Case ID: 2171

Judgment:
minal Appeal No. 193 of 1964. Appeal from the judgment and order dated April 29	 1964 	of the Calcutta High Court in Criminal Appeal No. 369 of 1962. section D. Banerjee	 Advocate General for the State of West Bengal	 B. Sen	 P. K. Chatterjee	 M. K. Banerjee and P. K. Bose	 for the appellant. M.C. Setalvad	 A. N. Sinha and Sukumar Ghose	 for the respondent	 N.S. Bindra	 R. H. Dhebar and R. N. Sachthey	 for inter vener No. 1. A. V. Rangam	 for intervener No. 2. V. A. Seyid Muhamad	 Advocate General for the State of Kerala and A. G. Puddisery	 for intervener No. 3. O. P. Rana	 for intervener No. 4. I. N. Shroff	 for intervener No. 5. K. B. Mehta	 for intervener No. 6. The Judgment of SUBBA RAO	 C.J.	 WANCHOO	 SIKRI	 RAMASWAMI	 SHELAT	 BHARGAVA and VAIDIALINGAM	 JJ. was delivered by SBBBA RAO	 C. J. BACHAWAT J.	 delivered a separate concurring Judgment. SHAH	 J. delivered a dissenting Opinion. Subbarao	 C.J. This Full Bench of 9 Judges has been cons tituted to consider the correctness of the decision of this Court 175 in Director of Rationing and Distribution vs The Corporation of Calcutta(1). The relevant facts are simple and are not in dispute. The State of West Bengal was carrying on the trade of a daily market at 1	 Orphanganj Road	 Calcutta	 without obtaining a licence as required under section 218 of the Calcutta Municipal Act	 1951 (West Bengal Act 33 of 1951) hereinafter called the Act. The Corporation of Calcutta filed a complaint against the State of West Bengal in the Court of the Presidency and Municipal Magistrate	 Calcutta	 under section 541 of the Act for contravening the provisions of section 218 thereof. Under section 218 of the Act	 every person who exercises or carries on in Calcutta any trade	 shall take out a licence and shall pay for the same such fee as is mentioned in that behalf in Schedule IV to the Act. Admittedly for the year 1960 61	 the Government of West Bengal did not take out a licence under the said section but carried on the said trade. The main contention of the Government was that the State was not bound by the pro visions of the Act. The learned Magistrate	 accepting the said contention	 acquitted the State. On appeal	 the High Court of Calcutta held that the State was carrying on the business of running a market and	 therefore	 it was as much bound as a private citizen to take out a licence. It distinguished the decision of this Court in Director of Rationing and Distribution vs The Corporation of Calcutta(1) on the ground that the said decision was concerned with the sovereign activity of the State. In the result the State of West Bengal was convicted under section 537 of the Act section 537 appears to be a mistake for section 541 and sentenced to pay a fine of Rs. 250	 with the direction that when realized	 it should be paid to the Corporation. Hence the present appeal. Learned Advocate General of West Bengal raised before us the following points: (1) The State is not bound by the provisions of a statute unless it is expressly named or brought in by necessary implication; (2) the said principle equally applies to sovereign and non sovereign activities of a State; and Mr. N. section Bindra	 learned counsel appearing for the Attorney General raised before us the third point	 namely	 this Court has no power under the Constitution to review its earlier judgment. While the learned Advocate General contended that the rule of construction in favour of the State was part of the common law of England accepted as the law of this country and	 therefore	 was law in force within the meaning of article 372 of the Constitution	 Mr. N. section Bindra argued that the said rule of construction was law of the land in that it was declared to be so by the Judicial Committee in Province of Bombay vs Municipal Corporation of (1) ; 176 the City of Bombay(1) and	 therefore	 it was law in force within the meaning of article 372 of the Constitution. The third contention need not detain us	 for it has been rejected by this Court in The Bengal Immunity Company Limited vs The State of Bihar(2). There a Bench of 7 Judges unanimously held that there was nothing in the Constitution which prevented the Supreme Court from departing from a previous decision of its own if it was satisfied of its error and of its baneful effect on the general interests of the public. If the aforesaid rule of construction accepted by this Court is inconsistent with the legal philosophy of our Constitution	 it is our duty to correct ourselves and lay down the right rule. In constitutional matters which affect the evolution of our polity	 we must more readily do so than in other branches of law	 as perpetuation of a mistake will be harmful to public interests. While continuity and consistency are conducive to the smooth evolution of the rule of law	 hesitancy to set right deviations will retard its growth. In this case	 as we are satisfied that the said rule of construction is inconsistent with our republican polity and	 if accepted	 bristles with anomalies	 we have no hesitation to reconsider our earlier decision. At the outset it will be convenient to notice the facts of the decision of this Court in Director of Rationing and ' Distribution vs The Corporation of Calcutta(3) and the reasons given by this Court for applying the said rule of construction to an Indian statute. There	 the Director of Rationing and Distribution was using certain premises in Calcutta for storing rice flour	 etc. without taking out any licence under section 385 (1)(a) of the Calcutta Municipal Act	 1923. The Corporation of	 Calcutta filed a complaint against the said Director in the Magistrate 's Court for the contravention of the said provision. This Court held that the State was not bound by the provisions of section 386 (1)(a) of the said Act and that the appellant was not liable to prosecution for the contravention of the said section. Sinha	 C. J.	 speaking for Imam and Shah	 JJ.	 gave one judgment	 Sarkar	 J.	 gave a separate but concurrent judgment	 and Wanchoo	 J.	 recorded his dissent. The reasoning of Sinha	 C.J.	 is found in the following passage : "It is well established that the common law of England is that the King 's prerogative is illustrated by the rule that the Sovereign is not necessarily bound by a statutory law which binds the subject. This is further enforced by the rule that the King is not bound by a statute unless he is expressly named or unless he is bound by necessary implication or unless	 the statute being for the public good	 it would be absurd to exclude the King from it." (at page 170). (1) [1946] L.H. 73 I.R. 271. (2) (3 ; 177 "That was law applicable to India also	 as authoritatively laid down by the Privy Council in the case referred to above [(1946) L. R. 73 I.A. 271)]. it (law in force under article 372 of the Constitution) must be interpreted as including the common law of England which was adopted as the law of this country before the Constitution came into force." (At p. 173). Sinha	 C.J.	 therefore	 held that the said rule of construction was	 part of the common law of England	 that it was adopted by this	 country and that Art ' 372 of the Constitution continued it. Sarkar	 J.	 on the other hand	 agreed with the conclusion arrived at by Sinha	 C.J.	 but on a different ground. He based his conclusion not on any common law doctrine	 but simply on the ground that the said rule of construction of statutory provisions was accepted and followed in England	 America and India. Wanchoo	 J.	 in his dissent	 put the case in a different perspective. The following	 passage brings out his line of thought : "Two things are clear from this modern conception of royal prerogative	 namely (1) that there must be a Crown or King to whom the royal prerogative attaches	 and (2) that the prerogative must be part of the common law of England. Both these conditions existed when the Privy Council decision in Province1 of Bombay vs Municipal Corporation of the City of Bombay(1) was given in October 1946; the King was still there and the Privy Council held that the English common law rule of construc tion applied to Indian legislation as much as to English 	statutes." (At p. 184). "In our country the Rule of Law prevails and our Constitution has guaranteed it by the provisions contained in Part III thereof as well as by other provisions in other Parts. It is to my mind inherent in the conception of the Rule of Law that the State	 no less than its citizens and others	 is bound by the laws of the land. When the King as the embodiment of all power executive	 legislative and judicial has disappeared and in our republican Constitution	 sovereign power has been distributed among various organs created 'thereby	 it seems	 to me that there is neither justification nor necessity for continuing the rule of construction based on the royal	 prerogative." (At p. 185). "But where the royal prerogative is merely a rule of construction of statutes based on the existence of the Crown in England and for historical reasons	 I fail to see why in a democratic republic	 the courts should not follow the ordinary principle of construction that no one (1) [1946] L.R. 73 I.A. 271. 178 is exempt from the operation of a statute unless the statute expressly grants the exemption or the exemption arises by necessary implication." (At pp. 188 189). The conflict between the two views expressed by the learned Judges in the earlier decision mainly rests on the meaning of the expression "law in force" in article 372 of the Constitution. While Sinha	 C.J.	 took the view that the common law of England	 including the rule of construction	 was accepted as the law of this country and was	 therefore	 the law in force within the meaning of the said Article	 Wanchoo	 J.	 took the view that whatever might be said of the substantive laws	 'a rule of construction adopted by the common law of England and accepted by the Privy Council at a time when the Crown was functioning in India	 was not the law in force within the meaning of the said Article. We shall now consider the validity of the conflicting views The common law of England is clear on the subject. In Halsbury 's Laws of England	 3rd Edn.	 Vol. 7	 in Part 5 of the Chapter on "Constitutional Law" under the heading "The Royal Prerogative"	 the Royal prerogatives are enumerated and their limitations are given. In para 464 it is stated : "The general rule is that prerogatives cannot be affected or parted with by the Crown	 except by express statutory authority. " The prerogative right can be taken away by law because the law is made by the Crown with the assent of the Lords and the Commons. It can be taken away only by law to which the Crown is a party. Whether a particular statute has taken away such right pertains to the domain of the rule of construction. The relevant rule of construction evolved by judicial decisions in England may be stated thus : "At all events	 the Crown is not reached except by express words or by necessary implication in any case where it would be ousted of an existing prerogative or interest. " (See Perry vs Eames) (1). It is said much to the same effect in Maxwell 's Interpretation of Statutes	 11th Edn.	 at page 129	 thus : "It is presumed that the legislature does not intend to deprive the Crown of any prerogative	 right or property	 unless it expresses its intention to do so in explicit terms	 or makes the inference irresistible." The same rule is given in Bacon 's Abridgment 7th Edn.	 9.462. The legal position in England may be summarised thus : (1) [1891] 1 179 "The substantive rule of law is that the prerogative of the Crown can only be taken away by law. The rule of construction evolved by the courts to ascertain the legislative intention is	 that it is presumed that a statute has not taken away the prescriptive right unless it has expressly or by necessary implication done so. " There is an essential distinction between a substantive law and a rule of construction and that is well expressed by Craies in his book "On Statute Law"	 6th Edn.	 at p. 10	 thus : "A rule of law	 e.g.	 the Rule against Perpetuities or the Rule in Shelley 's case (abolished in 1925)	 exists independently of the circumstances of the parties to a deed	 and is inflexible and paramount to the intention expressed in the deed. A rule of law cannot be said to control the construction of a statute	 inasmuch as a British statute is itself part of the supreme law of the land and overrides any pre existing rules with which it is inconsistent. A rule or canon of construction	 whether of will	 deed or statute	 is not inflexible	 but is merely a presumption in favour of a particular meaning in case of ambiguity. This was well expressed by Bowen	 L.J. in L. N. W. Ry. vs Evans:(1) 'These canons do not override the language of a statute where the language is clear : they are only guides to enable us to understand what is inferential. In each case the Act of Parliament is all powerful	 and when its meaning is unequivocally expressed the necessity for rules of construction disappears and reaches its vanishing point. " The same principle was stated by Bhashyam Ayyangar	 J.	 in Bell vs The Municipal Commissioners for the City of Madras(2) thus : "These compendious canons of interpretation which are in the nature of maxims can only be regarded as mere guides to the interpretation of Statutes and ought not to be applied as if they were statutory clauses	 enacted with all the precision and provisos of an Interpretation Act. " Franfurter	 J.	 said to the same effect in United States vs United Mine Workers of America thus : (3) "At best	 this canon	 like other generalities about statutory construction	 is not a rule of law. Whatever persuasiveness it may have in construing a particular (1) [1893] I Ch. 16	 27. (2) I.L.R. [1902] 25 Mad. 457	 484. (3) [1947] 91 L. ed. 180 statute derives from the subject matter and the terms of the enactment in its total environment. " Even in England this rule of interpretation has not been treated as inflexible. It is gradually losing ground in many branches of law. The incongruity of the rule of discrimination in favour of the Crown was pointed out by Glanville L. Williams in his treatise on "Crown Proceedings"	 at p. 53 : "The rule originated in the Middle Ages	 when it perhaps had some justification. Its survival	 however	 is due to little but the vis inertiae. " The author continues at p. 54 : "With the great extension in the activities of the State and the number of servants employed by it	 and with the modern idea	 expressed in the Crown Proceedings Act	 [compare in this connection article 300 of our Constitution]	 "that the State should be accountable in wide measure to the law	 the presumption should be that a statute binds the Crown rather than it does not. " The next question is	 how far and to what extent the common law of England relating to the prerogatives of the Crown has been accepted as the law of our country? Nothing has been placed before us to show that the entire body of the common law pertaining to prerogatives was accepted as the law throughout India. India at the relevant time comprised Provinces and Native States. As Bhashyam Ayyangar	 J.	 pointed out in Bell vs The Municipal Commissioners for the City of Madras() "the prerogatives of the Crown in India a country in which the title of the British Crown is of a very mixed character may vary in different provinces	 as also in the Presidency towns as distinguished from the mofussil. 