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CASE NO.: Appeal (civil)  7308-7309 of 2005

PETITIONER: M/s Tashi Delek Gaming Solutions Ltd. & Anr.             

RESPONDENT: State of Karnataka & Ors.

DATE OF JUDGMENT: 08/12/2005

BENCH: S.B. Sinha & P.P. Naolekar

JUDGMENT: J U D G M E N T [Arising out of S.L.P. (Civil) Nos.6898-6899 of 2005] W I T H   

CIVIL APPEAL NOS. 7310-7312   OF 2005 [Arising out of S.L.P. (Civil) Nos.7744-7746 of 2005]

S.B. SINHA , J :

       Leave granted.

Introduction :         Scope and ambit of Article 131 of the Constitution of India is in  question in these appeals, which arise out of a common judgment and order  dated 16.03.2005 passed by a Division Bench of the Karnataka High Court  in Writ Appeal Nos.5516-5117 of 2004 and Writ Appeal Nos.29-31 of 2005,  whereby and whereunder the appeals preferred by the Appellants herein  were dismissed.

Background facts It is not in dispute that the States of Sikkim and Meghalaya  commenced online lotteries, inter alia, in the State of Karnataka.  It is,  however, otherwise a lottery playing State.  In exercise of its power  conferred upon it under Section 5 of the Lotteries (Regulation) Act, 1998  (for short, ’the Act’)  a declaration was made that the State of Karnataka  shall be free zone from online and internet lotteries.  By reason of the said  notification sale of all computerized and online lottery tickets marketed and  operated through vending machines, terminals, electronic machines and  through internet in the State of Karnataka became prohibited with immediate  effect.   

Writ Proceedings :

The States of Sikkim and Meghalaya together with its agents filed  writ petitions before the Karnataka High Court, challenging the legality   and/or validity of the said notification, inter alia, on the ground that the State  of Karnataka, having itself been organizing lotteries, could not have imposed  the said ban having regard to the decision of this Court in M/s B.R.  Enterprises etc. v. State of  U.P. & Ors. etc.  [(1999) 9 SCC 700].

The contention of the State of Karnataka, on the other hand, was that  online lotteries had nothing to do with the conventional lotteries and as the  State of Karnataka has put an embargo on online lotteries without any  discrimination, B.R. Enterprises (supra) cannot be said to have any  application.   

A preliminary objection was taken on behalf of the State that as the

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dispute involved in the writ petitions related to two State Governments, the  writ petitions  were not maintainable, in view of the constitutional bar under  Article 131 of the Constitution of India.  The said contention was upheld by  a learned  Single Judge of the High Court holding, inter alia,  that the agents  of the State of Sikkim and State of Meghalaya had no locus standi to  maintain the writ petitions in view of the fact that they did not have any  independent right in that behalf.  The agents of the State of Sikkim preferred  an intra-court appeal thereagainst   The State of Meghalaya and its agents  thereafter also preferred writ appeals.   

Contentions of the writ petitioners : The contention of the Appellants herein being agents and distributors  of the State of Sikkim is as under :

Section 4(c) of the Act permits the State Governments to sell tickets  either itself or through distributors or selling agents and in terms thereof the  First Appellant M/s Tashi Delek Gaming Solutions Ltd, was appointed by  the State of Sikkim as an agent for sale of online lotteries.  The Second  Appellant, Pan India Network Infravest Pvt. Ltd., is a distributor of the First  Appellant.  

It was contended that the Appellants herein have invested a huge  amount of 300 crores for setting up the online lotteries network  infrastructure and 861 retail outlets therefor.  They have been paying sales  tax and other taxes running into crores of rupees to the Respondent-State and  have entered into diverse third party arrangements with distributors and  retailers.  It was contended that by reason of the impugned notification, their  investments made in this behalf would go totally waste and they would be  seriously prejudiced as they have borrowed funds from banks and financial  institutions on which interest is mounting manifold.  

The State of Meghalaya and its agent, M/s Best & Co. in their writ  petition, inter alia, contended :  

"The petitioner State for the purposes of sale of the  online and internet lotteries appointed Petitioner No. 2 &  3 as its agent/sub agent to sell the said internet and online  lotteries in various States.  Accordingly, the agent  appointed other persons, retailers etc. for the purposes of  establishing computerized retail outlets in the State of  Karnataka.  At present there are 1000 number of retail  outlets of the Petitioner State in the State of Karnataka  and more than 30000 number of persons are dependent  on the said business.  The Petitioner No.2 and its agents  have spent more than Rs.100 crores for the establishment  of the network of retail computer lottery outlet.  The sale  from computerized online and internet lotteries in the  State of Karnataka was presently approximately Rs.90  lacs per day."  

