Case: The State Of West Bengal  Vs. Shaikh Serajuddin Batley

2. The relevant facts are shortly these. By an indenture of lease dated the 22nd February 1947 the respondent demised to the Governor of the undivided Province of Bengal the first, second and third floors of premises No. 73, Dharmtolla Street in the town of Calcutta for a term of three years commencing from the 1st day of February 1947 yielding and paying unto the lessor therefor during the said term a monthly rent of Rs. 1,800/- only clear of all deductions by equal monthly payment on the 5th day of each and every month for the month immediately preceding and also the sum of Rs. 150/- per quarter towards payment of occupiers share of municipal taxes. By the lease the lessee covenanted that he would, during the said term, use the demised premises only for a hostel for the students of the Campbell Medical School and shall not at any time during the said term use the demised premises or any part thereof for any other purpose whatsoever. The lessee further agreed to pay the costs of and incidental to the lease.On the 15th August 1947 the partition of India took place and amongst other things, two new provinces came into existence, namely, West Bengal and East Bengal in place of the old Province of Bengal. The Province of West Bengal formed part of the Dominion of India and is now the State of West Bengal in the Union of India while the Province of East Bengal became and is still a part of the Dominion of Pakistan. The Indian Independence Act, 1947, by Section 9 empowered the Governor-General, amongst other things, to make such provision as appeared to him to be necessary or expedient for dividing between the new provinces to be constituted under that Act the powers rights, properties, duties and liabilities of the provinces which under that Act were to cease to exist. In exercise of that power the Governor-General promulgated an Order called the Indian Independence (Rights, Property and Liabilities) Order, 1947, hereinafter referred to as the said Order, to deal with the powers, rights, property, duties and liabilities of the respective Governments of West Bengal and East Bengal. Article 8 (2) of that Order, which is material for the purposes of this appeal, was in the followingcontracts made on behalf of the Province of Bengal before the appointed day shall, as from that day-(a) if the contract is for purposes which as from that day are exclusively purposes of the Province of West Bengal, be deemed to have been made on behalf of the Province instead of the Province of Bengal; and(b) in any other case be deemed to have been made on behalf of the Province of East Bengal instead of the Province of Bengal; and all rights and liabilities which have accrued or may accrue under any such contract shall, to the extent to which they would have been rights or liabilities of the Province of Bengal, be rights or liabilities of the Province of West Bengal or the Province of East Bengal, as the case may(6) of Article 8 provided that the provisions of that Article would have effect subject to the provisions of Article 9 of that Order. The relevant portion of Article 9 was as followsAll liabilities in respect of such loans, guarantee and other financial obligations of the Governor-General in Council or of a Province as are outstanding immediately before the appointed day shall as from that day-(a) ........................(b) in the case of liabilities of the Province of Bengal, be liabilities of the Province of East Bengal."

Court's reasoning:
To accept the argument of the learned Advocate-General will be to rob Article 8 of practically the whole of its content excepting claims for injunction or specific performance of the contract or the like.Such, we apprehend, could not have been the intention of the framers of that Article. This difficulty does not arise if the expression be construed ejusdem generis, for so construed it implies an obligation in the nature of an obligation in respect of loans and guarantees incurred or undertaken by the Stateas held by Harries, C. J., in - "Province of West Bengal v. Midnapur Zemindary Co. Ltd.. AIR 1950 Cal 159   (A), which has been followed by Chunder. J., in - Iswar Madan Gopal Jiu v. Province of West Bengal, AIR 1950 Cal 463   (B) and by Kapur J., in - The State of Punjab v. Mohan Lall, AIR 1951 Punjab 382 (C).The phrase "loans, guarantees and other financial obligations" occurred in Section 178 in Part VII of the Government of India Act. 1935 and there cannot be any doubt that those expression used in that section did not refer to all and sundry pecuniary obligations of the State arising out of contracts of every description. The loans and guarantees there referred to meant, it would seem, the special kinds of contracts relating to State loans and State guarantees. In that context "financial obligations" would mean obligations arising out of arrangement or agreements relating to State finance such as distribution of revenue, the obligation to grant financial assistance by the Union to any State or the obligation of a State to make contributions and the like. It is, however, not necessary or desirable to attempt an exhaustive definition of the expression "financial obligations". The Court will have to consider in each case whether a particular obligation which may be the subject-matter of discussion fails within the expression "financial obligations" within the meaning ofWhatever liabilities may or may not come within that expression we are clearly of opinion, in agreement with the High Court, that the liability to pay rent under a lease certainly does not come within that expression.