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PETITIONER: SUPERINTENDENT & LEGAL REMEMBRANCER,STATE OF WEST BENGAL

       Vs.

RESPONDENT: CORPORATION OF CALCUTTA

DATE OF JUDGMENT: 07/12/1966

BENCH: RAO, K. SUBBA (CJ) BENCH: RAO, K. SUBBA (CJ) WANCHOO, K.N. SHAH, J.C. SIKRI, S.M. BACHAWAT, R.S. RAMASWAMI, V. SHELAT, J.M. BHARGAVA, VISHISHTHA VAIDYIALINGAM, C.A.

CITATION:  1967 AIR  997            1967 SCR  (2) 170  CITATOR INFO :  R          1967 SC1643  (57)  D          1967 SC1831  (7)  F          1968 SC 360  (4,12)  R          1969 SC 843  (11)  R          1973 SC1425  (28)

ACT: Calcutta  Municipal Act (W.B. 33 of 1951), ss. 218 and  541- Taking out licence to run market-State if bound by  statute; if exempted by implication. State  Immunity-Rule  that  Crown is not  bound  by  statute unless  expressly named or clearly intended, if  applies  to India. Interpretation  of  Statutes-State immunity  from  statutes- Common law rule of construction if proper rule. Constitution  of  India, Art. 372-Rule of  construction,  if "law in force."

HEADNOTE: The appellant-State of West Bengal was carrying on trade  as owner and occupier of a market at Calcutta without obtaining a licence as required under s. 218 of the Calcutta Municipal Act,  1951.  The respondent-Corporation of Calcutta filed  a complaint against the State for contravention thereof.   The trial Magistrate, accepting the State’s contention that  the State  was not bound by the provisions of the Act  acquitted the State. on appeal, theHigh Court convicted the State and sentenced it to a fine, holding thatthe  State  was as  much bound as a private citizen to take out  a  licence. In  appeal to this Court the appellant, relying  on  this Court’s decision inDirector of Rationing v. Corporation  of Calcutta, [1961] 1 S.C.R. 158,contended that the  State was  not bound by the provisions of a statute unless it  was expressly  named or brought in by necessary implication  and this common law rule of construction, accepted as the law in

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India  was "law in force" within the meaning of Art. 372  of the  Constitution  and  that  in  any  event  by   necessary implication the State was excluded from the operation of  s. 218 of the Act. Held:Per  Subba  Rao C.J.,  Wanchoo,  Sikri,  Bachawat, Ramaswami, Shelat, Bhargava and Vaidialingam, JJ. (Shah,  J. dissenting) : The State was not exempt from the operation of s. 218 of the Calcutta Municipal Act, 1951 and was rightly convicted. Per  Subba  Rao C. J. Wanchoo,  Sikri,  Ramaswami.   Shelat, Bhargava  and Vaidialingam, JJ. (i) The Common Law  rule  of construction  that the Crown is not, unless expressly  named or  clearly intended, bound by a statute,, was not  accepted as  a rule of construction throughout India and even in  the Presidency Towns, it was not regarded as an inflexible  rule of  construction.  It was not statutorily recognized  either by  incorporating  it in different Acts or  in  any  General Clauses  Act; at the most, it was relied upon as a  rule  of general   guidance  in  some  parts  of  the  country.   The legislative   practice   establishes   that   the    various legislatures of country provided specifically, exemptions in favour of the Crown  171 whenever they intended to do so indicating thereby that they did  not  rely  upon any presumption  but  only  on  express exemptions.   Even those courts that accepted it  considered it only as a simple canon of construction and not as a  rule of  substantive law.  In the City of Calcutta there  was  no universal recognition of the rule of construction in  favour of  the Crown.  The Privy Council, in Province of Bombay  v. Corporation  of the City of Bombay, (1946) L.R. 73  I.A.  27 gave  its approval to the rule mainly on concession made  by counsel. [180 D-G; 183 H; 184 E-F; 186 D-G] The archaic rule based on the prerogative and perfection  of the  Crown has no ’relevance to a democratic republic it  is inconsistent with the rule of law based on the, doctrine  of equality and introduces conflicts and anomalies.  The normal construction, namely, that an enactment applies to  citizens as  well  as to State unless it expressly  or  by  necessary implication  exempts  the State from its  operation,  steers clear  of  all  the anomalies and  is  consistent  with  the philosophy  of equality enshrined in the Constitution.  [187 F; 188 B] If  a  rule  of  construction  accepted  by  this  Court  is inconsistent  with the legal philosophy of the  Constitution it  is  the duty of this Court to correct its self  and  lay down the right rule.  This Court must more readily do so  in constitutional  matters than in other branches of law.  [176 B-C] Director  of Rationing v. Corporation of Calcutta, [1961]  1 S.C.R. 158,, reversed. Province  of  Bombay v. Corporation of the City  of  Bombay, (1946) L.R. 73 I.A. 271, held inapplicable. Bengal Immunity Co. v. State of Bihar, [1955] 2 S.C.R.  603, referred to. Case law discussed. (ii)Even assuming that the common law rule of  construction was  accepted as a canon of interpretation throughout  India the rule is not "law in force" within the meaning of Article 372 of the Constitution.  There is an essential  distinction between  a  law  and  a rule of  construction.   A  rule  of construction  adopted  to  ascertain the  intention  of  the legislature is not -a rule of law. [187 D] (iii)The State is not excluded from the operation of s. 218  of the Act by necessary implication.  The State is  not

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the payer as well as the receiver of the fine, or the  fine, when  levied  goes  to  the  municipal  fund.   Though   the expression  fine’ is used, in effect and substance,  section 541 is a mode of realization of the, fee payable in  respect of  the licence.  The provision for imprisonment in  default of  fine is only an enabling provision and the court is  not bound to direct the imprisonment of the defaulter. [189 D-H; 190 A-B] Per Bachawat, J : (i) This Court should have in Director  of Rationing  and  Distribution  v.  Corporation  of  Calcutta, [1964] 1 S.C.R. 158, refused to recognise the rule that  the Crown is not bound by a statute save by express words or  by necessary implication.  In India the Crown never enjoyed the general  prerogative of overriding a statute  and  ’standing outside  it.   The doctrine of the general immunity  of  the Crown  from the operation of statutes so far as it is  based upon  the ’royal prerogative was never imported into  India. Nor  is there any compelling reason why the courts in  India should  not  give  full effect to the  general  words  of  a statute on the basis of some artificial rule of construction prevailing  in England.  The bulk of the Indian  legislation proceeds  upon  the assumption that the Government  will  be bound unless the contrary is stated.  The 172 rule,as  rule  of  construction, never  gained  a  firm foothold in untilthe  Privy Council decision in  Province of  Bombay v. Municipal Corporation for the City of  Bombay, (1946) L.R. 73 I.A. 271, in 1946, till which time there  was no  settled  course  of  decisions  of  the  Indian   courts necessitating or justifying the application of this rule  to the  construction  of  Indian statutes;  and  even  in  this decision  the  propriety  of  applying the  rule  to  Indian legislation  was  not considered.  The  imposition  of  this strict  rule  of  construction  by  the  Privy  Council  was received  very  unfavourably  in  India  till  this  Court’s decision in the Director of Rationing case wherein  Province of  Bombay was held to have laid down the correct law.   But subsequent  decisions of this Court disclosed a tendency  to relax  and  soften the rigour of the rule.   Further,  in  a country  having  a  federal  system  of  government  it   is difficult  to  apply  the  rule  of  Crown  exemption   from statutes.  This rule was not in force in India and therefore was not "law in force" within the meaning of Art. 372 of the Constitution.  [201 D-E; 202 C; 210 A-B, C-D; 205 F; 208  C, H; 210 H; 211 F] This  Court has power to reconsider its  previous  decisions and this is a fit case where this power should be exercised. [211 E] Director  of Rationing v. Corporation of Calcutta, [1961]  1 S.C.R.  158,  reversed.   Province of  Bombay  v.  Municipal Corporation for the City of Bombay, (1946) L.R. 73 I.A. 271, held inapplicable. Shivenkata  Seetararnanjaneya Rice & Oil Mills v.  State  of Andhra Pradesh, [1964] 7 S.C.R. 456 and Bengal Immunity  Co. v. State of Bihar, [1955] 2 S.C.R. 603, referred to. Case law discussed. (ii)On a question of construction of a statute no  rational distinction can be made between the trading and  non-trading activities of the State. [210 G] (iii)There  is nothing in the Act to indicate that  the State  should  be  excluded from the purview  of  s.  218(1) ’requiring  the  taking out of a licence on payment  of  the prescribed  fee and s. 5441(1) providing the remedy for  the recovery  of fee in face of default.  If the State is to  be exempt from the application of s. 541(1)(b) it would lead to

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the anomaly that the State is liable to pay the licence  fee but the Municipality will have no remedy for the recovery of the  fee.  Also, the fact that under s. 547(A) the court  is competent  to direct imprisonment in default of fine  is  no reason  why  s.  5411 1) (b) should not be  applied  to  the State.   The special provisions of s. 541(2) indicate  that- the  fine  realizable  under s. 541 is  -receivable  by  the Municipality.   It follows that the State Government is  the payer  but is not the receiver of the fine.  The fine,  when levied, is taken by the Municipality in full satisfaction of the demand on account of the licence fee. [212 H; 213B] State of Bihar v. Rani Sonavati Kumari [1961] 1 S.C.R.  728, relied on. Shah, J. (Dissenting); (i) The English Common Law rule  that the  Crown  is  not,  unless  expressly  named  or   clearly intended, bound by a statute, is a rule of construction  and was  settled law in India before the -Constitution. [197  F; 198 D] The  Common  Law  of England was  adopted  in  this  country subject  to  local variations and the personal  law  of  the parties  and  the  courts which  functioned  in  the  former British India territory were enjoined to cases not  governed by any specific statutory rules according to equity and good conscience,, which meant rules of English Common Law 173 in  so far as they were applicable to Indian society.   Them was practically a consistent course of decisions of the High Courts  in India, prior to the Constitution, in  support  of the view, affirmed by the Judicial Committee in Province  of Bombay  v.  Municipal  Corporation of the  City  of  Bombay, (1946) L.R. 73 I.A. 271, that the rule that the Crown is not unless  expressly  named  or clearly  intended  bound  by  a statute applied to  India.  It  was accepted as  a  rule  of interpretation ofstatutes applicable to   all    statutes governing state action, authority or property. A  difference may   have  prevailed  in  Parts  of  the  territories   now comprising theIndian    Union. But this is not peculiar  to this rule of interpretation adoptedby  the  Courts   in British  India.    Where  uniform  statutes  do  not   apply differences do arise and must be determined according to the law  and jurisdiction inherited by the courts  administering justice.   The present case concerns the  administration  of law  in  the town of Calcutta which has for  more  than  two centuries been governed by the English Common Law as adopted by the various Acts, Regulations and finally by the  Letters Patent. [191 A-D; 192 D-E; 194 F, 195 D-F] Director of Rationing and Distribution v. The Corporation of Calcutta, [1961] 1 S.C.R. 158, followed. Province  of Bombay v. Municipal Corporation of the City  of Bom. bay, L.R. 73 I.A. 271, applied. State  of  West  Bengal  v.  Union,  [1964]  1  S.C.R.   371 Srivenkata  Seetaramanjaneya  Rice & Oil Mills v.  State  of Andhra  Pradesh,  [1964]  7  S.C.R.  456,  Builders   Supply Corporation  v.  Union  of India,  A.I.R.  1965  S.C.  1061, referred to. Case law referred to. There  is no reason to hold that the rule  which  previously applied to the interpretation of a statute ceased to  apply. on the date on which the Constitution came into force.   The Constitution has not so fundamentally altered our concept of ’State’  as  to  abandon the traditional  view  about  State privileges,  immunities  -and  rights  because  they  had  a foreign  origin  and  on the  supposed  theory  of  equality between the State and its citizens.  The guarantee of  equal protection clause of the Constitution does not extend to any

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differential  treatment which may result in the  application of  a special rule of interpretation between the  State  and the  citizens  nor has the Constitution  predicated  in  all respects  equality in matters of interpretation between  the State  and  its citizens.  A State can, in the  interest  of public  good,  select itself for  special  treatment.   This being so, there is no reason to suppose that a Statute which was  framed  on  the basis of a well settled  rule  of  pre- Constitution  days  which  accorded  the  State  a   special treatment in the matter of interpretation. of statutes  must be  deemed  to have a different meaning on  the  supposition that the Constitution has sought to impose equality  between the State and the citizens. [198 H-199 F] The  fact that in the Indian federal set up  sovereignty  is divided  between  the  Union  and the  States,  and  in  the application  of  the rule that the State is not bound  by  a Statute, unless expressly named or clearly implied, conflict between-the State enacting a law and the Union,, or  another State,  may  arise, does not give rise  to  any  insuperable difficulty  which  renders  the  rule  inapplicable  to  the changed  circumstances, for, it is the State which enacts  a legislation  in terms general which alone may claim  benefit of the rule of interpretation and not any other State.  [199 G] (ii)The rule of interpretation being a settled rule is "law in force" within Me meaning of Art. 372 of the Constitution. A rule is not any 174 the   less  a  rule  of  law  because  it  is  a  rule   for determination  of the intention of the legislature  and  for its   application  requires  determination  of   facts   and circumstances  outside  the  statute.   Acceptance  of   the proposition that a decision of the highest judicial tribunal before  the Constitution, is law, does not involve the  view that  it is immutable.  A statue may be repealed,’ and  even retrospectively, it would then cease to be in ,operation;  a decision which in the view of this Court is erroneous may be overruled and may cease to be regarded as law, but till then it was law in force. [198 D-G] (iii)The  application of the rule cannot be  restricted to  cases  where  an action of the State  in  its  sovereign capacity  is in issue.  In the context of modem  notions  of the functions of a welfare State, it is difficult to  regard any particular activity of the State as exclusively trading. [200 A-B] (iv)The  State  of  West  Bengal  was  not  bound  by   the provisions relating to the issue of licences for  occupation or conduct of a market. [200 F] There  is no, express reference to the State, nor  is  there anything peculiar in the nature purpose and object or in the language  used  in the enactment relating to  the  issue  of licences, which may suggest that the State must by necessary implication be bound by its provision. [200 E]

JUDGMENT: CRIMINAL APPELLATE JURISDICTION: Criminal Appeal No. 193  of 1964. Appeal from the judgment and order dated April 29, 1964  ,of the Calcutta High Court in Criminal Appeal No. 369 of 1962. S.   D.  Banerjee,  Advocate-General for the State  of  West Bengal, B.   Sen,  P. K. Chatterjee, M. K. Banerjee and P. K.  Bose, for the appellant.

