that the Province was bound by the statute by imp lication was overruled by the Judicial Committee in Province of Bombay vs Municipal Corporation of the City of Bombay and Another5 to which I will presently refer
The Madras High Court in Bell vs The Municipal Commissioners for the City of Madras6 also upheld the rule which prevailed in the Bombay High Court that the Crown is not bound by a statute unless expressly named or clearly intended
In that case the Superintendent of the Gun 215 1 1 L R 3 ILR 5 ILR 73 IA 271
2 ILR 4 ILR 6 ILR 194 Carriage Factory in Madras brought timber belonging to Government into Madras without taking out a licence and paying the license fee prescribed by section 341 of the  City of  Madras Municipal Act
The Court held that the timber brought into Madras by or on behalf of Government was liable to the duty imposed by section 341 of the City of Madras Municipal Act although Government was not named in the section
Bhashyam Ayyangar J entered upon a detailed analysis of the case law and set out certain principles at p 500
The learned Judge was of the view that the canon of interpretation of Statutes that the prerogative or rights of the Crown cannot be taken away except by express words or necessary implication is As applicable to the Statutes passed by the Indian Legislatures as to Parliamentary and Colonial Statutes
But he held that the English law as to the exemption of the Crown and Crown property from payment of tolls poor rates and other taxes local or imperial imposed by statutes rests partly upon historical reasons and principally upon judicial decisions which do not proceed upon a course of reasoning or principle which will be binding on Indian Courts
It is not necessary to express any opinion on the question whether the general exception engrafted by the learned Judge on the rule in so far as it relates to taxing statute is wholly correct and applied to all taxing statutes in India
The Municipal Corporation of Calcutta is it may be recalled seeking to collect the license fee by prosecuting the State of West Bengal but the primary purpose of the prosecution is to enforce compliance with the pro visions relating to the conduct of a market by compelling the State to take out a license and paying a fee in lieu of services rendered to the owners of the markets
These decisions were affirmed by the Judicial Committee in Province of Bombay vs Municipal Corporation of the City of Bombay and Another1
The question which fell to be determined was whether by section 2221 and section 265 of the City of Bombay Municipal Act 1888 which invested the Municipality with power to carry water mains through across or under any street and into through or under any land whatsoever within the city bound the Crown in whom the lands were vested either expressly or by necessary implication
The Judicial Committee observed that the general principle applicable in England in deciding whether the Crown is bound by a statute that it must be expressly named or be bound by necessary implication applies to Indian legislation
The Board observed at p 274  The maxim of the law in early times was that no statute bound the Crown unless the Crown was expressly named therein Roy n est lie per ascun statute si il ne soit expressment nosme But the rule so laid down is subject 1 LA 73 IA 271 195 to at least one exception
The Crown may be bound as has often been said by necessary implication
If that is to say it is manifest from the very terms of the statute that it was the intention of the legislature that the Crown should be bound then the result is the same as if the Crown had been expressly named
It must then be inferred that the Crown by assenting to the law agreed to be bound by its provisions
 It is true that counsel appearing before the Judicial Committee accepted the correctness of the rule that the question whether or not the Crown is bound by a statute is no different in the case of Indian legislation from that which has long been applied in England But the judgment of the Judicial Committee did not proceed upon a concession the Board expressly observed that they regarded the rule as correct
The Union of India now includes territory of the former Indian States in which the law as originally existing and which the Courts are enjoined to apply may have been somewhat different
But that is not peculiar to the application of the rule of interpretation which was adopted by the Courts in British India that the State shall not be deemed to be bound by an enactment unless it is expressly named or by clear intendment included in the statute
Even in respect of matters of personal law procedure and jurisdiction of the Courts and in other matters where uniform statutes do not apply differences do arise and must be determined according to the law and jurisdiction inherited by the Courts administering justice
But the present case concerns the administration of the law in the town of Calcutta which has for nearly 250 years been governed by the English common law as adopted by the various Acts Regulations and finally by the Letters Patents
It may also be necessary to observe that we are not called upon to decide whether all the prerogatives of the British Crown have been incorporated in our system of law
Some of those are so wholly inconsistent with the system of law personal and common in India that they have not been held applicable eg the rule of English law incapacitating aliens from holding real property to their own use and transmitting it by descent or devise has never been in troduced in India so as to create forfeiture of lands held in Calcutta or the mofussil by an alien and devised by will for charitable purposes
Mayor of the City of Lyons vs The East India Company1 the English law of felo de se and forfeiture of goods does not extend to a Hindu committing suicide Advocate General of Bengal vs Ranee Surnomoye Dossee2
But the rule that the Crown debt is entitled to priority in payment of debts due to it has been adopted
and the State is entitled to priority in payment of debts due to it  1 LR
I Moare s IA 173
2 1864 9 MIA 196 The Secretary of State for India in Council vs The Bombay Landing A Shipping Co Ltd1 and Ms Builders Supply Corporation vs The Union of India2
As I have already stated the adoption of the English law was not in its entirety but as nearly as the circumstances of the case and of the inhabitants of the place admit
It would be confusing the issue to hold that because some prerogatives have not been adopted no prerogative of the State may have any place in our system of law
Again in considering the limited question as to the application of the rule of interpretation under discussion it would be an idle exercise to enter upon a detailed discussion of the prerogatives which have and which have not been assimilated in our system of law
In Director of Rationing  Distribution vs The Corporation of Calcutta  Ors3 this Court regarded the rule as one of interpretation and it is so expressly stated in State of West Bengal vs Union of India4 Sri Vankata Seetaramanjaneva Rice and Oil Mills vs State of Andhra Pradesh5 and Ms Builders Supply Corporation vs Union of India2
In England and the Colonies the rule has not been restricted to common Crown actions or the personal prerogatives of the Crown
It excludes from the operation of statutes all public servants acting under the authority of the Crown
It is well settled that in the Colonies the executive government represents the Crown as it does in England and therefore the Executive Government of the Commonwealth of Australia or of a State in Australia is not bound by a statute unless the intention that it shall be bound is apparent  Roberts vs Ahern6
Again because of the origin of the rule its protection is not restricted to the property and rights of the Crown alone and applies to State property actions and rights
When a statute expressly includes the State in its operation no difficulty arises in giving effect to the statute
Even if there be no express provision the State may be bound by clear intendment of the statute having regard to the nature of the legislation if the beneficent purpose intended to be served thereby would be wholly frustrated unless the State is bound
The rule of interpre tation applies only when the Court has no indication either by express reference or by clear intendment in the statute a presumption arises in such a case that the words of the statute even though general are not intended to bind the State
