Judgment Case ID: 3894

Judgment:
Civil Appeal No 12 of 1965. From the Judgment and Decree dated 29 4 1965 of the Rajasthan High Court in D. B. Civil Misc. Case No. 67 of 1965. B. D. Sharma for the Appellant. section N. Kacker	 Sol. Genl.	 U. R. Lalit and Girish Chandra for Respondent No. l. section M. Jain for Respondent No. 2 The Judgment of the Court was delivered by KOSHAL	 J. The facts forming the background to this appeal by certificate granted by the High Court of Rajasthan against its judgment dated the 29th April 1968	 in so far as they are undisputed	 may be stated in some detail. On the 28th February 1948	 the Rulers of the erstwhile States of Alwar	 Bharatpur	 Dholpur and Karauli entered into a Covenant (hereinafter referred to as the Matsya Covenant) agreeing to merge their States into one State known as the United State of Matsya which was to come into being on the 1st of April 1948 with the Ruler of Dholpur as its Raj Pramukh. Article VI of the Covenant provided that the Ruler of each Covenanting State shall	 as soon as may be practicable and in any event not later than the 15th March	 1948	 make over the administration of his State to the Raj Pramukh and that thereupon all rights	 authority and jurisdiction belonging to such Ruler which appertained or were incidental to the Government of his State. shall vest in the United State of Matsya. 65 Article Xl of the Covenant provided for the private properties of the Ruler and ran thus: "1. The Ruler of each Convenanting State shall be entitled to the full ownership	 use and enjoyment of all private	 properties (as distinct from State properties) belonging to him on the date of his making over the administration of that State to the Raj Pramukh. He shall furnish to the Raj Pramukh before the 1st May	 1948	 an inventory of all the immovable properties	 securities and cash balances held by him .16 such private property. If any dispute arises as to whether any item of property is the private property of the Ruler or State property it shall be referred to such person as the Government of India may nominate and the decision of that person shall be final and binding on all parties concerned. " The United State of Matsya came into being as stipulated in the Matsya Covenant on the 1st of April 1948 and during the same month the Ruler of Alwar	 who is the appellant before us	 furnished to the Raj Pramukh an inventory of all the immovable properties	 securities and cash balances held and claimed by him as his private properties. On the 11th of April 1948	 the Rulers of ten States	 namely	 Banswara	 Bundi	 Dungarpur	 Jhalawar	 Kishengarh	 Kotah	 Mewar	 Partabgarh	 Shahpura and Tonk entered into a Covenant agreeing to merge them into one State named the United State of Rajasthan. That Covenant was superseded by another dated the 10th of March 1949 (hereinafter called the Rajasthan Covenant) through which the United State of Rajasthan was to consist of the said ten States as also of four others	 namely	 Bikaner	 Jaipur	 Jaisalmer 	 and Jodhpur	 with the Ruler of Jaipur as the Raj Pramukh. Clause (c) of Article I of the Rajasthan Covenant defined the expression "new Covenanting State" to mean any of the said four States. Article II of the Covenant last mentioned provided that the United State of Rajasthan would include any other State	 the Ruler of which entered into an agreement with the Raj Pramukh	 with the approval of the Government of India? to the integration of that State with the United State of Rajasthan Article XII of the Rajasthan Covenant provided: "(1) The Ruler of each Covenanting State shall be entitled to the full ownership	 use and enjoyment of all private properties (as distinct from State properties)	 belonging to 66 him on the date of his making over the administration of that State to the Raj Pramukh of the former Rajasthan state or as the case may be	 to the Raj Pramukh of the United State under this Covenant. " (2) If any dispute arises as to whether any item of property is the private property of the Ruler of a Covenanting State other than a new Covenanting State	 or is State pro perty	 it shall be referred to such person as the Government of India may nominate in consultation with the Raj Pramukh	 and the decision of that person shall be final and binding on all parties concerned: "Provided that no such dispute shall be so referable after the first day of May	 1949. "(3) The private properties of the Ruler of each new Covenanting State shall be as agreed to between the Government of India in the States Ministry and the Ruler concerned	 and the settlement of properties thus made shall be final. " On the 1st of May 1949	 the Rulers of the States of Alwar	 Bharatpur	 Dholpur and Karauli which were the constituent States of the United State of Matsya	 entered into an agreement (hereinafter called the Amending Agreement) with the Raj Pramukh of the United State of Rajasthan merging with four States into it with effect from the 15th of May 1949 in abrogation of the Matsya Covenant. While subscribing to