Submissions :

       Mr. Soli J. Sorabjee, the learned Senior Counsel appearing on behalf  of the Appellants, relying inter alia upon the decisions of this Court in State  of Bihar v. Union of India [(1970) 1 SCC 67], State of Rajasthan & Ors. etc.  v. Union of India & Ors.  [(1977) 3 SCC 592], State of Karnataka v. Union  of India & Anr.  [(1977) 4 SCC 608] and Union of India v. State of  Rajasthan [(1984) 4 SCC 238], at the outset submitted that the principles laid  down therein clearly demonstrate inapplicability of Article 131 of the  Constitution of India where along with the State Governments private parties  are also added as Petitioners or Respondents.  The Appellants, it was urged,  being statutory agents of the States were persons aggrieved by the impugned  action of the State of Karnataka in their own right and, thus, the writ petition  filed by them with the State Governments were maintainable and, in that

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view of the matter, the findings of the Division Bench to the effect that the   Appellants could not enforce or vindicate their rights under the contract of  agency with the State of Sikkim is erroneous.   

       Our attention, in this behalf, was drawn to Section 7(3) of the Act to  show that the Act contains a penal provision.  In terms of the notification  issued by the State of Karnataka, if the Appellants herein continue to sell  online lottery tickets, the same would attract the penal provision contained in  Section 7(3) of the Act and in that view of the matter, it cannot be said that  the Appellants have no legal right to enforce and/or  they are otherwise not  aggrieved by the notification issued by the State of Karnataka enabling them  to maintain a writ application.   

        It was submitted that in view of a decision of this Court in Ghulam  Qadir v. Special Tribunal & Ors. [(2002) 1 SCC 33], the Appellants herein  being not merely strangers had a right to maintain the writ application.  

       Mr. K.K. Venugopal, the learned Senior Counsel, supplemented the  submissions of Mr. Sorabjee contending that as the Appellants are agents  coupled with interest, they could sue or be sued in their own names.  

       Mr. Sanjay R. Hegde, the learned counsel appearing on behalf of the  State of Karnataka, on the other hand, submitted that for the purpose of  determining the maintainability of the writ petition, it was necessary to  determine the nature of rights of the agents of the State.  It was argued that  the State Governments having exercised their executive power to carry on  business in lotteries, the activities prohibited by the State of Karnataka being  a matter between two States could be adjudicated upon by this Court alone  as the dispute related to the legal character involving two different States.    

       Mr. Hegde urged that Article 131 of the Constitution, in view of the  doctrine of federalism should receive wide and expansive definition and in  this case as one State asserts that it had the right to carry on business in  another State, which had been denied, the essential nature of dispute must be  held to have occurred between two States.   Issue :         The short question which arises for consideration is as to whether the  writ petitions filed by the Appellants herein were maintainable.

The Act :                          The Parliament of India in terms of  Entry 40 List 1 of the Seventh  Schedule of the Constitution of India enacted Lotteries (Regulation) Act,  1998.   ’Lottery’ has been defined in Section 2(b) of the Act to mean :

"2(b) "lottery" means a scheme, in whatever form and by  whatever name called, for distribution of prizes by lot or  chance to those persons participating in the chances of a  prize by purchasing tickets."

       Sections 3 and 4 of the said Act lay down the conditions subject to  which the State Governments could organize, conduct or promote lotteries.   By reason of Section 4 of the Act, distributors and selling agents are said to  have been given statutory status.  Section 6 thereof confers power of  prohibition expressly on the Central Government.          Section 5 of the Act  reads as follows :

"5. Prohibition of sale of tickets in a State.-A State  Government may, within the State, prohibit the sale of  tickets of a lottery organized, conducted or promoted by  every other State."

Sub-sections (3) of Section 7 of the Act provides for penal provision

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in the following terms :         "(3) If any person acts as an agent or promoter or  trader in any lottery organized, conducted or promoted in  contravention of the provisions of this Act, or sells,  distributes or purchases the ticket of such lottery, he shall  be punishable with rigorous imprisonment for a term  which may extend to two years or with fine or with  both."