The question is one of presumed intention where the language purpose and the nature of the statute give no clear indication and mere general words ire used
It was urged that in the Act there are certain provisions which expressly refer to the liability of the State and the binding character 5 Bom
HCR OCJ 23
2  1  3 4 1964 1 SCR 371
5 19647 SCR 456
6  197 of those provisions against the State is not in doubt
But that cannot be a ground for holding that the remaining provisions apply to the State  The Judicial Committee in Province of Bombay vs Municipal Corporation of the City of Bombay and Another observed  They the Judicial Committee were pressed with the argument that such an inference might be drawn from certain express references to the Crown in other parts of the Act itself and from the fact that by the Government Building Act 1899 the legislature had provided for the exemption of Government buildings from certain municipal laws
The argument was that no express provisions saving the rights of the Crown would be necessary if the Crown were already immune
This is not an unfamiliar argument but as has been said many times such provisions may often be inserted in one part of an Act or in a later general Act ex abundanti cautela and so far as the Act of 1899 is concerned it is fallacious to argue that the legislature which passed it must have had in mind the particular sections of the Act of 1888 which are not under review or that it was impliedly interpreting those sections
 The argument that the rule had not received recognition in the High Courts in India before the judgment of the Judicial Committee reported in Province of Bombay vs Municipal Corporation of the City of Bombay and Anr1 was pronounced is belied by the course of authorities summarised earlier
There was practically a consistent course of authorities prior to the Constitution in support of the principle which was affirmed by the Judicial Committee in Province of Bombay vs Municipal Corporation of the City of Bombay and Another1
The origin of the rule undoubtedly was in the prerogative of the Crown but there is even in the country of its origin authority for the view that the rule is regarded primarily as one of construction
In Madras Electric Supply Corporation Ltd vs Boarland2 in dealing with the question whether the immunity of the Crown from taxation depends on the construction of the statute or arises from the prerogative in some other way Lord MacDermott observed  Whatever ideas may once have prevailed on the subject it is in my opinion today impossible to uphold the view that the Crown can find in the prerogative an immunity from tax if the statute in question according to its true construction includes the Crown amongst those made liable to the tax it imposes
The appropriate rule as I under 1 LR 73 IA 271
2 HL 198 stand it is that in an Act of Parliament general words shall not bind the Crown to its prejudice unless by express provision or necessary implication
That however is and has long been regarded as a rule of construction
Lord Reid concurred in the view that the immunity depends upon construction of the statute rather than on royal prerogative
Lord Keith of Avonholm appeared to express a different view
In India the rule has been accepted as a rule of interpretation of statutes and applicable to all statutes which governed State actions authority or property
Is there any reason then to hold that on January 26 1950 the rule which previously applied to interpretation of statutes ceased to apply thereto on the date on which the Constitution came into force  The rule of interpretation was as already stated a settled rule and was law in force in the territory of India within the meaning of article 372 of the Constitution
I am unable to agree with the contention that a rule of interpretation is not law in force within the meaning of article 372
There is no warrant for holding that a rule of interpretation which is incorporated in a statute eg
The Indian Succession Act or the General Clauses Act is law in force and not a rule which was enunciated by the highest Court in the realm
The circumstance that a rule of interpretation is a rule for determination of intention of the legislature and for its application requires determination of facts and circumstances outside the statute will not make it any the less a rule of law
Acceptance of the proposition that a decision of the highest judicial tribunal before the Constitution is law does not involve the view that it is immutable
A statute may be repealed and even retrospectively it would then cease to be in operation  a decision which in the view of this Court is erroneous may be overruled and may cease to be regarded as law but till then it is law in force
It may be pertinent to bear in mind that it was never seriously argued before us that the judgment of the Judicial Committee which affirmed the view expressed in a long course of decisions was erroneous in the circumstances then prevailing
It was said by counsel for the Corporation that it is one of the fundamental principles of our Constitution that there is equality between the State and the citizens and discrimination is not permissible in the application of a law generally expressed
it was claimed that if other occupiers of markets take out licenses and comply with the regulatory provisions of the Act and the State is not obliged to abide by the rules there would be unequal treatment between owners similarly situate and that the State may ignore 199 the rules regulating the markets and on that account the public interest would suffer
There is no reason however to assume that the State under a democratic Constitution would be impervious to public opinion and would merely because it is not bound by a regulatory Act perpetuate a nuisance
If it be assumed that such be the attitude of the State there would be nothing to prevent the State from enacting express legislation excluding itself from the operation of the regulatory laws relating to markets
I do not think that the guarantee of the equal protection clause of the Constitution extends to any differential treatment which may result in the application of a special rule of interpretation between the State and the citizens
Nor can it be said that under our Constitution equality in matters of interpretation between the State and the citizens is predicated in all respects
It must be remembered that our Constitutional set up is built up not anew but on the foundations of our old institutions
The political set up is indisputably changed but can it be said that our concept of a State is so fundamentally altered that the traditional view about State privileges immunities and rights must be abandoned because they had a foreign origin an on the supposed theory of equality between the State and the citizens a theory which seeks to equate common good of the people represented by the State with the rights and obligations of the individual the Court should decline to give effect to the State privileges and immunities  If it be granted that the State in making laws is entitled to select itself for special treatment different from the treatment accorded to the citizen and it is not denied that in order to achieve public good it can do so even if there is a differential treatment between the State and the citizen is there any reason to suppose that a statute which evidently was framed on the basis of the well settled rule of the pre Constitution days which accorded to the State a special treatment in the matter of interpretation of statutes must be deemed to have a different meaning on the supposition that the Constitution has sought to impose equality between the State and the citizen  The fact that in our federal set up sovereignty is divided between the Union and the States and in the application of the rule that the State is not bound by a statute unless expressly named or clearly implied conflicts between the State enacting a law and the Union or another State may arise does not give rise to any insuperable difficulty which renders the rule in applicable to the changed circumstances for it is the State which enacts a legislation in terms general which alone may claim benefit of the rule of interpretation and not any other State
It was urged that even if the rule that the State is not unless expressly named or by necessary implication intended to be bound applies its application must be restricted to cases where an action of the State in its sovereign capacity is in issue
