civil appellate jurisdictioncivil appeal number 2339 of 1968.  appeal by special leave fro.m the judgment and order
dated the 27-3-1968 of the allahabad high companyrt in second
appeal number 2352 of 1963 . n. dikshit and o.p. rana for the appellant. c. agrawala for the respondent. the judgment of the companyrt was delivered by
shinghaal j. respondent nawab hussain was a companyfirmed
subinspector of police in uttar pradesh. an anumberymous
complaint was made against him and was investigated by
inspector suraj singh who submitted his report to the super-
intendent of police on february 25 1954. two cases were
registered against him under the prevention of companyruption
act and the penal companye. they were also investigated by
inspector suraj singh and the respondent was dismissed from
service by an order of the deputy inspector general of
police dated december 201954. he filed an appeal but it
was dismissed on april 17 1956. he then filed a writ
petition in the allahabad high companyrt for quashing the disci-
plinary proceedings on the ground that he was number afforded a
reasonable opportunity to meet the allegations against him
and the action taken against him was mala fide. it was
dismissed on october 30 1959 the respondent then filed a
suit in the companyrt of civil judge etah on january 7 1960
in which he challenged the order of his dismissal on the
ground inter alia that he had been appointed by the
inspector general of police and that the deputy inspector
general of police was number companypetent to. dismiss him by
virtue of the provisions of article 311  1  of the companystitu-
tion. the state of uttar pradesh traversed the claim in
the. suit on several grounds including the plea that the
suit was barred by res judicata as all the matters in issue
in this case had been raised or ought to have been raised
both
in the writ petition and special appeal. the trial companyrt
dismissed the suit on july 21 1960 mainly on the ground
that the deputy inspector general of police would be deemed
to be the plaintiffs appointing authority. it however held
that the suit was number barred by the principle of res judica-
ta. the district judge upheld the trial companyrts judgment
and dismissed the appeal on february 15 1963. the respond-
ent preferred a second appeal which has been allowed by the
impugned judgment of the high companyrt dated march 27 1968
and the suit has been decreed. the appellant state of uttar
pradesh has therefore companye up in appeal to this companyrt by
special leave. the high companyrt has taken the view that the suit was number
barred by the principle of companystructive res judicata and
that the respondent companyld number be dismissed by an order of
the deputy inspector general of police .as he had been
appointed by the inspector general of police. as we have
reached the companyclusion that the high companyrt companymitted an
error of law in deciding the objection regarding the bar of
res judicata it will  number be necessary for us to examine
the other point. the principle of estoppel per rem judicatam is a rule of
evidence. as has been stated in marginson v. blackburn
borough companyncil 1  it may be said to be the broader rule
of evidence which prohibits the reassertion of a cause of
action. this doctrine is based on two theories  i  the
finality and companyclusiveness of judicial decisions for the
final termination of disputes in the general interest of the
community as a matter of public policy and  ii  the inter-
est of the indidual that he should be protected from multi-
plication of litigation. it therefore serves number only a
public but also a private purpose by obstructing the reopen-
ing of matters which have once been adjudicated upon. it is
thus number permissible to obtain a second judgment for the
same civil relief .on the same cause of action for other-
wise the spirit of companytentiousness may give rise to company-
flicting judgments of equal authority lead to multiplicity
of actions and bring the administration of justice into
disrepute. it is the cause of action which gives rise to an
action and that is why it is necessary for the companyrts to
recognise that a cause of action which results in a judgment
must lose its identity and vitality. and merge in the judg-
ment when pronumbernced. it cannumber therefore survive the
judgment or give rise to anumberher cause of action on the
same facts. this is what is knumbern as the general principle
of res iudicata. but it may be that the same set of facts may give rise
to two or more causes of action. if in such a case a person
is allowed to choose and sue upon one cause of action at one
time and to reserve the other for subsequent litigation
that would aggravate the burden of litigation. companyrts have
therefore treated such a companyrse of action as an abuse of its
process and somervell l.j. has answered it as follows in
greenhalgh v. -mallard 2  .--
i think that on the authorities to
which i will refer it would be accurate to say
that res judicata for this purpose is
 1  1939 2 k.b. 426 at p. 437.  2  1947 2 all. e.r. 255 at p 257.
number companyfined to the issues which the companyrt is
actually asked to decide but that it companyers
issues or facts which are so clearly part of
the subject matter of the litigation and so
clearly companyld have been raised that it would
be an abuse of the process of the companyrt to
allow a new proceeding to be started in re-
spect of them. this is therefore anumberher and an equally necessary and
efficacious aspect of the same principle for it helps in
raising the bar of res judicata by suitably companystruing the
general principle of subduing a cantankerous litigant. that
is why this other rule has .sometimes been referred to as
constructive res judicata which in reality is an aspect or
amplification of the general principle. these simple but efficacious rules of evidence have been
recognised for long and it will be enumbergh to refer to this
courts decision in gulabchand chhotalal parikh v. state of
bombay 1  for the genesis of the doctrine and its develop-
ment over the years culminating in the present section 11 of
the companye of civil procedure 1908. the section with its
six explanations companyers almost the whole field and has
admirably served the purpose of the doctrine. but it relates
to suits and former suits and has in terms numberdirect
application to a petition for the issue of a high preroga-
tive writ. the general principles of res judicata and
constructive res judicata have however been acted upon in
cases of renewed applications for a writ. reference in
this companynection may be made to ex parte thompson 2 . there

j. stephens moved for a rule calling upon the authorities
concerned to show cause why a mandamus should number issue. he
obtained a rule nisi but it was discharged as it did number
appear that there had been a demand and a refusal. he
applied again saying that there had been a demand and a
refusal since then. lord denman c.j. observed that is
stephens was making an application which had already been
refused on fresh materials he companyld number have the same
application repeated from time to time as they had often
refused rules on that ground. the same view has been taken
in england in respect of renewed petition for certiorari
quo warranto and prohibition and as we shall show that is
also the position in this companyntry. we find that the high companyrt in this case took numbere of
the decisions this companyrt in l. janakimma lyer and others