Article 131 \026 Scope and Ambit :

Article  131 of the Constitution of India postulates that this Court to  the exclusion of any other court shall have original jurisdiction in any  dispute between  the Government of India and one or more States; or  between the Government of India and any State or States on one side and  one or more other States on the other; or between two or more States.  We in  this case are not concerned with the proviso to the said Article.  The said  Article would be attracted where adjudication is necessary in relation to a  legal right of one State or the Union of India vis-‘-vis other States, as the  case may be.  Indisputably, the expression ’legal right’ has received liberal  interpretation by this Court from time to time.  However, it is now well- settled by various decisions of this Court that this Article will not be  applicable where citizens or private bodies are parties either jointly or in the  alternative with the State or the Government of India.  The enlarged  definition of ’State’ under Article 12 would not extend to Article 131 of the  Constitution.  It is also not in dispute that even a statutory corporation is not  a state within the meaning of the said provision.

Locus of the Appellants :

The Appellants herein were appointed as agents of the State, which  were governed by contract, in terms whereof,  they had invested a huge  amount.  If the statements made in the writ petitions to which we have  adverted to hereinbefore  are correct, in the event the impugned notification  is implemented, the Appellants would not only loose a huge amount of  money which they have invested but also would be liable to pay  compensation to a large number of work force appointed by them in view of  the fact that they would have to close their business.  The Appellants are the   agents coupled with interest.  Such agencies are contemplated under the laws  of contract.  The Act also postulates that in the event an agent violates the  notification issued by the State, he would face the penal consequences laid  down therein.  The notification has the force of law.  In the aforementioned  backdrop, the question which arises for consideration is as to whether the  Appellants herein had any independent right to question the validity of the  said notification.

The learned Single Judge, as noticed hereinbefore, held that they did  not have any such right.  On the other hand, the Division Bench was of the  opinion :

"\005May be, the appellants also got adversely affected  with the prohibition imposed by the State of Karnataka  but it is only incidental because they are the agents of the   State of Sikkim and can have their rights only through  their principal\005."            We cannot subscribe to the said view.

       ’Agent’ has been defined in Section 182 of the Indian Contract Act,  1872, to mean a person employed to do any act for another or to represent  another in dealings with third persons.  The person for whom such act is  done, or who is so represented, is called the ’principal’.  Section 185 of the  Contract Act postulates that no consideration is necessary to create an  agency.  The authority of an agent may be express or implied in terms of

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Section 186 thereof.  Section 202 of the Contract Act provides that where  the agent has himself an interest in the property which forms the subject- matter of the agency, the agency cannot, in the absence of an express  contract, be terminated to the prejudice of such interest.  The right of an  agent to sue or be sued in its own name, is governed by Section 230 of the  Contract Act, which reads as under :

       "230.  Agent cannot personally enforce, nor be  bound by, contracts on behalf of principle.- In the  absence of any contract to that effect an agent cannot  personally enforce contracts entered into by him on  behalf of his principal, nor is he personally bound by  them."

                                   The second part of the said provision does not envisage a situation  where the right of an agent is protected in terms of Section 202 of the  Contract Act.  We have noticed hereinbefore that Section 4(c) of the Act  envisages appointment of agents, which empowers the State Government  to  sell the tickets either itself or through distributors or selling agents. Such  distributors or selling agents may also be companies or body corporates.   Section 7(3) of the Act, as noticed hereinbefore, provides for a penal  consequence.  If any person acts as an agent or promoter or trader in any  lottery, he may be subjected to punishment if he sells, distributes or  purchases  tickets of such lottery in contravention of the provisions of the  said Act, which may include any notification issued under Section 5 of the  Act.  

Right to Sue :

       An agent coupled with interest has a right to sue.  He may in certain  situations be sued as regard his own liabilities independent of his principal.