'The determination	 with anything like legal precision	 of all the prerogatives of the British Crown in India is by no means an easy task. " It is well known that the Common law of England was applied as such in the original sides of the High Courts of Calcutta	 Bombay and Madras	 and that in the mofussil courts the principles embodied in the common law were invoked in appropriate cases on the ground of justice	 equity and good conscience. It cannot	 therefore	 be posited that either the entire body of common law of England relating to prerogatives of the King or even the rule of construction as forming part of that law was accepted as law in every part of the country. It has to be established whenever a question arises as to what part of the common law was accepted as the law in a particular part of the country. Learned Advocate General of West Bengal referred us to the decision of the Privy Council in Province of Bombay vs Municipal (1) I.L.R. 	484. 181 Corporation of the City of Bomhay(1) in support of his contention that the common law of England was accepted as the law of our country in that regard. In that case the question was whether the Crown was not bound by section 222(1) and section 265 of the City of Bombay Municipal Act	 1888 which gave the Municipality power to carry water mains for the purposes of water supply through across or under any street and into	 through or under any land "whatsoever within the city. " When the Municipal Corporation wanted to lay water mains through the land belonging to the Government of Bombay	 the Government did not agree except on some condi tions. Thereafter	 the dispute between the parties was referred to the High Court. Ultimately	 setting aside the order of the High Court	 the Privy Council held that the rule that no statute bound the Crown unless the Crown was expressly or by necessary implication made bound thereunder applied to the Crown in India and that there was no such express intention or necessary implication in the said section. Indeed	 the High Court also accepted that principle	 but on the construction of the relevant provisions it came to the conclusion that there was such a necessary implication thereunder. On the application of the principle there was no contest before the Privy Council. The Privy Council expressly stated so at p. 274	 when it observed : "The High Court held	 following previous decisions of its own	 that the principle to be applied for the decision of the question whether or not the Crown is bound by a statute is no different in the case of Indian Legislation from that which has long been applied in England. The parties concurred in accepting this view	 and their Lordships regard it as correct. " The decision made on a concession made by the parties even though the principle conceded was accepted by the Privy Council without discussion	 cannot be given the same value as one given upon a careful consideration of the pros and cons of the question raised. Further	 no argument was raised before the Privy Council that the Common law of England had legal force only in the said three Presidency towns and not in the rest of the country	 for that case happened to be one that arose in the City of Bombay. The observations of the Privy Council that the principles obtaining in England also governed the Crown in India are	 rather wide. Nor any argument was raised before the Privy Counsel making a distinction between substantive branches of common law and mere rules of construction. It is not possible to predicate what the Privy Council would have said if that distinction had been placed before it. Be that as it may	 this decision cannot be taken as finally deciding the question that is raised before us. (1) [1946] L.R. 73 I.A. 271. 182 Learned counsel relied upon a series of Indian decisions in. support of his contention that this rule of construction had become the law of the land. It was held in The Secretary of State in Council of India vs The Bombay Landing and Shipping Company (Limited)(1) that in a winding up proceedings the Crown was entitled to the same precedence in regard to the debts due to it	 in England	 in Ganpat Putava vs Collector of Kanara(2) that the Crown was entitled to the same precedence in regard to fees payable to it by a pauper plaintiff	 in The Secretary of State for India vs Mathura Bhai() that section 26 of the Limitation Act	 1877 being a branch of substantive law did not affect the Crown 's right	 in Motilal Virchand vs The Collector of Ahmedabad(4) that the Mamlatdars ' Courts could not entertain and decide a suit to which the collector was a party in The Government of Bombay vs Esufali Salebhai(5) that the Crown had a prerogative right to intervene and claim compensation in Land Acquisition proceedings	 in Hiranand Khushiram vs Secretary of State(6)	 that the Crown was not bound by the provision of the Bombay Municipality Act	 in The Secretary of State for India vs The Municipal Corporation of Bombay (No. 1)(7) that the Crown was subject to a charge under section 212 of the Bombay City Municipal Act. A careful study of these decisions discloses that all of them related to particular prerogatives of the Crown and that the Court held either that the prerogative of the Crown Was taken away by the statute or not	 having regard to the construction placed by it on the relevant statute. It is true that in some of the decisions the said rule of construction was noticed	 but as the decisions turned upon the construction of the relevant provisions	 it could not be said that the said rule had been accepted as an inflexible rule of construction by the Bombay High Court. In one of the judgments even the applicability of the rule of construction was doubted. A learned thesis on the subject is found in the judgment of Bhashyam Ayyangar	 J.	 in Bell vs The Municipal Commissioners for the City of Madras(8). The Superintendent of the Government Gun carriage Factory	 Madras	 having brought timber belonging to the Government into the City of Madras without taking out a licence and paying the licence fees prescribed by section 341 of the City of Madras Municipal Act	 was prosecuted. There was no mention of Government in the said section. A Division Bench of the Madras High Court (1) [1868] 5 Ho H. C. Rep. 23	27. (3) Bom. (5) Bom. (7) 	 509. (2) Dom. 7. (4) Bom. (6) A.I.R. 1934 Bom. (8) I.L.R. (I 902) 	 484. 183 Indian legislation	 statutes imposing duties or taxes bound the Government unless the very nature of the duty or tax was such is to be inapplicable to it. Bhashyam Ayyangar	 J.	 in his judgment	 after considering all the relevant material on the subject statutes and English and Indian decisions came to the conclusion that exemption from the payment of tolls	 rates and taxes was not in reality a prerogative of the Crown	 but depended solely upon the right construction to be put on the Crown grant or the statute in question. Though the learned Judge noticed the rule of construction and affirmed its application both to English and Indian statutes vis a vis the Crown	 he pointed out that the said rule	 like every cognate rule of construction was not really a pre rogative of the Crown but only a canon of interpretation and a mere guide to the interpretation of statutes. That case arose in the Madras City. In Madras the_ position was that non liability of the Crown to taxes was not treated as its prerogative and the aforesaid rule of construction was only treated as a guide in interpreting the provisions of a statute. Now coming to Calcutta	 a Division Bench of the Calcutta High Court in Corporation of Calcutta vs Bhupal Chandra Sinha(1) held that the Crown was bound by section 421 of the Calcutta Municipal Act	 1923 and that the unwholesome barley found in the Government stores was liable to be destroyed. No doubt	 the Court re stated the said rule of construction and came to the conclusion that by necessary implication the State was bound by the said provision. A Division Bench of the same High Court in Corporation of Calcutta vs Director of Rationing and Distribution(2) held that the State Government which was carrying on a trade at premises No. 259	 Upper Chitpur Road	 Calcutta	 and was using or permitting the use of the said premises for the purpose of storing rice etc. without licence was liable to be convicted under section 386(1)(a) of the Calcutta Municipal Act	 1923	 read with section 488 thereof When the said rule of construction was pressed upon the learned Judges	 they held that the law	 even after coming into force of the Government of India Act	 1935	 was that the Crown or the Government was bound by the statute unless it was exempted from its operation either expressly or by necessary implication. They did not	 therefore	 accept the rule of construction laid down by the Privy Council. It cannot	 therefore	 be said that in the City of Calcutta there was a universal recognition of the rule of construction in favour of the Crown. The legislative practice in India establishes that the various Legislatures of the country provided specifically exemptions in (1 ) A.I.R 1950 Cal. (2)A.I.R. 1955 Cal.282. 184 favour of the Crown whenever they intended to do so indicating thereby that they did not rely upon any presumption but only on express exemptions	 see	 for instance	 section 74 of the Contract Act	 section 9 of the Specific Relief Act	 section 90 of the Indian Registration Act	 section 2(a) and (b) of the Indian Easements Act	 The Crown Grants Act XV of 1895	 sections 295 (proviso)	 356(b) and 411 and 616 (a) of the Code of Civil Procedure (old)	 section 212 (proviso) of the Indian Companies Act	 section 20 (proviso) of the 	 section 1(4)(i) of the Indian Ports Act	 section 3	 proviso (1) of the Indian Stamps Act	 1899	 and section 3 of the India Act XI of 1881 etc. What is more	 Act XI of 1881 empowered the Governor General in Council by order to prohibit the levy by a Municipal Corporation of any specified tax payable by the Secretary of State for India and to direct the Secretary of State for India to pay to the Municipal Corporation in lieu of such tax some definite amounts. This Act was a pointer against the contention that there was a presumption in favour of the Crown that a statute was not binding on it. It is true that there are other Acts where there are specific provisions to the effect that the provisions of the Acts shall be binding on the Government: see section 10 of the Arbitration Act (Act X of 1940)	 section 116 of the Oil Field Regulation and Development Act (Act LIII of 1948). Subsequent to the making of the Constitution also there were Acts where such a provision was found. There is no firm legislative practice based upon the said presumptive rule of construction. Different statutes adopted different devices to achieve their desired results. The legislative practice	 therefore	 does not support the contention that in India the said rule of construction was accepted. It only shows that wherever an exemption was intended to be given to the Government it was expressly mentioned and wherever there might have been any doubt of the liability of the Government	 it was expressly made liable. The rule of construction was not statutorily recognised either by incorporating it in different Acts or in any General Clauses Act; at the most	 it was relied upon as a rule of general guidance in some parts of the country. Some of the American decisions may usefully be referred to at this stage. It was said that in America where the Crown did not exist	 the same rule of construction was adopted in that country as law of the land and therefore by analogy the same legal position must be accepted in India. The decision in H. Snowden Marshall vs People of the State of New York(1) only lays down that the State of New York has the common law prerogative right of priority over unsecured creditors. This case has nothing to do with the rule of construction but was based upon the common law prerogative of the (1) (1920) 65 L.cd. 185 Crown expressly embodied in the State 's Constitution. The decision in Guarantee Trust Company of New York vs United States of America(1) accepted the immunity of the sovereign from he operation of statutes of limitation. That decision was based upon the doctrine of public policy evolved by courts	 though in evolving the said policy the courts had been influenced	 to some extent	 by the doctrine of the pregrogative of the Crown. This decision also does not express any opinion on the rule of construction. The decision in United States of America vs United Mine Workers of America(2) ruled that statutes which in general terms	 divested pre existing rights and privileges would not be applied to the sovereign without express words to that effect. But Frankfurter	 J.	 after citing the said rule	 pointed out that "At best	 this canon	 like other generalities about statutory construction	 is not a rule of law. " The same rule was again re stated in United States of America vs Reginald P. Wittek.