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M.C.  Setalvad,  A. N. Sinha and Sukumar Ghose,  for  the respondent, N.S. Bindra, R. H. Dhebar and R. N. Sachthey, for  inter- vener No. 1. A.   V. Rangam, for intervener No. 2. V.   A.  Seyid  Muhamad, Advocate-General for the  State  of Kerala and A. G. Puddisery, for intervener No. 3. O.   P. Rana, for intervener No. 4. I.   N. Shroff, for intervener No. 5. K.   B. Mehta, for intervener No. 6. The Judgment of SUBBA RAO, C.J., WANCHOO, SIKRI,  RAMASWAMI, SHELAT,  BHARGAVA  and VAIDIALINGAM, JJ.  was  delivered  by SBBBA   RAO,  C.  J.  BACHAWAT  J.,  delivered  a   separate concurring  Judgment.   SHAH,  J.  delivered  a   dissenting Opinion. Subbarao,  C.J. This Full Bench of 9 Judges has  been  cons- tituted to consider the correctness of the decision of  this Court  175 in Director of Rationing and Distribution v. The Corporation of Calcutta(1). The  relevant facts are simple and are not in dispute.   The State  of West Bengal was carrying on the trade of  a  daily market at 1, Orphanganj Road, Calcutta, without obtaining  a licence  as required under s. 218 of the Calcutta  Municipal Act,  1951 (West Bengal Act 33 of 1951)  hereinafter  called the  Act.   The Corporation of Calcutta  filed  a  complaint against  the  State  of  West Bengal in  the  Court  of  the Presidency and Municipal Magistrate, Calcutta, under s.  541 of  the  Act  for  contravening the  provisions  of  s.  218 thereof.   Under  s.  218  of  the  Act,  every  person  who exercises  or carries on in Calcutta any trade,  shall  take out  a  licence and shall pay for the same such  fee  as  is mentioned  in  that  behalf  in  Schedule  IV  to  the  Act. Admittedly  for  the year 1960-61, the  Government  of  West Bengal did not take out a licence under the said section but carried  on  the  said trade.  The main  contention  of  the Government  was  that the State was not bound  by  the  pro- visions  of the Act.  The learned Magistrate, accepting  the said  contention, acquitted the State.  On appeal, the  High Court  of Calcutta held that the State was carrying  on  the business of running a market and, therefore, it was as  much bound  as  a  private citizen to take  out  a  licence.   It distinguished  the  decision of this Court  in  Director  of Rationing and Distribution v. The Corporation of Calcutta(1) on the ground that the said decision was concerned with  the sovereign activity of the State.  In the result the State of West  Bengal  was convicted under s. 537 of the  Act-s.  537 appears  to be a mistake for s. 541-and sentenced to  pay  a fine  of Rs. 250, with the direction that when realized,  it should  be  paid  to the  Corporation.   Hence  the  present appeal. Learned Advocate General of West Bengal raised before us the following  points:  (1)  The  State  is  not  bound  by  the provisions  of  a statute unless it is  expressly  named  or brought in by necessary implication; (2) the said  principle equally applies to sovereign and non-sovereign activities of a State; and Mr. N. S. Bindra, learned counsel appearing for the  Attorney  General  raised before us  the  third  point, namely,  this Court has no power under the  Constitution  to review its earlier judgment. While  the learned Advocate General contended that the  rule of  construction  in  favour of the State was  part  of  the common  law of England accepted as the law of  this  country and, therefore, was law in force within the meaning of  Art.

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372  of the Constitution, Mr. N. S. Bindra argued  that  the said rule of construction was law of the land in that it was declared  to be so by the Judicial Committee in Province  of Bombay v. Municipal Corporation of (1)  [1961] 1 S.C.R. 158. 176 the   City of Bombay(1) and, therefore, it was law in  force within the meaning of Art. 372 of the Constitution. The  third  contention need not detain us, for it  has  been rejected  by  this  Court in  The  Bengal  Immunity  Company Limited v. The State of Bihar(2). There a Bench of 7  Judges unanimously held that there was nothing in the  Constitution which  prevented  the Supreme Court from  departing  from  a previous  decision  of its own if it was  satisfied  of  its error and of its baneful effect on the general interests  of the public.  If the aforesaid rule of construction  accepted by  this Court is inconsistent with the legal philosophy  of our  Constitution, it is our duty to correct  ourselves  and lay  down the right rule.  In constitutional  matters  which affect the evolution of our polity, we must more readily  do so  than  in  other branches of law, as  perpetuation  of  a mistake   will  be  harmful  to  public  interests.    While continuity  and  consistency  are conducive  to  the  smooth evolution  of  the  rule  of law,  hesitancy  to  set  right deviations will retard its growth.  In this case, as we  are satisfied that the said rule of construction is inconsistent with  our republican polity and, if accepted, bristles  with anomalies, we -have no hesitation to reconsider our  earlier decision. At  the outset it will be convenient to notice the facts  of the  decision  of this Court in Director of  Rationing  and’ Distribution  v.  The  Corporation of  Calcutta(3)  and  the reasons  given by this Court for applying the said  rule  of construction  to an Indian statute.  There, the Director  of Rationing  and  Distribution was using certain  premises  in Calcutta for storing rice flour, etc. without taking out any licence  under s. 385 (1)(a) of the Calcutta Municipal  Act, 1923.   The  Corporation  of,  Calcutta  filed  a  complaint against the said Director in the Magistrate’s Court for  the contravention  of the said provision.  This Court held  that the  State was not bound by the provisions of s. 386  (1)(a) of  the  said Act and that the appellant was not  liable  to prosecution  for  the  contravention of  the  said  section. Sinha,  C.  J., speaking for Imam and Shah,  JJ.,  gave  one judgment,  Sarkar,  J.,  gave  a  separate  but   concurrent judgment,  and  Wanchoo,  J.,  recorded  his  dissent.   The reasoning of Sinha, C.J., is found in the following  passage :               "It is well-established that the common law of               England  is  that the  King’s  prerogative  is               illustrated by the rule that the Sovereign  is               not necessarily bound by a statutory law which               binds  the subject.  This is further  enforced               by  the rule that the King is not bound  by  a               statute unless he is expressly named or unless               he  is  bound  by  necessary  implication   or               unless, the statute being for the public good,               it  would be absurd to exclude the  King  from               it." (at page 170). (1) [1946] L.H. 73 I.R. 271.                      (2) [1955] 2 S.C.R. 603. (3 [1961] 1 S.C.R. 158  177               "That  was  law applicable to India  also,  as               authoritatively laid down by the Privy Council

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             in the case referred to above [(1946) L. R. 73               I.A.  271)]...... it (law in force under  Art.               372  of the Constitution) must be  interpreted               as  including the common law of England  which               was adopted as the law of this country  before               the  Constitution  came into  force."  (At  p.               173). Sinha,   C.J.,  therefore,  held  that  the  said  rule   of construction was, part of the common law of England, that it was  adopted  by  this, country and that  Art’  372  of  the Constitution  continued it.  Sarkar, J., on the other  hand, agreed with the conclusion arrived at by Sinha, C.J., but on a  different  ground.  He based his conclusion  not  on  any common law doctrine, but simply on the ground that the  said rule  of construction of statutory provisions  was  accepted and followed in England, America and India.  Wanchoo, J., in his  dissent, put the case in a different perspective.   The following, passage brings out his line of thought :               "Two   things  are  clear  from  this   modern               conception  of royal prerogative,  namely  (1)               that there must be a Crown or King to whom the               royal  prerogative attaches, and (2) that  the               prerogative must be part of the common law  of               England.   Both these conditions existed  when               the  Privy  Council decision in  Province1  of               Bombay v. Municipal Corporation of the City of               Bombay(1) was given in October 1946; the  King               was  still  there and the Privy  Council  held               that the English common law rule of  construc-               tion applied to Indian legislation as much  as               to English ,statutes." (At p. 184).               "In  our country the Rule of Law prevails  and               our  Constitution  has guaranteed  it  by  the               provisions  contained in Part III  thereof  as               well   as   by  other  provisions   in   other               Parts......  It is to my mind inherent in  the               conception of the Rule of Law that the  State,               no less than its citizens and others, is bound               by the laws of the land.  When the King as the               embodiment of all power-executive, legislative               and   judicial-has  disappeared  and  in   our               republican  Constitution, sovereign power  has               been distributed among various organs  created               ’thereby,  it  seems,  to  me  that  there  is               neither   justification  nor   necessity   for               continuing  the rule of construction based  on               the royal, prerogative." (At p. 185).               "But  where the royal prerogative is merely  a               rule of construction of statutes based on  the               existence  of  the Crown in  England  and  for               historical  reasons,  I fail to see why  in  a               democratic  republic,  the courts  should  not               follow the ordinary principle of  construction               that no one (1)  [1946] L.R. 73 I.A. 271. 178               is  exempt  from the operation  of  a  statute               unless   the  statute  expressly  grants   the               exemption or the exemption arises by necessary               implication." (At pp. 188-189). The conflict between the two views expressed by the  learned Judges  in the earlier decision mainly rests on the  meaning of  the  expression  "law  in force"  in  Art.  372  of  the Constitution.   While  Sinha, C.J., took the view  that  the common  law of England, including the rule of  construction,

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was accepted as the law of this country and was,  therefore, the  law  in force within the meaning of the  said  Article, Wanchoo,  J., took the view that whatever might be  said  of the substantive laws, ’a rule of construction adopted by the common law of England and accepted by the Privy Council at a time  when the Crown was functioning in India, was  not  the law in force within the meaning of the said Article. We shall now consider the validity of the conflicting  views The  common  law  of England is clear on  the  subject.   In Halsbury’s  Laws of England, 3rd Edn., Vol. 7, in Part 5  of the  Chapter on "Constitutional Law" under the heading  "The Royal  Prerogative", the Royal prerogatives  are  enumerated and their limitations are given.  In para 464 it is stated :               "The general rule is that prerogatives  cannot               be  affected  or  parted with  by  the  Crown,               except by express statutory authority." The  prerogative right can be taken away by law because  the law  is made by the Crown with the assent of the  Lords  and the Commons.  It can be taken away only by law to which  the Crown  is a party.  Whether a particular statute  has  taken away  such  right  pertains to the domain  of  the  rule  of construction.  The relevant rule of construction evolved  by judicial decisions in England may be stated thus :               "At  all  events,  the Crown  is  not  reached               except  by  express  words  or  by   necessary               implication  in  any case where  it  would  be               ousted   of   an   existing   prerogative   or               interest." (See Perry v. Eames) (1). It   is   said  much  to  the  same  effect   in   Maxwell’s Interpretation of Statutes, 11th Edn., at page 129, thus :               "It is presumed that the legislature does  not               intend   to   deprive   the   Crown   of   any               prerogative,  right  or  property,  unless  it               expresses  its intention to do so in  explicit               terms, or makes the inference irresistible."               The  same rule is given in Bacon’s  Abridgment               7th Edn., 9.462. The legal position in England               may be summarised thus :               (1) [1891] 1                179               "The  substantive  rule  of law  is  that  the               prerogative  of  the Crown can only  be  taken               away by law.  The rule of construction evolved               by  the  courts to ascertain  the  legislative               intention  is,  that  it is  presumed  that  a               statute  has not taken away  the  prescriptive               right unless it has expressly or by  necessary               implication done so." There is an essential distinction between a substantive  law and  a  rule of construction and that is well  expressed  by Craies  in  his book "On Statute Law", 6th Edn., at  p.  10, thus :               "A  rule  of  law,  e.g.,  the  Rule   against               Perpetuities  or  the Rule in  Shelley’s  case               (abolished  in 1925), exists independently  of               the  circumstances of the parties to  a  deed,               and   is  inflexible  and  paramount  to   the               intention  expressed in the deed.  A  rule  of               law cannot be said to control the construction               of a statute, inasmuch as a British statute is               itself part of the supreme law of the land and               overrides any pre-existing rules with which it               is   inconsistent.    A  rule  or   canon   of               construction,   whether  of  will,   deed   or               statute,  is not inflexible, but is  merely  a

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             presumption in favour of a particular  meaning               in case of ambiguity.  This was well expressed               by  Bowen, L.J. in L. N. W. Ry.  v.  Evans:(1)               ’These canons do not override the language  of               a  statute where the language is clear :  they               are  only  guides to enable us  to  understand               what is inferential.  In each case the Act  of               Parliament  is  all  powerful,  and  when  its               meaning   is   unequivocally   expressed   the               necessity for rules of construction disappears               and reaches its vanishing point." The  same principle was stated by Bhashyam Ayyangar, J.,  in Bell  v.  The  Municipal  Commissioners  for  the  City   of Madras(2) thus :               "These  compendious canons  of  interpretation               which are in the nature of maxims can only  be               regarded as mere guides to the  interpretation               of Statutes and ought not to be applied as  if               they were statutory clauses, enacted with  all               the    precision    and   provisos    of    an               Interpretation Act."               Franfurter,  J.,  said to the same  effect  in               United  States  v.  United  Mine  Workers   of               America thus : (3)               "At best, this canon, like other  generalities               about statutory construction, is not a rule of               law.   Whatever persuasiveness it may have  in               construing a particular (1) [1893] I Ch. 16, 27.           (2) I.L.R. [1902] 25 Mad. 457, 484. (3) [1947] 91 L. ed. 923. 180 statute derives from the subject-matter and the terms of the enactment in its total environment." Even  in  England this rule of interpretation has  not  been treated  as  inflexible.  It is gradually losing  ground  in many  branches  of  law.  The incongruity  of  the  rule  of discrimination  in  favour of the Crown was pointed  out  by Glanville   L.   Williams   in  his   treatise   on   "Crown Proceedings", at p. 53 :               "The rule originated in the Middle Ages,  when               it   perhaps  had  some  justification.    Its               survival,  however, is due to little  but  the               vis inertiae."               The author continues at p. 54 :               "With the great extension in the activities of               the State -and the number of servants employed               by it, and with the modern idea, expressed  in               the  Crown Proceedings Act, [compare  in  this               connection  Art.  300  of  our  Constitution],               "that the State should be accountable in  wide               measure to the law, the presumption should  be               that a statute binds the Crown rather than  it               does not." The next question is, how far and to what extent the  common law of England relating to the prerogatives of the Crown has been  accepted as the law of our country?  Nothing has  been placed before us to show that the entire body of the  common law  pertaining  to  prerogatives was accepted  as  the  law throughout  India.   India at the  relevant  time  comprised Provinces  and  Native States.  As  Bhashyam  Ayyangar,  J., pointed  out in Bell v. The Municipal Commissioners for  the City  of Madras() "the prerogatives of the Crown in  India-a country in which the title of the British Crown is of a very mixed character-may vary in different provinces, as also  in

