http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 1 of 5  

PETITIONER: THE STATE OF WEST BENGAL

       Vs.

RESPONDENT: SHAIKH SERAJUDDIN BATLEY.UNION OF INDIA: INTRVENER

DATE OF JUDGMENT: 24/11/1953

BENCH: DAS, SUDHI RANJAN BENCH: DAS, SUDHI RANJAN SASTRI, M. PATANJALI (CJ) MAHAJAN, MEHR CHAND HASAN, GHULAM JAGANNADHADAS, B.

CITATION:  1954 AIR  193            1954 SCR  378  CITATOR INFO :  D          1973 SC 381  (12)

ACT:  Indian Independence (Rights, Property and Liabilities) Order  1947, Arts. 8(2), 9-Rent payable by Province of Bengalbefore  15th August, 1947-Purpose of lease exclusive purpose of West  Bengal  Liability  of West Bengal  "Financial  obligations,"  interpretation of- Object of Art. 9.

HEADNOTE:    The  liability to pay rent under a lease does  not  come with the expression "financial obligations" in article 9  of the  Indian Independence (Rights, Property and  Liabilities) Order, 1947.   The Province of Bengal took certain premises on lease  on the  6th February, 1947, agreeing to pay a monthly  rent  of Rs.  1,800 and the purposes for which the lease was  entered into  were, after 15th August, 1947, exclusivel purposes  of the Province of West Bengal: Held, that the liability to pay rent  was  not a "financial  obligagation"  contemplated  by article.  9  and the Government of West  Bengal  was  liable underar  article 8(2)(a) of the abovesaid order to  pay  the rent which had accrued up to the 15th August, 1947.   Province  of West Bengal v. Midnapur Zemindari Co.,  Ltd. (54  C.  W.  N. 677), Sree Sree Iswar  Madan  Gopal  Jim  v. Province  of West Bengal (54 C. W. N. 807) and The State  of Punjab  v.  L Mohanial Bhayana (A.  I. R.  1951  Punj.  382) referred to.

JUDGMENT: CIVIL  APPELLATE.       JURISDICTION : Civil Appeal No.  119 of 1951. Appeal  by  special leave granted by the Supreme  Court  of, India by its Order dated 14th December, 379 1950,  from  the Judgment and Decree dated  the  9th  March, 1950,  of the High Court of judicature at Calcutta  (Harries

