Case: Sri Sudhansu Shekhar Singh Deo Vs. The State Of Orissa And Another

2. The Legislature of the Province of Orissa enacted the Orissa AgriculturalAct, XXIV of 1947hereinafter referred to as the Actproviding for the levy ofon agricultural income derived from lands situated in the Province of Orissa. This Act was brought into operation from July 10, 1947. By S. 3, agriculturalat the rate or rates specified in the schedule was made payable for each financial year on the total income of the previous year of every person. By the proviso to that section, agricultural income of the Central Government or of the State Government or of any local authority was exempt from taxation. Section 2, cl. (i) defined a "person as inclusive of a Ruler of an Indian State. The appellant in these three appeals is the former Ruler of the State of Sonepur. After the establishment of the Dominion of India on August 15, 1947, the appellant as the Ruler of the State on Sonepur executed an instrument of accession to the Dominion restricted to three subjectsDefence, External Affairs and Communications. On December 15, 1947, he executed a merger agreement whereby the territory of the State of Sonepur became merged with the territory of the Dominion of India. By virtue of the merger agreement, the Government of India acquired full sovereign rights over the territory of the State, but ownership of private properties belonging to the appellant and full enjoyment thereof were under the agreement guaranteed to him under Art. 3. In exercise of the powers conferred by the Extra Provincial Jurisdiction Act. 47 of 1947, the Government of India by notification dated March 23, 1948, delegated to the Provincial Government of Orissa full powers to administer the merged State of Orissa including the State of Sonepur. The Government of the Province of Orissa applied to the merged States S. 1 of the Act as from January 19, 1949, and by notification dated April 1, 1949, the remaining provisions of the Act. In the meantime, by amendment, two new sections, Ss. 290 (A) and 290 (B) were incorporated in the Government of India Act, 1935. Theof India was thereby given power to direct by order that a merged State shall be administered in all respects as if it former part of the Governors Province specified in the order. Theof India exercising authority under Ss. 290(A) and 290(B) issued on July 27, 1949, an order providing that the merged Orissa States including the State of Sonepur shall be administered in all respects as if they formed part of the Province of Orissa with effect from August 1, 1949. On December 30, 1949, the Governor of Orissa promulgated Ordinance No. IV of 1949 providing inter alia that the AgriculturalAct, 1947, be applied to the merged Orissa States. This Ordinance was later replaced by the Orissa Merged States (Laws) Act XVI of 1950. The appellant was then called upon by the AgriculturalOfficer to furnish a return of his agricultural income. The appellant disputed his liability to pay the agriculturaland declined to furnish the return. The AgriculturalOfficer then proceeded to make enquiries about the income received from the lands held by the appellant and assessed him to pay tax for the years4. He also imposed a penalty upon the appellant for failure to submit his returns for the years1. Against the order assessing him to tax and directing him to pay penalty, the appellant preferred appeals to the Assistant Collector of AgriculturalSambalpur. The appeals were dismissed by that officer. Revision applications to the Collector of Commercial Taxes, Cuttack and to the Board of Revenue were unsuccessful.3. The appellant filed four petitions in the High Court of Orissa, being Petitions Nos. 17, 16, 19 and 137 of 1954 challenging the assessments made by the taxing authorities for the years52 andrespectively, and two more petitions being Petitions Nos. 18 and 138 of 1954 against the orders imposing penalty for the years51 respectively. These six petitions and certain other petitions were heard by a Division Bench of the Orissa High Court. The High Court held that by the guarantee of full ownership, use and enjoyment of the private properties under the merger agreement the properties of the appellant were not rendered immune from liability to pay tax imposed by the Act and that in the absence of an express provision, his income from lands was liable to pay agriculturalThe High Court also held that even though the appellant was the Ruler of a former Orissa State. He was a "person within the meaning of the Act and was liable to pay agriculturalThe learned Judges therefore dismissed the petitions challenging the liability of the appellant for the assessment years53 to pays agriculturaland they cancelled the order of assessment in respect of the yearand the orders imposing penalty in respect of years1. Against the orders dismissing the applications for setting aside the assessments in respect of years3, these appeals have been preferred with certificate granted by the High Court under Art. 132 of the Constitution.4. The appellant was undoubtedly the Ruler of an Indian State before August 15, 1947, but by reason of the merger agreement executed by him on December 15, 1947, his sovereignty was extinguished. By Art. 1 of the terms of the merger agreement, the appellant ceded to the Dominion of India full and exclusive authority, jurisdiction and power for and in relation to the governance of the State and agreed to transfer the administration of the State on the appointed day and as from the said day, the Dominion Government became competent to exercise the power, authority and jurisdiction in relation to the governance of the State in such matters and through such agency as the Government thought fit. By Art. 3, the appellant remained entitled to full ownership, use and enjoyment of all private properties (but not of the State properties) belonging to him on the date of the merger. By Art. 5, the Dominion Government guaranteed the succession according to law and customs, to the gadi of the State and to the personal rights, privileges. Dignities and titles of the appellant. It was provided by Art. 4 that "the Raja, the Rani, the Rajmata, the Yuvraja and the Yuvrani shall be entitled to all personal privileges enjoyed by them whether within or outside the territories of the State, immediately before the 15th day of August, 1947.

