Summarize the following court judgment. Appeal No.230 of 1954. Petition No. 276 of 1953. Appeal from the judgment and order dated June 7	 1954	 of the former Pepsu High Court in Civil Misc. No. 97 of 1953. Petition under Article 32 of the Constitution of India for the enforcement of fundamental rights. 731 G.S. Pathak	 Veda Vyasa	 section K. Kapur and J. B. Dadachanji	 for the appellants petitioners. H. N. Sanyal	 Additional Solicitor General of India	R.Ganapathi Iyer	 Raj Gopal Sastri and R. H. Dhebar	 for the respondents. April 28. The judgment of section R. Das C. J.	 Venkatarama Aiyar	 section K. Das and Gajendragadkar JJ. was delivered by Venkatarama Aiyar J. Bose J. delivered a separate judgment. VENKATARAMA AIYAR J. Messrs. Dalmia Dadri Cement Co. Ltd. which is the appellant in Civil Appeal No. 230 of 1954 and the petitioner in Petition No. 276 of 1953	 is a public company engaged in the manufacture and sale of cement at a place called Dadri situate in what was once the independent State of Jind. On April 1	 1938	 one Shanti Prasad Jain	 a promoter of the above company	 obtained certain concessions from the Ruler of Jind under an agreement	 exhibit A	 and as it is this document that forms the basis of the present claim of the appellant	 it is necessary to refer to the	 material terms thereof. Clause (1) of the agreement grants to the licensee	 Shanti Prasad Jain	 the sole and exclusive monopoly right of manufacturing cement in the Jind State and for that purpose he is authorised in Cl. (2) to win and work all quarries	 strata	 seams and beds of kankar	 rorey	 limestone or other like materials ". Under Cl. (7)	 the licence is to last for a period of 25 years with option for successive renewals. Clause (10) requires that a public limited company should be formed before July 21	 1936	 to work the concessions	 and that it should be registered in the Jind State. Under Cl. (11)	 the State is to be allotted 6 per cent. cumulative preference shares fully paid up of the face value of rupees one lack and ordinary shares fully paid up of the total face value of Rs. 50	000 without any payment whatsoever. Then there are provisions for the payment of royalty to the State and sale of cement at concession rates to local consumers. Clause (23) is very material for the present dispute	 and is as follows: 93 732 " The Company shall be assessed to income tax in accordance with the State procedure but the rate of income tax shall always be four per cent. up to a limit of the income of rupees five lacs and five per cent. on such income as is in excess of rupees five lacs. . . Clause (24) grants exemption from export	 import and other duties excepting consmers. Clause (37) provides for settlement of all disputes between the parties by arbitration. In accordance with the terms set out above	 the appellant company was duly incorporated in the Jind State	 and on May 27	 1938	 Shanti Prasad Jain executed in its favour a deed agreeing to transfer all " his rights	 privileges and obligations " under exhibit A. The appellant claims that it has become in this wise entitled as assignee of the licensee to all the benefits granted under exhibit A. The contention was raised by the respondent that the deed dated May 27	 1938	 does not itself purport to assign the rights under the license	 exhibit A but merely agrees to do so	 and that in the absence of a further deed transferring those rights	 the appellant could not claim the rights of assignee. But Cl. (35) expressly provides that " the licensee shall transfer his rights to the proposed Company on its formation "	 and after the appellant was incorporated	 the State had throughout recognised it as the person entitled to the rights and subject to the obligations under the license and realised royalty and levied income tax in accordance with the provisions of exhibit A. This objection was taken for the first time only in the Writ Petition No. 276 of 1953 in this Court. It is stated for the appellant and that is not controverted for the respondent that under the law of Jind State an assignment need not be in writing	 and that being so	 it is open to us to infer such assignment from the conduct of the parties. We must accordingly decide these cases on the footing that the rights under the license	 exhibit A	 dated April 1	 1938	 had become vested in the appellant by assignment. On August 15	 1947	 India became independent	 and on the same date	 the Ruler of Jind signed an Instrument of Accession ceding to the Government of India 733 power to legislate with respect to Defence	 External Affairs and Communications. On May 5	 1948	 eight of the Rulers of States in East Punjab including Jind entered into a Covenant for the merger of their territories into one State	 called the Patiala and East Punjab States Union. For brevity	 this State will hereafter be referred to as the Patiala Union. Article VI of the Covenant on which the appellant relies in support of its claim is as follows: " The Ruler of each Covenanting State shall	 as soon as may be practicable	 and in any event not later than the 20th August	 1948	 make over the administration of his State to the Raj Pramukh; and thereupon	 (a)all rights	 authority and jurisdiction belonging to the Ruler which appertain	 or are incidental to the Government of the Covenanting State shall vest in the Union and shall hereafter be exercisable only as provided by this Covenant or by the Constitution to be framed thereunder; (b)all duties and obligations of the Ruler pertaining or incidental to the Government of the Covenanting State shall devolve on the Union and shall be discharged by it; (c)all the assets and liabilities of the Covenanting State " shall be the assets and liabilities of the Union; and (d)the military forces	 if any	 of the Covenanting State shall become the military forces of the Union. " Article X provides that a Constituent Assembly should be formed as early as practicable	 and that it should frame a Constitution for the State	 and that until the Constitution is so framed	 the Rajpramukh is to have power to make and promulgate Ordinances for the peace and good government of the Union. Under article XVI	 the Union " guarantees either the continuance in service of the permanent members of the public services of each of the Covenanting States on conditions which will be not less advantageous than those on which they were serving on the 1st February	 1948	 or the payment of reasonable compensation or retirement or proportionate pension." 