Appeal No230 of 1954
Petition No 276 of 1953
Appeal from the judgment and order dated June 7 1954 of the former Pepsu High Court in Civil Misc
No 97 of 1953
Petition under Article 32 of the Constitution of India for the enforcement of fundamental rights
731 GS Pathak Veda Vyasa section K Kapur and J B Dadachanji for the appellants petitioners
H N Sanyal Additional Solicitor General of IndiaRGanapathi Iyer Raj Gopal Sastri and R H Dhebar for the respondents
April 28
The judgment of section R Das C J Venkatarama Aiyar section K Das and Gajendragadkar JJ
was delivered by Venkatarama Aiyar J Bose J delivered a separate judgment
VENKATARAMA AIYAR J Messrs
Dalmia Dadri Cement Co Ltd which is the appellant in Civil Appeal No 230 of 1954 and the petitioner in Petition No 276 of 1953 is a public company engaged in the manufacture and sale of cement at a place called Dadri situate in what was once the independent State of Jind
On April 1 1938 one Shanti Prasad Jain a promoter of the above company obtained certain concessions from the Ruler of Jind under an agreement exhibit A and as it is this document that forms the basis of the present claim of the appellant it is necessary to refer to the material terms thereof
Clause 1 of the agreement grants to the licensee Shanti Prasad Jain the sole and exclusive monopoly right of manufacturing cement in the Jind State and for that purpose he is authorised in Cl
2 to win and work all quarries strata seams and beds of kankar rorey limestone or other like materials 
Under Cl
7 the licence is to last for a period of 25 years with option for successive renewals
Clause 10 requires that a public limited company should be formed before July 21 1936 to work the concessions and that it should be registered in the Jind State
Under Cl
11 the State is to be allotted 6 per cent
cumulative preference shares fully paid up of the face value of rupees one lack and ordinary shares fully paid up of the total face value of Rs 50000 without any payment whatsoever
Then there are provisions for the payment of royalty to the State and sale of cement at concession rates to local consumers
Clause 23 is very material for the present dispute and is as follows 93 732  The Company shall be assessed to income tax in accordance with the State procedure but the rate of income tax shall always be four per cent
up to a limit of the income of rupees five lacs and five per cent
on such income as is in excess of rupees five lacs  
Clause 24 grants exemption from export import and other duties excepting consmers
Clause 37 provides for settlement of all disputes between the parties by arbitration
In accordance with the terms set out above the appellant company was duly incorporated in the Jind State and on May 27 1938 Shanti Prasad Jain executed in its favour a deed agreeing to transfer all  his rights privileges and obligations  under exhibit A
The appellant claims that it has become in this wise entitled as assignee of the licensee to all the benefits granted under exhibit A
The contention was raised by the respondent that the deed dated May 27 1938 does not itself purport to assign the rights under the license exhibit A but merely agrees to do so and that in the absence of a further deed transferring those rights the appellant could not claim the rights of assignee
But Cl
35 expressly provides that  the licensee shall transfer his rights to the proposed Company on its formation  and after the appellant was incorporated the State had throughout recognised it as the person entitled to the rights and subject to the obligations under the license and realised royalty and levied income tax in accordance with the provisions of exhibit A
This objection was taken for the first time only in the Writ Petition No 276 of 1953 in this Court
It is stated for the appellant and that is not controverted for the respondent that under the law of Jind State an assignment need not be in writing and that being so it is open to us to infer such assignment from the conduct of the parties
We must accordingly decide these cases on the footing that the rights under the license exhibit A dated April 1 1938 had become vested in the appellant by assignment
On August 15 1947 India became independent and on the same date the Ruler of Jind signed an Instrument of Accession ceding to the Government of India 733 power to legislate with respect to Defence External Affairs and Communications
On May 5 1948 eight of the Rulers of States in East Punjab including Jind entered into a Covenant for the merger of their territories into one State called the Patiala and East Punjab States Union
For brevity this State will hereafter be referred to as the Patiala Union
Article VI of the Covenant on which the appellant relies in support of its claim is as follows  The Ruler of each Covenanting State shall as soon as may be practicable and in any event not later than the 20th August 1948 make over the administration of his State to the Raj Pramukh and thereupon aall rights authority and jurisdiction belonging to the Ruler which appertain or are incidental to the Government of the Covenanting State shall vest in the Union and shall hereafter be exercisable only as provided by this Covenant or by the Constitution to be framed thereunder ball duties and obligations of the Ruler pertaining or incidental to the Government of the Covenanting State shall devolve on the Union and shall be discharged by it call the assets and liabilities of the Covenanting State  shall be the assets and liabilities of the Union and dthe military forces if any of the Covenanting State shall become the military forces of the Union
 Article X provides that a Constituent Assembly should be formed as early as practicable and that it should frame a Constitution for the State and that until the Constitution is so framed the Rajpramukh is to have power to make and promulgate Ordinances for the peace and good government of the Union
