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PETITIONER: UNION OF INDIA

       Vs.

RESPONDENT: STATE OF RAJASTHAN

DATE OF JUDGMENT04/09/1984

BENCH: VENKATARAMIAH, E.S. (J) BENCH: VENKATARAMIAH, E.S. (J) REDDY, O. CHINNAPPA (J) SEN, A.P. (J)

CITATION:  1984 AIR 1675            1985 SCR  (1) 700  1984 SCC  (4) 238        1984 SCALE  (2)314

ACT:      Constitution of India-Article 131-Original jurisdiction of the  Supreme Court-Scope  of-Jurisdiction when attracted. Held: attracted  only when dispute arises between or amongst the States  and the  Union of  India in  the context  of the constitutional relationship that exists between them and the powers,    rights,    duties,    immunities,    liabilities, disabilities, etc.,  flowing therefrom. Whether a suit filed by the  State against  the Union  of India  for recovery  of compensation for  loss on  account of damage caused to goods despatched through  the Indian  Railways could be filed in a civil court-Whether suit Maintainable. Held: yes.      Indian Railways  Act, 1890-Section  80-Suit filed under section 80  is one  between Railway  Administration and  the person instituting  the suit  even though  Union of India is impleaded as a party.

HEADNOTE:      The respondent, State of Rajasthan through its District Rehabilitation Officer,  Barmer filed a suit in the court of the District  Judge, Balotra against the appellant, Union of India, and  the Railway  Administration claiming damages for the loss  suffered by  it on account of the damage caused to the  goods   transported  by   rail  through   the   Railway Administration. The  appellant contended  that the  suit was not maintainable  in the  District Court  in view of Article 131 of  the Constitution  which, according  to it  conferred exclusive jurisdiction  on the  Supreme Court  to decide all disputes arising between a State and the Union. The District Judge held  that he  had jurisdiction  to try  the  suit.  A Revision Petition  filed against  the order  of the District Judge was  dismissed by  the High Court. Hence this petition for special leave to appeal.      Dismissing the petition, ^      HELD: The suit was entertainable by the District Court.      On a  careful consideration  of the whole matter in the light of  the decisions  of this  Court,  it  is  felt  that Article 131  of the  Constitution is  attracted only  when a dispute arises  between or  amongst the States and the Union in the  context  of  the  constitutional  relationship  that

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exists  between   them  and   the  powers,  rights,  duties. immunities,   liabilities,    disabilities   etc.    flowing therefrom. Any dispute 701 which may  arise between  a State  in  the  capacity  of  an employer in  a factory,  a manufacturer  of goods subject to exercise duty, a holder of a permit to run a stage carriage, a trader  or businessman carrying on business not incidental to the  ordinary functions  of  Government,  a  consumer  of railway services  etc. like  any other  private party on the one hand  and the  Union of  India on  the other  cannot  be construed as  a dispute  arising between  the State  and the Union in  discharge of  their  respective  executive  powers attracting Article  131 of  the Constitution. It could never have been  the intention  of the framers of the Constitution that any  ordinary dispute  of this  nature would have to be decided exclusively by the Supreme Court. [708G-H; 709A-B]      State of  Bihar v.  Union of  India &  Anr.,  [1970]  2 S.C.R. 522, Union of India v. State of Mysore, [1977] S.C.R. 842. State  of Mysore  v. Union  of India & Ors. A.I.R. 1968 Mysore 237 at pages 239-240, State of Rajasthan & Ors., etc. v. Union  of India  etc. etc.,  [1978] 1  S.C.R. 1, State of Karnataka v.  Union of  India &  Anr., [1978]  2 S.C.R. 1 at page 92  and The  Framing of India’s Constitution-A Study by Shri B. Shiva Rao at page 483, referred to.      In the  instant case,  the State  Government has made a claim like  any other  consignee of goods despatched through the railway  for compensation  and its success or failure in the suit  depends  on  proof  of  facts  which  have  to  be established in  the same way in which a private person would have to  establish. This  is not  even a case where a formal contract is  entered into between the Union of India and the State of  Rajasthan is  accordance with  the requirements of Article 299  of the  Constitution. It  is just  a commercial contract under  which an  officer of  the State of Rajasthan was entitled to claim delivery of the goods consigned as any ordinary consignee.  The claim  involved in this case is one based on  section 80  of  the  Indian  Railways  Act,  1890. Section 80  of the  Indian Railways Act, 1890 indicates that the claim  made under  it is essentially against the Railway Administration concerned. The Union of India is impleaded as a party  to suits  instituted thereunder  being the owner of the  Indian  Railways  by  virtue  of  Article  300  of  the Constitution. The  statute, however,  treats the  dispute as one between  the Railway  Administration concerned  and  the person instituting the suit. Neither of the parties to these proceedings  is   questioning  the   applicability  of   the provisions  of  the  Indian  Railways  Act,  1890  to  these proceedings. It  is, therefore,  difficult to  hold that  in these proceedings  there is  any question which falls within the scope of Article 131 of the Constitution.                                 [709H; 710A-B; D; H; 711A-B]

