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PETITIONER: NAWAB USMANALI KHAN

       Vs.

RESPONDENT: SAGARMAL

DATE OF JUDGMENT: 26/02/1965

BENCH: BACHAWAT, R.S. BENCH: BACHAWAT, R.S. SUBBARAO, K. SHAH, J.C.

CITATION:  1965 AIR 1798            1965 SCR  (3) 201  CITATOR INFO :  D          1971 SC 530  (96,138,232,323)

ACT:     Code  of Civil Procedure (Act 5 of 1908), ss.  60(1)(g), 86(1)  and  87B--Proceedings  under ss. 14  and  17  of  the Arbitration  Act (10 of "suit"--Payments to Ruler of  former Indian  State  on  account  of  privy  purse--If  liable  to attachment.

HEADNOTE:     The appellant, who was a Ruler of a former Indian State, had money dealings with the respondent. They referred  their disputes  to an arbitrator who made his award directing  the appellant  to pay. a certain sum of money, in  installments. The  award also stated that the existing documents  relating to debts on lands would remain as before and would remain as securities  till the payment of debts The  arbitrator  filed the  award  into court and the court, after  notice  to  the parties  passed a decree in terms of a compromise  modifying the award. The respondent started execution proceedings  and the  court passed a prohibitory order under O.XXI, r. 46  of the  Civil  Procedure  Code, 1908, in respect  of  the  sums payable  to  the  appellant by  the  Central  Government  on account  of the privy purse; but on the application  of  the appellant,  that  order  was  vacated.   The  appellant  and respondent  filed  appeals in the High  COurt,  against  the various  orders, and the High Court decided all the  appeals against the appellant.     In  the  appeal to the Supreme Court, it  was  contended that,  (i) as the award affected immovable property  of  the value of more than Rs. 100, and was not registered, a decree could  not  be  passed  in  terms     the  award,  (ii)  the proceedings  under the Indian  Arbitration Act,  1940,  were incompetent  in  the absence of the consent of  the  Central Government  under  ss.  86(1)  and  87B  of  the  Code,  and therefore the decree passed in those proceedings was without jurisdiction and void and (iii) the amount receivable by the appellant as his privy purse was a political pension  within the  meaning of s. 60(1)(g) of the Code, and not  liable  to attachment or sale in execution of a decree.     HELD:  (i)The award did not create or of its  own  force

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declare any interest in any immovable property and since  it did not come within the purview of s. 17 of the Registration Act, 1908, was not required to be registered. [(204 H]     (ii)  A  proceeding under s. 14 read with s. 17  of  the Arbitration Act, for the passing of a judgment and decree on an  award, does not commence with a plaint or a petition  in the nature of a plaint, and cannot be regarded as a suit and the parties to whom the notice of the filing of the award is given  under  s. 14(2) cannot be regarded as  "sued  in  any Court  otherwise  competent  to try  the  suit"  within  the meaning  of s. 86.(1) read with s. 87B of the Code.  Neither are  those provisions of the Code attracted by reason of  s. 41(a)  of  the  Arbitration Act or s. 141 of  the  Code.  It follows  that  the  COurt was  competent  to  entertain  the proceedings  under s. 14 of the Arbitration Act and  pass  a decree  in  those  proceedings  though  no  consent  to  the institution of the proceedings had been given by the Central Government. [205 G-H; 206 B-D] 202     (iii)  The amounts of the privy purse of  the  appellant were  not liable to attachment or sale in execution  of  the respondent’s decree. [209 C-D]     The  periodical payment of money by the Government to  a Ruler  of a former Indian State as privy purse on  political considerations and under political sanctions and not   under a  right  legally  enforceable in  any  municipal  court  is strictly  a  political  pension within  the  meaning  of  s. 60(1)(g)  of  the Code. The privy purse  satisfies  all  the essential  characteristics  of a political pension,  and  as such is protected from execution under s. 60(1) (g). [209 A- C]