Under article XVI the Union  guarantees either the continuance in service of the permanent members of the public services of each of the Covenanting States on conditions which will be not less advantageous than those on which they were serving on the 1st February 1948 or the payment of reasonable compensation or retirement or proportionate pension 734 In accordance with article VI of the Covenant the Rajpramukh of the Patiala Union took over the administration of Jind on August 20 1948 and immediately after assumption of office he promulgated the Patiala and East Punjab States Union Administration Ordinance No 1 of section 2005
Section 3 of the Ordinance which is material for the present discussion is as follows  As soon as the administration of any covenanting State has been taken over by the Raj Pramukh as aforesaid all Laws Ordinances Acts Rules Regulations Notifications Hidayate Firman i Shahi having force of law in Patiala State on the date of commencement of this Ordinance shall apply mutatis mutandis to the territories of the said State and with effect from that date all laws in force in such Covenanting State immediately before that date shall be repealed Provided that proceedings of any nature whatsoever pending on such date in the courts or offices of any such Covenanting State shall notwithstanding anything contained in this Ordinance or any other Ordinance be disposed of in accordance with the laws governing such proceedings in force for the time being in any such Covenanting State This Ordinance came into force on August 20 1948
On February 5 1949 it was repealed and replaced by Ordinance No XVI of section 2006 section 3a whereof being in the same terms as section 3 of Ordinance No 1 of 8 2005
Article X1 of the Covenant provided as has been mentioned for the framing of a Constitution for the Union in the manner provided therein
That however did not materialise and on November 24 1949 the Rajpramukh issued a proclamation accepting the Indian Constitution as that of the Patiala Union and thus the Union became a Part B State under the Constitution
On April 13 1950 the Patiala Union accepted the Federal Financial Integration Scheme and became a taxable territory of the Union of India and the Indian Finance Act 1950 became applicable to it from April 13 1950
The position therefore is that as regards liability to be assessed to income tax 735 which is what we are concerned with in these proceedings the law applicable to the appellant for the period prior to August 20 1948 was the income tax law of  Jind for the period August 20 1948 to April 13 1950 the Patiala Income tax Act section 2001 which came into force under Ordinance No 1 of section 2005 and after April 13 1950 the Indian Income tax Act
Civil Appeal No 230 of 1954 arises out of proceedings for assessment of income tax for the year 1949 1950
By its order dated November 11 1952 the Appellate Tribunal has found that the taxable profits of the appellant for the year of account which is the calendar year 1948 was Rs 194265 and that finding is not now in dispute
The substantial point now in controversy is as to the rate at which tax should be levied on that amount whether it should be what is enacted in the Patiala Income tax Act as contended for the respondent or what is provided in Cl
23 of the agreement exhibit A as claimed by the appellant
On this question the Appellate Tribunal held that the Patiala Union which was a new State that had come into existence as a result of the Covenant was not bound by the agreements entered into previously by the rulers of the Covenanting States that the appellant could claim the benefit of that agreement only if the new State chose to recognise it  that there had been in fact no such recognition and that in consequence the tax was leviable as prescribed in the Patiala Income tax Act section 2001
On the application of the appellant the Tribunal referred under section 661 of the Indian Income tax Act the following question for the opinion of the High Court  Whether the asseessee s profits and gains earned in the calendar year 1948 were assessable for section 2006 1949 50 at the rates in force according to the Patiala Income Tax Act of section 2001 read with section 3 of the Patiala  East Punjab States Union Administration Ordinance No 1 of section 2005 as repealed and re enacted in section 3 of the Patiala  East Punjab States Union General Provisions Administration Ordinance No XVI of 2006 or in accordance with clause 23 of the agreement of April 1938 above referred to 736 By their judgment dated June 7 1954 the learned Judges of the High Court answered the question against the appellant but granted a certificate under section 66A2 of the Indian Income tax Act and that is how Civil Appeal No 230 of 1954 comes before us
Meantime proceedings were taken by the Income tax authorities for assessment of tax for years subsequent to 1949 1950 and the dispute again related to the question whether the amount of tax should be determined in accordance with Cl
23 of exhibit A or the provisions of the Indian Income tax Act 1922
The Income tax Officer Rohtak rejected the contention of the appellant that it was liable to pay tax only in accordance with
exhibit A and passed orders determining the tax under the provisions of the Indian Incometax Act for the year 1950 1951 on April 28 1952 for 1951 1952 on May 12 1952 and for 1952 1953 on March 17 1953
Appeals against these orders have been preferred by the appellant and they are stated to be pending before the Appellate Assistant Commissioner
