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TMI Blog1963 (11) TMI 74X X X X Extracts X X X X X X X X Extracts X X X X ..... h a statement of the debt owing to him with full particulars thereof " The respondents in each of these 13 appeals, which have been consolidated for hearing are "displaced creditors" and the point arising for decision in them is whether they could make a claim under this provision against the State of Punjab. A petition claiming such relief was filed by the respondent in Civil Appeal 439 of 1961 before the Subordinate Judge, Amritsar who was the Tribunal created under the Act for the purpose of receiving claims under s. 13 and, similarly, the contesting respondents in the other 12 appeals 440-451 of 1961 made similar claims before the Subordinate Judge, Hissar. Immediately the claims were filed and notices issued to the State of Punjab, a preliminary objection to the maintainability of the applications was raised by the State and the Tribunal at Amritsar passed an order on May 7, 1953 rejecting the preliminary objection and holding that on a proper construction of s.13 the claim was maintainable before it. Similar objections were also raised before the Subordinate Judge, Hissar who, by orders passed on May 25, 1953, similarly over-ruled the preliminary objections and held that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ersonally works for gain. Both these arguments stem from a single postulate and that is that the State is not within the scope of the enactment, not being named expressly or by necessary implication, and hence is not bound in respect of the liabilities, if any which the respondents might have against it by the provisions of the Act, and therefore is not subject to the jurisdiction of the tribunals created by the Act. It is the further contention that far from the intention of the enactment being to bind the State, the language that it employs and the provisions that it enacts, both from the point of view of the positive provisions as well as the omissions, tend strongly to establish that the State was outside the Act. These submissions were supported by an elaborate and able argument which covered a very wide ground of constitutional law and general juries prudence which we shall notice and deal with, in their proper place. It would be seen from this brief statement of the points involved that nothing very much turns on the facts of the case. We would, however, set out the facts in one of the appeals, Civil Appeal 439 of 1961, merely as illustrative of the type of claims involved i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rned with the preliminary objection to the maintainability of the application based upon the provisions of the Act on the ground that what is claimed from the Government of the State is not a "debt" within the Act and that the State of Punjab is not a "person" against whom an application under s. 13 of the Act could be made. As a step leading to the consideration of these submissions it would be necessary to advert to and read certain of the provisions of the Act which have a bearing on the matter in controversy. Section 2 contains the definitions of the terms used in the Act and it enacts: "2. Definitions.-In this Act, unless the context otherwise requires.-- (6)'debt' means any pecuniary liability, whether payable presently or in future, or under a decree or order of a civil or revenue court or otherwise, or whether ascertained or to be ascertained, which- (c)is due to a displaced person from any other person (whether an- displaced person or not) ordinarily residing in the territories to which this Act extends; but does not include any pecuniary liability due under a decree passed after the 15th day of August, 1947, by any court situate in West Pakistan or any pecuniary liabi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng regard to the definition of the term 'displaced creditor' in S. 2(8), depend upon (2) whether the claim made by him is a "debt" which 'Would be the second point for con- sideration viz., is the sum claimed as due from the State a "debt" within the meaning of s. 2(6) (c) and lastly (3) Would the State be 'any other person' within s. 13? Now, what is invoked by the learned Advocate General is the well-known rule of construction which in the phraseology which is apt to the constitutional set up in the U.K. is expressed in the proposition that "the Crown is not bound by a statute unless it appears that it is brought within it by express words or by necessary intendment." We shall in due course consider the scope of this rule of construction which has been held by this Court to be applicable to the interpretation of Indian statutes both are as well as post- Constitution, but at this stage it is sufficient to mention three matters in relation to it. The first is that the expression " Crown" or "King" in the rule has to be understood as referring to the Executive Government of the State in the context of our Constitution. If authority were needed for what we consider so obvious a propo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that day are exclusively purposes of the Province of East Punjab, be deemed to have been made on behalf of that Province instead of the Province of the Punjab; and (b)in any other case be deemed to have been made on behalf of the Province of West Punjab instead of the Province of the Punjab; 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 liabilities of the Province of the Punjab, be rights or liabilities of the Province of East Punjab or the Province of West Punjab, as the case may be" it was not disputed that in regard to the claims which were the subject of the applications from which the appeals before us arise, if tenable on the merits, would be claims which could be properly made against the State of Punjab. Reading this provision in conjunction with Art. 300 of the Constitution the result would be that if a suit for enforcing the claim were filed against the appellant State apart from any contention on the merits or based on any plea of limitation, there could be no defence to the suit, save that under procedural law of India as enacted in the Civil Procedure Code, as