M. Sham Singh Vs. State of Mysore - Court Judgment

Excerpt:
- [ k. subba rao, c.j.,; c.a. vaidialingam,; j.c. shah,; j.m. shelat,; k.n. wancho, jj.] 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 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 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. 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. 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. 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. (iii)the state is not excluded from the operation of s. 218 of the act by necessary implication. the state is not 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. 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 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. this court has power to reconsider its previous decisions and this is a fit case where this power should be exercised. 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. (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 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. 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 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 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. 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. (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 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. 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.  - wrote to the chief secretary, government of mysore conveying the request of the appellant that he be permitted to stay on for practical training with the general electric company for one year at his own expense beyond september 30, 1949. the education secretary supported this request with the comments that the training would be very valuable, the general electric company being well known. the trial court dismissed the suit on the ground, interalia, that the government had failed to provide a job to the appellant within six months of his sending intimation of his arrival in india. the writing of such a letter and the reply sent by the government agreeing to what had been proposed by the appellant were dehors the contract which stood discharged as soon as there was failure on the part of the government to offer any employment within the period of six months of the intimation of the appellant's return to india. the period of six months was to expire on january 18, 1951 where as the letter dated november 27, 1950 was written well before that date.grover, j.1. this is an appeal by special leave from a judgment of the mysore high court in a suit filed by the state of mysore against the present appellant for recovery of rs. 40,000/- together with interest on account of the breach of the terms of bond dated july 2, 1947 by virtue of which the appellant received certain amounts by way of scholarship and expenses for studies abroad.2. the facts may be shortly stated. on september 11, 1946 the appellant applied to the state government for an overseas scholarship and the same was sanctioned in his favour. the appellant was required to execute a bond which he did on july 2, 1947. in the bond (ext. 5) it was stated interalia that the scholar had to accept and be bound by all the conditions specified in the rules contained in the annexure to the government proceedings mentioned therein. clauses 3 & 4 are reproduced below :-3. that on the completion of such study or research course, the scholar shall return to the mysore state, and if and when called upon to do so, serve the government for a period of not less than five years, on such salary as government may, in their sole discretion fix, provided that, if within six months after his return to bangalore, mysore state government do not find employment for him they shall be deemed to have waived their right to claim his services as aforesaid and the scholar shall, thereafter, be at liberty to seek employment elsewhere.4. that in case the scholar fails to fulfil any of the first two conditions herein set forth or specified in the aforesaid rules he shall refund to government the amounts received by him as scholarship, passage money and all other amounts that may be advanced to him upto the date of his return to the mysore state in connection with the aforesaid course of study or research with such interest not exceedings 5 percent per annum as government may, at their option, fix and demand. but if he fails to fulfil the third condition, viz, joining duty under and serving the government for a period of five years, after the completion of the terms of scholarship or deputation he shall pay on the aggregate amount to be refunded as aforsaid, enhanced interest at 9 percent per annum, instead of 5 percent as mentioned above and a penalty of not less than one year's salary for each period of deputation (strike off the latter condition in the case of scholarship holders).after completing the formalities the appellant left for u.s.a. he joined the polytechnic institute of brooklyan, new york in september 1949 for obtaining the diploma from that institute engineering. on july 25, 1949 by a letter. the education secretary, embassy of india in u.s.a. wrote to the chief secretary, government of mysore conveying the request of the appellant that he be permitted to stay on for practical training with the general electric company for one year at his own expense beyond september 30, 1949. the education secretary supported this request with the comments that the training would be very valuable, the general electric company being well known. this request was duly granted by means of a cable ext. p. 9 which was followed by a letter from the secretary to the government of mysore, education department, bangalore intimating that the appellant had been permitted to undergo practical training for one year from september 30, 1949 at his own expense.3. the appellant completed his studies at the polytechnic institute of brooklyn, new york in september 1949 and obtained the diploma from that institute on june 14, 1950. on july 6, 1950 he returned to bangalore and wrote a letter dated july 18, 1950 to the government of mysore saying that he had returned from the united states after the completion of his studies there. on november 29, 1950 the appellant addressed a letter to the mysore government saying that he be permitted to return to the united states to complete his training which he had interrupted on account of the news of the ill-health of his mother to see whom he had to return to india. the appellant assured the mysore government that he would place his services as its disposal on his return to india. the appellant made it clear that he would be going to the united states on his own cost without seeking any financial assistance from the government. the government acceded to the request of the appellant. in its order ext. p-4 it is stated 'in the circumstances sri m. sham singh is permitted to return to u.s.a. for the continuance of his studies, at his own cost, subject to the condition that he should serve the government of mysore for a period of 5 years after his return'. the appellant left india on february 27, 1951. it appears that he never returned to india thereafter and continued to stay in the united states after taking up employment as director of the tourist office at san francisco.4. the state of mysore filed a suit against the appellant for recovery of rs. 40,000/- for breach of the conditions of the bond which had