On the allegation that the tax as imposed in the orders aforesaid is unauthorised and that it constitutes an unlawful interference with its rights to carry on business guaranteed under article 191g the appellant has filed Petition No 276 of 1953 for an appropriate writ directing the respondents to levy tax in accordance with the agreement exhibit A dated April 1 1938
In support of this petition in addition to the contentions raised in Civil Appeal No 230 of 1954 the petitioner also urges that even if the Union of India is entitled to repudiate the agreement dated April 1 1938 it has not in fact done so and that it has on the other hand recognised it as good and is therefore not entitled now to go back upon it and that the levy of tax in accordance with the provisions of the Indian Income tax Act is accordingly illegal
As the contentions raised in the appeal and in the petition are substantially identical they were heard together
Before us the validity of the assessment of incometax for the year 1949 1950 was challenged by Mr Pathak on the following grounds 737 1Ordinance No 1 of section 2005 under which the Patiala Income tax Act Act is sought to be applied to the appellant does not on its true construction annul  the rights granted under exhibit A 2If the Ordinance in question is to be construed as having that effect then it is in contravention of article VI of the Covenant and is therefore unconstitutional and void
3Even apart from the Covenant the agreement exhibit A is binding on the Patiala Union and the impugned Ordinance is bad as infringing it and 4the Patiala Union had in fact recognised the rights granted under exhibit A and it is therefore binding on it as if it were a contract entered into by itself
1On the first question the argument of Mr Pathak is this The Ruler of Jind was an absolute monarch and his word was law
The agreement exhibit A must therefore be held to be a special law conferring rights on the licensee
Section 3 of Ordinance No 1 of section 2005 is a general provision extending all laws of the State of Patiala to the territories of the Covenanting States
The rule of construction is well established that general statutes should be interpreted so as not to interfere with rights created tinder special laws
Section 3 of the Ordinance should therefore be construed as not intended to affect the rights conferred under exhibit A Reliance is placed on the statement of the law in Maxwell s Interpretation of Statutes 10th Edn pp 176 and 180 and on the observations in Blackpool Corporation vs Starr Estate Co 1
Now the rule of construction expressed in the maxim generalia specialibus non derogant is well settled and we shall also assume in favour of the appellant that the agreement exhibit A is a special law in the nature of a private Act passed by the British Parliament and that accordingly section 3 of the Ordinance should not be construed unless the contrary appears expressly or by necessary implication as repealing the provisions of exhibit A
But ultimately the question is what does the language of the enactment mean  Section 3 is quite explicit and 11922 1 A C 27 34 738 it provides that from the date of the commencement of the Ordinance  all laws in force in such Covenanting States immediately before that date shall be repealed  and the proviso further enacts that pending proceedings are to be disposed of in accordance with laws in force for the time being in the Covenanting States
In the face of this language which is clear and unqualified it is idle to contend that Ordinance No 1 of section 2005 saves the rights of the appellant to the tax concessions under Cl
23 of exhibit A 2It is next contended by Mr Pathak that if Ordinance No 1 of section 2005 is to be construed as extinguishing the right to concessions conferred under exhibit A then it must be held to be unconstitutional and void
This contention is based on article VI b of the Covenant which provides that the obligations of the rulers pertaining to or incidental to government of the Covenanting State shall devolve on the Union and be discharged by it
It is argued that the Ruler of Jind had for good and valuable consideration undertaken certain obligations under Cl
23 of exhibit A with reference to taxation which is a governmental function that he had himself scrupulously honoured them so long as he was a Ruler and then passed them on under article VI b to the new State created under the Covenant that the Rajpramukh who was a party to the Covenant and claimed under it was bound by that obligation that his power to enact laws is subject under article VI a to the obligations mentioned in article VI b and that the impugned law is if it is to be construed as having the effect of abrogating those obligations ultra vires his powers under the Covenant and is in consequence void
In answer to this the respondent contends that the Covenant entered into by the rulers is an act of State and that any violation of its terms cannot form the subject of any action in the municipal courts that the obligations mentioned in article VI b refer not to liabilities under agreements for which there was special provision in article VI c but to obligations of the character contemplated by the Instrument of Accession and that in any event the rights granted to the licensee under exhibit A were 739 terminable by the Ruler of Jind at will and that in consequence if the obligation under Cl
23 devolved on the Raj Pramukh under article VI b it did so subject  to his rights under article VI a to terminate it if he so willed and that therefore the impugned law did not violate article VI b
The question that arises for our decision is whether the Covenant was an act of State
On that there can be no two opinions
It was a treaty entered into by rulers of independent States by which they gave up their sovereignty over their respective territories and vested it in the ruler of a new State