734 In accordance with article VI of the Covenant	 the Rajpramukh of the Patiala Union took over the administration of Jind on August 20	 1948	 and immediately after assumption of office	 he promulgated the Patiala and East Punjab States Union Administration Ordinance No. 1 of section 2005. Section 3 of the Ordinance	 which is material for the present discussion	 is as follows: " As soon as the administration of any covenanting State has been taken over by the Raj Pramukh as aforesaid all Laws	 Ordinances	 Acts	 Rules	 Regulations	 Notifications	 Hidayate Firman i Shahi	 having force of law in Patiala State on the date of commencement of this Ordinance shall apply mutatis mutandis to the territories of the said State and with effect from that date all laws in force in such Covenanting State immediately before that date shall be repealed: Provided that proceedings of any nature whatsoever pending on such date in the courts or offices of any such Covenanting State shall	 notwithstanding anything contained in this Ordinance or any other Ordinance be disposed of in accordance with the laws governing such proceedings in force for the time being in any such Covenanting State." This Ordinance came into force on August 20	 1948. On February 5	 1949	 it was repealed and replaced by Ordinance No. XVI of section 2006	 section 3(a) whereof being in the same terms as section 3 of Ordinance No. 1 of 8. 2005. Article X(1) of the Covenant provided	 as has been mentioned	 for the framing of a Constitution for the Union in the manner provided therein. That	 however did not materialise	 and on November 24	 1949	 the Rajpramukh issued a proclamation accepting the Indian Constitution as that of the Patiala Union	 and thus	 the Union became a Part B State under the Constitution. On April 13	 1950	 the Patiala Union accepted the Federal Financial Integration Scheme	 and became a taxable territory of the Union of India and the Indian Finance Act	 1950	 became applicable to it from April 13	 1950. The position	 therefore	 is that as regards liability to be assessed to income tax 735 which is what we are concerned with in these proceedings	 the law applicable to the appellant for the period prior to August 20	 1948	 was the income tax law of ' Jind	 for the period August 20	 1948	 to April 13	 1950	 the Patiala Income tax Act	 section 2001	 which came into force under Ordinance No. 1 of section 2005 and after April 13	 1950	 the Indian Income tax Act. Civil Appeal No. 230 of 1954 arises out of proceedings for assessment of income tax for the year 1949 1950. By its order dated November 11	 1952	 the Appellate Tribunal has found that the taxable profits of the appellant for the year of account which is the calendar year 1948 was Rs. 1	94	265	 and that finding is not now in dispute. The substantial point now in controversy is as to the rate at which tax should be levied on that amount	 whether it should be what is enacted in the Patiala Income tax Act as contended for the respondent	 or what is provided in Cl. (23) of the agreement	 exhibit A	 as claimed by the appellant. On this question	 the Appellate Tribunal held that the Patiala Union which was a new State that had come into existence as a result of the Covenant was not bound by the agreements entered into previously by the rulers of the Covenanting States	 that the appellant could claim the benefit of that agreement only if the new State chose to recognise it	 " that there had been	 in fact	 no such recognition	 and that	 in consequence	 the tax was leviable as prescribed in the Patiala Income tax Act	 section 2001. On the application of the appellant	 the Tribunal referred under section 66(1) of the Indian Income tax Act	 the following question for the opinion of the High Court: " Whether the asseessee 's profits and gains earned in the calendar year 1948 were assessable for section 2006 (1949 50) at the rates in force according to the Patiala Income Tax Act of section 2001 read with section 3 of the Patiala & East Punjab States Union Administration Ordinance (No. 1 of section 2005)	 as repealed and re enacted in section 3 of the Patiala & East Punjab States Union General Provisions (Administration) Ordinance (No. XVI of 2006)	 or in accordance with clause (23) of the agreement of April	 1938 above referred to	 736 By their judgment dated June 7, 1954, the learned ,Judges of the High Court answered the question against the appellant, but granted a certificate under section 66(A)(2) of the Indian Income tax Act, and that is how Civil Appeal No. 230 of 1954 comes before us. Meantime, proceedings were taken by the Income tax authorities for assessment of tax for years subsequent to 1949 1950, and the dispute again related to the question whether the amount of tax should be determined in accordance with Cl. (23) of exhibit A or the provisions of the Indian Income tax Act, 1922. The Income tax Officer, Rohtak, rejected the contention of the appellant that it was liable to pay tax only in accordance with. exhibit A and passed orders determining the tax under the provisions of the Indian Incometax Act for the year 1950 1951 on April 28, 1952, for 1951 1952 on May 12, 1952, and for 1952 1953 on March 17, 1953. Appeals against these orders have been preferred by the appellant, and they are stated to be pending before the Appellate Assistant Commissioner. On the allegation that the tax as imposed in the