1950 (12) TMI 1 - SC - Income Tax

Whether the attack on the legislation on the ground of the denial of equal protection of law cannot succeed? Whether there was a transfer of any liability by the Order as contemplated in Article 12(2)? Held that - The Province of East Bengal having succeeded to the liability to which the Province of Bengal was subject immediately before the appointed day, the former Province is to be deemed to be substituted for the other Province as a party to the suit and the suit must accordingly continue in the Court of the Subordinate Judge at Alipore, which has jurisdiction to proceed with it under Article 4 of the Indian Independence (Legal Proceedings) Order, 1947. In this view it is unnecessary to consider the question of submission to jurisdiction urged in the alternative by the appellant. In the result the appeal is allowed, the order of the Court below is set aside and the suit now pending in the Court of the Subordinate Judge at Alipore will be heard and determined by it.

Issues Involved:
1. Jurisdiction of the Subordinate Judge's Court at Alipore post-15th August 1947.
2. Applicability of Article 4(1) of the Indian Independence (Legal Proceedings) Order, 1947.
3. Interpretation of Article 12(2) of the Indian Independence (Rights, Property, and Liabilities) Order, 1947.
4. Definition and applicability of "actionable wrong" under Article 10(2) of the Rights, Property, and Liabilities Order.
5. The effect of Section 65 of the Bengal Agricultural Income-tax Act, 1944.
6. Submission to jurisdiction by the Province of East Bengal.
7. Impact of the Ordinance passed by the Governor-General of Pakistan on 13th November 1948.

Detailed Analysis:

1. Jurisdiction of the Subordinate Judge's Court at Alipore post-15th August 1947:
The main question was whether the Subordinate Judge's Court at Alipore had jurisdiction to try a suit in which the Province of East Bengal was impleaded as a defendant after the partition of India on 15th August 1947. The court concluded that the jurisdiction was maintained as per Article 4 of the Indian Independence (Legal Proceedings) Order, 1947, which allowed proceedings pending in any civil or criminal court in the Province of Bengal to continue as if the Indian Independence Act had not been passed.

2. Applicability of Article 4(1) of the Indian Independence (Legal Proceedings) Order, 1947:
Article 4(1) allowed all proceedings pending immediately before the appointed day in any civil or criminal court in the Province of Bengal to continue in that court as if the Indian Independence Act had not been passed. The court agreed that this provision enabled the continuation of the suit in the Court of the Subordinate Judge at Alipore.

3. Interpretation of Article 12(2) of the Indian Independence (Rights, Property, and Liabilities) Order, 1947:
Article 12(2) stated that where any Province from which property, rights, or liabilities are transferred by the Order is a party to legal proceedings, the Province which succeeds to the property, rights, or liabilities shall be deemed to be substituted for the other Province as a party to those proceedings. The court held that the Province of East Bengal was substituted in the suit for the Province of Bengal by operation of law, and the suit continued in the Court of the Second Subordinate Judge, 24 Parganas, as a suit against the substituted defendant.

4. Definition and applicability of "actionable wrong" under Article 10(2) of the Rights, Property, and Liabilities Order:
The court analyzed whether the liability of the Province of Bengal in respect of the cause of action upon which the plaintiff's suit had been founded became a liability of the Province of East Bengal. The court concluded that the wrongful act of issuing a notice under the Bengal Agricultural Income-tax Act was an actionable wrong as it infringed the legal right of the plaintiff and was capable of sustaining an action for an injunction.

5. The effect of Section 65 of the Bengal Agricultural Income-tax Act, 1944:
Section 65 barred suits in civil courts to set aside or modify any assessment made under the Act. The court held that the suit in question was not to set aside or modify an assessment, as no assessment had been made when it was instituted. The court distinguished the case from the Privy Council's decision in Raleigh Investment Co. Ltd. v. Governor-General in Council, noting that the present suit was for an injunction to restrain the completion of an illegal assessment proceeding.

6. Submission to jurisdiction by the Province of East Bengal:
The court found that the Province of East Bengal had not submitted to the jurisdiction of the Court merely by filing a written statement contesting the jurisdiction. The court did not consider this point further as it was unnecessary in light of the other findings.

7. Impact of the Ordinance passed by the Governor-General of Pakistan on 13th November 1948:
The Ordinance stated that no judgment, decree, order, or sentence shall affect the legislative or executive right or authority of the Central or any Provincial Government of Pakistan. The court acknowledged the potential impact of this Ordinance but did not base its decision on this point, as it was not raised before the High Court.

Conclusion:
The appeal was allowed, the order of the High Court was set aside, and the suit pending in the Court of the Subordinate Judge at Alipore was to be heard and determined by it. The respondent was ordered to pay the appellant's costs throughout.

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