JUDGMENT:      CIVIL APPELLATE  JURISDICTION: Special  Leave  Petition (Civil) No. 284 of 1982.      From the  Judgment and  Order dated  the 2nd  September 1981 of  the Rajasthan High Court in Civil Revision Petition No. 273 of 1981      K.G. Bhagat,  Addl. Sol General, Miss A. Subhashini and Vijay Panjwani for the Petitioners. 702      The Judgment of the Court was delivered by

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    VENKATARAMIAH, J. The precise question which arises for consideration in  this petition  is whether  a suit filed by the State  of Rajasthan  against  the  Union  of  India  for recovery of  compensation for  loss on account of the damage caused to  the goods  despatched through the Indian Railways in a  civil court at Rajasthan is maintainable or whether it should be  filed in  this Court  under Article  131  of  the Constitution.      The  facts   of  the   case  are  these.  The  District Administrator of  Baarmer in  Rajasthan   was in  need of  a certain number  of tents  and their  accessories and  at his request 170  bundles of  tents and  their  accessories  were despatched by  Chief Commandant, Mana Shivir (Raipur) Madhya Pradesh to the Collector, Barmer through the Indian Railways under  R.R.  No.  423978  dated  February  17,  1972  to  be delivered at  Barmer. No  intimation was  received about the arrival of  the consignment at Barmer till August 6,1972. On hearing that the consignment had reached Barmer on August 6, 1972,   the    Additional   Collector   and   the   District Rehabilitation Officer  went to Barmer on August 6, 1972 for taking delivery  but it  was found  that the packings of the goods had  been  seriously  damaged  and  as  a  consequence thereof the  tents as  well as  the accessories  had  become unfit for  use. The delivery was not, therefore, taken and a request was  made for  assessing the damages. The goods were auctioned and  a sum  of  Rs.  15,000  was  fetched  in  the auction. Since the claim of the consignee was not settled by the Railway  Administration, after  issuing necessary notice to the  General Manager, Northern Railway, New Delhi, a suit was filed  by the  State of  Rajasthan through  the District Rehabilitation Officer  Barmer claiming damages amounting to Rs. 1,  57,825.80 against the Union of India in the Court of the District  Judge, Balotra  on July  23,1977. The suit was contested  by   the  Union   of  India   and   the   Railway Administration on  various grounds  and one of them was that the suit  was not maintainable in the District Court in view of Article  131 of  the Constitution which according to them conferred exclusive  jurisdiction on  the Supreme  Court  to decide all  disputes arising  between a State and the Union. The 6th  issue framed  in the suit related to the competence of the  District Court to entertain the said suit. The above issue was  heard as  a preliminary  issue and  the  District Judge held by his order dated April 16, 1981 that he 703 had jurisdiction  to try  the suit. Against the order of the District Judge a revision petition was filed before the High Court of Rajasthan and that petition came to be dismissed on September  2,1981.   This  petition  for  Special  Leave  is preferred under  Article 136 of the Constitution against the order of the High Court.      After the  case was  heard for  some time,  the learned Additional Solicitor  General very  fairly stated  that  the suit could  be allowed  to  be  proceeded  with  before  the District Court.  Since the  question was  of importance  and that every  suit instituted  by any State Government against the Railway Administration may give rise to a similar issue, we propose  to dispose  of this  Special Leave Petition with our reasons.      Article 131 of the Constitution reads thus:      "131. Subject  to the  provisions of this Constitution,      the Supreme  Court shall, to the exclusion of any other      court have original jurisdiction in any dispute-           (a) between  the Government  of India  one or more      States; or           (b) between  the Government of India and any State

