1964 (3) TMI 119 - SC - Indian Laws

State's Obligations Extend to Merged Territories: Supreme Court Decision

State Of Rajasthan Versus Shyam Lal

The Supreme Court held that the State of Rajasthan was liable under Article 295(2) of the Constitution for the obligations of the former State of Dholpur. ... - Issues Involved:1. Liability of the State of Rajasthan under Article 295(2) of the Constitution.2. Recognition of obligations of the former State of Dholpur by the State of Rajasthan.3. Continuance of old laws and their impact on liabilities.4. Interpretation of 'Government of the corresponding State' in Article 295(2).Detailed Analysis:1. Liability of the State of Rajasthan under Article 295(2) of the Constitution:The central issue in these appeals was whether the State of Rajasthan was liable under Article 295(2) of the Constitution for obligations incurred by the former State of Dholpur. The respondent argued that the State of Rajasthan was bound by the obligations of the former State of Dholpur, citing Article 295(2) which states that the Government of each State specified in Part B of the First Schedule shall, from the commencement of the Constitution, be the successor of the Government of the corresponding Indian State regarding all property, assets, rights, liabilities, and obligations. The appellant, however, contended that the State of Rajasthan, being a new sovereign, was not bound by the obligations of the former State of Dholpur unless it chose to recognize them.2. Recognition of obligations of the former State of Dholpur by the State of Rajasthan:The Court examined the historical context of the political changes and mergers that led to the formation of the State of Rajasthan. It was noted that every time a merger took place, the new State assumed the assets and liabilities of the merging States. This was evidenced by provisions in the Covenants which stated that all assets and liabilities of the covenanting States would become those of the new State. The Court concluded that by continuing the old laws until they were repealed or altered, the new State implicitly recognized and assumed the liabilities of the merging States. This recognition was further supported by Article VI of the Covenant, which provided valuable evidence of the new State's intention to assume these liabilities.3. Continuance of old laws and their impact on liabilities:The Court emphasized that the continuance of old laws indicated that the new State intended to respect the rights and liabilities arising from those laws. Unlike the case of Pepsu, where old laws were repealed and replaced by Patiala laws, in Rajasthan, the old laws were continued, suggesting that the new State recognized the obligations under those laws. This continuity was seen as an affirmation of the rights of the subjects and the liabilities of the merging States.4. Interpretation of 'Government of the corresponding State' in Article 295(2):The High Court had to interpret whether the expression 'Government of the corresponding State' in Article 295(2) referred only to the United State of Rajasthan as it existed on January 26, 1950, or also included the covenanting States that had merged into it. The Full Bench of the High Court opined that it included both the United State of Rajasthan and its component units. The Supreme Court, while acknowledging this interpretation, found it unnecessary to decide this issue explicitly, as it was evident from the historical context and the continuance of old laws that the new State had recognized the liabilities of the merging States.Conclusion:The Supreme Court concluded that the State of Rajasthan was liable under Article 295(2) for the obligations of the former State of Dholpur. The appeals were dismissed, and the respondent in Appeal No. 887 was awarded costs. The Court's decision was based on the recognition of liabilities through the continuance of old laws and the evidence provided by the Covenants, affirming the rights and obligations of the subjects against the new State.