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TMI Blog1966 (3) TMI 87X X X X Extracts X X X X X X X X Extracts X X X X ..... on certain terms and conditions. The notifification--Ex. 4-was published in Bharatpur Rajpatra and one of the concessions proposed to be granted was embodied in cl. 3 of the notification which stated: If any commodity is imported from outside into the Mandi and is sold for consumption within the State, or if any commodity received in the Mandi from within the State and is exported in both cases, a reduction of 25% in the customs duty prevailing at the time of the import and export of such commodities will be allowed. This concession shall not be available in case of vegetable Ghee. The notification contained other terms and conditions relating to auction sale such as the prices for different kinds of plots available and the maximum number of plots which a person could purchase. A committee for supervising the auction was also formed and the notification laid down the procedure for the sale of plots and certain other conditions such as deposit of one-fourth sale money at the time of auction etc. The appellant purchased plots Nos. 8 and 9 for ₹ 4,600 at a public auction and two sale deeds (sanad nilam) were issued to the appellant on October 10, 1946. The Government of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... part of the contract, the successor State of Rajasthan did not recognise it and was not, therefore, bound by it. The first question involved in this appeal is whether cl. 3 of the Bharatpur notification-Ex. 4, was a term of the contract of sale between the appellant and the State of Bharatpur. It Was argued on behalf of the appellant that Ex. 4 which is the notification dated May 18, 1946 regarding the sale of plots by the Bharatpur State was an offer of purchase of plots on terms and conditions made in that notification. It was contended that the offer was made to the public as a whole and after it was accepted by the appellant a valid contract came into existence. The opposite view point was presented on behalf of the respondent. It was submitted that the concession granted in cl. 3 did not relate to, nor did it form a part of the contract of sale of the plots of the Mandi. It was pointed out that the concession of 25 per cent reduction in customs duty will not merely enure to the benefit of the purchaser of the plots but also enure to the benefit of the person trading in the shop. The benefits were generally offered for trade and business in the Mandi and cannot be considered ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... only if it recognises that contractual liability. The season is that the taking over of sovereign powers by a State in respect of territory which was not till then a part of it is an. act of State and the municipal courts recognised by the new sovereign have the power and jurisdiction to investigate and ascertain only such rights as the new sovereign has chosen to recognise or acknowledge; and such recognition may be express or may be implied from circumstances. In other words, accession of one State to another is an act of State... and the subjects of the former State may claim protection of only such rights as the new sovereign recognises as enforceable by the subjects of the former State in his municipal courts. In The Secretary of State in Council of India v. Kamachee Boye Saheba Moore's I.A. 476 the jurisdiction of the courts in India to adjudicate upon the validity of the seizure by the East India Company of the territory of Rajah of Tanjore as an escheat, on the ground that the dignity of the Raj was extinct for want of a male heir, and that the property of the late Rajah lapsed to the British Government, fell to be determined. The Judicial Committee held that as the s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... intiffs have no recourse against the Government in the Municipal Courts. The principle that cession of territory by one State to another is an act of State and the subjects of the former State may enforce only those rights which the new sovereign recognises has been accepted by this Court in M/s. Dalmia Dadri Cement Co. Ltd. v. The Commissioner of Income-tax 1959] S.C.R. 729. The State of Saurashtra v. Jamadar Mohamat Abdulla and others 68 I.A. 100. Maharaja Shree Umaid Mills Ltd. v. Union of India [1963] Supp. 2 S.C.R 515, and State of Gujarat v. Vora Fiddali Badruddin Mithibarwala 1964] 6 S.C.R. 461. On behalf of the appellant it was contended that there was an implied recognition by the Rajasthan State of the contractual liability since the exemptions were continued upto January 13, 1951 and were revoked with effect from that date by the notification No. F.4(18)SR/49. We are unable to accept this argument as correct. Before the process of integration began, each Covenanting State was a separate geographical unit for customs purposes and had its own customs laws and barrier. After the formation of the Matsya Union on March 18, 1948 there was a promulgation of the Matsya Cu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ass of goods. Eventually on August 15, 1949 a uniform revised tariff was made applicable to the whole of Rajasthan. Section 6 provided that the existing law in force of the covenanting States shall regulate the GI-8 collection of such duties and other ancillary duties in relation thereto, unless altered, modified or repealed by a competent legislative authority of Rajasthan and thus saved existing law with regard to the procedure and ancillary matters. It is manifest on examination of the provisions of this Ordinance that there was a repeal of all Customs laws of the Covenanting States in so far as they provided for the levy and collection of duties in the particular territorial limits of the Covenanting States and the Ordinance introduced a new law imposing duty on export and import into Rajasthan State as a whole. Further, after the issue of a revised tariff the old tariffs under the various laws of the Covenanting States also stood repealed. There is no express provision in the Ordinance saving the previous contractual rights with regard to customs duty. In the absence of any such express provision it must be held that all existing contracts were repudiated and cancelled. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oods imported or exported from the United State of Matsya from payment of customs duty leviable thereon. Then came another union of certain other Rulers in Rajasthan in March 1948 by which these Rulers united under the Ruler of Udaipur to form what later came to be known as the Former State of Rajasthan. In March 1949, the United State of Rajasthan was formed by Covenant entered into by fourteen Rulers of Rajasthan, including those who had formed the Former State of Rajasthan, and this State came into existence from April 7, 1949. There was a merger of the Matsya Union in the State of Rajasthan on May 15, 1949 and thus the former Bharatpur State came to be included in the United State of Rajasthan through the Matsya Union. As we have already stated, the Raj Pramukh promulgated the Rajasthan (Regulation of Customs Duties) Ordinance No. 16 of 1949 on August 9, 1949. It is well-established that Parliament or State Legislatures are competent to enact a law altering the terms and conditions of a previous contract or of a grant under which the liability of the Government of India or of the State Governments arises. The legislative competence of Parliament or of the State Legislatures can ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es subsequent to the agreements of Merger, which guaranteed, inter alia, the continuance of Jagirs in the merged 'States'. This principle also underlies the recent decision of this Court in Maharaja Shree Umaid Mills Ltd. v. Union of India [1963] Supp. 2 S.C.R. 515 in which it was pointed out that there is nothing in Art. 295 of the Constitution which prohibits Parliament from enacting a law altering the terms. and conditions of a contract or of a grant under which the liability of the Government of India arises. It was further held that there was nothing in Art. 295 prohibiting Parliament from enacting a law as to excise duty or income-tax in territories which became Part B States, and which were formerly Indian States, and such a prohibition cannot be read into Art. 295 by virtue of some contract that might have been made by the then Ruler of an Indian State with any person. As we have already indicated, there is nothing in the provisions of the Rajasthan (Regulation of Customs Duties) Ordinance No. 16 of 1949 which preserves the alleged contractual rights of the appel- lant, and in the absence of any express language in the Ordinance preserving such alleged contractual ..... 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