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    or States  on one  side and one or more other States on      the other; or           (c) between two or more States if and in so far as      the dispute  involves any  question (whether  of law or      fact) on which the existence or extent of a legal right      depends:           Provided that  the  said  jurisdiction  shall  not      extend  to   a  dispute  arising  out  of  any  treaty,      agreement, covenant, engagement, sanad or other similar      instrument which,  having been entered into or executed      before the commencement of this Constitution, continues      in operation after such commencement, or which provides      that the  said jurisdiction  shall not extend to such a      dispute."      The provision  corresponding  to  Article  131  of  the Constitution in  the  Government  of  India  Act,  1935  was section 204 of that Act. That section prior to its amendment by the  India (Provisional  Constitution) Order,  1947, read as: 704      "204.  Original  jurisdiction  of  Federal  Court.  (1)      Subject to  the provisions  of this  Act,  the  Federal      Court shall  to the  exclusion of any other court, have      an original jurisdiction in any dispute between any two      or more  of the  following parties, that is to say, the      Federation,  any   of  the  provinces  or  any  of  the      Federated States,  if and  in so  far  as  the  dispute      involves any question (whether of law or fact) on which      the existence or extent of a legal right depends:           Provided that  the  said  jurisdiction  shall  not      extend to-           (a) a  dispute to which a State is a party, unless      the dispute-           (i)  concerns the interpretation of this Act or of                an Order  in Council  made thereunder, or the                extent  of   the  legislative   or  executive                authority vested  in the Federation by virtue                of the Instrument of Accession of that State;                or           (ii) arise under  an agreement  made under Part VI                of this Act in relation to the administration                in that  States  of  a  law  of  the  Federal                Legislature,  or   otherwise  concerns   some                matter with  respect  to  which  the  Federal                Legislature has  power to  make laws for that                State; or           (iii)arises under  an  agreement  made  after  the                establishment of  the  Federation,  with  the                approval of  His Majesty’s Representative for                the exercise of the functions of the Crown in                its relations  with  Indian  States,  between                that State  and the Federation or a Province,                being an  agreement which  expressly provides                that the  said jurisdiction  shall extend  to                such a dispute,           (b)  a dispute  arising under  any agreement which      expressly provides that the said jurisdiction shall not      extend to such a dispute.           (2)  The Federal  Court in  the  exercise  of  its      original jurisdiction  shall not pronounce any judgment      other than a declaratory judgment." 705      It may be noted that while the main part of sub-section (1) of  section 204  of the Government of India Act, 1935 is more or  less similar  to Article  131 of  the Constitution,