JUDGMENT:     CIVIL APPELLATE JURISDICTION: Civil Appeals Nos. 568 and 757 of 1953.    Appeals  from  the judgment and order dated  October  10, 1960.  of  the Madhya Pradesh High  Court,   Indore   Bench, Indore,  in Civil Miscellaneous Appeals Nos. 33 of 1958  and 81 and 82 of 1957.     G.S. Pathak, B. Dutta, 1. B. Dadachanji, O.C. Mathur and Ravinder Narain, for the appellant.     B.R.L.  lyengar,  S.K.  Mehta and K.L.  Mehta,  for  the respondent. The Judgment of the Court was delivered by     Bachawat,  J. The appellant is the Ruler of  the  former Indian  State  of  Jaora. He had  money  dealings  with  the respondent.  By  an agreement dated February 23,  1957.  the appellant and the respondent agreed to refer their  disputes regarding   those  dealings  to  the  arbitration  of   Lala Durgashankar.  On  the  same date, the  arbitrator  made  an award. By this award, the arbitrator found that a sum of Rs. 1,60,000  was  due  to the respondent  from  the  appellant, and  .directed  that  this sum would  be  payable  in  eight quarterly installments, the first four installments to be of Rs.  21,000 each and the next four instalments to be of  Rs. 19,000  each,  the amount of interest would  be  payable  in another  quarterly instalment, the respondent would  have  a first  charge on the sums  receivable by the appellant  from the  Government  of  India as privy  purse,   and  would  be entitled  to realise those sums under a letter of  authority issued by the appellant, and if the Government would   raise any objection to the payment, the respondent would have  the right to realise the dues from the personal property of  the

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appellant.  Some      the items of the loans in  respect  of which  the  award  was  made  were  secured  on  lands   and ornaments. The award therefore provided:                      "The   documents  relating   to   debts               obtained  on lands and ornaments shall  remain               as  before till the payment of the  debts  and               they  shall  also remain  as  securities  till               then, and the Nawab Sahab shall have no  right               to transfer the land." The  award  was  signed by the arbitrator and  also  by  the appellant and the respondent.         203     On  the same day, the arbitrator filed the award in  the Court of the District Judge, Ratlam. Notice of filing of the award  under s. 14 of the Indian Arbitration Act,  1940  was duly  served on the parties. On March 9, 1957, an  agent  of the appellant filed a written submission accepting the award and  requesting the Court to pass a decree in terms  of  the award.  But  on  the same day, an application  was  made  by another  agent of the appellant intimating that steps  would be taken for setting aside the award. The Court fixed  March 23, 1957 for firing the objection. The time was subsequently extended  up to April 2, 1957. On that day,  an  application was  filed  on behalf of the appellant praying  for  setting aside  the award. But on April 5, 1957, an  application  was filed on behalf of the appellant withdrawing the  objections and asking the Court to pass a decree in terms of the award, subject  to  the modification that the amount of  the  award would  be  payable in quarterly instalments  of  Rs.  13,000 each. This application was signed by the respondent in token of  his  consent to the modification of the  amount  of  the instalments.  On  April 30, 1957. the arbitrator  filed  the relevant papers. On the same day, an agent of the  appellant filed   an  application  praying  for  setting   aside   the compromise and the award. The case was fixed for hearing  on June  19.  1957.  On  that  date.  the  Court  received   by registered   post   an  application   from   the   appellant withdrawing  the  objections  and praying for  an  order  in accordance with the compromise application filed on April 5. 1957.  In  the circumstances, on June 19.  1957,  the  Court recorded the compromise and passed a decree in terms of  the award as modified by the compromise. The appellant filed  in the Madhya Pradesh High Court Appeal No. 81 of 1957 under s. 39  of  the Indian Arbitration Act. 1940 against  the  order dated June 19. 1957 treating it as an order refusing to  set aside  the award. The appellant also filed Appeal No. 82  of 1957 under 0.43(1)(m) of the Code of Civil Procedure against the order dated June 19, 1957 recording the compromise.     In  the meantime. the respondent started Execution  Case No. 5 of 1957. and on September 9. 1957 obtained an ex parte order  for  transfer  of  the decree to  the  Court  of  the District  Judge.  Delhi.  On November  1.1957.  the  Central Government  gave  a certificate under s 86(3) read  with  s. 8713 of the Code of Civil Procedure. 1908 cpnsenting to  the execution  of  the  decree against  the  properties  of  the appellant.  On November 8, 1957. the District  Judge.  Delhi passed a prohibitory order under O. 21. r. 46 of the Code of Civil Procedure in respect of sums payable to the  appellant on account of the privy purse. By letter dated December  26. 1957,  the Central Government informed the appellant of  the prohibitory order. On January 8, 1958, the appellant applied to  the  Court  of the District Judge.  Ratlam  praying  for vacating  the  order  of  transfer of  the  decree  and  for cancellation of the certificate issued under O. 21. r.  6(b) of  the  Code of Civil Procedure. By order dated  March  15,