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the  Presidency  towns as distinguished from  the  mofussil. ’The  determination, with anything like legal precision,  of all the prerogatives of the British Crown in India is by  no means an easy task." It is well-known that the Common law of England  was  applied as such in the original sides  of  the High Courts of Calcutta, Bombay and Madras, and that in  the mofussil  courts the principles embodied in the  common  law were invoked in appropriate cases on the ground of  justice, equity  and  good  conscience.   It  cannot,  therefore,  be posited that either the entire body of common law of England relating  to  prerogatives of the King or even the  rule  of construction as forming part of that law was accepted as law in  every  part of the country.  It has  to  be  established whenever a question arises as to what part of the common law was accepted as the law in a particular part of the country. Learned  Advocate General of West Bengal referred us to  the decision  of  the  Privy Council in Province  of  Bombay  v. Municipal (1)  I.L.R. (1902) 25 Mad. 457,484. 181 Corporation  of  the  City of Bomhay(1) in  support  of  his contention  that the common law of England was  accepted  as the  law  of our country in that regard.  In that  case  the question  was whether the Crown was not bound by  s.  222(1) and  s. 265 of the City of Bombay Municipal Act, 1888  which gave  the  Municipality power to carry water-mains  for  the purposes of water supply through across or under any  street and  into, through or under any land "whatsoever within  the city."  When the Municipal Corporation wanted to lay  water- mains  through  the  land belonging  to  the  Government  of Bombay,  the Government did not agree except on some  condi- tions.   Thereafter,  the dispute between  the  parties  was referred  to the High Court.  Ultimately, setting aside  the order  of  the High Court, the Privy Council held  that  the rule  that no statute bound the Crown unless the  Crown  was expressly or by necessary implication made bound  thereunder applied  to  the Crown in India and that there was  no  such express  intention  or  necessary implication  in  the  said section.    Indeed,  the  High  Court  also  accepted   that principle,   but  on  the  construction  of   the   relevant provisions  it came to the conclusion that there was such  a necessary implication thereunder.  On the application of the principle  there  was no contest before the  Privy  Council. The  Privy  Council expressly stated so at p. 274,  when  it observed :               "The  High  Court  held,  following   previous               decisions of its own, that the principle to be               applied  for  the  decision  of  the  question               whether or not the Crown is bound by a statute               is   no  different  in  the  case  of   Indian               Legislation  from  that which  has  long  been               applied in England.  The parties concurred  in               accepting  this  view,  and  their   Lordships               regard it as correct." The  decision made on a concession made by the parties  even though  the  principle conceded was accepted  by  the  Privy Council  without discussion, cannot be given the same  value as  one given upon a careful consideration of the  pros  and cons  of  the  question raised.  Further,  no  argument  was raised  before  the  Privy Council that the  Common  law  of England  had legal force only in the said  three  Presidency towns  and  not in the rest of the country,  for  that  case happened  to be one that arose in the City of  Bombay.   The observations  of  the  Privy  Council  that  the  principles obtaining  in England also governed the Crown in India  are,

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rather  wide.  Nor any argument was raised before the  Privy Counsel making a distinction between substantive branches of common  law  and  mere rules of  construction.   It  is  not possible to predicate what the Privy Council would have said if  that distinction had been placed before it.  Be that  as it  may, this decision cannot be taken as  finally  deciding the question that is raised before us. (1)  [1946] L.R. 73 I.A. 271. 182 Learned counsel relied upon a series of Indian decisions in. support of his contention that this rule of construction had become the law of the land. It was held in The Secretary of State in Council of India v. The Bombay Landing and Shipping Company (Limited)(1) that in a winding up proceedings the Crown was entitled to the  same precedence in regard to the debts due to it, in England,  in Ganpat  Putava v. Collector of Kanara(2) that the Crown  was entitled to the same precedence in regard to fees payable to it  by  a pauper plaintiff, in The Secretary  of  State  for India  v. Mathura Bhai() that section 26 of  the  Limitation Act,  1877 being a branch of substantive law did not  affect the  Crown’s right, in Motilal Virchand v. The Collector  of Ahmedabad(4) that the Mamlatdars’ Courts could not entertain and decide a suit to which the collector was a party in  The Government  of Bombay v. Esufali Salebhai(5) that the  Crown had a prerogative right to intervene and claim  compensation in  Land Acquisition proceedings, in Hiranand  Khushiram  v. Secretary  of State(6), that the Crown was not bound by  the provision  of the Bombay Municipality Act, in The  Secretary of  State for India v. The Municipal Corporation  of  Bombay (No.  1)(7) that the Crown was subject to a charge under  s. 212  of the Bombay City Municipal Act.  A careful  study  of these  decisions  discloses  that all  of  them  related  to particular prerogatives of the Crown and that the Court held either  that the prerogative of the Crown Was taken away  by the statute or not, having regard to the construction placed by  it on the relevant statute.  It is true that in some  of the decisions the said rule of construction was noticed, but as  the  decisions  turned  upon  the  construction  of  the relevant provisions, it could not be said that the said rule had  been accepted as an inflexible rule of construction  by the  Bombay  High Court.  In one of the judgments  even  the applicability of the rule of construction was doubted. A learned thesis on the subject is found in the judgment  of Bhashyam   Ayyangar,   J.,   in  Bell   v.   The   Municipal Commissioners for the City of Madras(8).  The Superintendent of  the  Government  Gun-carriage  Factory,  Madras,  having brought timber belonging to the Government into the City  of Madras  without taking out a licence and paying the  licence fees  prescribed by s. 341 of the City of  Madras  Municipal Act, was prosecuted.  There was no mention of Government  in the said section.  A Division Bench of the Madras High Court   (1) [1868] 5 Ho   H. C. Rep. 23,27. (3) [1889] I.L.R. 14 Bom. 213. (5)  [1909] I.L.R. 34 Bom. 618. (7)  [1935] 37 Bom.  L.R. 499, 509. (2)  [1875] I.L.R. 1. Dom. 7. (4)  [1906] I.L.R. 31 Bom. 86. (6)  A.I.R. 1934 Bom. 379. (8)  I.L.R. (I 902) 25 Mad. 457, 484.  183 Indian legislation, statutes imposing duties or taxes  bound the Government unless the very nature of the duty or tax was such is to be inapplicable to it.  Bhashyam Ayyangar, J., in his judgment, after considering all the relevant material on

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the  subject statutes and English and Indian  decisions-came to the conclusion that exemption from the payment of  tolls, rates  and  taxes was not in reality a  prerogative  of  the Crown, but depended solely upon the right construction to be put  on the Crown grant or the statute in question.   Though the  learned  Judge  noticed the rule  of  construction  and affirmed its application both to English and Indian statutes vis-a-vis the Crown, he pointed out that the said rule, like every  cognate  rule of construction was not really  a  pre- rogative of the Crown but only a canon of interpretation and a  mere guide to the interpretation of statutes.  That  case arose in the Madras City.  In Madras the_ position was  that non-liability  of the Crown to taxes was not treated as  its prerogative and the aforesaid rule of construction was  only treated  as  a  guide in interpreting the  provisions  of  a statute. Now  coming  to Calcutta, a Division Bench of  the  Calcutta High  Court  in Corporation of Calcutta  v.  Bhupal  Chandra Sinha(1)  held  that the Crown was bound by s.  421  of  the Calcutta Municipal Act, 1923 and that the unwholesome barley found  in the Government stores was liable to be  destroyed. No doubt, the Court re-stated the said rule of  construction and came to the conclusion that by necessary implication the State was bound by the said provision. A  Division Bench of the same High Court in  Corporation  of Calcutta  v. Director of Rationing and Distribution(2)  held that  the State Government which was carrying on a trade  at premises  No.  259, Upper Chitpur Road,  Calcutta,  and  was using  or  permitting the use of the said premises  for  the purpose  of storing rice etc. without licence was liable  to be  convicted under s. 386(1)(a) of the  Calcutta  Municipal Act,  1923, read with s. 488 thereof When the said  rule  of construction was pressed upon the learned Judges, they  held that the law, even after coming into force of the Government of India Act, 1935, was that the Crown or the Government was bound  by  the  statute  unless it  was  exempted  from  its operation  either  expressly or  by  necessary  implication. They  did  not, therefore, accept the rule  of  construction laid  down by the Privy Council.  It cannot,  therefore,  be said  that  in the City of Calcutta there  was  a  universal recognition  of  the rule of construction in favour  of  the Crown. The  legislative  practice  in India  establishes  that  the various  Legislatures of the country  provided  specifically exemptions in (1 ) A.I.R 1950 Cal. 421.    (2)A.I.R. 1955 Cal.282. 184 favour  of  the  Crown  whenever  they  intended  to  do  so indicating   thereby  that  they  did  not  rely  upon   any presumption  but  only  on  express  exemptions,  see,   for instance,  s. 74 of the Contract Act, s. 9 of  the  Specific Relief  Act, s. 90 of the Indian Registration Act,  s.  2(a) and (b) of the Indian Easements Act, The Crown Grants Act XV of  1895, ss. 295 (proviso), 356(b) and 411 and 616  (a)  of the  Code of Civil Procedure (old), s. 212 (proviso) of  the Indian  Companies  Act, s. 20 (proviso) of the  Sea  Customs Act, 1878, s. 1(4)(i) of the Indian Ports Act, s. 3, proviso (1)  of the Indian Stamps Act, 1899, and s. 3 of  the  India Act XI of 1881 etc.  What is more, Act XI of 1881  empowered the  Governor-General  in Council by order to  prohibit  the levy by a Municipal Corporation of any specified tax payable by  the  Secretary  of State for India  and  to  direct  the Secretary  of  State  for  India to  pay  to  the  Municipal Corporation in lieu of such tax some definite amounts.  This Act  was a pointer against the contention that there  was  a

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presumption  in favour of the Crown that a statute  was  not binding  on it.  It is true that there are other Acts  where there  are  specific  provisions  to  the  effect  that  the provisions  of the Acts shall be binding on the  Government: see s. 10 of the Arbitration Act (Act X of 1940), s. 116  of the  Oil Field Regulation and Development Act (Act  LIII  of 1948).   Subsequent to the making of the  Constitution  also there were Acts where such a provision was found.  There  is no firm legislative practice based upon the said presumptive rule of construction.  Different statutes adopted  different devices  to achieve their desired results.  The  legislative practice, therefore, does not support the contention that in India  the said rule of construction was accepted.  It  only shows that wherever an exemption was intended to be given to the Government it was expressly mentioned and wherever there might   have  been  any  doubt  of  the  liability  of   the Government,  it  was  expressly made liable.   The  rule  of construction  was  not  statutorily  recognised  either   by incorporating it in different Acts or in any General Clauses Act;  at the most, it was relied upon as a rule  of  general guidance in some parts of the country. Some  of the American decisions may usefully be referred  to at this stage.  It was said that in America where the  Crown did not exist, the same rule of construction was adopted  in that country as law of the land and therefore by analogy the same legal position must be accepted in India. The  decision in H. Snowden Marshall v. People of the  State of New York(1) only lays down that the State of New York has the common law prerogative right of priority over  unsecured creditors.   This  case has nothing to do with the  rule  of construction  but was based upon the common law  prerogative of the (1)  (1920) 65 L.cd. 315. 185 Crown  expressly embodied in the State’s Constitution.   The decision  in Guarantee Trust Company of New York  v.  United States of America(1) accepted the immunity of the  sovereign from he operation of statutes of limitation.  That  decision was  based  upon the doctrine of public  policy  evolved  by courts,  though in evolving the said policy the  courts  had been  influenced,  to some extent, by the  doctrine  of  the pregrogative  of  the Crown.  This decision  also  does  not express any opinion on the rule of construction. The  decision  in United States of America  v.  United  Mine Workers  of America(2) ruled that statutes which in  general terms, divested pre-existing rights and privileges would not be  applied to the sovereign without express words  to  that effect.   But Frankfurter, J., after citing the  said  rule, pointed out that "At   best,  this  canon,  like  other  generalities   about statutory construction, is not a rule of law." The  same  rule  was again re-stated  in  United  States  of America  v. Reginald P. Wittek.(3) The  question  there  was whether the District of Columbia Emergency Rent Act did  not apply  to  Government-owned defence houses in  the  District such as Bellevue Houses.  The Court relied not only upon the said rule of construction but also on other circumstances in support of the conclusion that the United States was  exempt from the operation of that Act by necessary implication.  In Jess  Larson,  as  War  Assets  Administrator  and   Surplus Property  Administrator v. Domestic and  Foreign,,  Commerce Corporation,(4)  the purchaser of surplus coal from the  War Assets   Administration  filed  a  suit  against  the   said Administration for an injunction prohibiting the latter from selling  or  delivering the coal to any other  person.   The

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suit was dismissed on the ground that the sovereign immunity in  suits  for injunction or for  specific  performance  was based  upon  public  policy.  But it  was  argued  that  the principle of sovereign immunity was an archaic hangover  not consonant  with modern morality; the majority conceded  that there was substance in such a viewpoint as applied to  suits for  damages.  Mr. Justice Frankfurter in his  dissent  went further  and  pointed  out that the  doctrine  of  sovereign immunity   was  in  disfavour.   The   American   decisions, therefore, were mainly based either on the provisions of the constitution of the State or on. the ground of public policy evolved  by Courts.  The founding fathers carried with  them the  English  doctrine  of  the  Crown  Prerogative  and  it continued  to  influence some of the  principles  of  public policy evolved in that country.  Even so, the decisions made it clear that the rule of construction was relied upon  only as  one  of  the  guides to arrive at  the  intention  of  a particular  statute.  That apart, the fact that  the  common law of England pertaining to   2,1.4 (1)(1938) 82 L. ed. 1224. (3)(1949) 93 L. ed. 1406. M19Sup.C.I./66-13 (2)  (1947) 91 L. ed. 884,923. (4)  (1949) 93 L. ed. 1628.                             186 prerogatives influenced some of the decisions of the Supreme Court  ,of the United States cannot help us in coming  to  a conclusion whether the said rule had become part of the  Law in India. Mr. Bindra, the learned counsel appearing for the  Attorney- General  sought to reach at the same result by  a  different process.   He argued that the decision of the Privy  Council in  Province of Bombay v. Municipal Corporation of the  city of  Bombay and another(1) is a law of the country.  We  have already  noticed  the  decision  in  another  context.    It accepted  the rule of construction on a concession  made  by the  counsel.  Even if it was a considered decision  on  the point, it was nothing more than an application of a rule  of construction with which it was familiar for ascertaining the intention  of statutory provisions applicable to the  Bombay city. To  sum up : some of the doctrines of common law of  England were  administered  as the law in the  Presidency  Towns  of Calcutta, Bombay and Madras.  The Common Law of England  was not  adopted  in the rest of India.  Doubtless some  of  its principles were embodied in the statute law of our  country. That  apart, in the mofussil, some principles of Common  Law were invoked ’by courts on the ground of justice, equity and good  conscience.  It is, therefore, a question of  fact  in each  case whether any particular branch of the  Common  Law became a part of the law of India or in any particular  part thereof.  The aforesaid rule of construction is only a canon of  interpretation,  it is not a rule  of  substantive  law. Though it was noticed in some of the judgments of the Bombay High  Court,  the decisions therein mainly turned  upon  the relevant statutory provisions.  One decision even questioned its  correctness.   There  is nothing to show  that  it  was applied  in  other  parts of the country on  the  ground  of justice, good con.science and equity.  In Madras, it was not considered to be a binding rule of law, but only as a simple canon  of construction.  In Calcutta there was a conflict  : one  Bench accepted the construction and the other  rejected it.  The Privy Council gave its approval to the rule  mainly on the concession of Advocates and that decision related  to

