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PETITIONER: SHRI MANNA LAL AND ANOTHER

       Vs.

RESPONDENT: COLLECTOR OF JHALAWAR AND OTHERS

DATE OF JUDGMENT: 07/12/1960

BENCH: SARKAR, A.K. BENCH: SARKAR, A.K. SINHA, BHUVNESHWAR P.(CJ) DAS, S.K. AYYANGAR, N. RAJAGOPALA MUDHOLKAR, J.R.

CITATION:  1961 AIR  828            1961 SCR  (2) 962  CITATOR INFO :  RF         1961 SC1704  (10)  R          1963 SC 222  (23,58)  D          1964 SC1633  (9)  R          1967 SC1581  (20)  RF         1974 SC2009  (3,23)  R          1980 SC 801  (8)  R          1984 SC 200  (7)

ACT: Public  Demand--Loan  due  to  Jhalaway  State  Bank--Assets transferred  to  United State of Rajasthan  under  covenant, later  vested  in State of Rajasthan--If  recoverable  as  a Public  demand-Certificate--Requirements, if  applicable  to loans  due to Government Special facilites to Government  as Banker, whether discriminatory--Constitution of India,  Art. 14--Rajasthan Public Demands Recovery Act, 1952 (Raj.  V  of 1952), s. 4.

HEADNOTE: The  jhalawar State Bank was originally a Bank belonging  to the  ruling  State  of jhalawar and  its  assets,  including moneys 963 due  to it, became vested in the United State  of  Rajasthan under  the covenant executed by the Ruler of Jhalawar  along with other Rulers by which the United State of Rajasthan was formed.  On the promulgation of the Constitution  of  India, the United State of Rajasthan became the State of  Rajasthan in  the  Indian  Union and all  its  assets,  including  the jhalawar  State  Bank and its dues, vested in the  State  of Rajasthan. Moneys  due from the appellants in respect of advances  made to  them  by  the  jhalawar State Bank at  a  time  when  it belonged to the ruling State of jhalawar, could be recovered by  the State of Rajasthan after the Bank had become  vested in it, as a public demand under the Rajasthan Public Demands Recovery Act, 1952. The form prescribed in the Rajasthan Public Demands Recovery Act,  in  which a certificate has to be drawn up  and  filed

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under  S.  4  of  the Act  for  commencing  proceedings  for recovery  of  public demands under the Act in so far  as  it required  a  statement as to the period for which  a  public demand is due, was not applicable to a public demand like  a loan  due to the Government in respect of which there is  no question of any period for which it is due. The  Rajasthan Public Demands Recovery Act did not  off  end Art.  14 of the Constitution as giving special  facility  to the  Government as a banker for the recovery of  the  bank’s dues  for,  the  Government can legitimately  be  put  in  a separate class for this purpose.

JUDGMENT: CIVIL APPELLATE JURISDICTION: Civil Appeal No. 88 of 1957. Appeal  from the judgment and order dated January 18,  1956, of  the Rajasthan High Court (Jaipur Bench) in  D.B.C.  Writ Petition No. 262 of 1954. S.   K. Kapur and Ganpat Rai, for the appellants. N.   S. Bindra and D. Gupta, for the respondents. 1960.   December 7. The Judgment of the Court was  delivered by SARKAR,   J.-The   appellants  are  traders   of   Jhalawar. Respondent No. 1, the Collector of Jhalawar, ,served on  the appellants  a  notice under s. 6 of  the  ,Rajasthan  Public Demands  Recovery Act, 1952, hereafter called the  Act,  for the   recovery  from  them  as  a  public  demand,  of   Rs. 2,24,607/6/6  said  to be due on account of loans  taken  by them  from the Jhalawar State Bank.  The appellants filed  a petition under s.   8  of  the Act contending,  among  other things, that 964 the amount sought to be recovered from them was not a public demand.   Respondent No. 1 appears to have called  upon  the appellants  to prove that it was not a public  demand.   The appellants without proceeding further before respondent  No. 1,  filed a petition in the High Court of Rajasthan for  the issue  of a writ quashing the proceedings under  the  Public Demands Recovery Act.  The High Court dismissed the petition but  granted  a  certificate that the case was  fit  for  an appeal to this Court.  Hence the present appeal. The only question raised in this appeal is whether any  loan due  to  the  Jhalawar State Bank could be  recovered  as  a public demand.  A "public demand" within the meaning of  the Act  is  "any  money  payable to  the  Government  or  to  a department or an officer of Government under or in pursuance of a written instrument or agreement".  The Government  here means the Government of Rajasthan for the Act was passed  in 1952 by the Rajasthan State Legislature.  The question  then is  whether money due to the Jhalawar State Bank,  is  money payable to the Government of Rajasthan. Now,  the Jhalawar State Bank was started in 1932.  At  that time  Jhalawar  was a ruling State.  Sometime  in  or  about April,  1948, the State of Jhalawar, along with  nine  other ruling States of Rajputana, integrated and formed the United State  of Rajasthan under a covenant executed by the  Rulers of  these  States.   One of the articles  of  this  covenant provided, "All the assets and liabilities of the covenanting States  shall  be the assets and liabilities of  the  United State."  Subsequently,  on  March 30, 1949,  the  States  of Bikaner,  Jaipur,  Jaisalmer and Jodhpur joined  the  United State of Rajasthan.  On the promulgation of the Constitution of  India,  the United State of Rajasthan became  a  Part  B State  in  the  Indian Union.  The assets  of  the  previous