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there is  a difference  between the structure of the proviso to Article  131 and  the structure of the proviso to section 204 (1).  Article 131  of  the  Constitution  provides  that subject to  the provisions  of the Constitution, the Supreme Court shall  to the  exclusion  of  any  other  Court,  have original  jurisdiction   in  any   dispute-(a)  between  the Government of  India and  one or more States; or (b) between the Government  of India and any State or States on one side and one  or more  other States  on the other; or (c) between two or more States, if and in so far as the dispute involves any question (whether of law or fact) on which the existence or extent of a legal right depends. That means that if there is any dispute involving any question about the existence of a legal  right or even where the existence of legal right is admitted if  there is  a dispute  about its scope between or amongst the  States and  the Government  of India  as stated therein, the Supreme Court would have exclusive jurisdiction to decide  the question  whether of  law or  fact. No  other court has  jurisdiction to  deal with  it.  Similarly  under section 204 of the Government of India Act, 1935 the Federal Court had exclusive jurisdiction to decide similar questions which arose  between or  amongst the  Federation, any of the Provinces or  any of the Federated States. Under the proviso to that  section, however,  it was  provided that  the  said jurisdiction would not extend to dispute to which a State (a Federated State)  was a  party, unless the dispute concerned matters mentioned in clauses (i) to (iii) thereof. Under the proviso to  Article 131  of the  Constitution  the  original jurisdiction of the Supreme Court does not extend to matters referred to therein. In the State of Bihar v. Union of India & Anr.  after reviewing the constitutional history which led to the  enactment of  Article 131  of  the  Constitution,  a Constitution Bench  of this  Court observed at pages 529-530 thus:           "Although Art.  131 does  not define  the scope of      the disputes  which this  Court may  be called  upon to      determine in  the  same  way  as  section  204  of  the      Government  of  India  Act,  and  we  do  not  find  it      necessary to do so, this much is certain that the legal      right which is the subject of dispute must arise in the      context of the Consti- 706      tution and  the Federation  it sets  up. However, there      can be  no doubt  that so  far as  the parties  to  the      dispute are  concerned, the framers of the Constitution      did intend  that they  could only  be  the  constituent      units of the Union of India and the Government of India      itself arrayed  on one  side or the other either singly      or jointly  with another  unit  or  the  Government  of      India." (Underlining by us)      The Constitution  Bench ultimately  held in;  the above case that  if a private person, firm or corporation was also impleaded as  a party  the dispute could not be tried by the Supreme Court under Article 131 of the Constitution.      In Union  of India v. State of Mysore, the question was whether a  writ petition  filed in the High Court by a State against the  Union of  India questioning  the correctness of the order  of the  Central Government  passed on  a revision petition filed  under the Central Excises and Salt Act, 1944 rejecting the contention of the State Government against the levy of  excise duty  on goods  in stock  with  the  state’s Implements Factory  was maintainable.  The High  Court  held that the  Central Government  being a Tribunal as such while disposing of  the revision petition in the exercise of power conferred on  it by  Section 36  of the  Central Excises and

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Salt Act,  1944 could  not be  a disputant in the dispute it decided. The  Central Government  was only interested in the recovery of  duty which  was properly  payable but  that  by itself  did   not  transform  it  from  a  Tribunal  into  a disputant. The High Court observed that:      "A dispute falls within Article 131 of the Constitution      only when  the Central  Government is  a  disputant  as      such. The dispute must directly arise between the State      and the  Central Government  as the  repository of  the      executive power  of the  Union. An indirect interest in      the collection  of the  revenue in  the form  of excise      duty if  the excise duty demanded by the Central Excise      is exigible,  is far  too slender  a foundation for the      postulate that  in every  controversy arising under the      provisions  of  the  Central  Excise  Act  the  Central      Government is  necessarily a  disputant. The acceptance      of  such   interpretation  would   make   the   Central      Government  a  party  to  every  proceeding  under  the      Central 707      Excise Act  in the  role  of  a  disputant,  and,  that      consequence can scarcely fit into its constitution as a      tribunal under  section 36  of the Act." (Vide State of      Mysore. v. Union of India & Ors.      Accordingly the contention raised by the Union of India was negatived  by the  High Court.  This Court  affirmed the above view  of the  High Court in the case of Union of India v. State of Mysore (supra) at page 845 thus:      "Mr. Raman  tried to argue that the High Court erred in      not applying  article 131  of the  Constitution to  the      controversy even  though the  writ petition  was barred      thereunder  as   it   fell   exclusively   within   the      jurisdiction of  this Court  under article  131 of  the      Constitution as  a dispute  between the  Government  of      India and  the State of Mysore. The argument is however      futile because  there is  nothing on the record to show      that there was any such dispute between the Central and      the State  Government. As  the High  Court has  pointed      out, the  Union of  India was  made a party to the writ      petition merely  because it  had dismissed the revision      application of the State Government."      In State  of Rajasthan  & Ors.  etc. etc.  v. Union  of India etc. etc. while explaining the scope of Article 131 of the Constitution  Chandrachud, J.  (as he  then was) said at page 54:      "The dispute  between the  Union of  India and  a State      cannot but  be  a  dispute  which  arises  out  of  the      differences between  the Government  in office  at  the      Centre and  the Government  in office in the State. ’In      office’ means  ’in power’  but the  use of  the  latter      expression  may   prudently   be   avoided   with   the      realization of  what goes  with power.  But there  is a      further prerequisite  which narrows  down the  ambit of      the class  of dispute  which fall within Art. 131. That      requirement is that the dispute must involve a question      whether of  law or  fact, on  which  the  existence  or      extent  of   a  legal   right  depends.   It  is   this      qualification  which   affords  the   true  guide   for      determining whether a particular 708      dispute  is   comprehended  with   art.  131........The      purpose of  art. 131  is to  afford  a  forum  for  the      resolution of  disputes which depend for their decision      on the existence or extent of a legal right."      In State of Karnataka v. Union of India & Anr. Beg C.J.