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Bombay City.  It is, therefore, clear that the said rule  of construction  was  not accepted as a  rule  of  construction throughout India and even in the Presidency towns it was not regarded  as inflexible rule of construction.  In  short  it has not become a law* of the land. Let  us  now  proceed on the assumption  that  it  has  been accepted  as a rule of construction throughout India.   This leads   us  to  the  question  whether  the  said  rule   of construction  is the law of the land after the  Constitution came into force.  Under Article 372, (1)73 I.A. 271.  187 all the laws in force in the territory of India  immediately before the commencement of this Constitution shall  continue in force, therein until altered or repealed or amended by  a competent Legislature or other competent authority.  Can  it be  said that the said canon of construction was a  ’law  in force’  which can only be amended by a  Legislature?   Under Explanation (1) to the said Article, the expression ’law  in force’ shall include a law passed or,. made by a Legislature or  other  competent  authority in the  territory  of  India before  the  commencement of the Constitution. it  has  been held  by  this court that the said expression  includes  not only  enactments  of the Indian Legislatures  but  also  the Common  Law of the land which was being administered by  the Courts in India. (See Director of Rationing and Distribution v.  The Corporation of Calcutta and others() and V. S.  Rice and  Oil Mills & others v. State of Andhra Pradesh(2).   But it is not possible to hold. that a mere rule of construction adopted  by English Courts, and also by some of  the  Indian Courts  to ascertain the intention of the Legislature was  a law  in force within the meaning of this term.  There is  an essential   distinction  between  a  law  and  a  canon   of construction.  This distinction between law and the canon of construction has been noticed by us earlier and we have held that  a canon of construction is not a rule of law.  We  are not   concerned   here.   with  the   statutory   rules   of interpretation.   We are,- therefore, of the opinion that  a rule  of  construction is not a ’law in  force’  within  the meaning of Article 372. The  next  question is whether this Court should  adopt  the rule  of  construction  accepted by  the  Privy  Council  in interpreting  statute vis-a-vis the Crown.  There  are  many reasons  why the said rule of construction  is  inconsistent with and incongruous in the present set-up we have no Crown, the archaic rule based on the prerogative and perfection  of the  Crown has no relevance to a democratic republic; it  is inconsistent  with the rule of law based on the dictrine  of equality.   It introduces conflicts and  discrimination.  To illustrates:  (1)  State  "A" made  a  general  Act  without expressly making the Act binding on the said State.  In  the same  State  States  "B", "C" and "D"  and  the  Union  have properties.   Would the rule of construction apply  only  to the properties of State "A?’ or to the properties of all the States  and  the  Union ? (2) The Central  Act  operated  in different  States; the rule of construction was accepted  in some  States- and rejected in other States.  Is the  Central Act to be construed in different States in different ways  ? (3) Acts in general terms might be made in different States- States where the said rule of construction was accepted  and the States where it was not so accepted.. ’Should  different States construe (1) [1961] 1.S.C.R. 158.                       (2) [1965]  3 S.C.R. 289 188

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the  General  Acts  in different  ways,  some  applying  the presumption and some ignoring it ? There  is,  therefore, no justification for  this  Court  to accept  the  English canon of construction,  for  it  brings about  diverse  results and conflicting decisions.   On  the other  hand,  the  normal  construction,  namely,  that  the general  Act applies to citizens as well as to State  unless it  expressly or by necessary implication exempts the  State from its operation, steers clear of all the said  anomalies. ’It prima facie applies to all States and subjects alike,  a construction consistent with the philosophy of equality  en- shrined  in our Constitution.  This natural approach  avoids the archaic rule and moves with the modern trends.  This win not cause any hardship to the State.  The State can make  an Act,  if  it chooses, providing for its exemption  from  its operation.  Though the State is not expressly exempted  from the operation of an Act, under certain circumstances such an exemption may necessarily be implied.  Such an Act, provided it  does  not  infringe fundamental rights,  will  give  the necessary relief to the State.  We, therefore, hold that the said canon of construction was not ’the law in force’ within the meaning of Art. 372 of the Constitution and that in  any event having regard to the foregoing reasons the said  canon of  construction  should  not  be  applied  for   construing statutes  in  India.  In this view it is  not  necessary  to express  our opinion on the question whether  the  aforesaid rule of construction would not apply to the trade activities of   the  State,  even  if  it  applied  to  its   sovereign activities. Even so, it was contended that by necessary implication  the State was excluded from the operation of s. 218 of the  Act. It  was  contended  that, as the infringement  of  the  said provision   entailed  a  prosecution  and,  on   conviction, imposition  of fine and imprisonment, and that as the  State could not obviously be put in prison and as the fine imposed on  the  State would merge in the consolidated fund  of  the State,  it should necessarily be implied that the State  was outside  the scope of the section.  This argument was  based upon  the  reasoning  of  Wanchoo,  J.,  in  his  dissenting judgment  in  Director  of  Rationing  and  Distribution  v. Corporation  of Calcutta(1).  To appreciate the argument  it is  necessary to notice the relevant provisions of the  Act. Under s. 218(1) every person who exercises or carries on  in Calcutta  any of the trades indicated in Schedule  IV  shall annually  take out a licence before the prescribed date  and pay the prescribed fee.  Section 218 is in Ch.  XIII.  Under s.  541(1)(b) if any person exercises on or after the  first day  of  July in any year any profession, trade  or  calling referred  to  in  Chapter XIII without  having  the  licence prescribed by that chapter, he shall be punished with  fine; and under s. 541(2) (1)  [1961] 1 S.C.R. 158. 189 such fine, when levied, shall be taken in full  satisfaction of  the  demand on account of the said  licence.   Under  s. 547A, which was inserted in the Act by s. 96 of the Calcutta Municipal  (Amendment)  Act, 1953 (West Bengal  Act  XIX  of 1953),   in  every  case  of  an  offence  punishable   with imprisonment  or  fine,  or with fine  only,  in  which  the offender is sentenced to pay an fine, it shall be competent to the  Court to direct that in default of payment of the  fine the  offender  shall  suffer imprisonment for such  term  or further term   not  exceeding six months as may be fixed  by the  Court.   Under the Act there is a  distinction  between fines imposed under s. 537 and under s. 541 of the Act.  The

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fines  under  s. 537 are in respect of  offences  enumerated therein and they certainly go to the coffers of the  States. In respect of such offences it may be contended that, as the fines paid reach the State itself, there is an  implication’ that  the  State  is not bound  by  the  sections  mentioned therein,  for a person who receives the fine cannot  be  the same  person who pays it.  This incongruity may lead to  the said necessary implication.  But the same cannot be said  in respect of the provisions covered by s. 541.  Under the said section the -fine recovered for the infringement of the said provisions, when levied, shall be taken in full satisfaction of   the  demand  on  account  of  the  licence  not   taken thereunder.   Though  the  expression "fine"  is  -used,  in effect and substance, s. 541 is a mode of realization of the fee  payable  in  respect of the licence:  it  goes  to  the municipal  fund and forms part of it.  In this  context,  s. 115 of the Act is relevant.  Under that section, there shall be  one Municipal Fund held by the Corporation in trust  for the  purposes  of the Act to which the  moneys  realised  or realisable  under  the  Act  (other  than  fine  levied   by Magistrates)  and  all  moneys  otherwise  received  by  the corporation shall be credited.  Reliance is placed upon  the words within the brackets, viz., "other than fine levied  by Magistrates" and an argument is raised that the fine  levied under  s.  541 will not be credited to the  Municipal  Fund. That  interpretation brings that section into conflict  with s.  512.   On the other hand, a harmonious  construction  of these two provisions makes it clear that the fine  mentioned in s. 115 is the fine imposed under s. 537, for s. 541(2) in terms directs that the fine shall be credited to the demand. All  amounts credited towards demands, it cannot be  denied, necessarily have to be credited in the Municipal Fund.   Nor s. 547A detracts from our conclusion.  Under that section in every case of an offence where the offender is sentenced  to pay  a  fine, it shall be competent to the court  to  direct that  in default of payment of the fine the  offender  shall suffer   imprisonment.   It  was  said  that  this   section necessarily  implied that the State could not be, hit by  s. 218, as it could not obviously be imprisoned for default  of payment  of fine.  But it will be noticed that this  section only  confers  a discretionary power on the  court  and  the court is not bound to 190 direct  the  imprisonment of the defaulter.  It is  only  an enabling provision.  There are other ways of collecting  the money  from ]persons against whom an order under s. 547A  is not  made.   This enabling provision  does  not  necessarily imply an exemption in favour of the State. For all the aforesaid reasons we hold that the State is  not exempt from the operation of s. 218 of the Act. In the result we hold that the conclusion arrived at by  the High Court is correct.  The appeal fails and is dismissed. Shah,  J. The High Court of Calcutta convicted the State  of West Bengal of the offence of carrying on trade as owner and occupier of a market at Calcutta without obtaining a license under  s.  218  of the Calcutta  Municipal  Act,  1951,  and imposed a sentence of fine of Rs. 250/-.  In this appeal, it is  urged that the State not being by express  enactment  or clear intendment bound by the provisions of the Act relating to the obtaining of a license for carrying on trade as owner or  occupier  of a market, the order of  conviction  is  not sustainable,  and  reliance is placed upon the  judgment  of this  Court in Director of Rationing & Distribution  v.  The Corporation  of Calcutta & Ors.(1) The Corporation  contends that since India became a Republic, the rule that "Crown  is

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not  bound  by statute unless specially  named,  or  clearly intended"  has no application to the interpretation  of  the Calcutta Municipal Act, 1951.  The argument is urged on  two grounds  : (i) since India has ceased to be governed in  the name  of  the  British  Crown, the  rule  in  terms  has  no application;  and (ii) even if it be assumed that  the  rule applies to the State as the sovereign authority, it must  be deemed  to  be  superseded, for to accept  it  would  be  to countenance  unequal  treatment between the  State  and  the citizens. The  origin  of the rule in England that the  Crown  is  not bound  by  a  statute  unless  expressly  named  or  clearly intended  lay undoubtedly in the prerogative of the  British Crown.   In  Bacon’s  Abridgement, 7th  Edn.,  p.  462,  the general  rule is stated thus: "where a statute  is  general, and  thereby  any prerogative, right, title or  interest  is divested or taken away from the King, in such case the  King shall  not be bound, unless the statute is made  by  express terms to extend to him." But the Crown is bound where it  is expressly  named  or  by clear implication  intended  to  be bound.  An inference that the Crown was intended to be bound by implication is, however, not to be raised merely  because the Crown assented to the statute, for as stated by  Plowden "when  the  King  gives  his assent  he  does  not  mean  to prejudice  himself or to bar himself of his liberty and  his privilege,  but he assents that it shall be a law among  his subjects." (1)  [1961]1 S.C.R. 158.                             191 The  common  law  of England was  adopted  in  this  country subject  to  local variations and the personal  law  of  the parties, within the Presidency towns by the establishment of Mayors’  Courts  in  the, 18th  century  with  the  express, injunction  to apply that law. In the mufassal of the  three Presidencies  the common law was adopted by the  Regulations constituting   tribunals  for  administration   of   justice enjoining  them  to decide disputes  according  to  justice, equity  and good conscience’, and elsewhere by  the  diverse Civil  Courts  Acts imposing similar  injunctions.   In  the three  Presidency towns of Calcutta, Madras and  Bombay  the charters  of  1726  which  established  the  Mayors’  Courts introduced within their jurisdiction the English common  and statute law in force at the time so far as it was applicable to  Indian circumstances.  By the statute of 1781  (21  Geo. III c. 70, s. 17) the Supreme Court at Calcutta was enjoined to apply in the determination of actions against the  Indian inhabitants of the town in matters of succession and inheri- tance to lands, rents, goods, and in all matters of contract and  dealing between party and party, their personal law  if both parties belonged to the same community, and by the  law and  usages of the defendant if they belonged  to  different communities.   The English common law in its application  to Hindus  and  Mahomedans  in the matters  enumerated  in  the statute was to that extent superseded, but in other  matters the  English  common  law unless it  was  inconsistent  with statute  or Indian conditions continued to  apply.   Similar statutes were passed enjoining the Courts in the  Presidency towns of Madras and Bombay in 1797 (37 Geo.  III c. 142,  s. 13), to apply in the enumerated matters the personal law  of the parties. it may however be observed that by the  Supreme Court  charters,  English law, not in its  entirety  but  as nearly  as  the  circumstances  of  the  place  and  of  the inhabitants  admit, was applied: Advocate General of  Bengal v.  Ranee  Surnomove Dossee.(1) In the  mufassal  Courts  by Bengal  Regulation  III  of 1793 in respect  of  Bengal,  by