Where however 200 the State is following a commercial or trading activity the rule can have no application
But in the context of modem notions of the functions of a welfare State it is difficult to regard any particular activity of the State as exclusively trading
The State was originally regarded as merely concerned with the maintenance of law and order and was not concerned with any trading activity
But that is now an exploded doctrine
For the welfare of the people the State does and is required in modern times to enter into many trading activities eg to effectuate control of prices prevent hoarding and distribute commodities in short supply besides maintenance of departments like Posts Telegraphs Railways Telephones etc activities which may have been regarded as trading activities in the past
But if initiation and completion of schemes for social welfare of the people be regarded as an attribute of the exercise of sovereign authority it is difficult to regard activities undertaken by the State for setting up markets for effective distribution of goods as merely trading
Assuming that conducting a market in a metropolitan town may be regarded in a sense as a trading activity there is in my judgment no sufficient reason to justify any distinction in the application of the rule of interpretation to statutes concerning sovereign authority and trading activity
Under the provisions of the Calcutta Municipal Act the owner or occupier of a market is required to take out a license
But there is no express reference to the State nor is there anything peculiar in the nature purpose and object or in the language used in the enactment relating to the issue of licenses which may suggest that the State must by necessary implication be bound by its provisions
I am therefore of the view that the High Court was in error in holding that the State of West Bengal was bound by the provisions relating to the issue of licenses for occupation or conduct of a market
I do not deem it necessary to consider the argument that since the State cannot be imprisoned in enforcement of the general provisions and imposing a fine upon the State would be futile because the hand which pays and the hand which receives the fine is the same an implication arises that it was not intended that the State should be bound by section 218 of the Calcutta Municipal Act
in my view the penal provision of s541 is though in form a provision creating an offence intended to enable the Corporation to collect the license fee
The offender and the recipient of fine are therefore not the same bodies
Bachawat J
By the common law of England the Crown is not bound by a statute save by express provision or necessary implication
This rule was applied to Indian legislation in 201 Province of Bombay vs Municipal Corporation of the City of Bombay1
In The Director of Rationing and Distribution vs Corporation of Calcutta2 this Court followed the Privy Council decision
On the subject of the royal prerogative regarding statutes Chitty in his book on Prerogatives of the Crown at P 382 said The general rule clearly is that though the King may avail himself of the provisions of any Acts of Parliament he is not bound by such as do not particularly and expressly mention him 
It has been said that the reason of the rule is that it is inferred prima facie that the law made by the Crown with the assent of the Lords and the Commons is made for the subjects and not for the Crown per Alderson B in AG vs Bonaldson 3
Two rules follow from the proposition that the law is prima facie made for subjects and not for the Crown i the Crown is not bound by a statute save by express words or by necessary implication ii that the Crown may take advantage of a statute though not bound by it unless expressly or impliedly prohibited from doing so
This Court categorically rejected the second rule in V section Rice and Oil Mills vs State of Andhra Pradesh4 and held that the State cannot be permitted to rely upon the artificial rule that the State can take advantage of a statute though not bound by it
I think that this Court should have refused to recognise the first rule also
The exception of the Crown from the operation of statutes is based sometimes on the royal prerogative and sometimes on a rule of construction
Originally the exemption was claimed and allowed on the ground of the prerogative
The King by virtue of his prerogative could claim that a statute was made for subjects only and he stood outside it
He waived this prerogative right by assenting to a statute which bound him expressly or by necessary implication
The immunity of the Crown is now couched in the form of a rule of construction
In spite of this modem disguise there is high authority for the view that this immunity is still based upon the prerogative
In Madras Electric Supply Corporation Ltd vs Boarland5 Lord Keith said The true explanation easily understandable on his torical and legal grounds is that words in a statute capable of applying to the Crown may be overridden in the exercise of the prerogative
That is necessarily involved in the oft repeated phrase that the King is not bound by a statute 1 1946 LR 73 IA 271
2  3  124
4   463 463 4
5  694
CI66 14 202 unless by express words or by clear implication
If the statute does not apply to him there can be no question of his being bound by it
It is only because it can apply to him that appeal to the prerogative is necessary
The conception of the prerogative in my view is of something that stands outside the statute on which the Crown can rely to control the operation of the statute so far as it prejudices the Crown
But the prerogative right of overriding statutes did not extend to India
When the Crown of England became sovereign in India it acquired such prerogative rights as were enjoyed by the former Indian sovereigns and such other prerogative rights as may be said to inhere in every sovereign power
But the common law was never bodily imported into India and the Crown never possessed in India all the prerogatives allowed to the Crown by the law of England
In The Mayor of the City of Lyons vs Hon
East India Company1 the Privy Council held that the common law as to alienage and the royal prerogative of forfeiture of the lands held by a deceased alien on the ground of the incapacity of the alien to hold real property and transmit it by devise or descent was never  introduced in the Presidency town of Calcutta or the mofussil
Such a right was not enjoyed by the Indian sovereign nor was it a necessary incident of sovereignty
Lord Brougham said at pp
280 281 282 and 286 of the Report But it seems to be contended both here and below that there is something in the law incapacitating aliens which makes it so to speak of necessary application wheresoever the sovereignty of the Crown is established as if it were inherent in the nature of sovereign power
To this a sufficient answer has been already afforded if the acts of the sovereign power to which we have referred show that no such application to Bengal ever was contemplated unless direct authority can be produced to show that the right is inseparable from the sovereignty and as it were an essential part of it
It certainly is not an incident to sovereignty in several countries the sovereign has no such right  
Besides if reference be made to the prerogative of the English Crown that prerogative in other particulars is of as high a nature being given for the same purpose of protecting the State and it is not contended that these branches are extended to Bengal
Mines of precious metals treasuretrove royal fish are all vested in the Crown for the purpose of maintaining its power and enabling it to defend the State
They are not enjoyed by the sovereign in all or even in most 1 203 countries and no one has said that they extend to the East Indian possessions of the British Crown  
Upon the whole their Lordships are of opinion that the law incapacitating aliens from holding real property to their own use and transmitting it by descent or devise has never been introduced into Calcutta The common law of attainder or corruption of blood and the prerogative right of forfeiture or escheat on conviction of treason or felony now abolished by the Forfeiture Act 1870 33  34 Vict