the Amending Agreement the Ruler of Dholpur acted not only in his capacity as such but also as the Raj Pramukh of the United State of Matsya. Article IV of that Agreement effected amendments in the Rajasthan Covenant so as to make it applicable to the said four States with effect from the date last mentioned. No charge	 however	 was made in the provisions of clause (c) of Article I of Article XII of the Rajasthan Covenant. On the 14th of September 1949	 Mr. V. P. Menon of the Ministry of States	 Government of India	 wrote the following letter to the Ruler of Alwar: "My dear Maharaja Sahib	 "Your Highness will recall that the inventory of immovable properties	 securities and cash balances furnished by Your Highness in accordance with Article	 XI of the Covenant for the formation of the United State of Matsya was discussed with Your Highness at New Delhi on the 9th and 10th April	 1949. I now forward for Your Highness 's information a 67 copy of the final inventory of Your Highness 's private properties. It has the approval of the Government of India in the Ministry of States. The following claims of Your Highness and the counter claims of the former Matsya Government are still under consideration and the decision will be communicated to Your Highness as soon as possible. (1) cash balance of the Alwar State treasury; (2) claim for Rs. 4	82	520 as arrears of Privy Purse of Your Highness for 6 years from 1936 37 to 1942 43. Your Highness will appreciate that the settlement of the inventory is an integral part of an over all agreement in respect of all outstanding matters of dispute and does not stand by itself. "With kind regards	 "Yours sincerely	 Sd/ "(V. P. Menon)" This letter was accompanied by a copy of the "final ' inventory which listed 32 items. Reproduced below is the item at Serial No. 1 of that inventory: "section Description of property. Decision of the State No Ministry. City Palace including adjoining building. Ancestral. The portion of the building at present in use by the State for administrative purposes or for Museum and Imperial Bank will continue to be so used till such time as required. The requirements of the State in future will not be of the same order as today and every effort will be made to release the accommodation at present occupied in the Zenana & Mardana Mahals at the earliest practicable date. The State will bear the maintenance cost of the portions used by it. Any addition or alteration in the portion used by the State will require the prior consent of His Highness and should be carried out at State expense. " 68 Thereafter	 correspondence went on between the Ministry of States and the Ruler of Alwar and on the 24th September 1952 the later received from the former a written communication dealing with 26 items of properties. The opening clause of Para 2 of the letter stated: "2. The Government of India have carefully considered all the outstanding questions in respect of your High Courts private properties	 in consultation with the Rajasthan Government	 and their decisions in respect thereof are as follows: " The description of each item covered by the letter was followed by the decision in respect thereof That part of the letter which deals with item 26 is set down below: "(26) City Palace including adjoining buildings: The City Palace with the adjoining buildings	 comprising of the Jagir office	 Central Record	 lmperial Bank	 Treasury	 Gandhi National School etc. will be your Highness 's ancestral property. The secretariat building will however be State 1) property. This decision was reiterated in an office Memorandum issued by the Government of Rajasthan in the Political Department on the 30th of December 1952. Through a letter dated the 14th of October 1959 proceeding from his Private Secretary and addressed to the Chief Secretary	 Ministry of Home Affairs	 Government of India. the Ruler of Alwar claimed rent for three properties known as the Secretariat building	 Daulat Khana building and Indra Viman Station adjoining the City Palace and the bungalow at Sariska	 which were in the occupation of the Rajasthan Government. The claim was made on the ground that all the four properties had been declared to be the private properties of the Ruler in the inventory appended to the letter dated the 14th September 1949 mentiond above. The claim was rejected by the Ministry of Home Affairs which asserted in its letter dated the 24th of December 1959 that the four properties in question had not been recognized as the private properties of the Ruler. The claim was reiterated by the Ruler through a letter issued by Shri Gopesh Kumar Ojha	 his Legal & Financial Adviser	 but the name was again turned down by the Ministry of Home Affairs through their letter dated the 6th/8th of December 1960 in which the position taken was: "The Statement regarding the extent of your Private Property rights in the City Palace area made in our letter dated 24 12 59 are based upon the decision reached in March 1952 after discussion with your Highness and we regret that they cannot now be reopened." 