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Regulation 11 of 1802 in respect of Madras, it was  ordained that  where no specific rule existed the Courts were to  act according  to  "justice, equity and good  conscience"  which expression  was  interpreted to mean the  rules  of  English common  law  in  so far as they were  applicable  to  Indian society   and  circumstances:  Waghela  Rajsanji  v.   Shekh Masludin(2).  The Bombay Regulation IV -of 1827 provided  by s.  26  that the law to be observed in the  trial  of  suits shall  be Acts of Parliament and Regulations of  Government; in the absence of such acts and regulations the usage of the country  in which the suit arose; if none such appears,  the law of the defendant, and in the absence of specific law and usage equity and good conscience.  By the Letters Patents of the  High Courts of the three principal Courts of  Calcutta, Madras  and Bombay by cls.  19 in exercise of  the  original jurisdiction law or equity to be applied (1) (1864) 9 M. 1. A. 387. (2) (1887) 14 1. A. 89. 192 was such law or equity which would have been applied if  the Letters  Patents had not been issued.  By cl. 20 in  respect of  suits  tried in exercise of the  extraordinary  original jurisdiction,  and  by cl. 21 in respect  of  the  appellate jurisdiction, the High Courts were directed to apply law  or equity  and the rule of good conscience which the  Court  in which  the proceeding was originally instituted  would  have applied.   Similar  provisions  were  made  in  the  Letters Patents  of  the Allahabad, Patna, Lahore  and  Nagpur  High Courts  by  cls. 13 & 14 and in respect of Jammu  &  Kashmir High  Court by cls. 14 & 15, and in respect of Rajasthan  by cls.  33 & 34 of the Rajasthan High Court  Ordinance,  1949. The  jurisdiction  of the Assam and Orissa High  Courts  was derived   from  their  respective  parent  High   Courts-the Calcutta High Court and the Patna High Court.  In the Courts in the mufassal, the Civil Courts Acts e.g. Bengal, Agra and Assam  Civil  Courts Act, 1887 s. 37; the Punjab  Laws  Act, 1872, s. 5; the Central Provinces Laws Act, 1875, ss. 5,  6; the Oudh Laws Act, 1876, S. 3. require the Courts to  decide cases  according  to justice, equity  and  good  conscience. There  can  therefore  be no doubt  that  the  Courts  which functioned  in  the  former  British  India  territory  were enjoined  to  decide  cases not  governed  by  any  specific statutory  rules  according  to  justice,  equity  and  good conscience,  which meant rules of English common law  in  so far   as  they  were  applicable  to  Indian   society   and circumstances. By  a long course of decisions of the High Courts  in  India the  rule of the English common law that the Crown  is  not, unless  expressly  named  or clearly intended,  bound  by  a statute was applied in India.  In The Secretary of State  in Council of India v. Bombay Landing and Shipping Co.  Ltd.(1) the  Secretary  of State for India claimed priority  in  the payment  of a debt in the course of winding up of a  company and it was held by the High Court of Bombay that a  judgment debt  due  to the Crown is in Bombay entitled  to  the  same precedence in execution as a like judgment debt in  England, if there be no special legislative provision affecting  that right  in -the particular case.  The Court held that as  the Crown  is not, either expressly or by implication, bound  by the Indian Companies’ Act (X of 1866), and as an order  made under that Act for the winding up of a Company does not work any  alteration  of  property  against  which  execution  is sought, such an order does not enable the Court to stay  the execution  of  a judgment debt due to the Crown, or  to  the Secretary of State in Council for India.  Westropp, J.,  who

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delivered  the  judgment of the Court  after  an  exhaustive review of the earlier authorities observed               "The King, by his prerogative, regularly is to               be preferred, in payment of his duty or  debt,               before any subject although the King’s debt or               duty be the latter." (1)  5 Bom.  H.C.R O.CJ. 23.                             193 The learned Judge also observed that the rule was recognised by the laws of many countries as applicable to the claims of the Sovereign or the State, e.g. France, Spain, America  and Scotland and that principle was no novelty in India, because at  an  earlier  date it was promulgated  by  Hindu  jurists Yajnavalkya and others. In  The  Secretary  of State for India  v.  Mathurahbai  and Ors.(1)  the  rule was held to apply to India as a  rule  of construction of statutes.  In that case the inhabitants of a village  sued  to  establish their right  of  grazing  their cattle  on  certain Government land and  for  an  injunction restraining  the  Government  from  interfering  with  their right.   It  was held by the High Court of Bombay  that  the right of free pasturage which the plaintiffs enjoyed did not necessarily  confer  that right on any particular  piece  of land,  and that s. 26 of the Limitation Act 15 of  1877  did not  bind  the Secretary of State.  It was also  applied  in three  later  decisions of the Bombay High  Court:  Hiranand Khushiram Kirpalani v. Secretary of State; (2) Secretary  of State  v.  Municipal  Corporation  Bombay  (No.  1)(3)   and Province   of  Bombay  v.  The  Municipal   Corporation   of Bombay(4).   In  the first case the Secretary of  State  was held  not bound by ss. 305, 489 and 491 of the  Bombay  City Municipal Act, 1888, which deal with levelling, metalling or paving,  sewering,  draining, channelling  and  lighting  of private  streets  and  with execution of that  work  to  the satisfaction of the Commissioner, if the work be not done in accordance  with  the requisition and for  recovery  of  the expenses  incurred in that behalf.  In the second case,  the Court held that the Crown was bound by necessary implication in  respect of the charge which arises under s. 212  of  the Bombay  City Municipal Act 3 of 1888, that section being  an integral part of the general scheme of the Act imposing  tax on  land in Bombay including Government land.  In the  third case  the  Bombay  High  Court  observed  that  the  general principle  is that the Crown is not bound by legislation  in which it is not named expressly or by necessary implication. But reading the relevant sections in the Act relating to the water  supply  it appeared that it would  be  impossible  to carry them out with reasonable efficiency, unless Government was  bound by them.  The view of the High Court in the  last judgment that the Province was bound by the statute by  imp- lication was overruled by the Judicial Committee in Province of Bombay v. Municipal Corporation of the City of Bombay and Another(5) to which I will presently refer.  The Madras High Court in Bell v. The Municipal Commissioners for the City of Madras(6) also upheld the rule which prevailed in the Bombay High  Court that the Crown is not bound by a statute  unless expressly  named  or  clearly intended.  In  that  case  the Superintendent of the Gun   2,1.5 (1)  1. L. R. 14 Bom. 213. (3)  I.L.R. 59 Bom. 681 (5)  I.L.R. 73 I.A. 271. (2)  I.L.R. 58 Bom. 635. (4)  I.L.R. [1944] Bom. 45. (6)  I.L.R. 25 Mad. 457.

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194 Carriage  Factory  in  Madras brought  timber  belonging  to Government  into  Madras without taking out a  licence,  and paying the license fee prescribed by s. 341 of the’ City  of ,  Madras  Municipal Act.  The Court held  that  the  timber brought into Madras by or on behalf of Government was liable to  the  duty  imposed  by s. 341  of  the  City  of  Madras Municipal  Act,  although Government was not  named  in  the section.   Bhashyam  Ayyangar, J., entered upon  a  detailed analysis  of the case law and set out certain principles  at p.  500.  The learned Judge was of the view that "the  canon of interpretation of Statutes that the prerogative or rights of the Crown cannot be taken away except by express words or necessary  implication,  is As applicable  to  the  Statutes passed  by the Indian Legislatures as to  Parliamentary  and Colonial Statutes".  But he held that "the English law as to the  exemption of the Crown and Crown property from  payment of  tolls,  poor-rates and other taxes, local  or  imperial, imposed by statutes rests partly upon historical reasons and principally  upon  judicial decisions which do  not  proceed upon  a  course  of reasoning or  principle  which  will  be binding  on Indian Courts".  It is not necessary to  express any  opinion on the question whether the  general  exception engrafted  by the learned Judge on the rule in so far as  it relates  to taxing statute is wholly correct and applied  to all taxing statutes in India. The  Municipal  Corporation  of  Calcutta  is,  it  may   be recalled, seeking to collect the license fee by  prosecuting the  State  of West Bengal, but the primary purpose  of  the prosecution  is to enforce compliance with  the  pro-visions relating to the conduct of a market by compelling the  State to take out a license, and paying a fee in lieu of  services rendered to the owners of the markets. These  decisions were affirmed by the Judicial Committee  in Province  of Bombay v. Municipal Corporation of the City  of Bombay  and  Another(1).   The question  which  fell  to  be determined  was whether by s. 222(1) and s. 265 of the  City of   Bombay   Municipal  Act,  1888,  which   invested   the Municipality with power to carry water-mains through, across or  under any street and "into,, through or under  any  land whatsoever  within  the city" bound the Crown  in  whom  the lands   were  vested  either  expressly  or   by   necessary implication.   The  Judicial  Committee  observed  that  the general principle applicable in England in deciding  whether the  Crown is bound by a statute-that it must  be  expressly named or be bound by necessary implication-applies to Indian legislation.  The Board observed at p. 274 :               "The maxim of the law in early times was  that               no  statute bound the Crown unless  the  Crown               was  expressly named therein, "Roy  n’est  lie               per  ascun statute si il ne  soit  expressment               nosme." But the rule so laid down is subject (1)  L.A. 73 I.A. 271.                             195               to  at least one exception.  The Crown may  be               bound,  as has often been said, "by  necessary               implication".   If,  that  is to  say,  it  is               manifest  from the very terms of the  statute,               that  it was the intention of the  legislature               that  the  Crown  should be  bound,  then  the               result  is the same as if the Crown  had  been               expressly  named.   It must then  be  inferred               that  the  Crown,  by assenting  to  the  law,               agreed to be bound by its provisions." It  is  true  that counsel  appearing  before  the  Judicial

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Committee  accepted  the correctness of the rule  "that  the question  whether or not the Crown is bound by a statute  is no  different  in the case of Indian legislation  from  that which has long been applied in England." But the judgment of the  Judicial Committee did not proceed upon  a  concession: the Board expressly observed that they regarded the rule "as correct". The  Union  of India now includes territory  of  the  former Indian  States in which the law as originally  existing  and which  the  Courts  are  enjoined to  apply  may  have  been somewhat  different.   But  that  is  not  peculiar  to  the application of the rule of interpretation which was  adopted by  the Courts in British India that the State shall not  be deemed  to be bound by an enactment unless it  is  expressly named or by clear intendment included in the statute.   Even in  respect  of  matters  of  personal  law,  procedure  and jurisdiction  of  the  Courts and  in  other  matters  where uniform statutes do not apply differences do arise and  must be   determined  according  to  the  law  and   jurisdiction inherited  by  the Courts administering  justice.   But  the present  case concerns the administration of the law in  the town  of  Calcutta  which  has for  nearly  250  years  been governed by the English common law as adopted by the various Acts,  Regulations and finally by the Letters  Patents.   It may also be necessary to observe that we are not called upon to decide whether all the prerogatives of the British  Crown have been incorporated in our system of law.  Some of  those are  so wholly inconsistent with the system of  law-personal and   common-in  India,  that  they  have  not   been   held applicable,  e.g.  the rule of  English  law  incapacitating aliens  from  holding real property to their  own  use,  and transmitting  it  by descent or devise has  never  been  in- troduced  in India so as to create forfeiture of lands  held in Calcutta or the mofussil by an alien and devised by  will for charitable purposes.  Mayor of the City of Lyons v.  The East  India  Company(1): the English law of felo de  se  and forfeiture  of goods does not extend to a  Hindu  committing suicide:  Advocate  General  of Bengal  v.  Ranee  Surnomoye Dossee(2).  But the rule that the Crown debt is entitled  to priority  in payment of debts due to it has  been  adopted,. and  the State is entitled to priority in payment  of  debts due to it : (1) L.R. I Moare’s I.A. 173.                     (2) (1864) 9 M.I.A. 196 The  Secretary of State for India in Council v.  The  Bombay Landing  A  Shipping Co. Ltd.(1) and M/s.   Builders  Supply Corporation  v. The ’Union of India(2).  As I  have  already stated  the  adoption  of the English law  was  not  in  its entirety, but as nearly as the circumstances of the case and of  the  inhabitants  of  the  place  admit.   It  would  be confusing  the issue to hold that because some  prerogatives have not been adopted, no prerogative of the State may  have any  place in our system of law.  Again in  considering  the limited  question  as  to the application  of  the  rule  of interpretation  under  discussion,  it  would  be  an   idle exercise  to  enter  upon  a  detailed  discussion  of   the prerogatives which have and which have not been  assimilated in our system of law. In  Director of Rationing & Distribution v. The  Corporation of Calcutta & Ors.(3) this Court regarded the rule as one of interpretation,  and it is so expressly stated in  State  of West   Bengal   v.   Union   of   India(4);   Sri    Vankata Seetaramanjaneva  Rice  and  Oil Mills v.  State  of  Andhra Pradesh(5) and M/s.  Builders Supply Corporation v. Union of

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India(2). In England and the Colonies the rule has not been restricted to common Crown actions or the personal prerogatives of  the Crown.   It  excludes  from the operation  of  statutes  all public servants acting under the authority of the Crown.  It is   well-settled  that  in  the  Colonies   the   executive government  represents the Crown as it does in England,  and therefore  the Executive Government of the  Commonwealth  of Australia  or  of  a State in Australia is not  bound  by  a statute  unless  the  intention that it shall  be  bound  is apparent : Roberts v. Ahern(6).  Again because of the origin of  the  rule,  its  protection is  not  restricted  to  the property and rights of the Crown alone, and applies to State property, actions and rights. When   a  statute  expressly  includes  the  State  in   its operation,  no  difficulty arises in giving  effect  to  the statute.   Even if there be no express provision, the  State may  be  bound by clear intendment of  the  statute,  having regard  to the nature of the legislation, if the  beneficent purpose  intended  to  be served  thereby  would  be  wholly frustrated unless the State is bound.  The rule of interpre- tation applies only when the Court has no indication  either by express reference or by clear intendment in the  statute: a  presumption arises in such a case that the words  of  the statute  even  though general are not intended to  bind  the State.  The question is one of presumed intention where  the language,  purpose  and the -nature of the statute  give  no clear indication and mere general words .ire used. It  was urged that in the Act there are  certain  provisions which ,expressly refer to the liability of the State and the binding character 5 Bom.  H.C.R. O.C.J. 23.                  (2) A.I.R. [1965] S.C. 1061. (1)  [1961] 1 S.C.R. 158. (3)                                           4   [1964]   1 S.C.R. 371. (5)  [1964]7 S.C.R. 456.                     (6)   [1904]  1 C.L.R. 406.  197 of those provisions against the State is not in doubt.   But that  cannot  be  a ground for holding  that  the  remaining provisions  apply to the State. , The Judicial Committee  in Province  of Bombay v. Municipal Corporation of the City  of Bombay and Another() observed :               "They  (the Judicial Committee)  were  pressed               with the argument that such an inference might               be  drawn from certain express  references  to               the  Crown in other parts of the  Act  itself,               and  from  the  fact that  by  the  Government               Building   Act,  1899,  the  legislature   had               provided  for  the  exemption  of   Government               buildings  from certain municipal  laws.   The               argument was that no express provisions saving               the rights of the Crown would be necessary  if               the Crown were already immune.  This is not an               unfamiliar  argument,  but, as has  been  said               many  times,  such  provisions  may  often  be               inserted in one part of an Act, or in a  later               general Act, ex abundanti cautela, and, so far               as  the  Act  of  1899  is  concerned,  it  is               fallacious to argue that the legislature which               passed it must have had in mind the particular               sections  of  the Act of 1888  which  are  not               under   review,  or  that  it  was   impliedly               interpreting those sections."