orders aforesaid is unauthorised, and that it constitutes an unlawful interference with its rights to carry on business guaranteed under article 19(1)(g), the appellant has filed Petition No. 276 of 1953 for an appropriate writ directing the respondents to levy tax in accordance with the agreement, exhibit A, dated April 1, 1938. In support of this petition, in addition to the contentions raised in Civil Appeal No. 230 of 1954 the petitioner also urges that even if the Union of India is entitled to repudiate the agreement dated April 1, 1938, it has not, in fact, done so, and that it has, on the other hand, recognised it as good and is therefore not entitled now to go back upon it, and that the levy of tax in accordance with the provisions of the Indian Income tax Act is accordingly illegal. As the contentions raised in the appeal and in the petition are substantially identical, they were heard together. Before us, the validity of the assessment of incometax for the year 1949 1950 was challenged by Mr. Pathak on the following grounds: 737 (1)Ordinance No. 1 of section 2005 under which the Patiala Income tax Act Act is sought to be applied to the appellant does not, on its true construction, annul ' the rights granted under exhibit A. (2)If the Ordinance in question is to be construed as having that effect, then it is in contravention of article VI of the Covenant, and is therefore unconstitutional and void. (3)Even apart from the Covenant, the agreement, exhibit A, is binding on the Patiala Union and the impugned Ordinance is bad as infringing it; and (4)the Patiala Union had, in fact, recognised the rights granted under exhibit A and it is therefore binding on it, as if it were a contract entered into by itself. (1)On the first question, the argument of Mr. Pathak is this: The Ruler of Jind was an absolute monarch, and his word was law. The agreement, exhibit A, must therefore be held to be a special law conferring rights on the licensee. Section 3 of Ordinance No. 1 of section 2005 is a general provision extending all laws of the State of Patiala to the territories of the Covenanting States. The rule of construction is well established that general statutes should be interpreted so as not to interfere with rights created tinder special laws. Section 3 of the Ordinance should therefore be construed as not intended to affect the rights conferred under exhibit A. Reliance is placed on the statement of the law in Maxwell 's Interpretation of Statutes, 10th Edn., pp. 176 and 180, and on the observations in Blackpool Corporation vs Starr Estate Co. (1). Now the rule of construction expressed in the maxim generalia specialibus non derogant is well settled and we shall also assume in favour of the appellant that the agreement, exhibit A, is a special law in the nature of a private Act passed by the British Parliament, and that accordingly section 3 of the Ordinance should not be construed, unless the contrary appears expressly or by necessary implication, as repealing the provisions of exhibit A. But ultimately, the question is what does the language of the enactment mean ? Section 3 is quite explicit, and (1)[1922] 1 A. C. 27, 34. 738 it provides that from the date of the commencement of the Ordinance  all laws in force in such Covenanting States immediately before that date shall be repealed "	 and the proviso further enacts that pending proceedings are to be disposed of in accordance with laws in force for the time being	 in the Covenanting States. In the face of this language which is clear and unqualified	 it is idle to contend that Ordinance No. 1 of section 2005 saves the rights of the appellant to the tax concessions under Cl. (23) of exhibit A. (2)It is next contended by Mr. Pathak that if Ordinance No. 1 of section 2005 is to be construed as extinguishing the right to concessions conferred under exhibit A	 then it must be held to be unconstitutional and void. This contention is based on article VI (b) of the Covenant	 which provides that the obligations of the rulers pertaining to or incidental to government of the Covenanting State shall devolve on the Union and be discharged by it. It is argued that the Ruler of Jind had for good and valuable consideration undertaken certain obligations under Cl. (23) of exhibit A with reference to taxation which is a governmental function	 that he had himself scrupulously honoured them so long as he was a Ruler	 and then passed them on under article VI (b) to the new State created under the Covenant	 that the Rajpramukh who was a party to the Covenant and claimed under it was bound by that obligation	 that his power to enact laws is subject under article VI (a) to the obligations mentioned in article VI (b)	 and that the impugned law is	 if it is to be construed as having the effect of abrogating those obligations	 ultra vires his powers under the Covenant and is	 in consequence	 void. In answer to this	 the respondent contends that the Covenant entered into by the rulers is an act of State and that any violation of its terms cannot form the subject of any action in the municipal courts	 that the obligations mentioned in article VI (b) refer not to liabilities under agreements for which there was special provision in article VI (c) but to obligations of the character contemplated by the Instrument of Accession	 and that	 in any event	 the rights granted to the licensee under exhibit A were 739 terminable by the Ruler of Jind at will	 and that	 in consequence	 if the obligation under Cl. (23) devolved on the Raj Pramukh under article VI (b) it did so subject ' to his rights under article VI (a) to terminate it if he so willed	 and that	 therefore	 the impugned law did not violate article VI (b). The question that arises for our decision is whether the Covenant was an act of State. On that	 there can be no two opinions. It was a treaty entered into by rulers of independent States	 by which they gave up their sovereignty over their