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PETITIONER: FIRM BANSIDHAR PREMSUKHDAS

       Vs.

RESPONDENT: STATE OF RAJASTHAN

DATE OF JUDGMENT: 29/03/1966

BENCH: RAMASWAMI, V. BENCH: RAMASWAMI, V. SARKAR, A.K. (CJ) SUBBARAO, K.

CITATION:  1967 AIR   40            1966 SCR  (8)   1  CITATOR INFO :  R          1971 SC 846  (7)

ACT: Act   of   State-Contract   with   former   Indian    State- Enforceability after merger against successor State.

HEADNOTE: The   former  State  of  Bharatpur  sold  some   plots   for establishing  a  Mandi,  and the appellant was  one  of  the purchasers.   Under the terms of the sale, a person  trading in  the Mandi would get a reduction of 25 % in  the  customs duty  payable,  if  the commodities were  imported  into  or exported out of the State through the Mandi.  The Government of  Bharatpur  and after its merger the  Government  of  the United   State  of  Matsya,  and  thereafter,  the   present Rajasthan State (respondent herein) allowed the reduction to the  appellant,  who  was  also  a  trader.   In  1951,  the respondent  revoked the concession.  The appellant  filed  a suit  for the recovery of the excess amount of customs  duty paid  on  the  basis  that there  was  a  valid  contractual liability  to grant the concession.  The suit was  dismissed by the High Court on appeal. In appeal to this Court, HELD:(i) The appellant’s suit must fail because there was no recognition of the contractual right to the succeeding State of Rajasthan. The contractual liability of a former State is binding on  a succeeding  sovereign  State  only  if  it  recognises  that contractual liability.    The enjoyment of the concession  by the appellant after the formation of the Rajasthan State did not   show  any  implied  recognition  of  the   contractual liability  by  the respondent, because,  the  concession  is referable  to s. 33 of the Matsya Customs Ordinance of  1948 under which the concession could be granted and  recognised. [85B 88C-D] Case law referred to. (ii) Even upon the assumption that there was an implied re- cognition by  the respondent of the  contractual  liability, the suit must fail, for  the  contractual liability must  be taken  to  have been super. seded by the  enactment  of  the Rajasthan (Regulation of Customs Duties) Ordinance No. 16 of

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1949. [88 E-F]. Parliament  and  State  Legislatures  are,  subject  to  any prohibition  in  the Constitution, competent to  enact  laws altering the terms and conditions of a previous contract  or of  a grant under which the liability of the  Government  of India or of the State Governments arises.  There is  nothing in  the  provisions  of the Ordinance  which  preserves  the alleged  contractual  rights of the appellant,  and  in  the absence of any express language in the Ordinance  preserving such rights. it must be held that the general law enacted in the  Ordinance  supersedes  the  previous  contract  of  the appellant with the State of Bharatpur. [90 D-F] Maharaj  Umeg Singh v. The State of Bombay. [1955] 2  S.C.R. 164  and Maharaja Shree Umaid Mills Ltd. v. Union of  lndia, [1963] Supp. 2 S.C.R. 515, followed. 82 (iii)The levy of Customs duty is in conformity with Art. 306 of the Constitution. [91 D]