(3) The question there was whether the District of Columbia Emergency Rent Act did not apply to Government owned defence houses in the District such as Bellevue Houses. The Court relied not only upon the said rule of construction but also on other circumstances in support of the conclusion that the United States was exempt from the operation of that Act by necessary implication. In Jess Larson	 as War Assets Administrator and Surplus Property Administrator vs Domestic and Foreign		 Commerce Corporation	(4) the purchaser of surplus coal from the War Assets Administration filed a suit against the said Administration for an injunction prohibiting the latter from selling or delivering the coal to any other person. The suit was dismissed on the ground that the sovereign immunity in suits for injunction or for specific performance was based upon public policy. But it was argued that the principle of sovereign immunity was an archaic hangover not consonant with modern morality; the majority conceded that there was substance in such a viewpoint as applied to suits for damages. Mr. Justice Frankfurter in his dissent went further and pointed out that the doctrine of sovereign immunity was in disfavour. The American decisions	 therefore	 were mainly based either on the provisions of the constitution of the State or on. the ground of public policy evolved by Courts. The founding fathers carried with them the English doctrine of the Crown Prerogative and it continued to influence some of the principles of public policy evolved in that country. Even so	 the decisions made it clear that the rule of construction was relied upon only as one of the guides to arrive at the intention of a particular statute. That apart	 the fact that the common law of England pertaining to 2	1.4 (1)(1938) 82 L. ed. 1224. (3)(1949) 93 L. ed. 1406. M19Sup. C.I./66 13 (2) (1947) 91 L. ed. 884	923. (4) (1949) 93 L. ed. 186 prerogatives influenced some of the decisions of the Supreme Court 	of the United States cannot help us in coming to a conclusion whether the said rule had become part of the Law in India. Mr. Bindra	 the learned counsel appearing for the Attorney General sought to reach at the same result by a different process. He argued that the decision of the Privy Council in Province of Bombay vs Municipal Corporation of the city of Bombay and another(1) is a law of the country. We have already noticed the decision in another context. It accepted the rule of construction on a concession made by the counsel. Even if it was a considered decision on the point	 it was nothing more than an application of a rule of construction with which it was familiar for ascertaining the intention of statutory provisions applicable to the Bombay city. To sum up : some of the doctrines of common law of England were administered as the law in the Presidency Towns of Calcutta	 Bombay and Madras. The Common Law of England was not adopted in the rest of India. Doubtless some of its principles were embodied in the statute law of our country. That apart	 in the mofussil	 some principles of Common Law were invoked 'by courts on the ground of justice	 equity and good conscience. It is	 therefore	 a question of fact in each case whether any particular branch of the Common Law became a part of the law of India or in any particular part thereof. The aforesaid rule of construction is only a canon of interpretation	 it is not a rule of substantive law. Though it was noticed in some of the judgments of the Bombay High Court	 the decisions therein mainly turned upon the relevant statutory provisions. One decision even questioned its correctness. There is nothing to show that it was applied in other parts of the country on the ground of justice	 good con.science and equity. In Madras	 it was not considered to be a binding rule of law	 but only as a simple canon of construction. In Calcutta there was a conflict : one Bench accepted the construction and the other rejected it. The Privy Council gave its approval to the rule mainly on the concession of Advocates and that decision related to Bombay City. It is	 therefore	 clear that the said rule of construction was not accepted as a rule of construction throughout India and even in the Presidency towns it was not regarded as inflexible rule of construction. In short it has not become a law* of the land. Let us now proceed on the assumption that it has been accepted as a rule of construction throughout India. This leads us to the question whether the said rule of construction is the law of the land after the Constitution came into force. Under Article 372	 (1)73 I.A. 271. 187 all the laws in force in the territory of India immediately before the commencement of this Constitution shall continue in force	 therein until altered or repealed or amended by a competent Legislature or other competent authority. Can it be said that the said canon of construction was a 'law in force ' which can only be amended by a Legislature? Under Explanation (1) to the said Article	 the expression 'law in force ' shall include a law passed or	. made by a Legislature or other competent authority in the territory of India before the commencement of the Constitution. it has been held by this court that the said expression includes not only enactments of the Indian Legislatures but also the Common Law of the land which was being administered by the Courts in India. (See Director of Rationing and Distribution vs The Corporation of Calcutta and others() and V. section Rice and Oil Mills & others vs State of Andhra Pradesh(2). But it is not possible to hold. that a mere rule of construction adopted by English Courts	 and also by some of the Indian Courts to ascertain the intention of the Legislature was a law in force within the meaning of this term. There is an essential distinction between a law and a canon of construction. This distinction between law and the canon of construction has been noticed by us earlier and we have held that a canon of construction is not a rule of law. We are not concerned here. with the statutory rules of interpretation. We are	 therefore	 of the opinion that a rule of construction is not a 'law in force ' within the meaning of Article 372. The next question is whether this Court should adopt the rule of construction accepted by the Privy Council in interpreting statute vis a vis the Crown. There are many reasons why the said rule of construction is inconsistent with and incongruous in the present set up we have no Crown	 the archaic rule based on the prerogative and perfection of the Crown has no relevance to a democratic republic; it is inconsistent with the rule of law based on the dictrine of equality. It introduces conflicts and discrimination. To illustrates: (1) State "A" made a general Act without expressly making the Act binding on the said State. In the same State States "B"	 "C" and "D" and the Union have properties. Would the rule of construction apply only to the properties of State "A? ' or to the properties of all the States and the Union ? (2) The Central Act operated in different States; the rule of construction was accepted in some States and rejected in other States. Is the Central Act to be construed in different States in different ways ? (3) Acts in general terms might be made in different States States where the said rule of construction was accepted and the States where it was not so accepted. 'Should different States construe (1) [1961] 1.S.C.R. 158. (2) 188 the General Acts in different ways	 some applying the presumption and some ignoring it ? There is	 therefore	 no justification for this Court to accept the English canon of construction	 for it brings about diverse results and conflicting decisions. On the other hand	 the normal construction	 namely	 that the general Act applies to citizens as well as to State unless it expressly or by necessary implication exempts the State from its operation	 steers clear of all the said anomalies. 'It prima facie applies to all States and subjects alike	 a construction consistent with the philosophy of equality en shrined in our Constitution. This natural approach avoids the archaic rule and moves with the modern trends. This win not cause any hardship to the State. The State can make an Act	 if it chooses	 providing for its exemption from its operation. Though the State is not expressly exempted from the operation of an Act	 under certain circumstances such an exemption may necessarily be implied. Such an Act	 provided it does not infringe fundamental rights	 will give the necessary relief to the State. We	 therefore	 hold that the said canon of construction was not 'the law in force ' within the meaning of article 372 of the Constitution and that in any event having regard to the foregoing reasons the said canon of construction should not be applied for construing statutes in India. In this view it is not necessary to express our opinion on the question whether the aforesaid rule of construction would not apply to the trade activities of the State	 even if it applied to its sovereign activities. Even so	 it was contended that by necessary implication the State was excluded from the operation of section 218 of the Act. It was contended that	 as the infringement of the said provision entailed a prosecution and	 on conviction	 imposition of fine and imprisonment	 and that as the State could not obviously be put in prison and as the fine imposed on the State would merge in the consolidated fund of the State	 it should necessarily be implied that the State was outside the scope of the section. This argument was based upon the reasoning of Wanchoo	 J.	 in his dissenting judgment in Director of Rationing and Distribution vs Corporation of Calcutta(1). To appreciate the argument it is necessary to notice the relevant provisions of the Act. Under section 218(1) every person who exercises or carries on in Calcutta any of the trades indicated in Schedule IV shall annually take out a licence before the prescribed date and pay the prescribed fee. Section 218 is in Ch. Under section 541(1)(b) if any person exercises on or after the first day of July in any year any profession	 trade or calling referred to in Chapter XIII without having the licence prescribed by that chapter	 he shall be punished with fine; and under section 541(2) (1) ; 189 such fine	 when levied	 shall be taken in full satisfaction of the demand on account of the said licence. Under section 547A	 which was inserted in the Act by section 96 of the Calcutta Municipal (Amendment) Act	 1953 (West Bengal Act XIX of 1953)	 in every case of an offence punishable with imprisonment or fine	 or with fine only	 in which the offender is sentenced to pay an fine	 it shall be competent to the Court to direct that in default of payment of the fine the offender shall suffer imprisonment for such term or further term not exceeding six months as may be fixed by the Court. Under the Act there is a distinction between fines imposed under section 537 and under section 541 of the Act. The fines under section 537 are in respect of offences enumerated therein and they certainly go to the coffers of the States. In respect of such offences it may be contended that	 as the fines paid reach the State itself	 there is an implication ' that the State is not bound by the sections mentioned therein	 for a person who receives the fine cannot be the same person who pays it. This incongruity may lead to the said necessary implication. But the same cannot be said in respect of the provisions covered by section 541. Under the said section the fine recovered for the infringement of the said provisions	 when levied	 shall be taken in full satisfaction of the demand on account of the licence not taken thereunder. Though the expression "fine" is used	 in effect and substance	 section 541 is a mode of realization of the fee payable in respect of the licence: it goes to the municipal fund and forms part of it. In this context	 section 115 of the Act is relevant. Under that section	 there shall be one Municipal Fund held by the Corporation in trust for the purposes of the Act to which the moneys realised or realisable under the Act (other than fine levied by Magistrates) and all moneys otherwise received by the corporation shall be credited. Reliance is placed upon the words within the brackets	 viz.	 "other than fine levied by Magistrates" and an argument is raised that the fine levied under section 541 will not be credited to the Municipal Fund. That interpretation brings that section into conflict with section 512. On the other hand	 a harmonious construction of these two provisions makes it clear that the fine mentioned in section 115 is the fine imposed under section 537	 for section 541(2) in terms directs that the fine shall be credited to the demand. All amounts credited towards demands	 it cannot be denied	 necessarily have to be credited in the Municipal Fund. Nor section 547A detracts from our conclusion. Under that section in every case of an offence where the offender is sentenced to pay a fine	 it shall be competent to the court to direct that in default of payment of the fine the offender shall suffer imprisonment. It was said that this section necessarily implied that the State could not be	 hit by section 218	 as it could not obviously be imprisoned for default of payment of fine. But it will be noticed that this section only confers a discretionary power on the court and the court is not bound to 190 direct the imprisonment of the defaulter. It is only an enabling provision. There are other ways of collecting the money from ]persons against whom an order under section 547A is not made. This enabling provision does not necessarily imply an exemption in favour of the State. For all the aforesaid reasons we hold that the State is not exempt from the operation of section 218 of the Act. In the result we hold that the conclusion arrived at by the High Court is correct. The appeal fails and is dismissed. Shah	 J. The High Court of Calcutta convicted the State of West Bengal of the offence of carrying on trade as owner and occupier of a market at Calcutta without obtaining a license under section 218 of the Calcutta Municipal Act	 1951	 and imposed a sentence of fine of Rs. 250/ . In this appeal	 it is urged that the State not being by express enactment or clear intendment bound by the provisions of the Act relating to the obtaining of a license for carrying on trade as owner or occupier of a market	 the order of conviction is not sustainable	 and reliance is placed upon the judgment of this Court in Director of Rationing & Distribution vs The Corporation of Calcutta & Ors.(1) The Corporation contends that since India became a Republic	 the rule that "Crown is not bound by statute unless specially named	 or clearly intended" has no application to the interpretation of the Calcutta Municipal Act	 1951. The argument is urged on two grounds : (i) since India has ceased to be governed in the name of the British Crown	 the rule in terms has no application; and (ii) even if it be assumed that the rule applies to the State as the sovereign authority	 it must be deemed to be superseded	 for to accept it would be to countenance unequal treatment between the State and the citizens. The origin of the rule in England that the Crown is not bound by a statute unless expressly named or clearly intended lay undoubtedly in the prerogative of the British Crown. In Bacon 's Abridgement	 7th Edn.	 p. 462	 the general rule is stated thus: "where a statute is general	 and thereby any prerogative	 right	 title or interest is divested or taken away from the King	 in such case the King shall not be bound	 unless the statute is made by express terms to extend to him." But the Crown is bound where it is expressly named or by clear implication intended to be bound. An inference that the Crown was intended to be bound by implication is	 however	 not to be raised merely because the Crown assented to the statute	 for as stated by Plowden "when the King gives his assent he does not mean to prejudice himself or to bar himself of his liberty and his privilege	 but he assents that it shall be a law among his subjects. " (1) [1961]1 S.C.R. 158. 191 The common law of England was adopted in this country subject to local variations and the personal law of the parties	 within the Presidency towns by the establishment of Mayors ' Courts in the	 18th century with the express	 injunction to apply that law. In the mufassal of the three Presidencies the common law was adopted by the Regulations constituting tribunals for administration of justice enjoining them to decide disputes according to justice	 equity and good conscience '	 and elsewhere by the diverse Civil Courts Acts imposing similar injunctions. In the three Presidency towns of Calcutta	 Madras and Bombay the charters of 1726 which established the Mayors ' Courts introduced within their jurisdiction the English common and statute law in force at the time so far as it was applicable to Indian circumstances. By the statute of 1781 (21 Geo. III c. 70	 section 17) the Supreme Court at Calcutta was enjoined to apply in the determination of actions against the Indian inhabitants of the town in matters of succession and inheri tance to lands	 rents	 goods	 and in all matters of contract and dealing between party and party	 their personal law if both parties belonged to the same community	 and by the law and usages of the defendant if they belonged to different communities. The English common law in its application to Hindus and Mahomedans in the matters enumerated in the statute was to that extent superseded	 but in other matters the English common law unless it was inconsistent with statute or Indian conditions continued to apply. Similar statutes were passed enjoining the Courts in the Presidency towns of Madras and Bombay in 1797 (37 Geo. III c. 142	 section 13)	 to apply in the enumerated matters the personal law of the parties. it may however be observed that by the Supreme Court charters	 English law	 not in its entirety but as nearly as the circumstances of the place and of the inhabitants admit	 was applied: Advocate General of Bengal vs Ranee Surnomove Dossee.