1957 (4) TMI 66 - SC - Indian Laws

Summary

Issues Involved:
1. Jurisdiction of the Court at Ferozepore.
2. Liability of the Union of India under the contract in question.
3. Applicability of the Indian Independence (Rights, Property and Liabilities) Order, 1947, and the Joint Defence Council Order, 1947, to the contract.
4. The nature of the contract (executed or executory) and its implications.
5. The relevance of military stores in determining the purpose of the contract.

Detailed Analysis:

1. Jurisdiction of the Court at Ferozepore:
The respondent contended that the Court at Ferozepore had jurisdiction to try the suit since the respondent was a displaced person living in Muktsar, which is in Ferozepore. The Subordinate Judge and the High Court both found in favor of the respondent on this issue. As the jurisdiction issue was not contested further, no additional pronouncement was made by the Supreme Court on this matter.

2. Liability of the Union of India under the contract in question:
The core issue was whether the Union of India had any liability under the contract post-independence. The Subordinate Judge ruled in favor of the appellant, dismissing the application. However, the High Court reversed this finding, relying on the Joint Defence Council Order, 1947. The Supreme Court had to determine whether the contract was exclusively for the purposes of the Dominion of Pakistan as of August 15, 1947, under Article 8(1) of the Independence Order, 1947. The Supreme Court concluded that the contract was indeed for the exclusive purposes of the Dominion of Pakistan, thereby absolving the Union of India of any liability.

3. Applicability of the Indian Independence (Rights, Property and Liabilities) Order, 1947, and the Joint Defence Council Order, 1947, to the contract:
The High Court based its decision on the Defence Order, 1947, suggesting that military stores were under the Joint Defence Council's control and could be allocated between the two Dominions. The Supreme Court clarified that the Defence Order, 1947, did not alter the rights and liabilities determined under the Independence Order, 1947. The Defence Order only granted control over military stores but did not affect contractual liabilities.

4. The nature of the contract (executed or executory) and its implications:
The Supreme Court examined whether the contract was executed or executory. It was determined that Article 8(1) of the Independence Order, 1947, applied to both executed and executory contracts. The distinction was made between contracts where consideration is executed (act for a promise) and executory (promise for a promise). The Court concluded that the contract in question fell under the purview of Article 8(1) and was deemed to have been made for the purposes of the Dominion of Pakistan.

5. The relevance of military stores in determining the purpose of the contract:
The High Court assumed that 'bhoosa' (fodder) was military store and thus under the Joint Defence Council's control. The Supreme Court, even on the assumption that 'bhoosa' was military store, held that the purpose of the contract was to supply fodder to the Military Farms in Lahore, which was exclusively for the Dominion of Pakistan. The ultimate disposal of the goods did not alter the contract's purpose. The Supreme Court emphasized that the Defence Order, 1947, did not affect the rights and liabilities under the Independence Order, 1947.

Conclusion:
The Supreme Court allowed the appeal, setting aside the High Court's judgment and decree, and restored the Subordinate Judge's decision. The Union of India was found to have no liability under the contract, and the appellant was awarded costs throughout.