JUDGMENT: CIVIL APPELLATE JURISDICTION: Civil Appeal No. 203 of 1964. Appeal  from the judgment and decree dated January 29,  1963 of  the Rajasthan High Court in Civil Regular  First  Appeal No. 29 of 1956. Sarjoo Prasad and T. Satyanarayana, for appellant. R. Ganapapathy Iyer and B.R.G.K. Achar, for the respondent. The Judgment of the Court was delivered by Ramaswami, J. This appeal is brought by certificate  against the  judgment and decree of the Rajasthan High  Court  dated January 29, 1963. The  appellant  firm Bansidhar Premsukhdas  brought  a  suit which is the subject-matter of this appeal against the State of  Rajasthan  on  March 31, 1953 for the  recovery  of  Rs. 86,646/3/-  in the Court of District Judge, Bharatpur.   The case of the appellant was that the former State of Bharatpur with  a view to increase the trade and commerce in the  said State decided to establish a Mandi at Bharatpur where at the material  time  a T.B. Hospital was located, It  decided  to sell plots for certain fixed amounts and, therefore,  issued a notification on May 18, 1946 offering the plots by  public advertisement for sale on certain terms and conditions.  The notifification--Ex.  4-was published in  Bharatpur  Rajpatra and  one  of  the concessions proposed  to  be  granted  was embodied in cl. 3 of the notification which stated:               "If  any  commodity is imported  from  outside               into  the  Mandi and is sold  for  consumption               within the State, or if any commodity received               in  the  Mandi from within the  State  and  is               exported in both cases, a reduction of 25%  in               the customs duty prevailing at the time of the               import and export of such commodities will  be               allowed.    This  concession  shall   not   be               available in case of vegetable Ghee." The  notification  contained  other  terms  and   conditions relating  to auction sale such as the prices  for  different kinds   of plots available and the maximum number  of  plots which  a person could purchase. A committee for  supervising the  auction was also formed and the notification laid  down the  procedure  for  the sale of  plots  and  certain  other conditions such as deposit of one-fourth sale money at the                              83 time  of auction etc.  The appellant purchased plots Nos.  8 and  9 for Rs. 4,600 at a public auction and two sale  deeds

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(sanad  nilam) were issued to the appellant on  October  10, 1946.  The Government of Bharatpur and after its merger, the Government  of  United State of Matsya  and  thereafter  the present Rajasthan State carried out the promise contained in cl. 3 of the Bharatpur notification and allowed reduction of 25 per cent in the customs duty, but on January 16, 1951 the Rajasthan  Government issued notification No. F.4(18)  SR/49 which reads as follows:               "Now  therefore  Government  of  Rajasthan  is               hereby   pleased  to  direct  that   with   an               immediate  effect all free Mandies  and  Zones               including  the  area  comprising  the   former               Kishangarh State and the Bhim District of  the               former Rajasthan State shall be abolished  and               that in consequence all the Customs concession               hitherto  enjoyed  by or applicable  to  these               Mandies or Zones shall cease to have force and               duties   of  customs  shall  be   levied   and               collected   in  such  Mandies  or   Zones   in               accordance  with the revised  tariff,  amended               from time to time." The    appellant   and   other   traders   thereupon    made representation  to the Rajasthan Government on  January  29, 1951  and  pending the disposal of  the  representation  the Customs authorities agreed to keep the amount of 25 per cent by  way  of  ’Amanat’.  The State  of  Rajasthan  ultimately decided  on May 25, 1951 that the reduction in  the  customs duty could not be conceded.  On March 31, 1953 the appellant filed the present suit in the Court of the District Judge of Bharatpur  for the recovery of the excess amount of  customs duty paid to the Rajasthan Government.  The main defence  of the  State Government was that item No. 3 of  the  Bharatpur notification  was  a matter of concession and could  not  be claimed  as  of right and the Rajasthan State  as  successor State was not bound by the contracts of the former State and the  applicability  of  the  concessions  had  also   become impracticable  on the formation of Rajasthan.  The  District Judge  of Bharatpur, by his judgment dated March  31,  1956, held that item No. 3 of Bharatpur notification was a term of sale  between the parties and the Rajasthan State was  bound by  it  and  the  succeeding  States  have  recognised   the concessions granted to the appellant and therefore the  suit of the appellant should be decreed.  The State of  Rajasthan took the matter in appeal to the Rajasthan Nigh Court  which allowed the appeal and dismissed the suit holding that  item No.  3 of the Bharatpur notification was not a part  of  the contract  of sale, and even if it was held to be a  part  of the  contract,  the  successor State of  Rajasthan  did  not recognise it and was not, therefore, bound by it. 84 The first question involved in this appeal is whether cl.  3 of  the  Bharatpur  notification-Ex. 4, was a  term  of  the contract  of  sale between the appellant and  the  State  of Bharatpur.   It Was argued on behalf of the  appellant  that Ex. 4 which is the notification dated May 18, 1946 regarding the  sale  of plots by the Bharatpur State was an  offer  of purchase  of  plots  on terms and conditions  made  in  that notification.   It was contended that the offer was made  to the  public  as  a whole and after it was  accepted  by  the appellant  a  valid  contract  came  into  existence.    The opposite   view  point  was  presented  on  behalf  of   the respondent.  It was submitted that the concession granted in cl.  3  did  not relate to, nor did it form a  part  of  the contract of sale of the plots of the Mandi.  It was  pointed out that the concession of 25 per cent reduction in  customs