under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Pausing here, we might mention, and there was no dispute as to this, that so far as private individuals i.e., all parties other than the Government of the Union or of the State, were concerned, the enactments of 1948 and 1951 effected the necessary alterations in the procedural law as to the forum to which displaced persons could resort in which proceedings should be instituted to overcome the difficulties consequent on the entire cause of action having arisen in Pakistan. The contention of the appellant-State before us was that as regards causes of action against the State, the matter was left where it was. The judgment of the Full Bench of the High Court negativing this contention is an elaborate one, but its reasoning may be summarised as resting on the following postulates: unless there was an explicit exemption of the State from the operation of any particular statute, the State was bound by its provisions, (2) that the object of the Displaced Persons (Institution of Suits.) Act of 1948 and the present Act was to supplement the Independence (Liabilities) Order, 1947 and to furnish the adjectival relief to the substantive rights conferred by it against the State, (3) that unle ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ument arising from legislative confirmation of previous judicial construction, particularly when according to him no ambiguity existed in the construction of the Act or the language employed in its various relevant provisions. We shall now proceed to deal with the submissions in the order in which we have set them out. The learned Advocate- General is right when he says that this Court in Director of Rationing and Distribution v. The Corporation of Calcutta and Ors.( [1961] 1 S.C.R. 158 ) has accepted the continued applicability of the principle of construction of statutes laid down by the Privy Council in Province of Bombay v. Municipal Corporation of the City of Bombay.( [1946] L.R. 73 I.A. 271) In the case of Director of Rationing"), s. 386(1) of the Calcutta Municipal Act forbade any "person" to use or permit to be used any premises for the purposes named otherwise than or in conformity with the terms of the licence granted by the corporation. The question that was considered by this Court was whether the Director of Rationing representing the Food Department of the Government of West Bengal was subject to this provision. The High Court of Calcutta had held that in the absence ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... likewise, the king may take the benefit of any particular act, though he be not specially named". (Quoted at p. 355 of Holdsworth, A History of English Law, Vol.X) (italics ours). Based on this passage, particularly the words italicised, his submission was that the Act now for interpretation is one enacted for the public good and that consequently the presumption would be that the executive government was bound by it. We consider that the passage extracted is not capable of that construction. It has to be read not in vacuo and divorced from the rest of the judgment but in conjunction with the express approval of the rule of construction as explained by the Privy Council in Province of Bombay V. Municipal Corporation of the City of Bombay([1946] L.R. 73 I.A, 271) Lord du Parcq dealt with the submission regarding statutes "enacted for the public good" being exceptions to the rule in these terms: "It was contended on behalf of the respondents that whenever a statute is enacted 'for the public good' the Crown, though not expressly named, must be held to be bound by its provisions and that, as the Act in question was manifestly in. tended to secure the public welfare, it must bind the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Crown. Their Lordships prefer to say that the apparent purpose of the statute is one element, and may be an important element, to be considered when an intention to bind the Crown is alleged. 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 beneficent purpose must be wholly frustrated unless the Crown were bound, then it may be inferred that the Crown has agreed to be bound" In the view we take of the construction of the provisions of the Act before us, in the light of the principles of construction formulated by Lord du Parcq, we do not consider it necessary to examine whether there are any further limitations, qualifications or exceptions to the rule as applied to Indian statutes as have been accepted in the United Kingdom which have been set out and expounded at pages 438-443 of the sixth edition of Craies on Statute Law. We shall therefore proceed to examine the provisions of the Act on the footing that the test for determining whether the Government is bound by a statute is whether it is expressly named in the provision which it is contended binds it, or whether it "is manifest that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... struction of the Act. Under s. 8 of the Indian Independence (Rights, Property & Liabilities) Order, 1947, the right of the respondents would, reading it along with Art. 300 of the Constitution, be merely a right to institute a suit and that could be no justification for holding that the respondents were conferred rights to file applications under s. 13 of the Act unless its terms were satisfied. In order that a claim may fall within s. 13 it should satisfy the requirements of the section relating to the nature of the claim: (1) it must be to a displaced creditor (that, of course, was satisfied in the sense that he was a displaced person to whom amounts were due; (2) such a person must be claiming "a debt" i.e., a debt falling within s. 2(6) (c) i.e., a debt due from "a person" "ordinarily residing" in the territories to which the Act extends, and (3) such person should be one who is not a "displaced person." "Person" is not defined in the Act, but in the absence of any express provision therefor or by reason of any necessary implication arising from the provisions of the Act, the State or the Government of the State would not be a 'person'. This was particularly so in view of the d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... esiding in the territory of India to which the