(1) In the mufassal Courts by Bengal Regulation III of 1793 in respect of Bengal	 by Regulation 11 of 1802 in respect of Madras	 it was ordained that where no specific rule existed the Courts were to act according to "justice	 equity and good conscience" which expression was interpreted to mean the rules of English common law in so far as they were applicable to Indian society and circumstances: Waghela Rajsanji vs Shekh Masludin(2). The Bombay Regulation IV of 1827 provided by section 26 that the law to be observed in the trial of suits shall be Acts of Parliament and Regulations of Government; in the absence of such acts and regulations the usage of the country in which the suit arose; if none such appears	 the law of the defendant	 and in the absence of specific law and usage equity and good conscience. By the Letters Patents of the High Courts of the three principal Courts of Calcutta	 Madras and Bombay by cls. 19 in exercise of the original jurisdiction law or equity to be applied (1) (1864) 9 M. 1. A. 387. (2) (1887) 14 1. A. 89. 192 was such law or equity which would have been applied if the Letters Patents had not been issued. By cl. 20 in respect of suits tried in exercise of the extraordinary original jurisdiction	 and by cl. 21 in respect of the appellate jurisdiction	 the High Courts were directed to apply law or equity and the rule of good conscience which the Court in which the proceeding was originally instituted would have applied. Similar provisions were made in the Letters Patents of the Allahabad	 Patna	 Lahore and Nagpur High Courts by cls. 13 & 14 and in respect of Jammu & Kashmir High Court by cls. 14 & 15	 and in respect of Rajasthan by cls. 33 & 34 of the Rajasthan High Court Ordinance	 1949. The jurisdiction of the Assam and Orissa High Courts was derived from their respective parent High Courts the Calcutta High Court and the Patna High Court. In the Courts in the mufassal	 the Civil Courts Acts e.g. section 37; the 	 section 5; the Central Provinces Laws Act	 1875	 sections 5	 6; the 	 section 3. require the Courts to decide cases according to justice	 equity and good conscience. There can therefore be no doubt that the Courts which functioned in the former British India territory were enjoined to decide cases not governed by any specific statutory rules according to justice	 equity and good conscience	 which meant rules of English common law in so far as they were applicable to Indian society and circumstances. By a long course of decisions of the High Courts in India the rule of the English common law that the Crown is not	 unless expressly named or clearly intended	 bound by a statute was applied in India. In The Secretary of State in Council of India vs Bombay Landing and Shipping Co. Ltd.(1) the Secretary of State for India claimed priority in the payment of a debt in the course of winding up of a company and it was held by the High Court of Bombay that a judgment debt due to the Crown is in Bombay entitled to the same precedence in execution as a like judgment debt in England	 if there be no special legislative provision affecting that right in the particular case. The Court held that as the Crown is not	 either expressly or by implication	 bound by the Indian Companies ' Act (X of 1866)	 and as an order made under that Act for the winding up of a Company does not work any alteration of property against which execution is sought	 such an order does not enable the Court to stay the execution of a judgment debt due to the Crown	 or to the Secretary of State in Council for India. Westropp	 J.	 who delivered the judgment of the Court after an exhaustive review of the earlier authorities observed "The King	 by his prerogative	 regularly is to be preferred	 in payment of his duty or debt	 before any subject although the King 's debt or duty be the latter." (1) 5 Bom. H.C.R O.CJ. 193 The learned Judge also observed that the rule was recognised by the laws of many countries as applicable to the claims of the Sovereign or the State	 e.g. France	 Spain	 America and Scotland and that principle was no novelty in India	 because at an earlier date it was promulgated by Hindu jurists Yajnavalkya and others. In The Secretary of State for India vs Mathurahbai and Ors.(1) the rule was held to apply to India as a rule of construction of statutes. In that case the inhabitants of a village sued to establish their right of grazing their cattle on certain Government land and for an injunction restraining the Government from interfering with their right. It was held by the High Court of Bombay that the right of free pasturage which the plaintiffs enjoyed did not necessarily confer that right on any particular piece of land	 and that section 26 of the Limitation Act 15 of 1877 did not bind the Secretary of State. It was also applied in three later decisions of the Bombay High Court: Hiranand Khushiram Kirpalani vs Secretary of State; (2) Secretary of State vs Municipal Corporation Bombay (No. 1)(3) and Province of Bombay vs The Municipal Corporation of Bombay(4). In the first case the Secretary of State was held not bound by sections 305	 489 and 491 of the Bombay City Municipal Act	 1888	 which deal with levelling	 metalling or paving	 sewering	 draining	 channelling and lighting of private streets and with execution of that work to the satisfaction of the Commissioner	 if the work be not done in accordance with the requisition and for recovery of the expenses incurred in that behalf. In the second case	 the Court held that the Crown was bound by necessary implication in respect of the charge which arises under section 212 of the Bombay City Municipal Act 3 of 1888	 that section being an integral part of the general scheme of the Act imposing tax on land in Bombay including Government land. In the third case the Bombay High Court observed that the general principle is that the Crown is not bound by legislation in which it is not named expressly or by necessary implication. But reading the relevant sections in the Act relating to the water supply it appeared that it would be impossible to carry them out with reasonable efficiency	 unless Government was bound by them. The view of the High Court in the last judgment that the Province was bound by the statute by imp lication was overruled by the Judicial Committee in Province of Bombay vs Municipal Corporation of the City of Bombay and Another(5) to which I will presently refer. The Madras High Court in Bell vs The Municipal Commissioners for the City of Madras(6) also upheld the rule which prevailed in the Bombay High Court that the Crown is not bound by a statute unless expressly named or clearly intended. In that case the Superintendent of the Gun 2	1.5 (1) 1. L. R. (3) I.L.R. (5) I.L.R. 73 I.A. 271. (2) I.L.R. (4) I.L.R. (6) I.L.R. 194 Carriage Factory in Madras brought timber belonging to Government into Madras without taking out a licence	 and paying the license fee prescribed by section 341 of the ' City of 	 Madras Municipal Act. The Court held that the timber brought into Madras by or on behalf of Government was liable to the duty imposed by section 341 of the City of Madras Municipal Act	 although Government was not named in the section. Bhashyam Ayyangar	 J.	 entered upon a detailed analysis of the case law and set out certain principles at p. 500. The learned Judge was of the view that "the canon of interpretation of Statutes that the prerogative or rights of the Crown cannot be taken away except by express words or necessary implication	 is As applicable to the Statutes passed by the Indian Legislatures as to Parliamentary and Colonial Statutes". But he held that "the English law as to the exemption of the Crown and Crown property from payment of tolls	 poor rates and other taxes	 local or imperial	 imposed by statutes rests partly upon historical reasons and principally upon judicial decisions which do not proceed upon a course of reasoning or principle which will be binding on Indian Courts". It is not necessary to express any opinion on the question whether the general exception engrafted by the learned Judge on the rule in so far as it relates to taxing statute is wholly correct and applied to all taxing statutes in India. The Municipal Corporation of Calcutta is	 it may be recalled	 seeking to collect the license fee by prosecuting the State of West Bengal	 but the primary purpose of the prosecution is to enforce compliance with the pro visions relating to the conduct of a market by compelling the State to take out a license	 and paying a fee in lieu of services rendered to the owners of the markets. These decisions were affirmed by the Judicial Committee in Province of Bombay vs Municipal Corporation of the City of Bombay and Another(1). The question which fell to be determined was whether by section 222(1) and section 265 of the City of Bombay Municipal Act	 1888	 which invested the Municipality with power to carry water mains through	 across or under any street and "into		 through or under any land whatsoever within the city" bound the Crown in whom the lands were vested either expressly or by necessary implication. The Judicial Committee observed that the general principle applicable in England in deciding whether the Crown is bound by a statute that it must be expressly named or be bound by necessary implication applies to Indian legislation. The Board observed at p. 274 : "The maxim of the law in early times was that no statute bound the Crown unless the Crown was expressly named therein	 "Roy n 'est lie per ascun statute si il ne soit expressment nosme." But the rule so laid down is subject (1) L.A. 73 I.A. 271. 195 to at least one exception. The Crown may be bound	 as has often been said	 "by necessary implication". If	 that is to say	 it is manifest from the very terms of the statute	 that it was the intention of the legislature that the Crown should be bound	 then the result is the same as if the Crown had been expressly named. It must then be inferred that the Crown	 by assenting to the law	 agreed to be bound by its provisions. " It is true that counsel appearing before the Judicial Committee accepted the correctness of the rule "that the question whether or not the Crown is bound by a statute is no different in the case of Indian legislation from that which has long been applied in England." But the judgment of the Judicial Committee did not proceed upon a concession: the Board expressly observed that they regarded the rule "as correct". The Union of India now includes territory of the former Indian States in which the law as originally existing and which the Courts are enjoined to apply may have been somewhat different. But that is not peculiar to the application of the rule of interpretation which was adopted by the Courts in British India that the State shall not be deemed to be bound by an enactment unless it is expressly named or by clear intendment included in the statute. Even in respect of matters of personal law	 procedure and jurisdiction of the Courts and in other matters where uniform statutes do not apply differences do arise and must be determined according to the law and jurisdiction inherited by the Courts administering justice. But the present case concerns the administration of the law in the town of Calcutta which has for nearly 250 years been governed by the English common law as adopted by the various Acts	 Regulations and finally by the Letters Patents. It may also be necessary to observe that we are not called upon to decide whether all the prerogatives of the British Crown have been incorporated in our system of law. Some of those are so wholly inconsistent with the system of law personal and common in India	 that they have not been held applicable	 e.g. the rule of English law incapacitating aliens from holding real property to their own use	 and transmitting it by descent or devise has never been in troduced in India so as to create forfeiture of lands held in Calcutta or the mofussil by an alien and devised by will for charitable purposes. Mayor of the City of Lyons vs The East India Company(1): the English law of felo de se and forfeiture of goods does not extend to a Hindu committing suicide: Advocate General of Bengal vs Ranee Surnomoye Dossee(2). But the rule that the Crown debt is entitled to priority in payment of debts due to it has been adopted	. and the State is entitled to priority in payment of debts due to it : (1) L.R. I Moare 's I.A. 173. (2) (1864) 9 M.I.A. 196 The Secretary of State for India in Council vs The Bombay Landing A Shipping Co. Ltd.(1) and M/s. Builders Supply Corporation vs The 'Union of India(2). As I have already stated the adoption of the English law was not in its entirety	 but as nearly as the circumstances of the case and of the inhabitants of the place admit. It would be confusing the issue to hold that because some prerogatives have not been adopted	 no prerogative of the State may have any place in our system of law. Again in considering the limited question as to the application of the rule of interpretation under discussion	 it would be an idle exercise to enter upon a detailed discussion of the prerogatives which have and which have not been assimilated in our system of law. In Director of Rationing & Distribution vs The Corporation of Calcutta & Ors.(3) this Court regarded the rule as one of interpretation	 and it is so expressly stated in State of West Bengal vs Union of India(4); Sri Vankata Seetaramanjaneva Rice and Oil Mills vs State of Andhra Pradesh(5) and M/s. Builders Supply Corporation vs Union of India(2). In England and the Colonies the rule has not been restricted to common Crown actions or the personal prerogatives of the Crown. It excludes from the operation of statutes all public servants acting under the authority of the Crown. It is well settled that in the Colonies the executive government represents the Crown as it does in England	 and therefore the Executive Government of the Commonwealth of Australia or of a State in Australia is not bound by a statute unless the intention that it shall be bound is apparent : Roberts vs Ahern(6). Again because of the origin of the rule	 its protection is not restricted to the property and rights of the Crown alone	 and applies to State property	 actions and rights. When a statute expressly includes the State in its operation	 no difficulty arises in giving effect to the statute. Even if there be no express provision	 the State may be bound by clear intendment of the statute	 having regard to the nature of the legislation	 if the beneficent purpose intended to be served thereby would be wholly frustrated unless the State is bound. The rule of interpre tation applies only when the Court has no indication either by express reference or by clear intendment in the statute: a presumption arises in such a case that the words of the statute even though general are not intended to bind the State. The question is one of presumed intention where the language	 purpose and the nature of the statute give no clear indication and mere general words .ire used. It was urged that in the Act there are certain provisions which 	expressly refer to the liability of the State and the binding character 5 Bom. H.C.R. O.C.J. 23. (2) ; (1) ; (3) 4 [1964] 1 S.C.R. 371. (5) [1964]7 S.C.R. 456. (6) ; 197 of those provisions against the State is not in doubt. But that cannot be a ground for holding that the remaining provisions apply to the State. 	 