69 2. It was in the above background that the Ruler of Alwar filed two suits	 being suits Nos. 4 and 5 of 1963	 in the court of the District Judge	 Alwar. In Suit No. 5 the prayer made was that the three properties known as the Secretariat building	 Daulat Khana building and Indra Viman Station be declared to be the private properties of the plaintiff and that the State of Rajasthan be ejected therefrom	 or	 in the alternative	 be ordered to pay rent at a specified rate. A decree for 36	000% was also claimed for mesne profits. In suit No. 4 of 1963	 the Claim was that the plaintiff was entitled to rent or mesne profits in respect of a building forming part of the Mardana Palace. Both suits were resisted by the Union of India and the State of Rajasthan who were joined as the two defendants to each of them and it was claimed inter alia that the provisions of article 363 of the Constitution of India were a complete bar to their maintainability. The two suits were transferred by me High Court of Rajasthan to itself and the question of their maintainability was mooted before it with reference to the provisions of article 363 of the Constitution 1 which states: (1) Notwithstanding anything in this Constitution but subject to the provisions of article 143	 neither the Supreme Court nor any other court shall have jurisdiction in any dispute arising out of any provision of a treaty	 agreement	 covenant	 engagement	 sanad or other similar instrument which was entered into or executed before the commencement of this Constitution by any Ruler of Indian State and to which the Government or the Dominion of India or any of its predecessor Governments was a party and which has or has been continued in operation after such commencement	 or in any dispute in respect of any right accruing under or any liability or obligation arising out of any of the provisions of this Constitution relating to any such treaty	 agreement	 covenant	 engagement	 sanad or other similar instrument. (2) In this article (a) "Indian State" means any territory recognised before the commencement of this Constitution by His Majesty or the Government of the Dominion of India as being such a State; and (b) "Ruler" includes the Prince	 Chief or other per son recognised before such commencement by 70 His Majesty or the Government of the Dominion of India as the Ruler of any Indian State. The High Court proceeded to determine whether the dispute in suit No. 5 of 1963 was one arising out of an agreement such as fell within the ambit of article 363 (as was contended by the defendants) or was merely a one sided decision of the Government of India and	 therefore	 outside the purview of the article as was asserted by the plaintiff. It held that the "decisions" contained in the latter dated the 14th of September 1949 had really resulted from an agreement between the Ministry of States and the plaintiff	 that the extent of the building adjoining the City Palace was not to be found with precision in the inventory appended to the said letter	 that consequently there was a real dispute between the parties whether the suit property was included in the expression "adjoining building" and that the adjudication of such a dispute was barred by the provision of article 363 of the Constitution. Suit No. 5 of 1963 was	 therefore	 dismissed	 but with no order as to costs. In regard to suit No. 4 of 1963	 however	 the High Court held that the property in dispute was clearly a part of the City Palace itself as it was comprised in the Mardana Mahal that the dispute was altogether illusory in view of the fact that right up to the 8th of December 1960	 the Government of India had been taking the stand that the disputed property was the private property of the plaintiff	 that the dispute was consequently not barred by the provisions of article 363 of the Constitution	 and that the suit	 there fore	 deserved to be decided by the District Judge on merits. In the result	 suit No. 4 of 1963 was remitted to the trial court for decision according to law. It is the judgment of the High Court in suit No. S of 1963 alone that is challenged in this appeal. Mr. B. D. Sharma	 learned Counsel for the appellant Ruler	 has vehemently contended that the letter dated the 14th December 1949 was not the result of an agreement between the plaintiff and the Government of India and that	 on the other hand	 it was a decision arrived at in pursuance of clause (3) of Article XI of the Matsya Covenant. In support of this contention it was pointed out that the letter was issued as a sequel to the inventory furnished by the plaintiff under clause (2) of that Article and that the operative part of the inventory appended to the letter is headed "decision of the States Ministry" which	 according to learned Counsel	 clearly negatives an agreement. It was further urged that even the Rajasthan Covenant did not envisaged any agreement in so far as the plaintiff was concern cd because he was not the Ruler of a "new Covenanting State" with 71 in the