respective territories	 and vested it in the ruler of a new State. The expression " act of State " is	 it is scarcely necessary to say	 not limited to hostile action between rulers resulting in the occupation of territories. It includes all acquisitions of territory by a sovereign State for the first time	 whether it be by conquest or cession. Vide Vajesingji Joravar Singji and others vs Secretary of State (1) and Thakur Amar Singji vs State of Rajasthan (2). And on principle	 it makes no difference as to the nature of the act	 whether it is acquisition of new territory by an existing State or as in the present case	 formation of a new State out of territories belonging to quondam States. In either case	 there is establishment of new sovereignty over the territory in question	 and that is an act of State. Mr. Pathak did not contest the position that the Covenant in so far as it provided for the extinction of the sovereignty of the rulers of the Covenanting States and the establishment of a new State is an act of State. But he contended that it was much more than that	 that it was also in the nature of a Constitution for the new State in the sense that it is a law under which all the authorities of the new State including the Raj Pramukh had to act. In support of this contention he referred to article X	 which provided for the convening of a Constituent Assembly for the framing of the Constitution	 and argued that the Articles of the Covenant which provided for the administration of the State by the Rajpramukh were in the nature of an interin (1)(1924) L. R. 51 I. A. 357	 360. 94 (2) ; 	 335. 740 Constitution. He also relied on article XVI	 which guaranteed the rights of the permanent members of the public services in the Covenanting States to continuance in service	 and contended that this could not be regarded as an act of State but only as a law relating to the administration of the new State. In this view of the Covenant	 he argued	 article VI must be held to be a constitutional provision enacted for the protection of private rights	 that it was	 in conse quence	 binding on the ruler of the new State	 and that the municipal courts were competent to grant appropriate reliefs for the breach thereof. This argument proceeds	 in our view	 on a misconception as to what is an act of state and what is a law of the State conferring rights on the subject	 or	 as the learned counsel for the appellant termed it	 Constitution of the State. When the sovereign of a Statemeaning by that expression	 the authority in which the sovereignty of the State is vested	 enacts a law which creates	 declares or recognises rights in the subjects	 any infraction of those rights would be action able in the courts of that State even when that infraction is by the State acting through its officers. It would be no defence to that action that the act complained of is an act of state	 because as between the sovereign and his subjects there is no such thing as an act of state	 and it is incumbent on his officers to show that their action which is under challenge is within the authority conferred on them by law. Altogether different considerations arise when the act of the sovereign has reference not to the rights of his subjects but to acquisition of territories belonging to another sovereign. That is a matter between independent sovereigns	and any dispute arising therefrom must be settled byrecourse not to municipal law of either States but to diplomatic action	 and that failing	 to force. That is an act of state pure and simple	 and that is its character until the process of acquisition is completed by conquest or cession. Now	 the status of the residents of the territories which are thus acquired is that until acquisition is completed as aforesaid they are the subjects of the ex sovereign of those territories 741 and thereafter they become the subjects of the new sovereign. It is also well established that in the new set up these residents do not carry with them the	 rights which they possessed as subjects of the ex sovereign	 and that as subjects of the new sovereign	 they: have only such rights as are granted or recognised by him. Vide Secretary of State for India vs Bai Rajbai (1)	 Vajesingji Joravar Singji and others vs Secretary of State (2)	 Secretary of State vs Sardar Rustam Khan (3) and Asrar Ahmed vs Durgah Committee	 Ajmer (4). In law	 therefore	 the process of acquisition of new territories is one continuous act of state terminating on the assumption of sovereign powers de jure over them by the new sovereign and it is only thereafter that rights accrue to the residents of those territories as subjects of that sovereign. In other words	 as regards the residents of territories which come under the dominion of a new sovereign	 the right of citizenship commences when the act of state terminates and the two therefore cannot co exist. It follows from this that no act done or declaration made by the new sovereign prior to his assumption of sovereign powers over acquired territories can quoad the residents of those territories be regarded as having the character of a law conferring on them rights such as could be agitated in his courts. In accordance with this principle	 it has been held over and over again that clauses in a treaty entered into by independent rulers providing for the recognition of the rights of the subjects of the ex sovereign are incapable of enforcement in the courts of the new sovereign. In Cook vs Sprigg (5)	 the facts were that the ruler of Pondoland in Africa had granted certain concessions in favour of the appellants and subsequently ceded those territories to the British Government. The latter having declined to recognise those concessions	 the appellants sued for a declaration of their rights thereunder	 and the question was whether they had a right of action in respect of what was an act of State. One of the contentions (1) (1015) L.R. 42 I.A. 229. (3) (1941) L.R. 68 I.A. 109. (2) (1924) L. R. 51 T.A. 357	 360. (4) A.I.R. 1947 P.C. 1. (5) 	578. 