       The right of an agent having interest to sue or be sued in its own name  came up for consideration before the Madras High Court in Subrahmania  Pattar v. Narayanan Nayar [ILR 24 Mad 130] wherein it was held :              "It was argued before us that by the document in  question the plaintiff became an agent with interest, and  that he, therefore, had a right to sue in his own name and  Williams v. Millington; Robinson v. Rutter; Gray v.  Pearson; and other cases and text-books were cited in  support of this proposition, and Pestanji Mancharji  Wadia v. Matchett; was also cited as a further authority  for the same proposition.  The proposition as stated is in  our judgment too wide.  In Williams v. Millington; and  Robinson v. Rutter; the agents who were held entitled to  sue were agents who had made the contract with the  defendant as auctioneers, and it was held that, though  they had contracted as agents having an interest, they  were entitled to sue in their own names.  In Gray v.  Pearso  the plaintiff’s suit was dismissed.  There, there  was no contract entered into between the plaintiff and the  defendant.  The plaintiff was merely the manager for  others and the words used by Willes, J., in his judgment,  to which our attention was called, do not assist the  plaintiff’s contention.  He says the proper person to bring  the action is the person whose right has been violated.   Though there are certain exceptions to the general rule,  for instance, in the case of agents, auctioneers or factors,  these exceptions are in truth more apparent than real, &c.   The real proposition of law, which these and other cases  establish, is that where an agent enters into a contract as  such, if he has interest in the contract, he may sue in his  own name."

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       Yet again in Mallhu v. Megh Raj [AIR 1920 Lah. 196], it was held :  

"The only point calling for consideration in this  application for revision is whether the plaintiff is  debarred under S. 230, Contract Act from maintaining  the suit.  It is true that part of the wheat belonged to one  Khem Lal and was sold by the plaintiff as Khem Lal’s  agent, but the other part was the plaintiff’s own wheat, so  that he had an interest in the contract, and the law is that  when an agent enters into a contract, he may sue thereon  in his own name if he has an interest in the contract."

       The question again came up for consideration before the Bombay  High Court in Coorla Spinning & Weaving Mills v. Vallabhdas (AIR 1925  Bom. 547], wherein it was opined :

"It was next argued on behalf of the defendants that the  suit was defective and must have been dismissed unless  and until the Mill Company was added.  In other words,  that the Mill Company were necessary and not merely  proper parties.  The plaintiffs, on the other hand,  contended that the selling agents had here a beneficial  interest in the completion of the contract, and could  accordingly sue in respect of it.  This rule extends in  England to auctioneers and factors, and is thus expressed  in Bowstead on Agency, 7th Edn., p. 431:-

       "An agent may sue in his own name on  contracts made by him on behalf of his principal in  the following case, namely\005.(b) where, as in the  case of factors and auctioneers, he has a special  property in or lien upon, the subject-matter of the  contract, or has a beneficial interest in the  completion thereof,"          

       The Sind Court had also an occasion to consider the said question in  R.P. Kharas v. Bawanji Narsi [AIR 1926 Sind 6], wherein the law was stated  in the following terms :

       "The case of an agent who has an interest in the  contract made by him as such is not within the rule.  He  is the person to sue, and he is liable to be sued on the  contract.  An auctioneer or factor being in possession of  his employer’s goods having a lien on them for his  charges and advances is in this position.  An auctioneer  may be sued for non-delivery of the goods sold and he  may sue the buyer for the price."

       In Durga Prasad Manna Lal v. Cawnpore Flour Mills [AIR 1929 Oudh  417], upon referring to the provisions of the Indian Contract Act, it was held:

       "The three cases mentioned in this section in  which a contract to that effect may be presumed are by  no means exhaustive.  Thus there can be no difficulty in  presuming such a contract in a case in which the agent  has an interest in the transaction.  Apart from this the  position of an agent in such a case is virtually that of a  principal to the extent of the interest, which he has in the  contract.  This rule is based upon general principles and  not on any technicalities peculiar to the English Law.  It  has been followed in the Indian Courts as well."

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       The Lahore High Court had also the occasion to deal with the said  question in Firm Hardayal Mal Mohri Lal v. Kishan Gopal Jhanji [AIR 1938  Lah 673], wherein Tek Chand, J. opined :

       "These documents therefore do not affect the  matter.  This is clearly a case of an "agency coupled with  interest" and therefore the ordinary rule laid down in  S.230 is inapplicable.  It is settled law in England and as  observed by Pollock and Mulla in their Commentary on  the Indian Contract Act (Edn.6) page 638 :

       The like rule is laid down by Indian Courts that  where an agent enters into a contract as such if he has an  interest in the contract he may sue in his own name.  This  is not a real exception to the rule laid down at the  beginning of the Section, the agent being in such a case  virtually a principal to the extent of his interest in the  contract."