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The  argument that the rule had not received recognition  in the  High  Courts  in  India, before  the  judgment  of  the Judicial  Committee  reported  in  Province  of  Bombay   v. Municipal Corporation of the City of Bombay and Anr.(1)  was pronounced,   is  belied  by  the  course   of   authorities summarised  earlier.   There was  practically  a  consistent course  of authorities prior to the Constitution in  support of  the  principle  which  was  affirmed  by  the   Judicial Committee in Province of Bombay v. Municipal Corporation  of the City of Bombay and Another(1). The  origin of the rule undoubtedly was in  the  prerogative of the Crown, but there is even in the country of its origin authority  for the view that the rule is regarded  primarily as   one  of  construction.   In  Madras   Electric   Supply Corporation  Ltd.  v.  Boarland(2),  in  dealing  with   the question whether "the immunity" of the Crown "from  taxation depends  on the construction of the statute or arises,  from the prerogative in some other way", Lord MacDermott observed :               "Whatever ideas may once have prevailed on the               subject it is, in my opinion, today impossible               to uphold the view that the Crown can find  in               the  prerogative an immunity from tax  if  the               statute  in  question, according to  its  true               construction, includes the Crown amongst those               made  liable  to  the  tax  it  imposes.   The               appropriate rule as I under- (1) L.R. 73 I.A. 271. (2) [1955] A.C. 667 H.L.- 198               stand  it  is that, in an Act  of  Parliament,               general words shall not bind the Crown to  its               prejudice  unless  by  express  provision   or               necessary implication.  That, however, is, and               has   long  been,  regarded  as  a   rule   of               construction. Lord  Reid concurred in the view that the  immunity  depends upon  construction  of  the statute  rather  than  on  royal prerogative.   Lord Keith of Avonholm appeared to express  a different  view.  In India the rule has been accepted  as  a rule  of  interpretation of statutes and applicable  to  all statutes   which  governed  State  actions,   authority   or property. Is  there any reason then to hold that on January 26,  1950, the  rule  which  previously applied  to  interpretation  of statutes  ceased to apply thereto on the date on  which  the Constitution came into force ? The rule of interpretation was, as already stated, a settled rule  and was law in force in the territory of India  within the meaning of Art. 372 of the Constitution.  I am unable to agree  with the contention that a rule of interpretation  is not "law in force" within the meaning of Art. 372.  There is no  warrant for holding that a rule of interpretation  which is incorporated in a statute e.g. The Indian Succession Act, or  the General Clauses Act is law in force, and not a  rule which was enunciated by the highest Court in the realm.  The circumstance  that  a rule of interpretation is a  rule  for determination  of intention of the legislature and  for  its application    requires   determination   of    facts    and circumstances  outside the statute will not make it any  the less  a rule of law.  Acceptance of the proposition  that  a decision  of  the  highest  judicial  tribunal  before   the Constitution  is  law does not involve the view that  it  is immutable.    A   statute   may  be   repealed,   and   even retrospectively, it would- then cease to be in operation : a

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decision which in the view of this Court is erroneous may be overruled  and  may cease -to be regarded as law,  but  till then  it  is law in force.  It may be pertinent to  bear  in mind  that it was never seriously argued before us that  the judgment  of the Judicial Committee which affirmed the  view expressed in a long course of decisions was erroneous in the circumstances then prevailing. It was said by counsel for the Corporation that it is one of the fundamental principles of our Constitution that there is equality   between   the   State  and   the   citizens   and discrimination  is not permissible in the application  of  a law  generally  expressed.  it was  claimed  that  if  other occupiers of markets take out licenses, and comply with  the regulatory  provisions  of  the Act, and the  State  is  not obliged  to  abide  by the rules,  there  would  be  unequal treatment  between  owners similarly situate  and  that  the State may ignore  199 the  rules regulating the markets, and on that  account  the public interest would suffer.  There is no reason however to assume that the State under a democratic Constitution  would be impervious to public opinion, and would merely because it is not bound by a regulatory Act perpetuate ’a nuisance.  If it  be assumed that such be the attitude of the State  there would be nothing to prevent the State from enacting  express legislation  excluding  itself  from the  operation  of  the regulatory  laws relating to markets.  I do not  think  that the  guarantee  of  the  equal  protection  clause  of   the Constitution extends to any differential treatment which may result   in   the   application  of  a   special   rule   of interpretation between the State and the citizens.  Nor  can it  be said that under our Constitution equality in  matters of  interpretation  between the State and  the  citizens  is predicated in all respects.  It must be remembered that  our Constitutional  set-up  is  built up not anew,  but  on  the foundations  of our old institutions.  The political set  up is indisputably changed, but can it be said that our concept of a State is so fundamentally altered that the  traditional view  about State privileges, immunities and rights must  be abandoned  because  they  had a foreign origin,  an  on  the supposed  theory  of  equality between  the  State  and  the citizens  a theory which seeks to equate common good of  the people  represented  by  the  State  with  the  rights   and obligations  of the individual-the Court should  decline  to give  effect to the State privileges and immunities ? If  it be  granted  that the State in making laws  is  entitled  to select  itself  for  special treatment  different  from  the treatment accorded to the citizen-and it is not denied  that in  order to achieve public good it can do so even if  there is  a  differential  treatment between  the  State  and  the citizen-is there any reason to suppose that a statute  which evidently  was framed on the basis of the well-settled  rule of  the pre-Constitution days which accorded to the State  a special  treatment  in  the  matter  of  interpretation   of statutes  must be deemed to have a different meaning on  the supposition  that  the  Constitution has  sought  to  impose equality between the State and the citizen ?  The fact  that in  our  federal set-up sovereignty is divided  between  the Union  and  the States, and in the application of  the  rule that  the State is not bound by a statute, unless  expressly named  or  clearly  implied,  conflicts  between  the  State enacting  a  law and the Union, or another State  may  arise does  not  give  rise to any  insuperable  difficulty  which renders the rule in applicable to the changed circumstances, for  it  is the State which enacts a  legislation  in  terms

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general  which  alone  may  claim benefit  of  the  rule  of interpretation, and not any other State. It  was urged that even if the rule that the State  is  not, unless expressly named or by necessary implication intended, to be bound, applies, its application must be restricted  to cases where an action of the State in its sovereign capacity is in issue.  Where, however, 200 the State is following a commercial or trading activity, the rule  can have no application.  But in the context of  modem notions of the functions of a welfare State, it is difficult to   regard  any  particular  activity  of  the   State   as exclusively  trading.  The State was originally regarded  as merely concerned with the maintenance of law and order,  and was  not concerned with any trading activity.  But  that  is now an exploded doctrine.  For the welfare of the people the State  does  and is required in modern times to  enter  into many  trading  activities,  e.g. to  effectuate  control  of prices, prevent hoarding and distribute commodities in short supply,  besides  maintenance  of  departments  like  Posts, Telegraphs, Railways, Telephones etc., activities which  may have been regarded as -trading activities in the past.   But if  initiation and completion of schemes for social  welfare of the people be regarded as an attribute of the exercise of sovereign  authority, it is difficult to  regard  activities undertaken by the State for setting up markets for effective distribution  of  goods as merely  trading.   Assuming  that conducting  a market in a metropolitan town may be  regarded in  a sense as a trading activity there is, in my  judgment, no  sufficient  reason  to justify any  distinction  in  the application  of  the  rule  of  interpretation  to  statutes concerning sovereign authority and trading activity. Under the provisions of the Calcutta Municipal Act the owner or  occupier of a market is required to take out a  license. But there is no express reference to the State: nor is there anything  peculiar in the nature, purpose and object  or  in the language used in the enactment relating to the issue  of licenses which may suggest that the State must by  necessary implication be bound by its provisions.  I am, therefore, of the  view that the High Court was in error in  holding  that the  State  of  West  Bengal was  bound  by  the  provisions relating to the issue of licenses for occupation or  conduct of a market. I  do  not deem it necessary to consider the  argument  that since  the State cannot be imprisoned in enforcement of  the general provisions, and imposing a fine upon the State would be  futile  because the hand which pays and the  hand  which receives the fine is the same, an implication arises that it was not intended that the State should be bound by s. 218 of the  Calcutta Municipal Act. in my view the penal  provision of s.541 is, though in form a provision creating an offence, intended  to enable the Corporation to collect  the  license fee.   The offender and the recipient of fine are  therefore not the same bodies. Bachawat, J. By the common law of England, the Crown is  not bound  by a statute save by express provision  or  necessary implication.  This rule was applied to Indian legislation in  201 Province  of Bombay v. Municipal Corporation of the City  of Bombay(1).  In The Director of Rationing and Distribution v. Corporation  of Calcutta(2), this Court followed  the  Privy Council decision.    On  the  subject  of  the  royal  prerogative   regarding statutes Chitty in his book on "Prerogatives of the Crown at P.  382 said "The general rule clearly is, that  though  the

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King  may  avail himself of the provisions of  any  Acts  of Parliament,  he is not bound by such as do not  particularly and  expressly  mention  him’.  It has been  said  that  the reason of the rule is that "it is inferred prima facie, that the law made by the Crown, with the assent of the Lords  and the  Commons,  is  made for the subjects, and  not  for  the Crown" per Alderson, B. in A.G. v. Bonaldson (3).  Two rules follow from the proposition that the law is prima facie made for  subjects  and not for the Crown: (i) the Crown  is  not bound  by  a statute save by express words or  by  necessary implication,  (ii)  that the Crown may take advantage  of  a statute,  though  not  bound  by  it,  unless  expressly  or impliedly   prohibited   from   doing   so.    This    Court categorically rejected the second rule in V. S. Rice and Oil Mills v. State of Andhra Pradesh(4) and held that the  State cannot  be permitted to rely upon the artificial  rule  that the  State can take advantage of a statute though not  bound by  it.   I  think that this Court should  have  refused  to recognise the first rule also.    The exception of the Crown from the operation of statutes is  based sometimes on the royal prerogative, and  sometimes on  a rule of construction.  Originally, the  exemption  was claimed  and allowed on the ground of the prerogative.   The King by virtue of his prerogative could claim that a statute was  made  for subjects only and he stood  outside  it.   He waived  this  prerogative right by assenting  to  a  statute which bound him expressly or by necessary implication.   The immunity  of the Crown is now couched in the form of a  rule of construction.  In spite of this modem disguise, there  is high  authority  for the view that this  immunity  is  still based  upon  the  prerogative.  In  Madras  Electric  Supply Corporation Ltd v.  Boarland(5) Lord Keith said:                "The true explanation, easily  understandable               on  his  torical and legal  grounds,  is  that               words in a statute capable of applying to  the               Crown may be overridden in the exercise of the               prerogative.  That is necessarily involved  in               the  oft-repeated phrase that the King is  not               bound by a statute (1) [1946] L.R. 73 I.A. 271.        (2) [1961] 1 S.C.R. 158. (3) 10 M. & W. 117,124.             (4) [1964] 7 S.C.R. 456,               463, 463-4. (5) [1955] A.C. 667, 694. sup.  CI/66-14 202                unless   by   express  words  or   by   clear               implication.  If the statute does not apply to               him  there  can be no question  of  his  being               bound by it.  It is only because it can  apply               to  him  that  appeal to  the  prerogative  is               necessary.  The conception of the prerogative,               in  my  view,  is  of  something  that  stands               outside  the statute, on which the  Crown  can               rely, to control the operation of the  statute               so far as it prejudices the Crown". But  the  prerogative right of overriding statutes  did  not extend to India.  When the Crown of England became sovereign in  India,  it  acquired such  prerogative  rights  as  were enjoyed  by  the  former Indian sovereigns  and  such  other prerogative  rights  as  may  be said  to  inhere  in  every sovereign  power.   But  the common  law  was  never  bodily imported  into India and the Crown never possessed in  India all  the  prerogatives allowed to the Crown by  the  law  of England.   In  The Mayor of the City of Lyons v.  Hon.  East India Company(1), the Privy Council held that the common law

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as  to alienage and the royal prerogative of  forfeiture  of the  lands  held by a deceased alien on the  ground  of  the incapacity  of the alien to hold real property and  transmit it  by  devise  or  descent was  never’  introduced  in  the Presidency  town of Calcutta or the mofussil.  Such a  right was  not  enjoyed  by the Indian sovereign,  nor  was  it  a necessary  incident of sovereignty.  Lord Brougham  said  at pp. 280, 281, 282 and 286 of the Report:                "But  it seems to be contended both here  and               below,  that  there is something  in  the  law               incapacitating  aliens, which makes it, so  to               speak,  of necessary  application  wheresoever               the  sovereignty of the Crown is  established,               as  if  it  were inherent  in  the  nature  of               sovereign power.  To this a sufficient  answer               has been already afforded, if the acts of  the               sovereign  power  to which we  have  referred,               show  that no such application to Bengal  ever               was contemplated, unless direct authority  can               be   produced  to  show  that  the  right   is               inseparable  from the sovereignty, and, as  it               were,    an    essential    part    of     it.               It   certainly   is   not   an   incident   to               sovereignty;   in   several   countries    the               sovereign   has   no   such   right...........               Besides,   if   reference  be  made   to   the               prerogative   of  the  English   Crown,   that               prerogative in other particulars is of as high               a nature, being given for the same purpose  of               protecting the State; and it is not  contended               that  these branches are extended  to  Bengal.               Mines of precious metals, treasuretrove, royal               fish,  are  all vested in the Crown,  for  the               purpose of maintaining its power, and enabling               it  to defend the State. They are not  enjoyed               by the sovereign in all or even in most (1)  [1837] 1 M.I.A. 173.  203                countries,  and  no one has  said  that  they               extend  to the East Indian possessions of  the               British Crown...........                Upon  the  whole,  their  Lordships  are   of               opinion  that the law,  incapacitating  aliens               from  holding real property to their own  use,               and transmitting it by descent or devise,  has               never been introduced into Calcutta." The  common law of attainder or corruption of blood and  the prerogative right of forfeiture or escheat on conviction  of treason or felony now abolished by the Forfeiture Act,  1870 (33 & 34 Vict. c. 23) did not prevail in India, see  Papamma v.  Appa Rau(1)’ Nor did the English law as felo de  se  and the forfeiture of goods and chattels consequent upon suicide apply  to  a  Hindu, though a  British  subject,  committing suicide  at  Calcutta, see Advocate-General of  Calcutta  v. Ranee Surnomoye Dossee(2). At  Common  law,  no proceedings, civil  or  criminal,  were maintainable  against  the Sovereign in person for,  it  was said,  that  as the Courts were her own they could  have  no jurisdiction  over her, see Halsbury’s Law of England,  Vol. 7, Art. 544, p. 249.  In India, the government did not enjoy a general immunity from suits and legal proceedings, see The Peninsular  and  Oriental Steam Navigation  Company  v.  The Secretary  of  State  for India.(1) The  subjection  of  the Government  to suits where it was liable to be  sued  before the  Constitution  is preserved by Art. 300 of  the  Consti-