The Judicial Committee in Province of Bombay vs Municipal Corporation of the City of Bombay and Another() observed : "They (the Judicial Committee) were pressed with the argument that such an inference might be drawn from certain express references to the Crown in other parts of the Act itself	 and from the fact that by the Government Building Act	 1899	 the legislature had provided for the exemption of Government buildings from certain municipal laws. The argument was that no express provisions saving the rights of the Crown would be necessary if the Crown were already immune. This is not an unfamiliar argument	 but	 as has been said many times	 such provisions may often be inserted in one part of an Act	 or in a later general Act	 ex abundanti cautela	 and	 so far as the Act of 1899 is concerned	 it is fallacious to argue that the legislature which passed it must have had in mind the particular sections of the Act of 1888 which are not under review	 or that it was impliedly interpreting those sections. " The argument that the rule had not received recognition in the High Courts in India	 before the judgment of the Judicial Committee reported in Province of Bombay vs Municipal Corporation of the City of Bombay and Anr.(1) was pronounced	 is belied by the course of authorities summarised earlier. There was practically a consistent course of authorities prior to the Constitution in support of the principle which was affirmed by the Judicial Committee in Province of Bombay vs Municipal Corporation of the City of Bombay and Another(1). The origin of the rule undoubtedly was in the prerogative of the Crown	 but there is even in the country of its origin authority for the view that the rule is regarded primarily as one of construction. In Madras Electric Supply Corporation Ltd. vs Boarland(2)	 in dealing with the question whether "the immunity" of the Crown "from taxation depends on the construction of the statute or arises	 from the prerogative in some other way"	 Lord MacDermott observed : "Whatever ideas may once have prevailed on the subject it is	 in my opinion	 today impossible to uphold the view that the Crown can find in the prerogative an immunity from tax if the statute in question	 according to its true construction	 includes the Crown amongst those made liable to the tax it imposes. The appropriate rule as I under (1) L.R. 73 I.A. 271. (2) H.L. 198 stand it is that	 in an Act of Parliament	 general words shall not bind the Crown to its prejudice unless by express provision or necessary implication. That	 however	 is	 and has long been	 regarded as a rule of construction. Lord Reid concurred in the view that the immunity depends upon construction of the statute rather than on royal prerogative. Lord Keith of Avonholm appeared to express a different view. In India the rule has been accepted as a rule of interpretation of statutes and applicable to all statutes which governed State actions	 authority or property. Is there any reason then to hold that on January 26	 1950	 the rule which previously applied to interpretation of statutes ceased to apply thereto on the date on which the Constitution came into force ? The rule of interpretation was	 as already stated	 a settled rule and was law in force in the territory of India within the meaning of article 372 of the Constitution. I am unable to agree with the contention that a rule of interpretation is not "law in force" within the meaning of article 372. There is no warrant for holding that a rule of interpretation which is incorporated in a statute e.g. The Indian Succession Act	 or the General Clauses Act is law in force	 and not a rule which was enunciated by the highest Court in the realm. The circumstance that a rule of interpretation is a rule for determination of intention of the legislature and for its application requires determination of facts and circumstances outside the statute will not make it any the less a rule of law. Acceptance of the proposition that a decision of the highest judicial tribunal before the Constitution is law does not involve the view that it is immutable. A statute may be repealed	 and even retrospectively	 it would then cease to be in operation : a decision which in the view of this Court is erroneous may be overruled and may cease to be regarded as law	 but till then it is law in force. It may be pertinent to bear in mind that it was never seriously argued before us that the judgment of the Judicial Committee which affirmed the view expressed in a long course of decisions was erroneous in the circumstances then prevailing. It was said by counsel for the Corporation that it is one of the fundamental principles of our Constitution that there is equality between the State and the citizens and discrimination is not permissible in the application of a law generally expressed. it was claimed that if other occupiers of markets take out licenses	 and comply with the regulatory provisions of the Act	 and the State is not obliged to abide by the rules	 there would be unequal treatment between owners similarly situate and that the State may ignore 199 the rules regulating the markets	 and on that account the public interest would suffer. There is no reason however to assume that the State under a democratic Constitution would be impervious to public opinion	 and would merely because it is not bound by a regulatory Act perpetuate 'a nuisance. If it be assumed that such be the attitude of the State there would be nothing to prevent the State from enacting express legislation excluding itself from the operation of the regulatory laws relating to markets. I do not think that the guarantee of the equal protection clause of the Constitution extends to any differential treatment which may result in the application of a special rule of interpretation between the State and the citizens. Nor can it be said that under our Constitution equality in matters of interpretation between the State and the citizens is predicated in all respects. It must be remembered that our Constitutional set up is built up not anew	 but on the foundations of our old institutions. The political set up is indisputably changed	 but can it be said that our concept of a State is so fundamentally altered that the traditional view about State privileges	 immunities and rights must be abandoned because they had a foreign origin	 an on the supposed theory of equality between the State and the citizens a theory which seeks to equate common good of the people represented by the State with the rights and obligations of the individual the Court should decline to give effect to the State privileges and immunities ? If it be granted that the State in making laws is entitled to select itself for special treatment different from the treatment accorded to the citizen and it is not denied that in order to achieve public good it can do so even if there is a differential treatment between the State and the citizen is there any reason to suppose that a statute which evidently was framed on the basis of the well settled rule of the pre Constitution days which accorded to the State a special treatment in the matter of interpretation of statutes must be deemed to have a different meaning on the supposition that the Constitution has sought to impose equality between the State and the citizen ? The fact that in our federal set up sovereignty is divided between the Union and the States	 and in the application of the rule that the State is not bound by a statute	 unless expressly named or clearly implied	 conflicts between the State enacting a law and the Union	 or another State may arise does not give rise to any insuperable difficulty which renders the rule in applicable to the changed circumstances	 for it is the State which enacts a legislation in terms general which alone may claim benefit of the rule of interpretation	 and not any other State. It was urged that even if the rule that the State is not	 unless expressly named or by necessary implication intended	 to be bound	 applies	 its application must be restricted to cases where an action of the State in its sovereign capacity is in issue. Where	 however	 200 the State is following a commercial or trading activity	 the rule can have no application. But in the context of modem notions of the functions of a welfare State	 it is difficult to regard any particular activity of the State as exclusively trading. The State was originally regarded as merely concerned with the maintenance of law and order	 and was not concerned with any trading activity. But that is now an exploded doctrine. For the welfare of the people the State does and is required in modern times to enter into many trading activities	 e.g. to effectuate control of prices	 prevent hoarding and distribute commodities in short supply	 besides maintenance of departments like Posts	 Telegraphs	 Railways	 Telephones etc.	 activities which may have been regarded as trading activities in the past. But if initiation and completion of schemes for social welfare of the people be regarded as an attribute of the exercise of sovereign authority	 it is difficult to regard activities undertaken by the State for setting up markets for effective distribution of goods as merely trading. Assuming that conducting a market in a metropolitan town may be regarded in a sense as a trading activity there is	 in my judgment	 no sufficient reason to justify any distinction in the application of the rule of interpretation to statutes concerning sovereign authority and trading activity. Under the provisions of the Calcutta Municipal Act the owner or occupier of a market is required to take out a license. But there is no express reference to the State: nor is there anything peculiar in the nature	 purpose and object or in the language used in the enactment relating to the issue of licenses which may suggest that the State must by necessary implication be bound by its provisions. I am	 therefore	 of the view that the High Court was in error in holding that the State of West Bengal was bound by the provisions relating to the issue of licenses for occupation or conduct of a market. I do not deem it necessary to consider the argument that since the State cannot be imprisoned in enforcement of the general provisions	 and imposing a fine upon the State would be futile because the hand which pays and the hand which receives the fine is the same	 an implication arises that it was not intended that the State should be bound by section 218 of the Calcutta Municipal Act. in my view the penal provision of s.541 is	 though in form a provision creating an offence	 intended to enable the Corporation to collect the license fee. The offender and the recipient of fine are therefore not the same bodies. Bachawat	 J. By the common law of England	 the Crown is not bound by a statute save by express provision or necessary implication. This rule was applied to Indian legislation in 201 Province of Bombay vs Municipal Corporation of the City of Bombay(1). In The Director of Rationing and Distribution vs Corporation of Calcutta(2)	 this Court followed the Privy Council decision. On the subject of the royal prerogative regarding statutes Chitty in his book on "Prerogatives of the Crown at P. 382 said "The general rule clearly is	 that though the King may avail himself of the provisions of any Acts of Parliament	 he is not bound by such as do not particularly and expressly mention him '. It has been said that the reason of the rule is that "it is inferred prima facie	 that the law made by the Crown	 with the assent of the Lords and the Commons	 is made for the subjects	 and not for the Crown" per Alderson	 B. in A.G. vs Bonaldson (3). Two rules follow from the proposition that the law is prima facie made for subjects and not for the Crown: (i) the Crown is not bound by a statute save by express words or by necessary implication	 (ii) that the Crown may take advantage of a statute	 though not bound by it	 unless expressly or impliedly prohibited from doing so. This Court categorically rejected the second rule in V. section Rice and Oil Mills vs State of Andhra Pradesh(4) and held that the State cannot be permitted to rely upon the artificial rule that the State can take advantage of a statute though not bound by it. I think that this Court should have refused to recognise the first rule also. The exception of the Crown from the operation of statutes is based sometimes on the royal prerogative	 and sometimes on a rule of construction. Originally	 the exemption was claimed and allowed on the ground of the prerogative. The King by virtue of his prerogative could claim that a statute was made for subjects only and he stood outside it. He waived this prerogative right by assenting to a statute which bound him expressly or by necessary implication. The immunity of the Crown is now couched in the form of a rule of construction. In spite of this modem disguise	 there is high authority for the view that this immunity is still based upon the prerogative. In Madras Electric Supply Corporation Ltd vs Boarland(5) Lord Keith said: "The true explanation	 easily understandable on his torical and legal grounds	 is that words in a statute capable of applying to the Crown may be overridden in the exercise of the prerogative. That is necessarily involved in the oft repeated phrase that the King is not bound by a statute (1) [1946] L.R. 73 I.A. 271. (2) ; (3) ; 	124. (4) ; 	 463	 463 4. (5) 	 694. CI/66 14 202 unless by express words or by clear implication. If the statute does not apply to him there can be no question of his being bound by it. It is only because it can apply to him that appeal to the prerogative is necessary. The conception of the prerogative	 in my view	 is of something that stands outside the statute	 on which the Crown can rely	 to control the operation of the statute so far as it prejudices the Crown". But the prerogative right of overriding statutes did not extend to India. When the Crown of England became sovereign in India	 it acquired such prerogative rights as were enjoyed by the former Indian sovereigns and such other prerogative rights as may be said to inhere in every sovereign power. But the common law was never bodily imported into India and the Crown never possessed in India all the prerogatives allowed to the Crown by the law of England. In The Mayor of the City of