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1958.  the  Court  recalled the  decree  and  cancelled  the certificate  as  prayed for. on the ground that  the  amount receivable by the appel- 204 lant  on account of his privy purse was not attachable.  The respondent  preferred Appeal No. 33 of 1958 before the  High Court  against    order. By another order dated  January  7, 1959,   the   District  Judge,  Ratlam   dismissed   certain objections of the appellant filed in Execution Case No. 2 of 1958.  We are informed that the appellant flied  before  the High Court Appeal No. 13 of 1959 from this order.     Appeals  Nos.  81 and 82 of 1957, 33 of 1958 and  13  of 1959  were  heard  and disposed of by the High  Court  by  a common  judgment  on  October  10,  1960.  The  High   Court dismissed  Appeals  Nos. 81 and 82 of 1957 and  13  of  1959 preferred by the appellant and allowed Appeal No. 33 of 1958 preferred  by the respondent. The appellant has referred  to this Court Civil Appeal No. 568 of 1963 against the order of the High Court passed in Appeal No. 33 of 1958. He has  also preferred Civil Appeal No. 767 of 1963 from the order of the High  Court passed in Appeals Nos. 81 and 82 of 1957.  Civil Appeals  Nos. 568 and 767 of 1963 were heard  together,  and are being disposed of by this common judgment.     On  behalf  of the appellant, Mr.  Pathak  raised  three contentions  only.  He argued that: (1) the  award  affected immovable property of the value of more than Rs. 100, and as it was not registered, no decree could be passed in terms of the  award;  (2)the proceedings under s. 14  of  the  Indian Arbitration Act, 1940 were incompetent in the absence of the consent  of the Central Government under s. 86(1) read  with s.  87B, Code of Civil Procedure, and the decree  passed  in those proceedings is without jurisdiction and null and void; and  (3)  the amount receivable by the  appellant  from  the Central Government as his privy purse is a political pension within the meaning of s. 60(1)(g), Code of Civil  Procedure, and  is  not liable to attachment or sale  in  execution  of the  .decree. These contentions are disputed by Mr.  Iyengar on  behalf of the respondent. The first two  contentions  of Mr.  Pathak  arise in Civil Appeal No. 767 of 1963  and  the third contention arises in Civil Appeal No. 568 of 1963.     The  first  contention  raised by  Mr.  Pathak  must  be rejected.  The  award  stated that  the  existing  documents relating to. debts obtained on lands would remain as before, and  they  would remain as securities till  payment  of  the debts and the appellant would have no right to transfer  the land. This portion of the award stated an existing fact.  It did not create, or of its own force declare any interest  in any  immovable property. Consequently, the document did  not come within the purview of s. 17 of the Indian  Registration Act, 1908, and was not required to be registered.     The  second contention of Mr.  Pathak raises   questions of  construction  of  ss. 86 and 87B of the  Code  of  Civil Procedure. By reason of s. 86(1) read with s. 87B, no  Ruler of  any  former  Indian  State "may be  sued  in  any  Court otherwise competent to try the suit except with the  consent of the Central Government." Section         205 86(2) provides that the requisite consent may be given  with respect  to  a  specified suit or with  respect  to  several specified  suits  or with  respect to  all   suits  of   any specified  class  or  classes, Section 86 plainly deals with a special class of suits, and this conclusion is  reinforced by  the heading of Part IV, "Suit in Particular  Cases",  in which ss. 86 and 87B appear. Order 4, rule 1, Code of  Civil Procedure  provides that every suit shall be  instituted  by