been executed by him. it was pleaded in the suit that owing to the breach of the conditions of the bond the appellant was liable to refund all the monies advanced to him together with interest. the total amount after calculation of interest which was due from the appellant came to over rs. 62,000/- but the claim was limited to rs, 40,000/- only. in the written statement it was pleaded by the appellant that when he was permitted by of mysore government by its order dated february 25, 1951 to return to the united states the previous contract was discharged and ceased to be enforceable. in any event, it was asserted, that the suit was for breach of the terms of the bond which was for rs. 16,000/- only and the appellant was not liable to pay any amount exceeding that sum. it is un-necessary to refer to the written statement of the sureties who were also impleaded as defendants to the suit.5. a number of issues were framed on the pleadings of the parties. the trial court dismissed the suit on the ground, interalia, that the government had failed to provide a job to the appellant within six months of his sending intimation of his arrival in india. it was held that there had been variance of the terms of the contract by the government by permitting the appellant to continue studies in the united states and there had been no breach of the terms of the bond by the appellant. it was also held that the contract dated july 27, 1947 came to be discharged on the expiry of six months from july 1950 i.e. in january 1951. the government order dated february 28, 1951 if taken as a fresh contract was without consideration and not enforceable. the high court, on appeal, by the state reversed the decision and decree of the district judge and decreed the suit against the appellant. it was, however dismissed against the sureties.6. there is hardly any merit or substance in the present appeal. the appellant appears to seek advantage from the fact that he had informed the government of mysore about his arrival on july 18, 1950 after completion of his studies at the polytechnic institute of brooklyn. it has been contended on his behalf that as soon as this intimation was sent the appellant had performed his part of the contract and it was for the government to offer him employment within six months. he stayed in mysore till february 27, 1951 and the period of six months expired on january 18, 1951. he was not offered any employment & therefore in terms of clause 3 of the bond the government should be deemed to have waived the right to claim his services and he was at liberty thereafter to seek employment else where. it is claimed that the letters which the appellant wrote to the government asking for permission to go back to the united states for further studies without any financial assistance from the government did not affect the legal position. the writing of such a letter and the reply sent by the government agreeing to what had been proposed by the appellant were dehors the contract which stood discharged as soon as there was failure on the part of the government to offer any employment within the period of six months of the intimation of the appellant's return to india.7. the high court after considering all the facts and circumstances came to the conclusion that when the appellant returned to bangalore on july 6, 1950 he had not abandoned the idea of completing the course of training with the general electric company. he had come only because of the illness of his mother who died a little before his arrival. although he had submitted a report to the state government with regard to his arrival at bangalore on july 18, 1950 his letter dated november 27 1950 was consistent with the original agreement which had already taken place between the parties that he should complete the course of training with the general electric company by staying for a period of one year at his own expense. it was observed by the high court that the state government having sent a scholar and having incurred an expenditure of about rs. 35,000/- for his training could not have refused his request for overstay for a period of one year particularly when such a stay did not entail any financial burden on the state government. the high court proceeded to say :if under these circumstances, the state government agreed to the request to extend the period of stay for one year and subsequently permitted defendant no. 1 to return to u.s.a. in pursuance of proper commitment under a mutual agreement, to complete his training we have no doubt in holding that the request made by defendant no. 1 and granted by the plaintiff form one integral part of the contract, the performance of which by defendant no. 1 had been extended by mutual consent. it is regrettable that having secured the benefits of foreign technical education at the cost of the state exchequer, defendant no. 1 has been adopted an attitude in the suit, in utter disregard of his legal and moral obligations under the scholarship bond.8. we find it difficult to understand and appreciate how the government should be deemed to have waived the right to claim his services of the appellant in terms of clause 3 of the bond when by mutual consent it had been agreed that the appellant could stay for one year after he had completed his study at the polytechnic institute of brooklyn for getting practical training with the general electric company. the high court is quite right in saying that when the appellant came to bangalore in july 1950 he did not do so for the purpose of staying at bangalore and accepting any employment which might be offered to him. he had to come as he admitted in his own letters, on account of domestic reasons. he wanted to go back and finish that period of training with the general electric company. he sought permission in that behalf and was allowed to return to the united states for that purpose. we are unable to see how in these circumstances the government was bound to offer him any employment within a period of six months from july 18, 1950. by writing the letter dated november 27, 1950 the appellant had unequivocally indicated his desire to finish the training with the general electric company. he had made no suggestion and given no hint that he was waiting for the offer of any employment. the period of six months was to expire on january 18, 1951 where as the letter dated november 27, 1950 was written well before that date. the mere fact that he left after the expiry of the period of six months would not show that he had returned to bangalore and was waiting for any employment being offered to him within six months of his arrival in terms of the bond. it is significant that in the letter dated november 27, 1950 he had reiterated his assurance that he would place his services at the disposal of the government on his return provided a suitable position was available. this shows that he was fully conscious of what the true legal position was. instead of returning to india the appellant chose to take up a job at san francisco. surely the mysore government had not expended all the amount in question on the studies of the appellant to enable him to seek employment of his own without first placing his services at the disposal of the mysore government which he was legally bound to do under the terms of the bond and the subsequent mutual agreement between the parties.9. in the result this appeal fails and is dismissed with costs.