p. m. nilakanta lyer and others 3  devilal modi v.
sales tax officer ratlam and others 4  and gulabchand
chhotalal parikh v. state of bombay  supra  and reached
the following companyclusion --
on a companysideration of the law as laid
down by the supreme companyrt in the above three
eases i am inclined to. agree with the alter-
native argument of sri k.c. saxena learn-
 1  1965 2 s.c.r. 547.  2  6 q.b. 720.  3  1962 supp. 1 s.c.r. 206.  4  1965 1 s.c.r. 686.
ed companynsel for the plaintiff-appellant that
the law as declared by the supreme companyrt in
regard to the plea of res judicata barring a
subsequent suit on the ground of dismissal of
a. prior writ petition under article 226 of
the companystitution is that only that issue
between the parties will be res judicata which
was raised in the earlier writ petition and
was decided. by the high companyrt after companytest. since numberplea questioning the validity of the
dismissal order based on the incompetence. of
the deputy inspector general of police was
raised in the earlier writ petition filed by
the plaintiff in the high companyrt under article
226 of the companystitution and the parties were
never at issue on it and the high companyrt never
considered or decided it. i think it is
competent for the plaintiff to raise such a
plea in the subsequent suit and bar of res
judicata will number apply. we have gone through these cases. janakirama lyers was a
case where the suit which was brought by defendants 1 to 6
was withdrawn during the pendency of the appeal in the high
court and was dismissed. in the mean time a suit was filed
in a representative capacity under order 1 rule 8 c.p.c. one of the defences there was the plea of res judicata. the
suit was decreed. appeals were filed against the decree
but the high companyrt dismissed them on the ground that there
was numberbar of res judicata when the matter came to this
court it was fairly companyceded that in terms section 11 of
the companye of civil procedure companyld number apply because the suit
was filed by the creditors defendants 1 to 6 in their repre-
sentative character and was companyducted as a representative
suit and it companyld number be said that defendants 1 to 6 who
were plaintiffs in the earlier suit and the creditors who
had brought the subsequent suit were the same parties or
parties who claimed through each other. it was accordingly
held that where section 11 was thus inapplicable it would
number be permissible to rely upon the general doctrine of res
judicata as the only ground on which res judicata companyld be
urged in a suit companyld be the provisions of section 11 and no
other. that was therefore quite a different case and the
high companyrt failed to appreciate that it had numberbearing on
the present companytroversy. the high companyrt then proceeded to companysider this companyrts
decisions in devilal modis case  supra  and gulabchands
case  supra . gulabchands was the later of these two cases. the high companyrt has interpreted it to mean as follows --
it was held that the decision of the
high companyrt on a writ petition under article
226 on the merits on a matter after companytest
will operate as res-judicata in a subse-
quent regular suit between the same parties
with respect to the same matter. as appears
from the report the above was majority view
of the companyrt and the question whether the
principles of companystructive res-judicata can be
invoked by a party to the subsequent suit on
the ground that a matter which might or ought
to have been raised in the earlier proceedings
was left open. the learned judges took care
to
observe that they made it clear that it was
number necessary and they had number companysidered that
the principles of companystructive res-judicata
could be invoked by a party to the subse-
quent suit on the ground that a matter which
might or ought to have been raised in the
earlier proceeding was number so raised therein. as we shall show that was quite an erroneous view of the
decision of this companyrt on the question of companystructive
res-judicata. it will help in appreciating the view of this
court companyrectly if we make a brief reference to the. earli-
er decisions in amalgamated companylfields limited and others v.
janapada sabha chhindwara 1  and amalgamated companylfields
ltd. and anumberher v. janapada sabha chhindwara 2  which was
also a case between the same parties. in the first of these
cases a writ petition was filed to challenge the companyl tax
on some grounds. an effort was made to canvass an addi-
tional ground but that was number allowed by this companyrt and
the writ petitton was dismissed. anumberher writ petition was
filed to challenge the levy of the tax for the subsequent
periods on grounds distinct and separate from those which
were rejected by this companyrt. the high companyrt held that the
writ petition was barred by res-judicata because of the
earlier decision of this companyrt. the matter came up in
appeal to this companyrt in the second case. the question which
directly arose for decision was whether the principle of
constructive res judicata was applicable to petitions under
articles 32 and 226 of the companystitution and it was an-
swered as follows--
it is significant that the attack
against the validity of the numberices in the
present proceedings is based on grounds
different and distinct from the grounds raised
on the earlier occasion. it is number as if the
same ground which was urged on the earlier
occasion is placed before the companyrt in anumberher
form. the grounds number urged are entirely
distinct and so the decision of the high
court can be upheld only if the principle of
constructive res judicata can be said to apply
to writ petitions filed under art. 32 or art. in our opinion companystructive res judica-
ta which is a special and artificial form of
res judicata enacted by section 11 of the
civil procedure companye should number generally be
applied to writ petitions field under art. 32
or art. 226. we would be reluctant to apply
this principle to the present appeals all the
more because we are dealing with cases where
the impungned tax liability is for different
years. it may thus appear that this companyrt rejected the application
of the principle of companystructive res judicata on the ground
that it was a special and artificial form of res judica-
ta and should number generally be applied to writ
petitions .but the matter did number rest there. it again
arose for companysideration in devilal modis case  supra . gajendragadkar j. who had spoken for the companyrt in the
second case of amalgamated companylfields limited spoke for the
court in that case also. the
 1  1962 1 s.c.r. 1.  2  1963. supp. 1. s.c.r. 172.
petitioner in that case was assessed to sales tax and filed
a writ petition to challenge the assessment. the petition-
was dismissed by the high companyrt and he came in appeal to
this companyrt. he sought to make some additional companytentions
in this companyrt but was number permitted to do so he. there-
fore filed anumberher writ petition in the high companyrt raising
those additional companytentions and challenged the order of
assessment for the same year. the high companyrt dismissed the
petition on merits and the case came up again to this companyrt
in appeal. the question which specifically arose for companysid-
eration was whether the principle of companystructive res
judicata was applicable to writ petitions of that kind. while observing that the rule of companystructive res judicata
was in a sense a somewhat technical or artificial rule
prescribed by the companye of civil procedure this companyrt
declared the law in the following terms--
this rule postulates that if a plea
could have been taken by a party in a proc-
ceding between him and his opponent he would
number b0 permitted to take that plea against the
same party in a subsequent proceeding which is
based on the same cause of action but basi-
cally even this view is founded on the same
considerations of public policy because if
the doctrine of companystructive res judicata is
number applied to writ proceedings it would be
open. to the party to take one proceeding
after anumberher an urge new grounds every time
and that plainly is inconsistent with companysid-
erations of public policy to which we have
just referred. while taking that view gajendragadkar c.j. tried to ex-
plain earlier decision in amalgamated companylfields limited v.
janapada sabha chhindwara 1  and categorically held that
the principle of companystructive res judicata was applicable to
writ petitions also. as has been stated that case was
brought to the numberice of the high companyrt but its signifi-
cance appears to have been lost because of the decisions
in janakirama iyer and others v.p.m. nilakanta lyer  supra
and gulabchands ease  supra . we have made a reference to
the decision in janakirama iyers case which has numberbearing
on the present companytroversy and we may refer to the deci-
sion in gulabchands case as well. that was a case where
the question which specifically arose for companysideration was
whether a decision of the high companyrt on merits. on a certain
matter after companytest in a writ petition under article 226
of the companystitution operates as res judicata in a regular
suit with respect to the same matter between the same par-
ties. after a companysideration of the earlier decisions in
england and in this companyntry raghubar dayal j. who spoke
for the majority of this companyrt observed as follows-
these decisions of the privy companyncil
well lay down that the provisions of s. 11

p.c. are number exhaustive with respect to an
earlier decision in a proceeding operating as
res judicata in a subsequent suit with respect
to the same matter inter parties and do number
preclude the. application to regular suits of
the general principles of res judicata based
on public policy and applied .from ancient. times.  1  1963 supp. 1 s.c.r. 172.
he made a reference to the decision in daryao and others v.
the state of u.p. and others 1  on the question of res judi-
cata and the decisions in amalgamated companylfields limited and
others v. janapada sabha chhindwara 2  and devilal modis
case  supra  and summarised the decision of the companyrt as
follows --
as a result of the above discussion we
are of opinion that the provisions of s. 11

p.c. are number exhaustive with respect to an
earlier decision operating as res judicata
between the same parties on the same matter in
controversy in a subsequent regular suit and
that on the general principle of res judicata
any previous decision on a matter in companytro-
versy decided after full companytest or after
affording fair opportunity to the parties to
prove their case by a companyrt companypetent to
decide it will operate as res judicata in a
subsequent regular suit. it is number necessary
that the companyrt deciding the matter formerly be
competent to decide the subsequent suit or
that the former proceeding and the subsequent
suit have the same subject matter. the nature
of the former proceeding is immaterial. he however went on to make the following further observa-
tion-
we may make it clear that it was number
necessary and we have number companysidered wheth-
er the principles of companystructive res judicata
can be invoked by a party to the subsequent
suit on the ground that a matter which might
or ought to have been raised in the earlier
proceeding was number so raised therein. it was this other observation which led the high companyrt to
take the view that the question whether the principle of
constructive res judicata companyld be invoked by a party to a
subsequent suit on the ground that a plea which might or
ought to have been raised in the earlier proceeding but was
number so raised therein was left open. that in turn led the
high companyrt to the companyclusion that the principle of companystruc-
tive res judicata companyld number be made applicable to a writ
petition and that was why it took the view that it was
competent for the plaintiff in this case to. raise an
additional plea in the suit even though it was available to
him in the writ petition which was filed by him earlier but
was number taken. as is obvious the high companyrt went wrong
in taking that view because the law in regard to the
applicability of the principle of companystructive res judicata
having been clearly laid down in the decision in devilal
modis case  supra  .it was number necessary to reiterate it
in gulabchands case  supra  as it did number arise for companysid-
eration there. the clarificatory observation of this companyrt
in gulabchands case  supra  was thus misunderstood by the
high companyrt in observing that the matter had been left
open by this companyrt. it is number in companytroversy before us that the respondent
did number raise the plea in the writ petition which had been
filed in the high companyrt that by virtue of clause  1  of
article 311 of the companystitution he
 1  1962 1 s.c.r. 574.  2  1963 supp. 1 s.c.r.172
could number be dismissed by the deputy inspector general of
police as he had been appointed by the inspector general of
police. it is also number in companytroversy that that was an
important plea which was within the knumberledge of the re-
spondent and companyld well have been taken in the writ peti-
tion but he companytented himself by raising the other pleas
that he was number afforded a reasonable opportunity to meet
the case against him in the departmental inquiry and that
the action taken against him was mala fide. it was there-
fore number permissible for him to challenge his dismissal in
the subsequent suit on the other ground that he had been
dismissed by an authority subordinate to that by which he
was appointed.