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tution.   Though  orders of mandamus and  injunction  cannot issue  to  the  Crown in England,  see  Halsbury’s  Laws  of England, 3rd Edn.  Vol. II, Art. 25 and 184 pages 16 and 98, such  orders can issue to Government under Arts. 32 and  226 of  the Constitution.  See also State of Bihar  v.  Sonavati Kumari(4).   Province of Bombay v. Khusaldas Advani(5).   In England the King by his prerogative may sue in what Court he pleases,  see Craies on Statute law, 6th Edn., p. 435.   The prerogative  of choice of Courts by the Crown never  applied in  India.  The State can sue only in a Court  competent  to entertain the suit under the general law.  In England it was the  prerogative  of  the  Crown not to  pay  costs  in  any judicial proceeding, see Craies on Statute Law, 6th edn,  p. 432.   But this prerogative was never recognised  in  India. The State pays and receives costs like a private individual. The Indian law did not deny that the Crown had certain  pre- rogatives.  The Crown inherited the prerogatives enjoyed  by the  former  Indian Sovereigns and  had  other  prerogatives inherent   in  the  nature  of  sovereignty.   It  was   the prerogative  of  the  King in Council to  hear  appeals  and petitions from his Indian subjects, (1) 1. L. R. 16 Mad. 384,396.   (2) 9 M.I.A. 387. (3) 5 Bom.  H.C.R. Appendix 1.    (4) [1961] 1 S.C.R. 728. (5)  [1950] S.C.R. 621,697. 204 see   Modee  Kai  Khocscroo  Hormusjee  v.   Cooverbhaee(1). prerogative was taken away by the Abolition of Privy Council Jurisdiction Act 1949.  When there is a failure of heirs  on a  person  dying intestate, the Crown  had  the  prerogative right  to take his property by escheat, and this  right  was said to rest on grounds of general or universal law, see the Collector  of Masulipatam v. Cavaly  Vencata  Narrainapa(2), Sonet  Koor v. Himmut Bahadoor(3) Mussammat Khursaidi  Begun v.  Secretary  of  State for India(4).   The  right  of  the Government  to take the property by escheat or lapse on  the failure of heirs or as bona vacantia for want of a  rightful owner  is recognised by Art. 300 of the  Constitution.   The prerogative right of the Crown to priority in payment of its claims was recognised on the ground that this right did  not arise out of any peculiar quality in the writ of extent  and the Hindu, Muhammadan and Poituguese Sovereigns had  enjoyed a similar right, see Secretary of State for India v.  Bombay Landing  and  Shipping  company(5).   The  extent  of   this prerogative  right may be limited by a statutory  scheme  of administration, see GrovernorGeneral in Council v. Shiromani Sugar Mills Ltd. (in liquidation)(6).  It has been held that the Government continues to enjoy this prerogative right  of precedence  after  the  Constitution came  into  force,  see Builders  Supply Corporation v. Union of India (7), Bank  of India  v.  J. Boman(8).  The Crown as  parens  partriae  had other  prerogative rights.  The Crown may have also  enjoyed in  India certain prerogative rights which were not  allowed to  the  Crown  of  England by  the  common  law  and  those prerogatives  might vary in  different parts of  India,  see Bell    v.Municipal   Commissioners   for   the   City    of Madras(9).Gopalan v. State of Madras (10).  But in India the Crown never enjoyed the general prerogative of overriding  a statute  and  standing  outside it.  Such  a  right  is  not indigenous  to   India, nor is it a  necessary  incident  of sovereignty. In  The  Secretary of State for India in Council  v.  Bombay Landing  and Shipping Company(5), Ganpat Putava v. The  Col- lector  of  Canars (11) the Bombay High Court  held  that  a prerogative  of  the Crown cannot be taken  away  except  by express  words or by necessary implication.   To  appreciate

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these  rulings, it is necessary to remember that until  1861 there  were constitutional restrictions on the power of  the Indian  legislature to affect the prerogative of the  Crown, see Statutes 3 and 4 William cap.  LXXV S. 43 and 16 and  17 Vict.  cap  XCV  S.  43, which  were  swept  away  by  later statutes,  see  the  Indian Councils Act, 1861  s.  24,  the Government of India Act 1915, s. 84 (1) (A), the  Government of (1)  6 M.I.A. 448,455. (3)  [1876] I.L.R. I Cal.391. (5)  (1868) 5 Bom.  H.C.R. 23. (7)  [1965] 2 S.C.R. 289. (9)  I.L.R. 25 Mad. 457. (2)  [1859-61] 8 M.I.A. 500. (4)  [1925] I.L.R. 5 Patna 538. (6)  [1946] F.C.R. 40. (8)  A.I.R. 1956 Bom. 305 (10) [1902] I.L.R. 1958 Mad. 798,802. (11) [1875] I.L.R. I Bom. 1. 205 India  (Amendment)  Act, 1917, s. 2 as  interpreted  in  The Secretary  of  State  v. Bombay  Municipality(1),  with  one exception  introduced by the Government of India Act,  1935, s.   1  10(b)(ii).   Having   regard  to   this   historical background,  it was considered that the prerogative  of  the Crown  was a very special subject matter and in the  absence of  express  words or necessary implication,  it  should  be presumed  that  general  words of an  Indian  Act  were  not intended  to affect the prerogative.  In Bells  case(2)  Sir Bhashyam Ayyangar J.therefore pointed out that the  doctrine that the prerogative could not be taken away save by express words  or  by necessary implication could be  based  on  the maxim  generalia specialibus non derogant.  This maxim  does not  exempt  the  Crown  from  the  operation  of   statutes generally  whenever a statute prejudicially affects it.   In order  to  invoke this doctrine, the Crown  must,  establish that  it  has some prerogative right which it claims  to  be outside the purview of the statute. As pointed out already under the Indian law the Crown  could not claim a general exemption from statutes on the ground of the  prerogative.  But there is high authority for the  view that such an exemption is allowed to the Crown in England on the  basis  of a rule of construction.  In  Madras  Electric Supply Corporation v. Boarland(3) at p. 685 Lord  Macdermott said  that  the rule that in an Act  of  Parliament  general words  shall not bind the Crown to its prejudice  unless  by express  words  or by necessary implication  has  long  been regarded  as a rule of construction.  This rule has  a  wide sweep,  and  is not limited to cases where  the  prerogative right or property of the Crown is in question.  It  protects the  Crown whenever general words in a statute  may  operate to,  its prejudice.  See Broom’ s Legal Maxims,  10th  Edn., pp.  39-40, Glanville L.  Willams’ Crown Proceedings, p.  48 (f. n.). A review of the decided cases shows that until  the decision  of  the Privy Council in the Province  of  Bombays case(4)  this wide rule of construction had not  obtained  a firm  foothold  in India.  In Verubai v.  The  Collector  of Nasik(5), the Bombay High Court held that the Government was bound  by Art. 167 of Schedule 11 of the  Indian  Limitation Act, 1877.  Westropp, C.J. said:                "The  legislature in passing  the  Limitation               Act of 1871, which is applicable to this case,               where it intends that Government should have a               longer  period  than  the  subject,  has  been               careful expressly to say so, as for  instance,

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             in  article  150  of Schedule  II,  where  the               period  assigned  to  suits  brought  by   the               Secretary  of  State is sixty years  from  the               time  of the accruer of the cause  of  action;               but   the  Legislature  makes  no   difference               between Government and its subjects  (1) 37 Bom.  L.R. 499.             (2) I.L.R. 25 Mad. 457.  (3)[1955] A.C. 667,685.        (4) [1946] L.R. 73 I.A. 271.  (5) I.L.R. 7 Bom. 552.    206                in  the case of appeals  or  applications-see               Govind Lakshman v. Narayan Moreshvar(1)".    In Appava v. The Collector of Vizagapatam (2), the Madras High    Court held that the Government was bound by Art. 178 of the    Indian Limitation Act, 1877.  Turner, C.J. and Muttusami Ayyar,    J.said:                "If  the maxim on which the counsel  for  the               Crown  relies applies to this country-and  the               Crown  is not bound by the provisions  of  any               Act unless they are expressly declared binding               on  the  Crown-it  may be  inferred  from  the               circumstance that this Act contains provisions               prescribing a Limitation to the Government for               the  institution of suits and presentation  of               criminal   appeals   that   the    Legislature               contemplated that the Crown should be  subject               to the provisions of the Act and should  enjoy               a  privilege  to the extent expressed  and  no               further-expressum facit cessare tacitum" In  the last two cases, the Courts did not apply the  strict English  rule that the Crown under the prerogative  was  not bound by the statute of limitation, see Bank Voor Handel  v. Hungarian  Administrator(3).  In The Secretary of State  for India v. Mathurabhai(4) Sargent, C. J. was inclined to apply the  English rule that the Crown is not included in  an  Act unless  there are words to that effect and to hold that  the Government  was not bound by S. 26 of the Indian  Limitation Act,  1877.   But he observed that it was not  necessary  to express  a  decided  opinion on  the  question.   In  Bells, case(5), the Madras High Court held that the Government  was bound  by  the taxing provisions of s. 341 of  the  City  of Madras  Municipal  Act,  1884,  though  not  named  in  that section.   Sir  Bhashyam Ayyangar, J. reviewed  the  earlier cases and decisively rejected the general claim of  immunity of  the Crown from a statute imposing a tax on the basis  of any  prerogative right or supposed rule of construction.  In Motilal v. The Collector of Ahmedabad(6).  Russel, Acting C. J.  and  Beaman, J. doubted the application of  the  English rule of construction in this country.  They said:                "It  is contended that the maxim  of  English               law  that  the Crown cannot be  bound  by  any               statute   unless   expressly   named   therein               applies, and reference is made to the cases of               Ganpat  Putaya v. The Collector  of  Kanara(7)               The   Secretary   of  State   for   India   v.               Mathurabhai(8).  Without in any way wishing to               prejudge   the  question  or   fetter   future               argument,                (1)  11 Bom H.C.R. 1 1 1.                (2)  [1882] I.L.R.4 Mad. 135.                (3)  [1954] 1 A.E.R. 969, 984 (H.L).                (4)  [1889] I.L.R. 14 Bom. 213.                (5)  I.L.R. 25 Mad. 457.                (6)  [1906] I.L.R. 31 Bom. 86, 89.                (7)  [1875] I.L.R. I Bom. 1

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              (8)  [1889] I.L.R. 14 Bom. 213.    207                we  may  say that as at  present  advised  we               entertain some doubt whether an exact  analogy               exists  between the privileges and  immunities               of  the Crown under the Constitutional Law  of               England  and those of servants of  the  Indian               Government." The full Bench left the question open.  In The Secretary  of State  v.  Mohammed Yysuf(1), Pratt J. held that  ss.  17(2) (vii) and 90 of the Indian Registration Act, 1908  contained an  implication  that the Crown was bound by  the  Act.   In Hiranand  Khushiram  v.  Secretary of  State  for  India(2), Beaumont, C. J. and Rangnekar, J. applied the strict English rule  of construction and held that since the Crown was  not named  either expressly or by necessary implication  in  ss. 305, 489 and 491 of the City of Bombay Municipal Act,  1888, the Crown was not bound by those sections.  Soon thereafter, the same learned Judges held in Secretary of State for India v.  The Municipal Corporation of Bombay(3), that  the  Crown was  bound  by s. 212 of the City of Bombay  Municipal  Act, 1888  by necessary implication, though not  expressly  named therein.  In Province of Bombay v. The Municipal Corporation for   the   City   of  Bombay(4),  Beaumont,   C.   J.   and Rajadhayaksha,  J. held that ss. 222(1) and 265 of the  City of Bombay Municipal Act, 1888 by necessary implication bound the Crown.  They refused to follow the dictum of Day, J.  in Corton  Local Board v. Prison Commissioner(5) that the  test of necessary implication binding the Crown involves that the legislation  is unmeaning unless the Crown is  bound.   They said:                "..........   if   it  can  be   shown   that               legislation  cannot  operate  with  reasonable               efficiency,  unless the Crown is  bound,  that               would  be a sufficient reason for saying  that               the  Crown is bound by necessary  implication.               " This decision was reversed by the Privy Council on appeal in Province  of Bombay’s case(6).  The Privy  Council  rejected the test laid down by the Bombay High Court.  They held that the strict English rule of construction exempting the  Crown from the operation of statutes applied in the case of Indian legislation.  The parties appearing before the Privy Council concurred  in  accepting this view.  The  attention  of  the Privy  Council  was  not drawn to  Bell’s  case(7)  and  the propriety of applying the English rule to Indian legislation was not considered.  Lord Du Parcq said:                "If it can be affirmed that, at the time when               the statute was passed and received the  royal               sanction, it was apparent from its terms  that               its   beneficient  purpose  must   be   wholly               frustrated  unless the Crown were bound,  then               it  may be inferred that the Crown has  agreed               to be bound."                 (1)  [1919]  21  Bom.  L.R.  1120,  1136.(2)                [1934] I.L.R. 58 Bom. 635.                (3) 37 Bom. L.R. 499.    (4) I.L.R. 1944 Dom.               95.                (5) [1904] 2 K.B. 165.   (6)  (1946) L.R.  73               I.A. 271.                              (7)   I. L. R. 25 Mad. 457.    208 They held that the Crown was not bound by ss. 222(1) and 265 of  the City of Bombay Municipal Act, 1888 and an  inference of  necessary  implication binding the Crown  could  not  be