The expression  act of State  is it is scarcely necessary to say not limited to hostile action between rulers resulting in the occupation of territories
It includes all acquisitions of territory by a sovereign State for the first time whether it be by conquest or cession
Vide Vajesingji Joravar Singji and others vs Secretary of State 1 and Thakur Amar Singji vs State of Rajasthan 2
And on principle it makes no difference as to the nature of the act whether it is acquisition of new territory by an existing State or as in the present case formation of a new State out of territories belonging to quondam States
In either case there is establishment of new sovereignty over the territory in question and that is an act of State
Mr Pathak did not contest the position that the Covenant in so far as it provided for the extinction of the sovereignty of the rulers of the Covenanting States and the establishment of a new State is an act of State
But he contended that it was much more than that that it was also in the nature of a Constitution for the new State in the sense that it is a law under which all the authorities of the new State including the Raj Pramukh had to act
In support of this contention he referred to article X which provided for the convening of a Constituent Assembly for the framing of the Constitution and argued that the Articles of the Covenant which provided for the administration of the State by the Rajpramukh were in the nature of an interin 11924 L R 51 I A 357 360
94 2   335
740 Constitution
He also relied on article XVI which guaranteed the rights of the permanent members of the public services in the Covenanting States to continuance in service and contended that this could not be regarded as an act of State but only as a law relating to the administration of the new State
In this view of the Covenant he argued article VI must be held to be a constitutional provision enacted for the protection of private rights that it was in conse quence binding on the ruler of the new State and that the municipal courts were competent to grant appropriate reliefs for the breach thereof
This argument proceeds in our view on a misconception as to what is an act of state and what is a law of the State conferring rights on the subject or as the learned counsel for the appellant termed it Constitution of the State
When the sovereign of a Statemeaning by that expression the authority in which the sovereignty of the State is vested enacts a law which creates declares or recognises rights in the subjects any infraction of those rights would be action able in the courts of that State even when that infraction is by the State acting through its officers
It would be no defence to that action that the act complained of is an act of state because as between the sovereign and his subjects there is no such thing as an act of state and it is incumbent on his officers to show that their action which is under challenge is within the authority conferred on them by law
Altogether different considerations arise when the act of the sovereign has reference not to the rights of his subjects but to acquisition of territories belonging to another sovereign
That is a matter between independent sovereignsand any dispute arising therefrom must be settled byrecourse not to municipal law of either States but to diplomatic action and that failing to force
That is an act of state pure and simple and that is its character until the process of acquisition is completed by conquest or cession
Now the status of the residents of the territories which are thus acquired is that until acquisition is completed as aforesaid they are the subjects of the ex sovereign of those territories 741 and thereafter they become the subjects of the new sovereign
It is also well established that in the new set up these residents do not carry with them the rights which they possessed as subjects of the ex sovereign and that as subjects of the new sovereign they have only such rights as are granted or recognised by him
Vide Secretary of State for India vs Bai Rajbai 1 Vajesingji Joravar Singji and others vs Secretary of State 2 Secretary of State vs Sardar Rustam Khan 3 and Asrar Ahmed vs Durgah Committee Ajmer 4
In law therefore the process of acquisition of new territories is one continuous act of state terminating on the assumption of sovereign powers de jure over them by the new sovereign and it is only thereafter that rights accrue to the residents of those territories as subjects of that sovereign
In other words as regards the residents of territories which come under the dominion of a new sovereign the right of citizenship commences when the act of state terminates and the two therefore cannot co exist
It follows from this that no act done or declaration made by the new sovereign prior to his assumption of sovereign powers over acquired territories can quoad the residents of those territories be regarded as having the character of a law conferring on them rights such as could be agitated in his courts
In accordance with this principle it has been held over and over again that clauses in a treaty entered into by independent rulers providing for the recognition of the rights of the subjects of the ex sovereign are incapable of enforcement in the courts of the new sovereign
In Cook vs Sprigg 5 the facts were that the ruler of Pondoland in Africa had granted certain concessions in favour of the appellants and subsequently ceded those territories to the British Government
The latter having declined to recognise those concessions the appellants sued for a declaration of their rights thereunder and the question was whether they had a right of action in respect of what was an act of State
One of the contentions 1 1015 LR 42 IA 229
3 1941 LR 68 IA 109
2 1924 L R 51 TA 357 360
4 AIR 1947 PC 1
5 578