Court's reasoning:
6. The Act imposes on the agricultural income of "every person liability to pay agriculturalBy the proviso to S. 3, agricultural income of the Central Government, State Government and of local authorities is exempt from tax, but this exemption is not extended to any other body or person. It is true that in the definition of the expression "person as originally enacted in S. 2, cl. (i) a Ruler of an Indian State was expressly included and by the Adaptation of Laws Order, 1950, reference to Rulers of Indian Sates was deleted as from January 26, 1950. But by that amendment, an intention to exclude the Rulers of Indian States from liability to pay agriculturalwas, in our judgment, not evinced. Between the dates on which the Act was enacted and the Adaptation of Laws Order, 1950, several political events of far reaching effect had taken place, in consequence of which the appellant had ceased to be a Ruler of an Indian State. On January 26, 1950, the date on which the Adaptation of Laws Order, 1950 became operative, there were in existence no Indian States. The sovereign rights of the erstwhile Rulers of the Indian States were extinguished, and their territories were merged in the Indian Union.Article 291 of the Constitution deals with the privy purse of the Rulers under any covenant or agreement entered into by the Ruler of any Indian State before the commencement of the Constitution payment whereof is free from tax as has been granted or assured by the Government of the Dominion of India. Article 362 recommends to the Parliament and the State Legislatures in making laws after the Constitution "to have due regard to the guarantee or assurance given under any convenient or agreement. Even though Art. 362 is not restricted in its recommendation to agreements relating to the privy purse and covers all agreements and covenants entered into by the Rulers of Indian States before the commencement of the Constitution whereby the personal rights, privileges and dignities of the Ruler of an Indian State were guaranteed, it does not import any legal obligation enforceable at the instance of the erstwhile enforceable at the instance of the erstwhile Ruler of a former Indian State. If, despite the recommendation that due regard shall be had to the guarantee or assurance given under the covenant or agreement, the Parliament or the Legislature of a State makes laws inconsistent with the personal rights, privileges and dignities of the Ruler of an Indian State, the exercise of the legislative authority cannot relying upon the agreement or covenant, be questioned in any court, and that is so expressly provided by Art. 363 of the Constitution.9. The plea of the appellant that he was not seeking to enforce the terms of the merger agreement and that he was merely resisting the claim made by the authority appointed by the State of Orissa to levy a tax inconsistently with the terms of the merger agreement, has no substance. In truth, the appellant sought by his petitions under Art. 226 of the Constitution to enforce the terms of Art. 4 of the mergerthe grounds therefore that liability to pay agriculturalin respect of his private property is imposed upon the appellant by S. 3 of the Act, and the immunity claimed by the appellant is not one of the personal rights or privileges within the meaning of the merger agreement and that the claim made by the appellant is not justiciable, the objection raised by the appellant to liability to pay agriculturalassessed under the Act cannot beappears from the assessment order that this contention was raised before the AgriculturalOfficer and that officer rejected the contention relying upon S. 14, cl. (1) of the Act. It is unnecessary for the purpose of these appeals to decide whether the assessing officer was right in the view which he took. In the petitions filed by the appellant in the High Court, this plea was not raised and no relief was claimed by him in respect of the income of the two villages. The question was never mooted before the High Court and the State of Orissa had no opportunity of meeting the claim now sought to be made by the appellant. On the ground that the question was never raised in the High Court, we reject thisupon this premise, the appellant contends that he is liable to pay tax in respect of his income from these eighteen villages and no more. But even this plea was never raised in the High Court and we cannot, in dealing with these appeals, enter upon an enquiry into a question which was never raised on which no evidence was led, and on which no finding was given by the High Court.12. On the view taken by us, Appeals Nos. 307, 308 and 309 of 1958 fail and are dismissed with costs. There will, be one hearing fee.13. Civil Appeal No. 310 of 1958. The appellant in this appeal is the Ruler of the former State ofof the Orissa States. Relying on the same grounds on which the Ruler of the former State of Sonepur claimed immunity from payment of agriculturalthe appellant claimed immunity for the years of assessment,52 andThe High Court upheld his plea for the yearon the ground that the income of the previous year was not derived from the taxable territory, and cancelled the assessment for that year, but rejected his claim for the remaining years. With certificate under Art. 132 of the Constitution granted by the High Court, the appellant has appealed to this Court.14. For reasons set out in the judgment in Appeals Nos. 307, 308 and 309 of 1958, the contentions raised by the appellant which are identical with the principal contentions raised by the Ruler of the former State of Sonepur, this appeal must also fail.