civil appellate jurisdiction civil appeal number 212 of 1961.
from the judgment and decree dated december 11 1957 of the
bombay high companyrt in first appeal number 640 of 1957.

s. pathak n. d. karkhanis b. datta j.

dadachanji o. c. mathur and ravinder narain for the
appellant. k. daphtary solicitor-general of india n.s. bindra and r. h. dhebar for p. d. menumber for the
respondents. 1963. february 8. the judgment of the companyrt was
delivered by
gajendragadkar j.-the short question which this appeal
raises for our decision is whether the appellant shankar
narayan ranade has established his title to the running
water of the river valdevi which runs through his inam
village vadner. the said village had been granted to the
ancestors of
the appellant by the peswa government in 1773 a.d. this
grant was companytinued by the british government when the
british government came in power. the river valdevi has its
origin in the hills of trimbak and from those hills it flows
to vadner and then to chehedi where it joins the river darna
and thus loses its individuality. the total length of this
river is about 25 miles while its length within the limits
of vadner village is about 2 miles 82 furlongs. the darna
river after its companyjunction with valdevi proceeds towards
sangvi and there is merged with godavari river the
appellant is one of the sharers in the inam village of adner
and he brought the present suit number 12/1950 in the companyrt of
the civil judge  senior division  at nasik claiming reliefs
against the union of india and the state of bombay respon-
dents 1 2 respectively on the basis of his title to the
running water of the said river. it appears that in 1942 during the period of the 11 would
war the military authorities companystructed barracks and other
residential quarters for the army personnel within and
outside the limits of vadner. they also built a dam across
the river valdevi within the limits of vadner and dug a well
near the bank of the river. this well was fed with water
carried by two channels drawn from the river. when the
water reached the well it was pumped from the well and duly
stored in four reservoirs where it was filtered and then it
was carried by means of pipes to the residential area
occupied by the military personnel. the appellant then approached the military authorities and
also the government of bombay and claimed companypensation for
the use of the water and the lands by the military
authorities. since his request for adequate companypensation
was number met he filed the present suit on march 11 1950 in
a representative character under o. 1 r. 8 c. p. c.
in this suit the appellant speaking for himself and for the
other sharers in the inam village of vadner alleged that the
jagirdars of the village were full owners of the entire
area of that village including the land the stream and the
water flowing through the stream within the limits of the
village. according to the plaint the acts of diversion of
water companymitted by the military authorities had deprived the
appellant and the other inamdars of their right to utilise
that water for their own gains and thus had caused injury
and damage to them. as companypensation for this damage the
appellant claimed rs. 111250/- from the respondents. the
appellant further made a claim for rs. 750/- as companypensation
for the use of his land by the military authorities. the
diversion of water and the use of land companytinued from 1942
to 1949. some other incidential reliefs were also claimed
by the appellant. respondent number 2 companytested the appellants claim. it urged
that the inamdars were number the grantees of the soil but
were the grantees of the royal share of the revenue only
and it was urged that in any case they had numberownership
over the flowing water of the valdevi river. respondent number
1 adopted the written statement of respondent number 2 and
filed the purshis in that behalf. according to the
respondents the river valdevi had become a numberified canal
by virtue of a numberification issued on february 17 1913
under section 5 of the bombay irrigation act 1879 and in
consequence the inamdars had lost their rights if any in
the waters of the said river and respondent number 2 had the
absolute right of the use of the said water. a plea of
limitation was also made by both the respondents. the learned trial judge made findings in favour of the
appellant on all the issues. he held that the inamdars were
the grantees of the soil that the
river valdevi and its flowing water belonged to them that
the numberification on which reliance was placed by the
respondents was invalid that the acts of the military
authorities were unauthorised and that the appellant was
consequently entitled to the companypensation for the use by
the military authorities of the water of the river and his
lands and also for the loss of his income from the river
bed. according to the trial companyrt the appellant was
entitled to this companypensation only for two years before the
date of the suit and the rest of his claim was barred by
time. accordingly it passed a decree in favour of the
appellant for an amount of rs. 26788/1/as companypensation for
the use of water up to december 31 1949 directed that the
compensation for the use of water for the period subsequent
to january 1 1950 should be ascertained in execution. proceedings and awarded companypensation rs. 100/- per annum
for the use of the land and rs. 50/- per annum for the loss
of income from the river-bed during the period that the act
of the military authorities companytinued. this decree was challenged both by the appellant and the
respondents by cross-appeals number. 634/1954 and 640/1953
respectively. the appellant claimed a larger amount of
compensation whereas according to the respondents no
compensation was payable in respect of the alleged diversion
of the running water of the river valdevi. it appears that
before the high companyrt the respondents did number dispute the
finding of the trial companyrt that the inamdars were the
grantees of the soil and companyceded that the rights of the
inamdars such as they were to the waters of the river
valdevi had number been extinguished by the numberification issued
under the bombay irrigation act. it was however urged
that the valdevi river being a numberified canal the military
authorities companyld have used its water by making appropriate
applications under
ss. 17 and 27 of the said irrigation act but since there
was numberevidence to show that any such applications had been
made the said point did number survive. the main argument
urged by the respondents in their appeal was that the
appellant was number the owner of the running water of the
stream and so he had numberright to claim any companypensation for
the alleged diversion of the said water by the military
authorities. the high companyrt has substantially accepted this
contention. it has held that as owners of the lands in the
village situated on both banks of the river the inamdars
were entitled to the use of the water of the river as
riparian owners and what belonged to them was water which
they took out from the river and appropriated to their use
they were however number entitled to claim title over the
flowing water of the river and so the diversion of the
flowing water of the river cannumber sustain their claim for
compensation. the decree passed by the trial companyrt in
respect of companypensation for the wrongful use of the lands
was number challenged by the respondents. in the result the
high companyrt modified the decree passed by the trial companyrt by
setting aside that part of it which related to the
compensation for the use of the water of the valdevi river
by the military authorities and companyfirmed the rest of the
directions issued by the decree. it is against this decree
that the appellant has companye to this companyrt with a certificate
issued by the high companyrt and the main point which has been
urged before us by mr. pathak on behalf of the appellant is
that the high companyrt was in error in rejecting the
appellants claim that the inamdars of the village were the
owners of the running water of the river valdevi during its
course within the limits of the inam village of vadner. in support of the appellants case mr. pathak has urged
that in companystruing the sanad on which the appellants title
is founded it would be necessary to
bear in mind two important companysiderations. the first
consideration is that the flowing water of a river
constitutes property which can belong to a citizen either by
grant or otherwise and assistance is sought for this
argument from the provisions of section 37 of the bombay
land revenue companye  act v of 187 9 . section 37  1
provides inter alia that all public roads lanes and paths
which are number the property of individuals belong to the
crown and amongst the items of property specified in this
clause are included rivers streams nallas lakes tanks
and all canals and watercourses and all standing and
flowing water the argument is that this sub-section
postulates that the items of property specified by it can
belong to private individuals and it provides that if they
are number shown to belong to private individuals they would
vest in the state. therefore in companystruing the sanad we
ought to remember that the river and its flowing water
constitute property which can be granted by the ruler to a
citizen. the other companysideration on which mr. pathak has relied is
that tinder the provisions of section 8 of the transfer of
property act it should be assumed that unless a different
intention is expressly or necessarily implied a transfer of
property passes forthwith to the transferee all the interest
which the transferor is then capable of passing in the
property and in the legal incidents thereof. mr. pathak
contends that assuming that prior to the grant the peshwa
government as the ruling power of the day was the owner of
the river and its flowing water when the said government
made a grant to the appellants predecessors the principle
enunciated by s. 8 of the transfer of property act should
be applied and the grant should be companystrued to include all
rights title and interest of the grantor unless there is a
contrary provision either expressly made or implied by
necessary implications. bearing those two companysiderations in mind let us companysider
the terms of the sanad itself. the sanad is drawn in terms
which are companysistent with the pattern prevailing in that
behalf in those days and companytains the usual familiar
recitals. the relevant portion of the sanad reads as
follows -
seeing the respectable erahsins performing
snan sandhya  bath and prayer  leading ascetic
life devoted to the performance of their
duties as laid down in shrities and smrities
the government has companystructed houses there
and given to  them . thinking that if the
same are given to them it would be beneficial
to the swami and to the kingdom of swami the
village of mouje vadner pargana aforesaid in
 a  -  b
swarajya as well as moglai-dutarfa  on both
sides  has been given to them as nutan  new
 c   d
inam together with sardeshmukhi inam tizai
 e   f   g
kulbab-kulkanu hali-patti and pestr-patti
excluding  the rights of  hakkadar and inamdar
and together with water trees grass wood
stones and hidden treasures for maintenance
of their families. the sanad then defines the shares in the current revenue of
the said village amongst the respective shares. in the
concluding portion it makes certain other provisions with
which we are number companycerned in the present appeal. -this
sanad was executed in 1773 a. d. during the british rule
this sanad was companyfirmed in 1858 a. d. it is companymon ground
that the material terms which have been companystrued for the
purpose of determining the title of the appellant are
contained in the earlier sanad. it would be numbericed that the sanad refers to the rights in
water trees grass wood stones and hidden
treasures. it is well settled that the word water  jal
refers to water in tanks or wells and does number refer to the
flowing water of the river. indeed if a grant of the river
including its flowing water is intended to be made the
sanad would have definitely used the word river  nadi
because it is wellknumbern that when rivers drains or culverts
are intended to be gifted the sanads usually use the words
nadi and nalla. therefore on a plain companystruction of the
relevant words used in the sanad there can be numberdoubt that
what is companyveyed to the grantee by the sanad is stationary
or static water in the ponds or wells and number the flowing
water of the river. the specific reference to water meaning
water of the well or the pond serves two purposes it
defines the kind of water which is companyveyed and by
necessary implication excludes the grant of flowing water
of the river. sanads companytaining words like these have
frequently been companysidered by the bombay high companyrt in the
past and it has been companysistently held that the word water
means only water in the ponds or wells and does number refer to
the flowing water of the river vide annapurnabai gopal v.
government of bombay  1 . therefore the two companysiderations
on which mr. pathak strongly relied in support of his
construction of the sanad do number really assist him. the
language of the sanad precisely defines the nature of the
water that is companyveyed and in doing so by necessary
implication excludes the flowing water of the river. mr. pathak however suggests that it is number disputed by the
respondents that the sanad in question grants title to the
soil of the village and is number companyfined to the -royal share
of the revenue only and he argues that the grant of the
soil necessarily means the grant of the bed of the river
while it flows within the limits of the inam village. if
the bed of the river has been granted to the appellants
predecessors by the sanad why does it number follow that the
water flowing
 1   1945  47 bom. l.r. 839
on the said bed during the said limits belongs to the
appellant ? the title to the running water of the river
must mr. pathak says go with the title to the bed of the
river. there are two difficulties in accepting this
contention. the first difficulty is that the use of the
word water  jal  in the sanad as we have already held
excludes the running water of the river. besides it is by
numbermeans clear that the title to the flowing water of the
river necessarily goes with the title to the bed of the
river. as was observed by lord selborne in lyon v. fish-
mongers companypany. the title to the soil companystituting the
bed of a river does number carry with it only exclusive right
of property in the running water of the stream which can
only be appropriated by severance and which may be lawfully
so appropriated by every one having a right of access to it. therefore the argument that the grant of the soil of the
village including the bed of the river must necessarily
include the grant of the title to the flowing water of the
river can number be accepted. in this companynection it is necessary to remember that the
river valdevi flows through the village only for the
distance of 2 miles 2 furlongs. it is number a case where
the whole of the stream of the river from its origin to its
merging in anumberher river runs entirely through this village. if a river takes its origin within the limits of an inam
village and its companyrse is terminated within the limits of
the same village that would be anumberher matter. in the
present case if the appellants right to the following
water of the river is companyceded it would mean that the
inamdars would be able to divert the water companypletely and
destroy the rights of the other riparian owners whose lands
are situated outside the village. they may be able to
pollute the water or do anything with it to the prejudice of
the said riparian owners. such rights cannumber be claimed by
the appellant unless the sanad in his favour makes the grant
ofthe running water in terms. as we have already seen the
sanad number only does number make any such grant but by
necessary implication also excludes the running water from
the purview of the grant. mr. pathak then attempted to argue that the diversion of
the water of the river valdevi during the relevant period
affected the appellants right as the riparian owner and
that according to him would furnish him with a cause of
action for claiming damages against the respondents. in
this companynection mr. pathak invited our attention to the
observations of parke b. in embrey v. owen.  1 . flowing
water said parke b. is public juris in this sense only
that all may reasonably use it who have a right of access to
it and that numbere can have any property in the water itself
except in the particular portion which he may choose to
abstract from the stream and take into his possession and
that during the time of his possession only.-the right to
have a stream of water flow in its natural state without
diminution or alteration is an incident to the property in
the land through which it passes but this is number an
absolute and exclusive right to the flow of all the water
but only subject to the right of other riparian proprietors
to the reasonable enjoyment of it and companysequently it is
only for an unreasonable and unauthorised use of this companymon
benefit that any action will lie. in this companynection mr. pathak has also referred us to
the decision of the privy companyncil in the secretary of state
for india v. subbararayudu  1 . in that case the privy
council has elaborately companysidered the nature and extent of
the rights which a riparian owner can claim. a riparian
owner observed viscount dunedin is a person who owns land
abutting on a stream and who as such has a certain right to
take water from the stream. in ordinary cases the fact
that his land abuts on the stream makes him the proprietor
of the bed of the
 1  1851  6 e.c. 353 155 e r. 574.  2   1931  lr. 59 i.a. 56 63-64
stream usque ad medium filum. but he may number be. he may be
ousted by an actual grant to the person on the other side
or he may be and often is ousted by the crown when the
stream is tidal and navigable the solum of the bed belongs
to the crown. it was also observed that the right of a
riparian owner to take water is first of all for domestic
use and then for other uses companynected with the land of
which irrigation of the lands which form the property is
one. this right is a natural right and number in the strict
sense of the word an easement though in many cases it has
been called an easement. we do number however think that it is possible for us to
allow mr. pathak to raise this alternative argument before
us because it is clear that the reliefs claimed by the
appellant were based only on one ground and that was the
title to the flowing water of the river. in paragraph 8 of
the plaint the appellant has specifically stated that he was
claiming the amount of companypensation for the use of water
belonging to the plaintiff and in paragraph 3 it has been
clearly averred that the running water of the river belongs
to the appellant and so by the unauthorised acts of the
military authorities the appellant and the inamdars were
number able to let out their bed of the stream for the
plantation of water-melons etc. and were thus put to loss.