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ruling  State of Jhalawar, which had earlier vested  in  the United State of Rajasthan, thereupon passed to and  devolved upon the State of Rajasthan in the Indian Union. 965 The  proceedings under the Act against the  appellants  were started by the filing of a requisition with respondent No. 1 by respondents Nos. 2 and 3, being respectively the Treasury Officer, Jhalawar, and the Recovery Officer, Jhalawar  State Bank, under s. 3 of the Act stating that the amount  earlier mentioned  was due from the appellants to the Government  of Rajasthan  in  respect of the claims of the  Jhalawar  State Bank  against them.  This was done presumably shortly  prior to  June 16, 1953, on which date respondent No. 1  signed  a certificate specifying the amount of the demand and  certain other particulars and filed it in his own office under s.  4 of  the  Act.   A notice of the signing and  filing  of  the certificate was served upon the appellants under s. 6 of the Act.   This notice and the subsequent proceedings have  been referred to in the beginning of this judgment. The  claim thus is in respect of moneys due to the  Jhalawar State  Bank.   If  that Bank was not  the  property  of  the Jhalawar  State, then its dues cannot of course be  said  to have  merged  in  the  present  State  of  Rajasthan.    The appellants first contended that the Jhalawar State Bank  was not  the  property  of  the State  of  Jhalawar.   The  only material to which we have been referred by the appellants in support  of this contention is certain rules framed  by  the Ruler  of Jhalawar in respect of the Bank.  It  was  pointed out  that the rules showed that the Bank was like any  other commercial enterprise.  We are unable to agree that for this reason  it  could  not be an institution  belonging  to  the State.   There  was nothing to prevent  the  Jhalawar  State carrying  on  a commercial undertaking.  If it did  so,  the assets of that undertaking would be those of the State  and, in the circumstances earlier mentioned, must now be held  to be vested in the State of Rajasthan. It  was also said that the rules showed that the  management of  the  Bank was in the hands of a board of  which  certain non-officials  were  members.  It was  contended  that  this showed that the Bank was not the property of the State.   It is clear, however, from the 122 966 rules  that  the  Bank was not the property  of  the  board. Again,  the board was constituted from time to time  by  the Ruler  and the majority of its members were officers of  the State.   This would show that the Ruler was in full  control of the management of the Bank as a State undertaking.  It is true  that the rules indicate that the Bank might sue or  be sued  in respect of transactions made by or with it.   That, however,  would  not indicate that the Bank had  a  separate identity.   The  rules in this connection only  indicate  in what  name suits could be brought by or against the  State’s banking business.  On the other hand, it is perfectly  clear that  the  capital of the Bank was derived solely  from  the funds of the Jhalawar State.  No part of it was  contributed by  anyone  else.   One of the objects of the  Bank  was  to invest   the  surplus  funds  of  the  State.   The   entire transaction of the business of the Bank was in the  ultimate control  of  the Ruler.  The Jhalawar State  guaranteed  the financial liabilities of the Bank.  The name "Jhalawar State Bank"  also indicates that the institution belonged  to  the State  of Jhalawar.  About the time of the formation of  the United  State  of  Rajasthan in 1948,  the  Chief  Executive Officer,  Jhalawar, issued a public notification  in  which,