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presenting a plaint to the Court or such other officer as it appoints  in  this behalf. In the context of s. 176  of  the Government  of India Act,  1935, Mahajan   and    Mukherjea, observed that the expression "sue" means the "enforcement of a  claim or civil right by means of legal proceedings",  see Province  Bombay  v .K.S. Advani and others(1). But  in  the context of the Indian Limitation Act, 1908, Lord Russell  of Killowen  observed in Hansraj Gupta v. Official  Liquidator, Dehra Dun- Mussorrie Electric Tramway Co.(2):               "The  word ’suit’ ordinarily means, and  apart               from  some  context must be taken to  mean,  a               civil    proceeding    instituted    by    the               presentation of a plaint." And  construing s. 86 of the Code of Civil Procedure,  Shah, J.  speaking  on behalf of this Court  observed  in  Bhagwat Singh v. State Rajasthan(3):                  "The  appellant  is recognised  under  Art.               366(22)  of the Constitution as a Ruler of  an               Indian  State, but s. 86 in terms  protects  a               Ruler  from being ’sued’ and not  against  the               institution  of any other proceeding which  is               not  in  the nature of a  suit.  A  proceeding               which  does  not  commence with  a  plaint  or               petition in the nature of plaint, or where the               claim is not in respect of dispute  ordinarily               triable  in a Civil Court, would  prima  facie               not be regarded as falling within s. 86,  Code               of Civil Procedure."      Now,  a proceeding under s. 14 read with s. 17  of  the Indian  Arbitration Act, 1940 for the passing of a  judgment and decree on an award does not commence with a plaint or  a petition  in the nature of a plaint, and cannot be  regarded as  a suit and the parties to whom the notice of the  filing of  the award is given under s. 14(2) cannot be regarded  as "sued  in  any Court otherwise competent to try  the  suit", within  the  meaning of s. 86(1) read with s. 87B,  Code  of Civil  Procedure.  Accordingly,  the  institution  of   this proceeding against the Ruler of a former Indian State is not barred  by  s.  86(1)  read  with  s.  87B.   Section   141, Code  of  Civil Procedure does not attract the provisions of s. 86(1) read with s.  87B  to  the  proceedings  under   s. 14  of  the  Indian Arbitration Act. Section 86(1) read with s.  87B confers upon the Rulers  of  former  Indian   States substantive  rights  of  im- (1)[1950] S.C.R. 621, at pp. 661, (2)[1932] L.R. I.A.13,19. (3) A.I.R. [1964] S.C. 444 at pp. 445, 446. 206 munity  from  suits. Section 141 makes applicable  to  other proceedings  only  those provisions of the Code  which  deal with  procedure  and not those which deal  with  substantive rights.  Nor  does s. 41(a) of the Indian  Arbitration  Act, 1940  carry  the matter any further. By  that  section,  the provisions  of  the Code of Civil Procedure, 1908  are  made applicable  to  all proceedings before the Court  under  the Act.  Now,  by its own language s. 86(1)  applies  to  suits only,  and s. 141, Code of Civil Procedure does not  attract the provisions of s. 86(1) to proceedings other than  suits. Accordingly,  by the conjoint application of s. 41(a)of  the Indian Arbitration Act and ss. 86(1) and 141 of the Code  of Civil  Procedure,  the  provisions  of  s.  86(1)  are   not attracted  to  a  proceeding  under  s.  14  of  the  Indian Arbitration  Act,  1940.  It  follows  that  the  Court  was competent  to entertain the proceedings under s. 14  of  the Indian  Arbitration Act, 1940 and to pass a  decree  against