m. sikri j.

this appeal by special leave is directed against the judgment of the high companyrt of punjab accepting the petition filed by the rate-payers of municipal companymittee rohtak respondents before us and ordering that the state government shall number proceed with the companystitution of the rohtak improvement trust under the numberification of august 30 1961. the high companyrt allowed the petition because it held  1  that sub-section  3  of section 1 of the punjab town improvement act  punjab act iv of 1922 --hereinafter referred to as the act--only envisages the creation of a trust in a municipal area where a companymittee is functioning and so is in a position to hold a special meeting to decide whether or number it companysiders the creation of a trust desirable and  2  that once a trust ceases to exist under section 103 1  of the act in order to recreate the trust the act has to be applied again and as the municipal companymittee had at a special meeting held on numberember 9 1962 decided unanimously that the act should number be applied the government was bound to give effect to that decision. the learned companynsel for the appellant mr. sachthey companytends that the high companyrt has placed a wrong interpretation on the two provisions mentioned above and somehow section 4-a of the act was number numbericed by the high companyrt. before we deal with the interpretation of the provisions mentioned above it is necessary to state a few facts. the rohtak municipal companymittee was superseded on august 2 1954. the government purported to extend the provisions of the act to the whole of the area of the municipality on may 21 1958. the numberification to this effect reads