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Stated as under:      "It has  to be remembered that Article 131 is traceable      to section  204 of  the Government  of India  Act.  The      jurisdiction conferred  by it  thus originated  in what      was part  of  the  federal  structure  set  up  by  the      Government of  India Act,  1935. It is a remnant of the      Federalism found  in that Act. It should, therefore, be      widely and  generously interpreted  for that reason too      so as  to  advance  the  intended  remedy.  It  can  be      invoked, in  my opinion,  whenever a  State  and  other      States  or   the  Union   differ  on   a  question   of      interpretation of  the Constitution  so that a decision      of it will affect the scope or exercise of governmental      powers which  are attributes  of a  State. It  makes no      difference to  the maintainability of the action if the      powers of  the State,  which are Executive, Legislative      and  Judicial,   are   exercised   through   particular      individuals as  they necessarily  must be.  It is  true      that a  criminal act committed by a Minister is no part      of his  official duties.  But, if  any of the organs of      the State  claim exclusive  power to take cognizance of      it, the  state, such, becomes interested in the dispute      about the  legal competence  or extent of powers of one      of its organs which may emerge."      On a  careful consideration  of the whole matter in the light of  the decisions  of this Court referred to above, we feel that  Article 131 of the Constitution is attracted only when a  dispute arises between or amongst the States and the Union in the context of the constitutional relationship that exists  between   them  and   the  powers,  rights,  duties, immunities,   liabilities,    disabilities   etc.    flowing therefrom. Any  dispute which  may arise  between a State in the capacity  of an employer in a factory, a manufacturer of goods subject  to excise duty, a holder of a permit to run a stage carriage, a trader or businessman carrying on business not incidental 709 to the  ordinary functions  of  Government,  a  consumer  of railway services  etc. like  any other  private party on the one hand  and the  Union of  India on  the other  cannot  be construed as  a dispute  arising between  the State  and the Union in  discharge of  their  respective  executive  powers attracting Article  131 of  the Constitution. It could never have been  the intention  of the framers of the Constitution that any  ordinary dispute  of this  nature would have to be decided exclusively  by the  Supreme Court.  It is  well  to remember that  the constitutional  proposals  of  the  Sapru Committee advocated the strengthening of the position of the Federal Court  in India and widening its jurisdiction on the original side  so that  the Federal  Court could  act as  an interpreter and  guardian  of  the  Constitution  and  as  a tribunal for  the determination  of the disputes between the constituent units  of the Federation. The Joint Committee on Indian Constitutional  Reforms was  also of opinion that the object of  conferring exclusive original jurisdiction on the Federal Court  was that  the disputes  of the kind specified between the  Federation and the Provinces as the constituent units of  the Federation should not be left to be decided by courts of  law of  a particular unit but be adjudicated upon only by  the highest  tribunal in  the land  which would  be beyond the  influence  of  any  one  constituent  unit.  The Special Committee  consisting of  Sriyuts S.  Varadachariar, Alladi Krishnaswami Ayyar, B.L. Mitter. K.M. Munshi and B.N. Rau appointed  by the  constituent Assembly  to consider and report on  the constitution  and powers of the Supreme Court