Lyons vs Hon. East India Company(1)	 the Privy Council held that the common law as to alienage and the royal prerogative of forfeiture of the lands held by a deceased alien on the ground of the incapacity of the alien to hold real property and transmit it by devise or descent was never ' introduced in the Presidency town of Calcutta or the mofussil. Such a right was not enjoyed by the Indian sovereign	 nor was it a necessary incident of sovereignty. Lord Brougham said at pp. 280	 281	 282 and 286 of the Report: "But it seems to be contended both here and below	 that there is something in the law incapacitating aliens	 which makes it	 so to speak	 of necessary application wheresoever the sovereignty of the Crown is established	 as if it were inherent in the nature of sovereign power. To this a sufficient answer has been already afforded	 if the acts of the sovereign power to which we have referred	 show that no such application to Bengal ever was contemplated	 unless direct authority can be produced to show that the right is inseparable from the sovereignty	 and	 as it were	 an essential part of it. It certainly is not an incident to sovereignty; in several countries the sovereign has no such right. . . Besides	 if reference be made to the prerogative of the English Crown	 that prerogative in other particulars is of as high a nature	 being given for the same purpose of protecting the State; and it is not contended that these branches are extended to Bengal. Mines of precious metals	 treasuretrove	 royal fish	 are all vested in the Crown	 for the purpose of maintaining its power	 and enabling it to defend the State. They are not enjoyed by the sovereign in all or even in most (1) 203 countries	 and no one has said that they extend to the East Indian possessions of the British Crown. . . Upon the whole	 their Lordships are of opinion that the law	 incapacitating aliens from holding real property to their own use	 and transmitting it by descent or devise	 has never been introduced into Calcutta." The common law of attainder or corruption of blood and the prerogative right of forfeiture or escheat on conviction of treason or felony now abolished by the Forfeiture Act	 1870 (33 & 34 Vict. c. 23) did not prevail in India	 see Papamma vs Appa Rau(1) ' Nor did the English law as felo de se and the forfeiture of goods and chattels consequent upon suicide apply to a Hindu	 though a British subject	 committing suicide at Calcutta	 see Advocate General of Calcutta vs Ranee Surnomoye Dossee(2). At Common law	 no proceedings	 civil or criminal	 were maintainable against the Sovereign in person for	 it was said	 that as the Courts were her own they could have no jurisdiction over her	 see Halsbury 's Law of England	 Vol. 7	 article 544	 p. 249. In India	 the government did not enjoy a general immunity from suits and legal proceedings	 see The Peninsular and Oriental Steam Navigation Company vs The Secretary of State for India.(1) The subjection of the Government to suits where it was liable to be sued before the Constitution is preserved by article 300 of the Consti tution. Though orders of mandamus and injunction cannot issue to the Crown in England	 see Halsbury 's Laws of England	 3rd Edn. II	 article 25 and 184 pages 16 and 98	 such orders can issue to Government under articles 32 and 226 of the Constitution. See also State of Bihar vs Sonavati Kumari(4). Province of Bombay vs Khusaldas Advani(5). In England the King by his prerogative may sue in what Court he pleases	 see Craies on Statute law	 6th Edn.	 p. 435. The prerogative of choice of Courts by the Crown never applied in India. The State can sue only in a Court competent to entertain the suit under the general law. In England it was the prerogative of the Crown not to pay costs in any judicial proceeding	 see Craies on Statute Law	 6th edn	 p. 432. But this prerogative was never recognised in India. The State pays and receives costs like a private individual. The Indian law did not deny that the Crown had certain pre rogatives. The Crown inherited the prerogatives enjoyed by the former Indian Sovereigns and had other prerogatives inherent in the nature of sovereignty. It was the prerogative of the King in Council to hear appeals and petitions from his Indian subjects	 (1) 1. L. R. 	396. (2) (3) 5 Bom. H.C.R. Appendix 1. (4) ; (5) ; 	697. 204 see Modee Kai Khocscroo Hormusjee vs Cooverbhaee(1). prerogative was taken away by the Abolition of Privy Council Jurisdiction Act 1949. When there is a failure of heirs on a person dying intestate	 the Crown had the prerogative right to take his property by escheat	 and this right was said to rest on grounds of general or universal law	 see the Collector of Masulipatam vs Cavaly Vencata Narrainapa(2)	 Sonet Koor vs Himmut Bahadoor(3) Mussammat Khursaidi Begun vs Secretary of State for India(4). The right of the Government to take the property by escheat or lapse on the failure of heirs or as bona vacantia for want of a rightful owner is recognised by article 300 of the Constitution. The prerogative right of the Crown to priority in payment of its claims was recognised on the ground that this right did not arise out of any peculiar quality in the writ of extent and the Hindu	 Muhammadan and Poituguese Sovereigns had enjoyed a similar right	 see Secretary of State for India vs Bombay Landing and Shipping company(5). The extent of this prerogative right may be limited by a statutory scheme of administration	 see GrovernorGeneral in Council vs Shiromani Sugar Mills Ltd. (in liquidation)(6). It has been held that the Government continues to enjoy this prerogative right of precedence after the Constitution came into force	 see Builders Supply Corporation vs Union of India (7)	 Bank of India vs J. Boman(8). The Crown as parens partriae had other prerogative rights. The Crown may have also enjoyed in India certain prerogative rights which were not allowed to the Crown of England by the common law and those prerogatives might vary in different parts of India	 see Bell vs Municipal Commissioners for the City of Madras(9).Gopalan vs State of Madras (10). But in India the Crown never enjoyed the general prerogative of overriding a statute and standing outside it. Such a right is not indigenous to India	 nor is it a necessary incident of sovereignty. In The Secretary of State for India in Council vs Bombay Landing and Shipping Company(5)	 Ganpat Putava vs The Col lector of Canars (11) the Bombay High Court held that a prerogative of the Crown cannot be taken away except by express words or by necessary implication. To appreciate these rulings	 it is necessary to remember that until 1861 there were constitutional restrictions on the power of the Indian legislature to affect the prerogative of the Crown	 see Statutes 3 and 4 William cap. LXXV section 43 and 16 and 17 Vict. cap XCV section 43	 which were swept away by later statutes	 see the Indian Councils Act	 1861 section 24	 the Government of India Act 1915	 section 84 (1) (A)	 the Government of (1) 6 M.I.A. 448	455. (3) [1876] I.L.R. I Cal.391. (5) (7) (9) I.L.R. (2) [1859 61] 8 M.I.A. 500. (4) Patna 538. (6) (8) A.I.R. 1956 Bom. 305 (10) Mad. 798	802. (11) [1875] I.L.R. I Bom. 205 India (Amendment) Act	 1917	 section 2 as interpreted in The Secretary of State vs Bombay Municipality(1)	 with one exception introduced by the Government of India Act	 1935	 section 1 10(b)(ii). Having regard to this historical background	 it was considered that the prerogative of the Crown was a very special subject matter and in the absence of express words or necessary implication	 it should be presumed that general words of an Indian Act were not intended to affect the prerogative. In Bells case(2) Sir Bhashyam Ayyangar J.therefore pointed out that the doctrine that the prerogative could not be taken away save by express words or by necessary implication could be based on the maxim generalia specialibus non derogant. This maxim does not exempt the Crown from the operation of statutes generally whenever a statute prejudicially affects it. In order to invoke this doctrine	 the Crown must	 establish that it has some prerogative right which it claims to be outside the purview of the statute. As pointed out already under the Indian law the Crown could not claim a general exemption from statutes on the ground of the prerogative. But there is high authority for the view that such an exemption is allowed to the Crown in England on the basis of a rule of construction. In Madras Electric Supply Corporation vs Boarland(3) at p. 685 Lord Macdermott said that the rule that in an Act of Parliament general words shall not bind the Crown to its prejudice unless by express words or by necessary implication has long been regarded as a rule of construction. This rule has a wide sweep	 and is not limited to cases where the prerogative right or property of the Crown is in question. It protects the Crown whenever general words in a statute may operate to	 its prejudice. See Broom ' s Legal Maxims	 10th Edn.	 pp. 39 40	 Glanville L. Willams ' Crown Proceedings	 p. 48 (f. n.). A review of the decided cases shows that until the decision of the Privy Council in the Province of Bombays case(4) this wide rule of construction had not obtained a firm foothold in India. In Verubai vs The Collector of Nasik(5)	 the Bombay High Court held that the Government was bound by article 167 of Schedule 11 of the Indian Limitation Act	 1877. Westropp	 C.J. said: "The legislature in passing the Limitation Act of 1871	 which is applicable to this case	 where it intends that Government should have a longer period than the subject	 has been careful expressly to say so	 as for instance	 in article 150 of Schedule II	 where the period assigned to suits brought by the Secretary of State is sixty years from the time of the accruer of the cause of action; but the Legislature makes no difference between Government and its subjects (1) (2) I.L.R. (3)[1955] A.C. 667	685. (4) [1946] L.R. 73 I.A. 271. (5) I.L.R. 206 in the case of appeals or applications see Govind Lakshman vs Narayan Moreshvar(1)". In Appava vs The Collector of Vizagapatam (2)	 the Madras High Court held that the Government was bound by article 178 of the Indian Limitation Act	 1877. Turner	 C.J. and Muttusami Ayyar	 J.said: "If the maxim on which the counsel for the Crown relies applies to this country and the Crown is not bound by the provisions of any Act unless they are expressly declared binding on the Crown it may be inferred from the circumstance that this Act contains provisions prescribing a Limitation to the Government for the institution of suits and presentation of criminal appeals that the Legislature contemplated that the Crown should be subject to the provisions of the Act and should enjoy a privilege to the extent expressed and no further expressum facit cessare tacitum" In the last two cases	 the Courts did not apply the strict English rule that the Crown under the prerogative was not bound by the statute of limitation	 see Bank Voor Handel vs Hungarian Administrator(3). In The Secretary of State for India vs Mathurabhai(4) Sargent	 C. J. was inclined to apply the English rule that the Crown is not included in an Act unless there are words to that effect and to hold that the Government was not bound by section 26 of the Indian Limitation Act	 1877. But he observed that it was not necessary to express a decided opinion on the question. In Bells	 case(5)	 the Madras High Court held that the Government was bound by the taxing provisions of section 341 of the City of Madras Municipal Act	 1884	 though not named in that section. Sir Bhashyam Ayyangar	 J. reviewed the earlier cases and decisively rejected the general claim of immunity of the Crown from a statute imposing a tax on the basis of any prerogative right or supposed rule of construction. In Motilal vs The Collector of Ahmedabad(6). Russel	 Acting C. J. and Beaman	 J. doubted the application of the English rule of construction in this country. They said: "It is contended that the maxim of English law that the Crown cannot be bound by any statute unless expressly named therein applies	 and reference is made to the cases of Ganpat Putaya vs The Collector of Kanara(7) The Secretary of State for India vs Mathurabhai(8). Without in any way wishing to prejudge the question or fetter future argument	 (1) 1 1. (2) [1882] I.L.R.4 Mad. 135. (3) 	 984 (H.L). (4) Bom. (5) I.L.R. (6) Bom. 86	 89. (7) [1875] I.L.R. I Bom. 1 (8) Bom. 207 we may say that as at present advised we entertain some doubt whether an exact analogy exists between the privileges and immunities of the Crown under the Constitutional Law of England and those of servants of the Indian Government. " The full Bench left the question open. In The Secretary of State vs Mohammed Yysuf(1)	 Pratt J. held that sections 17(2) (vii) and 90 of the Indian contained an implication that the Crown was bound by the Act. In Hiranand Khushiram vs Secretary of State for India(2)	 Beaumont	 C. J. and Rangnekar	 J. applied the strict English rule of construction and held that since the Crown was not named either expressly or by necessary implication in sections 305	 489 and 491 of the City of Bombay Municipal Act	 1888	 the Crown was not bound by those sections. Soon thereafter	 the same learned Judges held in Secretary of State for India vs The Municipal Corporation of Bombay(3)	 that the Crown was bound by section 212 of the City of Bombay Municipal Act	 1888 by necessary implication	 though not expressly named therein. In Province of Bombay vs The Municipal Corporation for the City of Bombay(4)	 Beaumont	 C. J. and Rajadhayaksha	 J. held that sections 222(1) and 265 of the City of Bombay Municipal Act	 1888 by necessary implication bound the Crown. They refused to follow the dictum of Day	 J. in Corton Local Board vs Prison Commissioner(5) that the test of necessary implication binding the Crown involves that the legislation is unmeaning unless the Crown is bound. They said: ". . if it can be shown that legislation cannot operate with reasonable efficiency	 unless the Crown is bound	 that would be a sufficient reason for saying that the Crown is bound by necessary implication. " This decision was reversed by the Privy Council on appeal in Province of Bombay 's case(6). The Privy Council rejected the test laid down by the Bombay High Court. They held that the strict English rule of construction exempting the Crown from the operation of statutes applied in the case of Indian legislation. The parties appearing before the Privy Council concurred in accepting this view. The attention of the Privy Council was not drawn to Bell 's case(7) and the propriety of applying the English rule to Indian legislation was not considered. Lord Du Parcq said: "If it can be affirmed that	 at the time when the statute was passed and received the royal sanction	 it was apparent from its terms that its beneficient purpose must be wholly frustrated unless the Crown were bound	 then it may be inferred that the Crown has agreed to be bound." (1) 	 1136.