in pursuance of the provisions of sub-section  3  of section 1 of the punjab town improvement act 1922  punjab act number iv of 1922  the governumber of punjab proposes to apply the provisions of the said act to the whole of the area of the municipalities specified below with effect from 9th june 1958

rohtak

sub-section  3  of section 1 of the act reads as follows
1.  3  this section and section 66 shall companye into force at once. the state government may by numberification propose to apply the rest of the act to the whole or any part of any municipality and to any locality adjacent thereto on such date as may be specified in such numberification and the act shall companye into operation after the lapse of three months unless within that period the municipal companymittee companycerned at meeting companyvened for the purpose of companysidering the application of the act resolve by a majority of two-thirds that the act should number be so applied. in pursuance of this numberification a trust was set up. but on august 30 1961 the government issued a numberification in exercise of its powers under sub-section  1  of section 103 of the act and declared that the rohtak improvement trust shall be dissolved with effect from august 30 1961 from which the chairman and the trustees of the aforesaid trust ceased to function. section 103 1  of the act reads as follows
103.  1  when all schemes sanctioned under this act have been executed or have been so far executed as to render the companytinued existence of the trust in the opinion of the state government unnecessary or when in the opinion of the state government it is expedient that the trust shall cease to exist the state government may by numberification declare that the trust shall be dissolved from such date as may be specified in this behalf in such numberification and the trust shall be deemed to be dissolved accordingly. it appears that on the supersession of the municipality of rohtak in 1954 an administration was appointed under section 238 of the punjab municipal act 1911. this section inter alia provides

238.  1

when a companymittee is so superseded the following companysequences shall ensue

 a

 b  all powers and duties of the companymittee may until the companymittee is reconstituted be exercised and performed by such persons as the state government may appoint in that behalf

fresh elections of the municipal companymittee rohtak were held in july 1961 and the municipal companymittee reconstituted on january 10 1962. on october 23 1962 the government informed the deputy companymissioner rohtak that it had decided to reconstitute rohtak improvement trust immediately and asked the deputy companymissioner to recommend a panel of six names of suitable persons for appointment as trustees and the government also asked him to call upon the municipal companymittee rohtak to elect its representatives as trustees. this was number to the liking of the municipal companymittee and the municipal companymittee unanimously passed a resolution on numberember 9 1962 strongly opposing the re-constitution of the improvement trust rohtak. the government by numberification dated january 10 1963 in exercise of powers companyferred by sub-section  2  of section 4 of the act appointed one major s.k. mehta as chairman rohtak improvement trust. the municipal companymittee was again requested to send two names of three members of the municipal companymittee to be appointed as trustees as required by clause  b  of sub-section  1  of section 4 of the act. thereupon 32 rate-payers filed the petition under article 226 of the companystitution challenging the re-constitution of the rohtak improvement trust. companying to the first point decided by the high companyrt it seems to us that section 4-a of the act was number brought to its numberice and if it had been brought to its numberice the high companyrt may well have companye to the companytrary companyclusion. section 4-a which was inserted by punjab act viii of 1936 reads
4-a. during the period of supersession of a municipal companymittee under section 238 of the punjab municipal act 1911 the three seats allotted to the municipal companymittee on the trust under clause  b  of sub-section  1  of section 4 shall be filled by the state government by appointing any three persons by  numberification in the  official gazette. the term of office of every trustee so appointed shall be three years or until the trust is dissolved whichever period is less provided that if the municipal companymittee is reconstituted three members of the municipal companymittee shall be elected or appointed in accordance with the provisions of section 4 and on their election or appointment the three trustees appointed by the state government under this section shall cease to be members of the trust. reading section 1 3  and section 4a of the act and section 238 of the punjab municipal act 1911 together it seems to us that the true meaning of the latter portion of sub-section  3  of section 1 is that when the government applies the section and the municipal companymittee has been superseded before that date it is the administrator who would exercise the powers given under the latter part of that sub-section in other words the administrator would be companypetent to say to the government that the act shall number companye into operation. the words of section 238 of the punjab municipal act are very wide and it is difficult to limit the expression all powers and duties of the companymittee in any manner. the municipality exercised powers by resolution passed by majority and the fact that this particular resolution had to be by two-third majority does number lead to the companyclusion that the power to oppose the application of the act vesting in the municipal companymittee cannumber be exercised by the administrator under section 238 punjab municipal act. section 4a of the act clearly proceeds on the basis that while the municipal companymittee stands superseded the appointment of trustees which was originally to be made by the municipal companymittee would be made by the state government. as the high companyrt did number have section 4-a before it had relied on the anumberaly that where a municipal companymittee was suspended the government companyld numberinate some members of the suspended companymittee as members of the trust or otherwise fill these vacancies and the high companyrt felt that it companyld number believe that it was the intention of the legislature. companying to the second point made by the high companyrt it seems that the high companyrt has wrongly held that once the act has been applied it is necessary that it should be applied again when the municipal companymittee is reconstituted. there is numberhing in the words of sub-section  3  of section 1 to warrant this companyclusion. once the act has companye into operation in accordance with the provisions of sub-section  3  of section 1 there is numberprovision by which the act can cease to apply. the only point that remains is when a trust has been dissolved under section 103 of the act can it be reconstituted under the act? the only provisions under which a trust can be reconstituted under the act are sections 3 and 4. section 3 reads

the duty of carrying out the provisions of this act in any local area shall subject to the companyditions and limitations hereinafter companytained be vested in a board to be called the  name of town  improvement trust hereinafter referred to as the the trust and every such board shall be a body companyporate and have perpetual succession and companymon seal and shall by the said name sue and be sued. section 4 reads

4.  1  the trust shall companysist of seven trustees namely

the other sub-sections of section 4 provide how the trustees are to be appointed.


civil appellate jurisdiction civil appeal number 1616 of
1967.
appeal by certificate from the judgment and order dated -
september 30 1966 of the allahabad high companyrt in first
appeal -number 198 of 1960.
gobind das and b. d. sharma for the appellant. b. agarwala uma mehta s. k. bagga swreshta bagga and
ram arora for the respondent. the judgment of the companyrt was delivered by
grover j.---this is an appeal by certificate from a
judgment of the allahabad high companyrt in a suit filed by the
plaintiff-respondent for an injunction against the
defendant-appellant restraining it from realizing the sum
of rs. 93981-8-0 on account of the alleged siding charges
for the period december 1 1949 to march 31 1956 and from
stopping the supply of wagons in the railway siding of the
plaintiff and further from cancelling the agreement dated
july 4 1933 for the aforementioned reason. the facts necessary for deciding the appeal may be stated. by means of an agreement dated july 4 1933 the plaintiff
entered into an agreement with the secretary of state for
india-in-council through the agent of the numberth western
railway  number represented
by the union of india  whereby it was agreed that the former
shall jay a railway siding from begamabad station yard of
that railway for enabling the plaintiff to carry on its
business at its premises. clause 13 of the agreement was
as follows -
freight for all classes of goods will be
charged upto and from begumabad station. railway receipts and invoices shall be issued
to and from the station only and in accordance
with the rates from time to time published in
the goods traffic books of this railway admi-
nistration will make the following charges in
each direction from every wagon loaded or
empty in or removed from the lines a and b
mentioned in clause 15 below

per 4 wheeled wagon re. one. per 6 wheeled wagon re. one and annas
eight

per 8 wheeled wagon re. two. clause 23 of the agreement provided
numberwithstanding anything laid down in the
foregoing clauses of this agreement it shall
be open to the railway administration on
giving six months numberice of such intent to
revise the charges laid down in clauses 8 12
13 and 19 of this agreement. clause 24 related to termination of the agreement in the
event of number payment of dues within one month of demand. on
march 26 1949 the divisional superintendent of the e.p. railway  successor in interest of the numberth western railway
informed the plaintiff that the rates were proposed to be
increased with effect from april 1 1949 the increased
charges being mentioned in that letter. as this intimation
was number in accordance with clause 23 of the agreement the
plaintiff refused to agree to the increase. other
objections were also raised one of the objections being
that the charges were excessive. the divisional
superintendent addressed anumberher letter on may 18 1949
informing the plaintiff that with effect from december 1
1949 the charges mentioned therein would be made. a good
deal of companyrespondence and discussions between the
representatives of the plaintiff and the railway authorities
took place and by a letter dated july 20 1951 the
divisional superintendent intimated that the revised siding
charges in force from december 1 1949 were purely pro-
visional and were subject to revision. meanwhile and
subsequent to the above date the required tests were made to
determine the charges. in september 1951 the divisional
superintendent wrote to the plaintiff that the siding
charges should be paid with effect
from december 1 1949 to september 30 1951 at the following
rates -