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suggested ’that  the Supreme  Court, like  the Federal Court under the  1935 constitution,  would be  the best  available forum for the adjudication of all disputes between the Union and a  unit and  between one  unit and  another and proposed that  the   court  should   have   an   exclusive   original jurisdiction in such disputes’. (Vide The Framing of India’s Constitution-A Study  by Shri  B.  Shiva  Rao  at  p.  483). Considered in  the light  of the  foregoing  the  conclusion becomes inevitable  that disputes  of the nature involved in this case  could not  have been  in the contemplation of the framers of the constitution when they adopted Article 131 of the Constitution.      In the  instant case  the legal  right of  the State of Rajasthan to  sue for damages for the loss suffered by it on account of  the  damage  caused  to  the  goods  transported through the Railway Administration as such is not in dispute between the  Union Government  and like  State of Rajasthan. The  State  Government  has  made  a  claim  the  any  other consignee of goods despatched through the railway for 710 compensation and  its success or failure in the suit depends on proof  of facts  which have to be established in the same way in  which a private person would have to establish. This is not  even a  case where a formal contract is entered into between the  Union of  India and  the State  of Rajasthan in accordance with  the requirements  of  Article  299  of  the Constitution. It  is just  a commercial contract under which an officer  of the  State of Rajasthan was entitled to claim delivery of  the goods  consigned as any ordinary consignee. It may be noticed that the jurisdiction of the Supreme Court under Article  131 of  the Constitution  is subject  to  the other provisions  of the  Constitution. Under Article 298 of the Constitution  the executive  power of  the Union  and of each State  extends to  the carrying  on  of  any  trade  or business and  to the  acquisition, holding  and disposal  of property and  the making  of contracts for any purpose. That Article further  provides that  the said  executive power of the Union  shall, in  so far  such trade or business or such purpose is not one with respect to which Parliament may make laws, be  subject in  each State to legislation by the State and said  executive power  of each State shall, in so far as such trade  or business  or such  purpose is  not  one  with respect to  which the  State Legislature  may make  laws, be subject to  legislation by Parliament. The claim involved in this case  is one based on section 80 of the Indian Railways Act 1890.  Under that  section a  suit for  compensation for loss of  life of,  damage, deterioration  or non-delivery of animals or  goods may  be instituted if the passenger was or the animals or goods were booked from one station to another on the  railway of  the same  Railway Administration against that Railway  Administration and if the passenger was or the animals of  goods were  booked through  over the railways of two or  more railway  administrations  against  the  Railway Administration from which the passenger obtained his pass or purchased his  ticket or  to which the animals or goods were delivered for  carriage, as  the case may be, or against the railway administration  on  whose  railway  the  destination station lies,  or the loss, injury, destruction or damage or deterioration occurred  and in  either case  the suit may be instituted in  a court having jurisdiction over the place at which the  passenger obtained  his  pass  or  purchased  his ticket or  the animals or goods were delivered for carriage, as the  case  may  be,  or  over  the  place  in  which  the destination station  lies or  the loss, injury, destruction, damage or  deterioration occurred  Section 80  of the Indian

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Railways Act  1890 indicates that the claim made under it is essentially against  the Railway  Administration  concerned. The Union  of Indian  is  impleaded  as  a  party  to  suits instituted thereunder being the owner of the Indian Railways by 711 virtue of  Article 300  of the  Constitution.  The  statute, however, treats  the dispute  as  one  between  the  Railway Administration concerned  and  the  person  instituting  the suit.  Neither  of  the  parties  to  these  proceeding,  is questioning the  applicability  of  the  provisions  of  the Indian Railways  Act, 1890  to  these  proceedings.  It  is, therefore, difficult  to hold  that in  these proceedings is any question  which falls within the scope of Article 131 of the Constitution.      The High  Court and the District Judge were, therefore, right in  holding that  the suit  was entertainable  by  the District Court.      For the  foregoing reasons, this Special Leave Petition fails and hereby dismissed. H.S.K.    Petition dismissed. 712