1961 (3) TMI 129 - SC - Indian Laws

Summary

Issues Involved:
1. Enforceability of claims against the former State of Mayurbhanj and the ex-Ruler of Mayurbhanj.
2. Jurisdiction of municipal courts over claims against the new Sovereign State.
3. Compliance with principles of natural justice in rejecting claims.
4. Status and effect of the act of State in relation to the claims.

Issue-wise Detailed Analysis:

1. Enforceability of Claims Against the Former State of Mayurbhanj and the Ex-Ruler of Mayurbhanj:
The appellant sought to enforce claims against the former State of Mayurbhanj and its ex-Ruler based on agreements from 1943 for establishing a manufacturing business and for purchasing wheat and barley. The appellant claimed that the Maharaja of Mayurbhanj failed to contribute his share of capital and did not provide necessary permits and facilities for transport, resulting in financial losses. The appellant's claims were for Rs. 1,40,400 in the first case and Rs. 14,844-0-3 in the second case.

2. Jurisdiction of Municipal Courts Over Claims Against the New Sovereign State:
Upon the merger of Mayurbhanj State with the Province of Orissa on January 1, 1949, the Administration of Mayurbhanj State Order, 1949 was promulgated. Clause 9 of the Order outlined the process for preferring claims against the State or the Ruler. The Claims Officer investigated the appellant's claims and recommended certain amounts to be paid. However, the Board of Revenue, Orissa, rejected the claims as barred by limitation. The Supreme Court held that the municipal courts had no jurisdiction over these claims unless the new Sovereign State expressly or impliedly admitted them, as established in previous cases like Dalmia Dadri Cement Co. Ltd. v. Commissioner of Income-tax and State of Saurashtra v. Memon Haji Ismail Haji.

3. Compliance with Principles of Natural Justice in Rejecting Claims:
The appellant argued that rejecting his claims without a proper hearing violated principles of natural justice. He cited cases such as Shivji Nathubai v. Union of India and New Prakash Transport Co. Ltd. v. New Suwarna Transport Co. Ltd. The Supreme Court acknowledged that the appellant was heard by the Claims Officer, but the final decision by the Board of Revenue did not require a further hearing. The Court concluded that the enquiry was not a judicial trial but an investigation to determine whether the claims should be recognized, and thus, the appellant was not entitled to a writ for lack of a hearing.

4. Status and Effect of the Act of State in Relation to the Claims:
The Court discussed the concept of an act of State and when it ceases to apply. It was held that the act of State continued until the new Sovereign State accepted the claims. The investigation by the Claims Officer and the subsequent report did not constitute an acceptance by the new Sovereign State. The Court referenced Vaje Singh Ji Joravar Singh v. Secretary of State for India, emphasizing that the act of State was still in effect as the claims had not been accepted by the new Sovereign State. Therefore, the rejection of the claims was within the sovereign rights of the new State.

Conclusion:
The Supreme Court dismissed the appeals, concluding that the act of State was still applicable, and the appellant was not entitled to enforce his claims through municipal courts. The rejection of the claims was within the rights of the new Sovereign State, and the appellant's argument for a hearing based on principles of natural justice did not warrant a writ. The appeals were dismissed with no order as to costs.