Act extends" was, in this context, examined in great detail, on the assumption that the Union of India might be "a person' i.e., an artificial or a juristic "person" within the Act. Chagla, C.J. then referred to a long catena of cases in which it had been held that it could not be predicated that the Government resided in any place or that it carried on any business in any particular place. It was, therefore, held that the claim made was not a debt under s. 2(6)(c) and therefore the application was not maintainable. We see force in the submission of the learned Advocate- General and if the matter bad to be decided solely on the basis of the expressions used to define the word "debt" and the description of the "person" against whom proceedings could be taken under s. 13 of the Act, there would undoubtedly be grave difficulties in the way of accepting the view that "person" was intended to include the Government of the Union or of the State. But the matter does not stop here, and the question depending, as it is, on "the intention of the legislature" cannot be answered without an examination of the provisions and purposes of the Act for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he referred us to various writers on Public International Law and on Political Science and to certain decisions of the American Courts. We do not, however, feel called upon to examine these submissions and pronounce upon their correctness in view of the conclusion we have reached on a construction of the provisions of the Act. We would, however, make two observations: (1) that the mere fact that certain artificial entities like corporations are brought within the scope of the Act, would not by itself rebut the presumptive rule of construction that the State is not bound by a statute unless it is brought within its scope expressly or by necessary implication, (2) it would not be correct to say that the State is not a constitutional or even juristic entity for the reason that it does not partake the characteristics of or satisfy in whole, the definition of a corporation. The State is an organised political institution which has several of the attributes of a corporation. Under Art. 300 of the Constitution, the Government of the Union and the Government of a State are enabled to sue and be sued in the name of Union of India and of the Government of the State, as the case may be. It w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arily resides, or carries on business or personally works for gain." Sub-section (2) specifies what the application shall contain and among the matters to be included in the application are: (1) a schedule containing full particulars of all his debts, whether owed jointly or individually, with the names and addresses of his creditors and his jointdebtors.................. (2) a schedule of all his properties, both movable and immovable, including claims due to him. The purpose of these schedules would be apparent from s. 32 which deals with the manner in which the debts of a displaced debtor are to be scaled down and to which we shall draw attention later. Sections 6 to 9 lay down the procedure regarding applications made under s. 5, the object of the procedure being the ascertainment of the total of the debts owing by a displaced debtor and the total amount of his assets, the relief which the Act grants on the basis of this ascertainment being the subject matter of later provisions. Sections 10 to 14 deal with the converse case of claims by displaced creditors first against displaced debtors and next against debtors who are not displaced debtors. In their case also the procedur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... placed debtors. Next, we come to s. 32. This section runs: "32. Scaling down of debts.-(1) Where, on the application of a displaced debtor under section 5 or sub-section (2) of section 11, the Tribunal has determined the amount due in respect of each debt in accordance with the provisions of this Act, it shall proceed to determine the paying capacity of the debtor. (2) If the paying capacity of the debtor is equal to or exceeds the aggregate sum of all the debts so determined (exclusive of any debt in respect of which the creditor has elected to retain the security in accordance with the provisions of section 16), the Tribunal shall pass a decree for the aggregate sum so determined, specifying the amount due to each creditor and shall allow repayment thereof in instalments, in accordance with the provisions contained in section 33, unless for reasons to be recorded it directs otherwise. (3) If the paying capacity of the debtor is less than the aggregate sum referred to in sub-section (2), the Tribunal shall divide the decree into two parts and provide in the first part thereof (hereinafter referred to as the first part of the decree) that the sum equivalent to the paying capacit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the aggregate sum payable in respect of the second part of the decree shall be a second charge upon the property received by way of exchange bears to the value of the original property verified and valued under the Displaced Persons (Claims) Act, 1950 (XLIV of 1950). (9) Where a displaced person makes a default in the payment of any instalment fixed in respect of the first part of the decree or does not pay the amount determined in accordance with subsection (4) of section 16 or sub-section (8) of this section for which the first or the second charge may have been created upon the property received by way of exchange the creditor may apply for the execution of the decree by the attachment and sale of the attachable assets of the judgment-debtor or by the sale of the property obtained by way of exchange upon which the charge has been created, as the case may be, and the amount realised by such execution shall be distributed rateably among the decree-holders: Provided that nothing contained in this subsection shall affect the rights of any charge-holders. (10) For the purposes of this Act, where the compensation is paid in cash, the amount which shall be available for purposes of s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he execution of decrees against Government under s. 82 of the Civil Procedure Code, debts due by the State to a judgmentdebtor are certainly attachable. The contrary construction of the words in s. 32 viz., that debts due by the State are not assets" besides being inconsistent with the express terms of the Explanation, would also render the entire scheme of scaling down provided for in sub-ss. (2) to (10) infructuous and unworkable. The conclusion that for the purpose of s. 32 a debt due by the State is within the Explanation and that it has to be taken into account for deter- mining the paying capacity would appear to be reinforced by s. 47 which runs in these terms: "47. Effect of failure on the part of displaced debtor to disclose certain matters.