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duty  will not merely enure to the benefit of the  purchaser of  the  plots but also enure to the benefit of  the  person trading  in the shop.  The benefits were  generally  offered for trade and business in the Mandi and cannot be considered as an offer of benefit only to the prospective purchasers of the  plots.   The commodities for which the  concession  was granted might be in the hands of purchasers and builders  of plots, their tenants and licensees or other dealers.  It was therefore  not  possible to hold that the  State  Government offered  the  tax  concessions as a  reciprocal  promise  in connection with the contracts of sale with the appellant and the  latter had no justification for treating  the  benefits offered  as consideration in return for the purchase of  the plots  and the construction of shop buildings.  It  is  also pointed  out by learned Counsel on behalf of the  respondent that   there  are  certain  conditions  in   the   Bharatpur notification-Ex. 4, which can. not, in the nature of things, be  treated  as terms of the sale.  Reference was  made,  in this connection, to cls. 5, 6, 7, 10 and 11. In our opinion, there  is much force in the argument advanced on  behalf  of the  respondent  but  it is not  necessary  to  express  any concluded  opinion  on this aspect of the  case.   We  shall assume  in  favour  of  the appellant  that  cl.  3  of  the Bharatpur notification, Ex. 4, was a term of the contract of sale  of  plots  8  and 9 of  the  Mandi.   Even  upon  that assumption the suit of the appellant must fail, for we shall presently  show  that  there  was  no  recognition  of   the contractual right by the succeeding State of Rajasthan,  and in the absence of such recognition the contract between  the former  State  of  Bharatpur and  the  appellant  cannot  be legally enforced. We shall proceed, therefore, to consider the next  question, namely,  whether the term of the contract was  binding  upon the successor State of Rajasthan on the assumption that  cl. 3 of the Bharatpur notification, Ex. 4, was an integral term of the contract between the appellant and the Government  of Bharatpur State. It  is  not  correct  to say as a matter  of  law  that  the successor  State  automatically  inherits  the  rights   and obligations  of the merged State.  There is no  question  of suborgation-the successor State is not                              85 subrogated ipso jure to the contracts with the merged State. The  true  legal  position  is  that  the  contract  of  the predecessor State terminates with the change of  sovereignty unless the contract is ratified by the succeeding  sovereign State.    It  is  now  well-established  in  law  that   the contractual  liability  of a former State is  binding  on  a succeeding  sovereign  State  only  if  it  recognises  that contractual  liability.  The season is that the taking  over of sovereign powers by a State in respect of territory which was not till then a part of it is an. act of State" and  the municipal  courts recognised by the new sovereign  have  the power  and  jurisdiction to investigate and  ascertain  only such rights as the new sovereign has chosen to recognise  or acknowledge;  and such recognition may be express or may  be implied  from circumstances.  In other words,  accession  of one State to another is an "act of State... and the subjects of the former State may claim protection of only such rights as  the  new  sovereign recognises  as  enforceable  by  the subjects  of the former State in his municipal  courts.   In The Secretary of State in Council of India v. Kamachee  Boye Saheba(1)  the  jurisdiction  of  the  courts  in  India  to adjudicate  upon  the validity of the seizure  by  the  East India  Company  of the territory of Rajah of Tanjore  as  an