742 urged on their behalf was that the ruler of Pondoland had at the time of cession of his territories expressed his desire to the British Government that the concessions in favour of the appellants should be recognised and that in consequence the appellants had the right to enforce them against the new Government
In rejecting this contention the Lord Chancellor observed  The taking possession by Her Majesty whether by cession or by any other means by which sovereignty can be acquired was an act of state and treating Sigcau as an independent sovereign which the appellants are compelled to do in deriving title from him
It is a well established principle of law that the transactions of independent States between each other are governed by other laws than those which municipal courts administer
 It is no answer to say that by the ordinary principles of international law private property is respected by the sovereign which accepts the cession and assumes the duties and legal obligations of the former sovereign with respect to such private property within the ceded territory
All that can be properly meant by such a proposition is that according to the well understood rules of international law a change of sovereignty by cession ought not to affect private property but no municipal tribunal has authority to enforce such an obligation
And if there is either an express or a well understood bargain between the ceding potentate and the Government to which the cession is made that private property shall be respected that is only a bargain which can be enforced by sovereign against the sovereign in the ordinary course of diplomatic pressure In Vajesingji Joravar Singji and others vs Secretary Of State for India 1 the dispute related to the title of the appellants to certain lands situated in the Panch Mahals
This area formed at one time part of the dominion of the Scindias of Gwalior and it was ceded to the British Government by treaty on December 12 1860
Clauses 2 and 3 of the treaty provided for 11924 LR 51 IA 357 360
743 the recognition by the new sovereign of rights of the residents under existing leases jagirs and the like
The complaint of the appellants was that in 1907 the British Government had proposed to lease the lands to them on terms which infringed their proprietary rights and that this was in violation of the rights which had been guaranteed under Cls
2 and 3 of the treaty and was in consequence bad
The answer of the Government was that the treaty in question was an act of state and conferred no rights on the appellants
In upholding this contention Lord Dunedin observed  When a territory is acquired by a sovereign state for the first time that is an act of state
It matters not how the acquisition has been brought about
It may be by conquest it may be by cession following on treaty it may be by occupation of territory hitherto unoccupied by a recognised ruler
In all cases the result is the same
Any inhabitant of the territory can make good in the municipal courts established by the new sovereign only such rights as that sovereign has through his officers recognized
Such rights as he had under the rule of predecessors avail him nothing
Nay more even if in a treaty of cession it is stipulated that certain inhabitants should enjoy certain rights that does not give a title to those inhabitants to enforce these stipulations in the municipal courts
The right to enforce remains only with the high contracting parties
 In Hoani Te Heuheu Tukino vs Aotea District Maori Land Board 1 the question arose with reference to the Treaty of Waitangi entered into by the British Government with the native chiefs of New Zealand in 1840
Under cl
1 of the Treaty there was a complete cession by the chiefs of all their rights and powers of sovereignty
Clause 2 guaranteed to the chiefs the tribes and the respective families and individuals certain rights in lands forests and fisheries
In 1935 the Legislature of New Zealand enacted a law the provisions of which were impugned as ultra vires on the ground that they infrigned the rights 1 744 protected by cl
2 of the Treaty of Waitangi
In holding that the rights under the Treaty furnished no ground for action in the civil courts Viscount Simon L C referred to the decision in Vajesingji Joravar Singji and others vs Secretary of State 1 and observed   So far as the appellant invokes the assistance of the court it is clear that he cannot rest his claim on the Treaty of Waitangi and that he must refer the court to some statutory recognition of the right claimed by him The result of the authorities then is that when a treaty is entered into by sovereigns of independent States whereunder sovereignty in territories passes from one to the other clauses therein providing for the recognition by the new sovereign of the existing rights of the residents of those territories must be regarded as invested with the character of an act of state and no claim based thereon could be enforced in a court of law
It must follow from this that the Covenant in question entered into by the rulers of the Covenanting States is in its entirety an act of state and that article VI therein cannot operate to confer on the appellant any right as against the Patiala Union
This conclusion becomes all the more impregnable when it is remembered that the Covenant was signed by the rulers on May 5 1948 whereas the new state came into being only on August 20 1948
In the decisions cited above the sovereign against whom the obligations created by the treaty were sought to be enforced was the very sovereign who entered into that treaty or his successor
But here the ruler of the Patiala Union against whom article VI is sought to be enforced was not a party to the Covenant at all because that State had not come into existence on that date