c 23 did not prevail in India see Papamma vs Appa Rau1  Nor did the English law as felo de se and the forfeiture of goods and chattels consequent upon suicide apply to a Hindu though a British subject committing suicide at Calcutta see Advocate General of Calcutta vs Ranee Surnomoye Dossee2
At Common law no proceedings civil or criminal were maintainable against the Sovereign in person for it was said that as the Courts were her own they could have no jurisdiction over her see Halsbury s Law of England Vol 7 article 544 p 249
In India the government did not enjoy a general immunity from suits and legal proceedings see The Peninsular and Oriental Steam Navigation Company vs The Secretary of State for India1 The subjection of the Government to suits where it was liable to be sued before the Constitution is preserved by article 300 of the Consti tution
Though orders of mandamus and injunction cannot issue to the Crown in England see Halsbury s Laws of England 3rd Edn
II article 25 and 184 pages 16 and 98 such orders can issue to Government under articles 32 and 226 of the Constitution
See also State of Bihar vs Sonavati Kumari4
Province of Bombay vs Khusaldas Advani5
In England the King by his prerogative may sue in what Court he pleases see Craies on Statute law 6th Edn p 435
The prerogative of choice of Courts by the Crown never applied in India
The State can sue only in a Court competent to entertain the suit under the general law
In England it was the prerogative of the Crown not to pay costs in any judicial proceeding see Craies on Statute Law 6th edn p 432
But this prerogative was never recognised in India
The State pays and receives costs like a private individual
The Indian law did not deny that the Crown had certain pre rogatives
The Crown inherited the prerogatives enjoyed by the former Indian Sovereigns and had other prerogatives inherent in the nature of sovereignty
It was the prerogative of the King in Council to hear appeals and petitions from his Indian subjects 1 1
L R 396
2 3 5 Bom
HCR Appendix 1
4  5  697
204 see Modee Kai Khocscroo Hormusjee vs Cooverbhaee1
prerogative was taken away by the Abolition of Privy Council Jurisdiction Act 1949
When there is a failure of heirs on a person dying intestate the Crown had the prerogative right to take his property by escheat and this right was said to rest on grounds of general or universal law see the Collector of Masulipatam vs Cavaly Vencata Narrainapa2 Sonet Koor vs Himmut Bahadoor3 Mussammat Khursaidi Begun vs Secretary of State for India4
The right of the Government to take the property by escheat or lapse on the failure of heirs or as bona vacantia for want of a rightful owner is recognised by article 300 of the Constitution
The prerogative right of the Crown to priority in payment of its claims was recognised on the ground that this right did not arise out of any peculiar quality in the writ of extent and the Hindu Muhammadan and Poituguese Sovereigns had enjoyed a similar right see Secretary of State for India vs Bombay Landing and Shipping company5
The extent of this prerogative right may be limited by a statutory scheme of administration see GrovernorGeneral in Council vs Shiromani Sugar Mills Ltd in liquidation6
It has been held that the Government continues to enjoy this prerogative right of precedence after the Constitution came into force see Builders Supply Corporation vs Union of India 7 Bank of India vs J Boman8
The Crown as parens partriae had other prerogative rights
The Crown may have also enjoyed in India certain prerogative rights which were not allowed to the Crown of England by the common law and those prerogatives might vary in different parts of India see Bell vs
Municipal Commissioners for the City of Madras9Gopalan vs State of Madras 10
But in India the Crown never enjoyed the general prerogative of overriding a statute and standing outside it
Such a right is not indigenous to India nor is it a necessary incident of sovereignty
In The Secretary of State for India in Council vs Bombay Landing and Shipping Company5 Ganpat Putava vs The Col lector of Canars 11 the Bombay High Court held that a prerogative of the Crown cannot be taken away except by express words or by necessary implication
To appreciate these rulings it is necessary to remember that until 1861 there were constitutional restrictions on the power of the Indian legislature to affect the prerogative of the Crown see Statutes 3 and 4 William cap
LXXV section 43 and 16 and 17 Vict
cap XCV section 43 which were swept away by later statutes see the Indian Councils Act 1861 section 24 the Government of India Act 1915 section 84 1 A the Government of 1 6 MIA 448455
3 1876 ILR
I Cal391
5 7 9 ILR 2 1859 61 8 MIA 500
4 Patna 538
6 8 AIR 1956 Bom
305 10 Mad
798802
11 1875 ILR
I Bom
205 India Amendment Act 1917 section 2 as interpreted in The Secretary of State vs Bombay Municipality1 with one exception introduced by the Government of India Act 1935 section 1 10bii
Having regard to this historical background it was considered that the prerogative of the Crown was a very special subject matter and in the absence of express words or necessary implication it should be presumed that general words of an Indian Act were not intended to affect the prerogative
In Bells case2 Sir Bhashyam Ayyangar Jtherefore pointed out that the doctrine that the prerogative could not be taken away save by express words or by necessary implication could be based on the maxim generalia specialibus non derogant
This maxim does not exempt the Crown from the operation of statutes generally whenever a statute prejudicially affects it
In order to invoke this doctrine the Crown must establish that it has some prerogative right which it claims to be outside the purview of the statute
As pointed out already under the Indian law the Crown could not claim a general exemption from statutes on the ground of the prerogative
But there is high authority for the view that such an exemption is allowed to the Crown in England on the basis of a rule of construction
In Madras Electric Supply Corporation vs Boarland3 at p 685 Lord Macdermott said that the rule that in an Act of Parliament general words shall not bind the Crown to its prejudice unless by express words or by necessary implication has long been regarded as a rule of construction
This rule has a wide sweep and is not limited to cases where the prerogative right or property of the Crown is in question
It protects the Crown whenever general words in a statute may operate to its prejudice
See Broom  s Legal Maxims 10th Edn pp 39 40 Glanville L Willams  Crown Proceedings p 48 f n
A review of the decided cases shows that until the decision of the Privy Council in the Province of Bombays case4 this wide rule of construction had not obtained a firm foothold in India
In Verubai vs The Collector of Nasik5 the Bombay High Court held that the Government was bound by article 167 of Schedule 11 of the Indian Limitation Act 1877
Westropp CJ said The legislature in passing the Limitation Act of 1871 which is applicable to this case where it intends that Government should have a longer period than the subject has been careful expressly to say so as for instance in article 150 of Schedule II where the period assigned to suits brought by the Secretary of State is sixty years from the time of the accruer of the cause of action but the Legislature makes no difference between Government and its subjects 1 2 ILR 31955 AC 667685
4 1946 LR 73 IA 271
5 ILR 206 in the case of appeals or applications see Govind Lakshman vs Narayan Moreshvar1
In Appava vs The Collector of Vizagapatam 2 the Madras High Court held that the Government was bound by article 178 of the Indian Limitation Act 1877
Turner CJ and Muttusami Ayyar Jsaid If the maxim on which the counsel for the Crown relies applies to this country and the Crown is not bound by the provisions of any Act unless they are expressly declared binding on the Crown it may be inferred from the circumstance that this Act contains provisions prescribing a Limitation to the Government for the institution of suits and presentation of criminal appeals that the Legislature contemplated that the Crown should be subject to the provisions of the Act and should enjoy a privilege to the extent expressed and no further expressum facit cessare tacitum In the last two cases the Courts did not apply the strict English rule that the Crown under the prerogative was not bound by the statute of limitation see Bank Voor Handel vs Hungarian Administrator3