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escheat,  on  the  ground that the dignity of  the  Raj  was extinct  for want of a male heir, and that the  property  of the late Rajah lapsed to the British Government, fell to  be determined.  The Judicial Committee held that as the seizure was  made by the British Government, acting as  a  sovereign power, through its delegate, the East India, Company, it was an act of State and the Municipal Court had no  jurisdiction to inquire into the propriety of the action.  At page 529 of the Report Lord Kingsdown observed:               "The   transactions  of   independent   States               between each other are governed by other  laws               than those which Municipal Courts  administer:               Such Courts have neither the means of deciding               what is right, nor the power of enforcing  any               decision which they may make." In  another  case-Vajesingji Joravarsingji v.  Secretary  of State   for  India  in  Council(1)-the  Judicial   Committee observed as follows:               "...  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 recognized 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, recognised.   Such               rights as he had under the rule of precedes-               (1) Moore’s I.A. 476.               (2) 51  I.               A. 357.               86               sors 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 Secretary of State v. Sardar Rustom Khan and Others(1)  a question  arose whether the rights of a grantee  of  certain proprietary  rights  in lands from the then Khan  of  Kalat, ceased  to  be enforceable since the agreement  between  the Khan  and the Agent to the Governor-General  in  Baluchistan under which the Khan had granted to the British Government a perpetual lease of a part of the Kalat territory, at a  quit rent,  and had ceded in perpetuity with full  and  exclusive revenue civil and criminal jurisdiction and all other  forms of  administration.   In  delivering  the  opinion  of   the Judicial Committee, Lord Atkin observed as follows:               "In this case the Government of India had  the               right  to  recognise  or  not  recognise   the               existing  titles to land.  In the case of  the               lands  in suit they decided not  to  recognize               them, and it follows that the plaintiffs  have               no  recourse  against the  Government  in  the               Municipal Courts." The  principle  that cession of territory by  one  State  to another  is an act of State and the subjects of  the  former State may enforce only those rights which the new  sovereign recognises  has been accepted by this Court in M/s.   Dalmia Dadri Cement Co. Ltd. v. The Commissioner of  Income-tax(2).

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The  State  of  Saurashtra v. Jamadar  Mohamat  Abdulla  and others(1).   Maharaja  Shree Umaid Mills Ltd.  v.  Union  of India  (4), and State of Gujarat v. Vora  Fiddali  Badruddin Mithibarwala(5). On  behalf of the appellant it was contended that there  was an  implied  recognition  by  the  Rajasthan  State  of  the contractual  liability since the exemptions  were  continued upto January 13, 1951 and were revoked with effect from that date by the notification No. F.4(18)SR/49. We are unable  to accept  this  argument as correct.  Before  the  process  of integration  began,  each Covenanting State was  a  separate geographical  unit  for  customs purposes and  had  its  own customs laws and barrier.  After the formation of the Matsya Union  on  March 18, 1948 there was a  promulgation  of  the Matsya Customs Ordinance by the Raj Pramukh on September 21, 1948.  The United State of Rajasthan was constituted on  May 15, 1949 when there was merger of Matsya Union in the United State  of  Rajasthan.   On August 9, 1949  the  Raj  Pramukh promulgated  the  Rajasthan (Regulation of  Customs  Duties) Ordinance (1) 68 I.A. 100.                   (2) [1959] S.C.R. 729. (3) [1962] 3 S.C.R. 970.          (4) [1963] Supp. 2  S.C.R. 515. (5)  [1964] 6 S.C.R. 461. 87 No. 16 of 1949. Section 3 of this Ordinance abolished duties on the transport of goods within the territory of Rajasthan.Sectio n Section 3 reads as follows:               "3.   No duty leviable on internal  transport-               With effect from such date as may be  notified               by the Government in the Rajasthan Gazette, no               duties   of  Customs  shall  be   levied   and               collected in respect of any goods  transported               within Rajasthan, notwithstanding anything  to               the  contrary in any law, or rule,  instrument               of usage having the force of law, in any  part               of   Rajasthan;   and  any  such   law,   rule               instrument  or  usage shall be  deemed  to  be               repealed to that extent:               Provided   that   the   Government   may,   by               notification  in  the  Rajasthan   Gazette-(a)               Impose  a duty of customs on the transport  of               goods  from or to any part of Rajasthan to  or               from  such other part thereof at such rate  or               rates and with effect from such date as may be               specified  in the notification, or (b)  direct               that, in respect of the transport of goods  of               such  description and from or to such part  of               Rajasthan   as   may  be  specified   in   the               notification,  a  sum of money  equal  to  the               amount  of the duty leviable on the export  on               such   goods  shall  be  deposited  with   the               appropriate Customs Officer of the place  from               where   the   goods   are   intended   to   be               transported."               section 4 is the charging section with  regard               to  import  and export duties.   Section  4(1)               states:               "4.  Duties on export and import: (1) Until  a               revised tariff is introduced under sub-section               (2)  Customs  duties on the export or  on  the               import of goods shall be levied and  collected               in  accordance  with the tariff for  the  time               being in force in the place from or into which