- Where a displaced debtor has not mentioned in the relevant schedule to his application any debt owing by him or any property, movable or immovable, belonging to him, whether such property is liable to attachment or not liable to attachment at all, nothing contained in this Act shall prevent- (a) in the case of the debt, the creditor from instituting any proceeding for the recovery thereof under any law for the time being in force ot ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ity of the debtor notwithstanding the definition of "debt" in s. 2(6)(c) but that the State is not within the scope of s. 13 for the purpose of the same liability being ascertained. This is so because for the very purpose of determining paying capacity under s. 32 the genuineness and the quantum of the alleged debt due by the State is the subject of enquiry and adjudication by the identical tribunal which would be conducting the enquiry and make the decision if the claim were made under s. 13. Adopting, therefore, the very principle for which the learned Advocate-General contends we consider that the test formulated by Lord du Parcq in Province of Bombay v. Municipal Corporation of the City of Bombay[1946] L.R. 73 I.A. 271"' : "......... Its beneficent purpose must be wholly frustrated unless the Crown were bound, then it may be inferred that the Crown has agreed to be bound", is satisfied in the case of the provisions of the Act now before us. That the Act was passed for the beneficent purpose of affording relief to those who owing to the disturbances which followed the partition of the country suffered grievous wrong is not in dispute. What we have stated earlier about the impac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the Act both in s. 13 as well as in the definition of 'debt' and have arrived at the conclusion that that language is not intractable nor such as to create any insuperable obstacle in the way of such a construction. Undoubtedly if s. 13 stood by itself read in conjunction with the definition of 'debt' in s. 2 (6), the submission that a debt due by Government was not within them might have weight. But there is nothing in s. 13 which would negative the construction at which we have arrived after considering the scheme and purpose of the Act. Taking first the terms of s. 13, the contention that debts due by the Government are not within the scope of the provision, is in ultimate analysis based on the last portion of the section which speaks of "actual and voluntary residence" and "carrying on business" not being capable of being attributed to the Government. If, in this context, one looked at s. 20 of the Civil Procedure Code it will be found that when it dealt with Companies and artificial persons it was not so much the residence as the situs where the business was carried on that was treated as being relevant for determining the forum, for Explanation II to s. 20 reads: "A corpo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e read as applying the test of "residence" or "of carrying on business" exclusively to natural or artificial persons to whom such conditions would be apt. The second point urged by the learned Advocate-General was about the legislative confirmation of the meaning of the word "person" as excluding the State. We have already referred to the Displaced Persons (Institution of Suits) Act, 1948 and the circumstances in which it was enacted and the terms of its s. 4. It is the interpretation which this section received in M/s Nagi Bros. v. The Dominion of India(I.L.R. 4 Punjab 358) a decision of the High Court of Punjab that forms the basis of the contention now under discussion. The question that arose for decision was whether the terms of s. 4 could be availed of by a displaced person to file a suit against the Union of India, the contention of the latter being that it could be sued only in a court which had territorial jurisdiction over the area where the cause of action arose and that since it could not be said to actually and voluntarily reside or carry on business or personally work for gain in any place in India, it could not be comprehended within the term "person" in s. 4. This c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iness were repeated in the Act without any specific provision for claims against the State, Parliament must be taken to have affirmed this decision, adopting its reasoning and that consequently, in any event, the general rule of interpretation about the State not being bound by an enactment in which it is not named expressly or by necessary implication was doubly attracted and reinforced. We are clearly of the view that this argument does not deserve to be accepted. In the first place, we, are concerned solely with the interpretation of the Act of 1951 and unless there was an. ambiguity it would be impermissible to refer to any previous legislation for construing the words in it. The examination we have made of the Act read in conjunction with the purposes it seeks to achieve which are manifest in its various provisions have led us unmistakably to the conclusion which we have expressed earlier. In the circumstances, there is no scope for invoking this external aid to the construction of the expressions used in the Act. Secondly, the scope of the two enactments viz., the Act of 1948 and that of 1951 are widely different, and the latter has a definitely more extended scope and is de ..... X X X X Extracts X X X X X X X X Extracts X X X X
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