Case: Jagannath Agarwala Vs. State Of Orissa

(AIR 1960 SC 606 ); New Prakash Transport Co., Ltd. v. New Suwarna Transport Co., Ltd., 1957 SCR 98 : ( (S) AIR 1957 SC 232 ); Nagendra Nath Bora v. Commr, of Hills Division, 1958 SCR 1240 : (AIR 1958 SC 398 ) and Gullapalli Nageswara Rao v. Andhra Pradesh State Road Transport Corporation, 1959 (Supp) 1 SCR 319 : (AIR 1959 SC 308). In reply, Mr. A. V. Viswanatha Sastri contended that the rejection of the claim was an act of State, and that the new Sovereign State could not be compelled by a process of the municipal courts to accept a liability of the old Ruler, and though the new Sovereign State might make such enquiry as it chose, it was not compelled to give a hearing to the claimant. In his rejoinder, Mr. Chatterjee contended that the act of State was over, when the new Sovereign State invited claims under a law passed for the purpose, and proceeded to consider the evidence tendered in support of the claim. He also contended that by the admission of the claim by the Claims Officer the act of State was over, and that any further consideration of the report had to comply with the rules of natural justice, laid down by this Court in the cases cited by him.9. What is an act of State and when it ceases to apply between a new Sovereign and the subjects of a State conquered, acquired or ceded to the new Sovereign, has been the subject of several decisions of this Court. In Dalmia Dadri Cement Co. Ltd. v. Commissioner of Income-tax, 1959 SCR 729 : (AIR 1958 SC 816 ) and State of Saurashtra v. Memon Haji Ismail Haji, 1960-1 SCR 537 : (AIR 1959 SC 1383 ), it has been held that unless the new Sovereign, either expressly or impliedly, admits the claim, the municipal courts have no jurisdiction in the matter. The question to consider is whether such a stage had been reached in the enquiry which had been commenced. No doubt, the plea that this was a part of an act of State was not specifically raised before the High Court; but, as pointed out by the Judicial Committee in Vaje Singh Ji Joravar Singh v. Secretary of State, 51 Ind App. 357: (AIR1924 PC 216) no plea is really needed. It is clear from the Order, which was made under the Extra Provincial Jurisdiction Act, that claims were being asked to be entertained only for investigation and not for acceptance. It is the acceptance of the claim which would have bound the new SovereignState and the act of State would then have come to an end. But short of an acceptance, either express or implied, the time for the exercise of the Sovereign right to reject a claim was still open. In Vaje Singh Jis case, 51 Ind App 357: (AIR 1924 PC 216 ), enquiries were made by Captain Buckle and again in 1868, and the two enquiries lasted 16 years before the rejection of the claims, and the rejection was still upheld as an act of State. Vaje Singh Jis case, 51 Ind App 357: (AIR 1924 PC 216 ) has been relied upon by this Court in the two cases referred to, in the argument of Mr. A. V. Viswanatha Sastri. It would, therefore, appear that the act of State could not be said to have come to an end, when the Government allowed claims to be preferred, or when their own officer made his report. The Claims Officer was not a part of the municipal courts, and Government cannot be said to have submitted itself to the jurisdiction of the municipal courts, when it entrusted the enquiry to him. Nor can the investigation on claims be said to have conferred a civil right upon the claimants to enforce their claims against the State. In our opinion, the enquiry was for the benefit of the State and not for conferring rights upon likely claimants. It was always open to the Government to admit any claim, even though reported adversely by the Claims Officer, though such a contingency might have been very remote. Equally, therefore, the Government had the paramount right to reject a claim, which its Claims Officer considered good but on which the Government held a different opinions. In Short, till there was an acceptance by the Government or some officer of the Government, who could be said to bind the Government, the act of State was still open, and, in our opinion, it was so exercised in this case.10. Mr. Chatterjee contended that at least within the four corners of the Order, the appellant had a right to be heard, and that he did not have a proper hearing. If the Member, Board of Revenue, entertained some doubt about the claim being within time, he might have heard the party. That this was an enquiry mainly to ascertain whether a claim should or should not be recognised is obvious enough. It was in no sense a trial of any issue between the appellant and the Government. To judge such an action with the same rigour with which a judicial enquiry or trial is judged is to convert the enquiry into a civil suit. The appellant was fully heard by the Claims Officer, and the only question was whether the claim was within time. Even there, the Member, Board of Revenue, asked the appellant to submit all documents and arguments in support of his contention that the claim was within limitation, and to that extent, the appellant had his say. Whether the Member, Board of Revenue, should have gone further and given a viva voce hearing was a matter entirely for that Officer to choose, and there was nothing under the law to compel him. Though we think that such an opportunity might have been afforded to the appellant, we cannot say that this was a matter which entitled him to a writ.

Court's decision (1 = petition accepted / positive for appellant, 0 = rejected / negative): 0

Reasoning from the judgment:
0[ds]8. The first point was not argued before us, and it seems that the appellant has accepted the decision of the High Court that the Third Member was competent to hear and disposed of theseis clear from the Order, which was made under the Extra Provincial Jurisdiction Act, that claims were being asked to be entertained only for investigation and not for acceptance. It is the acceptance of the claim which would have bound the new SovereignState and the act of State would then have come to an end. But short of an acceptance, either express or implied, the time for the exercise of the Sovereign right to reject a claim was stillwould, therefore, appear that the act of State could not be said to have come to an end, when the Government allowed claims to be preferred, or when their own officer made his report. The Claims Officer was not a part of the municipal courts, and Government cannot be said to have submitted itself to the jurisdiction of the municipal courts, when it entrusted the enquiry to him. Nor can the investigation on claims be said to have conferred a civil right upon the claimants to enforce their claims against the State. In our opinion, the enquiry was for the benefit of the State and not for conferring rights upon likely claimants. It was always open to the Government to admit any claim, even though reported adversely by the Claims Officer, though such a contingency might have been very remote. Equally, therefore, the Government had the paramount right to reject a claim, which its Claims Officer considered good but on which the Government held a different opinions. In Short, till there was an acceptance by the Government or some officer of the Government, who could be said to bind the Government, the act of State was still open, and, in our opinion, it was so exercised in thisthe Member, Board of Revenue, entertained some doubt about the claim being within time, he might have heard the party. That this was an enquiry mainly to ascertain whether a claim should or should not be recognised is obvious enough. It was in no sense a trial of any issue between the appellant and the Government. To judge such an action with the same rigour with which a judicial enquiry or trial is judged is to convert the enquiry into a civil suit. The appellant was fully heard by the Claims Officer, and the only question was whether the claim was within time. Even there, the Member, Board of Revenue, asked the appellant to submit all documents and arguments in support of his contention that the claim was within limitation, and to that extent, the appellant had his say. Whether the Member, Board of Revenue, should have gone further and given a viva voce hearing was a matter entirely for that Officer to choose, and there was nothing under the law to compel him. Though we think that such an opportunity might have been afforded to the appellant, we cannot say that this was a matter which entitled him to a writ.