The person who signed the Covenant was the ruler of the State of Patiala which was one of the Covenanting States but that State as well as the seven other States which entered into the Covenant stood all of them dissolved on August 20 1948 when the new Patiala Union came into being
The new State could not and did not enter into any covenant before August 20 1948 and therefore in strictness it cannot be 1 1924 LR 511
A 357 360
745 held to be bound by article VI to which it was not a party
Considerable emphasis was laid for the appellant on article XVI of the Covenant under which the Union guaranteed the continuance of the service of permanent members of public services and this was relied on as showing that the rights of the subjects of the quondam States were intended to be protected
This argument is sufficiently answered by what we have already observed namely that a clause in a treaty between high contracting parties does not confer any right on the subjects which could be made the subject matter of action in the courts and that the Patiala Union is not bound by it because it was not a party to the Covenant
It should however be mentioned that after the formation of the new State oil August 20 1948 the first legislative act of the sovereign was the promulgation of Ordinance No 1 of section 2005 and section 4 thereof expressly recognises the rights of the permanent members of public services
That undoubtedly is a law enacted by the sovereign conferring rights on his subjects and enforceable in a court of law but at the same time the enactment of such a law serves to emphasise that the Articles have not in themselves the force of law and were not intended to create or recognise rights
In this connection reference should also be made to cl
XVI of the Ordinance which enacts that  the provisions of articles XV and XVII of the Covenant relating to the bar of certain suits and proceedings shall have the force of law
 In support of his contention that article VI of the Covenant is to be regarded as a Constitutional provision counsel for the appellant relied on certain passages in the judgment of this Court in Thakur Amar Singji vs State of Rajasthan 1 at pp 313 and 315 wherein a similar covenant entered into by the rulers of Rajasthan was described as a Constitution
Apart from the use of the word  Constitution  we find nothing in these passages which has any bearing on the point now under consideration
There the question was as regards the vires of a law enacted by 11955 2 SCR 303
746 the Rajpramukh of Rajasthan and that depended on whether he was the authority in whom the legislative authority of the State was vested within article 385
This Court held that under the Covenant it was the Rajpramukh who had the power to enact laws and that the Ordinance issued by him was therefore valid and it was in that context that the covenant was referred to as a Constitution
We had not to consider there the question whether the Covenant was an act of state or whether it was a law conferring on the citizens of the defunct States rights which were enforceable in a court of law
No such question arose for decision and therefore the description of the Covenant as a Constitution cannot be read as importing a decision that it is a law conferring rights and not an act of state
In the result we hold that the Covenant is in whole and in parts an act of state that article VI therein does not operate to confer any rights on the subjects of the Covenanting States as against the sovereign of the new State constituted thereunder and that Ordinance No 1 of section 2005 is in consequence not open to attack as being a violation of article VI
3We shall now consider the contention of the appellant that even apart from article VI of the Covenant the impugned Ordinance No 1 of section 2005 is bad in so far as it annuls rights granted by the Ruler of Jind under the agreement dated April 1 1938
It was argued that exhibit A was not a mere concession which could be withdrawn by the sovereign at his will and pleasure but that it was an agreement entered into for valuable consideration and creating mutual rights and obligations that the appellant had acting on the agreement allotted to the State shares of the value of Rs 150000 without payment and had incurred considerable expense in working the concessions and that therefore it was not open to the Patiala Union to go back upon it
The decisions in The Piqua Branch of the State Bank of Ohio vs Knoop 1 and Home of the Friendless vs Rouse 2 were relied on as authorities for the proposition that a State is not competent to revoke a grant made by it for consideration
1   2 1869 19 L Ed 495
747 In The Piqua Branch of the State Bank of Ohio vs Knoop 1 a law of the State of Ohio of the year 1845 had provided for the incorporation of Banks and it contained provisions as to the taxes payable by them to the State and the mode of payment
In 1851 another Act was passed the effect of which was to increase the tax payable and the validity of this Act was questioned by a Bank incorporated under the Act of 1845
It was held by the majority of the Court that the Act of 1845 was a legislative contract and that the State Legislature was not competent to impair the rights which had been acquired under that contract
In Home of the Friendless V Rouse 2 a Society called the Home of the Friendless was established under a charter granted by the State of Missouri
The charter had provided that the properties of the Society shall be exempt from taxation
Subsequently the State proposed to withdraw the concession and impose tax
It was held by the Supreme Court of the United States that the charter was a contract entered into between the State and the Society and that there was no power in the State to go behind it
Now it should be observed that the decisions cited above were given on section 10 of article 1 of the American Constitution that  no State shall pass a law impairing the obligations of contracts 