742 urged on their behalf was that the ruler of Pondoland had at the time of cession of his territories expressed his desire to the British Government that the concessions in favour of the appellants should be recognised and that	 in consequence	 the appellants had the right to enforce them against the new Government. In rejecting this contention	 the Lord Chancellor observed: " The taking possession by Her Majesty	 whether by cession or by any other means by which sovereignty can be acquired	 was an act of state and treating Sigcau as an independent sovereign which the appellants are compelled to do in deriving title from him. It is a well established principle of law that the transactions of independent States between each other are governed by other laws than those which municipal courts administer. " "It is no answer to say that by the ordinary principles of international law private property is respected by the sovereign which accepts the cession and assumes the duties and legal obligations of the former sovereign with respect to such private property within the ceded territory. All that can be properly meant by such a proposition is that according to the well understood rules of international law a change of sovereignty by cession ought not to affect private property	 but no municipal tribunal has authority to enforce such an obligation. And if there is either an express or a well understood bargain between the ceding potentate and the Government to which the cession is made that private property shall be respected	 that is only a bargain which can be enforced by sovereign against the sovereign in the ordinary course of diplomatic pressure." In Vajesingji Joravar Singji and others vs Secretary Of State for India (1)	 the dispute related to the title of the appellants to certain lands situated in the Panch Mahals. This area formed at one time part of the dominion of the Scindias of Gwalior	 and it was ceded to the British Government by treaty on December 12	 1860. Clauses (2) and (3) of the treaty provided for (1)(1924) L.R. 51 I.A. 357	 360. 743 the recognition by the new sovereign of rights of the residents under existing leases	 jagirs and the like. The complaint of the appellants was that in 1907 the British Government had proposed to lease the lands to them on terms which infringed their proprietary rights	 and that this was in violation of the rights which had been guaranteed under Cls. (2) and (3) of the treaty	 and was	 in consequence	 bad. The answer of the Government was that the treaty in question was an act of state and conferred no rights on the appellants. In upholding this contention	 Lord Dunedin observed: " When a territory is acquired by a sovereign state for the first time that is an act of state. It matters not how the acquisition has been brought about. It may be by conquest	 it may be by cession following on treaty	 it may be by occupation of territory hitherto unoccupied by a recognised ruler. In all cases the result is the same. Any inhabitant of the territory can make good in the municipal courts established by the new sovereign only such rights as that sovereign has	 through his officers	 recognized. Such rights as he had under the rule of predecessors avail him nothing. Nay more	 even if in a treaty of cession it is 	stipulated that certain inhabitants should enjoy certain rights	 that does not give a title to those inhabitants to enforce these stipulations in the municipal courts. The right to enforce remains only with the high contracting parties. " In Hoani Te Heuheu Tukino vs Aotea District Maori Land Board (1)	 the question arose with reference to the Treaty of Waitangi entered into by the British Government with the native chiefs of New Zealand in 1840. Under cl. (1) of the Treaty	 there was a complete cession by the chiefs of all their rights and powers of sovereignty. Clause (2) guaranteed to the chiefs	 the tribes and the respective families and individuals certain rights in lands	 forests and fisheries. In 1935	 the Legislature of New Zealand enacted a law	 the provisions of which were impugned as ultra vires on the ground that they infrigned the rights (1) 744 protected by cl. (2) of the Treaty of Waitangi. In holding that the rights under the Treaty furnished no ground for action in the civil courts	 Viscount Simon L. C. referred to the decision in Vajesingji Joravar Singji and others vs Secretary of State (1) and observed : " So far as the appellant invokes the assistance of the court	 it is clear that he cannot rest his claim on the Treaty of Waitangi	 and that he must refer the court to some statutory recognition of the right claimed by him." The result of the authorities then is that when a treaty is entered into by sovereigns of independent States whereunder sovereignty in territories passes from one to the other	 clauses therein providing for the recognition by the new sovereign of the existing rights of the residents of those territories must be regarded as invested with the character of an act of state and no claim based thereon could be enforced in a court of law. It must follow from this that the Covenant in question entered into by the rulers of the Covenanting States is in its entirety an act of state	 and that article VI therein cannot operate to confer on the appellant any right as against the Patiala Union. This conclusion becomes all the more impregnable when it is remembered that the Covenant was signed by the rulers on May 5	 1948	 whereas the new state came into being only on August 20	 1948. In the decisions cited above	 the sovereign against whom the obligations created by the treaty were sought to be enforced was the very sovereign who entered into that treaty or his successor. But here	 the ruler of the Patiala Union against whom article VI is sought to be enforced was not a party to the Covenant at all	 because that State had not come into existence on that date. The person who signed the Covenant was the ruler of the State of Patiala which was one of the Covenanting States	 but that State as well as the seven other States which entered into the Covenant stood all of them dissolved on August 20	 1948	 when the new Patiala Union came into being. The new State could not and did not enter into any covenant before August 20	 1948	 and therefore	 in strictness	 it cannot be (1) (1924) L.R. 511. A. 357	 360. 