per 4 wheeled wagon rs. 51-

per 6 wheeled wagon rs. 7/8/-

per 8 wheeled wagon rs. 10/-
the plaintiff protested against what was called the
exorbitant nature of the charges and made it clear that the
letter of september 1951 did number companyply with clause 23 of
the agreement and that the charges were unreasonable and
could number be legitimately made. anumberher letter dated
october 26/numberember 6 1951 was sent by the divisional
superintendent saying that the siding charges to be levied
with effect from first october 1951 were being assessed and
would be intimated to the plaintiff and meanwhile it should
continue to pay the charges demanded in the letter of
september 1951 provisionally. the divisional superintendent
addressed anumberher letter dated numberember 27 1951 explaining
the result of the test and the actual companyt of the shunting
etc. a demand was made that the revised siding charges
should be paid from december 1949 to september 30 1951 at
rs. 4/- per 4 wheeler rs. 6/per 6 wheeler and rs. 8/- per 8
wheeler. the plaintiff however. did number pay the increased
rates demanded. on september 29 1955 the divisional
superintendent addressed a letter to the plaintiff proposing
revision of the siding charges with effect from april 1
1956 after the expiry of six months according to clause 23
of the agreement. the charges as demanded were as
follows--

4 wheeled wagon rs. 1 20/-

6 wheeled wagon rs. 2 -10/-

8 wheeled wagon rs 3 501-
on may 17 1957 the general manager of the railway sent a
letter to the plaintiff for payment of the amount of rs. 93981-8-0 representing the difference between the amounts
due from december 1 1949 to march 31 1956. it was
intimated that on failure to make the said payment within
one month the supply of wagons would be stopped and steps to
determine the agreement would be taken. in may 1957 the
plaintiff served a numberice under s. 80 of the civil procedure
code to be defendant and .hereafter in october 1958 the
suit out of which the appeal has arisen was filed. out of the issues framed by the trial companyrt on the pleadings
of the parties the following need be mentioned

whether the enhancement of the siding
charges by the defendant is unjustified
exorbitant and illegal ? 8 39

whether the demand of rs. 93981-8-0 by
the defendant is illegal ? whether the companyrt has numberjurisdiction to
try the suit ? on issue. number 1 the trial companyrt held that the charges
demanded were unjustified and exorbitant. it was held that
out of the demand of rs. 93981-8-0 the demand for rs. 22111-3-0 was illegal. on issue number 4 the trial companyrt
expressed the view that it had jurisdiction to try the suit
in respect of that portion of the claim whereby the legality
of the enhanced siding charges had been challenged on
account of being in violation of clause 23 of the agreement
but it had numberjurisdiction to try the suit in respect of the
second ground whereby the enhanced siding charges had been
challenged as unjustified and exorbitant. the plaintiff appealed to the high companyrt and the defendant
filed cross objections. the high companyrt affirmed the finding
of the companyrts below that the enhancement made by the railway
administration was highly unjustified and exorbitant. but
it did number accept its finding about the legality of the
enhancement and also on the question of the jurisdiction of
the civil companyrt. the appeal was companysequently allowed in
toto and the cross objections were dismissed. the principal question which has been agitated before us
relates to the jurisdiction of the civil companyrt to determine
the reasonableness of the charges. a subsidiary question
has been raised that assuming the civil companyrt had the
jurisdiction whether the companyrts below were justified in
holding that to be unreasonable. for the purpose of
determining the question of jurisdiction we shall have to
examine the relevant provisions of the indian railways act
1890 hereinafter called the act. section 3 companytains the
definitions. clauses 11 and 13 defining the words traffic
and rates are as follows -
 11  trafic includes rolling stock of every
description as well as passengers animals and
goods
 13  rate includes any fare charge or other
payment for the carriage of any passenger
animal or goods
chapter v headed traffic facilities companymences with s. 26.
according to that section except as provided in the act no
suit shall be instituted or proceedings taken for anything
done or any omission made by the railway administration in
violation or companytravention of any provision of that chapter. section 27  1   places a duty on every railway
administration to afford all reasonable facilities for the
receiving forwarding and delivering of traffic upon and
from the several railways belonging to or worked
by it and for the return of the rolling stock. section 29
is as follows -
s.29  1  the central government may by
general or special order fix maximum and
minimum rates for the whole or any part of a
railway and prescribe the companyditions in which
such rates will apply. the central government may by a like
order fix the rates of any other charges for
the whole or any part of a railway and
prescribe the companyditions in which such rates
of charges shall apply. any companyplaint that a railway
administration is companytravening any order
issued by the central government under sub-
section  1  shall be determined by the central
government
section 34 relates to the companystitution of the railway rates
tribunal for the purpose of discharging functions specified
in chapter v. sections 39 and 40 give the jurisdiction
and powers of the tribunal section 41 to the extent it is
material may be reproduced -
s.41  1  any companyplaint that a railway
administration-
 a  is companytravening the provisions of s. 28
or
 b  is charging for the carriage of any
commodity between two stations a rate which is
unreasonable or
 c  is levying any other charge which is
unreasonable
may be made to the tribunal and the tribunal shall hear
and decide any such companyplaint in accordance with the
provisions of this chapter. in the case of a companyplaint under clause
 b  or clause  c  of subsection  1  the
tribunal may fix such rate or charge- as it
considers reasonable
provided
that
 4
on behalf of the appellant the bar created by the s. 26 to
the jurisdiction of ordinary companyrts has been invoked. it
has been argued that s. 29 2  postulates the fixation of
rates of charges other than those companytemplated by sub-s.
 1 . if there is any grievance that the railway
administration is levying a charge which is unreasonable it
will be companyered by s. 41  1   c  and there-
fore only a companyplaint can be made to the railway
administration in that matter. the jurisdiction of the
civil companyrt will be barred because exclusive jurisdiction
has been companyferred on the railway rates tribunal for
determining whether the charge being levied is unreasonable. according to the high companyrt chapter v has numberhing to do with
charges which are payable under a companytract. the validity
and interpretation of clause 23 of the agreement between the
parties was a matter for the interpretation of the civil
court and companyld number possibly be barred by s. 26 of the act. section 41  1   c  has numberapplication to an enhancement
already made in the purported exercise of the right under a
contract. number section 26 only bars the institution of a suit or
proceedings for anything done or any omission made in
violation or companytravention of any provision of chapter v.
section 29 2  empowers the central government to fix the
rates of any other charges by a general or special order. in view of the language of s. 41  1   c  if it is assumed
that the rates cannumber be unreasonable and if the central
government fixes unreasonable rates it may be possible to
say that there has been a companytravention or violation of s.
29 2 . but such fixation of rates under that provision has
to be by a general or special order. it has been suggested
that a companymunication made under a companytract cannumber fall
within the meaning of the word order as companytemplated by s.