There is in our Constitution no similar provision protecting contractual rights and it would therefore be unsafe to rely on American authorities in deciding on the validity of legislation which interferes with rights under contracts
And moreover we are dealing with a contract entered into by a sovereign whose powers were not subject to any constitutional limitation and whose word was as contended for the appellant law
But apart from this there is an obvious reason why the above decisions have no application to the present controversy
The point for decision there was whether a State which had entered into a contract with its subjects conferring rights on them was entitled to enact a law abridging or abrogating those rights 1  2  95 748 and the answer was in the negative
But here the impugned law is that of the Patiala Union and the contract which it affects is not a contract entered into by it but by the Ruler of Jind and unless it can be established that the obligations of the Ruler have devolved on the sovereign of the Patiala Union the question whether he could repudiate obligations undertaken by him cannot arise
That would have arisen for consideration if article VI had the effect of imposing obligations on him
But on our finding that that is not its effect there is no scope for the contention that the impugned Ordinance is bad as involving breach of contractual obligations which were entered into by the Patiala Union or which devolved on it
4Lastly we have to deal with the contention of Mr Pathak that the Patiala Union had affirmed the agreement exhibit A that in consequence it was bound by it as if it had itself entered into it and that the liability of the appellant to income tax should therefore be determined in accordance with Cl
23 thereof
This contention would be irrefragable if the Patiala Union had as a fact affirmed the agreement
But has that been established  It has been already observed that the rights of the appellant under exhibit A would become enforceable only if the new State had accorded recognition to them and what is requisite therefore is a declaration or conduct of the Patiala Union subsequent to its formation which could be regarded as amounting to affirmation of exhibit A Of that there is no evidence whatsoever
On the other hand the first act of the Rajpramukh after assumption of office by him was the promulgation of Ordinance No 1 of section 2005 the effect of which was to sweep away the rights of the appellant under Cl
23 of exhibit A
It was argued that article VI of the Covenant would at least be valuable evidence from which affirmance of those rights could be inferred
That is so  but that inference must relate to act or conduct of the new State and that can only be after its formation on August 20 1948
If there were any acts of the new State which were equivocal in character it would have been possible to hold in the light of article VI of the 749 Covenant that its intention was to affirm the concessions in Cl
23 of exhibit A
But the act of the new
sovereign immediately after he became in titulo was the application of the Patiala State laws including the Patiala Income tax Act to the territories of Jind involving negation of those rights
It was said that the levy of income tax for 1948 1949 was made in accordance with exhibit A but that relates to a period anterior to the formation of the new State and is within the saving enacted in the proviso to section 3 of the Ordinance
The appellant has failed to substantiate his plea that there has been affirmance of Cl
23 of exhibit A by the Patiala State Union and this point also must be found against it
All the contentions urged in support of the appeal fail and it must therefore be dismissed with costs
Coming next to Petition No 276 of 1953 in addition to the contentions already dealt with the petitioner urged that whatever its rights under the law prior to the Constitution when once it came into force it conferred on the citizens certain fundamental rights that the tax concessions which the petitioner had under the agreement exhibit A were rights to property and they were protected by article 191f and that it was entitled to seek redress under article 32 of the Constitution when those rights were violated
The decision in Virendra Singh and others vs The State of Uttar Pradesh 1 is relied on in support of this position
This argument assumes that there were in existence at the date when the Constitution came into force some rights in the petitioner which are capable of being protected by article 191f
But in the view which we have taken that the concessions under Cl
23 of exhibit A came to an end when Ordinance No 1 of section 2005 was promulgated the petitioner had no rights sub sisting on the date of the Constitution and therefore there was nothing on which the guarantees enacted in article 191f could operate
The petition must therefore be dismissed on this short ground
In this view it is unnecessary to express any opinion on the soundness of the contention based on article 295 which was 1 1955 I SCR 415
750 urged in support of the petition or on the scope of article 363
The petitioner will pay the costs of the respondents
BOSE J I agree but want to reserve my opinion on a point that does not arise here but which the ratio of my learned brother s judgment will cover unless the reservation that I make is set out
If I judge aright international opinion is divided about the effect that a change of sovereignty has on rights to immoveable property
The English authorities hold that all rights to property including those in real estate are lost when a new sovereign takes over except in so far as the new sovereign chooses to recognise them or confer new rights in them
