Act of State doctrine bars municipal challenge to resumption order made before sovereign transfer was complete.

The impugned resumption order, made while Junagadh was under Dominion administration, was treated as an act of State because it was a sovereign act during the process of territorial acquisition and not an exercise of municipal law. The Court held that the residents' asserted rights had not yet been recognised by the new sovereign, so they were not enforceable in municipal courts. As the Dominion's assumption of administration had not terminated when the order was passed, the dispute was non-justiciable and the suit could not be maintained.

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Issues: Whether the impugned resumption order, passed during the period when Junagadh was under the administration of the Dominion of India, was an act of State and therefore immune from challenge in municipal courts.

Analysis: An act of State, in the relevant sense, is a sovereign act directed against an alien outside the State and not one that is founded on, or purports to be justified by, municipal law. The material question was the legal status of the respondent when the order was made. The administration of Junagadh had been assumed by the Government of India before the final constitutional transfer of authority, and the residents had not yet become subjects whose rights were enforceable against the new sovereign in municipal courts. The Court held that the Dominion's assumption of administration was itself an act of State, and the Administrator's impugned action was taken before that act had terminated. Since no prior recognition of the respondent's asserted rights by the new sovereign was shown, the dispute was not justiciable.

Conclusion: The order was protected by the act of State doctrine, and the suit could not be maintained in a municipal court.

Final Conclusion: The appeal succeeded because the respondent's claim was barred at the threshold by the doctrine of act of State, leaving no municipal remedy against the resumption.

Ratio Decidendi: Where a new sovereign is still in the process of acquiring and administering territory, acts done before the completion of that sovereign transfer, and not under any recognized municipal title, are acts of State and are not justiciable in municipal courts unless the new sovereign has recognized the asserted private right.

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