(2) Bom. (3) (4) I.L.R. 1944 Dom. 95. (5) (6) (1946) L.R. 73 I.A. 271. (7) I. L. R. 208 They held that the Crown was not bound by sections 222(1) and 265 of the City of Bombay Municipal Act	 1888 and an inference of necessary implication binding the Crown could not be drawn from certain express references to the Crown in other parts of the same Act and from the exemption of the Crown in a later general Act since such provisions are often inserted ex abundanti cautela. It is to be noticed that in several earlier decisions the Bombay High Court had drawn an inference of necessary implication binding the Crown in other sections of the same Act. Moreover	 except the Bombay High Court	 no other High Court held that the English c of Crown exemption from statutes applied to India. Even in Bombay	 some of the Judges doubted the applicability of the rule to Indian conditions. The imposition of the strict rule of construction by the Privy Council decision was received very unfavourably in India. In Corporation of Calcutta vs Sub Postmaster	 Dharamtala(1)	 the Calcutta High Court felt bound to follow the Privy Council decision	 and held that the Government was not bound by the provisions of the Calcutta Municipal Act	 1923. Mookerjee	 J.	 however	 said: "Had the question been res integra and had it been open 	 to us to consider the question untrammelled by a decision of the Judicial Committee we might have considered the reasonableness and propriety of applying the principles as enunciated by the English Courts and also how far they should be applied to Indian conditions. For some years past the position of the Crown with regard to liability and procedure has been considered by the lawyers in England as being antiquated and absurd as contrasted with that of ordinary individuals and reform in this respect has been considered to be long overdue. " In The Corporation of Calcutta vs Director of Rationing and Distribution(2)	 the Calcutta High Court refused to follow the Privy Council decision and held that the State was bound by section 386(1) (a) of the Calcutta Municipal Act	 1923. This decision was reversed in The Director of Rationing and Distribution 's case (3) and a majority of a Bench of this Court held that the law was correctly laid down in the Province of Bombay 's case(4) and continued to apply in this country even after the Constitution came into force	 and the State was not bound by section 386(1) (a) of the Calcutta Municipal Act	 1923. Wanchoo	 J. dissented and held that the rule laid down by the Privy Council did not apply to the construction of Indian statutes after the Constitution came into force. Later decisions of this Court disclose a tendency to relax and soften the rigour of (1) [1948]54 C. W. N. 429. (3) ; (2) A.I.R. 1955 Cal. 282. (4) (1964) L.R. 73 I.A. 271. 209 this rule. In Sri Venkata Seetaramanjaneya Rice and Oil Mills and others vs State of Andhra Pradesh(1) this Court held that an inference of necessary implication binding the State may be drawn if "the conclusion that the State is not bound by the specific provision of a given statute would hamper the working of the statute	 or would lead to the anomalous position that the statute may lose its efficacy". In other words	 the Court was inclined to revive the Bombay heresy rejected by the Privy Council. With regard to this rule of exemption of the Crown from statutes	 Glanville L. Williams in his book on "Crown Proceedings"	 1948	 pp. 53 and 54 said: "The rule originated in the Middle Ages	 when it perhaps had some justification. Its survival	 however	 is due to little but the vis inertiae. The chief objection to the rule is its difficulty of application . With the great extension in the activities of the State and the number of servants employed by it	 and with the modern idea	 expressed in the Crown Proceedings Act	 that the State should be accountable in wide measure to the law	 the presumption should be that a statute binds the Crown rather than that it does not. " Thus	 the artificial rule of construction has not escaped criticism even in England. This rule of construction is unsuitable to Indian conditions and should never have been applied to India. Before 1946 there was no settled course of decisions of the Indian Courts necessitating or justifying the application of this rule to the construction of Indian statutes. Rules of English law which could not suitably be applied to Indian conditions were not introduced even in the Presidency Town of Calcutta by 13 Geo HI c 63 or 21 Geo III c 70 or any other cognate statute or by the Charter of Charles II in 1661 see The Mayor of the City of Lyons vs The Hon. East India Company(2) The Advocate General of Calcutta vs Ranee Surnomoyee Dossee(3). Technical rules of English common law were not applied even in the Presidency Towns if they clashed with principles of justice	 equity and good conscience	 see Abdul Kawder vs Mahomed Mera (4) Mool Chand vs Alwar Chetty (5). In the mofussil	 common law had no force proprio vigore but the Judges were free to adopt and apply any rule of common law if it was consonant with principles of justice	 equity and good conscience. Artificial rules of Common Law based on feudal notions had no application in India. In Mithibai vs Limii Nowroji Benaji(6)	 the Bombay High Court refused to apply the rule in Shelley 's case in a case arising between Parsis in the mofussil. In The State of Rajasthan vs Mst. Vidyawati(7) (1) ; 	 462 (2) [1837]1 M. A. 175	 246 9	 274 5. (4) I.L.R (5) I.L.R. 	 553. 506	531. (3) 	 407 13	 424 30. (7) [1962] 2 Supp. S.C.R 989	 1007. (6) Bom. 506	 531. 210 this Court refused to apply rules of immunity of the Crown based on old	 feudalistic notions. In interpreting a statute	 it is the duty of the Court to give effect to the expressed intentions of the legislature. There is no compelling reason why the Courts in India should not give full effect to the general words of a statute on the basis of some artificial rule of construction prevailing in England. No doubt	 there are many Indian Acts which expressly provide that the Crown or the Government shall be bound by their provisions. See the Indian Arbitration Act No. 10 of 1940	 section 43	 Trades and Merchandise Marks Act No. 43 of 1958	 section 130	 the Factories Act No. 63 of 1948	 section 116	 the Oil Fields (Regulation and Development) Act No. 53 of 1948	 the 	 section 85. Some of these Acts are modelled on English statutes which contain similar provisions. In some Acts	 the express provision binding the Government is inserted by way of abundant caution. But the bulk of the Indian legislation proceeds upon the assumption that the Government will be bound unless the contrary is stated. Many Acts like the Code of Civil Procedure	 1908 and the make special provisions for the Government in respect of particular matters on the assumption that in respect of all other matters the Government will be bound by the general provisions of the Act. The Indian Limitation Act 1882 provided a special period of limitation for suits by the Government on the assumption that the Government like the subjects will be bound by its other general provisions. To apply the technical rule of construction exempting the Crown from the operation of Indian statutes will be to stultify the intention of the legislature in most cases. The English Courts have gone to the length of deciding that the Crown is not bound even by general regulations as to public safety	 see Cooper vs Hawkins(1). Such a result has not escaped criticism even in England. In India	 no one has doubted that general regulations as to public safety bind the Government equally like the citizens. The Director of Rationing and Distribution 's case(2) left open the question whether the State could claim immunity from the provisions of a statute with regard to its trading or commercial activities. But the executive power of the State extends to the carrying on of a trade or business	 see article 298 of the Constitution. On a question of construction of a statute	 no rational distinction can be made between the trading and non trading activities of the State. If the State is not bound by a statute	 it would seem that it is not so bound in respect of all its activities. in a country having a federal system of government	 it is difficult to apply the rule of Crown exemption from statutes. In (1) (2) ; 211 R vs Sutton(1)	 the High Court of Australia held that this presumption should not	 be applied so as to bring about either State exemption from federal laws or federal exemption from State statutes. But the contrary opinion seems to have prevailed in later cases	 see Minister of Works (W.A.) vs Gulson(2). The Commonwealth of Australia vs Bogle(3). This branch of Australian law is discussed in detail by Dr. Wynes in his book on Legislative	 Executive and Judicial Powers	 3rd Edition pp. 518 to 544. We should not import in this country either the English rule of implied exception of the Crown or the subtle distinctions engrafted on it by the Australian Courts. Our system of Government is federal in character. The taxing power is vested both in the Union and the States. Subject to certain constitutional restrictions	 the Union can tax the State and the State can tax the Union. There is no ground for presuming that the States are excluded from the scope of a general taxing statute enacted by Parliament or that the Union is outside the purview of the general words of a taxing statute enacted by a State legislature. I am therefore of the opinion that the rule that the Govern ment is not bound by a statute unless it is expressly named or bound by necessary implication does not prevail in this country and the decisions in the Province of Bombay 's case(4) and The Director of Rationing and Distribution 's case(s) and the subsequent decisions applying the rule to the construction of Indian Acts should not be followed. The imposition of this artificial rule has been harmful to our body politic. We have power to reconsider our previous decisions	 see The Bengal Immunity Company Ltd. vs The State of Bihar(6). This is a fit case where we should exercise this power. If the rule of common law controlling the operation of a statute on the ground of the prerogative applied to India	 it would be a law in force before the Constitution and would continue to be in force by virtue of article 372 of the Constitution. It would be the law in force because it would limit and control the operation of the existing Indian Acts. But we have ample power to say that this rule was not in force in India and the Indian law was not correctly laid down by the Privy Council in the Province of Bombay 's case(4) and the decisions which followed it. There is no presumption that the provisions of an Act do not bind the State (using the expression "State" in a compendious sense as including the Union and the States). In each case	 it is a question of fair construction of the Act whether or not any particular provision of the Act binds the State. The intention of the legislature has to be gathered on a careful scrutiny of the Act in question. Particular care should be taken in scrutinising the pro visions of a taxing or a penal Act. If the application of the Act (1) ; (3) ; 	 254. (5) ; (2) ; (4) [1946] L.R. 73 I.A. 271. (6) 212 leads to some absurdity	 that may be a ground for holding that the State is excluded from its operation by necessary implication. If the only penalty for an offence is imprisonment	 the State cannot be convicted of the offence	 for the State cannot be locked up in prison. If the penalty for the offence is fine and the fine goes to the consolidated fund of the State	 it may be presumed that the penal provision does not bind the State	 for the legislature could not have intended that the State will be the payer as well as the receiver of the fine. Presumably	 the Union is not bound by the Central Income tax Act because if it paid income tax	 it will be both the payer and the receiver. Likewise	 a State is prima facie not bound by a State Agricultural Income tax Act where the tax is receivable by it. Moreover cases may conceivably arise where "press provisions in a statute binding the State in respect of certain specific matters may give rise to the necessary implication that the State is not bound in respect of other matters. The Calcutta Municipal Act	 1951 contains special provisions exempting the Government from some of its provisions. Section 167(2) exempts from the consolidated rate certain open spaces and parade grounds which are the property of the Government. Section 208(1)(b) exempts certain carriages and animals belonging to the Government from payment of tax on carriages and animals. Section 225(1) (c) proviso exempts carts which are the property of the Government from payment of registration fees. Sections 218(1) and 541(1)(b) are however framed in general terms and do not expressly exempt the Government from their operation. Under section 218(1) it is the duty of every person carrying on any of the trades mentioned in schedule TV to take out a licence and to pay the prescribed fee. Under section 541(1) (b) any person carrying on such a trade without taking out the licence is punishable with fine. Prima facie	 the two provisions apply to all persons including the State Government. Section 218 is a taxing section and its object is to levy revenue for the municipality. There is no reason why the State Government like any other person should not take out a license and pay the prescribed fee if it chooses to exercise or carry on a trade and why it should not be punished with fine under section 541(1)(b) if it chooses to carry on a trade without taking a license. By section 541(2)	 such fine	 when levied	 is taken by the Municipality in full satisfaction of the demand on account of the license Fee. Section II 5 of the Act no doubt provides that all monies realised or realisable under the Act (other than fine levied by magistrates) shall be credited to the municipal fund. Reading sections 115 and 541(2) together it appears that the excepting words "other than fine levied by magistrates" in section 115 do not refer to the fine levied under section 541. The general provisions of section 115 must be read subject to the special provisions of section 541(2) and the fine realisable under section 541 is receivby the Municipality. It follows that the State Government is 213 the payer but is not the receiver of the fine. There is nothing to indicate that the State Government should be excluded from the purview of section 218(1) and section 541(1)(b). Section 218 renders the State liable to pay the license fee. Section 541(1) provides the remedy for the recovery of the fee in case of default in taking out the license and payment of the fee. If we are to hold that section 218 (1) applies to the State but section 541(1) (b) does not	 the result would be that though the State is liable to pay the license fee	 the Municipality will have no remedy against the State for the recovery of the fee. The legislature could not have contemplated such a result. Section 541 (1)(b) is a penal provision. But the State is not necessarily exempt from the operation of a statute having a punitive aspect. No doubt	 under section 547(A) the Court is competent to direct imprisonment of the offender in default of the payment of fine under section 547(1)(b). Obviously	 this provision cannot be applied to the State	 because the State cannot be detained in prison. But there is no reason why section 541(1) (b) should not be applied to the State. In Rani Sonavati Kumari vs The State of Bihar( ') this Court held that under the punitive provisions of 0 39	 r. 2(3) of the Code of Civil Procedure	 1908	 the Court could direct attachment of the property of the State for breach of an order of injunction	 though the Court could not direct detention of the State in civil prison. The High Court found that the State of West Bengal was carrying on a trade referred to in schedule IV of the Calcutta Municipal Act	 1951	 and was bound to take out a license under section 218(1). It is common case that the State did not take out a license for 1960 61. The State was therefore rightly convicted by the High Court under section 541(1). In the judgment of the High Court it is stated by inadvertence that the conviction was under section 537	 but from the materials on the record it is clear that the High Court intended to pass the order of conviction under section 541. It was argued that the State was the owner of a market and did not carry on any business. it was suggested that the trades	 if any	 in the market were carried on by the stall holders and not by the Government. But the High Court has recorded the finding that the Government carried on a trade. In this appeal under article 136 of the Constitution	 I do not propose to interfere with this finding Of fact. This judgment will not preclude the Government from proving in any future case that it is not carrying on any trade or business at 1	 Orphanage Road	 Calcutta	 The appeal is dismissed. ORDER In accordance with the opinion of the majority	 the appeal is dismissed. Y. P. (1) [1961] S.C.R.728.