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 2 of 5  

C.  J. and Bannerjee J.) in Appeal from Original Decree  No. 162 of 1949 arising out of the judgment and Decree dated the 4th  August, 1949, of the said High Court (Sinha J.) in  its Ordinary  Original  Civil jurisdiction in Suit No.  1502  of 1948.     S.M. Bose, Advocate General of West Bengal, and N. C. Chatterjee (B.  Sen, with them) for the appellant    R.     Choudhary and B. Choadhary for the respondent    C.K. Daphiary, Solicitor General for India. (G. N.  Joshi and Porus A. Mehta, with him) for the Union of India. 1953.  November 24.  The judgment of the Court was delivered by DAS  J.-This is an appeal by special leave by the  State  of West  Bengal from the judgment and decree passed on the  9th March, 1950, by a Division Bench of the Calcutta High  Court affirming  the judgment and decree pronounced by Sinha  J.on the  4th August, 1949, in exercise of the ordinary  original civil   jurisdiction  of  that  court.   The  question   for consideration  in  this  appeal  is  whether  on  a   proper interpretation   of   articles  8  and  9  of   the   Indian Independence (Rights, Property and Liabilities) Order, 1947, the  appellant  can be held liable for payment of  rent  and taxes  for  a.  period prior to the 15th  August,  1947,  in respect  of a premises which had been taken on lease by  the undivided Province of Bengal.    The relevant facts are shortly these.  By an indenture of lease dated the 22nd February, 1947, the respondent  demised to  the  Governor of the undivided Province  of  Bengal  the first,   second  and  third  floors  of  premises  No.   73, Dharmatolla  Street, in the town of Calcutta for a  term  of three  years commencing from the 1st day of February,  1947, Yielding and Paying unto the lessor therefor during the said term  a  monthly  rent  of  Rs.  1,800  only  clear  of  all deductions by equal monthly payments on the 5th day of  each and 380 every month for the month immediately preceding and also the sum  of  Rs. 150 per quarter towards payment  of  occupicr’s share   of  municipal  taxes.   By  the  lease  the   lessee covenanted  that  he would, during the said  term,  use  the demised  premises only for a hostel for the students of  the Campbell Medical School and shall not at any time during the said  term use the demised premises or any part thereof  for any other purpose whatsoever.  The lessee further agreed  to pay the costs of and. incidental to the lease.  On the  15th August, 1947, the partition of India took place and, amongst other things, two new provinces came into existence, namely, West  ’Bengal and East Bengal, in Place of the old  Province of  Bengal.  The Province of West Bengal formed part of  the Domininion  of India and is now the State of West Bengal  in the Union of India while the Province of East Bengal  became and is still a part of the Dominion of Pakistan. the  Indian Independence Act, 1947, by section 9 empowered the Governor- General,  amongst  other things, to make such  provision  as appeared  to him to be necessary or expedient  for  dividing between  the new provinces to be constituted under that  Act the  powers, rights, properties, duties and  liabilities  of the  provinces which under that Act were to cease to  exist. In  exercisc of that power the Governor General  promulgated an  Order called the Indian Independence  (Rights,  Property and Liabilities) Order, 1947, hereinafter referred to as the said  Order,  to deal with the  power.%,  rights,  property, dudes and liabilities of the respective Governments of  West Bengal  and East Bengal.  Article 8(2) of that Order,  which is  material  for the purposes of this appeal,  was  in  the

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 3 of 5  

following terms         "Any  contracts  made on behalf of the  Province  of Bengal before the appointed day shall, as from that day      (a)  if the contract is for purposes which as from that day are exclusively purposes of the Province of West Bengal, be  deemed  to  have been made on behalf  of  that  Province instead of the Province of Bengal: And 381 (b)  in any other case be deemed to have been made on behalf of  the Province of East Bengal instead of the  Province  of Bengal ; and  all  rights and liabilities which have accrued  or  may accrue  under  any such contract shall., to  the  extent  to which  they  would  have been rights  or  liabities  of  the Province of Bengal, be rights or liabilities of the Province of  West Bengal or the Province of East Bengal, as the  case may be."    Clause  (6) of article 8 provided that the provisions  of that article would have effect subject to the provisions  of article 9 of that Order.  The relevant portion of article  9 was as follows :        "9.  All liabilities in respect of such loans,  guar- ntee and other financial obligations of the Governor General in  Council or of a Province as are outstanding  Immediately before the. appointed day shall as from that day (a)........................................ (b)  in the case of liabilities of the Province of Bengal be liabilities of the Province of East Bengal."      On the 8th May, 1948,the respondent filed a suit in the Calcutta  High  Court  against the  appellant  claiming  Rs. 21,600  as  arrears  of rent at Rs.  1,800  per  month  from February,  1947,  to January, 1948, Rs.  600  as  occupier’s share  of municipal tax for the same period and Rs.  523-9-3 being   the  costs  of  land  incidental  to   the,   lease, aggregating to Rs. 22,723-9-3.  During the pendency of  this suit the appellant paid Rs. 9,250 being the arrears of  rent and  taxes from the 15th August, 1947, but denied  liability for  the  arrears of rent or taxes for any period  prior  to that date or for the costs of the lease. The  case was heard by Sinha J., who by his  judgment  dated the  10th August, 1947, held, amongst other things that  the lease  was entered into for purposes which as from the  15th August, 1947, were exclusively purposes of  the, Province of West Bengal and that under articlc 8(2)(a) of the said Order the  appellant was clearly liable  for the rents  which  had accrued  previous to the appointed day, that is to say,  the 15th 382 August,  1947, and decreed the suit for Rs. 13,473-9-3  with costs and interest on judgment at. 6 percent.  The  Province of West Bengal preferred an appeal from, that judgment but a Division  Bench  of the said High Court (Harries C.  J.  and Banerjee  J.) affirmed the decree and dismissed  the  appeal with costs The State of West Bengal which took the place  of the Province of West Bengal applied for leave to appeal  but that  application was dismissed.  The State of  West  Bengal thereafter applied for and obtained special leave to  appeal from this court and the appeal has now come up before us for final disposal.      The  learned Advocate General of West Bengal  appearing in  support of this appeal fairly and frankly conceded  that in  the absence of anything else this case would  be  wholly covered by article 8 (2) (a) but contended that by virtue of article 8 (6) that article was to have effect subject to the provisions  of article 9. In the circumstances the  question

