Appeal No 20 of 1960
Appeal from the judgment and decree dated September 5 1956 of the Judicial Commissioner s Court at Ajmer in Civil First Appeal No 3 of 1956
B D Sharma for the appellant
M C Setalvad Attorney General of India C L Agarwala M K Ramamurthy R K Garg D P Singh and section C Agarwal for the respondents I and 3 1961
April 3
The Judgment of the Court was delivered by HIDAYATULLAH J
This is an appeal by the plaintiff against the judgment and decree of the Judicial Commissioner Ajmer confirming the decree of the trail Judge dismissing the suit
it comes before us on a certificate under articles 1321 and 1331c of the Constitution granted by the High Court of Rajasthan after the Reorganisatiion of the States
The suit was filed by the appellant for recovery of Rs 23998 12 0 as price of goods supplied in the year 1947 to the Ruler of Jaipur State including interest and damages suffered by the appellant due to the refusal of the defendants to take delivery of some other goods similarly ordered
In addition to the ex Ruler of Jaipur his Military Secretary and one Mohabat Singh an employee of the ex Ruler were also joined as defendants on the plea that they had placed the orders as agents of the ex Ruler
The suit was filed on February 28 1951
The ex Ruler raised the plea that the suit was incompetent as the consent of the Central Government under section 87 B of the Code of Civil Procedure was not obtained and asked that the suit be dismissed
The other defendants denied the claim and also their lability on various grounds
It may be mentioned the Military Secretary second 704 defendant has since died and this appeal is now directed against the ex Ruler and Mohabat Singh only
The Subordinate Judge held that though the suit was filed prior to the enactment of section 87 B by section 12 of the Code of Civil Procedure Amendment Act 1951 11 of 1951 it could not be continued against the ex Ruler
He adjourned the hearing for four months to enable the appellant to obtain the necessary consent
The appellant applied to the Central Government for its consent but it was refused
He also applied in revision to the Judicial Commissioner contending that section 87 B of the
Code of Civil Procedure offended the equality clause in article 14 of the Constitution and was thus void but the Judicial Commissioner rejected the contention
He also refused a certificate on the ground that there was no final order as required by article 132lof the Constitution
The suit was subsequently dismissed against all the three defendants
In regard to the ex Ruler it was held that no suit lay against him without the consent of the Central Government and in regard to the remaining defendants it was held that they were protected by section 230 of the Indian Contract Act
Sub section 3 of that section was held inapplicable inasmuch as a suit could be filed against the ex Ruler with the consent of the Central Government
The appellant appealed to the Judicial Commissioner Ajmer but the appeal was dismissed
He obtained a certificate as stated above and this appeal has been filed
Two main questions have been raised in this appeal
The first is that the dismissal of the suit against the ex Ruler was erroneous
In support of this contention it is urged that section 87 B of the Code of Civil Procedure is ultra vires the Constitution in view of article 14 and in the alternative that section 87 B even if valid cannot apply to this suit which was pending when the section was enacted
The right to continue the suit being a substantive right cannot it is submitted be taken away except by a law which is made applicable to pending actions either expressly or by necessary intendment
Against the other respondent it is contended that he was liable as an agent or at least as a 705 sub agent in view of the provisions of section 2303 of the Indian Contract Act
We are not concerned with the merits of the claim and they have not been mentioned at the bearing
We shall begin by considering whether section 87 B is ultra vires and void
It is said that it discriminates in favour of ex Rulers of Indian States by creating an immunity from civil actions
Prior to the present Constitution Part IV of the Code of Civil Procedure contained provisions in respect of suits in particular cases
This was divided into three parts
Sections 79 to 82 dealt with suits by or against the Crown or Public Officers in their official capacity and section 88 provided for suit of interpleader
We are not concerned with them
Sections 83 to 87 dealt with suits by aliens and by or against Foreign Rulers and Rulers of Indian States
Sections 83 and 84 provided respectively when aliens and foreign States may sue
Section 85 provided for the appointment by Government of persons to prosecute or defend Princes or Chiefs
Section 86 provided for suits against Princes Chiefs Ambassadors and Envoys
It created partial ex territoriality by granting them exemption from civil jurisdiction except when an action was brought with the consent of the Central Government
The first sub section provided Any such Prince or Chief and any ambassador or envoy of a foreign State may in the case of the Ruling Chief of an Indian State with the consent of the Crown Representative certified by the signature of the Political Secretary and in any other case with the consent of the Central Government certified by the signature of a secretary to that Government but not without such consent be sued in any competent Court
 The remaining four sub sections dealt with the kinds of suits and the conditions under which they could be brought and certain other aspects Of ex territoriality
Section 87 laid down the style of Princes or Chiefs as parties to suits