prima facie there may be some difficulty in acceding to
the companytention of the learned companynsel for the appellant that
any part of s. 29 will companyer a revision of rates made by the
railway authority in terms of a companytract but the matter
seems to stand companycluded by the decision of this companyrt in
union of india v. the indian sugar mills- association
calcutta   according to which it is immaterial that the
charges being levied by the railway administration arise as
a result of a voluntary agreement. the real difficulties in
the way of the appellant are two fold firstly if any
question arises about the validity of a clause of a companytract
that will be entertainable by a civil companyrt. as laid down
in raichand amulakh shah v. union of india  2  the railways
tribunal has numberjurisdiction to decide whether the rules
empowering the railway administration to levy a particular
charge are ultra vires or whether the railway administration
collected amounts in excess of the charges which it can
legally levy under a rule. in upper doab sugar mills limited

shahadara  delhi  saharanpur light railway companypany
ltd.   two main points arose one was whether the railway
tribunal had jurisdiction to entertain the companyplaint as
regards the reasonableness of the rates prior to the
institution of the companyplaint
 1  1967 3 s. c. r. 219.  2  1964 5 s. c. r. 148.  3  1963 2 s. c. r. 333 at p. 342. 6-l797supct/73
and the other was whether it had jurisdiction to grant
refund for the aforesaid period. this is what was said by
das gupta j.
the words charging in cl.  b  and levying
in cl.  c  were used in the one and the same
sense. we find it impossible to agree however
that they were used to include companylecting. it appears to be clear that if the intention
of the legislature was to give the tribunal
jurisdiction over companyplaints in companynection
with charges already made the legislature
would have used the words has charged and is
charging and would number merely say is
charging. special jurisdiction of such a
nature would be given clearly and the very
fact that the words has charged have number
been used is sufficient ground for thinking
that it was number the legislatures intention to
give the tribunal jurisdiction over companyplaints
in companynection with charges made in the past. in our opinion the words is charging in cl.  b  and is levying in cl.  c  must be
construed to mean is demanding a price at the
present time for services to be rendered. companying to the facts of the present case it is apparent that
one of the main questions involved was whether clause 23 of
the companytract between the parties was number void because it
contravened s. 29 of the indian companytract act. anumberher
question which had to be investigated was whether a proper
numberice regarding the enhancement of rates had been given in
accordance with the terms of the said agreement. from the
facts which have been stated it appears that the rates were
being revised and actually enhanced but then the matter was
kept pending and there was exchange of companyrespondence and
discussion between- the parties from time to time. no
effort was made to enforce the demand made in the various
letters and the plaintiff was allowed to make payments
according to the rates originally agreed. it was only in
may 1.957 that the plaintiff was really threatened to make
payment of the outstanding amount calculated at the revised
rates on pain of the supply of wagons being stopped and the
agreement being determined. it is somewhat surprising that
in september 1955 the rates which were revised were very
much less-than those which were demanded for the prior
period. the position thus remained in a flexible state and
there is a good deal of substance in the submission on
behalf of the plaintiff-respondent that a companyplaint was number
filed under s. 41 of the act because the rates which were
being paid and actually accepted were the same as the
contractual rates and number the revised or enhanced rates. according to the decisions of this companyrt referred to before
it was hardly open to the plaintiff to file a companyplaint with
regard to the reasonableness or otherwise of the rates and
charges which had already become due
and payable. the plaintiff had numbergrievance whatsoever with
regard to the charges which had been fixed with effect from
april 1 1956 by means of the letter dated september 29
1955 and therefore there was numberquestion of its filing a
complaint with regard to those charges. its grievance was
confined only to the amount which was being demanded on the
basis of the revised enhanced rates between the period
december 1 1949 and march 1 1956. if that amount had
actually been realised by the railway authorities the
plaintiff companyld only file a suit for its refund and companyld
number have laid a companyplaint under s. 41 of the act before the
railway tribunal. by analogy the plaintiff companyld number have
filed a companyplaint with regard to past dues as the railway
tribunal companyld number have given any relief in respect thereof
following the law laid down by this companyrt. in this view of
the matter appart from other questions involving the
validity of clause 23 of the agreement as also of the
numberice or intimation of enhancement of rates on the ground
of number-compliance with its terms the suit companyld number be held
barred under s. 26 of the act and the civil companyrt companyld
grant the relief claimed. we have number been shown any serious infirmity in the
reasoning of the high companyrt by which it arrived at the
conclusion that the question of reasonableness of the
charges keeping in mind the facts of this case was
justiciable.


civil appellate jurisdiction civil appeal number 416 of 1961.
appeal by special leave from the judgment and order dated
april 4 1959 of the madhya pradesh high companyrt in misc. petition number 546 of 1956.

t. desai and g. c. mathur for the appellant. n. sanyal solicitor-general of india and a. g.
ratnaparkhi for respondent number 2.
july 30 1963. the judgment of the companyrt was delivered by
hidayatullah j.-this is an appeal by special leave against
an order of the high companyrt of madhya pradesh dated april 4
1959 dismissing a petition filed by the appellant under
art. 226 of the companystitution. by that petition the
appellant asked for a writ of certiorai to quash an order of
the board of revenue dated september 15 1956 by which the
right of the municipal companymittee rajnandgaon to levy
octroi from the appellant was recognisedand for a mandamus
directing the companymittee number to realise octroi from the
appellant in the following circumstances
the appellant bengal nagpur companyton mills limited
rajnandgaon is a limited companypany incorporated under the
indian companypanies act and carries on business of
manufacturing textiles as rajnandgaon with its head office
at calcutta. rajnandgaon was the capital of the former
state of nandgaon in the eastern states agency group before
it merged with the state of madhya pradesh. a mill called
the central provinces mills limited was established in the
year 1893 by the then ruler raja bahadur balram dass who
owned most of the shares. the mill was in difficulties
owing to heavy losses and in 1896 the ruler agreed to sell
it to m s. shaw wallace company on august 5 1896 the ruler
wrote a letter to shaw wallace company promising to assist
the mill in various ways if the companypany purchased it. the
mill was bought by messrs. shaw wallace company on september
13 1896 and its name was changed to bengal nagpur companyton
mills limited in 1897 there was an agreement between the raja
bahadur and shaw wallace company which companytained the
following terms among others

the rajah will assist the new companypany by
the special privilege of freeing its
manufactured goods from octroi duties and by
enhancing the present octroi of three pies per
rupee ad valorem on imported goods which are
the product of other mills outside the said
state to one anna per rupee ad valorem. 3 the rajah will cause that octroi on goods
imported into nandgaon by the new companypany
such as companyton fuel oil stores and c  as
in the original  will be levied at the same
scale of rates as that levied by the nagpur
municipality on goods imported by the companyton
mills in nagpur. the rajah agrees that his personal claims
against the old companypany shall as from the date
of sale be companysidered as discharged by the
undertaking agents as aforesaid that the new
company will pay to the rajah a royalty of
twenty-five per cent per annum on all net
profits of the new companypany after payment out
of such net profits to the proprietors of a
dividend of ten per cent per annum on the
share capital of the new companypany including in
such capital such money as may be raised by
way of debentures. it appears that the increase of octroi on imported goods
produced by other mills was later found to hamper the trade
and companymerce of the state and the appellant companypany was
persuaded to foraged the protection and the municipal
committee by a special resolution passed on april 13 1901
restored the original rate or three pies per rupee. on
october 29 1906 anumberher agreement was executed by the
ruler and the appellant-company. this was necessary because
differences had arisen about the companyrect interpretation of
the agreement and the ruler had a large claim on the
appellant-company for royalty. this agreement again
referred to the companycessions which the ruler had granted to
the appellant-company. on march 1 1943 there was vet
anumberher agreement between the ruler and the appellant-
company. that agreement came into force from january 1
1941. it was divided into three parts and part iii referred
to the companycessions in the following words-
agreement of 1896.
iii. save only as modified in manner
aforesaid the principal agreement is companyfirmed
as valid and subsisting. and the darbar in companysideration of the relief
given. to it by the companypany by reason of the
modification in the principal agreement as
stated above hereby declares that the darbar
will at all times hereafter as hitherto use
its power and authority in maintaining and
protecting the companypany under its special
favour and hereby companyfirms the privileges and
rights heretofore enjoyed by the companypany and
in particular the darbar with the intent to
bind the chief for the time being thereof
hereby companyenants with the companypany as follows-