In The Secretary of State for India vs Mathurabhai4 Sargent C J was inclined to apply the English rule that the Crown is not included in an Act unless there are words to that effect and to hold that the Government was not bound by section 26 of the Indian Limitation Act 1877
But he observed that it was not necessary to express a decided opinion on the question
In Bells case5 the Madras High Court held that the Government was bound by the taxing provisions of section 341 of the City of Madras Municipal Act 1884 though not named in that section
Sir Bhashyam Ayyangar J reviewed the earlier cases and decisively rejected the general claim of immunity of the Crown from a statute imposing a tax on the basis of any prerogative right or supposed rule of construction
In Motilal vs The Collector of Ahmedabad6
Russel Acting C J and Beaman J doubted the application of the English rule of construction in this country
They said It is contended that the maxim of English law that the Crown cannot be bound by any statute unless expressly named therein applies and reference is made to the cases of Ganpat Putaya vs The Collector of Kanara7 The Secretary of State for India vs Mathurabhai8
Without in any way wishing to prejudge the question or fetter future argument 1 1 1
2 1882 ILR4 Mad 135 3  984 HL
4 Bom
5 ILR 6 Bom 86 89
7 1875 ILR
I Bom 1 8 Bom
207 we may say that as at present advised we entertain some doubt whether an exact analogy exists between the privileges and immunities of the Crown under the Constitutional Law of England and those of servants of the Indian Government
 The full Bench left the question open
In The Secretary of State vs Mohammed Yysuf1 Pratt J held that sections 172 vii and 90 of the Indian contained an implication that the Crown was bound by the Act
In Hiranand Khushiram vs Secretary of State for India2 Beaumont C J and Rangnekar J applied the strict English rule of construction and held that since the Crown was not named either expressly or by necessary implication in sections 305 489 and 491 of the City of Bombay Municipal Act 1888 the Crown was not bound by those sections
Soon thereafter the same learned Judges held in Secretary of State for India vs The Municipal Corporation of Bombay3 that the Crown was bound by section 212 of the City of Bombay Municipal Act 1888 by necessary implication though not expressly named therein
In Province of Bombay vs The Municipal Corporation for the City of Bombay4 Beaumont C J and Rajadhayaksha J held that sections 2221 and 265 of the City of Bombay Municipal Act 1888 by necessary implication bound the Crown
They refused to follow the dictum of Day J in Corton Local Board vs Prison Commissioner5 that the test of necessary implication binding the Crown involves that the legislation is unmeaning unless the Crown is bound
They said   if it can be shown that legislation cannot operate with reasonable efficiency unless the Crown is bound that would be a sufficient reason for saying that the Crown is bound by necessary implication  This decision was reversed by the Privy Council on appeal in Province of Bombay s case6
The Privy Council rejected the test laid down by the Bombay High Court
They held that the strict English rule of construction exempting the Crown from the operation of statutes applied in the case of Indian legislation
The parties appearing before the Privy Council concurred in accepting this view
The attention of the Privy Council was not drawn to Bell s case7 and the propriety of applying the English rule to Indian legislation was not considered
Lord Du Parcq said If it can be affirmed that at the time when the statute was passed and received the royal sanction it was apparent from its terms that its beneficient purpose must be wholly frustrated unless the Crown were bound then it may be inferred that the Crown has agreed to be bound 1  11362 Bom
3 4 ILR 1944 Dom 95
5 6 1946 LR 73 IA 271
7 I L R 208 They held that the Crown was not bound by sections 2221 and 265 of the City of Bombay Municipal Act 1888 and an inference of necessary implication binding the Crown could not be drawn from certain express references to the Crown in other parts of the same Act and from the exemption of the Crown in a later general Act since such provisions are often inserted ex abundanti cautela
It is to be noticed that in several earlier decisions the Bombay High Court had drawn an inference of necessary implication binding the Crown in other sections of the same Act
Moreover except the Bombay High Court no other High Court held that the English c of Crown exemption from statutes applied to India
Even in Bombay some of the Judges doubted the applicability of the rule to Indian conditions
The imposition of the strict rule of construction by the Privy Council decision was received very unfavourably in India
In Corporation of Calcutta vs Sub Postmaster Dharamtala1 the Calcutta High Court felt bound to follow the Privy Council decision and held that the Government was not bound by the provisions of the Calcutta Municipal Act 1923
Mookerjee J however said Had the question been res integra and had it been open  to us to consider the question untrammelled by a decision of the Judicial Committee we might have considered the reasonableness and propriety of applying the principles as enunciated by the English Courts and also how far they should be applied to Indian conditions
For some years past the position of the Crown with regard to liability and procedure has been considered by the lawyers in England as being antiquated and absurd as contrasted with that of ordinary individuals and reform in this respect has been considered to be long overdue
 In The Corporation of Calcutta vs Director of Rationing and Distribution2 the Calcutta High Court refused to follow the Privy Council decision and held that the State was bound by section 3861 a of the Calcutta Municipal Act 1923
This decision was reversed in The Director of Rationing and Distribution s case 3 and a majority of a Bench of this Court held that the law was correctly laid down in the Province of Bombay s case4 and continued to apply in this country even after the Constitution came into force and the State was not bound by section 3861 a of the Calcutta Municipal Act 1923
Wanchoo J dissented and held that the rule laid down by the Privy Council did not apply to the construction of Indian statutes after the Constitution came into force
Later decisions of this Court disclose a tendency to relax and soften the rigour of 1 194854 C W N 429
3  2 AIR 1955 Cal 282
4 1964 LR 73 IA 271
209 this rule
In Sri Venkata Seetaramanjaneya Rice and Oil Mills and others vs State of Andhra Pradesh1 this Court held that an inference of necessary implication binding the State may be drawn if the conclusion that the State is not bound by the specific provision of a given statute would hamper the working of the statute or would lead to the anomalous position that the statute may lose its efficacy
In other words the Court was inclined to revive the Bombay heresy rejected by the Privy Council
With regard to this rule of exemption of the Crown from statutes Glanville L Williams in his book on Crown Proceedings 1948 pp 53 and 54 said The rule originated in the Middle Ages when it perhaps had some justification
Its survival however is due to little but the vis inertiae
The chief objection to the rule is its difficulty of application 
With the great extension in the activities of the State and the number of servants employed by it and with the modern idea expressed in the Crown Proceedings Act that the State should be accountable in wide measure to the law the presumption should be that a statute binds the Crown rather than that it does not
 Thus the artificial rule of construction has not escaped criticism even in England
This rule of construction is unsuitable to Indian conditions and should never have been applied to India
Before 1946 there was no settled course of decisions of the Indian Courts necessitating or justifying the application of this rule to the construction of Indian statutes
Rules of English law which could not suitably be applied to Indian conditions were not introduced even in the Presidency Town of Calcutta by 13 Geo HI c 63 or 21 Geo III c 70 or any other cognate statute or by the Charter of Charles II in 1661 see The Mayor of the City of Lyons vs The Hon
East India Company2 The Advocate General of Calcutta vs Ranee Surnomoyee Dossee3