After the coming into force of the Constitution 89 706 certain adaptations were made by the President by the Adaptations of Laws Order 1950 but we are not concerned with them
Suffice it to say that the protection continued in view of article 372 of the constitution unless it was void under the Chapter on Fundamental Rights till we come to the enactment of Act 11 of 1951
The impact of the Fundamental Rights provisions on section 86 as originally enacted and on the new section 87 B being the same we need not consider the matter separately
When the Indian States integrated with British India the Rulers of States and the Government of India entered Into covenants and agreements
In those covenants it was agreed that the privileges dignities and titles of the Indian Princes would be continued to be recognised
When the Constitution was enacted the assurance in the covenants was respected and article 362 was included in the Constitution
It reads In the exercise of the power of Parliament or of the Legislature of a State to make laws or in the exercise of the executive power of the Union or of a State due regard shall be had to the guarantee or assurance given under any such covenant or agreement as is referred to in clause i of Article 291 with respect to the personal rights privileges and dignities of the Ruler of an Indian State The reference to article 291 merely indicates that those covenants or agreements were meant which the Ruler of any Indian State had entered into with the Central Government before the commencement of the Constitution
This description is not repeated in article 362 but is incorporated by reference
The mention of article 291 in article 362 has no further significance and the generality of the assurance in the latter Article is not lessened
The privilege of ex territoriality and exemption from civil jurisdiction except with the consent of the Central Government was one of long standing and when the Amendment Act of 1951 was passed sections 83 to 87 were reenacted
We are not concerned with all the changes that were made and reference to some 707 of them is unnecessary
Section 86 was amended by deleting all references to Ruling Chiefs of Indian States and the first sub section was reenacted as follows 86
1 No Ruler of a foreign State may be sued in any court otherwise competent to try the suit except with the consent of the Central Government certified in writing by a Secretary to that Government proviso omitted
Sub section 3 gave protection against arrest and except with the consent of the Central Government against execution of decrees against the property of any such Ruler
Section 87 laid down the style of foreign Rulers as parties to suits
Section 87 A was added to define foreign State and Ruler and to make the exemption only available to a State and its head recognised as such by the Central Government
Section 87 B with which we are concerned was specially enacted in respect of suits against Rulers of former Indian States
It provided 87 B 1 The provisions of section 85 and of sub sections 1 and 3 of section 86 shall apply in relation to the Rulers of any former Indian State as they apply in relation to the Ruler of a foreign State
2 In this section aformer Indian State means any such Indian State as the Central Government may by notification in the Official Gazette specify for the purposes of this section and b Ruler  in relation to a former Indian State means the person who for the time being is recognised by the President as the Ruler of that State for the purposes of the Constitution
 By this provision which is very much the same as the former section 86 the privilege previously enjoyed by the Rulers of Indian States was continued
In this historical background the question of dis crimination raised in the appeal must be examined
It is easy to see that the ex Rulers form a class and the special legislation is based upon historical considerations applicable to them as a class
The Princes 708 who were before integration sovereign Rulers of Indian States handed over after the foundation of the Republic their States to the Nation in return for an annual Privy Purse and the assurance that their personal rights privileges and dignities would be respected
The Constitution itself declared that these rights etc would receive recognition
A law made as a result of these considerations must be treated as based on a proper classification of such Rulers who had signed the agreement of the character described above it is based upon a distinction which can be described as real and substantial and it bears a just relation to the object sought to be attained
It is further contended that the Article speaks of privileges but not of immunities and we were referred to certain other Articles of the Constitution where immunities are specifically mentioned
It is not necessary to refer to those Articles
Immunity from civil action may be described also as a privilege because the word Privilege is sufficiently wide to  include an immunity
The Constitution was not limited to the choice of any particular words so long as the intention was clearly expressed
In our opinion the words personal rights and privileges are sufficiently comprehensive to embrace an immunity of this character
It is therefore clear that the section cannot be challenged as discriminatory because it arises from a classification based on historical facts
It is next contended that section 87 B only applies the provisions of sub sections
1 and 3 of section 86 that tile words of the latter section are not retrospective that the suit was filed before the enactment of section 87 B and that the substantive right of the plaintiff to continue his suit could not be taken away in the absence of express language or clear intendment