745 held to be bound by article VI	 to which it was not a party. Considerable emphasis was laid for the appellant on article XVI of the Covenant under which the Union guaranteed the continuance of the service of permanent members of public services	 and this 'was relied on as showing that the rights of the subjects of the quondam States were intended to be protected. This argument is sufficiently answered by what we have already observed	 namely	 that a clause in a treaty between high contracting parties does not confer any right on the subjects which could be made the subject matter of action in the courts	 and that the Patiala Union is not bound by it	 because it was not a party to the Covenant. It should	 however	 be mentioned that after the formation of the new State oil August 20	 1948	 the first legislative act of the sovereign was the promulgation of Ordinance No. 1 of section 2005	 and section 4 thereof expressly recognises the rights of the permanent members of public services. That undoubtedly is a law enacted by the sovereign conferring rights on his subjects and enforceable in a court of law	 but at the same time the enactment of such a law serves to emphasise that the Articles have not in themselves the force of law and were not intended to create or recognise rights. In this connection	 reference should also be made to cl. XVI of the Ordinance which enacts that " the provisions of articles XV and XVII of the Covenant relating to the bar of certain suits and proceedings shall have the force of law. " In support of his contention that article VI of the Covenant is to be regarded as a Constitutional provision	 counsel for the appellant relied on certain passages in the judgment of this Court in Thakur Amar Singji vs State of Rajasthan (1) at pp. 313 and 315 wherein a similar covenant entered into by the rulers of Rajasthan was described as a Constitution. Apart from the use of the word " Constitution "	 we find nothing in these passages which has any bearing on the point now under consideration. There	 the question was as regards the vires of a law enacted by (1)[1955] 2 S.C.R. 303. 746 the Rajpramukh of Rajasthan	 and that depended on whether he was the authority in whom the legislative authority of the State was vested within article 385. This Court held that under the Covenant it was the Rajpramukh who had the power to enact laws	 and that the Ordinance issued by him was therefore valid	 and it was in that context that the covenant was referred to as a Constitution. We had not to consider there the question whether the Covenant was an act of state	 or whether it was a law conferring on the citizens of the defunct States rights which were enforceable in a court of law. No such question arose for decision	 and therefore the description of the Covenant as a Constitution cannot be read as importing a decision that it is a law conferring rights and not an act of state. In the result	 we hold that the Covenant is in whole and in parts an act of state	 that article VI therein does not operate to confer any rights on the subjects of the Covenanting States as against the sovereign of the new State constituted thereunder	 and that Ordinance No. 1 of section 2005 is	 in consequence	 not open to attack as being a violation of article VI. (3)We shall now consider the contention of the appellant that even apart from article VI of the Covenant	 the impugned Ordinance No. 1 of section 2005 is bad in so far as it annuls rights granted by the Ruler of Jind under the agreement dated April 1	 1938. It was argued that exhibit A was not a mere concession which could be withdrawn by the sovereign at his will and pleasure	 but that it was an agreement entered into for valuable consideration and creating mutual rights and obligations	 that the appellant had	 acting on the agreement	 allotted to the State shares of the value of Rs. 1	50	000 without payment and had incurred considerable expense in working the concessions	 and that	 therefore	 it was not open to the Patiala Union to go back upon it. The decisions in The Piqua Branch of the State Bank of Ohio vs Knoop (1) and Home of the Friendless vs Rouse (2) were relied on as authorities for the proposition that a State is not competent to revoke a grant made by it for consideration. (1) ; 	 (2) (1869) 19 L. Ed 495. 747 In The Piqua Branch of the State Bank of Ohio vs Knoop (1)	 a law of the State of Ohio of the year 1845 had provided for the incorporation of Banks and it contained provisions as to the taxes payable by them to the State and the mode of payment. In 1851 another Act was passed	 the effect of which was to increase the tax payable and the validity of this Act was questioned by a Bank incorporated under the Act of 1845. It was held by the majority of the Court that the Act of 1845 was a legislative contract	 and that the State Legislature was not competent to impair the rights which had been acquired under that contract. In Home of the Friendless V. Rouse (2)	 a Society called the Home of the Friendless was established under a charter granted by the State of Missouri. The charter had provided that the properties of the Society shall be exempt from taxation. Subsequently	 the State proposed to withdraw the concession and impose tax. It was held by the Supreme Court of the United States that the charter was a contract entered into between the State and the Society	 and that there was no power in the State to go behind it. Now	 it