TMI Blog1963 (7) TMI 100X X X X Extracts X X X X X X X X Extracts X X X X ..... gaon with its head office at Calcutta. Rajnandgaon was the capital of the former State of Nandgaon in the Eastern States Agency Group before it merged with the State of Madhya Pradesh. A mill called the Central Provinces Mills Ltd., was established in the year 1893 by the then Ruler Raja Bahadur Balram Dass, who owned most of the shares. The mill was in difficulties owing to heavy losses, and in 1896, the Ruler agreed to sell it to M/s. Shaw Wallace Co. On August 5, 1896, the Ruler wrote a letter to Shaw Wallace Co., promising to assist the mill in various ways if the company purchased it. The mill was bought by Messrs. Shaw Wallace Co., on September 13, 1896 and its name was changed to Bengal Nagpur Cotton Mills Ltd. In 1897, there was an agreement between the Raja Bahadur and Shaw Wallace Co., which contained the following terms among others : 2. The Rajah will assist the New Company by the special privilege of freeing its manufactured goods from octroi duties and by enhancing the present octroi of three pies per rupee ad valorem on imported goods which are the product of other mills outside the said State to one anna per rupee ad valorem. 3 The Rajah will cause that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1.That the company shall during the currency of the Principal Agreement continue to enjoy freedom from all cesses duties (whether excise octroi or otherwise) licences taxes or other impositions leviable either by the said State or by the Municipality of Rajnandgaon or other local Authority in the said State on any goods manufactured by the Company and on any machinery raw materials or Mill Stores imported into the said State by the company for its own use for the working of the Mills. From the time of the execution of the agreement of 1943, the Municipal Committee Rainandgaon, did not collect octroi and other duties contemplated by the agreement as indeed it had not, ever since 1896. On December 31, 1947, Nandgaon State merged with the State of Madhya Pradesh. It seems that for a few years, the Municipal Committee did not recover octroi from the appellant company. On September 20, 1952, the Municipal Committee at a general meeting passed a resolution in the following terms: This Committee, therefore, resolves that the so called Darbar agreement of 1943 is not binding on this Committee when the State Government has already started collecting taxes and cases exempted under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... main question is whether the agreement of 1943 operated as a law before the merger and it must continue so to govern the Municipal Committee till it is repealed or abrogated by suitable legislation. Reliance is placed upon the observations in Madhaorao Phalke v. the State of Madhya Bharat([1961] 1 S.C.R. 957 at 964), where this Court observes that in dealing with the question as to whether the orders issued by an absolute monarch amount to laws or regulations having the force of law or whether they constitute mere administrative orders, it is important to bear in mind that the distinction between executive orders and legislative commands, is likely to be merely academic where the ruler is the source of all power, and that all the orders of the ruler; however issued, must be regarded as law. It is contended that these observations show that the order of the ruler incorporated in the agreement of 1943 must be read as a law enjoining upon the Municipal Committee not to recover octroi from the appellant-company and abrogating the law imposing the levy in respect of the mill. It is also contended that in determining whether a particular order bears the character of law, the name which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... generally an established method for the enactment of laws, and the laws, when enacted have also a distinct form. It is not every indication of the will of the Ruler, however expressed, which amounts to a law. An indication of the will meant to bind as a rule of conduct and enacted with some formality either traditional or specially devised for the occasion, results in a law but not an agreement to which there are two parties, one of which is the Ruler. Judged from this angle, it is quite obvious that the document of 1943, was merely intended to bind consensually and not by a dictate of the Ruler. The Ruler bound himself in consideration of certain advantages promised to him by the mill. The document is not worded as a law is ordinarily expected to be. It records a contract and Part III where the concessions occur is also worded as a contract and uses language familiar in agreements between two parties dealing with each other at arm's length. It is not necessary to refer in detail to Part 111, but the words, And the Darbar in consideration of the relief given to it by the Company by reason of the modification in the Principal Agreement as stated above hereby declares that t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... upon the appellant-company which was in suspense, began to take effect from such date as the Municipal Committee chose to determine. The Municipal Committee ceased to be subject to the wish of the Ruler after the merger, and for a time it did not collect octroi from the appellant-company because the succeeding Government was accepting the royalty. In 1952, the Municipal Committee resolved to recover octroi from the appellant-company in accordance with the original imposition of the tax in the State and there was nothing which stood in the way of the Committee. The resolution was neither a fresh imposition of octroi because it had already been imposed nor the cancellation of an exemption because the Municipal Committee had not granted an exemption to the appellant-company. The resolution only indicated that on and from a particular date, the Municipal Committee would recover octroi which it had already imposed a long time ago upon all and sundry and to which the appellant company was also subject and which was no longer affected by the will of the quondam sovereign. The agreement of the Ruler bound the Municipal Committee only indirectly, because the Ruler to whom the amount recover ..... X X X X Extracts X X X X X X X X Extracts X X X X
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