Technical rules of English common law were not applied even in the Presidency Towns if they clashed with principles of justice equity and good conscience see Abdul Kawder vs Mahomed Mera 4 Mool Chand vs Alwar Chetty 5
In the mofussil common law had no force proprio vigore but the Judges were free to adopt and apply any rule of common law if it was consonant with principles of justice equity and good conscience
Artificial rules of Common Law based on feudal notions had no application in India
In Mithibai vs Limii Nowroji Benaji6 the Bombay High Court refused to apply the rule in Shelley s case in a case arising between Parsis in the mofussil
In The State of Rajasthan vs Mst
Vidyawati7 1   462 2 18371 M A 175 246 9 274 5
4 ILR 5 ILR  553
506531
3  407 13 424 30
7 1962 2 Supp
SCR 989 1007
6 Bom
506 531
210 this Court refused to apply rules of immunity of the Crown based on old feudalistic notions
In interpreting a statute it is the duty of the Court to give effect to the expressed intentions of the legislature
There is no compelling reason why the Courts in India should not give full effect to the general words of a statute on the basis of some artificial rule of construction prevailing in England
No doubt there are many Indian Acts which expressly provide that the Crown or the Government shall be bound by their provisions
See the Indian Arbitration Act No 10 of 1940 section 43 Trades and Merchandise Marks Act No 43 of 1958 section 130 the Factories Act No 63 of 1948 section 116 the Oil Fields Regulation and Development Act No 53 of 1948 the  section 85
Some of these Acts are modelled on English statutes which contain similar provisions
In some Acts the express provision binding the Government is inserted by way of abundant caution
But the bulk of the Indian legislation proceeds upon the assumption that the Government will be bound unless the contrary is stated
Many Acts like the Code of Civil Procedure 1908 and the make special provisions for the Government in respect of particular matters on the assumption that in respect of all other matters the Government will be bound by the general provisions of the Act
The Indian Limitation Act 1882 provided a special period of limitation for suits by the Government on the assumption that the Government like the subjects will be bound by its other general provisions
To apply the technical rule of construction exempting the Crown from the operation of Indian statutes will be to stultify the intention of the legislature in most cases
The English Courts have gone to the length of deciding that the Crown is not bound even by general regulations as to public safety see Cooper vs Hawkins1
Such a result has not escaped criticism even in England
In India no one has doubted that general regulations as to public safety bind the Government equally like the citizens
The Director of Rationing and Distribution s case2 left open the question whether the State could claim immunity from the provisions of a statute with regard to its trading or commercial activities
But the executive power of the State extends to the carrying on of a trade or business see article 298 of the Constitution
On a question of construction of a statute no rational distinction can be made between the trading and non trading activities of the State
If the State is not bound by a statute it would seem that it is not so bound in respect of all its activities
in a country having a federal system of government it is difficult to apply the rule of Crown exemption from statutes
In 1 2  211 R vs Sutton1 the High Court of Australia held that this presumption should not be applied so as to bring about either State exemption from federal laws or federal exemption from State statutes
But the contrary opinion seems to have prevailed in later cases see Minister of Works WA vs Gulson2
The Commonwealth of Australia vs Bogle3
This branch of Australian law is discussed in detail by Dr Wynes in his book on Legislative Executive and Judicial Powers 3rd Edition pp
518 to 544
We should not import in this country either the English rule of implied exception of the Crown or the subtle distinctions engrafted on it by the Australian Courts
Our system of Government is federal in character
The taxing power is vested both in the Union and the States
Subject to certain constitutional restrictions the Union can tax the State and the State can tax the Union
There is no ground for presuming that the States are excluded from the scope of a general taxing statute enacted by Parliament or that the Union is outside the purview of the general words of a taxing statute enacted by a State legislature
I am therefore of the opinion that the rule that the Govern ment is not bound by a statute unless it is expressly named or bound by necessary implication does not prevail in this country and the decisions in the Province of Bombay s case4 and The Director of Rationing and Distribution s cases and the subsequent decisions applying the rule to the construction of Indian Acts should not be followed
The imposition of this artificial rule has been harmful to our body politic
We have power to reconsider our previous decisions see The Bengal Immunity Company Ltd vs The State of Bihar6
This is a fit case where we should exercise this power
If the rule of common law controlling the operation of a statute on the ground of the prerogative applied to India it would be a law in force before the Constitution and would continue to be in force by virtue of article 372 of the Constitution
It would be the law in force because it would limit and control the operation of the existing Indian Acts
But we have ample power to say that this rule was not in force in India and the Indian law was not correctly laid down by the Privy Council in the Province of Bombay s case4 and the decisions which followed it
There is no presumption that the provisions of an Act do not bind the State using the expression State in a compendious sense as including the Union and the States
In each case it is a question of fair construction of the Act whether or not any particular provision of the Act binds the State
The intention of the legislature has to be gathered on a careful scrutiny of the Act in question
Particular care should be taken in scrutinising the pro visions of a taxing or a penal Act
If the application of the Act 1  3   254
5  2  4 1946 LR 73 IA 271
6 212 leads to some absurdity that may be a ground for holding that the State is excluded from its operation by necessary implication
If the only penalty for an offence is imprisonment the State cannot be convicted of the offence for the State cannot be locked up in prison
If the penalty for the offence is fine and the fine goes to the consolidated fund of the State it may be presumed that the penal provision does not bind the State for the legislature could not have intended that the State will be the payer as well as the receiver of the fine
Presumably the Union is not bound by the Central Income tax Act because if it paid income tax it will be both the payer and the receiver
Likewise a State is prima facie not bound by a State Agricultural Income tax Act where the tax is receivable by it
Moreover cases may conceivably arise where press provisions in a statute binding the State in respect of certain specific matters may give rise to the necessary implication that the State is not bound in respect of other matters
The Calcutta Municipal Act 1951 contains special provisions exempting the Government from some of its provisions
Section 1672 exempts from the consolidated rate certain open spaces and parade grounds which are the property of the Government
Section 2081b exempts certain carriages and animals belonging to the Government from payment of tax on carriages and animals
Section 2251 c proviso exempts carts which are the property of the Government from payment of registration fees
Sections 2181 and 5411b are however framed in general terms and do not expressly exempt the Government from their operation
Under section 2181 it is the duty of every person carrying on any of the trades mentioned in schedule TV to take out a licence and to pay the prescribed fee
Under section 5411 b any person carrying on such a trade without taking out the licence is punishable with fine
Prima facie the two provisions apply to all persons including the State Government
Section 218 is a taxing section and its object is to levy revenue for the municipality