The words of section 86l are No Ruler of a foreign State may be sued in any court
This precludes it is said only the initiation of a suit and not the continuance of a suit already filed before the section was enacted
In our opinion these arguments cannot be accepted
The word sued means not only the filing of a suit or a civil proceeding but also their pursuit through Courts
A person 709 is sued not only when the plaint is filed but is sued also when the suit remains pending against him
The word sued covers the entire proceeding in an action and the person proceeded against is sued throughout the duration of the action
It follows that consent is necessary not only for the filing of the suit against the ex Ruler but also for its continuation from the time consent is required
In view of the amplitude of the word sued it is not necessary to consider generally to what extent pending cases are affected by subsequent legislation or refer to the principles laid down in The United Provinces V Atiqa Begum 1 Venugopala Reddiar vs Krishnaswamy Reddiar 2 or Garikapatti Veeraya vs N Subbiah Choudhury 3
If the language of section 86 read with section 87 B were applicable only to the initiation of a civil suit these cases might have been helpful but since the words may sue include not only the initiation of a suit but its continuation also it is manifest that neither the suit could be filed nor maintained except with the consent of the Central Government
In Atiqa Begum s Case 1 Varadachariar J referred to the two principles applicable to cases where the question of retrospectivity of a law has to be considered
They are that vested rights should not be presumed to be affected and that the rights of the parties to an action should ordinarily be determined in accordance with the law as it stood at the date of the commencement of the action
But the learned Judge pointed out that the language of the enactment might be sufficient to rebut the first and cited the case of the Privy Council in K C Mukherjee vs Mst
Ram Ratan Kuer 4
Here the matter can be resolved on the language of the enactment
The language employed is of sufficient width and certainty to include even pending actions and the contrary rule applies namely that unless pending actions are saved from the operation of the new lawthey must be taken to be affected
The word sued  as we have shown denotes not only the start but also the continuation of a civil action and the 1 1940 FCR110 2 3 1957 SCR4ss
4 Pat
710 Prohibition therefore affects not only a suit instituted after the enactment of section 87 B but one which though instituted before its enactment is pending
In our judgment the present suit was incompetent against the first defendant the ex Ruler of Jaipur
It is contended that defendants 2 and 3 acted as the agents of the ex Ruler and placed the order with the appellant
The position of the Military Secretary since dead was on a different footing but it is conceded that no cause of action against him survived because the appeal has abated against him
Mohabat Singh who is the third defendant cannot be described as an agent of the ex Ruler because his connection with the orders placed was merely to sign the letters purporting to emanate from the Military Secretary
Those letters he signed for the Military Secretary
He was not acting as the agent of the ex Ruler but was performing the ministerial act of signing the letters on behalf of the Military Secretary
This cannot be said to have constituted him an agent
The suit against him was therefore misconceived whatever might have been said of the Military Secretary
In our opinion the dismissal of the suit was justified in the circumstances of the case
The appeal fails and is dismissed with costs
The appellant will pay court fee on the memorandum of appeal as he was allowed to file this appeal as a pauper
Appeal dismissed


Summary:
A scheme for the distribution of cloth was evolved by the Deputy Commissioner of the District who appointed a group of persons as sole agents for the import of cloth from Mills and distribution of the same to retailers
Though for different periods the group was differently constituted one of the members firm H  remained a common member
The profits of the business were distributed amongst the members of the group in proportion of the capital contributed by them
The Income tax Officer issued notice under section 224 Of the Indian Income tax Act and on production of books of account assessed the respondent as an Association of Persons
The High Court was of the opinion inter alia that before a group of persons could be called an Association of Persons it had to be established that they were in the nature of partners which was not so in the instant case as the members of the group were appointed by the Deputy Commissioner as importers the participation of the group could not be held to be of free will but under compulsion and therefore they were not an Association of Persons within the meaning Of section 3 Of the Indian Income tax Act
Held that where a business is carried on and the profits ascertained on a joint basis and then distributed according to the capital contributed by each
member of the group the group is an Association of Persons and it makes no difference that the scheme which produced profits was at the instance of or under the control of the Deputy Commissioner or that he had appointed the members constituting the group
Commissioner of Income tax Bombay North vs Indira Bal krishna   referred to
Mohamed Noorullah vs Commissioner of Income tax   relied on