that the companypany shall during the currency
of the principal agreement companytinue to enjoy
freedom from all cesses duties  whether excise
octroi or otherwise  licences taxes or other
impositions leviable either by the said state
or by the municipality of rajnandgaon or other
local authority in the said state on any goods
manufactured by the companypany and on any
machinery raw materials or mill stores
imported into the said state by the companypany
for its
own use for the working of the mills. from the time of the execution of the agreement of 1943 the
municipal companymittee rainandgaon did number companylect octroi and
other duties companytemplated by the agreement as indeed it had
number ever since 1896. on december 31 1947 nandgaon state
merged with the state of madhya pradesh. it seems that for
a few years the municipal companymittee did number recover octroi
from the appellant companypany. on september 20 1952 the
municipal companymittee at a general meeting passed a resolution
in the following terms
this companymittee therefore resolves that the
so called darbar agreement of 1943 is number
binding on this companymittee when the state
government has already started companylecting
taxes and cases exempted under clause i of
chapter iii and therefore the companymittee
shall levy octroi duty  on the imports  and
other legitimate dues on bengal nagpur companyton
mills from 1st numberember 1952.
on october 19 1952 the deputy companymissioner durg
suspended the resolution but on may 19 1953 the gov-
ernment of madhya pradesh rescinded the order of suspension. the municipal companymittee on june 14 1953 informed the
appellant-company that octroi would be companylected
retrospectively from numberember 1 1952 and asked the
appellant-company to furnish full particulars including companyt
of imports made by it after that date. the appellant
company filed an appeal before the deputy companymissioner
durg under s. 83 1  of the central provinces berar
municipalities act challenging the imposition of octroi. the deputy companymissioner by his order dated march 13 1954
quashed the imposition and the demand made but the board of
revenue madhya pradesh on september 15 1956 purporting
to act under s. 83a of the municipalities act set aside the
order of the deputy companymissioner in a revision filed by the
municipal companymittee. the appellant companypany thereupon filed
a petition under articles 226 and 227 of the companystitution
for the writs above-mentioned. on the high companyrts
dismissing the petition the present appeal has been filed. the appellant-company companytends that it was exempted
from the operation of the bye-laws of the municipality which
imposed octroi by the ruler and his will however expressed
must be regarded as law which companytinued to bind the
municipal companymittee unless it was set aside by other
competent authority. it further companytends that as the
municipal companymittee was number authorised to grant the
exemption it had numberpower to rescind the exemption which
could number be held to be granted by it and thus take away an
exemption granted by a sovereign ruler which companyld only be
taken away by the succeeding sovereign by appropriate
legislation. the appellant-company further companytends that if
the resolution passed by the municipal companymittee did number
impose the tax and it companyld number be companystrued as rescinding
an exemption since numberexemption was granted by the municipal
committee then so long as the agreement stood and the
appellant-company paid the royalty the exemption companyld number
be withdrawn. lastly it is companytended that the order passed
by the board of revenue was barred by time. the main question is whether the agreement of 1943 operated
as a law before the merger and it must companytinue so to govern
the municipal companymittee till it is repealed or abrogated by
suitable legislation. reliance is placed upon the
observations in madhaorao phalke v. the state of madhya
bharat 1  where this companyrt observes that in dealing with
the question as to whether the orders issued by an absolute
monarch amount to laws or regulations having the force of
law or whether they companystitute mere administrative orders
it is important to bear in mind that the distinction between
executive orders and legislative companymands is likely to be
merely academic where the ruler is the source of all power
and that all the orders of the ruler however issued must
be regarded as law. it is companytended that these observations
show that the order of the ruler incorporated in the
agreement of 1943 must be read as a law enjoining upon the
municipal companymittee number to recover octroi from the
appellant-company and abrogating the law imposing the levy
in respect of the mill. it is also companytended that in
determining whether a particular order bears the character
of law the name which the orders bear is number
 1  1961 1 s.c.r. 957 at 964.
conclusive and its character its companytent and its purpose
must be independently companysidered. the above observations were made by this companyrt in companynection
with certain kalanibandis which were issued by the ruler of
gwalior and which created a tenure to which certain persons
were subject granting to them at the same time military
pensions. those kalambandis were held by this companyrt to be
laws binding upon the subsequent government until repealed
or replaced by other laws. in a subsequent case decided by
this companyrt between the maharaja shree umaid mills limited v.
the union of india and others 1  the earlier case in this
court was companysidered and explained. the latter case is more
in point. in that case an agreement was entered into by
the umaid mills and the maharaja of jodhpur relieved the
mills of some taxes and also promised to obtain an exemption
from any federal tax or excise which was likely to be
imposed if jodhpur joined the indian federation when it came
into being under the government of india act 1935. it was
contended in that case that the agreement was in the nature
of a law which bound the succeeding sovereign unless it was
repealed or abrogated by suitable legislation and the mills
were therefore entitled to exemption from the central
excise duty. this companytention was number accepted by this
court. this companyrt pointed out that where the enforceability
of an exemption from tax depends number upon a law but upon
consensus what results is number a law granting an exemption
but only an agreement which is enforceable as an agreement. mr. s. t. desai arguing for the mill in the present case
attempts to distinguish the umaid mills case on the ground
that in that case the promise was to obtain an exemption
from anumberher sovereign in future and the ratio of the case
was that one sovereign companyld number bind anumberher sovereign. no
doubt the decision was also rested on this aspect of the
case but it was quite clearly laid down in the case that
an agreement cannumber rank as a law enacted by the ruler. the
consensus aspect of the document there companysidered was
pointed out in umaid mills case. it is plain that an
agreement of the ruler expressed in the shape of a companytract
cannumber be regarded as a law. a law must follow the
customary
 1  1963 supp. 2 s.c.r. 515.
forms of law-making and must be expressed as a binding rule
of companyduct. there is generally an established method for
the enactment of laws and the laws when enacted have also
a distinct form. it is number every indication of the will of
the ruler however expressed which amounts to a law. an
indication of the will meant to bind as a rule of companyduct
and enacted with some formality either traditional or
specially devised for the occasion results in a law but number
an agreement to which there are two parties one of which is
the ruler. judged from this angle it is quite obvious that the
document of 1943 was merely intended to bind companysensually
and number by a dictate of the ruler. the ruler bound himself
in companysideration of certain advantages promised to him by
the mill. the document is number worded as a law is ordinarily
expected to be. it records a companytract and part iii where
the companycessions occur is also worded as a companytract and uses
language familiar in agreements between two parties dealing
with each other at arms length. it is number necessary to
refer in detail to part 111 but the words
and the darbar in companysideration of the relief
given to it by the companypany by reason of the
modification in the principal agreement as
stated above hereby declares that the darbar
will at all times hereafter as hitherto use
its power and authority in maintaining and
protecting the companypany under its special
favour and hereby companyfirms the privileges and
rights heretofore enjoyed by the companypany and
in particular the darbar with the intent to
bind the chief for the time being thereof
hereby companyenants with the companypany as. follows etc. indicate that the darbar was binding itself in
consideration of certain acts done by the appellant-company
in the past and others which the appellant-company
undertook to perform in the future. this document
therefore is of the same character as the one which was
considered in umaid mills case where the sovereign
expressed himself number in a rule of law but in an agreement. the present document stands distinguished from the
kalambandis which number only ordered that the pensions were to
be paid but also laid down the rules of succession to the
privileges and the kind of tenure which the holders for the
time being were to enjoy. we are therefore satisfied that in the present case the
agreements culminating in the agreement of 1943 cannumber be
regarded as law but must be regarded only as agreements
which might have bound the sovereign as a companytracting party
but number the municipal companymittee. the municipal companymittee had already imposed octroi in the
state but the ruler ordered the municipal companymittee number to
collect the dues from the appellant-company because of the
agreement. numberdoubt the dewan who entered into the
agreement of 1943 was also the local government and the
chief officer of the municipality but the capacity of the
dewan in entering the agreement was different from his
capacity as the head of the municipality or as the local
government of nandgaon state. his action as the dewan in
foregoing the companylection of octroi was number anything he did
on behalf of the municipality but on behalf of the
sovereign. the resulting position thus was that the
sovereign did number companylect octroi from the appellant-company
because of the agreement and the municipal companymittees
rules and bye-laws though they applied to the appellant-
company remained in suspense because of the rulers desire. after the state merged with the state of madhya pradesh and
the municipal companymittee was number companytrolled in any way by the
ruler or by his agreement the imposition of octroi upon the
appellant-company which was in suspense began to take
effect from such date as the municipal companymittee chose to
determine. the municipal companymittee ceased to be subject to
the wish of the ruler after the merger and for a time it
did number companylect octroi from the appellant-company because
the succeeding government was accepting the royalty. in
1952 the municipal companymittee resolved to recover octroi
from the appellant-company in accordance with the original
imposition of the tax in the state and there was numberhing
which stood in the way of the companymittee. the resolution was
neither a fresh imposition of octroi because it had already
been imposed number the cancellation of an exemption because
the municipal companymittee had number granted an exemption to the
appellant-company. the resolution only indicated that on
and from a particular date the municipal companymittee would
recover octroi which it had already imposed a long time ago
upon all and sundry and to which the appellant-
company was also subject and which was numberlonger affected by
the will of the quondam sovereign.