should be observed that the decisions cited above were given on section 10 of article 1 of the American Constitution that " no State shall pass a law impairing the obligations of contracts ". There is	 in our Constitution	 no similar provision protecting contractual rights	 and it would therefore be unsafe to rely on American authorities in deciding on the validity of legislation which interferes with rights under contracts. And moreover	 we are dealing with a contract entered into by a sovereign	 whose powers were not subject to any constitutional limitation	 and whose word was	 as contended for the appellant	 law. But apart from this	 there is an obvious reason why the above decisions have no application to the present controversy. The point for decision there was whether a State which had entered into a contract with its subjects conferring rights on them was entitled to enact a law abridging or abrogating those rights	 (1) ; (2) ; 95 748 and the answer was in the negative. But here	 the 	impugned law is that of the Patiala Union and the contract which it affects is not a contract entered into by it but by the Ruler of Jind and unless it can be established that the obligations of the Ruler have devolved on the sovereign of the Patiala Union	 the question whether he could repudiate obligations undertaken by him cannot arise. That would have arisen for consideration if article VI had the effect of imposing obligations on him. But on our finding that that is not its effect	 there is no scope for the contention that the impugned Ordinance is bad as involving breach of contractual obligations	 which were entered into by the Patiala Union	 or which devolved on it. (4)Lastly	 we have to deal with the contention of Mr. Pathak that the Patiala Union had affirmed the agreement	 exhibit A	 that	 in consequence	 it was bound by it as if it had itself entered into it	 and that the liability of the appellant to income tax should therefore be determined in accordance with Cl. (23) thereof. This contention would be irrefragable if the Patiala Union had	 as a fact	 affirmed the agreement. But has that been established ? It has been already observed that the rights of the appellant under exhibit A would become enforceable only if the new State had accorded recognition to them	 and what is requisite	 therefore	 is a declaration or conduct of the Patiala Union subsequent to its formation which could be regarded as amounting to affirmation of exhibit A. Of that	 there is no evidence whatsoever. On the other hand	 the first act of the Rajpramukh after assumption of office by him was the promulgation of Ordinance No. 1 of section 2005	 the effect of which was to sweep away the rights of the appellant under Cl. (23) of exhibit A. It was argued that article VI of the Covenant would at least be valuable evidence from which affirmance of those rights could be inferred. That is so ; but that inference must relate to act or conduct of the new State	 and that can only be after its formation on August 20	 1948. If there were any acts of the new State which were equivocal in character	 it would have been possible to hold in the light of article VI of the 749 Covenant that its intention was to affirm the concessions in Cl. (23) of exhibit A. But the act of the new. sovereign immediately after he became in titulo was the application of the Patiala State laws including the Patiala Income tax Act to the territories of Jind involving negation of those rights. It was said that the levy of income tax for 1948 1949 was made in accordance with exhibit A	 but that relates to a period anterior to the formation of the new State and is within the saving enacted in the proviso to section 3 of the Ordinance. The appellant has failed to substantiate his plea that there has been affirmance of Cl. (23) of exhibit A by the Patiala State Union	 and this point also must be found against it. All the contentions urged in support of the appeal fail	 and it must therefore be dismissed with costs. Coming next to Petition No. 276 of 1953	 in addition to the contentions already dealt with	 the petitioner urged that whatever its rights under the law prior to the Constitution	 when once it came into force it conferred on the citizens certain fundamental rights	 that the tax concessions which the petitioner had under the agreement	 exhibit A	 were rights to property and they were protected by article 19(1)(f)	 and that it was entitled to seek redress under article 32 of the Constitution when those rights were violated. The decision in Virendra Singh and others vs The State of Uttar Pradesh (1) is relied on in support of this position. This argument assumes that there were in existence at the date when the Constitution came into force	 some rights in the petitioner which are capable of being protected by article 19(1)(f). But in the view which we have taken that the concessions under Cl. (23) of exhibit A came to an end when Ordinance No. 1 of section 2005 was promulgated	 the petitioner had no rights sub sisting on the date of the Constitution and therefore there was nothing on which the guarantees enacted in article 19(1)(f) could operate. The petition must therefore be dismissed on this short ground. In this view	 it is unnecessary to express any opinion on the soundness of the contention based on article 295 which was (1) [1955] I S.C.R. 415. 