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the appellant in those proceedings, though no consent to the institution  of  those  proceedings had been  given  by  the Central  Government.  A sovereign foreign State and a  Ruler of  such  State  may  enjoy  a  wider  immunity  from  legal proceedings   other   than   suits  under   the   rules   of International   Law  recognised  by  our  Courts,  but   the appellant  is  not  now a Ruler of a  sovereign  State,  and cannot claim immunity from proceedings other than suits. The second   contention  of  Mr.  Pathak  must,  therefore,   be rejected.     The  third contention of Mr. Pathak raises the  question whether  an  amount payable to a Ruler of  a  former  Indian State  as  privy  purse is a political  pension  within  the meaning  of s. 60(1)(g), Code of Civil Procedure.  The  word "pension"  in s. 60(1)(g), Code of Civil  Procedure  implies periodical  payments  of  money by  the  Government  to  the pensioner.  See  Nawab  Bahadur of  Murshidabad  v.  Karnani ,Industrial  Bank  Ltd.(1) And in Bishambhar Nath  v.  Nawab Imdad  Ali Khan(2), Lord Watson observed:                 "A pension which the Government of India has               given  a  guarantee  that it will  pay,  by  a               treaty  obligation  contracted  with   another               sovereign power, appears to their Lordships to               be,  in  the  strictest  sense,  a   political               pension. The obligation to pay, as well as the               actual  payment of the pension, must, in  such               circumstances, be ascribed to reasons of State               policy." Now,  the  history  of  the  integration  and  the  ultimate absorption  of  the Indian States and of the  guarantee  for payment  of periodical sums as privy purse to the Rulers  of the  former  Indian States are well-known.  Formerly  Indian States   were   semi-sovereign  vassal  States   under   the suzerainty  of the British Crown.  With  the declaration  of Independence, the paramountly of the British Crown lapsed as from August 15, 1947, and the Rulers of Indian States      207 became politically independent sovereigns. The Indian States parted with their sovereignty in successive stages,  firstly on  accession  to  the,  Dominion  of  India,  secondly   on integration of the States into sizable administrative  units and   on   closer accession to the Dominion  of  India,  and finally  on  adoption  of  the  Constitution  of  India  and extinction  of  the  separate existence of  the  States  and Unions of States. During the second phase of this  political absorption  of the States, the Rulers of the  Madhya  Bharat States  including  the Ruler of Jaora State entered  into  a Covenant  on April 22, 1948 for the formation of the  United State of Gwalior, Indore and Malwa (Madhya Bharat).  By Art. II  of the Covenant, the Covenanting States agreed to  unite and  integrate their territories into one State. Article  VI provided that the Ruler of each Covenanting State shall  not later than July 1, 1948 make over the administration of  the State to the Rajpramukh and thereupon all rights,  authority and jurisdiction belonging to the Ruler and appertaining  or incidental to the Government of the State would vest in  the United ..State of Madhya Bharat. Article XI(1) provided that "the  Ruler of each Covenanting State shall be  entitled  to receive  annually from the revenues of the United State  for his   privy   purse  the  amount  specified   against   that Covenanting  State in Schedule I." In Sch. I, a sum  of  Rs. 1,75,000  was specified against the State of Jaora.  Article XI(2)  provided  that  the amount of  the  privy  purse  was intended  to  cover all the expenses of the  Ruler  and  his family  including  expenses of the residence,  marriage  and