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             goods  leviable  with a duty of  Customs  have               been  exported  or imported, as the  case  may               be."               sub-section (2) of s. 4 provides:               "The  Government may, by notification  in  the               Rajasthan  Gazette,  issue  a  revised  tariff               specifying  the  goods or class  of  goods  in               respect  of  which,  and the  rate  at  which,               duties   of  Customs  shall  be   levied   and               collected with effect from such date as may be               specified in the notification on the export or               on  the  import  of such  goods  or  class  of               goods." eventually  on August 15, 1949 a uniform revised tariff  was made  applicable  to  the whole  of  Rajasthan.   Section  6 provided  that the existing law in force of the  covenanting States shall regulate the GI-8 88 collection  of  such duties and other  ancillary  duties  in relation thereto, unless altered, modified or repealed by  a competent legislative authority of Rajasthan and thus  saved existing  law  with regard to the  procedure  and  ancillary matters.  It is manifest on examination of the provisions of this  Ordinance that there was a repeal of all Customs  laws of the Covenanting States in so far as they provided for the levy and collection of duties in the particular  territorial limits   of  the  Covenanting  States  and   the   Ordinance introduced a new law imposing duty on export and import into Rajasthan  State as a whole.  Further, after the issue of  a revised tariff the old tariffs under the various laws of the Covenanting States also stood repealed.  There is no express provision  in the Ordinance saving the previous  contractual rights  with regard to customs duty.  In the absence of  any such  express  provision it must be held that  all  existing contracts  were repudiated and cancelled.  The enjoyment  of the  concession by the appellant after the formation of  the Rajasthan State is clearly referable to the law under  which customs  concessions could be granted and recognised.   This is  borne  out by the notification dated  January  16,  1951 which  appeared  in the Rajasthan Raj  Patra,  which  itself refers to ss. 10 and 33 of the Matsya Customs Ordinance  No. 14  of 1948 by which customs concessions were  revoked.   We are,  therefore,  of  the opinion that the  High  Court  has rightly  taken  the view, upon an analysis of  the  evidence adduced  in the case, that there was no recognition  of  the contractual liability by the succeeding State of Rajasthan. We  shall however ,assume in faboure of the  appellant  that the  State of Rajasthan recognised the contractual right  of the  appellant  with regard to the exemption of  tax.   Even upon  that assumption the suit of the appellant  must  fail, for  the  contractual liability must be taken to  have  been superseded by the enactment of the Rajasthan Regulation  ’of Customs Duties) Ordinance No. 16 of 1949 promulgated by  the Raj  Pramukh  on August 9,1949.  Before we  deal  with  this question  it  is desirable to  indicate  the  constitutional developments  which resulted in the inclusion of the  former Bharatpur  State into the Part B State of  Rajasthan,  which came  into  existence  on  January  26,  1950.   The  former Bharatpur  State remained a separate entity till  March  18, 1948,  though it had acceded to the Dominion of India  after August  15,  1947 with respect to  three  subjects,  namely, communications,  defence  and external  affairs.   In  1948, however,  the process of merger in Rajasthan began  and  the first  merger  that took place was of the former  States  of