But that I gather is not the view of the International Court of Justice
According to one of its opinions which I have quoted at p 426 of Virendra Singh vs State of Uttar Pradesh private rights acquired under existing law do not cease on a change of sovereignty Certain American cases take the same view though they can be distinguished on the facts
But this view as I understand it does not extend to personal rights such as those based on contract nor in any event does the new sovereign assume any obligations of the old State in the absence of express agreement
I have referred to this at p 427
In any event whether I am right in thinking that that is what I might call the international view I would agree that for our country that is and should be the law so far as per sonal rights are concerned
In the present case in so far as the right is claimed on the basis of contract it would fall to the ground on any view and in so far as it is not founded on contract it is an obligation that is sought to be fastened on the new State
There is no contract between the new State and the appellant so there also he is out of court and even if there was some agreement or understanding between the high contracting parties it cannot be enquired into or enforced by the municipal 11955 1 section C R 415
751 courts of the new State
So I agree that so far as this case is concerned the appellant must fail
But my learned brother s judgment is grounded to  a large extent on the views of the English courts which do not draw the distinction that I am drawing here
I therefore want to make it clear that this decision must not be used as a precedent in a case in which rights to immoveable property are concerned
Without in any way committing myself to one view or the other as at present advised I feel it may be a pity for us to disregard the trend of modern international thought and continue to follow a line of decisions based on the views of an older Imperialism when we are not bound by them and are free to mould our own laws in the light of modern thought and conceptions about rights to and in immoveable property
But in so far as the present case is concerned I agree that the appeal and the petition under article 32 should both be dismissed
Appeal and petition dismissed


Summary:
Mohd Zainulabdeen and Yasin By filed a suit for decla ration that they were entitled to be in enjoyment and pos session of Saint Syeed Moosa Shah Khadiri Dargah in Madras for 27 days and to restrain the defendants from interfering with tile plaintiffs  aforesaid right and management in the Dargah
In reply the defendant No 1 alleged that in the manage ment of the Dargah female members had no right nor could they claim the right of Mujawar
It was also alleged that Fathima Bee through whom the Plaintiffs were claiming never enjoyed the right to Hundial collection of the Dargah and share in the Mujawarship and even if she had any right the same was lost as she did not claim any right till her death and therefore the Plaintiffs were also not entitled to any relief
Defendants 7 8 and 10 however in their written statements admitted family members to be sharer in the income and management of the Dargah and they also admitted that they were paying such share to their sister Ahamadun nissa 10th defendant in the Hundial collections and that the City Civil Court in suit No 7518 of 1971 had also recognised the right of 7th defendant Anser Bi to management of the Dargah for 9 days in a year
Thus it was false to contend that the females were not entitled to claim manage ment
The trial court decreed the suit of the Plaintiffs and held that they were entitled to manage the Dargah 1or 27 days in a year
Defendants 3 to 6 and 12 to 19 filed appeals against the judgment of the trial court
The City Civil Judge however affirmed the judgment of the Trial Court with some modifications in the relief
Different sets of defendant filed two second appeals before the High Court and both were disposed of by the High Court by its judgment and Order dated 17th November 1981 whereby it reversed the 520 judgments and decrees of the courts below and dismissed the suit filed by the Plaintiffs
This Court came to the conclusion that there is no controversy as regards the period of 27 days falling to the share of the Plaintiffs and the right of the females to the management of the Dargah according to Muslim law
As regards the question of right of Fathima Bee having become barred by limitation by ouster and that as such the Plaintiffs too had lost that right this Court while setting aside the Judg ment and Decree of the High Court and restoring that of the Trial Court as modified by the First Appellate Court HELD It iS well settled that where one co heir pleads adverse possession against another co heir it is not enough to show that one out of them was in sole possession and enjoyment of the profits of the properties
The possession of one co heir is considered in law as possession of all the co heirs
The co heir in possession cannot render his pos session adverse to the other co heirs not in possession merely by any secret hostile animus on his own part in derogation of the other co heirs title
526G H 527A It is a settled rule of law as between co heirs that there must be evidence of open assertion of hostile title coupled with exclusive possession and enjoyment by one of them to the knowledge of the other so as to construe ouster
527A The High Court in the instant case committed a serious error in reversing the finding of the lower Appellate Court and in taking a wrong approach in holding ouster on the basis of the judgment and decree given in Suit No 116 of 1909 and on the ground that Fathima Bee had not made a demand or asked for her share of the hundial collections at any point of time till her death in 1957
527G P Lakshmi vs
L Lakshmi Reddy   referred to