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after  referring  to  the  article  in  the  Covenant  which provided that the assets and liabilities of the  covenanting States  would  be the assets and liabilities of  the  United State, he proceeded to state that by virtue of this article, on  the formation of the new State, the  responsibility  and guarantee  of the existing transactions with  the  different departments  of Jhalawar State or the Jhalawar  State  Bank, would  be  of the newly formed United  State  of  Rajasthan. This  would show that the assets of the Jhalawar State  Bank were being treated by all concerned as assets of the  former Jhalawar  State,  which, upon the formation  of  the  United State  of  Rajasthan,  had  vested  in  the  latter   State. Further,  no one else has at any time made any claim to  the assets of the Jhalawar State Bank.  It is, therefore,  clear beyond  all doubt, that the Jhalawar State Bank was  one  of the assets of Jhalawar State and is now vested in the  State of Rajasthan. 967 The second point argued for the appellants is that the  dues of the Jhalawar State Bank have in any case been transferred by the Government of Rajasthan to the Bank of Rajasthan Ltd. under  certain  Notifications to which  we  shall  presently refer.   It is said that the Bank of Rajasthan Ltd.  is,  as its name shows, obviously a limited company having an  inde- pendent existence and is not a department of the  Government of Rajasthan State.  It is also contended that this  vesting took place before the proceedings under the Act had started. Therefore,  it  is said that at the  commencement  of  those proceedings,  the amount claimed from the appellants as  due to  the Jhalawar State Bank, was not a public demand  within the meaning of the Act. This contention which is based on the Notifications, earlier mentioned, does not seem to us to be well founded.  We  will assume  for the present purpose that the Bank  of  Rajasthan Ltd.  is  not a department of the  Government  of  Rajasthan State.   The  question  is  whether  the  effect  of   these Notifications,  which  were two in number, was to  vest  the dues  of  the Jhalawar State Bank in the Bank  of  Rajasthan Ltd.   The  first Notification is dated February  15,  1951. It, stated that the Government of the State of Rajasthan had decided to transfer, among others, the Jhalawar State  Bank, to the Bank of Rajasthan Ltd.  It was contended that by this Notification  the  assets  of the Jhalwar  State  Bank  were transferred  to the Bank of Rajasthan Ltd.  We do not  think that that was the effect of this Notification.  It contained two very significant provisions which we set out below: "All  debtors of the State Banks irrespective of the  class, category  and  nature of the debt are hereby  informed  that within one month from the date of publication of this notice they  should clear accounts with the aforesaid  State  Banks which  will  continue  to function only  to  clear  the  old accounts, and thereafter their accounts with the  securities pledged  will  automatically be transferred to the  Bank  of Rajasthan  Ltd.,  who will be authorised on  behalf  of  the State, to effect necessary recoveries and settle accounts. 968 The  transfer of these debts to the Bank of  Rajasthan  Ltd. will not, on any account, take away the inherent right which the  Rajasthan Govt. possess in these  various  transactions made on the guarantee of the respective convenanting  States to  make recoveries and settle accounts in  accordance  with the  existing  rules or laws that may hereafter be  made  to effect recovery of State dues or State debts." It is clear from these provisions that the Bank of Rajasthan Ltd. was being authorised "on behalf of the State", that is,