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Alwar,  Bharatpur,  Dholpur and Karauli,  which  formed  the Matsya Union as from March 18, 1948 by a Covenant entered on February 28, 1948.  After the formation of the Matsya  Union the  Raj  Pramukh promulgated the Matsya  Customs  Ordinance 1948  on  September 21, 1948.  Section 2 of  that  Ordinance repealed the levy of                              89 customs  duty  in force in all the  Covenanting  States  and applied the provisions of the new Ordinance to the whole  of the  United  State of Matsya.  Section 10 of  the  Ordinance provided  for the charge of customs duty on goods or-  class of  goods to be notified in the State Gazette from  time  to time.   Section 33 of the Ordinance similarly granted  power to  the  State Government to exempt any goods  or  class  of goods  imported or exported from the United State of  Matsya from  payment of customs duty leviable thereon.   Then  came another union of certain other Rulers in Rajasthan in  March 1948 by which these Rulers united under the Ruler of Udaipur to  form what later came to be known as the Former State  of Rajasthan.  In March 1949, the United State of Rajasthan was formed  by  Covenant  entered into  by  fourteen  Rulers  of Rajasthan,  including those who had formed the Former  State of Rajasthan, and this State came into existence from  April 7,  1949.   There was a merger of the Matsya  Union  in  the State  of  Rajasthan  on May 15, 1949 and  thus  the  former Bharatpur  State came to be included in the United State  of Rajasthan  through  the Matsya Union.  As  we  have  already stated,   the   Raj  Pramukh   promulgated   the   Rajasthan (Regulation  of Customs Duties) Ordinance No. 16 of 1949  on August  9, 1949.  It is well-established that Parliament  or State Legislatures are competent to enact a law altering the terms  and conditions of a previous contract or of  a  grant under  which the liability of the Government of India or  of the State Governments arises.  The legislative competence of Parliament  or  of  the  State  Legislatures  can  only   be circumscribed  by  express  prohibition  contained  in   the Constitution  itself  and  unless and  until  there  is  any provision   in   the  Constitution   expressly   prohibiting legislation   on   the   subject   either   absolutely    or conditionally,  there  is  no fetter  of  imitation  on  the plenary  powers  which the Legislature is endowed  with  for legislating on the topics enumerated in the relevant  Lists. this  view  is  borne out by the decision  of  the  Judicial Committee  in  Thakur Jagannath Baksh Singh  v.  The  United Provinces(1)  in which a similar complaint was made  by  the taluqdars  of Oudh against the United Provinces Tenancy  Act (U.P. Act 17 of 1939). It was held by the Judicial Committee that the Crown  cannot deprive itself of its legislative authority by the mere fact that in the exercise of its prerogative it makes a grant  of land  within  the  territory  over  which  such  legislative authority exists, and no court can annul the enactment of  a legislative  body acting within the legitimate scope of  its sovereign  competence.  If therefore, it be found  that  the subject-matter of a Crown grant is within the competence  of a   Provincial   legislature  nothing   can   prevent   that legislature   from   legislating   about   it   unless   the Constitution  Act itself expressly prohibits legislation  on the subject either absolutely or conditionally. accordingly, in the absence of any such express prohibition, the (1)  [1946] F.C.R. III.] I-8(a) 90 United  Provinces Tenancy Act, 1939, which in  consolidating and amending the law relating to agricultural tenancies  and