There is no reason why the State Government like any other person should not take out a license and pay the prescribed fee if it chooses to exercise or carry on a trade and why it should not be punished with fine under section 5411b if it chooses to carry on a trade without taking a license
By section 5412 such fine when levied is taken by the Municipality in full satisfaction of the demand on account of the license Fee
Section II 5 of the Act no doubt provides that all monies realised or realisable under the Act other than fine levied by magistrates shall be credited to the municipal fund
Reading sections 115 and 5412 together it appears that the excepting words other than fine levied by magistrates in section 115 do not refer to the fine levied under section 541
The general provisions of section 115 must be read subject to the special provisions of section 5412 and the fine realisable under section 541 is receivby the Municipality
It follows that the State Government is 213 the payer but is not the receiver of the fine
There is nothing to indicate that the State Government should be excluded from the purview of section 2181 and section 5411b
Section 218 renders the State liable to pay the license fee
Section 5411 provides the remedy for the recovery of the fee in case of default in taking out the license and payment of the fee
If we are to hold that section 218 1 applies to the State but section 5411 b does not the result would be that though the State is liable to pay the license fee the Municipality will have no remedy against the State for the recovery of the fee
The legislature could not have contemplated such a result
Section 541 1b is a penal provision
But the State is not necessarily exempt from the operation of a statute having a punitive aspect
No doubt under section 547A the Court is competent to direct imprisonment of the offender in default of the payment of fine under section 5471b
Obviously this provision cannot be applied to the State because the State cannot be detained in prison
But there is no reason why section 5411 b should not be applied to the State
In Rani Sonavati Kumari vs The State of Bihar  this Court held that under the punitive provisions of 0 39 r 23 of the Code of Civil Procedure 1908 the Court could direct attachment of the property of the State for breach of an order of injunction though the Court could not direct detention of the State in civil prison
The High Court found that the State of West Bengal was carrying on a trade referred to in schedule IV of the Calcutta Municipal Act 1951 and was bound to take out a license under section 2181
It is common case that the State did not take out a license for 1960 61
The State was therefore rightly convicted by the High Court under section 5411
In the judgment of the High Court it is stated by inadvertence that the conviction was under section 537 but from the materials on the record it is clear that the High Court intended to pass the order of conviction under section 541
It was argued that the State was the owner of a market and did not carry on any business
it was suggested that the trades if any in the market were carried on by the stall holders and not by the Government
But the High Court has recorded the finding that the Government carried on a trade
In this appeal under article 136 of the Constitution I do not propose to interfere with this finding Of fact
This judgment will not preclude the Government from proving in any future case that it is not carrying on any trade or business at 1 Orphanage Road Calcutta The appeal is dismissed
ORDER In accordance with the opinion of the majority the appeal is dismissed
Y P 1 1961 SCR728


Summary:
The appellant State of West Bengal was carrying on trade as owner and occupier of a market at Calcutta without obtaining a licence as required under section 218 of the Calcutta Municipal Act 1951
The respondent Corporation of Calcutta filed a complaint against the State for contravention thereof
The trial Magistrate accepting the State s contention that the State was not bound by the provisions of the Act acquitted the State
on appeal theHigh Court convicted the State and sentenced it to a fine holding thatthe State was as much bound as a private citizen to take out a licence
In appeal to this Court the appellant relying on this Court s decision inDirector of Rationing vs Corporation of Calcutta  contended that the State was not bound by the provisions of a statute unless it was expressly named or brought in by necessary implication and this common law rule of construction accepted as the law in India was law in force within the meaning of article 372 of the Constitution and that in any event by necessary implication the State was excluded from the operation of section 218 of the Act
HeldPer Subba Rao CJ Wanchoo Sikri Bachawat Ramaswami Shelat Bhargava and Vaidialingam JJ
Shah J dissenting  The State was not exempt from the operation of section 218 of the Calcutta Municipal Act 1951 and was rightly convicted
Per Subba Rao C J Wanchoo Sikri Ramaswami
Shelat Bhargava and Vaidialingam JJ
i The Common Law rule of construction that the Crown is not unless expressly named or clearly intended bound by a statute was not accepted as a rule of construction throughout India and even in the Presidency Towns it was not regarded as an inflexible rule of construction
It was not statutorily recognized either by incorporating it in different Acts or in any General Clauses Act at the most it was relied upon as a rule of general guidance in some parts of the country
The legislative practice establishes that the various legislatures of country provided specifically exemptions in favour of the Crown 171 whenever they intended to do so indicating thereby that they did not rely upon any presumption but only on express exemptions
Even those courts that accepted it considered it only as a simple canon of construction and not as a rule of substantive law
In the City of Calcutta there was no universal recognition of the rule of construction in favour of the Crown
The Privy Council in Province of Bombay vs Corporation of the City of Bombay 1946 LR 73 IA 27 gave its approval to the rule mainly on concession made by counsel
180 D G 183 H 184 E F 186 D G The archaic rule based on the prerogative and perfection of the Crown has no relevance to a democratic republic it is inconsistent with the rule of law based on the doctrine of equality and introduces conflicts and anomalies
The normal construction namely that an enactment applies to citizens as well as to State unless it expressly or by necessary implication exempts the State from its operation steers clear of all the anomalies and is consistent with the philosophy of equality enshrined in the Constitution
B If a rule of construction accepted by this Court is inconsistent with the legal philosophy of the Constitution it is the duty of this Court to correct its self and lay down the right rule
This Court must more readily do so in constitutional matters than in other branches of law
176 B C Director of Rationing vs Corporation of Calcutta   reversed
Province of Bombay vs Corporation of the City of Bombay 1946 LR 73 IA 271 held inapplicable
Bengal Immunity Co vs State of Bihar  referred to
Case law discussed
iiEven assuming that the common law rule of construction was accepted as a canon of interpretation throughout India the rule is not law in force within the meaning of Article 372 of the Constitution
There is an essential distinction between a law and a rule of construction
A rule of construction adopted to ascertain the intention of the legislature is not a rule of law
187 D iiiThe State is not excluded from the operation of section 218 of the Act by necessary implication
The State is not the payer as well as the receiver of the fine or the fine when levied goes to the municipal fund
Though the expression fine  is used in effect and substance section 541 is a mode of realization of the fee payable in respect of the licence
The provision for imprisonment in default of fine is only an enabling provision and the court is not bound to direct the imprisonment of the defaulter
189 D H 190 A B Per Bachawat J  i This Court should have in Director of Rationing and Distribution vs Corporation of Calcutta  refused to recognise the rule that the Crown is not bound by a statute save by express words or by necessary implication
In India the Crown never enjoyed the general prerogative of overriding a statute and standing outside it