meaning of that expression as used in clauses (2) and (3) of Article XII thereof	 that it was clause (2) of that Article which governed him and which again provided for a decision being given on disputes relating to properties and that the letter dated 14th September 1949 must still be construed as a decision if the Matsya Covenant was held to be inapplicable. A careful examination of the material on the record	 however	 clearly makes out that the contention is without substance as we shall presently show. It is no doubt true that the plaintiff had furnished the inventory of the properties held by him in accordance with Article XI of the Matsya Covenant as is stated in the opening paragraph of the letter dated the 14th of September 1949. It further cannot be gain said that the third column of the inventory to that letter was headed "decision of the State Ministry". These two factors	 without more	 might have gone a long way to support the case propounded on behalf of the plaintiff	 but they are sought to be used out of context as is clear from a perusal of the entire letter from which it can be safely spelt out that the so called "decision" was nothing but an agreement arrived at between the Government of India and the plaintiff. It is pertinent that the letter mentions that the inventory furnished by the plaintiff was discussed with him at New Delhi on the 9th and 10th of April 1949 and then states that a copy of the final inventory of the plaintiff 's private properties	 which had the approval of the Government of India in the Ministry of States	 was forwarded to him. Now	 under clause (3) of Article XI of the Matsya Covenant as also clause (2) of Article XII of the Rajasthan Covenant no approval of the Ministry of States was called for. In fact	 what each of those clauses provided was that if any dispute arose as to whether any item of property was the private property of the Ruler concerned or of his erstwhile State	 it was to be referred to such person as the Government of India might nominate	 and the decision of that person was to be final and binding on all parties concerned. Now	 it is not the case of the plaintiff that the Government of India nominated a person to whom the dispute was to be referred; nor is it claimed by him that such a person gave any decision. The contents of the letter	 therefore	 are not at all relateable to those of either of the two clauses just above mentioned. On the other hand	 they clearly indicate that the so called "decisions" of the Sates Ministry contained in the inventory appended to the letter formed really the record of the agreement arrived at between the Ministry of States and the plaintiff as a result of negotiations held on the 9th and 10th of April 1949. In this connection	 reference may pointedly be made to paragraph 3 of the letter which bears repetition: 72 "3. Your Highness will appreciate that the settlement of the inventory is an integral part of an overall agreement in respect of all outstanding matters of dispute and does not stand by itself." This paragraph talks of "the settlement of the inventory" which was to be an integral part of an "over all agreement in respect of all outstanding matters of dispute" and was not to stand by itself. In our opinion	 the paragraph is a clincher against the plaintiff and indicates without any shadow of doubt that what the letter said was that all the disputes regarding the property of the Ruler were to be settled by an over all agreement	 that the contents of the inventory appended to the letter merely recorded the settlement between the plaintiff and the Ministry of States and that even those contents were not to be regarded as a final settlement of the matters dealt with therein unless they formed part of an agreement embracing all items of property. It may be noted here that the Matsya Covenant had been abrogated with effect from the 15th May 1949 by the Rajasthan Covenant as modified by the Amending Agreement and there was thus no question of any decision being given after that date under clause 3 of Article XI of the Matsya Covenant and that the only surviving provision under which disputes regarding property owned by the plaintiff could be determined after the 15th of May 1949	 was Article XII of the Rajasthan Covenant. It is true that the expression "new Covenanting State" as defined in clause (c) of Article I of that Covenant meant only any of the four States of Bikaner	 Jaipur	 Jaisalmer and Jodhpur	 that the definition was not amended by any provision of the Amending Agreement	 so that the State of Alwar could not be regarded as a "new Covenanting Stat. _" for the purpose of clause (3) of Article XII of the Rajasthan Covenant and that the clause of that Article in accordance with which disputes relating to property claimed by tho Ruler of Alwar as his private property were to be determined was clause (2) which provided for their decision by a person nominated by the Government of India in that behalf. The fact remains	 however	 that no such person was ever nominated