       In Subodh Gopal Bose v. Province of Bihar [AIR 1950 Patna 222] a  Division Bench of the Patna High Court considered the question, and upon  noticing a large number of decisions, laid down law in the following terms :

       "There is another aspect of the case which has a  more direct bearing on this question.  In the suit the main  relief which the appellant has claimed (as disclosed by  the plaint) is a declaration that the appellant is entitled to  quarry lime stone and manufacture lime from the Murli  hill  As a mere local agent of the lessee company, the  appellant has no such right of suit.  An agent who has  some interest in the property \026 may be a qualified interest  \026 can maintain an action to protect that interest (see  Whittingham v. Bloxham,(1831) 172 E.R. 841: (4 Car. &  P. 597).  In Smith’s Leading Cases, Vol. II, p. 395 (12th  Edn.) the following statement of the law is made:

       "But it is not merely in cases where the  agent has contracted in his own name for an  unnamed principal that he has a right, at law, to  sue upon the contract, when he has made a contract  in the subject-matter of which he has a special  property, he may, even though he contracted for an  avowed principal, sue in his own name."

Legal Right :         If by a statutory provision the right of an agent to carry on his  business is affected, he may, in our considered opinion, in his own right  maintain an action.   The question came up for consideration before this  Court in Calcutta Gas Company (Proprietary) Ltd. v. State of West Bengal  and Others [AIR 1962 SC 1044 = 1962 Supp. (3) SCR 1].  Therein a  question arose as to whether the petitioner therein who had a right to manage  the Oriental Gas Company for a period of 20 years and to receive  remuneration for the same could question the vires of the law whereby the  said Oriental Gas Company was taken over as a result whereof, his right to  continue in the business was affected.  It was held that the Petitioner  Company had such a right, stating :

"\005It is not necessary in this case to decide whether  under the said agreement the appellant was constituted as  agent or managing agent or a servant of Oriental Gas  Company. Whatever may be its character, by reason of  Section 4 of the impugned Act, it was deprived of certain  legal rights it possessed under the agreement. Under the  agreement, the appellant had the right to manage Oriental

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Gas Company for a period of 20 years and to receive  remuneration for the same. But under Section 4 of the  impugned Act, it was deprived of that right for a period  of five years. There was certainly a legal right accruing to  the appellant under the agreement and that was abridged,  if not destroyed, by the impugned Act. It is, therefore,  impossible to say that the legal right of the appellant was  not infringed by the provisions of the impugned Act. In  the circumstances, as the appellant’s personal right to  manage the Company and to receive remuneration  therefor had been infringed by the provisions of the  statute, it had locus standi to file the petition under  Article 226 of the Constitution."

       Once it is held, in view of the aforementioned pronouncement that the  Appellants had legal rights to challenge the validity or otherwise of the said  notification issued by the State of Karnataka, there cannot be any doubt  whatsoever that they would have independent rights to maintain the writ  application.            We may consider the question from another angle.

       If the agent was to be prosecuted for violation of the term of the  notification, he could challenge the validity thereof.  A fortiori, a quia timet    application would also be maintainable.  A person must be held to have  access to justice if his right in any manner whether to carry on business or  threat to his liberty is infringed.  Access to justice is a human right.

       In Dwarka Prasad Agarwal (D) By LRs. v. B.D. Agarwal and Others  [(2003) 6 SCC 230], this Court opined:

"\005A party cannot be made to suffer adversely  either indirectly or directly by reason of an order  passed by any court of law which is not binding on  him. The very basis upon which a judicial process  can be resorted to is reasonableness and fairness in  a trial. Under our Constitution as also the  international treaties and conventions, the right to  get a fair trial is a basic fundamental/human right.  Any procedure which comes in the way of a party  in getting a fair trial would be violative of Article  14 of the Constitution of India. Right to a fair trial  by an independent and impartial Tribunal is part of  Article 6(1) of the European Convention for the  Protection of Human Rights and Fundamental  Freedoms, 1950 [See Clark (Procurator Fiscal,  Kirkcaldy) v. Kelly]\005"

    The High Court, therefore, was not correct in holding that they had no  personal right to enforce despite the fact that they would suffer injuries or  would otherwise be prejudiced by the notification issued by the State of  Karnataka.  It would, therefore, not be correct to contend that they could  enforce their rights only through their  principal and not independently.  The  Appellants had a legal right to carry on business.  Such a right having been  impugned by reason of the impugned notification, a writ petition at their  instance was maintainable.

Locus Standi :

If the Appellants herein had a legal right, they could seek redressal for  violation thereof before an appropriate forum.  The locus standi to maintain  a writ application even otherwise has received liberal interpretation.   