750 urged in support of the petition	 or on the scope of article 363. The petitioner will pay the costs of the respondents. BOSE J. I agree	 but want to reserve my opinion on a point that does not arise here but which the ratio of my learned brother 's judgment will cover unless the reservation that I make is set out. If I judge aright	 international opinion is divided about the effect that a change of sovereignty has on rights to immoveable property. The English authorities hold that all rights to property	 including those in real estate	 are lost when a new sovereign takes over except in so far as the new sovereign chooses to recognise them or confer new rights in them. But that	 I gather	 is not the view of the International Court of Justice. According to one of its opinions	 which I have quoted at p. 426 of Virendra Singh vs State of Uttar Pradesh private rights acquired under existing law do not cease on a change of sovereignty." Certain American cases take the same view though they can be distinguished on the facts. But this view	 as I understand it	 does not extend to personal rights	 such as those based on contract	 nor	 in any event	 does the new sovereign assume any obligations of the old State in the absence of express agreement. I have referred to this at p. 427. In any event	 whether I am right in thinking that that is what I might call the international view	 I would agree that for our 	country that is	 and should be	 the law so far as per sonal rights are concerned. In the present case	 in so far as the right is claimed on the basis of contract	 it would fall to the ground on any view; and in so far as it is not founded on contract	 it is an obligation that is sought to be fastened on the new State. There is no contract between the new State and the appellant	 so there also he is out of court; and even if there was some agreement or understanding between the high contracting parties	 it cannot be enquired into	 or enforced	 by the municipal (1)[1955] 1 section C. R. 415. 751 courts of the new State. So I agree that	 so far as this case is concerned	 the appellant must fail. But my	 learned brother 's judgment is grounded to ' a large extent on the views of the English courts which do not draw the distinction that I am drawing here. I therefore want to make it clear that this decision must not be used as a precedent in a case in which rights to immoveable property are concerned. Without in any way committing myself to one view or the other	 as at present advised	 I feel it may be a pity for us to disregard the trend of modern international thought and continue to follow a line of decisions based on the views of an older Imperialism	 when we are not bound by them and are free to mould our own laws in the light of modern thought and conceptions about rights to and in immoveable property. But in so far as the present case is concerned	 I agree that the appeal and the petition under article 32 should both be dismissed. Appeal and petition dismissed.

The appellant company which was incorporated in 1938 in the erstwhile State of Jind obtained certain concessions from the Ruler of the State under an agreement dated April 1	 1938	 which	 inter alia	 provided that the State was to be allotted certain shares in the company without any payment and as regards income tax the company was to be assessed at concessional rates. On May 5	 1948	 the Ruler of jind along with the Rulers of seven other States entered into a Covenant for the merger of their territories into one State	 Article VI of the Covenant provided	 inter alia	 that the Ruler of the Covenanting State shall make over the administration of his State to the Rajpramukh of the new State and that all duties and obligations of the Ruler of the Covenanting State shall devolve on the New State and shall be discharged by it. In accordance with that Article the Rajpramukh took over the administration of jind on August 20	 1948	 and immediately after assumption of office promulgated Ordinance No. 	 by section 3 of which all laws in force in the State of Patiala were made applicable mutatis mutandis to the territories of the New State and that all laws in force in the Covenanting States stood repealed. On November 24	 1949	 the Rajpramukh issued a proclamation accepting the Constitution of India and on April 13	 1950	 the New State became a taxable territory of the Union of India. 730 The result of the constitutional changes was that the law relating to income tax applicable to the appellant	 for the period prior to August 20	 1948	 was that of Jind	 for the period August 20	 1948	 to April 13	 1950	 that of the Patiala Income tax Act and after April 13	 1950	 the Indian Income tax Act ; but the appellant contended that the income tax should be levied on him as provided in the agreement entered into with the Ruler of jind	 dated April 1	 1938: Held	 (1) that section 3 Of the Ordinance No. on its true construction extinguished the right to tax concessions conferred on the appellant under the agreement dated April 1	 1938	 and that the appellant cannot rely on that agreement after August 20	 1948. (2)The Covenant dated May 5	 1948	 entered into by the Rulers of the States	 is in whole and in parts an act of State and Article VI cannot be relied on by the appellant for the enforcement of the rights conferred on him under the agreement with the Ruler of jind as against the Rajpramukh of the new State	 Per section R. Das C. J.	 Venkatarama Aiyar	 section K. Das and Gajendragadkar JJ. When a treaty is entered into by sovereigns of independent States whereunder sovereignty in territories passes from one to the other	 clauses therein providing for the recognition by the new sovereign of the existing rights of the residents of those territories must be regarded as invested with the character of an act of State and no claim based thereon could be enforced in the municipal courts established by the new sovereign unless those rights have been recognised by him. Secretary of State for India vs Bai Ralbai	 (1915) L. R. 42 I. A. 229	 Vajasingji Joravarsingji and others vs Secretary of State	 (1924) L. R. 51 1. A. 357	 Sccretary of State vs Sardar Rustam Khan	 (1941) L. R. 68 1. A. 109	 Cook vs Sprigg	 and Hoani Te Heuheu Tukino vs Aotea District Maori Land Board 	 relied on. Per Bose J. International opinion is divided about the effect that a change of sovereignty has on rights to immoveable property and this decision must not be used as a precedent in a case in which rights to immoveable property are concerned.