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drawn from certain express references to the Crown in  other parts of the same Act and from the exemption of the Crown in a later general Act since such provisions are often inserted ex  abundanti cautela.  It is to be noticed that in  several earlier  decisions  the  Bombay  High  Court  had  drawn  an inference  of  necessary implication binding  the  Crown  in other sections of the same Act.  Moreover, except the Bombay High Court,  no other High Court held that the English c  of Crown  exemption  from statutes applied to India.   Even  in Bombay, some of the Judges doubted the applicability of  the rule  to  Indian conditions.  The imposition of  the  strict rule  of  construction  by the Privy  Council  decision  was received  very  unfavourably in India.   In  Corporation  of Calcutta v. Sub Postmaster, Dharamtala(1), the Calcutta High Court  felt bound to follow the Privy Council decision,  and held that the Government was not bound by the provisions  of the  Calcutta Municipal Act, 1923.  Mookerjee, J.,  however, said:                "Had the question been res integra and had it               been  open  ,-to us to consider  the  question               untrammelled  by  a decision of  the  Judicial               Committee   we  might  have   considered   the               reasonableness  and propriety of applying  the               principles as enunciated by the English Courts               and  also  how far they should be  applied  to               Indian  conditions.  For some years  past  the               position of the Crown with regard to liability               and  procedure  has  been  considered  by  the               lawyers  in  England as being  antiquated  and               absurd  as  contrasted with that  of  ordinary               individuals  and  reform in this  respect  has               been considered to be long overdue." In The Corporation of Calcutta v. Director of Rationing  and Distribution(2),  the Calcutta High Court refused to  follow the Privy Council decision and held that the State was bound by s. 386(1) (a) of the Calcutta Municipal Act, 1923.   This decision  was  reversed  in The Director  of  Rationing  and Distribution’s  case (3) and a majority of a Bench  of  this Court  held  that  the law was correctly laid  down  in  the Province of Bombay’s case(4) and continued to apply in  this country even after the Constitution came into force, and the State  was  not  bound  by s. 386(1)  (a)  of  the  Calcutta Municipal  Act, 1923.  Wanchoo, J. dissented and  held  that the rule laid down by the Privy Council did not apply to the construction of Indian statutes after the Constitution-came into  force.   Later  decisions of  this  Court  disclose  a tendency to relax and soften the rigour of (1)  [1948]54 C. W. N. 429.      (3)    [1961] 1 S.C.R. 158. (2)  A.I.R. 1955  Cal. 282. (4)  (1964) L.R. 73 I.A. 271.    209 this  rule.   In Sri Venkata Seetaramanjaneya Rice  and  Oil Mills  and others v. State of Andhra Pradesh(1)  this  Court held that an inference of necessary implication binding  the State may be drawn if "the conclusion that the State is  not bound  by  the specific provision of a given  statute  would hamper  the  working of the statute, or would  lead  to  the anomalous position that the statute may lose its  efficacy". In other words, the Court was inclined to revive the  Bombay heresy rejected by the Privy Council. With  regard  to this rule of exemption of  the  Crown  from statutes,  Glanville  L.  Williams in  his  book  on  "Crown Proceedings", 1948, pp. 53 and 54 said:                "The rule originated in the Middle Ages, when               it   perhaps  had  some  justification.    Its

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             survival,  however, is due to little  but  the               vis inertiae.  The chief objection to the rule               is its difficulty of application .... With the               great extension in the activities of the State               and the number of servants employed by it, and               with  the modern idea, expressed in the  Crown               Proceedings  Act,  that the  State  should  be               accountable  in wide measure to the  law,  the               presumption should be that a statute binds the               Crown rather than that it does not." Thus,  the artificial rule of construction has  not  escaped criticism  even  in England.  This rule of  construction  is unsuitable  to Indian conditions and should never have  been applied  to India.  Before 1946 there was no settled  course of   decisions  of  the  Indian  Courts   necessitating   or justifying the application of this rule to the  construction of  Indian statutes.  Rules of English law which  could  not suitably be applied to Indian conditions were not introduced even in the Presidency Town of Calcutta by 13 Geo HI c 63 or 21  Geo  III  c 70 or any other cognate statute  or  by  the Charter  of Charles II in 1661 see The Mayor of the City  of Lyons  v.  The  Hon.  East  India  Company(2)  The  Advocate General   of   Calcutta  v.  Ranee   Surnomoyee   Dossee(3). Technical rules of English common law were not applied  even in  the Presidency Towns if they clashed with principles  of justice,  equity  and good conscience, see Abdul  Kawder  v. Mahomed  Mera  (4) Mool Chand v. Alwar Chetty (5).   In  the mofussil,  common  law had no force proprio vigore  but  the Judges  were free to adopt and apply any rule of common  law if  it was consonant with principles of justice, equity  and good  conscience.  Artificial rules of Common Law  based  on feudal notions had no application in India.  In Mithibai  v. Limii  Nowroji Benaji(6), the Bombay High Court  refused  to apply  the rule in Shelley’s case in a case arising  between Parsis  in the mofussil.  In The State of Rajasthan v.  Mst. Vidyawati(7) (1)  [1964] 7 S.C.R. 456, 462 (2) [1837]1 M. A. 175, 246-9, 274-5. (4) I.L.R 4 Mad 410 (5)  I.L.R. 39 Mad. 584, 553. Bom. 506,531. (3) 9 M.I.A,387, 407-13, 424-30.  (7) [1962] 2 Supp.  S.C.R 989, 1007. (6)  (1881) I.L.R 5 Bom. 506, 531. 210 this  Court refused to apply rules of immunity of the  Crown based  on  old,  feudalistic  notions.   In  interpreting  a statute,  it is the duty of the Court to give effect to  the expressed  intentions  of  the  legislature.   There  is  no compelling  reason why the Courts in India should  not  give full  effect to the general words of a statute on the  basis of  some  artificial  rule  of  construction  prevailing  in England. No doubt, there are many Indian Acts which expressly provide that  the  Crown or the Government shall be bound  by  their provisions.  See the Indian Arbitration Act No. 10 of  1940, s.  43, Trades and Merchandise Marks Act No. 43 of 1958,  s. 130,  the  Factories  Act No. 63 of 1948, s.  116,  the  Oil Fields (Regulation and Development) Act No. 53 of 1948,  the Mines Act, 1952, s. 85.  Some of these Acts are modelled  on English statutes which contain similar provisions.  In  some Acts,  the  express  provision  binding  the  Government  is inserted  by way of abundant caution.  But the bulk  of  the Indian  legislation  proceeds upon the assumption  that  the Government  will  be bound unless the  contrary  is  stated. Many  Acts  like the Code of Civil Procedure, 1908  and  the

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Indian  Contract  Act 1872 make special provisions  for  the Government   in  respect  of  particular  matters   on   the assumption  that  in  respect  of  all  other  matters   the Government  will be bound by the general provisions  of  the Act.   The  Indian Limitation Act 1882  provided  a  special period  of  limitation for suits by the  Government  on  the assumption  that  the Government like the subjects  will  be bound  by  its  other  general  provisions.   To  apply  the technical rule of construction exempting the Crown from  the operation  of  Indian  statutes  will  be  to  stultify  the intention  of  the legislature in most cases.   The  English Courts have gone to the length of deciding that the Crown is not  bound even by general regulations as to public  safety, see  Cooper  v. Hawkins(1).  Such a result has  not  escaped criticism  even  in England.  In India, no one  has  doubted that  general  regulations  as to  public  safety  bind  the Government equally like the citizens. The  Director of Rationing and Distribution’s  case(2)  left open  the  question whether the State could  claim  immunity from the provisions of a statute with regard to its  trading or  commercial activities.  But the executive power  of  the State extends to the carrying on of a trade or business, see Art. 298 of the Constitution.  On a question of construction of  a statute, no rational distinction can be  made  between the trading and non-trading activities of the State.  If the State  is not bound by a statute, it would seem that  it  is not so bound in respect of all its activities. in  a country having a federal system of government,  it  is difficult  to  apply  the  rule  of  Crown  exemption   from statutes.  In (1) [1904] 2 K.B. 164.    (2) [1961] 1 S.C.R. 158.     211 R  v. Sutton(1), the High Court of Australia held that  this presumption  should  not, be applied so as  to  bring  about either   State  exemption  from  federal  laws  or   federal exemption  from  State statutes.  But the  contrary  opinion seems  to  have prevailed in later cases,  see  Minister  of Works (W.A.) v. Gulson(2).  The Commonwealth of Australia v. Bogle(3).   This  branch of Australian law is  discussed  in detail  by Dr. Wynes in his book on  Legislative,  Executive and Judicial Powers, 3rd Edition pp. 518 to 544.  We  should not  import  in  this country either  the  English  rule  of implied  exception of the Crown or the  subtle  distinctions engrafted  on  it by the Australian Courts.  Our  system  of Government  is  federal in character.  The taxing  power  is vested both in the Union and the States.  Subject to certain constitutional restrictions, the Union can tax the State and the  State  can  tax  the Union.  There  is  no  ground  for presuming  that the States are excluded from the scope of  a general  taxing  statute enacted by Parliament or  that  the Union  is  outside  the purview of the general  words  of  a taxing statute enacted by a State legislature. I am therefore of the opinion that the rule that the Govern- ment is not bound by a statute unless it is expressly  named or  bound by necessary implication does not prevail in  this country  and  the  decisions in  the  Province  of  Bombay’s case(4)  and  The Director of Rationing  and  Distribution’s case(s)  and the subsequent decisions applying the  rule  to the construction of Indian Acts should not be followed.  The imposition  of this artificial rule has been harmful to  our body  politic.   We have power to  reconsider  our  previous decisions, see The Bengal Immunity Company Ltd. v. The State of  Bihar(6).  This is a fit case where we  should  exercise this  power.   If  the rule of common  law  controlling  the

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operation  of  a statute on the ground  of  the  prerogative applied  to  India, it would be a law in  force  before  the Constitution and would continue to be in force by virtue  of Art. 372 of the Constitution.  It would be the law in  force because  it  would limit and control the  operation  of  the existing  Indian Acts.  But we have ample power to say  that this  rule was not in force in India and the Indian law  was not correctly laid down by the Privy Council in the Province of Bombay’s case(4) and the decisions which followed it. There is no presumption that the provisions of an Act do not bind   the  State  (using  the  expression  "State"   in   a compendious  sense as including the Union and  the  States). In  each case, it is a question of fair construction of  the Act whether or not any particular provision of the Act binds the  State.   The  intention of the legislature  has  to  be gathered  on  a  careful scrutiny of the  Act  in  question. Particular  care  should be taken in scrutinising  the  pro- visions  of a taxing or a penal Act.  If the application  of the Act    (1) [1908] 5 C. L. R. 789.    (3) [1953] 89 C. L. R. 229, 254.    (5) [1961] 1. S.C.R. 158.    (2) [1944] 69 C. L. R. 338.    (4) [1946] L.R. 73 I.A. 271.    (6) [1955] 2 S.C.R. 603.    212 leads  to some absurdity, that may be a ground  for  holding that  the State is excluded from its operation by  necessary implication.   If  the  only  penalty  for  an  offence   is imprisonment, the State cannot be convicted of the  offence, for the State cannot be locked up in prison.  If the penalty for   the  offence  is  fine  and  the  fine  goes  to   the consolidated fund of the State, it may be presumed that  the penal provision does not bind the State, for the legislature could not have intended that the State will be the payer  as well as the receiver of the fine.  Presumably, the Union  is not  bound by the Central Income-tax Act because if it  paid income-tax,  it  will be both the payer  and  the  receiver. Likewise,  a  State  is prima facie not  bound  by  a  State Agricultural  Income-tax Act where the tax is receivable  by it.   Moreover  cases  may conceivably  arise  where  "press provisions  in  a statute binding the State  in  respect  of certain  specific  matters may give rise  to  the  necessary implication that the State is not bound in respect of  other matters. The Calcutta Municipal Act, 1951 contains special provisions exempting  the  Government  from  some  of  its  provisions. Section  167(2) exempts from the consolidated  rate  certain open spaces and parade grounds which are the property of the Government.  Section 208(1)(b) exempts certain carriages and animals  belonging to the Government from payment of tax  on carriages  and animals.  Section 225(1) (c) proviso  exempts carts which are the property of the Government from  payment of  registration  fees.  Sections 218(1) and  541(1)(b)  are however framed in general terms and do not expressly  exempt the Government from their operation.  Under s. 218(1) it  is the  duty  of  every person carrying on any  of  the  trades mentioned  in schedule TV to take out a licence and  to  pay the prescribed fee.  Under s. 541(1) (b) any person carrying on such a trade without taking out the licence is punishable with  fine.  Prima facie, the two provisions  apply  to  all persons  including the State Government.  Section 218  is  a taxing  section  and its object is to levy revenue  for  the municipality.   There is no reason why the State  Government like any other person should not take out a license and  pay

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the  prescribed fee if it chooses to exercise or carry on  a trade  and why it should not be punished with fine under  S. 541(1)(b) if it chooses to carry on a trade without taking a license.  By S. 541(2), such fine, when levied, is taken  by the  Municipality  in  full satisfaction of  the  demand  on account  of  the license Fee.  Section II 5 of  the  Act  no doubt provides that all monies realised or realisable  under the  Act  (other than fine levied by magistrates)  shall  be credited  to the municipal fund.  Reading sections  115  and 541(2)  together it appears that the excepting words  "other than  fine levied by magistrates" in s. 115 do not refer  to the fine levied under s. 541.  The general provisions of  s. 115  must  be read subject to the special provisions  of  s. 541(2) and the fine realisable under s. 541 is receivby  the Municipality.  It follows that the State Government is     213 the  payer  but is not the receiver of the fine.   There  is nothing  to  indicate that the State  Government  should  be excluded  from  the purview of s. 218(1) and  s.  541(1)(b). Section 218 renders the State liable to pay the license fee. Section  541(1) provides the remedy for the recovery of  the fee in case of default in taking out the license and payment of  the fee.  If we are to hold that s. 218 (1)  applies  to the  State but s. 541(1) (b) does not, the result  would  be that though the State is liable to pay the license fee,  the Municipality  will have no remedy against the State for  the recovery  of  the  fee.   The  legislature  could  not  have contemplated such a result. Section  541 (1)(b) is a penal provision.  But the State  is not  necessarily  exempt  from the operation  of  a  statute having  a  punitive aspect.  No doubt, under s.  547(A)  the Court is competent to direct imprisonment of the offender in default   of  the  payment  of  fine  under  s.   547(1)(b). Obviously,  this provision cannot be applied to  the  State, because  the State cannot be detained in prison.  But  there is no reason why s. 541(1) (b) should not be applied to  the State.   In  Rani Sonavati Kumari v. The State  of  Bihar(’) this  Court held that under the punitive provisions of  0  - 39, r. 2(3) of the Code of Civil Procedure, 1908, the  Court could  direct  attachment of the property of the  State  for breach of an order of injunction, though the Court could not direct detention of the State in civil prison. The  High  Court  found that the State of  West  Bengal  was carrying  on  a  trade referred to in  schedule  IV  of  the Calcutta  Municipal Act, 1951, and was bound to take  out  a license  under s. 218(1).  It is common case that the  State did  not  take  out a license for  1960-61.  The  State  was therefore  rightly  convicted  by the High  Court  under  s. 541(1).   In the judgment of the High Court it is stated  by inadvertence that the conviction was under s. 537, but  from the materials on the record it is clear that the High  Court intended  to pass the order of conviction under s.  541.  It was argued that the State was the owner of a market and  did not carry on any business. it was suggested that the trades, if  any, in the market were carried on by the  stall-holders and not by the Government.  But the High Court has  recorded the finding that the Government carried on a trade.  In this appeal under Art. 136 of the Constitution, I do not  propose to interfere with this finding Of fact.  This judgment  will not preclude the Government from proving in any future  case that  it  is  not carrying on any trade or  business  at  1, Orphanage Road, Calcutta,    The appeal is dismissed.        ORDER In  accordance with the opinion of the majority, the  appeal

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is dismissed.    Y. P.    (1) [1961] S.C.R.728. 214