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the  Government  of the State of Rajasthan, to  recover  the amounts due to the Jhalawar State Bank.  The transfer of the latter Bank to the Bank of Rajasthan Ltd. was to be  subject to this qualification that its dues would remain the dues of the  Government of the State of Rajasthan and would only  be recovered by the Bank of Rajasthan Ltd. as the agent of that Government.   The  last paragraph set out  above  emphasises this Position.  It preserves the right of the Government  of the  State  of Rajasthan to recover the amounts due  to  the Jhalawar State Bank in accordance with any law that might be made after the date of the Notification.  The position  then is  that  under  this  Notification the  debts  due  to  the Jhalawar Bank were not transferred to the Bank of  Rajasthan Ltd.  and remained payable to the Government  of  Rajasthan. The  other  Notification  is dated April 16,  1952,  and  it repeats   that   the   banks  mentioned   in   the   earlier Notification,  including the Jhalawar State Bank,  "will  be merged  in the Bank of Rajasthan Limited".  It is said  that the  effect of this Notification was in any event to  cancel the earlier Notification, in so far as the latter  preserved the power of the State to collect the debts of the  Jhalawar State  Bank.  We are wholly unable to agree.   This  Notifi- cation  only reiterates the intention of the  Government  of the State of Rajasthan to merge the banks named, in the Bank of  Rajasthan Ltd.  It says nothing specifically  about  the dues  of these banks or as to their recoveries, with  regard to   which,  therefore,  the  provisions  of  the   previous Notification  must  have  effect.   Furthermore,  there   is nothing to show that the debts 969 due  to  the  Jhalawar  State  Bank  were  by  any  document specifically  transferred  to  or  vested  in  the  Bank  of Rajasthan  Ltd.  and thereupon became  its  property.   That being  so,  there is no basis for the  contention  that  the debts  due  from the appellants are now due to the  Bank  of Rajasthan Ltd. in its own right.  It would follow that  such debts  remained debts due to the Government of the State  of Rajasthan. The third point argued was that the moneys claimed from  the appellants  were not payable under a written  instrument  or agreement.  This contention is wholly unfounded.  It appears that  the loans were granted by the Jhalawar State  Bank  to the   appellants  on  their  own  applications.    In   each application  the appellants stated that they wanted  a  loan from  the Jhalawar State Bank and promised to repay it  with interest at the rate mentioned in it.  By these applications the   appellants  also  proposed  to   hypothecate   various properties  belonging  to  them  as  security  for  the  due repayment of the loans taken.  They signed the  applications and  the receipts, which latter also bore the signatures  of the  officers  of the Bank in token of the sanction  of  the loan.  In our view, the money payable by the appellants  was payable  under  these  applications and  receipts  and  was, therefore, payable under written instruments or  agreements. A  point was sought to be made that in each case there  were two documents, namely, the application by the appellants and the receipt for the moneys advanced signed by them,  whereas a  public  demand  as  defined  in  the  Act,  required  one instrument.   It  is  enough  to  say  in  regard  to   this contention  that the Act does not say that the moneys  shall be due under a single instrument.  It is well-known that  in a statute a singular includes the plural.  In any case,  the two documents constituted the written agreement between  the parties and that is enough to satisfy the requirement of the Act, even if read in the way suggested by the appellants.

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The fourth point advanced was that the certificate under the Act  was  defective  and therefore the  proceedings  were  a nullity.  Section 4 of the Act requires that the certificate shall be in the prescribed form. 970 One  of the particulars to be stated in the  form,  requires that  the  period  for which the demand was  due  should  be specified.  That period was not specified in the certificate in the present case.  It seems to us however that this is no defect.   In the case of loans due, there is no question  of any  period  for which the demand is  due.   Obviously,  the requirement as to, the specification of the period was meant to  apply where the demand consisted of a claim for  revenue or rent or the like, which could be due for a period.  It is clear  to us that the requirement as to stating  the  period for which the demand is due, as appears from the  prescribed form,  does  not  arise in the case of a  loan  due  to  the Government  which is a public demand within the Act  and  in such  a case no question of stating the period arises.   The certificate was not, therefore, defective. The last point argued was that in so far as the Act  enables moneys  due  to  the Government in respect  of  its  trading activities  to  be  recovered by way of  public  demand,  it offends  Art. 14 of the Constitution.  It is said  that  the Act  makes  a  distinction between  other  bankers  and  the Government as a banker, in respect of the recovery of moneys due.  It seems to us that the Government, even as a  banker, can  be legitimately put in a separate class.  The  dues  of the Government of a State are the dues of the entire  people of the State.  This being the position, a law giving special facility for the recovery of such dues cannot, in any event, be said to offend Art. 14 of the Constitution. We  have now discussed all the points raised in this  appeal and  are unable, for the reasons earlier mentioned, to  find merit  in  any  of  them.  In the  result  we  come  to  the conclusion that the amount claimed from the appellants was a public demand within the meaning of the Act and was  legally recoverable  by  the  impugned  proceedings.   This   appeal therefore  must  be  dismissed  with  costs  and  we   order accordingly                                           Appeal dismissed. 971