and that the letter dated the 14th September	 1949	 cannot be construed (for reasons already stated by us) as laying down a decision of any such person. What appears to have happened is that instead of following the course indicated in clause (2) last mentioned and having the disputes referred for decision to a person nominated by the Government of India	 the parties (the Government of India and the appellant) decided to adopt the method of mutual agreement to settle those disputes a method which always remained open to them	 notwithstanding the Matsya 73 Covenant and the Rajasthan Covenant. Such mutual agreement could	 by no stretch of imagination be regarded as a decision by a person nominated by the Government of India either under clause (3) of Article XI of the Matsya Covenant or clause (2) of Article XII of the Rajasthan Covenant and must be deemed to be nothing more or less than an agreement simpliciter even though it was labelled as a "decision of the States Ministry" in the inventory appended to the letter dated the 14th September	 1949. Another contention raised by Mr. Sharma was that even if the letter dated the 14th September	 1949 was held to evidence an agreement	 it was not hit by the provisions of article 363 of the Constitution inasmuch as it was an agreement resulting from the Rajasthan Covenant which alone according to him	 was the agreement covered by the article. This contention is also without substance. Article 363 of the Constitution bars the jurisdiction of all courts in any dispute arising out of any agreement which was entered into or executed before the commencement of the Constitution by any Ruler of an Indian State to which the Government of India was a party. The operation of the article is not limited to any "parent" Covenant and every agreement whether it is primary or one entered into in pursuance of the provisions of a preceding agreement would fall within the ambit of the article. Thus the fact that the agreement contained in the letter dated the 14th September 1949 had resulted from action taken under the provisions of the Rajasthan Covenant	 is no answer to the plea raised on behalf of the respondents that article 363 of the Constitution is a bar to the maintainability of the two suits	 although we may add	 that agreement did not flow directly from the Rajasthan Covenant but was entered into by ignoring and departing from the provisions of clause (2) of Article XII thereof. The only other contention put forward by Mr. Sharma was based on the contents of column 3 of Item 1 of the inventory appended to the letter dated the 14th September 1949. He drew our attention to the mention in that column of the portions of the adjoining building being occupied by the State for administrative purposes or for Museum and Imperial Bank and also comprising the Zenana and Mardana Mahals. According to him	 this meant that the entire building adjoining the City Palace was held to be the private property of the plaintiff	 which finally vested in the plaintiff as from the date of the letter and of which the plaintiff could not be divested by any subsequent decision of the Ministry of States. In this connection	 Mr. Sharma urged that the Ministry of States had no power of reviewing a settlement once arrived at and argued that if it was claimed that such 6 817 SCI/78 74 a power existed	 the determination by a court of the limited question of the power of review would be barred by the provisions of article 363 of the Constitution. This contention also is of no avail to him. As held above	 the agreement dated the 14th September 1949 was not to stand by itself but was to be a part and parcel of an overall agreement embracing all outstanding matters of dispute. It follows that the terms of the agreement contained in the letter were liable to change till a final agreement was reached	 and in this view of the matter no finality could be said to attach to those terms until all the disputes became the subject matter of an agreed settlement. The terms of the inventory attached to the letter were thus merely tentative	 the process of settlement being a continuous one till all the disputes were finally resolved. And the ultimate decision of the Ministry of Home Affairs conveyed in its letter of the 24th of December 1959	 not to treat the Secretariat building	 Daulat Khana building and Indra Viman Station adjoining the City Palace to be the private property of the plaintiff	 was based upon a mutual agreement between the parties which was reached after discussion in March 1952	 as part of an over all agreement as is evident from the letter of the Ministry of Home Affairs dated the 6th/8th of December 1960. In view of the conclusions arrived at above	 we hold that the ` 'decision" sought to be enforced by the plaintiff is an agreement hit by article 363 of the Constitution and that the High Court was right in dismissing suit No. 5 of 1963 as being not maintainable. The appeal	 therefore	 fails and is dismissed	 but with no order as to costs. N.V.K. Appeal dismissed.