       In Ghulam Qadir v. Special Tribunal [(2002) 1 SCC 33], this Court

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observed :              "38. There is no dispute regarding the legal  proposition that the rights under Article 226 of the  Constitution of India can be enforced only by an  aggrieved person except in the case where the writ  prayed for is for habeas corpus or quo warranto. Another  exception in the general rule is the filing of a writ petition  in public interest. The existence of the legal right of the  petitioner which is alleged to have been violated is the  foundation for invoking the jurisdiction of the High  Court under the aforesaid article. The orthodox rule of  interpretation regarding the locus standi of a person to  reach the court has undergone a sea change with the  development of constitutional law in our country and the  constitutional courts have been adopting a liberal  approach in dealing with the cases or dislodging the  claim of a litigant merely on hypertechnical grounds. If a  person approaching the court can satisfy that the  impugned action is likely to adversely affect his right  which is shown to be having source in some statutory  provision, the petition filed by such a person cannot be  rejected on the ground of his not having the locus standi.  In other words, if the person is found to be not merely a  stranger having no right whatsoever to any post or  property, he cannot be non-suited on the ground of his  not having the locus standi."                  The Appellants were not mere strangers.

Maintainability of the suit before this Court :

       For determining the question as regard maintainability of the suit  before this Court, it is necessary to consider as to whether the appellants  herein whether independently or together with their principals could  maintain a suit.  In view of a large number of decisions of this Court,  evidently, they could not.

       Even the States of Sikkim and Meghalaya filed suits against the State  of Karnataka in this Court, the independent right of the Appellants herein to  maintain independent action before the appropriate forum could not have  been taken away.

       In State of Bihar v. Union of India and Another [(1970) 1 SCC 67], a  Constitution Bench of this Court while deciding a case wherein the State of  Bihar had not only sued the Union of India but also Hindustan Steel Ltd. in  regard to negligence or deliberate action of servants of both the defendants  therein the matter of short delivery of iron and steel material ordered by the  State in connection with the construction work of Gandak Project, this Court  held that such a suit shall not be maintainable, opining :

       "Although Article 131 does not define the scope of  the disputes which this Court may be called upon to  determine in the same way as Section 204 of the  Government of India Act, and we do not find it necessary  to do so this much is certain that the legal right which is  the subject of dispute must arise in the context of the  constitution and the Federalism it sets up.  However,  there can be no doubt that so far as the parties to the  dispute are concerned, the framers of the Constitution did  intend that they could only be the constituent units of the  Union of India and the Government of India itself  arrayed on one side or the other either singly or jointly  with another unit or the Government of India."

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       This Court further observed :

                "Apart from these special provisions a dispute  which falls within the ambit of Article 131 can only be  determined in the forum mentioned therein, namely, the  Supreme Court of India, provided there has not been  impleaded in any said ’dispute any private party, be it a  citizen or a firm or a corporation along with a State either  jointly or in the alternative.  A dispute in which such a  private party is involved must be brought before a court,  other than this court having jurisdiction over the matter."              In State of Rajasthan and Others v. Union of India and Others [(1977)  3 SCC 592], this Court opined : :

"\005The Article provides in so many terms in clauses (a),  (b) and (c) that the dispute must be between the  Government of India and one or more States, or between  the Government of India and any other State or States on  one side and one or more other States on the other, or  between two or more States. It does not contemplate any  private party being arrayed as a disputant on one side or  the other. The parties to the dispute must fall within one  or the other category specified in clauses (a), (b) and (c).  

       In State of Karnataka v. Union of India  [(1977) 4 SCC 608], this  Court observed :  

" It has to be remembered that Article 131 is traceable  to Section 204 of the Government of India Act. The  jurisdiction conferred by it thus originated in what was  part of the federal structure set up by the Government of  India Act, 1935. It is a remnant of the federalism found in  that Act. It should, therefore, be widely and generously  interpreted for that reason too so as to advance the  intended remedy. It can be invoked, in my opinion,  whenever a State and other States or the Union differ on  a question of interpretation of the Constitution so that a  decision of it will affect the scope or exercise of  governmental powers which are attributes of a State. It  makes no difference to the maintainability of the action if  the powers of the State, which are Executive, Legislative,  and Judicial, are exercised through particular individuals  as they necessarily must be. It is true that a criminal act  committed by a Minister is no part of his official duties.  But, if any of the organs of the State claim exclusive  power to take cognizance of it, the State, as such,  becomes interested in the dispute about the legal  competence or extent of powers of one of its organs  which may emerge."