The doctrine of the general immunity of the Crown from the operation of statutes so far as it is based upon the royal prerogative was never imported into India
Nor is there any compelling reason why the courts in India should not give full effect to the general words of a statute on the basis of some artificial rule of construction prevailing in England
The bulk of the Indian legislation proceeds upon the assumption that the Government will be bound unless the contrary is stated
The 172 ruleas rule of construction never gained a firm foothold in untilthe Privy Council decision in Province of Bombay vs Municipal Corporation for the City of Bombay 1946 LR 73 IA 271 in 1946 till which time there was no settled course of decisions of the Indian courts necessitating or justifying the application of this rule to the construction of Indian statutes and even in this decision the propriety of applying the rule to Indian legislation was not considered
The imposition of this strict rule of construction by the Privy Council was received very unfavourably in India till this Court s decision in the Director of Rationing case wherein Province of Bombay was held to have laid down the correct law
But subsequent decisions of this Court disclosed a tendency to relax and soften the rigour of the rule
Further in a country having a federal system of government it is difficult to apply the rule of Crown exemption from statutes
This rule was not in force in India and therefore was not law in force within the meaning of article 372 of the Constitution
201 D E 202 C 210 A B C D C H 210 H 211 F This Court has power to reconsider its previous decisions and this is a fit case where this power should be exercised
211 E Director of Rationing vs Corporation of Calcutta   reversed
Province of Bombay vs Municipal Corporation for the City of Bombay 1946 LR 73 IA 271 held inapplicable
Shivenkata Seetararnanjaneya Rice  Oil Mills vs State of Andhra Pradesh  and Bengal Immunity Co vs State of Bihar  referred to
Case law discussed
iiOn a question of construction of a statute no rational distinction can be made between the trading and non trading activities of the State
210 G iiiThere is nothing in the Act to indicate that the State should be excluded from the purview of section 2181 requiring the taking out of a licence on payment of the prescribed fee and section 54411 providing the remedy for the recovery of fee in face of default
If the State is to be exempt from the application of section 5411b it would lead to the anomaly that the State is liable to pay the licence fee but the Municipality will have no remedy for the recovery of the fee
Also the fact that under section 547A the court is competent to direct imprisonment in default of fine is no reason why section 5411 1 b should not be applied to the State
The special provisions of section 5412 indicate that the fine realizable under section 541 is receivable by the Municipality
It follows that the State Government is the payer but is not the receiver of the fine
The fine when levied is taken by the Municipality in full satisfaction of the demand on account of the licence fee
212 H 213B State of Bihar vs Rani Sonavati Kumari   relied on
Shah J Dissenting i The English Common Law rule that the Crown is not unless expressly named or clearly intended bound by a statute is a rule of construction and was settled law in India before the Constitution
197 F 198 D The Common Law of England was adopted in this country subject to local variations and the personal law of the parties and the courts which functioned in the former British India territory were enjoined to cases not governed by any specific statutory rules according to equity and good conscience which meant rules of English Common Law 173 in so far as they were applicable to Indian society
Them was practically a consistent course of decisions of the High Courts in India prior to the Constitution in support of the view affirmed by the Judicial Committee in Province of Bombay vs Municipal Corporation of the City of Bombay 1946 LR 73 IA 271 that the rule that the Crown is not unless expressly named or clearly intended bound by a statute applied to India
It was accepted as a rule of interpretation ofstatutes applicable to all statutes governing state action authority or property
A difference may have prevailed in Parts of the territories now comprising theIndian Union
But this is not peculiar to this rule of interpretation adoptedby the Courts in British India
Where uniform statutes do not apply differences do arise and must be determined according to the law and jurisdiction inherited by the courts administering justice
The present case concerns the administration of law in the town of Calcutta which has for more than two centuries been governed by the English Common Law as adopted by the various Acts Regulations and finally by the Letters Patent
191 A D 192 D E D F Director of Rationing and Distribution vs The Corporation of Calcutta   followed
Province of Bombay vs Municipal Corporation of the City of Bom
bay LR 73 IA 271 applied
State of West Bengal vs Union 1964 1 SCR 371 Srivenkata Seetaramanjaneya Rice  Oil Mills vs State of Andhra Pradesh   Builders Supply Corporation vs Union of India   referred to
Case law referred to
There is no reason to hold that the rule which previously applied to the interpretation of a statute ceased to apply
on the date on which the Constitution came into force
The Constitution has not so fundamentally altered our concept of State  as to abandon the traditional view about State privileges immunities and rights because they had a foreign origin and on the supposed theory of equality between the State and its citizens
The guarantee of equal protection clause of the Constitution does not extend to any differential treatment which may result in the application of a special rule of interpretation between the State and the citizens nor has the Constitution predicated in all respects equality in matters of interpretation between the State and its citizens
A State can in the interest of public good select itself for special treatment
This being so there is no reason to suppose that a Statute which was framed on the basis of a well settled rule of pre Constitution days which accorded the State a special treatment in the matter of interpretation
of statutes must be deemed to have a different meaning on the supposition that the Constitution has sought to impose equality between the State and the citizens
198 H 199 F The fact that in the Indian federal set up sovereignty is divided between the Union and the States and in the application of the rule that the State is not bound by a Statute unless expressly named or clearly implied conflict between the State enacting a law and the Union or another State may arise does not give rise to any insuperable difficulty which renders the rule inapplicable to the changed circumstances for it is the State which enacts a legislation in terms general which alone may claim benefit of the rule of interpretation and not any other State
199 G iiThe rule of interpretation being a settled rule is law in force within Me meaning of article 372 of the Constitution
A rule is not any 174 the less a rule of law because it is a rule for determination of the intention of the legislature and for its application requires determination of facts and circumstances outside the statute
Acceptance of the proposition that a decision of the highest judicial tribunal before the Constitution is law does not involve the view that it is immutable
A statue may be repealed  and even retrospectively it would then cease to be in operation a decision which in the view of this Court is erroneous may be overruled and may cease to be regarded as law but till then it was law in force
198 D G iiiThe application of the rule cannot be restricted to cases where an action of the State in its sovereign capacity is in issue
In the context of modem notions of the functions of a welfare State it is difficult to regard any particular activity of the State as exclusively trading
200 A B ivThe State of West Bengal was not bound by the provisions relating to the issue of licences for occupation or conduct of a market
200 F There is no express reference to the State nor is there anything peculiar in the nature purpose and object or in the language used in the enactment relating to the issue of licences which may suggest that the State must by necessary implication be bound by its provision
200 E