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other  ceremonies and neither be increased nor  reduced  for any  reason  whatsoever.  Article XI(3)  provided  that  the Rajpramukh would cause the amount to be paid to the Ruler in four  equal instalments at the beginning of each quarter  in advance.  Article  XI(4) provided that the amount  would  be free  of alI taxes whether imposed by the Government of  the United State or by the Government of India. Article XIII  of the Covenant secured to the Ruler of each Covenanting  State all  personal privileges, dignities and titles then  enjoyed by them. Article XIV guaranteed the succession, according to law and custom, to the gadding of each Covenanting State and to the personal rights, privileges, dignities and titles  of the Ruler. The Covenant was signed by all the Rulers of  the Covenanting  States.  At the foot of the  Covenant,  it  was stated  that "The Government of India hereby concur  in  the above  Covenant  and  guarantee  all  its  provisions."   In confirmation of this consent and guarantee, the Covenant was signed by a Secretary to the Government of India.     On  the coming into force of the Constitution of  India, the territories of Madhya Bharat became an integral part  of India. Article 291 of the Constitution provided:                     "Where  under any covenant or  agreement               entered into by the Ruler of any Indian  State               before the commencement of this  Constitution,               the payment of any sums, free               208               of tax, has been guaranteed or assured by  the               Government  of the Dominion  of  India to  any               Ruler of such State as privy purse:--                     (a)  such sums shall be charged on,  and               paid  out of, the Consolidated Fund of  India;               and                     (b) the sums so paid to any Ruler  shall               be exempt from all taxes on income." In  view of the guarantee by the Government of the  Dominion of India to the Ruler of Jaora State in the Covenant for the formation of the United State of Madhya Bharat, the  payment of the sums specified in the covenant as privy purse to  the Ruler became charged on the Consolidated Fund of India,  and became payable to him free from all taxes on income. Article 362  provides  that in the exercise of the  legislative  and executive  powers, due regard shall be had to the  guarantee given  in  any such covenant as is referred to in  Art.  291 with   respect  to  the  personal  rights,  privileges   and dignities  of the Ruler of an Indian State.  Article  363(1) provides,  that  notwithstanding anything contained  in  the Constitution,  the Courts would have no jurisdiction in  any dispute  arising,  out  of any  provision  in  any  covenant entered  into by any Ruler  of an Indian State to which  the Government of the ’Dominion of India was a party, or in  any dispute  in  respect  of any right  accruing  under  or  any liability or obligation arising out of any of the provisions of  the Constitution relating to any such covenant.  Article 366(22) provides that the expression "Ruler" in relation  to an Indian State means a person by whom the covenant referred to  in  Art. 299(1) was entered into and who for   the  time being  is  recognised by the President as the Ruler  of  the State,  and  includes any person who for the time  being  is recognised by the President as the successor of such Ruler.     Now,  the Covenant entered into by the Rulers of  Madhya Bharat  States  was a treaty entered into by the  Rulers  of independent  States by which they gave up their  sovereignty over  their respective territories and vested it in the  new United  State of Madhya Bharat. The Covenant was an  act  of State,  and  any  violation of its  terms  cannot  form  the

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subject of any action in any municipal courts. The guarantee given   by  the  Government of India was in the nature of  a treaty  obligation contracted with the sovereign  Rulers  of Indian States and cannot be enforced by action in  municipal courts.  Its  sanction is political and not  legal.  On  the coming  into  force  of  the  Constitution  of  India,   the guarantee for the payment of periodical sums as privy  purse is  continued  by  Art. 291 of  the  Constitution,  but  its essential  political character is preserved by Art.  363  of the  Constitution, and the obligation under  this  guarantee cannot be enforced in any municipal court. Moreover, if  the President  refuses  to  recognise the  person  by  whom  the covenant  was  entered into as the Ruler of  the  State,  he would  not be entitled to the amount payable as privy  purse under Art. 291.      209 Now, the periodical payment of money by the Government to  a Ruler  of a former Indian State as privy purse on  political considerations and under political sanctions and not under a right legally enforceable in any municipal court is strictly a political pension within the meaning of s. 60(1)(g) of the Code  of Civil Procedure.  The use of the expression  "privy purse"  instead of the  expression  "pension"  is   due   to historical   reasons. The privy  purse  satisfies   all  the essential characteristics of a political  pension,  and   as such,   is   protected  from  execution under  s.  60(1)(g), Code  of Civil Procedure. Moreover, an amount of  the  privy purse receivable from the Government cannot be said to be  a debt  or other property over which or the proceeds of  which he has disposing power within the main part of s. 60(1),Code of Civil Procedure. It follows that the third contention  of Mr.  Pathak must be accepted, and it must be held  that  the amounts  of the privy purse are not liable to attachment  or sale  in  execution of the respondent’s  decree.  The  third contention is raised in Civil Appeal No. 568 of 1963 arising out  of  Appeal  No.  33  of 1958.  It  follows  that  Civil Appeal No.  568 of 1963 must be allowed. All the contentions raised in Civil Appeal No. 767 of 1963 arising from  Appeals Nos.  81  and 82 of 1957 fail, and accordingly  this  appeal must be dismissed.    In  the result, Civil Appeal No. 568 of 1963 is  allowed, the order of the High Court in Appeal No. 33 of 1958 is  set aside  and the order of the District Judge dated  March  15, 1958 is restored with costs in this Court only. Civil Appeal No. 767 of 1963 is dismissed with costs.                           Appeal 568 of 1963 allowed.                           Appeal 767 of 1963 dismissed. LB(D)2SCI-2,500 -16-3-66--GIPS 211