       Yet again in Union of India v. State of Rajasthan [(1984) 4 SCC 238],  it was observed :

"On a careful consideration of the whole matter in the  light of the decisions of this Court referred to above, we  feel that Article 131 of the Constitution is attracted only  when a dispute arises between or amongst the States and  the Union in the context of the constitutional relationship  that exists between them and the powers, rights, duties,  immunities, liabilities, disabilities etc. flowing therefrom.  Any dispute which may arise between a State in the

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capacity of an employer in a factory, a manufacturer of  goods subject to excise duty, a holder of a permit to run a  stage carriage, a trader or businessman carrying on  business not incidental to the ordinary functions of  Government, a consumer of railway services etc. like any  other private party on the one hand and the Union of  India on the other cannot be construed as a dispute  arising between the State and the Union in discharge of  their respective executive powers attracting Article 131  of the Constitution. It could never have been the intention  of the framers of the Constitution that any ordinary  dispute of this nature would have to be decided  exclusively by the Supreme Court. It is well to remember  that the constitutional proposals of the Sapru Committee  advocated the strengthening of the position of the Federal  Court in India and widening its jurisdiction on the  original side so that the Federal Court could act as an  interpreter and guardian of the Constitution and as a  tribunal for the determination of the disputes between the  constituent units of the Federation. The Joint Committee  on Indian Constitutional Reforms was also of opinion  that the object of conferring exclusive original  jurisdiction on the Federal Court was that the disputes of  the kind specified between the Federation and the  Provinces as the constituent units of the Federation  should not be left to be decided by courts of law of a  particular unit but be adjudicated upon only by the  highest tribunal in the land which would be beyond the  influence of any one constituent unit. The Special  Committee consisting of Sriyuts S. Varadachariar, Alladi  Krishnaswami Ayyar, B.L. Mitter, K.M. Munshi and  B.N. Rau appointed by the Constituent Assembly to  consider and report on the constitution and powers of the  Supreme Court suggested "that the Supreme Court, like  the Federal Court under the 1935 Constitution, would be  the best available forum for the adjudication of all  disputes between the Union and a unit and between one  unit and another and proposed that the court should have  an exclusive original jurisdiction in such disputes". (Vide  The Framing of India’s Constitution\027A Study by Shri B.  Shiva Rao at p. 483). Considered in the light of the  foregoing the conclusion becomes inevitable that  disputes of the nature involved in this case could not  have been in the contemplation of the framers of the  Constitution when they adopted Article 131 of the  Constitution."

Conclusion :

       The Division Bench of the High Court accepted the position that the  Appellants herein are statutory agents but it evidently failed to take into  consideration the status of the Appellants vis-‘-vis their contractual rights  and obligations with their principal coupled with their individual rights to  maintain their writ petitions in proper perspective.  It is no doubt true that  had the State of Sikkim or the State of Meghalaya intended to sue the State  of Karnataka independently; in terms of Article 131 of the Constitution of  India the only forum where the dispute between them could have been  resolved is this Court alone but when such a lis is brought by the State  jointly with their agents who had also independent cause of action and had a  legal right to maintain writ application questioning the legality and/or  validity of the said notification issued by the State, a suit in terms of Article  131 of the Constitution of India would not have been maintainable.   

The Appellants herein were not busy bodies.  They had an interest in  the subject-matter of the writ petition.  They were, thus, not merely strangers

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having no right whatsoever in the matter.   

It has not been contended, nor could it be contended that the  Appellants are mere smoke screens of the States of Sikkim and Meghalaya.   In absence of such a plea and in view of the fact that the Appellants here not  been held to be mere strangers without having any legal right, we are of the  opinion that the writ petitions were maintainable.  The impugned judgment,  therefore, cannot be sustained, which is set aside accordingly.   

The appeals are allowed.

Keeping in view the fact that the Appellants are out of business, the  High Court is requested to consider the desirability of disposing of the writ  petitions as expeditiously as possible and preferably within a period of two  months from the date of communication of this order.  The Chief Justice of  the High Court, having regard to the importance of the question, may also  consider the desirability of getting the matter heard out and disposed of by a  Division Bench.      

The Appellants are entitled to costs throughout.   Counsel fee assessed  at Rs.25,000/- in each appeal.