Summary:
The appellant State of West Bengal was carrying on trade as owner and occupier of a market at Calcutta without obtaining a licence as required under section 218 of the Calcutta Municipal Act	 1951. The respondent Corporation of Calcutta filed a complaint against the State for contravention thereof. The trial Magistrate	 accepting the State 's contention that the State was not bound by the provisions of the Act acquitted the State. on appeal	 theHigh Court convicted the State and sentenced it to a fine	 holding thatthe State was as much bound as a private citizen to take out a licence. In appeal to this Court the appellant	 relying on this Court 's decision inDirector of Rationing vs Corporation of Calcutta	 ; 	contended that the State was not bound by the provisions of a statute unless it was expressly named or brought in by necessary implication and this common law rule of construction	 accepted as the law in India was "law in force" within the meaning of article 372 of the Constitution and that in any event by necessary implication the State was excluded from the operation of section 218 of the Act. Held:Per Subba Rao C.J.	 Wanchoo	 Sikri	 Bachawat	 Ramaswami	 Shelat	 Bhargava and Vaidialingam	 JJ. (Shah	 J. dissenting) : The State was not exempt from the operation of section 218 of the Calcutta Municipal Act	 1951 and was rightly convicted. Per Subba Rao C. J. Wanchoo	 Sikri	 Ramaswami. Shelat	 Bhargava and Vaidialingam	 JJ. (i) The Common Law rule of construction that the Crown is not	 unless expressly named or clearly intended	 bound by a statute		 was not accepted as a rule of construction throughout India and even in the Presidency Towns	 it was not regarded as an inflexible rule of construction. It was not statutorily recognized either by incorporating it in different Acts or in any General Clauses Act; at the most	 it was relied upon as a rule of general guidance in some parts of the country. The legislative practice establishes that the various legislatures of country provided specifically	 exemptions in favour of the Crown 171 whenever they intended to do so indicating thereby that they did not rely upon any presumption but only on express exemptions. Even those courts that accepted it considered it only as a simple canon of construction and not as a rule of substantive law. In the City of Calcutta there was no universal recognition of the rule of construction in favour of the Crown. The Privy Council	 in Province of Bombay vs Corporation of the City of Bombay	 (1946) L.R. 73 I.A. 27 gave its approval to the rule mainly on concession made by counsel. [180 D G; 183 H; 184 E F; 186 D G] The archaic rule based on the prerogative and perfection of the Crown has no 'relevance to a democratic republic it is inconsistent with the rule of law based on the	 doctrine of equality and introduces conflicts and anomalies. The normal construction	 namely	 that an enactment applies to citizens as well as to State unless it expressly or by necessary implication exempts the State from its operation	 steers clear of all the anomalies and is consistent with the philosophy of equality enshrined in the Constitution. B] If a rule of construction accepted by this Court is inconsistent with the legal philosophy of the Constitution it is the duty of this Court to correct its self and lay down the right rule. This Court must more readily do so in constitutional matters than in other branches of law. [176 B C] Director of Rationing vs Corporation of Calcutta	 ; 		 reversed. Province of Bombay vs Corporation of the City of Bombay	 (1946) L.R. 73 I.A. 271	 held inapplicable. Bengal Immunity Co. vs State of Bihar	 	 referred to. Case law discussed. (ii)Even assuming that the common law rule of construction was accepted as a canon of interpretation throughout India the rule is not "law in force" within the meaning of Article 372 of the Constitution. There is an essential distinction between a law and a rule of construction. A rule of construction adopted to ascertain the intention of the legislature is not a rule of law. [187 D] (iii)The State is not excluded from the operation of section 218 of the Act by necessary implication. The State is not the payer as well as the receiver of the fine	 or the fine	 when levied goes to the municipal fund. Though the expression fine ' is used	 in effect and substance	 section 541 is a mode of realization of the	 fee payable in respect of the licence. The provision for imprisonment in default of fine is only an enabling provision and the court is not bound to direct the imprisonment of the defaulter. [189 D H; 190 A B] Per Bachawat	 J : (i) This Court should have in Director of Rationing and Distribution vs Corporation of Calcutta	 	 refused to recognise the rule that the Crown is not bound by a statute save by express words or by necessary implication. In India the Crown never enjoyed the general prerogative of overriding a statute and 'standing outside it. The doctrine of the general immunity of the Crown from the operation of statutes so far as it is based upon the 'royal prerogative was never imported into India. Nor is there any compelling reason why the courts in India should not give full effect to the general words of a statute on the basis of some artificial rule of construction prevailing in England. The bulk of the Indian legislation proceeds upon the assumption that the Government will be bound unless the contrary is stated. The 172 rule	as rule of construction	 never gained a firm foothold in untilthe Privy Council decision in Province of Bombay vs Municipal Corporation for the City of Bombay	 (1946) L.R. 73 I.A. 271	 in 1946	 till which time there was no settled course of decisions of the Indian courts necessitating or justifying the application of this rule to the construction of Indian statutes; and even in this decision the propriety of applying the rule to Indian legislation was not considered. The imposition of this strict rule of construction by the Privy Council was received very unfavourably in India till this Court 's decision in the Director of Rationing case wherein Province of Bombay was held to have laid down the correct law. But subsequent decisions of this Court disclosed a tendency to relax and soften the rigour of the rule. Further	 in a country having a federal system of government it is difficult to apply the rule of Crown exemption from statutes. This rule was not in force in India and therefore was not "law in force" within the meaning of article 372 of the Constitution. [201 D E; 202 C; 210 A B	 C D; C	 H; 210 H; 211 F] This Court has power to reconsider its previous decisions and this is a fit case where this power should be exercised. [211 E] Director of Rationing vs Corporation of Calcutta	 ; 	 reversed. Province of Bombay vs Municipal Corporation for the City of Bombay	 (1946) L.R. 73 I.A. 271	 held inapplicable. Shivenkata Seetararnanjaneya Rice & Oil Mills vs State of Andhra Pradesh	 ; and Bengal Immunity Co. vs State of Bihar	 	 referred to. Case law discussed. (ii)On a question of construction of a statute no rational distinction can be made between the trading and non trading activities of the State. [210 G] (iii)There is nothing in the Act to indicate that the State should be excluded from the purview of section 218(1) 'requiring the taking out of a licence on payment of the prescribed fee and section 5441(1) providing the remedy for the recovery of fee in face of default. If the State is to be exempt from the application of section 541(1)(b) it would lead to the anomaly that the State is liable to pay the licence fee but the Municipality will have no remedy for the recovery of the fee. Also	 the fact that under section 547(A) the court is competent to direct imprisonment in default of fine is no reason why section 5411 1) (b) should not be applied to the State. The special provisions of section 541(2) indicate that the fine realizable under section 541 is receivable by the Municipality. It follows that the State Government is the payer but is not the receiver of the fine. The fine	 when levied	 is taken by the Municipality in full satisfaction of the demand on account of the licence fee. [212 H; 213B] State of Bihar vs Rani Sonavati Kumari ; 	 relied on. Shah	 J. (Dissenting); (i) The English Common Law rule that the Crown is not	 unless expressly named or clearly intended	 bound by a statute	 is a rule of construction and was settled law in India before the Constitution. [197 F; 198 D] The Common Law of England was adopted in this country subject to local variations and the personal law of the parties and the courts which functioned in the former British India territory were enjoined to cases not governed by any specific statutory rules according to equity and good conscience		 which meant rules of English Common Law 173 in so far as they were applicable to Indian society. Them was practically a consistent course of decisions of the High Courts in India	 prior to the Constitution	 in support of the view	 affirmed by the Judicial Committee in Province of Bombay vs Municipal Corporation of the City of Bombay	 (1946) L.R. 73 I.A. 271	 that the rule that the Crown is not unless expressly named or clearly intended bound by a statute applied to India. It was accepted as a rule of interpretation ofstatutes applicable to all statutes governing state action	 authority or property. A difference may have prevailed in Parts of the territories now comprising theIndian Union. But this is not peculiar to this rule of interpretation adoptedby the Courts in British India. Where uniform statutes do not apply differences do arise and must be determined according to the law and jurisdiction inherited by the courts administering justice. The present case concerns the administration of law in the town of Calcutta which has for more than two centuries been governed by the English Common Law as adopted by the various Acts	 Regulations and finally by the Letters Patent. [191 A D; 192 D E; D F] Director of Rationing and Distribution vs The Corporation of Calcutta	 ; 	 followed. Province of Bombay vs Municipal Corporation of the City of Bom. bay	 L.R. 73 I.A. 271	 applied. State of West Bengal vs Union	 [1964] 1 S.C.R. 371 Srivenkata Seetaramanjaneya Rice & Oil Mills vs State of Andhra Pradesh	 ; 	 Builders Supply Corporation vs Union of India	 ; 	 referred to. Case law referred to. There is no reason to hold that the rule which previously applied to the interpretation of a statute ceased to apply. on the date on which the Constitution came into force. The Constitution has not so fundamentally altered our concept of 'State ' as to abandon the traditional view about State privileges	 immunities and rights because they had a foreign origin and on the supposed theory of equality between the State and its citizens. The guarantee of equal protection clause of the Constitution does not extend to any differential treatment which may result in the application of a special rule of interpretation between the State and the citizens nor has the Constitution predicated in all respects equality in matters of interpretation between the State and its citizens. A State can	 in the interest of public good	 select itself for special treatment. This being so	 there is no reason to suppose that a Statute which was framed on the basis of a well settled rule of pre Constitution days which accorded the State a special treatment in the matter of interpretation. of statutes must be deemed to have a different meaning on the supposition that the Constitution has sought to impose equality between the State and the citizens. [198 H 199 F] The fact that in the Indian federal set up sovereignty is divided between the Union and the States	 and in the application of the rule that the State is not bound by a Statute	 unless expressly named or clearly implied	 conflict between the State enacting a law and the Union		 or another State	 may arise	 does not give rise to any insuperable difficulty which renders the rule inapplicable to the changed circumstances	 for	 it is the State which enacts a legislation in terms general which alone may claim benefit of the rule of interpretation and not any other State. [199 G] (ii)The rule of interpretation being a settled rule is "law in force" within Me meaning of article 372 of the Constitution. A rule is not any 174 the less a rule of law because it is a rule for determination of the intention of the legislature and for its application requires determination of facts and circumstances outside the statute. Acceptance of the proposition that a decision of the highest judicial tribunal before the Constitution	 is law	 does not involve the view that it is immutable. A statue may be repealed	 ' and even retrospectively	 it would then cease to be in 	operation; a decision which in the view of this Court is erroneous may be overruled and may cease to be regarded as law	 but till then it was law in force. [198 D G] (iii)The application of the rule cannot be restricted to cases where an action of the State in its sovereign capacity is in issue. In the context of modem notions of the functions of a welfare State	 it is difficult to regard any particular activity of the State as exclusively trading. [200 A B] (iv)The State of West Bengal was not bound by the provisions relating to the issue of licences for occupation or conduct of a market. [200 F] There is no	 express reference to the State	 nor is there anything peculiar in the nature purpose and object or in the language used in the enactment relating to the issue of licences	 which may suggest that the State must by necessary implication be bound by its provision. [200 E]