Summary:
The appellant who was the Ruler of a princely state entered into a covenant agreeing to merge his state into a union called the United States of Matsya. The Matsya Covenant	 by article Xl Cl. (2) provided that the ruler of each state shall furnish to the Raj Pramukh an inventory of all the inn movable properties	 securities and cash balances held by him as private property and cl. (3) provided that if any dispute arose as to whether any item of property was the private property of the ruler or the state property it shall be referred to such person as the Government of India may nominate in the decision of that person shall be final and binding on all parties. The appellant furnished an inventory of all properties claimed to be his private "property. Sometime later the rulers of the constituent States of Matsya entered into a Covenant with the Rajpramukh of the United State of Rajasthan for merger of their States into the State of Rajasthan in abrogation of the Matsya Covenant. The Rajasthan Covenant by article XII	 Cl. (2) provided for the settlement of any dispute as to whether the property was private property or state property by reference to such person as the Government of India may nominate in consultation with the Rajpramukh and that the decision of such person shall be final and binding on the parties. The Ministry of States	 Government of India wrote on 14th September	 1949 to the appellant that the settlement of the inventory was an integral part of an overall agreement in respect of all outstanding matters of dispute and did not stand by itself. After correspondence with the Government of India the appellant received a written communication intimating the decision of the Government of India in respect of 25 items of the property. The appellant claimed that four buildings which were in occupation of the State Government had been declared as his private properties in the inventory appended to the letter of the Government of India and that the State Govern 63 ment should pay rent to him in respect of those buildings. This claim of the appellant having been rejected	 he filed a suit in the district court for a declaration that the properties were his private properties and that the respondents should be ordered to pay rent to him. The suit was transferred by the High Court to itself	 The High Court dismissed the suit on the ground that adjudication of the dispute was barred by article 363 of the Constitution. In appeal to this Court it was contended that the letter of 14th September	 1949 was the result of a decision arrived at in pursuance of cl. (3) of article XI of Matsya Covenant and cl. (2) of article XII of the Rajasthan Covenant and must be construed as a decision of the Government of India. Dismissing the appeal	 ^ HELD: 1. The decision sought to be enforced is an agreement hit by article 363 of the Constitution and the High Court was right in dismissing the suit. [74H] 2. The so called decision was nothing but an agreement between the Government of India and the appellant. The letter clearly stated that the inventory furnished by the plaintiff was discussed with him at New Delhi and that a copy of the final inventory of the appellant 's private properties	 which had the approval of the Government of India in the Ministry of States	 Was forwarded to him. Under clause (3) article XI of the Matsya Covenant as also clause (2) of article XII of the Rajasthan Covenant	 no approval of the Ministry of States was called for. What each of these clauses provided was that if any dispute arose as to whether any item of property was the private property of the ruler concerned or of his erstwhile state	 it was to be referred to such a person as the Government of India might nominate	 and the decision of that person was to be final and binding on all parties concerned. Neither the Government of India nominated a person to whom the dispute was to be referred; nor did any such person give a decision on the point. The contents of the letter	 are not at all relatable to those of either of the two clauses. On the other hand	 they clearly indicate that the so called "decisions" of the States Ministry contained in the inventory appended to the letter formed really the record of the agreement arrived at between the Ministry of States and the plaintiff as a result of negotiations. [71D H] 3. Paragraph three of the letter talks of the "settlement of the inventory '. which was tc. be an integral part of an "overall agreement in respect of all outstanding matters of dispute" and was not to stand by itself. What the said was that all the disputes regarding the property of the Ruler were to be settled by an overall agreement that the contents of the inventory appended to the letter merely recorded the settlement between the appellant and the Ministry and that even those contents were not to be regarded as final settlement of the matters dealt with therein unless they formed part of an agreement embracing all items of property. [72B C] 4. In the instant case instead of having the disputes referred for decision to a person nominated by the parties they decided to adopt the method of mutual agreement to settle those disputes. Such mutual agreement could not 64 be regarded as a decision by a person nominated by the Government of India either under clause (3) of article of Matsya Covenant or clause (2) of article Xll of Rajasthan Covenant. It must be deemed to be nothing more nor less than an agreement simpliciter even though it was labelled as a decision of the States Ministry. [72H 73B] 5. Article 363 of the Constitution bars the jurisdiction of all courts in any dispute arising out of any agreement which was entered into or executed before the commencement of the Constitution by any Ruler of an Indian Sate to which the Government of India was party. The operation of the Article is not limited to any "parent" Covenant and every agreement whether it was primary or one entered into in pursuance of the provisions of a preceding agreement would fall within the ambit of the Article. The fact that the agreement contained in the letter dated the 14th September	 1949 had resulted from action taken under the provisions of the Rajasthan Covenant	 is no answer to the plea raised on behalf of the respondents that article 363 of the Constitution is a bar to the maintainability of the two suits	 although that agreement did not flow directly from the Rajasthan Covenant but was entered into by ignoring and departing from the provisions of clause (2) of article XII thereof. [73D E]