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 4 of 5  

whether  the  contract was for purposes which  as  from  the appointed  day were exclusively purposes of the Province  of West  Bengal and whether article 8(2) made  any  distinction between liabilities which had accrued or which might  accrue need not be considered.     The  argument  before us has been confined only  to  the interpretation  of  article  9.  Learned  Advocate   General contends  that  the liability to pay rent  under  the  lease comes within the expression "other financial obligations" to be found in that article.  According to him all  obligations to  pay  money  under  a contract whether  by  reason  of  a covenant  to  pay money or by way of damages for  breach  of contract   may   be   properly   described   as   "financial obligations.  It is no doubt true an obligation to pay money under  a  contract  or for breach thereof is in  a  sense  a "financial  obligation"  but the question is  not  what  may popularly  be described as "financial obligation" but.  what is  the  meaning of the expression  "other  financial  obli- gations in the context in which it has been used.  To accept the argument of the learned Advocated will be to rob article 8 of practically the whole of its 383 content except claims for injunction or specific performance of  a contract or the like.  Such, we apprehend,  could  not have  been  the intention of the framers  of  that  article. This  difficulty  does  not  arise  if  the  expression   be construed  ejusdem gener is, for so construed it implies  an obligation  in  the nature of an obligation  in  respect  of loans and guarantees incurred or undertaken by the State  as held by Harries C J. in Province of West Bengal v.  Midnapur Zemindary Co., Ltd.( 1), which has been followed by  Chunder J.  in Sree Sree Isiwar Madan Gopal Jiu v. Province of  West Bengl(2), and by Kapur J. in The State of Punjab v. L. Mohan Lal  Bhayana (3 ). The phrase "loans, guarantees  and  other financial  obligations" occurred in section 178 in Part  VII of  the Government of India Act, 1935, and there  cannot  be any  doubt that those expressions used in that  section  did not  refer  to au and sundry pecuniary  obligations  of  the State  arising out of contracts of every  description.   The loans and guarantees there referred to meant, it would seem, the  special kinds of contracts relating to the State  loans and   State   guarantees.   In   that   context   "financial obligations"   would  mean  obligations  \arising   out   of arrangement or agreements relating to State finance such  as distribution  of revenue, the obligation to grant  financial assistance by the Union to any State or the obligation of  a State  to make contributions and the like.  It is,  however, not   necessary  or  desirable  to  attempt  an   exhaustive definition  of the expression "financial  obligations."  The court  will  have  to  consider  in  each  case  whether   a particular  obligation  which may be the  subject-matter  of discussion   falls   within   the   expression    "financial obligations’  within  the  meaning of  article  9.  Whatever liabilities  may or may not come within that  expression  we are  clearly of opinion, in agreement with the  High  Court, that the liability to pay rent under a lease certainly  does not come within that expression. (1) 54 C.W.N. 677, 85 C.L.J.202;A.I.R 1950 Cal.159. (2)  54 C. W. N. 807. (3)  A.I.R. 1951 Punjab 382. 384 The result, therefore, is that we affirm the decision of the High Court and dismiss this appeal with costs.                 Appeal dismissed. Agent for the appellant: P. K. Bose.

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 5 of 5  

Agent for the respondent: A. N. Mitter. Agent for the intervener : G. H. Raiadhyaksha.