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other  matters connected therewith in Agra and  Oudh,  dealt with matters within the exclusive legislative competence  of the  Provincial legislature under item 21 of List 11 of  the 7th  Sch.  to the Government of India Act, 1935,  was  intra vires   the  Provincial  legislature  notwithstanding   that admittedly  some  of its provisions cut  down  the  absolute rights claimed by the appellant taluqdar to be comprised  in the grant of his estate as evidenced by the sanad granted by the  Crown to his predecessor.  The same principle has  been reiterated by this Court in Maharaj Umeg Singh and others v. The State of Bombay and others(1).  It was pointed out  that in  view of Art. 246 of the Constitution, no curtailment  of legislative  competence  can be spelt out of  the  terms  of clause  5 of the Letters of Guarantee given by the  Dominion Government  to  the  Rulers of "States"  subsequent  to  the agreements  of  Merger, which guaranteed,  inter  alia,  the continuance   of  Jagirs  in  the  merged  ’States’.    This principle  also underlies the recent decision of this  Court in  Maharaja Shree Umaid Mills Ltd. v. Union of India(2)  in which  it was pointed out that there is nothing in Art.  295 of the Constitution which prohibits Parliament from enacting a law altering the terms. and conditions of a contract or of a grant under which the liability of the Government of India arises.  It was further held that there was nothing in  Art. 295 prohibiting Parliament from enacting a law as to  excise duty  or  income-tax  in territories  which  became  Part  B States,  and which were formerly Indian States, and  such  a prohibition  cannot be read into Art. 295 by virtue of  some contract  that might have been made by the then Ruler of  an Indian State with any person.  As we have already indicated, there  is  nothing  in  the  provisions  of  the   Rajasthan (Regulation  of  Customs Duties) Ordinance No.  16  of  1949 which preserves the alleged contractual rights of the appel- lant,  and  in the absence of any express  language  in  the Ordinance  preserving  such alleged contractual  rights,  it must be held that the general, law enacted in the  Ordinance supersedes  the previous contract of the appellant with  the State of Bharatpur. Lastly,  it was argued on behalf of the appellant  that  the notification  dated  January  16,  1951  revoking  the   tax concessions was in violation of Art. 306 of the Constitution which provides as follows:               "Notwithstanding  anything  in  the  foregoing               provisions  of  this  Part  or  in  any  other               provisions  of  this Constitution,  any  State               specified  in  Part B of  the  First  Schedule               which before the commencement of this  Consti-               tution  was  levying any tax or  duty  on  the               import  of  goods into the  State  from  other               States or on the export of goods               (1)   [1955] 2 S.C. R. 16               [1963] Supp. 2 S.C.R. 515.               91               from  the  State to other States  may,  if  an               agreement in that behalf has been entered into               between  the  Government  of  India  and   the               Government of that State, continue to levy and               collect such tax or duty subject to the  terms               of  such  agreement and for  such  period  not               exceeding  ten years from the commencement  of               this  Constitution as may be specified in  the               agreement. The  argument is based on the assumption that the  appellant was enjoying concessions under s. 40 of the Customs Circular No.  15 and continued to enjoy the concessions in the  State

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of Matsya under s. 34 of the Matsya Customs Ordinance No. 14 of 1948, and subsequently in the State of Rajasthan under s. 6 of the Rajasthan (Regulation of Customs Duties)  Ordinance No.  16  of  1949.  It is the  admitted  position  that  the agreement  entered between the Government of India  and  the United State of Rajasthan on February 25, 1950  incorporated certain  recommendations  of  the  Federal  Finance  Enquiry Committee   Report  1948-49.   The  agreement  having   been executed  and  the  condition under  Art.  306  having  been satisfied in this case, the continuance of the customs  duty is  in conformity with the provisions of this  Article.   In any  case,  the claim of the appellant is not based  on  any provision of Bharatpur law but upon a contractual  liability of  Bharatpur  State and to a case of this  description  the provisions of Art. 306 cannot be attracted. For the reasons expressed, we hold that the judgment of  the High  Court is right and this appeal must be dismissed  with costs. Appeal dismissed. 92